Accounting policies and classification
Employee benefits comprise salaries and wages and social insurance (including contributions for retirement benefits, which are discussed in detail in the note ‘Provisions’), as well as costs of the employee pension scheme constituting a defined contribution scheme and the programme of variable remuneration components for persons occupying managerial positions, a part of which is recorded as a liability in respect of share-based payments settled in cash, in accordance with IFRS 2 ‘Share-based payments’ (the programme of variable remuneration components has been discussed in detail in the note entitled ‘Remuneration of the PKO Bank Polski SA key management’.
The Employee Pension Programme (EPP) has operated at the Bank since 2013. As part of the EPP (for employees who joined the Programme), the Bank accrues the basic contribution of 3% of the salary components on which social insurance contributions are accrued. Employees are entitled to declare additional contributions which are paid to the EPP by the Employer and deducted from the Employee’s salary. PKO Towarzystwo Funduszy Inwestycyjnych SA manages the EPP.
Moreover, as part of wages and salaries the Group creates a provision for future liabilities in respect of compensation and severance bonuses paid out to employees with whom the employment relationship is terminated for reasons not related to the employees; and accruals related to costs attributable to the current period which will be incurred in the next period, including bonuses and holiday pay, taking account of all unused holiday.
The balance includes the following items: maintenance and lease of fixed assets, IT and telecommunications services, costs of administration, promotion and advertising, property protection and training.
Lease payments under an operating lease and subsequent instalments are recognised as an expense in the income statement and are recognised on a straight-line basis over the lease term.
|DEPRECIATION /AMORTIZATION||Depreciation/amortization principles have been described in detail in the note ‘Intangible assets and tangible fixed assets’|
|CONTRIBUTION AND PAYMENTS TO THE BANK GUARANTEE FUND||According to IFRIC 21 ‘Levies’, fees paid by the Group to the Bank Guarantee Fund, i.e. the annual fee and the prudential fee, are recognised in profit or loss on occurrence of the obligating event. The Group is obliged to make contributions on a quarterly basis, therefore in 2016 the respective costs were recognised in profit or loss on a quarterly basis.|
|TAXES AND FEES||The following items are recorded here: property tax, payments made to the State Fund for Rehabilitation of Disabled Persons, municipal and administration fees, fees for perpetual usufruct of land.|
|Employee benefits||(2 835.8)||(2 766.5)|
|Overheads||(1 421.9)||(1 462.7)|
|Amortisation and depreciation||(800.7)||(818.6)|
|Contribution and payments to the Bank Guarantee Fund||(437.9)||(445.3)|
|Taxes and other charges||(69.7)||(63.2)|
|Additional contribution to the Bank Guarantee Fund||(24.4)||(337.9)|
|Contribution to Borrowers' Support Fund||-||(142.0)|
|Total||(5 590.4)||(6 036.2)|
|Wages and salaries, of which:||(2 373.3)||(2 310.7)|
|expenses on employee pension programme||(45.9)||(44.7)|
|Social insurance, of which:||(379.0)||(375.4)|
|contributions to retirement pay and pensions||(309.6)||(308.8)|
|Other employee benefits||(83.5)||(80.4)|
|Total||(2 835.8)||(2 766.5)|
Operating lease – lessee
|Total value of future lease payments under irrevocable operating lease for the period:||31.12.2016||31.12.2015|
|up to 1 year||243.0||233.6|
|from 1 year to 5 years||448.8||466.4|
|over 5 years||140.6||150.3|
Lease and sub-lease payments recognised as an expense of a given period in 2016 amounted to PLN 262.8 million (in 2015 PLN 243.4 million).
Comments to selected items of administrative expenses
‘Contribution to Borrower Support Fund’:
According to Article 25 of the Act from 9 October 2015 on support for borrowers in a difficult financial situation who took out mortgage loans, Guarantee Fund Council, based on information from the Polish Financial Supervision Authority (PFSA), set out for the Group the amount of payment to PLN 142 million and the day of payment until 18 February 2016. As at 31 December 2015 the Group recognised accrual in other liabilities charged as costs of 2015.
‘Additional payment to the Bank Guarantee Fund’:
On 23 November 2015 the Group received information from the Bank Guarantee Fund (BGF), pursuant to which the Group was obliged to make the mandatory contribution earmarked for disbursement of guaranteed funds on deposits accumulated in the Co-operative Crafts and Agriculture Bank in Wołomin (Spółdzielczy Bank Rzemiosła i Rolnictwa w Wołominie). On 26 November 2015 the BGF published its resolution No. 87/DGD/2015 of the Management Board of the BGF on paying out guaranteed funds to depositors of Co-operative Crafts and Agriculture Bank in Wołomin, and informed Group that it is obliged to make a payment in the amount of PLN 337.9 million until 30 November 2015. The Group made the payment on 30 November 2015.
On 28 October 2016 the Group received information from BGF, pursuant to which the Group was obliged to make the mandatory contribution earmarked for disbursement of guaranteed funds on deposits accumulated in Cooperative Bank in Nadarzyn (Bank Spółdzielczy w Nadarzynie). On 28 October 2016 the BGF published Resolution No. 308/DGD/2016 of the Management Board of the BGF on paying out guaranteed funds to depositors of Cooperative Bank in Nadarzyn and notified the Group of the need to pay PLN 24.4 million to the BGF by 2 November 2016. The Group made the payment on 2 November 2016.