This document is a translation of a document originally issued in Polish.
The only binding version is the original Polish version.
PKO Bank Hipoteczny SA
Directors’ Report
for the year ended 31 December 2025
Selected financial data for the period from 1 January 2025 to 31 December 2025 (in PLN million)
|
INCOME STATEMENT |
01.01.2025– 31.12.2025 |
01.01.2024– 31.12.2024 |
Change y/y |
|
Net interest income |
261.4 |
286.8 |
(25.4) |
|
Net fee and commission income |
(7.0) |
(4.7) |
(2.3) |
|
Net foreign exchange gains / (losses) |
0.1 |
4.0 |
(3.9) |
|
Net allowance for expected credit losses |
7.2 |
5.4 |
1.8 |
|
Net other operating income and expenses |
0.6 |
0.3 |
0.3 |
|
Administrative expenses |
(53.5) |
(47.4) |
(6.1) |
|
Regulatory charges |
(17.3) |
(17.4) |
0.1 |
|
Tax on certain financial institutions |
(48.9) |
(51.0) |
2.1 |
|
Operating profit |
142.6 |
176.1 |
(33.5) |
|
Profit before tax |
142.6 |
176.1 |
(33.5) |
|
Income tax expense |
(47.5) |
(45.8) |
(1.7) |
|
Net profit |
95.1 |
130.3 |
(35.2) |
|
|
|
|
|
|
STATEMENT OF FINANCIAL POSITION |
31.12.2025 |
31.12.2024 |
|
|
Cash and balances with the Central Bank |
0.0 |
0.4 |
|
|
Amounts due from banks |
2.9 |
10.2 |
|
|
Derivative hedging instruments |
0.2 |
0.0 |
|
|
Securities |
786.2 |
749.3 |
|
|
Loans and advances to customers |
17,130.4 |
16,600.7 |
|
|
Other assets[1] |
18.6 |
16.1 |
|
|
TOTAL ASSETS |
17,938.3 |
17,376.7 |
|
|
Amounts due to banks |
4,679.6 |
5,342.8 |
|
|
Derivative hedging instruments |
21.7 |
208.7 |
|
|
Liabilities in respect of mortgage covered bonds issued |
8,431.6 |
7,233.4 |
|
|
Liabilities in respect of bonds issued |
2,925.8 |
2,721.3 |
|
|
Other liabilities and provisions[2] |
138.7 |
127.0 |
|
|
Equity |
1,740.9 |
1,743.5 |
|
|
TOTAL LIABILITIES AND EQUITY |
17,938.3 |
17,376.7 |
|
Table of contents
2. External operating conditions
2.1. Macroeconomic environment
2.2. Residential real estate market
2.4. Mortgage covered bonds market
2.5. Regulatory and legal environment
3. Financial performance and capital adequacy
3.1. Key financial indicators of PKO Bank Hipoteczny SA
3.2. Statement of financial position of PKO Bank Hipoteczny SA
3.3. Income statement of PKO Bank Hipoteczny SA
3.4. Requirements regarding own funds (Pillar I)
3.5. Internal capital (Pillar II)
4. Business of PKO Bank Hipoteczny SA
4.1. Sale of residential mortgage loans under the agency model
4.2. Acquisition of residential mortgage loan receivables
4.3. Structure of the residential mortgage loan portfolio
4.5. Financial market operations
4.6. Bonds – Bond Issue Programme Agreement concluded with PKO Bank Polski SA
5. Internal Operating Conditions
5.1. Lending process and cooperation with PKO Bank Polski SA
5.3. Management of conflicts of interest
5.6. Measurement of residential loan collaterals
5.7. Cover Pool for Mortgage Covered Bonds
6. Organization and governing bodies of PKO Bank Hipoteczny SA
6.2. Organizational structure of PKO Bank Hipoteczny SA
6.3. Competences of the governing bodies and committees of PKO Bank Hipoteczny SA
6.4. The Management Board of PKO Bank Hipoteczny SA
6.5. The Supervisory Board of PKO Bank Hipoteczny SA
6.6. Remuneration and Human Resources Management Policy
6.7. Benefits for Key Management of PKO Bank Hipoteczny SA
7. Corporate governance and information for investors
7.1. Representation on compliance with corporate governance principles
8. Representation of the Management Board of PKO Bank Hipoteczny SA
1. Introduction
PKO Bank Hipoteczny SA (the “Bank”) specializes in granting residential mortgage loans to individual customers and purchasing receivables in respect of such loans. The Bank acquires loans for its portfolio based on strategic cooperation with PKO Bank Polski SA.
PKO Bank Hipoteczny SA is the leader on the Polish mortgage bank market in terms of total assets and the balance of residential loans. The Bank is also the largest issuer of mortgage covered bonds in Poland with a share of approximately 40% of the total value of outstanding mortgage covered bonds issued by mortgage banks operating in Poland (as at the end of December 2025). It was the only bank in Poland to carry out benchmark issues of EUR-denominated mortgage covered bonds, including the first Green Covered Bond issue in Central and Eastern Europe.
In October 2025, PKO Bank Hipoteczny SA carried out the first mortgage bond issue for individual investors in Poland in almost 100 years. The pioneering issue was a great success.
At the end of December 2025, the Bank’s total assets amounted to more than PLN 17.9 billion, an increase of nearly PLN 0.5 billion year-on-year. Of the above amount, PLN 17.1 billion consisted of a high-quality portfolio of housing loans, whose main source of funding was mortgage covered bonds.
Evaluation of PKO Bank Hipoteczny SA’s financial credibility – Ratings
The financial credibility of PKO Bank Hipoteczny SA and of the mortgage covered bonds issued by the Bank is assessed by the Moody’s Investors Service Ltd international rating agency (“Moody’s”).
As at 31 December 2025, PKO Bank Hipoteczny SA had the following ratings assigned by Moody’s:
|
|
Rating |
Outlook |
Date of initial rating / rating confirmation date |
|
Long-term issuer rating |
A3 |
Stable |
23.09.2025
|
|
Short-term issuer rating |
P-2 |
n/a |
|
|
Opinion on long-term counterparty risk |
A2(cr) |
n/a |
|
|
Opinion on short-term counterparty risk |
P-1(cr) |
n/a |
|
|
Long-term counterparty risk rating |
A2 |
n/a |
|
|
Short-term counterparty risk rating |
P-1 |
n/a |
The ratings take into account Moody’s assessment of the Bank’s mutual relations with its Parent Company – PKO Bank Polski SA – and reflect a low probability that the Parent Company would consider assigning the Bank’s liabilities a lower priority compared to the Parent Company’s liabilities should financial tensions occur within the PKO BP Group.
As at 31 December 2025, the mortgage covered bonds of PKO Bank Hipoteczny SA had the following ratings assigned by Moody’s:
|
|
Rating |
Rating confirmation date |
|
Mortgage covered bonds denominated in PLN |
Aa1 |
27.02.2025 |
|
Mortgage covered bonds denominated in EUR |
Aa1 |
25.06.2025 |
The rating assigned to the mortgage covered bonds of PKO Bank Hipoteczny SA is the highest rating achievable by Polish securities. The limit for the ratings is the Polish country ceiling[3] for debt instruments, which currently is at the level of Aa1.
Mortgage covered bonds issued
In 2025, PKO Bank Hipoteczny SA carried out two issues of mortgage bonds under the International Programme of Mortgage Covered Bonds Issuance based on the base prospectus, in the amount of PLN 800 million and EUR 500 million. In October 2025, the Bank carried out its first mortgage covered bond issue targeting individual investors in almost 100 years in the amount of PLN 1.155 billion. The issues were conducted as part of the International Programme of Mortgage Covered Bonds Issuance based on a base prospectus.
The value of outstanding mortgage covered bonds issued by PKO Bank Hipoteczny SA was PLN 8.4 billion as at 31 December 2025.
War in Ukraine and its impact on the Bank’s operations
Due to the ongoing military conflict, the Bank identifies geopolitical risks that have or may have an indirect impact on the operations of the Bank as an issuer.
The Bank is monitoring the developments relating to the conflict in Ukraine and adjusting its actions accordingly.
Current and anticipated financial position of the Bank
In the opinion of the Management Board, the financial position and business outlook of PKO Bank Hipoteczny remain stable. The Bank operates with a high level of security, both in terms of the quality and level of collateralization of the loan portfolio and in all areas of risk control and supervision, to which a solid capital base also contributes.
PKO Bank Polski SA’s strategy for the years 2023 – 2025
In the first quarter of 2023, the Bank’s Management Board adopted and the Supervisory Board approved a new Strategy of PKO Bank Hipoteczny SA for the years 2023 – 2025.
The Bank’s strategic goals under the strategy comprise:
Selected projects
Development of a special offer to support sustainable development - mortgage loan
The special offer is being developed as part of ESG sustainability activities. The strategic objective of the initiative is to create an offer that will support sustainable development of the PKO BP Group’s mortgage offer and build the potential to issue Green Covered Bonds.
Currently, the Bank, in cooperation with PKO Bank Polski SA, is promoting such an offer and granting preferential price terms in return for the customer providing an energy efficiency certificate confirming the low carbon performance of the financed property (required to meet a certain EP value, i.e. an indicator defining the building’s annual demand for non-renewable primary energy).
PKO Bank Hipoteczny SA, in cooperation with PKO Bank Polski SA, has prepared a concept for a new approach to its offering in order to increase the volume of loans acquired to support sustainable development. Preparatory work to change the processes and tools supporting the implementation of the offer is planned to start in 2026.
Within the PKO BP Group, the Bank is the leader in creating a comprehensive offer of mortgage loans to support sustainable development and is a centre of excellence in this area.
ESG Centre of Excellence in PKO Bank Hipoteczny SA
The ESG Centre of Excellence is another aspect of achieving the Bank’s 2023 - 2025 strategic goal with respect to sustainability activities.
The task of the Centre of Excellence is to ensure that the organization has the necessary, comprehensive and up-to-date ESG knowledge to meet its business objectives in line with the rapidly evolving sustainability regulatory environment.
In 2025, the centre’s tasks focused on reviewing and assessing the impact of the European Commission’s proposed legislative simplification package in the area of sustainable development, the so-called Omnibus I, on the Bank.
As a result of the changes, the sustainability reporting obligation was deferred by two years. Further developments relevant from the Bank’s perspective in this area are under way at EU level. Over the course of 2025, the centre’s activities have also focused on analysing the EBA’s guidelines on the management of environmental, social and corporate governance risks, as well as supporting business units in the conceptualisation process of sustainable mortgage offerings.
Implementation of external communication to educate customers
In 2025, PKO Bank Hipoteczny SA conducted extensive outreach activities with the PKO BP Group on mortgage covered bonds in Poland. It also carried out a nationwide educational and promotional campaign related to the first issue of mortgage covered bonds for individual investors in Poland in almost 100 years. These activities resulted in several hundred publications in electronic media and printed press. In addition, in 2025 the Bank published 16 educational articles on the Bankomania portal and produced accompanying posts on its LinkedIn profile.
Links to the articles are published on the website, as well as on the Bank’s profile on the LinkedIn platform, where educational posts on living in harmony with the environment are also published. Behaviours such as household energy conservation, careful waste sorting or choosing environmentally friendly modes of transport – such as commuting to work by bicycle – are promoted. The values promoted in external communication are consistent with the activities carried out within the organization. The Bank also participated as an expert in the activities of the European Financial Congress on the development of the mortgage covered bond market in Poland and in industry conferences related to real estate and financial products. These were widely reported by the media.
Optimization and automation of processes
The strategic goal of the initiative is to digitize and simplify the Bank’s processes.
The Bank participates, among other things, in the PKO BP Group’s ‘Digital Mortgage’ project, which aims to optimize and digitize the mortgage lending and servicing processes. As part of this project, in the first half of 2025, two borrowers were offered the possibility of being granted a loan and purchasing an apartment on the primary market and renovation.
PKO BH developed the assumptions for the implementation - within the framework of the aforementioned project - of the process of granting mortgage loans by PKO BH (under the so-called agency model) and carried out preparatory work for the implementation of the full process within the Digital Mortgage with readiness in the third quarter of 2026.
The Bank also regularly implements improvements and automation of operations in other processes, such as the provision of certain types of annexes with the possibility of concluding them remotely (with the mSzafir electronic signature), optimizing the policy delivery and servicing process and the reporting process.
Development of a uniform template for a residential loan agreement
The strategic aim of the project is to develop a template of mortgage loan agreement clauses in terms of improving legibility and reducing the risks associated with the mortgage product. As part of the consultations of the supervisory and control authorities with representatives of the Association of Polish Banks, experts gathered around the European Financial Congress and the Ministries of Finance and Justice, two proposals for solutions were developed: a uniform model mortgage loan agreement based on a periodically fixed interest rate and a model mortgage loan agreement with the option of offering additional services. Work is currently being undertaken to initiate legislation.
The Bank’s adaptation to the benchmark reform
In connection with the planned replacement of WIBOR with the POLSTR benchmark as part of the reform, the WIBOR Benchmark Reform Taskforce (the “Taskforce”) was established within the Bank. The Taskforce’s objective is to prepare the Bank for the implementation of the new interest rate benchmark to replace the currently used WIBOR, acting consistently with the PKO BP Group and the Roadmap set by the Taskforce’s Steering Committee.
The Taskforce’s objectives include, in particular:
• adapting contracts with counterparties and customers and changing the product offer;
• adapting valuation and risk management methodologies and tools;
• adapting accounting methodologies and tools (including, among other things, hedge accounting and transfer pricing);
• implementing changes to IT systems;
• estimating the impact of the reform on the Bank’s financial results.
2. External operating conditions
Macroeconomic environment
Residential real estate market
Residential loan market
Mortgage covered bonds market
Regulatory and legal environment
2.1. Macroeconomic environment
The macroeconomic factors which shaped the national economy in 2025 are presented below.
Solid consumption, start of recovery in investments
|
|
The pace and decomposition of GDP growth (%, y/y) and its components (p.p.)
In 2025, GDP growth accelerated to 3.6% compared to the 3.0% growth recorded in 2024. The upturn was backed by both the strengthening in consumption, especially since the second quarter, and a revival in investment activity. Since the second quarter, private consumption increased more than 3% y/y, reflecting sustained real wage growth and improved consumer sentiment. Similarly as in 2024, consumer demand for services grew particularly strongly. The scale of consumption growth was constrained by the historically relatively high household savings rate. Investment dynamics over the quarters were characterized by high volatility, which is linked to the completion of large orders, including armaments. Over the course of the year, business investment activity increased, particularly in the public sector, supported by, among other things, EU funding. In the third quarter of 2025, the flow of funds from the National Recovery and Resilience Plan (KPO) into the economy increased markedly. In December 2025, signed contracts for the use of KPO funds amounted to 70% of the available pool of funds, which promises to maintain significant disbursements in the following quarters. In 2025, the external environment of the economy was challenging. The world was grappling with the new US tariff policy, which, among other things, increased Chinese interest in markets in Europe, including Poland. Germany emerged from recession, but the economy was closer to stagnation than recovery, limiting the room for domestic export growth. As a result, in the first half of the year the contribution of net exports to economic growth was negative, and the widening trade deficit led to the emergence and gradual build-up of a current account deficit that approached 1% of GDP by the end of the year.
A cooling labour market with low unemployment
Unemployment and employment (end of period, %)
In December 2025, the registered unemployment rate was 5.7 per cent, compared to 5.1 per cent at the end of 2024. As of June 2025, the registered unemployment rate was increasing, but this was due to regulatory changes in the registration and de-registration process rather than a downturn in the labour market. This interpretation is supported by the fact that the harmonized unemployment rate after deseasonalization was stable in 2025, fluctuating in a narrow range of 3.0-3.2%.
The number of foreigners in the domestic labour market was steadily increasing. According to the State Insurance Institution (ZUS), by the end of 2025, the number of working foreigners was approaching 1.3 million, with the growth rate accelerating in the second half of the year. Of this group, nearly 70% were Ukrainians.
Employment in the enterprise sector declined for the third consecutive year. At the end of the year, it was 0.7% lower than a year earlier. According to Polish Labour Survey (LFS) data, the number of people working in the economy as a whole increased slightly, and in the third quarter of 2025 was 0.5% higher than a year earlier. Similarly as in 2024, job cuts were concentrated in micro businesses and SMEs.
Despite economic recovery, labour demand remained subdued and the number of vacancies in the economy declined. The low demand for workers favoured the normalization of wage dynamics. In the corporate sector, wages grew at an average rate of 8% y/y in 2025, compared to 11% y/y in 2024; the growth rate of the average wage in the national economy slowed down to a similar extent, but thanks to the drop in inflation, the growth rate of wages in real terms slowed down to a lesser extent and oscillated around 5% y/y.
Return of inflation to the NBP target
Inflation (%, y/y) and reference rate (%, monthly data)
2025 was a year of disinflation. While in the first quarter of 2025 CPI inflation was still 4.9% y/y, it fell below 3.5% y/y in July, thus returning to the range of acceptable deviations from the inflation target of the National Bank of Poland (NBP), and stood at 2.4% y/y at the end of the year. The disinflation process covered all the main components of inflation. Energy price dynamics dropped, despite the unfreezing of heat prices and with the cap on the price of electricity for households maintained until the end of 2025. Food price dynamics decreased, and this trend was particularly evident in the second half of the year, reflecting both global trends and good domestic harvests of fruit and vegetables. Core inflation (inflation excluding food and energy prices) also declined successively and stood at 2.7% y/y at the end of the year. In the structure of inflation, service prices continued to grow noticeably more than goods prices. The drop in CPI inflation was accompanied by a drop in inflation expectations.
Public finances under pressure but under control
Public sector deficit and debt
After a visible deterioration in public finances in 2024, the scale of deepening of the sector’s deficit was already much smaller in 2025. In the third and fourth quarters of 2025, the ESA deficit represented 7% of GDP and public debt 58.1% of GDP compared to 6.5% of GDP and 55.1% of GDP at the end of 2024. The performance of the public finance sector is increasingly affected by rising defence spending. In 2025, measures related to the period of increased inflation (such as the so-called shields) were also still being felt, while social benefit spending was increasing. Faced with an increased deficit, Poland is subject to the excessive deficit procedure. However, due to high military spending, the European Commission, at Poland’s request, triggered the so-called exit clause, which suspends the risk of possible sanctions related to the procedure and adjusts the scale of the recommended consolidation so as to enable an increase in defence spending. The build-up of debt, the deepening of the deficit and the distancing prospect of consolidation have resulted in Fitch and Moody’s downgrading Poland’s rating outlook from stable to negative, while keeping the ratings unchanged (A- and A2 respectively). S&P maintained Poland’s rating at A- with a stable outlook in 2025.
Despite a stronger than assumed in the state budget drop in inflation in 2025, which was unfavourable for tax revenues, the budget deficit for the full year was several billion below the limit of PLN 288.8 billion. Tax revenue of the state budget was negatively affected by the 2024 reform of the local government revenue system. The deterioration in balance of the state budget is also due to the repayment of debt incurred outside the budget mainly during the pandemic period.
A year of solid NBP rate cuts
NBP interest rates (at the end of the period)
|
|
Q4 2024 (%) |
Q4 2025 (%) |
|
Reference rate |
5.75 |
4.00 |
|
Rediscount rate |
5.80 |
4.05 |
|
Discount rate |
5.85 |
4.10 |
|
Lombard rate |
6.25 |
4.50 |
|
Deposit rate |
5.25 |
3.50 |
In 2025 a series of interest rate cuts totalling 175bp were implemented by the National Bank of Poland. The cuts were cumulated in the second half of the year - from July to December 2025, the Monetary Policy Council cut interest rates at every meeting. The main rationale for the rate cuts was the drop in current inflation, higher than earlier expectations. Council members also pointed out that the space for interest rate cuts is created by the progressive cooling of the labour market, including mainly a decline in wage growth. The main factor that was cited as a constraint on the scale of rate cuts was the fiscal situation and the high public finance sector deficit. In 2025, a number of MPC members indicated that interest rate cuts could fall in the range of 3.50-4.00%.
