On 30 June 2016 the Ordinary General Shareholders’ Meeting of the Bank adopted resolution (No. 7/2016, Resolution on the distribution of profit) on distribution of the net profit for the period from 1 January 2015 to 31 December 2015 (PLN 2 571.1 million) and retained earnings from previous years (PLN 1 250.0 million), in the total amount of PLN 3 821.1 million as follows:
- dividend for shareholders PLN 1 250.0 million (which represents PLN 1.00, gross, per share),
- reserve capital in the amount of PLN 2 500.0 million,
- other reserve in the amount of PLN 71.1 million.
The distribution of the profit described above was dependent on meeting, incluging, the following conditions (‘Meeting the Conditions for the Dividend Payment’), by 8 December 2016:
- PKO Bank Polski SA shall not take over control of a bank or other entity of the financial sector by a direct or indirect acquisition of a block of shares and shall not acquire a right or incur an obligation to take over control in the manner specified above, and
- there shall not occur any regulatory changes or changes of the supervisory recommendations affecting the requirements for the Bank’s own funds that – according to the level of capital adequacy ratios recognized in the financial statements of the Bank for Q3 2016 – would cause a lack of possibility to pay dividend in accordance with the regulatory requirements and supervisory recommendations.
The Bank’s Management Board was put under an obligation to pass, no later than by 9 December 2016, a resolution on Meeting the Conditions for the Dividend Payment or failure to meet them.
On 1 December 2016, a transaction comprising the acquisition of 100% of shares in RLPL by PKO Leasing was closed. Furthermore, the Bank’s Management Board passed a resolution stating a failure in Meeting the Conditions for the Dividend Payment. In consequence, the Bank’s profit earned in 2015 and undistributed profits from previous years were distribution in the manner specified in § 2 of the Resolution on the Distribution of Profit, which assumes that the entire profit be earmarked for transfer to the supplementary capital and the reserve capital, without providing for the payment of a dividend.
Therefore, in 2016 the Bank retained the entire undistributed profits from previous years (PLN 1 250 millions worth of the undistributed profits from 2014) and the entire profit earned in 2015 (in the amount of PLN 2 571.1 millions), which brought about an increase in the Bank’s equity of PLN 3 821.1 millions thousand in total.
According to the Financial Supervision Authority’s position of 6 December 2016 on dividend policy, the required level of capital ratios for Bank Polski SA to be allowed to pay dividend out of profit of 50%, is, respectively:
- Total capital ratio TCR = 14.83%
- Capital ratio T1 = 14.62%.
In accordance with the PFSA guidelines, the Bank should meet the criteria for dividend distribution both at the standalone and consolidated level, as at the last reporting date before the decision on the payment.
Moreover, the PFSA indicated that the banks which are significantly engaged in currency housing loans for households (which have receivables from the non-financial sector of over 5% of the share in currency housing loans for households) adjust the dividend rate based on two additional criteria:
1) Criterion 1 (K1) – which relies on the share of currency housing loans for households in the entire portfolio of receivables from the non-financial sector;
2) Criterion 2 (K2) – based on the share of currency housing loans granted in the years 2007-2008 (loans decisive for the amounts of bank losses in the case of implementing potential statutory solutions) in the portfolio of currency housing loans of households.
The PFSA recommended applying respective adjustments depending on the portfolio held by the Bank:
1) Criterion 1:
a) banks with a share of over 10% - adjustment of the dividend rate of 20%,
b) banks with a share of over 20% - adjustment of the dividend rate of 30%,
c) banks with a share of over 30% - adjustment of the dividend rate of 50%.
2) Criterion 2:
a) banks with a share of over 20% - adjustment of the dividend rate of 30%,
b) banks with a share of over 50% - adjustment of the dividend rate of 50%.
As at 31 December 2016, the share of currency housing loans for households in the entire portfolio of amounts due from the non-financial sector of the PKO Bank Polski SA amounts to approx. 20%, and the share of the currency portfolio granted in the years 2007-2008 – to approx. 44%.
The general principle of the Bank’s dividend policy is the stable execution of dividend payments over a long period in keeping with the principle of prudent management of the Bank and the Bank’s Group, in line with the Bank’s and Group’s financial capabilities, taking into account the requirements and recommendations of the Financial Supervision Authority in respect of dividend policy.