BNP PARIBAS BANK POLSKA S.A. INDEX
FINANCIAL STATEMENTS OF THE BANK AND THE ACTIVITY REPORT OF THE MANAGEMENT BOARD OF THE BANK 3
Separate statement of profit and loss4
Statement of other comprehensive income 7
Statement of financial position 7
Equity and capital ratios 8
Financial ratios 9
Assessment made by the Supervisory Board 10
REPORT OF THE MANAGEMENT BOARD ON ACTIVITY OF BANK BGŻ BNP PARIBAS S.A. CAPITAL GROUP IN 2015 10
RECOMMENDATION OF THE MANAGEMENT BOARD ON 2016 PROFIT ALLOCATION 10
FINANCIAL STATEMENTS OF THE BANK'S CAPITAL GROUP AND REPORT OF THE MANAGEMENT BOARD ON ACTIVITY OF BANK'S CAPITAL GROUP IN 2016 10
Consolidated financial statements 11
Selected financial data 11
Consolidated Statement of Profit or Loss 11
Statement of Comprehensive Income 15
Statement of Financial Position of the Capital Group 15
Equity and capital ratios 16
Equity and capital ratios 17
Assessment made by the Supervisory Board 18
REPORT OF THE MANAGEMENT BOARD ON ACTIVITY OF BANK BGŻ BNP PARIBAS S.A. CAPITAL GROUP IN 2016 18
ASSESSMENT OF ADEQUACY AND EFFECTIVENESS OF THE INTERNAL CONTROL SYSTEM AT THE BANK 18
ASSESSMENT OF ADEQUACY AND EFFECTIVENESS OF RISK MANAGEMENT WITH REGARD TO RISKS ESSENTIAL FOR THE BANK 19
CONCLUSION 20
FINANCIAL STATEMENTS OF THE BANK AND THE ACTIVITY REPORT OF THE MANAGEMENT BOARD OF THE BANK
Pursuant to Article 382 § 3 of the Code of Commercial Companies and § 20 paragraph 1 item 2) letter a), of the Articles of Association of the Bank, the Supervisory Board of Bank BGŻ BNP Paribas S.A. conducted an assessment of the financial statements of the Bank for the year ended 31 December 2016, the Management Board Report on the activities of Bank BGŻ BNP Paribas S.A., and the recommendation of the Management Board on the allocation of the profit for the year ended 31 December 2016.
The aforementioned assessment has been made based on:
The financial statements covering:
Statement of financial position prepared as at December 31, 2016 showing total assets PLN 70 381 933 thou.,
Profit and Loss account statement for the period from January 1, 2016 to December 31, 2016 showing net profit of PLN 49 388 thou.
Statement of total income for the period from January 1, 2016 to December 31, 2016, showing a total loss of PLN 148 770 thou.,
Statement of changes in total equity for the period from January 1, 2016 to December 31, 2016 disclosing a decrease in equity by PLN 41 964 thou.,
Cash-flow statement for the period from January 1, 2016 to December 31, 2016 disclosing a negative net cash in the amount of PLN 800 138 thou.,
and
Auditor's notes to financial statements.
Management Board Report on the activities of Bank BGŻ BNP Paribas S.A. in 2016.
Motion of the Management Board on the profit distribution for the year ended 31 December 2016.
Opinion and report of the independent statutory auditor - Deloitte Polska Spółka z ograniczoną odpowiedzialnością Spółka komandytowa. - appointed to audit the financial statements based on the resolution of the Supervisory Board No. 79/2015 of 11 June 2015.
The Supervisory Board states as follows:
FINANCIAL STATEMENTS
Based on the assessment of the financial statements of Bank BGŻ BNP Paribas S.A. for the year ended 31 December 2016, the Supervisory Board has concluded that these financial statements, in all material aspects, have been prepared:
in accordance with the International Financial Reporting Standards approved by the European Union;
based on properly maintained accounting records;
in accordance with the provisions of the law governing preparation of the financial statements and provisions of the Bank's Articles of Association influencing the form and content of the financial statements;
and give a fair and clear view of all information material for the evaluation of the financial result of business activities for the period from 1 January 2016 to 31 December 2016, as well as the economic and financial position of Bank BGŻ BNP Paribas S.A. as at 31 December 2016.
