INTEGRATED REPORT 2019 INTEGRATED REPORT 2019 Table of Contents Letter from the President of the Management Board of mBank S.A. .............................. 4 About mBank Group ........................................................................................................................................ 6 About mBank.................................................................................................................................................... 6 Key information .......................................................................................................................................... 6 Business model and value creation model of mBank Group ...................................... 15 History ............................................................................................................................................................. 18 Strategy .............................................................................................................................................................. 19 „Mobile bank” strategy ......................................................................................................................... 19 CSR Strategy for 2016-2019 ................................................................................................................ 25 Responsible Bank ......................................................................................................................................... 33 Ethics, values and compliance ....................................................................................................... 33 Principles for suppliers ........................................................................................................................ 38 ESG Ratings ................................................................................................................................................ 38 Cybersecurity ............................................................................................................................................ 39 How do we create value? ....................................................................................................................... 40 mBank Group in 2019 .................................................................................................................................... 47 Summary of the year ............................................................................................................................... 47 mBank Group’s environment ............................................................................................................... 53 Macroeconomic environment ......................................................................................................... 53 Market and regulatory environment ........................................................................................ 64 mBank Group’s market position of segments ..................................................................... 70 Shareholders ....................................................................................................................................................73 Key innovations in 2019 ........................................................................................................................... 82 Capital adequacy and funding at mBank Group ................................................................. 87 Structure of own funds including Tier 1 and Tier 2 capital ........................................... 87 Dividend ........................................................................................................................................................ 89 Minimum requirement for own funds and eligible liabilities (MREL) ................... 90 mBank Group funding ......................................................................................................................... 91 Financial results ........................................................................................................................................... 95 1 INTEGRATED REPORT 2019 Changes in the consolidated statement of financial position of mBank Group ................................................................................................................................................................................ 103 Changes in off-balance sheet items, changes in guarantees granted to mBank Group subsidiaries and other agreements ................................................... 106 Business segments ................................................................................................................................... 107 Retail Banking ........................................................................................................................................ 107 Corporates and Financial Markets .............................................................................................120 Business activity of selected subsidiaries .............................................................................. 134 Investments .................................................................................................................................................... 138 Environment (E) .............................................................................................................................................. 140 Management of the environment area ..................................................................................... 140 CO2 emission .................................................................................................................................................. 141 Restrictions on coal financing ............................................................................................................142 Support for renewable energy sources .......................................................................................142 Our approach to client relationships (S) ......................................................................................... 144 Our clients ...................................................................................................................................................... 144 Our approach to client relationships ....................................................................................... 144 Client data security ............................................................................................................................. 147 Innovation is our middle name ................................................................................................... 148 Complaints ................................................................................................................................................ 149 Committed employees ...........................................................................................................................150 Our employees ........................................................................................................................................150 How we ensure commitment ........................................................................................................150 Diversity........................................................................................................................................................ 153 Ergonomics and security at the workplace ......................................................................... 155 Remuneration principles .................................................................................................................. 157 Supporting society .................................................................................................................................... 158 Solutions for persons with disabilities....................................................................................... 158 mBank Foundation .............................................................................................................................. 159 Let’s play with WOŚP! .......................................................................................................................... 161 Governance (G) ................................................................................................................................................. 163 Corporate governance ............................................................................................................................ 163 2 INTEGRATED REPORT 2019 Application of corporate governance principles .............................................................. 163 Internal control and risk management systems with regard to the process of preparing financial statements of mBank .......................................................................... 168 Significant block of shares ................................................................................................................ 171 Composition of the Supervisory Board ....................................................................................187 Powers and procedures of the Supervisory Board .......................................................... 193 Risk management .................................................................................................................................... 202