ING Bank Śląski | Annual Report 2014

ING BANK ŚLĄSKI

ING BANK ŚLĄSKIAnnual Report 2014

Financial results
Selected quarterly data

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1. Segment reporting

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Segment reporting

The management of ING Bank Śląski is conducted within the areas defined in the Bank’s business model.
The Bank’s business model, above all for the purpose of management reporting, includes division of clients into two main segments:

  • etail banking segment,
  • corporate banking segment.

The segments are separated based on the financial (especially turnover, level of collected assets) and subject-related criteria. The specific rules of putting clients to respective segments are governed by the clients segmentation criteria specified in the Bank’s internal regulations.

Retail banking segment

Within the framework of retail banking, the Bank provides services for individual customers (segments of mass customers and wealthy customers) and for sole traders. 

This activity is analysed by the leading products, including i.e.: credit products (overdraft on the savings and settlement account - ROR, loans related to cards, hire purchase loans, housing loans, mortgage loans, contract loans granted by the Building Society), deposit products (current accounts, term deposits, savings accounts), structured product, ING fund units, brokerage services provided by ING Securities SA and bank cards.

Corporate banking segment

Corporate banking area encompasses as follows:

  • providing services to institutional clients,
  • Financial Markets products,
  • Bank Treasury operations.

Services to institutional clients encompasses strategic clients, large corporate entities and mid-sized companies. For corporate activity, the Bank provides reporting broken down by leading products covering i.e. loan products (working loans, investment loans), deposit products (current accounts, term deposits and negotiated deposits, savings accounts), financial markets products, trust services, capital market operations conducted by the parent and by ING Securities, products related to leasing and factoring services offered by ING Lease (Polska) Sp. z o.o. and ING Commercial Finance Polska S.A.  

Financial Markets products encompass operations performed in money and capital markets, conducted both on the proprietary basis as well as for the customers’ benefit. 

Within the framework of this activity, currency, money and derivative instrument market products and securities operations (treasury securities, shares and notes) are specified.

The main scope of responsibilities of the Bank Treasury is management of both short-term and long-term liquidity risk, in line with the effective regulations and with risk appetite internally set at the Bank, interest rate risk management and investing surpluses obtained from business lines while maintaining the liquidity buffer in the form of liquid assets.

Measurement

The measurement of the segment’s assets and liabilities, segment’s revenue and costs is based on the accounting standards applied by the Bank, included in notes describing applied accounting standards. In particular, both internal and external interest income and costs for individual segments are determined with the use of the transfer price system within the Risk Transfer System (RTS).

Transfer prices are defined based on the yield curve for a given currency that is common for assets and liabilities. The transfer price that is determined for the products being assets and liabilities with the same position on the yield curve is identical. The original transfer price – coming from the product measurement regarding the yield curve can be modified and the factors adjusting the transfer price can be the following: a premium for obtainment of long-term liquidity, matching of the Bank’s position, a hedging cost for sophisticated products and the pricing policy. Thereafter, based on quotation rates available at news services, yield curves are developed using mathematical equations.

Revenue, costs, results, assets and liabilities for a given segment account for elements that are directly attributable to the segment in question, as well as element that may be attributed to that segment based on reasonable premises. 

The Bank presents segment’s interest income reduced by the cost of the interest. 

This results from the fact that while evaluating the segment’s results and assigning assets to the segment, the Management Board relies mainly on net interest income. In 2014, the Bank updated the allocation key for ALCO income and introduced changes referred to in item V. Comparability of financial data. Data for the 2013 presented herein were made comparable.

Geographical segments

The business activities of the Capital Group are performed on the territory of the Republic of Poland.

year 2014
  Retail banking
segment
Corporate
banking
segment
TOTAL
Revenue total* 1,839.3 1,705.5 3,544.8
net interest income 1,310.3 1,019.9 2,330.2
net commission income 437.9 625.0 1,062.9
other income/expenses 78.8 60.6 139.4
share in net profit (loss) of associated entities recognised under the equity method 12.3 0.0 12.3
Operational expenses 1,161.3 768.4 1,929.7
Result before risk 678.0 937.1 1,615.1
Impairment losses 78.7 189.0 267.7
Result after impairment losses (profit before tax) 599.3 748.1 1,347.4
Income tax - - 306.6
Result after tax - - 1,040.8
- attributable to shareholders of ING Bank Śląski S.A. - - 1,040.7

 

year 2013
  Retail banking
segment
Corporate
banking
segment
TOTAL
Revenue total* 1,638.9 1,689.6 3,328.5
net interest income 1,038.5 1,004.1 2,042.6
net commission income 439.6 582.3 1,021.9
other income/expenses 122.7 103.2 225.9
share in net profit (loss) of associated entities recognised under the equity method 38.1 0.0 38.1
Operational expenses 1,145.0 723.4 1,868.4
Result before risk 493.9 966.2 1,460.1
Impairment losses 128.4 138.8 267.2
Result after impairment losses (profit before tax) 365.5 827.4 1,192.9
Income tax - - 231.4
Result after tax - - 961.5
- attributable to shareholders of ING Bank Śląski S.A. - - 961.5

*/ including the share in net profit of affiliated units shown using the method of ownership rights

 

end of year 2014
  Retail banking
segment
Corporate
banking
segment
TOTAL
Assets of the segment 21,455.3 77,181.1 98,636.4
Segment investments in controlled entities recognized under the equity method 0.0 0.0 0.0
Other assets (not allocated to segments) 0.0 0.0 1,224.3
Total assets 21,455.3 77,181.1 99,860.7
Segment liabilities 50,321.2 37,829.1 88,150.3
Other liabilities (not allocated to segment) 0.0 0.0 1,253.8
Equity 0.0 0.0 10,456.6
Total equity and liabilities 50,321.2 37,829.1 99,860.7

 

2014
  Retail banking
segment
Corporate
banking
segment
TOTAL
Capital expenditure 260.4 172.3 432.7
Net cash flow from operating activities 4,124.8 -4,887.1 -762.3
Net cash flow from operating activities (not allocated to segment) 0.0 0.0 -163.0
Net cash flow from operating activities total 4,124.8 -4,887.1 -925.3
Net cash flow from investment activities  -118,5 -77.8 -196.3
Net cash flow from financial activities (not allocated to segment) 0.0 -417.3 -417.3

 

end of year 2013
  Retail banking
segment
Corporate
banking
segment
TOTAL
Assets of the segment 18,097.2 67,341.5 85,438.7
Segment investments in controlled entities recognized under the equity method 136.5 0.0 136.5
Other assets (not allocated to segments) 0.0 0.0 1,175.4
Total assets 18,233.7 67,341.5 86,750.6
Segment liabilities 44,609.1 32,390.1 76,999.2
Other liabilities (not allocated to segment) 0.0 0.0 1,122.8
Equity 0.0 0.0 8,628.6
Total equity and liabilities 44,609.1 32,390.1 86,750.6

 

2013
  Retail banking
segment
Corporate
banking
segment
TOTAL
Capital expenditure 174.0 109.9 283.9
Net cash flow from operating activities 4,672.4 -1,455.8 3,216.6
Net cash flow from operating activities (not allocated to segment) 0.0 0.0 -153.1
Net cash flow from operating activities total 4,672.4 -1,455.8 3,063.5
Net cash flow from investment activities  -92,0 -57.5 -149.5
Net cash flow from financial activities (not allocated to segment) 0.0 -124.6 -124.6

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