2.2. Residential real estate market
Situation on the residential real estate market in Poland
The residential property market in 2025 was characterized by gradual recovery in demand for residential property, mainly influenced by factors such as: (1) a series of interest rate reductions resulting in lower funding costs and an increase in the creditworthiness of residential real estate buyers, (2) stabilization of residential real estate prices, (3) real wage growth, (4) a stable labour market and low unemployment. The increased strength of demand was met with a record high supply of new residential real estate on the primary market, which was a factor that effectively held back residential prices.
Primary market
The year 2025 in the domestic primary market started with a record high volume of new housing offerings in developers’ portfolios. During 2025, we saw a recovery in demand and an increase in housing sales, particularly during the fourth quarter. In total, 40,700 apartments were sold in the segment in 2025, which was 9% higher than in the previous year. At the same time, developers maintained high investment activity, offering 44,800 apartments, over than 4,000 more than they sold. Consequently, the offer of new apartments increased by 11% in the segment, reaching 62,100 apartments. The dynamic increase in sales towards the end of the year meant that the length of the average offer sale period shortened from more than six to less than five quarters during 2025.
The high supply of residential properties had a stabilizing effect on their prices. Data published by the NBP shows that the average transaction prices on the primary market in the segments of the six largest cities[4] and 10 medium-sized cities[5] were at almost the same level in the third quarter of 2025 as a year before. In contrast, data collected from the PKO BP SA Central Real Estate Database (CBN) for the fourth quarter of 2025 shows a 2% annual decrease in prices in the segment of six largest cities and a 3.7% annual increase in the segment of the 10 medium-sized cities.
Secondary market
Supply and demand on the residential real estate market
The recovery in demand was positively influenced by the stabilization of housing prices and the declining level of interest rates, with real wage growth remaining relatively high (according to GUS, in December 2025, the rate of wage growth in the corporate sector was +8.6% per annum, i.e. more than 6 percentage points above inflation). According to NBP data, the average interest rate on residential loans granted by banks in December 2025 was 6.3%, compared to 7.5% in December 2024. The synthetic measure of residential affordability in Poland, the M3 Housing Affordability Index, published by the Polish Bank Association (Amron Centre), which stood at 138.79 points at the end of 2024, rose to 153.37 points during the three quarters of 2025. The index reflects changes in affordability of apartments for a family consisting of two working people and an older child, with mortgage financing.
Purchases of residential real estate are financed with mortgages and household savings. According to NBP data, the estimated share of cash purchases of apartments on the primary market in the seven largest metropolitan areas in the third quarter of 2025 reached 46% compared with 57% in the fourth quarter of 2024.
According to GUS, the nominal value of household deposits in the third quarter of 2025 increased by 9.2% y/y. This means that - in view of the drop in inflation to 3% (the average annual total consumer price index in the third quarter of 2025 published by the GUS) - the real value of household deposits has increased.
2.3. Residential loan market
Based on NBP data, as at 31 December 2025, amounts due to banks in respect of residential loans in Poland were PLN 514.7 billion, up by 3.4% y/y. As at 31 December 2025, PLN-denominated loans amounted to PLN 474.1 billion (92% of the total amounts due to banks in respect of residential loans in Poland), up by 7.9% y/y.
The total balance of residential loans in relation to the GDP as estimated by PKO Bank Polski at market prices stood at 13% at the end of 2025. This is significantly below the average for the European Union countries. This shows that the residential loan market in Poland has a great potential for further development.
2.4. Mortgage covered bonds market
As at 31 December 2025, five mortgage banks were operating in Poland:
• PKO Bank Hipoteczny SA
• mBank Hipoteczny SA
• Pekao Bank Hipoteczny SA
• ING Bank Hipoteczny SA
• Millennium Bank Hipoteczny SA.
The Polish mortgage covered bond market is relatively small and moderately liquid. As at the end of December 2025, total outstanding mortgage covered bonds issued by the mortgage banks operating in Poland amounted to PLN 20.7 billion, i.e. PLN 3.7 billion more than as at 31 December 2024. As at 31 December 2025, mortgage covered bonds issued by Polish mortgage banks represented 4.0% of total value of mortgage loans granted by banks.
PKO Bank Hipoteczny SA is the largest issuer of mortgage covered bonds on the Polish market. The balance of outstanding mortgage covered bonds issued by PKO Bank Hipoteczny SA amounted to PLN 8.4 billion as at 31 December 2025 which represents more than 40.4% of the total outstanding mortgage covered bonds issued by mortgage banks operating in Poland.
2.5. Regulatory and legal environment
The operations of PKO Bank Hipoteczny SA were affected by legal, regulatory and supervisory solutions which entered into force in 2025, in particular those which related to:
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Digital resilience |
|
On 17 January 2025, Regulation (EU) 2022/2554 of the European Parliament and of the Council of 14 December 2022 on digital operational resilience for the financial sector (DORA Regulation) entered into force, imposing a number of new ICT risk management obligations on financial entities, including increased reporting and auditing requirements, as well as enforcing reviews of procedures and resilience analyses. |
|
Mortgage loans |
|
On 1 April 2025, in accordance with the Electronic Delivery Act of 18 November 2020 and the Communication of the Minister of Digitization, the obligation for entities registered with the National Court Register (KRS) to have and use an address for e-Delivery (ADE) came into force. Accordingly, the Bank set up an ADE, adapted its contractual templates and changed its internal regulations and processes to take into account the new form of contact. |
|
On 5 April 2025, amendments to the Act of 23 March 2017 on Mortgage Credit and the Supervision of Mortgage Credit Intermediaries and Agents came into force, increasing the Bank’s information obligations towards the consumer in the event of a planned change to the provisions of a mortgage loan agreement. |
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The Act of 26 April 2024 on ensuring that business entities meet accessibility requirements for certain products and service defines the accessibility requirements for products and services, the obligations of businesses to ensure that the accessibility requirements for products and services are met, and the system, rules and procedures for supervision in ensuring that the accessibility requirements for products and services are met. The Bank has updated its templates for letters, contracts and information addressed to consumers. The Bank’s website was also adapted and relevant internal regulations were updated. |
|
LOAN FUNDING |
|
On 15 July 2024, the Polish Financial Supervision Authority (PFSA) issued a recommendation on the Long-term Funding Ratio (WFD), which aims to reduce the risk of funding long-term mortgage loans with short-term deposits primarily replacing them with long-term debt instruments that cannot be redeemed in at least one year. The recommendation requires domestic banks to maintain a WFD of at least 40% from 31 December 2026 onwards. Banks are obliged to report the ratio monthly to the PFSA, which monitors the implementation of the Recommendation. From 31 December 2027 onwards, the PFSA may make changes to the expected level of the WFD in the following years, taking into account both the condition of individual banks and the macroeconomic situation. On 21 November 2025, the PFSA proposed amendments to the WFD recommendation consisting, among other things, of a change in the way instruments were to be included in own funds and a reduction in the expected level of the WFD. |
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Reporting |
|
On 1 January 2025, the Act of 6 December 2024 amending the Act on Accounting, Statutory Auditors, Audit Firms and Public Oversight and certain other Acts entered into force, implementing the CSRD in relation to corporate sustainability reporting. As a result of legislative changes at the EU level, further amendments were made to the act in question, on the basis of which the sustainability reporting obligation for wave 2 and 3 obligated entities was postponed for two years. |
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On 25 June 2025, the Regulation of the Minister of Finance of 6 June 2025 on current and periodical information to be reported by issuers of securities and on conditions for recognizing as equivalent information required by the laws of a non-member state came into force, mainly to align the legislation with the CSRD. |
|
Risk management |
|
On 24 September 2024, the Regulation of the Minister of Finance of 18 September 2024 on the countercyclical buffer rate, according to which the countercyclical buffer rate is 1% of the total risk exposure of institutions that have credit exposures in the territory of the Republic of Poland was published in the Journal of Laws. This rate shall apply from the first day after 12 months have passed from the date of publication of the regulation. |
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On 9 January 2025, the European Banking Authority published guidelines on the environmental, social and corporate governance (ESG) risks, which include minimum standards and reference methods to identify, measure, manage and monitor ESG risks, and qualitative and quantitative criteria for assessing the impact of ESG risks on an institution’s risk and solvency profile. The guidelines also set out the content of the transition plans. |
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Personnel Issues |
|
On 24 December 2025, the Act of 4 June 2025 amending the Labour Code Act came into force, increasing the transparency of recruitment by requiring employers to disclose salary ranges and relevant provisions of the remuneration regulations to candidates. |
|
Confidential Information |
|
On 17 December 2025, the PFSA published a position paper on how to keep private data for the purposes of an issuer’s obligation to maintain a list of insiders and the form of confirmation of the obligations referred to in the MAR. |
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Interest Rate Benchmark Reform |
|
As part of the work of the Benchmark Reform Taskforce, in relation to the planned change of the benchmark to POLSTR: - on 12 September 2025, the Taskforce’s Steering Committee issued a Recommendation on the principles and methods of applying the POLSTR interest rate benchmark when entering into new contracts for Polish zloty products based on reference rates offered by financial market entities - on 6 October 2025, the Taskforce’s Steering Committee published a Recommendation on the use of the POLSTR® reference rate in floating rate debt securities - on 30 September 2025, GPW Benchmark SA announced that it will cease to develop WIBID® and WIBOR® Reference Rates for the following Fixing Tenors on the dates indicated below: Overnight (O/N) - from 1 October 2026 Tomorrow/Next (Y/N) - from 22 December 2025 2 weeks (2W) - from 22 December 2025 1 year (1Y): from 22 December 2025 based on the existing method from 22 December 2026, following a change in the method for developing the WIBOR reference index for 1Y Fixing Tenor - on 21 November 2025, the Ministry of Finance carried out the first pilot issue of POLSTR index-based government bonds - on 28 November 2025, the Taskforce’s Steering Committee published a recommendation to convert WIBOR interest rate derivatives to the POLSTR benchmark |
3. Financial performance and capital adequacy
Key financial indicators of PKO Bank Hipoteczny SA
Statement of financial position of PKO Bank Hipoteczny SA
Income statement of PKO Bank Hipoteczny SA
Requirements regarding own funds (Pillar I)
Internal capital (Pillar II)
Disclosures (Pillar III)
3.1. Key financial indicators of PKO Bank Hipoteczny SA
|
|
31.12.2025 |
31.12.2024 |
|
Total assets (in PLN M) |
17,938.3 |
17,376.7 |
|
ROA [6] |
0.5 |
0.7 |
|
ROE[7] |
5.4 |
7.8 |
|
Total capital ratio (TCR) |
28.7% |
22.9% |
|
Leverage ratio (LR) |
9.2% |
9.5% |
|
Cost/income ratio (C/I)[8] |
27.7% |
22.6% |
3.2. Statement of financial position of PKO Bank Hipoteczny SA
|
in PLN million |
31.12.2025 |
31.12.2024 |
|
Cash and balances with the Central Bank |
0.0 |
0.4 |
|
Amounts due from banks |
2.9 |
10.2 |
|
Derivative hedging instruments |
0.2 |
0.0 |
|
Securities |
786.2 |
749.3 |
|
Loans and advances to customers |
17,130.4 |
16,600.7 |
|
Other assets[9] |
18.6 |
16.1 |
|
TOTAL ASSETS |
17,938.3 |
17,376.7 |
|
in PLN million |
31.12.2025 |
31.12.2024 |
|
Amounts due to banks |
4,679.6 |
5,342.8 |
|
Derivative hedging instruments |
21.7 |
208.7 |
|
Liabilities in respect of mortgage covered bonds issued |
8,431.6 |
7,233.4 |
|
Liabilities in respect of bonds issued |
2,925.8 |
2,721.3 |
|
Other liabilities and provisions[10] |
138.7 |
127.0 |
|
Equity |
1,740.9 |
1,743.5 |
|
TOTAL LIABILITIES AND EQUITY |
17,938.3 |
17,376.7 |
As at 31 December 2025, total assets of PKO Bank Hipoteczny SA amounted to PLN 17,938.3 million. Residential loans were the key component of the Bank’s assets. Their carrying amount, taking into account allowances for expected credit losses recognized as at 31 December 2025, amounted to PLN 17,130.4 million, of which loans granted by PKO Bank Hipoteczny SA amounted to PLN 9,099.5 million, whereas loans purchased from PKO Bank Polski SA amounted to PLN 8,112.4 million.
On the liabilities side, the share of mortgage covered bonds increased and accounted for 47% of the balance sheet total at the end of December 2025.
In 2025, PKO Bank Hipoteczny SA carried out:
• an issue PLN-denominated mortgage covered bonds of PLN 800 million;
• a benchmark issue of EUR-denominated covered bonds of EUR 500 million;
• an issue PLN-denominated retail mortgage covered bonds of PLN 1,155 million.
Thus, the carrying value of mortgage covered bonds was PLN 8,431.6 million as at the end of December 2025,
which is an increase of 17% compared to the end of 2024.
As at 31 December 2025, financial liabilities to PKO Bank Polski SA constituted a significant item of the Bank’s liabilities. They consisted of liabilities in the form of loans, overdraft facilities up to the limit available, liabilities in respect of receivables purchased, liabilities in respect of mortgage covered bonds and other bonds acquired by PKO Bank Polski SA and other liabilities to PKO Bank Polski SA. Their total balance was PLN 5,235.9 million. Unsecured bonds issued by the Bank were also a significant source of funding for the Bank’s operations, with a balance of PLN 2,925.8 million as at 31 December 2025, up 7.5% compared with the end of 2024. Equity amounted to PLN 1,740.9 million as at 31 December 2025 (PLN 1,743.5 million at the end of 2024).
3.3. Income statement of PKO Bank Hipoteczny SA
|
in PLN million |
01.01.2025– 31.12.2025 |
01.01.2024– 31.12.2024 |
Change y/y |
|
Net interest income |
261.4 |
286.8 |
(25.4) |
|
Net fee and commission income |
(7.0) |
(4.7) |
(2.3) |
|
Net foreign exchange gains / (losses) |
0.1 |
4.0 |
(3.9) |
|
Net allowance for expected credit losses |
7.2 |
5.4 |
1.8 |
|
Net other operating income and expenses |
0.6 |
0.3 |
0.3 |
|
Administrative expenses |
(53.5) |
(47.4) |
(6.1) |
|
Regulatory charges |
(17.3) |
(17.4) |
0.1 |
|
Tax on certain financial institutions |
(48.9) |
(51.0) |
2.1 |
|
Operating profit |
142.6 |
176.1 |
(33.5) |
|
Profit before tax |
142.6 |
176.1 |
(33.5) |
|
Income tax expense |
(47.5) |
(45.8) |
(1.7) |
|
Net profit |
95.1 |
130.3 |
(35.2) |
In the period under analysis, the Bank generated interest income of PLN 1,180.3, of which interest income on residential loans measured at amortised cost amounted to PLN 1,133.0 million. During this period, the Bank incurred interest expense of PLN 918.9 million, including interest on mortgage covered bonds and the cost of hedging transactions which amounted to PLN 479.1 million in total.
The realized turnover (understood as interest income and fee and commission income) was generated entirely from the Bank’s operations in Poland.
In 2025, the Bank incurred administrative expenses of PLN 53.5 million. Material costs of PLN 28.5 million were a significant item in the structure of administrative expenses, of which PLN 20.0 million were costs related to services provided by PKO BP under an outsourcing contract. Employee benefit cost amounted to PLN 23.2 million.
In 2025, regulatory charges amounted to PLN 17.3 million. A contribution to the Bank Guarantee Fund’s resolution fund which amounted to PLN 14.0 million was the main component of this item.
Tax on certain financial institutions of PLN 48.9 million in the reporting period was another material item of the cost of the Bank’s activities.
A high level of costs of regulatory charges and taxes has a material impact on the Bank’s profitability.
The Bank’s net allowances for expected credit losses amounted to PLN 7.2 million in 2025 (a net release of provisions) which translated to a credit risk cost ratio of -0.04%. In 2024, the respective amounts were PLN 5.4 million and -0.03%. The cost of risk is at a very low level as a result of maintaining strict control of credit risk, which translates into the very good quality of the loan portfolio.
Dividend paid
On 27 June 2025, the Ordinary General Shareholders’ Meeting of PKO Bank Hipoteczny SA passed a resolution on profit distribution for the financial year 2024, in which:
• PLN 32.6 million was allocated to the Bank’s supplementary capital, including 8% of the profit in accordance with Articles 348 and 396 of the Commercial Companies Code,
• PLN 97.7 million, i.e. the remaining portion of the profit was earmarked for payment of dividend. On 30 June 2025, the funds for the payment of dividend to PKO Bank Polski SA were transferred to the non-public market companies’ shareholders register maintained by the Brokerage Office of PKO BP.
The Bank’s funding structure
The table below presents the structure of the Bank’s funding sources:
|
|
31.12.2025 |
31.12.2024 |
|
Mortgage covered bonds issued |
47.0% |
41.6% |
|
Funds from the Parent Company |
26.1% |
30.8% |
|
Bonds issued |
16.3% |
15.7% |
|
Equity |
9.7% |
10.0% |
|
Other |
0.9% |
1.9% |
|
Total |
100.0% |
100.0% |
As at 31 December 2025 and 31 December 2024, by Bank was not in default in respect of any contractual liabilities.
As at 31 December 2025, the total amount of the Bank's financial liabilities, as defined in the Act on Bonds, Article 35.1 as of 15 January 2015, amounted to PLN 16.2 billion and was higher than the forecast of financial liabilities as at that date by PLN 1.8 billion, of which PLN 1.5 billion was related to covered bonds. The increase in the value of covered bonds was primarily due to the business decision made in 2025 to expand and direct the Bank's covered bonds offering to individual customers. The new project proved to be a historic success for the Bank.
3.4. Requirements regarding own funds (Pillar I)
General information
Starting from 1 January 2025, changes were made to the calculation of capital requirements for credit and operational risk and the estimation of own funds, in accordance with Regulation (EU) 2024/1623 of the European Parliament and of the Council of 31 May 2024 amending Regulation (EU) No 575/2013 as regards requirements for credit risk, credit valuation adjustment risk, operational risk, market risk and the output floor (CRR 3).
The changes related in particular to:
• Updating the risk weights for exposures secured by residential real estate;
• Updating credit conversion factors (CCFs) for off-balance sheet exposures;
• Introducing an obligation to calculate the credit requirement for accepted credit applications for which no contract has been signed;
• Changing the method of calculating the capital requirement for operational risk - from the BIA to the new standardized approach;
In accordance with the CRR, the Bank calculates requirements in respect of own funds for the following risk types:
• credit risk – according to the standardized approach;
• credit valuation adjustment (CVA) risk – according to the standardized approach;
• settlement and delivery risk – according to the standardized approach;
• operational risk - according to the standardized approach based on the business indicator component (BIC),
• market risk (foreign exchange risk only) – according to basic methods.
