13. Segment reporting

The PKO Bank Polski S.A. Group conducts business activities within segments offering specific products and services addressed to specific groups of customers. The manner in which the business segments are divided ensures consistency with the sales management model and offers customers a comprehensive product mix comprising both traditional banking products and more complex investment products, as well as services provided by the Group entities.

The segment note presented below is included in the internal reporting system, i.e. information presented to the Management Board of PKO Bank Polski S.A.,  used to assess the achieved results and allocate resources.

The segment report presented below reflects the internal organizational structure of the PKO Bank Polski S.A. Group.

The Group activities cover three main segments:

The segmentation note was prepared on the basis of the internal reporting system, i.e. information provided to the Management Board of PKO Bank Polski S.A., which is used to assess the achieved results and allocate resources.

The principles of identifying revenues and costs as well as assets and liabilities applied in the segmentation report are consistent with the accounting principles described in this report. The presented assets and liabilities of the segment are operating assets and liabilities used by the segment in its operating activities. The values ​​of assets and liabilities as well as revenues and costs for individual segments are based on internal management information. The segment results, assets and liabilities also include items that can be assigned based on rational assumptions. On this basis, the segments recognize the impact of significant one-off events, such as negative goodwill arising from the acquisition of the company, goodwill impairment losses, impairment losses on associates, and the cost of legal risk of the portfolio of mortgage loans in convertible currencies.

Share of profits and losses of associates and joint ventures, profits and losses of non-controlling shareholders, income tax charge for the presentation of the result and deferred tax assets, current income tax receivables, current income tax liabilities and provisions due to deferred income tax in the presentation of the statement of financial position were recognized at the Group level (unallocated assets and liabilities).

The Capital Group settles transactions between segments as if they were related to unrelated entities, using internal settlement rates based on market rates for a given currency and maturity / maturity date, taking into account liquidity margins. Transactions between the segments are carried out on normal commercial terms.

In 2020, the Capital Group introduced the following changes to the method of determining the management result of operating segments:

• introducing the allocation of benefits from capital reinvestment from the Transfer Center to the Retail Segment and the Corporate and Investment Segment,
• transfer of the result on the investment portfolio of debt securities from the Corporate and Investment Segments to the Transfer Center and other.

The data for 2019 has been brought to comparability in this respect.

In connection with the changes to the accounting principles introduced from 1 January 2020, which are described in detail in Chapter 12, analogous changes were made to the comparative data for 2019 in the scope of:

• reclassification of negative costs from the net fee and commission income to the net interest income,
• reclassification of the transaction margin from the FX result to the net fee and commission income,
• reclassification of the result on insurance activity, the result on operating lease, short-term rental and the result on the provision of fleet management services from other net operating income and costs to the result on commissions and fees,
• inclusion of the result of regulatory burdens in operating costs.

The tables below present data on revenues, costs, profits / losses as well as assets and liabilities of the individual reporting segments of the Capital Group for the periods ended 31 December 2020 and 31 December 2019.