TRANSLATORS’ EXPLANATORY NOTE
The
English
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this
report
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a
free
translation
of
the
registered
auditor’s
report
of
the
below-
mentioned
Polish
Company.
In
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and
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and practices generally adopted in Poland.
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PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp. k.
, ul.
Polna 11, 00-633 Warsaw, Poland,
T: +48 (22) 746 4000, F:+48 (22) 742 4040 ,
PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp. k.
is entered into the National Court Register maintained by
the District Court for the Capital City of Warsaw, under KRS number 0000741448, NIP 113-23-99-979. The seat of the Company is in Warsaw at
Polna 11.
Independent Registered Auditor’s Report
To the General Shareholders’ Meeting and the Supervisory Board of Santander Bank Polska S.A.
Report on the audit of consolidated financial statements
Our opinion
In our opinion, the accompanying annual consolidated financial statements:
•
give a true and fair view of the consolidated financial position of the group Santander Bank Polska
S.A. (the “Group”), in which Santander Bank Polska S.A. is the parent entity (the “Parent
Company”) as at 31 December 2021 and the Group’s consolidated financial performance and the
consolidated cash flows for the year then ended in accordance with the applicable International
Financial Reporting Standards as adopted by the European Union and the adopted accounting
policies;
•
comply in terms of form and content with the laws applicable to the Group and the Parent
Company’s Articles of Association.
Our opinion is consistent with our additional report to the Audit Committee issued on the date of this
report.
What we have audited
We have audited the annual consolidated financial statements of Santander Bank Polska S.A. Group
which comprise:
•
the consolidated statement of financial position as at 31 December 2021;
and the following prepared for the financial year from 1 January to 31 December 2021:
•
the consolidated income statement;
•
the consolidated statement of comprehensive income
•
the consolidated statement of changes in equity;
•
the consolidated statement of cash flows, and
•
the additional notes to the consolidated financial statements comprising a description of the
significant adopted accounting policies and other explanations.
Basis for opinion
We conducted our audit in accordance with the National Standards on Auditing in the wording of the
International Standards on Auditing as adopted by the resolution of the National Council of Statutory
Auditors (“NSA”) and pursuant to the Law of 11 May 2017 on Registered Auditors, Registered Audit
Companies and Public Oversight (the “Law on Registered Auditors”) and the Regulation (EU) No.
537/2014 of 16 April 2014 on specific requirements regarding the statutory audit of public-interest
entities (the “EU Regulation”). Our responsibilities under NSA are further described in the Auditor’s
responsibilities for the audit of the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
We are independent of the Group in accordance with the International Code of Ethics for Professional
Accountants (including International Independence Standards) issued by the International Ethics
Standards Board for Accountants (IESBA Code) as adopted by resolution of the National Council of
Statutory Auditors and other ethical requirements that are relevant to our audit of the financial
statements in Poland. We have fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code. During the audit, the key registered auditor and the registered
audit firm remained independent of the Group in accordance with the independence requirements set
out in the Act on Registered Auditors and in the EU Regulation.
Our audit approach
•
The overall materiality threshold adopted for
the purposes of our audit was set at PLN
155,000
thousand,
which represents ca. 5%
of the profit before tax adjusted by the tax on
financial institutions and the costs of creating
a restructuring provision. As the basis for
determining the materiality level, we used
the average of the last three financial years.
•
We have audited the financial statements of
the Parent Company and consolidation
packages of subsidiaries that have a
significant impact on the consolidated
financial statements.
•
The scope of our audit covered 91% of the
Group’s revenue and 82% of the absolute
value of its profit or loss and 88% of total
assets of all the consolidated Group
companies before consolidation eliminations.
•
Estimating the value of expected credit
losses in the portfolio of loans and advances
to customers
•
Estimating risk provisions related to the
portfolio of mortgage loans in swiss franc
(CHF)
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the consolidated financial statements. In particular, we considered where the Parent
Company’s Management Board made subjective judgements; for example, in respect of significant
accounting estimates that involved making assumptions and considering future events that are
inherently uncertain. As in all of our audits we also addressed the risk of management override of
internal controls, including among other matters, consideration of whether there was evidence of bias
that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the consolidated financial statements as a whole, taking into account the structure of the
Group, the accounting processes and controls, and the industry in which the Group operated.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain
reasonable assurance whether the consolidated financial statements are free from material
misstatement. Misstatements may arise due to fraud or error. They are considered material if,
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall materiality for the consolidated financial statements as a whole, as set out in the
table below. These, together with qualitative considerations, helped us to determine the scope of our
audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
misstatements, if any, both individually and in aggregate on the consolidated financial statements as
a whole.
Overall Group
materiality
PLN 155,000 thousand (last year PLN 174,900 thousand)
ca. 5% of the profit before tax, adjusted by the tax on financial institutions and
the costs of creating a restructuring provision. As the basis for determining the
materiality level, we used the average of the last three financial years.