As at 31 December 2025, own fund requirements regarding the risk of credit valuation adjustment, settlement and delivery, and market risk were nil, therefore, the total requirement in respect of own funds comprised the requirements for credit and operational risks.
|
Own funds requirements |
31.12.2025 |
31.12.2024 |
|
Credit risk (in PLN million) |
426.3 |
531.6 |
|
Operational risk (in PLN million) |
41.3 |
49.3 |
|
Total own funds requirement (in PLN million) |
467.6 |
581.0 |
|
Common equity Tier 1 capital ratio (CET1) |
28.7% |
22.9% |
|
Tier 1 capital ratio (T1) |
28.7% |
22.9% |
|
Total capital ratio (TCR) |
28.7% |
22.9% |
The following tables show exposure values, risk-weighted assets (RWA) and own funds requirements, by exposure class:
|
31.12.2025 in PLN million |
Gross exposure |
Exposure value[11] |
Risk-weighted assets (RWA) |
Own funds requirement |
|
Retail exposures[12] |
3,358.6 |
3,342.0 |
2,450.4 |
196.1 |
|
Exposures secured by mortgages on real estate |
14,082.0 |
14,051.6 |
2,810.3 |
224.9 |
|
Exposures to central governments or central banks |
786.2 |
786.2 |
- |
- |
|
Exposures to institutions |
422.0 |
422.0 |
- |
- |
|
Exposures in default |
82.1 |
46.3 |
49.4 |
3.9 |
|
Other exposures |
18.1 |
18.1 |
18.1 |
1.4 |
|
Total |
18,749.0 |
18,666.2 |
5,328.2 |
426.3 |
|
31.12.2024 in PLN million |
Gross exposure |
Exposure value[13] |
Risk-weighted assets (RWA) |
Own funds requirement |
|
Retail exposures[14] |
1,996.5 |
1,933.0 |
1,449.8 |
116.0 |
|
Exposures secured by mortgages on real estate |
14,715.0 |
14,669.4 |
5,134.3 |
410.7 |
|
Exposures to central governments or central banks |
749.7 |
749.7 |
- |
- |
|
Exposures to institutions |
74.7 |
74.7 |
- |
- |
|
Exposures in default |
78.3 |
42.3 |
45.4 |
3.6 |
|
Other exposures |
15.8 |
15.8 |
15.8 |
1.3 |
|
Total |
17,629.9 |
17,484.9 |
6,645.2 |
531.6 |
Credit risk adjustments
For the purpose of specific credit risk adjustments, the Bank uses impairment loss, which was recognized in the Bank’s Tier 1 capital in accordance with the CRR and implementing legislation.
The approach applied by the Bank to identifying exposures at risk of impairment and methods for estimating allowances for expected credit losses and provisions for financial liabilities granted are described in Note 46.5 “Impairment of credit exposures” to the financial statements of PKO Bank Hipoteczny SA for the year ended 31 December 2025.
Use of credit risk mitigation techniques
The Bank uses mortgage collateral to classify exposures to classes of exposures secured by mortgages on real estate and to apply preferential risk weights. Detailed information about the main types of collateral accepted by the Bank and the method of determining the mortgage lending value may be found in Note 46.2 “Credit risk mitigation techniques - hedging” to the financial statements of PKO Bank Hipoteczny SA for the year ended 31 December 2025.
3.5. Internal capital (Pillar II)
Internal capital is the estimated amount of capital required to cover all material risks identified in the Bank’s activities, as well as the effect of changes in the business environment, taking into account the expected level of risk.
PKO Bank Hipoteczny SA monitors the materiality of different risks involved in the Bank’s operations.
The Bank separately estimates its internal capital for the following risks considered to be material:
• credit risk;
• liquidity risk;
• operational risk;
• interest rate risk;
• business risk;
• model risk.
The internal capital required to cover individual risks is determined in accordance with the methods set out in the Bank’s internal regulations. The total internal capital is the sum of the internal capital required to cover all the risks material for the Bank.
|
Internal capital structure |
31.12.2025 |
31.12.2024 |
|
For credit risk |
59.3% |
66.1% |
|
For liquidity risk |
7.7% |
6.1% |
|
For operational risk |
5.7% |
5.4% |
|
For interest rate risk |
13.2% |
9.8% |
|
For business risk |
13.9% |
12.4% |
|
For model risk |
0.2% |
0.2% |
|
Total |
100.0% |
100.0% |
As at 31 December 2025, the ratio of the Bank’s own funds to its internal capital remained above both the statutory and internal limits.
In order to estimate the amount of own funds required to operate safely in times of recession, the Bank regularly conducts stress tests. The results of the tests carried out indicate the Bank’s low sensitivity to the materialization of shock scenarios and confirm that the Bank’s capital base will allow it to absorb potential negative events.
3.6. Disclosures (Pillar III)
Considering the scale and specific nature of its operations, in the financial statements and in the Directors’ Report the Bank discloses in particular information about:
• risk management objectives and strategies;
• own funds for capital adequacy purposes;
• capital buffers;
• leverage;
• capital requirements;
• credit risk adjustments;
• credit risk mitigation techniques used;
• the Bank’s remuneration policy, in line with Recommendation Z;
• the main provisions of the Principles for the Management of Conflicts of Interest in line with Recommendation Z;
• the requirements referred to in Article 111a of the Banking Law and Recommendation H;
• operational risk, in line with Recommendation M;
• credit risk and information on impairment of financial assets in line with Recommendation R and IFRS 9;
• liquidity risk management system and liquidity position, in accordance with Recommendation P;
The Bank, operating within the PKO Bank Polski Group, also provides information to the Parent Company for inclusion in the consolidated data.
Detailed information on the scope of disclosures, the manner of their verification and publication is contained in the Disclosure Policy of PKO Bank Hipoteczny SA concerning capital adequacy and other reportable information, which is available on the Bank’s website (www.pkobh.pl).
4. Business of PKO Bank Hipoteczny SA
Sale of residential mortgage loans under the agency model
Acquisition of residential mortgage loan receivables
Structure of the residential mortgage loan portfolio
Mortgage covered bonds
Financial market operations
Bonds – Bond Issue Programme Agreement concluded with PKO Bank Polski SA
4.1. Sale of residential mortgage loans under the agency model
In 2025 the Bank granted mortgage loans of PLN 1,232 million.
In accordance with Recommendation S of the Polish Financial Supervision Authority, the Bank only grants loans for which the loan-to-value ratio does not exceed 80%. Moreover, in compliance with the Polish Act on Mortgage Covered Bonds and Mortgage Banks, the Bank only grants loans whose value in relation to the mortgage lending value of the real estate does not exceed 100%.
The main criteria applied by PKO Bank Hipoteczny SA in the process of granting mortgage-secured loans are shown in the table below:
The Bank offers both variable-interest loans and loans bearing interest based on a five-year fixed base rate. It also allows the option of changing the variable rate to the five-year fixed base interest rate.
|
Criteria |
Agency model |
|
Loan amount/market value of the real estate |
Max 80%[15] |
|
Loan amount/mortgage lending value of the real estate |
Max 100% |
|
Legal title to the real estate |
Ownership |
|
Loan collateral |
First mortgage Recorded in Section IV of the Land and Mortgage Register |
|
Currency |
PLN |
|
Purpose |
Residential |
4.2. Acquisition of residential mortgage loan receivables
As part of its business activities, PKO Bank Hipoteczny SA acquires residential mortgage loan receivables from PKO Bank Polski SA based on a framework agreement signed in 2015.
The following table shows the main criteria used by PKO Bank Hipoteczny SA in the process of acquiring residential mortgage loans.
|
Criteria |
Pooling model |
|
Loan amount/mortgage lending value of the real estate |
Max 100% |
|
Legal title to the real estate |
Ownership |
|
Loan collateral |
First mortgage Recorded in Section IV of the Land and Mortgage Register |
|
Currency |
PLN |
|
Days past due or impairment indicators |
None |
|
Purpose |
Residential |
|
Assessment of borrower’s creditworthiness |
Positive |
4.3. Structure of the residential mortgage loan portfolio
Portfolio structure by LtV
The structure of the portfolio of residential mortgage loans in the statement of financial position of PKO Bank Hipoteczny SA by the LtV ratio based on market valuation[16] and the LtV ratio based on the MLV is presented in the tables below.
|
Gross loans granted to customers by LtV based on market valuation |
31.12.2025 |
31.12.2024 |
|
below 50% |
86.2% |
92.7% |
|
51% - 60% |
5.0% |
3.4% |
|
61% - 70% |
3.5% |
1.9% |
|
71% - 80% |
2.9% |
1.3% |
|
81% - 90% |
2.4% |
0.7% |
|
over 90% |
0.0% |
0.0% |
|
Total, gross |
100.0% |
100.0% |
|
Average LTV based on market valuation |
33.4% |
31.4% |
|
Gross loans granted to customers by LtV based on mortgage lending value |
31.12.2025 |
31.12.2024 |
|
below 50% |
27.4% |
26.0% |
|
51% - 60% |
14.7% |
14.2% |
|
61% - 70% |
18.1% |
17.7% |
|
71% - 80% |
19.8% |
21.1% |
|
81% - 90% |
15.9% |
18.4% |
|
over 90% |
4.1% |
2.6% |
|
Total, gross |
100.0% |
100.0% |
|
Average LtV based on MLV |
61.8% |
62.4% |
In 2025, the average LtV based on the market valuation of the loan portfolio increased by 2 p.p. (down 3.6 p.p. in 2024). The increase is due to the combination of the low value of the LtV at the end of 2024, the stopping of significant increases in property prices and sales/transfers of receivables higher than in the previous year. In the case of the MLV-based LtV indicator, a slight y/y decrease was observed. The MLV determined as at the moment of granting the loans did not require updating – in the Bank’s opinion, it is at a safe level, lower than the market value, and meets the requirements of the Regulations for Setting the Mortgage Lending Value of Real Estate by PKO Bank Hipoteczny SA.
Interest on loans
The Bank offers loans based on the WIBOR 6M rate and loans bearing interest based on a five-year fixed base rate. It also allows the option of changing the variable rate to fixed-interest rate in a period of five years. In the past, the Bank also offered loans based on WIBOR 3M.
The base reference rates used for the Bank’s loans are the WIBOR 6M and WIBOR 3M and a fixed base rate, which on average amounted to 4.97%, 5.11% and 4.71% respectively in 2025.
4.4. Mortgage covered bonds
The key objective of PKO Bank Hipoteczny SA is to issue mortgage covered bonds which are the main source of the long-term funding for loans secured with real estate.
Mortgage covered bond issues under the Domestic Programme of Mortgage Covered Bonds Issuance
From the beginning of its operations, PKO Bank Hipoteczny SA has issued thirteen series of Polish mortgage covered bonds, including two issues of Green Covered Bonds. These issues were conducted under the Domestic Programme of Mortgage Covered Bonds Issuance of PKO Bank Hipoteczny SA. In October 2025, under the domestic programme updated in August 2025, the Bank issued 1N series mortgage bonds addressed to retail investors, with a nominal value of PLN 10 billion of issued and unredeemed mortgage covered bonds.
The total value of outstanding mortgage covered bonds issued by PKO Bank Hipoteczny SA for the domestic market (at nominal value) was PLN 1.215 million at the end of 2025.
All series of domestic mortgage covered bonds issued are traded on the regulated parallel market of the Warsaw Stock Exchange and on the BondSpot regulated market. They are also accepted in repo transactions by the National Bank of Poland. The 1N series mortgage covered bonds are listed on the parallel WSE CATALYST market .
In 2025, PKO Bank Hipoteczny SA redeemed two series of PLN-denominated mortgage covered bonds issued under the domestic programme, with a total nominal value of PLN 730 million.
Mortgage covered bonds of PKO Bank Hipoteczny SA issued under the Domestic Programme of Mortgage Covered Bonds Issuance and outstanding as at 31 December 2025:
|
Series |
Mortgage covered bond number (ISIN) |
Issue date |
Redemption date |
Series value (in PLN million) |
Interest rate |
Currency |
Rating of the issue |
Listing |
|
10 |
PLPKOHP00108 |
24.08.2018 |
24.08.2028 |
60 |
3.4875% |
PLN |
Aa1 |
Bondspot, WSE parallel regulated market |
|
1N (series for retail investors) |
PLPKOHP00215 |
24.10.2025 |
27.11.2028 |
1,155.2 |
in the first six-month period 5% per annum, thereafter NBP reference rate plus 0.25% margin |
PLN |
the issuer has not applied for a rating |
WSE parallel regulated market |
Mortgage covered bond issues under the International Programme of Mortgage Covered Bonds Issuance
From the beginning of its operations, PKO Bank Hipoteczny SA has issued sixteen series of mortgage covered bonds under the International Programme of Mortgage Covered Bonds Issuance, including nine issues denominated in EUR and seven denominated in PLN.
The total value of issued and outstanding mortgage covered bonds denominated in EUR and PLN under PKO Bank Hipoteczny SA’s International Programme of Mortgage Covered Bonds Issuance (at nominal value) amounted to EUR 500 million and PLN 5,050 million, respectively, as at the end of 2025, which, using the average euro exchange rate announced by the National Bank of Poland as at 31 December 2025, gives a total amount of PLN 7,163 million.
Series 9, 10, 11, 12 and 13 of mortgage covered bonds issued under the International Mortgage Covered Bonds Issuance Programme are traded on the parallel regulated market of the Warsaw Stock Exchange and on the Luxembourg Stock Exchange. Series 14 and 15 are listed on the parallel regulated market of the Warsaw Stock Exchange and Series 16 on the Luxembourg Stock Exchange. Mortgage covered bonds denominated in EUR are also accepted in repo transactions by the National Bank of Poland and the European Central Bank.
In 2025, PKO Bank Hipoteczny SA carried out one issue of Series 15 mortgage covered bonds with a nominal value of PLN 800 million and an issue of Series 16 mortgage covered bonds with a nominal value of EUR 500 million.
In 2025, PKO Bank Hipoteczny SA redeemed nine series of EUR-denominated mortgage covered bonds with a total nominal value of EUR 500 million.
Mortgage covered bonds of PKO Bank Hipoteczny SA issued under the International Mortgage Covered Bonds Issuance Programme outstanding as at 31 December 2025:
|
Series |
Mortgage covered bond number (ISIN) |
Issue date |
Redemption date |
Series value (in millions) |
Currency |
Coupon |
Rating of the issue |
Listing |
|
9 |
XS2583335943 |
09.02.2023 |
09.02.2026 |
500 |
PLN |
WIBOR 3M + 0.85% |
Aa1 |
LuxSE, WSE parallel regulated market |
|
10 |
XS2641919639 |
28.06.2023 |
29.06.2026 |
500 |
PLN |
WIBOR 3M + 0.78% |
Aa1 |
LuxSE, WSE parallel regulated market |
|
11 |
XS2711876370 |
02.11.2023 |
02.11.2026 |
750 |
PLN |
WIBOR 3M + 0.78% |
Aa1 |
LuxSE, WSE parallel regulated market |
|
12 |
XS2787873541 |
22.03.2024 |
22.03.2028 |
1,000 |
PLN |
WIBOR 3M + 0.55% |
Aa1 |
LuxSE, WSE parallel regulated market |
|
13 |
XS2854926701 |
05.07.2024 |
04.07.2028 |
500 |
PLN |
WIBOR 3M + 0.55% |
Aa1 |
LuxSE, WSE parallel regulated market |
|
14 |
PLL219200028 |
24.10.2024 |
24.10.2028 |
1000 |
PLN |
WIBOR 3M + 0.70% |
Aa1 |
WSE parallel regulated market |
|
15 |
PLL219200036 |
27.02.2025 |
27.02.2029 |
800 |
PLN |
WIBOR 3M + 0.80% |
Aa1 |
WSE parallel regulated market |
|
16 |
XS3097942141 |
25.06.2025 |
12.06.2029 |
500 |
EUR |
2.50% |
Aa1 |
LuxSE |
The funds raised from the issues of mortgage covered bonds have been used by PKO Bank Hipoteczny SA to grant residential loans and to purchase mortgage loan receivables from PKO Bank Polski SA.
Pursuant to Article 7d of the Polish Mortgage Covered Bonds and Mortgage Banks Act of 29 August 1997, mortgage covered bonds may be labelled as European Covered Bonds or European Covered Bonds (premium). Mortgage covered bonds of PKO Bank Hipoteczny SA are labelled as European Mortgage Bonds (premium). The “premium” label allows easy and unequivocal identification of whether the mortgage covered bonds meet the requirements of Article 129 of the CRR, which is to facilitate assessment of their quality by investors and therefore increase their attractiveness as an investment instrument both in the EU and in other countries.
The list of mortgage covered bonds issues which include mortgage covered bonds labelled as European Mortgage Bonds or European Mortgage Bonds (premium) is available on the PFSA website:
https://www.knf.gov.pl/podmioty/Podmioty_sektora_bankowego/Banki_hipoteczne
The Covered Bond Label
On 6 February 2018, PKO Bank Hipoteczny SA as the first issuer of mortgage covered bonds from Poland joined The Covered Bond Label. The Covered Bond Label is a quality certificate, whose purpose is to build awareness of the safety and high quality of assets such as mortgage covered bonds among investors.
The Bank’s details on the website of The Covered Bond Label are available at:
https://coveredbondlabel.com/issuer/132-pko-bank-hipoteczny-spolka-akcyjna
Energy Efficient Mortgage Label
The Energy Efficient Mortgage Label was created by the European Mortgage Federation – European Bond Council (EMF-ECBC) as a clear and transparent quality label for consumers, lenders and investors, aimed at identifying energy-efficient residential mortgage loans.
PKO Bank Hipoteczny SA was the first Polish bank to join the Energy Efficient Mortgage Label in 2021. This initiative is aimed at supporting the Green Deal and climate neutrality by 2050, by adapting the product portfolio to regulatory changes such as the new EU taxonomy.
The Bank’s details on the website of Energy Efficient Mortgage Label are available at:
https://www.energy-efficient-mortgage-label.org/issuers/directory
Green Covered Bonds
In 2019, PKO Bank Hipoteczny SA published the Green Covered Bond Framework (GCBF) for the first time. In June 2022 the GCBF was updated by the Bank in connection with the planned issue of Green Covered Bonds. The GCBF specifies, among other things, the principles for selecting assets to secure the Green Covered Bond issues. Green issues by PKO Bank Hipoteczny SA are secured with mortgages that meet the highest energy efficiency and CO2 emissions standards.
On 27 August 2024, in order to standardize the framework for the issuance of green debt instruments for PKO Bank Polski SA Group companies, PKO Bank Hipoteczny adopted the PKO Bank Polski SA Group Green Bond Framework. The Green Bond Framework is a framework document containing the principles of green and sustainable financing in the PKO BP Group. It was developed on the basis of International Capital Market Association’s (ICMA’s) Green Bond Principles from 2021. The document defines the objectives of green financing and the types of investments for which funds obtained from green issues can be used and indicates the distribution of tasks related to its topic.
The proceeds from Green Covered Bonds are used exclusively to provide full or partial funding or refunding of new and/or existing projects which have been classified as green assets. Such bonds satisfy the criteria set by the International Capital Market Association (ICMA), which are known as Green Bond Principles (GBP). The GBP are a set of guidelines concerning the purpose of funding, assessment and selection of assets, managing the proceeds from the issue and reporting the allocation of funds.
In June 2019 and then in June 2022, PKO Bank Hipoteczny SA obtained a second party opinion for its Green Covered Bond Framework from Sustainalytics, a specialized and certified international institution. PKO Bank Hipoteczny SA’s Green Covered Bonds are certified by the Climate Bond Initiative (CBI) - the last post-issue certification took place in May 2023. The CBI certificate is awarded to bonds and mortgage covered bonds that meet the highest standards in terms of positive environmental impact.
At least once a year, the Bank publishes a report on the allocation and impact of the issues of the Green Covered Bonds on the environment.
