This document is a translation from the original Polish version. In case of any discrepancies between the Polish and English versions, the Polish

version shall prevail.

2

3

Dear Sir/Madam,

I cordially invite you to read the Annual Report for 2022 - a year full of uncertainty and

loans, we achieved good operating and business results in 2022. This shows the strength of the core

business and the business model, which allows for consistent revenue generation and development of

the Bank. Unfortunately, despite the positive results, the unexpected and unjustifiable new

regulation of credit holidays resulted in a big net loss and as a result, in accordance with the

applicable legislation and regulations, we decided to launch the Recovery Plan and the Capital

Protection Plan.

Recovery Plan and Capital Protection Plans. In the process of rebuilding the Bank's capital position,

we use existing internal resources - we pursue business goals, we have made two synthetic

securitisations of the portfolio of corporate and SME receivables, we benefit from the reduction of

capital requirements by the PFSA. All these initiatives resulted in 4Q22 in the long-awaited positive

2022 by nearly 9600, which is a very good result in an extremely unfavourable environment. Our goal

is to continue to offer amicable settlements to all the customers in and outside the courts and thus

gradually reduce the CHF loans portfolio.

Consistent digitalisation of internal processes and customer service appreciated by the market.

In this year’s edition of Newsweek’s Friendly Bank ranking we came 1st in the category “Remote

Banking” (we won in all five sub-categories) and second in the main category “Bank for Mr. Kowalski”.

In as many as 4 categories, we received awards from Global Finance magazine, the most important

of which remains the title of "The best consumer digital bank in Poland 2022". This means that we are

a technologically advanced organisation that can set and consistently achieve goals.

Solidarity with Ukraine. In a gesture of solidarity towards our eastern neighbours, we provided

What lies ahead? Uncertainty and instability, which we have already become familiar with, and new

challenges related to the deterioration of the economic environment in Poland. Just as in 2022 credit

holidays had the greatest impact on the sector, in 2023 the process of changing the WIBOR reference

rate to WIRON may be a problem. The legal environment related to mortgage loans in Swiss francs

will remain uncertain, and the introduction by the government of further taxes and benefits having a

specific financial impact on banks cannot be ruled out.

Bank Millennium is fully prepared to face-up to these challenges. After a year of work on the

implementation of the 2022-24 strategy, the vast majority of indicators monitoring the

implementation of KPIs, strategic initiatives and projects, indicated a positive trend, which means

4

that we are on the right track to keep our promises. We still want to be a leader in innovation, take

care of customer satisfaction and successfully complete the recovery process.

5

commercial banks. It is now one of the top 7 commercial banks in Poland in terms of assets and offers

its services to all market segments via a network of branches, a network of personal advisors as well

as electronic and mobile banking.

Ever since the start of its activity it has been a trendsetter in Polish banking. For example it was the

first Bank to be listed on the Warsaw Stock Exchange and issued the first payment card on the Polish

market. The bank satisfies most stringent standards of corporate governance; it implements social

programmes to support culture development as well as education of the youth.

Bank Millennium is a market leader in the area of innovations understood to mean state-of-the-art

technology and process improvements. Innovation in Bank Millennium is part of its business strategy.

Bank Millennium, together with its subsidiaries, forms Bank Millennium Group (‘BM Group’, ‘Group’)

above-mentioned companies complements the services and products offered by the Bank.

In 2022, the company Millennium Dom Maklerski S.A., fully owned by the Bank, was divided by

separating and transferring an organized part of the enterprise related to the performance of

brokerage activities, constituting the assets of MDM, to Bank Millennium. From 29 July 2022, i.e.

from the date of registration of the MDM division, the company operates under the name Millennium

6

Bank Millennium operates according to a business model centered on six pillars:

7

8

Against all the odds, 4Q22 brought the long awaited black ink at the bottom line. The PLN249 million

events.

9

The Bank’s corporate ratings, as at 31 December 2022, were as follows:

In keeping with best practice on equal access to information from 2006 the Bank has been assuring

unrestricted access to results conferences online with the Management Board (video streaming in

resolutions adopted are also available on the website.

