Nordea Bank Polska Annual Report 2011

Transcription

Nordea Bank Polska S.A.
Annual Report 2011
This document is a free translation of the Polish original. Terminology current
in Anglo-Saxon countries has been used where practicable for the purposes of
this translation in order to aid understanding. The binding Polish original
should be referred to in matters of interpretation.
Selected figures
Statement of Comprehensive Income
1
2
3
4
5
Interest income
Commission income
Profit before income tax
Profit for the period
Decrease in cash and cash
equivalents
6 Earnings per share (PLN/EUR)
PLN thousand
period
period
01/01/2011 - 01/01/2010 31/12/2011
31/12/2010
1 047 227
761 828
143 750
128 237
381 972
326 910
296 663
259 337
3 194 288
5,35
700 273
5,21
EUR thousand
period
period
01/01/2011 31/12/2011
252 947
34 721
92 262
71 656
01/01/2010 31/12/2010
190 248
32 024
81 638
64 763
771 549
1,29
174 876
1,30
The following exchange rates were applied in order to convert financial figures in the profit and loss
account into EUR:
For figures relating to the period from 01/01/2011 to 31/12/2011: 4.1401, i.e. the exchange rate
calculated as the average of the rates quoted by the National Bank of Poland (NBP), prevailing on the
last day of each month in that period.
For figures relating to the period from 01/01/2010 to 31/12/2010: 4.0044, i.e. the exchange rate
calculated as the average of the rates quoted by the NBP, prevailing on the last day of each month in
that period.
Statement of Financial Position
1
2
3
4
5
6
7
8
9
10
Loans and advances to banks
Loans and advances to customers
Total assets
Deposits from banks
Deposits from customers
Total liabilities
Total equity
Number of shares
Book value per share (PLN /EUR)
Capital adequacy ratio
PLN thousand
Period
Period
31/12/2011
31/12/2010
283 229
27 584 938
35 325 117
18 834 996
13 291 863
33 176 671
2 148 446
55 498 700
38,71
9,55
839 607
20 718 093
24 832 366
12 566 105
9 460 672
22 981 001
1 851 365
55 498 700
33,36
10,85
EUR thousand
Period
Period
31/12/2011
31/12/2010
64 125
6 245 458
7 997 898
4 264 399
3 009 388
7 511 472
486 426
55 498 700
8,76
-
212 006
5 231 445
6 270 324
3 173 018
2 388 878
5 802 843
467 481
55 498 700
8,42
-
For conversion of items of the statement of financial position into EUR, the Bank used the NBP‟s
exchange rate of 4.4168 quoted on 31/12/2011 and the NBP‟s rate of 3.9603 quoted on 31/12/2010 .
2
Nordea Bank Polska S.A. Annual Financial Statements 2011
Nordea Bank Polska S.A.
Annual Financial Statements 2011
3
Nordea Bank Polska S.A. Annual Financial Statements
Table of Contents
Title
Page
Statement of Comprehensive Income ................................................................................ 6
Statement of Financial Position ......................................................................................... 7
Statements of Changes in Equity ....................................................................................... 8
Statement of Cash Flows .................................................................................................... 9
NOTES TO THE FINANCIAL STATEMENTS ..................................................................... 10
1. General information about the Issuer .......................................................................... 10
2. Significant Accounting Policies ................................................................................... 10
3. Important accounting estimates and judgements....................................................... 21
4. Segment Reporting ....................................................................................................... 23
5. Management of financial risks...................................................................................... 26
6. Net interest income ....................................................................................................... 41
7. Net commission income ............................................................................................... 42
8. Instruments at fair value through profit or loss and revaluation ............................... 42
9. Other operating income ................................................................................................ 43
10. Administrative expenses ............................................................................................ 43
11. Depreciation and amortisation ................................................................................... 44
12. Impairment on loans and advances ........................................................................... 45
13. Income tax ................................................................................................................... 45
14. Earnings per share ...................................................................................................... 46
15. Cash and balances with central bank ........................................................................ 47
16. Loans and advances to banks .................................................................................... 47
17. Loans and advances to customers ............................................................................ 48
18. Financial assets designated at initial recognition as at fair value through profit or
loss ..................................................................................................................................... 49
19. Financial assets and financial liabilities held for trading ......................................... 50
20. Intangible assets ......................................................................................................... 51
21. Property, plant and equipment ................................................................................... 54
22. Deferred tax assets and liabilities .............................................................................. 56
23. Other assets................................................................................................................. 57
24. Deposits from banks ................................................................................................... 58
25. Deposits from customers ........................................................................................... 59
26. Debt securities issued ................................................................................................ 59
27. Other liabilities ............................................................................................................ 60
28. Provisions .................................................................................................................... 60
4
29. Subordinated liabilities ............................................................................................... 61
30. Equity ........................................................................................................................... 62
31. Classification of financial instruments ...................................................................... 64
32. Management of equity ................................................................................................. 68
33. Fair Value ..................................................................................................................... 69
34. Contingent Liabilities .................................................................................................. 71
35. Assets pledged for collateral ...................................................................................... 72
36. Operating lease ........................................................................................................... 73
37. Statement of cash flows – supplementary information ............................................ 74
38. Related parties............................................................................................................. 75
39. Share-based payment programme ............................................................................. 79
40. Events after the reporting period ............................................................................... 85
5
Statement of Comprehensive Income
PLN thousand
Note
01/01/2011
01/01/2010
31/12/2011
31/12/2010
OPERATING INCOME
Interest income
6
1 047 227
761 828
Interest expenses
6
(403 841)
(299 918)
Net interest income
6
643 386
461 910
Commission income
7
143 750
128 237
Commission expenses
7
(35 884)
(37 225)
Net commission income
Instruments at fair value through profit or loss and
revaluation
7
107 866
91 012
8
203 482
201 625
Other operating income
9
29 450
34 164
Total operating income
984 184
788 711
OPERATING EXPENSES
Administrative expenses
(494 773)
(403 172)
- staff costs
(227 258)
(188 581)
- other administrative expenses
(267 515)
(214 591)
(46 224)
(37 999)
540 997
441 171
(56 272)
(4 943)
(20 630)
-
381 972
326 910
(85 309)
(67 573)
296 663
259 337
Total earnings for the period
296 663
259 337
Depreciation
10
11;20;21
Total operating expenses
Impairment on loans and advances
12
Impairment of property, plant and equipment
Income tax
Earnings per share
Diluted earnings per share
13
01/01/2011
01/01/2010
31/12/2011
31/12/2010
14
5.35
5.21
14
5.35
5.21
Diluted earnings are equal ordinary earnings per share because there are no factors causing dilution.
The notes presented on pages 10-86 are an integral part of the financial statements.
6
Statement of Financial Position
PLN thousand
ASSETS
Cash and balances with central bank
Note
15
16
17
Financial assets at fair value through profit or loss
Financial assets held for trading
Financial assets designated at initial recognition as at fair
value through profit or loss
Intangible assets
Property, plant and equipment
Deferred tax assets, net
Other assets
including current tax
TOTAL ASSETS
19
18
20
21
22
23
LIABILITIES
Deposits from banks
Debt securities issued
Financial liabilities at fair value through profit or loss
Financial liabilities held for trading
Other liabilities
including current tax
Subordinated liabilities
Reserves
TOTAL LIABILITIES
Share capital
Other reserve capital
Profit for the year
TOTAL SHAREHOLDERS‟ EQUITY
TOTAL LIABILITIES AND EQUITY
31/12/2011
1 021 025
283 229
27 584 938
757 511
839 607
20 718 093
6 102 972
2 240 282
123 024
16 311
5 979 948
48 071
177 461
60 710
46 711
35 325 117
2 223 971
44 689
158 217
43 763
30 204
3 204
24 832 366
31/12/2011
24
25
26
19
27
29
28
30
31/12/2010
18 834 996
13 291 863
248 098
36 452
36 452
228 254
4 049
536 629
379
33 176 671
277 494
1 573 832
297 120
2 148 446
35 325 117
31/12/2010
12 566 105
9 460 672
325 139
19 587
19 587
141 811
467 314
373
22 981 001
277 494
1 314 534
259 337
1 851 365
24 832 366
The notes presented on pages 10-86 are an integral part of the financial statements.
7
Statements of Changes in Equity
Core capital
Share
capital
1 January 2011
Total comprehensive
income for the
period
277 494
847 936
Gener
al risk
fund
300
-
-
(300)
(157)
457
296 663
-
296 633
-
-
-
-
418
-
-
418
277 494
847 936
-
259 337
725 896
457
(259 337)
296 663
2 148 446
Bank‟s equity
Share-based
payment
Profit appropriation
31 December 2011
Reserve
capital
Other
capital
PLN thousand
Retained earnings
and profit for the
period
Total
Retained Profit for
earnings
the
period
259 337 1 851 365
466 298
PLN thousand
Retained
earnings and
profit for the
period
Total
Profit for the
period
Core capital
Name
1 January 2010
Total
comprehensive
income for the
period
Capital increase
Share-based
payment
Profit appropriation
31 December 2010
Share
capital
Reserve
capital
227 594
511 860
General
Risk
Fund
300
49 900
336 076
277 494
847 936
Other
capital
320 541
145 193
1 205 488
-
-
259 337
-
259 337
385 976
300
564
145 193
466 298
(145 193)
259 337
564
1 851 365
The notes presented on pages 10-86 constitute an integral part of the financial statements.
8
Statement of Cash Flows
PLN thousand
Nota
Operating activities
Adjustment for the reconciliation of the net
profit against net cash from operating
activities
Interest paid and received
Income tax
Effect of exchange differences on operating
activities
Depreciation
01/01/2011
31/12/2011
01/01/2010
31/12/2010
296 663
259 337
(40 712)
12 194
(100 158)
(54 382)
(8 022)
(85 519)
1 028
46 224
1 160
37 999
(6 863 011)
(30 347)
(6 818 363)
(106 713)
(3 566 303)
(19 258)
(3 694 156)
18 349
92 412
9 550 774
5 630 015
128 762
5 039 514
4 815 056
3 815 727
105 032
207 964
16 494
Cash flow in operating activities
Investing activities
Acquisition of non-current assets
Acquisition of intangible assets
Change in other financial assets
2 943 713
1 678 173
(90 993)
(5 890)
(268 851)
(25 604)
(4 539)
(57 192)
Cash flow in investing activities
Financing activities
Proceeds from issue of shares
Issue of debt securities
Redemption of debt securities
Repayment of long-term bank loans
Other, including loans received
(365 734)
(87 335)
639 642
(730 000)
706 666
385 976
325 139
(1 638 410)
36 737
Cash flow in financing activities
Decrease in cash and cash equivalents
Opening balance of cash and cash equivalents
Closing balance of cash and cash equivalents
Balance sheet change in cash and cash
equivalents
616 308
3 194 288
2 746 310
5 940 598
(890 558)
700 273
2 046 037
2 746 310
3 194 288
700 273
407 935
888 972
295 365
644 497
Changes in operating assets
Change in loans to financial institutions
Change in advances (lending activity)
Change in derivative instruments
Change in other assets except financial
instruments
Changes in operating liabilities
Change in deposits by financial institutions
Change in deposits and advances by other
institutions
Change in other liabilities
Interest paid
Interest received
37
37
The notes presented on pages 10-86 constitute an integral part of the financial statements.
9
NOTES TO THE FINANCIAL STATEMENTS
1. General information about the Issuer
Information about Nordea Bank Polska S.A.
Nordea Bank Polska S.A. is a bank with the registered seat in Poland: 81-303 Gdynia , 2, Kielecka
Street, Tax Identification Number (NIP) 586-000-78-20, REGON 190024711, registered by the District
Court in Gdańsk-North in Gdańsk, 8th Commercial Division of the National Court Register under
number KRS: 0000021828.
The Bank provides a wide range of universal banking services to retail and institutional customers in
accordance with the scope of services listed in its Statutes.
The Bank's shares are listed on the Warsaw Stock Exchange.
2. Significant Accounting Policies
Statement of compliance
The annual separate financial statements of Nordea Bank Polska S.A. for the period ended
on 31 December 2011 have been drawn up in accordance with the International Financial Reporting
Standards adopted by the European Union, and other applicable regulations.
The financial statements have been approved by the Management Board for publication on 8 February
2012.
The financial statements will be finally approved by the General Meeting of the Shareholders.
An earlier application of standards that are not yet mandatory as well as amendments to the
existing standards and interpretations issued by the International Financial Reporting
Standards Interpretation Committee (IFRSIC).
The Bank has not followed any standards that are not mandatory yet.
The following is a list of standards and interpretations approved by the EU which have not come into
effect yet as well as standards and interpretations pending approval by the EU, including amendments
to such standards and interpretations as well as an assessment of the impact, if any, of such
standards and interpretations on the financial statements of Nordea Bank Polska S.A.
Amendments to IFRS 7 – Financial Instruments: Disclosure. Offsetting of financial assets and financial
liabilities. The amendments to the Standard taking effect on 1 January 2013 will not affect the financial
statements because the Bank does not doe offsetting in regard to its financial assets and liabilities not
has it entered into any master agreement in regard to offsetting.
10
IFRS 9 Financial Instruments. It is expected that upon initial application, the new standard will affect
financial statements due to its retroactive application. However, the Bank will not be able to assets the
impact on its financial statements until it applies it for the first time.
IFRS 10 Consolidates Financial Statements will take effect as of 1 January 2013. The Bank will not be
able to assets the impact on its financial statements until it applies it for the first time.
New standard IFRS 11 Joint Arrangements, which will take effect as of 1 January 2013, regulates the
settlement of joint arrangements, classifying them as either joint operations or joint ventures. The
standard will not affect the financial statements.
New standard IFRS 12 Disclosure of Interests in Other Entities – which will come into effect as of 1
January 2013, regulates disclosures of the Bank‟s interests in subsidiaries, affiliates, joint ventures or
unconsolidated structured entities. The new regulation should not have an effect on the financial
statements.
IFRS 13 Fair Value Measurement, effective as of 1 January 2013. The Bank does not expect the
standard to have any material impact on the financial statements.
Amendments to IAS 1 Presentation of Financial Statements. Presentation of Other Comprehensive
Income, will take effect as of 1 July 2012 and they will not affect the Bank‟s financial statements as the
Bank does not have any other comprehensive income.
Amendments to IAS 12 Taxes – Deferred Income Tax: Future Realization of an Asset effective as of 1
January 2012 do not apply to the financial statements of the Bank because it does not have any
investment property measured at fair value on accordance with IAS 40.
Amendments to IAS 19 Employee Benefits effective as of 1 January 2013 will not have any material
effect on the financial statements of the Bank.
Amendments to IAS 27 Consolidated and Separate Financial Statements effective as of 1 January
2013 will not have any effect on the financial statements of the Bank as they will not result in any
changes in the Bank‟s accounting policy.
Amendments to IAS 28 Investments in Associates and Joint Ventures, effective as of 1 January 2013
will not have any material effect on the financial statements of the Bank, because the Bank does not
have any investments in subsidiaries or any joint ventures which said amendments would apply to.
Amendments to IAS 32 – Financial Instruments: Presentation. - Offsetting of financial assets and
financial liabilities. will take effect on 1 January 2014. They will not affect the financial statements
because the Bank does not doe offsetting in regard to its financial assets and liabilities not has it
entered into any master agreement in regard to offsetting.
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine, effective as of 1 January 2013.
Owing to the nature of the Bank‟s business, the standard will not affect its financial statements.
11
Comparability with previous periods
In the annual report 2011, the Bank changed the presentation of cash in transit and cash in ATMs.
The changes are as follows:
the Statement of Financial Position in the comparable period (31/12/2010); the presentation of
the following items has been changed accordingly:
o „Cash and balances with central bank” (previously: PLN 628,834 thousand; now:
PLN 757,511 thousand)
o „Other assets” (was PLN 158,881 thousand; now: PLN 30,204 thousand)
the Statement of Cash Flows in the comparable period (31/12/2010) the relevant items were
changed.
o
„Changes in other assets except financial instruments” (previously: PLN 85,518
thousand; now: PLN 128,762 thousand)
o
„Decrease in cash and cash equivalents” (previously: PLN 619,030 thousand; now:
PLN 700,273 thousand)
o
„Opening balance of cash and cash equivalents” (previously: PLN 1 998,603
thousand; now: PLN 2,046,037 thousand)
o
Closing balance of cash and cash equivalents” (previously: PLN 2,617,633 thousand;
now: PLN 2,746,310 thousand)
The basis of preparation of the financial statements
These financial statements for the period from 1 January 2011 to 31 December 2011 contain
comparable data for the period from 1 January 2010 to 31 December 2010.
The financial statements are presented in the Polish zloty (PLN) and all the figures are rounded to the
nearest thousand, unless expressly stated otherwise.
The following accounting principles have been applied to all the reporting periods presented in these
financial statements.
These financial statements have been prepared using the fair value concept regarding financial assets
and financial liabilities measured at fair value through profit or loss, including derivative instruments,
as well as financial assets classified as available for sale, except such assets whose fair value cannot
be reliably established. Other financial assets and financial liabilities (including loans and advances)
are carried at amortised cost determined with the use of the effective interest rate, reduced by
impairment allowances or at cost less any impairment allowances.
