Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
2
CONTENTS
I. Overview of Activities of Bank and Santander Bank Polska Group in 2022 4
1. Introduction............................................................................................................................................................................................................................. 4
2. Key Achievements .................................................................................................................................................................................................................. 5
3. Key Financial and Business Data on Santander Bank Polska Group for 2018-2022 ...................................................................................................... 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 ...................................................................................................................................................................... 16
III. Macroeconomic Situation in 2022 18
IV. Development Strategy 24
1. Purpose, Aim, Values and Strategic Objectives for 2021–2023 ..................................................................................................................................... 24
2. Ambitions for 2021–2023 and Delivery of the Strategy ................................................................................................................................................. 26
3. Corporate Culture ................................................................................................................................................................................................................ 30
4. Outlook for 2023 ................................................................................................................................................................................................................. 31
V. Relations with Employees 32
1. Human Resources Management ....................................................................................................................................................................................... 32
2. Management by objectives ................................................................................................................................................................................................ 36
3. Components of Remuneration Policy ................................................................................................................................................................................ 36
4. Training and Development ................................................................................................................................................................................................. 36
VI. Relations with Customers 37
1. Service Quality and Customer Experience Management ................................................................................................................................................ 37
2. Complaints Management ................................................................................................................................................................................................... 39
3. Barrier-free Banking and Digital Solutions ....................................................................................................................................................................... 39
4. CRM Solutions ...................................................................................................................................................................................................................... 40
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. Dividend ................................................................................................................................................................................................................................ 42
5. Rating of Santander Bank Polska S.A. ................................................................................................................................................................................ 43
VIII. Relations with External Environment 45
1. Responsible Banking/ ESG Strategy .................................................................................................................................................................................. 45
2. Communication with Stakeholders ................................................................................................................................................................................... 45
3. Social Resposibility .............................................................................................................................................................................................................. 48
IX. Business Development in 2022 49
1. Group’s Business Management Structure ........................................................................................................................................................................ 49
2. Business Development of Santander Bank Polska S.A. and Non-Banking Subsidiaries ............................................................................................... 51
3. Business Development of Santander Consumer Bank Group ........................................................................................................................................ 60
X. Organisational and Infrastructure Development 63
1. Organisational Changes in Santander Bank Polska S.A. .................................................................................................................................................. 63
2. Organisational Changes in Santander Consumer Bank S.A. ............................................................................................................................................ 64
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
3
3. Changes in the Structure of Santander Bank Polska Group ............................................................................................................................................ 65
4. Changes in the Equity Investment Portfolio ..................................................................................................................................................................... 65
5. Changes in the Institutional Protection Scheme .............................................................................................................................................................. 66
6. Development of Distribution Channels of Santander Bank Polska S.A. ......................................................................................................................... 67
7. Development of Distribution Channels of Santander Consumer Bank S.A. .................................................................................................................. 70
8. IT Development ................................................................................................................................................................................................................... 70
9. Capital Expenditure ............................................................................................................................................................................................................. 73
XI. Financial Performance in 2022 74
1. Consolidated Income Statement ....................................................................................................................................................................................... 74
2. Consolidated Statement of Financial Position .................................................................................................................................................................. 84
3. Selected Financial Ratios of Santander Bank Polska Group ............................................................................................................................................ 89
4. Separate Income Statement .............................................................................................................................................................................................. 90
5. Statement of Financial Position of Santander Bank Polska S.A. ..................................................................................................................................... 95
6. Selected Ratios of Santander Bank Polska S.A. ................................................................................................................................................................ 97
7. Additional Financial Information about Santander Bank Polska S.A. and Santander Bank Polska Group .................................................................. 97
8. Factors Affecting the Financial Performance in the Next Year ........................................................................................................................................ 99
XII. Risk and Capital Management 100
1. Key risk management principles ...................................................................................................................................................................................... 100
2. Risk Management Priorities in 2022 ............................................................................................................................................................................... 103
3. Material Risk Factors Projected for 2023 ........................................................................................................................................................................ 106
4. Credit Risk Management .................................................................................................................................................................................................. 106
5. Market Risk and Liquidity Risk Management .................................................................................................................................................................. 113
6. Operational Risk Management ........................................................................................................................................................................................ 116
7. ESG Risk Management ...................................................................................................................................................................................................... 117
8. Legal and Regulatory (Compliance) Risk Management ................................................................................................................................................. 119
9. Capital Management ........................................................................................................................................................................................................ 121
XIII. Statement of Santander Bank Polska S.A. on Corporate Governance in 2022 125
1. Corporate Governance at Santander Bank Polska S.A. .................................................................................................................................................. 125
2. Issuer’s Securities .............................................................................................................................................................................................................. 135
3. Amendment of the Statutes of Santander Bank Polska S.A. ......................................................................................................................................... 135
4. Governing Bodies .............................................................................................................................................................................................................. 136
5. Remuneration Policy ......................................................................................................................................................................................................... 152
6. Other Transactions with the Bank’s executives .............................................................................................................................................................. 156
7. Diversity Policy ................................................................................................................................................................................................................... 156
8. Internal Control and Risk Management Systems ........................................................................................................................................................... 158
9. External Auditor ................................................................................................................................................................................................................. 160
10. Court Proceedings ............................................................................................................................................................................................................. 163
XIV. Statement on Non-Financial Information for 2022 164
1. Business Model, Strategy and Key Performance Indicators ......................................................................................................................................... 164
2. Responsible Banking/ ESG Strategy ................................................................................................................................................................................ 166
3. Risk Management System ................................................................................................................................................................................................ 168
4. Environmental Policies and their Outcomes .................................................................................................................................................................. 170
5. Anti-corruption Policies and their Outcomes.................................................................................................................................................................. 177
6. Human Rights Policies and their Outcomes ................................................................................................................................................................... 179
7. HR Policies and their Outcomes ....................................................................................................................................................................................... 180
8. Diversity Policy and its Outcomes .................................................................................................................................................................................... 184
9. Customer Experience Management ................................................................................................................................................................................ 185
10. Social Policies and their Outcomes .................................................................................................................................................................................. 186
XV. Statement of the Management Board 191
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
4
I. Overview of Activities of Bank and Santander
Bank Polska Group in 2022
1. Introduction
Scope
This Management Board Report on Santander Bank Polska Group Performance in 2022 contains the information required in both consolidated and separate
Management Board reports on Santander Bank Polska S.A. performance.
Business environment
After the post-pandemic period of economic recovery in Poland, the year 2022 brought the escalation of geopolitical tensions caused by Russia’s invasion of
Ukraine, resulting in a negative supply shock, monetary policy tightening by central banks, growing inflationary pressure and worsening economic outlook.
Elevated external risk led to higher volatility of financial markets, a decrease in valuation of securities and an increase in credit risk. The Polish Act on
crowdfunding for business and support for borrowers imposed a new charge on banks: payment deferrals for PLN mortgage loan borrowers. In addition to
that, banks faced an increased number of unfavourable court rulings in cases related to CHF mortgage loans. On the other hand, the profitability of banks
was supported by the high interest rate environment.
War in Ukraine
The implications of the war in Ukraine for the Polish banking sector were manifold, starting from initiatives supporting refugees in the first months of the
conflict to macroeconomic and geopolitical impact factors.
Initially, banks had to increase the supply of cash due to high demand for cash withdrawals and ensure access to the banking system for Ukrainian refugees
with respect to personal accounts and FX payments.
The direct impact of the conflict on credit risk of the banking system is not significant as Polish banks have focused on the domestic market and financed
foreign entities only to a limited extent. Before Russia’s invasion of Ukraine, the total gross value of balance sheet and off-balance sheet exposures connected
with Russia, Ukraine and Belarus was less than 2% of own funds of Polish commercial banks.
The Polish banking system is mostly affected indirectly, i.e. through the macroeconomic environment, which deteriorated substantially due to supply factors
(supply chain disruptions, increased commodity prices, trade restrictions and sanctions) and demand factors (rising prices of energy and commodities and
cost of funding).
Apart from challenges posed by the war in Ukraine (and previously by the Covid-19 pandemic), the banking sector also has to face growing cost of legal risk
connected with foreign currency loans as well as statutory and regulatory burdens (e.g. payment deferrals for borrowers).
Performance of the banking sector
Pursuant to the NBP Financial System Stability Report of December 2022, the recovery of banks’ profitability started in 2021 accelerated in early 2022 due
to growing net interest income and net interest margin, low credit losses and higher net fee and commission income. However, in the second half of the
year, the number of loss-making commercial banks and their share in the assets of the banking sector returned to the previous relatively high levels.
According to the NBP assessment, the main reason behind the decline in the sector profitability was the cost of payment deferrals, reflecting the expected
level of utilisation of this statutory mechanism throughout its term. It put particular pressure on commercial banks with sizeable PLN home loan portfolios.
Other substantial charges to financial results of some commercial banks included new allowances for legal risk of foreign currency home loans and
contributions for the Institutional Protection Scheme. This was combined with increased contributions to the Borrowers Support Fund and reimbursements
of margins collected until the entry of a mortgage to the land and mortgage register.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
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Performance of Santander Bank Polska Group
In this challenging economic environment, Santander Bank Polska Group reported growth in its key business volumes, including an increase of 4.0% YoY in
gross loans and advances to customers and a rise of 6.0% YoY in deposits from customers. As the Group grew its core business, higher net fee and
commission income was generated on lending, insurance, currency exchange, cross-border payments, and debit cards. The volume of transactions made by
customers and their activity in remote channels increased, too.
In 2022, the consolidated profit attributable to shareholders of the parent entity increased by 151.8% YoY on account of 61.9% YoY rise in net interest
income. The Group’s profitability was also supported by lower expected credit loss allowances (-20.4% YoY) and higher net fee and commission income
(+3.2% YoY).
However it was negatively affected by net trading income and revaluation (-PLN 141.2m YoY) and net result on other financial instruments
(-PLN 118.0m YoY), which reflected trends in the financial markets.
The profit was weighed down by the cost of payment deferrals (PLN 1,544.4m), cost of legal risk and settlements connected with foreign currency mortgage
loans (+34.3% YoY) and staff, administrative and general expenses (+25.4% YoY), which included the Group’s contribution to the aid fund established as
part of the institutional protection scheme as well as contributions to the Borrowers Support Fund and the BFG guarantee and resolution funds. This was
coupled with an increase in tax on financial institutions (+27.1% YoY) and a decrease in dividend income (-PLN 102.3m YoY).
2. Key Achievements
EFFICIENCY AND
SECURITY
Group’s solid capital position confirmed by capital ratios as at 31 December 2022, including total capital ratio of
19.27% (19.05% as at 31 December 2021).
Higher return on equity (ROE) on a year-on-year basis (12.1% vs 4.7% as at 31 December 2021).
Sound liquidity position. Net customer loans to deposits ratio at 77.6%. Supervisory liquidity ratios well above the
regulatory minimum.
Close monitoring of risk and implementation of relevant prudential measures.
Significa
nt YoY improvement in the cost of credit risk from 0.76% to 0.59% as at the end of December 2022, and
reduction of the NPL ratio from 5.01% to 4.95%.
Improved cost efficiency based on high income growth rate, despite increased charges related to the suppor
t for
borrowers and the banking system. Decline in the cost-to-income ratio from 43.6% to 37.9% in 2022.
Further automation and optimisation of operational processes.
Improved availability, reliability, performance and cybersecurity of the Group’s systems.
BUSINESS VOLUMES
AND ASSET QUALITY
6.6% YoY increase in total assets to PLN 259.2bn.
6.0% YoY growth in deposits from customers to PLN 196.5bn supported by an increase in term deposits (+129.6%
YoY).
4.0% YoY increase in gross loans and advances to customers to PLN 158.4bn, including loans to business customers
and the public sector (+11.4% YoY), and leasing receivables (+9.7% YoY).
Growth of cumulative net interest margin from 2.72% in 2021 to 4.31%
in 2022 in line with interest rate movements,
supported by an increase in business volumes, and taking into account payment deferrals.
3.2% YoY increase in net fee and commission income on account of FX fees (+27.6% YoY), credit fees (+8.3% YoY) and
debit card fees (+11.6% YoY).
Dynamic growth in the number of transactions made via mobile banking (+32.7% YoY) and in the share of this channel
in remote sales.
CUSTOMERS AND
COMMUNITIES
7.4m customers of Santander Bank Polska S.A. and Santander Consumer Bank S.A., including 3.6m loyal customers.
15.6% YoY increase in the number of Accounts As I Want It opened with Santander Bank Polska S.A. to 2.9m.
3.6m digital customers of both banks, including 2.7m mobile banking customers.
Further automation, robotisation, optimisation and simplification of operational processes.
Continued delivery of IT projects aimed at improving experience of customers and employees (accelerated
digitalisation of the retail business, development of the HR platform).
Self-service solutions for customers applying for payment deferral and support offered via the Bank’s helpline.
Implementation of further measures to support sustainable development and promote cybersecurity culture.
Awards and recognitions for development and implementation of BLIK cheques (as an innovative tool for
distribution of humanitarian aid).
Implementation of the hybrid work model taking into account the voice of employees.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
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AWARDS
1st position in the Golden Banker 2022 ranking in the main category: “Golden Bank – best multichannel service
quality”. 2nd position in the “personal account” category (for Account As I Want It) and the “mortgage loan” category
and 3rd position in the categories: “payment card – best design” and “credit card”.
1st place in the Business-friendly Bank ranking by Forbes.
The title of Ethical Company awarded by Puls Biznesu magazine in recognition of the Bank’s efforts to build and
strengthen the corporate culture based on ethics and principles of corporate social responsibility.
Diversity IN Check – recognition given to most advanced employers in Poland in terms of managing diversity and
inclusion.
Recognition in Human&Family Humanites Wellbeing Awards in the large companies category.
CSR Golden Leaf from Polityka magazine – an accolade granted to companies for which compliance with the ISO
26000 standard is a strategic element of doing business and building relations with stakeholders.
Award for the best “Fintech Project 2022”, title of the “best bank for corporate responsibility in Central and Eastern
Europe” in the Euromoney Awards for Excellence, and the main award in e-Commerce Poland Awards 2022
competition in the “Best e-banking Implementation” category for the implementation of BLIK cheques as a way of
distributing humanitarian aid to refugees from Ukraine.
2nd position in the Responsible Company Ranking.
Special award for the “Best Cooperating Institution” in the Business Protector programme for supporting businesses
affected by the pandemic.
Eurobuild Award – 1st position in the category: “Financing Provider of the Year in CEE” from Eurobuild magazine
specialising in the commercial properties sector.
Equal Pay Certificate granted by the Business Centre Club in recognition of the policy of equal pay for women and
men holding the same positions and in appreciation of the Bank’s diversity and inclusion activities.
Title of the best Private Banking provider in Poland awarded by Euromoney.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
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3. Key Financial and Business Data on Santander Bank Polska Group for
2018-2022
Key financial data of Santander Bank Polska Group for the last five years
Selected Income Statement data 2022 2021
1)
2020 2019 2018
YoY change
(2022/2021)
Total income PLN m
12 381,5
9 141,6 8 647,3 9 462,1 8 715,5
35,4%
Total costs
PLN m
(4 697,7)
(3 988,3)
(4 488,0)
(4 466,3)
(3 769,0)
17,8%
Impairment losses on loans and advances PLN m
(894,7)
(1 124,2) (1 762,8) (1 219,4) (1 085,1)
-20,4%
Profit before tax
PLN m
4 353,0
2 057,8
1 880,9
3 244,6
3 424,3
111,5%
Net profit attributable to Santander Bank Polska S.A.
PLN m
2 799,1
1 111,7
1 037,2
2 138,3
2 363,4
151,8%
Selected Balance Sheet data
31.12.2022 31.12.2021
1)
31.12.2020 31.12.2019 31.12.2018
YoY change
(2022/2021)
Total assets PLN m
259 167,2
243 017,3 229 311,3 209 476,2 206 656,3
6,6%
Total equity
PLN m
30 115,3
27 213,6
28 658,0
26 979,5
26 594,7
10,7%
Net loans and advances to customers PLN m
152 508,7
146 391,3 141 998,8 143 402,6 137 460,4
4,2%
Deposits from customers PLN m
196 496,8
185 373,5
171 522,3
156 480,3 149 616,7
6,0%
Selected off-Balance Sheet data 31.12.2022 31.12.2021 31.12.2020 31.12.2019 31.12.2018
YoY change
(2022/2021)
Net assets under management in investment funds
2)
PLN m
12,3
17,6
16,2
16,9
15,1
-5,3
Selected ratos
3)
2022 2021
1)
2020 2019 2018
YoY change
(2022/2021)
Total costs/Total income
%
37,9%
43,6% 51,9% 47,2% 43,2%
-5,7 p.p.
Total capital ratio
%
19,27%
19,05%
20,42%
17,07%
15,98%
0,2 p.p.
ROE
%
12,1%
4,7%
4,4%
9,7%
11,9%
7,4 p.p.
Basic earning per share PLN
27,4
10,9 10,2 21,0 23,7
16,5
Book value per share
PLN
294,7
266,3
280,4
264,3
260,5
28,4
NPL ratio %
5,0%
5,0% 5,8% 5,2% 4,6%
0 p.p.
Credit risk ratio %
0,59%
0,76% 1,21% 0,85% 0,86%
-0,2 p.p.
Customer net loans/customer deposits
%
77,6%
79,0%
82,8%
91,6%
91,9%
-1,4 p.p.
Key non-financial data of Santander Bank Polska Group for the last five years
Selected non-financial data
2022 2021 2020 2019 2018
YoY change
(2022/2021)
Number of shares
items
102 189 314
102 189 314
102 189 314
102 088 305
102 088 305
0
Dividend payout
4)
PLN
2,68
2,16 - 19,7 3,1
0,52
Electronic banking users
5)
m
6,3
5,7
5,4
4,4
4,0
0,6
Digital (active) customers
6)
m
3,6
3,2
2,9
2,5
2,3
0,4
Digital (active) mobile banking customers m
2,7
2,4 2,0 1,6 1,3
0,3
Debit cards
m
4,6
4,4
4,3
4,2
4,0
0,2
Credit cards m
0,9
1,1 1,2 1,3 1,3
-0,2
Customer base
m
7,4
7,2
7,1
7,2
7,0
0,2
Branches
locations
401
450
562
665
764
-49
Partner outlets locations
433
435 380 317 293
-2
Employment
FTEs
11 309
11 323
12 616
13 579
15 347
-14
1) As of 1 January 2022, the Group changed the accounting policy rules for recognition of legal risk connected with foreign currency mortgage loans, which is now measured and presented in accordance with IFRS 9
(previously: IAS 37). The Group reduces the gross carrying amount of mortgage loans in line with IFRS 9. If there is no exposure to cover the estimated provision or the existing exposure is insufficient, the provision
is recognised in accordance with IAS 37. The total impact of the above risk on the Group’s performance is presented in a separate line of the income statement. It includes raised and released provisions for legal
risk and legal claims. Those items were previously disclosed separately in other operating expenses and operating income, respectively.
2) Assets in investment funds managed by Santander Towarzystwo Funduszy Inwestycyjnych S.A.
3) For definitions of ratios presented in the table above, see Chapter XI “Financial Performance in 2022”, Part 3 “Selected Financial Ratios of Santander Bank Polska Group”.
4) For more information on dividend, see Chapter VII “Investor Relations”.
5) Registered users with active access to internet and mobile banking services of Santander Bank Polska S.A. and Santander Consumer Bank S.A.
6) Active users of electronic banking services of Santander Bank Polska S.A. and Santander Consumer Bank S.A. who at least once used the services in the last month of the reporting period.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
8
4. Key External Factors
Key macroeconomic factors impacting financial and business performance of Santander Bank Polska Group in 2022
Economic growth
Dynamic post-pandemic rebound at the start of the year followed by gradual slowdown.
Rising commodity prices, distruptions caused by the war in Ukraine.
Inflow of Ukrainian refugees.
Labour market
Double-digit nominal wage growth, but negative growth in real terms later in the year - stabilisation of unemployment.
Inflation
Sharp rise in inflation to the highest level in 20 years.
Monetary policy
Increase in the reference rate to 6.75% in September from 1.75% in January followed by a pause in monetary
tightening.
Fiscal policy
Government measures aimed at mitigating the impact of rising inflation on household budgets: indirect tax cuts, cash
benefits. Changes in PIT at the beginning of the year. Increase in fiscal deficit.
Credit market
Weakening of demand for credit (with temporarily stronger demand from companies working capital finance), sharp
increase in interest rates, rise in repayment rates, introduction of payment holidays.
Financial markets
Volatility in market sentiment due to new geopolitical and economic shocks (war in Ukraine, energy crisis), but also due
to uncertainty about growth and inflation prospects.
Rising yields under the influence of interest rate hikes by central banks.
Exchange rate fluctuations, reflecting changes in global market sentiment and under the influence of domestic factors
(central bank decisions, national recovery plan negotiations).
5. Corporate Events
Major corporate events in the reporting period until the release date of the report for 2022
Pillar 2 capital add-on
imposed by the KNF
The Management Board of Santander Bank Polska S.A. received the following recommendations from the Polish Financial
Supervision Authority (KNF):
on 11 February 2022: to maintain own funds to cover a capital add-on of 0.31 percentage point (on a standalone
and consolidated level) over the total capital ratio;
on 27 December 2022: to maintain own funds to cover a capital add-on of 0.26 percentage point (on a standalone
level) and 0.23 percentage point (on a consolidated level) over the total capital ratio.
The above capital add-ons were set at the level enabling the Bank to absorb potential losses resulting from
materialisation of stress conditions. They consist entirely of Common Equity Tier 1 capital.
Additional own funds
requirement in relation to
the other systemically
important institution
buffer
On 3 October 2022, the Bank received a decision of the Financial Stability Committee issued on 23 September 2022 at
the request of the KNF as part of the a
dministrative proceedings conducted by the KNF to review the adequacy of the
other systemically important institution (O-SII) buffer imposed on the Bank.
The Financial Stability Committee endorsed the O-SII buffer equivalent to 1.00% of the total risk exposure (previously:
0.75%).
The administrative proceedings were completed on 20 December 2022 and on 16 December 2022 the KNF announced
its final decision confirming the above change to the O-SII buffer.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
9
Major corporate events in the reporting period until the release date of the report for 2022 (cont.)
Additional own funds
requirement in relation to
mortgage-backed foreign
currency home loans and
equity releases
On 30 December 2022, the Bank received the KNF recommendation to maintain own funds at the level sufficient to cover
a capital add-on for risk connected with foreign currency home loans and equity releases at 0.016 percentage point above
the total capital ratio at a consolidated level.
The total capital ratio must consist in at least 75% of
Tier 1 capital (which corresponds to a capital requirement of 0.012
percentage point above the Tier 1 capital ratio) and in at least 56.25% of Common Equity Tier 1 capital (which corresponds
to a capital requirement of 0.009 percentage point above the Common Equity Tier 1 capital ratio).
MREL for the Bank and
the Group
On 6 May 2022, the Bank received a letter from the Bank Guarantee Fund setting the minimum requirement for own
funds and eligible liabilities (MREL):
for Santander Bank Polska Group: at 15.41% of the total risk exposure amount (TREA) and 5.91% of the total
exposure measure (TEM), both calculated in accordance with Regulation (EU) No 575/2013;
for the Bank: at 13.35% of TREA and 5.91% of TEM.
These targets should be met by 31 December 2023.
KNF recommendations
on a dividend policy
On 23 February 2022, the Bank received an individual recommendation from the KNF on a dividend policy:
As at 31 December 2021, the Bank met the basic criteria defined by the KNF to distribute up to 100% of the net profit
earned in 2021.
Taking into consideration the additional criteria due to the Bank’s sizeable portfolio of foreign currency mortgage
loans for households, the dividend yield was adjusted by a total of 70 percentage points. Accordingly, the maximum
dividend yield was 30%.
The Bank was recommended not to take any other measures beyond the scope of the ordinary business and
operational activity which could result in reduction of own funds, unless such measures have been agreed with the
supervisor.
Recommendation of the
Bank’s Management
Board on profit
distribution and dividend
payment
On 31 March 2022, the Bank’s Management Board adopted a resolution recommending (in accordance with the KNF
recommendation) that:
the profit of PLN 915.9m for 2021 be distributed as follows:
29.9% of the net profit to be allocated to a dividend for shareholders;
70.1% of the net profit to be retained, with 50% of that sum to be allocated to the capital reserve and 20.1%
to be kept undistributed;
the undistributed profit of PLN 1,056.8m for 2019 be distributed as follows:
the entire amount to be allocated to the dividend reserve set aside from the capital reserve.
The above recommendation was endorsed by the Bank’s Supervisory Board and approved by the Bank’s Annual General
Meeting (AGM) on 27 April 2022.
For more information about the dividend, see Chapter VII “Investor Relations”.
Resolution of the Bank
Guarantee Fund on
resolution fund
contribution
On 12 April 2022, the Bank Guarantee Fund Council
adopted a resolution setting the amount of resolution fund
contributions payable by Santander Bank Polska S.A. and Santander Consumer Bank S.A. in 2022 at PLN 192.2m and PLN
16.8m, respectively. The above amounts include the adjustments to the contributions calculated for 2020 and 2021.
Annual and Extraordinary
General Meetings
On 27 April 2022, the Annual General Meeting (AGM) of Santander Bank Polska S.A. was held. It adopted standard
resolutions and Best Practice for GPW Listed Companies 2021, approved the amended remuneration policy for members
of the Bank’s Supervisory Board and Management Board, and gave its consent to the application of a higher maximum
ratio of variable remuneration components to fixed remuneration components for holders of managerial positions in
Santander Bank Polska Group. The AGM distributed the profit for 2021 in accordance with the above-mentioned
recommendation of the Management Board, allocating PLN 273.9m to dividend payment, i.e. PLN 2.68 per one share of
series A–O. The AG
M participants were also presented with amendments to the Policy on the suitability assessment of
the Supervisory Board members, the Nomination and succession planning policy for Supervisory Board members and the
Terms of Reference of the Supervisory Board.
