21. Loans and advances to customers

As at 31 December 2013, as a part of issuance stabilising actions for the selling shareholder the Brokerage House of PKO Bank Polski SA had the company’s shares valued using the purchase price, presented in position ‘receivables due from repurchase agreements’ in the amount of PLN 105 665 thousand and cash in the amount of PLN 14 629 thousand, blocked on the stabilisation manager’s account and a liability in the same amount to the selling shareholder. Settlement of this transaction will take place according to the stabilisation agreement, under mutual offsetting of assets and liabilities in the same amount after 30 days from the beginning of the stabilisation, or when the number of shares acquired from the market as a part of issuance stabilising actions will equal the number of shares received from the selling shareholder.

The structure of loans and advances presented in Note 21 ‘Loans and advances to customers’ includes the following segmentation:

• corporate loans of financial institutions (i.e. e.g. leasing companies, insurance companies, investment companies) include corporate banking,
• housing loans include loans of mortgage banking, housing market clients, corporate client segment and small and medium enterprises as regards to products intended for housing purposes,
• corporate loans of non-financial entities, depending on the size of the entity, include loans for small and medium enterprises, housing market loans and corporate loans granted to corporate entities for non-housing purposes,
• consumer loans include retail and private banking,
• corporate loans of State budget entities include corporate banking loans,
• reclassified debt securities are included in the corporate client segment.

Debt securities in the loans and advances to customers portfolio

Securities reclassification

In 2013 there was no reclassification of securities to the loan and advances to customers’ portfolio. In 2012, due to change of intention as regards holding of the selected portfolio of non-Treasury securities classified upon initial recognition as available for sale the Group reclassified them to loans and advances to customers.
As a result of the reclassification of the portfolio, the portfolio valuation methods have changed, i.e. from measured at fair value to measured at amortised cost. 

Debt securities reclassified from financial assets available for sale to loans and advances to customers as at the date of reclassification

Debt securities (municipal bonds and corporate bonds) reclassified from financial assets available for sale to loans and advances to customers as at:

Change in fair value which would have been recognised in the income statement and/or in other comprehensive income if there was no reclassification, would amount to PLN (5 948) thousand for the period from the date of reclassification until 31 December 2013 (31 December 2012 PLN 10 850 thousand).

As at 31 December 2013, the average effective interest rate for the debt securities portfolio was 4.139% (5.758% as at 31 December 2012).

A detailed description of changes in allowances has been presented in the Note 10.

As at 31 December 2013, the share of impaired loans amounted to 8.2% (as at 31 December 2012: 8.9%), whereas the coverage ratio for impaired loans (calculated as total impairment allowances on loans and advances to customers divided by gross carrying amount of impaired loans) amounted to 51.7% (as at 31 December 2012: 50.5%).

As at 31 December 2013, the share of loans overdue by more than 90 days in the gross amount of loans and advances was 5.9% (as at 31 December 2012: 6.1%).

As at 31 December 2013 and as at 31 December 2012 the Group did not have transferred financial assets, which are derecognised from the financial statements, for which the Group would continue involvement in those assets.

Finance lease agreements

Finance lease – lessor

The Group conducts lease activities through the entities from the PKO Leasing SA Group.

The value of gross investments in leases and the minimal lease payments resulting from finance lease agreements amounted to:

as at 31 December 2013

as at 31 December 2012

As at 31 December 2013 and 31 December 2012, there are no unguaranteed residual values attributable to the lessor.