Annual Report 2021 of Santander Bank Polska Group Annual Report 2021 of Santander Bank Polska Group 2 Selected data of Santander Bank Polska Group EFFICIENCY AND SECURITY Sound liquidity position. Net customer loans to deposits ratio at 80.0%. Supervisory liquidity ratios well above the regulatory minimum. 80.0% BUSINESS VOLUMES AND ASSET QUALITY 6.8% YoY increase in total assets to PLN 244.9bn. 6.8% Continued growth in deposits from customers by 8.1% YoY to PLN 185.4bn supported by an increase in current account balances of individuals, businesses and the public sector (+11.4% YoY). PLN 185.4bn Cost of credit at a pre-pandemic level of 0.76%. Decrease in the NPL ratio to 5.0% as at 31 December 2021. Group’s solid capital position confirmed by capital ratios as at 31 December 2021, including total capital ratio of 18.58%. 3.9% YoY increase in gross loans and advances to customers to PLN 154.1bn, including home loans (+7.3% YoY), leases (+11.8% YoY) and loans to business customers (+1.8% YoY). Close monitoring of risk and implementation of relevant prudential measures. Further automation and optimisation of operational processes. Improved availability, reliability, performance and cybersecurity of the Group’s systems. Design and implementation of a target hybrid work model. Growth of quarterly net interest margin in 2021 (from 2.56% in Q1 to 2.71% in Q4). Increase in net fee and commission income from the majority of product lines, including currency exchange (+22.1% YoY), account maintenance and cash transactions (+27.1% YoY), debit cards (+18.2% YoY) and electronic and payment services (+12.4% YoY). Higher net value of assets in investment funds managed by Santander TFI S.A. (+8.6% YoY to PLN 17.6bn). Contents Annual Report 2021 of Santander Bank Polska Group 3 Dynamic growth in the number of transactions made via mobile banking (+42.9% YoY) and in the share of this channel in remote credit sales (35.6%). Progress in the delivery of group IT projects aimed at improving experience of customers and employees (accelerated digitalisation of the retail business, single HR platform). Santander Bank Polska S.A. among the top three banks in Poland in the mass and SME segments in terms of the NPS. Recognised in many competitions and rankings (Newsweek’s TOP3, Forbes “Friendly Bank”, “Golden Banker”, “Financing Provider of the Year”). CUSTOMERS AND COMMUNITIES 15.3% YoY increase in the number of Accounts As I Want It opened with Santander Bank Polska S.A. to 2.5m. 2.5m 7.2m customers of Santander Bank Polska S.A. and Santander Consumer Bank S.A., including 3.5m loyal customers. 3.5m 7.2m 3,2m digital customers of both banks, including 2.4m mobile banking customers.   FINANCIAL HIGHLIGHTS PLN k EUR k 31.12.2021 31.12.2020 31.12.2021 31.12.2020 Consolidated financial statements of Santander Bank Polska Group I Net interest income 5 962 445 5 888 149 1 302 555 1 316 023 II Net fee and commission income 2 487 123 2 152 106 543 337 481 004 III Profit before tax 2 057 828 1 880 897 449 553 420 387 IV Net profit attributable to the owners of Santander Bank Polska S.A. 1 111 684 1 037 167 242 858 231 811 V Total net cash flows 4 714 123 (3 633 610) 1 029 847 (812 125) VI Total assets 244 876 340 229 311 309 53 240 931 49 690 411 VII Deposits from banks 4 400 138 5 373 312 956 677 1 164 365 VIII Deposits from customers 185 373 443 171 522 255 40 303 832 37 167 863 IX Total liabilities 217 662 764 200 653 319 47 324 165 43 480 393 X Total equity 27 213 576 28 657 990 5 916 767 6 210 018 XI Non-controlling interests 1 681 896 1 663 240 365 677 360 414 XII Profit of the period attributable to non-controlling interests 140 722 200 007 30 596 44 702 XIII Number of shares 102 189 314 102 189 314     XIV Net book value per share in PLN/EUR 266.31 280.44 57.90 60.77 XV Capital ratio 18.58% 20.42%*   XVI Profit per share in PLN/EUR 10.88 10.16 2.38 2.27 XVII Diluted earnings per share in PLN/EUR 10.88 10.15 2.38 2.27 XVIII Declared or paid dividend per share in PLN/EUR* 2.16** –* 0.47 –* * Data in relevant periods include profits included in own funds based on the decisions of the Polish Financial Supervision Authority and the applicable EBA requirements. ** Detailed information is provided in Note 57. Æ The following rates were applied to determine the key EUR amounts for selected financial statements line items: Æ for balance sheet items – average NBP exchange rate as at 31.12.2021: EUR 1 = PLN 4,5994 and as at 31.12.2020: EUR 1 = PLN 4.6148 for profit and loss items – as at 31.12.2021 – the rate is calculated as the average of NBP exchange rates prevailing as at the last day of each month in 2021: EUR 1 = PLN 4,5775; as at 31.12.2020 – the rate is calculated as the average of NBP exchange rates prevailing as at the last day of each month in 