Rationale for the
materiality
benchmark
applied
We have adopted profit before tax as the basis for determining materiality
because, in our opinion, it is an indicator commonly used by the users of
financial statements to evaluate the Group’s operations and it is a key
benchmark.
We have adjusted profit before tax by the tax on financial institutions because
it is a specific tax burden and costs of creating restructuring provision treated
as a one-off event. Taking into account the significant fluctuations in the level
of gross profit, and at the same time no significant changes to the scale of the
Group's operations, we used the average of the last three years.
We adopted the materiality threshold of 5% because, based on our
professional judgement, it is within the quantitative materiality thresholds
acceptable for the auditing of profit-oriented entities in the financial sector.
We agreed with the Parent Company's Audit Committee that we would report to them misstatements
identified during our audit above PLN 7,750 thousand, as well as misstatements below that amount
that, in our view, warranted reporting for qualitative reasons.
in the consolidated financial statements, the
Management Board did not make a decision on
potential out-of-court solutions, including
settlements with customers, it was not included
in the scenarios adopted to estimate the level
of provisions as at 31 December 2021.
Estimation of the provisions created by the
Group to cover the legal risk of this portfolio is
complex and requires a significant degree of
judgement due to the high degree of
uncertainty of the assumptions made by the
Management Board in the calculation,
including forecasted number of lawsuits in the
future, as well as possible court settlement
scenarios and estimated levels of expected
losses on their basis.
Due to the uncertainty as to the assumptions
described above, as well as the significant
value of the portfolio constituting the basis for
estimating the current and potential future
claims against the Group, we considered this
area to be the key audit matter.
Note 48
Legal risk connected with CHF
mortgage loans
in the consolidated financial
statements provide details of the assumptions
used to calculate the portfolio provision for
CHF mortgage loans and possible alternative
results presented in the sensitivity analysis of
the estimate.
•
We also verified adequacy and completeness
and of disclosures in the consolidated financial
statements in accordance with applicable
accounting standards.
Responsibility of the Management and Supervisory Board for the consolidated
financial statements
The Management Board of the Parent Company is responsible for the preparation of the annual
consolidated financial statements that give a true and fair view of the Group’s financial position and
results of operations, in accordance with International Financial Reporting Standards as adopted by
the European Union, the adopted accounting policies, the applicable laws and the Parent Company’s
Articles of Association, and for such internal control as the Management Board determines is
necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Parent Company’s Management Board is
responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the
Management Board either intends to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Description of a subject matter and applicable criteria
The consolidated financial statements were prepared in the ESEF format by the Parent Company’s
Management Board to comply with the technical requirements regarding the specification of a single
electronic reporting format and marking-up, which are set out in the ESEF Regulation.
The subject matter of our assurance engagement is the compliance of the consolidated financial
statements in the ESEF format with the requirements of the ESEF Regulation and the requirements of
this regulation, in our view, constitute appropriate criteria to form a reasonable assurance conclusion.
Responsibility of the Management Board of the Parent Company and the Supervisory Board
The Parent Company’s Management Board is responsible for the preparation of the consolidated
financial statements in the ESEF format in accordance with the technical requirements regarding the
specification of a single electronic reporting format which are set out in the ESEF Regulation.
This
responsibility includes the selection and application of appropriate markups in iXBRL using taxonomy
specified in the ESEF Regulation. The responsibility of the Management Board includes also
designing, implementing and maintaining internal controls relevant for the preparation of the
consolidated financial statements in the ESEF format which are free from material non-compliance
with the requirements of the ESEF Regulation and their marking-up in compliance with these
requirements
.
Members of the Parent Company’s Supervisory Board
are responsible for overseeing the financial
reporting process, which includes also the preparation of the consolidated financial statements in
accordance with the format compliant with legal requirements.
Our
objective was to express an opinion, based on the conducted reasonable assurance engagement,
whether the consolidated financial statements prepared in the ESEF format were marked-up, in all
material respects, with the requirements of the ESEF Regulation.
We conducted our engagement in accordance with the National Standard on Assurance Engagements
other than Audit and Review 3001 - audit of financial statements prepared in the single electronic
reporting format (“KSUA 3001pl”) and where relevant with the National Standards on Assurance
Engagements 3000 (R) in the wording of the International Standard on Assurance Services 3000
(Revised) - ‘Assurance Engagements other than Audits and Reviews of Historical Financial
Information’ (as issued by the National Council of Statutory Auditors (KSUA 3000(R)). These
standards require that we comply with ethical requirements, plan and perform procedures to obtain
reasonable assurance whether the consolidated financial statements in the ESEF format were
marked-up, in all material aspects, in compliance with the specified criteria.
Reasonable assurance is a high level of assurance, but it does not guarantee that the service
performed in accordance with KSUA 3001pl and KSAU 3000 (R) will always detect the existing
material misstatement (significant non-compliance with the requirements).
