INTERIM REPORT 2011 OF BANK ZACHODNI WBK GROUP

Transcription

1 INTERIM REPORT 2011 OF BANK ZACHODNI WBK GROUP 2011

2 FINANCIAL HIGHLIGHTS PLN k EUR k for reporting period ended: Interim consolidated financial statements I Net interest income II Net fee and commission income III Operating profit IV Profit before tax V Net profit attributable to owners of BZ WBK S.A VI Total net cash flow ( ) ( ) VII Total assets VIII Deposits from banks and central bank IX Deposits from customers X Total liabilities XI Total equity XII Non-controlling interests in equity XIII Profit of the period attributable to non-controlling interests XIV Number of shares XV Net book value per share in PLN/EUR 93,73 85,49 23,51 20,62 XVI Solvency ratio 15,76% 13,67% XVII Profit per share in PLN/EUR 8,77 6,62 2,21 1,65 XVIII Diluted earnings per share in PLN/EUR 8,76 6,60 2,21 1,65 XIX Declared or paid dividend per share in PLN/EUR 8,00 4,00 2,01 0,96 Interim stand alone financial statements I Net interest income II Net fee and commission income III Operating profit IV Profit before tax V Profit for the period VI Total net cash flow ( ) ( ) VII Total assets VIII Deposits from banks and central bank IX Deposits from customers X Total liabilities XI Total equity XII Number of shares XIII Net book value per share in PLN/EUR 85,56 77,82 21,46 18,77 XIV Solvency ratio 15,26% 13,16% XV Profit per share in PLN/EUR 9,21 6,76 2,32 1,69 XVI Diluted earnings per share in PLN/EUR 9,20 6,75 2,32 1,69 XVII Declared or paid dividend per share in PLN/EUR 8,00 4,00 2,01 0,96 FINANCIAL HIGHLIGHTS for the period ended Consolidated statement of financial position Statement of financial position PLN k EUR k PLN k EUR k I Total assets II Deposits from banks and central bank III Deposits from customers IV Total liabilities V Total equity VI Non-controlling interests in equity The following rates were applied to determine the key EUR amounts for selected financials: for balance sheet items PLN rate to EUR as at stated by National Bank of Poland (NBP), PLN rate to EUR as at and PLN rate to EUR as at for profit and loss items as at : (an average PLN mid-rate to EUR in NBP on the last day of each month in 1H 2011), as at : (an average PLN mid-rate to EUR in NBP on the last day of each month in 1H 2010) As at, FX denominated balance sheet positions were converted into PLN in line with the NBP FX table no. 125/A/NBP 2011 dd..

3 CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF BANK ZACHODNI WBK GROUP FOR THE 6-MONTH PERIOD ENDED 30 JUNE

4 BZ WBK Group for the 6-month period ended 30 June Table of Contents Consolidated income statement... 5 Consolidated statement of comprehensive income... 5 Consolidated statement of financial position... 6 Movements on consolidated equity... 7 Consolidated statement of cash flows... 8 Additional notes to consolidated financial statements General information about issuer Basis of preparation of interim consolidated financial statements Segment reporting Risk management Capital management Net interest income Net fee and commission income Net trading income and revaluation Gains (losses) from other financial securities Impairment losses on loans and advances Employee costs General and administrative expenses Corporate income tax Cash and balances with central banks Loans and advances to banks Financial assets and liabilities held for trading Loans and advances to customers Investment securities available for sale Financial assets held to maturity Investments in associates and joint ventures Deposits from central bank Deposits from banks Deposits from customers Contingent liabilities Basis of FX conversion Shareholders with min. 5% voting power Related party disclosures Acquisitions and disposals of investments in subsidiaries and associates Changes in the business or economic circumstances that affect the fair value of the entity s financial assets and financial liabilities, whether those assets or liabilities are recognized at fair value or amortised costs Any loan default or breach of a loan agreement that has not been remedied on or before the end of the reporting period Transfers between levels of the fair value hierarchy used in measuring the fair value of financial instruments Changes in the classification of financial assets as a result of a change in the purpose or use of those assets Comments concerning the seasonal or cyclical character of the annual activity Character and amounts of items which are extraordinary due to their nature, volume or occurrence Issues, repurchases and repayments of debt and equity securities Events which occurred subsequently to the end of the interim period Share based payments Dividend per share Change of majority shareholder... 39