Application of estimates
The preparation of the financial statements in compliance with the IFRS requires that management
make subjective judgements, estimates and assumptions influencing its accounting policies and the
presentation of the assets and liabilities, as well as income and expenses. Such estimates and
assumptions are based on available historical data and a number of other factors that are deemed to
be reasonable under the circumstances, the results of which constitute the basis for estimating the
carrying amounts of assets and liabilities that are not readily apparent from other sources.
12
The estimates and the underlying assumptions are subject to review. Revisions to accounting
estimates are recognised in the period when the estimate is revised, provided that such an estimation
affects only that period, or in the period of the revision and in future periods if the revision affects both
current and future periods.
Transactions in foreign currencies
Transactions in foreign currencies are translated at the average exchange rates quoted by the
central bank at the transaction date. Monetary assets and liabilities resulting from such
transactions, denominated in foreign currencies (stated at historical cost), are translated at the
exchange rates effective at that date. Any exchange differences arising from translation are
recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies
which are stated at historical cost are translated at the average exc hange rates quoted by the
central bank at the transaction date. Non-monetary assets and liabilities denominated in foreign
currencies which are stated at fair value are translated into the presentation currency of the
financial statements at the average exchange rates quoted by the central bank at the date when
their fair value was determined.
Financial assets and financial liabilities
Classification
The Bank classifies financial instruments into the following categories:
-
financial assets or financial liabilities at fair value through profit or loss,
-
loans and receivables,
-
other financial liabilities.
The Bank does not classify financial assets into the categories of held-to-maturity or available-for-sale.
(a) Financial assets or financial liabilities at fair value through profit or loss
These are financial assets and liabilities meeting one of the following criteria:
(1) They are classified as held-for-trading. Financial assets or financial liabilities are classified as heldfor-trading if they are acquired or incurred mainly for the purpose of being sold and repurchased in the
short term; they are a part of the portfolio of certain financial instruments managed together and for
which there is evidence of a recent actual pattern of short-term profit taking. Derivative instruments are
also categorised as held-for-trading unless the derivative is a designated and effective hedging
instrument.
(2) Upon initial recognition they were designated by the Bank as measured at fair value through profit
or loss. The Bank applies such a designation when one of the following conditions is met:
-
the designated financial asset or financial liability is a compound instrument containing one or
more embedded derivative instruments eligible for separate recognition and the embedded
derivative instrument considerably changes the cash flows originating from the underlying
agreement or the separation of the derivative instrument is prohibited;
-
such a qualification of the asset or the liability eliminates or considerably reduces
inconsistency in measurement or recognition (the so-called accounting mismatch due to the
13
different method of measurement of assets or liabilities or different recognition of related
profits or losses);
-
the group of financial assets or financial liabilities or of both of these categories is
appropriately managed and their results are measured at fair value, in line with documented
principles of risk management or the Bank‟s investment strategy.
(b) Loans and receivables
Loans and receivables are financial assets other than derivative instruments, whose terms of payment
are defined or definable, which are not quoted in an active market, other than:
-
financial assets which the entity intends to sell immediately or in the near future, which it has
qualified as held for trading and those that after initial recognition were designated by the
entity as measured at fair value through profit or loss;
-
financial assets designated by the entity upon initial recognition as available for sale; or
-
financial assets the holder of which may not recover a substantially complete original
investment for a reason other than deterioration in credit quality, which are qualified as
available for sale.
(c) Other financial liabilities
Other financial liabilities are contractual obligations of the Bank to deliver cash or another financial
asset to another entity, other than those that are held for trading or designated to be measured at fair
value through profit or loss. This category includes deposits from other banks, deposits from
customers and debt securities issued.
Recognition
The Bank recognises a financial asset or a financial liability when and only when it becomes a party to
the agreement for the given instrument. The Bank recognises a regular way purchase or sale of a
financial asset using settlement date accounting. Loans and receivables are recognised when cash is
advanced to the borrowers.
Derecognition
A financial asset is derecognised when the contractual rights to the cash flows from the financial asset
expire or when the Bank transfers the contractual rights to receive the cash flows from the transaction
transferring a material part of the risk and rewards of ownership of the financial assets.
The Bank derecognises a financial liability (or a part of it) when and only when the liability has expired,
that is when the contractual obligation has been discharged, cancelled or when it has expired.
Measurement
Upon initial recognition, a financial asset or a financial liability is measured at fair value increased, in
the case of a financial asset or financial liability not classified at fair value through profit or loss, by
14
transaction costs if directly attributable to the acquisition or issue of the financial asset or financial
liability.
Subsequently, the Bank measures financial assets, including derivatives being assets, at fair value
without any deduction for transaction costs to be borne on sale or other disposal, except for:
-
loans and receivables (loans and advances to banks and to customers, NBP bonds), which
are measured at amortised cost using the effective interest rate method.
After the initial recognition, financial liabilities are measured at amortised cost using the effective
interest rate method except for financial liabilities measured at fair value through profit or loss
(derivative financial instruments).
The fair value of equity financial instruments in an active market is based on current bid prices. If there
is no active market for a given instrument or for unlisted securities, the Bank establishes the fair value
using valuation techniques, which include recent market transactions, an analysis of discounted cash
flows, option pricing models and other valuation techniques commonly applied by marketplace
participants. If it is impossible to obtain a reliable fair value measurement, unlisted financial
instruments are recognised at cost and periodically tested for impairment.
The fair value of debt instruments traded in active markets is measured on the basis of the current
market prices for such instruments.
The Bank measures the fair value of derivative financial instruments using valuation techniques. All
the models are approved before use and adjusted in order to ensure that the results achieved reflect
the actual data and comparable market prices. All the models use observable data only, taken from an
active market. The Bank has the following derivative instruments:
-
forward FX transactions, currency swaps, interest rate swaps, cross-currency swaps and FRAs;
such instruments are measured at fair value based on models that discount future cash flows.
- currency options: option transactions are measured at fair value with the use of option measurement
models.
Gains and losses on subsequent measurement
Gains and losses on a change in the fair value of a financial asset or financial liability eligible for being
recognised at their fair value through profit or loss, not being a part of a hedging relationship, are
recognized in profit or loss.
Offsetting financial instruments
A financial asset and a financial liability are offset and the net amount is presented in the balance
sheet when and only when there is a legally enforceable legal right to set off the recognised amounts
and when the settlement is to be carried out on a net basis or the asset is realised and the liability
settled simultaneously.
15
Hedge accounting
The Bank does not apply hedge accounting.
Impairment of financial assets
Financial assets measured at amortised cost
At the end of each reporting period, the Bank assesses whether there is any objective evidence of
impairment of any financial asset (or a group of financial assets).
What may serve as objective evidence of impairment of a financial asset or a group of financial assets
is a single event or a cumulative effect of several events. Evidence of impairment may include:
-
significant financial difficulties of the issuer or obligor,
-
a breach of contract such as a default or delinquency in payment of interest or the principal
amount,
-
a concession made by the Bank to the borrower which the Bank would not otherwise have
considered if it hadn‟t been for the Borrower‟s financial or legal difficulties;
-
probable bankruptcy or other financial reorganisation of the obligor caused by its difficult
situation;
-
the disappearance of an active market for a given financial asset caused by financial difficulties,
or
-
observable data indicating that there has been a measurable decrease in the estimated future
cash flows related to a group of financial assets since their original recognition even though such
a decrease cannot yet be attributed to any specific financial assets in the group, including:
-
adverse changes in the payment status of the debtors (e.g. increasing number of delayed
payments), or
-
adverse changes in the domestic or local market that are correlated with (may contribute to) the
impairment of assets coming within such a group (e.g. an increase in the unemployment rate,
adverse economic or legal changes in a given sector of economy).
The above list presents examples and does not exhaust all possible situations that may be considered
as sufficient evidence of impairment.
The Bank tests all its credit exposures for impairment.
Exposures for which evidence of impairment has been found are subject to impairment testing on an
individual basis. This process makes it possible to classify all the Bank‟s customers into the proper risk
categories and to determine whether a loss has been incurred (a given exposure has become
impaired).
Exposures where no evidence of impairment has been found are subject to tests for incurred but not
reported impairment losses (“IBNR”).
The purpose of portfolio IBNR tests is to estimate the losses that have already been incurred (and
which have affected future cash flows that were to be settled in accordance with the agreement), but
are still unidentifiable under individual impairment tests. To carry out portfolio tests, credit exposures
are grouped in such a manner as to maintain an approximate specification of credit risk of individual
16
sub-portfolios. The basic factors taken into account are: customer type, product type and sector and
delinquency in payment. The Bank excludes from portfolio testing the customers‟ exposures in whose
case objective evidence of impairment has been found.
The results of historical data analyses serving as the basis for provisioning are further adjusted to take
account of the impact of current factors which did not exist in the past, and to eliminate the impact of
the factors that existed in the past and do not exist now.
If there is objective evidence of impairment of a credit exposure, the amount of the impairment loss is
calculated as the difference between the carrying amount of the asset and the present value of
estimated future cash flows. The time factor (a loss in the value of money over time) is taken into
account in the process of calculation of estimated future cash flows both when additional payments
are expected and when certain effects of debt collection (enforcement of collateral) are assumed.
When valuating the collateral held, the Bank takes into account the price that can be obtained in a
forced sale. Such a price is further reduced by expected costs of enforcement, sales, storage, etc.
With regard to exposures towards business entities, to assess risks and carry out impairment tests,
the Bank uses an internal rating system which in principle is supposed to reflect the probability of
default.
When the probability of recovery of loan receivables with recognised impairment does not increase
and the recovery of the receivables is in practice impossible, the amount of a specific loan receivable
is written off against the related impairment provision. Receivables that were previously written off and
subsequently recovered decrease the impairment charge in the income statement.
Provisions for off balance sheet liabilities such as: guarantees, LCs and unused credit lines are
recognised in accordance with these principles.
Items of property, plant and equipment are initially measured at cost. After the initial recognition of
items of property, plant and equipment as assets, the Bank carries them at cost less accumulated
depreciation/amortisation and any accumulated impairment losses.
Intangible assets
Goodwill
All business combinations are accounted for under the acquisition method. Goodwill is the difference
between the acquisition price and the fair value of the acquired identifiable assets.
Goodwill is allocated to cash generating units and it is not subject to depreciation but is tested for
impairment on an annual basis.
Licences and software
Licences and software are initially measured at cost, and after the initial recognition as assets; the
Bank carries them at cost less accumulated depreciation and any cumulative impairment losses.
17
Subsequent expenses
Regarding items of property, plant and equipment and intangible assets, the Bank recognises - in the
carrying amount - the cost of replacing some of such items at the moment such a cost is incurred if the
Bank is likely to obtain future economic benefits related to such items, and the cost to buy or
manufacture of the asset may be reliably measured. Other costs are recognized in the profit and loss
account when incurred.
Depreciation and amortisation
Depreciation and amortisation is charged to the profit and loss account according to the straight-line
method over the economic useful life of a given item of property‟ plant and equipment or an intangible
asset. Land is not subject to depreciation. The estimated economic useful lives are as follows:
buildings and structures
10 - 40 years
machinery and equipment
3 - 22 years
fittings
5 - 10 years
vehicles
5 years
computer software
5 years
licences
2 - 5 years
The residual value and the useful life of an asset are subject to annual estimation.
Other receivables
Trade and other receivables are carried at cost less any impairment losses.
Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents comprise items maturing
within three months of their acquisition date, including: cash and balances with the central bank of
unlimited negotiability, Treasury bills and other eligible bills (i.a. money bills) and loans and advances
to other banks, deposits from other banks and short-term securities of the State Treasury.
Impairment of assets other than financial assets
The carrying amounts of the Bank's assets other than deferred tax assets are reviewed as at the end
of the reporting period to determine whether there is any indication of impairment. If so, the
recoverable amount of the assets is estimated.
For goodwill and intangible assets of an indefinite useful life and intangible assets not yet available for
use, the recoverable amount is estimated at the end of each reporting period.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating
unit exceeds the recoverable amount. Impairment losses are recognised in the profit and loss account.
In the case of cash generating units, impairment losses first reduce the goodwill allocated to these
units (group of units), and then proportionally reduce the carrying amount of other assets in the unit
(group of units).
18
Calculation of the recoverable amount
The recoverable amount of other assets is the higher of an asset‟s net selling price and its value in
use. To assess the value in use, estimated future cash flows are discounted to their present value at a
pre-tax discount rate reflecting current market assessments of the time value of money and the risks
specific to the asset. In the case of assets not generating independent cash inflows, the recoverable
amount is determined for the cash-generating unit to which the assets belong.
Reversal of an impairment allowance
An impairment allowance in respect of goodwill is not reversible. In the case of other assets, an
impairment allowance is reversed if there has been a change in the estimates used to define their
recoverable amount. An impairment allowance is reversed only to the extent that the assets' carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation, if
no impairment allowance had been recognised.
Lease agreements and lease payments
The Bank is a party to operating lease arrangements where the leased assets are not recognised in
the Bank‟s balance sheet. Payments made under operating leases are recognised on a straight-line
basis as cost in the income statement over the term of the lease.
Equity
Share capital
The share capital is shown at its nominal value consistent with the Bank‟s statues.
Other capital
Supplementary capital
Supplementary capital is established from appropriation of profits or share premium from the issue of
shares less direct costs of the issue.
Reserve capital
Reserve capital comprises the general banking risk fund and other reserves.
Employee benefits
Employee benefits may be short and long term. Short term employee benefits include salaries,
bonuses, paid holidays, social insurance premiums and service anniversary awards. These benefits
are measured on an undiscounted basis and are expensed as the related service is provided.
Liabilities due to long-term employee benefits constitute the amount of future benefits which an
employee will receive in consideration of the work provided during the current period and previous
periods.
Provisions
Provisions are recognised in the balance sheet if the Bank has such a legal or constructive obligation
as a result of past events, and if it is probable that an outflow of economic benefits will be required to
settle such an obligation. If the effect is material, the amount of provisions is determined based on
19
discounted expected cash flows at a before-tax rate which reflects the current market assessment
regarding the time value of money and, if applicable, risks specific to the liability.
Net interest income
Interest income and expenses regarding all financial instruments are recognised in the income
statement in amounts resulting from measurement at amortised cost using the effective interest rate
method.
The effective interest rate is the rate that exactly discounts the estimated future cash payments or
receipts through the expected life of the financial instrument, or, where appropriate, a shorter period,
to the net carrying amount of the financial asset or financial liability. When calculating the effective
interest rate, the Bank estimates the cash flows, considering all the contractual terms of the financial
instrument, however, it does not consider any future loan losses. The calculation includes all the fees
and points paid or received between the parties and items constituting an integral part of the effective
interest rate, as well as all other premiums and discounts.
Fee and commission income and expenses
Fee and commission income and expenses arise from the provision of financial services offered by the
bank and include lending, fees for the Bank‟s undertaking to provide credit, card fees, cash
management fees, fees for brokerage services, investment banking services, project finance services,
financial transaction structuring services and asset management services.
Fees and commission directly related to the creation of financial assets or liabilities (both income and
expense) are recognised in the income statement as an adjustment in the calculation of the effective
interest rate. Fees and commission received for the granting of renewable loans, credit lines, credit
cards, guarantees and Letters of Credit are accounted for in the income statement using the straightline method during the period until maturity and are presented as commission income.
Other fees and commission connected with the services offered by the Bank, such as cash
management fees, fees for brokerage services, investment advice, financial planning, investment
banking services and financial transaction structuring are recognised in the income statement when
the service is performed.
Gains (losses) on financial instruments at fair value and revaluation
This category of result comprises:
-
gains and losses on the disposal of or a change in the fair value of assets and liabilities at fair
value through profit or loss (including derivative financial instruments). Interest and amortisation of
premiums from and discount of securities designated as at fair value are presented under net
interest income.
-
gains and losses from the measurement of financial assets and liabilities denominated in foreign
currencies (revaluation of the balance sheet position) as well as realized and unrealized gains and
losses on foreign exchange transactions.
20
Other income and expenses
Other income and expenses comprise any profit or loss made by the Bank on its activities not related
directly to the financial activity. These include income and expenses on the sale of non-current assets,
salary costs, and administrative expenses.
Income tax expense
Income tax expense comprises current and deferred tax. Income tax expenses is recognised in the
income statement.
Current tax is the expected tax payable on the taxable income for the year at the tax rate effective as
at the end of the reporting period, and any adjustments to the tax liabilities of previous years.
Deferred tax assets and reserve are calculated using the balance sheet method by calculating
temporary differences between the carrying amounts of assets and liabilities and their amounts used
for taxation purposes. Deferred tax assets relating to all the negative temporary differences are
recognised only to the extent that it is probable that future taxable profits will be available against
which the assets can be set off. The carrying amount of deferred tax assets is reviewed at each
reporting date and is reduced to the extend that it is no longer probable that the related economic
benefit will be realised.
3. Important accounting estimates and judgements
The Bank makes estimates and judgements that have some impact on the value of the assets and
liabilities to be recognised in the following period. Such estimates and judgements, reviewed on a
regular basis, are based on past experience and other factors, including expectations as to future
events that seem justified under the circumstances.
