Integrated Report 2020

Statement of  financial position

Assets

The Group’s total assets as at the end of 2020 amounted to PLN 119,577,288 thousand and were higher by PLN 9,623,146 thousand, or 8.8%, compared to the end of 2019.

in PLN’000 31.12.2020 31.12.2019 change
in PLN’000 %
Cash and balances at Central Bank 3,421,877 4,658,171 (1,236,294) (26.5%)
Amounts due from banks 774,722 679,308 95,414 14.0%
Derivative financial instruments 1,531,617 800,886 730,731 91.2%
Fair value adjustment of hedged item 531,793 228,120 303,673 133.1%
Loans and advances to customers measured at amortised cost 74,097,269 71,836,643 2,260,626 3.1%
Loans and advances to customers measured at fair value through profit or loss 1,539,848 1,974,396 (434,548) (22.0%)
Debt securities measured at amortised cost 23,361,022 17,916,645 5,444,377 30.4%
Financial instruments measured at fair value through profit or loss 371,900 241,754 130,146 53.8%
Debt securities measured at fair value through other comprehensive income 10,228,560 7,953,358 2,275,202 28.6%
Investment real estate 0 56,577 (56,577) (100.0%)
Intangible assets 651,608 519,945 131,663 25.3%
Property, plant and equipment 1,479,540 1,226,746 252794 20.6%
Deferred tax assets 745,606 976,748 (231,142) (23.7%)
Current tax assets 55,087 0 55,087 x
Other assets 786,839 884,845 (98,006) (11.1%)
Total assets 119,577,288 109,954,142 9,623,146 8.8%

The most important change in the Group’s asset structure compared to the end of 2019 was the increase in the share of the securities portfolio (+4.7 p.p.) with a simultaneous decrease in the share of the loan portfolio (the sum of portfolios measured at amortised cost and at fair value), which decreased by 3.9 p.p., and decrease in the share of cash and balances with the Central Bank by 1.4 p.p.

The structure of assets is dominated by loans and advances to Customers (sum of portfolios measured at amortised cost and at fair value), which accounted for 63.3% of total assets at the end of 2020, compared to 67.1% at the end of 2019. The increase in the net volume of loans and advances amounted to PLN 1,826,078 thousand (+2.5%) and concerned the retail portfolio (+13.1%) with a decrease in the corporate portfolio (-4.4%). The increase in the value of the portfolio was influenced among other things by the depreciation of the PLN against the CHF, EUR and USD, related to the development of the coronavirus pandemic and its impact on the currency markets.

The second largest asset item was securities, which accounted for 28.4% of total assets at the end of 2020 (end of 2019: 23.7%). In 2020, their value increased by PLN 7,849,725 thousand, or 30.1%, primarily as a result of an increase in the portfolio of bonds issued by banks and bonds issued by other financial institutions (including BGK and PFR under programmes related to the so-called „anti-crisis shield”).

Simultaneously with the above changes, there was a decrease in the share of cash and balances with the Central Bank from 4.2% to 2.9% (in value terms by PLN 1,236,294 thousand, i.e. by 26.5%) and an increase in the share of derivative financial instruments from 0.7% to 1.3% (increase by PLN 730,731 thousand, i.e. by 91.2%).

Loan portfolio

Structure and quality of loan portfolio

At the end of 2020, gross loans and advances to Customers (sum of portfolios measured at amortised cost and measured at fair value) amounted to PLN 78,999,754 thousand and increased by PLN 1,818,338 thousand, or 2.4%, compared to the end of 2019.