5 In thousands of PLN BZ WBK Group for the 6-month period ended 30 June Consolidated income statement for reporting period: Interest income Interest expense ( ) ( ) ( ) ( ) Net interest income Note Fee and commission income Fee and commission expense ( ) ( ) ( ) ( ) Net fee and commission income Note Dividend income Net trading income and revaluation Note Gains (losses) from other financial securities Note Other operating income Impairment losses on loans and advances Note 10 ( ) ( ) ( ) ( ) Operating expenses incl.: ( ) ( ) ( ) ( ) Bank's staff, operating expenses and management costs Notes 11,12 ( ) ( ) ( ) ( ) Depreciation/amortisation ( ) ( ) ( ) ( ) Other operating expenses ( 9 398) ( ) ( 7 594) ( ) Operating profit Share in net profits (loss) of entities accounted for by the equity method Profit before tax Corporate income tax Note 13 ( ) ( ) ( ) ( ) Profit for the period of which: attributable to owners of BZ WBK S.A attributable to non-controlling interests Net earnings per share (PLN/share) Basic earnings per share 5,08 8,77 3,42 6,62 Diluted earnings per share 5,07 8,76 3,42 6,60 Consolidated statement of comprehensive income for reporting period: Profit for the period Other comprehensive income: Available-for sale financial assets valuation (32 934) Cash flow hedges valuation Other comprehensive income for the period, net of income tax (23 982) TOTAL COMPREHENSIVE INCOME FOR THE PERIOD Attributable to: owners of BZ WBK S.A non-controlling interests

6 6 BZ WBK Group for the 6-month period ended 30 June 2011 Consolidated statement of financial position In thousands of PLN as at: ASSETS Cash and balances with central banks Note Loans and advances to banks Note Financial assets held for trading Note Hedging derivatives Loans and advances to customers Note Investment securities Notes 18, Investments in associates and joint ventures Note Intangible assets Property, plant and equipment Net deferred tax assets Other assets Total assets LIABILITIES Deposits from central bank Note Deposits from banks Note Hedging derivatives Financial liabilities held for trading Note Deposits from customers Note Subordinated liabilities Note Current income tax liabilities Other liabilities Total liabilities Equity Equity attributable to owners of BZ WBK S.A Share capital Other reserve funds Revaluation reserve Retained earnings Profit of the current period Non-controlling interests in equity Total equity Total equity and liabilities

7 In thousands of PLN BZ WBK Group for the 6-month period ended 30 June Movements on consolidated equity Movements on consolidated equity Share capital Other reserve funds Revaluation reserve Retained earnings and profit for the period Non-controlling interests in equity Total Opening balance as at Total comprehensive income Transfer to other capital ( ) - - Dividend relating to ( ) ( ) ( ) Share scheme charge Other - ( 135) ( 135) As at As at the end of the period revaluation reserve in the amount of PLN k comprises of debt securities and equity shares classified as available for sale of PLN k and PLN k respectively and additionally cash flow hedge activities of PLN k. The revaluation reserve relates to the securities designated as available-for-sale. Movements on consolidated equity Share capital Other reserve funds Revaluation reserve Retained earnings and profit for the period Non-controlling interests in equity Total Opening balance as at Total comprehensive income Transfer to other capital ( ) - - Dividend relating to ( ) ( ) ( ) Other As at As at the end of the period revaluation reserve in the amount of PLN k comprises of debt securities and equity shares classified as available for sale of PLN k and PLN k respectively and additionally cash flow hedge activities of PLN k. The revaluation reserve relates to the securities designated as available-for-sale. Movements on consolidated equity Share capital Other reserve funds Revaluation reserve Retained earnings and profit for the period Non-controlling interests in equity Total Opening balance as at Total comprehensive income Transfer to other capital ( ) - - Dividend relating to ( ) ( ) ( ) As at As at the end of the period revaluation reserve in the amount of PLN k comprises of debt securities and equity shares classified as available for sale of PLN k and PLN k respectively and additionally cash flow hedge activities of PLN k. The revaluation reserve relates to the securities designated as available-for-sale.