SELECTED FINANCIAL DATAPLN '000
12 months
ended 31.12.2016
12 months
ended 31.12.2015
PLN '000
%
Profit before income tax
134 349
25 276
109 073
431.5%
Net profit for the period
49 388
8 263
41 125
497.7%
Integration costs
(173 453)
(206 354)
32 901
(15.9%)
Net profit for the period
189 885
175 410
14 476
8.3%
Total equity
6 121 214
6 163 178
(41 964)
(0,7%)
Total liabilities and equity
70 381 933
63 009 129
7 372 804
11,7%
Change YoY
SEPARATE STATEMENT OF PROFIT AND LOSSIn 2016, the Bank BGŻ BNP Paribas generated a net profit of PLN 49,388 thousand, which denoted a year-on-year growth by PLN 41,125 thousand (497.7%).
The net banking income generated in 2016 was PLN 2,492,248 thousand and was 23.5% higher than in 2015. It resulted mostly from the improved interest income.
The main factors that determined the comparison of the performance in the reporting periods under discussion were the mergers of banks BGŻ S.A., BNPP Polska and Sygma Bank Polska S.A. in 2015 and 2016. Data comparability was upset by the prospective recognition of the result of BNPP Polska in the profit or loss of the Bank in the 2015, i.e. from 30 April 2015, and the performance of Sygma Bank Polska being included in that of the Bank as from 31 May 2016.
Additionally, in 2015 and 2016, the Bank incurred substantial expenses related to the merger processes. Had the effects of integration in the above periods been eliminated, Bank's net profit in 2016 would amount to PLN 189,885 thousand, denoting a 8.3% growth YoY. In 2016, the cost of integration of the banks dropped by 15.9% YoY and amounted to PLN 173,453 thousand.
In 2015 and 2016 the performance of the Bank was affected by events beyond its control. In 2016, the Act on tax on certain financial institutions of 15 January 2016 introduced an additional tax on bank assets, calculated at the monthly rate of 0.0366%. The resulting total charge on the gross banking income in 2016 was PLN 185,876 thousand.
To events that significantly impact comparability of financials of two periods must be included additional costs charges pertaining to 2015, i.e. the statutory payment to the Banking Guarantee Fund to be used to pay guaranteed funds to depositors of Spółdzielczy Bank Rzemiosła i Rolnictwa in Wołomin (PLN 90.2 million), recognizing a provision for contribution to the Borrowers' Support Fund (BSF, PLN 38.2 million) and a fine charged by Office for Competition and Consumer Protection in relation to interchange fees on Visa and MasterCard cash card transactions in Poland (PLN 10.6 million), as well as the settlement of the transaction of acquiring Visa Europe Limited by Visa Inc. (PLN 41,817 thousand), which positively impacted the gross banking income for 2016.
Net interest income
In 2016, the net interest income, which represents the major source of the Bank's income, went up by PLN 356,770 thousand, i.e. 25.4%, which was driven by a rise in interest income of PLN 445,760 thousand, i.e. 21.8% YoY, while interest expense saw a smaller rise of PLN 88,990 thousand, i.e. 13.9% YoY. The level of interest income and expense in 2016 was affected both by external factors and the growth rate of commercial volumes arising mostly from the merger of Bank BGŻ with BNPP Polska and Sygma Bank Polska.
External factors include the policy of the National Bank of Poland regarding base rates involving their stabilization on a record low level (the reference rate of 1.5%).
Interest income on loans and advances to customers, the value of which increased by PLN 291,077 thousand (i.e. 19.9%) YoY, is the major item in the structure of the Bank's interest income (70.4%). In addition to interest on loans and advances, a rise was observed in interest on overdrafts to customers (by PLN 41,836 thousand, i.e. 12.8% YoY). The aforesaid increases resulted from the growth in the scale of operations of the Corporate Banking and Retail and Business Banking segments.
The volume of gross loans in the Bank increased by 6.9% YoY.
Among others, the rise in interest expense was driven by an increase in amounts due to banks as a result of merger processes (in 2015, no costs of financing BNP Paribas Polska S.A. received in the period from 30 April 2015 and an increase in 2016 expenses after the merger with Sygma Bank Polska S.A. as of 31 May 2016). For both banks, the share of liabilities to banks in financing sources was very high.
At the end of 2016, the Bank applied hedge accounting. Hedged items included current accounts maintained in EUR with fixed interest rate, and hedging instruments were plain vanilla IRS transactions, denominated in EUR, with the face value of PLN 4,019,360 thousand. The change in the fair value measurement of hedging transactions is recognized in the Result on hedge accounting; interest on IRS transactions and hedged items is recognized in the net interest income.
In 2016, the net interest income on hedge relationships (the sum of interest income on hedging instruments and interest expense on hedged items) was negative and amounted to PLN -1,042 thousand vs. a positive result of PLN 2,991 thousand for 2015.
Bank BGZ BNP Paribas SA published this content on 26 May 2017 and is solely responsible for the information contained herein.
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