The gross portfolio of loans and advances measured at amortised cost in the analysed period amounted to PLN 77,284,074 thousand and increased by PLN 2,219,222 thousand, i.e. by 3.0% compared to the end of 2019.

in PLN ‘000 31.12.2020 31.12.2019
in PLN ‘000 share % in PLN ‘000 share %
Business entities with the exception of farmers 30,554,320 39.5% 31,632,607 42.1%
Farmers 8,118,713 10.5% 8,732,840 11.6%
Retail customers 33,802,097 43.7% 29,997,525 40.0%
– mortgage loans 22,559,727 29.2% 18,526,757 24.7%
in PLN 17,687,284 22.9% 13,634,997 18.2%
in foreign currencies 4,872,443 6.3% 4,891,760 6.5%
– cash loans 7,312,444 9.5% 7,404,864 9.9%
– other retail loans 3,929,926 5.1% 4,065,904 5.4%
Lease receivables 4,112,460 5.3% 3,995,444 5.3%
Public sector 101,382 0.1% 129,915 0.2%
Other financial entities 595,102 0.8% 576,521 0.8%
Gross loans and advances 77,284,074 100.0% 75,064,852 100.0%

Gross loans and advances measured at amortised cost – structure

Gross loans and advances measured at amortised cost – structure

Gross loans and advances to retail Customers at the end of 2020 amounted to PLN 33,802,097 thousand (an increase of PLN 3,804,572 thousand or 12.7% compared to the end of 2019). Their share in the loan portfolio measured at amortised cost in the analysed period was 43.7% (+3.8 p.p.). More than two-thirds (66.7%) of the credit exposure of individual Customers are mortgage loans, which amounted to PLN 22,559,727 thousand at the end of 2020. In the structure of mortgage loans, 78.4% are loans granted in PLN, while 21.4% are loans granted in CHF (compared with the end of December 2019, the share of CHF decreased by 4.7 p.p.).

The gross portfolio of loans and advances to businesses (excluding farmers) amounted to PLN 30,554,320 thousand (down by PLN 1,078,287 thousand, or 3.4%, compared with the end of 2019). Their share in the analysed loan portfolio amounted to 39.5% at the end of 2020 and decreased by 2.6 p.p. compared to the end of 2019. Almost half of this portfolio (45.3%) are current account loans. From the second quarter of 2020, a reduction in the demand for credit from businesses and a decrease in the share of financing of a current nature became apparent (-5.3 p.p. compared to the end of 2019).

The volume of loans granted to individual farmers at the end of 2020 amounted to PLN 8,118,713 thousand, registering a decrease of 7.0%, compared to December 2019.

Lease receivables amounted to PLN 4,112,460 thousand (increase by 2.9% compared to the end of 2019). Their share in the loan portfolio measured at amortised cost in the analysed period was 5.3% (no change compared to the end of 2019).

The volume of loans granted to non-banking financial entities and budget sector institutions amounted to a total of PLN 696,484 thousand, remaining at a level similar to December 2019 (PLN 706,436 thousand).

The ratio of impaired exposures to gross loans and advances to Customers measured at amortised cost amounted to 5.4% at the end of 2020 and decreased slightly (-0.3 p.p.) compared to the end of 2019.

in PLN ‘000 31.12.2020 31.12.2019
Gross total of which:
impaired
share % Gross total of which:
impaired
share %
Business entities with the exception of farmers 31,250,804 1,711,016 5.5% 32,339,043 1,981,962 6.1%
Farmers 8,118,713 789,395 9.7% 8,732,840 768,651 8.8%
Retail customers 33,802,097 1,444,716 4.3% 29,997,525 1,332,616 4.4%
– mortgage loans 22,559,727 672,458 3.0% 18,526,757 523,852 2.8%
in PLN 17,687,284 275,967 1.6% 13,634,997 218,053 1.6%
in foreign currencies 4,872,443 396,490 8.1% 4,891,760 305,799 6.3%
– cash loans 7,312,444 595,880 8.1% 7,404,864 607,222 8.2%
– other retail loans 3,929,926 176,378 4.5% 4,065,904 201,542 5.0%
Lease receivables 4,112,460 204,124 5.0% 3,995,444 196,747 4.9%
Gross loans and advances 77,284,074 4,149,251 5.4% 75,064,852 4,279,976 5.7%