Impairment of loans and advances
At the end of each reporting period, Nordea Bank Polska S.A. assesses whether there is any objective
evidence of impairment of any financial asset or a group of financial assets. Recognition of assets as
impaired assets is not limited to situations where a loss can be deemed as irreversible.
What may serve as objective evidence of impairment of a financial asset or a group of financial assets
is a single event or a cumulative effect of several events. Nordea Bank Polska S.A. includes the
following examples of events in the list of objective evidence of impairment:
-
significant financial difficulties of the issuer or obligor;
-
a breach of contract such as a default or delinquency in payment of interest or principal amount;
-
a concession made by Nordea Bank Polska to the borrower which the Bank would not otherwise
have considered if it hadn‟t been for the Borrower‟s financial or legal difficulties;
-
probable bankruptcy or other financial reorganisation of the debtor caused by its difficult situation;
-
the disappearance of an active market for a given financial asset caused by financial difficulties;
or
-
observable data indicating that there has been a measurable decrease in the estimated future
cash flows related to a group of financial assets since their original recognition even though such a
decrease cannot yet be attributed to any individual financial assets in the group, including:
21
-
adverse changes in the payment status of the debtors (e.g. increasing number of delayed
payments); or
-
adverse changes in the domestic or local market that are correlated (may contribute to) with the
impairment of assets coming within such a group (e.g. growth of an unemployment rate,
unfavourable economic or legal changes in a given sector of economy).
The above list presents examples and does not exhaust all possible situations that may be considered
as sufficient evidence of impairment.
Nordea Bank Polska tests all credit exposures for impairment on an individual basis.
Exposures where no evidence of impairment has been found are subject to tests for incurred but not
reported impairment losses (“IBNR”).
The purpose of portfolio IBNR tests is to estimate the losses that have already been incurred (and
which have affected future cash flows that were to be settled in accordance with the agreement), but
are still unidentifiable under individual impairment tests. To carry out portfolio tests, credit exposures
are grouped in such a manner as to maintain an approximate specification of credit risk of individual
sub-portfolios. The basic factors taken into account are: customer type, product type and sector and
delinquency in payment. The Bank excludes from portfolio testing the customers‟ exposures in whose
case objective evidence of impairment has been found.
The results of historical data analyses serving as the basis for provisioning are further adjusted to take
account of the impact of current factors which did not exist in the past, and to eliminate the impact of
the factors that existed in the past and do not exist now.
If there is objective evidence of impairment of a credit exposure, the amount of the impairment loss is
calculated as the difference between the carrying amount of the asset and the present value of
estimated future cash flows. The time factor (the loss of the value of money over time) is taken into
account in the process of calculation of estimated future cash flows both when additional payments
are expected and when certain effects of debt collection (enforcement of collateral) are assumed.
When valuating the collateral held, the Bank takes into account the price that can be obtained in a
forced sale. Such a price is further reduced by expected costs of enforcement, sales, storage, etc.
With regard to exposures towards business entities, to assess risks and carry out impairment tests,
the Bank uses an internal rating system which in principle is supposed to reflect the probability of
default.
There is a number of financial instruments whose fair values cannot be obtained directly from quoted
market prices or indirectly - using valuation techniques or models supported by observable market
prices or rates. This is generally the case for investments in unlisted securities, private equity funds,
hedge funds, and both more complex or less active markets supplying input to the technique or model
for OTC derivatives, certain complex or structured financial instruments and illiquid bonds.
22
4. Segment Reporting
The operating activities of Nordea Bank Polska S.A. are divided into three basic segments: Retail
Banking, Corporate Banking and Financial Segment.
The Retail Banking segment comprises transactions (other than markets transactions) made at the
Bank‟s branch network, the Internet Branch and the Call Centre as well as the bank outlets being part
of the Retail Banking Centre – Main Branch. Retail services concern the following groups of
customers: small businesses, sole proprietors and private customers.
The Corporate Banking segment comprises transactions made with corporate customers (companies
of high turnover), Nordic customers, municipalities, hospitals, as well as debt paper trading. It also
offers markets products to customers (foreign exchange transactions).
The Financial Segment comprises money market transactions, foreign exchange transactions,
transactions in derivative instruments and debt securities performed on the interbank market.
The banking income and expenses of a segment are income and expenses earned/incurred on sales
to external customers, as well as internal settlements between the Bank's segments. External banking
income and expenses were allocated to segments based on the allocation of groups of customers to
specific segments (so called customer responsible units). The internal banking result is based on
defined assumptions on internal transfer prices. Segment operating expenses are costs of operation of
a given segment that may be directly assigned or allocated to the segment.
Internal transfer prices used in sales transactions between the segments are based on market prices
with appropriate mark-ups
The Bank's assets and liabilities are allocated to segments based on the so called customer
responsibility. The Corporate and Retail Divisions are assigned the customer deposits and loans for
which they are respectively responsible.
The assets and liabilities that are not allocated to the separate segments are accounted for under
"unallocated assets" and "unallocated liabilities".
Nordea Bank Polska S.A. operates exclusively in Poland. No material differences in the risk resulting
from the geographical location of its outlets have been identified, therefore no geographical segment
information is provided.
23
The statement of financial position of Nordea Bank Polska S.A. (at 31/12/2011)
PLN thousand
ASSETS
31/12/2011
Total
Corporate
Segment
Retail
Segment
Financial
Segment
1. Segment‟s assets
including non-current assets
and intangible assets
2. Other assets (unallocated)
35 264 407
9 570 535
18 825 871
6 868 001
225 532
60 710
11 771
-
164 025
-
49 736
-
TOTAL ASSETS
35 325 117
9 570 535
18 825 871
6 868 001
PLN thousand
LIABILITIES
31/12/2011
Total
Corporate
Segment
Retail
Segment
Financial
Segment
1. Segment‟s liabilities
2. Equity
33 176 671
2 148 446
5 742 600
-
7 019 642
-
20 414 429
-
35 325 117
5 742 600
7 019 642
20 414 429
The income statement of Nordea Bank Polska S.A. (01/01/2011-31/12/2011)
PLN thousand
Total segment’s income
Segment‟s income (external)
Segment‟s income (internal)
Total segment’s costs
Segment‟s costs (external)
Segment‟s costs (internal)
Depreciation
Dividends received
Change in impairment
allowances for receivables
Impairment allowances
Impairment reversals
Segment’s profit (loss)
Other income (unallocated)
Other costs (unallocated))
Income tax
Total
1 402 738
1 402 738
(953 199)
(906 975)
(46 224)
-
Corporate
Segment
680 098
503 732
176 366
(460 643)
(230 972)
(224 351)
(5 320)
-
(61 215)
(68 443)
7 228
388 324
21 171
(27 523)
381 972
(85 309)
296 663
(4 254)
(6 761)
2 507
215 201
-
Retail
Financial
Exclusions
Segment
Segment
938 902
166 094
(382 356)
761 785
137 221
177 117
28 873
(382 356)
(759 334)
(115 578)
382 356
(594 252)
(81 751)
(124 930)
(33 075)
382 356
(40 152)
(752)
(58 802)
(61 682)
2 880
120 766
-
1 841
1 841
52 357
-
-
24
The statement of financial position of Nordea Bank Polska S.A. (at 31/12/2010)
PLN thousand
ASSETS
31/12/2010
Total
Corporate
Segment
Retail
Segment
Financial
Segment
1. Segment‟s assets
including non-current assets
and intangible assets
2. Other assets (unallocated)
24 788 603
7 403 871
13 872 622
3 512 110
202 906
43 763
17 574
-
138 322
-
47 010
-
TOTAL ASSETS
24 832 366
7 403 871
13 872 622
3 512 110
PLN thousand
LIABILITIES
31/12/2010
Total
Corporate
Segment
Retail
Segment
Financial
Segment
1. Segment‟s liabilities
2. Equity
22 981 001
1 851 365
3 791 756
-
5 299 834
-
13 889 411
-
TOTAL LIABILITIES AND
EQUITY
24 832 366
3 791 756
5 299 834
13 889 411
The income statement of Nordea Bank Polska S.A. (01/01/2010-31/12/2010)
PLN thousand
Total segment’s income
Segment‟s income (external)
Segment‟s income (internal)
Total segment’s costs
Segment‟s costs (external)
Segment‟s costs (internal)
Depreciation
Dividends received
Change in impairment
allowances for receivables
Impairment reversals
Other income (unallocated)
Other costs (unallocated))
Income tax
Total
1 113 495
1 113 495
(756 953)
(718 954)
(37 999)
-
Corporate
Segment
544 553
398 891
145 662
(342 237)
(190 135)
(146 735)
(5 367)
-
Retail
Segment
752 145
628 055
124 090
(614 778)
(481 782)
(101 073)
(31 923)
-
(20 630)
(26 284)
5 654
335 912
12 359
(21 361)
326 910
(67 573)
259 337
(11 107)
(12 373)
1 266
191 209
-
(9 894)
(13 911)
4 017
127 473
-
Financial Exclusions
Segment
96 623
(279 826)
86 549
10 074
(279 826)
(79 764)
279 826
(47 037)
(32 018)
279 826
(709)
371
371
17 230
-
-
25
5. Management of financial risks
The Bank is exposed to the following types of financial risk resulting from its operations:
-
credit risk (including counterparty credit risk)
-
market risk (including: interest rate risk, FX risk and equity price risk)
-
liquidity risk.
The objective of risk management is to limit the potentiality of losses resulting from:
-
changes in the market situation (market risk),
-
counterparty's insolvency (credit risk)
and to assure the adequate and safe structure of financing for the Bank (liquidity risk) and the size of
equity adequate to the risk.
The Bank is also exposed to operational risk that is exposure to losses resulting from inadequate
internal processes or systems, human errors or external factors. The objective of the operational risk
management is to minimise the likelihood of occurrence and/or reduce the consequence of occurrence
of unexpected adverse events. Operational risk management is based on identification of operational
risk, reporting on operational incidents and lessons learned, business continuity management and
regular reporting to the Management Board and Supervisory Board.
Credit risk
Credit risk is the risk of default by the borrower or by another party to the transaction, as well as a
situation where, in the event of default, the collateral and guarantees or other means of recovery of the
receivable are insufficient to satisfy the Bank‟s claims.
Credit risk includes also pre-settlement risk and settlement risk.
When granting loans, the Bank follows the common credit policies and procedures established by the
Nordea Group. The primary rules and the relevant decision-making authorities are described in the
Bank's credit policy and strategy.
Specific procedures relating to the granting of loans are presented in the Bank's internal instruction
manuals.
When assessing credit risk resulting from exposures to business entities, the Bank uses an internal
rating model. Every customer with a significant credit exposure receives a solvency rating (financial
rating) and a collateral rating, which represent a synthetic measure of the risk generated by the
customer.
An adequately high financial rating is a prerequisite for granting a loan. The internal financial rating
allows the Bank to assign 18 grades to non-defaulted customers and 3 grades to defaulted customers.
In addition, the „S‟ grade is used for non-defaulted customers from the public sector. A rating is
composed of financial and quality factors.
26
The collateral coverage ratio calculated in the rating sheet is used in the credit process in order to
provide the decision-making authority with general information about the secured portion of the
customer‟s exposure. The rating scale relating to collateral coverage is made up of five grades.
The assessment of the credit ability of private individuals is based on the estimation of the borrower‟s
net income surplus (NIS), the ratio of the amount of monthly loan liabilities and net income as well as
the ratio of monthly financial liabilities (including loan liabilities) and net income. NIS is the average
monthly net income less:
1/ house/apartment upkeep costs
2/ the costs of living of the members of the household
3/ encumbrances resulting from writs of enforcement,
4/ financial encumbrances
The borrower is deemed creditworthy if his or her NIS is sufficient for them to handle loan repayments
and the relationship between the amount of the monthly loan liabilities and their net income and
between their monthly financial obligations and net income is below the maximum level set by the
Bank.
When making credit decisions, Nordea Bank Polska follows the principle of consensus. This means
that to increase a credit commitment requires the consent of all the members of the decision-making
authority.
Every credit exposure is subject to periodic monitoring. The customer‟s ability to repay his or her
liabilities, the current value of the collateral, the potential weaknesses in the customer‟s financial
performance and deviations from the agreed terms are verified on a continuous basis.
The periodical monitoring of credit customers in the Bank constitutes a form of individual testing aimed
at the identification of customers that are in default or who are at risk of default.
The Bank treats a customer as being in default (defaulted), if one of the following events has
occurred:
-
the customer is meeting its obligations, but currently observable facts (for example: a considerable
reduction in the business volume, the loss of principal markets, a sudden reduction of earning
ability, an increase in the liabilities exceeding the value of the assets), suggest that there is little
likelihood that within the next 12 months the customer will be able to service its debt properly
(principal, interest, fees and commissions) and there is no way of preventing the loss of the
customer‟s credit ability,
-
the customer is non-performing i.e. it is no longer able or willing to meet its financial obligations,
for one or several of the following reasons:
a/ there are economically significant delays in the repayment of the loans, exceeding
90 days,
b/ the loan agreement has been terminated, and the loan has been called in,
27
c/ the assessment of interest has been stopped due to the risk of default in repayment of the
principal debt (non-interest accruing loans),
d/ the principal debt, interest, fees or other ancillary charges have been forgiven (including their
charging to the provision account) or another concession has been made in favour of the
customer, in consequence of the customer‟s difficult financial situation,
e/ the debt repayment has been suspended in connection with a composition agreement or
another type of creditors‟ arrangement giving protection to the debtor.
-
the customer has filed for bankruptcy or a petition for announcing the customer‟s bankruptcy has
been filed by another party.
In the event of defaulted customers or (only in the case of business entities) at risk of default
(categories “Risk-classified” and “Special mention”), the Bank tests each customer‟s exposure
individually that is the Bank checks whether a loan loss has incurred.
The impairment of a loan (and consequently the value of impairment allowance) is calculated on the
basis of a conservative estimation of future cash flows, the value of collateral or other sources of
repayment.
In order to set up adequate impairment allowances (portfolio provisions) for the coverage of loan
losses that were not recognized during individual impairment tests, the Bank carries out portfolio
impairment tests.
The Bank pays special attention to credit exposures that were reclassified to higher risk categories,
with a view to effective restructuring or, if necessary, to a successful debt recovery process.
Independent Head Office segments are responsible for the credit process, the monitoring of the quality
of the credit portfolio and the level of impairment allowances, as well as for the control of credit
operations.
The table below shows the maximum exposure to credit risk at 31 December 2011, resulting from
balance sheet and off-balance sheet items.
28
The maximum credit exposure disregarding the collateral and other risk mitigating factors
PLN thousand
Maximum
Maximum
Maximum
Maximum
exposure at
exposure at
exposure at
exposure at
carrying
gross nominal
carrying
gross nominal
ASSETS
amount
amount
amount
amount
31/12/2011*
31/12/2011
31/12/2010*
31/12/2010
Financial assets designated at
initial recognition as at fair value
through profit or loss
Loans and advances to
customers
Shares in subsidiaries
Total
Contingent liabilities granted
Total
Total credit exposure
5 979 948
-
2 223 971
-
283 229
7 902
839 607
-
27 584 938
27 844 767
20 813 033
20 889 984
33 848 115
27 852 669
23 876 611
20 889 984
7 136 022
7 136 022
7 136 022
7 136 022
7 220 041
7 220 041
7 220 041
7 220 041
40 984 137
34 988 691
31 096 652
28 110 025
* The figures are not adjusted for impairment allowances
The primary differences between the maximum exposure at the carrying amount and the amounts
included in the table analysis at gross nominal amounts result from the fact that the latter are principal
amounts, not adjusted for accrued interest, effective interest rate adjustment as well as revaluation
charges.
The following tables to not include interbank placement and takings, cash and balances with central
bank, Treasury securities, NBP securities nor write-ups of derivative financial instruments.