For more detailed information concerning Green Covered Bonds issued by the Bank, please visit:
https://www.pkobh.pl/listy-zastawne/zielone-listy-zastawne/
4.5. Financial market operations
PKO Bank Hipoteczny SA executes treasury transactions on the wholesale financial market. The purpose of the transactions is to manage liquidity (over short-, mid- and long-term time horizons) and the Bank’s foreign-currency position. Additionally, the Mortgage Covered Bonds and Mortgage Banks Act imposes an obligation on PKO Bank Hipoteczny SA to mitigate the risk caused by fluctuations in exchange rates.
For the purpose of funding the granting of residential loans and the purchase of receivables for residential loans granted by PKO Bank Polski SA, PKO Bank Hipoteczny SA issues mortgage covered bonds and unsecured bonds, utilizes credit lines and assumes liabilities for purchased receivables.
In the Management Board’s opinion, as at 31 December 2025, there were no indications of a risk of late payment of the liabilities incurred by the Bank. As at 31 December 2025, the Bank complied with all internal and regulatory liquidity limits. Details of the levels of the Bank’s liquidity limits are provided in Note 47 “Liquidity risk management” to the financial statements of PKO Bank Hipoteczny SA for the year ended 31 December 2025.
For the purpose of hedging interest rate risk and foreign exchange risk of the issue of EUR-denominated mortgage covered bonds, PKO Bank Hipoteczny SA entered into Cross-Currency Interest Rate Swap (CIRS) transactions, under which the Bank pays a coupon in PLN based on a variable interest rate, and receives a coupon based on a fixed interest rate for EUR. If PKO Bank Hipoteczny SA is declared bankrupt by the court, the CIRS transactions will be automatically extended by 12 months on the terms and conditions set on the transaction date. Additionally, the Bank has executed a series of FX-Forward contracts, which hedge currency exposures with maturities on the payment dates of the coupons for the EUR-denominated mortgage covered bonds.
As far as the issue of fixed-interest rate mortgage covered bonds in PLN is concerned, PKO Bank Hipoteczny SA entered into IRS transactions under which it pays a coupon based on a variable PLN rate, and receives a coupon based on a fixed PLN rate.
4.6. Bonds – Bond Issue Programme Agreement concluded with PKO Bank Polski SA
On 30 September 2015, PKO Bank Hipoteczny SA concluded an Own Bonds Issue Programme Agreement with PKO Bank Polski SA, based on which zero coupon bonds, variable coupon bonds and fixed coupon bonds with maximum tenors up to 36 months may be issued.
In 2025, by Bank issued bonds with a total nominal value of PLN 5,549 million under this Programme. At the same time, the Bank redeemed bonds with a total nominal value of PLN 5,350.0 million. The balance of bonds issued under the Programme was PLN 2,959.5 million as at 31 December 2025. The Bank intends to continue raising funds under this Programme.
5. Internal Operating Conditions
Lending process and cooperation with PKO Bank Polski SA
Internal governance
Management of conflicts of interest
Internal control system
Risk management
Measurement of residential mortgage loan collaterals
Cover Pool for Mortgage Covered Bonds
Cover Pool Monitor
Statutory limits
5.1. Lending process and cooperation with PKO Bank Polski SA
• the agency model;
• the pooling model.
Cooperation with PKO Bank Polski SA is governed in detail by an outsourcing agreement concluded on 16 January 2015. The agreement governs the scope of the cooperation and describes in detail the method of performing the outsourced functions, first and foremost in the area of offering and administering residential loans and performing support functions for PKO Bank Hipoteczny SA. Additionally, PKO Bank Polski SA committed in the agreement to properly perform the functions entrusted to it, as well as to perform reporting and controlling activities for PKO Bank Hipoteczny SA.
On 17 November 2015, a Receivables Sale Framework Agreement was signed with PKO Bank Polski SA. On the basis thereof, the Bank has been acquiring portfolios of receivables in respect of residential mortgage loans from PKO Bank Polski SA since December 2015.
5.2. Internal governance
An effective and transparent internal governance system is operative in the Bank, as specified in PKO Bank Hipoteczny SA’s Articles of Association and the adopted internal regulations, which comprises, in particular:
• the Bank’s management system;
• the Bank’s organization; and
• operating principles, rights, duties and responsibilities, and mutual relationships between the Bank’s particular authorities and organizational units, including the Supervisory Board, Management Board and key employees.
The key elements of internal governance, its goals and relationships between them, and the basic principles of the Bank’s organization are defined in the Bank’s Management Strategy.
The Bank’s Management System covers all the aspects of the Bank’s functioning, and in particular strategic planning and managing of the Bank’s strategy, the internal control system, the risk management system, ethical principles, whistleblowing procedures for anonymous notification of violations of the law and the ethical procedures and standards binding in the Bank, capital adequacy, the manner of shaping products, managing human resources and the remuneration policy.
The Bank conducts its activities in a responsible manner, taking into consideration the principles of internal governance, guided by the need to maintain the highest diligence, professionalism and ethics. The Bank discharges its duties under the binding legal regulations, complies with the requirements for regulated institutions imposed by the Polish Financial Supervision Authority in the form of recommendations and good practices for the banking sector, the Corporate Governance Framework for supervised institutions, and guidelines specified by the European Banking Authority to be adopted pursuant to the supervisory practice in the Member States in the scope relating to the Bank’s operations and the adopted business model, in consideration of the scale, specificity and nature of the Bank’s operations. The above rules support the Bank in its endeavours to reinforce operating transparency and maintain safety of its operations.
The Bank’s Management Board is responsible for designing, implementing, and ensuring the compliance with and the proper functioning of the internal governance, taking into account all of its components. The Bank’s Management Board regularly informs the Bank’s Supervisory Board of the state of implementation of the Bank’s management strategy and its risk management strategy, and of the most important related issues; if necessary, it also immediately notifies of events and circumstances material for the assessment of the Bank’s position and its management.
The Bank’s Supervisory Board oversees the implementation and functioning of the internal governance and assesses its adequacy and effectiveness. The assessment takes into account primarily all the elements of the internal governance and potential material changes in internal and, if arising, external factors which may have an impact on the Bank’s operations
Taking into account the recommendation of the Management Board and the results of periodical reviews and evaluations of particular fields comprising the Bank’s internal governance disclosed in the comprehensive “Report on the assessment of the functioning of internal governance in PKO Bank Hipoteczny SA for the year 2025”, the Supervisory Board has assessed the internal governance implemented in the Bank as satisfactory, which means that it is adequate to the business model adopted by the Bank and functions effectively with respect to its particular components.
5.3. Management of conflicts of interest
The Bank has the “Policies for managing conflicts of interests in PKO Bank Hipoteczny SA” adopted by the Management Board and approved by the Supervisory Board.
The objective of managing conflicts of interest at the Bank is to ensure that all customers, the Bank related parties, suppliers and bidders are treated professionally, fairly and honestly.
The Bank manages conflicts of interest by preventing situations that may give rise to conflicts of interest, taking steps to identify, disclose and control conflicts of interest and to eliminate or limit their negative impact on the Bank’s functioning and its relations with clients and other entities.
Given the scope and the specific nature of its operations as a mortgage bank, the Bank identifies potential situations of conflicts of interest which may arise in the relationship between:
• the Bank or its related entity and a Bank’s customer;
• a related entity and the Bank;
• the Bank or its related entity and a supplier or bidder or their related parties;
• the Bank and its Parent Company.
5.4. Internal control system
The Bank has an internal control system which is part of the Bank’s management system.
The Bank’s Management Board is responsible for the design, implementation and operation of an adequate and effective internal control system. The Supervisory Board supervises and evaluates the implementation and functioning of an adequate and effective internal control system, including the control function, the compliance function and the internal audit function. The internal control system is assessed on the basis of specific criteria, taking into account information provided by the Bank’s Management Board, the Audit and Finance Committee of the Supervisory Board, the compliance function and the internal audit function, as well as findings made by the auditor and arising from supervisory activities of authorized institutions and other information and documents relevant to the adequacy and effectiveness of the internal control system. The Bank’s Supervisory Board is supported in this respect by the Audit and Finance Committee of the Supervisory Board, which is responsible in particular for monitoring the effectiveness of the internal control system.
The purpose of the internal control system is to ensure:
• effectiveness of the Bank’s operations;
• reliability and accuracy of financial reporting, administrative and accounting procedures, and reliable internal and external reporting;
• compliance with the risk management policy;
• compliance of the Bank’s operations with the generally applicable laws, internal regulations and market standards adopted by the Bank, taking into account regulatory recommendations.
The internal control and risk management system at the Bank is organized at three independent levels:
1. the first level consists of organizational structures that perform operational tasks that generate risks, which operate under the Bank’s internal regulations;
2. the second level includes the activities of:
• the compliance unit;
• specialized organizational structures of the Bank responsible for the identification, measurement, control, monitoring and reporting of the various risks, as well as the threats and irregularities identified, in order to ensure that the activities carried out at the first level are properly designed and that the second level structures effectively manage the risks and support the efficiency of the Bank’s activities.
3. the third level is the internal audit unit which carries out independent audits of particular components of the Bank’s management system, including the risk management system and the internal control system. Internal audit operates separately from the first and second levels.
The Bank’s internal control system includes:
1) the control function,
2) the compliance unit - the Compliance Team (ZZ),
3) the internal audit function - the Bureau of Internal Audit (BAW).
The control function is designed to ensure compliance with controls relating, in particular, to risk management; this function covers all of the Bank’s business units which are responsible for carrying out the tasks assigned to this function;
The control function consists of:
• control mechanisms;
• independent monitoring of compliance with controls;
• reporting as part of the control function.
On the basis of criteria approved by the Bank’s Management Board, the Bank identifies processes that are material to the achievement of the objectives of the Bank’s internal control system and business objectives, and ensures that periodic reviews of the processes operating in the Bank are carried out in terms of their materiality. The list of essential processes and their relationship to the objectives of the internal control system is set out in a resolution of the Management Board.
Control mechanisms are built into the Bank’s processes and the systems or applications that support them. The control mechanisms are aligned with the objectives of the internal control system linked to the processes operating in the Bank, the complexity of the processes, the risk of irregularities and the scale and nature of the Bank’s activities, taking into account the resources available to the Bank. Compliance with these control mechanisms is subject to independent monitoring at all levels of the internal control system.
Independent monitoring of compliance with controls at the aforementioned levels is carried out as:
• horizontal - monitoring compliance with controls implemented within a given level;
• vertical - monitoring of compliance of the second level with first-level controls.
The organizational units are responsible for carrying out specific tasks relating to horizontal or vertical monitoring, to the extent resulting from their tasks and competences. Independent monitoring includes ongoing verification or testing of controls.
The compliance unit (ZZ) is an organizationally separate, independent unit that plays a key role in ensuring compliance and managing the risk of non-compliance, understood as the risk of legal sanctions, financial losses, or loss of reputation as a result of the Bank, its employees, or entities acting on its behalf failing to comply with generally applicable laws, the Bank’s internal regulations, and market standards adopted by the Bank, taking into account supervisory recommendations.
The purpose of the compliance unit is to develop solutions that enable ensuring compliance and compliance risk management, and to identify, assess, control, monitor and report these risks within the Bank.
Internal audit (BAW) is an independent and objective assurance and advisory activity, consisting of a systematic and orderly evaluation of the various areas of the Bank’s operations and the identification of possible areas of action to support the Bank in achieving its strategic business goals.
The purpose of the audit function is:
• as part of the assurance activity, to assess the adequacy and effectiveness of the risk management system and the internal control system within the first and second level of the internal control system, taking into account the adequacy and effectiveness of the risk control and control mechanisms selected for audit;
• as part of its advisory activities - to add value and improve processes at the Bank.
The Bank has mechanisms in place to ensure the independence of the compliance function and the internal audit function which include, in particular:
• approval by the Management Board and Supervisory Board of the Audit Charter and the Compliance Risk Management Principles;
• the compliance function reporting directly to the President of the Management Board;
• functional subordination of the internal audit function to the Audit and Finance Committee of the Supervisory Board and organizational subordination to the President of the Management Board;
• the internal audit function, which represents the third level of the internal control, not being subject to independent monitoring by the Bank’s organizational units of the second level of internal control;
• ensuring that the managers of the above-mentioned units have direct contact with the members of the Management Board and Supervisory Board;
• ensuring that the managers of ZZ and BAW participate in meetings of the Management Board and Supervisory Board, and of the Audit and Finance Committee of the Supervisory Board when issues relating to the internal control system or risk management are discussed;
• appointing and dismissing (after a prior hearing) of the head of the internal audit and compliance function requires the approval of the Supervisory Board, informing the PFSA of changes in the positions of the heads of the aforementioned functions with an indication of the reason for the change;
• approving the amount of remuneration for the manager of the internal audit function and the compliance function by the Supervisory Board;
• ensuring that staff in the said units have access to all necessary information (including confidential and sensitive information) to the extent that they deem necessary for the performance of their tasks;
• non-participation of the employees of the above-mentioned units in the execution of day-to-day business tasks;
• ensuring that arrangements are in place to control the remuneration of the staff in the above-mentioned units, guaranteeing that they carry out their tasks independently and objectively, and enabling the recruitment of suitably qualified, experienced and skilled people;
• protecting employees in the above-mentioned units against unjustified termination of employment.
• Information on irregularities, the results of evaluations and other relevant issues identified by the various components of the internal control system are presented in periodic reports intended for the Management Board, the Audit and Finance Committee of the Supervisory Board, the Risk Committee of the Supervisory Board and the Supervisory Board.
5.5. Risk management
The risk management process is a key process in PKO Bank Hipoteczny SA. Its purpose is to ensure the Bank’s financial stability, protect the values and safety of the mortgage covered bonds issued and to ensure that the funds derived from the issue of mortgage covered bonds and bonds and the Bank’s other funding sources are secure by striving to maintain the risk level within the adopted tolerance level. The risk management system is also intended to ensure that the information on risks is appropriate and as comprehensive as possible when making decisions, and to effectively embed risk management in the Bank’s organizational culture. The assumed level of risk is an important element of the planning and decision-making processes.
Risk management in the Bank is based, in particular, on the following principles:
• the Bank manages all identified risks associated with its operations;
• the process of risk management is adequate to the scale of the Bank’s operations and to the materiality, scale and complexity of a given risk;
• the risk management process supports the execution of the Bank’s management strategy in compliance with the risk management strategy, in particular with respect to the risk tolerance level;
• the process of risk management is continuously updated for new risk factors and sources;
• the risk management methods and the risk measurement systems are adjusted to the scale and complexity of the Bank’s operations and to the nature and magnitude of the risks to which the Bank is exposed;
• the risk management methods are periodically reviewed and validated;
• risk management is integrated with planning and controlling processes;
• the risk level is regularly monitored and compared against the system of limits that apply in the Bank, and the Bank’s management receives regular information on the risk level;
• the risk management process is consistent with the risk management principles of the PKO Bank Polski SA Group.
PKO Bank Hipoteczny SA identifies and manages the following types of risk:
|
Material risks |
• Credit risk • Liquidity risk, including funding risk • Interest rate risk • Model risk • Business risk, including macroeconomic risk • Operational risk |
|
Monitored risks |
• Concentration risk • Residual risk • Foreign exchange risk • Compliance risk • Reputation risk • Capital adequacy risk, including excessive leverage risk |
While determining the criteria for considering certain risks to be material, the impact of such risk on the Bank’s activities is taken into account, and three levels of risk are distinguished:
• material risks - which are subject to active management;
• monitored risks - which are monitored for materiality;
• other risks which have not been identified in the Bank’s operations (immaterial and unmonitored).
For monitored risks, PKO Bank Hipoteczny SA periodically monitors whether they should be designated as material. The Bank has defined materiality criteria which, when exceeded, result in the risk being recognized as material.
In its Risk Management Strategy, the Bank set out a number of strategic limits which define the tolerance for different risks. The Bank monitors these limits on an ongoing basis. None of the limits were exceeded in 2025.
A detailed description of the Bank’s risk management objectives and methods is provided in the financial statements of PKO Bank Hipoteczny SA for the year ended 31 December 2025, in the chapter “Objectives and principles of risk management”. These financial statements also provide important information on the level of financial risk in the Bank’s operations, together with the methods of hedging significant types of planned transactions for which hedge accounting is applied.
5.6. Measurement of residential loan collaterals
PKO Bank Hipoteczny SA’s policy concerning loan collaterals and their measurement is based on the provisions of the following legal acts:
• the Polish Mortgage Covered Bonds and Mortgage Banks Act;
• the Land and Mortgage Registers and Mortgage Act;
• the Banking Law.
Additionally, the question of loan collaterals is addressed by:
• the recommendations of the PFSA, including Recommendations F, S and J;
• the Bank’s internal regulations.
The Bank has in place and applies the Rules for Setting the MLV of Real Estate, approved by the PFSA. The Rules take into account the provisions of Recommendation F concerning the basic criteria applied by the Polish Financial Supervision Authority in approving rules for setting the mortgage lending value of real estate issued by mortgage banks.
The MLV of real estate is the value determined by a mortgage bank which, in the Bank’s opinion, reflects the level of risk associated with the real estate as the loan collateral. The MLV is used to determine the maximum amount of a loan that can be secured by a mortgage on given real estate, and to decide whether a receivable secured by particular real estate can be purchased by the Bank. The mortgage lending value of real estate is determined prudently, taking into consideration long-term parameters.
PKO Bank Hipoteczny SA determines the MLV on the basis of expert valuations of the mortgage lending value of real estate. Such valuations are prepared with due diligence and prudence. They take into account only those real estate characteristics and expenditures necessary for its construction which will be of a permanent nature and which any real estate holder will be able to obtain assuming rational exploitation. An expert opinion, prepared as at a specific date, documents assumptions and parameters underlying the analysis, the process of determining the MLV and the resulting MLV proposal. The expert valuation takes into account analyses and forecasts concerning specific parameters for a given real estate which affect the evaluation of credit risk, as well as factors of a general nature, e.g. population growth, the unemployment rate and urban development planning.
The process of determining the MLV is carried out in the Bank by a dedicated team of experts in property valuation.
In the agency model, the process of setting the mortgage lending value of real estate comprises three stages:
|
Preparation of the MLV expert opinion |
Property appraiser with appropriate experience and the ability to estimate banking risk in connection with securing residential mortgage loans, or a dedicated organizational unit of the Bank - the Collateral Valuation Team, based on a report from the inspection of the real estate prepared by a property appraiser |
|
Verification of the MLV opinion |
PKO Bank Polski SA under the Outsourcing Agreement, or a dedicated business unit of the Bank: the Collateral Valuation Team |
|
Determining the mortgage lending value of the real estate |
A dedicated organizational unit of the Bank: the Collateral Valuation Team |
In the case of the purchase of a receivable, the process of setting the mortgage lending value of real estate comprises four stages:
|
Confirmation of the real estate’s legal status |
PKO Bank Polski SA, under the outsourcing agreement |
|
Preparation of a report from the inspection of the real estate, including market research |
Appraiser with appropriate experience and the ability to estimate banking risk in the area of securing residential mortgage loans |
|
Preparation of the MLV expert opinion |
A dedicated organizational unit of the Bank: the Collateral Valuation Team |
|
Determining the mortgage lending value of the real estate |
A dedicated organizational unit of the Bank: the Collateral Valuation Team |
The processes of preparing an MLV expert opinion and setting the mortgage lending value of real estate described above are executed by two independent individuals.
5.7. Cover Pool for Mortgage Covered Bonds
PKO Bank Hipoteczny SA maintains a cover pool for its mortgage covered bonds.
The manner of maintaining the cover pool is governed by:
• The Polish Mortgage Covered Bonds and Mortgage Banks Act of 29 August 1997 (Journal of Laws of 2022 item 581, as amended) (hereinafter: the “Act”);
• Resolution No. 633/2015 of the Polish Financial Supervision Authority dated 1 December 2015 on defining the form of the cover pool;
• Recommendation K of the PFSA of 9 February 2016 concerning the principles for maintaining a cover pool by mortgage banks.
