45. Dividend and profit appropriation

On 26 August 2020, the Annual General Meeting of the Bank passed a resolution to retain the entire net profit earned by the Bank in previous years:

• with regard to the profit for 2019 – to allocate to the reserve capital the amount of PLN 2 155 113 and to leave as undistributed the amount of PLN 3 832 348 976,
• leaving still undistributed profit from previous years in the amount of PLN 1 667 651 024.

The resolution was in line with the recommendation of the Polish Financial Supervision Authority submitted to the Bank on 26 March 2020.

On 16 December 2020, the Polish Financial Supervision Authority (KNF) adopted a stance on the banks’ dividend policy in 2021, which resulted in:

• significant uncertainty as to the further development of events related to the COVID-19 pandemic,
• the temporary nature of solutions used by banks to improve the capital situation during the pandemic,
• continuing cautious supervisory positions in the European Union with regard to dividend restrictions and other forms of reducing capital resources,
• revision of the guidelines of the European Banking Authority, extending the moratoria

The Polish Financial Supervision Authority considered it necessary to suspend the payment of dividends by commercial banks in the first half of 2021 and not to take other actions, in particular those outside the scope of current business and operating activities, which could result in a reduction of the capital base without prior consultation with the supervisory authority. This applies to possible dividend payments from retained earnings and the buyout of treasury shares. The Commission expects that the possible implementation of such operations will always be preceded by a prior consultation with the supervisory authority and subject to their positive outcome.

The position of the Polish Financial Supervision Authority on the dividend policy of commercial banks in the second half of 2021 will be presented separately after analyzing the financial situation of the banking sector in the first half of the year.

PKO Bank Polski S.A. On 14 January 2021, he received an individual recommendation of the Polish Financial Supervision Authority, in which the Polish Financial Supervision Authority recommended the Bank:

• suspension of dividend payments in the first half of 2021 (including retained earnings from previous years),
• failure to undertake in the first half of 2021, without prior consultation with the supervisory authority, other activities outside the scope of current business and operating activities that may result in a reduction in the capital base, including buyouts of treasury shares.

The Management Board of the Bank and the Supervisory Board of the Bank adopted resolutions that, within the limits of their competences, they will supervise the implementation of the above recommendation of the PFSA.

Pursuant to Art. 395.2.2 of the Commercial Companies Code, the decision on the distribution of profit remains within the competence of the Bank’s Ordinary General Meeting.