29
PLN thousand
Specification
Business entities
- performing
S
6+…65+…54+…43+…32+…21+…10+…0unrated
Gross total
IBNR
Net total
- non-performing
6+…10+…0unrated
Gross total
Net total
Private Individuals
- performing
IBNR
Net total
- non-performing
Net total
Public Sector
- performing
IBNR
Net total
- non-performing
Net total
Banks
- performing
IBNR
Net total
Total gross exposure
Total impairment allowance
Total net credit exposure *
31/12/2011
31/12/2010
876 953
916 284
2 835 567
5 072 488
2 066 981
66 774
3 712
5 600
79 062
11 923 421
(21 936)
11 901 485
1 016 937
433 279
2 921 805
4 194 982
1 699 422
67 393
18 896
31 007
85 959
10 469 680
(21 936)
10 447 744
435
124 930
190
125 555
(46 986)
78 569
122 615
522
123 137
(42 575)
80 562
18 795 937
(32 969)
18 762 968
192 002
(47 356)
144 646
13 898 887
(13 029)
13 885 858
109 504
(16 694)
92 810
3 664 866
3 664 866
555
(576)
(21)
3 033 290
3 033 290
621
(706)
(85)
286 355
286 355
34 988 691
(149 823)
34 838 868
473 843
473 843
28 108 962
(94 940)
28 014 021
* The amount is adjusted for impairment allowances related to the principal
30
Past due loans as at the reporting date (overdue for less than three months):
PLN thousand
Specification
31/12/2011
14 days - 1 month
1 month - 2 months
2 months - 3 months
Total:
234 555
47 188
23 976
305 719
31/12/2010
169 157
28 590
14 035
211 782
Impaired loans and the structure of the collateral provided for such loans:
Specification
Impaired loans
Collateral for impaired loans
assignment of receivables
guarantees and suretyship
mortgage
transfer of ownership title
pledge
security deposit
31/12/2011
318 112
98 053
1 133
88 896
182
7 615
227
PLN thousand
31/12/2010
233 262
66 831
12 336
49 655
4 481
359
Concentration of the credit portfolio
Credit portfolio by sectors:
Specification
Business entities
Private individuals
Public sector
Banks
Total
31/12/2011
12 048 976
18 987 939
3 665 421
286 355
34 988 691
PLN thousand
31/12/2010
10 592 817
14 008 391
3 033 911
473 843
28 108 962
31
Credit portfolio by currency and sector:
PLN thousand
Currency
Total
31/12/2011
PLN
EUR
USD
CHF
NOK
SEK
31/12/2010
14 732 864
5 406 120
362 848
14 441 514
35 609
6 853
14 091 214
3 588 314
171 024
10 233 957
13 875
7 020
Other
2 883
3 558
Total:
34 988 691
28 108 962
PLN thousand
Currency
Business entities
31/12/2011
PLN
EUR
USD
CHF
NOK
SEK
31/12/2010
8 369 376
3 242 992
343 933
64 161
27 452
1 062
8 501 547
1 852 947
152 528
74 403
7 920
1 480
Other
-
1 992
Total:
12 048 976
10 592 817
PLN thousand
Currency
Public sector
31/12/2011
PLN
EUR
USD
CHF
NOK
SEK
Other
Total:
31/12/2010
3 663 036
2 057
328
3 665 421
3 018 634
14 845
432
3 033 911
PLN thousand
Currency
PLN
EUR
USD
CHF
NOK
SEK
Other
Total:
Banks
31/12/2011
31/12/2010
225 374
59 429
1 552
286 355
411 583
60 824
1 436
473 843
32
PLN thousand
Private individuals
Currency
31/12/2011
PLN
EUR
USD
CHF
NOK
SEK
Other
Total:
31/12/2010
2 475 078
2 101 642
17 035
14 377 353
8 157
5 791
2 883
18 987 939
2 159 450
1 659 698
16 628
10 159 554
5 955
5 540
1 566
14 008 391
Product structure by sector:
PLN thousand
Product type
overdraft facilities
working capital loans
investment loans
bonds
guarantees
mortgage loans
eFirma
car loans
credit cards
other
Total:
Business entities
31/12/2011 31/12/2010
2 790 230
623 436
2 987 148
1 725 425
944 300
2 545 667
542 137
1 949 058
1 453 587
1 391 606
249 085
248 583
-
220 910
256 094
8 903
2 224 855
11 689
2 469 080
12 048
976
10 592 817
Public sector
Banks
31/12/2011 31/12/2010 31/12/2011 31/12/2010
176 840
1 073 970
257 153
1 399 569
328
-
176 763
1 053 873
264 429
949 590
64 099
49 520
-
20
756 341
20
525 137
236 835
-
3 665 421
3 033 911
286 355
1 200
-
40 020
433 823
473 843
33
Product type
mortgage loans
overdraft facilities
credit cards
car loans
consumer loans
loans for purchase of shares
guarantee
other
Total:
PLN thousand
Private Individuals
31/12/2011
31/12/2010
18 713 233
13 690 157
181 037
213 376
81 693
91 933
3 241
3 231
4 067
4 066
6
6
4 662
5 622
18 987 939
14 008 391
Conditional liabilities granted, by sector:
Specification
Business entities
Public Sector
Private Individuals
Banks
Total:
PLN thousand
31/12/2010
31/12/2011
5 279 368
5 602 718
815 233
443 962
762 968
278 453
7 136 022
700 806
472 555
7 220 041
Conditional liabilities granted, by currency:
Specification
PLN
USD
NOK
EUR
SEK
other
Total:
31/12/2011
5 796 575
76 132
25 128
1 140 438
97 596
153
7 136 022
PLN thousand
31/12/2010
6 036 388
104 429
6 047
908 526
163 067
1 584
7 220 041
Percentage share of industries in the total exposure to business entities:
PLN thousand
Industry
Industrial production
Commerce (retail, wholesale and commission sale)
Real estate administration
Financial services
Power, gas and water supply
Construction
Transport and communications
Business services and consulting
Agriculture
Hotels and restaurants
Other
Total:
Share
31/12/2011
21,20%
9,29%
19,78%
4,80%
14,98%
6,96%
7,61%
11,14%
0,57%
0,09%
3,58%
100,00%
31/12/2010
22,35%
14,89%
9,68%
6,54%
12,51%
7,27%
15,30%
3,64%
0,70%
0,04%
7,08%
100,00%
34
Credit risk inherent in derivative instruments (counterparty risk)
Credit risk inherent in derivative financial instruments is a risk that a counterparty will become
insolvent before the transaction matures.
Counterparty risk is controlled in the Bank on the basis of exposure limits assigned to credit products
during the decision-making process, in compliance with all the procedural requirements concerning
credit repayment capacity and with the credit policy. The exposure to counterparty credit risk is
calculated on the basis of the current market value of the transaction and the assessment of its future
potential value. This assessment depends on the extent of the volatility of specific underlying
instruments (foreign exchange rates and interest rate) in particular derivative products.
Separate limits are set in order to control the specific type of credit risk existing in trading transactions
in derivatives, i.e. settlement risk.
Market risk
The Bank‟s activities are exposed to market risk. This risk consists of a loss of market value due to
changes in interest rates, foreign exchange rates and prices of equity instruments, as well as a risk of
adverse impact of such changes on profits.
Market risk is managed on the basis of a market risk management policy adopted by the Bank.
The exposure to market risk is formally mitigated by risk limits established by the Management Board
as part of the limits approved by the Supervisory Board of the Bank. These limits cover the value at
risk (foreign exchange risk, interest rate risk and equity market price risk), sensitivity to interest rate
changes (interest rate risk) and limitation of the nominal amounts of exposures (foreign exchange
risk).
The measurement of risk and the control of its compliance with the limits accepted by the
Management Board for particular risks is carried out on a daily basis by a specialized unit operating
independently of the business divisions responsible for meeting profit targets. Regular reports on
market risk are discussed at meetings of the Assets and Liabilities Management Committee (ALCO)
and are presented to the Bank‟s Management Board.
The limits for specific risk categories approved by the Management Board are reviewed from time to
time to ensure that they comply with the current goals and strategy of the Bank.
All the procedures are updated on an ongoing basis so that they take account of the latest solutions in
risk control.
Management of interest rate risk
Interest rate risk arises from a mismatch between the re-pricing periods of assets, liabilities and offbalance sheet items. Under such circumstances, a change in market interest rates may lead to the
occurrence of losses (or gains) as a result of changes in the market value of instruments or changes
in the value of interest flows.
35
The main source of interest rate risk are transactions in the bank‟s portfolio (loans and deposits). The
Bank avoids instruments generating a high interest rate risk. Long term assets and liabilities carry an
interest rate based on floating rates. The products in the Bank‟s portfolio include only those against
the risk of which the Bank can hedge itself. The exposure resulting from the Banks‟ trade transactions
is insignificant because all transactions with customers are closed with opposite transactions
concluded on the interbank market.
Interest rate risk management is the responsibility of a specialised unit of the Bank. This unit receives
daily information about the Bank‟s exposure to interest rate risk.
The level of interest rate risk is measured and controlled by a specialized unit (operating
independently of the business divisions responsible for generating the financial result). The risk is
controlled by limits reducing the exposure to:
-
changes in the market value resulting from all balance-sheet items sensitive to interest rate
changes,
-
changes in the market value resulting from balance-sheet items re-priced within more than 12
months,
-
value at interest rate risk.
The methods of measurement of interest rate risk applied at the Bank are described below in the
section entitled “Market risk measurement methods”.
Exposure to interest rate risk
The Bank analyses interest rate risk by reviewing the re-pricing gap and calculating the VaR amount
and market value sensitivity to interest rate changes (a parallel shift of the zero-coupon curve by one
percentage point).
Repricing gap at 31/12/2011 (PLN million):
Total
Assets
Liabilities
Off-balance sheet
items (net)
Gap
to 1 month
to 3 months
To 1 year
to 5 yrs
over 5 yrs
Insensitive
items
35 325
18 975
14 190
1 704
3
-
453
(35 325)
(21 024)
(10 219)
(1 748)
(8)
-
(2 326)
84
27
55
1
1
-
-
-
(2 023)
4 027
(43)
(4)
-
-
Repricing gap at 31/12/2010 (PLN million):
Total
Assets
Liabilities
Off-balance sheet
items (net)
Gap
to 1 month
to 3 months
To 1 year
to 5 yrs
over 5 yrs
Insensitive
items
24 832
12 031
10 658
1 613
67
1
462
(24 832)
(16 306)
(5 073)
(1 400)
-
-
(2 053)
(4)
-
(4)
-
-
-
-
-
(4 275)
5 581
213
67
1
-
36
The gap presented above is determined on the basis of statements of cash flow ge nerated by
items deemed to be sensitive to interest rate risk (only principal amounts without taking into
account loan impairment). Other balance sheet items, including loan losses, are excluded from
the analysis and presented under „Insensitive items‟.
Foreign exchange risk management
The Bank manages FX risk using limits for the open FX position and value at risk (VAR).
The FX position is managed by a separate bank unit. The foreign exchange position resulting from
every FX transaction of a significant amount (at individually negotiable prices) is directly closed with
an opposite transaction in the market – FX risk is fully eliminated. The position resulting from FX
transactions of smaller values is closed collectively during and at the end of every business day.
A separate risk control unit (independent of the business divisions responsible for profits) verifies
whether the open position exceeds the limits and whether an actual and/or expected loss from the
maintenance of the position justifies any change to the applicable open position limits. For that
purpose, the Group applies advanced risk measurement methods, including the measurement of
VaR).
Exposure to foreign exchange risk
The Bank's FX position by currencies is presented below:
PLN thousand
31/12/2010
Long
Short
position
position
31/12/2011
Specification
Long position
Short
position
EUR
5 311
-
-
125
USD
137
-
-
484
CHF
593
-
-
1 094
Other currencies
952
789
433
584
6 993
789
433
2 287
Total FX position
Market risk measurement methods
Value at risk
The main method used in the Bank for the measurement of market risk is the value-at-risk model.
Value at Risk is a measure of the maximum expected loss that is likely to occur with a specific
probability in a defined period of time under normal market conditions. The amount of VaR is
estimated by means of statistical modelling based on a set of market data defined for particular
market risks.
In the Bank, VaR is calculated based on a historical simulation method using data for the latest 500
business days, using the “Expected Tail Loss” technique. It must be noted that the assumptions used
37
for the calculation of VaR cause certain limitations of this value and the potential losses that the Bank
may incur in specified (exceptional) circumstances may be higher than the amount of VaR.
The table below presents VaR in 2011 and in the comparative period for particular market risk
categories, calculated on the assumption that the open position will be maintained for 10 days at a
99% confidence level.
PLN thousand
Interest rate risk
FX risk
Total market risk
VAR on 31.Dec.
average
minimum
maximum
VAR on 31.Dec
average
minimum
maximum
VAR on 31.Dec
average
minimum
maximum
2011
969
1 521
480
3 542
343
123
20
1 235
1 190
1 695
640
3 689
2010
1353
735
255
1 353
330
98
26
413
1 509
849
361
1 509
Sensitivity to changes in interest rates
Sensitivity to interest rate changes is calculated in the Bank on the basis of a theoretical model of
market value with the use of the cash flow method, as a change in the market value of cash flow
caused by 1-percent increase in the respective interest rate. This method assumes that the market
value of a given instrument is equal to the value of updated future cash flows generated by such an
item.
The table below presents the Bank‟s sensitivity to changes in interest rates, calculated on the
assumption that interest rates will go up by 1 percentage point (parallel shift).
PLN thousand
Sensitivity to changes in interest rates in 2011
PLN thousand
Sensitivity to changes in interest rates in 2010.
31/12/2011
1 411
31/12/2010
8 620
average minimum
7 124
1 411
maximum
16 002
average minimum maximum
8 537
2 970
12 865
Management of equity risk
The Bank avoids any exposure in equity instruments generating any price risk. An exposure to such a
risk, if any, may result only from the Bank‟s debt collection activities, i.e. the take-over of assets of
38
insolvent debtors, and it is temporary by nature. The Bank is thus only marginally exposed to equity
instrument price risk.
Liquidity risk
Liquidity risk is defined as the risk of a situation where the Bank is only capable of meeting its
payment obligations at increased costs or, in the worst case, it is not able to meet its obligations at
their maturity. The Bank is exposed to liquidity risk if its lending or other activity generates a negative
mismatch of cash flows, and the Bank is not able to acquire an adequate amount of finance or cash in
its assets.
Management of liquidity risk
The Bank's policy adopted by the Management Board provides for a conservative approach to
liquidity risk. The Bank avoids any unnecessary exposure and maintains the risk at a level being in
appropriate proportion to the Bank‟s capacity to bear it.
Short-term liquidity risk is managed by the Treasury Department, which arranges funding to finance
the Bank's current operations. To ensure availability of funding at any time during its activity, the Bank
uses a lower limit of its liquid funds, the so-called liquidity buffer.
Mid-term and long-term risk is controlled by a separate unit in charge of risk control based on the
analysis of expected future cash flows, changes in the sources of funding, the utilisation of these
sources and the stability and concentration of the Bank's deposit base. Regular, periodical reports on
liquidity risk are discussed at meetings of the Assets and Liabilities Management Committee (ALCO)
and presented to the Management Board.
The Bank has developed a contingency plan in case of unexpected disruptions in liquidity. The plan
has been approved by the Management Board and by the Supervisory Board.
The Bank uses a number of methods to measure its liquidity risk. Starting from daily monitoring of its
short-term liquidity gap being the reflection of the Bank's current demand for liquid funds through the
periodical observation of various liquidity ratios, to the analysis of the long-term liquidity gap
established on the grounds of statistical results of a deposit base study and estimates related to
maturities of particular balance-sheet items and the possibility of liquidation of Bank's assets.
Exposure to liquidity risk
The table below shows the nominal amounts of the Bank‟s financial liabilities by contractual maturity
dates, the amounts resulting from derivative transactions and the amount of off-balance sheet
commitments granted in the form of credit lines or overdraft limits in current accounts.
Analysis of the contractual maturity periods of financial liabilities (PLN million):
39
31/12/2011
Total
<1 month
1-3
months
3-12
months
1-5 years
>5
years
(32 876)
(12 092)
(4 164)
(9 381)
(6 374)
(865)
Liabilities to financial sector
(20 605)
(2 866)
(2 233)
(8 810)
(6 365)
(331)
Liabilities to non-financial sector
(11 487)
(9 126)
(1 781)
(571)
(9)
-
(250)
(534)
(100)
-
(150)
-
-
-
(534)
83
27
55
1
-
-
Balance sheet liabilities:
Liabilities under own securities
issued
Liabilities under derivative
instruments:
Inflows
Outflows
Off-balance sheet liabilities
granted
Total
31/12/2010
Balance sheet liabilities:
Liabilities to financial sector
Liabilities to non-financial sector
Liabilities under own securities
issued
Liabilities under derivative
instruments:
Inflows
Outflows
Off-balance sheet liabilities
granted
Total
3 847
1 265
1 660
348
488
86
(3 764)
(1 238)
(1 605)
(347)
(488)
(86)
(7 136)
(7 136)
-
-
-
-
(39 930)
(19 201)
(4 109)
(9 381)
(6 374)
(865)
Total
<1 month
1-3
months
3-12
months
1-5 years
>5
years
(22 751)
(14 199)
(7 757)
(7 412)
(1 205)
(6 207)
(2 867)
(1 388)
(1 379)
(7 129)
(6 728)
(171)
(4 447)
(4 447)
(0,3)
(896)
(431)
(0)
(330)
(465)
0
0
(100)
0
(230)
0
0
0
0
(465)
(3)
-
(4)
1
-
0
1 808
699
416
283
350
60
(1 811)
(699)
(420)
(282)
(350)
(60)
(7 220)
(7 220)
(0)
(0)
(0)
(0)
(29 974)
(14 632)
(2 871)
(7 128)
(4 447)
(896)
Under agreements signed with Nordea Bank AB (Sweden), the Bank has access to credit lines. As at
31/12/2011, the amount of undrawn credit lines was equivalent of approximately PLN 2.73 billion.
