9. Functional currency, presentation currency and foreign currencies

The functional currency of the parent and other entities included in these financial statements, except for the German Branch, the Czech Branch, the Slovak Branch and entities conducting their activities outside of the Republic of Poland, is the Polish zloty. The functional currency of the entities operating in Ukraine is the Ukrainian hryvnia, the functional currency of the German Branch, the Slovak Branch and the entities operating in Sweden and Ireland is the euro, and the functional currency of the Czech Branch is the Czech koruna.

Transactions denominated in foreign currencies are translated into the functional currency at the exchange rate applicable on the transaction date. At the end of each reporting period, the Group translates:

• monetary items in foreign currencies – at the closing exchange rate, i.e. the mid-exchange rate quoted by the National Bank of Poland at the end of the reporting period;
• non-monetary items carried at historical cost in foreign currencies – at the exchange rate as at the date of the transaction;
• non-monetary items measured at fair value in a foreign currency are translated using the exchange rates prevailing as at the date of determination of the fair value.

Foreign exchange gains and losses arising from the settlement of such transactions and from the valuation of monetary and non-monetary assets and liabilities denominated in foreign currencies are recognized in the income statement.

Until 9 September 2022, i.e. until the date on which the Bank terminated the purchase of UAHs at bank outlets¹, the Group adopted the exchange rate quoted by the National Bank of Ukraine at which the Group exchanged UAH into PLN as the closing rate as of 31 March 2022. As at 31 December 2022, the Group has again adopted the mid- exchange rate of UAH as the closing rate quoted for this currency by the National Bank of Poland.