8 8 BZ WBK Group for the 6-month period ended 30 June 2011 In thousands of PLN Consolidated statement of cash flows for reporting period: Profit before tax Total adjustments: ( ) Share in net profits (losses) of entities accounted for by the equity method ( 4 897) ( 1 366) Depreciation/amortisation Impairment losses ( 113) ( 184) Gains (losses) on exchange differences ( 4 888) 631 Interests and similar charges Dividend received ( ) ( ) (Profit) loss from investing activities ( 3 875) ( 8 754) Change in provisions ( ) ( ) Change in trading portfolio financial instruments Change in loans and advances to banks ( 530) ( 332) Change in loans and advances to customers ( ) Change in deposits from banks ( ) Change in deposits from customers ( ) Change in other assets and liabilities Paid income tax ( ) ( ) Other adjustments Net cash flow from operating activities Inflows Sale/maturity of investment securities Sale of intangible assets and property, plant and equipment Dividend received Proceeds from other investments 5 5 Outflows ( ) ( ) Purchase of subsidiaries, associates and joint ventures ( 18) - Purchase of investment securities ( ) ( ) Purchase of intangible assets and property, plant and equipment ( ) ( ) Other investments ( 17) ( 24) Net cash flow from investing activities ( ) Inflows Drawing of long-term loans Outflows ( ) ( ) Repayment of long-term loans ( ) ( ) Dividends and other payments to shareholders ( ) ( ) Other financing outflows ( ) ( ) Net cash flow from financing activities ( ) ( ) Total net cash flow ( ) Cash at the beginning of the accounting period Cash at the end of the accounting period

9 In thousands of PLN BZ WBK Group for the 6-month period ended 30 June Additional notes to consolidated financial statements 1. General information about issuer Bank Zachodni WBK S.A. is a bank seated in Poland, Wrocław, Rynek 9/11, TIN , National Official Business Register number (REGON) , registered in the District Court for Wrocław-Fabryczna, VI Economic Unit of the National Court Registry under number. The interim consolidated financial statements of Bank Zachodni WBK S.A. includes bank s stand alone financial information as well as information from its subsidiaries (all together called Group), share of net assets of associated entities and joint ventures. The direct parent of Bank Zachodni WBK SA is Banco Santander, S.A. seated in Santander, Spain. On 10 September 2010, the Board of Allied Irish Banks plc, resolved to sell its entire stake in Bank Zachodni WBK and 50% of shares in BZ WBK AIB Asset Management S.A. to Banco Santander. On 18 February 2011, the Polish Financial Supervision Authority (KNF) issued a decision stating that there were no grounds to object to the intended direct acquisition by Banco Santander of Bank Zachodni WBK shares representing more than 50% of voting rights at the General Meeting of Shareholders. On 1 April 2011, Banco Santander finalised the purchase of 95.67% stake in the Bank. Consequently, Bank Zachodni WBK joined Santander Group. As a consequence of Banco Santander s exceeding a 90% share in the total voting power at the General Meeting of Shareholders of Bank Zachodni WBK, the non-controlling shareholders became entitled to demand that their shares be acquired by the majority shareholder. Based on the requests from the shareholders, Banco Santander acquired additional shares of Bank Zachodni WBK, thus increasing its share in the share capital and voting power at the General Meeting of Shareholders to 96.25%. BZ WBK Group offers a wide range of banking services for individual and business customers and operates in domestic and interbank foreign markets. Additionally, it offers also the following services: intermediation in trading securities, leasing, factoring, asset/ fund management, insurance services, trading in stock and shares of commercial companies. Group of Bank Zachodni WBK consists of the following entities: Subsidiaries: Registered % of votes on AGM % of votes on AGM Subsidiaries office 1. BZ WBK Finanse Sp. z o.o. Poznań BZ WBK Faktor Sp. z o.o. Warszawa 100% of AGM votes is held by BZ WBK Finanse Sp. z o.o. 100% of AGM votes is held by BZ WBK Finanse Sp. z o.o 3. BZ WBK Inwestycje Sp. z o.o. Poznań Dom Maklerski BZ WBK S.A. Poznań BZ WBK Finanse & Leasing S.A. Poznań 99.99% of AGM votes is held by BZ WBK Finanse Sp. z o.o % of AGM votes is held by BZ WBK Finanse Sp. z o.o. 6. BZ WBK Leasing S.A. Poznań 99.99% of AGM votes is held by BZ WBK Finanse Sp. z o.o % of AGM votes is held by BZ WBK Finanse Sp. z o.o. 7. BZ WBK Nieruchomości S.A. Poznań BZ WBK Asset Management S.A.* Poznań BZ WBK Towarzystwo Funduszy Inwestycyjnych S.A. Poznań 100% of AGM votes is held by BZ WBK Asset Management S.A. 100% of AGM votes is held by BZ WBK Asset Management S.A.