On 12 January 2023, the Extraordinary General Meeting (EGM) of Santander Bank Polska S.A. was held. It adopted a
resolution on the authorisation of the Management Board members to acquire treasury shares as part of the Incentive
Plan VII, on the establishment of a capital reserve for that purpose, and on the assessment of the Supervisory Board’s
performance. The EGM participants were also presented with amendments to the Policy on the suitability assessment of
the Supervisory Board members in Santander Bank Polska S.A. and the Terms of Reference of this governing body.
Changes to the Bank’s
Management Board
composition
On 31 May 2022, Carlos Polaino Izquierdo resigned as a Management Board member, effective as of 1 January 2023. The
decision was made due to his planned return to the global structures of Banco Santander Group.
As a result of the resignation of Carlos Polaino Izquierdo, on 13 December 2022 María Elena Lanciego Pérez was
appointed a member of the Bank’s Management Board in charge of the F
inancial Accounting and Control Division,
effective as of 1 January 2023.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
10
Major corporate events in the reporting period until the release date of the report for 2022 (cont.)
Participation in the
creation of the protection
scheme
As announced on 7 June 2022, the Management and Supervisory Boards of Alior Bank S.A., BNP Paribas Bank Polska S.A.,
ING Bank Śląski S.A., mBank S.A., Bank Millennium S.A., Bank Polska Kasa Opieki S.A., PKO Bank Polski S.A. and Santander
Bank Polska S.A. adopted resolutions to apply to the KNF for approval of the protection scheme created by the above
banks and of the draft protection scheme agreement. The objective of the protection scheme is to ensure liquidity and
solvency of member banks on the terms and conditions defined in the protection scheme agreement, and to support the
resolution procedure conducted by the Bank Guarantee Fund or acquisition of banks operating as joint stock companies.
For more information, see Chapter XII “Risk and Capital Management”.
Act on crowdfunding for
business and support for
borrowers
In relation to the Act on crowdfunding for business and support for borrowers of 7 July 2022 (Payment Deferral Act)
signed by the President on 14 July 2022, the Bank published the estimated cost of payment deferral solutions on the
profit before tax of Santander Bank Polska S.A. and its Group for Q3 2022. It was estimated at PLN 1.3bn on a standalone
basis and PLN 1.4bn on a consolidated basis, assuming that 50% of eligible customers will have all the possible
installments deferred.
In the current reports of 29 November 2022 and 30 December 2022, the Management Board of Santander Bank Polska
S.A. reported an increase of PLN 192m in the estimated cost of payment deferrals taken to the profit and loss account for
Q4 2022. The estimate was changed as the underlying assumptions had to be adjusted to the current data, including the
assumption that approx. 63.8% of eligible customers will opt for payment deferrals.
The actual impact of costs ar
ising from payment deferrals on the Group’s financial performance will depend on factors
such as the number of customers who will use the solution, the number of instalments deferred by each of these
customers, the time they start applying the payment deferral and interest rate levels.
Change of credit rating
Rating actions by Fitch Ratings:
On 14 September 2022, the agency downgraded the Viability Rating (VR) of Santander Bank Polska S.A. to “bbb”
from “bbb+” and removed it from Rating Watch Negative
(RWN). The above rating action reflected the increased
pressure on the Bank’s credit profile from its operating environment in relation to government intervention in the
Polish banking sector.
The agency affirmed the Bank's long-term issuer default rating (IDR) at “BBB+” with a stable outlook and assigned a
new rating, i.e. Shareholder Support Rating (SSR) of “bbb+”.
Rating actions by Moody’s Investors Service:
The agency affirmed all long-term and short-term ratings and assessments of Santander Bank Polska S.A. and
maintained a stable outlook on the long-term deposit ratings.
Early redemption of
securities
On 22 November 2022, the Management Board of Santander Bank Polska S.A. decided on early redemption of series
1/2021 certificates of deposit (CDs) in accordance with their issue terms and conditions.
The early redemption took place on the interest payment
date, i.e. 22 December 2022 (“Redemption Day”) and covered
all 1,500 CDs with a total nominal value of PLN 750m. CD holders were paid a nominal value of CDs plus interest. The
early redemption of CDs was made through the Central Securities Depository of Poland (KDPW) in accordance with its
regulations.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
11
II. Basic Information about the Bank and
Santander Bank Polska Group
1. History, Ownership Structure and Profile
> History of Santander Bank Polska S.A. (key events)
2001
>
Incorporation of Bank Zachodni WBK S.A. (BZ WBK S.A.) as a result of
a merger of Bank Zachodni S.A. with Wielkopolski Bank Kredytowy S.A.
(13 June 2001)
2011
>
Sale of all shares of Bank Zachodni WBK S.A. held by AIB European
Investments Ltd. (70.36% of
share capital and voting power) to Banco
Santander S.A. (1 April 2011)
>
Acquisition of 95.67% of share capital and voting power of BZ
WBK S.A. by Banco Santander S.A. in the tender offer for 100% of
the Bank's shares
2013
>
Merger of BZ WBK S.A. and Kredyt Bank S.A. by way of acquisition (transfer of
all assets of the acquired bank to the acquirer in exchange for newly issued
series J shares allotted to shareholders of Kredyt Bank S.A.) (4 January 2013)
2014
>
Acquisition
of ordinary and preference shares of Santander
Consumer Bank S.A. (SCB S.A.) with its registered office in Wrocław
by BZ WBK S.A., representing 60% of the share capital of SCB S.A.
and 67% of votes at the General Meeting of SCB S.A. (1 July 2014)
2017
>
Execution of a transaction agreement between BZ WBK S.A.,
Banco Santander S.A. and Deutsche Bank AG (DB AG) to purchase
a demerged part of Deutsche Bank Polska S.A. and 100% of shares
in DB Securities S.A. (14 December 2017)
2018
>
Registration of the change of the Bank’s name from Bank Zachodni WBK
S.A. to Santander Bank Polska S.A. and its registered office address from
Wrocław to Warsaw in the National Court Register (7 September 2018)
>
Acquisition of 95.67% of share capital and voting power of
BZ WBK
S.A. by Banco Santander S.A. in the tender offer for 100% of the
Bank's shares
2019
>
Division of Santander Securities S.A. through transfer of an organised part to
Santander Bank Polska S.A. and Santander Finanse Sp. z o.o.
(8 November 2019)
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
12
Ownership structure
Share capital
Santander Bank Polska S.A. is a subsidiary of Banco Santander S.A. with its registered office in Madrid, which held 67.41% share in the Bank’s registered
capital and in the total number of votes at the Bank’s General Meeting as at 31 December 2022.
Banco Santander S.A.
67,41%
Non-controlling shareholders
32,59%
Ownership structure of Santander Bank Polska share capital
as at 31.12.2022
For more information about the share capital, see Chapter VII “Investor Relations” (Part 2 “Share Capital, Ownership Structure and Share Price”) and Chapter
XIII “Statement on Corporate Governance in 2022” (Part 5 “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., having its registered office in Santander and operating headquarters in Madrid, is one of the largest commercial banks in the world
with more than 165 years of history. The bank specialises in retail banking services, but it is also very active in the private banking, 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. With geographic location as the primary criterion, the Group has identified
four main operating segments: Europe, North America, South America, and the Santander Open Platform.
> Santander Group in numbers (as at 31 December 2022)
9k
branches
159.8m
customers
206.5k
employees
EUR 1,734.7bn
total assets
EUR 97.6bn
total equity
EUR 47.1bn
market
capitalisation
EUR 1,255.7bn
total customer
funds
EUR 1,036.0bn
loans and advances
to customers
EUR 2,289m
attributable profit
2nd largest bank in the eurozone and 36th largest bank in the world
in terms of market capitalisation
(source: Financial Report of Santander Group for 2022)
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
13
Profile of the organisation
Legal form
Santander Bank Polska S.A. with its registered office in Warsaw started operations in 1989 as one of the first universal commercial banks in post-war Poland.
Since 1993, it has been listed on the Warsaw Stock Exchange. After several ownership changes and more than 30-year presence on the Polish banking
market, it was the second largest bank in terms of market capitalisation and third in terms of total assets as at 30 September 2022.
The Bank is a parent entity of Santander Bank Polska Group and forms a domestic bank holding group as defined in the Polish Banking Law Act together with
its related entities, including Santander Consumer Bank S.A. (a domestic subsidiary bank). It is also registered as a foreign bank holding group with Spain-
based Banco Santander S.A. as the ultimate parent entity. No financial support agreements referred to in Article 141t of the Polish Banking Law Act have
been concluded as part of the above-mentioned holding groups.
Santander Bank Polska S.A. operates in Poland and has standard business and operational relationships with foreign banks and financial institutions. It also
provides services to foreign customers and cooperates with Santander Group companies on a large scale. The Bank does not conduct active cross-border
operations in other countries.
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 offer is modern, comprehensive and satisfies diverse customer needs with regard to bank accounts, credit, savings,
investment, settlement, insurance and card products. The financial services of Santander Bank Polska S.A. also 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 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 in technologically advanced remote channels. The Bank’s
outlets are located Poland-wide.
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 Allianz Towarzystwo Ubezpieczeń S.A. and Santander Allianz
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.
Santander Consumer Bank S.A. and its subsidiaries form a separate business segment with its own customer base, product range and distribution channels.
It provides credit facilities to households, mainly in the consumer finance and car finance sectors. It also provides financing to businesses, mainly car dealers
and importers. Santander Consumer Bank Group offers consumer loans, car finance through car loans, lease and factoring, credit facilities for car dealers,
retail and business deposits and insurance products.
As at 31 December 2022, Santander Bank Polska Group provided services to 7.4m customers, including 1.7m customers of Santander Consumer Bank S.A.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
14
Value creation at Santander Bank Polska Group
> Value creation at Santander Bank Polska Group
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 interim reports for the quarter ended 30 September 2022, which at the date of authorisation of this Management Board report for issue
were 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 market capitalisation, third largest one
in terms of total assets and deposits and fourth largest one in terms of net loans.
People
Motivated and engaged employees...
A key focus of the Group’s strategy is to embed a
strong culture based on Simple, Personal and Fair
values.
How we do things is as important as what we do.
The key success measure of the Group’s strategy is
employee engagement above the industry average.
Customers
... mean more satisfied and loyal customers...
Higher number of loyal customers means higher
income, loans and deposits.
Loyal customers more often choose digital channels,
use more products and services and initiate more
transactions with the Bank.
Shareholders
... driving profitability and sustainable growth...
Focus on customer loyalty allows the Group:
to achieve satisfactory growth in financial results in a
short and long term;
to strengthen its balance sheet and capital;
to be more resilient and more effectively respond to
risks if they materialise.
Community
... resulting in higher investment in the community
The Group makes investments for the future in
partnership with universities, supporting education and
financing environmental projects.
It generates sound financial performance in a
responsible way, supporting sustainable growth and
social inclusion.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
15
438 494
279 563
263 395
213 012
207 581
110 194
PKO BP PEKAO
Santander
Bank Polska
ING BSK mBank Millenium
Total assets (PLN m) of Santander Bank Polska Group
as at 30.09.2022 against the peer group
31 680
28 847
23 573
11 479
7 423
4 866
PKO BP Santander
Bank Polska
PEKAO mBank ING BSK
Millenium
Total equity of Santander Bank Polska Group
(in PLN m) as at 30.09.2022 against the peer group
340 402
209 241
189 501
186 581
173 305
97 771
PKO BP PEKAO Santander
Bank Polska
ING BSK mBank Millenium
Customer deposits of Santander Bank Polska Group
(PLN m) as at 30.09.2022 r. against the peer group
234 957
166 964
154 350
153 539
125 680
78 965
PKO BP PEKAO ING BSK Santander
Bank Polska
mBank Millenium
Customer loans and advances of Santander Bank Polska Group
(PLN m) as at 30.09.2022 against the peer group
Share in key market segments
According to the NBP statistics on the banking market, as at the end of September 2022 the market share of Santander Bank Polska Group was 11.6% for
loans (11.5% as at 31 December 2021) and 11.1% for deposits (11.3% as at 31 December 2021).
The Group operates in the factoring and leasing markets via its subsidiaries, holding a market share of 8.6% and 9.8%, respectively, as at 30 September
2022 (according to the Polish Factors Association and the Polish Leasing Association). In the same period, the Group’s share in the retail investment fund
market was 9.6% (according to Analizy Online), while its share in the retail investors market was 13.1%.
∗ Combined market share of Santander Leasing S.A. and Santander Consumer Multirent Sp. z o.o.
```````````````````
9.6%
share in the
investment fund
market
```````````````````
9.8%*
share in the leasing
market
```````````````````
8.6%
share in the
factoring market
```````````````````
11.1%
share in the
deposit
market
```````````````````
11.6%
share in the credit
market
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
16
2. Structure of Santander Bank Polska Group
> Subsidiaries and associates of Santander Bank Polska S.A. as at 31 December 2022
1) SCM Poland Auto 2019-1 Designated Activity Company with its registered office in Dublin was incorporated on 18 November 2019. Its shareholder is a legal person that is not connected with the Group. It is an SPV
established to securitise a part of the lease portfolio of Santander Consumer Multirent Sp. z o.o., which is its controlling entity in accordance with the conditions laid down in IFRS 10.7.
2) Santander Consumer Finanse Sp. z o.o. w likwidacji was dissolved and put into liquidation as of 31 December 2020 by virtue of a resolution of the company’s Extraordinary General Meeting of 23 December 2020.
3) PSA Finance Polska Sp. z o.o. is an investment in a subsidiary for the purpose of consolidated financial statements due to the fact that it is controlled by Santander Consumer Bank S.A. (directly) and Santander Bank Polska
S.A. (indirectly).
4) SC Poland Consumer 23-1 Designated Activity Company (DAC) is a special purpose vehicle incorporated in Dublin on 17 June 2022 for the purpose of securitising a part of the retail loan portfolio of Santander Consumer
Bank S.A. (SCB S.A.). The SPV does not have any capital connections with SCB S.A., which is its controlling entity in accordance with the conditions laid down in IFRS 10.7.
5) Both owners of Santander Towarzystwo Funduszy Inwestycyjnych S.A. (Santander TFI S.A.), i.e. Santander Bank Polska S.A. and Banco Santander S.A., are members of global Santander Group and hold an equal stake of
50% in the company's share capital. In practice, Santander TFI S.A. is controlled by Santander Bank Polska S.A. within the meaning of International Financial Reporting Standards (IFRS) because the latter has a real impact
on its operations and financial performance as its main business partner and distributor of investment products.
Santander Bank Polska S.A.
Santander Factoring Sp. z o.o.
100%
Santander Leasing S.A.
100%
Santander F24 S.A.
100%
Santander Finanse Sp. z o.o.
100%
Santander Inwestycje Sp. z o.o.
100%
Santander Consumer Multirent Sp. z o.o.
100%
Santander Consumer Finanse Sp. z o.o.
w likwidacji
2)
100%
PSA Finance Polska Sp. z o.o.
3)
50%
Santander Consumer Bank S.A.
60%
SC Poland Consumer 23–1 DAC
4)
0%
Santander Towarzystwo Funduszy
Inwestycyjnych S.A.
5)
50%
POLFUND
– Fundusz Poręczeń Kredytowych S.A.
50%
Santander Allianz
Towarzystwo Ubezpieczeń na Życie S.A.
49%
Santander Allianz
Towarzystwo Ubezpieczeń S.A.
49%
SCM Poland Auto 2019–1 DAC
1)
0%
Santander Consumer Financial
Solutions Sp. z o.o.
100%
PSA Consumer Finance Polska Sp. z o.o.
3)
100%
Legend:
%
Share of Santander Bank Polska S.A. in the
company’s capital
Subsidiaries
(consolidated with Santander Bank Polska S.A.)
Associates
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
17
Subsidiaries
As at 31 December 2022, 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. w likwidacji (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 23-1 DAC (subsidiary of SCB S.A.)
7. PSA Finance Polska Sp. z o.o. (subsidiary of SCB S.A.)
8. PSA Consumer Finance Polska Sp. z o.o. (subsidiary of PSA Finance Polska Sp. z o.o.)
9. Santander Towarzystwo Funduszy Inwestycyjnych S.A.
10. Santander Finanse Sp. z o.o.
11. Santander Factoring Sp. z o.o. (subsidiary of Santander Finanse Sp. z o.o.)
12. Santander Leasing S.A. (subsidiary of Santander Finanse Sp. z o.o.)
13. Santander F24 S.A. (subsidiary of Santander Finanse Sp. z o.o.)
14. Santander Inwestycje Sp. z o.o.
Compared with 31 December 2021, the list of subsidiaries of Santander Bank Polska S.A. excludes Santander Leasing Poland Securitization 01 Designated
Activity Company with its registered office in Dublin, a special purpose vehicle and a former subsidiary of Santander Leasing S.A. The SPV was incorporated
on 30 August 2018 for the sole purpose of traditional securitisation of a lease and credit portfolio. The SPV did not have any capital connections with
Santander Leasing S.A., which was its controlling entity in accordance with the conditions laid down in IFRS 10.7. Due to the final settlement of the project,
in 2022 Santander Bank Polska S.A. lost control over the above entity. On 8 December 2022, the SPV was put into liquidation.
The list of members of Santander Bank Polska Group was expanded to include SC Poland Consumer 23-1 Designated Activity Company, a new SPV and a
subsidiary of Santander Consumer Bank S.A. The SPV was incorporated on 17 June 2022 in Dublin under Irish law for the sole purpose of securitising a retail
loan portfolio. Its shareholder is a legal person not connected with the Group, but Santander Consumer Bank S.A. is its controlling entity in line with IFRS
10.7. The above SPV replaced SC Poland Consumer 16-1 Sp. z o.o. following the restructuring of securitisation, including the repayment of debt and transfer
of claims to the newly established company.
As at 31 December 2022, 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 the 12-month period ended 31 December 2022, the following companies are
accounted for using the equity method in accordance with IAS 28:
1. Santander Allianz Towarzystwo Ubezpieczeń S.A.
2. Santander Allianz Towarzystwo Ubezpieczeń na Życie S.A.
3. POLFUND – Fundusz Poręczeń Kredytowych S.A.
Compared with 31 December 2021, the list of associates did not change.
On 21 May 2022, following the purchase of shares held by Aviva International Holdings Limited by Allianz Group, Santander Aviva insurance companies
were renamed Santander Allianz Towarzystwo Ubezpieczeń S.A. and Santander Allianz Towarzystwo Ubezpieczeń na Życie S.A.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
18
III. Macroeconomic Situation in 2022
Economic growth
The Polish economy started 2022 with high momentum, but later decelerated due to, among other things, Russia's invasion of Ukraine and the shock
increase in energy commodity prices and disruptions in international trade. In the first quarter of the year, GDP growth was 8.6% YoY, and in the fourth
quarter it was only around 2% YoY. On average, economic growth for the whole year was 4.9% against 6.8% in 2021. The prospect of an energy crisis and
natural gas supply constraints, particularly pronounced in Europe, translated into a worsening business outlook. Economic growth was also not helped by
the significant tightening of monetary policy, in Poland and globally. Weaker readings were recorded by all major economic activity statistics: industrial and
construction output, retail sales. The labour market situation still looked good, although it stopped improving. The outbreak of the war, the high dynamics
of the economic rebound after the pandemic and the loose economic policy contributed to a very strong acceleration in price growth, with inflation reaching
the levels last recorded decades ago. Prices rose noticeably faster than wages, and by the end of the year the real decline in wages was the strongest in
years. This translated into a much worse performance of private consumption. Higher interest rates in turn caused a strong slowdown in the credit and
housing markets. The increase in the price of imported energy commodities boosted the current account deficit, which reached around 3% of GDP compared
to 1.4% of GDP in 2021.
Labour market
The slowing economy had a negative impact on labour demand, although there were hardly any signs of a clear weakening in the labour market. Declines
in employment were basically only registered in manufacturing, while at the same time many refugees from Ukraine found work in the Polish economy.
The unemployment rate according to the Labour Force Survey, after seasonal adjustment, was 2.9% in December - the same as a year earlier. Although
nominal wage growth remained at double-digit levels (averaging around 13% YoY), it was noticeably slower than the price growth in the second half of the
year, which translated into a reduction in real wages - the strongest since comparable data have been available (1990s).
Inflation
2022 was characterised by very high inflation, averaging around 14.3% YoY - the highest level in many years. Inflation peaked in October, when it reached
17.9% YoY. It declined slightly in the following two months, to 16.6% in December. Strong price increases were seen across a wide range of categories,
energy, fuel and food prices in particular. Core inflation (after excluding food, fuel and energy prices) also reached record levels and averaged around 9.0%
YoY while PPI (producer prices) inflation was around 22.5% YoY on average in 2022. The government tried to limit the rise in CPI, including through regulation
of prices and indirect tax cuts. It also decided on cash benefits for households to compensate for the increase in energy commodity prices.
Monetary policy
Very high inflation prompted the Monetary Policy Council to continue the interest rate increases started in 2021 and the NBP reference rate rose during
2022 to 6.75% from 1.75%. The last rate hike took place in September, after which the MPC decided to pause the monetary policy tightening cycle to observe
the effects of its earlier decisions and amid growing concerns about the strength of the economic slowdown.
Na p
-10
-5
0
5
10
15
20
4Q12
2Q13
4Q13
2Q14
4Q14
2Q15
4Q15
2Q16
4Q16
2Q17
4Q17
2Q18
4Q18
2Q19
4Q19
2Q20
4Q20
2Q21
4Q21
2Q22
4Q22
SELECTED MACROECONOMIC INDICATORS
GDP (%YoY) Current account balance (% GDP)
CPI (%YoY) Employment in corporate sector (%YoY)
Real wages in corporate sector (%YoY)
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
19
oczątku 2020 r. Rada Polityki Pieniężnej utrzymywała stabilną politykę pieniężną, podtrzymując stanowisko nt. przejściowego
Loan and deposit markets
The weakening economic growth and the very strong rise in interest rates translated into lower demand for credit. In particular, sales of mortgages, which
started the year very strongly, in the second half were even ¾ lower than a year earlier. The rate of early repayments also increased, as borrowers wanted
to avoid high interest rates. Payment holidays, which allowed borrowers to suspend the repayment of part of instalments of PLN mortgage loans, had an
impact on limiting the rate of decline in the volume of loans of this type. In December, their total value was 1.6% lower than a year earlier, while in 2021
the volume had increased by 12.5%. The value of consumer loans, on the other hand, fell by 3% (after adjustment for exchange rate effects). Businesses
reported an increased demand for working capital finance in the first part of the year, but this too weakened in the following months. At the end of the year,
the volume of business loans was 9% higher than a year earlier (after adjustment for exchange rate effects). The total loan portfolio in the banking sector
increased by 0.6% in 2022 (after adjustment for exchange rate effects), following an increase of 4.4% in 2021.
Deposits increased by 5.8% YoY, with deposits from private individuals up 4.4% YoY and from companies up 11.6% YoY. As the rise in interest rates increased
the attractiveness of term deposits, their volume increased by 90.7% YoY against a 10.9% YoY decline in the volume of current deposits.
Financial market situation
In 2022, trends in financial markets mainly reflected inflation-influenced changes in market interest rate expectations. Dynamically rising inflation first led
to an acceleration of the pace of interest rate increases, and then to a slowdown or in some cases even a halt in this process due to signs of actual or
anticipated weakening of inflationary processes. A factor that further stimulated volatility in financial markets was the outbreak of war in Ukraine and its
economic aftermath.
Due to the geographic proximity of the conflict in Ukraine, the currencies and bonds of CEE countries, including Poland, suffered particularly heavy losses.
Although from the beginning of 2022 pandemic restrictions were gradually lifted in most developed countries (but not in Asia), global supply problems
generating inflationary pressures persisted for a long time. The outbreak of the war in Ukraine and sanctions imposed on Russia further exacerbated the
global supply shock resulting from more expensive energy commodities, which further disrupted supply chains and spurred market volatility. All this will
led to even bigger global problems with persistently high inflation. At the same time, the supply-side nature of the shock to the global economy made it
more difficult for central banks to respond effectively to high inflation, as they faced the prospects of weakened economic growth. However, subsequent
much higher-than-expected inflation readings forced central banks to increase interest rates more aggressively in order to keep inflation expectations from
de-anchoring. The pace of rate hikes by the Federal Reserve and ECB slowed down only in December, when there were signs that core inflation in the USA
had begun to decline for the second consecutive month, and in the case of the Eurozone, when there was the first lower HICP inflation reading for November.
In the case of NBP, the situation was somewhat different. While all domestic CPI readings in 2022 indicated a steady upward trend, in September NBP rates
stopped at 6.75% and remained unchanged until the end of the year. The first CPI decline in Poland was reported only in December (reading published in
January 2023), while the core CPI continued on the rise, including in the last month of 2022.
In 2022, US 10-year government bond yields rose from 1.50% to 3.83%, with a peak in yields reached a few days before the end of September at 4.02%.
German 10-year yields rose from -0.18% to 2.56%, peaking at the same level on the last business day of the year. Domestic bond yields moved in 2022 as
follows: 2Y rose from 3.346% to 6.728%, 5Y from 3.988% to 6.881%, and 10Y from 3.705% to 6.877%, with peaks recorded in mid-October. Their declines
later in the year were not triggered by changes in the domestic data or the MPC's communications, but a change in trends in the global markets amid news
of a possible slowdown in the pace of rate hikes in the US and then also in the Eurozone.
The zloty's exchange rate against the euro rose from 4.60 to 4.69 in 2022. Until the outbreak of the war in Ukraine, the zloty had been appreciating, with the
peak close to 4.48 reached in mid-February. However, after the outbreak of the war, the zloty depreciated sharply, reaching 5 zloty per euro. By mid-April,
the exchange rate returned to around4.60 , and by the end of May it even tried to test the 4.56 area thanks to the good performance of the economy and the
strong NBP rate hikes. After that, however, the trend reversed again, as the lack of progress in negotiations with the EU on the unblocking of the national
recovery plan, the suspension of rate hikes by the NBP, and the escalation of geopolitical tensions following Russia's official announcement of its annexation
of part of the Ukrainian territory began to work against the zloty. As a result, by mid-October, the EUR/PLN exchange rate once again hovered close to 4.90.