The Cover Pool Monitor and his/her Deputy are responsible for supervising the cover pool on an ongoing basis.
In the cover pool, the Bank includes residential loan receivables secured with the first mortgage entered in the Land and Mortgage Register, and rights and funds that constitute the basis for issuing mortgage covered bonds, as well as additional funds that constitute the excess to cover interest on outstanding mortgage covered bonds which is due in the following six months. The mortgage covered bonds are secured by the first mortgage. The following Bank’s funds can also constitute the basis for issuing mortgage covered bonds:
• invested in securities issued or guaranteed by the National Bank of Poland, the European Central Bank, governments and central banks of Member States of the European Union and/or the Organization for Economic Cooperation and Development, with the exception of countries that are restructuring or have restructured their foreign debt in the past five years;
• deposited with the National Bank of Poland;
• deposited with domestic banks or with a credit institution referred to in Article 18. 3 of the Act.
The Mortgage Covered Bonds Cover Pool also includes CIRS transactions hedging the currency and interest rate risk of mortgage covered bonds denominated in EUR and IRS transactions hedging the interest rate risk of fixed rate mortgage covered bonds denominated in PLN.
In 2025 and in the previous years, the Cover Pool did not include asset-backed securities (ABS) which do not meet the requirements specified in paragraph 1 of Article 80 of the Guideline (EU) 2015/510 of the European Central Bank of 19 December 2014 on the implementation of the Eurosystem monetary policy framework (ECB/2014/60) (recast).
The following table presents basic data on the Mortgage Covered Bonds Cover Pool as at 31 December 2025 and 31 December 2024:
|
|
31.12.2025 |
31.12.2024 |
|
Total cover pool, including (in PLN million) |
15,004.5 |
15,372.4 |
|
loans secured by mortgages (in PLN million) |
15,004.5 |
15,292.4 |
|
other assets[17] (in PLN million) |
0.0 |
80.0 |
|
Liquidity buffer[18] (in PLN million) |
331.0 |
275.7 |
|
Nominal value of hedging transactions[19] (in PLN million) |
2,164.5 |
2,196.1 |
|
Number of loans |
87,918 |
91,385 |
|
Average loan value (in PLN thousand) |
170.7 |
167.3 |
|
Average weighted time since loan issuance (seasoning) (months) |
98.5 |
93.5 |
|
Average maturity (months) |
226.5 |
231.4 |
|
Average LtV (loan amount to market value) (%) |
30.6 |
30.2 |
|
Average LtMLV (loan to mortgage lending value of real estate) (%) |
59.1 |
62.0 |
|
Over-collateralization[20] (%) |
78.8 |
111.3 |
5.8. Cover Pool Monitor
The purpose of the Cover Pool Monitor is to ensure protection of the financial interests of the holders of mortgage covered bonds. The Mortgage Covered Bonds and Mortgage Banks Act guarantees protecting the independence of the Cover Pool Monitor and his/her deputy. Cover Pool Monitors are appointed by the Polish Financial Supervision Authority, upon request of the Bank’s Supervisory Board, for a period of six years.
Due to the lapse of the six-year period referred to above, on 5 March 2021 the PFSA appointed the Cover Pool Monitor and the Deputy Cover Pool Monitor for PKO Bank Hipoteczny SA, and the same persons were reappointed:
|
|
Position |
Date of appointment |
Date of dismissal / resignation |
|
Tadeusz Swat |
Cover Pool Monitor |
05.03.2021 |
- |
|
Grzegorz Kędzia |
Deputy Monitor |
05.03.2021 |
- |
5.9. Statutory limits
Acting under the Mortgage Covered Bonds and Mortgage Banks Act, PKO Bank Hipoteczny SA is obliged to monitor and comply with designated limits related to the operations of a mortgage bank.
On 8 July 2022, the amended Mortgage Covered Bonds and Mortgage Banks Act came into force. By that date, the Bank had made the necessary changes to its internal regulations to ensure compliance with the amended wording of the Act.
The statutory limits and the level of their utilization as at 31 December 2025 and 31 December 2024 were as follows:
|
Limit |
Legal basis |
Limit level |
Actual level |
|
|
31.12.2025 |
31.12.2024 |
|||
|
Ratio of the funds received from the issue of mortgage covered bonds designated for refinancing loans secured by mortgages or receivables in respect of such loans acquired from other banks to the lower of 80% of the mortgage lending value of the residential property (within the meaning of Article 4(1)(75) of Regulation (EU) No 575/2013) pledged as collateral for the receivable and the current balance of the receivable able |
Article 14 |
≤100% |
50.1% |
44.4% |
|
Ratio of the total value of acquired shares in other entities to the Bank’s own funds |
Article 15(1)(5) |
≤10% |
0.0% |
0.0% |
|
Ratio of the total amount of loans and advances taken out and bonds issued to the Bank’s own funds |
Article 15.2 |
≤1000% |
452.3% |
485.2% |
|
Ratio of the total amount of loans and advances taken out and bonds issued to the amount designated for refinancing of activities referred to in Article 12 of the Act, i.e. granting loans secured and unsecured by mortgages, acquiring receivables from other banks on loans granted by them and secured or unsecured by mortgage |
Article 15(3) |
≤100% |
44.3% |
48.6% |
|
Ratio of the nominal value of mortgage covered bonds outstanding to the sum of the Bank’s own funds and the general risk provision |
Article 17 |
≤4000% |
498.9% |
431.7% |
|
Ratio of the sum of nominal amounts of mortgage-secured receivables and amounts of the Bank’s rights and additional funds entered to the cover pool which constitute the basis for issuing mortgage covered bonds to the total nominal value of outstanding mortgage covered bonds (including hedging instruments) |
Article 18(1) |
≥105% |
178.8% |
211.3% |
|
Ratio of the sum of nominal amounts of mortgage-secured receivables which constitute the basis for issuing mortgage covered bonds to the total nominal value of outstanding mortgage covered bonds |
Article 18(1) |
≥85% |
179.1% |
213.1% |
|
Ratio of interest expense on outstanding mortgage covered bonds (overnight interest as at the date of account transfer) to interest income on mortgage-secured receivables and amounts of the Bank’s rights and additional funds entered to the cover pool (overnight interest as at the date of transfer of the account), with the exception of assets in default within the meaning of Article18.2a of the Act |
Article 18(2) |
≤100% |
41.2% |
37.1% |
|
Ratio of the Bank’s funds constituting the excess referred to in Article 18.3a and c of the Act to the maximum cumulative outflows of net liquidity over the following 180 days. Outflow of net liquidity constitutes outflows of payments maturing on a given payment date including payments of the nominal value of mortgage covered bonds plus interest and payments with respect to derivative instruments under the mortgage covered bonds programme, after deducting inflows of payments from assets securing the mortgage covered bonds maturing on the same date. To calculate the amount of payment of the nominal value of a mortgage covered bond, the period to maturity of the mortgage covered bonds extended by 12 months is used |
Article 18(3a), (3aa), (3b) and (3d) |
≥100% |
N/A |
N/A |
|
Ratio of the value of receivables secured on mortgages established during the execution of a construction project to the total value of mortgage-secured receivables constituting the basis for issuing mortgage covered bonds |
Article 23 (1) sentence 1 |
≤10% |
1.4% |
1.3% |
|
Ratio of the value of receivables secured on mortgages established on real estate earmarked for development in a local zoning plan to the value of receivables secured on mortgages established during the execution of a construction project constituting the basis for issuing mortgage covered bonds |
Article 23 (1) sentence 2 |
≤10% |
0.0% |
0.0% |
The Bank obtained positive results of the liquidity tests and coverage balance tests conducted as at the end of 2025 and at the end of 2024.
6. Organization and governing bodies of PKO Bank Hipoteczny SA
Qualified staff
Organizational structure of PKO Bank Hipoteczny SA
Competences of the governing bodies and committees of PKO Bank Hipoteczny SA
The Management Board of PKO Bank Hipoteczny SA
The Supervisory Board of PKO Bank Hipoteczny SA
Remuneration and Human Resources Management Policy
Benefits for Key Management of PKO Bank Hipoteczny SA
6.1. Qualified staff
The Bank implements tools and procedures to ensure that staff employed by the Bank have the highest qualifications in the Bank’s key business areas. The Bank systematically raises the qualifications of its staff and is committed to ensuring stability of its workforce. These factors have a significant impact on the pursuit of the Bank’s strategy and its business objectives, and therefore on its operations and performance.
6.2. Organizational structure of PKO Bank Hipoteczny SA
PKO Bank Hipoteczny SA is managed on the basis of the organizational structure presented in the chart below and within the framework of the duties of the Bank’s Governing Bodies, described in the following section of this chapter.
6.3. Competences of the governing bodies and committees of PKO Bank Hipoteczny SA
The competences of the General Shareholders’ Meeting of the Bank include in particular:
• appointing and dismissing members of the Supervisory Board and determining the principles for remunerating them and covering the costs related to the performance of the function of a Supervisory Board member by the Bank;
• determining the procedures for redeeming shares, the compensation for such redeemed shares and granting consent for the purchase of the Bank’s treasury shares for redemption purposes;
• creating and dissolving special funds accumulated from net profit;
• adopting resolutions on the issue of bonds convertible into shares or other instruments entitling the holder to acquire or take up shares in the Bank;
• adopting resolutions on the liquidation, disposal or lease of the enterprise of the Bank or its organized part and establishing limited property rights over them;
• adopting resolutions on the settlement of claims for damage caused at the establishment of the Bank, or by the exercise of management or supervision;
• granting consent to investing and disinvesting in companies and granting consent for the purchase and sale of bonds or other securities convertible into shares;
• assessing whether the Bank’s remuneration policy contributes to the development and safety of the Bank’s operations;
• granting consent to dispose of intangible fixed assets, property, plant and equipment, or long-term investments, including making contributions to a company or cooperative if the market value of the assets exceeds 5% of total assets determined on the basis of the latest approved financial statements, and offering these assets for use to another entity, for a period longer than 180 days in a calendar year, based on a legal transaction, if the market value of the subject matter of the legal transaction exceeds 5% of total assets;
• granting consent to purchase fixed assets with a value exceeding PLN 100,000,000 or 5% of total assets determined based on the latest approved financial statements;
• assessing the adequacy of internal regulations concerning the functioning of the Supervisory Board and evaluating the effectiveness of the Supervisory Board’s actions.
The competences of the Bank’s Supervisory Board include, in particular:
• approving the Bank’s annual financial plan and long-term development plans (in particular the Bank’s strategy);
• approving the Bank’s compliance policy, and the rules of procedure for the compliance unit;
• approving the Bank’s management strategy, the risk management strategy, including the general level of risk at the Bank, the policy for estimating internal capital and capital management and reviewing the internal capital assessment strategies and procedures and capital management procedures;
• approving the policies for creating and changing the Bank’s products;
• approving the audit charter, the internal audit function’s strategy, the annual and long-term internal audit plans and the principles for cooperation with the internal audit function at PKO Bank Polski SA and the statutory auditor;
• approving the policy for remunerating Material Risk Takers;
• approving the operating principles of internal controls, the criteria for assessing the adequacy and effectiveness of the internal control system and the principles for classifying irregularities discovered by the internal controls;
• approving the Management Board Rules;
• approving Regulations for Setting the Mortgage Lending Value of Real Estate, which take effect after the approval by the PFSA;
• approving the Code of Ethics and Rules for the Management of Conflicts of Interest;
• approving the Bank’s framework organizational structure, adjusted to the scale and profile of the risk taken on by the Bank;
• approving the results of reviews of the operation of the cooperation agreements concluded with PKO Bank Polski SA;
• adopting the Supervisory Board Rules;
• appointing and dismissing individual members of the Management Board, specifying the detailed principles and procedures of conducting qualification procedures for Management Board members, determining terms and conditions of employment, including remuneration, of members of the Management Board and representing the Bank in agreements with members of the Management Board;
• suspending, if there are important reasons, individual or all members of the Management Board in their functions and delegating members of the Supervisory Board to temporarily perform the functions of the members of the Management Board who were suspended, resigned or cannot perform their functions for other reasons, for a period of no longer than three months;
• giving consent to a member of the Management Board to conduct competitive activities or participate in a competing company as a partner in a civil law partnership or general partnership, or as a member of the authorities of a commercial company, or to participate in another competing legal person as a member of its governing bodies;
• giving consent to creating and winding up the Bank’s branches and other organizational units of the Bank in Poland and abroad;
• granting prior permission to the Management Board to acquire, encumber or sell real estate, interest in real estate or the right of perpetual usufruct therein; the permission is not required if the acquisition of the real estate, interest in the real estate or its perpetual usufruct being sold is conducted under executory, bankruptcy, composition proceedings or another type of arrangement with the Bank’s debtor;
• giving opinions on entertainment expenses and expenses on legal, marketing, PR and social communication, and management advisory services, incurred during the year;
• giving consent for the Bank to conclude a contract for legal, marketing, public relations, social communication and management advisory services: (i) if the amount of the total fee stipulated with respect to the provision of such services in the given contract or in other contracts concluded with the same entity exceeds PLN 500,000 net during one year (ii) increasing the fee above the aforesaid amount, and (iii) in which the maximum fee has not been specified;
• giving consent for the conclusion of a donation agreement or another agreement with a similar effect exceeding PLN 20,000 or 0.1% of the value of total assets determined based on the latest approved financial statements;
• giving consent for the conclusion of a loan forgiveness agreement or another agreement with a similar effect exceeding PLN 50,000 or 0.1% of the value of total assets determined based on the latest approved financial statements;
• giving opinions on the application of good practices;
• approving the policy and procedures for selecting an audit firm responsible for auditing the Bank’s financial statements and the policy for providing permitted non-audit services by the audit firm performing the audit, its related entities and members of its network;
• selecting an audit firm to conduct an audit or review of the Bank’s separate or consolidated financial statements;
• assessing the Directors’ Report on the Bank’s activities and the financial statements for the previous financial year in terms of their consistency with the books of account and documents and the factual situation, and the proposals of the Management Board concerning the distribution of profit or the offsetting of losses and preparing and presenting a written annual report of the Supervisory Board to the General Shareholders’ Meeting;
• assessing the adequacy and effectiveness of the internal governance, internal control system, including the control function of the compliance unit and the internal audit unit, as well as assessing the adequacy and effectiveness of the risk management system;
• assessing the effectiveness of the Bank’s compliance risk management;
• assessing the adequacy and effectiveness of the whistleblowing procedure with respect to violations of the law and of the procedures and ethical standards in force at the Bank;
• overseeing the implementation of the management system and assessing its adequacy and effectiveness;
• applying to the PFSA for consent to appoint two members of the Management Board, including the President of the Management Board and the member of the Bank’s Management Board responsible for managing risks material to the Bank’s operations, and to entrust the function of the member of the Management Board responsible for supervising the management of risks material to the Bank’s operations to an appointed member of the Management Board;
• informing the PFSA about including on the agenda of a Supervisory Board meeting items concerning: (i) dismissing the President of the Management Board; (ii) dismissing the member of the Management Board supervising material risk management or entrusting his duties to another member of the Board;
• applying to the PFSA for consent to the appointment of the Bank’s Cover Pool Monitor and Deputy Cover Pool Monitor;
• granting consent to appointing and dismissing the persons managing the compliance unit and the internal audit unit;
• approving the remuneration of the managers of the compliance and internal audit units;
• granting consent to changing the registered office or location (address) of the Bank;
• assessing the functioning of the Bank’s remuneration policy and submitting relevant reports to the General Shareholders’ Meeting;
• assessing the application of the Principles of Corporate Governance for Supervised Institutions issued by the PFSA by the Bank.
