18. Administrative expenses

Accounting policies and classification

Employee benefits

Employee benefits comprise salaries and wages and social insurance (including contributions for retirement benefits, which are discussed in detail in the note “Provisions”), as well as costs of the employee pension scheme constituting a defined contribution scheme and the programme of variable remuneration components for persons occupying managerial positions, a part of which is recorded as a liability in respect of share-based payments settled in cash, in accordance with IFRS 2 Share-based payments (the programme of variable remuneration components has been discussed in detail in the note entitled ‘Remuneration of the PKO Bank Polski SA key management’).

Annual report

The Employee Pension Programme (EPP) has been in place at the Bank since 2013. As part of the EPP (for employees who joined the Programme), until 9 December 2018 the Group accrued the basic contribution of 3% of the salary components on which social insurance contributions are accrued and from 10 December 2018 there was an increase in the basic contribution to 3.5%. Employees are entitled to declare additional contributions which are paid to the EPP by the Employer and deducted from the Employee’s salary. PPE is managed by PKO Towarzystwo Funduszy Inwestycyjnych SA.

Moreover, as part of wages and salaries the Group creates a provision for future liabilities in respect of compensation and severance bonuses paid out to employees with whom the employment relationship is terminated for reasons not related to the employees; and accruals related to costs attributable to the current period, which will be incurred in the next period, including bonuses and holiday pay, taking account of all unused holiday.


The balance includes the following items: maintenance and lease of fixed assets, IT and telecommunications services, costs of administration, promotion and advertising, property protection and training.

Lease payments under an operating lease and subsequent instalments are recognized as an expense in the income statement and are recognized on a straight-line basis over the lease term.

Amortization and depreciation

Depreciation/amortization principles have been described in detail in the note “Intangible assets and property, plant and equipment”.

Contribution and payments to the bank guarantee fund

According to IFRIC 21 Levies, fees paid by the Group to the Bank Guarantee Fund are recognized in profit or loss upon the occurrence of the obligating event.

The Group makes contributions to the banks’ guarantee fund (quarterly) and the banks’ forced restructuring fund (annually). Contributions to the guarantee fund and the forced restructuring fund are not tax-deductible.

Taxes and fees

The following items are recorded here: property tax, payments made to the State Fund for Rehabilitation of Disabled Persons, municipal and administration fees.

Financial information

Administrative expenses

2018 2017
Employee benefits (3 023) (2 974)
Overheads, of which: (1 478) (1 391)
IT (294) (282)
Depreciation and amortization (821) (844)
property, plant and equipment, of which: (370) (365)
IT (118) (114)
 investment properties (2) (3)
intangible assets, of which: (451) (476)
IT (409) (449)
Contributions and fees to the Bank Guarantee Fund (BGF) (427) (401)
to the Resolution Fund (167) (209)
to the Banks’ Guarantee Fund (260) (192)
Payments to the PFSA (28) (20)
Taxes and charges (128) (154)
Total (5 905) (5 784)

Employee benefits

2018 2017
Wages and salaries, of which: (2 537) (2 497)
  costs of contributions to the employee pension plan (44) (47)
Social insurance, of which: (404) (399)
contributions for disability and retirement benefits (343) (270)
Other employee benefits (82) (78)
Total (3 023) (2 974)

Operating lease – the lessee

The costs of operating lease on the part of the lessee are recognized in administrative expenses under overheads. Rental and lease contracts concluded by the Group as part of its normal operating activities also meet the definition of operating lease. All contracts are concluded on an arm’s length basis.

The lease and sub-lease payments recognized in the costs of a current period in 2018 amounted to PLN 209 million (in 2017 they amounted to PLN 277 million).

Total future lease payments under irrevocable operating leases – lessee

31.12.2018 31.12.2017
up to 1 year 192 228
from 1 to 5 years 395 424
over 5 years 50 98
Total 637 750

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