47. Contingent liabilities and off-balance commitments received and granted
Accounting policies
As part of its operating activities the Group concludes transactions which, at the time of conclusion, are not recognized as assets or liabilities in the statement of financial position, but which give rise to contingent liabilities. Pursuant to IAS 37 a contingent liability is:
Annual report
2018
2018
- a potential obligation resulting from past events whose existence will be confirmed at the moment of occurrence or non-occurrence of one or more uncertain future events which are not fully under the Group’s control; or
- a current obligation which arises as a result of past events but is not recognized in the statement of financial position because it is not probable that cash or other assets would have to be expended to meet the obligation or the amount of the liability could not be assessed reliably.
Upon initial recognition financial guarantees are stated at fair value. In subsequent periods, as at the reporting date, financial guarantees are stated at the higher of:
- allowances for expected credit losses; or
- the amount recognized at the initially, less accumulated amortization in accordance with IFRS 15.
Financial information
Securities programmes covered with underwriting agreements (the Group’s maximum commitment to take up securities)
| Issuer of underwritten securities | Type of underwritten securities | Maximum commitment to take up securities |
Contract expiry date |
| As at 31 December 2018 |
|||
| Company A | corporate bonds | 1 266 | 31.12.2020 |
| Company B | corporate bonds | 708 | 31.07.2020 |
| Company C | corporate bonds | 47 | 31.12.2022 |
| Total | 2 021 |
| Issuer of underwritten securities | Type of underwritten securities | Maximum commitment to take up securities |
Contract expiry date |
| As at 31 December 2017 | |||
| Company A | corporate bonds | 1 453 | 31.12.2020 |
| Company B | corporate bonds | 769 | 31.07.2020 |
| Company C | corporate bonds | 58 | 31.12.2022 |
| Total | 2 280 |
All contracts relate to the Agreement for Organization, Conducting and Servicing of the Bond Issuance Programme.
All securities of the Group under the underwriting programme have unlimited transferability, are not listed on the stock exchange and are not traded on a regulated OTC market.
Contractual commitments
| Value of contractual commitments concerning | 31.12.2018 | 31.12.2017 |
|---|---|---|
| intangible assets | 43 | 21 |
| property, plant and equipment | 51 | 78 |
| Total | 94 | 99 |
Financial and Guarantee commitments granted
| FINANCING AND GUARANTEE LIABILITIES GRANTED AS AT 31.12.2018 | Liabilities granted at nominal amount | Provisions for liabilities granted under IFRS 9 | Financing and guarantee liabilities granted, net |
|---|---|---|---|
| Financing liabilities granted: | |||
| Credit lines and limits | |||
| housing | 4 275 | (35) | 4 240 |
| business | 32 618 | (96) | 32 522 |
| consumer | 8 974 | (35) | 8 939 |
| Other | 4 010 | (11) | 3 999 |
| Total | 49 877 | (177) | 49 700 |
| of which: irrevocable loan commitments | 23 378 | (67) | 23 311 |
| Guarantees and pledges granted: | |||
| Guarantees granted in domestic and foreign trading | 6 151 | (46) | 6 105 |
| to financial entities | 69 | (1) | 68 |
| to non-financial entities | 6 069 | (44) | 6 025 |
| to public entities | 13 | (1) | 12 |