However, a retest of the level of PLN 5 per euro did not occur. In the last months of 2022, the rate gradually returned towards and below 4.70. The zloty
was helped by improved investment sentiment in global markets amid signals of a possible slowdown in rate hikes by major central banks, as well as the
liquidity situation in the domestic foreign exchange market favouring the zloty, making long-term speculation against the zloty difficult.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
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Stock market
2022 went down in history as one of the most challenging years, both for the WSE and the global financial market. The world’s economy recovering from
the pandemic had to face political and economic implications of the war between Russia and Ukraine. Russia’s invasion on 24 February 2022, followed by
military and economic response of western countries, disrupted energy commodities markets. It resulted in great tensions in European economies,
particularly those dependent on Russian resources. A surge in the cost of commodities strengthened the inflationary pressure caused by the pandemic. Stock
markets, including the WSE, were affected by the increasing cost of money amid turbulences in the real economy. In response to high inflation, major central
banks tightened their monetary policies, which resulted in negative sentiment prevailing for the greater part of 2022. The demand increased only in the last
quarter and – together with the appreciating złoty – helped to curb yearly declines. As a result, WIG and WIG20 improved their performance, losing 21%
and 17% YoY respectively. Mid-cap companies performed poorly too, with mWIG40 losing more than 21%. Small-cap companies fared a bit better thanks
to the successful end of the year, with sWIG80 decreasing by 13% YoY.
The sentiment further improved at the beginning of 2023, which was the so-called January effect. Still, the WSE will face serious challenges going forward.
The war beyond the eastern border and growing economic problems will continue to put pressure on governments and central banks trying to combat
raging inflation, particularly in Europe.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
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Legal environment of the banking sector
The table below shows the selected legislation which came into effect in 2022 and has impact on the financial sector in Poland.
Act or regulation
Effective date
Selected regulations affecting the financial sector
Act of 20 May 2021 on the protection
of rights of buyers of residential units
or detached houses and on the
Development Guarantee Fund
1 July 2022
(majority of provisions)
Compared with the previous Development Act, the new legislation covers a broader
range of agreements
and modifies the catalogue of measures designed to protect payments made by
buyers (an open residential escrow account with an insurance or bank guarantee has
been removed).
Under the new regime, an open residential escrow account must be maintained until
the transfer of ownership of the last residential unit/ detached house developed as
part of the project.
The Act also imposes an obligation on developers to make contributions to the
Development Guarantee Fund through banks maintaining open residential escrow
accounts.
Act on crowdfunding for business and
support for borrowers
29 July 2022
(majority of provisions)
The Act provides an option for consumers to have their PLN mortgage payments
suspended (except for mortgage loans indexed to or denominated in a foreign
currency) in relation to one agreement concluded to buy a property for one’s own
housing needs. The payments can be suspended for two months in each quarter in
the period from 1 August 2022 until the end of 2022 and for one month in each
quarter in 2023.
The new legislation sets out the rules for calculation of a replacement rate for the
main benchmark (WIBOR).
Changes regarding support for borrowers:
Wider access to solutions provided under the Borrowers Support Fund,
including a possibility to apply for support via the lender’s ICT system.
Introduction of a more precise definition of a home loan based on the own
housing needs criterion and identification of borrower groups which are not
eligible for support.
Increase of PLN 1.4bn in the value of the Borrowers Support Fund.
Waiver of an obligation to make contributions to the Fund in the case of lenders
which do not meet specific requirements regarding own funds (banks) or
solvency ratio (credit unions).
Act of 18 November 2020 on
electronic delivery
Act of 15 June 2021 amending the Act
on electronic delivery
Act of 28 April 2022 amending certain
acts in relation to development of
public ICT systems
5 October 2021
(subsequent changes
introduced in 2022)
Banks will be required to register an electronic address and indicate it in agreements
with customers as an address relevant for making complaints or statements on
withdrawal from the agreement, among other things.
Electronic addresses will need to be registered within three months of the date
indicated in the announcement made by the minister responsible for digitalisation.
Regulation (EU) 2020/852 of the
European Parliament and of the
Council of 18 June 2020 on the
establishment of a framework to
facilitate sustainable investment, and
amending Regulation (EU) 2019/2088
1 January 2022 (part
of provisions) and 1
January 2023 (all
provisions)
The regulation introduces the EU taxonomy of environmentally sustainable economic
activities and sets out reporting obligations for financial market entities as well as
obligations directly applicable to companies publishing non-financial reports and
indirectly to all other companies.
The regulation applies to banks (with respect to interim disclosures) from 1 January
2022 (starting from annual reports for 2021) until 31 December 2023.
Act of 9 June 2022 amending the PIT
Act and certain other acts (Polish Deal
2.0)
1 July 2022
(with exceptions)
Changes impacting the calculation of employees’ remuneration:
New tax rates – reduction of PIT rate in the first tax bracket from 17% to 12%.
Change of the deductible amount (PLN 3,600 as of 1 July 2022).
Elimination of the middle-class tax relief.
Elimination of the mechanism for comparing personal income tax withholdings
according to the rules of 2021 and Polish Deal 1.0.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
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Act or regulation (cont.) Effective date Selected regulations affecting the financial sector
Act of 13 April 2022 on special
solutions to counteract support for
aggression against Ukraine and to
protect national security
16 April 2022
Pursuant to the Act, the Minister of the Interior and Administration may apply
measures specified in sanction regulations no. 765/2006 and 269/2014 by way of an
administrative decision. The Minister may choose from the restrictive measures
(contrary to the resolutions where certain solutions were applied automatically). This
means that the Ministry’s websites must be monitored on an ongoing basis to check
what measures have been imposed.
The Act provides for criminal penalties (imprisonment for min. three years) and
administrative fines of up to PLN 20,000.00 for the breach of sanction regulations,
which generates additional legal risk in relation to application of sanction regulations.
Act of 17 December 2022 amending
certain acts in relation to setting up
the Central Cybercrime Prevention
Office
11 January 2022
The Act amends the following:
the Banking Law Act, with respect to provisions requiring that each bank should
report to prosecutors any reasonable suspicion that the bank’s services are used
for the purpose of hiding fraudulent activity or activity related to treasury frauds
or other crime than the crime referred to in Article 165a or Article 299 of the
Criminal Code;
the AML Act, with respect to provisions concerning the identification of a
suspicious transaction by an obligated institution, reporting any suspected
proceeds of crime other than money laundering or terrorist financing to
prosecutors and provision of specific information by the General Inspector.
Act of 6 October 2022 amending acts
on prevention of usury
18 December 2022
(part of provisions)
The Act amends the rules for calculating parameters of the total loan amount and
non-interest cost in relation to further loans granted to a borrower (within 120 days
of the disbursement of the first loan): the calculations must include loans granted by
entities connected with the lender.
Council Regulation (EU) 2022/328 of
25 February 2022 amending
Regulation (EU) No 833/2014
concerning restrictive measures in
view of Russia's actions destabilising
the situation in Ukraine
25 February 2022
In relation to the Russian aggression against Ukraine, a range of new economic and
financial sanctions were imposed against bodies, institutions and entities having their
registered offices in Russia or occupied territories of Ukraine.
Council Regulation (EU) 2022/398 of
9 March 2022 amending Regulation
(EC) No 765/2006 concerning
restrictive measures in view of the
situation in Belarus and the
involvement of Belarus in the Russian
aggression against Ukraine
9 March 2022
The regulation expands the scope of the sanctions to further implement the
conclusions of the European Council of 24 February 2022 in relation to the
involvement of Belarus in the unacceptable and illegal Russian military aggression
against Ukraine.
It introduces new measures to limit the financial inflows from Belarus to the Union
by prohibiting the acceptance of deposits exceeding certain values from Belarusian
nationals or residents, the holding of accounts of Belarusian clients by the Union
central securities depositories as well as the selling of euro-denominated securities
to Belarusian clients.
Regulation of the Minister of Finance
of 11 August 2022 amending the
regulation on the procedure and
operating conditions for investment
firms, banks referred to in Article
70(2) of the Act on trading in
financial instruments, and custodian
banks
22 November 2022
The regulation implements Commission Delegated Regulation (EU) 2021/1269 of 21
April 2021 amending Delegated Regulation (EU) 2017/593 as regards the integration
of sustainability factors into the product governance obligations.
In particular, it introduces the definition of sustainability factors and imposes an
obligation on investment firms to integrate sustainability factors when determining
the target market and negative target market, and include them in information about
financial instruments offered to customers.
Commission Delegated Regulation
(EU) 2021/1253 of 21 April 2021
amending Delegated Regulation (EU)
2017/565 as regards the integration
of sustainability factors, risks and
preferences into certain
organisational requirements and
operating conditions for investment
firms
2 August 2022
Pursuant to the regulation, the suitability assessment should include customer’s
sustainability preferences (as defined in the document). The purpose is to
strengthen the devel
opment of sustainable finance and ensure appropriate
identification of customers’ needs. However, the definition introduced by the
regulation may be difficult to apply in practice.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
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Regulatory recommendations and
guidelines
Effective date
Selected guidelines affecting the financial sector
New Recommendation R on rules for
classification of credit exposures,
estimation and recognition of
expected credit losses and
management of credit risk
1 January 2022
The amended Recommendation R was is
sued in connection with International
Financial Reporting Standard 9 (IFRS 9) –
Financial Instruments, which became
effective in 2018.
The Recommendation specifies 14 macroeconomic factors which must be analysed
by banks as part of estimation of credit risk and expected credit losses.
Banks must periodically (at least annually) review the quality of macroeconomic
forecasts.
Macroeconomic forecasts must be included in the individual analysis for both
performing and non-performing exposures.
Letter from the Ministry of Finance,
Control Oversight Department, on the
rules for application of restrictive
measures by banks
21 June 2022
The letter provides answers to banks’ questions sent by the Polish Bank Association
(ZBP) as well as explanations and guidelines
regarding the application of restrictive
measures indicated in the Polish Sanctions Act and in the EU regulations concerning
restrictive measures in respect of actions undermining or threatening the territorial
integrity, sovereignty and independence of Ukraine.
KNF’s stance on AMLRO, taking into
account EBA guidelines on policies
and procedures in relation to
compliance management and the
role and responsibilities of the
AML/CFT Compliance Officer under
Article 8 and Chapter VI of Directive
(EU) 2015/849 (EBA/GL/2022/05 of
14 June 2022) in relation to Polish
laws and regulatory framework on
the prevention of money laundering
and terrorist financing
1 December 2022
The document describes the roles and responsibilities of the AML Officer and the
Management Board member in charge of AML/CFT.
If an institution is part of a group, a group AML Officer should be appointed. The AML
Officer should have the relevant knowledge, skills and experience.
An institution should approve a general AML/CFT strategy a
nd oversee its
implementation as well as ensure cooperation between compliance, AML and risk
units.
EBA Guidelines of 22 November 2022
on the use of remote customer
onboarding solutions
6 months after
publication of the
guidelines in all EU
official languages
The guidelines set out common EU standards with respect to development and
implementation of due diligence policies and processes connected with remote
customer onboarding in the context of AML/CFT regulations.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
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IV. Development Strategy
1. Purpose, Aim, Values and Strategic Objectives for 2021–2023
The strategy of Santander Bank Polska Group 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 Group’s purpose, aim and values have not changed for years:
Purpose
Aim
Values
To help people and businesses prosper.
To be the best open financial services platform by
acting responsibly and earning the lasting loyalty
of employees, customers, shareholders and
communities.
Simple|Personal|Fair
> Key strategic dimensions for 2021–2023
The strategy of Santander Bank Polska Group reflects 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 perspective of customers, which helps to
enhance their experience, increase operational efficiency and provide more simple and transparent products and services. The delivery of the Group’s
strategy is underpinned by innovative solutions and the corporate culture which is focused on increasing engagement and motivation of employees as well
as social responsibility of the organisation.
Our Purpose
/Mission
Our Aim
/Vision
Values
Behaviours
&
Leadership Commitment
Strategic
Directions
Initiatives
Metrics
Help people and businesses prosper
Be the Best Open Financial Services PLATFORM by acting RESPONSIBLY
and earning the lasting
LOYALTY of our people, customers, shareholders and communities
Simple – Personal - Fair
•
Think
customer
•
Embrace change
•
Act now
•
Move together
•
Speak up
•
Being open and inclusive
•
Inspiring and executing transformation
•
Encouraging the team to prosper
•
Leading by example
Customer
Obsession
Simplification
Employee
Focus
Omnichannel
Evolution to
Open Platform
Safety
& Trust
•
Strategic programs
•
Bets
•
Group programs
•
Hotspots
•
TCR
•
ROTE
•
C/I
•
C/I
•
NPS
•
Loyal Customers
•
eNPS
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
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> Six strategic directions for 2021–2023: “Focus to accelerate”
As part of the strategy for 2021–2023, the following six strategic directions have been defined: “Customer obsession”, “Employee focus”, “Simplification”,
“Smart omnichannel”, “Innovate to open platform”, “Safety and trust”. They are the key focus areas of the Group’s transformation. The strategic directions
set by the Group:
consolidate specific objectives set to increase loyalty of individual stakeholder groups: employees (employee focus), customers (customer
obsession), communities and shareholders (safety and trust);
place the highest transformational value on the objectives related to development of the Group’s operating model: simplification and smart
omnichannel;
comply with the aim of Santander Group’s regional strategic plan One Europe, emphasising the foundations for the development of the organisation
(safety and trust), with a particular focus on responsible banking and ESG (Environmental, Social and Governance) matters;
reflect the Group’s ambition to build competitive advantages through innovation to an “Open platform”.
> Strategic objectives for 2021–2023
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
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The activities undertaken as part of the six strategic directions are based on strategic initiatives, i.e. strategic programmes, bets (initiatives in the Agile model)
and group programmes. They are regularly monitored and their results are reviewed on the basis of qualitative and quantitative metrics. The following are
measures defining the Group’s financial ambitions.
Ambitions of Santander Bank Polska Group (financial measures) as part of the strategy for 2021–2023
In view of dynamic and complex changes in the macroeconomic environment, the strategy of Santander Bank Polska Group is regularly verified, which helps
take prompt action in response to market trends and other changes in the dynamic environment.
2. Ambitions for 2021–2023 and Delivery of the Strategy
Strategic directions
When setting strategic directions, the Group also defines strategic objectives and key success measures that let it track the progress in delivery of the
strategy.
Employee focus
Our achievements: Key success measure: Our ambition:
Implementation of a hybrid work model
taking into consideration the voice of
employees
Optimisation of a significant number of HR
processes through their automation and
implementation of an e-signature
Promotion of diversity, equal treatment
and inclusion
Support for talent development and
responsible leadership
Monitoring of employee satisfaction based
on the results of the eNPS survey
Ensuring equal pay
High level of Agile maturity (ceremonies
and tools)
Foster the corporate culture based on the
Simple, Personal and Fair values
Increase employee engagement and retain
the employer of choice title
Attract and retain best talents
Continue to develop key competencies
(including leadership skills)
Further ensure an inclusive and friendly
work environment
Dividend Payout Ratio
Cost /Income Ratio
Cost of Credit Risk
Our Amibition
<40%
50% of PAT
at the level allowing dividend payout
Total Capital Ratio
at the average through-the-cycle level
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
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Customer obsession
Our achievements: Key success measure: Our ambition:
Acceleration of process digitalisation and
optimisation
More extensive communication and
measures taken in response to key issues
concerning Poles
Support for refugees from Ukraine – an
offer for individuals and businesses
Introduction of plain language in
documents, offers and communication
with customers
Adaptation of communication (channels,
language, message, offer) to the needs of
specific customer groups
Positive result of the audit at the Bank (as a
signatory and one of the initiators of the
Responsible Sales Declaration) confirming
that the Bank’s internal regulations are
transparent and customer friendly
Stable increase in mass NPS
More than 2m lo
yal customers of
Santander Bank Polska S.A.
Build long-
term customer relationships
thanks to products created using service
design competencies and feedback from
customers from individual segments
Build loyalty and increase digitalisation of
our customers
Increase the customer satisfaction level
(NPS)
Simplification
Our achievements: Key success measure: Our ambition:
Simplification of the product range and a
number of key processes used by our
customers and employees
Further measures taken to become a
paperless bank
Reduction of paper consumption (36m
sheets less by the end of November 2022)
Increase in the number of customers using
e-communication channels
Reduction in the number of products
Extension of the scope of SMS-based
authentication of paym
ents and cash
transactions at branches and introduction
of electronic signature of documents
Digitalisation of communication of changes
in interest rates and dispatch of mortgage
repayment schedules
Centralisation of the mortgage
establishment and release
process (no
need for the customer to visit the branch)
Further reduce paper documents and
promote electronic communication
Continue to simplify processes and
products and digitalise post-
sales and
internal processes
Implement a wide-scale process of signing
documents in advisor-based channels in
electronic form
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
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Smart omnichannel
Our achievements: Key success measure: Our ambition:
Design and launch of a pilot of a new
mobile application for retail customers
Further development of iBiznes24
internet banking for corporate customers
Increased availability of products and
processes in digital channels (autosavings,
insurance offer, price comparison engine
for motor insurance, restructuring portal)
Reduction of the number of processes
requiring a visit to a branch
Focus on personalisation of
communication and offer in digital
channels
Active measures taken to migrate
customers to digital channels and increase
the number of customers acquired in
those channels
Further optimisation of branch network
Alignment of customer experience across
all channels
Development of the restructuring portal
Increase in the number of digital
customers
Increase in the number of transactions
made in remote channels
Growth of product sales through self-
service channels
Increase in the number of transactions and
communications which are paperless and
do not require a traditional hand-written
signature
NPS for the mobile application
Maximise the use of self-
service and
remote channels in key sales and post-
sales processes
Increase the number of digital customers
Improve customer experience in remote
contact channels
Innovate to open platform
Our achievements: Key success measure: Our ambition:
Support for further evolution to an open
platform in cooperation with Santander
Group and external partners
Development of open banking solutions
via Santander Open
Development of GTS platform offering
new digital services for corporate
customers
Extension of cooperation with external
partners (e.g. mojeID)
Growing number of customers using
Santander Open (PSD2 aggregator)
Further develop and improve the open
financial services platform
Management Board Report on Santander Bank Polska Group Performance in 2022
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Safety and trust
Our achievements: Key success measure: Our ambition:
Further steps taken to meet the objectives
of the Group’s Net-Zero strategy
Implementation of the Sustainable Finance
Classification System based on the EU
taxonomy
Expansion of the range of green products
and services and support for customers in
their green transition
Creation of a diverse and friendly working
environment
Launch of the ESG Database project to
address regulatory requirements
(Taxonomy, Pillar 3)
Top award for the Bank’s ESG report in the
Sustainability Reports competition
Support for green transformation of
corporate and investment banking
customers
Green finance of EUR 500m in the year to
Q3 2022
36% of women in managerial positions
Equal Pay Gap of 2.1%
90% of energy used by the Bank coming
from renewable sources
Issuance of the first card made of
biodegradable plastic
ECO Loan on offer
Develop green finance and support
customers in their transition to a low- and
zero-emission operating models
Adapt our measures to meet the
requirements of the TCFD (Task Force on
Climate-related Financial Disclosures)
Continue to develop leadership skills, focus
on employees and promote diversity, equal
treatment and inclusion in the workplace
Build the awareness of fraud risk among
the Bank’s customers and employees as
part of promotion of cybersecurity culture
Ensure high stability and security of our
systems and take measures to significantly
reduce the number of system failures
> Financial and non-financial measures of Santander Bank Polska Group (as at 31 December 2022 and 31 December 2021)
Number of customers
Number of employees
Number of branches *
2022
7,4 mln
11 309 (etaty)
351
2021
7,2 mln
11 323 (etaty)
396
NPS Mass*
Number of digital
customers *
Number of internet and
mobile banking transactions*
2022
TOP 4
3 285 tys.
438 mln
2021
TOP 3
2 998 tys.
386 mln
C/I
Dividend payout ratio*
TCR
CoR
2022
37.9%
29.90%
19.27%
0.59%
2021
43.6%
29.89%
19.05%
0.76%
* Only Santander Bank Polska S.A. (the number of branches also includes off-site locations and Santander Zones)
Management Board Report on Santander Bank Polska Group Performance in 2022
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Key activities planned for 2023
The Bank’s strategic priorities for 2023 are consistent with the ambitions defined as part of the six strategic directions set in the strategy for 2021–2023.
Both the objectives and success measures of the strategy will be regularly reviewed and adjusted to the changing environment if needed.
The existing strategy covers the period until the end of 2023, which means that a new strategy will be developed. It will comprise the key elements that will
ensure business continuity and enhance the Bank’s competitive position in the banking sector.
3. 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 foundations of the corporate culture of Santander Bank Polska Group and Banco Santander Group are 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. Special focus is placed on the areas where
the Group may significantly help customers achieve financial success and sustainable growth.
Simple
Fair
Personal
The Group’s products and services are tailored
to customers’ needs and expectations and
based on easy-to-understand and
uncomplicated solutions and procedures. The
Group continuously improves operational
processes and communicates with customers
using plain and clear language.
Employees and customers are treated equally
and fairly. Banking business is conducted with
due care in a transparent and compliant
manner. The Group maintains satisfactory
relationships with shareholders, trusting that
what is good for them is good for Santander
Group. It keeps promises and fulfils its
commitments towards communities.
The Group builds lasting relationships with
customers. Customers are provided with
tailored products and personalised services.
The Group strives to treat each employee and
customer in a way that makes them feel special
and appreciated.
The Group promotes five 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, leaders (managers) are expected to act in line with the leadership
commitments summarised below.
In 2022, the list of corporate behaviours was updated to speed up transformation of the organisation and make it more attractive for customers. The
new corporate behaviours form an acronym: “T.E.A.M.S.”, emphasising that people, teams and customers are the top priority for the Group.
Management Board Report on Santander Bank Polska Group Performance in 2022
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The risk culture promoted by Santander Bank Polska S.A. is called Risk Pro and consists of five principles: responsibility, 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, the quality of product offer and services for customers and outstanding relations with other stakeholders are
seen by the Group as the sources of its strength and competitive advantage.
The Group promotes diversity, among other things, by eliminating gender pay gaps, increasing the female representation on managerial positions,
employing people with disabilities and delivering the Barrier-free Banking Programme (implementing new features in branches for people with
disabilities and adjusting advertising and educational communication to their needs).
The Group conducts its activity in line with the principles of responsible banking, understanding the role and importance of banks to customers, the
economy, the environment and the community. It focuses on developing fair and transparent relationships with customers and making a positive
contribution to communities and the environment.
4. Outlook for 2023
Economic growth
Economic activity was declining towards the end of 2022 and is likely to weaken further in early 2023. In the first quarter of 2023, YoY GDP growth can fall
below zero. However, a relatively warm winter reduces the risk of an energy crisis, and growth is expected to recover later in the year as shocks related to
Russian aggression of Ukraine subdue. GDP growth should approach 2% YoY in the last quarter of 2023. However, inflation will remain high, generating
pressure on consumers, with private consumption stagnating in real terms. Weaker business sentiment and high interest rates will not be conducive to
investment, although the unblocking of the national recovery plan may be a positive factor, especially for public spending.
Labour market
The labour market situation is likely to deteriorate gradually in 2023, with labour demand weakening and unemployment possibly rising slightly. The weaker
bargaining power of workers will translate into lower upward pressure on wages.
Inflation
Inflation will remain elevated in 2023, with a peak likely to be rcorded in February. In January, CPI inflation will be boosted by the reinstatement of the
original VAT rates for fuel and energy. This will add around 2 percentage points to inflation. In the following months, it should gradually decline as the
primary shocks subdue, energy commodity prices decline and economic growth and private consumption weaken. However, throughout the year, CPI
inflation may remain in double digits. Core inflation will decline too, but probably at a lower rate than CPI inflation.
Monetary policy
At the beginning of 2023, some MPC members believed that interest rates should be raised further, some that they should remain stable and some that
rate cuts are possible within a few quarters. Further action by the MPC depends on economic developments. Further increases would be possible if CPI
inflation surprised sharply upwards. Cuts, on the other hand, would be possible if the economic slowdown turned out to be stronger than expected and the
pace of disinflation accelerated. We currently assume that interest rates will remain unchanged throughout 2023.
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Loan and deposit markets
Slower economic growth and high interest rates will have a negative impact on credit demand and may translate into higher loan default rates. Credit
volumes may decline. It is only in the second half of the year, with the recovery of economic growth, that the credit market is assumed to recover, but its
overall value will increase merely by a few percent. Deposits are also likely to grow slowly, although slightly faster than the credit market.
Financial markets
In 2023, the key factors that will have a positive impact on the zloty will be:
an improvement in global investment sentiment due to a reduction in market concerns about the risk of a "hard landing" of the main centres of the
global and Polish economy;
the end of the cycle of rate hikes in the main markets by mid-2023.
We also assume that during the year a compromise will be reached by Poland and the EU and investments based on co-financing from the EU Recovery Fund
will be unblocked. At the beginning of the year, the possible escalation of the war in Ukraine remains a risk factor.In 2023, we expect domestic debt to
strengthen as inflation gradually declines and the economy slows down. We expect a temporary increase in yields only in February and March as domestic
inflation is expected to rise again following the removal of some of the anti-inflationary shields, as well as an increase in yields in the main markets as a
result of slower deceleration in the economies and further rate hikes in the US and the Eurozone. The remaining risk factors are: a possible slower decline
in inflation and high gross borrowing needs of the budget. In our view, these may slow down the trend of domestic debt appreciation in 2023, but are unlikely
to lead to its complete negation.
