Net interest income for 2020 amounted to PLN 9 184 million – PLN 106 million less than in the previous year. The lower result was mainly determined by a decrease in income from financing granted to customers, which was caused by the MPC’s decision to reduce interest rates, taken in the first half of 2020. This drop was partly compensated by a drop in interest expense on customer deposits, an increase in income on securities as a result of an increase in their volumes and an increase in income from hedge accounting.
Interest income in 2020 amounted to PLN 10 332 million and was 9.0% lower than in 2019. This was mainly due to:
- a decrease in income from financing granted to customers of PLN 1 456 million y/y – related mainly to the drop in the average interest rate on financing granted to customers of 0.8 p.p., partly compensated by an increase in the average volume of loan receivables of PLN 10 billion, accompanied by a change in their structure (an increase in the share of PLN housing loans accompanied by a decrease in the share of foreign currency housing loans),
- higher income on securities (PLN +372 million y/y), mainly as a result of an increase in the average volume of PLN 36 billion, which resulted mainly from purchases of Treasury bonds,
- higher income from hedge accounting (PLN +252 million y/y) in effect of an increase in the volume of the IRS PLN transactions, an increase in the spreads between the interest received and paid on the transactions and recognizing the valuation of designated CIRS transactions.
In order to maintain comparability of data, the interest income was adjusted: income on non-Treasury bonds which is recognized in the financial statements in income from debt securities was transferred to income on financing granted to customers.
In 2020, interest income went down by PLN 232 million in connection with the judgment of the Court of Justice of the European Union in respect of the consumer’s right to reduce the cost of the loan in the event of repayment of the loan before the deadline specified in the loan agreement.
Interest expense amounted to PLN 1 148 million and was PLN 797 million lower than in 2019. The lower interest expense was mainly the effect of a drop in the costs of the deposit base of PLN 751 million y/y, which resulted from lower PLN interest rates after the decisions of the MPC.
The interest margin decreased by 0. 44 p.p. y/y and amounted to 2.95% as at the end of 2020. The decrease in the margin results from lower returns on assets in effect of changes in the structure of interest-bearing assets (the share of securities with the lowest interest rates increased mainly at the expense of the share of amounts due to Customers bearing the highest interest rates). Additionally, interest margin decreased as a result of a drop in net interest income due to the decrease in market rates in Poland which to a larger degree translated into a drop in interest on assets than on liabilities. In 2020, the average interest rate on PKO Bank Polski S.A. loans was 3.8% (2019: 4.6%), and the average interest rate on total deposits was 0.3% (2019: 0.6%).