Contents

I.    Overview of Activities of Santander Bank Polska S.A. and its Group in 2020. 5

1.       Introduction   5

2.       Key Achievements  6

3.       Key Financial and Business Data of Santander Bank Polska Group for 2020  7

4.       Key External Factors  8

5.       Corporate Events  8

II.   Basic Information about the Bank and Santander Bank Polska Group.. 11

1.       History, Ownership Structure and Profile  11

2.       Structure of Santander Bank Polska Group   17

3.       Other Equity Investments  19

III. Macreconomic situation in 2020 r. 19

IV. Development Strategy of the Bank and Santander Bank Polska Group.. 24

1.       Purpose, Aim, Values and Strategic Objectives for 2021–2023  24

2.       Brand Promise and Values  26

3.       Forecast of Economic and Financial Market Situation in 2021  28

V.   Relations with Employees. 29

1.       Human Resources Management  29

2.       Business Ethics  36

VI. Relations with Customers. 37

1.       Service Quality and Customer Experience Management  37

2.       Barrier-Free Banking  39

3.       CRM Solutions  39

VII.   Investor Relations. 40

1.       Investor Relations at Santander Bank Polska S.A. 40

2.       Share Capital, Ownership Structure and Share Price  41

3.       Share Price of Santander Bank Polska S.A. vs the Market  41

4.       Credit Ratings of Santander Bank Polska S.A. 44

VIII. Relations with External Environment. 45

1.       Corporate Social Responsibility at Santander Bank Polska S.A. 45

2.       Social Responsibility  47

3.       Key Sponsorship Projects in 2020  47

4.       Communication with Stakeholders  47

IX. Business Development in 2020. 49

1.       Group’s Business Management Structure  49

2.       Business Development of Santander Bank Polska S.A. and Non-Banking Subsidiaries  52

2.1.    Management of the Covid-19 Situation in 2020  52

2.2.    Retail Banking Segment  58

2.3.    Business and Corporate Banking Segment  64

2.4.    Corporate and Investment Banking Segment  68

3.       Business Development of Santander Consumer Bank Group   72

X.   Organisational and Infrastructure Development 75

1.       Organisational Changes in the Business Support Centre  75

2.       Development of Santander Bank Polska Group   76

3.       Development of Distribution Channels of Santander Bank Polska S.A. 77

4.       Development of Distribution Channels of Santander Consumer Bank S.A. 82

5.       IT Development  83

6.       Capital Expenditure  86

XI. Financial Performance in 2020. 87

1.       Income Statement of Santander Bank Polska Group   87

2.       Statement of Financial Position of Santander Bank Polska Group   99

3.       Selected financial ratios of Santander Bank Polska Group   106

4.       Income Statement of Santander Bank Polska S.A. 107

5.       Statement of Financial Position of Santander Bank Polska S.A. 111

6.       Selected Financial Ratios of Santander Bank Polska S.A. 112

7.       Additional Financial Information about Santander Bank Polska S.A. and Santander Bank Polska Group   113

8.       Factors which may affect the financial results in the next year  114

XII. Risk and Capital Management. 115

1.       Key Risk Management Principles and Structure in the Bank and in Santander Bank Polska Group   115

2.       Risk Management Priorities in 2020  117

3.       Material Risk Factors Projected for 2021  118

4.       Credit Risk Management  118

5.       Market Risk and Liquidity Risk Management  121

6.       Operational Risk Management  124

7.       Legal and Regulatory (Compliance) Risk Management  125

8.       Reputational Risk Management  127

9.       Capital Management  128

XIII. Statement on Corporate Governance in 2020. 132

1.       Objective of Corporate Governance at Santander Bank Polska Group   132

2.       Legal and Regulatory Basis of Corporate Governance  132

3.       Principles of Corporate Governance  132

4.       Management Board’s Statement on Corporate Governance  133

5.       Issuer’s Securities  133

6.       Disclosure Policy and Communication with Shareholders, Investors and Customers  134

7.       Governing Bodies  134

8.       Remuneration Policy  151

9.       Diversity Policy  156

10.     Internal Control and Risk Management System    158

11.     External Auditor  160

12.     Pending Court Proceedings  163

XIV. Statement on Non-Financial Information for 2020. 164

1.       Business Model and Key Non-Financial Ratios  164

2.       Risk Management System    165

3.       Anti-Corruption Policies and their Outcomes  167

4.       Employee Policies and their Outcomes  169

5.       Human Rights Policies and their Outcomes  171

6.       Social Policies and their Outcomes  172

7.       Environmental Policies and their Outcomes  176

XV.   Statement of the Management Board.. 179

I.    Overview of Activities of Santander Bank Polska S.A. and its Group in 2020

1.   Introduction

Scope

The Management Board Report on Santander Bank Polska Group Performance in 2020 contains the information required in both consolidated and separate Management Board report on Santander Bank Polska S.A. performance.

Unprecedented business environment of 2020

As in the case of many other Polish, European and global entities, in 2020 the activities of Santander Bank Polska S.A. and its Group were largely determined by the Covid-19 pandemic caused by SARS-CoV-2.

On 14 March 2020, the state of epidemic emergency was declared in Poland, followed by the announcement of the state of epidemic on 20 March, together with a set of restrictions (including on movement and doing business). They were gradually lifted from April to May 2020, starting from unlocking the economy. Some restrictions were re-introduced in August, and Poland was divided into red and amber districts, depending on the number of cases. As a result of the autumn wave of the pandemic, on 24 October 2020 the whole Poland was declared a red zone, followed by a quarantine introduced on 28 December 2020. 

The top priority during the pandemic period of 2020 was to protect the health and safety of employees and customers of the Group and to ensure business continuity. Equally important was to provide support to borrowers affected by Covid-19 and adapt the customer service model to the restrictions and sanitary regime. Remote distribution channels were increasingly used, which combined with other IT challenges caused acceleration of the digital transformation, automation and robotisation across the organisation. The entire banking sector faced such challenges as interest rate cuts, lower volumes of transactions made by customers and increased cost of credit, which forced banks to look for new growth opportunities, further improvements and savings.

Management of the crisis situation connected with the pandemic

Measures taken by Santander Bank Polska S.A. in relation to the coronavirus outbreak were first initiated by the Response Group to Relevant Operational Events (RGROE) and coordinated by the Digital Transformation Division. Action plans and scenarios related to the pandemic had been developed before the virus spread to Poland. The work was delivered in the following seven streams: IT, BCM, Logistics and Procurement, Communication, HR, Operations and Business Response. From March to April 2020, the progress of each stream was monitored on an ongoing basis, with daily updates provided to the executive group including the Management Board members. Next, the Business Rebound initiative was set up to ensure smooth transition of the organisation to the new normal, i.e. to rebuild business, explore new business opportunities, maintain savings and protect revenues, whilst providing unparalleled customer service.  

2.   Key Achievements

3.   Key Financial and Business Data of Santander Bank Polska Group for 2020

4.   Key External Factors

5.   Corporate Events

Major corporate events in the reporting period

II. Basic Information about the Bank and Santander Bank Polska Group

1.   History, Ownership Structure and Profile

History and profile of Santander Bank Polska S.A. as a parent entity

Ownership structure

Share capital

Santander Bank Polska S.A. is a subsidiary of Banco Santander S.A., which held 67.41% share in the registered capital and the total number of votes at the bank’s General Meeting as at 31 December 2020. The remaining shares were held by the minority shareholders, of which only the following funds: Nationale-Nederlanden Otwarty Fundusz Emerytalny (OFE) and Nationale-Nederlanden Dobrowolny Fundusz Emerytalny (DFE) jointly exceeded the 5% threshold with respect to the share capital and voting power according to the information held by the bank’s Management Board on the date of approval of this report.

For more information about the share capital, see Chapter VII “Investor Relations” (Section 2 “Share Capital, Ownership Structure and Share Price”) and Chapter XIII “Statement on Corporate Governance in 2020” (Section 4 “Issuer’s Securities”).  

Majority shareholder

Santander Bank Polska S.A. is a member of Santander Group, with Banco Santander S.A. as a parent entity.

Banco Santander S.A. is one of the largest commercial banks in the world with a more than 160-year history, having its operational headquarters in Madrid. The bank specialises in retail banking services but it is also very active in the private banking and corporate banking, asset management and insurance markets.

The business of Banco Santander S.A. is geographically diversified, but it focuses on 10 core markets – both developed and emerging, including Spain, Poland, Portugal, Germany, the UK, Brazil, Argentina, Mexico, Chile and the USA.

Business profile of Santander Bank Polska Group

Santander Bank Polska S.A. is a universal bank which provides a full range of services for personal customers, SMEs, large companies, corporates and public sector institutions. The bank’s offering is modern, comprehensive and satisfies diverse customer needs with regard to current/personal accounts, credit, savings, investment, settlement, insurance and card products. The financial services of Santander Bank Polska S.A. include cash management, payments, trade finance and transactions in the capital, money, FX and derivative markets, as well as underwriting and brokerage services.

The bank’s own product range is complemented by specialist products offered by its group of related companies, including: Santander Towarzystwo Funduszy Inwestycyjnych S.A., Santander Leasing S.A., Santander Factoring Sp. z o.o., Santander Aviva Towarzystwo Ubezpieczeń S.A. and Santander Aviva Towarzystwo Ubezpieczeń na Życie S.A. In cooperation with all these companies, the bank provides its customers with access to investment funds, asset portfolios, insurance, leasing and factoring products.

The bank continuously develops its product range to ensure that solutions offered to customers are transparent, simple, digital, flexible and available in self-service channels. It offers unique solutions which are developed within Santander Group based on its global presence, infrastructure and market potential. Customers are provided with comprehensive services in traditional sales channels and via remote channels.

Santander Consumer Bank S.A. and its subsidiaries form a separate business segment with its own customer base, offering and distribution channels. It provides credit facilities to households, mainly in the consumer finance and car finance sectors. It also offers financing to businesses, notably car dealers and importers. Santander Consumer Bank Group offers consumer loans, car finance through lease and factoring, credit facilities for car dealers, retail and business deposits and insurance products.