10 10 BZ WBK Group for the 6-month period ended 30 June 2011 In thousands of PLN * In case of BZ WBK Asset Management S.A., the Bank is a co-owner of the company together with Banco Santander, S.A.. Both owners of BZ WBK Asset Management S.A. holds an equal stake of 50% in the company s share capital. In practice, Bank Zachodni WBK S.A. exercises control over the company and its subsidiary, BZ WBK Towarzystwo Funduszy Inwestycyjnych S.A., because through it Banco Santander pursues its policy in Poland. Therefore the company is treated as a subsidiary undertaking. Associates: Associates Registered office % of votes on AGM % of votes on AGM 1. POLFUND - Fundusz Poręczeń Kredytowych S.A. Szczecin Metrohouse & Partnerzy S.A.* Warszawa Krynicki Recykling S.A.* Warszawa Holicon Group S.A.* Poznań *these are the associates of BZ WBK Inwestycje Sp. z o.o - bank's subsidiary. They are accounted for using the equity method. Purchase of shares was a part of building a portfolio of pre-ipo type own investment. Joint ventures: Joint ventures Registered office % of votes on AGM % of votes on AGM 1. BZ WBK-Aviva Towarzystwo Ubezpieczeń Ogólnych S.A. Poznań BZ WBK-Aviva Towarzystwo Ubezpieczeń na Życie S.A. Poznań Joint ventures are accounted for using the equity method. 2. Basis of preparation of interim consolidated financial statements In comparison with annual financial statements content of an interim financial report is condensed, therefore it should be read in conjunction with the financial statements of Bank Zachodni WBK Group for the year The consolidated financial statements of the Group for the year 2010 are available at the Bank s official website: Statement of compliance Bank Zachodni WBK Group for the period from 1 January 2011 to 30 June 2011 were prepared in accordance with the International Accounting Standard 34 Interim Financial Reporting as adopted by the European Union and other applicable regulations. In accordance with Decree of the Ministry of Finance dated 19 February 2009 on current and periodic information provided by issuers of securities and the conditions for recognition as equivalent information required by the law of a non-member State (Official Journal from 2009, No 33, item 259 as amended), the Bank is required to publish the financial results for the three months ended 30 June 2011 which is deemed to be the current interim financial reporting period. Accounting policies The condensed interim consolidated financial statements are presented in PLN, rounded to the nearest thousand. The accounting policies have been applied consistently by Group entities. Taking into account the exceptions below, as described in the Comparability with profit or loss for previous accounting periods section the accounting policies applied by the Group in these condensed interim consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December Comparability with results of previous periods For the purpose of comparability of data, the following material presentation changes were made in: a) the consolidated statement of financial position: settlements on account of matured and unpaid derivative instruments with bank customers have been moved from Financial assets held for trading to Loans and advances to customers, as presented below.

11 In thousands of PLN BZ WBK Group for the 6-month period ended 30 June Prior adjustment Adjustment After adjustment Financial assets held for trading (89) Loans and advances to customers b) statement of cash flows: as a result of changes in the interpretation of IAS 7, the definition of cash components was revised and applied. Since 2009 cash components have included other liquid financial assets with original maturity up to 3 months. The details of reclassification are presented in the table below Cash components: Before revision After revision Before revision After revision Cash and current accounts in central bank Deposits in other banks, current account Debt securities held for trading Debt securities available for sale Total The changes were made to appropriate items of the statement of cash flows, i.e.: a) Change in loans and advances to banks, b) Change in trading portfolio financial instruments, c) Purchase/sale of investment securities. Changes in judgments and estimates The significant judgment and the key sources of estimation uncertainty were the same as those that applied to the Annual Report for 2010, except for those outlined below. As of the publication date of the financial statements, the legislative process related to changes in the pension system had already been completed. Among others, premiums allocated to open pension schemes have been reduced. This change had an adverse impact on the value of PTE Aviva shares. The value of shares was assessed as of 30 June 2011, based on laws and systems applicable at that time. Their carrying value, measured as a reasonably estimated fair value, was PLN k (as of 31 December PLN k). New standards and interpretations or changes to existing standards or interpretations which can be applicable to BZ WBK Group and are not yet effective or have neither been implemented earlier IFRS Description of changes Effective from Impact on the Group IFRS 9 Financial Instruments Changes in classification and measurement - the existing categories of financial instruments to be replaced by two measurement categories, i.e. amortised cost and fair value. 1 January 2013 The Group has not completed its analysis of changes to IFRS 9 IFRS 7 Financial instruments: disclosures The change requires disclosure of information so that the readers of the financial statements may: understand the relation between the transferred financial asset which has not been fully excluded from the financial statements and the underlying financial obligations as well as assess the nature of the asset, associated risks and exposure towards the excluded asset. The change includes definition of continous engagement to ensure compliance with disclosure requirements. 1 July 2011 Amendments to IFRS 7 will not have material impact over financial statement