V. Relations with Employees
1. Human Resources Management
Human capital
As at 31 December 2022, the number of FTEs in Santander Bank Polska Group was 11,309 (11,323 as at 31 December 2021), including 9,281
FTEs of Santander Bank Polska S.A. (9,281 as at 31 December 2021) and 1,519 FTEs of Santander Consumer Bank Group (1,587 as at
31 December 2021).
The employment in Santander Bank Polska Group was stable YoY and decreased by 3.4% during the year on average.
The Group continues the transformation of the business model through digitalisation, branch network optimisation, migration of products and services to
remote distribution channels, and gradual 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 skills matching the target
profile for the organisation.
The HR processes take into account both present operational needs as well as market conditions. They are based on natural employee attrition as well as
collective redundancies at Santander Bank Polska S.A.
Pursuant to the resolution of the Management Board of Santander Bank Polska S.A. dated 29 October 2020, collective redundancies were to cover up to two
thousand employees by 31 December 2022. 1 031 employees have been made redundant since the start of the programme. At Santander Consumer
Bank S.A., the last collective redundancies programme was completed on 31 December 2021.
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> Employment of Santander Bank Polska Group
15 347
13 579
12 616
11 323
11 309
31-Dec-2018 31-Dec-2019 31-Dec-2020 31-Dec-2021 31-Dec-2022
Employment in Santander Bank Polska Group
as at 31 December in years 2018-2022 (in FTEs)
Santander Bank Polska S.A.
82%
Subsidiaries
18%
Employment structure in
Santander Bank Polska Group as at 31.12.2022
9 895
9 526
9
349
9 281
9 267
9 338
9 300
9 281
452
450
455
455
468
473
497
509
1 716
1 660
1 636
1 587
1 574
1 538
1 528
1 519
12 063
11 636
11 440
11 323
11 309
11 349
11 325
11 309
31-Mar-2021 30-Jun-2021 30-Sep-2021 31-Dec-2021 31-Mar-2022 30-Jun-2022 30-Sep-2022 31-Dec-2022
Employment at Santander Bank Polska Group (in FTE)
by quarter in 2021 and 2022
Santander Consumer Bank S.A. Subsidiaries Santander Bank Polska S.A.
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.
>
Employment structure of Santander Bank Polska Group
up to 25 yrs
6%
26-35 yrs
28%
36-45 yrs
36%
46-50 yrs
15%
over 50 yrs
15%
Employee structure by age
at Santander Bank Polska Group
Men
33%
Women
67%
Employee structure by gender
at Santander Bank Polska Group
Employees with minimum
university education
75%
Employees with other
than university
education
25%
Employee structure by education
at Santander Bank Polska Group
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HR strategy and priorities
The Business Partnership Division of Santander Bank Polska S.A. actively contributes to business transformation in a volatile and challenging economic
environment. It ensures continuous development of competencies of the future and leadership skills, enabling reorganisation of the bank as part of digital
transformation of the business.
The HR strategy for 2022 and the next years focuses particularly on creating an employee-focused corporate culture, improving employee experience by
modelling the corporate culture, ensuring employee wellbeing, digitalising processes and ensuring flexible work environment.
Strategic direction: Employee focus
The “Employee focus” strategic direction supports the Bank’s digital transformation through the continuous development of leadership, improvement of
employee experience and creation of a corporate culture promoting diversity and T.E.A.M.S. behaviours.
In 2022, the Bank’s eNPS – measuring how likely employees would recommend the Bank as a place to work – was 41, which was an all-time high score. It
was achieved due to delivery of the strategy in the following areas:
creating a corporate culture focused on trust, diversity and open communication (listening to the voice of the employee);
developing leadership skills in a changing business environment;
ensuring wellbeing of employees and recognising their work;
digitalising processes in line with the Agile methodology and ensuring flexible work environment based on a hybrid work model.
Employment of people with disabilities
In 2022, the Bank took a range of measures to increase the employment of people with disabilities. This included information campaigns for employees, as
a result of which many of them decided to share information about their disability with the employer. In 2023, the Bank will continue the initiatives
undertaken to raise the employment rate of people with disabilities.
Speak-up culture
To promote a speak-up culture, communication campaigns continued to be run in 2022 to encourage employees to report their concerns and act when they
observe misconduct. This included a series of webinars carried out to raise the awareness of bullying and other unwanted behaviours in the workplace, as
well as a series of articles and educational materials prepared for all managers by the Ethics and Relations Office (“Workplace Diagnostics”). In 2023, further
measures will be taken to develop a culture of openness and prevent workplace issues.
HR initiatives
Hybrid work model
As the risk of SARS-Cov2 infection decreased in 2022, the Bank’s Management Board decided that employees of the Business Support Centre should return
to the office. In H1 2022, a pilot was run to test the organisational and technological solutions, and since September 2022 employees of the Business Support
Centre have been working in accordance with the hybrid model (2–3 days in the office on average per week). Cultural and development activities were
launched to support the Bank’s employees and leaders in the transition to the new work model.
Modification of corporate behaviours
For many years now, Santander Bank Polska S.A. has been doing things The Santander Way. This concept sets out the Bank’s purpose, aim and how it wants
to do business: by being Simple, Personal and Fair. To that end, a list of behaviours is promoted to guide employees on a day-to-day basis.
Based on the results of employee and customer surveys across all geographies and businesses of Santander Group, the list of corporate behaviours was
updated in 2022 to speed up transformation of the organisation and make it more attractive for customers. The new corporate behaviours form an acronym:
“T.E.A.M.S.”, emphasising that people, teams and customers are the top priority for the Group.
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Other HR initiatives
A detailed description of selected HR initiatives that were carried out in 2022 as part of the implementation of the Bank’s strategy is included in Chapter XIII
"Statement on non-financial information for 2022."
HR management in response to the pandemic threat and the war in Ukraine
Covid-19
The fifth wave of the Covid-19 pandemic, which hit in Q1 2022, was the most severe one in terms of the number of confirmed cases among the Bank’s staff.
During that period, employees were recommended to work from home if possible, and meetings in person, both internal and external ones, were suspended.
As the pandemic-related limits were removed by the Ministry of Health at the beginning of March, the Bank’s employees are allowed to return to the office.
In-person meetings can now be organised. On 28 March 2022, the majority of Covid-19 restrictions were lifted (such as face masks, isolation and quarantine)
and on 16 May 2022 the state of epidemic was replaced by the state of epidemic emergency.
The Bank closely monitors the pandemic and the procedure implemented in case of Covid-19 cases at work still applies. It includes, among other things,
the following measures to prevent contagion:
basic safety regime (distance, disinfection and face masks);
registration of Covid-19 cases via a dedicated form and associated procedures (such as disinfection in the case of confirmed infections);
testing of employees who had contact with a person tested positive for coronavirus;
antigen tests for self-testing by employees who had Covid-19 symptoms and/or felt worse at work.
Statistics related to Covid-19 in 2022:
there were 953 confirmed cases among employees;
114 branches were closed due to Covid-19;
1,925 tests were made.
War in Ukraine
Following the outbreak of the war, Santander Bank Polska S.A. took prompt actions to support people from Ukraine.
Financial support for Ukrainian employees and citizens
Non-financial support for Ukrainian employees and citizens
Support for employees and contractors:
Assistance Fund –
financial aid for employees and
contractors from Ukraine (PLN 4,900 per person).
Advance payment of remuneration for up to three months
(available on request).
A possibility to apply for non-returnable financial aid or
low-interest loan from the Employee Benefit Fund;
“We Will Double Your Impact” – a fundraiser as part of which the
Bank doubled every donation made to Santander Bank Polska
Foundation. The total of PLN 4.25m was raised and donated for
humanitarian and medical aid in Poland and Ukraine.
Santander Group’s support: the Bank, together with Santander
Group banks in Europe, donated over PLN 4.5m to the
International Committee of the Red Cross (including PLN 500k
to the Polish Red Cross) and to the UN Refugee Agency – UNHCR.
“Kilometers for Ukraine” – a fundraiser for children from Ukraine
staying at three children’s homes in Poland.
Support for employees and contractors:
Additional paid days off – up to 5 days.
Ongoing psychological support.
Support in finding job for family members – a dedicated
mailbox for job inquiries, advice regarding vacancies and
career at the Bank and legal advice regarding
recruitment.
Flexible working hours for those in need.
Guarantee of employment (on return) for people going
to Ukraine.
Support for employees and managers (webinars and
materials on crisis management and psychological
support; counselling).
Providing accommodation to Ukrainian refugees using
the Bank’s infrastructure.
Launch of a website with information about aid for
people from Ukraine and the “Helping to help” platform
where employees can ask for or offer support for
Ukrainian citizens.
WAW-MAD humanitarian corridor –
Santander Group
chartered a plane to transfer 180 Ukrainian refugees to Spain.
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2. Management by objectives
Santander Bank Polska S.A. has an objectives management process in place which supports delivery of strategic objectives and staff development and
promotes attitudes in accordance with the Simple | Personal | Fair values and five corporate behaviours. The process allows for flexibility (as the objectives
can be modified along the way) and effective communication between employees and their line managers (frequent meetings, regular feedback, and
support of the OneHR system).
In 2022, the Bank implemented a new management-by-objectives process common for entire Santander Group. It is based on three dimensions: WHAT
(business objectives), HOW (the way the objectives are achieved) and RISK. A new rating scale and a new system were also implemented. The change
implementation was supported by a series of webinars, meetings and training sessions for managers and employees.
3. Components of Remuneration Policy
The Remuneration Policy of Santander Bank Polska Group was updated in 2022 to bring it in line with new regulations including:
revised EBA Guidelines on sound remuneration policies under Directive 2013/36/EU (EBA/GL/2021/04);
revised Remuneration Policy of Santander Group;
KNF recommendation on the maximum ratio of variable to fixed remuneration (arising from the Regulation of the Minister of Finance).
The new version was adopted in accordance with the Bank’s Management Board resolution of 16 February 2022, which was approved by the Supervisory
Board on 23 February 2022. The key changes included:
alignment of the general rules with EBA guidelines and Santander Group’s Remuneration Policy;
introduction of a principle of equal pay for equal work or work of equal value;
introduction of rules for measurement, analysis and definition of action plans for Gender Pay Gap (GPG) and Equal Pay Gap (EPG);
incorporation of a general rule on ESG targets/ limits for key function holders;
introduction of general rules on discretionary pension benefits;
refinement of the procedure with respect to a resolution increasing the ratio of fixed and variable remuneration.
In response to the dynamics of 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 2022 and its objective was to:
ensure that base salaries reflect market rates;
increase the pay of the lowest earners across the Bank;
ensure equal pay for women and men performing the same roles;
reward employees engaged in the Bank’s digital transformation and in strategic projects and initiatives;
reward top performers who demonstrate the Bank’s corporate values.
As a result of the review, the salary of 70% of the Bank’s employees was increased in Q3–Q4 2022. The salary review enabled the Bank to increase
competitiveness of remuneration and reduce the gender pay gap. The Bank constantly monitors salary rates across the market (based on e.g. payroll reports)
and takes relevant decisions as part of the remuneration strategy.
As the criteria stipulated in the bonus regulations were met, in 2022 the Bank’s employees were paid an annual bonus for 2021. The bonuses were paid in
March 2022. In the comparative period, the bonus payment criteria were not met. However, pursuant to the Remuneration Policy of Santander Bank Polska
Group, the discretionary awards were granted to top performers.
4. Training and Development
The Bank provides employees with a range of obligatory training courses to develop the skills required to perform a given role in the organisation as well as
optional training courses/ workshops/ programmes that help enhance technical and social skills, including competencies of the future. The Bank also runs
programmes supporting development of specific target groups and specific competencies.
The Bank manages the social potential and professional development of its staff based on the 70-20-10 approach, which combines learning through
experience (70), through others (20) and through structured courses (10). In line with that model, the Bank offers a wide array of training and
development opportunities.
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In 2022, the majority of training and workshops were delivered by experienced internal trainers, but external training providers were retained as well. The
Bank provided employees with access to modern e-learning solutions on internal and external training platforms. The Bank’s employees also participated
in training and development activities of Santander Group, using the opportunities and resources offered by the international organisation.
The main training initiatives in 2022 included:
Induction Programmes for employees of the distribution network, which were high on the training agenda in 2022 and covered 897 employees
(523 in 2021);
Development programmes for new SME advisors;
Programmes supporting leaders in talent management and strengthening leadership skills.
At Santander Bank Polska S.A., managers of various levels steadily enhance their leadership skills. The initiatives in this regard are described in the table
above, in “Other initiatives”.
Training in numbers
2022 2021
Average number of training hours per employee (Bank)
41.7 27.6
Average number of training hours per employee (Group)
35.1 23.2
VI. Relations with Customers
1. Service Quality and Customer Experience Management
Dynamic progress measured by the NPS
Customer experience is a key success factor and the main competitive advantage, particularly in the banking sector where services are easily comparable
due to regulations and technology. Alongside extensive changes in the market caused by pandemic-driven innovations and fintech solutions, customers
compare their experience from different sectors and their expectations are constantly growing.
The Bank is transforming its business by strengthening and improving relations with customers and their experience. It consistently develops skills, tools
and processes that support the areas which are key to customer experience. Customer-centric transformation covers both customer-facing areas and service
design teams.
The Bank’s ambition is to become a market leader based on the quality and depth of relationships with customers reflected not only in their satisfaction with
individual service areas but also in the likelihood they would recommend the Bank as a whole (NPS). The NPS is a key measure of how well the Bank caters
for customers’ needs and how satisfied customers are. It is used to assess the progress in delivery of enhanced customer experience.
As part of the quarterly planning process, the Bank projects the potential impact on the NPS and defines customer impact measures for each initiative. Once
a month, the Customer Forum is convened to discuss NPS results for individual business segments and identify key underlying initiatives. The Forum is also
a platform for sharing experience and ideas on how to build customer experience.
Santander Bank Polska S.A. is among the top four banks in Poland in terms of mass customer experience management.
Customers appreciate, among other things, the quality of banking services and security. One of the key assessment criteria
and an important area of competitors’ activities in this respect is the functionality of mobile application. At the beginning
of 2023, the Bank implemented a new version of the mobile application.
In 2022, Santander Bank Polska S.A. was ranked third in terms of the NPS
in the segment of high-net-worth customers and SMEs.
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New customer experience management policy
In 2022, Santander Bank Polska S.A. adopted the Customer Experience Management Policy (CX Policy) to complete the customer-centric transformation
process in 2019–2022. The individual elements of the Policy were developed and implemented over the past few years to increase satisfaction of customers
and their propensity to recommend the Bank. The Policy increases the maturity of the Bank and its employees in terms of customer centricity and improves
effectiveness of building positive customer experience.
The CX Policy describes the process of customer experience management and key customer-centric standards applicable at the Bank. Customer experience
management starts with the identification of customer’s needs, followed by definition of NPS targets and planning of relevant initiatives which are then
implemented, monitored and reported on. Customer-centric standards set the framework for delivery of initiatives improving customer experience. In 2022,
a special focus was placed on three standards: KOMPAS product and service design standard, empathic service standard and plain language standard.
Customer-centric standards in 2022
The KOMPAS product and service design standard is based on modern customer-centric design
principles.
To implement it, the research and design skills of dedicated teams were developed and new
tools, procedures and methods were introduced.
Thanks to this approach, solutions built and tested together with customers cater for their
specific needs and provide them with unique value, making the Bank stand out from its
competitors.
The plain language standard (“Rzecz jasna”) was introduced both in messages and documents
sent to customers and in internal communication.
Key agreements, terms and conditions and correspondence for customers were made in plain
language.
Work is also underway to change the layout of documents to highlight the key information and
use graphic presentation of more complex issues.
The plain language standard also includes rules for preparation of documents for people with
special needs.
In 2022, the second l
anguage audit took place, which confirmed that the Bank achieved the
planned plain language index.
The empathic customer service standard addresses customers’ expectations changed after
the Covid-19 pandemic.
The ability to combine digital solutions with branch services becomes increasingly important.
It was the main focus area of initiatives delivered in 2022. Equally important were measures
taken to ensure effective and friendly work environment for branch employees (eNPS).
Elements of the customer experience management process
Customer experience management at the strategic level
One of the directions set out in the strategy of Santander Bank Polska S.A. is “Customer Obsession”, meaning that each initiative or decision made to deliver
the Bank’s goals takes into account the quality and strength of customer relationship.
Simplicity, convenience, self-service and remote access are now the basic features of all services. But a key distinctive quality for higher-end customers is a
good relationship with their dedicated customer advisor.
Service standards
Customer service standards applicable at Santander Bank Polska S.A. include remote service standards for individual segments and reflect the commitments
adopted by the Bank as the foundations of good customer service.
KOMPAS product and
service design standard
Plain language standard
Empathic customer service
standard
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Our customer service credo:
We help customers resolve their issues here and now (irrespective of the segment).
We encourage customers to extend the scope of banking, also into other segments.
We support customers in using remote and omnichannel services.
We give recognition to each other and collaborate to serve customers’ interests.
Product and service design and development standard
KOMPAS – the standardised customer-centric product and service development process – is an Agile-based process specific to Santander Bank Polska S.A.
which supports the delivery of business objectives by focusing on customers’ needs and verifying hypotheses with customers. KOMPAS is about the practical
use of design and research methods in the complex and strictly regulated business environment of a large bank.
It requires advanced competencies as well as a very good knowledge of existing processes and procedures. KOMPAS is used on a day-to-day basis to check
if the products and services that are planned to be implemented meet customers’ needs and ensure positive customer experience, while supporting delivery
of business objectives of the Bank.
Management and monitoring of activities impacting customer experience at the operational level
As part of the quarterly planning process at the Bank (QBR), customer expectations are identified together with initiatives to be undertaken to meet them.
The initiatives are subject to regular reporting. For each initiative, the impact on the NPS is estimated and customer impact measures are defined and
monitored.
NPS results for all segments are monitored each month at the Management Board level. In addition, the results for the mass customer segment are subject
to thorough review.
Once a month, the Forum is convened to discuss NPS results for individual business segments and identify key underlying initiatives.
Collection, analysis and use of voice of the customer
The Bank has a complete decentralised customer survey system for the key segments. For each segment, standardised tools are used to understand the
customer’s perspective and assess the competitiveness of services provided by the Bank (in comparison to peers, if possible). Based on the survey results
and in accordance with the Agile way of working, a customer report is published before the start of each quarter presenting key information that may help
plan new initiatives.
Each segment also has an NPS simulator for assessing the potential impact of the solutions on customer experience measured by the NPS.
2. Complaints Management
Customers of Santander Bank Polska S.A. may file complaints at their convenience: in branch, by phone, via electronic banking or by traditional mail.
Responses to complaints are provided in the customer’s preferred form: by letter, text message or via online and mobile banking. Text messages are used
to acknowledge receipt of the complaint, close the case and communicate the form of providing response. If the case takes more than five (and subsequently
ten) days to process, a text message is also sent to communicate that fact to the customer.
In 2022, the quality of responses was further improved and measures were continued to shorten the turnaround times. The Bank takes efforts to ensure
that responses are clear and comprehensive. Banking jargon and complicated language are avoided. Robotisation is employed in complaint-handling, which
greatly increases routine tasks.
More information on the complaint handling process can be found in Chapter XIV "Statement on non-financial information for 2022”.
3. Barrier-free Banking and Digital Solutions
For 12 years, Santander Bank Polska S.A. has delivered the “Barrier-Free Banking” (“Obsługa bez Barier”) programme, designed to ensure access to the
Bank’s services and products for customers with diverse needs (people with disabilities, the elderly). The Bank steadily improves accessibility using advanced
technologies and ensuring appropriate conditions in traditional branches. Inclusive banking is one of the pillars of the Responsible Banking strategy. For
more information about the programme, see Chapter XIV “Statement on Non-Financial Information for 2022”.
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4. CRM Solutions
In 2022, CRM activities focused on personalisation of communication with customers. To this end:
The customer onboarding strategy was further developed: new communication options were created using an algorithm that matches the
offer, channel and message to the customer’s profile and activity.
The offer in digital channels was personalised in terms of the product and form of communication.
A range of campaigns were delivered to increase the NPS, including contextual campaigns, campaigns promoting innovative solutions and
raising awareness of security, and special offers.
Measures were also underway to encourage new customers to transfer their salaries to an account with the Bank and to increase cross-selling (e.g. in digital
channels using real-time signals), increase loyalty of customers and update customer data in terms of AML regulations.
VII. Investor Relations
1. Investor Relations at Santander Bank Polska S.A.
The ambition of the investor relations function of Santander Bank Polska S.A. is to maintain best-in-class standards of communication with capital
market participants in Poland and abroad. Fundamental to this dialogue are the following elements: accurate information, transparency and equal
treatment of all stakeholders.
As a listed company and the second bank in Poland in terms of market capitalisation (as at 31 December 2022), Santander Bank Polska S.A. actively
communicates with its stakeholders in order to satisfy their information needs in accordance with the highest market standards, applicable law and best
practice.
Particularly important to the Bank is the communication with shareholders, investors and analysts. Santander Bank Polska S.A. makes best efforts to provide
the above market participants with regular and timely access to high quality and clear information in order to facilitate the accurate assessment of the Bank’s
and the Group’s financial standing, market position and effectiveness of the strategy and business model.
The Bank’s investor relations unit engages in a dialogue 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. It also responds to questions about the current situation of the company. The
above activities are aimed to ensure adequate transparency, build stakeholders’ trust and promote the Bank’s image in capital markets.
In 2022, the following initiatives were undertaken as part of standard investor relations activities:
Four conferences were held to present market analysts with the Bank’s quarterly performance. In line with best market practice, they were open to
everyone interested and were broadcast online in Polish and English. The recordings are available on the Bank’s website
(https://bank.santander.pl/relacje-inwestorskie/serwis-relacjiinwestorskich.html.).
The representatives of the Bank’s Management Board and the Investor Relations Office organised regular meetings with investors and stock market
analysts (around 140 ones held in 2022, partly in the form of conference calls and virtual meetings).
The Bank’s representatives took part in eight conferences organised by various Polish and foreign brokerage offices.
At the end of 2022, 16 analysts from Polish and foreign financial institutions prepared and published reports and recommendations concerning the Bank’s
shares.
All information published by the Bank (concerning both current and past years) is available on the Bank’s website, “Investor Relations” service:
https://www.santander.pl/en/investor-relations. The “Best Practice” tab includes details on the application by the Bank of the principles contained in Best
Practice for GPW Listed Companies 2021 (https://www.santander.pl/en/investor-relations/best-practice).
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2. Share Capital, Ownership Structure and Share Price
Ownership structure in 2022 and the majority shareholder
As at 31 December 2022, 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.
The number of shares and votes held by individual shareholders as at the end of 2021 and 2022 is presented in the table included in Chapter XIII “Statement
on Corporate Governance”, Section 2 “Issuer’s Securities”.
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
> SHARE PRICE OF SANTANDER BANK POLSKA S.A. AND TRADING VOLUME IN 2022
0
100
200
300
400
0
200000
400000
600000
31-Dec-20
31-Jan-21
28-Feb-21
31-Mar-21
30-Apr-21
31-May-21
30-Jun-21
31-Jul-21
31-Aug-21
30-Sep-21
31-Oct-21
30-Nov-21
31-Dec-21
31-Jan-22
28-Feb-22
31-Mar-22
30-Apr-22
31-May-22
30-Jun-22
31-Jul-22
31-Aug-22
30-Sep-22
31-Oct-22
30-Nov-22
31-Dec-22
Price of Santander Bank Polska shares and their stock exchange trading volumes in 2021 and 2022
Share Turnover (number of shares) - left axis
Price of Santander Bank Polska Shares (in PLN) - right axis
Key data on shares of Santander Bank Polska S.A. Unit 31.12.2022 31.12.2021
Total number of shares at the end of the period
item
102 189 314
102 189 314
Nominal value per share
PLN
10,00
10,00
Closing share price at the end of the reporting period
PLN
259,40
348,50
Ytd change
%
-25,6%
87,7%
Highest closing share price Ytd
PLN
385,00
382,30
Date of the highest closing share price
-
12.01.2022
05.11.2021
Lowest closing share price Ytd
PLN
191,70
181,40
Date of the lowest closing share price
-
10.10.2022
29.01.2021
P/E for 12 months at the end of the period (Bank)
-
10,82
38,88
P/E for 12 months at the end of the period (Group)
-
9,47
32,04
Basic earnings per share for the reporting period (Bank)
PLN
23,97
8,96
Basic earnings per share for the reporting period (Group)
PLN
27,39
10,88
Capitalisation at the end of the period
PLN m
26 507,91
35 612,98
Average trading volume per session (PLN m)
PLN m
72 485
66 697
Dividend per share paid
1)
PLN
2,68
2,16
Dividend record date
-
25.05.2022
08.10.2021
Dividend payment date
-
01.06.2022
15.10.2021
Management Board Report on Santander Bank Polska Group Performance in 2022
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42
1) For more information, see “Dividend” section below.
2022 was a very challenging year for the entire WSE, notably the banking sector. WIG-Banks performed quite poorly compared to the market, losing nearly
28%. The share price of Santander Bank Polska S.A. decreased by 26% in the same period and it was not until Q4 that it managed to partially make up for
losses, as did the majority of companies. On 1 June 2022, the Bank paid a dividend of PLN 2.68 per share from the profit for 2021. The Bank’s share price
was highest on 12 January (PLN 385) and lowest on 10 October (PLN 191.70). This performance was a combined effect of a relatively high base from 2021
and adverse economic developments following the outbreak of the war in Ukraine. Galloping inflation and resulting interest rate hikes no longer supported
the valuation of Polish banks’ stock, after payment deferrals were introduced at the initiative of the government. In Q3 alone, nine listed banks posted nearly
PLN 13bn worth of losses in this regard. Santander Bank Polska S.A. was one of few banks which closed that period at a profit. Still, similarly to the entire
sector, it is exposed to the risk of deterioration in the quality of the credit portfolio. Apart from the war in Ukraine, the prospect of an economic slowdown
and a potential increase in the unemployment rate, coupled with persistently high inflation, will be the main factors that will affect the situation of banks in
2023.