As at 31 December 2020, Santander Bank Polska Group provided services to 7.1m customers, including 1.9m customers of Santander Consumer Bank S.A.

Business model of Santander Bank Polska Group

Business model framework

The strategy and business model of Santander Bank Polska Group is based on six strategic directions, of which Simplification and Intelligent Omnichannel Banking have the highest transformation potential.

Customers and their needs are at the heart of all decisions taken by the bank. The products, processes and communication channels are created using Service Design in order to continuously increase customer satisfaction and build lasting relationships.

Employees are key to creating value for customers. The Group gives priority to developing a friendly work environment and corporate culture by promoting cooperation and diversity, and increasing the motivation, engagement and professionalism of employees.

The Group provides top quality services and solutions based on the latest technologies, innovation and open platforms. Security, stability of systems and sustainable and socially responsible development are key aspects of the Group’s business model. The Group conducts its business activity taking into consideration the interests of all stakeholders, including shareholders and communities it operates in.

The new normal related to the Covid-19 pandemic has a strong impact on the bank’s strategy and priorities. It also affects its operating model which is regularly revised to ensure that the bank can effectively implement changes, whilst mitigating risks and leveraging opportunities for accelerated digitalisation.  

Business model of Santander Bank Polska Group

Value creation

Position of Santander Bank Polska S.A. and its Group in the Polish banking sector

Position in the banking sector

Santander Bank Polska S.A. is ranked among the top three banks in the Polish banking sector (together with PKO BP S.A. and Pekao S.A.) and is the largest private bank in Poland.

According to the financial report for the quarter ended 30 September 2020, which at the date of approval of this Management Board report (22 February 2020) was the most up-to-date source of comparable data on the performance of banks listed on the Warsaw Stock Exchange (WSE), Santander Bank Polska S.A. – including its subsidiaries and associates – was Poland’s second largest banking group in terms of total equity and net loans, and third largest one in terms of total assets and deposits.  

Share in key market segments

According to NBP statistics, as at the end of September 2020 the Group’s share of the market was 11.8% for loans and 11.3% for deposits.

The Group operates in the factoring and leasing markets via its subsidiaries, holding a market share of 10.3% and 7.6%, respectively, as at 31 December 2020 (according to the Polish Factors Association and the Polish Leasing Association). In the same period, the Group’s share in the retail investment funds market was 9.8% (according to Analizy Online) while in the equity and futures markets it held 8.0% and 9.0%, respectively (according to the Warsaw Stock Exchange).

Competitive advantages

Santander Bank Polska Group has stable sources of funding, solid capital and liquidity position and a diversified asset portfolio. The Group’s competitive edge is built on a clear and consistent strategic vision focused on customer-centricity and effectiveness, steadily improved through process simplification, digitalisation and transformation of the bank into an Agile organisation. What also gives the bank an advantage is an effective and simple business model, an extensive and diversified business, options available to the bank as a member of Santander Group, use of emerging opportunities for non-organic growth and experience in mergers and acquisitions. The business scale, quality of products and services, pursuit of operational excellence and strong focus on building lasting relationships with customers allow the Group to compete successfully with the largest players in the Polish banking market. The Group’s engagement in the consolidation of the banking sector, a wide array of complementary services for respective customer segments, a large Poland-wide branch network, modern banking technologies, rapidly expanding functionality, integration of remote distribution channels and competent and flexible personnel give the Group good prospects for further market penetration.

2.   Structure of Santander Bank Polska Group

Subsidiaries

As at 31 December 2020, Santander Bank Polska Group comprised Santander Bank Polska S.A. and the following subsidiaries:

1.      Santander Consumer Bank S.A. (SCB S.A.)

2.      Santander Consumer Finanse Sp. z o.o. (subsidiary of SCB S.A.)

3.      Santander Consumer Multirent Sp. z o.o. (SCM Sp. z o.o. – subsidiary of SCB S.A.)

4.      Santander Consumer Financial Solutions Sp. z o.o. (subsidiary of SCM Sp. z o.o.)

5.      SCM Poland Auto 2019-1 DAC (subsidiary of SCM Sp. z o.o.)

6.      SC Poland Consumer 15-1 Sp. z o.o. (subsidiary of SCB S.A.)

7.      SC Poland Consumer 16-1 Sp. z o.o. (subsidiary of SCB S.A.)

8.      PSA Finance Polska Sp. z o.o. (subsidiary of SCB S.A.)

9.      PSA Consumer Finance Polska Sp. z o.o. (subsidiary of PSA Finance Polska Sp. z o.o.)

10.    Santander Towarzystwo Funduszy Inwestycyjnych S.A.

11.    Santander Finanse Sp. z o.o.

12.    Santander Factoring Sp. z o.o. (subsidiary of Santander Finanse Sp. z o.o.)

13.    Santander Leasing S.A. (subsidiary of Santander Finanse Sp. z o.o.)

14.    Santander Leasing Poland Securitization 01 Designated Activity Company (subsidiary of Santander Leasing S.A.)

15.    Santander F24 S.A. (subsidiary of Santander Finanse Sp. z o.o.)

16.    Santander Inwestycje Sp. z o.o.

Compared to 31 December 2019, the list of members of Santander Bank Polska Group was extended to include the following two subsidiaries of Santander Consumer Multirent Sp. z o.o. (a company controlled indirectly by Santander Bank Polska S.A. and directly by Santander Consumer Bank S.A.): Santander Consumer Financial Solutions Sp. z o.o. with its registered office in Wrocław and SCM Poland Auto 2019-1 DAC with its registered office in Dublin. For more details, see Chapter X “Organisational and Infrastructure Development”, Section 2 “Changes in Composition of Santander Bank Polska Group”.

The above-mentioned list of subsidiaries includes Santander Consumer Finanse Sp. z o.o. which was dissolved and liquidated as of 31 December 2020 based on the resolution of the Extraordinary General Meeting of 23 December 2020.

As at 31 December 2020, all entities of Santander Bank Polska Group are consolidated with the bank in accordance with IFRS 10.

Associates

In the consolidated financial statements of Santander Bank Polska Group for 2020, the following companies are accounted for using the equity method in accordance with IAS 28:

1)      Santander Aviva Towarzystwo Ubezpieczeń S.A. (Santander Aviva TU S.A.)

2)      Santander Aviva Towarzystwo Ubezpieczeń na Życie S.A. (Santander Aviva TUnŻ S.A.)

3)      POLFUND – Fundusz Poręczeń Kredytowych S.A.

Compared with 31 December 2019, the list of associates did not change.

3.   Other Equity Investments

As at 31 December 2020 and 31 December 2019, Santander Bank Polska Group owned at least 5% of share capital or voting power in the following companies:

1)    Companies from the equity investment portfolio of Santander Inwestycje Sp. z o.o. 

III.      Macreconomic situation in 2020 r.

Economic growth

The Polish economy entered 2020 with still good, but slowing economic growth. However, as the first diagnosed Covid-19 cases appeared in Poland in mid-March, the economic outlook deteriorated dramatically. The disease proved to be the most important factor affecting economic and financial activity until the end of the year. Restrictions in business activity and social mobility triggered a major decline in GDP growth in Q2 2020: -8.2% YoY or -8.9% QoQ after a seasonal adjustment. This was the most considerable decline since early 90s. Q3 2020 saw a surprisingly rapid and strong rebound. However, the recovery process was uneven: some areas were improving faster, while others remained in stagnation or even deteriorated. For example, industrial production and retail sales returned to positive YoY growth rates, while in the construction sector, which was initially quite immune to the pandemic, the output fell significantly in Q3. In 4Q20 GDP slowed again together with stricter epidemic restrictions, but by only 0.7% QoQ and 2.8% YoY. In the final month of 2020 industrial output rose by more than 10% YoY with goods exports up by c.15% YoY, retail sales fell by less than 1% YoY and construction output registered the first positive YoY growth since the start of the pandemic. Taking this together, GDP in the whole 2020 fell by 2.8% according to preliminary estimates by GUS, In general, such sectors as tourism, travel, entertainment and events suffered the most, whole industry and export-oriented branches did quite well.

Labour market

The initial reaction of employment to the pandemic and restrictions was quicker and stronger than during previous crises in the Polish economy. However, the adjustment was mostly based on shortening working hours, not on layoffs (“labour hoarding” was common among firms), which was supported by government’s support schemes. As a result, average employment in the corporate sector (calculated in full-time jobs) fell by 3% YoY in May, while headcount fell by 0.8% YoY. As the economic activity was going up in Q3 2020, companies were restoring normal working hours and their reaction to the second wave was calmer. Thanks to that, at the end of the year the average employment was only by 1% lower in annual terms. Unemployment also reacted in a limited way – in December, the jobseekers count was by 180 thousand higher in annual terms. Partially this was due to the fact that some of the redundant employees became economically inactive. Migration was another factor limiting the rise in unemployment: some migrants who had lost their jobs moved back to their homelands (at least temporarily). Wage growth was markedly lower only in April and May (after correcting for inflation it was even negative in YoY terms), in August, it already returned above 4% YoY and in December it reached 6.6% YoY.

Inflation

CPI inflation began 2020 with a rise to 4.5% YoY on average in Q1 from 2.8% YoY in Q4 2019, due to electricity price hike and further strengthening of food price inflation. With the outbreak of Covid-19, inflation started to decline, but slower than expected. Only December saw a sharper decline (to 2.4% YoY). During the year, there was a sharp downside adjustment of food price inflation and of fuel prices – due to a collapse of oil prices. However, core inflation excluding food and energy only strengthened during the pandemic and reached 4.3% YoY in July, the highest value in more than 18 years, a level at which it stayed until November (December saw an abrupt decline to 3.7% YoY). The reaction of core inflation in Poland was the opposite of its reaction in the euro zone, where it declined to almost zero during the pandemic. Service prices were growing increasingly faster throughout 2020 to 7.8% YoY in November vs 6.1% in December 2019, but in December 2020 the growth rate dropped to 6.6% YoY. Goods price inflation eased to 0.9% YoY from approx. 4% in Q1 2020. The persistently high inflation in Poland and its different behaviour compared to that in the euro zone was mainly due to administered prices, notably in relation to electricity and waste collection.

