Bank’s financial position

The results achieved by PKO Bank Polski led to the main financial effectiveness ratios reaching the following levels:
PKO Annual
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Key financial indicators

31.12.2020 31.12.2019 Change
Net ROE (net profit/(loss)/average equity) -7.1% 9.8% -16.9 p.p.
Net ROTE (net profit/(loss)/average equity less intangible assets) -7.6% 10.4% -18.0 p.p.
Net ROA (net profit/(loss)/average assets) -0.9% 1.3% -2.2 p.p.
C/I (cost-to-income ratio) 40.2% 40.8% -0.6 p.p.
Interest margin (net interest income/average interest-bearing assets) 2.95% 3.39% -0.44 p.p.
Share of impaired exposures 4.5% 4.4% +0.1 p.p.
Cost of credit risk1) 0.77% 0.46% +0.31 p.p.
Total capital ratio (own funds/total capital requirement*12.5) 19.78% 22.21% -2.43 p.p.
Common equity Tier 1 (CET1) 18.45% 20.76% -2.31 p.p.
1) After eliminating the impact of COVID-19, the cost of credit risk as at 31 December 2020 would be 0.38% (-0.08 p.p. y/y).

Standalone income statement

2020 2019 Change
(PLN million)
Net interest income 9,184 9,290 -106 -1.1%
Net fee and commission income 3,101 2,828 273 9.6%
Net other income 590 704 -114 -16.2%
Dividend income 332 561 -229 -40.8%
Result on financial transactions 213 365 -151 -41.5%
Net foreign exchange gains/(losses) 133 106 27 25.0%
Net other operating income and expenses -88 -328 240 -73.1%
Result on business activities 12,875 12,822 54 0.4%
Operating expenses -5,180 -5,237 57 -1.1%
Tax on certain financial institutions -957 -931 -26 2.8%
Net operating result 6,738 6,654 84 1.3%
Net write-downs and impairment -9,004 -1,536 -7,468 5.9x
Profit/loss before tax -2,266 5,118 -7,384 x
Income tax -678 -1,283 605 -47.2%
Net profit/loss -2,944 3,835 -6,779 x

Major line items of the standalone income statement:

In 2020, PKO Bank Polski incurred a net loss of PLN -2 944 million (i.e. a drop in its results of PLN 6 779 million). This was mainly the effect of a decrease in net write-downs and impairment at a higher result on business activities and lower operating expenses. The result on business activities was PLN 12 875 million and it was PLN 54 million (+0.4% y/y). This was mainly the effect of an increase in net fee and commission income of PLN 273 million y/y, and a decrease in net interest income of PLN 105 million y/y and net other income of PLN 114 million y/y.

Other items include other result excl. commission refunds and dividend income, credit allowances excl. COVID-19, tax on certain financial institutions and corporate income tax.

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%).

In 2020 net fee and commission income amounted to PLN 3 101 million and was PLN 273 million higher than in the previous year. The level of the net fee and commission income was determined by:

  • higher net income on margins in Forex transactions (PLN +106 million y/y) in effect of an increase in the number of transactions and active management of the level of the spreads in the tables,
  • higher net income from investment funds and brokerage activities (PLN +101 million y/y), caused mainly by an increase in net income from trading on the stock exchange resulting from playing the role of an issuing agent in respect of the sales of bonds,
  • higher net income on loans and insurance (PLN +29 million y/y), mainly in effect of an increase in commission on business loans and leases, and a drop in the costs of granting the loans,
  • higher net income on payment and credit cards (PLN +15 million y/y) due to the higher number of cards and higher volumes of non-cash transactions,
  • higher net income from maintaining bank accounts and other net income (PLN +22 million y/y), among other things as a result of an increase in commissions for maintaining bank accounts and domestic bank transfers in the corporate segment.

In 2020, other net income amounted to PLN 590 million and was PLN 114 million lower than that earned in 2019 due to:

  • lower dividend income (PLN -229 million),
  • lower net income on financial operations (PLN -151 million y/y), as a result of a lower net income on the remeasurement of the bank’s investment securities and net income on embedded derivatives,
  • higher net foreign exchange income (PLN +27 million y/y) – mainly due to a better result on Treasury activities and limiting the volatility of other differences,
  • higher net other operating income and expenses (PLN +240 million y/y), as a result of:
    • recognizing income of PLN 24 million in 2020 from reducing the commitment to inject capital in a subsidiary, compared with respective costs of PLN 274 million which were recognized in 2019,
    • partially releasing, in 2019, the provision for proceedings before the President of the Office for Competition and Consumer Protection concerning practices which violate the collective interests of consumers (PLN 58 million), which was set up in 2018 in the amount of PLN 62.5 million (the information on setting up the provision was published in current report no. 24/2018 dated 27 June 2018),
    • recognizing the cost of refunds to customers for prepayments of consumer and mortgage loans at an amount which is PLN 22 million lower y/y,
    • setting up a provision for potential proceedings before the President of the Office for Competition and Consumer Protection of PLN 41 million.