12 12 BZ WBK Group for the 6-month period ended 30 June 2011 In thousands of PLN IFRS 10 Consolidated Financial Statements New standard supersedes the previous version of IAS 27 (2008) Consolidated and Separate Financial Statements together with the related interpretation SIC 12 Consolidation-Special Purpose Entities. Establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. 1 January 2013 The Group has not completed its analysis of changes IFRS 11 Joint Arrangements Supersedes SIC 13 Jointly Controlled Entities Non- Monetary Contributions by Ventures 1 January 2013 The Group has not completed its analysis of changes IFRS 12 Disclosures of Interests in Other Entities New standard requires the disclosure of information that enables users of financial statements to evaluate: - the nature of, and risks associated with, its interests in other entities; - the effects of those interests on its financial position, financial performance and cash flows 1 January 2013 The Group has not completed its analysis of changes IFRS 13 Fair Value Measurement IFRS establishes a framework for measuring fair value and sets out disclosure requirements for fair value measurements. IFRS 13 explains how to measure fair value when it is required by other IFRSs. 1 January 2013 The Group has not completed its analysis of changes IAS 27 Separate Financial Statements IAS 27 has the objective of setting standards to be applied in accounting for investments in subsidiaries, jointly ventures, and associates when an entity elects, or is required by local regulations, to present separate (non-consolidated) financial statements. 1 January 2013 The Group has not completed its analysis of changes IAS 28 Investments in Associates and Joint Ventures The change prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. 1 January 2013 The Group has not completed its analysis of changes 3. Segment reporting Operational activity of the BZ WBK S.A. Group has been divided into five segments: Retail Banking, Business Banking, Investment Banking, Treasury and Centre. They were identified based on customers and product types. Income and costs assigned to a given segment are generated on sale and service of products or services in the segment, according to description presented below. Such income and costs are recognized in the profit and loss account for the Group and may be assigned to a given segment either directly or based on reasonable assumptions. Settlements among business segments apply to payments for delivered services and include: sale and/or service of customers assigned to a given segment, via sale/service channels operated by another segment; sharing of income and costs on transactions in cases where a transaction is processed for a customer assigned to a different segment; sharing of income and cost of delivery of common projects. Income and cost allocations are regulated by segments on a mutual basis, according to single rates for specific services or agreements concerning the breakdown of total income and/or cost. Assets and liabilities of a given segment are used for the operational activity and may be assigned to the segment directly or on a reasonable basis.

13 In thousands of PLN BZ WBK Group for the 6-month period ended 30 June The principles of income and cost identification, as well as assets and liabilities for segmental reporting purposes are consistent with the accounting policy applied in Bank Zachodni WBK Group. Thereby there are no discrepancies between the valuation of segments profit or loss, assets or liabilities, presented to the Management Board and the valuation of these components for the Group, included in the consolidated financial statement. Retail Banking Retail Banking segment includes products and services targeted at individual customers as well as small and micro companies. In the offer for customers of this segment there are a wide range of savings products, consumer and mortgage loans, credit and debit cards, insurance and investment products, clearing services, GSM phones top-ups, foreign payments and Western Union and private-banking services. For small and micro companies, the segment provides, among others, lending and deposit taking services, cash management services, leasing, factoring, letters of credit and guarantees. Retail Banking Segment also renders services for retail customers of third party financial institutions (in-sourcing services). Business Banking Business Banking segment covers products and activities targeted at business entities, local governments and the public sector. In addition to banking services covering lending and deposit activities, the segment provides services in the areas of cash management, leasing, factoring, trade financing and guarantees. Investment Banking Investment Banking segment includes such activities as underwriting financing via issue of securities, financial advisory services, brokerage services provided by Brokerage House and asset management services within investment funds and private portfolios, management of strategic investments of the bank (dividends). Treasury Treasury is responsible for the management of the bank's liquidity, interest rate risk and foreign exchange rate risks. It also provides interest rate and fx risk management products to the bank's customer base. Through its presence in the wholesale markets, it also generates revenues from interest rate and fx risk positioning activity. Centre The segment covers central operations, financing of other Groups segments activity as well as other income and/or costs that cannot be reasonably assigned to one of the defined segments.