Monetary policy

In response to the spread of the new disease and the government’s decision to impose lockdown, the MPC started cutting rates. After three moves – in March, April and May – the reference rate was 0.1%, the lowest ever. At the same time, an asset purchase programme was introduced, covering government bonds and state-guaranteed bonds. Some other, less important support instruments were also launched. In later months, the activity of the MPC was low, with no press conferences after monetary policy meetings, and poorer quality of communication with the market. Late in 2020, the NBP intervened several times on the FX market to weaken the zloty, sending EURPLN from 4.45 in early December to above 4.60 at the end of the year.

Loans and deposits

Lower economic activity has reduced the demand for loans. Even though the demand for mortgages recovered relatively quickly, sales of consumer and corporate loans remained subdued. Bank loans were also partially replaced by the government’s financial help programme. Due to these factors, at the end of the year, the total volume of loans was down 1% vs December 2019 (after taking into account FX changes). PLN-denominated mortgage loans advanced by about 10% YoY, consumer loans went down by 2% YoY, while corporate loans declined by 7% YoY, with the most considerable decline observed in current loans (-15% YoY). Despite weak creation of money through bank loans, the expansive fiscal policy financed by bond issues resulted in a high growth of deposits in the banking system. In mid-2020, the deposit growth rate was close to 16% YoY, while in the following months it slowed down to approx. 12% YoY in December. Depositors continued to turn away from term deposits (which declined by about 27% YoY) in favour of current deposits (which rose by about 30% YoY), mostly due to the low interest rates on the former.

Financial market situation

In late 2019, it seemed that in 2020 financial markets will continue to be driven mainly by brexit or the US-China trade wars. The unexpected appearance of the novel coronavirus and the outbreak of the pandemic triggered a sharp sell-off of risky assets and  shutdown of many economies, which resulted in bigger recession than during the 2008 World Financial Crisis. Experience gained during the previous turbulences allowed central banks to ease monetary policy immediately – interest rates were cut, existing asset purchase programmes were extended and new ones were launched. Governments arranged rescue packages to support closed economies in order to limit the scale of recession and potential rise of the unemployment rate. The European Commission proposed a recovery package of EUR 750bn called Next Generation EU, aimed at supporting the economy during the pandemic. Together with the EU multiyear financial framework, the instrument was accepted before the end of 2020. The fast monetary and fiscal policy

response mitigated the adverse reaction from the market (as evidenced, for example, by the size of the drop of equity indexes) compared with the 2008 crisis, and risky assets soon started to recover pricing in a scenario of V-shaped economic revival. The significant rise in the number of Covid-19 cases in autumn resulted in only temporary deterioration of the global market sentiment. In November, the presidential election was held in the USA, and Joe Biden won the race to the White House. Although results were announced later than usual, there was no meaningful nervousness on the market in anticipation of a highly accommodative monetary policy to be maintained by the Fed in the coming years. At the very end of the year, the EU and UK managed to reach an agreement regarding the trade deal.

In 2020, Polish short- and long-term bond yields fell substantially since the global central banks (including the Fed) and the NBP were cutting interest rates and launched QE programs to fight the adverse effects of the pandemic. In Poland, cash from the central bank’s bond purchases went to commercial banks, which invested it in short- and medium-term bonds. As a result, the 2Y bond yield fell to 0%. In the whole of 2020, the Polish 10Y bond yield fell from 2.20% to 1.24% (by nearly 100 bps), and 2Y from 1.55% to 0.05% (by 150bps). As long-term bond yields fell less, the bond curve steepened with the 2-10Y spread rising from 60 bps to approx. 120 bps. The 10Y PL-DE bond yield spread fell from 250 bps to 180 bps. The size of the NBP bond purchase programme exceeded PLN 105bn with the highest pace of purchases noted at the beginning of the pandemic whereas the second part of the year saw some slowdown. The value of 7-day money bills outstanding reached PLN 185bn at the end of the year vs PLN 80bn before the pandemic. Bonds issued by the Polish state owned bank BGK and the Polish Development Fund (PFR) were positively received by investors thanks to the higher yield offered. In 2020, investors purchased BGK bonds for over PLN 100bn and PFR bonds for approx. PLN 65bn.

2020 brought a significant increase in volatility on the EM FX market. Versus the dollar, CEE currencies and Latin American currencies recorded the widest annual % high-low spreads in 3–4 years and 5 years, respectively (in the case of MXN, even since the 2008 US financial crisis). Over the last 12 months, all of the main EM currencies depreciated vs the euro, and a half of them strengthened vs the dollar. The main factor affecting the zloty in 2020 was the Covid-19 pandemic. In the first months of 2020, the rise of global risk aversion hit the Polish currency and pushed EURPLN to 4.63 (its highest since mid-2009), USDPLN to 4.30 (its highest since H2 2001), CHFPLN to 4.37 (its highest since January 2015 when the Swiss National Bank unpegged the franc leading to its sharp strengthening), and GBPPLN to 5.25 (its highest since late 2016). In the subsequent months, the zloty was recovering on the back of hopes that the Polish and global economy will recover fast thanks to the support from the monetary and fiscal policy. The autumn rise in Covid-19 cases in Poland and abroad terminated the zloty appreciation impulse. Additionally, in the second half of December the National Bank of Poland intervened on the FX market in order to weaken the zloty. As a result, EURPLN jumped temporarily to its 2020 peak reached in Q1. In the whole of 2020, EURPLN rose by 6.8%, CHFPLN by 7.6%, GBPPLN ended the year roughly flat while USDPLN fell by 1.9%.

Stock market

2020 was the most remarkable year in the history of the Warsaw Stock Exchange (WSE). The outbreak of the global pandemic, which spread from China to Europe in March, caused not only an economic crash but also a serious turmoil in stock markets. The panic on the Warsaw floor resulted in a mass selloff at the turn of February and March, dragging stock indices down to the levels from before a decade. A gradual recovery of the WSE observed in summer gained momentum in November after the new Covid-19 vaccines had been approved for use. Growing optimism backed by the zero interest rate policy of the major central banks triggered another surge in the stock markets, which was not even stopped by the defeat of the Republican president in the US election. As a result of the holiday rally, WIG, the broad-based index, recovered nearly all the pandemic losses, closing the year only 1.3% down. WIG20 fared worse and lost 7.7% YoY. This relatively weak performance of the blue chip index was once again caused by the structure dominated by old economy stocks, which were under the strong supply pressure for the larger part of the year. It was not until the news on a Covid-19 vaccine came through that this disproportion was partially reduced. Mid-cap companies performed much better against this background, with mWIG40 rising by 1.8 YoY, but the biggest gainers were small-cap stocks: sWIG continued its winning streak from H1 2020 and soared by 33.6% YoY, only to confirm a growing demand from retail investors. Apart from the pace of the Covid-19 vaccine rollout, stock market trends will strongly depend on the scale of the stimulus programmes on the one hand, and on continuation of the existing policy by central banks on the other, bringing the cost of debt virtually to zero and making traditional ways of saving less attractive.

Regulatory environment of the banking sector

The table below shows the selected legislation which came into effect in 2020 and has impact on the financial sector in Poland.

IV.     Development Strategy of the Bank and Santander Bank Polska Group

1.   Purpose, Aim, Values and Strategic Objectives for 2021–2023

The strategy of Santander Bank Polska S.A. for 2021–2023 is a continuation of the previous course of action and is based on the same values and assumptions as applied before. The bank’s purpose, aim and values have not changed for years:

As part of its strategic vision, Santander Bank Polska S.A. intends to:

·        Become a leading bank in terms of service quality, focusing on customer needs and expectations;

·        Build long-term relationships with customers based on trust, loyalty and enhanced customer experience;

·        Anticipate and respond to customers’ needs with tailored products, services and solutions; 

·        Modernise banking services through digital transformation, including end-to-end processes, and change the operating model to a more effective and less capital-intensive one;

·        Increase the number of digital customers;

·        Focus on the growth of profitable business, strengthening its position in the key market segments through both organic and inorganic growth;

·        Create an engaging work environment through collaboration, communication and bottom-up initiatives raised in the bank’s units;

·        Enhance effectiveness and streamline internal processes in line with an Agile methodology;

·        Combine the maximisation of shareholder value with the commitment to the growth of local communities.

The above assumptions are reflected in the bank’s strategic goal for 2021–2023, which is to:  

The strategy of Santander Bank Polska S.A. promotes a customer-centric approach to business management through continuous improvement of service quality and product range. A special focus is placed on digitalisation and simplification of processes from the customer’s perspective, which results in increased operational efficiency, simple solutions, and transparency of the offer. It also promotes the corporate culture which is focused on increasing engagement and motivation of employees and social responsibility of the organisation. The outbreak of the pandemic in 2020 further enhanced the development direction set by the bank.

The overall goal has been divided into six strategic directions for 2021–2023: customer obsession, employee focus, simplification, smart omnichannel, open platform, safety and trust. The above directions include specific objectives related to the key stakeholder groups: employees, customers, communities and shareholders.

Santander Bank Polska S.A. puts customers at the heart of its business, and all activities (projects, initiatives, hot spots, bets and group programmes) are delivered in six strategic areas, with simplification and smart omnichannel banking having the greatest transformation impact.

In view of dynamic and complex changes in the macroeconomic environment, the strategy of Santander Bank Polska S.A. is regularly verified, which helps take prompt action in response to market trends and other significant changes in the environment (e.g. pandemic situation). The new normal created by the Covid-19 pandemic has a strong impact on the bank’s strategy and priorities. It also affects the bank’s operating model, which is regularly adapted to the new circumstances in order to maximise the emerging opportunities (such as acceleration of digitalisation) and effectively mitigate risk.

