Risk factors

Stabilization of the global economy was expected at the turn of the year 2019/2020 with brighter forecasts for 2020, but the emergence of COVID-19 has since clouded the horizon for projections.

Annual Report

The following external factors could affect the Group’s operations in 2020:

  • global recession due to disruptions in economic activity, and uncertainty over the duration of pandemic restrictions and the effectiveness of economic policy interventions,
  • continuation of the cycle of interest rate reductions,
  • possible increase in geopolitical tensions (Iran, Hong Kong, Syria, Russia-Ukraine, North Korea, Venezuela),
  • uncertainty related to the ultimate outcome of economic relations between the United Kingdom and the European Union following Brexit – the transition period started at the end of January and will last till the end of 2020,
  • global political events, in particular the presidential elections in the USA in November,
  • continued possible escalation of tensions in trade policy, although this risk factor was limited by phase I of the US-China trade agreement being signed,
  • political and economic conditions in Ukraine.
  • domestic economy in recession, decline in investment and consumption coupled with a deteriorating consumer confidence, rising unemployment, and higher inflation than in 2019,
  • expected slowdown of the inflow of EU funds and reduced dynamics of public investments,
  • increase in the minimum wage by more than 15% (and further increases planned for the following years), which at the macro-scale should have a close-to-neutral impact on employment with a positive impact on productivity (moving employees to more effective enterprises and sectors), but at the micro-scale may have a negative impact on the financial standing and employment in certain sectors of the economy and regions of the country,
  • potential limitation of demand for Polish exports related to the continuing difficult situation in the German economy,
  • stabilization of NBP interest rates at a record-breaking low level,
  • potential stabilization of deposit dynamics (with an increase in the rate of growth of deposits in the public sector, a high rate of growth of deposits of individuals, and slower growth in deposits of enterprises), and a slightly weaker demand for loans.
  • regulation of the European Parliament and of the Council amending Regulation (EC) No. 924/2009 regarding certain charges on cross-border payments in the EU and currency conversion fees as of 15 December 2019,
  • draft Act on amending certain acts to counteract usury,
  • potential statutory solutions relating to the transfer of the funds accumulated in OFE to IKE or to ZUS,
  • potential regulatory solutions, which apply to foreign currency housing loans for households, including resulting from the judgment of EUCoJ of 3 October 2019, determining the line of interpretation in the case of abusive provisions in loan agreements,
  • resolutions of the BGF Board of 2020, which will implement a change in charges payable by the banking sector to the system for protecting bank deposits and mandatory restructuring,
  • new version of Recommendation R of the Polish Financial Supervision Authority regarding consistency of processes, systems, tools and data used in the measurement and evaluation of credit risk, estimation of anticipated credit losses in order to recognize them in the accounting records and determine expected losses for capital adequacy purposes,
  • new version of Recommendation S of the Polish Financial Supervision Authority in respect of including in the offer of mortgage covered loans fixed interest rates or periodically fixed interest rate,
  • NBU Decision No. 130/2019 of 7 November 2019, based on which the deadline for banks to adapt their regulatory capital and share capital to UAH 300 million, by 1 January 2021,
  • NBU Management Board’s resolution No. 926/2019 of 12 December 2019 amending the requirements regarding mandatory bank reserves – as of 10 March 2020 the standards for mandatory bank reserves will depend on the currency in which the funds were obtained, and not on their maturity. A zero-reserve rate will be determined for funds in UAH, and for foreign currencies – 10%.

Changes in taxes

Act of 12 April 2019 amending the Act on tax on goods and services (VAT) and certain other acts (Journal of Laws of 2019, item 1018) levied on taxpayers, as of 1 January 2020, an obligation to verify settlement accounts to which taxpayers make payments for transactions, on the (White) List maintained by the Chief of the National Revenue Administration, if the transaction value exceeds PLN 15 thousand. Payments made to accounts which are not on the List may be included in tax-deductible costs only if a respective notification is filed with the tax office within 3 days of the payment. Increase in operating expenses, increase in operating tasks
Act of 4 July 2019 amending the Act on tax on goods and services (VAT) and certain other acts (Journal of Laws of 2019, item 520) which:
  • introduced, as of 1 January 2020, individual tax accounts for taxpayers and tax remitters, through which PIT, CIT and VAT as well as non-tax budget dues will be settled,
  • as of 1 April 2020, modifies the method of filing tax returns and information in respect of VAT (in particular replaces the obligation to file tax returns with an obligation to file transformed JPK-VAT (SAF-T) files).
Modification of operating burden
Act of 4 July 2019 amending the Act on supporting borrowers in a difficult financial situation, who drew housing loans, and certain other acts (Journal of Laws of 2019, item 1358), included in the list of costs which are non-deductible for tax purposes the payments made to the Borrowers Support Fund (Fundusz Wsparcia Kredytobiorców) and amounts for support or a loan for repayment of debt within the meaning of Art. 8a (7) of the Act on supporting borrowers who drew housing loans and are in a difficult financial situation. The Act came into force as of 1 January 2020. Increase in tax burden
Act of 19 July 2019 amending certain other acts to limit payment backlogs (Journal of Laws of 2019, item 1649) entitles creditors who have not received payment within 90 days of the payment deadline specified on the invoice (bill) or in the agreement, to reduce the taxation base by the unpaid amount of receivables included by the creditor in revenue receivables. At the same time, the debtor is obliged to increase their taxation base by the amount or liability included in tax-deductible costs, but not paid within the deadline. The Act came into effect on 1 January 2020, and applies to transactions with payment deadlines after 31 December 2019. Diverse impacts on financial results and increase in operating expenses
Act of 16 October 2019 on determining disputes related to double taxation and concluding advance pricing arrangements (Journal of Laws of 2019, item 2200), which, as of 1 July 2020, implements the concept of an agreement for collaboration. The agreement is concluded by the taxpayer with the Chief of the National Revenue Administration on the taxpayer’s request, after an audit. Over the first three years of applying the regulations, the Chief of the National Revenue Administration can limit the number of entities with which it concludes an agreement to 20. Taxpayers covered by the agreement enjoy various facilitations in the process of their tax compliance. Modification of operating burden

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