> Share price of Santander Bank Polska S.A. vs key indices
40
60
80
100
120
140
31-Dec-21
31-Jan-22
28-Feb-22 31-Mar-22 30-Apr-22 31-May-22
30-Jun-22
31-Jul-22 31-Aug-22 30-Sep-22 31-Oct-22
30-Nov-22
31-Dec-22
Share price of Santander Bank Polska S.A. vs. indices in 2022
Share price of Santander Bank Polska S.A., WIG, WIG20 and WIG Banki at 31.12.2021=100
Santander Bank Polska S.A. WIG20 WIG WIG Banki
4. Dividend
Profit distribution and dividend policy in 2022
Dividend from the net profit for 2021
In accordance with the KNF letter of 23 February 2022, Santander Bank Polska S.A. met the basic criteria defined by the supervisor in its position of 9
December 2021 on the dividend policy of commercial banks for 2022 to pay a dividend up to 100% of the Bank’s profit for 2021. However, after applying
the additional criteria relating to the Bank’s sizeable portfolio of foreign currency mortgage loans for households, the maximum dividend yield was adjusted
to 30%.
Accordingly, the KNF recommended that the dividend to be paid by the Bank should not exceed 30% of the profit for 2021 and that the Bank should not take
any other measures beyond the scope of the ordinary business and operational activity which could result in reduction of own funds, unless such measures
have been agreed with the supervisor.
Taking into consideration the Bank’s capital adequacy and the KNF recommendations on an appropriate level of own funds and a dividend policy, the
Management Board recommended the distribution of the net profit for 2021, which was subsequently approved by the Bank’s AGM of 27 April 2022.
The net profit of PLN 915.9m for 2021 was distributed by the AGM as follows:
PLN 273.9m (29.90% of the net profit) was allocated to a dividend for shareholders;
PLN 457.9m (50% of the net profit) was allocated to the capital reserve;
PLN 184.1m (20.1% of the net profit) was left undistributed.
The total undistributed profit of PLN 1,056.8m for 2019 was allocated to the dividend reserve created by way of resolution no. 6 of the Bank’s AGM of 22
March 2021.
Management Board Report on Santander Bank Polska Group Performance in 2022
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The dividend payment from the profit earned in 2021 covered 102,189,314 shares of series A, B, C, D, E, F, G, H, I, J, K, L, M, N, O. The dividend per share was
PLN 2.68. The dividend record date was 25 May 2022 and the dividend payment date was 1 June 2022.
Profit distribution and dividend policy in 2021
Retention of the net profit for 2020
Pursuant to the recommendation of the KNF and taking into consideration the macroeconomic conditions, the Annual General Meeting of Santander Bank
Polska S.A. held on 22 March 2021 retained the entire net profit for 2020 of PLN 738.4m, allocating 50% (PLN 369.2m) to the capital reserve and setting
aside the same amount as a dividend reserve (capital reserve earmarked for payment of a dividend, including an interim dividend). The Annual General
Meeting authorised the Management Board to use the dividend reserve to pay an interim dividend pursuant to Article 349(2) of the Commercial Companies
Code.
Satisfaction of the dividend policy criteria for commercial banks
As at 31 March 2021, the Bank met the basic dividend policy criteria for commercial banks to distribute up to 100% of the net profit earned in 2020. However,
taking into consideration the additional criteria due to the Bank’s portfolio of foreign currency home mortgages, the maximum dividend yield was 30% of
the profit earned in 2020.
In its individual recommendation on the dividend policy of Santander Bank Polska S.A. issued on 20 July 2021, the KNF confirmed that the maximum dividend
yield was 30% of the net profit for 2020 and recommended that the Bank should not take any other measures which could weaken the capital base unless
such measures were agreed with the supervisor.
Payment of an interim dividend
On 1 September 2021, the Management Board of Santander Bank Polska S.A. decided to pay out an interim dividend for 2021 and allocate PLN 220.7m for
that purpose from the dividend reserve set aside from the capital reserve established to pay dividends or interim dividends.
On 1 September 2021, the Bank’s Management Board received the Supervisory Board’s approval for paying out an interim dividend of PLN 2.16 per share
The profit distribution covered 102,189,314 shares of series A, B, C, D, E, F, G, H, I, J, K, L, M, N, O. The record date for the interim dividend was 8 October
2021 and the payment date was 15 October 2021.
8,00 PLN 8,00 PLN
7,60 PLN
10,70 PLN
0,00 PLN
13,00 PLN
5,40 PLN
3,10 PLN
19,72 PLN
0,00 PLN
2,16 PLN
2,68 PLN
2011
2012
2013 2014 2015 2016 2017 2018
2019
2020 2021 2022
Dividend per share paid out by Santander Bank Polska S.A.
in years 2011-2022*
14.06.2018
14.06.2019
23.05.2011
8.06.2012
17.05.2013
16.05.2014
16.05.2016
14.06.2017
15.10.2021
1.06.2022
∗ Santander Bank Polska S.A. pays dividends in accordance with the dividend policy in place, taking into account individual recommendations of the KNF in this respect.
5. Rating of Santander Bank Polska S.A.
Santander Bank Polska S.A. has bilateral credit rating agreements with Fitch Ratings and Moody’s Investors Service.
The tables below show the latest ratings assigned by the agencies to the Bank, which remained in effect on the date the Report of Santander Bank Polska
Group for 2022 was authorised for issue.
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Ratings by Fitch Ratings
Rating category
Ratings changed/affirmed on
14.09.2022
1)
Ratings changed/affirmed
on 5.08.2022
Ratings changed/affirmed on
11.06.2021 and 23.09.2021
2)
Long-term issuer default rating (long-term IDR)
BBB+
BBB+ BBB+
Outlook for the long-term IDR
stable
stable
stable
Short-term issuer default rating (short-term IDR)
F2
F2
F2
Viability rating (VR)
bbb
removed from Rating Watch
Negative
bbb+
placed on Rating Watch
Negative
bbb+
Support rating
-
2
2
Shareholder support rating
bbb+
-
-
National long-term rating AA(pol)
AA(pol) AA(pol)
Outlook for the long-term IDR
stable
stable
stable
National short-term rating
F1+(pol)
F1+(pol)
F1+(pol)
Long-term senior unsecured debt rating (EMTN
Programme)
BBB+
BBB+ BBB+
Short-term senior unsecured debt rating (EMTN
Programme)
F2
F2 F2
1) Ratings of Santander Bank Polska S.A. applicable as at 31 December 2022
2) Ratings of Santander Bank Polska S.A. applicable as at 31 December 2021
On 5 August 2022, Fitch Ratings placed the Viability Rating (VR) of Santander Bank Polska S.A. on Rating Watch Negative (RWN), and on 14 September 2022
it downgraded it to “bbb” from “bbb+” and removed it from RWN. At the same time, the agency affirmed the Bank's long-term Issuer Default Rating (IDR)
at “BBB+” with a stable outlook.
The downgrade of the Bank’s VR reflected the increased pressure on the Bank’s credit profile from its operating environment in relation to government
intervention in the Polish banking sector.
The agency also withdrew the Bank’s Support Rating of “2” as it was no longer applicable. Based on the existing rating criteria and methodology, the Bank
was assigned a new rating, i.e. a Shareholder Support Rating (SSR) of “bbb+”.
According to Fitch Ratings, both IDR and SSR of the Bank were driven by a high probability of support from its parent, Banco Santander S.A. (A-/Stable/a-),
2nd largest bank in terms of capitalisation in the eurozone and 37th globally (as at the end of December 2022).
VR of Santander Bank Polska S.A. reflects the Bank's solid capital position, healthy funding and liquidity, recurring earnings and good asset quality on the
one hand and a significant exposure to risks from the economic environment on the other. Costs of legal risk connected with the foreign currency mortgage
portfolio additionally weigh on the Bank’s profitability.
Ratings by Moody’s Investors Service
Rating category Ratings affirmed on 20.12.2022
1)
Ratings upgraded on 3.06.2019
2)
Long-term/short-term counterparty risk rating A1/P-1
A1/P-1
Long-term/short-term deposit rating
A2/P-1
A2/P-1
Outlook for long-term deposit rating
stable
stable
Baseline credit assessment (BCA) baa2 baa2
Adjusted baseline credit assessment baa1 baa1
Long-term/short-term counterparty risk assessment
A1 (cr)/P-1 (cr)
A1 (cr)/P-1 (cr)
Senior unsecured euro notes rating (EMTN Programme) (P) A3 (P) A3
1) Ratings of Santander Bank Polska S.A. applicable as at 31 December 2022
2) Ratings of Santander Bank Polska S.A. applicable as at 31 December 2021
On 20 December 2022, Moody’s Investors Service affirmed the ratings of Santander Bank Polska S.A. as part of rating actions taken on nine Polish banks as
a result of interventionist government measures (including payment deferrals on foreign currency mortgage loans and higher contributions to the Borrowers
Support Fund) adversely affecting investor sentiment and financial performance of the Polish banking sector starting from Q3 2022. In consideration of the
above, the agency lowered the macro profile of Poland, an assessment of banks’ propensity to fail, by one notch from “strong-” to “moderate+”. Furthermore,
Polish banks, particularly entities with CHF mortgage loan portfolios, are more exposed to risk due to the weakening macroeconomic environment. Over the
past years, costs of legal risk increased dramatically due to a growing number of adverse court decisions against the banking sector regarding CHF mortgage
Management Board Report on Santander Bank Polska Group Performance in 2022
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loans. The situation may further deteriorate, depending on an opinion of the advocate of the Court of Justice of the European Union on a mortgage loan
indexed to CHF. The opinion is expected to be issued in Q1 2023 and will affect the ruling practice of Polish courts.
The agency affirmed all short-term and long-term ratings and assessments of Santander Bank Polska S.A. and maintained a stable outlook on the long-term
deposit ratings.
The long-term deposit rating with stable outlook at A2 and BCA and Adjusted BCA at baa2 and baa1, respectively, reflect high likelihood of affiliate support
from Banco Santander S.A. At the same time, the Bank’s capitalisation (even after profit distribution) and profitability provide a sufficient risk absorption
capacity. The Bank’s strong income generation capacity is expected to more than compensate for potential adverse implications from higher costs (including
cost of legal risk and litigation) and expected credit loss allowances. While the external environment may negatively affect asset quality, the Bank can boast
a lower-than-sector average NPL ratio, a solid NPL coverage ratio and a low share of CHF mortgage loans in the total loan book (4%).
VIII. Relations with External Environment
1. Responsible Banking/ ESG Strategy
Pillars of Responsible Banking
The objective of sustainable and socially responsible development at Santander Bank Polska Group is to build a long-term value for all stakeholders.
The Group’s approach to corporate social responsibility and sustainable development is defined in the Responsible Banking Strategy, which is an integral
part of the Group’s overall business strategy and takes into account ESG factors in addition to the Principles for Responsible Banking.
The Responsible Banking Strategy is based on two pillars, namely the corporate culture and sustainable finance.
As part of sustainable finance the Group pursues goals related to protection of the environment and prevention of climate change, which have become
increasingly important nowadays.
The above mentioned subjects are thoroughly discussed in Chapter XIV “Statement on Non-Financial Information for 2022”.
2. Communication with Stakeholders
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 the Bank’s social and business partners organised in accordance with the AA1000SES standard.
Since 2014, ten sessions have been held. They allowed the Bank to get to know the opinions and expectations of its stakeholders.
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.
Corporate Social Responsibility Report
The Bank informs its stakeholders about its CSR activities by means of a dedicated annual report and ESG webpage. In 2022, the ninth report was prepared
summarising the Bank’s social, economic and environmental impact. The ESG report was made available online in Polish and English.
It was prepared in accordance with the Global Reporting Initiative (GRI) standards (Core option), international guidelines (issued by the European
Commission, Warsaw Stock Exchange, the European Bank for Reconstruction and Development, the Task Force on Climate-related Financial Disclosures) as
well as Principles for Responsible Banking. Before publication, the key indicators were reviewed by an independent auditor.
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Marketing communication
Brand promise
Santander is a strong and stable brand that is primarily associated with its global market presence and, then, with sports sponsorship. The Bank is viewed
as a customer-centric financial institution.
In December 2022, the Bank’s brand metrics ranked high. Santander was among the TOP3 of most recognisable banks, ranking 3rd in terms of unaided
awareness and 4th in terms of Top of Mind.
In 2022, the Bank’s ATL communication was one of the best assessed in this category. The Bank’s advertisements stood out for their high persuasiveness,
brand association and positive appeal.
Underlying message of marketing communication
A bank that makes your life easier
In 2022, the Bank continued its ATL communication addressed to mass customers and based on “the bank that makes lives easier” narrative with our brand
ambassador – Marcin Dorociński (this campaign had been started in 2021). The underlying message is based on the customers’ strong need of a bank that
is modern and innovative, yet also strong and secure. Technologically advanced yet simple and flexible solutions help customers efficiently manage their
finances. At the same time, the Bank assures them that they do not sacrifice the security of their money for the convenience of new technologies. These
attributes are also of key importance for enhancing the customer-centric strategy and improving the Bank’s NPS.
Marketing campaigns
In 2022, a particular focus was placed on features of the mobile application. A strong emphasis was also put on messages concerning cybersecurity.
Communication activities were delivered using the existing platform, with Marcin Dorociński as the brand ambassador and with a well-recognised and
distinctive tune.
In 2022, the Bank launched eight nationwide ATL campaigns (TV, internet, social media, radio, OOH, branches) targeted at various customer segments:
millennials, teenagers, families and business enterprises.
Personal customer campaigns promoting the mobile app and its features (My goals, public transport tickets, taxi ordering, flower purchases, sign
language video chat, BLIK, NFC payments), account for a teenager, deposits and savings accounts.
The “Power of Winning” lottery campaign aimed to encourage the customers to participate in the lottery. Its purpose was to appreciate our
customers by giving them an opportunity to win the lottery.
SME customer acquisition campaign. Business owners could open a business account with value-added services (e-accounting, e-factoring and
other).
Christmas campaign – a heart-warming, touching commercial stressing the importance of taking care of cross-generational relations and of paying
attention to the loved ones. The commercial presents the features of My goals service helping customers to take care of good gifts that have great
power.
In March 20022, the Bank promoted its “We Will Double Your Impact” charity campaign to help Ukraine, ultimately raising over PLN 4m together with our
customers. The Bank also pro-actively promoted the proposition and solutions for citizens from Ukraine (free-of-charge operations/ transactions and Polish
language classes, fast-track account opening).
On top of that, the Bank organised product-related campaigns (online initiatives, displays at branches), which included:
Account with the mobile app (opening the app-linked account, BLIK, parking payments supported by the app);
Mobile deposit;
Account for a teenager with the mobile app;
Max Savings Account;
Lottery;
Business Account Worth Recommending with online services;
Account for the Young with the app.
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Social media
The Bank has built a large and engaged virtual user community. At the end of 2022, it had 16 profiles on six platforms (Facebook, Instagram, YouTube,
Twitter, TikTok, Linkedln). The Bank had 650,000 followers, with our publications reaching 10 million users per month.
The Bank’s Facebook fan page was the second most popular one among Polish banks. The Bank’s messages reached 6-8m users per month, 550k of whom
interacted with the fan page, which means that the content was interesting and relevant.
In addition, the Bank reported the highest sentiment ratio due to positive opinions posted on the fan page. At the end of 2022, the Bank decided to set up its
TikTok profile, becoming the first bank active in this social media channel. A community of almost 400 users was built in a month, the Bank reaching out to
a group of young users from generations Y and Z.
In 2022, the Bank received three awards in the Golden Clip contest (Polish: Złote Spinacze, a prestigious contest for the marketing and PR industry):
the golden award in the “finance” category and two bronze awards in “social media” and “content marketing” categories (respectively), for the
“Don’t believe in fairytales for adults” campaign delivered in social media. This campaign was also recognised by the jury of Golden Arrow and
KREATURY awards.
In addition to the above-mentioned social media campaigns, the Bank undertook the following initiatives:
Support for refugees from Ukraine: “We Will Double Your Impact” charity event, Polish language courses (organised by Santander
Universidades), free-of-charge money transfers to and from Ukraine, free-of-charge PLN and currency accounts as well as debit cards from our
Bank, fast-track procedure for opening accounts for new customers from Ukraine, Santander mobile application in the Ukrainian language
version;
For personal customers, promoting:
the following products: mobile deposit, Eco loan, My Goals, Account for the Young, Eco card, Visa card campaigns, Insurance discount;
(Travel insurance, insurance price comparison engine);
the following services: Autopay, CyberRescue, Telemedico, Bank with discounts; Santander Exchange, mobile application features
(Santander Open, mobile authorisation, trusted profile, BLIK);
other: “Moc Wygrywania” (Power of Winning) lottery;
For SME customers: Account Worth Recommending, campaigns promoting e-Services, webinars for entrepreneurs, “EmPOWERed in business”
contest;
Education and information campaigns: campaigns promoting cybersecurity (“Don't believe in fairy tales for adults”);
CSR activities: “Green Ribbon #ForThePlanet” (“Zielona Wstążka #DlaPlanety”), CSR Fairs, promotion of the CSR Report, International Day of Sign
Languages, Day of the Deaf; Earth Hour with WWF;
Initiatives that support Santander Universidades: communication of global and local programmes;
Other campaigns: promotion of Work Café outlets, Santander Foundation’s scholarships and grants, “Let talk about money” podcasts, “What do
you think?” radio show at Newonce radio;
Sponsoring intiatives: Legaue of Legends, Formula F1, UEFA Champions League.
Media house cooperation as part of One Europe
On 1 June 2022, we started to cooperate with Dentsu media group in all countries of Santander One Europe (Poland, Spain, Portugal, UK) and the USA. In
Poland, this initiative will cover the management of online and offline media and performance marketing. This is the very first international initiative which
will make it easier to manage media across the Santander Group.
Content marketing in the Internet
In 2022, content marketing initiatives were extended to include a strategy for year-round continued campaigns delivered on an ongoing basis and connected
with context communication planned for each month. The aim was to improve website positioning through a customised strategy (SEO) and generate
assisted conversions. This year, the Bank also developed a strategy and plan for a content platform where all marketing materials are collected.
In 2022, the Bank was recognised for its content marketing initiatives as a nominee to European Search Award.
Outreach campaigns
In 2022, the Bank developed a strategy for outreach and branding activities in digital channels – these initiatives had a direct impact on awareness,
consideration and NPS, while they had an indirect impact on sales activities (assisted conversion). Outreach/ branding campaigns were run for the Account
As I Want It, Account for the Young, SME and Santander Exchange. The Bank received an IAB Mixx Award in the “performance” category for the Account As I
Want It campaign.
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3. Social Resposibility
Santander Bank Polska Group 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. The Group undertakes various sponsorship, charity and corporate volunteering initiatives which are described in
detail in Chapter XIV “Statement on Non-Financial Information for 2022”.
In 2022, the sponsorship initiatives of Santander Bank Polska S.A. continued to focus on the following three main areas: education (particularly financial
education), sports, and culture. The pandemic, which continued during the first months of the year, and the related sanitary regime affected the form of
projects as well as intensity of measures taken, with a wider use of remote communication and promotion tools. The Bank focused particularly on long-
term projects which give a bigger opportunity to create lasting association between a given event and the Bank. New image-building projects were also
delivered involving the Bank’s experts from different areas. The Bank was actively involved in the promotion and communication activities related to the two
global sponsorship projects of Santander Group: Scuderia Ferrari and League of Legends European Championship (LEC).In 2022, Santander Bank Polska
Foundation performed educational, chairity and cultural donation agreements in cooperation with social partners. It also supported corporate volunteering
at Santander Bank Polska S.A. There are 1,972 volunteers at the Bank Poland-wide.
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IX. Business Development in 2022
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 2022). They are complemented by the ALM and Central Operations segment, which covers funding,
management of strategic investments and transactions which generate expenses/ income 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.
Retail Banking
Segment
Business and
Corporate
Banking Segment
Corporate and
Investment
Banking Segment
ALM and Central
Operations
Segment
Santander
Consumer
Segment
Segment Area Operating model
RETAIL BANKING
Customer
profile
Personal customers (divided into Standard, Premium, Select and Private Banking customer segments based
on their diverse needs and expectations).
Small and medium-sized companies (with annual turnover up to PLN 8m).
Key product
lines
Current and business accounts, savings products, consumer and mortgage loans, credit and debit cards,
insurance and investment products, clearing services, brokerage services, mobile phone top-ups, foreign
payments, Western Union money transfers and services for high-net-
worth customers, open banking
services.
Business loans, business deposits, cash management, leasing facilities, factoring, payment orders, letters of
credit, collections and guarantees, payment terminals, additional services.
Asset management services as part of investment funds.
Service
model
Relationship-building, sales and after-sales contacts with retail customers through the network of branches
and partner outlets, as well as remote channels (Multichannel Communication Centre, Santander internet
and Santander mobile).
Premium customers are serviced by dedicated advisors as part of their individual portfolios, based on a
personalised approach and regular contacts aimed at strengthening relationships and customer loyalty.
Private Banking and Select customers benefit from a personalised service model under which they can use
the support of a specialised advisor and the Select Line operating as part of the Multichannel Communication
Centre, which offers support via telephone. Private Banking customers have several dozen dedicated private
bankers operating from 26 locations around Poland, including four Private Banking Centres.
Firms with relatively low turnover are handled by SME advisors in branches and partner outlets. They can
al
so use the services of the Multichannel Communication Centre and electronic channels (Santander mobile
and dedicated services: Mini Firma, Moja Firma plus and iBiznes24).
Customers of Santander Brokerage Poland may invest via the Inwestor online system, Inwestor mobile
application, the Multichannel Communication Centre and at the Bank’s branches providing brokerage
services.
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Segment
Area
Operating model
BUSINESS AND CORPORATE BANKING
Customer
profile
Businesses and corporations with turnover of PLN 8m–PLN 1.2bn, local authorities and the public sector.
Key product
lines
Payment transactions, loans, deposits, cash management, leasing facilities, factoring, letters of credit and
guarantees.
Services to customers of other banks and
financial institutions provided under agreements with those
institutions.
Service
model
Business customers are managed by the Business Clients Department and the Corporate Clients
Department. These units encompass six regional centres (three Business Banking Centres and three
Corporate Banking Centres) divided into 29 offices located across Poland.
The specialised Business and Corporate Banking Department – Premium provides services to the Bank’s
largest customers, the public sector, and universities. It is also responsible for financing commercial
properties.
Customers have dedicated advisors who are responsible for the overall relationship. They are supported by
units specialised in transaction structuring, lending and product development.
Customers are provided with access to the Bank’s products and services via remote channels, including
internet and mobile iBiznes24 platform (featuring such modules as currency exchange and trade finance)
as well as call centres which handle a wide range of operating processes (Business Service Centre, SME
Service Centre, and Trade Finance Service Centre).
CORPORATE AND INVESTMENT
BANKING
Customer
profile
Largest corporate customers allocated to that segment based on their turnover (nearly 250 of the largest
companies and groups).
Corporations serviced within the international Santander Corporate and Investment Banking structures.
Treasury, syndicated lending, and advisory services for customers of other Divisions.
Key product
lines
Transactional banking (including cash management), deposits, working capital finance, mid- and long-term
finance, leasing facilities, factoring, letters of credit, guarantees, and trade finance.
Project finance, syndicated loans, arranging and financing of securities issues, financial advisory services
(including those related to mergers and acquisitions), and brokerage services for financial institutions.
FX and interest rate risk hedging products (offered to all customers of the Bank).
Service
model
Customers of the Corporate and Investment Banking Segment have dedicated product specialists and
managers who are responsible for the overall relationship.
They are provided with access to the Bank’s products and services via remote channels, including internet
and mobile iBiznes24 platform, as well as dedicated call centres (Business Service Centre and Trade Finance
Service Centre).
SANTANDER CONSUMER
Customer
profile
Personal and business customers.
Key product
lines
Hire purchase loans, cash loans (including consolidation loans), credit cards, online renewable limits,
special-purpose loans, car finance (refinance solutions, leasing facilities and leasing loans), business loans,
factoring and bank guarantees.
Term deposits and insurance products (mainly related to credit facilities).
Service
model
The Bank sells its products through:
a network of own branches and franchise outlets, which offer cash loans, credit cards and retail deposits;
a structure for mobile sales of car loans and leasing facilities;
a structure for mobile sales of corporate deposits;
a structure for mobile sales of hire purchase loans;
remote channels, i.e. a call centre and internet and mobile banking used to sell cash loans, credit cards and
hire purchase loans;
a network of partners offering the Bank’s car loans and leasing facilities (car dealers, second-hand car
dealers and intermediaries) as well as hire purchase loans and credit cards (retail chains and stores);
a remote channel for car loans.
Management Board Report on Santander Bank Polska Group Performance in 2022
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51
2. Business Development of Santander Bank Polska S.A. and Non-Banking
Subsidiaries
2.1. Main Development Directions
Santander Bank Polska S.A. is focused on the following strategic priorities:
Ensuring unparalleled experience for customers and employees.
Simplifying and digitalising products and processes.
Acquiring new customers and growing business, mainly in digital channels.
Strengthening the market position and image of the Bank as the best bank for business and retail customers.
Delivering projects in cooperation with Santander Group units (One Europe).
Other key focus areas:
Further optimisation of the brick-and-mortar distribution network.
Improving profitability of products and optimising asset structure.
The activities of individual Divisions are presented in the tables below.
2.2. Retail Banking Division
Product line
for personal customers
Activities of the Retail Banking Division in 2022
Cash loans
In 2022, the range of distribution channels in which customers could apply for ECO cash loan for eco-friendly solutions
was expanded to include network agents and intermediaries.
In the reporting period, the Bank offered numerous special deals on cash loans, including short-term online deals with
special pricing terms adjusted to the customer’s lifecycle.
The Bank extended the promotional offer launched in H1 2022 on a fixed-rate cash loan for up to 60 months, as it was very
popular among customers.