in PLN ’000 31.12.2020 31.12.2019 change
in PLN ’000 %
Total gross loans and advances to customers 77,284,074 75,064,852 2,219,222 3.0%
Impairment allowances (3,186,805) (3,228,209) 41,404 (1.3%)
Total net loans and advances to customers 74,097,269 71,836,643 2,260,626 3.1%
Exposures without impairment triggers
Gross carrying value 73,134,823 70,784,875 2,349,947 3.3%
Impairment allowance (1,099,866) (943,899) (155,967) 16.5%
Net balance sheet exposure 72,034,957 69,840,976 2,193,980 3.1%
Impaired exposures (stage 3)
Gross carrying value 4,149,251 4,279,976 (130,725) (3.1%)
Impairment allowance (2,086,939) (2,284,310) 197,371 (8.6%)
Net balance sheet exposure 2,062,312 1,995,666 66,646 3.3%
Ratios 31.12.2020 31.12.2019 change
Share of impaired exposures in gross portfolio 5.4% 5.7% (0.3 p.p.)
Coverage with impairment allowances 50.3% 53.4% (3.1 p.p.)

The value of collateral held for Customer loans at the end of 2020 amounted to PLN 2,649,256 thousand. Detailed information on collateral held is included in Note 56.2. of the Consolidated Financial Statements of BNP Paribas Bank Polska S.A. Group for the 12-month period ended 31 December 2020.

In December 2017, the Bank performed a securitization transaction of the portfolio of cash and car loans. The transaction is a traditional securitization involving the transfer of ownership of the securitized receivables to SPV (BGŻ Poland ABS1 DAC based in Ireland). The revolving period is 24 months. Transaction is subject to amortisation since January 2020.

As a result of securitization, the Bank obtained financing in exchange for the transfer of rights to future cash flows resulting from the securitized loan portfolio in a value of PLN 2,300,471 thousand as of 22 November 2017 (the cut-off date). The maximum deadline for full redemption of bonds and repayment of the loan is 27 April 2032.

SPV issued bonds with a total value of PLN 2,180,850 thousand on the basis of securitized assets, and received a loan of PLN 119,621 thousand, which were secured by a registered pledge on the rights to cash flows from securitized assets. As at the end of December 2020, the value of bonds and loans amounted to PLN 1,390,318 thousand.

The main benefit of the performed transaction is a positive impact on capital adequacy ratios and improvement of liquidity and diversification of financing sources.

In the light of the provisions of IFRS 9, the contractual terms of the securitization do not fulfil the conditions for derecognition of securitized assets. In connection with the above, the Bank recognizes securitized assets in “Loans and advances to Customers” as at 31 December 2020 at net value of PLN 1,393,049 thousand.

The Bank acts as a servicer in the transaction.

The transaction is affected by factors related to the effects of the coronavirus epidemic. On the one hand, the value of flows and future flows in the transaction are affected by the deferrals of credit instalments granted by the Bank since 19 March 2020 in order to mitigate possible negative effects related to the coronavirus pandemic, and currently in particular those resulting from the Act of 19 June 2020 on interest rate subsidies on bank loans granted to entrepreneurs affected by COVID-19 and simplified procedure for approval of the agreement in connection with COVID-19.

On the other hand, the decisions of the Monetary Policy Council to reduce the NBP base interest rates, in particular the reference rate to 0.10% on 29 May 2020, which resulted in a reduction of the maximum interest rate on loans and advances and a decrease in the market WIBOR rates also have an impact.

At present, it is not possible for the Bank to precisely estimate the impact of the coronavirus pandemic on this transaction, in particular in relation to a possible long-term deterioration of borrowers’ situation.

Liabilities and equity

As at 31 December 2020, the Group’s total liabilities amounted to PLN 107,546,761 thousand and were PLN 8,752,002 thousand or 8.9% higher than at the end of 2019. The share of liabilities in the Group’s total liabilities and equity was 89.9% in the analysed period (+0.1 p.p. compared to the end of 2019).