In addition, the Bank maintains a portfolio of liquid assets, which - treated as a liquidity buffer - serves
the purpose of securing potential short-term liquidity requirements of the Bank. The portfolio is
valuated on a daily basis in order to determine the current amount of funds that can be raised
immediately. A minimum required amount is imposed, determined at monthly intervals. The value of
the liquidity portfolio as at 31/12/2011 was PLN 5,861 million, which was significantly higher than in
the comparable period (PLN 2,141 million as at 31/12/2010)
For the purpose of a better description of the situation in the area of its long-term liquidity, the Bank
calculates the surplus/shortage of stable liabilities over long term assets, including received off-
40
balance sheet liabilities and portfolio of liquid securities. The net balance of stable funds as at
31/12/2011 was within the limit accepted by the Management Board of the Bank. The calculation of
net balance of stable funds requires a number of assumptions on the values of balance sheet items,
including in particular a conservative assumption (from the point of view of liquidity risk) as to the
complete renewability of the credit portfolio.
In addition, under resolution No 386/2008 of the Banking Supervision Committee dated 17 December
2008, in respect of imposing mandatory liquidity levels for banks, the Bank is obliged to calculate its
liquidity measures. The results of the calculations as at 31/12/2011 and in the comparative period are
presented in the table below:
Regulatory liquidity measures
Required
minimum
Value at
31/12/2011
Value at
31/12/2010
M1
Short-term liquidity gap
0,0
2 052 255
1 706 283
M2
Short-term liquidity ratio
1,0
1,27
1,41
M3
Non-liquid assets to shareholders‟ equity
ratio
1,0
4,05
4,93
M4
Non-liquid assets and assets with limited
negotiability to shareholders‟ equity and
stable external funds
1,0
1,04
1,04
6. Net interest income
Specification
Interest income
Loans and advances to customers:
- other financial institutions (non-banks)
- private individuals
- businesses
- public sector
Debt securities
Total
Specification
Interest expense
Deposits from banks
- other financial institutions (non-banks)
- private individuals
- businesses
- public sector
Debt securities
Total
Net interest income
From 01/01/2011
to 31/12/2011
7 724
916 792
42 403
443 951
278 028
152 410
122 711
1 047 227
From 01/01/2011
to 31/12/2011
PLN thousand
From 01/01/2010
to 31/12/2010
3 165
665 778
26 515
323 668
208 058
107 537
92 885
761 828
PLN thousand
From 01/01/2010
to 31/12/2010
(71 603)
(318 290)
( 77 613)
(90 255)
(140 061)
(10 361)
(13 948)
(403 841)
(43 154)
(250 089)
(67 566)
(69 452)
(106 606)
(6 465)
(6 675)
(299 918)
643 386
461 910
41
The net interest income for the 12-month period ended on 31/12/2011 includes interest accrued on
impaired loans in the amount of PLN 7,345 thousand
The net interest income for the 12-month period ended on 31/12/2010 includes interest accrued on
impaired loans in the amount of PLN 4,854 thousand
7. Net commission income
Specification
Commission income
Payment commission
Financial intermediation commission
Card commission
Loan commission
Commission on guarantee-related off-balance sheet
commitments
Securities commission
Other commission income
Total
Specification
From 01/01/2011
to 31/12/2011
PLN thousand
From 01/01/2010
to 31/12/2010
48 436
24 857
24 723
23 199
43 577
19 841
20 429
22 030
13 648
7 260
1 627
143 750
12 419
9 508
433
128 237
From 01/01/2011
to 31/12/2011
PLN thousand
From 01/01/2010
to 31/12/2010
Commission expenses
Payment commission
Insurance commission
Other commission expenses
Total
(24 180)
(8 756)
(2 948)
(35 884)
(26 746)
(7 825)
(2 654)
(37 225)
Net commission income
107 866
91 012
8. Instruments at fair value through profit or loss and revaluation
Specification
From 01/01/2011
to 31/12/2011
PLN thousand
From 01/01/2010
to 31/12/2010
Profit from foreign exchange transactions and FX
financial instruments closing the FX position
Other derivative financial instruments
Equity instruments
Debt securities
204 876
730
(96)
(2 028)
202 436
813
215
(1 840)
Total
203 482
201 625
The result presented under “Debt securities” and “Equity instruments” is the result achieved in
financial assets designated at initial recognition for measurement at fair value through profit or loss.
The figure presented under “Profit from foreign exchange transactions and FX financial instruments
closing the FX position” includes, among other things, gains on revaluation and gains on derivative
42
transactions classified as held for trading, including FX Spot and FX Swap whereas the result on
other derivative financial instruments is a result generated on financial instruments classified as held
for trading, which includes, among other things, the result on IRS, CIRS, FX Forward and FX Option
transactions.
As of 2011, the Bank changed the presentation of the result of derivative FX transactions closing the
FX position (FX Spot and FX Swap). In the previous reporting periods, this result was presented along
with the profit/loss on other derivative financial instruments. In the financial statements for the year
2011 the result of derivative FX transactions closing the FX position was presented together with the
profit/loss on FX transactions. A corresponding change in the presentation was also applied to the
comparable period (01/01.2010-31/12/2010).
9. Other operating income
Specification
Income from IT projects
Reimbursement for the fees paid for expert services
Sale of goods and services
Other
Reversal of unutilised provisions
Reimbursements for costs of the Bank Guarantee Fund
Receivables related to court proceedings and
enforcement proceedings
Reversal of provisions for litigations
Total
From 01/01/2011
to 31/12/2011
13 372
4 920
3 592
2 804
2 735
1 715
312
29 450
PLN thousand
From 01/01/2010
to 31/12/2010
8 639
4 904
2 105
8 634
50
679
439
8 714
34 164
10. Administrative expenses
Staff costs
From 01/01/2011
to 31/12/2011
PLN thousand
From 01/01/2010
to 31/12/2010
Salaries:
- salaries of Bank’s authorities
- salaries of employees
Social security payments
Other staff costs
(199 901)
(11 606)
(188 295)
(26 760)
(597)
(165 042)
(5 955)
(159 087)
(22 236)
(1 303)
Total
(227 258)
(188 581)
As at 31/12/2011 there were 2,333 people employed in the Bank whereas as at 31/12/2011 – 2,219
people.
43
Other administrative expenses
PLN thousand
From 01/01/2010
to 31/12/2010
From 01/01/2011
to 31/12/2011
Cost of lease
Services: IT, cleaning, medical and archiving
services
Expenses on property maintenance
Marketing
Post and telecommunications services
Fee for Bank Guarantee Fund
Maintenance of data processing systems
Training expenses
Taxes and charges
Business travel
Legal services
Other, including the cost of expert services
Additional costs of loan service
Damages, penalties and fines paid
Cost of provisions for liabilities resulting from past
events
( 96 985)
(71 513)
(38 547)
(29 303)
(20 011)
(19 834)
(18 402)
(9 654)
(6 840)
(6 573)
(5 821)
(5 166)
(5 392)
(4 954)
(26)
(31 858)
(21 834)
(20 910)
(19 050)
(6 567)
(10 845)
(5 303)
(5 496)
(4 854)
(6 369)
(5 123)
(4 251)
(335)
(7)
(283)
Total
(267 515)
(214 591)
11. Depreciation and amortisation
Specification
Property, plant and equipment (Note 21)
Plant and equipment
Buildings and improvements in third party assets
Intangible assets (Note 20)
Licences
Software
Other
Total
From 01/01/2011
to 31/12/2011
PLN thousand
From 01/01/2010
to 31/12/2010
(39 441)
(24 891)
(14 550)
(32 421)
(20 047)
(12 374)
(6 783)
(5 911)
(697)
(175)
(5 578)
(4 710)
(678)
(190)
(46 224)
(37 999)
44
12. Impairment on loans and advances
PLN thousand
Impairment on loans
and advances
From 01/01/2011
to 31/12/2011
Loans and
Loans and
advances
advances
to
to banks
customers
Allowances for loans and advances
- Establishment of
allowances for identified
impairment
- Reversal of allowances
for identified impairment
- Allowances for Incurred
but Not Reported Losses
(IBNR)
-Recoveries of loans
previously charged to
provisions
- Gains/losses on sale of
loans and advances
From 01/01/2010
to 31/12/2010
Total
Loans and
Loans and
advances
advances
to
to banks
customers
Total
(43 559)
(43 559)
-
(14 215)
(14 215)
-
5 387
5 387
-
5 283
5 283
-
(19 940)
(19 940)
-
(12 070)
(12 070)
-
1 204
1 204
-
241
241
-
636
636
-
131
131
Total
-
(56 272)
(56 272)
-
(20 630)
(20 630)
13. Income tax
Income tax charge
Specification
Current tax
Adjustment of current tax for previous period
Deferred tax
Total income tax in the P&L Account
From 01/01/2011
to 31/12/2011
(104 164)
1 908
16 947
(85 309)
PLN thousand
From 01/01/2010
to 31/12/2010
(81 013)
1 242
12 198
(67 573)
Reconciliation of tax charges and the product of profit before income tax and the tax rate
PLN thousand
From 01/01/2011
From 01/01/2010
Specification
to 31/12/2011
to 31/12/2010
Tax rate
Income tax
Other tax-exempt income and non-deductible
expenses
Permanent differences
Donations
Adjustment of current tax for previous period
381 973
19%
(72 575)
326 910
19%
(62 113)
(3 522)
(11 156)
36
1 908
323
(7 057)
32
1 242
Total charges to profit before income tax
(85 309)
(67 573)
45
14. Earnings per share
Specification
Weighted average number of ordinary shares
Earnings per share, PLN
Specification
Weighted average number of ordinary shares
From 01/01/2011
to 31/12/2011
296 663
55 498 700
5,35
From 01/01/2011
to 31/12/2011
PLN thousand
From 01/01/2010
to 31/12/2010
259 337
49 756 782
5,21
PLN thousand
From 01/01/2010
to 31/12/2010
296 663
55 498 700
259 337
49 756 782
5,35
5,21
Diluted earnings per share (PLN)
The calculation of the weighted average number of ordinary shares:
The method of calculation of the weighted average number of ordinary shares during the
period from 01/01/2011 to 31/12/2011
1/ From 01/01/2011 to 31/12/2011 (365 days – 55,498,700 shares)
The calculation of the weighted average number of shares:
55,498,700 * 3650/365 = 55,498,700
1/ From 01/01/2010 to 29/07/2010 (210 days – 45,518,700 shares)
45,518,700 * 210/365 = 26,188,841
The share capital was increased on 30/07/2010
2/ From 30/07/2010 to 31/12/2010 (155 days) – 55,498,700 shares
55,498,700 * 155/365 = 23,567,941
The weighted average number of shares for the whole year (from 01/01/2010 to 31/12/2010)
amounts to:
26,188,841 + 23,567,941 = 49,756,782
46
15. Cash and balances with central bank
PLN thousand
Specification
Cash
Balances with central bank
Other
Total
31/12/2011
31/12/2010
94 435
772 555
154 035
82 396
546 435
128 680
1 021 025
757 511
The Bank holds an obligatory reserve on a current account in the National Bank of Poland. The figure
is calculated as 3.5% of the average monthly balance of customer deposits. The amount of the
reserve is reduced by the equivalent of EUR 500 thousand, in accordance with the relevant
regulations.
16. Loans and advances to banks
Specification
31/12/2011
PLN thousand
31/12/2010
Current accounts
Term deposits and loans
Other
Total
Interest
Gross loans and advances to banks
Impairment allowance
282 253
976
283 229
283 229
-
272 674
566 229
678
839 581
26
839 607
-
Net loans and advances to banks
283 229
839 607
Gross loans and advances to banks (by currency)
PLN thousand
Specification
PLN
foreign currencies (translated into PLN))
EUR
USD
CHF
SEK
GBP
other
Total
31/12/2011
31/12/2010
46 016
237 213
31 187
47 597
10 948
229 808
609 799
416 513
15 646
148 032
34 353
13 718
99 410
5 865
9 624
14 119
283 229
839 607
Gross loans and advances to banks (by maturity)
PLN thousand
Specification
31/12/2011
31/12/2010
Current accounts
Up to and including 3 months
282 479
750
272 837
566 770
Total
283 229
839 607
47
17. Loans and advances to customers
Specification
Private individuals
Business entities
Public sector
Total
Interest
Gross loans and advances to customers
Net loans and advances to customers
31/12/2011
18 072
343
6 755 426
2 846 916
27 674 685
60 076
27 734 761
(149 823)
27 584 938
PLN thousand
31/12/2010
13 193 449
4 985 333
2 587 474
20 766 256
46 777
20 813 033
( 94 940)
20 718 093
Specification
Private individuals
Business entities
Public sector
Allowance for incurred but not reported impairment
losses (IBNR)
Total
31/12/2011
PLN thousand
31/12/2010
(47 357)
(46 985)
(576)
(16 694)
(42 575)
(706)
(54 905)
(34 965)
(149 823)
(94 940)
Gross loans and advances to customers (by currency)
PLN thousand
Specification
PLN
foreign currencies (translated into PLN)
EUR
USD
CHF
SEK
other
Total
31/12/2011
8 940 411
18 794 350
4 247 093
286 607
14 240 796
6 782
13 072
27 734 761
31/12/2010
8 066 212
12 746 821
2 664 535
66 453
9 998 126
6 645
11 062
20 813 033
Gross loans and advances to customers (by maturity)
PLN thousand
Specification
Current accounts
From 3 months up to and including 1 year
From 1 year up to and including 5 years
Over 5 years
Total
31/12/2011
1 485 039
601 474
1 405 081
8 623 766
15 619 401
27 734 761
31/12/2010
1 170 067
184 776
1 781 610
3 266 770
14 409 810
20 813 033
48
Change in impairment allowances for loans and advances to customers
PLN thousand
Specification
Opening balance
Impairment allowances created in current period
Write -offs
Impairment allowances reversed in current period
Change due to exchange differences
Other
Closing balance
31/12/2011
94 940
63 499
(5 387)
(14 881)
(90)
11 742
149 823
31/12/2010
76 800
26 285
(5 283)
(3 062)
200
94 940
18. Financial assets designated at initial recognition as at fair value through profit or
loss
Specification
31/12/2011
PLN thousand
31/12/2010
Debt securities
State and municipal securities
- bonds
- bills
Central Bank‟s securities
- bills
Equity investments
5 979 474
1 343 130
504 983
838 147
4 636 344
4 636 344
474
2 223 403
1 074 185
279 685
794 500
1 149 218
1 149 218
568
Total
5 979 948
2 223 971
Financial assets designated at initial recognition as at fair value through profit or loss (by
maturity)
PLN thousand
Specification
by maturity
Without a fixed maturity
Equity investments
Total
31/12/2011
31/12/2010
5 559 194
96 980
323 300
1 581 054
584 971
57 378
474
568
5 979 948
2 223 971
Income from debt instruments and other fixed-yield instruments is shown under interest income.
The Bank designated securities as financial instruments measured through profit or loss due to the
fact that it manages the portfolio and reports on its performance to the Management Board on the
basis of the fair value of such instruments.
49
19. Financial assets and financial liabilities held for trading
PLN thousand
Specification
- FX swaps and FX spot
- FX forwards
- Currency options
- IRS
- CIRS
Total
31/12/2011
88 690
22 232
78
10 324
1 700
123 024
31/12/2010
2 100
5 232
4
7 600
1 375
16 311
PLN thousand
Specification
- FX swaps and FX spot
- FX forwards
- Currency options
- IRS
- CIRS
Total
31/12/2011
2 598
21 752
78
10 324
1 700
36 452
31/12/2010
5 700
4 909
4
7 599
1 375
19 587
Financial assets and financial liabilities held for trading (by maturity)
PLN thousand
Specification
Over 5 years
Total
31/12/2011
98 430
11 394
4 802
8 398
123 024
31/12/2010
4 655
2 008
3 111
6 537
16 311
PLN thousand
31/12/2011
Over 5 years
Total
12 157
11 170
4 727
8 398
36 452
31/12/2010
8 168
1 861
3 022
6 536
19 587
50
20. Intangible assets
CHANGE IN INTANGIBLE ASSETS (BY GENERIC GROUP)
PLN thousand
Concessions,
patents, licences
etc.
Goodwill
31/12/2011
Gross intangible assets at the beginning of the period
Increase (due to)
- Transfers from assets under construction
- Other
Decrease (due to)
- Liquidation
-Sale
- Other
Gross intangible assets at the end of the period
Accumulated amortisation at the beginning of the
period
Increase (due to)
- Amortisation in current period
- Other
Decrease (due to)
- Liquidation
- Sale
- Other
Accumulated amortisation at the end of the period
Net intangible assets at 31/12/2011
Other intangible Assets under
assets
construction
Total intangible
assets
32 639
-
51 286
5 890
31 816
-
985
7 986
116 726
13 876
32 639
5 890
57 176
31 816
7 986
(3 715)
(3 715)
5 256
5 890
7 986
(3 715)
(3 715)
126 887
-
(40 406)
(6 608)
(6 608)
(31 631)
(175)
(175)
-
-
(47 014)
4
2
2
(31 802)
-
(72 037)
(6 783)
(6 783)
4
2
2
(78 816)
32 639
10 162
14
5 256
48 071
-
51
Goodwill is tested for impairment at least once a year.
