EN_Managment_Board_report_on_operations_of_ING_Bank_Slaski_SA_Group

2022 is another period of events with huge impact, both locally and internationally. The outbreak of war in Ukraine was felt in many ways, those direct and those indirect. Many of us have taken in refugees from Ukraine under our roof. The scale and involvement of Poles in helping Ukraine is a source of pride. This conflict also has a direct impact on the economic environment in which we move. Inflationary pressures, including energy prices, cast a shadow over economic life in 2022. The banking sector was also burdened with numerous additional regulatory costs. We enter 2023 with inflation still high, a continuation of the war in Ukraine, earthquake disaster in Turkey and Syria or strained relations between the United States of America and China.

The Management Report on the ING Bank Śląski S.A. Group is our response to our stakeholders’ expectations for information about us, how we operate and what the results are – including in difficult circumstances such as those cited above. We begin the report by presenting our Group, indicating where we are in the sector, identifying the trends we face and our response to them through our operating strategy and our value creation model. In the next section, we provide information about the environment in which we operate. Corporate governance is a very important element for us and we devote a significant part of the report to it. We then outline our approach to managing the security of the bank and our clients, describing the management of capital and the various risks (both financial and non-financial). In the following chapters, we present our actions in relation to the areas that are important to us, starting with

clients, then climate and environment, moving on to communities and employees.

The management report has been prepared based on the Integrated Reporting Framework as revised (published in January 2021) issued by the IIRC (now IFRS Foundation). It also uses GRI Standards and additionally introduces the UN Sustainable Development Goals (SDGs) label. They are presented next to the text in the relevant designation: GRI (we also use this colour for our own indicators) and SDGs . In addition, we use the Greenhouse Gas Protocol – a Corporate Accounting and Reporting Standard (Revised edition) and the Global GHG Accounting and Reporting Standard for the Financial Industry for the counting of our greenhouse gas emissions in the report. The audit firm for the 2022 financial statements was KPMG. In addition, the management report was verified in terms of all GRI indicators by Bureau Veritas Poland.

Following the update of the integrated reporting framework, we have updated our presentation of the value creation model. We also carried out a comprehensive materiality assessment following GRI Standards 2021. In the process, we used, among other things, the AA1000SES standard, and the survey conducted, involving a large number of our stakeholders, allowing us to identify a list of relevant topics that we address in this report. Material from this study will also feed into our other work, such as future strategic and business decisions.

Introduction

ING Bank Śląski

Our environment

Our

financial results

Corporate governa nce (G )

Bank and client safety (G)

ING for clients (S)

ING for climate (E)

ING for community (S)

ING for employees (S)

About

the report

Attachments

Managment Board statement

ING Bank Śląski S.A.

Management Board Report on Operations of ING Bank Śląski S.A. Group in 2022

Letter from the CEO

GRI [2-22]

Dear Ladies and Gentlemen,

In 2022, we were confronted with events that we did not foresee. The invasion of Ukraine, the economic war, accelerating inflation, the rapid rise in interest rates, the costs associated with new regulations – these factors have affected the bank’s financial performance. However, they have not hindered our development. This is because for years we have been building the bank to be resilient to unpredictable events and shocks, while at the same time being stable and maintaining a high quality of service. An element of stability is our strategy, which we have built around the needs of our customers, supporting them at times of major life decisions. These are the objectives we focus on regardless of market conditions. This requires us to be particularly flexible and involve all staff.

Confirmation of our long-term strategy is provided by the growth in customer numbers and commercial balances achieved last year. By the end of December 2022, the number of customers on the retail side had risen to nearly 4.38 million and in corporate banking to 533,000 companies.

We also increased loans by 7% to PLN 156.4 billion and deposits by 12% to PLN 189.2 billion. At the same time, we strengthened our market share in the corporate segment lending market to 13.15% and in the consumer lending market to 9.02%. In turn, the deposit market share increased to 11.00% for corporate customers and 10.16% in the retail part.

As a result, we achieved a consolidated net profit of PLN 1,714.4 million in 2022, compared to PLN 2,308.3 million in the previous year. The fall in profit is mainly the result of the charge to the bank’s income from the credit moratorium, which occurred in the third quarter of last year.