The biggest changes in the structure of liabilities in 2020 were a decrease in the share of liabilities to Customers, as well as an increase in the share of items such as subordinated liabilities, liabilities to banks, fair value adjustments of hedged and hedging items and derivative financial instruments.

in PLN ’000 31.12.2020 31.12.2019 change
in PLN ’000 %
Amounts due to Central Bank 84,675 84,675
Amounts due to banks 6,824,894 4,485,264 2,339,630 52.2%
Fair value adjustment of hedging instruments and hedged itemsitems 542,719 224,218 318,501 142.0%
Derivative financial instruments 1,521,148 815,637 705,511 86.5%
Amounts due to customers 90,051,004 86,134,984 3,916,020 4.5%
Securities issued 1,318,380 2,179,052 (860,672) (39.5%)
Subordinated liabilities 4,306,539 1,882,064 2,424,475 128.8%
Lease liabilities 968,749 602,192 366,557 60.9%
Other liabilities 1,269,243 1,893,414 (624,171) (33.0%)
Current income tax liabilities 38,338 (38,338) (100.0%)
Deferred tax 8,533 (8,535) (100.0%)
Provisions 659,410 531,061 128,349 24.2%
Total liabilites 107,546,761 98,794,759 8,752,002 8.9%
Share capital 147,419 147,419
Supplementary capital 9,110,976 9,110,976
Other reserve capital 2,208,982 1,572,757 636,225 40.5%
Revaluation reserve 255,833 125,251 130,582 104.3%
Retained earnings 30, 317 202,980 104,337 51.4%
– previous years result (425,778) (411,714) (14,064) 3.4%
– net profit for the period 733,095 614,694 118,401 19.3%
Total equity 12,030,527 11,159,383 871,144 7.8%
Total liabilites and equity 119,577,288 109,954,142 9,623,146 8.8%

The structure of liabilities is dominated by amounts due to Customers. Their share at the end of 2020 amounted to 83.7% and decreased compared to the end of 2019 by 3.5 p.p. In value terms, the volume of these liabilities increased by PLN 3,916.020 thousand, i.e. by 4.5% compared to December 2019 and amounted to PLN 90,051.004 thousand. This increase took place despite the reduction of NBP interest rates almost to zero, resulting in lower interest rates on bank deposits.

Liabilities from the issue of debt securities also recorded a decrease in their share in total liabilities by 1.0 p.p. to 1.2%. Their value amounted to PLN 1,318,380 thousand and was by PLN 860,672 thousand lower compared to the end of 2019 (by 39.5%), as a result of the start of amortisation of the securitisation transaction from January 2020.

Compared to the end of 2019, the largest increase in the share of total liabilities was recorded for subordinated liabilities (+2.1 p.p., to 4%). At the end of 2020, they amounted to PLN 4,306,539 thousand (an increase of PLN 2,424,475 thousand, i.e. 128.8% mainly as a result of the non-revolving subordinated loan agreement concluded on 7 December 2020 with BNP Paribas S.A. in the amount of PLN 2,300,000 thousand.

Equity as at 31 December 2020 amounted to PLN 12,030,527 thousand and increased by 7.8% or PLN 871,144 thousand compared to 31 December 2019. The share of total equity in the Group’s total liabilities and equity was at the end of 2020 10.1% (compared to 10.1% at the end of last year).

Amounts due to Customers

At the end of 2020, amounts due to Customers amounted to PLN 90,051,004 thousand and were higher by PLN 3,916,020 thousand, i.e. by 4.5% compared to the end of 2019, despite the significant decrease in interest rates on bank deposits as a result of interest rate cuts to near zero.

By entity, the increase was mainly in amounts due to business entities (balance at the end of 2020: PLN 43,677,506 thousand), the volume of which increased by PLN 3,338,720 thousand, or 8.3% compared to the balance at the end of 2019 (including mainly in current deposits, up by PLN 10,982,354 thousand, i.e. by 37.6%, with a decrease in term deposits). The share of this segment in the structure of total amounts due to Customers increased to 48.5% compared to 46.8% at the end of December 2019.

An increase in volumes was also recorded in the case of retail Customer deposits, which amounted to PLN 43,578,829 thousand at the end of 2020, up by PLN 1,228,371 thousand, or 2.9%, compared to the balance at the end of 2019. At the same time, the share of retail Customer deposits in the structure of amounts due to Customers decreased to 48.4% compared to 49.2% at the end of 2019.