The Bank includes in impairment testing the goodwill that arose from the merger between Nordea
Bank Polska S.A. and BWP Unibank S.A. as well as the merger between Nordea Bank Polska S.A.
and LG Petro Bank S.A. For the purpose of the test, possible cash-generating units were identified
and assigned the relevant goodwill from the merger.
The recoverable amount was determined on the basis of the assessment of the value in use of an
asset allowing for an estimated forecast of the expected future cash flows generated during the
continued utilization of the asset. Cash flow forecasts are based on assumptions reflecting the
management‟s judgement of the entirety of the conditions that will arise during the remaining useful
life of the assets. Forecasts concerning cash flow are based on the financial plan adopted by the Bank
and the long-term strategy covering the next few years. The viability of the assumptions is periodically
verified and discrepancies between the estimated future cash flows and the actual flows are reviewed.
52
CHANGE IN INTANGIBLE ASSETS (BY GENERIC GROUP)
PLN thousand
Goodwill
31/12/2010
Gross intangible assets at the beginning of the period
Increase (due to)
- Other
Decrease (due to)
- Liquidation
- Other
Gross intangible assets at the end of the period
Accumulated amortisation at the beginning of the
period
Increase (due to)
- Amortisation in current period
- Other
Decrease (due to)
- Liquidation
- Sale
- Other
Accumulated amortisation at the end of the period
Net intangible assets at 31/12/2010
Concessions,
patents, licences
etc.
Other intangible Assets under
assets
construction
Total intangible
assets
32 639
-
46 825
4 519
31 845
20
4 839
111 309
9 378
32 639
4 519
(58)
(58)
51 286
20
(49)
(49)
31 816
4 839
(3 854)
(3 854)
985
4 539
4 839
(3 961)
(107)
(3 854)
116 726
32 639
(35 076)
(5 388)
(5 388)
58
58
(40 406)
10 880
(31 493)
(190)
(190)
52
49
3
(31 631)
185
985
(66 569)
(5 578)
(5 578)
110
107
3
(72 037)
44 689
53
21. Property, plant and equipment
CHANGE IN PROPERTY, PLANT AND EQUIPMENT (BY GENERIC GROUP)
PLN thousand
Land and buildings
Plant and
equipment
Other nonAssets under
current assets construction
Vehicles
31/12/2011
Gross property, plant and equipment at the
beginning of the period
153 604
91 587
1 308
32 633
Increase (due to)
- other
Decrease (due to)
- liquidation
- other
52 068
52 048
20
(13 633)
(13 611)
( 22)
26 726
26 413
313
(6 223)
(5 867)
(356)
(911)
(911)
-
12 216
12 216
end of the period
192 039
112 090
Accumulated depreciation at the beginning
of the period
Increase (due to)
- depreciation in current period
- other
Decrease (due to)
(67 242)
(14 663)
(14 550)
(113)
12 915
(61 904)
(18 945)
(18 721)
(224)
5 745
8 356
4 559
- depreciation of liquidated items of property,
plant and equipment
- other
Accumulated depreciation at the end of
the period
Impairment allowance for property, plant
and equipment
Net property, plant and equipment at
31/12/2011
Total property,
plant and
equipment
(4 061)
(3 941)
(120)
29 775
45
985
45 985
(71 817)
(71 817)
136 995
90 677
46 318
(96 645)
(24 330)
(72 315)
397
40 788
3
943
349 257
(947)
(173)
(173)
828
(20 597)
(6 058)
(5 997)
(61)
4 188
-
(150 690)
(39 839)
(39 441)
(398)
23 676
5 531
214
828
-
3 724
464
-
18 439
5 237
(68 990)
(75 104)
(292)
(22 467)
-
(166 853)
(4 559)
-
-
(384)
(4 943)
118 490
36 986
105
17 937
3
943
-
308 907
177 461
54
CHANGE IN PROPERTY, PLANT AND EQUIPMENT (BY GENERIC GROUP)
PLN thousand
Land and buildings
Plant and
equipment
Vehicles
Other noncurrent assets
Assets
under
construction
31/12/2010
beginning of the period
Increase (due to)
- other
Decrease (due to)
- liquidation
- other
end of the period
Accumulated depreciation at the beginning
of the period
Increase (due to)
- depreciation in current period
- other
Decrease (due to)
- depreciation of liquidated items of property,
plant and equipment
- other
Accumulated depreciation at the end of the
period
Net property, plant and equipment at
31/12/2010
Total property,
plant and
equipment
146 685
9 919
9 896
23
(3 000)
(2 958)
(42)
93 007
12 797
12 797
(14 217)
(14 195)
(22)
1 308
-
31 414
2 578
2 578
(1 359)
(1 351)
(8)
1 923
59 746
59 746
(31 894)
(31 894)
274 337
85 040
25 271
59 769
(50 470)
(18 504)
(31 966)
153 604
91 587
1 308
32 633
29 775
308 907
(57 395)
(59 768)
(728)
(18 066)
-
(135 957)
(12 392)
(12 374)
(18)
2 545
(15 979)
(15 973)
(6)
13 843
(219)
(219)
-
(3 901)
(3 855)
(46)
1 370
-
2 389
13 843
-
1 326
-
17 558
156
-
-
44
-
200
(67 242)
(61 904)
(947)
(20 597)
-
(150 690)
86 362
29 683
361
12 036
29 775
158 217
-
(32 491)
(32 421)
(70)
17 758
55
22. Deferred tax assets and liabilities
PLN thousand
Assets
Accrued interest expenses
and accrued commission
recognised according to EIR
Non-deductible provisions for
loans
Other provisions
Cost of occupation of
premises during conversion
Income taken in advance
Fair value of derivative
instruments - adjustment 2010
LTIP Incentive Programme adjustment 2010
Unrealised income – premiumbonds
Social Security (ZUS)
Closing balance
01/01/2011
Increase
Decrease
31/12/2011
35 323
13 160
1 246
47 237
7 107
14 350
6 997
13 726
6 317
14 104
21 759
236
122
-
43
71
193
51
1 301
582
-
1 883
254
83
-
337
2 139
407
120
-
2 080
129
179
278
61 239
34 668
9 886
86 021
PLN thousand
Liabilities
Accrued interest income and
accrued commission
Securities – discount over time
Fair value of securities
Low-value assets according to
CIT Act
instruments- adjustment 2010
Prepaid expenses
Closing balance
Deferred tax assets
01/01/2011
Increase
Decrease
31/12/2011
9 696
3 934
185
4 327
2 384
-
77
69
13 946
6 318
116
1 179
1 426
595
2 010
1 301
1 181
563
-
124
1 864
1 057
17 476
43 763
8 700
25 968
865
9 021
25 311
60 710
56
PLN thousand
Assets
Accrued interest expenses
and accrued commission
Non-deductible provisions for
loans
Other provisions
Cost of occupation of
premises during conversion
instruments- adjustment 2009
LTIP Incentive Programme adjustment 2009
Unrealised income – premiumbonds
Social Security (ZUS)
Closing balance
01/01/2010
Increase
Decrease
31/12/2010
27 778
7 545
-
35 323
6 279
9 556
828
4 794
-
7 107
14 350
208
64
28
58
-
236
122
1 157
144
-
1 301
146
108
-
254
1 745
-
394
407
-
2 139
407
46 933
14 306
-
61 239
PLN thousand
Liabilities
Accrued interest income and
accrued
commission
Securities – discount over time
Fair value of securities
Low-value assets according to
CIT Act
instruments - adjustment 2009
Prepaid expenses
01/01/2010
Increase
Decrease
31/12/2010
7 880
4 746
422
1 816
-
812
237
9 696
3 934
185
1 184
-
5
1 179
1 136
-
165
1 181
-
1 301
1 181
Closing balance
15 368
3 162
1 054
17 476
Deferred tax assets
31 565
11 144
1 054
43 763
23. Other assets
PLN thousand
Specification
Other prepaid expenses
Sundry debtors
Overpaid current tax
Other
Other deferred income
Assets held for sale
Credit/payment card settlements
Interbank/Inter-branch settlements
Total
31/12/2011
32 227
9 636
2 337
1 456
695
278
82
46 711
31/12/2010
12 186
8 343
3 204
2 210
1 500
695
720
1 346
30 204
57
Other assets (by maturity)
PLN thousand
Specification
From 3 months to and including 1 year
Total
31/12/2011
14 665
32 046
46 711
31/12/2010
13 685
16 519
30 204
24. Deposits from banks
Specification
31/12/2011
PLN thousand
31/12/2010
Payable on demand
Term deposits
Total
Interest
209 627
18 621 376
18 831 003
3 993
247 358
12 315 190
12 562 548
3 557
Total
18 834 996
12 566 105
Deposits from banks (by maturity)
PLN thousand
Specification
Payable on demand
Over 5 years
Total
31/12/2011
31/12/2010
209 627
4 507 803
7 930 279
6 187 287
-
247 358
1 959 687
5 279 065
5 079 995
-
18 834 996
12 566 105
Deposits from banks (by currency)
PLN thousand
Specification
31/12/2011
31/12/2010
PLN
foreign currencies (converted into PLN)
EUR
USD
CHF
SEK
GBP
other
312 634
18 522 362
3 304 293
1 458 857
13 698 393
97
2 789
57 933
600 181
11 965 924
1 888 200
176 868
9 790 944
48 696
277
60 939
Total
18 834 996
12 566 105
58
25. Deposits from customers
Specification
Payable on demand
Private individuals
Business entities
Public sector
Sub-total
Term deposits
Private individuals
Business entities
Public sector
Sub-total
Interest
Private individuals
Business entities
Public sector
Sub-total
Total
31/12/2011
PLN thousand
31/12/2010
1 458 161
2 593 834
338 129
4 390 124
1 304 337
2 521 334
362 945
4 188 616
2 258 435
6 352 653
236 053
8 847 141
1 525 507
3 586 729
120 959
5 233 195
13 546
40 421
631
54 598
7 318
31 284
259
38 861
13 291 863
9 460 672
Deposits from customers (by maturity)
PLN thousand
Specification
Current accounts
Over 5 years
Total
31/12/2011
31/12/2010
4 390 124
7 289 689
1 513 589
74 446
24 015
4 188 616
4 236 708
973 293
42 268
19 787
13 291 863
9 460 672
Deposits from customers (by currency)
PLN thousand
Specification
31/12/2011
31/12/2010
PLN
foreign currencies (converted into PLN)
EUR
USD
CHF
SEK
GBP
other
11 939 935
1 351 928
893 995
236 726
18 550
51 877
14 047
136 733
8 318 941
1 141 731
794 976
178 540
6 141
38 614
11 220
112 240
Total
13 291 863
9 460 672
26. Debt securities issued
Specification
31/12/2011
PLN thousand
31/12/2010
Principal of Certificates of Deposit
Unallocated discount
250 000
(1 902)
330 000
(4 861)
Closing balance
248 098
325 139
59
Debt securities issued (by maturity)
PLN thousand
Specification
31/12/2011
31/12/2010
248 098
-
325 139
Total
248 098
325 139
27. Other liabilities
PLN thousand
Specification
Interbank/Inter-branch settlements
Other payable costs:
- maintenance
- awards
- other
Settlements of credit/payment cards
Public and legal settlements
Sundry creditors
Foreign currency intermediation
Other
Total
31/12/2011
31/12/2010
89 242
59 479
18 806
30 661
10 012
34 217
21 201
13 792
7 119
2 639
565
31 864
40 396
16 990
21 098
2 308
30 926
20 311
7 905
8 506
1 717
186
228 254
141 811
Other liabilities (by maturity)
PLN thousand
Specification
Total
31/12/2011
31/12/2010
144 574
83 680
228 254
139 347
2 464
141 811
28. Provisions
PLN thousand
Specification
31/12/2011
31/12/2011
Litigations
379
373
Total
379
373
60
Change in provisions
PLN thousand
Specification
31/12/2011
Opening balance
Establishment of provisions
Litigations
Utilisation of provisions
Litigations
Provisions for liabilities:
- Staff provisions
Reversals
Litigations
Provisions for liabilities
Closing balance
31/12/2010
373
6
6
379
9 087
8 714
8 714
373
29. Subordinated liabilities
Subordinated liabilities at 31/12/2011 (without interest)
PLN thousand
Nominal
amount
Currency
Interest rate (%)
Nordea Bank Finland
79 000
CHF
6M LIBOR + margin
Maturity
/redemption
date
24.05.2017
Nordea Bank Finland
68 000
CHF
6M LIBOR + margin
28.01.2019
Specification
Outstanding
amount
287 031
247 064
Subordinated liabilities at 31/12/2010 (without interest)
PLN thousand
Nominal
amount
Currency
Interest rate (%)
Nordea Bank Finland
79 000
CHF
6M LIBOR + margin
Maturity
/redemption
date
24.05.2017
Nordea Bank Finland
68 000
CHF
6M LIBOR + margin
28.01.2019
Specification
Outstanding
amount
249 948
215 145
The subordinated liability comprises loans received from Nordea Bank Finland on 24/05/2007 and
26/01/2009 with a 10-year term to maturity. The funds served the purpose of changing the structure of
shareholder's equity and to increase the proportion of supplementary funds in the capital structure.
The Bank received permission from the Financial Supervision Commission to include the amount of
the loan into supplementary capital.
61
Change in subordinated liabilities
Specification
31/12/2011
PLN thousand
31/12/2010
Opening balance
Increase (due to)
- interest on subordinated loans
- exchange differences
Decrease (due to)
467 314
76 939
7 937
69 002
(7 624)
408 780
65 722
7 245
58 477
(7 188)
- interest on subordinated loans
- exchange differences
(6 811)
(813)
(6 528)
(660)
536 629
467 314
Closing balance of subordinated liabilities
The subordinated liability consisting of the loans received on 24/05/2007 and on 26/01/2009 were
calculated by using the average central bank rate quoted on the transaction day for CHF (NBP‟s
average exchange rate to the CHF of 2.2996 and 2.9466, respectively). At the end of the reporting
period (31/12/2011) the average NBP rate for CHF was 3.6333, which generated considerable
exchange differences.
30. Equity
Equity (shareholders‟ funds) comprises capitals and funds established by the Bank in accordance with
the law, statutory acts and the Bank‟s Statutes.
The Bank's equity is comprised of:
1. Share capital, which is the equivalent of the nominal value of the issued shares, consistent with the
Bank's Statutes and the registration entry in the National Court Register.
2. Supplementary capital established from the share premium and from profit appropriations.
Supplementary capital is used to cover any balance-sheet losses that might result from the Bank's
activities.
3. Reserve capital is established from profit appropriations.
4. Retained earnings – not distributed by the shareholders.
5. Net profit for the year.
62
Share capital
The total number of shares at 31/12/2011 was 55,498,700 (31/12/2010
– 55,498,700)
with a nominal value of PLN 5 each (2010: PLN 5 each). All the issued shares have been fully paid up.