14 14 BZ WBK Group for the 6-month period ended 30 June 2011 Consolidated income statement (by business segments) In thousands of PLN Retail Banking Business Banking Investment Banking Treasury Centre Total Net interest income ( ) incl. internal transactions - ( ) Other income incl. internal transactions ( ) ( ) ( 441) - Dividend income Operating costs ( ) ( ) ( ) ( ) ( ) ( ) incl. internal transactions ( ) ( 3 237) Depreciation/amortisation ( ) ( 7 103) ( 4 966) ( 1 728) ( 149) ( ) Impairment losses on loans and advances ( ) ( ) ( ) Share in net profits (loss) of entities accounted for by the equity method Profit before tax Corporate income tax ( ) Non-controlling interests ( ) Profit for the period Consolidated statement of financial position (by business segment) Retail Banking Business Banking Investment Banking Treasury Centre Total Loans and advances to customers Investments in associates and joint ventures Other assets Total assets Deposits from customers Other liabilities and equity Total equity and liabilities

15 In thousands of PLN BZ WBK Group for the 6-month period ended 30 June Consolidated income statement (by business segments) Retail Banking Business Banking Investment Banking Treasury Centre Total Net interest income ( ) incl. internal transactions - ( ) Other income incl. internal transactions ( ) ( ) Dividend income Operating costs ( ) ( ) ( ) ( ) ( 4 405) ( ) incl. internal transactions ( ) ( 2 314) Depreciation/amortisation ( ) ( 6 225) ( 4 611) ( 1 550) ( 627) ( ) Impairment losses on loans and advances ( ) ( ) Share in net profits (loss) of entities accounted for by the equity method Profit before tax Corporate income tax ( ) Non-controlling interests ( ) Profit for the period Consolidated statement of financial position (by business segment) Retail Banking Business Banking Investment Banking Treasury Centre Total Loans and advances to customers Investments in associates and joint ventures Other assets Total assets Deposits from customers Other liabilities and equity Total equity and liabilities

16 16 BZ WBK Group for the 6-month period ended 30 June 2011 In thousands of PLN 4. Risk management During the first six months of 2011 BZ WBK Group carried out risk management activities based on the same policies and rules as described in Consolidated Financial Statements for As far as risk management is concerned, there are no significant changes in BZ WBK Capital Group during the reporting period except those listed below. Credit risk As far as credit risk management is concerned, there are no significant changes in BZ WBK Capital Group during the reporting period except those listed below. Continued pro-active credit risk management is recognised as key to the Group s performance in the volatile market conditions. The Group carries it out by: on-going improvement of risk assessment tools and credit policies aimed at ensuring the balanced growth of high quality credit book, and tight control and monitoring of individual credit portfolios. Good quality of the credit portfolio confirms the effectiveness of taken actions. The risk profile of the Group s credit portfolios has remained stable with an improvement trend with regard to some retail portfolios. The Group s credit risk management depends among others on internal ratings that, for presentational purposes, are grouped in provision cover differentiated classes. The table below presents a breakdown of BZ WBK Group s financial instruments into classes which correspond to different levels of impairment. There are separate percentage levels for unimpaired portfolio (both for the past-due and non-past due ) and for impaired portfolio (identical for individually and collectively impaired).

17 In thousands of PLN BZ WBK Group for the 6-month period ended 30 June Provision cover Loans and advances to customers Loans and advances to banks Investment securities Financial assets held for trading* Individually impaired up to 50% % - 70% % - 85% over 85% Gross amount Charge due to impairment losses ( ) Net amount Collectively impaired up to 50% % - 70% % - 85% over 85% Gross amount Charge due to impairment losses ( ) Net amount IBNR portfolio up to 0,10% ,10% - 0,30% ,30% - 0,65% over 0,65% Gross amount IBNR ( ) Net amount Other receivables Off-balance sheet exposures Financing granted Guarantees Nominal value of derivatives - purchased Allowance for impairment ( ) Off-balance sheet exposures - total *the value of financial assets held for trading includes adjustment of the fair value as described in Note 16

18 18 BZ WBK Group for the 6-month period ended 30 June 2011 In thousands of PLN Provision cover Loans and advances to customers Loans and advances to banks Investment securities Financial assets held for trading* Individually impaired up to 50% % - 70% % - 85% over 85% Gross amount Charge due to impairment losses ( ) Net amount Collectively impaired up to 50% % - 70% % - 85% over 85% Gross amount ( ) Net amount IBNR portfolio up to 0,10% ,10% - 0,30% ,30% - 0,65% over 0,65% Gross amount IBNR ( ) Net amount Other receivables Off-balance sheet exposures Financing granted Guarantees Nominal value of derivatives - purchased Allowance for impairment ( ) Off-balance sheet exposures - total *the value of financial assets held for trading includes adjustment of the fair value as described in Note 16