In 2025, the Supervisory Board committees which operated in the Bank had, in particular, the following competences:
|
Audit and Finance Committee
|
• monitoring and periodically expressing opinions on: (i) the adequacy and effectiveness of the internal control system, risk management system and internal audit, including with respect to financial reporting; (ii) the effectiveness of the Bank’s compliance risk management and the adequacy and effectiveness of the compliance unit; (iii) the application of the Principles of Corporate Governance for Supervised Institutions and implementation and application of internal governance, and assessment of its adequacy and effectiveness; (iv) the adequacy and effectiveness of the whistleblowing policy and the ethical procedures and standards in force at the Bank, using the information obtained from the Bank, the Risk Committee, independent statutory auditor and from other sources; • giving opinions on the audit charter, the principles of cooperation between the internal audit unit and its counterpart in PKO BP and the statutory auditor, the operating strategy of the internal audit unit and the annual and multi-annual internal audit plans; • giving opinions on Management Board information relating to the operation of the internal control system, the manner of ensuring independence of the internal audit and the compliance units, and ensuring funds for the purpose of performing tasks and improving the qualifications and skills of the units’ staff; • monitoring the financial reporting process, including the review of the Bank’s interim and annual financial statements, and expressing opinions on them; • monitoring the performance of audit work, in particular the audits performed by external audit firms, in consideration of all the conclusions and findings of the Audit Supervision Committee from the inspection of the audit firm; • controlling and monitoring the independence of the statutory auditor and the audit firm, including an evaluation of independence risks and safeguards, in particular when other, non-audit services are provided to the Bank by the audit firm; • obtaining a representation confirming the independence of the audit firm and of the auditors performing the audit of the Bank’s financial statements annually; • developing a policy for selecting an audit firm to conduct the audit and providing the Supervisory Board with recommendations as to the policy adopted; • developing a procedure for selecting the audit firm and providing the Supervisory Board with recommendations as to the procedure adopted; • developing a policy for providing permitted non-audit services by the audit firm which conducts the audit, its related entities, and by a member of the audit firm’s network, and presenting recommendations on adopting the policy to the Supervisory Board; • providing the Supervisory Board with recommendations as to the appointment of the audit firm to conduct the audit of the Bank’s financial statements; • giving consent for the provision of permitted non-audit services by the auditor, the audit firm which conducts the audit, and in the event that the auditor or audit firm are part of a network – for every member of such a network; • assessing the reasons for terminating a contract with the audit firm conducting the audit; • agreeing the policies for conducting audit activities by the audit firm performing the audit, in consideration of the proposed audit plan; • informing the Supervisory Board of the audit results and explaining how the audit contributed to the fairness of the Bank’s financial reporting and what was the role of the Committee in the audit process; • analysing the effectiveness of functioning of the internal controls and credit risk management system with respect to the correct determination of the allowances for expected credit losses; • ensuring compliance with all the requirements relating to the independence of a statutory auditor by external audit firms participating in the development of the IFRS 9 models and the processes of estimating allowances for expected credit losses; • submitting an additional audit report referred to in Article 11 of the Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 to the Management and Supervisory Boards; • submitting recommendations aimed at ensuring the fairness of the Bank’s financial reporting to the Supervisory Board; • giving opinions on the Bank’s strategic and financial plans; • giving opinions on Management Board resolutions with respect to the internal control system, the approval of which is the responsibility of the Supervisory Board; • analysing information and periodic reports in the area of particular internal control components; • supervising and monitoring the Bank’s anti-money laundering (AML) and counter-terrorist financing (CFT) activities by analysing quarterly reports, the AML/CFT Coordinator’s annual report and the information contained in the AML/CFT Risk Assessment of PKO Bank Hipoteczny SA; • expressing opinions on the effectiveness of the Bank’s anti-money laundering and counter-terrorist financing activities; • meeting with the manager of the finance and accounting function at least once a year; • meeting with the manager of the internal audit unit and the manager of the compliance unit at least once a year – without the participation of members of the Bank’s Management Board; • giving opinions on appointing and dismissing, as well as on the remuneration of the manager of the internal audit unit and of the compliance unit. |
|
Risk Committee |
• giving opinions on the Bank’s overall current and future risk appetite; • giving opinions on the operational risk management strategy developed by the Management Board and the information on implementation of the said strategy submitted by the Management Board; • supporting the Supervisory Board in overseeing the implementation of the Bank’s operational risk management strategy by senior management; • reviewing the prices of liabilities and assets offered to customers to check whether they are fully compliant with the Bank’s business model and its risk management strategy, and if they do not appropriately reflect the types of risk consistent with this model and strategy, presenting proposals to ensure the adequacy of the prices of liabilities and assets with respect to risk to the Bank’s Management Board; • monitoring conformity of the Bank’s risk-taking policy with the strategy and the financial plan; • analysing periodic risk reports, including the utilization of strategic risk tolerance limits and developing relevant guidelines on their basis; • issuing opinions about capital adequacy, the rules of evaluation of creditworthiness, the risk measurement models, the impairment model; • giving opinions on the disclosure policies regarding capital adequacy, the management of capital adequacy, liquidity risk, operational risk, model risk, and impairment measurement risk; • giving opinions on the draft Regulations for Setting the Mortgage Lending Value of Real Estate; • submitting information relevant for monitoring the effectiveness and adequacy of the Bank’s risk management system to the Audit and Finance Committee; • assessing the information received on potential non-compliance with the management strategy adopted by the Bank, its risk management strategy, adopted risk appetite and other policies approved by the Bank’s Management Board. |
|
Remuneration and Nomination Committee |
• annually assessing the structure, size, composition and effectiveness of the Bank’s Management Board and recommending potential changes in this respect to the Supervisory Board; • annually assessing the knowledge, competences and experience of the Management Board as a whole, and of particular members of the Board, and informing the Management Board of the results of the assessment; • periodically reviewing the Policy on assessing the suitability of candidates for members of the Management Board, member of the Management Board and key employees, and presenting respective recommendations to the Management Board; • recommending candidates for members of the Management Board and the scope of their responsibilities; • submitting proposals relating to appropriate forms of contracts with members of the Bank’s Management Board to the Supervisory Board; • preparing opinions on the Code of Ethics and the Principles for the Management of Conflicts of Interest; • preparing opinions on requests concerning the consent for a member of the Management Board to engage in competitive activities or to participate in a competing company as a partner in a civil law partnership or general partnership, or as a member of the authorities of a commercial company, or to participate in another competing legal person as a member of its governing bodies; • giving opinions on and performing periodic reviews, subject to the approval of the Supervisory Board, of the general principles of the policy for remunerating Material Risk Takers; • supporting the Supervisory Board in the process of giving opinions on the functioning of the Bank’s remuneration policy and the respective reporting to the General Shareholders’ Meeting; • giving opinions on and monitoring variable remuneration components of Material Risk Takers, second-level risk management, the compliance function manager, the internal audit function manager and the managers of the human resources and legal services functions; • giving opinions on the amount of fixed remuneration for the manager of the internal audit function and the compliance function; • giving opinions on the detailed rules and procedures for recruiting members of the Bank’s Management Board and assessing the suitability of members of the Bank’s Management Board; • preparing and carrying out, with potential support from external independent entities, the programme for raising the qualifications of members of the Supervisory Board. |
|
Commercial Committee |
• evaluating the results of reviews of the performance of the cooperation agreements concluded with PKO Bank Polski SA; • giving opinions on material changes to the criteria for qualifying products for the Bank; • giving opinions on products to be introduced to the Bank’s offer and the directions of changes in the Bank’s product offer; • monitoring and supervising the outsourcing of internal processes. |
The competences of the Bank’s Management Board include, in particular:
• defining the Bank’s strategy, taking into account the operational risk and the principles of prudent and stable management of the Bank;
• determining the risk management strategy and the general level of the Bank’s risk tolerance;
• determining the annual financial plan of the Bank, including the conditions for its implementation;
• creating and dissolving the Bank’s standing committees and determining their responsibilities;
• adopting Regulations: (i) for managing special funds accumulated from net profit, (ii) organizational regulations and the principles for the division of competences, (iii) of the Management Board, (iv) for setting the Mortgage Lending Value of real estate;
• appointing proxies and determining the principles for their appointment in the Bank;
• approving the operating principles of the internal control system, the criteria for assessing the adequacy and effectiveness of the internal control system and the principles for classifying irregularities detected by the internal control system;
• approving the audit charter, determining the principles of cooperation between the internal audit unit and its counterpart in PKO BP and the statutory auditor, giving opinions on the operating strategy of the internal audit unit and on the annual and multi-annual internal audit plans;
• creating, transforming and winding up the Bank’s branches and other organizational units in Poland and abroad;
• deciding on issues of mortgage covered bonds;
• determining the operating principles of the management system, including in particular: (i) the principles of capital adequacy information policy, (ii) the assumptions of the compliance risk management policy, (iii) the principles of managing capital adequacy and equity which relate to the estimation of internal capital, capital management, capital planning and dividend policy, (iv) the rules for managing particular risks;
• periodically assessing and verifying compliance with the Bank’s internal governance, including assessing the adequacy of the Bank’s internal regulations governing the operations of the Management Board and their effectiveness;
• determining accounting policies;
• approving the Bank’s annual financial statements;
• developing a remuneration policy;
• specifying banking products;
• determining the principles of the Bank’s participation in companies and other organizations;
• deciding on payment of interim dividend to the shareholders;
• deciding on the Bank’s conclusion of contracts with third parties the value of which on an annual basis equals or exceeds PLN 500,000.00 (in words: five hundred thousand zlotys) or the total value of which equals or exceeds PLN 2,000,000.00 (in words: two million zlotys);
• convening the General Shareholders’ Meetings, making the required announcements in the manner specified in legal regulations and notifying of circumstances which have to be entered to the National Court Register;
• making decisions on issues requested by a member of the Management Board or submitted for consideration by the Supervisory Board.
The Bank’s Management Board appointed the following standing committees with the following competences as at 31 December 2025:
|
Asset and Liability Committee |
• supporting the management of liquidity, interest rate and business risks – including macroeconomic, currency, capital risks – including leverage risk – and the related risk of models for their measurement; • managing the Bank’s capital adequacy; • reviewing documents concerning capital adequacy, equity, internal capital, stress testing, the aforementioned risks and the tolerance limits for those risks; • making decisions concerning the Bank’s operations, particularly in relation to risk measures and limits, risk management, results of the validation of risk models, hedging strategies under hedge accounting and recommendations for the Management Board with regard to launching emergency measures relating to capital requirements and emergency measures relating to liquidity, loan and settlement limits for financial institutions and countries; • issuing recommendations for the relevant governing bodies of the Bank, organizational units, members of the Bank’s Management Board, project teams or task forces – within the scope of its competences. |
|
Credit Committee |
• supporting the management of credit, concentration and residual risks, as well as the risk of the models used to measure such risks; • reviewing documents concerning the risks mentioned above, the profile and quality structure of the loan portfolio, impairment allowances, acquisition of loan portfolios and the real estate market; • making decisions concerning the Bank’s operations, particularly in relation to risk measures and limits, results of the validation of risk models, methodologies for and models of calculation of impairment allowances in respect of credit assets, cut-offs used in the assessment of credit risk, loan receivables purchased by the Bank and individual loan transactions; • issuing recommendations for the relevant governing bodies of the Bank, organizational units, members of the Bank’s Management Board, project teams or task forces – within the scope of its competences. |
|
Operational Risk and Data Quality Committee |
• effective management of operational risk, improving the safety of the Bank’s operating activities; • outsourcing risk management; • determining the directions of development of operational risk management; • supervising the functioning of operational risk management, including tasks relating to ensuring the Bank’s business continuity and the security of the IT and ICT environment; • setting tasks in the event of emergencies putting the Bank’s image at risk, which could lead to operating losses; • determining the directions of operations in the area of managing the quality of data and data architecture in the Bank, in the context of the Data Management System (DMS); • supervising the Data Management System, including assessing its effectiveness and actions of the Bank’s particular business units; • overseeing the functioning of the Bank’s anti-money laundering and counter-terrorist financing system; • issuing recommendations for the relevant governing bodies of the Bank, organizational units, members of the Bank’s Management Board, project teams or task forces – within the scope of its competences. |
|
Strategy and Business Initiatives Committee |
• determining the directions of the strategic planning and managing the Bank’s strategy and the IT strategy; • determining the directions and monitoring the implementation of initiatives related to the pursuit of the Bank’s strategy and the IT strategy; • determining the directions of changes in the product offer and in the lending process; • determining the directions of work on the products’ profitability; • managing the reputation and compliance risks; • issuing recommendations for the relevant governing bodies of the Bank, organizational units, members of the Bank’s Management Board, project teams or task forces – within the scope of its competences. |
|
Green Covered Bonds Committee |
• supervising the issuance of Green Covered Bonds, including determining the directions of changes in the principles of issuing Green Covered Bonds and assessing and selecting assets eligible for funding with the Green Covered Bonds; • examining materials relating to the guidelines and principles set by the International Capital Markets Association (ICMA) for the Green Covered Bonds market, domestic regulations on the binding energy efficiency standards, reporting on the allocation of funds earned on emissions and the impact on the funding environment gained by issuing the Green Covered Bonds, in accordance with the rules for issuing the Green Covered Bonds in force at the Bank, investor information with respect to the Green Covered Bonds; • deciding on the Bank’s operations with regard to, among other things, the assessment and selection of eligible loans according to the Bank’s adopted methodology and the adoption of certain rules for the issuance of Green Bonds in the Bank in line with the applicable ICMA Green Bond Principles, reporting the allocation of the funds raised from the issuance and the impact on improving the energy efficiency of the funded residential properties; • issuing recommendations for the relevant governing bodies of the Bank, business units, members of the Bank’s Management Board, project teams or task forces – within the scope of its competences. |
6.4. The Management Board of PKO Bank Hipoteczny SA
In 2025, the composition of the Management Board of PKO Bank Hipoteczny SA was as follows:
|
|
Position |
Position holding period |
|
Wojciech Papierak |
President of the Management Board
Vice-President of the Management Board responsible for managing the work of the Management Board |
06.12.2024 – to date
10.08.2024 - 05.12.2024 |
|
Katarzyna Kurkowska-Szczechowicz |
Vice-President of the Management Board
President of the Management Board |
10.08.2024 – to date
27.01.2023 – 09.08.2024 |
|
Piotr Kochanek |
Vice-President of the Management Board |
01.01.2019 – to date |
|
Michał Stępniewski |
Vice-President of the Management Board |
01.01.2019 – to date |
On 28 February 2025, the Supervisory Board of PKO Bank Hipoteczny SA appointed Mr Michał Stępniewski Vice President of the Management Board of the Bank as of 1 March 2025 for the current joint term of office of the Management Board of PKO Bank Hipoteczny SA
On 27 June 2025, the Ordinary General Shareholders’ Meeting:
• approved: The Company’s Directors’ Report for the financial year ended 31 December 2024 and the Company’s Financial Statements for the financial year ended 31 December 2024;
• gave a vote of approval to: (i) Mr Wojciech Papierak for the performance of his duties as a member of the Management Board, performing the function of a Vice-President of the Management Board in charge of the Management Board’s work in the period from 10 August 2024 to 5 December 2024 and the function of President of the Management Board in the period from 6 December 2024 to 31 December 2024; (ii) Ms Katarzyna Kurkowska-Szczechowicz for the performance of her duties as a member of the Management Board, performing the function of President of the Management Board in the period from 1 January 2024 to 9 August 2024 and the function of a Vice-President of the Management Board in the period from 10 August 2024 to 31 December 2024; (iii) Mr Piotr Kochanek for the performance of his duties as a member of the Management Board, performing the function of Vice-President of the Management Board in the period from 1 January 2024 to 31 December 2024; (iv) Mr Piotr Jaworski for the performance of his duties as a member of the Management Board acting as Vice-President of the Management Board in the period from 1 January 2024 to 9 August 2024; and (v) Mr Stanisław Skoczylas for the performance of his duties as a member of the Management Board, performing the function of a Vice-President of the Management Board, in the period from 1 January 2024 to 29 February 2024.
By Resolution No. 8/2025 of 28 February 2025, the Bank’s Supervisory Board defined the internal segregation of key competences within the Bank’s Management Board.
At 31 December 2025, the internal distribution of core competences was as follows:
|
WOJCIECH PAPIERAK |
President of the Management Board responsible for overseeing the internal audit function and the performance of the control function, the management of: compliance risk, reputation risk, legal services, human resources, the process of outsourcing services to third parties and matters in the area of anti-money laundering and terrorist financing. |
|
Other functions performed: |
Chairperson of the Strategy and Business Initiatives Committee Chairperson of the Asset and Liability Committee Chairperson of the Green Covered Bonds Committee Deputy Chairperson of the Operational Risk and Data Quality Committee |
|
KATARZYNA KURKOWSKA-SZCZECHOWICZ |
Vice-President of the Management Board responsible for overseeing the issuance of securities, raising funding and the creation and development of the product offering, activities relating to coordination of the sale of products and the acquisition of loan receivables and the process of their further servicing, the functioning and efficiency of IT resources. |
|
Other functions performed: |
Deputy Chairperson of the Strategy and Business Initiatives Committee Deputy Chairperson of the Green Covered Bonds Committee Member of the Asset and Liability Committee Member of the Credit Committee Member of the Operational Risk and Data Quality Committee |
|
PIOTR KOCHANEK |
Vice President of the Management Board responsible for supervising the management of all risks relating to the Bank’s operations, save for compliance and reputation risk, supervising the process of assessing creditworthiness and determining the Mortgage Lending Value of real estate, and the restructuring and debt collection processes. |
|
Other functions performed: |
Chairperson of the Credit Committee Chairperson of the Operational Risk and Data Quality Committee Deputy Chairperson of the Asset and Liability Committee Member of the Green Covered Bonds Committee Member of the Strategy and Business Initiatives Committee |
|
MICHAŁ STĘPNIEWSKI |
Vice President of the Management Board responsible for overseeing financial planning and financial control matters, as well as accounting and financial reporting matters, and clearing and confirming treasury transactions. |
|
Other functions performed: |
Member of the Asset and Liability Committee Member of the Strategy and Business Initiatives Committee |
Other management functions of the members of the Management Board
|
|
Position |
Position holding period |
|
Wojciech Papierak |
TOYA SA with its registered office in Wrocław - Member of the Supervisory Board |
Throughout the reporting period |
|
Katarzyna Kurkowska-Szczechowicz |
Did not perform additional functions as a member of the Management Board or Supervisory Board or held any other positions as director |
Throughout the reporting period |
|
Piotr Kochanek |
Did not perform additional functions as a member of the Management Board or Supervisory Board or held any other positions a director |
Throughout the reporting period |
|
Michał Stępniewski |
Chairman of the Supervisory Board of Szpital Praski Sp. z o.o. Chairman of the Council of the Stare Powązki Foundation Chairperson of the Board of the Rev. Julian Chrościcki Foundation -------------------------------------- Vice-President of the Management Board of the Queen Hedvig Scholarship Foundation
|
During the period of holding the position
------------------------------------------------------- until 31.10.2025 |
Recruitment policy for appointing Management Board members and their evaluation
The process of selecting and evaluating candidates for members of the Management Board in PKO Bank Hipoteczny SA is carried out by the Remuneration and Nomination Committee of the Bank’s Supervisory Board. The Committee is mindful of the European Banking Authority’s guidelines of 2 July 2021 on the assessment of the suitability of members of the management body and key function holders (EBA guidelines), the Regulation of the Minister of Development and Finance of 10 March 2017 on information and documents concerning the founders and the management board of a bank to be submitted to the Polish Financial Supervision Authority and the Methodology for assessing the suitability of members of the bodies of entities supervised by the Polish Financial Supervision Authority. In selecting candidates, the Committee takes into account the profile, scope and scale of PKO Bank Hipoteczny SA’s operations. When assessing a candidate, the Committee also verifies that the candidate’s experience and knowledge will reinforce the skills possessed by the other members of the Bank’s Management Board and complement them, so as to ensure that all areas managed at the Bank are covered. The examination of the above criterion is intended to ensure differentiation with regard to the selection of members of the governing body, its objectives, tasks and scope of action.
Before their appointment, all members of the Management Board of PKO Bank Hipoteczny SA were evaluated in terms of their suitability, in accordance with the EBA and PFSA guidelines.
Members of the Management Board are subject to continuous evaluation by the Supervisory Board’s Remuneration and Nomination Committee and the Supervisory Board, starting from the moment of their recruitment and continuing through their entire term of office. Moreover, pursuant to Article 395 § 2(3) of the Commercial Companies Code, each year the Ordinary General Shareholders’ Meeting grants each individual member of the Management Board a vote of approval. The granting of this vote of approval constitutes an evaluation of the Management Board members, which is independent of the approval of the Bank’s Directors’ Report by the General Shareholders’ Meeting.
The process described above for appointments to perform functions on the Management Board and the positive evaluation of members of the Bank’s Management Board constitutes confirmation of the proper performance of their duties, based on adequate knowledge, abilities and experience, in accordance with the requirements of Article 22aa of the Banking Law.
6.5. The Supervisory Board of PKO Bank Hipoteczny SA
In 2025, the composition of the Supervisory Board of PKO Bank Hipoteczny SA was as follows:
|
|
Function on the Supervisory Board |
Date of appointment |
Date of dismissal / resignation |
||||||
|
Marek Radzikowski |
Member of the Supervisory Board Chairman |
19.08.2024 23.08.2024 |
|
√ |
|
|
|
C |
C |
|
Jakub Niesłuchowski |
Member of the Supervisory Board Deputy Chairman |
28.04.2022 22.02.2024 |
|
√ |
|
D |
|
D |
M |
|
Iwona Brzozowska-Poniedzielska |
Member of the Supervisory Board |
29.05.2024 |
|
√ |
√ |
C |
M |
|
|
|
Robert Ciborowski |
Member of the Supervisory Board |
29.05.2024 |
|
√ |
√ |
M |
|
|
|
|
Lucyna Kopińska |
Member of the Supervisory Board |
01.09.2019 |
|
√ |
|
|
D |
|
M |
|
Paweł Metrycki |
Member of the Supervisory Board |
30.03.2019 |
|
√ |
|
|
C |
|
|
C - Chairman of the Committee, D - Deputy Chairman of the Committee, M - Member of the Committee
*The composition of the Committees is shown as at 31 December 2025
There were six meetings of the Supervisory Board in 2025.
On 27 June 2025, the Ordinary General Shareholders’ Meeting:
gave a vote of approval to: (i) Mr Mieczysław Król for the performance of his duties as a member of the Supervisory Board, acting as Chairman of the Supervisory Board in the period from 1 January 2024 to 22 February 2024; (ii) Mr Marek Radzikowski for the performance of his duties as a member of the Supervisory Board, acting as Chairman of the Supervisory Board in the period from 19 August 2024 to 31 December 2024; (iii) Mr Paweł Metrycki for the performance of his duties as a member of the Supervisory Board in the period from 1 January 2024 to 31 December 2024; (iv) Ms Lucyna Kopińska for the performance of her duties as a member of the Supervisory Board in the period from 1 January 2024 to 31 December 2024; (v) Ms Jadwiga Lesisz for the performance of her duties as a member of the Supervisory Board in the period from 1 January 2024 to 13 June 2024; (vi) Mr Robert Ciborowski for the performance of his duties as a member of the Supervisory Board in the period from 29 May 2024 to 31 December 2024; (vii) Mr Maciej Brzozowski acting as Deputy Chairman of the Supervisory Board in the period from 1 January 2024 to14 February 2024; (viii) Mr Jakub Niesłuchowski for the performance of his duties as a member of the Supervisory Board acting as Deputy Chairman of the Supervisory Board in the period from 1 January 2024 to 31 December 2024; (ix) Mr Tomasz Baum for the performance of his duties as a member of the Supervisory Board in the period from 1 January 2024 to 28 May 2024 and (x) Ms Iwona Brzozowska-Poniedzielska for the performance of her duties as a member of the Supervisory Board in the period from 29 May 2024 to 31 December 2024.
