14. General administrative expenses and depreciation

[Financial notes are presented in PLN thousand]

Significant accounting policies

General administrative expenses

Personnel expenses and other employee benefits mainly include wages and salaries, social insurance and share based payments costs which are described in detail in Note 40.

Other administrative expenses mainly include the tax of certain financial institutions, maintenance costs of Bank’s fixed assets, IT and telecommunications infrastructure also marketing and advertising costs.

This cost category also includes contributions and payments to the Bank Guarantee Fund (quarterly contributions to the banks’ guarantee fund and annual contribution to the banks’ compulsory resolution fund paid once a year) the fee paid to the aid fund established in the Protection Scheme Managing Entity and a mandatory fees to the Polish Financial Supervision Authority (to cover the cost of banking supervision and to cover the costs of supervision over the capital market) which Bank recognizes in the profit or loss at the time of the obligating event.

Depreciation

Depreciation expense for property, plant and equipment and investment properties and the amortization expense for intangible assets are calculated using straight line method over the expected useful life of an asset. Depreciated value is defined as the purchase price or cost to develop a given asset, less residual value of the asset. Depreciation rates and residual values of assets, determined for balance-sheet purposes, are subject to regular reviews, with results of such reviews recognized in the same period.

The statement of financial position depreciation and amortization rates applied to property, plant and equipment, investment properties and intangible assets are as follows:

a) depreciation rates applied for non-current assets

Buildings and structures and cooperative ownership rights to residential premises and cooperative ownership rights to commercial premises	1.5% – 10.0%
Technical equipment and machines	4.5% – 30.0%
Vehicles	7% – 25.0%

b) amortization rates for intangible assets

Buildings and structures and cooperative ownership rights to residential premises and cooperative ownership rights to commercial premises	10.0% – 50.0%
Technical equipment and machines	12.5% – 33.3%
Vehicles	12.5% – 33.3%

Land, non-current assets under construction and intangible assets under development are not subject to depreciation and amortization.

Depreciation are charged to the income statement in the item ‘Depreciation and amortization’, whereas the impairment losses are charged to the income statement in the item ‘Other operating expenses’.

Financial data

Personnel expenses

	2022	2021
Wages and salaries	-1 934 056	-1 830 681
Insurance and other charges related to employees	-345 129	-311 820
Share-based payments expenses	-21 143	-13 555
Total	-2 300 328	-2 156 056

	2022	2021
Overheads (*)	-1 095 802	-868 846
Tax on certain financial institutions	-866 190	-718 923
Fee paid for the Protection Scheme (**)	-482 140	–
Contributions to the Bank Guarantee Fund, including:	-267 219	-289 307
to the resolution fund	-210 179	-170 592
to the banks’ guarantee fund	-57 040	-118 715
Contributions to the Borrowers Support Fund (***)	-169 382	–
Fees to cover costs of supervision over banks (KNF)	-29 136	-26 321
Other taxes and fees	-41 645	-39 589
Total	-2 951 514	-1 942 986

(*) including: an increase in 2022 of the cost related to reclassification of part of IT expenses from intangible assets to administrative expenses in the amount of PLN 123.8 million.
(**) The fee paid to the aid fund established in the Protection Scheme Managing Entity referred to in Art. 4 par. 1 point 9a of the Act of August 29,1997 – Banking Law.
(***) Estimated costs of additional contributions to the Borrowers Support Fund (‘BSF’), resulting from an Article 89 (1) of the Act of 7th July 2022 on social financing for business ventures and support to borrowers, which obliges lenders to contribute a total of PLN 1.4 billion to the BSF by 31 December 2022.

Depreciation

	2022	2021
Property, plant and equipment	-318 504	-320 880
Intangible assets (*)	-297 536	-327 338
Total	-616 040	-648 218

(*) including: a decrease in 2022 in the cost related to reclassification of part of IT expenses from intangible assets to administrative expenses in the amount of PLN 41.0 million.

Total administrative expenses and depreciation	-5 867 882	-4 747 260