Directors' Report on the operations of GETIN NOBLE BANK S.A. CAPITAL GROUP and GETIN NOBLE BANK S.A. in 2020 Warsaw, March 2021 GETIN NOBLE BANK S.A. CAPITAL GROUP Directors’ Report on the operations of the Bank and the Group in 2020 TABLE OF CONTENTS: 1. Activities of the Bank and the Group in 2020 ......................................................................................................... 3 1.1. Recovery Plan of the Getin Noble Bank S.A. Group ................................................................................................. 3 1.2. Implementation of the business model transformation provided for in the Recovery Plan ............................... 4 1.3. Significant factors affecting the performance of the Bank and the Group ............................................................ 6 2. Organisation of the Group and the Bank’s capital investments ........................................................................... 21 2.1. Share capital and shareholding structure of the Bank ......................................................................................... 21 2.2. Structure of the Capital Group and its changes..................................................................................................... 22 3. Scope of activities, products and services of the Bank and the Group companies ............................................. 23 3.1. Getin Noble Bank S.A. ............................................................................................................................................. 23 3.2. Business areas of subsidiaries and associates ...................................................................................................... 31 4. Financial position and performance in 2020 ........................................................................................................ 33 4.1. Separate income statement of the Bank ................................................................................................................ 33 4.2 Statement of financial position of the Bank .......................................................................................................... 38 4.3 Consolidated income statement............................................................................................................................. 46 4.4 Consolidated statement of financial position ........................................................................................................ 51 4.5 Contingent liabilities ............................................................................................................................................... 56 5 Financial risk management in the Bank and the Group ....................................................................................... 57 5.5 Credit risk ................................................................................................................................................................ 57 5.6 Operational risk ...................................................................................................................................................... 62 5.7 Liquidity risk ........................................................................................................................................................... 64 5.8 Currency risk ........................................................................................................................................................... 66 5.9 Interest rate risk ..................................................................................................................................................... 68 5.10 Capital management ............................................................................................................................................... 70 6 Prospects and growth factors for the Bank and the Group .................................................................................. 75 6.1 External factors ....................................................................................................................................................... 75 6.2 Internal factors ........................................................................................................................................................ 77 7 Corporate governance ............................................................................................................................................ 77 7.1 Compliance with best practices ............................................................................................................................. 77 7.2 Diversity policy applied to managing and supervisory bodies ............................................................................ 79 7.3 Supervisory and management bodies of the Bank ............................................................................................... 80 7.4 Internal control and risk management systems relating to the financial statements ........................................ 91 8 Social support.......................................................................................................................................................... 94 9 Supplemental disclosures ...................................................................................................................................... 94 10 Representations by the Management Board ......................................................................................................... 95 10.1 Reliability and accuracy of the presented financial statements .......................................................................... 95 10.2 Appointment of a qualified auditor of financial statements ................................................................................ 96 2 GETIN NOBLE BANK S.A. CAPITAL GROUP Directors’ Report on the operations of the Bank and the Group in 2020 The Directors’ Report on the operations of the Getin Noble Bank S.A. Capital Group in the 2020 also includes the information required for the Directors’ Report on operations of Getin Noble Bank S.A. The Bank prepared a separate report on non-financial information referred to in Article 49b(9) of the Accounting Act. 1. Activities of the Bank and the Group in 2020 1.1. Recovery Plan of the Getin Noble Bank S.A. Group Since January 2020, the Bank has been implementing the Recovery Plan referred to in Article 141n of the Banking Law Act of 29 August 1997, i.e. the group recovery plan of Getin Noble Bank S.A. Group. The Recovery Plan of GNB Group S.A. (“RP”), was approved on 9 January 2020 by the Polish Financial Supervision Authority and subsequently launched on 10 January 2020 by decision of the Management Board. The Recovery Plan replaced the “Plan for a sustainable improvement in profitability of Getin Noble Bank S.A. for 2017-2021. UPDATE of the Recovery Program for 2016–2019” implemented previously by the Bank. It is assumed that the recovery measures taken as part of the Group Recovery Plan in order to return to sustainable profitability and to reach required capital ratio levels will be performed until the end of 2024, provided that no external or internal factors hampering the planned recovery path will materialise. The outbreak of the pandemic and concerns about the further spread of the COVID-19 coronavirus resulted in increased uncertainty in financial markets since January 2020, which was reflected in particular in March-May 2020 in significant fluctuations in exchange rates as well as in a strong slump in prices of financial market instruments. In view of the significant share of foreign currency-linked loans in the Bank's assets, the Bank's financial ratios are characterised by a significant sensitivity to such events. Market disturbances caused by the spread of the COVID-19 coronavirus generate factors affecting the entire banking sector both directly and indirectly, inter alia, as a consequence of support and stabilisation measures taken by the state authorities. Moreover, the outbreak of the COVID-19 pandemic and the expected negative consequences for the Polish economy were the premise for the Monetary Policy Council's (“MPC”) decisions of 17 March, 8 April and 28 May 2020 to cut the NBP's interest rates, including the reference rate, by a total of 1.4 percentage points, which had a negative impact on the Bank's and the Group's interest income in 2020 relative to the objectives of the Plan. The effects of the COVID-19 coronavirus pandemic, including, among others, weakening of PLN, as well as the expectations in terms of worsening financial condition of the Bank’s credit customers, have a negative bearing on asset quality and increase the cost of credit risk. In addition, deterioration of prospects for global and domestic economic situation also results in reduced customer activity and reduced sales of banking products, and consequently impacts the Bank’s business and financial results. The Bank’s management Board has adjusted its measures in an active manner to the prevailing economic conditions, as well as to the requirements related to the Recovery Plan, and has taken steps to limit the negative impact of the above factors on the Bank’s financial position. The Bank has revised the objectives of the Recovery Plan with respect to, among other things, financial projections in the baseline and shock scenarios and the recovery options, aligning the objectives of the Recovery