A 0% arrangement fee promotion was offered to customers applying for an overdraft in branches and via helpline.
The Bank adjusted cash loan pricing to changes in official interest rates. Analytical work was also underway in relation to
the planned replacement of WIBOR (Warsaw Interbank Offered Rate) by WIRON (Warsaw Interest Rate Overnight).
In 2022, cash loan sales of Santander Bank Polska S.A. were PLN 9.2bn, up 25.6% YoY. Sales generated via remote channels
accounted for 54.4% vs 43.7% in 2021. As at 31 December 2022, the cash loan portfolio of Santander Bank Polska S.A.
totalled PLN 15.0bn, up 2.5% YoY.
Mortgage loans
The Bank’s mortgage loan offer was expanded to include Guaranteed Home Loan, i.e. a no-deposit mortgage loan secured
with BGK guarantee (July 2022).
Processes were further simplified and solutions were put in place to reduce the necessary visits at branches:
The Bank centralised the dispatch of documents required to establish a mortgage (they are now sent directly to
customers).
It also simplified the process of executing an agreement on the assignment of receivables under a property insurance
policy and applying for replacement of a variable interest rate with a fixed interest rate on a loan (an annex can be
signed during one visit at the branch).
The functionality of the Santi chatbot was further enhanced to include new features (generation of a list of documents
to be submitted by customers applying for a loan, answers to FAQs related to post-sales services).
Documents required to establish and release mortgage are now sent to customer by post.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
52
Product line
for personal customers Activities of the Retail Banking Division in 2022 (cont.)
Mortgage loans
(cont.)
The Bank implemented mechanism required under legal regulations:
payment deferrals under the Act on support for borrowers (customers could conveniently apply for this solution
online);
reimbursement of a bridge margin collected until the entry of the mortgage to the land and mortgage register (in line
with the amended Act on mortgage loans) and pro-rata reimbursement of fees on early repaid loans.
As part of marketing activities, in 2022 the Bank:
Ran campaigns for: customers with variable-rate mortgage loans (to inform them about a possibility to switch to a
fixed interest rate for the period of five years), CHF loan borrowers (to encourage them to convert their loan to PLN at
a more favourable CHF rate than the market rate), and for Select customers;
Extended the marketing information on mortgage loans published on santander.pl and launched a new website with
information about services for mortgage loan borrowers.
In 2022, the pricing of mortgage loans was modified several times. Fixed interest rates for the first five years were changed
depending on 5Y IRS quotations and margins on variable-rate loans were increased. A three-month moratorium on
principal and interest payments was offered to Ukrainian borrowers.
In 2022, the value of new mortgage loans totalled PLN 7.1bn, down 26.2% YoY. Mortgage loans with a fixed interest rate
for the first five years of the lending period accounted for 52% of total mortgage sales.
The gross mortgage portfolio of Santander Bank Polska S.A. decreased by 6.3% YoY to PLN 50.9bn at the end of December
2022. PLN mortgage loans totalled PLN 45.1bn and were stable YoY.
The Bank is ranked third in the mortgage loan market with a share of 16.3% in terms of new mortgage loans and equity
releases and fourth with a share of 10.6% in terms of the value of the portfolio (data published by the Polish Bank
Association as at the end of November 2022).
Personal accounts and
bundled products,
including:
The number of PLN personal accounts grew by 6.8% YoY and reached 4.4m as at 31 December 2022. The number of
Accounts As I Want It (the main acquisition product for a wide group of customers) was 2.9m, up 15.6% YoY. Together with
FX accounts, the personal accounts base was nearly 5.6m (+8.7% YoY).
In 2022, the pricing model for personal and savings accounts and for debit and credit cards did not change. The Bank
continued to reward active customers with waiver of the account maintenance fee or debit or card fees.
Day-to-day banking products and services were modified in line with new market trends and customers’ expectations as
follows:
The buy-by-
click process for opening personal accounts for minors was simplified: now a parent only needs to
complete a simple electronic form (video-verification is not required).
The Bank implemented a dedicated personal account offer for Ukrainian refugees, waiving account maintenance fees,
card fees and fees for transfers to Ukraine.
Users of internet and mobile banking
were provided with an application to register for and monitor a new edition of
the “I recommend my Bank” (“Polecam mój Bank”) referrals programme, which supports sales of personal accounts.
The Bank launched an educational and promotional campaign called “PLN 100 of pocket money” (“100 zł
kieszonkowego”) for customers aged 13–17 who open an account with a debit card.
Together with business partners, the Bank offered a range of discounts available on the bankujzrabatami.pl platform.
Payment cards
In relation to payment cards, the Bank focused on promotional, sales and relationship-building activities to increase card
turnover.
A pilot of card plastic recycling process was run in branches to support sustainable development (using dedicated
shredders).
As at 31 December 2022, the personal debit card portfolio comprised 4.6m cards and increased by 5.8% YoY, generating
27.3% higher non-cash turnover YoY.
The credit card portfolio of Santander Bank Polska S.A. included 670.1k instruments, a decrease of 11.4% YoY. The non-
cash turnover increased by 14.8% YoY (in value terms).
Deposit and investment
products, including:
The Bank offers a wide range of investment products and services such as brokerage services, structured deposits and
investment funds, including funds managed by Santander Towarzystwo Funduszy Inwestycyjnych S.A., the Bank’s
subsidiary, as well as selected Polish and foreign funds.
In 2022, the Bank’s priority was to maintain the existing portfolio of deposit and investment products and apply an effective
pricing policy amid increasing interest rates and soaring inflation.
The outbreak of the war in Ukraine at the beginning of 2022 changed savers’ behaviours, mainly due to increased risk
aversion. As a result, the transfer of funds from investment products to bank accounts accelerated, coupled with increased
foreign currency purchases (USD, EUR) and cash withdrawals. The above trends were temporary.
Deposits
Due to increasing interest rates, the Bank’s deposit offer was adjusted in line with market trends. Interest rates on both
existing products and new savings accounts were modified 14 times.
The structure of deposits changed in the reporting period due to outflows from personal and savings accounts and growing
balances of term deposits.
As at 31 December 2022, total deposits from retail customers increased by 1.2% YoY to PLN 102.4bn. In line with the
market trends, term deposit balances grew by 217.6% YoY to PLN 29.9bn, while current account balances decreased by
21.1% YoY to PLN 72.3bn, including a 39.9% YoY decline in savings account balances to PLN 19.3bn.
In 2022, the most popular term deposit was one-month eTerm Deposit (eLokata) with an interest rate of 8%, introduced
in Santander online at the end of November and available for a short period. This deposit was opened by more than 110k
customers.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
53
Product line
for personal customers
Activities of the Retail Banking Division in 2022 (cont.)
Deposits (cont.)
My Goals service was expanded to include a new regular savings solution, whereby a part of salary is set aside
automatically.
In H1 2022, Santander Bank Polska S.A. launched one subscription for PLN Daily Range Accrual structured deposit linked
to a EUR/PLN rate with 100% capital protection.
Investment funds
Net value of assets in investment funds managed by Santander Towarzystwo Funduszy Inwestycyjnych S.A. was PLN
12.3bn, down 30.2% YoY.
In 2022, net sales of investment funds were negative at -PLN 4.0bn. Outflows were reported for all categories of
investment funds except for Santander PPK SFIO, with the highest negative net sales reported by government bond funds
and equity funds.
Short-term debt funds performed best and managed to increase the value of net assets during the year.
In 2022, the functionality of an online platform supporting investment funds was improved: the request processing time
was reduced by approx. 50% and plain language rules were implemented.
Periodical educational campaigns for customers were continued, including webinars on capital.
Brokerage services
Despite a decrease in trading in capital markets caused by the macroeconomic and geopolitical situation, Santander Bank
Polska S.A. arranged two largest tender offers for share of PLN 1.7bn and PLN 400m related to acquisitions. The Bank was
also active in the secondary market: it provided advisory services (in relation to, among other things, numerous M&A
transactions in the renewable energy sector), participated in capital increase transactions (including the largest share issue
during the year totalling PLN 1.9bn) and other transactions.
Secondary market transactions are the main business line of Santander Brokerage Poland. Structured products become
increasingly important too, as do private market-related services such as maintenance of shareholder registers.
From the beginning of the year, Santander Brokerage Poland made regular issues of structured deposits, including for
Select customers, who could use this offer for the first time in March 2022 (previously structured deposits were issued to
Private Banking customers). In H2 2022, the Bank expanded the range of products and services for high-net-worth
customers (PB and Select), offering products with shorter investment horizon (e.g. one year).
Santander Brokerage Poland communicated with customers mainly via electronic channels, which helped lower the cost
of paper correspondence and increase data security.
The Bank signed an agreement with a supplier of a new brokerage system, under which the internet and mobile services
for customers and back-office system will be modified. The new system will be launched at the start of 2024.
New solutions were implemented for customers investing in forwards and futures. They can check information on daily
market settlements in Inwestor online and effectively monitor the current status of investments.
The scope of the active stock market advisory service was expanded to include treasury bonds, as a result of which the
service is now also available to more conservative investors.
In cooperation with the Treasury Services Department of Santander Bank Polska S.A., the first treasury bond issues were
made in the secondary market.
In November 2022, GlobalConnect was launched (a new market organised by the WSE, which makes it possible for
investors to buy and sell foreign stocks in PLN on the Polish stock exchange). Santander Brokerage Poland is the only
Introducing Market Maker.
Bancassurance
In Q3 2022, a standardised insurance package (third party liability insurance, damage and theft insurance and personal
accident insurance) from four insurers (Benefia, Generali, InterRisk and Link4) was offered to customers in Santander
internet and Santander mobile. A motor insurance comparison engine was also deployed.
In 2022, insurance premiums collected increased by 24% YoY, mainly on account of sales of cash loan insurance.
Income from bancassurance was generated mainly on the basis of individual life and unemployment insurance packages
for cash loan borrowers (Życie, Życie+ and Praca), life insurance for mortgage borrowers (Spokojna Hipoteka) and business
loan borrowers (Biznes Gwarant), as well as life and health insurance (Życie i zdrowie) and home insurance (Locum/ Locum
Comfort).
Private Banking
Private Banking customers were offered structured bonds throughout 2022. In H2 2022, the sales of certificates in this
segment accelerated due to the issue of products with one-year maturity.
Management Board Report on Santander Bank Polska Group Performance in 2022
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54
Small and Medium Enterprises (SMEs)
Product line
for SMEs
Activities of the Retail Banking Division in 2022
Business accounts and
bundled products
The Bank offered a range of special deals on business accounts, including:
another edition of the special offer of the Business Account Worth Recommending (Konto Firmowe Godne Polecenia)
available online (including bonuses for specific banking operations and use of selected products and a waiver of
selected fees and charges for an indefinite period);
special
offers related to the business account: benefits with Fixly (a package of additional services available for
customers who open the business account on special offer); eShop with Santander (a benefit package for customers
running online business and using the business account);
special deal on POS terminals (in phones);
promotion of additional services: eBidSecurity/ eWadia (bid guarantees), eLeasing (leaseback up to PLN 20k), eHealth/
eZdrowie (private healthcare packages), eAccounting/ eKsięgowość, eAgreements/ eUmowy, eDebtCollection/
eWindykacja.
Between May and November 2022, the Bank ran “EmPOWERed in business” (“MOCne w biznesie”), a series of workshops
and competitions for women looking to start or expand their business. The participants were offered a special deal on the
Business Account Worth Recommending called “EmPOWERed at the start” (“MOCne na starcie”) and lease products with
a fuel card with free first refuelling.
Loans
To increase customer satisfaction with products and services, the Bank introduced a number of new functionalities in SME
processes in the reporting period:
Offered online loans to first-time borrowers;
Implemented improvements in remote channels in relation to overdrafts secured with de minimis guarantee;
Simplified the customer statement submission process;
Streamlined the overdraft extension process;
As part of development of the SME offer, the Bank prepared:
a special offer for customers transferring their exposure from another bank, including a lower margin and an
arrangement fee of 0%;
a special offer of 0% arrangement fee on loans bought in remote channels and 0.5% fee on other loans;
a credit offer for customers using eAccounting services;
simplified financial data confirmation rules for sole traders and facilitated lending procedure for B2B customers.
A prelimit offer was prepared for existing customers of the Bank and the leasing company.
Deposits
Standard and negotiated term deposits for business customers have been back on offer.
Standard deposits are available to SME customers in branches and internet and mobile banking services.
In addition, the range of structured deposits for business customers was extended to include 3-month and 6-month
deposits linked to currency exchange rates. They offer better opportunities for investing surpluses where a single amount
exceeds PLN 500k.
Product line
for SMEs
Activities of Santander Leasing S.A. in 2022
Leasing
In 2022, Santander Leasing S.A. financed non-current assets of PLN 6.8bn, i.e. at the level comparable to the previous year,
both in the case of vehicles, and machines and equipment. This result was achieved amid slowdown in the leasing market
caused by increasing interest rates, uncertainty related to the war in Ukraine, and limited availability of assets.
In July 2022, the company extended the BGK guarantees for leasing, a programme supporting businesses affected by
Covid-19 and the crisis caused by Russ
ia’s invasion of Ukraine. The above guarantee offer facilitates access to funding for
SME customers.
The company expanded the scope of the automated decision-making process for business customers, improving its
effectiveness and reducing turnaround times.
In Q4 2022, SME customers were offered long-term rental of passenger cars and vans.
In Q4 2022, the company reviewed the photovoltaic panels financing options, which translated into an increase in the
average transaction value and contributed to dynamic growth in sales of those products (+80% YoY).
Management Board Report on Santander Bank Polska Group Performance in 2022
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55
2.3. Business and Corporate Banking Division
The Business and Corporate Banking (BCB) Division pursues the strategic goal of Santander Bank Polska S.A. which is to become the best business bank and
to be among the top three banks in terms of the market share. It strives to ensure best-in-class customer experience (confirmed by outstanding NPS survey
results) by investing in new CRM platforms and processes. Santander Bank Polska S.A. wants to become both the bank of choice and the employer of choice.
This strategic goal is measured using a range of indicators which cover all stakeholder groups. The market position is assessed on the basis of NPS as well
as employee engagement and motivation.
The priorities of the Business and Corporate Banking Division for 2022 were set in accordance with its strategy, observations and lessons learned from the
last year. The Business and Corporate Banking Division focuses on the following strategic priorities:
ensuring unparalleled experience for customers and employees and strengthening the Bank’s market
position;
simplifying and digitalising key products and services;
acquiring new customers and growing business, mainly in digital channels;
delivering projects in cooperation with Santander Group units.
Business highlights of 2022:
Increase in the number of mobile
customers
+10% YoY
Increase in the number of e-commerce
transactions
+12% YoY
Increase in FX income from eFX platform
+28% YoY
Utilisation of trade finance limits
+18% YoY
Growth of credit volumes
+13% YoY
Performance of selected business areas
The Business and Corporate Banking Division pursues its strategy based on the strategic priorities. The relationship-building and acquisition activities
contributed to the continued growth in the majority of business lines along with a satisfactory quality of the credit portfolio. The table below presents the
activities of the Business and Corporate Banking Division in 2022 in particular areas.
Area Activities of the Business and Corporate Banking Division in 2022
Business
developments
Strong business growth in 2022 despite the challenging macroeconomic environment, including an increase in income from
trade finance (+17.6% YoY), treasury products (+19.0% YoY), leasing (+11.4% YoY) and transactional banking (+10.4% YoY).
Sound sales performance, notably in terms of credit limits (+15.2% YoY), trade finance limits (+15.3% YoY), factoring (+23.8%
YoY) and leasing (+6.2% YoY).
Increase in volumes, including lending volumes (+12.1% YoY, and +14.3% YoY excluding the property sector) and factoring
volumes (+29.8% YoY).
Growing sales in digital channels, particularly in terms of currency exchange (+27.6% YoY) and e-guarantees.
Increased transactional activity of customers (+7.0% YoY), including e-commerce transactions (+11.6% YoY).
High quality of the corporate credit portfolio coupled with a low and stable cost of credit.
Management Board Report on Santander Bank Polska Group Performance in 2022
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56
Area Activities of the Business and Corporate Banking Division in 2022 (cont.)
Customer experience
Further measures were taken to enhance customer experience and improve NPS including:
faster execution of customers’ instructions thanks to automated solutions (including bots);
introduction of changes in iBiznes24 electronic banking;
development of advisors’ skills and enhancement of the remote channels functionality;
start of periodic customer surveys on FCR (First Contact Resolution) and satisfaction with services relating to non-credit
instructions;
implementation of customer contact standards in the unit handling non-credit instructions.
Ongoing analysis of the voice of the customer based on interactions with customers. Continued focus on customers’ needs and
delivery of a real business value.
Further development of customer centricity by increasing the quality of customer contact and simplifying the credit process,
procedures, product range and the language of communication with customers.
The resulting steady increase in the relationship NPS and the electronic banking (iBiznes24) NPS.
Business
transformation/
digitalisation
Continuation of digitalisation and development projects aimed to ensure best-in-class services.
Launch of a new version of iBiznes24 electronic banking platform featuring a new FX module. Further changes in iBiznes24
mobile.
Increase in the number of customers’ operations in remote channels, including in the self-service zone of iBiznes24 electronic
banking.
Delivery of further initiatives to encourage customers to use remote channels:
introduction of a new framework agreement based on a global plain language standard;
facilitation of agreement generation in the e-Documentation tool.
Dynamic growth in the share of e-guarantees in the total number of guarantees as a result of the promotion of the paperless
concept and use of an electronic signature.
Waiver of selected fees and charges as part of simplification of iBiznes24 electronic banking offer with a view to improving NPS
and optimising the Bank’s operations.
Implementation of a simplified process for setting charge card limits for existing customers based on an account history for the
last six months.
Introduction of an option for customers to buy a qualified signature via electronic banking of Santander Bank Polska S.A., which
simplifies and speeds up the execution of documents with customers and reduces the workload. Agreements are made
remotely in electronic form and can be easily archived.
Further development of the CLP tool:
an increase in the amount of the automatically assigned limit in CLP to PLN 5m, which makes the credit decision-making
process much simpler and faster;
implementation of new functionalities, including a multi-currency credit line and leasing limit as well as other changes
extending eligibility for the new process;
the resulting considerable increase in the number of credit customers handled by the Bank and substantial limitation of
email correspondence on the Business side, reducing turnaround times.
Implementation of:
#4US – a new transformation programme focused on improving the work environment for all employees of Business
and Corporate Banking and increasing the income potential of the Division;
#4Leaders – a new leadership skills development and experience sharing programme.
Implementation of GTS (One Trade) – an end-to-end tool for cross-border paym
ents and one of the drivers of the digital
transformation of Santander Group. The new service supports delivery of the Group’s One Europe strategy, enabling further
growth in line with the common objective. Key benefits of the platform:
integration – globa
l view of all current accounts in all currencies; information from different countries available in one
place;
access to information – monitoring of all cross-border transactions with full transparency;
easy-to-manage tool – a possibility to consolidate the account and control international payments and cash flows
Public sector
Steady increase in the number of local authorities serviced by the Bank, from provinces to cities and towns to municipalities.
Growth of structured finance for local authorities combined with optimisation of RWA levels.
Increase in the share of financing for local authorities following the successful acquisition of the DNB Bank portfolio in
September 2022.
Active support for new solutions related to energy transformation and zero-emission public transport.
Management Board Report on Santander Bank Polska Group Performance in 2022
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Area
Activities of Santander Factoring Sp. z o.o. in 2022
Factoring
The credit portfolio of Santander Factoring Sp. z o.o. decreased by 8.1% YoY to PLN 7.0bn as at 31 December 2022.
The receivables purchased by the company increased by 12.8% YoY in 2022 to PLN 40.1bn, which ranks the company
fourth in the factoring market.
Santander Factoring Sp. z o.o. continued its cooperation with BGK in respect of factoring programmes.
In January 2022, the first ESG-linked factoring agreement was signed. The transaction was based on factoring
combined with a credit facility for one of the largest retailers in Poland.
2.4. Corporate and Investment Banking Division
The Corporate and Investment Banking (CIB) Division provides an end-to-end support to the largest corporate customers of Santander Bank Polska S.A. As
at 31 December 2022, the active CIB customer base included nearly 250 of the largest companies and groups in Poland (allocated to that segment based
on the turnover) representing all economic sectors.
Leveraging the opportunities arising from the global presence of Santander Group, the CIB Division renders services to corporations within international
structures of Santander Corporate and Investment Banking and cooperates with several Santander Group units.
Key achievements in 2022
Top bond issue arranger in Poland according to the Bloomberg League Table.
First position in the Bloomberg League Table in terms of the value of transactions in the Polish capital market.
Second position of the brokers team and fifth position of the equity research team in the ranking published by Parkiet.
Warsaw Stock Exchange Award (Market Maker of the Year in the spot market).
In 2022, units of the Corporate and Investment Banking Division focused on the following initiatives:
Unit Key activities in 2022
Credit Markets
Department
Funding (loans and corporate bonds issues) towards medium- and long-term investments of CIB customers provided by the
Division single-handedly and in cooperation with other units.
Execution of deals as part of project finance and syndicated lending, including:
Co-financing of photovoltaic and wind farm portfolios with a total capacity above 723 MW, including co-financing of a
wind farm portfolio of approx. 150 MW in cooperation with the Global Transactional Banking Department, Banco
Santander S.A. and an export credit agency.
Co-financing for companies from the residential lettings and logistic property sectors.
Participation in syndicated lending for companies from the infrastructure, construction and manufacturing sectors.
Co-financing of acquisitions in the TMT and e-commerce sectors.
Active communication with key customers and expert and/or
operational support in terms of acquisitions, project finance,
infrastructure finance, securitisation structuring and finance, and debt and rating advisory services, notably in the retail, TMT,
renewable energy and infrastructure sectors.
Stable activity in terms of asset turnover and underwriting:
In H1 2022, financing of several billion PLN was successfully syndicated for a customer from the telecommunications
sector.
In Q4 2022, several billion PLN worth of syndicated facility was started to be arranged for a customer from the
telecommunications infrastructure sector.
Despite uncertainty caused by the geopolitical situation, the activity in the local bank debt market was stable in H1 2022
but deteriorated in H2 2022 due to growing cost of PLN finance for foreign banks operating in Poland.
Transactions in the renewable energy, infrastructure and logistics sectors were most popular.
Continuation of the service development strategy in terms of bond issue arrangement (DCM) in Poland and abroad. Top bond
issue arranger in Poland according to the Bloomberg League Table in terms of the value of bond issues with maturity above
one year. Santander Group (supported by units of Santander Bank Polska S.A.) participated in all eurobond issues made in
2022 by Polish entities, i.e. two issues for the State Treasury (EUR/USD), two transactions for Bank Gospodarstwa Krajowego
and one issue for PKO Bank Hipoteczny.
Management Board Report on Santander Bank Polska Group Performance in 2022
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Unit Key activities in 2022 (cont.)
Credit Markets
Department
(cont.)
Co-arrangement of Poland’s largest issue of sustainability-linked corporate bonds totalling PLN 2.67bn for Cyfrowy Polsat
S.A. (with Santander Bank Polska S.A. acting as an ESG advisor and joint bookrunner) and execution of several deals for
financial sector entities totalling approx. PLN 2.2bn (with the Bank acting as a joint or sole bookrunner).
Widening of credit spreads following the outbreak of the war in Ukraine, coupled with a limited supply of new corporate
bond issues due to higher yields of government bonds connected with increased volatility of the Polish bond market.
Capital Markets
Department
Leading M&A advisor in the transition of the Polish energy system to renewable energy sources and delivery of the Bank’s
green agenda, including advisory services for:
the buyer in the acquisition of 1 GW solar platform;
the seller in the sale of 51 MW photovoltaic platforms constructed in 2021–2022;
the renewable energy platform operated in Poland and Baltic states in the search for a minority shareholder for the
purpose of a capital increase to EUR 200m;
the seller in the sale of a renewable energy platform.
Advisory services in connection with acquisition and intermediation in the tender for shares of:
Poland’s largest company specialising in glass recycling (yet another initiative of the Bank supporting customers in their
transition to a circular economy);
one of Poland’s largest breweries.
Advisory services in relation to the sale of one of Poland’s largest aluminium processing companies (currently suspended).
Offering a qualifying holding in a WSE-listed company by way of accelerated bookbuilding.
The increase in geopolitical risks following the outbreak of the war in Ukraine significantly impacted transaction processes
and investor activity.
Compared to the previous years, investors were less active in the equity market. This was additionally
affected by negative sentiment caused by high inflation, increasing interest rates and fears of economic slowdown among
other things. As regards private transactions, investors’ concerns over potential geopolitical risks for the entire region were
not as considerable as before. The majority of private transaction processes suspended in March 2022 have been gradually
resumed and new transaction processes have been started.
Global Transactional
Banking Department
Business trends in other areas:
The upward trend in drawdown of overdrafts observed since Q1 2022 continued until the end of the year. The utilisation
of credit lines in individual quarters was higher YoY.
There is no significant direct exposure of GTB Lending customers to the Russian, Ukrainian or Belarusian markets (a
several percent share in total revenue). While the repayment capacity of GTB Lending customers has not deteriorated
significantly to date, their situation is monitored on an ongoing basis, including due to an increase in interest rates and
cost of finance.
Changes were introduced to the guarantee scheme as part of the BGK support package for businesses. At the turn of
July and August 2022, the Crisis Guarantee Fund was set up to provide liquidity and investment guarantees as well as
factoring limit guarantees to medium and large companies which can obtain higher financing.
Financial
Markets Area
The Financial Markets Area focused on development in accordance with its strategy, particularly on process effectiveness,
automation, digitalisation, new technologies and innovations, ecosystems and 24/7 access. The main initiatives designed to
increase process effectiveness, automation and digitalisation in the unit included:
Improvement of the sale of fixed-rate loans for SME customers.
Extension of the scope of interest rate hedging products available as part of an automated credit workflow.