2020: EUR 1 = PLN 4.4742 As at 31.12.2021, FX denominated balance sheet positions were converted into PLN in line with the NBP FX table no. 254/A/ NBP/2021 dd. 31.12.2021. Contents Annual Report 2021 of Santander Bank Polska Group 4 Contents 2 Selected data of Santander Bank Polska Group 5 Letter from the Chairman of the Supervisory Board 7 Letter from the CEO 11 Assessment of Annual Financial Statements and Annual Management Board Report by the Supervisory Board of Santander Bank Polska S.A. 12 Statement of Supervisory Board of Santander Bank Polska S.A. 13 Management Board Report 15 I. Overview of Activities of Santander Bank Polska S.A. and its Group in 2021 20 II. Key Information on Santander Bank Polska S.A. and its Group 27 III. Macreconomic Situation in 2021 31 IV. Development Strategy of the Bank and Santander Bank Polska Group 38 V. Relations with Employees 44 VI. Relations with Customers 47 VII. Investor Relations 52 VIII. Relations with External Environment 54 IX. Business Development in 2021 68 X. Organisational and Infrastructure Development 77 XI. Financial Performance in 2021 99 XII. Risk and Capital Management 114 XIII. Statement on Corporate Governance in 2021 171 XV. Statement of the Management Board 172 Independent Registered Auditor’s Report 187 Consolidated Financial Statements 189 I. Consolidated income statement 190 II. Consolidated statement of comprehensive income 191 III. Consolidated statement of financial position 192 IV. Consolidated statement of changes in equity 193 V. Consolidated statement of cash flows 194 VI. Additional notes to consolidated financial statements Annual Report 2021 of Santander Bank Polska Group 5 Dear All, Although the present report covers last year´s developments. It is, however, difficult not to mention the dramatic situation we are going through now. The war in Ukraine is being tragic to millions. Some of them, fleeing their country, have found support, care and open hearts here in Poland. I would like to wholeheartedly thank those wonderful Polish people for their beautiful and compassionate act of kindness and solidarity that should and will not be forgotten. We need solid foundations in those turbulent times loaded with challenges and unprecedented situations. Our values, Simple, Personal and Fair, are such a foundation for us. We have shown that as Santander Group we can respond effectively to the challenges, adjust to difficult conditions and provide our customers and ourselves, with a space for development. Customer care and top quality services have paved our way to becoming the best bank for our customers and helping them prosper. We have achieved our goal and we are one of the top three banks with the highest NPS in Poland. I would like to congratulate the employees and the Management Board on this result and thank the customers for their trust. We are striving to be a partner bank at all times, both during prosperity and hardship. We want all our products and processes to be simple and friendly. We are focusing on projects and initiatives that accelerate the digital transformation and propose innovative, intuitive and convenient solutions. Last year, we provided such services to our customers – individuals, businesses and corporations. We have implemented the One Europe strategy, assuming a close international cooperation across Santander Group so that we can better respond to current needs. In 2021, we tightened the relations in our region by delivering strategic projects in the digital transformation area. As part of the global policy of sustainable growth, we implemented eco- friendly payment cards. We want to leverage even more the regional and global potential, accelerate automation and digitalisation, improve service quality across all markets and segments. New projects are ahead of us. The changes we are implementing are seen and appreciated by our customers and partners which is reflected in high NPS, numerous awards and in our financial performance. In 2021, Santander Bank Polska Group generated profit attributable to shareholders of PLN 1.11bn. Our total income increased, mainly driven by the higher net fee income. With a good liquidity and capital position, we have solid and safe foundations for further growth and business development. I would like thank the Management Board and Employees for their excellent work and achievement of strong results. Letter from the Chairman of the Supervisory Board ”We need solid foundations in those turbulent times loaded with challenges and unprecedented situations. Our values, Simple, Personal and Fair, are such a foundation for us.” ”The changes we are implementing are seen and appreciated by our customers and partners which is reflected in high NPS, numerous awards and in our financial performance...” Contents