In 2020, the bank’s business strategy was used to develop a three-year IT strategy with the following assumptions:

·        delivery of the 4P Programme (simple offer, better and easier-to-use products, simplified and increased flexibility of the IT infrastructure, more effective investment into new technologies, long-term competitive edge and better working conditions);

·        introduction of the DevOps culture (uninterrupted implementation of changes in production systems);

·        improvement of the software development process (reduction in the number of production incidents and faster implementation of changes);

·        accelerated digitalisation of Retail Banking. 

The bank’s business strategy was used to develop a new three-year IT strategy in 2020, taking into consideration the current IT capabilities and their use by the organisation. For more details about the IT strategy and its delivery, see Chapter X “Organisational and Infrastructure Development”, Section 5 “IT Development”.

2.   Brand Promise and Values 

Corporate culture

The corporate culture of Santander Bank Polska Group is based on the values and ethical standards which help build trust and earn lasting loyalty of employees, customers, shareholders and local communities.

The corporate culture of Santander Bank Polska Group and Banco Santander Group is underpinned by the General Code of Conduct and Simple|Personal|Fair values and behaviours.

The Simple|Personal|Fair values reflect the Group’s philosophy, including rules it follows when taking decisions and interacting with customers, shareholders and other stakeholders. In line with these values, the Group strives not only to fulfil its business commitments and comply with laws, regulations and best practice, but also to exceed expectations of its stakeholders, particularly customers. Particular focus is placed on the areas where the Group may significantly help customers achieve financial success and sustainable growth.

·      The Group promotes eight corporate behaviours among its employees, which are additionally used as a performance review criterion:

·      Apart from the corporate behaviours which apply to all employees of the Group, all managers (leaders) are also expected to act in line with the leadership commitments summarised below.

·      The risk culture promoted by Santander Bank Polska S.A. is called “pro risk” and consists of five principles: accountability, resilience, simplicity, challenge and customer focus. Activities implemented within this culture include: education of the bank's employees; awareness-raising activities among employees relating to risks encountered in day-to-day work; providing channels for anonymous reporting of issues of concern; and features of the incentive system encouraging employees to adhere to the risk culture values.

·      Diversity and inclusion in the workplace, product offering, customer service and relationships with other stakeholders are seen by the Group as the sources of its strength and competitive advantage. 

Bank As You Want It

The bank’s brand promise reflected in the concepts of “Bank As You Want It” (“Bank Jaki Chcesz”) and “You Bank As You Want It” (“Bankujesz jak chcesz”) focuses on the fundamental consumer need of having influence and control. While placing customers at the heart of its business, the bank strives to identify their needs and provide solutions and functionalities that are tailored to individual requirements. At the same time, the bank provides customers with tools that enable them to personalise products and services on their own (without engaging branch advisors). It is helped by the digitalisation of banking processes and by a growing number of customers who prefer banking via remote channels.

Socially responsible bank

The Group conducts its activity in line with the Principles for Responsible Banking, understanding the role and importance of banks to customers, the economy and the community. It focuses on developing fair and transparent relationships with customers and making a positive contribution to communities and the environment. Particularly important are responsible sales and prevention of misselling. By embedding responsible business principles in its day-to-day management, the Group increases loyalty of its customers and delivers its strategy in a more effective way.

3.   Forecast of Economic and Financial Market Situation in 2021

Economic growth

At the start of 2021, the economic situation will remain subdued and the coronavirus threat will persist throughout the winter, but we are expecting a stronger economic recovery in H2 2021 owing to the progress of vaccination. When the coronavirus threat decreases, a strong economic recovery will be possible thanks to realisation of delayed demand, substitution effects and the generous flow of EU funds. Even though there are many question marks, e.g. about the pace of vaccine distribution or the number of people willing to get the vaccine, we think it is reasonable to assume that in mid-2021 the level of vaccination will be high enough to markedly decrease the risk of further pandemic waves and economic restrictions. We are expecting an average 2021 GDP growth at 4.6% YoY (e.g. very close to 4.7% recorded in 2019), driven mostly by a decisive rebound in domestic demand, especially in private consumption, with a weaker and delayed rebound in investment. Even though the balance of trade will still record a major surplus, this element will be affecting the GDP growth negatively despite solid exports, as we are expecting an acceleration in imports in H2 2021.

Labour market

Although the peak of the unemployment rate could be still ahead, we do not expect it to be high. When the economic revival starts in H2 2021, the unemployment rate should stabilise at a moderately low level. The government’s Financial Shield should support the labour market in small and medium companies in H1 2021, but in mid-year verification will begin to check if firms comply with the Shield’s loan forgiveness conditions. On the other hand, labour hoarding during the pandemic means that there seems to be little room for employment growth amid the economic recovery, and there should be no strong pressure on wages growth.

Inflation

We believe that in 2021 inflation should ease from 3.4% in 2020 to 2.5%, that is to below the NBP target of 2.5%. This would be the delayed effect of weaker domestic demand as well as decent financial performance of companies, the base effect and a smaller rise in food prices. Administrative components, like a further rise in electricity prices, introduction of the capacity charge and new taxes will prevent inflation from falling lower.

Monetary policy

Development of the macroeconomic situation in 2021 will give the central bank the comfort of keeping interest rates unchanged, even until the end of the current MPC term (early 2022). While some members have already mentioned the need to normalise the policy, they remain a minority. On the other hand, some members, including NBP governor Adam Glapiński, have signaled the possibility of further interest rate cuts but only if the economy suffers further disruptions – however, these members are of the opinion that the current interest rates are appropriate for the macroeconomic situation. During 2021, the size of the NBP bond purchase programme may change in response to the government’s possible new anti-crisis measures and their related borrowing needs.

Loans and deposits

In 2021, as economic and health situation normalises, there should be a gradual recovery of credit demand. Companies’ demand for bank financing may still be reduced in the first half of the year because of the distribution of support from another government programme (Financial Shield 2.0) amid low appetite for new projects. Deposit growth should be higher than credit growth, but the difference may be smaller than in 2020. At the same time, the low interest rates will be negatively affecting the demand for term deposits, making them stagnate or fall further.

Situation in financial markets

According to our forecasts, at the end of 2021 EURPLN will return to 4.30, that is the middle of the 4.25-4.35 range in which it was trading for most of the time since mid-2018 until the Covid-19 crisis broke out. The key assumptions here are: positive global market sentiment continuing for most of 2021; progress of vaccination with reduced concerns about next waves of the pandemic; and no resurfacing tensions between Poland and the EU. In the first months of 2020, the zloty may remain quite stable, near 4.50 against the euro, anchored by the risk of central bank’s FX interventions.

In 2021, we expect 10Y bond yields to increase to 1.75%, driven predominantly by the rise in the core market yields as well as by better-than-market-consensus GDP growth, and the issuance of government and Covid bonds. The falling CPI and the continued NBP QE might stabilise the yields or even drive them a bit lower. The front end of the curve should remain stable with NBP rates on hold throughout the year.

V.        Relations with Employees

1.   Human Resources Management

Human capital

As at 31 December 2020, the number of FTEs in Santander Bank Polska Group was 12,616 vs 13,579 as at 31 December 2019. These headcount figures included 10,170 FTEs of Santander Bank Polska S.A. (10,726 as at 31 December 2019) and 1,976 FTEs of Santander Consumer Bank Group (2,388 as at 31 December 2019).

The 7.1% decrease in the total employment of Santander Bank Polska Group in 2020 reflects the ongoing transformation of the operating models of both banks through digitalisation, optimisation of branch network, dynamic migration of sales and services related to financial products to remote distribution channels and steady implementation of technological and organisational solutions increasing operational efficiency of the organisation. The objective is to allocate the maximum resources to strengthen customer relationships, grow business and build competencies in accordance with the target profile. As a result of this transformation, the employment levels in branches and some business support areas are being reduced, while the headcount of units requiring specialist competencies and knowledge is increasing. The HR processes take into account natural employee attrition as well as the present business needs and market conditions.

In connection with the above-mentioned optimisation and transformation, in Q2 2020 Santander Consumer Bank S.A. started the collective redundancy process, which will be completed by the end of H1 2021 and will cover 430 people. In 2020, the total headcount of Santander Consumer Bank Group decreased by 412 FTEs. 

Santander Bank Polska S.A. also decided to start collective redundancies (Management Board Resolution of 29 October 2020). The process will cover max 2,000 employees of the bank’s Business Support Centre and distribution network (approx. 18.52% of the total headcount) and will be completed by 31 December 2022. On 19 November 2020, the bank signed a memorandum of understanding on collective redundancies with all trade unions established at the bank, setting out, among other things, the staff selection criteria, terms and conditions of severance pay and additional compensation, and the scope of the support programme for employees to be made redundant.

Human and intellectual capital of Santander Bank Polska Group is created by highly-qualified employees who constantly develop their competencies as part of day-to-day activities and top-quality development programmes. Comprehensive development programmes for managers and employees and continuous focus on knowledge sharing and self-education contribute to the growth of the intellectual potential as well as efficiency and stability of the Group’s human capital.

Support programme for employees selected for collective redundancies

Santander Bank Polska S.A. prepared a comprehensive support programme for employees to be made redundant (reStart). It is focused on activities aimed at helping employees re-enter the labour market and develop their competencies. The programme ensures support for groups and individuals and access to self-study materials. It offers a range of training courses, including on how to analyse own aptitudes, improve existing skills and build new competencies required to find a new job. The programme also envisages psychological support and sessions with experts for employees who are to be made redundant. Comprehensive information about collective redundancies and details about the support programme are available on a dedicated intranet site.

Human resources management during the Covid-19 pandemic

As part of extensive measures taken in response to the Covid-19 pandemic, a range of solutions were put in place in connection with health and safety at work and human resources management. They are presented in Chapter IX “Business Development in 2020” (Section 2.1 “Management of the Covid-19 Situation in 2020”). Alongside this, the existing experience was used to develop a remote work model, organise workshops for managers of dispersed teams and define assumptions for a new hybrid model to be used in the new normal.