In 2022, we continued to implement, important for the bank’s development, long-term projects related to infrastructure replacement, changing the architecture of IT systems and banking applications. At the same time, we were successful in encouraging customers to use digital solutions. In retail banking, we saw further growth in the number of transactions and sales in digital channels. The higher number of remote operations was accompanied, in line with our strategy, by lower customer activity in bank branches. This is a trend we have been observing for many years now.

We have also seen an increase in remote channel transactions in corporate banking. We have also increased the number of online shops with an active imoje payment gateway and the number of payment terminals installed.

Social issues are always at the centre of our attention. In 2022, Russia’s brutal aggression against Ukraine triggered a huge wave of aid to our neighbours. Since the first days of the war, ING Bank Śląski and the ING for Children Foundation have been involved in various activities for Ukraine. We support charities and provide assistance to refugees in Poland.

In 2022, we implemented a new ESG Strategy for 2022-2024. Conducting business in a responsible and sustainable manner is at the heart of our

operations. At the same time, our ESG objectives are integrated into our business strategy, stemming from our bank’s mission and values.

We have also consistently implemented the provisions of the Environmental Declaration, which stipulates that the bank actively participates in climate action, including by financing investments that support customers’ environmental transformation. Promoting positive change always starts with ourselves. We have been taking environmentally friendly measures in our own operations for many years, including reducing energy or water consumption. The ING Grant Programme, which supports start-ups and young researchers working towards sustainable development, was very positively received by our stakeholders. In 2022, during the first two editions of the programme, we provided PLN 2 million for this purpose.

Our commitment to sustainability has been recognised by the market. We were the first company in Poland to be awarded an ESG rating by the rating agency Sustainable Fitch. We also became the leader of the Responsible Companies Ranking and were among the winners of the ESG Leaders competition.

I encourage you to read the report and see a detailed description of our activities.

Sincerely yours,

Brunon Bartkiewicz , President of the Bank Management Board

Introduction

ING Bank Śląski

Our environment

Our

financial results

Corporate governa nce (G )

Bank and client safety (G)

ING

for clients (S)

ING

for climate (E)

ING

for community (S)

ING

for employees (S)

About

the report

Attachments

Managment Board statement

ING Bank Śląski S.A.

Management Board Report on Operations of ING Bank Śląski S.A. Group in 2022

Summary of 2022

Environment

Social

Governance

-25.7%

227 kWp

8,399

4,000

50%

96%

Reduction of greenhouse gas emissions in scope I and II in relation to the base year

Total capacity of our photovoltaic installations

Number of our employees at the end of the year

People in the Orange Team at the “Run Warsaw” event

Participation of women in the Management Board

Ratio of total remuneration of women to men

In caring for the environment, we pay great attention to the impact we ourselves have through our operational activities. One of our most important objectives is to achieve climate neutrality in Scope I and II by 2030 ( market-based approach) We present more information on this topic in the ING for climate chapter.

We are committed to creating a friendly workplace where we care about the well-being of our employees. We care about well-being and health but also support employees in their development. We present more on this topic in the ING for employees chapter.

Diversity and gender equality are very important to us at our bank. Therefore, the policies we have adopted in this area have been implemented for many years. You can read about the details of our activities in this area in the chapter about Corporate governance .

PLN 1.6 billion

PLN 2 million

PLN 10.8 million

2.3 p.p.

PLN 5.30

Value of RES projects financed by our bank

Value of grants provided in the ING Grant Programme

Total amount collected for Ukraine

Highest NPS in the retail segment (25 points)

Share of stage 3 loans and POCI

Dividend per share paid from 2021 net profit

We consistently implement the provisions of the new Environmental Declaration of the ING Bank Śląski Capital Group, announced in 2021. We continue activities related to the financing of RES and support in the environmental transformation of our clients. We present more on this subject in the chapter ING for climate .

It is hard not to see the huge commitment of our employees to helping Ukraine. We therefore refer to the ING for community

chapter for detailed information in this respect.

We also pay great attention to the quality of our relationship with our clients. Details are referred to in the ING for clients chapter.

We take the utmost care in managing the capital entrusted to us. We take care to maintain capital above regulatory minimum levels while maintaining high asset quality and profitability of our business. This allows us to share the profit with our shareholders. And all this with care and caution in protecting our clients and their data. You can read more about this in the chapter on Bank and client security .