The structure of the share capital of Nordea Bank Polska S.A at 31/12/2011 was as follows:
REGISTERED SHARE CAPITAL (STRUCTURE)
Series
/ issue
Series/
issue
Series/ issue
Series/ issue
Series/
issue
Series/ issue
Series/
issue
Series/
issue
Series/
issue
A
Bearer
Ordinary
-
239 300
1 196 500
cash
21/11/1991
01/01/1995
B
Bearer
Ordinary
-
409 900
2 049 500
cash
01/01/1995
547 800
cash and
contributio
2 739 000 ns-in-kind
30/11/1992
07/01/1994
1rst
tranche
31/05/1995
2nd tranche
4 515 000
cash
07/01/1994
1rst tranche
31/05/1995
2nd tranche
01/01/1995
cash
CI
Bearer
Ordinary
-
CO
Bearer
Ordinary
-
903 000
D
Bearer
Ordinary
-
73 700
368 500
E
Bearer
Ordinary
-
1 100 000
5 500 000
G
Bearer
Ordinary
-
H
Bearer
Ordinary
-
I
Bearer
Ordinary
J
Bearer
K
Registered
L
M
01/01/1995
31/05/1995
01/01/1995
31/05/1996
10/07/1996
2 140 853
cash
cash and
contributio
10 704 265 ns-in-kind
29/10/1999
01/01/1999
4 010 780
20 053 900
cash
09/10/2000
01/01/2000
-
7 500 000
37 500 000
09/03/2002
01/01/2002
Ordinary
-
16 692 500
83 462 500
cash
assets of
acquired
company
30/06/2003
01/01/2002
Ordinary
-
11 800 000
59 000 000
08/11/2007
01/01/2007
Bearer
Ordinary
-
cash
Contributi
on in-kind
04/04/2008
01/01/2007
Bearer
Ordinary
Cash
30/07/2010
01/01/2010
100 867
504 335
9 980 000
49 900 000
55 498 700
Total number of shares
277 493 500
Registered share capital, total
Nominal value of one share (PLN) = 5
Shareholders holding at least 5% of the total number of voting rights at the General Meeting of
Shareholders and of the share capital of Nordea Bank Polska S.A.:
Shareholder
Nordea Bank AB
(publ)
Shareholder
Nordea Bank AB
(publ)
31/12/2011
Total number of votes: 55,498,700
Total number of shares: 55,498,700
No. of votes
% of votes at GMS No. of shares
Share in capital
55,061,403
99.21%
55,061,403
99.21%
31/12/2010
Total number of votes: 55.498.700
Total number of shares: 55.498.700
No. of votes
% of votes at GMS No. of shares
Share in capital
55,061,403
99.21%
55,061,403
99.21%
63
31. Classification of financial instruments
Loans and
receivables
Financial assets
Financial assets designated at initial
held for trading recognition as at fair value through profit
or loss
Measurement
Measurement
technique using
technique using
some data not
data from active
Quoted prices in
coming from an
market
active market
active market but
estimated by the
(level 2)
(level 1)
bank (level 3)
ASSETS
31/12/2011
Non-financial
assets
PLN thousand
Total
283 229
-
-
-
1 021 025
-
1 021 025
283 229
Financial assets at fair value through
profit or loss
27 584 938
-
-
-
-
27 584 938
-
4 759 368
1 343 130
474
-
6 102 972
Intangible assets
-
-
-
-
48 071
48 071
-
-
-
-
177 461
177 461
Deferred tax assets
-
-
-
-
60 710
60 710
Other assets
-
-
-
-
46 711
46 711
27 868 167
4 758 368
1 343 130
474
1 353 978
35 325 117
TOTAL ASSETS
64
LIABILITIES
31/12/2010
Financial liabilities at Financial liabilities
amortised cost
held for trading
Measurement
technique based on
active market data
(level 2)
Non-financial liabilities
PLN thousand
Total
Deposits from banks
18 834 996
-
-
18 834 996
13 291 863
-
-
13 291 863
248 098
-
-
248 098
-
36 452
-
36 452
Other liabilities
-
-
228 254
228 254
536 629
-
-
536 629
-
-
379
379
32 911 586
36 452
228 633
33 176 671
Share capital
-
-
277 494
277 494
Other capital
-
-
1 573 832
1 573 832
Retained earnings and profit for the year
-
-
297 120
297 120
32 911 586
36 452
2 148 446
2 377 079
2 148 446
35 325 117
Provisions
TOTAL LIABILITIES
65
Loans and
receivables
Financial assets
Financial assets designated at initial
held for trading recognition as at fair value through profit
or loss
Measurement
technique using
Measurement
some data not
technique using
coming from an
data from active
Quoted prices in
active market but
market
active market
estimated by the
(level 2)
(level 1)
bank (level 3)
ASSETS
31/12/2010
Non-financial
assets
PLN thousand
Total
-
-
-
-
757 518
757 518
839 607
-
-
-
-
839 607
20 718 093
-
-
-
-
20 718 093
-
1 165 529
1 074 185
568
-
2 240 282
Intangible assets
-
-
-
-
44 689
44 689
-
-
-
-
158 217
158 217
Deferred tax assets
-
-
-
-
43 763
43 763
Other assets
-
-
-
-
30 197
30 197
Financial assets at fair value through
profit or loss
TOTAL ASSETS
21 557 700
1 165 529
1 074 185
568
1 034 384
24 832 366
66
Financial liabilities at Financial liabilities
amortised cost
held for trading
PLN thousand
Total
Measurement
technique using data
from active market
(level 2)
LIABILITIES
31/12/2010
Deposits from banks
Non-financial liabilities
12 566 105
-
-
12 566 105
9 460 672
-
-
9 460 672
325 139
-
-
325 139
-
19 587
-
19 587
Other liabilities
-
-
141 811
141 811
467 314
-
-
467 314
-
-
373
373
19 587
-
142 184
22 981 001
Share capital
22 819 230
-
277 494
277 494
Other capital
-
-
1 314 534
1 314 534
Retained earnings and profit for the year
-
-
259 337
259 337
22 819 230
19 587
1 851 365
1 993 549
1 851 365
24 832 366
Reserves
TOTAL LIABILITIES
In determining the fair value of financial assets/liabilities in accordance with IAS 39 the Bank classified financial assets and financial liabilities to the following
categories, depending on the measurement techniques used:
-
level 1 – quoted prices in active market
-
level 2 – measurement technique using data from an active market
-
level 3 – measurement technique using some data not coming from an active market but estimated by the bank.
67
32. Management of equity
The process of management of the Bank‟s equity meets the regulatory requirements, in particular the
1
provisions of resolution No 258/2011 of the Banking Supervision Committee dated 04.10.2011 The
Bank calculates the regulatory capital requirement on the basis of the provisions of Resolution No
76/2010 of the Banking Supervision Committee dated 10/03/2010
2
(as amended), using the
standardised approach for credit risk and the basic indicator approach (BIA) for operating risk.
The Bank analyzes regulatory capital based on a division into two subclasses:
-
Tier 1 capital: the bank‟s core funds (including reserve capital/fund), general risk fund for
unidentified risk inherent in banking operations, other core funds of the Bank, short term capital and
items that reduce the core funds;
-
Tier 2 capital: components of supplementary own funds, additional items of supplementary funds
(including subordinated liabilities) and decreases in supplementary own funds.
The Bank meets the requirement of maintaining the regulatory capital at a level not lower than the
calculated capital requirement. This is reflected in the value of the capital adequacy ratio which is at a
level not lower than 8%.
In addition, the Bank analyses the dependence between the capital base and the risk incurred by the
Bank so as to:
-
ensure a sufficient value of equity in order to cover the operational risk incurred by the Bank, taking
into consideration the current situation and future expectations,
-
optimise the level of equity from the point of view of the ratio of expected profits to the estimated
risk level, taking into account the principles set forth in the Bank‟s strategic goals,
-
optimise the structure of equity from the point of view of the ratio of expected profit to the estimated
level of risk.
The Bank has an equity policy approved by the Supervisory Board, based on which it fulfils its equity
targets. In order to monitor the accomplishment of the goals, the Bank calculates the capital
requirements in two ways: determining the regulatory capital requirement and determining the internal
capital requirement based on the Bank‟s own methodology. Both the calculations serve the purpose of
optimising return on equity ratio and of fulfilling the regulatory requirements.
The Bank‟s equity cannot be lower than the regulatory capital requirement. The Bank‟s internal
processes ensure absolute compliance with this principle. In its capital policy, the Bank sets internal
limits at the minimum level for the solvency ratio.
1
„in respect of specific rules of functioning of the system of risk management and the system of internal control and the specific
conditions of assessing internal capital and reviewing the process of assessment and maintenance of internal capital and the
rules of formulation of the policy of variable salary components for persons holding managerial positions in banks ”
2
in respect of the scope and specific rules of determining the capital requirements in relation to particular types of risk.”
68
The Bank‟s equity should not be lower than the internal capital calculated on the basis of the Bank‟s
own methodology. Thus, if the internal capital requirement is bigger than the regulatory capital
requirement, the amount of internal capital requirement becomes the binding minimum capital
requirement.
In order to determine the internal capital requirement, the Bank uses an internal methodology for
calculating Economic Capital for all types of risk that the Bank deems significant.
33. Fair Value
Fair value of financial assets and financial liabilities
Fair value is the amount for which an asset may be exchanged or a liability settled between
knowledgeable and willing parties in an arm‟s length transaction other than a forced sale or liquidation. It
is best reflected by a quoted market price, if available.
Detailed below is a summary of the carrying amounts and fair values of each class of assets and
liabilities that are not presented in the statement of financial position at their fair value.
Fair value:
31/12/2011
Specification
Financial assets
Financial liabilities
Deposits from banks
Fair value:
Carrying amount
PLN thousand
Fair value
283 229
27 584 938
283 229
27 139 442
18 834 996
13 291 863
18 659 977
13 291 863
248 098
536 629
248 098
536 629
31/12/2010
Specification
Financial assets
Financial liabilities
Deposits from banks
Carrying amount
PLN thousand
Fair value
839 607
20 718 093
839 607
20 121 156
12 566 105
9 460 672
325 139
467 314
12 354 681
9 460 672
325 139
467 314
69
Fair value measurement
The following is a summary of the main methods and assumptions used for the measurement of the fair
value of the financial instruments specified in the table above.
In the case of short-term financial assets and liabilities, it is assumed that their carrying value is
approximately equal to their fair value
Loans and advances to banks: It is assumed that the fair value of loans and advances to banks does
not differ significantly from their carrying amount due to the short term of the transactions.
Loans and advances to customers: They are reported by the Bank net of impairment allowances.
The fair value is calculated as the discounted value of future payments of the principal and interest.
It is assumed that loans and advances will be amortised on the a greed dates. Regarding loans and
advances to customers carrying interest at a variable rate, loans and advances falling due within
1 year and impaired loans and advances, it is assumed that their carrying amount does not differ
materially from their fair value unless there has been a material change in the borrower‟s credit risk.
The estimated fair value of loans and advances reflects a change in the level of credit risk since the
making of the loan or advance and changes in interest rates in the case of f ixed-rate loans.
Deposits from banks and customers: As regards demand deposits and deposits of unspecified
maturity, the fair value is assumed to be the amount that would be paid on demand at the end of the
reporting period.
The fair value of deposits with a fixed maturity is assessed on the basis of cash flows discounted
with the current interest rates for deposits of similar maturities.
Regarding variable-rate deposits, it is assumed that their fair value does not differ materially from their
carrying amount. In the case of fixed-rate deposits with terms to maturity up to and including 3 months,
it is assumed that their fair value does not differ materially from their carrying amount. As fixed-rate
term deposits with maturities over 3 months represent a small percentage of the total deposit portfolio,
it is assumed that a fair value adjustment of such deposit is immaterial to the whole deposit portfolio.
The fair value of debt securities in issue was estimated on the basis of the analysis of future cash flow
by observing the market at the reporting date.
Subordinated liabilities have been estimated on the basis of an analysis of the mechanisms of future
cash flows.
70
34. Contingent Liabilities
Contingent credit commitments
The Bank made commitments to grant credit. Such commitments comprise approved loans, credit card
limits and overdrafts. The term of credit commitments does not exceed the usual time of credit
application processing and loan disbursement, i.e. from one to three months.
The Bank issues guarantees and letters of credit warranting that its customers will meet their
obligations towards third persons. Such contracts have specific limits and they are usually concluded
for up to five years. Contract expiry dates do not cumulate in any one period.
The value of contractual contingent commitments broken down into categories is presented in the
table below. The value of guarantees and letters of credit presented therein reflects the maximum
possible loss that would be disclosed as at the balance-sheet date if customers did not fulfil all of their
obligations.
PLN thousand
Specification
Contingent liabilities granted to customers
a) related to funding
including: - letters of credit
- credit lines
- underwriting of securities issued
31/12/2011
31/12/2010
b) guarantees
Contingent liabilities received from customers
b) guarantees
7 136 022
5 954 554
61 917
5 092 279
800 358
1 181 468
8 530 694
7 440 129
1 090 565
7 220 041
5 330 508
42 077
4 568 338
719 030
1 889 533
5 997 600
4 586 312
1 411 288
Liabilities under of FX transactions and nominal amounts
of derivative transactions
FX Spot transactions
- Purchased amount
- Sold amount
Derivative forward transactions
a) SWAP
- Purchased amount
- Sold amount
b) FORWARD
- Purchased amount
- Sold amount
c) IRS
- Purchased amount
- Sold amount
d) CIRS
- Purchased amount
- Sold amount
e) Currency options
- Purchased amount
- Sold amount
6 681 666
520 454
259 439
261 015
6 161 212
3 590 019
1 836 739
1 753 280
1 467 782
734 300
733 482
941 430
470 715
470 715
149 883
74 853
75 030
12 098
6 049
6 049
3 121 885
254 853
127 474
127 379
2 867 032
1 046 607
523 466
523 141
1 286 774
641 207
645 567
509 114
254 557
254 557
12 153
6 062
6 091
12 384
6 192
6 192
22 348 382
16 339 526
Total
71
The above contingent commitments bear an off-balance sheet credit risk, as only commitment
commissions and provisions for probable losses are disclosed in the statement of financial position
until a commitment is met or expires. Many contingent commitments will expire before they are fully
or partially paid out. Therefore, their values do not reflect expected future cash flows.
Financial instruments with embedded derivatives
The Bank offers a Dual-Currency Deposit which contains an embedded derivative instrument (an FX
option issued by the customer). The deposit is constructed in such a way that in the event of
a specified change of the exchange rate, the principal amount is returned in the second currency
(in an amount calculated at the exchange rate determined at the inception of the transaction).
The embedded option is booked and reported separately.
Details on credit risk concentration, including the credit risk resulting from contingent liabilities,
as well as the Bank‟s policy concerning credit collateral were presented in n ote 5.
Litigations
In 2011 there were certain proceedings concerning Nordea Bank Polska S.A‟s liabilities instituted or
pending before courts, arbitration authorities or public administration bodies. The total value of such
proceedings, as at 31/12/2011 did not exceed the threshold of 10% of the Bank‟s equity.
35. Assets pledged for collateral
Specification
1) State Treasury bonds collateralized for the BFG
Fund
3) State Treasury bonds collateralized for BZ WBK S.A
31/12/2011
81 891
39 408
PLN thousand
31/12/2010
43 192
40 542
1) Bank Guarantee Fund - pursuant to Articles 25 and 26 of the Bank Guarantee Fund Act, entities are
obliged to establish a guaranteed fund in an amount defined in the relevant resolution of the Bank
Guarantee Fund. The basis is the sum of funds accumulated in the Bank in all the accounts constituting
the basis of calculation of the mandatory reserve (Treasury bonds blocked for the Bank Guarantee
Fund: 80 000 bonds having the total nominal value of PLN 80.000 thousand).
In the comparable period, as at 31/12/2010 , the Fund of Money Guaranteed by the BFG was secured
with Treasury Bonds blocked for the Bank Guarantee Fund: 42.800 units with the total nominal value of
PLN 43.000 thousand.
2) Treasury bills frozen for the benefit of BZ WBK S.A.: 40 000 bills having the total nominal value of
PLN 40.000 thousand (in comparable period 40 000 bills having the total nominal value of PLN
40 million) guarantee transactions made by Bank‟s customers with VSA Cards.
72
36. Operating lease
Lease payments resulting from irrevocable operating lease are specified below:
Expenses due to irrevocable operating lease
Under one year
From one year to five years
Over five years
Total
31/12/2011
82 704
174 369
36 392
293 465
Income from irrevocable operating lease
31/12/2011
1 176
2 703
Under one year
From one year to five years
Over five years
Total
3 879
PLN thousand
31/12/2010
83 543
166 387
23 573
273 503
PLN thousand
31/12/2010
1 043
2 999
396
4 438
The Bank leases office space under operating lease contracts.
A majority of contracts are concluded for 5 to 10 years with an extension option thereafter. The Bank
also leases cars, photocopying machines, ATMs, terminals and servers under operating lease
contracts. These are standard contracts concluded for 3 to 5 years.
The costs of operating lease in 2011 and 2010 amounted to PLN: 96,985 thousand and PLN 71,513
thousand respectively. The operating lease revenues in 2011 and 2010 amounted to PLN 1,727
thousand and PLN 1,039 thousand respectively. They related to leased office space owned by the
Bank. A major part of the contracts were concluded for a term of up to 5 years.
Lease payments are indexed on an annual basis so that their value reflects market rent rates. None of
the lease contracts provides for any contingent payments.
.
73
37. Statement of cash flows – supplementary information
For the purpose of the statement of cash flows, cash and cash equivalents comprise balances with
maturities shorter than 3 months.
PLN thousand
Specification
NBP bills
Current accounts with other banks
Term deposits with other banks (by original maturity)
Total
31/12/2011
31/12/2010
1 021 025
4 636 344
283 229
-
757 511
1 149 218
273 352
566 229
5 940 598
2 746 310
Cash flows in operating activities comprise mainly the core business of the Bank. i.e. lending.
deposit and foreign exchange transactions. Therefore, it is a consequence of economic events that the
Bank was a participant of, which are accounted for while assessing the net profit or loss. The Bank
draws up a statement concerning cash flow in operating activities applying the indirect method, under
which the net result of a given reporting period is adjusted for any non-cash consequences of
transactions, for any prepayments and accruals related to future or past inflows or cash payments
related to operating activities, as well as income and costs related to the cash flow in investing
activities.
Investing activities comprise the purchase and sale of investment securities, non-current assets
since this type of cash flow reflects expenditures made by the Bank to achieve specific benefits in the
future.
Financing activities comprise cash flows resulting from repayment of loans taken out by the Bank to
finance its activities, issuance of debt securities.
74
38. Related parties
Parties related to Nordea Bank Polska S.A. at 31/12/2011:
-
The majority shareholder (parent company) - Nordea Bank AB (publ), Stockholm (99.21%)
-
Entities related by way of organization (other members of the Nordea Group):
-
The members of the Management Board (as at 31/12/2011):
Sławomir Żygowski – 1st Vice President of Management Board – Deputy President
Agnieszka Domaradzka – Vice President of Management Board
Jacek Kalisz – Vice President of Management Board
Tomasz Misiak – Vice President of Management Board
Bohdan Tillack – Vice President of Management Board
The President of the Management Board - Włodzimierz Kiciński handed in his resignation from the
position of President of the Management Board of Nordea Bank Polska S.A. effective as of 10
November 2011.
