Notes to the consolidated financial statements
Download note 6 in XLS6. Segment reporting
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.
For management purposes, the Group’s operations have been divided into segments in accordance with products sold, services provided and types of customers. The following operating segments have been identified: consumer, institution, settlement and treasury.
Detailed principles of separating revenue, expenses, assets and liabilities in each segment are described in internal regulations of the Bank. The Group settles inter-segment transactions applying internal transfer rates determined based on market data. Most operations are carried out in the Polish market – the customer 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) ratio.
The accounting principles applied to segment reporting comply with the accounting principles discussed in note 5.
As the Management Board of the Bank analyses the aggregate net interest income, no interest income or interest expense has been separated in financial performance of individual segments.
Consumer segment of the Group
From management accounting perspective the consumer segment offers products targeted at individuals and microenterprises (individuals carrying out business activities). The offer consists of saving and settlement accounts, savings accounts, term deposits, consumer loans (including cash loans and overdrafts), mortgage loans (including housing loans and mortgages), debit and credit cards, insurance products and investment funds. It is sold through traditional distribution channels in a countrywide network of branches and sales points (including the sales network of Poczta Polska and financial agents), Pocztowy24 Internet banking, PocztowySMS mobile banking and a Contact Center.
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. Services such as accepting in-branch deposits and secure deposits for institutional customers and giro transfers (cash payments to beneficiaries, i.e. third parties who are not Bank customers) are offered through the Bank's own network and the distribution network of Poczta Polska S.A., while bank products such as credit facilities are sold through the Bank's network and financial agents.
The Bank offers the following types of treasury products: purchase and sale of debt securities (treasury and non-treasury securities, certificates of deposit) and forward contracts within the treasury limit.
Settlement and treasury segment of the Group
For management accounting purposes, the settlement and treasury segment disclses the profit or loss from settlement services and treasury activities.
The Bank offers the customers of Poczta Polska S.A. comprehensive settlement services such as cash payments, because cash payments received in the offices of Poczta Polska S.A. have been included in interbank settlements. The services include mainly: managing cash payments made in other banks and handling payments made to the Social Insurance Institution and Tax Offices.
Operations of the treasury function include treasury transactions, financial markets, and 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 customer funds obtained by operating segments at a transfer rate and sells the funds to finance their credit operations.
Unallocated items
Unallocated items comprise revenue and expenses not classified in the above segments, as well as income tax.
Changes in operational segment reporting
In 2015 the Group made changes in the operational segment reporting. The changes resulted from a revised allocation key applied to the general and administrative expenses based on an internal capital assigned to individual segments. In addition, the net interest income in the settlement and treasury segment has been divided into external customers and other segments. The data for 2014 have been appropriately restated to ensure comparability. The Bank has separated assets and liabilities related to the settlement and treasury segment from the data related to assets, equity and liabilities as at 31 December 2015. The data as at 31 December 2014 have been appropriately restated to ensure comparability.
| Period | Consumer segment | Institutional segment | Segment of settlement and treasury |
Unallocated items | Total |
|---|---|---|---|---|---|
| From 1 January 2015 | |||||
| to 31 December 2015 | |||||
| PLN’000 | PLN’000 | PLN’000 | PLN’000 | PLN’000 | |
| Net interest income | 222 162 | 23 766 | 11 588 | 659 | 258 175 |
| - sales to external customers | 223 630 | 19 290 | 14 596 | 659 | 258 175 |
| - sale to other segments | (1 468) | 4 476 | (3 008) | 0 | 0 |
| Net fee and commission income | 28 015 | 11 179 | 15 501 | 1 142 | 55 837 |
| Other revenue and expenses related to banking operations* | 0 | 0 | 13 516 | 0 | 13 516 |
