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PLN 122 billion of support for the economy in 2021 from BGK – Polish development bank

PLN 122 billion of support for the economy in 2021 from BGK – Polish development bank

Since 2021 Bank Gospodarstwa Krajowego has pursued new strategy. Its goal and at the same time mission is to support the sustainable socio-economic development of Poland. New business approach of the bank meets the needs resulting from the pandemic and the war caused by Russia in Ukraine. In 2021, BGK generated PLN 122 billion of support for Polish economy.

The year 2021 was for the world economy not less difficult than 2020. Thanks to BGK, that during the pandemic instantly introduced support programmes for companies, PLN 122 billion was transferred to the economy in 2021. This amount included: credit exposure, guaranties and sureties.

- In 2021 we announced new business strategy of the bank, strongly focused on supporting the sustainable socio-economic development. It turns out today that our mission is very important and our actions are much needed for the economy. BGK’s business approach helped to respond adequately to economic events induced, inter alia, by the pandemic or the war started by Russia. Last year we continued the support for the companies – we prolonged our aid solutions, mostly guarantees. We also introduced new programmes – e.g. exceptional in a European scale leasing and factoring guarantees. The most widely known – de minimis guarantees – helped to survive the crisis induced by the pandemic for 72 per cent of the recipients of those guarantees and maintain or create almost half a million jobs – Beata Daszyńska-Muzyczka, the president of BGK, says.

Sustainable development

BGK’s business strategy has the influence on stakeholders and partners of the bank mainly via three pillars. Sustainable development is the first one.

On the one hand BGK pursues this goal through its programmes. In 2021, a record was set in the Social Rental Housing programme – the bank received applications for building almost 5 thousand social and cooperative flats. The support of social and cooperative housing from the Subsidy Fund was 20 times higher than in 2020 (PLN 1.7 billion).

Polish development bank also created the 3W Idea that is to help building competitive economy with the use of three resources: water, hydrogen and carbon (non-energy, e.g. carbon fibers). 3W Idea is also a platform for the exchange of information, seeking investors, contractors, partners among scientific and local government units. In April, 2022, business representatives signed next letters of intent on cooperation.

Local governments are the recipients of another programme – Government Polish Order Fund: Strategic Investment Programme. Last year was extremely difficult for budgetary positions of local governments. Proceeds from personal income tax, which have a significant share in the budgets of local government units, dropped by 1.9 per cent which, combined with a decline in investment surplus by more than 11 per cent, greatly reduced investment appetite. Thanks to the Programme, Local Government Units may receive up to 95 per cent of non-repayable co-financing for their projects.

- In 2021, when we were still combating the pandemic, we started to support sustainable investments of local governments that may be a powerful drive for Polish economy. In the first edition of the Programme the co-financing in the amount of PLN 24 billion was granted to almost 100 per cent of Local Government Units in the country. PLN 4.8 billion was for water and sanitation infrastructure projects, PLN 11.3 billion for road infrastructure. The name Strategic Investment Programme is not random – for many municipalities these are strategic investments, very much needed for local societies, that for many years lacked the funds. Today, thanks to our support, they can finally be carried out – Beata Daszyńska-Muzyczka, the president of Polish development bank, explains.

On the other hand BGK supports sustainable development by building a method for scoring and transaction classification regarding ESG risk. Thanks to it the bank will decide what exactly it will score in transactions and in which scale. ESG Risk Office was created in the bank to manage this.

International business and cooperation

One of the government’s goals for the coming years is the development of Polish economy on foreign markets. BGK plays a crucial role in financing export to countries outside the European Union (including the high-risk countries regarding conducting business activities), and also in developing more advanced forms of cooperation with abroad. The bank increases the exposure to export and foreign expansion financing both under the “Financial Support for Exports” programme and as part of its own activities – the amount of export and foreign expansion financing in 2021 totalled PLN 3.6 billion. BGK supported 220 foreign projects of Polish companies. These include: sale of chemical products to Ukraine, sale of semi-trailers to Mali, sale of machinery to Asia, or foreign expansion of Polish businesses in the USA and Chile. In 2021, BGK was present with Polish companies on 76 markets (7 years before, the bank supported the entrepreneurs in just 9 counties).