| Guarantees and pledges granted – domestic corporate bonds | 2 021 | (2) | 2 019 |
| to financial entities | – | – | – |
| to non-financial entities | 2 021 | (2) | 2 019 |
| Letters of credit issued | 1 207 | (2) | 1 205 |
| to non-financial entities | 1 205 | (2) | 1 203 |
| to public entities | 2 | – | 2 |
| Guarantees and warranties granted – payment guarantee for financial entities | 368 | – | 368 |
| Guarantees and pledges granted – domestic municipal bonds | 188 | – | 188 |
| Total | 9 935 | (50) | 9 885 |
| of which: irrevocable loan commitments | 6 516 | (46) | 6 470 |
| of which: performance guarantees granted | 2 418 | (19) | 2 399 |
| FINANCING AND GUARANTEE LIABILITIES GRANTED AS AT 01.01.2018 | Liabilities granted at nominal amount | Provisions for liabilities granted under IFRS 9 | Financing and guarantee liabilities granted, net |
|---|---|---|---|
| Financing liabilities granted: | |||
| Credit lines and limits | |||
| housing | 5 195 | (15) | 5 180 |
| business | 28 478 | (71) | 28 407 |
| consumer | 8 348 | (25) | 8 323 |
| Other | 2 450 | – | 2 450 |
| Total | 44 471 | (111) | 44 360 |
| of which: irrevocable loan commitments | 33 607 | (70) | 33 537 |
| Guarantees and pledges granted: | |||
| Guarantees granted in domestic and foreign trading | 5 813 | (42) | 5 771 |
| to financial entities | 320 | (5) | 315 |
| to non-financial entities | 5 462 | (36) | 5 426 |
| to public entities | 31 | (1) | 30 |
| Guarantees and pledges granted – domestic corporate bonds | 2 350 | – | 2 350 |
| to non-financial entities | 2 350 | – | 2 350 |
| Letters of credit issued | 1 409 | (4) | 1 405 |
| to financial entities | 1 409 | (4) | 1 405 |
| Guarantees and warranties granted – payment guarantee for financial entities | 252 | – | 252 |
| Guarantees and pledges granted – domestic municipal bonds | 316 | – | 316 |
| Total | 10 140 | (46) | 10 094 |
| of which: performance guarantees granted | 2 630 | (14) | 2 616 |
| FINANCING AND GUARANTEE LIABILITIES GRANTED AS AT 31.12.2017 | Liabilities granted at nominal amount | Provisions for liabilities granted under IFRS 37 | Financing and guarantee liabilities granted, net |
|---|---|---|---|
| Financial liabilities granted: | |||
| Credit lines and limits | |||
| housing | 5 195 | (6) | 5 189 |
| business | 28 478 | (43) | 28 435 |
| consumer | 8 348 | (10) | 8 338 |
| Other | 2 450 | – | 2 450 |
| Total | 44 471 | (59) | 44 412 |
| of which: irrevocable loan commitments | 33 607 | (51) | 33 556 |
| Guarantees and pledges granted: | |||
| Guarantees granted in domestic and foreign trading | 5 813 | (25) | 5 788 |
| to financial entities | 320 | (3) | 317 |
| to non-financial entities | 5 462 | (21) | 5 441 |
| to public entities | 31 | (1) | 30 |
| Guarantees and pledges granted – domestic corporate bonds | 2 350 | – | 2 350 |
| to non-financial entities | 2 350 | – | 2 350 |
| Letters of credit issued | 1 409 | (2) | 1 407 |
| to non-financial entities | 1 409 | (2) | 1 407 |
| Guarantees and warranties granted – payment guarantee for financial entities | 252 | – | 252 |
| Guarantees and pledges granted – domestic municipal bonds | 316 | – | 316 |
| Total | 10 140 | (27) | 10 113 |
| of which: performance guarantees granted | 2 630 | (9) | 2 621 |
Information about the provisions recognized for financial and guarantee liabilities is presented in Note 41 “Provisions”.