Members of the Supervisory Board (as at 31/12/2011):
Wojciech Rybowski – Chairman of Supervisory Board
Thomad Neckmar- Vice Chairman of Supervisory Board until 05/09/2011
Ossi Leikola – Vice Chairman of Supervisory Board as of 08/09/2011
Maciej Dobrzyniecki - Member of Supervisory Board
Marek Głuchowski – Member of Supervisory Board
Asbjörn Höyheim – Member of Supervisory Board
Eugeniusz Kwiatkowski - Member of Supervisory Board
Emilia Osewska-Mądry - Member of Supervisory Board
Rauno Päivinen - Member of Supervisory Board
Esa Tuomi - Member of Supervisory Board
Jacek Wańkowicz – Member of Supervisory Board
Henrik Bernhard Winther - Member of Supervisory Board
On 5 September 2011, the Extraordinary General Meeting of Shareholders of Nordea Bank Polska SA
passed resolutions in respect of a change in the composition of the Bank‟s Supervisory Board
consisting in the recalling of Mr Thomas Neckmar and appointment of Mr Ossi Leikola in his place.
Mr Ossi Leikola replaced Mr Thomas Neckmar in the position of Vice Chairman of the Supervisory
Board of the Bank, effective as of 08/09/2011.
Related party disclosures
Transactions with related parties are of deposit/credit character and remain within the scope of the
Bank‟s current operating activity. They are mainly loans, deposits, foreign exchange transactions and
guarantees.
75
Items concerning related parties in the Statement of Financial Position:
Receivables
31/12/2011
Derivative financial instruments
Other banking assets
TOTAL
Receivables
31/12/2010
with Parent
company
41 949
800
42 749
5 865
-
with entities related by
organization (other Nordea
Group companies)
818 131
147 009
6 343
Other banking assets
TOTAL
35
5 900
127
971 610
Liabilities
31/12/2011
Deposits from banks
Supplementary funds (subordinated
loan)
Other liabilities
TOTAL
Liabilities
31/12/2010
Deposits from banks
Supplementary funds (subordinated
loan)
Other liabilities
TOTAL
with Parent
company
Group companies)
219 685
309 429
88 491
2 461
620 066
with Parent
company
8 961
-
Group companies)
18 604 204
1 223 885
33 630
8 961
536 629
20 398 348
with Parent
company
512 516
-
Group companies)
11 364 755
1 128 198
15 491
512 516
467 398
51
12 975 893
PLN thousand
Total
31/12/2011
261 634
309 429
88 491
3 261
662 815
PLN thousand
Total
31/12/2010
823 996
147 009
6 343
162
977 510
PLN thousand
Total
31/12/2011
18 613 165
1 223 885
33 630
536 629
20 407 309
PLN thousand
Total
31/12/2010
11 877 271
1 128 198
15 491
467 398
51
13 488 409
76
Bank’s off-balance sheet items concerning related parties:
31/12/2011
b) related to guarantees
Contingent liabilities received
Liabilities related to the execution of
sale/purchase transactions
Spot currency transactions
Derivative transactions- forward
a) SWAP
b) FORWARD
c) Currency options
d) IRS and CIRS
Other
a) Underwriting of securities issued
Total
with Parent
company
6 473
6 473
2 890 496
2 731 684
158 812
with entities related
by organization
(other Nordea Group
companies)
274 472
45 926
228 546
1 263 024
343 223
919 801
5 368 670
492 759
4 875 911
3 590 019
734 275
6 049
545 568
6 906 166
2 896 969
PLN thousand
Total
31/12/2011
280 945
45 926
235 019
4 153 520
3 074 907
1 078 613
5 368 670
492 759
4 875 911
3 590 019
734 275
6 049
545 568
9 803 135
Bank’s off-balance sheet items concerning related parties:
31/12/2010
Contingent liabilities received
Liabilities related to the execution of
sale/purchase transactions
Spot currency transactions
Derivative term transactions
a) SWAP
b) FORWARD
c) Currency options
d) IRS and CIRS
Other
a) Underwriting of securities issued
Total
with Parent
company
by organization
(other Nordea Group
companies)
PLN thousand
Total
31/12/2010
40 378
40 378
2 559 167
2 449 350
109 817
393 759
1 000
392 759
1 414 931
307 749
1 107 182
434 137
1 000
433 137
3 974 098
2 757 099
1 216 999
2 599 545
2 328 788
251 743
2 077 045
1 286 774
523 460
6 192
260 619
4 137 478
2 328 788
251 743
2 077 045
1 286 774
523 460
6 192
260 619
6 737 023
77
Items of the Income statement with related parties:
01/01/2011
31/12/2011
Commission income
Interest income
Other operating expenses
Commission expenses
Interest expenses
Result on derivative instruments
TOTAL
with Parent
company
846
698
378
(159)
(161)
(1 313)
289
by organization
(other Nordea
Group companies)
13 318
24 093
12 469
(2 015)
(2 396)
(219)
(114 654)
60 754
(8 650)
PLN thousand
Total
14 164
24 791
12 847
(2 015)
(2 555)
(380)
(115 967)
60 754
(8 361)
Items of the Income statement with related parties:
01/01/2010
31/12/2010
Commission income
Interest income
Other operating expenses
Commission expenses
Interest expenses
Result on derivative instruments
TOTAL
with Parent
company
682
585
7
(67)
(116)
(3 298)
(2 207)
by organization
(other Nordea
Group companies)
9 343
19 892
5 917
(1 837)
(2 231)
(55)
(76 095)
(6 803)
(51 869)
PLN thousand
Total
10 025
20 477
5 924
(1 837)
(2 298)
(171)
(79 393)
(6 803)
(54 076)
Transactions with executive managers and supervising directors
Loans and advances made to executive managers and supervising directors of the Bank.
PLN thousand
Specification
31/12/2011
Management Board
Supervisory Board
Total
31/12/2010
3 599
3 889
783
937
4 382
4 826
*Excluding interest.
The total amount of salaries and awards paid or due to executive managers and supervising
directors and due to positions held in governing bodies of subsidiaries.
Salaries, awards and benefits paid or due to executive managers and supervising directors broken
down by components for each group separately (in thousand of PLN):
78
Management Board:
Salary components
Basic salary
From 01/01/2011
to 31/12/2011
9 906
PLN thousand
From 01/01/2010
to 31/12/2010
4 464
46
48
926
1 002
Additional pay
Bonuses
Fringe benefits
Vacation pay
Sick pay
Total
36
36
250
-
15
15
11 179
5 565
The figures stated above include also the remuneration, awards or other benefits paid to Mr
Włodzimierz Kiciński, who held the position of President of the Management Board until 10/11/2011.
Supervisory Board:
PLN thousand
Components of remuneration
From 01/01/2010
to 31/12/2010
From 01/01/2009
to 31/12/2009
Basic salary
427
390
Total
427
390
Information about the amount of salary and bonuses paid or due to persons managing or supervising
the bank, separately for each person, have been presented in section 14 of the Nordea Bank Polska
S.A. 2011 Management Board Report.
39. Share-based payment programme
In the years 2007- 2011 the parent company, Nordea Bank AB (NBAB), issued Share-based Payment
Programs called "Long Term Incentive Program 2007-2011 in which senior executives of Nordea Bank
Polska are invited to participate. The program participants will take ownership of NBAB shares if
certain performance criteria are met.
In 2011 an expense of PLN 438 thousand (2010:PLN 564 thousand) was recognised in the income
statement of the Bank with a corresponding entry in equity.
PLN thousand
Conditional Rights LTIP 2011
Granted
Outstanding at end of year
- of which currently exercisable
Matching Share
Performance Performance
Share I
Share II
8 901
8 901
17 802
17 802
8 901
8 901
-
-
-
79
PLN thousand
Conditional Rights LTIP
2010
2011
Matching
Share
Outstanding at the
beginning of year
Granted
Forfeited
Outstanding at the
beginning of year
- of which currently
exercisable
2010
Performance
Share I
Performance
Share II
8 863
(1 401)
17 726
(2 802)
8 863
(1 401)
8 863
-
17 726
-
8 863
-
7 462
14 924
7 462
8 863
17 726
8 863
-
-
Matching
Share
Performance Performance
Share I
Share II
PLN thousand
2009
2011
A-rights
Outstanding at the
beginning of year
Outstanding at end of
year
-of which currently
exercisable
B-C-rights
D-rights
A-rights
B-C-rights
D-rights
9 531
9 531
3 812
9 531
19 062
9 531
-
-
-
-
(9 531)
(5 719)
(1 000)
(1 000)
(400)
-
-
-
8 531
8 531
3 412
9 531
9 531
3 812
8 531
8 531
3 412
-
-
-
Granted
Forfeited
Exercised
2010
PLN thousand
2008
2011
A-rights
Outstanding at the
beginning of year
Forfeited
Exercised
year
-of which currently
exercisable
2010
B-C-rights
D-rights
A-rights
B-C-rights
D-rights
4 876
-
4 876
-
3 901
-
4 876
-
4 876
-
3 901
-
4 876
4 876
3 901
4 876
4 876
3 901
4 876
4 876
3 901
-
-
-
PLN thousand
2007
Outstanding at the
beginning of year
Forfeited
Exercised
year
-of which currently
exercisable
2011
B-C-rights
A-rights
D-rights
2010
B-C-rights
A-rights
D-rights
4 284
(4 284)
1 424
(1 424)
4 156
(4 156)
4 284
-
1 424
-
4 156
-
-
-
-
4 284
1 424
4 156
-
-
-
-
-
-
80
Long-Term Incentive Programmes
Participation in the Long-Term Incentive Programmes (LTIPs) requires that the participants take direct
ownership by investing in Nordea shares.
LTIP 2011
Matching Share
Ordinary share per right
Exercise price, EUR
Grant date
Vesting period, months
Contractual life, months
First day of exercise
Fair value at grant date, EUR
1,00
13 May 2011
36 months
36 months
April/May 2014
8,21
Performance Share I
1,00
13 May 2011
36 months
36 months
April/May 2014
8,21
Performance
Share II
1,00
13 May 2011
36 months
36 months
April/May 2014
2,97
81
LTIP 2010
Performance Share
I
Matching Share
LTIP 2009
Performance
Share II
A-rights
B-C-rights
D-rights
1,00
1,00
1,00
1,00
1,00
1,00
-
-
-
0,77
0,38
0,38
13 May 2010
13 May 2010
13 May 2010
14 May 2009
14 May 2009
14 May 2009
36 months
36 months
36 months
24 months
25 months
24 months
36 months
36 months
36 months
48 months
48 months
48 months
April/May 2013
April/May 2013
April/May 2013
29 April 2011
29 April 2011
29 April 2011
6,75
6,75
2,45
4,66
5,01
1,75
Exercise price, EUR
Grant date
LTIP 2008
A-rights
1
B-C-rights
LTIP 2007
D-rights
A-rights
1
B-C-rights
D-rights
1,30
1,30
1,30
1,30
1,30
1,30
Exercise price, EUR
2,30
1,53
1,53
2,53
1,00
1,00
13 May 2008
13 May 2008
13 May 2008
17 May 2007
17 May 2007
17 May 2007
24 months
24 months
24 months
24 months
24 months
24 months
48 months
48 months
48 months
48 months
48 months
48 months
29 April 2010
29 April 2010
29 April 2010
30 April 2009
30 April 2009
30 April 2009
7,53
8,45
4,14
8,76
10,49
7,76
Grant date
1
The new rights issue, which was resolved on an extra ordinary general meeting on 12 March 2009, triggered recalculations of some of the parameters in LTIP
2007 and LTIP 2008, in accordance with the agreements of the programmes. The recalculations were performed with the purpose of putting the participants in an
equivalent financial position as the one being at hand immediately prior to the new rights issue..
82
Conditions and requirements
For each ordinary share the participants lock in to the LTIPs, they are granted a conditional A-right/Matching Share to acquire or receive ordinary shares based on
continued employment and the conditional B-D-rights/Performance Share I and II to acquire or receive additional ordinary shares based on fulfilment of certain
performance conditions. The performance conditions for B- and C-rights and for Performance Share I comprise a target growth in risk adjusted profit per share
(RAPPS). Should the reported earnings per share (EPS) be lower then a predetermined level the participants are not entitled to exercise any B- or C-rights or
Performance Share I. The performance conditions for D-rights and Performance Share II are market related and comprise growth in total shareholder return (TSR)
in comparison with a peer group's TSR.
When the performance conditions are not fully fulfilled, the rights that are no longer exercisable are shown as forfeited in the previous tables, as well as shares
forfeited due to participants leaving the Nordea Group.
The exercise price for ordinary shares is adjusted for dividends, however never adjusted below a predetermined price. Furthermore the profit for each right is
capped.
LTIP 2011
LTIP 2010
LTIP 2009
LTIP 2008
LTIP 2007
Service condition, A-Drights/Matching
Share/Performance Share I
and II
Employed within the
Nordea Group during
the three year vesting
period.
Employed within the
Nordea Group during the
three year vesting period.
Employed within the
Nordea Group during
the two year vesting
period.
Employed within the
Nordea Group during
period.
Employed within the
Nordea Group during
period.
Performance condition, Brights/Performance Share I
Compound Annual
Growth Rate in RAPPS
from year 2010 (base
year) to and including
year 2013. Full right to
exercise will be obtained
if the Compound Annual
Growth Rate amount to
or exceed 10%.
Compound Annual
Growth Rate in RAPPS
from year 2009 (base
year) to and including
year 2012. Full right to
if the Compound Annual
Growth Rate amount to
or exceed 9%.
Increase in RAPPS
2009 compared to
2008. Full right to
exercise was obtained
if RAPPS increased by
8% or more.
Increase in RAPPS
2008 compared to
2007. Full right to
12% or more.
Increase in RAPPS
2007 compared to
2006. Full right to
15% or more.
83
LTIP 2011
LTIP 2010
LTIP 2009
LTIP 2008
LTIP 2007
Performance condition, Brights
-
-
Increase in RAPPS
2010 compared to
2009. Full right to
8% or more.
Increase in RAPPS
2009 compared to
2008. Full right to
12% or more.
Increase in RAPPS
2008 compared to
2007. Full right to
12% or more.
EPS knock out, C-rights
-
-
Reported EPS for 2010
lower than EUR 0.26.
Performance conditions, Drights/Performance Share II
TSR during 2011-2013
in comparison to a peer
group. Full right to
if Nordea is ranked
number 1-5.
TSR during 2010-2012 in
comparison to a peer
group. Full right to
if Nordea is ranked
number 1-5.
in comparison with a
peer group. Full right to
if Nordea was ranked
number 1.
if Nordea was ranked
number 1.
if Nordea's TSR
exceeded peer group
index by 10
percentage points or
more.
Cap
The market value of the
allotted shares is
capped to the
participant's annual
salary for year-end 2010
The market value of the
allotted shares is capped
to the participant's
annual salary for yearend 2009.
The profit per A-D-right
is capped to EUR 9.59
per right.
is capped to EUR
21.87 per right.
is capped to EUR
19.18 per right.
84
RAPPS for the financial year 2008 used for LTIP 2008 (C-rights) and LTIP 2009 (B-rights), RAPPS for
the financial year 2009 used for LTIP 2009 (C-rights), EPS knock out in LTIP 2008 (C-rights) and
LTIP 2009 (B- and C-rights) and the cap in LTIP 2009, LTIP 2008 and LTIP 2007 has been adjusted
due to the financial effects of the new rights issue in 2009.
Fair value calculations
Fair value is determined on the basis of generally adopted measurement methods, taking into account
the following input factors:
Weighted average share price, EUR
Right life, years
Deduction of expected dividends
Risk free rate, %
Expected volatility, %
LTIP 2011 LTIP 2010 LTIP 2009 LTIP 2008 LTIP 2007
8,39
6,88
5,79
11,08
12,23
3,0
3,0
2,5
2,5
3,0
Yes
Yes
No
No
Yes
1,48%
1,99%
1,84%
3,83%
4,20%
36%
40%
29%
21%
20%
Expected volatility is based on historical values. As the exercise price (zero for LTIP 2010) is
significantly below the share price at grant date, the value has a limited sensitivity to expected
volatility and risk-free interest. The fair value calculations are also based on estimated early exercise
behaviour during the programmes' exercise windows, however not applicable for LTIP 2010 and LTIP
2011.
The value of the D-rights/Performance Share II are based on market related conditions and fulfilment
of the TSR targets has been taken into consideration when calculating the right's fair value at grant.
When calculating the impact from the TSR target it has been assumed that all possible outcomes
have equal possibilities.
40. Events after the reporting period
No events occurred after the reporting period that could have a material impact on these financial
statements.
85
Signatures of all the Members of the Management Board:
-----------------------------------------------------------------------------------------------------------------------------------Date
Name and surname
Position/Function
Signature
----------------------------------------------------------------------------------------------------------------------------- ------08-02-2012
Sławomir Żygowski
1st Vice President –
Deputy President of the MB
08-02-2012
Agnieszka Domaradzka
Vice President
08-02-2012
Jacek Kalisz
Vice President
08-02-2012
Tomasz Misiak
Vice President
08-02-2012
Bohdan Tillack
Vice President
86

Nordea Bank Polska Annual Report 2011

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