PZU Group’s asset and liability structure

As at 31 December 2021, the PZU Group’s total assets were PLN 402,129 million, up PLN 23,155 million compared to the end of 2020.

Assets

53.5% of the Group’s assets (versus 52.1% at the end of 2020) was loan receivables from clients. Their balance reached PLN 215,008 million. It increased compared to the end of 2020 by PLN 17,720 million, mainly due to the growing loans (particularly mortgage loans) for individual customers, and an increase of the balance of operating loans in the business segment.

37.2% of assets (versus 39.5% at the end of 2020) were investments: financial assets, investment property, derivatives and financial assets pledged as collateral for liabilities. They totaled PLN 149,391 million, and were down by PLN 363 million as compared to the end of last year. The decrease in the value of investments was associated particularly with Bank Pekao, and was related to the lower value of the portfolio of government debt securities. Net of the banking business, the investment portfolio was at a level comparable to the previous year, and changes in its balance are attributable to the generated investment result, and inflow of premiums driven by business growth.

2.6% of assets (versus 2.7% at the end of 2020) were non-current assets in the form of intangible assets, goodwill and property, plant and equipment. They amounted to PLN 10,325 million, and were by PLN 155 million higher as compared to the end of 2020. The increase is attributable to intangible assets in Bank Pekao.

2.3% of assets (versus 2.1% at the end of 2020) were cash and cash equivalents. Their value was PLN 9,447 million, and was PLN 1,508 million higher than a year before. This was caused by an increase in the balance of funds accumulated in Poland’s central bank by Bank Pekao and Alior Bank.

2.3% of assets (versus 1.6% at the end of 2020) represented the PZU Group’s receivables, including receivables under insurance contracts and the current income tax. They amounted to PLN 9,418 million and were higher by PLN 3,172 million compared to the year before. The increase arose primarily from the higher value of outstanding transactions involving financial instruments.

0.2% of assets (compared to the corresponding share as at the end of 2020) were the assets held for sale. Their balance grew by PLN 53 million, to PLN 643 million, over a year. It concerned mainly the properties held by real estate sector mutual funds as held for sale, since the expected investment horizon has been reached.

PZU Group’s asset structure (in %)

Equity and liabilities

At yearend 2021, the PZU Group’s consolidated equity reached PLN 39,994 million, which was down PLN 3,409 million versus the year before.

The value of the non-controlling interests decreased by PLN 1,712 million to PLN 22,914 million. This was driven by the decrease in the valuation of debt instruments and cash flow hedging instruments measured at fair value through other comprehensive income, Pekao’s dividends to non-controlling shareholders of PLN 674 million and the result generated by Alior Bank and Bank Pekao attributable to non-controlling owners of PLN 2,098 million.

Equity attributable to the parent company’s shareholders dropped by PLN 1,697 million to PLN 17,080 million. This was caused by the decrease in the valuation of debt instruments and cash flow hedging instruments measured at fair value through other comprehensive income, distribution of PZU’s profit for 2020, including the allocation of PLN 3,022 million to dividend payout, and PLN 3,336 million in net profit generated in 2021 attributable to shareholders of the parent company.

65.9% of the Group’s equity and liabilities at yearend 2021 were liabilities to clients under deposits. They amounted to PLN 265,155 million and were higher by PLN 23,180 million than one year before. This resulted from the increase in current deposits of Bank Pekao and Alior Bank by PLN 30,900 million, which was partly offset by a decrease in term deposits.

As at 31 December 2021, the PZU Group had liabilities arising from own debt securities totaling PLN 5,940 million, including:

• PLN 4,154 million on bonds issued by Bank Pekao and Alior Bank;
• PLN 695 million on certificates of deposit issued by Bank Pekao and Alior Bank;
• PLN 1,091 million on covered bonds issued by Bank Pekao.

Subordinated liabilities of the PZU Group at yearend 2021 reached PLN 6,274 million, which was similar to the corresponding 2020 value.

12.5% of equity and liabilities at yearend 2021 was the value of technical provisions. It reached PLN 50,173 million and was PLN 1,702 million higher than one year before. This was affected by:

• higher provision for unearned premiums in non-life insurance resulting mainly from developing sales of insurance;
• increase in the provision for outstanding claims and benefits in non-life insurance related to the higher level of claims provisions in motor TPL, general liability and motor own damage insurance;
• higher provisions in life insurance as an effect of enhancing cooperation with banks in terms of protection and investment products;
• lower provisions for policyholder risk in group investment products as a result of negative portfolio investment performance and a decrease in provisions on the structured product in life insurance which had been withdrawn from the offering.

3.3% of equity and liabilities at yearend 2021 was other liabilities in the amount of PLN 13,203 million. They were higher by PLN 769 million than one year before. The balance changed primarily due to liabilities arising from transactions in financial instruments and repurchase transactions.

Structure of PZU Group’s equity and liabilities (in %)

Cash flow statement

At yearend 2021, net cash flow was PLN 1,442 million, up by PLN 1,471 million versus the previous year. This growth was recorded in particular in cashflow from investment activity.

Material off-balance sheet line items

The value of contingent liabilities at the end of 2021 was PLN 68,948 million, that is PLN 3,163 million more year on year. This was caused predominantly by:

• PLN 4,813 million in contingent liabilities for renewable limits in settlement accounts and credit cards;
• PLN 41,017 million in liabilities from loans in tranches;
• PLN 9,531 million in liabilities in the form of awarded guarantees and sureties;
• PLN 5,240 million in the form of guarantees for the issue of securities.