Liabilities granted by maturity
| LIABILITIES GRANTED BY MATURITY AS AT 31.12.2018 | up to 1 month inclusive |
1 to 3 months |
3 months to 1 year |
1 to 5 years |
over 5 years | Total |
|---|---|---|---|---|---|---|
| Liabilities granted at nominal amount | ||||||
| liabilities granted – financial | 12 626 | 2 874 | 13 293 | 12 026 | 9 058 | 49 877 |
| liabilities granted – guarantees and pledges | 290 | 693 | 4 823 | 3 313 | 816 | 9 935 |
| Total | 12 916 | 3 567 | 18 116 | 15 339 | 9 874 | 59 812 |
| LIABILITIES GRANTED BY MATURITY AS AT 31.12.2017 |
up to 1 month inclusive |
1 to 3 months |
3 months to 1 year |
1 to 5 years |
over 5 years | Total |
|---|---|---|---|---|---|---|
| Liabilities granted at nominal amount | ||||||
| liabilities granted – financial | 9 014 | 524 | 12 135 | 15 000 | 7 798 | 44 471 |
| liabilities granted – guarantees and pledges | 752 | 554 | 3 213 | 4 726 | 895 | 10 140 |
| Total | 9 766 | 1 078 | 15 348 | 19 726 | 8 693 | 54 611 |
| FINANCING AND GUARANTEE LIABILITIES GRANTED AS AT 31.12.2018 | Nominal amount of liabilities with no significant increase in credit risk since initial recognition (stage 1) | Allowances for expected credit losses (stage 1) |
Nominal amount of liabilities with a significant increase in credit risk since initial recognition, but not credit-impaired, gross (stage 2) | Allowances for expected credit losses (stage 2) |
Nominal amount of liabilities at risk of credit impairment (stage 3) | Allowances for expected credit losses (stage 3) |
Total nominal amount | Total provision | Total, net |
|---|---|---|---|---|---|---|---|---|---|
| Financial liabilities granted: | |||||||||
| Credit lines and limits | 42 649 | (75) | 3 025 | (77) | 193 | (14) | 45 867 | (166) | 45 701 |
| housing | 3 813 | (14) | 454 | (18) | 8 | (3) | 4 275 | (35) | 4 240 |
| business | 31 019 | (50) | 1 422 | (38) | 177 | (8) | 32 618 | (96) | 32 522 |
| consumer | 7 817 | (11) | 1 149 | (21) | 8 | (3) | 8 974 | (35) | 8 939 |
| Other | 4 010 | (11) | – | – | – | – | 4 010 | (11) | 3 999 |
| Total | 46 659 | (86) | 3 025 | (77) | 193 | (14) | 49 877 | (177) | 49 700 |
| of which: irrevocable loan commitments | 21 554 | (28) | 1 729 | (35) | 95 | (4) | 23 378 | (67) | 23 311 |
| of which: purchased or originated credit-impaired assets (POCI) | – | – | – | – | 80 | – | 80 | – | 80 |
| Guarantees and pledges granted: | |||||||||
| Guarantees granted in domestic and foreign trading | 5 770 | (10) | 235 | (9) | 146 | (27) | 6 151 | (46) | 6 105 |
| to financial entities | 69 | (1) | – | – | – | – | 69 | (1) | 68 |
| to non-financial entities | 5 688 | (8) | 235 | (9) | 146 | (27) | 6 069 | (44) | 6 025 |
| to public entities | 13 | (1) | – | – | – | – | 13 | (1) | 12 |
| Guarantees and pledges granted – domestic corporate bonds | 2 021 | (2) | – | – | – | – | 2 021 | (2) | 2 019 |
| to financial entities | – | – | – | – | – | – | – | ||
| to non-financial entities | 2 021 | (2) | – | – | – | 2 021 | (2) | 2 019 | |
| Letters of credit issued | 1 206 | (1) | – | – | 1 | (1) | 1 207 | (2) | 1 205 |
| to non-financial entities | 1 204 | (1) | 1 | (1) | 1 205 | (2) | 1 203 | ||
| to public entities | 2 | – | – | – | – | – | 2 | – | 2 |
| Guarantees and warranties granted – payment guarantee for financial entities | 368 | – | – | – | – | – | 368 | – | 368 |
| Guarantees and pledges granted – domestic municipal bonds | 188 | – | – | – | – | – | 188 | – | 188 |
| Total | 9 553 | (13) | 235 | (9) | 147 | (28) | 9 935 | (50) | 9 885 |
