3. Information on the segments of activities and information about geographical areas

3.1. Information on the segments of activities

The PKO Bank Polski SA Group’s segment reporting scheme is primarily based on the criteria of groups of clients i.e. recipients of products and services offered by the parent company and the PKO Bank Polski SA Group entities. Each operating business segment comprises activities of providing products and services that are characterised by similar risk and income – different from other business segments. The segment note below is recognised in an internal reporting system, i.e. information presented to the Management Board of PKO Bank Polski SA, used to assess achieved results and to allocate resources.

The segment report below presents an internal organisational structure of Bank Group. At present, the Group comprises four basic segments: retail, corporate and investment segment and transfer centre:

1. The retail segment comprises transactions of the parent company with retail clients, clients of small and medium enterprises and housing market clients. This segment comprises, among others, the following products and services: current and saving accounts, deposits, private banking services, investment products, credit and debit cards, consumer and mortgage loans, corporate loans for small and medium enterprises and housing market customers. 
2. The corporate segment includes transactions of the parent company with large corporate clients. This segment comprises, among others, the following products and services: current accounts, deposits, depositary services, currency and derivative products, sell-buy-back and buy-sell-back transactions, corporate loans, leases and factoring. Within the segment, PKO Bank Polski SA also enters, individually or in a consortium with other banks, into loan agreements financing large investment projects and issuance of non-Treasury securities. 
3. The investment segment comprises transactions of the parent company with financial institutions’ clients and the Bank’s portfolio activity on its own account i.e. investing and brokerage activities, interbank transactions, derivative instruments and debt securities transactions and activities of PKO Bank Polski SA’s subsidiaries. 
4. The transfer centre comprises the result on internal settlements related to funds transfer pricing, the result on long-term sources of financing and the result on positions classified for hedge accounting is presented. Internal funds transfer is based on transfer pricing dependant on interest rates. The transactions between business segments are conducted on arm’s length. Long-term external financing includes the issuance of securities, subordinated liabilities and amounts due to financial institutions.

The  Group typically settles inter-segment transactions as if they were concluded between unrelated parties - using internal settlement rates. The transactions between business segments are conducted on arm’s length.

Accounting policies applied in the segment report are consistent with accounting policies described in Note 2 of these financial statements.

Disclosed values of assets and liabilities are operating assets and liabilities applied by operating activities segment. Values of assets, liabilities, income and expenses of a particular segment are based on internal management information. To particular segments there are assigned assets and liabilities as well as income and costs related to these assets and liabilities.

The current income tax expense in respect of the presentation of the result, and deferred income tax asset, current income tax receivables, current income tax liabilities and deferred income tax liability in respect of the consolidated statement of financial position presentation were recognised at the Group level. 

The tables below present data relating to revenue and results of individual business segments of the PKO Bank Polski SA Group for the 12-month period ended 31 December 2013 and 31 December 2012 and assets and liabilities as at 31 December 2013 and as at 31 December 2012.

3.2 Information about geographical areas

As a complementary, the PKO Bank Polski SA Group applies geographical areas distribution. The PKO Bank Polski SA Group operations conducted in the Republic of Poland and in Ukraine through the KREDOBANK SA Group, ‘Inter-Risk Ukraina’ Additional Liability Company and Finansowa Kompania ‘Prywatne Inwestycje’ Sp. z o.o., as well as in Sweden through subsidiaries: PKO Finance AB and PKO Leasing Sverige AB. For presentation purposes, the results of companies operating in Sweden are included in the segment of Poland.