14. Other operating income and expenses
Accounting policies
Other operating income and expenses comprise income and costs not directly related to banking activities. Other operating income mainly includes operating lease income, gains on sale of investment in residential real estate, gains on sale/scrapping of fixed assets, intangible assets and foreclosed collateral, sale of shares in a subsidiary, legal damages, fines and penalties, income from lease/rental of properties. Other operating expenses mainly include provisioning costs for potential refund of fees to customers for early repayments of consumer and mortgage loans, losses on sale/scrapping of fixed assets, intangible assets and foreclosed collateral, and donations made.
2019
In the Group companies, other operating income and expenses also include, respectively, revenue from the sale of finished goods, goods for resale and materials, and cost of their manufacture.
Other operating income and expenses also include provisions recognized and released for legal claims, excluding legal claims relating to mortgage loans in foreign currencies and other provisions.
Financial information
| OTHER OPERATING INCOME | 2019 | 2018 |
|---|---|---|
| Net sales of finished goods and services | 333 | 311 |
| Income on operating leases | 273 | 81 |
| Gain from losing control over a subsidiary | – | 25 |
| Gains on sale or scrapping of property, plant and equipment, intangible assets and assets held for sale |
45 | 57 |
| Damages, compensation and penalties received and ancillary income | 35 | 38 |
| Recovery of receivables expired, forgiven or written off | 6 | 7 |
| Income from BGF in respect of guarantees | – | 8 |
| Release of provision for potential return of fees and commission to customers | 58 | – |
| Provision for future payments | 1 | 16 |
| Release of provisions for legal claims excluding legal claims relating to mortgage loans in convertible currencies |
7 | 4 |
| Gain from a bargain purchase of PCM Group (see the Note 40) | 102 | – |
| Other* | 45 | 83 |
| Total | 905 | 630 |
*The amount relating to the refund of the penalty imposed by UKOiK of PLN 21 million is shown in the item “Other” in 2018.
| OTHER OPERATING EXPENSE | 2019 | 2018 |
|---|---|---|
| Costs of products and services sold | (22) | (32) |
| Losses on sale or scrapping of property, plant and equipment, intangible assets and assets held for sale |
(34) | (25) |
| Damages, compensation and penalties paid and sundry costs | (11) | (17) |
| Donations made | (23) | (53) |
| Provision recognized for potential refunds of fees and commission to customers | (127) | (62) |
| Provision for future payments | (1) | (6) |
| Provision recognized for legal claims excluding legal claims relating to mortgage loans in convertible currencies* |
(8) | (43) |
| Other** | (142) | (75) |
| Total | (368) | (313) |
*The penalty imposed by UKOiK of PLN 21 million is shown in the item “Provisions recognized for legal claims” in 2018.
**The item “Other” includes the costs of car fleet management of PLN 57 million for 2019 and PLN 4 million for 2018.
A detailed description of the provision set up was provided in Note “Legal claims”.
In 2019, the Group recognized the cost of provision for potential refunds of fees to customers for early repayment of consumer and mortgage loans of PLN 127 million (see Note “Provisions” and Note “Legal claims”).