Selected HR initiatives

The strategy of the Business Partnership Division of Santander Bank Polska S.A. is to build positive employee experience, as higher employee engagement is believed to have direct impact on customer satisfaction. This helps the organisation pursue its strategic goal, which is to achieve the leadership position in Poland from the perspective of customers and employees alike. The table below presents the main focus areas of HR management.

HR policy

Recruitment policy

Santander Bank Polska S.A. recruits new employees both internally and externally using methods and sources which are relevant to existing vacancies, including internal recruitment processes, the Referrals Programme, external service providers, specialised social media, practical training and internships, career fairs, events organised by universities, science clubs and career services.

The bank’s employees have precedence over other candidates in the internal recruitment processes at Santander Bank Polska S.A. and the companies from Santander Consumer Bank Group, which increases their development opportunities and helps build individual career paths.

The candidate profiles are checked to see if they meet the required job criteria in terms of their competencies, experience, knowledge, motivation, personality and compatibility with the organisational culture. All persons involved in the recruitment process must comply with the business ethics principles arising from the Labour Code and internal policies, in particular with the confidentiality and non-discrimination regulations.

The Referrals Programme of Santander Bank Polska S.A. engages employees in the recruitment process as it provides an opportunity to recommend candidates for vacant job roles in the bank. The system helps to reach a wider group of prospective employees who have relevant skills, aptitude and motivation, and are interested in taking up a job at the bank.

The recruitment process is additionally supported by the Practical Training and Internship Programme run in cooperation with universities across Poland, which is designed to recruit talented individuals who have key competencies defined in the global development strategy (Software Engineering, Cyber Security, Big Data and User Experience).

In 2020, Santander Bank Polska S.A. recruited employees with a new profile that are better prepared to deal with such market challenges as volatility, digitalisation and robotisation. It also focused on initiatives designed to enhance positive experience of job candidates and promote the bank as a modern and responsible employer.

During the Covid-19 pandemic, the recruitment interviews held both as part of internal and external processes were conducted exclusively online using the media available at the bank (Skype). The interviews were carried out in such a way as to make them as close to a face-to-face meeting as possible, while maintaining the highest standards.

Performance management

Santander Bank Polska S.A. has an objectives management process in place which supports staff development and promotes attitudes in accordance with the Simple|Personal|Fair values and eight corporate behaviours. The process allows for flexibility (as the objectives can be modified along the way) and for communication efficiency (as it facilitates communication between employees and their line managers due to more frequent meetings, regular feedback, and support of the HRup! system). In the existing model, individual performance (assessed in two dimensions: WHAT and HOW, and in terms of delivery of risk management objectives) is closely related to the bonus level.  

Remuneration policy and incentive schemes 

The objective of the remuneration policy of Santander Bank Polska Group is to recruit and retain top talents in the financial sector, using an appropriate and competitive remuneration package including base salary, bonus schemes and attractive benefits. The long-term goal of the remuneration policy is to ensure sustainable growth of the Group, with due regard to the interests of the key stakeholder groups (employees, shareholders, customers and communities) as well as corporate values.

The structure of the total remuneration offered by the bank is in line with the market practice, and the amount of remuneration corresponds to the levels prevailing in the banking sector.

The rules for remunerating employees are set out in the Remuneration Policy of Santander Bank Polska Group, which covers employees of the bank and its subsidiaries, including those whose professional activity has a significant impact on the risk profile of the organisation (Material Risk Takers/ identified employees) except for Supervisory Board members and the Management Board members. The remuneration of the supervisory and management bodies is governed by separate policies as approved by the Shareholders’ Meeting, namely the Remuneration Policy for the Supervisory Board Members of Santander Bank Polska S.A. and the Remuneration Policy for the Management Board Members of Santander Bank Polska S.A.

The Remuneration Policy of Santander Bank Polska Group covers an extensive scope of subject matters. Among others it defines rules for determining fixed and variable remuneration, awarding bonuses for the sales force, identifying and awarding bonuses to material risk takers in the Group, determining remuneration of control function employees and applying malus clauses.

The policy is based on an assumption that remuneration should be consistent with the interests of the shareholders and support creating a long-term value, while taking into account risk management, strategies, values and interests of the organisation as well as capital requirements.

The policy of Santander Bank Polska S.A. is consistent with the remuneration policy of Santander Group, relevant EBA guidelines on sound remuneration policies (EBA/GL/2015/22), Regulation of the Minister of Economic Development and Finance of 6 March 2017 on the risk management system and the internal control system, remuneration policy and detailed method of internal capital estimation in banks (Journal of Laws of 2017, item 637) and the Act of 16 October 2019 amending the Act on public offering, conditions for introducing financial instruments to organised trading, and on public companies, and certain other acts.

The existing Remuneration Policy of Santander Bank Polska Group was updated in H1 2020, along with the Remuneration Policy of the Bank’s Management Board and the Remuneration Policy of the Bank’s Supervisory Board. The above regulations were adopted by the Management Board on 12 May 2020 and approved by the Supervisory Board on 20 May 2020. The policies applicable to the governing bodies were approved by the Annual General Meeting of 22 June 2020.  

The changes were implemented to ensure compliance with the amended Act on public offering, conditions for introducing financial instruments to organised trading, and on public companies, which transposes a range of EU regulations, such as Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 (Shareholder Rights Directive II), including the say-on-pay rule. 

The updated Remuneration Policy of Santander Bank Polska Group also reflects the conclusions from the annual review of remuneration regulations and harmonisation measures taken across Santander Group. The key changes are summarised below: 

·        Selected sections concerning the Management Board were removed and incorporated into the Remuneration Policy of the Management Board of Santander Bank Polska S.A.

·        The provisions regarding salary benchmarking based on the internal process were elaborated.

·        The rules for remuneration of internal audit and compliance managers were refined (in accordance with Recommendation H).

·        References were made to the separate severance pay and compensation procedure.

·        Sections about potential payments under non-competition clauses were added.

·        The employee groups subject to EBA and ESMA guidelines were defined.

·        An option was introduced for the Management Board to extend the variable remuneration deferral period and increase the share of variable remuneration paid to the selected key employees in the form of financial instruments.

Stable financial results for 2019 enabled the bank to pay an annual bonus for employees in Q1 2020. Variable remuneration for 2019 was calculated before the state of epidemic emergency was introduced in Poland.

Due to the significant impact of the Covid-19 pandemic on the macroecomic situation in Poland, the bank reviewed the existing remuneration policy and took necessary measures in accordance with the fundamental principle of prudent management of risk and capital and limitation of actions that might weaken the bank’s capital base.

Fixed remuneration

The key component of remuneration at Santander Bank Polska Group is the base salary, which is determined on the basis of the role performed, scope of responsibility, qualifications and experience. In its approach to job valuation, the Group uses best market practice to ensure competitiveness of remuneration. In response to dynamic changes in the labour market, the Group’s remuneration system is periodically revised using payroll reports of leading advisory companies and data published by Statistics Poland (GUS).

The last comprehensive review of base salaries took place in Q3 2020. In view of the uncertain economic situation, the bank decided not to launch the pay rise process in 2020.

Variable components of remuneration

The bonus schemes adopted by Santander Bank Polska S.A. enhance staff motivation and support the delivery of strategic objectives set by the organisation. Such schemes are linked to the results of the bank, respective units and individual employees whose performance, delivery of objectives, behaviours and engagement are reviewed on a regular basis.

The bank’s employees are set individual objectives that correspond to the activities of a given organisational unit. The objectives of the employees within the control units arise from the roles they perform and their remuneration does not depend on the financial performance of business areas they control. In the case of the sales staff, in addition to quantitative and qualitative objectives the performance review also covers the indicators related to customer service, risk management and compliance with the applicable regulations.

Variable remuneration depends on a bonus scheme relevant to a given employee (including bonus regulations for sales staff and Business Support Centre employees). Individual bonus schemes differ in terms of eligibility criteria, bonus amount and payment frequency. Bonus payment is conditioned upon the delivery of specific financial objectives (e.g. a stated gross or net profit growth rate or amount, credit cost, NPL, RWA) and satisfaction of qualitative criteria (e.g. customer satisfaction).

The rules for setting and paying variable remuneration of Material Risk Takers are presented in Chapter XIII "Statement of Corporate Governance in 2020”, Section 7 “Governing Bodies”.

In view of the guidelines on variable remuneration issued by the KNF, the bank:

·        reviewed its remuneration policy;

·        analysed its current and projected situation, taking into account the impact of the Covid-19 pandemic, in particular in terms of its capital base, financial liquidity and financial result.

In line with its prudent approach to maintaining a solid capital base, in 2020 the bank updated the documents about variable remuneration incorporated in the remuneration policy. The following changes were introduced:

·        an option to extend the variable remuneration deferral period and increase the share of variable remuneration paid to the selected employees in the form of financial instruments;

·        additional criteria related to business objectives delivery by the bank, which are used as a basis for bonus pool calculation.

The overall variable remuneration cannot exceed 100% of fixed remuneration even in the case of an exceptionally outstanding performance. However, in an exceptional case, this limit might be increased to maximum 200% of fixed remuneration subject to the approval by the AGM. 

Variable remuneration components also include long-term (three-year) incentive programmes addressed to key employees of the bank. Under the programme, newly issued Santander Bank Polska shares are awarded to the participants if the business conditions specified in the programme regulations are met (for details about the 6th Incentive Programme, see Section 7 “Governing Bodies” in Chapter XIII “Statement on Corporate Governance in 2020”).

The Group also offers additional benefits that suit employees’ needs such as: health care packages or the cafeteria system which provides a wide range of cultural, sports and tourist benefits.

