PFSA on individual criteria for dividend policy

27.12.2019 Report 39/2019 - The PFSA letter regarding individual criteria for the dividend policy for Bank Pekao S.A in 2020

Bank Polska Kasa Opieki Spółka Akcyjna (the "Bank") hereby informs that the Bank received a letter from the Polish Financial Supervision Authority (the "PFSA") dated December 24, 2019 regarding individual criteria for the commercial bank dividend policy in 2020.

The criteria for dividend payment of up to 50% and up to 75% of the profit earned in 2019, as well as the rules for adjustments of dividend payment for the banks with the exposure to loans denominated in foreign currency, indicated in the abovementioned letter, are consistent with the criteria published on December 3, 2019 in the PFSA statement regarding the supervisory authority position on criteria for the dividend policy of commercial banks, cooperative and associative banks, insurance and reinsurance companies in 2020.

The criteria for dividend payment of up to 100% of the profit earned in 2019, additionally incorporate the Bank's sensitivity to the adverse macroeconomic scenario (ST add-on). The sensitivity to the adverse macroeconomic scenario was defined as the difference between total capital ratio (TCR) in the reference and adverse scenario at the end of forecast period i.e. 2021. The ST add-on was determined taking into account the results of stress tests, including full implementation of IFRS9 and the assumption of no dividend payment. PFSA included supervisory adjustments in the calculations. According to the PFSA letter, the ST add-on for the Bank, after the supervisory adjustments, was set at the level of 2.26 percentage points.

Taking into account the abovementioned criteria and values of capital buffers for Bank standalone and consolidated levels as of September 30, 2019, to make dividend payment:

- up to 50% of the 2019 net profit, the Bank is required to maintain at least Common Equity Tier 1 (CET1) ratio at the level of 10.65%, Tier 1 (T1) ratio at the level of 12.15%, and TCR at the level of 14.15% on standalone level; and at least CET1 ratio at the level of 10.66%, T1 ratio at the level of 12.16%, and TCR at the level of 14.16% on consolidated level,

- up to 75% of the 2019 net profit, the Bank is required to maintain at least CET1 ratio at the level of 12.15%, T1 ratio at the level of 13.65%, and TCR at the level of 15.65% on standalone level; and at least CET1 ratio at the level of 12.16%, T1 ratio at the level of 13.66%, and TCR at the level of 15.66% on consolidated level,

- up to 100% of the 2019 net profit, the Bank is required to maintain at least CET1 ratio at the level of 14.41%, T1 ratio at the level of 15.91%, and TCR at the level of 17.91% on standalone level; and at least CET1 ratio at the level of 14.42%, T1 ratio at the level of 15.92%, and TCR at the level of 17.92% on consolidated level.

Legal basis: Art. 17 of (1) MAR - inside information