Expansion of the functionality of e-Generator to include an annex execution option for treasury agreements and further
improvement of treasury and corporate agreement generation.
Further automation of investment line products.
Implementation of innovative tools (Google Analytics) to optimise sales processes connected with currency exchange
in electronic channels.
Implementation of a proc
ess and tools for setting individual margins for currency exchange transactions made by SME
customers in electronic channels.
Design of currency exchange solutions for a new mobile app.
Improvement of regulatory processes, including those related to target markets and ex-ante costs.
Ensuring pre-
trade transparency for liquid interest rate hedging instruments as part of obligations of a systematic
internaliser.
Implementation of the Autorates module in the Financial Markets Platform to automate calculation and distribution of
interest rates.
Completion of the first and launch of the second stage of the global project focused on the management of FX positions
in electronic channels (e-Book).
Design of global solutions for automation of currency exchange (PagoNxt project).
Design of solutions for digitalisation of the customer onboarding process (procedures to be completed before
establishing relationship with the customer).
Migration of treasury tool functionalities to the new infrastructure.
Management Board Report on Santander Bank Polska Group Performance in 2022
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Unit Key activities in 2022
Financial
Markets Area (cont.)
The main activities related to services for business customers of Santander Brokerage Poland included:
Warsaw Stock Exchange Award (Market Maker of the Year in the spot market).
Second position of the brokers team and fifth position of the equity research team in the ranking published by Parkiet.
Successful implementation of a new product (Global Connect).
Activities in the equity research area:
Publication of recommendations with regard to CEE listed companies.
Providing institutional investors with an opportunity to participate in investor conferences.
Organisation of the “Santander Video Gaming Night”, an event bringing together 11 Polish computer game companies
and 50 institutional investors.
Business trends:
In H1 2022, the turnover in the FX market increased due to high economic growth and high inflation. In Q3 2022, a
slowdown was observed, affecting the number of active customers and transactions and volumes in the FX market. It
was combined with a lower demand for hedging transactions due to companies’ difficulties with making projections
for the next quarters. The above trend continued in Q4 2022.
A lower demand for investment loans impacted the number of hedging transactions. High interest rates decreased
customers’ interest in hedging solutions, and lower margins were generated on existing transactions.
It was a very good year for investment products as customers looked for alternative investment opportunities to invest
surpluses.
Management Board Report on Santander Bank Polska Group Performance in 2022
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3. Business Development of Santander Consumer Bank Group
Strategic priorities
Santander Consumer Bank S.A. (SCB S.A.) has defined five strategic priorities to increase its competitive advantage in terms of product range, notably in
electronic channels.
Priority Objective Action
Customer focus
To strengthen relationships with customers and
increase their satisfaction.
To gather customer feedback about new products
and processes.
To improve products and processes based on
customer feedback.
To use advanced customer analytics tools.
Leader of e-commerce
To develop and implement solutions which will
position the Bank as a strategic provider of
financing in the electronic channel.
To grow the share of sales via the electronic
channel.
To develop processes and financial products aligned
to e-commerce requirements.
To build partnerships with entities from the e-
commerce sector.
Leader of growth
To increase the share in the consumer finance
market (to maintain at least the existing customer
acquisition levels in the credit area).
To launch new products.
To develop sales tools.
To establish and strengthen relationships with
business partners.
Data management
expert
To improve the Bank’s technological and data
management capabilities.
To raise employees’ knowledge about the latest
analytical methods.
To automate processes.
To improve existing and implement new
technological solutions.
Employer of choice
To develop talents and corporate culture and
attract highly-qualified staff.
To improve working conditions.
To foster the corporate culture.
To build the employer brand and support upskilling.
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Key business development directions
In 2022, Santander Consumer Bank Group focused on:
Strengthening the leadership position in the hire purchase market through stable share in traditional sales, maintained relationship with large retailers
and profitability of cooperation with trade partners, further growth of online sales as well as identification of new sales growth opportunities.
Further acquisition of customers based on consumer finance products and credit cards and maximisation of sales opportunities through cross-selling
and up-selling.
Maximising the effectiveness of customer contacts and optimising the product range. Substantial growth of sales in remote channels (including online)
and launch of cash loan sales in the mobile application.
Focus on the SME segment due to unfavourable developments in the automotive market, leveraging the extended base of distribution partners.
Key challenges in 2022
Maintaining the market share and the balance between sales volumes and sales profitability.
Adjusting the product range, sales channels and customers service channels to changing needs and regulations.
Adjusting loan interest rates to new official rates.
Key achievements in 2022
Dynamic digitalisation of business with potential for further improvements:
all credit products available in remote channels
276k active users of mobile application
increase in the share of remote channels in financing sales: 51.3% (+20.6 p.p. YoY)
increase in the share of remote channels in cash loan sales: 29.0% (+7.3 p.p. YoY)
new products aligned to changing customers’ expectations and market conditions: Online Revolving Limit, Online Savings Account
One of the top Polish banks in terms of NPS
Performance of selected business areas
Area Activities of Santander Consumer Bank Group in 2022
Lending
As at 31 December 2022, net loans and advances granted by SCB Group amounted to PLN 15.6bn and increased by
3.4%
YoY on account of loans to business customers (lease receivables, working capital loans and hire purchase loans). At
the same time, the value of cash loans and credit card receivables went down and the mortgage loan portfolio was
gradually maturing (no new sales).
The Bank adjusted loan interest rates in line with prevailing market trends.
It offered cash loans and car loans with a fixed interest rate and credit cards with a fixed monthly payment in accordance
with customers’ expectations. This was accompanied by communication campaigns concerning the above products.
The Bank introduced a variable rate on hire purchase loans (which normally bear a fixed interest rate) for the renewable
energy sector and agreements with min. 60-month lending period. The maximum tenor of a cash loan was extended from
96 to 120 months.
The range of credit facilities was extended to include a Clean Air (Czyste Powietrze) cash loan secured with a guarantee
from Bank Gospodarstwa Krajowego, enabling borrowers to receive a subsidy from the Regional Fund for Environmental
Protection and Water Management (WFOŚGW) for replacement of old inefficient heating devices and for energy efficiency
improvements.
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Area Activities of Santander Consumer Bank Group in 2022
Ledning (cont.)
The Bank strengthened its position in the electronic channel (eCommerce) by increasing sales of new products financing
online transactions (special-purpose loan and Open Online Limit).
Sales of credit cards and cash loans were supported by promotional campaigns, e.g. a referral programme for customers
of Santander Consumer Bank S.A. valid until the end of 2022, under which both a referring customer and a customer taking
out a cash loan or credit card were rewarded with a voucher to be used at a popular network of grocery stores. Cash loans
were also promoted as part of the “Last Minute” campaigns offering cash loans on preferential terms for a short period of
time.
In the segment of hire purchase loans, the Bank continued to focus on the cooperation with retail chains and further growth
of e-commerce. In 2022, Santander Consumer Bank S.A. extended the term or scope of cooperation with three key partners
from the household appliances sector, maintaining its leadership position in the consumer finance market.
In 2022, the Bank sold the written-off portfolio of cash loans, hire purchase loans and car loans, as well as the written-off
and active portfolio of mortgage loans totalling PLN 549.5m, with a P&L impact of PLN 96.1m gross (PLN 78.0m net).
Deposits
As at 31 December 2022, deposits from customers of Santander Consumer Bank Group totalled PLN 10.3bn and increased
by 11.5% YoY, supported by dynamic growth of savings account balances and corporate deposit balances.
In 2022, the popularity of remote banking channels continued to grow, as did the demand for shorter-term deposit products
(up to one year) and savings accounts. The Bank steadily adjusted its deposit pricing to dynamic changes in the market
environment and actions taken by competitors. The Bank’s marketing activities focused in particular on the online channel.
Other products
In July 2022, the Bank’s partner outlets started to sell insurance which is not linked to banking products: “My Home” (“Mój
Dom”) and “My Health” (“Moje Zdrowie”). These two insurance policies are offered by the Bank’s branches, along with the
third non-linked product: “Safe Finance” (“Bezpieczne Finanse”).
In late August 2022, the Bank implemented life insurance linked to cash loans, which is compliant with the
recommen
dations of the Office of Competition and Consumer Protection (UOKiK). The “Help at your beck and call” (“Pomoc
na zawołanie”) assistance insurance linked to a cash loan and credit card was replaced by the “My Home” (“Mój Dom”) non
-
linked insurance.
Sources of funding
In September 2022, the Bank signed an agreement with EBRD providing for PLN 350m worth of funding for energy
transition projects. The funds will be used to finance investments in photovoltaic systems.
As part of the joint debt securities i
ssue programme, in 2022 Santander Consumer Bank S.A. and Santander Consumer
Multirent Sp. z o.o. issued one tranche of 2-year bonds each with a total nominal value of PLN 565m (including PLN 300m
worth of bonds issued by the Bank).
In December 2022, the Bank made changes to the securitisation of hire purchase loans: the transaction executed in 2019
was repaid and settled, and a new transaction was launched. As a result, PLN 1bn worth of new funding was raised. The
new transaction is a revolving transaction and is expected to mature in two years.
Santander Consumer Multirent Sp. z o.o. renewed the securitisation of lease receivables, which increased the related
liability to PLN 891m in nominal terms.
Furthermore, in December 2022 the Bank entered into a syn
thetic securitisation of an unsecured hire purchase loan
portfolio of PLN 1,146m, which reduced the level of risk-weighted assets.
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X. Organisational and Infrastructure
Development
1. Organisational Changes in Santander Bank Polska S.A.
Continuation of the remote work model
As the risk of SARS-Cov2 infection decreased, the Bank’s Management Board decided that employees of the Business Support Centre should return to the
office. In H1 2022, a pilot was run to test the organisational and technological solutions, and since September 2022 employees of the Business Support
Centre have been working in accordance with the hybrid model
(2–3 days in the office on average per week). Cultural and development activities were launched to support the Bank’s employees and leaders in the
transition to the new work model.
Optimisation of the organisational structure
In 2022, a number of changes were introduced in the organisational structure of Santander Bank Polska S.A. to increase operational efficiency, adjusting it
to changes in the business environment and optimising management processes. The most important ones are presented below:
Retail Banking
Division and
Branch Network
In the Retail Banking Division, Chief Bancassurance Officer was appointed, reporting directly to the Management Board
member in charge of the Division. The Chief Bancassurance Officer is responsible for the Bancassurance Area and the Support
and Distribution Office.
The Home Solutions Ecosystems Department was replaced by the ESG & Home Solutions Area reporting directly to the Vice
President of the Bank’s Management Board in charge of the Retail Banking Division.
The above changes were introduced in line with the Bank’s strategic directions including: “Digital transformation”, “Branch
network optimisation” and “Responsible Banking”.
Digital
Transformation
Division
The Management and Processes Transformation Department, previously a unit of the Strategy and Business Model
Transformation Area, was incorporated into the Digital Transformation Division.
The number of IT Areas which provide support to retail banking and report to the CIO (Chief Information Officer) was expanded
to include IT Areas responsible for development of IT systems related to corporate banking, financial markets and payments
and for automation of operational processes, which used to report to the CTO (Chief Technology Officer).
As part of services provided by the Central Operations Area to retail customers, the Mortgage Sales Support Centre and the
Mortgage Post-
Sales Centre were created in order to separate units responsible for mortgage sales from units responsible for
post-sales.
Financial Accounting
and Control Division
The Financial Services Area in the Financial Accounting and Control
Division was liquidated and the Operating Accounting
Department, formerly a unit of the Area, was transferred to the Financial Accounting Area.
Risk Management
Division
In the Risk Management Division, the structure of the Standardised Credit Area was changed to improve customer service as
part of the lending process. The units of the Area were reorganised and its name was changed to the Credit Risk Area for Retail,
SME & Corporate Clients.
A new structure was implemented in the Money Laundering and Terrorist Financing Risk Management Department to clearly
separate the operational activity from the implementation and oversight of AML standards, which facilitates operational
management.
Legal and
Compliance Division
The Legal Support Department for
Proceedings was set up in the Legal Area of the Legal and Compliance Division to centralise
legal support for all court proceedings.
Other changes
The Strategy and Business Model Transformation Area was liquidated and its units were transferred to other organisational
units with a relevant area of responsibility.
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> Organisational units of the Business Support Centre of Santander Bank Polska S.A.
Agile methodology at Santander Bank Polska S.A.
Santander Bank Polska S.A. has been steadily increasing the use of the Agile methodology and culture to achieve lasting success in a dynamically developing
environment. One of the objectives of the Agile way of working is to move away from complex hierarchical structures towards small interdisciplinary teams
that are capable of quick and effective implementation of new solutions in accordance with customer needs.
Currently, there are 18 Tribes at the Bank, and the total number of employees working in Agile structures is approx. 1.6k. Agile units commonly use Jira (a
comprehensive tool for standardisation of processes and workflows in teams) and a standardised quarterly planning process. The development of Agile
competencies in Tribes and non-Agile structures is supported by Agile Coaches. In 2022, their work model was changed: the key tasks of Tribes are supported
by the so-called flying squads. In addition, in 2022 all key function holders within the Agile structures were covered by the skills assessment as a starting
point for development activities, both at the individual level and Bank-wide level.
2. Organisational Changes in Santander Consumer Bank S.A.
The organisational structure of the head office of Santander Consumer Bank S.A. is aligned with the Agile model applicable across the organisation since
September 2021. Instead of organisational divisions, there are Tribes (Development Centres) operating in accordance with the Agile methodology.
Implementation of the Kanban method began in other parts of the head office (support areas).
In 2022, the organisational structure of Santander Consumer Bank S.A. was relatively stable. No major reorganisation took place with regard to units or their
tasks. Key changes include:
introduction of the Centres of Excellence model in the branch network (one manager can manage more than one branch) and reduction of the
number of regions;
set-up of a new Tribe: Open Banking Development Centre.
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> Summary information about the organisational structure
3. Changes in the Structure of Santander Bank Polska Group
Compared with 31 December 2021, the list of members of Santander Bank Polska Group excludes Santander Leasing Poland Securitization 01 Designated
Activity Company with its registered office in Dublin (a subsidiary of Santander Leasing S.A.). Furthermore, SC Poland Consumer 23-1 Designated Activity
Company, an SPV incorporated in June 2022 in Dublin and a subsidiary of Santander Consumer Bank S.A., replaced SC Poland Consumer 16-1 Sp. z o.o. as a
result of securitisation restructuring, including the repayment of debt and transfer of claims to the newly established company.
The members of Santander Bank Polska Group are presented in Chapter II, Section 2 “Structure of Santander Bank Polska Group”.
4. Changes in the Equity Investment Portfolio
Selected investments in the investment securities portfolio
As at 31 December 2022 and 31 December 2021, Santander Bank Polska Group owned at least 5% of share capital or voting power in the following
companies:
No.
Company
% in the share
capital
% of the total
votes at AGM
% in the share
capital
% of the total
votes at AGM
31.12.2022
31.12.2022
31.12.2021
31.12.2021
1.
Polski Standard Płatności Sp. z o.o.
14.29%
14.29%
14.29%
14.29%
2.
Krajowa Izba Rozliczeniowa S.A.
14.23%
14.23%
14.23%
14.23%
3.
System Ochrony Banków Komercyjnych S.A.
12.91%
12.91%
-
-
4.
Biuro Informacji Kredytowej S.A.
7.72%
9.22%
7.72%
9.22%
5.
Hortico S.A.
1)
6.18%
6.18%
6.39%
6.39%
6.
Krynicki Recycling S.A.
1)
-
-
19.19%
19.19%
1)
Companies from the portfolio of equity investments of Santander Inwestycje Sp. z o.o.
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Santander Bank Polska S.A., together with seven other commercial banks, signed the institutional protection scheme agreement and established a joint
stock company to manage the scheme. The share capital of the managing entity (System Ochrony Banków Komercyjnych S.A.) is PLN 1m. Santander Bank
Polska S.A. took up 12,914 shares with the total nominal value of PLN 129,140, representing approx. 12.91% of the share capital. For more information
about the Institutional Protection Scheme, see Part 5 “Changes to the Institutional Protection Scheme” below.
Santander Inwestycje Sp. z o.o. (a wholly owned subsidiary of Santander Bank Polska S.A.) divested all its shares in Krynicki Recykling S.A. in response to the
public tender for shares. 3,332,648 shares representing 19.19% of the share capital and the total voting power at the company’s General Meeting were sold
in the regulated market. The transactions were settled on 31 May 2022. The above measures were taken in line with the equity portfolio management
strategy of Santander Bank Polska Group according to which investments not connected with the Bank’s core business are limited.
Conversion of series C preference shares of Visa Inc.
As a result of the settlement of acquisition of Visa Europe Limited by Visa Inc. on 21 June 2016 and acquisition of assets of Deutsche Bank Polska S.A.,
Santander Bank Polska S.A. received 21,032 series C preference shares of Visa Inc. entitling it to acquire series A preference shares convertible into ordinary
shares. The first partial conversion of the shares took place in September 2020.
On 29 July 2022, series C preference shares of Visa Inc. were again partially converted. As a result, the Bank still holds 21,032 series C shares whose value
decreased as the ratio of conversion of series C shares into series A ordinary shares was reduced from 6,824 to 3,645. The Bank’s portfolio also includes 668
series A preference shares (convertible to 66 800 series A ordinary shares).
As part of the conversion, part of series A ordinary shares were cancelled and the Bank received a payment of USD 12k gross.
5. Changes in the Institutional Protection Scheme
Set-up of the Institutional Protection Scheme for commercial banks
On 9 June 2022, the KNF approved the draft agreement and recognised the Institutional Protection Scheme (IPS) created in accordance with the banking law
by Santander Bank Polska S.A. and seven other commercial banks: Alior Bank S.A., BNP Paribas Bank Polska S.A., ING Bank Śląski S.A., mBank S.A., Bank
Millennium S.A., Bank Polska Kasa Opieki S.A. and PKO Bank Polski S.A.
The foregoing banks signed the protection scheme agreement and established a managing entity operating in the form of a joint stock company – System
Ochrony Banków Komercyjnych S.A. (SOBK S.A.) The share capital of the managing entity is PLN 1m. Santander Bank Polska S.A. took up shares representing
12.91% of the share capital.
The objective of the protection scheme is to ensure liquidity and solvency of member banks on the terms and conditions defined in the protection scheme
agreement, and to support the resolution procedure pursued by the Bank Guarantee Fund (BFG) or acquisition of banks operating as joint stock companies.
The protection scheme can be joined by other local banks provided they satisfy the terms and conditions set out in general law and in the protection scheme
agreement. The liability of each bank in respect of its membership of the protection scheme will be limited to the amount of the contributions made. Each
member bank may terminate the protection scheme agreement with a 24-month notice.
The operations of the protection scheme will be financed from an aid fund established by the managing entity from contributions made by member banks
at 0.4% of the sum of a given lender's guaranteed funds covered by the mandatory deposit guarantee scheme.
The contribution of Santander Bank Polska S.A. to the aid fund for 2022 calculated on the basis of the guaranteed funds as at 31 March 2022 was PLN
407.3m and was taken to the profit and loss account for Q2 2022. In September 2022, the BFG approached System Ochrony Banków Komercyjnych S.A. to
make another contribution to the aid fund. Pursuant to a unilateral resolution of the General Meeting of the above company approving the contribution, in
September 2022 Santander Bank Polska S.A. additionally paid PLN 38.4m to the aid fund, recognising that sum in the Bank’s profit and loss account for Q3
2022.
On 30 September 2022, the BFG started the resolution of Getin Noble Bank S.A., whose operations were transferred to a bridge bank (Velo Bank) on 3
October 2022. The BFG is the majority shareholder of the bridge bank and SOBK S.A. took up a minority interest in that bank from funds from the aid fund to
support the resolution process. SOBK S.A. has no voting rights in the bridge institution and will not influence its management. It will be a passive investor
supporting its stability.
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6. Development of Distribution Channels of Santander Bank Polska S.A.
Santander Bank Polska S.A. pursues an omnichannel strategy based on a network of branches, customer service points and best-in-class digital banking
solutions. In 2022, the Bank strengthened its position as an omnichannel bank, focusing on relationships with customers and their experience and on
business growth, with a particular emphasis on digital channels.
Basic Statistics on Distribution Channels
Santander Bank Polska S.A.
31.12.2022 31.12.2021
Branches (locations)
335
383
Off-site locations
2
2
Santander Zones (acquisition stands)
14
11
Partner outlets
170
164
Business and Corporate Banking Centres
6
6
Single-function ATMs
472
610
Dual-function machines
952
914
Registered internet and mobile banking customers
1)
(in thousands)
4,869
4,492
Digital (active) mobile and internet banking customers
2)
(in thousands)
3,285
2,998
Digital (active) mobile banking customers
3)
(in thousands)
2,452
2,194
iBiznes24 – registered companies
4)
(in thousands)
20
25
1) The number of customers who signed an electronic banking agreement under which they can use the available products and services.
2) The number of active internet and mobile banking users (digital customers) who at least once logged into internet or mobile banking or checked their balance without logging in the last month of the reporting period.
3) The number of active mobile banking customers who at least once logged into the mobile application or its light version or checked their balance without logging in the last month of the reporting period.
4) Only customers using iBiznes24 – an electronic platform for business customers (the customers having access to Moja Firma plus and Mini Firma platforms are not included).
Traditional distribution channels
As at 31 December 2022, Santander Bank Polska S.A. had 335 branches, 2 off-site locations, 14 Santander Zones and 170 partner outlets.
During the year, the number of bank outlets (branches, off-site locations and Santander Zones) decreased by 45, and the number of partner outlets
increased by 6.
The Bank continued to deliver its branch network development strategy focusing on:
optimisation;
transformation of branches into partner outlets;
modernisation of outlets (relocation, upgrade, downsizing);
pilot launch of branches without cashier services.
In 2022, 19 branches were remodelled, increasing the total number of branches covered by the modernisation project to 194 (more than half of the
network). 19 branches were transformed into partner outlets. The network of Santander Zones included three new locations: new acquisition stands in
shopping centres in Warsaw, Olsztyn and Szczecin. The range of products and services offered by those units did not change but their acquisition potential
increased significantly after the epidemic situation improved, by 94% YoY in the case of personal accounts and by 84% YoY in the case of credit facilities.
In 2022, the Bank ran a pilot branch transformation process in accordance with the model of branches without cashier services. The pilot has already been
carried out in Gdańsk, Legnica and Kalisz, where branches providing cash services operate next to branches without cashier services (12 in total at the end
of December 2022). As part of the pilot, the Bank encourages customers to use cards and BLIK payments, and promotes the mobile application as an easy,
safe and convenient way of banking. Customers may use self-service devices (ATMs/ CDMs), which are available 24/7.
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> Branches (including acquisition stands and off-site locations) and partner outlets of Santander Bank Polska S.A. in consecutive
quarters of 2021–2022 and at the end of 2018–2022
139
146 155 164 165 165 165 170
12
12
12
13
13
13
16
16
434
415
402
383
363
356
347
335
585
573
569
560
541
534
528
521
31-Mar-2021 30-Jun-2021 30-Sep-2021 31-Dec-2021 31-Mar-2022 30-Jun-2022 30-Sep-2022 31-Dec-2022
Number of branches and partner outlets of Santander Bank Polska S.A.
by quarter in 2021 and 2022
Partner outlets Off-site locations and Santander Zones Branches
685
735
649
606
560
521
31-Dec-17
31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22
Number of branches and outlets
of Santander Bank Polska S.A. in years 2018-2022
> Branches and partner outlets of Santander Bank Polska S.A.
At the end of December 2022, the Private Banking model included 58 Private Bankers based in 24 outlets across Poland (4 Private Banking Centres and 20
other locations).
Services to businesses and corporations were provided by two departments: the Business Clients Department and the Corporate Clients Department with
their 6 Banking Centres (3 Business Banking Centres and 3 Corporate Banking Centres) operating within three regional structures through 29 offices located
Poland-wide. Premium customers and entities from the public and commercial properties sector were handled by three dedicated offices.
Intermediaries network
Indirect distribution channels, whose main role is to acquire new customers, include mainly agents and intermediaries/ brokers.
In 2022, the external network employed 271 people as the Bank’s tied agents on average per month (Mobile Agency Network). The Bank used their
services to offer cash loans, mortgage loans, SME loans, loan insurance, personal and business accounts, and leasing facilities. In 2022, credit sales in
this channel increased by 7% YoY.
Cooperation with financial and real estate brokers (network agents) was centrally managed under nine agreements. The mortgage loan offer did not
change, neither did the terms of cooperation between the Bank and brokers. Despite difficult conditions in the mortgage loan market in H2 2022, this
channel generated an 8% YoY growth in sales.
ATMs
As at 31 December 2022, the network of self-service devices of Santander Bank Polska S.A. comprised 1,424 units, including 472 ATMs and 952 dual-
function machines (including 500 recyclers, i.e. devices enabling withdrawal of cash that has been previously deposited by other customers), giving the Bank
second position among Polish banks in terms of the number of CDMs and third in terms of the number of ATMs.
The Bank continued to review and optimise the configuration of cassettes, instal recyclers and optimise its off-site machines, removing and relocating
economically unviable, low-transaction ATMs. As a result of the above measures, in 2022 the number of recyclers increased by 60 and the number of other
dual-function machines and ATMs decreased by 160.
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Since June 2022, the majority of the Bank’s ATMs have offered services in Ukrainian, enabling customers from Ukraine to make all types of transactions in
a convenient and hassle-free way.
Remote channels
In 2022, Santander Bank Polska S.A. continued to improve the functionality and capacity of digital contact channels in line with its long-term strategy which
is to increase the share of such channels in customer acquisition and sales. It also took measures in response to external developments (accelerated
acquisition of Ukrainian customers).
The changes were intended to improve the user-friendliness of existing features and processes, and add new ones, while enhancing security of operations.
Furthermore, channel integration was continued, harmonising customer service across the bank.
Electronic channel Selected solutions and improvements introduced in 2022
Santander.pl
A revamped version of santander.pl was launched and information about products and sales was refined to increase the
number of transactions in digital channels.