In 2020, operating expenses amounted to PLN 5 180 million and were 1.1% y/y lower. Their level was mainly determined by:

  • decrease in employee benefit costs by PLN 261 million (-9.4% y/y) due to reduction in the number of employees by 1 700 FTEs in 2020, mainly in retail segment outlets (1 261 FTEs),
  • decrease in tangible costs of PLN 66 million (-5.8% y/y), mainly in connection with lower expenses on the costs of promotion and advertising as a result of the high costs incurred in 2019 related to the celebration of the bank’s centenary,
  • increase of PLN 159 million (+32.6% y/y) in contributions to the Bank Guarantee Fund (BGF),
  • increase of PLN 88 million in the costs of withheld tax on the issue of foreign bonds related to adjustments in gross-ups of interest for the years 2017-2019 in 2019 and accounting for the 3% tax on interest paid for the period 2014-2019 following amendments to the tax regulations,
  • increase of PLN 33 million (+4.0% y/y) in amortization and depreciation, mainly in amortization of intangible assets related to digitization of the bank, and depreciation of buildings and structures.

Regulatory costs include the result of regulatory burdens.

The effectiveness of operations of PKO Bank Polski measured with the C/l ratio on an annual basis was 40.2% and improved by 0.6 p.p. y/y in consequence of lower operating expenses (+1.1% y/y) and a higher result on business activities (+0.4% y/y).

In 2020, net write-downs and impairment with costs of the legal risk of mortgage loans in convertible currencies amounted to PLN -9 004 million and was PLN 7 468 million less than in 2019. The bank recognized the costs of legal risk of mortgage loans in convertible currencies of PLN -6 552 million (an increase of PLN 6 101 million compared with 2019). The legal risk is connected with the portfolio of mortgage loans in convertible currencies granted to households in the years 1999-2012 and is related to potential customer claims.

Mortgage loans include the cost of legal risk related to mortgage loans in convertible currencies amounting to PLN 6 552 mln in 2020 and PLN 451.5 mln in 2019.

The net write-downs for credit risk and non-financial assets were PLN -2 451 million and were PLN 1 367 million higher than in 2019, mainly as a result of write-downs recorded in connection with COVID-19 and impairment of: the shares in Bank Pocztowy, goodwill (which arose as a result of acquiring Nordea Bank Polska) and real estate. The share of impaired loans amounted to 4.5% as at the end of 2020 (+0.1 p.p. y/y).

The cost of credit risk was 0.77% as at the end of 2020, which is a 0.31 p.p. deterioration compared with the prior year.


Expenses on selected types of services

In 2020, the bank incurred entertainment costs, expenditure on legal services, marketing services, public relations and social communication services, and advisory services related to management totalling PLN 132 million, which represented 1.05% of the bank’s Result on Business Activities (RBA).

Type of expense constituting part of the bank’s administrative expenses 2020
(in PLN mln)
Share in RBA (%)
Marketing services
– image campaigns supporting the creation of a positive image of the bank (mainly the Ekstraklasa campaign and the image campaign #StayAtHome) as well as advertising campaigns supporting the sales of the bank’s product offer
82 0.65%
Legal services
– providing constant legal services on behalf of the bank based on civil law agreements concluded with law firms and expenses on ad hoc legal aid
31 0.24%
Public relations and social communication services
– internal and external communication actions, relating mainly to press publications
10 0.08%
Costs of management advisory services
– advisory services related to business and finance advice
8 0.07%
Entertainment costs
– expenses aimed at maintaining positive relations with customers, partners and counterparties
1 0.01%
Total 132 1.05%

Standalone statement of financial position

Total assets, and total equity and liabilities of PKO Bank Polski amounted to PLN 345 billion at the end of 2020 and increased by PLN 28 billion since the beginning of the financial year. Therefore, the bank reinforced its position as the largest financial institution in the Polish banking sector. On the assets side, the bank noted an increase, mainly in the securities portfolio, and on the side of sources of finance the increase was determined mainly by the increase in the deposit base.

Major line items of the standalone statement of financial position:

At the end of 2020, financing granted to customers amounted to PLN 207.0 billion, which marked a decrease of PLN 7.8 billion y/y.

The volume of retail and private banking loans decreased by PLN 1.8 billion and related to real estate loans, with a lower level of corporate loans (PLN -4.7 billion) and loans to firms and enterprises (PLN -1.1 billion).

Corporate loans include non-Treasury bonds (other than held for trading).

Retail and private banking loans, and corporate loans were the main items in the structure of financing by type, with shares of 54.9% and 37.0% of the portfolio as at the end of 2020 respectively.

Amounts due to customers constitute the basic source of financing of the bank’s assets. At the end of 2020, amounts due to customers amounted to PLN 278.9 billion, which is an increase of PLN 26.0 billion since the beginning of the year. The main factor that contributed to the increase in the deposit base was an increase in retail and private banking deposits (PLN +23.0 billion) and deposits of business entities (PLN +12.1 billion), accompanied by a decrease in deposits of corporate entities (PLN -9.1 billion).


In the structure of customer deposits by type, the main items are the retail and private banking deposits (70.3% as at the end of 2020). The share of current deposits in the break-down of total deposits increased to 82.2% (+11.8 p.p. compared with the end of 2019).

PKO Bank Polski has been an active participant of the debt securities market for many years, which enables it to diversify the sources of financing its operations and to adapt them to the regulatory requirements regarding long-term financial stability. In 2020, borrowings decreased by PLN 0.9 billion, as a result of:

  • premature redemption of EMTN bank bonds with a nominal value of EUR 250 million,
  • repayment of loan instalments received from international financial institutions in accordance with the payment schedule,
  • higher exchange rates of EUR (PLN +0.36) and CHF (PLN +0.34), accompanied by a drop in USD exchange rate (PLN -0.04).


Detailed information on the issues conducted by PKO Bank Polski and loans received is provided in the Financial Statements of PKO Bank Polski for the year ended 31 December 2020 (in Note 39).

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