Social and employee benefits

The bank offers a broad range of employee benefits which help make it a more attractive workplace, enhance the comfort and security of employees and their families and promote healthy lifestyle and work-life balance. Additional benefits are tailored to individual needs of employees and include medical care, group life insurance, life insurance without pension option, and  accommodation, travel expenses, school fees and a cafeteria system which provides a wide range of cultural, sports and tourist benefits.

For four years now, the bank has run the “BeHealthy” programme (earlier referred to as “Zdrowie na Bank”), which is a part of the global corporate wellness programme of Santander Group. It is based on a holistic health model whose objective is to promote a healthy lifestyle and work-life balance. The programme covers educational and motivational campaigns and bottom-up health promotion activities (webinars with experts, and articles on healthy diet, ergonomics and active leisure). The bank launched an application designed to encourage sports competition among employees, in which they can build their communities, share their interests, take up various challenges and motivate one another.

Training and development

The Business Partnership Division offers a range of development programmes and business training to facilitate delivery of the Group’s strategic goals and key business projects. 

Due to the Covid-19 pandemic, in 2020 standard training courses were replaced by remote training sessions (using the latest technological solutions), promoting the concept of self-education among employees. Mandatory remote business training programmes (e.g. induction programme, cashier training, product and quality training) were fully coordinated via the LMS platform in terms of registration and attendance.

In response to the new needs arising from the remote work model, a calendar of workshops and webinars was created to provide guidance on how to use the latest technologies at work and manage virtual teams.

As part of talent management, specialist development programmes were delivered to the defined groups of employees, including new and existing managers, managers willing to build their competencies in relation to the new normal, young individuals with leadership potential, top performing employees, product owners and participants of the remote internship programme of Santander Group.

2.   Business Ethics

Santander Bank Polska Group is committed to maintaining the highest ethical standards in its relationship with shareholders, customers and employees.

Ethical conduct is the foundation of the corporate culture of the bank, whose strategic goal is to improve the product range and service quality to help customers prosper in accordance with the Simple | Personal | Fair values. The bank promotes attitudes among its employees which foster respect for others, integrity, reliability, honesty, engagement, openness, and willingness to cooperate and help. This is in line with the recommended behaviours:

The General Code of Conduct adopted by Santander Group provides a set of guidelines for all employees, irrespective of their role. It establishes standards and promotes the desired behaviours in relation to various aspects across the organisation.

The code is complemented with regulations concerning specific areas: Code of Conduct in the Securities Markets, Anti-Money Laundering Policy, Anti-Corruption Programme, Conflict of Interest Prevention Policy and many others.

The Group combats any forms of corruption in accordance with its “zero tolerance for corruption” policy.

The bank develops tools and resources to be able to mitigate legal liability risk arising from its operations. The measures aimed to prevent the materialisation of this risk are defined in the Corporate Defense Policy.

In order to protect its reputation, the Group continues to deliver the ethics and compliance e-learning programme (COMeT), which has become a regular part of the mandatory staff training system.  Ethical and reputational issues are also incorporated in the risk pro campaign (Risk Culture Week) that promotes risk culture across the organisation.

The bank consistently promotes the idea of an open dialogue with employees, offering them a possibility to report any breaches of the General Code of Conduct and to share their opinions and doubts. Employees may use dedicated communication channels to report any concerns they have, including anonymously. Apart from the etyka@santander.pl email inbox, employees may use two helplines to report ethical and legal issues or employment-related issues, respectively. In 2020, a new application was deployed to facilitate reporting and management of these issues. During the year, the bank continued an intranet-based training and information campaign to remind employees of communication channels available at the bank and to encourage them to report issues in justified cases.

In 2020, a new initiative called “News from the whistleblowing channel” (“Wieści z kanału whistleblowing”) was launched to publish information about the categories and numbers of issues reported via the whistleblowing channel on the intranet.

VI.     Relations with Customers

1.   Service Quality and Customer Experience Management

Customer experience management strategy

Santander Bank Polska S.A. gives priority to building positive customer experience. Customers’ needs are at the centre of everything the bank does, in accordance with its purpose, which is to help people and businesses prosper.

In 2020, the customer experience management strategy focused on the three main pillars:

·        Voice of the customer (including in-depth analysis of business data and market trends);

·        Service design

·        Customer-centric projects.

Voice of the customer

In 2020, the bank continued to enhance customer experience, while regularly monitoring customer satisfaction based on surveys conducted in the following three areas:

·        benchmarking surveys, which compare the bank to its peers;

·        relationship surveys, which assess the overall relationship between the customer and the bank;

·        event-driven surveys, which are conducted e.g. after the customer’s visit to a branch or a partner outlet.

Customer surveys were also undertaken as part of the processes created in accordance with the Service Design methodology used within the bank’s Agile structures.

Due to the Covid-19 outbreak, additional customer satisfaction surveys were carried out to monitor feedback on communication and services during the pandemic, among other things. 

Measures taken on the basis of customer satisfaction surveys, analysis of business data and monitoring of the current situation helped the bank increase customers’ loyalty. At the end of 2020, NPS was at its highest since the beginning of the survey in 2013. The bank was ranked first or second among its peers in the majority of areas assessed by customers, which contributes to the further growth of NPS.

In the retail customers segment, more than 5 p.p. YoY increase in the ranking was recorded in such areas as:

·        range of services and products which meet customers’ expectations;

·        efficiency and speed of service;

·        intelligibility of the language used in contact with customers;

·        customer service at a branch;

·        use of ATMs and CDMs.

In the Select customers segment, Santander Bank Polska S.A. was among the top three banks in terms of propensity to recommend the bank. An increase was also reported in the overall satisfaction of Private Banking and corporate customers with services provided by the bank.

Service design

The bank continued to deliver projects aimed to create new solutions for customers, focusing on those that could contribute most to increasing customer satisfaction. They were implemented using best practice in service design within the Agile model. The Management Board members and senior executives also contributed to developing solutions using the design thinking approach. The project progress was monitored on an ongoing basis. A mentoring programme was also launched for prospective service designers.  

The design thinking method is becoming increasingly popular at the bank. Along with the Agile way of working and a unique Service Design Framework engaging customers, this approach helps the bank build a positive image among customers

Customer-centric projects

In 2020, the bank continued the following long-term projects:

·        A model was implemented to define the key customer-centricity attributes for the organisation to focus on. They are one of the aspects considered in the product commercialisation procedure.

·        Remote customer service models and rules (new customer service standards) were introduced, along with additional safety measures with respect to services provided at branches, which was particularly important during the pandemic.

·        A plain language standard was introduced in messages and documents sent to customers and in internal communication (“Rzecz jasna” project). As part of traditional training and e-learning sessions, more than 2,000 employees were trained on how to use a plain language. Language audits were conducted in all customer segments (covering more than 4,000 documents) and feedback from customer surveys was used to simplify documentation. The bank also signed the Plain Language Charter (Deklaracja Prostego Języka), which was prepared as part of an initiative led by the Polish Bank Association (ZBP).

·        The key qualitative success factors were defined for the most significant projects designed to improve customer experience in order to reflect the contribution of individual units to creating value for customers.

·        Best practice in servicing vulnerable customers was developed and implemented (for more information, see Section 1.1 “Management of the Covid-19 Situation in 2020”, “Support for personal customers”) and the Consumer Protection Policy was monitored.

·        In 2020, the bank signed the Declaration on Responsible Sales, according to which the key customer-centricity aspects are

·        subject to annual external audits. The outcome of the 2020 audit was positive, with areas for development indicated.

The Golden Bank title for the best multichannel services confirms the effectiveness of initiatives undertaken by the bank to enhance customer experience.

Complaints management

Santander Bank Polska S.A. not only makes sure that complaint handling complies with regulatory requirements, but also works on increasing customer satisfaction at each stage of the process. Last year, new templates of complaint reply letters were prepared in accordance with the plain language standard for all types of claims made by customers. The layout was changed to a clearer and more legible one.

Customers may submit a complaint by following a simple procedure in any of the following ways: at a branch, in writing, over the phone or via an electronic banking platform, including via a video call or chat. A reply to a complaint may have a form of a letter, a text message or a message sent via internet or mobile banking services. Customers also receive text messages informing them about the status of the process: acceptance of the complaint, closure of the process (indicating the channel in which the bank will reply) or additional time needed to resolve the complaint (if longer than 7 days). 

In 2020, the bank continued to optimise the complaint-handling process:

·        the robotisation of complaint management was further implemented;

·        customers who received the bank’s reply to their complaint via a text message were sent letters explaining how card fees had been charged;

·        branch employees, helpline staff and Select and Private Banking advisors were authorised to inform customers, in specific circumstances, that their complaint has been upheld right after its acceptance (with money claimed by customers to be refunded within two working days).

After the complaint is resolved, the bank measures the level of customer satisfaction. The results are distributed to a number of units within the organisation to improve the process.

Customers who are not satisfied with the resolution may appeal to the Customer Care Officer, who provides the relevant support.

2.   Barrier-Free Banking

Barrier-free branches and digital solutions

For ten years now, Santander Bank Polska S.A. has been running and developing the “Barrier-Free Banking” (“Obsługa bez Barier”) programme, designed to ensure access to the bank’s services and products for customers with special needs (the disabled, the elderly, pregnant women). The bank continuously increases accessibility, using advanced methods and providing appropriate conditions to people choosing traditional branches.

·        At branches, customers are served by well-trained advisors and may use priority-service points. There are signature frames and mini magnifying glasses for visually-impaired customers. At each outlet, hearing-impaired customers may talk online with the bank’s advisor who uses Polish sign language. This option is also available via Santander mobile, Santander internet and the bank’s website.

·        21 branches are equipped with portable induction loops, i.e. devices which facilitate interactions with customers who use hearing aids. There are special procedures in place regarding statements of will made by customers who cannot read and/or write.

·        Barrier-free branches may be equipped with additional tools such as tactile ground surface indicators and maps in Braille with a bell to be rung for assistance, and the TOTUPOINT navigation and information system, which supports spatial awareness and increases safety for people with visual impairment.