The selection of the procedures depend on the auditor's judgement, including the auditor's
assessment of the risk of material misstatements, whether due to fraud or error. In performing the
assessments of this risk, the auditor shall consider the internal control related to the preparation of the
consolidated financial statements in the ESEF format and its marking-up in order to plan appropriate
procedures to provide the auditor with sufficient evidence appropriate to the circumstances. The
assessment of the functioning of the internal control system was not carried out in order to express an
opinion on the effectiveness of its operation.
Quality
control and ethical
requirements
We apply the provisions of the regulation of the National Council of Statutory Auditors with regard to
internal quality control in the wording of International Standard on Quality Control 1 and accordingly
maintain a comprehensive system of quality control including documented policies and procedures
regarding compliance with ethical requirements, professional standards and applicable legal and
regulatory requirements.
We comply with the independence and other ethical requirements of the International Code of Ethics
for Professional Accountants (including International Independence Standards) issued by the
International Ethics Standards Board for Accountants (IESBA Code) as adopted by resolution of the
National Council of Statutory Auditors, which is founded on fundamental principles of integrity,
objectivity, professional competence and due care, confidentiality and professional behaviour.
Summary of the work performed
Our planned and performed procedures were aimed at obtaining reasonable assurance whether the
consolidated financial statements in the ESEF format were marked-up, in all material aspects, in
compliance with the applicable requirements. Our procedures included in particular:
●
obtaining an understanding of the process of preparation of the consolidated financial statements
in the ESEF format, including the process of selection and application by the Group of the XBRL
tags and ensuring the compliance with the ESEF Regulation, including understanding the
mechanism of the internal control system related to this process;
●
reconciliation, on a selected sample, of the marked-up information contained in the consolidated
financial statements in the ESEF format to the audited consolidated financial statements;
●
compliance with the technical standards regarding the specification of a single electronic reporting
format, including the use of XHTML,
using a specialised IT tool and with the support of an IT
expert
assessment;
●
evaluating the completeness of marking up the consolidated financial statements in the ESEF
format using the iXBRL tags;
●
evaluating the appropriateness of the
use of XBRL tags selected from the ESEF taxonomy and
whether the extension markups were used appropriately where no suitable element in the ESEF
taxonomy has been identified;
●
evaluating the appropriateness of anchoring of the extension elements to the ESEF taxonomy
from the ESEF regulation.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
conclusion.
In our opinion, based on the procedures performed, the consolidated financial statements in the ESEF
format were marked-up, in all material respects, in compliance with the requirements of the ESEF
Regulation.
Information on compliance with prudential regulations
The Management Board of the Parent Company is responsible for complying with the applicable
prudential regulations set out in separate legislation, and in particular, for correct determination of the
capital ratios.
The capital ratios as at 31 December 2021 have been presented in Note 5 of the consolidated
financial statements and include capital ratio and Tier 1 ratio.
We are obliged to inform in our report on the audit of the consolidated financial statements whether
the Group has complied with the applicable prudential regulations set out in separate legislation, and
in particular, whether the Group has correctly determined its capital ratios. For the purposes of the
said information, the following legal acts are understood as separate legislation: Regulation (EU) no.
575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements
for credit institutions and investment firms and amending Regulation (EU) No 648/2012, as amended
(“CRR”), the Banking Law and the Act of 5 August 2015 on macro-prudential supervision over the
financial system and on crisis management in the financial system (“the Act on macro-prudential
supervision”).
It is not the purpose of an audit of the financial statements to present an opinion on compliance with
the applicable prudential regulations specified in the separate legislation specified above, and in
particular, on the correct determination of the capital ratios, and therefore, we do not express such an
opinion.
Based on the work performed by us, we inform you that we have not identified:
•
any cases of non-compliance by the Group with the applicable prudential regulations set out in
separate legislation referred to above, in the period from 1 January to 31 December 2021;
•
any irregularities in the determination by the Group of the capital ratios as at 31 December 2021 in
accordance with the separate legislation referred to above;
which would have a material impact on the consolidated financial statements.
Statement on the provision of non-audit services
To the best of our knowledge and belief, we declare that the non-audit services we have provided to
the Parent Company and its subsidiaries are in accordance with the applicable laws and regulations in
Poland and that we have not provided any non-audit services prohibited under Article 5(1) of the EU
regulation and Article 136 of the Law on Registered Auditors.
The non-audit services which we have provided to the Parent Company and its subsidiaries during the
audited period are disclosed in the Report on the operations.
We were first appointed to audit the annual consolidated financial statements of the Group by
resolution of the Supervisory Board dated 22 March 2016 and re-appointed by resolution dated 23
February 2021. We have been auditing the Group’s financial statements without interruption since the
financial year ended 31 December 2016, i.e. for six consecutive years.
The Key Registered Auditor responsible for the audit on behalf of PricewaterhouseCoopers Polska
spółka z ograniczoną odpowiedzialnością Audyt sp.k., a company entered on the list of Registered
Audit Companies with the number 144, is Agnieszka Accordi.
Warsaw, 22 February 2022