Pursuant to Article 395 § 2(3) of the Commercial Companies Code, the Ordinary General Shareholders’ Meeting gives a vote of approval to each member of the Supervisory Board separately once a year. The vote of approval is an evaluation of individual members of the Supervisory Board, independent of the Ordinary General Shareholders’ Meeting’s appraisal of the Supervisory Board’s activity report.
The above confirms that the members of the Supervisory Board duly performed their duties based on adequate knowledge, skills and experience as required by Article 22aa of the Banking Law.
Information concerning the Audit and Finance Committee
In 2025, the composition of the Audit and Finance Committee of PKO Bank Hipoteczny SA was as follows:
|
|
Function in the Audit and Finance Committee |
Date of appointment |
Date of dismissal / resignation |
|||
|
Iwona Brzozowska-Poniedzielska |
Chairperson of the Committee |
21.06.2024 |
|
√ |
√ |
√ |
|
Jakub Niesłuchowski |
Deputy Chairperson of the Committee |
21.06.2024 |
|
|
√ |
√ |
|
Robert Ciborowski |
Member of the Committee |
21.06.2024 |
|
√ |
√ |
√ |
In 2025, five meetings of the Audit and Finance Committee took place.
6.6. Remuneration and Human Resources Management Policy
Number of Employees
As at 31 December 2025, PKO Bank Hipoteczny SA employed 66 people. This is an increase of seven employees compared with the end of 2024.
Remuneration Policy
The basic internal regulation with regard to the remuneration policy is the Remuneration Policy of PKO Bank Hipoteczny SA approved by the Supervisory Board. The Policy specifies:
• the functions of particular structures and bodies within the Bank in the implementation and application of the Policy and the identification of positions of Material Risk Takers (MRT);
• the functioning of fixed and variable components of remuneration of the members of the Bank’s Management Board, MRTs and employees other than members of the Management Board and MRTs;
• benefits other than remuneration available to the employees.
In addition, the Bank complies with the Remuneration Regulations of PKO Bank Hipoteczny SA implemented on the order of the President of the Management Board. According to the Regulations, the Bank’s employees are entitled to the following remuneration components:
• basic salary;
• bonuses and awards for special achievements in their work;
• additional remuneration for overtime work and night work.
The Remuneration Policy of PKO Bank Hipoteczny SA is consistent with the principles of proper and effective risk management.
The Bank has no employee share programme.
Basic Salary
The Bank has a gender-neutral remuneration policy. Fixed remuneration is calculated with regard to the complexity of the tasks performed in a given organizational structure, the level of responsibility related to a given position, the work results achieved and the evaluation of an employee’s competences.
Variable Remuneration
The Bank regulates the process of granting variable remuneration in the Bank Hipoteczny SA Remuneration Policy, the Principles for employing and remunerating members of the Bank’s Management Board and the Principles for granting bonuses to Bank employees whose actions have a material impact on Bank Hipoteczny SA’s risk profile – Material Risk Takers – and the Principles of granting bonuses to the Bank’s employees.
The targets assigned are aimed at ensuring that the risk associated with the Bank’s operations is taken into account. All targets result from target grids approved by the Bank’s Management Board, which are cascaded to the employees of the individual structures. MRTs are additionally responsible for special projects aimed at executing the Bank’s strategy.
MRTs, who have significant influence on the safety level and stable development of the Bank, are subject to additional remuneration restrictions. Variable remuneration components are granted to MRTs, including the Management Board members, for a particular bonus year (calendar year), following the assessment of the achievement of targets, in non-deferred and deferred form. In order to ensure that the results are sustainable, deferred variable remuneration components can be reduced if the Bank’s financial results have deteriorated, the Bank incurred a loss or other variables deteriorated.
Moreover, part of the value of each component is payable in the form of an instrument linked to the carrying amount of the Bank’s net assets. Measurement of the instrument takes into account the Bank’s situation and the market benchmarks of the financial sector.
With regard to the award and payment of variable remuneration components to members of the Management Board or MRTs, the limited scope provisions referred to in Article 9 ca(1b) of the Banking Law apply, i.e. variable remuneration components paid for a given bonus period are not subject to deferral and are paid in full in cash, in the event that the following conditions are cumulatively met:
1) the base amount of variable remuneration does not exceed the PLN equivalent of EUR 50,000, calculated according to the mid EUR exchange rate announced by the National Bank of Poland on the last working day of the preceding year;
2) the base amount of variable remuneration does not exceed one-third of the total annual remuneration for the bonus period concerned.
The Supervisory Board has the right to approve bonuses for the Management Board, and the Management Board has the right to approve bonuses for MRTs and other employees.
Irrespective of the bonus system, an employee awards system functions in the Bank, as part of which an award fund is created for individual discretionary awards for employees who achieve distinctive results in their professional work or for achievements resulting in important outcomes for the Bank.
Employee benefits
|
Extra medical care |
The Bank provides its employees with extra medical care (in addition to occupational medical care provided in accordance with the Labour Code). Different medical packages are assigned to specific job categories. |
|
Group Insurance |
The Bank’s employees and members of the Bank’s Management Board have the possibility of joining group insurance, which is paid for by the employees through the Bank. |
|
MyBenefit cafeteria system |
Under this system, every employee of the Bank can manage the funds assigned to him/her from the Company Social Fund as he/she chooses via an online platform. |
|
Multisport Plus card |
Every employee of the Bank has the opportunity to order a Multisport Plus card via an online platform, which is paid for by the employer. |
|
Employee Pension Scheme (PPE) |
Employees have the possibility of joining the Employee Pension Scheme where the base premium is fully funded by the employer. |
|
“Training zone” platform |
Employees have the opportunity to use the Training Zone platform, where training is available in a number of categories including programming, website development, computer graphics, using office software (MS Office, Google), psychology, graphics-photography, managerial skills, etc. |
|
MULTILIFE platform |
Employees have access to the Multi.Life platform, a wellbeing and development tool that, among other things, promotes development and involvement as well as self-care. |
Principles for remunerating members of the Bank’s Management Board
On 7 August 2025, the Policy for employing and remunerating members of the Management Board of the Bank was adopted by Resolution of the Supervisory Board No. 51/2025. Based thereon, members of the Bank’s Management Board are entitled to:
• fixed remuneration, whose level is set by the Bank’s Supervisory Board in a resolution, separately for each of the members of the Management Board;
• variable remuneration – additional remuneration granted and payable after the end of the bonus award period, in particular in the form of bonuses, rewards for special achievements at work, severance pay (other than fixed remuneration and benefits granted based on the applicable laws or not related to performance).
The information on remuneration components and other benefits payable to Management Board members in the reporting period is presented in Chapter 6.7.
Variable remuneration components for members of the Management Board and Material Risk Takers (MRT)
In accordance with the requirements of the CRD, the Commission Delegated Regulation (EU) 2021/923 of 25 March 2021 supplementing Directive 2013/36/EU of the European Parliament and of the Council with regard to regulatory technical standards setting out the criteria to define managerial responsibility, control functions, material business units and a significant impact on a material business unit’s risk profile, and setting out criteria for identifying staff members or categories of staff whose professional activities have an impact on the institution’s risk profile that is comparably as material as that of staff members or categories of staff referred to in Article 92(3) of that Directive, as well as in connection with the Regulation of the Minister of Finance, Funds and Regional Policy of 8 June 2021 on the risk management system, the internal control system, and the remuneration policy in banks, the following regulations laying down the principles of determining variable remuneration components are in force in the Bank:
• The Policy for employing and remunerating members of the Management Board of the Bank, adopted by a Resolution of the Supervisory Board;
• The principles of remunerating persons whose professional activities significantly affect the Bank’s risk profile (MRTs);
• The list of positions where professional activities have a significant impact on the institution’s risk profile and identification of key functions in the Bank (the list of MRTs).
As at 31 December 2025, the policy on variable remuneration components for Management Board members and MRTs was applicable to four Management Board members, four former Management Board members and 13 MRT positions.
Variable remuneration components are awarded for the purpose of the achievement of objectives assigned as part of the Management by Objectives (MbO) system.
Variable salary components are awarded and paid in the following forms:
• non-deferred;
• deferred.
In 2025, variable remuneration components were paid out based on resolutions passed in previous periods.
Both non-deferred and deferred remuneration is granted in cash and in the form of instruments (i.e. phantom shares) converted into cash after the bonus period, and in the case of deferred remuneration – after the period of deferral.
Each of the accrued components of variable remuneration may be reduced as a consequence of:
• material breaches of the duties performed under the employment contract or contract for services;
• irregularities in the performance of the assigned professional duties;
• material non-compliance with the legal regulations or customer service standards;
• material violation of the principles of community life in relation to other employees and co-workers.
For members of the Management Board, variable remuneration may only be awarded and paid provided that the Directors’ Report and the financial statements for the previous financial year have been approved and the Management Board member has been granted a discharge in respect of his/her duties. Variable remuneration may be reduced or revoked by the Supervisory Board if a member of the Management Board committed a breach, irregularity or non-compliance referred to above up to the date of payment (in particular, within the assessment period covering the last three years).
A member of the Management Board is entitled to severance pay as a result of termination of his/her contract for services if he/she ceases to perform the functions of a Management Board member, in an amount equal to three times the fixed portion of remuneration on condition that the function of Management Board member was performed for at least twelve months before the termination of the contract; the period of performing a function on the Management Board includes a period of continuously performing the function directly before the date of concluding a management contract. A member of the Management Board is entitled to compensation in respect of the ban to engage in competitive activities over a period of six months after termination of the management contract, in the amount of 100% of the fixed portion of remuneration for providing management services based on the contract for services, as at the date of its termination. A member of the Management Board is entitled to contributions to the Employee Pension Fund over a period of performing the duties of member of the Management Board, which are accrued on the fixed and variable components of remuneration and which are not included in the fixed and variable remuneration; the amount of the contributions is the same as for the Bank’s employees.
In 2025, none of the members of the Management Board or employees at PKO Bank Hipoteczny SA received total remuneration of at least EUR 1 million.
The policy on variable remuneration components for members of the Management Board and Material Risk Takers is reviewed annually by the Bureau of Internal Audit, the Remuneration and Nomination Committee of the Bank’s Supervisory Board and by the Supervisory Board of PKO Bank Hipoteczny SA.
In the reporting period, seven meetings of the Remuneration and Nomination Committee of the Supervisory Board of PKO Bank Hipoteczny SA were held.
Contracts Concluded by and between the Bank and Management Board Members
Within the meaning of the provisions of § 2 (1) (22)(a) of the Regulation of the Minister of Finance of 6 June 2025 on current and periodical information to be reported by issuers of securities and on conditions for recognizing as equivalent information required by the laws of a non-member state, the persons managing the Bank are the Management Board members.
In 2025, each of the members of the Bank’s Management Board performed their functions based on the contracts for providing management services concluded with the Bank, which determined – among other things – the terms and conditions relating to remuneration and the ban on conducting competitive activities.
6.7. Benefits for Key Management of PKO Bank Hipoteczny SA
Benefits for members of the Supervisory Board
Pursuant to the Resolution of the Extraordinary General Shareholders’ Meeting of the Bank of 31 October 2024, members of the Supervisory Board, with the exception of members of the Supervisory Board who are employed by PKO Bank Polski SA or a company of the PKO Bank Polski SA Group or who receive, upon termination of such employment, non-competition compensation from PKO Bank Polski SA or a company of the PKO Bank Polski SA Group, are entitled to a monthly remuneration for performing the function of member of the Supervisory Board in an amount equivalent to a one-time basis of assessment referred to in Article 1.3(3, 4 and 5) of the Act of 9 June 2016 on the principles of determining the salaries of persons managing certain companies. The remuneration is increased by 10% if a member of the Supervisory Board participates in at least one standing committee of the Supervisory Board.
|
Benefits for independent members of the Supervisory Board (PLN ‘000) |
01.01.2025 – 31.12.2025 |
01.01.2024 – 31.12.2024 |
|
Tomasz Baum |
|
50 |
|
Iwona Brzozowska-Poniedzielska |
112 |
51 |
|
Robert Ciborowski |
112 |
51 |
|
Mieczysław Król |
|
23 |
|
Jadwiga Lesisz |
|
54 |
|
Total |
224 |
229 |
*Gross benefits excluding surcharges.
Benefits for members of the Management Board received, receivable and potentially receivable
|
BENEFITS FOR MEMBERS OF THE MANAGEMENT BOARD (PLN ‘000) |
01.01.2025- 31.12.2025 |
|||||
|
Short-term employee benefits |
Other long-term employee benefits – variable cash remuneration[23] |
Short-term employee benefits |
||||
|
Remuneration 01.01.2025-31.12.2025[24] |
Other received 01.01.2025- 31.12.2025 |
Received 01.01.2025-31.12.2025 |
Potentially receivable as at 31.12.2025 |
Received 01.01.2025-31.12.2025 |
Potentially receivable as at 31.12.2025 |
|
|
Wojciech Papierak |
744.0
|
- |
175.2 |
- |
- |
- |
|
Piotr Kochanek |
576.0 |
- |
108.3 |
143.4 |
105.8 |
264.7 |
|
Katarzyna Kurkowska-Szczechowicz |
596.4
|
- |
100.9 |
124.0 |
90.7 |
244.5 |
|
Michał Stępniewski |
480.0 |
- |
- |
- |
- |
- |
|
Members of the Management Board who have not performed their functions in 2025 |
0 |
- |
42.0 |
153.1 |
95 |
237.9 |
|
Total benefits for members of the Management Board* |
2396.4 |
- |
426.4 |
420.5 |
291.5 |
747.1 |
*Gross benefits excluding surcharges.
|
BENEFITS FOR MEMBERS OF THE MANAGEMENT BOARD (PLN ‘000) |
01.01.2024- 31.12.2024 |
|||||
|
Short-term employee benefits |
Other long-term employee benefits – variable cash remuneration[25] |
Short-term employee benefits |
||||
|
Remuneration 01.01.2024-31.12.2024[26] |
Other received 01.01.2024- 31.12.2024 |
Received 01.01.2024-31.12.2024 |
Potentially receivable as at 31.12.2024 |
Received 01.01.2024-31.12.2024 |
Potentially receivable as at 31.12.2024 |
|
|
Wojciech Papierak |
292.0
|
- |
- |
- |
- |
- |
|
Piotr Kochanek |
496.0 |
- |
106.1 |
115.2 |
100.6 |
182.4 |
|
Katarzyna Kurkowska-Szczechowicz |
596.4
|
- |
85.6 |
63.5 |
- |
149.1 |
|
Piotr Jaworski |
255.1 |
- |
105.0 |
- |
- |
- |
|
Stanisław Skoczylas |
70.0 |
- |
106.1 |
- |
- |
- |
|
Members of the Management Board who have not performed their functions in 2024 |
0 |
- |
174.2 |
95.8 |
79.2 |
124.2 |
|
Total benefits for members of the Management Board* |
1709.5 |
- |
577.0 |
274.5 |
179.8 |
455.7 |
*Gross benefits excluding surcharges.
Benefits after the term of the contract for services
In 2025, Piotr Jaworski was paid a post-employment benefit with respect to the ban on competition of PLN 80 thousand.
Severance benefits
In the period from 1 January to 31 December 2025 severance benefit of PLN 4.8 thousand was paid to Agnieszka Krawczyk.
7. Corporate governance and information for investors
Representation on compliance with corporate governance principles
Audit firm
Other information
7.1. Representation on compliance with corporate governance principles
The general rules for corporate governance adopted by the Bank, i.e. the internal regulations for managing the Bank and controlling its operations, follow from the generally binding legal regulations, in particular the Commercial Companies Code and the Banking Law, as well as the rules issued by the PFSA, i.e. the Principles of Corporate Governance for Supervised Institutions and Recommendation Z concerning the rules of internal governance.
The Bank has adopted the Principles of Corporate Governance for Supervised Institutions, as issued by the Polish Financial Supervision Authority, on the basis of the following decisions by the Bank’s bodies:
• the Resolution of the Bank’s Management Board of 15 December 2014 – in relation to the powers and duties of the Management Board, i.e. conducting the Bank’s affairs and its representation, in accordance with the generally applicable laws and the Bank’s Articles of Association;
• the Resolution of the Bank’s Supervisory Board of 18 December 2014 - in relation to the powers and duties of the Supervisory Board, i.e. supervising the conduct of the Bank’s affairs, in accordance with the generally applicable laws and the Bank’s Articles of Association;
• the Resolution of the General Shareholders’ Meeting of 22 December 2015 – in relation to the powers reserved for the General Shareholders’ Meeting.
Pursuant to and to the extent arising from the aforementioned decisions, the Bank opted out of the following provisions of the Principles of Corporate Governance for Supervised Institutions:
• the provisions referring to the principles of cooperation with and rights of multiple shareholders (§ 8 (4), § 9 (1) and (6), § 10 (3), § 11 (3) and § 31 (3)), which are not applied because the Bank only has a single shareholder;
• chapter 9, concerning the management of assets at the customer’s risk, because the Bank does not conduct operations in this area;
• the principle described in § 22 (1), concerning the independence of Supervisory Board members, manifesting itself primarily in the lack of direct and indirect ties to the supervised institution, members of the management and supervisory bodies, significant shareholders and related parties; it should be noted that two members meeting the independence requirements set out in the Act of 11 May 2017 on Statutory Auditors, Audit Firms and Public Oversight (Journal of Laws, item 1089 as amended) were appointed as members of the Bank’s Supervisory Board.
As required by § 27 of the Corporate Governance Principles for Supervised Institutions, on 6 March 2025, the Bank’s Supervisory Board assessed the application of the Principles at the Bank in 2024. The Supervisory Board positively assessed the application of the Principles at the Bank, finding that the Bank and its bodies applied the Principles to the extent adopted by the Bank, adequate to the scale, nature of the Bank’s activities and the specific nature of the Bank.
The text of the Principles can be found on the Polish Financial Supervision Authority’s website:
The Bank applies Recommendation Z relating to internal governance in banks pursuant to the principle of proportionality and adequacy which follow from the scale, nature of operations and specific character of the Bank.
The Bank represents that, when the scope of Recommendation Z covers the same subjects as the Principles of Corporate Governance for Supervised Institutions, the provisions of Recommendation Z prevail. To the extent not governed by Recommendation Z, the Principles of Corporate Governance for Supervised Institutions apply.
The text of Recommendation Z on corporate governance principles in banks can be found on the website of the Polish Financial Supervision Authority:
https://www.knf.gov.pl/knf/pl/komponenty/img/Rekomendacja_Z_70998.pdf
Diversity Policy
Diversity management at the Bank concerns all employees, key managers and the Bank’s authorities. Diversity activities affect many aspects of the Bank’s operations and are aimed at respecting other persons, ensuring equal treatment of the employees and making use of their potential. Diversity means that people are important regardless of their gender, age, health, sexual orientation, religion, marital status or country of origin. Therefore, the following solutions were implemented in the form of regulations, processes and HR policies:
• Principles for preventing, reporting and investigating violations of the Diversity, Equal Treatment and Mutual Respect Policy. The principles ensure that disadvantages in labour relations are countered and define how to respond in the event of interpersonal conflict;
• The Code of Ethics of PKO Bank Hipoteczny SA The Code of Ethics of the PKO BP Group, the Code of Ethics for suppliers, service providers and bidders cooperating with PKO Bank Hipoteczny in procurement procedures, and the Rules and regulations of the Bank’s operations concerning, among other things, preventing discrimination due to gender, age, disability, race, religion, nationality, political views, trade union membership, ethnicity, religion or sexual orientation, as well as due to employment for a specified or unspecified period or full- or part-time. In addition, the aforementioned documents identify the values, principles, standards of conducting and ethical attitudes in relationships with Customers, in the Bank’s business operations, and in the Bank’s relations with the environment;
• The Bank observes the principles of equal treatment during the recruitment process and at work; the candidate selection processes are based on objective criteria, and their individual stages follow the established procedures;
• The Bank unconditionally reacts to and prevents mobbing, harassment and discrimination, and other forms of unequal and inappropriate treatment.
