REPORT OF THE MANAGEMENT BOARD ON THE ACTIVITIES OF THE CAPITAL GROUP OF ALIOR BANK S.A. IN H1 2021 This version of our report is a translation from the original, which was prepared in Polish language. All possible care has been taken to ensure that the translation is an accurateAlior Bank representation Group Management of the original.Board’s ReportHowever, for inoperations all matters in H1 of interpretation2021 of information,1 views or opinions, the original language version of our report takes precedence over this translatio n. Table of Contents I. Summary of activities of Alior Bank in H1 2021 ....................................................................................................................... 4 New “More than a Bank” strategy....................................................................................................................................................... 4 Activities implementation ....................................................................................................................................................................... 7 Basic financial data for H1 2021 ....................................................................................................................................................... 10 Distribution network and headcount ............................................................................................................................................. 11 Assessment of activities pursued by the Alior Bank Capital Group ................................................................................... 11 II. External environment of the Bank’s operations .................................................................................................................... 13 Poland’s economic growth ................................................................................................................................................................. 13 Key structural and financial figures for the Polish banking sector in H1 2021 .............................................................. 19 Key structural figures............................................................................................................................................................................. 19 Key income statement items .............................................................................................................................................................. 20 Loans and deposits ................................................................................................................................................................................ 21 Equity and capital ratios ....................................................................................................................................................................... 22 III. Financial results of the Alior Bank S.A. Capital Group ...................................................................................................... 23 Income statement ................................................................................................................................................................................... 23 Net expected credit losses .................................................................................................................................................................. 27 Net impairment charges on non-financial assets ...................................................................................................................... 28 Balance sheet ............................................................................................................................................................................................ 28 Contingent liabilities .............................................................................................................................................................................. 33 Financial projections .............................................................................................................................................................................. 35 Factors affecting Alior Bank’s operations in subsequent quarters .................................................................................... 35 IV. Impact of COVID-19 on the operations of Alior Bank ..................................................................................................... 37 Impact of COVID-19 on the pursuit of the Bank’s business strategy ................................................................................ 37 Impact of COVID-19 on financial results ....................................................................................................................................... 38 Impact of COVID-19 on the operations of the Bank outlets................................................................................................. 38 Impact of COVID-19 on the quality of the credit portfolio ................................................................................................... 39 V. Business activities pursued by Alior Bank .............................................................................................................................. 42 Activities pursued by Alior Bank S.A. .............................................................................................................................................. 42 Retail segment ......................................................................................................................................................................................... 42 Business segment ................................................................................................................................................................................... 56 Treasury activity ....................................................................................................................................................................................... 66 Equity investments ................................................................................................................................................................................. 69 Internet and mobile Banking ............................................................................................................................................................. 70 Strategic partnerships ........................................................................................................................................................................... 72 VI. Activity of companies from the Alior Bank Capital Group ............................................................................................. 77 VII. Major events in the activity of the Alior Bank S.A. Capital Group .............................................................................. 83 Major events post balance-sheet date .......................................................................................................................................... 84 VIII. Issues of bonds and Banking Securities of Alior Bank .................................................................................................... 85 IX. Alior Bank’s risk report ................................................................................................................................................................... 87 Credit risk ................................................................................................................................................................................................... 88 Alior Bank Group Management Board’s Report for operations in H1 2021 2 Operational risk ....................................................................................................................................................................................... 96 Market and liquidity risks .................................................................................................................................................................... 97 Market risk ................................................................................................................................................................................................. 98 Liquidity risk .............................................................................................................................................................................................. 99 Interest rate risk ..................................................................................................................................................................................... 102 Currency risk ........................................................................................................................................................................................... 103 Model risk ................................................................................................................................................................................................ 105 Capital management (ICAAP) .......................................................................................................................................................... 105 X. Internal control system .................................................................................................................................................................