| of which: irrevocable loan commitments | 6 135 | (10) | 235 | (9) | 146 | (27) | 6 516 | (46) | 6 470 |
| of which: performance guarantees granted | 2 216 | (5) | 130 | (5) | 72 | (9) | 2 418 | (19) | 2 399 |
| of which: purchased or originated credit-impaired assets (POCI) | – | – | – | – | – | – | – | – | – |
| FINANCING AND GUARANTEE LIABILITIES GRANTED AS AT 01.01.2018 |
Nominal amount of liabilities with no significant increase in credit risk since initial recognition (stage 1) | Allowances for expected credit losses (stage 1) |
Nominal amount of liabilities with a significant increase in credit risk since initial recognition, but not credit-impaired, gross (stage 2) | Allowances for expected credit losses (stage 2) |
Nominal amount of liabilities at risk of credit impairment (stage 3) | Allowances for expected credit losses (stage 3) |
Total nominal amount | Total provision | Total, net |
|---|---|---|---|---|---|---|---|---|---|
| Financial liabilities granted: | |||||||||
| Credit lines and limits | 40 098 | (70) | 1 626 | (17) | 297 | (24) | 42 021 | (111) | 41 910 |
| housing | 5 163 | (11) | 27 | (1) | 5 | (3) | 5 195 | (15) | 5 180 |
| business | 27 700 | (49) | 494 | (3) | 284 | (19) | 28 478 | (71) | 28 407 |
| consumer | 7 235 | (10) | 1 105 | (13) | 8 | (2) | 8 348 | (25) | 8 323 |
| Other | 2 450 | – | – | – | – | – | 2 450 | – | 2 450 |
| Total | 42 548 | (70) | 1 626 | (17) | 297 | (24) | 44 471 | (111) | 44 360 |
| of which: irrevocable loan commitments | 31 722 | (40) | 1 589 | (14) | 296 | (16) | 33 607 | (70) | 33 537 |
| of which: purchased or originated credit-impaired assets (POCI) | – | – | – | – | – | – | – | – | – |
| Guarantees and pledges granted: | |||||||||
| Guarantees granted in domestic and foreign trading | 5 360 | (31) | 44 | (1) | 409 | (10) | 5 813 | (42) | 5 771 |
| to financial entities | 320 | (5) | – | – | – | 320 | (5) | 315 | |
| to non-financial entities | 5 009 | (25) | 44 | (1) | 409 | (10) | 5 462 | (36) | 5 426 |
| to public entities | 31 | (1) | – | – | – | – | 31 | (1) | 30 |
| Guarantees and pledges granted – domestic corporate bonds | 2 350 | – | – | – | – | – | 2 350 | – | 2 350 |
| to non-financial entities | 2 350 | – | – | – | 2 350 | – | 2 350 | ||
| Letters of credit issued | 1 406 | (3) | 3 | (1) | – | – | 1 409 | (4) | 1 405 |
| to non-financial entities | 1 406 | (3) | 3 | (1) | – | – | 1 409 | (4) | 1 405 |
| Guarantees and warranties granted – payment guarantee for financial entities | 252 | 252 | – | 252 | |||||
| Guarantees and pledges granted – domestic municipal bonds | 316 | 316 | – | 316 | |||||
| Total | 9 684 | (34) | 47 | (2) | 409 | (10) | 10 140 | (46) | 10 094 |
| of which: performance guarantees granted | 2 283 | (8) | 31 | – | 316 | (6) | 2 630 | (14) | 2 616 |
| of which: purchased or originated credit-impaired assets (POCI) | – | – | – | – | – | – | – | – | – |
| OFF-BALANCE SHEET LIABILITIES – MOVEMENTS BETWEEN IMPAIRMENT STAGES 31.12.2018 |
Gross amount | TOTAL | ||||||
|---|---|---|---|---|---|---|---|---|
| AMOUNTS NOT SUBJECT TO TRANSFER IN A GIVEN PERIOD | Transfer from stage 1 to stage 2 | Transfer from stage 2 to stage 3 | Transfer from stage 1 to stage 3 | |||||
| from stage 1 to stage 2 | from stage 2 to stage 1 | from stage 2 to stage 3 | from stage 3 to stage 2 | from stage 1 to stage 3 | from stage 3 to stage 1 | |||
| Financial liabilities granted: | ||||||||
| Credit lines and limits | 43 389 | 1 820 | 585 | 6 | 4 | 60 | 3 | 45 867 |
| housing | 3 865 | 401 | 3 | 1 | 1 | 4 | – | 4 275 |
| business | 30 865 | 1 246 | 446 | 4 | 2 | 53 | 2 | 32 618 |