·        The bank conducts regular audits at branches to make sure they are accessible to customers with disabilities. At the end of 2020, Santander Bank Polska S.A. had a network of 160 certified barrier-free outlets. Another 20 branches were selected for certification audits scheduled for late 2020/ early 2021.

·        Santander Bank Polska S.A. also has a network of 1,460 ATMs available to disabled people.

·        Online and mobile banking services are regularly developed and audited in terms of accessibility for customers with disabilities. Users can log into the mobile app using Face ID or Touch ID, while customers calling the Multichannel Communication Centre can be identified using voice recognition. Work is underway to improve accessibility of the website and the transactional service in accordance with the WCAG 2.0 and 2.1 standard.

·        The bank’s advertising messages are adapted to the needs of the visually and hearing impaired. The videos published on the website of the Barrier-Free Banking Programme and the bank’s YouTube channel are available with subtitles and translation by the Polish sign language interpreter. The repository of documents in electronic formats (audio or video recordings in Polish sign language) is being steadily expanded.

3.   CRM Solutions

In 2020, a particular focus was placed on solutions which facilitate communication with customers in remote channels, which was additionally required by the Covid-19 pandemic. The bank provided support for customers, including information about safe remote banking solutions.

Below are the main customer relationship management (CRM) initiatives undertaken in 2020: 

·        The CRM environment was integrated with electronic banking systems, which allowed the bank to personalise internet banking banners and improve management of digital communication. Personalised messages in internet banking increased the customer’s interest in the bank’s products and services measured by the number of clicks.

·        New real time campaigns were run to sell credit and investment products and support customers in financial distress (e.g. customers with an unauthorised overdraft, a blocked card, etc.).

·        A high-capacity online text message gateway was put in place and the length of messages sent this way was increased, thereby adding to the number of fully automated CRM campaigns.

·        An email gateway was implemented, i.e. a new, free-of-charge customer contact channel which can be used to send mass, marketing and regulatory messages.

·        Salesforce CRM was deployed, being one of the most innovative cloud-based systems worldwide, which facilitates service and reduces turnaround times by providing bankers with access to complete information about business customers.

·        The bank launched Santi on santander.pl: a chatbot that can answer questions about products and services, internet banking, mobile application, as well as solutions prepared in response to Covid-19.

·        A new onboarding process was designed and implemented for holders of the Account As I Want It. It consists of ten campaigns and a number of message templates which promote best daily banking solutions, encouraging customers to log in to electronic banking, make transactions and transfer their salary.

VII.  Investor Relations

1.   Investor Relations at Santander Bank Polska S.A.

The ambition of Santander Bank Polska S.A. is to maintain best-in-class standards of communication with capital market participants in Poland and abroad. The bank is focused on providing accurate and transparent information, while ensuring a level playing field for all stakeholders.

As a listed company with an established market position, Santander Bank Polska S.A. is required to actively communicate with its stakeholders in order to satisfy their information requirements in accordance with the highest market standards and prevailing laws.

Particularly important is the communication with shareholders, investors and analysts. Santander Bank Polska S.A. makes best efforts to provide the above stakeholders with regular and timely access to high quality and clear information in order to facilitate the accurate assessment of the bank’s financial standing, market position and effectiveness of its strategy and business model.

The bank’s Investor Relations unit maintains relationships with institutional investors and stock market analysts, informing them about the bank’s development and performance and other relevant aspects which may affect their decisions. The unit also responded to questions about the current situation of the company.The above activities are aimed to ensure adequate transparency of the company, build trust and promote the bank’s image in capital markets.

In 2020, the following initiatives were undertaken as part of standard investor relations activities:

·        The representatives of the bank’s Management Board and the Investor Relations unit held regular meetings with investors and stock market analysts. Around 150 meetings were organised in 2020 (due to the pandemic, they were video and teleconference calls).

·        The bank’s representatives took part in eight conferences organised by Polish and foreign brokerage offices. As a result of the Covid-19 pandemic, these events were held online, making it possible to meet existing and prospective investors.

·        Four teleconferences were held to present market analysts with the bank’s quarterly figures. In line with best market practice, they were broadcast online in both Polish and English, and recordings were made available on the bank’s website (https://bank.santander.pl/relacje-inwestorskie/serwis-relacji-inwestorskich.html).

At the end of 2020, 17 analysts from Polish and foreign financial institutions prepared and published reports and recommendations concerning the bank’s stocks.

All announcements and reports published by the bank are available on the Investor Relations website: https://bank.santander.pl/relacje-inwestorskie/serwis-relacji-inwestorskich.html. Results and presentations from the past years can also be found there.

2.   Share Capital, Ownership Structure and Share Price

Ownership structure in 2020

As at 31 December 2020, the share capital of Santander Bank Polska S.A. totalled PLN 1,021,893,140, divided into 102,189,314 ordinary bearer shares with a nominal value of PLN 10 each.

On 25 September 2020, the share capital of Santander Bank Polska S.A. was increased through the issue of 101,009 series O shares under the 6th Incentive Programme, as a result of which the stake of shareholders which do not exceed the 5% threshold went up from 27.51% to 27.58%, while the shareholdings of Banco Santander S.A. and funds managed by Nationale-Nederlanden PTE S.A. decreased from 67.47% to 67.41% and from 5.02% to 5.01%, respectively.

The table presenting the number of shares and votes held by individual shareholders as at the end of 2019 and 2020 is included in Chapter XIII “Statement on Corporate Governance in 2020”, Section 5 “Issuer’s Securities”. For details about the increase in the bank’s share capital, see Chapter I “Overview of Activities of Santander Bank Polska S.A. and its Group in 2020”, Section 5 “Corporate Events”.

Majority shareholder

The profile of Banco Santander S.A. and its Group is presented in Chapter II “Basic Information about the Bank and Santander Bank Polska Group”, Section 1 “History, Ownership Structure and Profile”.

3.   Share Price of Santander Bank Polska S.A. vs the Market

1)    For more information, see “Dividend per share” section below

Globally, the banking sector was one of the industries that were worst hit by the pandemic in 2020. In Poland, the banking industry, which is considered to be the lifeblood of the economy, faced unprecedented challenges. Apart from lower activity of customers, banks had to cope with three interest rate cuts and legislative moratoria. Day-to-day operations of banks were seriously disrupted; however, strong flexibility and accelerated digitalisation allowed financial institutions to bring the situation under control. Although the end of the year was favourable and the stock prices visibly improved, the sector still remains under strong pressure caused by all-time low interest rates and possible further cuts in 2020 as hinted by the NBP at the end of December 2020, no dividend payments, high regulatory fees, uncertainty about the impact of the economic slowdown on the quality of assets, and the public debate about CHF loans. Despite some recovery, WIG-Banks lost as much as 29.6% YoY. The market capitalisation of Santander Bank Polska S.A. followed the same trend, decreasing by 39.6% compared with the start of the year.

In 2020, the share price of Santander Bank Polska S.A. reached its maximum of PLN 315,0 on 7 February 2020 and its minimum of PLN 123.00 on 30 October 2020. Pursuant to the KNF recommendations, the bank’s AGM decided not to pay out a dividend for 2019.

Due to strong liquidity and high market capitalisation, shares of Santander Bank Polska S.A. are traded in a number of stock market indices. Apart from WIG-Banks (an industry index), WIG (a broad-based index) and WIG20 (a blue chip index), the bank is included in such index portfolios as: RESPECT, WIG-Poland, WIG30, WIG30TR and WIG20TR.

The charts below show the share price of Santander Bank Polska S.A. against the main stock exchange indices in 2019 and 2020 and after the acquisition of a controlling stake by Banco Santander S.A. on 1 April 2011.

Dividend per share

Retention of the profit for 2019

The Annual General Meeting (AGM) of Santander Bank Polska S.A. held on 22 June 2020 adopted a resolution to retain the entire profit for 2019 (PLN 2,113,523,989.28), allocating 50% to the reserve capital (PLN 1,056,761,994.64) and leaving the remaining 50% undistributed. The resolution was passed in accordance with the recommendation of the bank’s Management Board and the KNF letter of 26 March 2020, in which the regulator stated that in view of the state of epidemic announced in Poland and its adverse impact on the economy, it is expected that banks will retain their entire profits earned in the previous years and will not take any other measures which might weaken the capital base, unless agreed with the supervisory authority.

As at 31 December 2019, the bank met the basic dividend policy criteria for commercial banks for distribution of up to 100% of the profit earned in 2019. Due to the additional criteria binding on the banks with major residential mortgage exposures in foreign currencies, the individual recommendation issued by the KNF required that the dividend payout ratio be adjusted by 50 p.p. Accordingly, if there had been no pandemic, the bank would have retained 50% of the profit for 2019.

Dividend payment for 2018

In accordance with the individual recommendation issued by the KNF on 25 February 2019 regarding an increase in own funds, the Management Board of Santander Bank Polska S.A. recommended that 25% of the net profit for 2018 be paid as dividend. However, given the strong capital position of the bank and the Group, the Management Board made a proposal, subsequently approved by the Supervisory Board and adopted by way of resolution of the AGM of 16 May 2019, to allocate to dividend the following amounts of the retained net profit for 2016 and 2017: 

•   PLN 514.0m of the bank’s undistributed net profit for 2016;

•   PLN 957.6m of the bank’s undistributed net profit for 2017;

•   PLN 541.1m of the bank’s net profit for 2018.

The dividend paid out of the profit earned in 2018 and 2017 included shares of all series (i.e. from A to N), while the dividend paid from the profit generated in 2016 did not include series M shares, as stipulated in the AGM resolution no. 43 of 17 May 2017.

Accordingly, the dividend per one share of series A, B, C, D, E, F, G, H, I, J, K, L and N was PLN 19.72, while the dividend per series M share was PLN 14.68.

The dividend record date was 30 May 2019 and the dividend payment date was 14 June 2019.

4.   Credit Ratings of Santander Bank Polska S.A.

Santander Bank Polska S.A. has bilateral credit rating agreements with Fitch Ratings Ltd. and Moody’s Investors Service.