A decrease was recorded in the case of deposits of non-banking financial entities (at the end of 2020 they amounted to PLN 1,528,698 thousand, i.e. by PLN 915,094 thousand or 37.6% less than at the end of 2019).

The volume of deposits of public sector institutions increased by PLN 264,023 thousand (i.e. by 26.4%), to PLN 1,265,971 thousand at the end of 2020.

Structure of amounts due to Customers at 31.12.2020 r.

Structure of amounts due to Customers at 31.12.2019

The share of current accounts in the structure of total amounts due to Customers was at the end of 2020 87.2%, recording an increase of 20.2 p.p. compared to the end of 2019. Funds deposited in current accounts amounted to PLN 78,495,305 thousand and increased by PLN 20,816,888 thousand, or 36.1%. This increase concerned all Customer groups: business entities (+ PLN 10,982,354 thousand, i.e. by 37.6%), retail Customers (+ PLN 8,551,216 thousand, i.e. by 31.4%), non-bank business entities (+ PLN 959,776 thousand, i.e. by 255.8%) and public sector institutions (+ PLN 323,542 thousand, i.e. by 41.1%)

The share of term deposits in the structure of amounts due to Customers in the analysed period amounted to 11.1% and decreased by 20.2 p.p. compared to the end of 2019. In value terms, time deposits decreased by PLN 16,987,688 thousand or 62.1% compared to December 2019 and reached PLN 10,384,101 thousand. This decrease was mainly related to business entities and individual Customers (by: PLN 7,613,148 thousand and PLN 7,426,320 thousand, respectively).

The share of other liabilities in the structure of liabilities to Customers was 1.3% (unchanged compared to December 2019). Their volume amounted to PLN 1,171,598 thousand

PLN’000 31.12.2020 31.12.2019
PLN’000 share % PLN’000 share %
Current accounts 78,495,305 87.2% 57,678,417 67.0%
Term deposits 10,384,101 11.5% 27,371,789 31.8%
Other liabilities 1,171,598 1.3% 1,084,778 1.3%
Total amounts due to customers 90,051,004 100.0% 86,134,984 100.0%

The territorial structure of amounts due to the Bank’s Customers at the end of 2020 by major regions, in a management view, is presented below.

share % 31.12.2020
Warszawa 28.4%
Poznań 15.9%
Katowice 13.4%
Lublin 13.4%
Gdańsk 12.9%
Kraków 9.4%
Others 6.6%

Equity

As at the end of 2020, the Group’s equity amounted to PLN 12,030,527 thousand and was by PLN 871,144 thousand or 7.8% higher than at the end of 2019.

Pursuant to the Resolution of the Ordinary General Shareholders’ Meeting of BNP Paribas Bank Polska S.A. of 29 June 2020, the entire profit of the Bank for 2019, in the amount of PLN 628,696 thousand, was allocated to reserve capital. In addition, the increase in equity was influenced by the improvement in the revaluation reserve (by PLN 130,582 thousand compared to the end of 2019).

Contingent liabilities

The table below shows the value of the items of commitments given and received.

in PLN ‘000 31.12.2020 31.12.2019 change y/y
in PLN ‘000 %
Granted contingent liabilities 38,053,674 31,087,503 6,966,171 22.4%
Liabilities concerning financing 30,220,021 24,293,205 5,926,816 24.4%
Liabilities of guarantee nature 7,833,653 6,794,298 1,039,355 15.3%
Received contingent liabilites 21,911,007 21,443,112 467,895 2.2%
Liabilities concerning financing 13,037,589 12,127,379 910,210 7.5%
Liabilities of guarantee nature 8,873,418 9,315,733 (442,315) (4.7%)

The amount of long-term liabilities granted as at 31.12.2020 amounts to PLN 15,903,598 thousand (31.12.2019 amounted to PLN 14,049,630 thousand), while long-term liabilities received as at 31.12.2020 amounted to PLN 20,249,636 thousand (31.12.2019 amounted to PLN 18,515,956 thousand).

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