Financial support of export / foreign expansion

Developing the Three Seas Fund – an economic dimension of the Three Seas Initiative in a market economy, is an essential part of BGK’s international activity. Bank Gospodarstwa Krajowego is its initiator, co-founder and main investor. The Fund invests in infrastructure projects in the Three Seas region in three areas: transport, energy and digital technologies. At the end of December 2021, the Fund’s portfolio included 3 investment projects. Within 12 months of the last year the number of shareholders increased from 7 to 11. BGK’s exposure in the Fund is EUR 750 million and the total contribution (as at 31 December 2021) was EUR 274.7 million.

- The war in Ukraine and Russia’s aggressive policy cause the Three Seas Fund to take a completely new geopolitical meaning. For the western world rebuilding Ukraine will soon be a new challenge. Investments in the Three Seas region will be even more predominant than ever before – Beata Daszyńska-Muzyczka, the president of the management board of Bank Gospodarstwa Krajowego, says.

BGK also develops international cooperation. On June 25, 2021, Polish development bank submitted its offer to the European Commission for becoming an implementing partner of the InvestEU Programme. The offer was positively reviewed by the Commission and terms of the guarantee agreement with the EC are currently being negotiated. Concurrently, the Bank has undertaken extensive efforts to prepare it for the new role of an implementing partner of the InvestEU guarantee fund. The Fund supports sustainable investments, among others, in: sustainable transport, green energy, digital communication and sustainable waste management.

Moreover, basing on pillar assessment carried out by the European Commission, BGK develops its competences in the distribution of development aid to other countries. As a result, on 13 December, 2021, the European Commission signed an agreement with BGK worth EUR 35 million. It applied to the mechanism that supports EU Member States in the delivery of COVID-19 vaccines to the Eastern Partnership countries. Till June, 2023, EU with BGK’s help will deliver from 2 to dozen or so million of COVID-19 vaccines. Due to the war in Ukraine, BGK suggested that the existing programme should be used for providing humanitarian aid. The Commission has approved and currently BGK carries out the programme in cooperation with Solidarity Fund PL.

Social commitment

In 2021 BGK was also involved in social projects. J.K. Steczkowski BGK Foundation worked out the programme of support for pediatric transplantology. The bank donated almost PLN one million for the Silesian Centre for Heart Diseases in Zabrze for new equipment and the construction of a Congenital Heart Disease and Children’s Cardiology Unit along with Paediatric Cardiac Intensive Care.

- We started to support building social awareness of transplantology. We want to influence the decrease of refusals and objections regarding donating organs for transplantation. That is why we launched the campaign and national discussion on this topic – Beata Daszyńska-Muzyczka explains.

In 2021 State of Poland Foundation continued the biggest long-term project of the Foundation “Jabłonki”, promoting Poland through the symbol of an apple. Most the Most Foundation announced the pilot edition of “Our Monument” competition for everybody who wants to positively affect their surroundings. Upon BGK’s initiative new educational foundation “Empiria i Wiedza” was created. It launched the project “cybercompetence academy” where 240 students applied. The project through training cycle is to develop the competences of the future: programming and computer graphics.

As a socially committed bank, BGK joined in helping the refugees from Ukraine in a number of ways. On behalf of NBU the bank opened a special account into which people have already donated over PLN 54 million. Polish development bank donated PLN 30 million for Ukraine. The employees – volunteers, joined helping the refugees, and the Foundation “Empiria i Wiedza” has launched career guidance programme.

Financial results

In 2021 BGK generated PLN 841.5 million gross i.e. PLN 695.6 million net profit.

 20212020
Net profit in PLN million695.6315.7
Loans, bonds (municipal and commercial), gross in PLN million45 83045 935
Total equity (in PLN million)24 51423 874
Balance sheet total (in PLN million)196 442160 301
C/I ratio on core activities30.9%35.6%
ROE (net profit / average total equity)2.9%1.4%
Total capital ratio28.5%33.9%

You will find detailed reports on Periodic reports website.