Notes to the consolidated financial statements

6. Segment reporting

Download note 6 in XLS

As intended by IFRS 8, financial information on segments is reported on the same basis as is used internally in reports presented to the Management Board of the Bank for the purpose of allocating resources to segments and evaluating their performance.
The Group’s operations have been divided into segments in accordance with products sold, services provided and types of clients, for management purposes. The following operating segments have been identified: consumer, institution and settlement and treasury departments.
Detailed principles of separating revenue, expenses, assets and liabilities in each segment are described in internal regulations of the Bank. The operations are focused on the Polish market – the client base is composed mainly of local individuals and corporations. The Group’s activities are not exposed to the risk of fluctuations resulting from seasonality of operations.
The Bank’s Management Board assesses segment financial performance based on the following figures:

• Operating profit after any impairment losses including other operating revenue and expenses;
• General and administrative expenses;
• C/I (cost/income).

Consumer segment of the Group
From management accounting perspective the consumer segment offers products targeted at individuals and microenterprises (sole proprietorships). The offer consists of saving and settlement accounts, savings accounts, term deposits, consumer loans (including cash loans and overdrafts), mortgage loans (including housing loans, mortgage loans and consolidation loans), credit cards, insurance products and investment products and funds. It is sold through traditional distribution channels in a country-wide network of branches and sales points (inclduing the sales network of Poczta Polska and financial agents), Pocztowy24 Internet banking, PocztowySMS mobile banking and a Contact Centre.

Institutional segment of the Group
For management accounting purposes institutional segment includes operating profit/loss from services provided to business entities with legal personality, individuals and entities with no legal personality carrying out business activities under applicable regulations and central and local administration entities.
Products offered in the institutional segment include: credit products (working capital loans including revolving loans, overdrafts, investment loans, loans with thermal improvement and refurbishment premium, mortgage loans and bank guarantees), deposits (current accounts, standards and individually negotiated deposits, savings accounts) and settlement services with reasonably priced cash management offer. Products are offered through the Bank’s own network, the network of Poczta Polska S.A. and financial agents.

Settlement and treasury segment of the Group
For management accounting purposes, the settlement and treasury segment includes the profit or loss from settlement services and treasury activities. The Group offers comprehensive settlement services of unique quality, based on access to Poczta Polska's infrastructure. The services include: managing documents of payments to the Social Security Institution and Tax Offices. Further, the settlement product offer includes cash payments to third parties available in the network of Poczta Polska S.A. and in the Bank’s own network, cash payments to accounts in the network of Poczta Polska S.A. and in the Bank’s own network, mass domestic and international non-cash payment orders in PLN and payments made by clients in ADMs.
Operations of the treasury function include treasury transactions, financial markets, management of liquidity, interest rate and currency risks. The department concludes transactions in the interbank market (e.g. deposits), buys and sells securities (Treasury bonds, debt instruments issued by the National Bank of Poland, bank bonds) and enters into sell-buy-back and buy-sell-back transactions and derivative transactions such as FRA, IRS or swap. It repurchases client funds obtained by operating segments at a transfer rate and sells the funds to finance their credit operations.

Unallocated items, adjustments and exclusions
Unallocated items, adjustments and exclusions include revenue and expenses not classified in the above segments, as well as income tax.

Changes in operational segment reporting
In 2014 the Bank introduced changes in operational segment reporting. The changes resulted from a revised allocation key applied to operating expenses of the Bank’s branches assigned to consumer and institutional segments and changes in the allocation key applied to the net interest income of the treasury function. Moreover, following organizational structure changes introduced in 2014, microenterprises have been moved from the institutional segment to the consumer segment. Data for the 12-month period ended 31 December 2013 and as at that date presented in the consolidated financial statements have been recalculated to ensure data comparability.

As the Management Board of the Bank analyses the aggregate net interest income, no interest revenue or interest expense has been separated in financial performance of individual segments.