19 In thousands of PLN BZ WBK Group for the 6-month period ended 30 June Provision cover Loans and advances to customers Loans and advances to banks Investment securities Financial assets held for trading* Individually impaired up to 50% % - 70% % - 85% over 85% Gross amount Charge due to impairment losses ( ) Net amount Collectively impaired up to 50% % - 70% % - 85% over 85% Gross amount Charge due to impairment losses ( ) Net amount IBNR portfolio up to 0,10% ,10% - 0,30% ,30% - 0,65% over 0,65% Gross amount IBNR ( ) Net amount Other receivables Off-balance sheet exposures Financing granted Guarantees Nominal value of derivatives - purchased Allowance for impairment ( ) Off-balance sheet exposures - total *the value of financial assets held for trading includes adjustment of the fair value as described in Note 16 IBNR portfolio Loans and advances to customers Non-past due Past-due days days days > 90 days Gross amount

20 20 BZ WBK Group for the 6-month period ended 30 June 2011 Allowances for impairment by classes In thousands of PLN Provision cover Loans and advances to customers Loans and advances to banks Individual allowance for impairment up to 50% ( ) ( ) ( ) % - 70% ( ) ( ) ( ) % - 85% ( ) ( ) ( ) over 85% ( ) ( ) ( ) Total individual allowance for impairment ( ) ( ) ( ) Collective allowance for impairment up to 50% ( ) ( ) ( ) % - 70% ( ) ( ) ( ) % - 85% ( ) ( ) ( ) over 85% ( ) ( ) ( ) Total collective allowances for impairment ( ) ( ) ( ) IBNR up to 0,10% ( 6 437) ( 5 959) ( 6 248) ,10%-0,30% ( ) ( ) ( ) ,30%-0,65% ( ) ( ) ( ) over 0,65% ( ) ( ) ( ) Total IBNR ( ) ( ) ( ) Total allowance for impairment ( ) ( ) ( ) Market risk As far as market risk management is concerned, there are no significant changes in BZ WBK Capital Group during the reporting period except those listed below: The unit responsible for ongoing risk measurement, control, monitoring and reporting was moved from the Treasury Division to the Risk Management Division. Market Risk Monitoring Team, responsible for independent risk monitoring as well as measurement policy and methodology, was merged with the foregoing unit. Interest rate risk The table below presents risk levels in 1H 2011, 1H 2010 and as at end (both measures assume 1 month holding time horizon): Interest rate risk VaR Stress scenario 1 month holding period Average High Low as at end of the period The Treasury Division operates within an operational VaR risk limit, which amounted to PLN k (EUR k) at the end of June The tables below present the sensitivity of trading and banking portfolios at the end of June 2011 and comparable periods:

21 In thousands of PLN BZ WBK Group for the 6-month period ended 30 June Interest Rate Risk (PLN k) Sensitivity parallel increase of yield curves by 1 bp Trading book Banking book Total 0-3m ( 13) ( 28) ( 41) 3m-1Y ( 95) 46 ( 49) 1Y-5Y 22 ( 438) ( 416) over 5Y 4 ( 30) ( 26) Total ( 82) ( 450) ( 532) Interest Rate Risk (PLN k) Sensitivity parallel increase of yield curves by 1 bp Trading book Banking book Total 0-3m 11 ( 80) ( 69) 3m-1Y ( 71) Y-5Y ( 3) ( 363) ( 366) over 5Y ( 6) ( 33) ( 39) Total ( 69) ( 394) ( 463) Interest Rate Risk (PLN k) Sensitivity parallel increase of yield curves by 1 bp Trading book Banking book Total 0-3m ( 2) ( 37) ( 39) 3m-1Y ( 16) Y-5Y ( 7) ( 465) ( 472) over 5Y ( 6) ( 70) ( 76) Total ( 31) ( 540) ( 571) The following tables present interest rate sensitivities of each NIRIL portfolios at the end of June 2011 and 2010 and December 2010: Interest Rate Risk (PLN k) Sensitivity parallel increase of yield curves by 1 bp Business portfolio Capital portfolio Total 0-3m 25 ( 1) 24 3m-1Y ( 90) ( 60) ( 150) 1Y-5Y ( 1 097) ( 774) ( 1 871) over 5Y ( 323) ( 1 079) ( 1 402) Total ( 1 485) ( 1 914) ( 3 399) Interest Rate Risk (PLN k) Sensitivity parallel increase of yield curves by 1 bp Business portfolio Capital portfolio Total 0-3m m-1Y ( 48) ( 43) ( 91) 1Y-5Y ( 873) ( 821) ( 1 694) over 5Y ( 120) ( 805) ( 925) Total ( 1 027) ( 1 669) ( 2 696) Interest Rate Risk (PLN k) Sensitivity parallel increase of yield curves by 1 bp Business portfolio Capital portfolio Total 0-3m m-1Y ( 116) ( 42) ( 158) 1Y-5Y ( 891) ( 651) ( 1 542) over 5Y ( 143) ( 835) ( 978) Total ( 1 132) ( 1 528) ( 2 660)