| Profit/loss on banking operations | 250 177 | 34 945 | 40 605 | 1 801 | 327 528 |
| Other operating revenue and expense | (586) | 51 | (23) | (916) | (1 474) |
| General and administrative expenses including: | (178 104) | (20 753) | (15 059) | (3 114) | (217 030) |
| - amortization | (14 959) | (1 882) | (689) | (648) | (18 178) |
| Net impairment losses | (65 136) | (1 009) | 0 | 0 | (66 145) |
| Operating profit/loss | 6 351 | 13 234 | 25 523 | (2 229) | 42 879 |
| Gross profit (loss) | 6 351 | 13 234 | 25 523 | (2 229) | 42 879 |
| Income tax | 0 | 0 | 0 | (8 948) | (8 948) |
| Net financial profit/loss for the current period | 6 351 | 13 234 | 25 523 | (11 177) | 33 931 |
| * Gain/loss on financial instruments measured at fair value through profit or loss, gain/loss on foreign exchange transactions (including derivatives) and gain/loss on investing activities | |||||
| Period | Consumer segment | Institutional segment | Segment of settlement and treasury |
Unallocated items | Total |
|---|---|---|---|---|---|
| From 1 January 2014 | |||||
| to 31 December 2014 | |||||
| PLN’000 | PLN’000 | PLN’000 | PLN’000 | PLN’000 | |
| Net interest income | 222 091 | 28 631 | 18 083 | (655) | 268 150 |
| - sales to external customers | 222 292 | 22 738 | 23 775 | (655) | 268 150 |
| - sales to other segments | (201) | 5 893 | (5 692) | 0 | 0 |
| Net fee and commission income | 32 089 | 10 827 | 15 177 | 1 564 | 59 657 |
| Other revenue and expenses related to banking operations* | 0 | 0 | 4 533 | 0 | 4 533 |
| Profit/loss on banking operations | 254 180 | 39 458 | 37 793 | 909 | 332 340 |
| Other operating revenue and expense | 3 875 | (265) | 25 | (1 195) | 2 440 |
| General and administrative expenses including: | (172 011) | (27 964) | (15 207) | (3 440) | (218 622) |
| - amortization | (16 345) | (2 728) | (1 159) | (572) | (20 804) |
| Net impairment losses | (54 222) | (6 791) | 0 | 0 | (61 013) |
| Operating profit/loss | 31 822 | 4 438 | 22 611 | (3 726) | 55 145 |
| Gross profit (loss) | 31 822 | 4 438 | 22 611 | (3 726) | 55 145 |
| Income tax | 0 | 0 | 0 | (11 506) | (11 506) |
| Net financial profit/loss for the current period | 31 822 | 4 438 | 22 611 | (15 232) | 43 639 |
| * Gain/loss on financial instruments measured at fair value through profit or loss, gain/loss on foreign exchange transactions (including derivatives) and gain/loss on investing activities | |||||
The consumer and institutional segment assets comprise items directly allocated to the segment, such as net loans and advances granted to the Group’s customers and the following items allocated to individual segments for management accounting purposes: cash in hand, current accounts in other banks, property, plant and equipment, intangible assets, net deferred tax assets and other assets. The settlement and treasury segment assets comprise items directly allocated to the segment, such as cash deposited in the Central Bank, receivables from securities purchased under reverse repo and buy-sell-back agreements, financial assets held for trading, hedging financial instruments and investment financial assets.
The equity and liabilities of the consumer and institutional segment comprise liabilities directly allocated to customers, current liabilities to the Central Bank and other banks and the following items of equity and liabilities allocated to the segments for management accounting purposes: provisions, current tax liabilities, other liabilities and total equity. The settlement and treasury segment liabilities comprise directly allocated fixed-term liabilities to other banks, individually negotiated deposits of Poczta Polska S.A., liabilities arising from securities sold under repo and sell-buy-back agreements, liabilities held for trading, subordinated liabilities, liabilities due to issue of debt securities and financial hedges.
| Balance as at | Consumer segment | Institutional segment | Segment of settlement and treasury |
Unallocated items | Total |
|---|---|---|---|---|---|
| 31 December 2015 | |||||
| PLN’000 | PLN’000 | PLN’000 | PLN’000 | PLN’000 | |
| Aktywa segmentu | 4 711 723 | 814 971 | 1 702 244 | (15 908) | 7 213 030 |
| Segment liabilities and equity | 4 919 151 | 1 297 821 | 1 011 966 | (15 908) | 7 213 030 |
| Balance as at | Consumer segment | Institutional segment | Segment of settlement and treasury |
Unallocated items | Total |
|---|---|---|---|---|---|
| 31 December 2014 | |||||
| PLN’000 | PLN’000 | PLN’000 | PLN’000 | PLN’000 | |
| Segment assets | 4 529 748 | 923 330 | 2 280 125 | (14 176) | 7 719 027 |
| Segment liabilities and equity | 5 035 378 | 1 373 920 | 1 323 905 | (14 176) | 7 719 027 |
In 2015, revenue from the key counterparty of the Group disclosed in the value of a payment received amounted to PLN 17,031 thousand, as compared to PLN 16,648 thousand in 2014.