| consumer | 8 659 | 173 | 136 | 1 | 1 | 3 | 1 | 8 974 |
| Other | 4 010 | – | – | – | – | – | – | 4 010 |
| Total | 47 399 | 1 820 | 585 | 6 | 4 | 60 | 3 | 49 877 |
| Guarantees and pledges granted: | ||||||||
| Guarantees granted in domestic and foreign trading | 5 777 | 180 | 163 | 3 | – | 28 | – | 6 151 |
| to financial entities | 69 | – | – | – | – | – | – | 69 |
| to non-financial entities | 5 695 | 180 | 163 | 3 | – | 28 | – | 6 069 |
| to public entities | 13 | – | – | – | – | – | – | 13 |
| Guarantees and pledges granted – domestic corporate bonds | 2 021 | – | – | – | – | – | – | 2 021 |
| to financial entities | – | – | – | – | – | – | – | – |
| to non-financial entities | 2 021 | – | – | – | – | – | – | 2 021 |
| Letters of credit issued | 1 204 | 1 | 1 | 1 | – | – | – | 1 207 |
| to non-financial entities | 1 202 | 1 | 1 | 1 | – | – | – | 1 205 |
| to public entities | 2 | – | – | – | – | – | – | 2 |
| Guarantees and warranties granted – payment guarantee for financial entities | 368 | – | – | – | – | – | – | 368 |
| Guarantees and pledges granted – domestic municipal bonds | 188 | – | – | – | – | – | – | 188 |
| Total | 9 558 | 181 | 164 | 4 | – | 28 | – | 9 935 |
| OFF-BALANCE SHEET LIABILITIES – MOVEMENTS BETWEEN IMPAIRMENT STAGES 31.12.2018 |
Provisions | TOTAL | ||||||
|---|---|---|---|---|---|---|---|---|
| AMOUNTS NOT SUBJECT TO TRANSFER IN A GIVEN PERIOD | Transfer from stage 1 to stage 2 | Transfer from stage 2 to stage 3 | Transfer from stage 1 to stage 3 | |||||
| from stage 1 to stage 2 | from stage 2 to stage 1 | from stage 2 to stage 3 | from stage 3 to stage 2 | from stage 1 to stage 3 | from stage 3 to stage 1 | |||
| Financial liabilities granted: | ||||||||
| Credit lines and limits | (100) | (59) | (4) | – | – | (3) | – | (166) |
| housing | (18) | (16) | – | – | – | (1) | – | (35) |
| business | (58) | (33) | (4) | – | – | (1) | – | (96) |
| consumer | (24) | (10) | – | – | – | (1) | – | (35) |
| Other | (11) | – | – | – | – | – | – | (11) |
| Total | (111) | (59) | (4) | – | – | (3) | – | (177) |
| Guarantees and pledges granted: | ||||||||
| Guarantees granted in domestic and foreign trading | (34) | (7) | – | – | – | (5) | – | (46) |
| to financial entities | (1) | – | – | – | – | – | – | (1) |
| to non-financial entities | (32) | (7) | – | – | – | (5) | – | (44) |
| to public entities | (1) | – | – | – | – | – | (1) | |
| Letters of credit granted | (2) | – | – | – | – | – | – | (2) |
| to non-financial entities | (2) | – | – | – | – | – | – | (2) |
| Total | (38) | (7) | – | – | – | (5) | – | (50) |
| OFF-BALANCE SHEET LIABILITIES – MOVEMENTS BETWEEN IMPAIRMENT STAGES 31.12.2018 |
Net amount | TOTAL | ||||||
|---|---|---|---|---|---|---|---|---|
| AMOUNTS NOT SUBJECT TO TRANSFER IN A GIVEN PERIOD | Transfer from stage 1 to stage 2 | Transfer from stage 2 to stage 3 | Transfer from stage 1 to stage 3 | |||||
| from stage 1 to stage 2 | from stage 2 to stage 1 | from stage 2 to stage 3 | from stage 3 to stage 2 | from stage 1 to stage 3 | from stage 3 to stage 1 | |||
| Financing liabilities granted: | ||||||||
| Credit lines and limits | 43 289 | 1 761 | 581 | 6 | 4 | 57 | 3 | 45 701 |
| housing | 3 847 | 385 | 3 | 1 | 1 | 3 | – | 4 240 |
| business | 30 807 | 1 213 | 442 | 4 | 2 | 52 | 2 | 32 522 |
| consumer | 8 635 | 163 | 136 | 1 | 1 | 2 | 1 | 8 939 |
| Other | 3 999 | – | – | – | – | – | – | 3 999 |
| Total | 47 288 | 1 761 | 581 | 6 | 4 | 57 | 3 | 49 700 |
| Guarantees and pledges granted: | ||||||||
| Guarantees granted in domestic and foreign trading | 5 743 | 173 | 163 | 3 | – | 23 | – | 6 105 |