Fitch Credit Ratings

The table below shows ratings assigned to Santander Bank Polska S.A. by Fitch Ratings and  applicable as at 31 December 2020 and 31 December 2019.

The IDR of Santander Bank Polska S.A. is driven by its intrinsic strength (as reflected in its VR) and is also underpinned by potential parental support from Banco Santander S.A. (A-/Negative/a-). The bank’s VR reflects its established domestic franchise, conservative risk appetite, solid capital and funding position. The bank’s asset quality remains solid underpinned by conservative underwriting and healthy origination of new loans. According to the agency, the relatively high exposure to foreign-currency mortgage loans and unsecured cash loans may affect the vulnerability of the bank’s credit exposures to the negative impact of the operating environment. As in the case of other Polish banking institutions, the agency expects that the full impact of the pandemic on the asset-quality metrics will materialise only after the expiry of state support measures (guarantees, loans and liquidity support). Further to this, there are still downside risks to the bank’s profitability such as fiscal and legislative pressure and effects of the pandemic, such as interest rate cuts and increase in impairment charges.  

In accordance with the Fitch Ratings announcement of 29 September 2020 affirmig the previous ratings of Santander Bank Polska S.A., the bank’s IDR is driven by its intrinsic strength (as reflected in its VR) and is also underpinned by potential parental support from Banco Santander S.A. (A-/Negative/a-). The bank’s VR reflects its established domestic franchise, conservative risk appetite, solid capital and funding position. The bank’s asset quality remains solid underpinned by conservative underwriting and healthy origination of new loans. According to the agency, the relatively high exposure to foreign-currency mortgage loans and unsecured cash loans may affect the vulnerability of the bank’s credit exposures to the negative impact of the operating environment. As in the case of other Polish banking institutions, the agency expects that the full impact of the pandemic on the asset-quality metrics will materialise only after the expiry of state support measures (guarantees, loans and liquidity support). Further to this, there are still downside risks to the bank’s profitability such as fiscal and legislative pressure and effects of the pandemic, such as interest rate cuts and increase in impairment charges.  

Moody’s Investors Service Credit Ratings

The table below shows ratings assigned to Santander Bank Polska S.A. by Moody’s Investors Service and applicable as at 31 December 2020 and 31 December 2019.

On 3 June 2019, Moody’s Investors Service upgraded the ratings of Santander Bank Polska S.A. and made a public announcement of this credit action. In its release of 30 September 2020, Moody’s Investors Service announced that it had completed a periodic portfolio review of the ratings of Santander Bank Polska S.A., taking into account recent internal and external developments as well as financial and operating profiles of similarly rated peers. The review concluded that the bank’s ratings are justified.  

VIII.     Relations with External Environment

1.   Corporate Social Responsibility at Santander Bank Polska S.A.

The objective of sustainable and socially responsible development at Santander Bank Polska Group is to build a long-term value for all stakeholders (i.e. individuals and entities which affect or are affected by the organisation, such as employees, customers, business partners, shareholders and communities), and to manage social and environmental risks arising from the activities of the Group and its customers. The Group’s approach to sustainable development as part of responsible business has been summarised in the Sustainability Policy. The ethical, social and environmental commitments undertaken therein go beyond the legal commitments towards stakeholders.

Responsible banking is embedded in the business strategy of the organisation and is based on the following pillars:

Two of the above-mentioned pillars were assigned a top priority.

In its activity, the Group is focused on delivery of the UN Sustainable Development Goals which are most consistent with its business operations and on which the bank, being a financial institution, can have the biggest impact. The Group follows international standards and best practice concerning social aid and environmental protection, particularly the Equator Principles.

As part of its commitment to responsible banking, in 2020 the bank took part in such initiatives as Declaration on Responsible Sales and Sustainable Cities (a programme delivered in accordance with the sustainable development goals).

2.   Social Responsibility

The bank participates in long-term social projects which are not only aimed at responding to the needs of local communities but also at making a positive contribution to society.

CSR initiatives delivered by Santander Bank Polska Group in 2020 as part of the above-mentioned strategy of sustainable and socially responsible development are presented in the Statement on Non-Financial Information for 2020, Section 7 “Environmental Policies and their Outcomes” (the concept of the Green Bank and green products and services) and Section 6 “Social Policies and their Outcomes” (products and services tailored to the needs of the elderly, the disabled, foreigners and people at risk of exclusion; as well as educational and information campaigns, social initiatives, corporate volunteering and Santander Universidades).

3.   Key Sponsorship Projects in 2020

In 2020, the bank delivered sponsorship initiatives in the following three areas: sports, culture and education. The bank is focused mainly on long-term projects which give opportunity to create lasting association with its brand and facilitate communication and relationship building activities aimed at employees and customers alike.

The pandemic and the resulting restrictions changed the way in which projects were delivered, involving a wider use of remote communication and promotion tools.

4.   Communication with Stakeholders

Corporate Social Responsibility Report

The bank issues regular communications about its CSR activities, mainly by means of its annual Corporate Social Responsibility Report of Santander Bank Polska S.A., prepared in accordance with the guidelines of the Global Reporting Initiative (GRI STANDARDS) and reviewed by an independent auditor. The report for 2019 was made available online in Polish and English.

Relations with stakeholders

The Group identifies the key groups of stakeholders and analyses their needs and mutual impact. It regularly communicates with the stakeholders using various channels, such as sessions with the representatives of social and business partners organised in accordance with the AA1000ES standard. Since 2014, nine such sessions have been held.

Due to the pandemic, in 2020 the consultations with the stakeholders were made via an online questionnaire. An expert group of stakeholders representing the business, investors, the regulator and the social expert organisation were asked to give their opinion on the responsible business management by the bank, including its impact on the society, the economy and the environment. Their expectations and recommendations were presented in the Corporate Social Responsibility Report 2019 https://raport.santander.pl/zarzadzanie/odpowiedzialna-bankowosc/interesariusze-2/.

The Group analyses recommendations issued by the stakeholders and incorporates them into its processes. Special attention is paid to the voice of customers, who are provided with products and services developed in accordance with the customer-centric model called Diamond.

Marketing communication

Brand promise

Since 2017, the marketing communication of Santander Bank Polska S.A. has been founded upon the “Bank As You Want It” brand promise, which was adopted as an integral part of the bank’s logo. In accordance with its promise, the bank responds to changing business environment and customers’ needs at each stage of their lives.

At the end of 2020, Santander Bank Polska S.A. was among the leading banking brands, ranking third in terms of top-of-mind awareness. 

Marketing campaigns

The TV campaigns continued to focus on the “Bank As You Want It” brand promise and messages based on emotions (empathy, support, understanding). Marcin Dorociński, an actor known for his commitment to issues of social importance, became the bank’s new brand ambassador.

In 2020, the bank delivered two Poland-wide ATL marketing campaigns which were one of the best rated campaigns (above the benchmark) in terms of persuasiveness, attractiveness and clarity of the message. They were targeted at personal customers and promoted:

·        mobile banking, including payment transactions made from the comfort of the customer’s home (BLIK payments and instant transfers);

·        family banking and the Account As I Want It for adults and children under 13.

Videos with Marcin Dorociński were created and published on the internet to support the main campaigns and instruct customers how to use mobile services (“Wyzwanie bankowania”/ “Banking challenge”, “Dobre pytanie”/ “Good question”).

The bank also ran product campaigns to encourage customers to take out life and health insurance, set up sole proprietorship via Santander internet or open an account based on a photo (using data from the ID card and the face image).

Charity campaigns were delivered in connection with two fundraisers: “Podwójna moc pomagania”/ “We will double your impact” (campaign for hospitals in which the bank doubled the donations made by customers) and “Pomoc jest w nas”/ “Power to Help” (campaign for pediatric oncology).

Due to the pandemic, the relationship-building activities related to Select and Private Banking customers focused on supporting branch advisors in delivery of their day-to-day tasks and providing them with essential marketing materials.

Social media

The bank has built a large virtual user community. As at December 2020, it had more than 301.5k Facebook fans, 19.8k Twitter fans and 4.7k Instagram fans. The bank’s fan page on Facebook was the second biggest fan page among Polish banks. The content generated by the bank reached 4m users per month, 550k of which posted comments on the bank’s fan page, which means that the content was interesting and engaging.

In 2020, the bank changed its Instagram marketing strategy by generating the content together with the users and by posting abstract and funny messages concerning its products. This helped the bank to triple the number of followers and increase the number of interactions 55 times.

Social media were used to deliver a range of marketing activities for personal and SME customers and to support educational and information campaigns, CSR initiatives, Santander Universidades and other campaigns.

The scope of marketing activities was extended to include a new communication platform, i.e. content marketing. In 2020, the bank published 16 articles and 242 content marketing formats on the internet, which encouraged 213,170 unique users to learn more about products and services of Santander Bank Polska S.A. and resulted in 127 decisions to apply for a banking product.

The content marketing communication was used on the razempokonamy.pl website, which was created to support customers and society during the spring wave of the Covid-19 pandemic.

IX.    Business Development in 2020

1.   Group’s Business Management Structure

Operational structure

Santander Bank Polska S.A., together with its non-banking subsidiaries, conducts its operations through the following central units: Retail Banking Division, Business and Corporate Banking Division, and Corporate and Investment Banking Division.

Santander Consumer Bank Group (SCB Group), which specialises in consumer finance, forms a separate business segment with its own customer base, product range and distribution channels.

Segment reporting

The business management structure presented above corresponds to business segments identified as part of segment reporting (Note 3 to the Consolidated Financial Statements of Santander Bank Polska Group for the 12-month period ended 31 December 2020). They are complemented by the ALM and Central Operations segment, which covers funding, management of strategic investments and transactions which generate expenses/ revenues that cannot be allocated to individual segments.

The table below presents the business segments of Santander Bank Polska Group in three dimensions: customer profile, key product lines and service model.