22 22 BZ WBK Group for the 6-month period ended 30 June 2011 FX risk In thousands of PLN As far as FX risk management is concerned, there are no significant changes in BZ WBK Capital Group during the reporting period except those listed below. The table below presents risk levels in June 2011 and 2010 and December 2010 (data for both measures are scaled to 1 month holding period to make it comparable): FX risk VaR Stress scenario 1 month holding period Average High Low as at end of the period The Treasury Division operates within an VaR risk limit, which amounted to PLN k (EUR k). The tables below present currency breakdown of selected items of consolidated statement of financial position as at, and. PLN EUR CHF Other Total ASSETS Cash and balances with central banks Loans and advances to banks Loans and advances to customers Investment securities Selected assets LIABILITIES Deposits from banks Deposits from customers Subordinated liabilities Selected liabilities PLN EUR CHF Other Total ASSETS Cash and balances with central banks Loans and advances to banks Loans and advances to customers Investment securities Selected assets LIABILITIES Deposits from banks Deposits from customers Subordinated liabilities Selected liabilities PLN EUR CHF Other Total ASSETS Cash and balances with central banks Loans and advances to banks Loans and advances to customers Investment securities Selected assets LIABILITIES Deposits from central bank Deposits from banks Deposits from customers Selected liabilities

23 In thousands of PLN BZ WBK Group for the 6-month period ended 30 June Equity investment risk As far as price risk of equity instruments portfolio management is concerned, there are no significant changes in BZ WBK Capital Group during the reporting period except those listed below. The table below presents risk levels in half-year 2011 and comparable periods: Equity risk VaR Stress scenario 1 day holding period Average High Low as at end of the period Brokerage House operates within an operational limit PLN k. During the reporting period no excesses above the VaR limit were observed. Liquidity risk As far as liquidity risk management is concerned, there are no significant changes in BZ WBK Capital Group during the reporting period except those listed below. Liquidity Policy Report- Modified Liquidity Gap: Liquidity risk <1W <1M >1M Qualifying Liquid Assets Treasury inflows Other inflows Treasury outflows ( ) ( ) ( ) Other outflows ( ) ( ) ( ) GAP ( ) Cumulative GAP Liquidity risk <1W <1M >1M Qualifying Liquid Assets Treasury inflows Other inflows Treasury outflows ( ) ( ) ( ) Other outflows ( ) ( ) ( ) GAP ( ) Cumulative GAP Liquidity risk <1W <1M >1M Qualifying Liquid Assets Treasury inflows Other inflows Treasury outflows ( ) ( ) ( ) Other outflows ( ) ( ) ( ) GAP ( ) ( ) Cumulative GAP The Treasury Division reported a growth in payments vis a vis YE 2010, mainly in connection with maturing short-term repo deals. Nevertheless, the Group still keeps the current assets at a safe level which ensures satisfactory liquidity. All key regulatory ratios for the Bank were kept at the required level in the current reporting period and in comparable periods. In 1H 2011 and in comparable periods all the regulatory measures have been kept at the required levels.

24 24 BZ WBK Group for the 6-month period ended 30 June 2011 Operating Risk In thousands of PLN As far as operating risk management is concerned, there are no significant changes in BZ WBK Capital Group during the reporting period. Legal & compliance risk As far as legal & compliance risk management is concerned there are no significant changes in BZ WBK Capital Group during the reporting period. 5. Capital management As far as capital management is concerned there are no significant changes in BZ WBK Capital Group during the reporting period. 6. Net interest income Interest income Loans and advances to enterprises Loans and advances to individuals, of which: Home mortgage loans Debt securities incl.: Investment portfolio available for sale Investment portfolio held to maturity Trading portfolio Leasing agreements Loans and advances to banks Other from public sector Reverse repo transactions Interest recorded on hedging IRS ( 2 837) ( 7 324) Total Interest expense Deposits from individuals ( ) ( ) ( ) ( ) Deposits from enterprises ( ) ( ) ( ) ( ) Repo transactions ( ) ( ) ( ) ( ) Public sector ( ) ( ) ( ) ( ) Deposits from banks ( 7 550) ( ) ( ) ( ) Subordinated liabilities ( 5 090) ( ) - - Total ( ) ( ) ( ) ( ) Net interest income