| to financial entities | 68 | – | – | – | – | – | – | 68 |
| to non-financial entities | 5 663 | 173 | 163 | 3 | – | 23 | – | 6 025 |
| to public entities | 12 | – | – | – | – | – | – | 12 |
| Guarantees and pledges granted – domestic corporate bonds | 2 019 | – | – | – | – | – | – | 2 019 |
| to financial entities | – | – | – | – | – | – | – | – |
| to non-financial entities | 2 019 | – | – | – | – | – | – | 2 019 |
| Letters of credit issued | 1 202 | 1 | 1 | 1 | – | – | – | 1 205 |
| to non-financial entities | 1 200 | 1 | 1 | 1 | – | – | – | 1 203 |
| to public entities | 2 | – | – | – | – | – | – | 2 |
| Guarantees and warranties granted – payment guarantee for financial entities | 368 | – | – | – | – | – | – | 368 |
| Guarantees and pledges granted – domestic municipal bonds | 188 | – | – | – | – | – | – | 188 |
| Total | 9 520 | 174 | 164 | 4 | – | 23 | – | 9 885 |
Off-Balance Sheet Liabilities Received
| OFF-BALANCE SHEET LIABILITIES RECEIVED BY NOMINAL VALUE | 31.12.2018 | 31.12.2017 |
|---|---|---|
| Financial | 90 | 95 |
| Guarantees | 1 825 | 14 227 |
| Total | 1 915 | 14 322 |
The decrease in off-balance sheet liabilities received as guarantees compared with 31 December 2017 resulted mainly from the termination of the guarantee agreement which ensured unfunded credit protection in respect of a portfolio of selected corporate loan receivables of the Bank, in the amount of PLN 4 505 million, and the expiry of the guarantee limit under the de minimis portfolio guarantee line of PLN 8 016.
As a result of the provisions of the Agreement which bound the Nordea Bank AB (publ) Group to participate in the impairment risk of the Mortgage Portfolio (in foreign currencies), on 1 April 2014 PKO Bank Polski SA and Nordea Bank AB (publ) concluded a credit risk sharing agreement (“Risk Sharing Agreement”), pursuant to which until 31 March 2018 Nordea Bank AB (publ) bore 50% of the costs of excess risk of the Mortgage Portfolio above the annual risk cost level determined at 40 base points for each year of the above four-year term of the Risk Sharing Agreement the fair value of which was PLN 0 million as at 31 December 2017. No losses were recorded during the Agreement resulting in the need for Nordea AB to pay the Bank any funds. The guarantee expired in 2018.
On 21 December 2017, after obtaining the necessary corporate consents, the Bank concluded a guarantee agreement with the counterparty which ensured unfunded credit protection in respect of a portfolio of selected corporate loan receivables of the Bank, in accordance with the CRR Regulation (“Guarantee”).
The total value of the Bank’s portfolio of receivables covered by the Guarantee amounts to PLN 5 495 million, and the portfolio comprises a portfolio of bonds with a value of PLN 1 097 million (“Portfolio A”) and a portfolio of other receivables of PLN 4 398 million (“Portfolio B”). The Guarantee coverage ratio amounts to 90% – in respect of Portfolio A and 80% – in respect of Portfolio B, therefore the total Guarantee amounted to PLN 4 505 million. The maximum period of the Guarantee amounts to 60 months, whereas the Bank is entitled to terminate the Guarantee before the end of the period.
Right to sell or pledge a collateral established for the Group
As at 31 December 2018 and as at 31 December 2017 no collateral was established for the Bank, which the Bank’s Group would be entitled to sell or encumber with another pledge in the event of the fulfilment of all obligations by the owner of the collateral.