Millennium shares, of which 20 were "Buy", 12 "Hold", 2"Neutral" and 10 "Sell". As at 31 December

The year 2022 was dominated by the Russian attack on Ukraine. It has triggered a humanitarian crisis

that has not been seen in Europe for a long time and has left its mark on the global economy. The

economic sanctions imposed on Russia and Belarus as well as the disruptions of energy and food

commodities’ supply have caused a very rapid increase in their prices. In 2022, the increase in gas

prices in Europe exceeded temporarily 600% y/y, and the food price index immediately after the

outbreak of the war was 40% higher than a year earlier. As a result, inflation in many economies

In 2022 the outbreak of war in Ukraine had also a strong impact on the domestic economy. The supply

shock on commodities markets and the increase in uncertainty intensified inflation, which in Oct’22

in terms of CPI reached its peak of 17.9% y/y, the highest value since 1996. A strong increase in cost

pressure in the economy fell however on the ground of solid domestic demand, which gave producers

room for price increases. Finally, CPI inflation on average in the whole 2022 amounted to 14.4% y/y

compared to 5.1% y/y in 2021. Average annual core inflation measured as a CPI index excluding food

and energy prices increased to 9.1% y/y from 4.1% y/y in 2021, i.e. to the highest value in the history

of available data. It should be emphasised that these numbers turned out to be much higher than the

forecasts and market expectations from the beginning of 2022, i.e. before the Russian invasion on

Ukraine. In the conditions of rapidly rising inflation, the Monetary Policy Council continued the cycle

of interest rate increases started in Oct’21. In Sep’22, the reference rate reached 6.75%, and the

the value of newly granted loans for housing, which decreased in that period by 66.8% y/y. The scale

of the reduction in lending was limited by the demand from households for consumer loans. Their

value between Jul’22 and Dec’22 was 5.3% lower than a year earlier. In the case of value of new loans

to non-financial enterprises in 2H22, a decrease of 4.5% y/y was recorded. The year 2022 was a period

of growth in the value of deposits in the economy. The corporate sector was mainly responsible for

this, which was associated with good results of enterprises. Households’ deposits also increased,

which was supported by higher interest rates, increased propensity to save and still quickly growing

wage bill in nominal terms in the economy.

1H22 was still a period of strong economic recovery in Poland resulting from the lifting of anti-

epidemic restrictions, as well as increased demand due to the influx of refugees from Ukraine.

According to the baseline macroeconomic scenario of Bank Millennium, at the beginning of 2023 there

will be an increase in inflation, mainly caused by the expiry of temporary reductions in VAT rates,

which were part of the governmental Anti-Inflation Shield. After peaking in Feb’23, CPI inflation is

expected to decline as commodity markets and supply chains in industry further normalise and due

to an effect of high statistical base. However, this decline will be slow, i.a. due to cost pressure on

the labour market resulting from the expected still high wage growth, including strong increase in the

The economic downturn will continue in 2023, as its most important determinants - high inflation and

interest rates – are going to stay for longer. GDP growth will slow-down to 0.7% in the Bank's baseline

scenario from 4.9% in 2022, i.e. it will be the weakest (excluding 2020) in history of available data.

The source of the slowdown should be the subdued consumption of households, whose disposable

income for almost the whole of 2023 is expected to decrease in real terms. At the same time, a

reduced propensity for consumer spending should continue, especially as demand for labour is

forecasted to decline. The investment outlook is also pessimistic, given uncertainty in the economic

environment, higher borrowing costs, strong inflation in capital goods’ prices and the expected

weakness in the construction sector. Furthermore, the recovery of investment demand in the economy

in 2023 will not be supported by the transitional period between the old and the new perspective of

the European Union budget. The Bank's basic scenario also assumes a noticeable impact of the

one of the largest beneficiaries. It should be emphasised that there is a high uncertainty regarding

economic forecasts for both the domestic economy and its environment.

the economy and the Bank Millennium Group, connected with the macroeconomic situation.

the prospects for investments in the country and the global economy.

in strong increases in their prices on international markets and the possible need to suspend

or reduce the scale of economic activity, although mainly abroad.

2024. It could perpetuate inflationary pressures and foster the build-up of disequilibria in the

economy, including external and fiscal imbalances. This would result in higher debt servicing

costs, a weaker exchange rate, higher inflation and a stronger than expected tightening of

monetary policy.