PKO Bank Polski S.A.

Earnings Release • Mar 7, 2024

PKO Bank Hipoteczny Spółka Akcyjna with the registered office in Warsaw, ul. Puławska 15, 02-515 Warsaw, registered in the Capital City of Warsaw District Court in Warsaw, 13th Commercial Division of the National Court Register under KRS number 0000528469; Tax Identification Number (NIP): 204-000-45-48; REGON: 222181030; share capital (paid up): PLN 1,611,300,000 Ladies and Gentlemen, On behalf of myself and the entire Management Board of PKO Bank Hipoteczny SA, I would like to present the annual report containing the financial results for the financial year ended 31 December 2023. I am pleased to inform you that 2023 was an exceptional year for us, as confirmed by our results. We recorded the highest net profit in the history of the Bank’s operations of PLN 165.8 million. Thanks to the commitment of the entire team, the sales of mortgage loans increased by 233% compared with 2022 and reached PLN 785 million. PKO Bank Hipoteczny SA is the undisputed leader among mortgage banks in Poland in terms of total assets, the balance of loans and the total amount of mortgage covered bonds issued. As at the end of 2023, the Bank’s total assets exceeded PLN 18.9 billion, of which PLN 17.9 billion represented a high quality portfolio of residential mortgage loans. The balance of outstanding mortgage covered bonds reached PLN 10.4 billion, which accounts for more than 56% of the total outstanding mortgage covered bonds issued by mortgage banks operating in Poland. 2023 was also the year in which PKO Bank Hipoteczny SA started pursuing a new strategy for the years 2023–2025. In the new strategy, we identified five challenging strategic goals which we are gradually implementing. The Bank’s activities are focused on creating value and supporting the achievement of goals by our stakeholders: investors, customers and PKO Bank Polski SA as our sole shareholder. To meet the needs of the PKO Bank Polski SA Group, we raise funds by issuing mortgage covered bonds and we use these funds to refinance residential loans. In 2023, we conducted three issues on the Polish market with the total nominal value of PLN 1,750 million. Our activities continue to contribute to the development of the mortgage covered bond market in Poland. In line with our strategy, we maintain a safe level of risk in the Bank’s operations. Both capital and liquidity ratios are at safe levels, significantly above the regulatory requirements. This, combined with a high level of collateralization of the mortgage covered bonds issued, enabled us to maintain their rating at the level of Aa1, which is the highest possible rating for Polish securities. In 2023, as part of our strategy, we integrated the management and business objectives with sustainable development goals. We are creating a centre of excellence in the area of ESG and we are educating our customers by regularly publishing articles relating to the real estate market and issues specific to mortgage loans, including the advantages of buying energy efficient real estate. Having in mind environmental issues, we introduced to our offer a mortgage loan with a reduced target margin for customers who submit an energy efficiency certificate which meets the criteria specified by the Bank. We are committed to building the potential for issuing green mortgage covered bonds based on the Green Covered Bond Framework. The area of process digitization and streamlining is a very important element of our strategy. We participate in a project aimed at making the lending process fully digital, and we regularly implement improvements and automate tasks executed as part of our internal processes. This includes, among other things, building a state-of-the-art reporting platform. We cooperate with other mortgage banks and initiate regulatory changes that are important for the whole sector. We are currently involved in drafting a uniform template of a residential loan agreement. The strategic objective of the project is to develop model clauses included in mortgage loan agreements to improve their clarity and reduce the risks associated with mortgage products. We also participated in the work of interdisciplinary groups preparing proposals for legislative changes to develop the mortgage covered bond market in Poland and increase the long-term funding ratio. Our proposals are intended to improve the liquidity of the mortgage covered bond market in Poland and to expand the group of investors interested in such debt instruments. 2023 was a year full of challenges, as well as of many achievements. We believe that the stable foundations of the Bank’s operations and our strategic cooperation with PKO Bank Polski SA will make 2024 another year of growth and good results for the Bank. Regardless of the business, economic and legislative challenges that the banking sector will face in the nearest future, we are well prepared to achieve the goals set in our new strategy for the years 2023-2025. I wish to thank the employees of PKO Bank Hipoteczny SA for their commitment, support and professionalism, the representatives of PKO Bank Polski SA for fruitful cooperation, and our investors, for their unwavering trust. I invite you to read the annual report for 2023. I hope that it will be a source of valuable information on our Bank which will celebrate its 10 th anniversary this year. Yours faithfully, Katarzyna Kurkowska-Szczechowicz