Diversity policy concerning the management and supervisory staff as at 31 December 2025
Diversity management also concerns the PKO Bank Hipoteczny SA’s Supervisory Board and Management Board members and the key managers. The management and supervisory staff includes persons of different gender, age and experience.
|
Gender |
Female |
Male |
|
Supervisory Board |
2 |
4 |
|
Management Board |
1 |
3 |
|
Key managers |
6 |
7 |
|
Age |
30 – 40 years |
41 – 50 years |
51 – 60 years |
more than 60 years |
|
Supervisory Board |
- |
3 |
3 |
- |
|
Management Board |
- |
1 |
3 |
- |
|
Key managers |
1 |
7 |
4 |
1 |
|
Period of employment with PKO Bank Hipoteczny SA |
up to 1 year |
1 – 5 years |
more than 5 years |
|
Supervisory Board |
- |
3 |
3 |
|
Management Board |
1 |
2 |
1 |
|
Key managers |
0 |
4 |
9 |
Main features of the internal control and risk management systems in relation to the process of preparing the financial statements
In order to ensure the integrity and correctness of the financial reporting process, the Bank has designed and implemented a number of controls embedded in the reporting systems and the internal regulations of the process. These controls involve, among other things, the use of continuous verification and reconciliation of reporting data with the accounting, analytical and other documents that form the basis for the preparation of the financial statements.
The process of preparing the financial statements is reviewed periodically, in particular with regard to the correctness of the accounting reconciliations, substantive analysis and reliability of the information. In accordance with internal regulations, the financial statements are adopted by the Management Board of PKO Bank Hipoteczny SA. They are subject to the opinion of the Audit and Finance Committee of the Supervisory Board of PKO Bank Hipoteczny SA appointed by the Supervisory Board. The annual financial statements are furthermore subject to evaluation by the Supervisory Board of PKO Bank Hipoteczny SA.
The Director of the Finance and Accounting Office is responsible for ensuring compliance with the controls in financial reporting, while Internal Audit, as part of its assurance activity, assesses the adequacy and effectiveness of the risk management system and the internal control system at the first and second levels, respectively.
Identification of shareholders who directly or indirectly hold substantial blocks of shares, with an indication of the number of shares held and the resulting number of votes
As at 31 December 2025, the share capital of PKO Bank Hipoteczny SA amounted to PLN 1,611,300,000 and comprised 1,611,300,000 shares of PLN 1 nominal value each. The shares are fully paid up. Compared to the end of 2024, the share capital has not changed. The issued shares of PKO Bank Hipoteczny SA are non-preferred shares. No special control rights arise for the holders of shares in PKO Bank Hipoteczny SA from these securities. 100% of the shares of PKO Bank Hipoteczny SA are held by Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna.
The share capital structure of PKO Bank Hipoteczny SA:
|
Series |
Type of shares |
Number of shares |
Nominal value per share |
Number of votes at the GSM |
Amount paid in for the shares |
|
A |
Ordinary registered shares |
300,000,000 |
PLN 1 |
300,000,000 |
PLN 300,000,000.00 |
|
B |
Ordinary registered shares |
200,000,000 |
PLN 1 |
200,000,000 |
PLN 200,000,000.00 |
|
C |
Ordinary registered shares |
200,000,000 |
PLN 1 |
200,000,000 |
PLN 200,000,000.00 |
|
D |
Ordinary registered shares |
100,000,000 |
PLN 1 |
100,000,000 |
PLN 100,000,000.00 |
|
E |
Ordinary registered shares |
150,000,000 |
PLN 1 |
150,000,000 |
PLN 150,000,000.00 |
|
F |
Ordinary registered shares |
150,000,000 |
PLN 1 |
150,000,000 |
PLN 150,000,000.00 |
|
G |
Ordinary registered shares |
100,000,000 |
PLN 1 |
100,000,000 |
PLN 100,000,000.00 |
|
H |
Ordinary registered shares |
95,000,000 |
PLN 1 |
95,000,000 |
PLN 95,000,000.00 |
|
I |
Ordinary registered shares |
100,000,000 |
PLN 1 |
100,000,000 |
PLN 100,000,000.00 |
|
J |
Ordinary registered shares |
131,500,000 |
PLN 1 |
131,500,000 |
PLN 131,500,000.00 |
|
K |
Ordinary registered shares |
84,800,000 |
PLN 1 |
84,800,000 |
PLN 84,800,000.00 |
|
|
TOTAL |
1,611,300,000 |
|
1,611,300,000 |
PLN 1,611,300,000.00 |
|
Shareholder |
31.12.2025 |
31.12.2024 |
||
|
Number of shares |
Number of votes at GSM |
Number of shares |
Number of votes at GSM |
|
|
Powszechna Kasa Oszczędności |
1,611,300,000 |
100% |
1,611,300,000 |
100% |
Description of the rules for appointing and dismissing managers
Members of the Management Board are appointed and dismissed by resolution of the Supervisory Board. Appointment are made following a selection procedure to check and assess the qualifications of the candidates and to identify the best candidate for membership of the Management Board. When appointing Management Board members, the Supervisory Board determines their number. Appointing two members of the Management Board, including the President of the Management Board and the member of the Bank’s Management Board responsible for managing risks material to the Bank’s operations, and entrusting the function of the member of the Management Board responsible for supervising the management of risks material to the Bank’s operations to an appointed member of the Management Board requires the consent of the Polish Financial Supervision Authority. Members of the Management Board are appointed for a joint three-year term of office. Management Board members may be dismissed before the end of their term of office at any time.
The Supervisory Board notifies the Polish Financial Supervision Authority of the composition of the Management Board and of any changes in the composition thereof immediately after its appointment or after any changes in the composition thereof. The Supervisory Board also notifies the Polish Financial Supervision Authority of the members of the Management Board who, as a result of the segregation of duties, are in charge of the risk management and the internal audit unit. The Supervisory Board notifies the Polish Financial Supervision Authority of its intention to dismiss, and the reasons for dismissal of, a member of the Management Board whose competences include risk management or the internal audit unit, immediately after the relevant item has been placed on the agenda of the Supervisory Board meeting.
Additional information on the powers of the managers is provided in Chapter 6 “Organization and governing bodies of PKO Bank Hipoteczny SA.”
Description of powers to decide on share issues or redemptions
The powers of the General Shareholders’ Meeting include adopting resolutions on establishing the share redemption procedures and the level of compensation for redeemed shares, approving the acquisition of the Bank’s treasury shares for redemption, and approving the issue of bonds convertible into shares or other instruments giving the right to purchase or take up shares in the Bank.
Indication of any limitations on the transfer of ownership rights to the issuer’s securities
There are no limitations on the transfer of ownership rights to the issuer’s securities.
Principles for amending the Bank’s Articles of Association
Amendments to the Bank’s Articles of Association require a resolution of the General Shareholders’ Meeting and must be entered in the Register of Businesses of the National Court Register. To the extent defined by Article 34.2 of the Banking Law, an amendment to the Articles of Association requires the consent of the Polish Financial Supervision Authority.
Composition and changes during the last financial year and description of the operation of the issuer’s management, supervisory or administrative bodies and their committees
Information concerning the description of the management, supervisory and administrative bodies of the issuer, their committees and their composition and changes during the last financial year is presented in Chapter 6 “Organization and governing bodies of PKO Bank Hipoteczny SA.”
General Shareholders’ Meeting and relations with shareholders
The method of operation of the General Shareholders’ Meeting and its key powers as well as a description of the shareholder rights and the method of their execution follow directly from the applicable laws and the Bank’s Articles of Association. In consideration of the fact that all shares in the Bank’s share capital are held by a single shareholder, i.e. PKO Bank Polski SA, the resolutions of the General Shareholders’ Meeting are adopted without formally convening a General Shareholders’ Meeting, in accordance with the principles arising from Article 405 of the Polish Commercial Companies Code.
7.2. Audit firm
In accordance with the policy for selecting an audit firm to perform an audit of the Bank’s financial statements, the Supervisory Board conducts an open tender procedure to commission an audit of the financial statements. The Audit and Finance Committee of the Bank’s Supervisory Board recommends an audit firm to be appointed to the Supervisory Board. Unless it concerns renewing an existing audit contract, the recommendation contains at least two suggestions with justifications and indicates the preferred firm. The Bank’s Supervisory Board appoints the audit firm based on the recommendation of the Audit and Finance Committee of the Bank’s Supervisory Board. Transparent and non-discriminatory selection criteria are used in the evaluation of bids submitted by the audit firms.
In accordance with the policy for providing permitted non-audit services to the Bank by the audit firm conducting the audit, its related entities and members of its network, the provision of non-audit services by the audit firm conducting the audit, its related entities and members of its network to the Bank requires the consent of the Audit and Finance Committee of the Bank’s Supervisory Board and of the Audit Committee of the Supervisory Board of PKO Bank Polski SA.
In accordance with the Policy and Procedures for selecting an audit firm to perform an audit of the Bank’s financial statements, based on § 18. 1 (4) of the Bank’s Articles of Association and in accordance with the recommendation of the Audit and Finance Committee of the Supervisory Board, on 1 March 2023 the Supervisory Board of PKO Bank Hipoteczny SA appointed KPMG Audyt Sp. z ograniczoną odpowiedzialnością sp. k. as the audit firm to conduct audits and reviews of the Bank’s financial statements for the years 2024-2026. KPMG Audyt Sp. z ograniczoną odpowiedzialnością sp. k. with its registered office in Warsaw, ul. Inflancka 4A, is registered on the list of audit firms maintained by the National Council of Statutory Auditors with the number 3546.
The following table presents the scope of services provided by the audit firm and the fees for the services, as specified in the Contracts:
|
Gross fee of the audit firm (PLN ‘000) |
2025 |
2024 |
|
Audit of the financial statements |
331.3 |
319.8 |
|
Review of the financial statements, audit and review of group packages |
152.9 |
147.6 |
7.3. Other information
Changes in the holding of shares and rights to shares in PKO Bank Hipoteczny SA by individuals in management and supervisory roles
In 2025, there were no changes in the holding of shares and rights to shares in PKO Bank Hipoteczny SA by individuals in management and supervisory roles. 100% of the shares are held by PKO Bank Polski SA.
Information required pursuant to Article 111A(1)(1) of the Banking Law
PKO Bank Hipoteczny SA has its registered office in Warsaw and operates solely in the territory of Poland. The Bank has no subsidiaries.
ESG reporting
ESG reporting is realized at the consolidated level of the Parent Company, i.e. PKO Bank Polski SA with its registered office in Warsaw, ul. Świętokrzyska 36. The obligation of PKO Bank Hipoteczny SA to prepare sustainability reports on a separate level has been deferred for two years (i.e. from the year 2028, report for the year 2027) as a result of legislative changes at the EU level, implemented into the national legislation through amendments to the Accounting Act.
The consolidated Directors’ Reports of the PKO BP Group are available under the following link:
https://www.pkobp.pl/relacje-inwestorskie/wyniki-finansowe-i-prezentacje/#category=154443
Significant and material agreements with the Central Bank and/or regulatory bodies
PKO Bank Hipoteczny SA is obliged to report on all agreements that meet the definition of inside information as defined in the Regulation (EU) No 596/2014 of the European Parliament and of the Council on market abuse. In 2025, by Bank did not conclude any significant or material agreements with the Central Bank or with supervisory bodies.
Financial and guarantee commitments granted
Financial liabilities in respect of loans granted but not disbursed as at 31 December 2025 amounted to PLN 186.4 million, an increase of PLN 86.1 million compared with 31 December 2024.
In 2025, PKO Bank Hipoteczny SA did not issue any guarantees.
Off-balance sheet liabilities granted to related parties
In 2025, PKO Bank Hipoteczny SA did not grant any off-balance sheet liabilities to its related parties.
Loans taken out and loan and guarantee agreements unrelated to the Bank’s operating activities
In 2025, PKO Bank Hipoteczny SA did not take out any loans or enter into any loan, guarantee or warranty agreements unrelated to the Bank’s operations.
Information on defaults on loans or advances or infringement of material covenants with respect to which no corrective measures were adopted by the end of the reporting period
PKO Bank Hipoteczny SA has not identified any outstanding loans or advances or breaches of material contractual provisions of loans or advances in which it acts as borrower or lender.
Underwriting agreements
In 2025, PKO Bank Hipoteczny SA did not conclude any underwriting agreements.
Other information relevant to the assessment of the issuer’s human resources, assets, financial position, net profit or loss and of their changes
In 2025, no other significant events occurred in PKO Bank Hipoteczny SA which re relevant to the assessment of its human resources, assets, financial position and net profit or loss.
Identification of proceedings pending before courts, arbitration bodies or public administration authorities
As at 31 December 2025, no material proceedings were pending before courts, arbitration bodies or public administration bodies concerning liabilities or receivables of PKO Bank Hipoteczny SA.
Factors which will influence future financial performance over the horizon of at least one quarter
PKO Bank Hipoteczny SA recognizes the growing risks arising from macroeconomic and regulatory changes.
The following external conditions may affect the Bank’s operations and future performance.
In the global economy:
• geopolitical risks, with heightened risk of escalating global conflicts and their impact on commodity prices, risk appetite and supply chains;
• the persistence of relatively low rates of global economic growth, including in Europe, while public debt is on the rise;
• changes in climate policy, including energy transition and changes in environmental requirements, and climate change itself and its consequences.
In the Polish economy:
• complicated political situation potentially hindering the smooth implementation of economic policies;
• the scale and direction of changes in the NBP interest rates and in the level of and interest on the mandatory reserve;
• the expected recovery in demand for mortgage loans, in view of the expected interest rate cuts;
• the risks associated with the implementation of the new POLSTR® benchmark and its impact on the financial market;
• the introduction of the Long-Term Funding Ratio and its impact on the long-term funding market;
• regulations increasing the corporate income tax rate for, among others, domestic banks (in 2026 to 30%, in 2027 to 26% and from 2028 to 23%), including, respectively, for tax groups comprising at least one domestic bank, effective as of 1 January 2026. The entry into force of this legislation results in the need to revaluate the deferred tax asset and liability for 2025. The higher tax rates are taken into account when calculating advance tax payments in 2026;
• possible further court decisions regarding the PLN-denominated loans based on WIBOR rates.
Seasonality or cyclicality of activities during the reporting period
The activities of PKO Bank Hipoteczny SA show no significant seasonal or cyclical characteristics.
PKO Bank Hipoteczny SA has not published forecasts of its financial results for 2025. The Bank provides information on significant events that affect the Bank’s results in current reports.
Information on loan guarantees and warranties, and other guarantees issued by the Bank or its subsidiary – in aggregate to a single entity or its subsidiary, if the total amount of the existing guarantees is equivalent to at least 10% of the issuer’s equity
In 2025, PKO Bank Hipoteczny SA did not grant any loan guarantees and warranties, or other guarantees to a single entity or a subsidiary of such an entity with a total value equivalent to at least 10% of the Bank’s equity.
Information on loan and advance agreements concluded or terminated during the financial year
On 30 January 2025, PKO Bank Hipoteczny SA and PKO Bank Polski SA concluded an annex to the contract for a revolving working capital overdraft facility dated 2 February 2017, as amended, extending the facility utilization period until 2 February 2029.
On 23 December 2025, PKO Bank Hipoteczny SA and PKO Bank Polski SA concluded Annex 3 to the contract for a non-revolving working capital facility in PLN dated 3 January 2023, as amended, increasing the amount of the limit from PLN 900 million to PLN 1,300 million and extending the loan utilization period until 3 January 2027.
Information on transaction(s) with related parties concluded by the issuer or its subsidiary, if material and not concluded on an arm’s length basis
PKO Bank Polski SA and PKO Bank Polski SA Group entities are the Bank’s related parties in terms of equity.
In 2025, PKO Bank Hipoteczny SA did not conclude any material non-arm’s length transactions with related parties.
Information on changes in the key principles of managing the Bank’s enterprise
In 2025, there were no changes in the key principles of managing the Bank’s enterprise in PKO Bank Hipoteczny SA.
Funding support agreements
PKO Bank Hipoteczny SA did not conclude funding support agreements with other entities subject to consolidated supervision operating within the same holding, or with closely related parties.
Deposits, and guarantees and sureties issued
PKO Bank Hipoteczny SA does not accept deposits or issue any guarantees or sureties.
Information on the value of security established on the accounts or assets of borrowers
In 2025 PKO Bank Hipoteczny SA did not set up any security on the borrowers’ accounts.
As at 31 December 2025, the value of collateral in respect of residential mortgage loans secured with real estate mortgages was PLN 69.8 billion compared with PLN 69.6 billion as at 31 December 2024.
Statement on non-financial information
PKO Bank Polski SA with its registered office in Warsaw, Świętokrzyska 36, is the Parent Company preparing the statement on non-financial information covering PKO Bank Hipoteczny SA.
Events after the end of the reporting period
On 9 January 2026, based on the Framework Agreement for the Sale of Receivables signed with PKO Bank Polski SA on 17 November 2015, the Bank purchased a portfolio of receivables in respect of mortgage covered residential loans amounting to PLN 689,789 million.
8. Representation of the Management Board of PKO Bank Hipoteczny SA
The Management Board of PKO Bank Hipoteczny SA represents that, to the best of their knowledge:
• the financial statements of PKO Bank Hipoteczny SA for the year ended 31 December 2025 have been prepared in accordance with the applicable accounting principles, and give a true, fair and clear view of the economic and financial position of PKO Bank Hipoteczny SA, and of its financial result;
• the Directors’ Report on the activities of PKO Bank Hipoteczny SA in the year ended 31 December 2025 includes a true reflection of the development and achievements, and of the position of PKO Bank Hipoteczny SA, including a description of the basic risks and threats.
The Management Board of PKO Bank Hipoteczny SA represents that the audit firm which conducted the audit of the financial statements of PKO Bank Hipoteczny SA for the year ended 31 December 2025 was appointed in compliance with the applicable laws, and that both the firm and the statutory auditor who conducted the audit fulfilled all the criteria for providing an unbiased and independent audit report on the financial statements, in compliance with the applicable laws and professional standards.
This Directors’ Report on the activities of PKO Bank Hipoteczny SA for the year ended 31 December 2025 comprises 60 sequentially numbered pages.
Signatures of all members of the Bank’s Management Board
|
06.03.2026 |
Wojciech Papierak |
President of the Management Board |
|
Signed on the Polish original ...................................................... (signature) |
|
06.03.2026 |
Katarzyna Kurkowska-Szczechowicz |
Vice-President of the Management Board |
|
Signed on the Polish original ...................................................... (signature) |
|
06.03.2026 |
Piotr Kochanek |
Vice-President of the Management Board |
|
Signed on the Polish original ...................................................... (signature) |
|
06.03.2026 |
Michał Stępniewski |
Vice-President of the Management Board |
|
Signed on the Polish original ...................................................... (signature) |