A cash loan calculator was implemented, shortening the sales cycle.
Performance of the web app
lication was optimised, including a faster download speed and twice as high capacity to handle
website traffic.
New sales sites were launched and solutions were put in place to enhance user experience. The click-through rate (CTR)
increased 70-fold.
Visi
tors to santander.pl can use the website in a convenient way, as it currently has the fastest download speed among
banking websites in Poland, which is the key factor improving the conversion rate.
Internet and mobile
banking
A new version of Santander mobile app was made available to users of Android and iOS devices (March 2022). It has a
modern design and descriptions ensuring best possible digital banking experience (easier and faster navigation and
application for products).
A new online cash loan process was launched in March 2022 for all customers assigned a prelimit or handled under the
fast-track procedure.
New features were added: welcome screens in English, Russian, Ukrainian and Spanish, and reminders about the
approaching expiry date of the identity document in a new format.
An option was provided to apply for a kindergarten allowance (in cooperation with its originator – the Social Insurance
Institution), 300+ benefit (“Good Start” government programme) and 500+ child benefit for Ukrainian refugees.
The price guide was further developed, increasing the transparency of the Bank’s prices and helping customers to avoid
unnecessary costs.
The process of adding accounts from other banks was optimised (PSD2).
The eID service was offered to Santander internet users enabling them to remotely confirm their identity, including as part
of application for a qualified electronic signature.
The contents of text messages, push messages and emails concerning cash deposits and withdrawals at ATMs were
refined.
At the start of July 2022, an application for “Good Start” allowance was implemented in internet banking as part of
the social benefit application package.
The online KYC (Know Your Customer) questionnaire was optimised to increase the number of questionnaires
completed (July, September).
The Bank continued the pilot of One App in mobile banking, as part of which 200 thousand customers were migrated from
the light transactional service (internet banking in a mobile browser on a phone) to the Santander mobile application.
Santander Open
The Santander Open service was expanded to include another bank – Credit Agricole. Customers were provided with an
option to integrate accounts online (AIS) and initiate transfers (PIS) via electronic and mobile banking in relation to accounts
held with any of the following eight banks: Alior Bank, Bank Millennium, BNP Paribas, Credit Agricole, ING Bank Śląski,
mBank, PKO BP and Pekao S.A. AIS and PIS are available both in Santander internet and Santander mobile.
Multichannel
Communication Centre
(MCC)
Service and sales processes were further optimised.
A helpline was set up for refugees making cash withdrawals under the UNHCR Cash Assistance Programme. Additional
employees were hired as interpreters for Ukrainian customers and branch advisors. A helpline in Ukrainian was further
developed in response to an increased traffic.
Call Steering (voice IVR), a technology that recognises and interprets speech, was started to be implemented as part of the
19999 helpline. Selected customers were provided with an option to choose how to communicate via IVR, i.e. through the
use of voice or tone input. The customer’s intentions are recognised on the basis of the subject indicated by them. The call
is
then forwarded to a relevant advisor. The effectiveness of the customer’s intention recognition model exceeds 90%. The
tool is being developed in cooperation with customers.
In August 2022, the Bank launched the pilot of the MCC Behavioural Assessment Model designed to monitor and analyse
actions and eliminate potential risks in customer service. The model introduces a uniform fraud risk management process
applicable to all employees based on transparent measurement of operational control results according to the risk levels
adopted by the Bank (operational risk, reputational risk, ethical risk, misselling risk and fraud risk).
A campaign was run to support the AML process in terms of updating the data of non-active or high-risk customers and
unblocking non-active accounts.
MCC advisors supported customers with self-service solutions: unblocking a card via Santander internet which has been
blocked due to security reasons, and applying for payment deferral (via the Bank’s helpline IVR managed by advisors
addressing questions and doubts from customers).
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The new features of iBiznes24 are described in Chapter IX “Business Development in 2022”, section on Business and Corporate Banking and Corporate and
Investment Banking.
E-commerce
Santander Bank Polska S.A. develops an e-commerce channel to sell strategic products online. The Bank offers personal accounts, business accounts and
cash loans in partnership with affiliate networks in Poland, i.e. the largest online platforms. The Bank also takes active measures in electronic channels in
relation to existing customers, providing them with tailored products and services.
Active digital customer base
As at 31 December 2022, the number of digital customers (i.e. electronic banking customers who used electronic banking at least once a month) went up
by 9.6% YoY to 3.3m, accounting for 67.5% of customers with access to electronic banking services. The number of active mobile banking users increased
by 11.8% YoY to 2.5m (including 1.3m customers who used Santander mobile only and 832.9k customers who used only internet banking). In 2022, mobile
application users made 230.7m transactions (up 32.7% YoY). At the same time, the number of transactions in internet banking decreased by 2% YoY to
207.4m.
7. Development of Distribution Channels of Santander Consumer Bank S.A.
The section below presents the main sales channels of Santander Consumer Bank S.A.
Santander Consumer Bank S.A.
31.12.2022 31.12.2021
Branches
50
54
Partner outlets
263
271
Car finance partners 1,188
1,161
Hire purchase partners
6,085
7,028
Registered internet and mobile banking customers
1)
(in thousands)
1,404
1,257
Digital (active) mobile and internet banking customers
2)
(in thousands)
348
237
Digital (active) mobile banking customers
3)
(in thousands) 276
165
8. IT Development
Main IT development directions
Santander Bank Polska Group builds competitive edge based on state-of-the-art technologies, digital processes and simple rules. As part of those
endeavours, the Group:
Continues to implement the DevOps culture, which ensures uninterrupted delivery of changes in production systems (in response to customer needs)
while reducing the time-to-market.
Reduces the number of production incidents and errors and accelerates change implementation by focusing on quality at early stages of the
development process and increasing its automation.
Enhances the security of software development processes by implementing tools to identify vulnerabilities in particular software elements (the source
code, the components used or the elements of the runtime environment).
Delivers the strategic programme aimed at increasing organisational, process and cost efficiency, reducing paper-based documents (c. 85% of
communications to customers are sent in electronic format), simplifying branch processes (e.g. electronic authorisation and signature) as well as
centralising and ensuring remote access to a range of post-sales processes.
Continues to streamline, upgrade and reduce the total cost of maintenance and development and enhance the security of IT architecture (APO –
Application Portfolio Optimizations) in accordance with the long-term redesign plan.
Enhances the security of services provided to customers on an ongoing basis.
Takes measures to be less dependent on external suppliers in the key areas of operations (development of a mobile application) for IT development.
1)
Customers who signed an agreement with Santander Consumer Bank S.A. and at least once used the bank’s electronic banking system in the reporting period.
2)
The number of active internet and mobile banking users (digital customers) who at least once logged into internet or mobile banking or checked their balance without logging in the last month of the reporting
period.
3)
The number of active mobile banking customers who at least once logged into the mobile application or its light version or checked their balance without logging in the last month of the reporting period.
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Development of IT resources
In 2022, Santander Bank Polska S.A. transferred its entire IT infrastructure to new Data Centres that meet best security standards. This allowed the Bank to
increase the security of services provided to customers.
Equipment with expiring supplier support is being gradually replaced, and the computing power needed to ensure an adequate performance of customer-
facing systems is steadily increasing.
In line with the “infrastructure as a code” methodology, the Bank continues to automate its infrastructure in order to eliminate manual delivery and
installation of servers, reduce infrastructure management costs and speed up deployments.
As part of the modernisation of the ICT network, the modern SD-WAN architecture was implemented in 60% of the Bank’s branches, integrating traditional
links with internet links. This solution facilitates flexible traffic management and ensures appropriate link performance for key applications.
The Bank actively works on cloud solutions to more effectively deliver new solutions to employees (Office365) and customers. A project is underway to
develop an operating model for cloud computing services based on Microsoft Azure.
Main projects
The Bank delivers multiple projects to gain competitive edge, ensure best security standards, protect the environment and continuously improve the quality
and reliability of services. These measures are designed to strengthen the loyalty of the Group’s customers and increase the competitiveness of products
and services. Particularly noteworthy are the following initiatives:
In April 2022, customers were provided with a pilot version of Santander OneApp Polska: a mobile application for mass customers, Select and Private
Banking customers and business customers. On 12 December 2022, the latest version of the application was made available in Google Play and App
Store as part of the final stage of the pilot.
The Bank completed the migration of the Primary Data Centre in Wrocław and the Backup Data Centre in Poznań to modern server facilities. All
production and test systems were transferred, together with network devices, security systems and systems of the Bank’s subsidiaries.
Following the outbreak of the war in Ukraine, the Bank took prompt measures to help customers, employees and contractors from Ukraine (for more
information, see Chapter XII “Risk and Capital Management”). Specifically, the Group provided comprehensive support to Ukrainian employees, waived
fees for cards and account maintenance for Ukrainian citizens and fees for transfers to/from Ukraine, offered free ATM services and unlimited access
to cash through branches and ATMs, and provided services in Ukrainian via the helpline, internet and mobile banking.
As part of the 4P Programme, the Bank reached the next milestones on its way to become a paperless bank. This included pilot implementation of an
electronic signature in the sales of deposit products at branches as well as new campaigns encouraging customers to use paperless solutions.
The Bank continuously raises the awareness of cyberthreats among customers and employees.
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Continuation of digital transformation
The table below presents the selected IT projects delivered by Santander Bank Polska Group in 2022 in line with the main directions of digital
transformation.Polska S.A. w 2022 r. w ramach głównych kierunków transformacji cyfrowej.
Initiative Key projects delivered in 2022
Improvement of
availability, reliability and
performance of the
Bank’s systems
Successful migration of the Primary Data Centre in Wrocław and the Backup Data Centre in Poznań to modern server
facilities.
Continuation of the SDWAN (Software Defined Wide Area Network) project designed to increase the capacity of internet
links in branches.
Improvement of electronic channel performance as part of the stabilisation programme by increasing the number of servers
processing customer queries and eliminating bottlenecks through traffic distribution into several communication nodes.
Migration of the network infrastructure of partner outlets to new servers to ensure better consistency with the Bank’s
standards and increased availability (thanks to implementation of redundancy).
Achievement of the next milestone of the Retail Banking digitalisation programme (Smart Loans stream): implementation
of the renewal process for overdrafts secured by de minimis guarantee.
Launch of Santander OneApp Polska for external customers at the last stage of the pilot (December 2022).
Participation in global
optimisation initiatives of
Santander Group
Execution of an agreement with Microsoft on the use of the Azure cloud as part of the Azure Landing Zone implementation
project.
Participation in the group project introducing the new AML Sanctions Policy:
implementation of new types of SWIFT messages for sanctions screening;
completion of the second stage of the project aimed to ensure compliance with control requirements for trade finance
and payment processes.
Implementation of a new mortgage post-sales service model as part of the 4P Programme (simplification), the next step is
centralisation of the collateral release process (documents are sent directly to the customer rather than the branch).
Introduction of the following solutions to align retail customer experience in the European countries, where Banco
Santander operates:
Santander Max account with a customised card;
discounts for card transactions made online and via Santander OneApp Polska.
Offering a new International Instant Payment channel to business customers.
Enhancement of security
of the Bank’s systems
Ensuring high quality of authentication and data security programs on employee laptops and desktops.
Completion of the secure configuration of ATMs.
Implementation of the following authentication services as part of the Open Banking st
rategic direction: MojeID in
cooperation with the National Clearing House (KIR) and eID.
Promotion of cybersecurity culture among customers and employees: measures taken to increase the social media reach
of the cybereducation campaign “Don't believe in fairy tales for adults” (e.g. a competition for customers to write a fairy
tale), publication of alerts about emerging cyberthreats, update of the Bank’s websites on safe banking to reflect emerging
threats, educational measures and alerts in other channels.
Implementation of a new anti-fraud platform, enhancing fraud detection and prevention.
Implementation of
regulatory requirements
Launch of end-to-end management of Santander TFI funds offered in New E-Platform.
Finalisation of the work on the
Autorates system for automatic publication of market rates and bank reference rates as part
of the Financial Markets Platform.
Delivery of the last stage of changes in relation to the 5th AML Directive.
Completion of the project to ensure compliance with the requirements related to the Act on Financial Information System
(STIR/SInF).
Implementation of:
key government programmes: “Good Start (300+)” and “Payment deferral”;
new procedures and automated processes related to the Borrowers Support Fund;
ISO20022 and ESMIG;
mandatory changes to processes and procedures arising from the amended Development Act;
changes in the Ankieta system related to new regulatory requirements (Target Market Regulation) and online
exchange of information about MiFID questionnaires between banking systems.
Automation of transaction blocking for non-active accounts.
Deployment o
f an electronic correspondence exchange channel: the eKancelaria application, which meets the
requirements of the Polish Electronic Delivery Act.
Modification of the transaction control model in line with AML requirements regarding occasional and high-amount
deposits.
Implementation of the procedure for reimbursing fees in connection with early repayment of mortgage loans and
mortgage entry into the land and mortgage register.
Measures taken to ensure compliance with reporting requirements arising from the EU regulations promoting sustainable
development and sustainable investments.
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Initiative
Key projects delivered in 2022
Automation and
optimisation of
operational processes
Replacement of the printing and scanning system in the Business Support Centre and implementation of a new system to
control printouts to enhance user experience and save paper.
Acceleration of the paperless agenda as part of the 4P Programme (simplification): providing new electronic authentication
tools in advisor-based channels, limiting the use of printouts, reducing paper-based correspondence (85% of
communications sent to customers are in electronic form).
Automation of the processes related to:
mortgage loans – centralisation of post-sale services related to mortgage loans (preparation of security documents;
release of security; handling instructions in the video, chat and electronic banking channels);
the system for central management of execution titles –
implementation of a functionality for monitoring payments
and blockades connected with debt enforcement proceedings;
dispatch of repayment schedules for mortgage and cash loans in the Electronic Communication Channel.
Robotic automation of:
overdue payments – repayment of personal and SME loans in PLN;
settlement of subsidies pursuant to the PFR decision;
certificates on CHF mortgage loans (approx. 80% of them are prepared with the use of a robot);
processes for SMEs related to future collateral – statements on submission to debt enforcement.
Optimisation of preparation and storage of property valuation reports thanks to an application for exchanging information
with third parties cooperating with the Bank as part of the credit process.
Implementation of the External Information Exchange System (SWIZ) for all customer segments, digitalising the process
of gathering property information from appraisers.
Launch of an innovative process for obtaining the borrower’s spouse’s consent during an online loan application process.
Achievements in innovation and research and development
In 2022, the Digital Innovation Office – in partnership with Industry Lab (DGA Group) – ran the Acceleration Programme to facilitate cooperation with Polish
startups. One startup was selected and a six-month proof-of-concept stage was completed. The purpose of the project was to develop a tool for Santander
Brokerage Poland to automate the control of Market Maker’s risk, including a module for handling innovative products and services.
9. Capital Expenditure
In 2022, Santander Bank Polska Group incurred PLN 449.0m worth of capital expenditure compared with PLN 424.4m in 2021. The expenditure primarily
included projects related to the development of IT systems, infrastructure and equipment, which are described above. Particularly noteworthy is the
replacement of legacy servers and extension of their computing power, purchase of IBM licences in connection with new systems, as well as measures
taken to ensure appropriate conditions for incremental back-up systems.
The Bank continued its Accelerated Retail Digitalisation Programme, as part of which a pilot of a brand new mobile application was completed, customers
were provided with a motor insurance comparison engine in the mobile application and electronic banking, and the number of cash loan purchase options
available in digital channels was increased, including an opportunity to provide a spouse’s consent remotely. Further focus was placed on interent, mobile
and phone banking for retail customers as well as on the modernisation and rationalisation of the branch network.
The transformation of business, corporate and investment banking was centred on process effectiveness, automation, digitalisation, use of new
technologies and innovations as well as extension of functionality and 24/7 access to iBiznes24. Global Connect was successfully implemented.
As part of the One-AML programme aimed to create a Group solution to support the prevention of money laundering and terrorist financing, a range of
process and technological optimisations were implemented, ensuring compliance with the policies of Santander Group and financial crime prevention
regulations. They included, among other things, the centralisation of processes related to non-bank financial institutions.
For more information about capital expenditure, see Section 6 of this Chapter “Development of Distribution Channels” and Chapter IX “Business Development
in 2022”.
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XI. Financial Performance in 2022
1. Consolidated Income Statement
Structure of Santander Bank Polska Group’s profit before tax
Condensed Consolidated Income Statement
of Santander Bank Polska Group in PLN m (for analytical purposes)
2022
2021
4)
restated data
YoY change
Total income
12,381.5
9,141.6
35.4%
- Net interest income 9,652.3 5,962.1 61.9%
- Net fee and commission income 2,566.4 2,487.1 3.2%
- Other income
1)
162.8 692.4 -76.5%
Total costs
(4,697.7)
(3,988.3)
17.8%
- Staff, general and administrative expenses (3,977.5) (3,172.1) 25.4%
- Depreciation/amortisation
2)
(523.6) (579.0) -9.6%
- Other operating expenses (196.6) (237.2) -17.1%
Net expected credit loss allowances
(894.7)
(1,124.2)
-20.4%
Cost of legal risk connected with foreign currency mortgage loans
3)
(1,739.1)
(1,431.0)
21.5%
Profit/loss attributable to the entities accounted for using the equity method 84.1
74.1
13.5%
Tax on financial institutions
(781.1)
(614.4)
27.1%
Consolidated profit before tax
4 353.0
2,057.8
111.5%
Tax charges (1,344.2) (805.4) 66.9%
Net profit for the period
3,008.8 1,252.4 140.2%
- Net profit attributable to the shareholders of the parent entity
2,799.1
1,111.7
151.8%
- Net profit attributable to the non-controlling shareholders 209.7
140.7
49.0%
2 117,3
2 261,9
2 206,3
2 556,2
2 987,6
3 525,6
2 353,6
3 514,7
361,5
430,9
817,5
447,9
1 426,1
1 046,6
531,2
1 349,0
Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022
The Group's total income and profit before tax by quarter in 2021 and 2022
Total Income Profit Before Tax
PLN m
+37,5%
YoY
+201,2%
YoY
1)
Other income includes total non-interest and non-fee income of the Group comprising the following items of the full income statement: dividend income, net trading income and revaluation, gain/ loss on other
financial instruments, gain/ loss on derecognition of financial instruments measured at amortised cost and other operating income.
2)
Depreciation/ amortisation includes depreciation of property, plant and equipment, amortisation of intangible assets and depreciation of the right-of-use asset.
3)
As of 1 January 2022, the Group changed the accounting policy rules for recognition of legal risk connected with foreign currency mortgage loans, which is now measured and presented in accordance with IFRS
9 (previously: IAS 37). The Group reduces the gros
s carrying amount of mortgage loans in line with IFRS 9. If there is no exposure to cover the estimated provision or the exis
ting exposure is insufficient, the
provision is recognised in accordance with IAS 37. The total impact of the above risk on the Group’s performance is presented in a separate line of the income statement. It includes raised and released provisions
for legal risk and legal claims. Those items were previously disclosed separately in other operating expenses and operating income, respectively.
4)
As a result of the above-mentioned change to the accounting policy as well as changes to the presentation of the selected items of the full income statement (i.e. introduction of the following lines: “Income
similar to interest on finance leases” and “Gain/ loss on derecognition of financial instruments measured at amortised cost”), the comparative data for 2021 needed to be restated.
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8 715,5
9 462,1
8 647,3
9 141,6
12 381,5
3 424,3
3 244,6
1 880,9
2 057,8
4 353,0
2018 2019 2020 2021 2022
The Group's total income and profit before tax in years 2018-2022
Total Income Profit Before Tax
PLN m
+35,4%
YoY
+111,5%
YoY
The profit before tax of Santander Bank Polska Group for the 12-month period ended 31 December 2022 was PLN 4,353.0m, up 111.5% YoY. The profit
attributable to the shareholders of the parent entity increased by 151.8% YoY to PLN 2,799.1m.
The table presented in the “Comparability of periods” section below contains the selected items of the income statement of Santander Bank Polska Group
which affect the comparability of the analysed periods. After the relevant adjustments:
the underlying profit before tax increased by 136.0% YoY and
the underlying profit attributable to the shareholders of the parent entity went up by 146.2% YoY.
Comparability of periods
Selected items of the income statement
affecting the comparability of periods
2022 2021
Negative adjustment to interest income on
mortgage loans due to payment deferrals
(interest income)
PLN 1,544.4m, including PLN 1,538.0m in relation to
Santander Bank Polska S.A., and PLN 6.4m in relation
to Santander Consumer Bank S.A.
No corresponding adjustment
Negative adjustment to interest income on
mortgage loans due to an obligation to
reimburse a bridge margin and fees on
prepaid/ repaid loans
(interest income)
PLN 78.3m recognised by Santander Bank
Polska
S.A., including a liability of PLN 37.8m in
respect of reimbursement of a bridge margin and a
liability of PLN 40.5m in respect of settlement of fees
on partially or fully repaid mortgage loans
No corresponding adjustments
Cost of legal risk connected with foreign
currency mortgage loans
(income statement item)
PLN 1,739.1m PLN 1,431.0m
Costs related to the Institutional Protection
Scheme (IPS)
(general and administrative expenses)
PLN 445.7m – a contribution made by Santander
Bank Polska S.A. to the aid fund established as part
of the protection scheme for commercial banks
No corresponding costs
Contributions to the Bank Guarantee Fund
made by Santander Bank Polska S.A. and
Santander Consumer Bank S.A.
(general and administrative expenses)
PLN 264.6m, including a contribution of PLN 55.6m
to the bank guarantee fund and PLN 209.0m to the
bank resolution fund
PLN 262.6m, including a contribution of
PLN 108.5m to the bank guarantee fund and
PLN 154.1m to the bank resolution fund
Costs related to the Borrowers Support
Fund
(general and administrative expenses)
PLN 173.6m, including a contribution of PLN 139.6m
made by Santander Bank Polska S.A., and a
contribution of PLN 34.0m made by Santander
Consumer Bank S.A.
No corresponding costs
Dividend income
(income statement item)
PLN 10.6m
PLN 112.9m, including PLN 95.6m from
companies from former Aviva Group
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Determinants of the Group’s profit for 2022
2 057,8
4 353,0
+3 690,2
+229,5
+79,3
+55,4
+40,6
+ 10,0
- 166,7
-308,1
-529,6
-805,4
Profit
before tax
for 2021
Net interest
income
Impairment
allowances
for expected credit
losses
Net
fee & commission
income
Depreciation/
amortisation
Other
operating
expenses
Profit
attributable
to the entities
accounted for
using the
equity method
Tax on financial
institutions
Cost of legal risk
associated with
foreign currency
mortgage loans
Other income Staff,
general and
administrative
expenses
Profit
before tax
for 2022
Changes in the key components of the consolidated profit before tax for
2022
vs
2021
Key components with a negative impact on a YoY change in PBT
Key components with a positive impact on a YoY change in PBT
Profit before tax for 2021 and 2022
PLN m
+ PLN 2 295,2 m
The consolidated profit before tax for 2022 was driven by high net interest income (+61.9% to PLN 9,652.3m) resulting from a series of unprecedented NBP
interest rate hikes and satisfactory growth of the Group’s key credit portfolios. The increase in net interest income was reduced by payment deferrals, whose
estimated financial impact (PLN 1,544.4m) was recognised in P&L for Q3 and Q4. Interest rate increases adversely affected net trading income and
revaluation (-PLN 141.2m YoY), and gain/ loss on other financial instruments (-PLN 118.0m YoY) due to higher yield of debt securities, lower value of equity
instruments and lower gains on derivatives.
Apart from net interest income, the consolidated profit was also positively affected by lower expected credit loss allowances (-20.4% YoY) reflecting a stable
financial standing of customers in H1 2022 and signs of its deterioration in H2 2022 due to adverse macroeconomic environment and outlook. The
profitability was also driven by higher net fee and commission income (+3.2% YoY), mainly from currency exchange, lending, insurance and debit cards.
The profit before tax for 2022 was weighed down by cost of legal risk and settlements connected with foreign currency mortgage loans (+34.3% YoY) and
staff, administrative and general expenses (+25.4% YoY), which included the Group’s contribution to the aid fund established by member banks of the
institutional protection scheme as well as contributions to the Borrowers Support Fund and the BFG resolution fund.
This was coupled with an increase in tax on financial institutions (+27.1% YoY) following the growth in taxable assets. At the same time, dividend income
was lower (-PLN 102.3m YoY) due to the divestment of three insurance companies from Aviva Group in 2021, which used to be classified to the portfolio of
investment securities of Santander Bank Polska S.A.
Profit before tax of Santander Bank Polska Group by contributing entities
Components of Santander Bank Polska Group’s profit before tax
in PLN m (by contributing entities)
2022 2021 YoY change
Santander Bank Polska S.A.
3,598.3
1,548.8
132.3%
Subsidiaries:
832.5
606.4
37.3%
Santander Consumer Bank S.A. and its subsidiaries
1)
563.5
299.6
88.1%
Santander Towarzystwo Funduszy Inwestycyjnych S.A.
93.7
144.6
-35.2%
Santander Finanse Sp. z o.o. and its subsidiaries
2)
(Santander Leasing S.A., Santander Factoring Sp. z o.o.,
Santander F24 S.A.)
174.9 156.1
12.0%
Santander Inwestycje Sp. z o.o. 0.4 6.1
-93.4%
Equity method valuation
84.1
74.1
13.5%
Exclusion of dividends received by Santander Bank Polska S.A. and
consolidation adjustments
(161.9)
(171.5)
-5.6%
Profit before tax 4,353.0 2,057.8
111.5%
1)
In both periods under review, SCB Group comprised Santander Consumer Bank S.A. and the following entities: Santander Consumer Multirent Sp. z o.o., Santander Consumer Finanse Sp. z o.o. w likwidacji (a
company in liquidation), PSA Finance Polska Sp. z o.o., PSA Consumer Finance Polska Sp. z o.o., Santander Consumer Financial Solutions Sp. z o.o. and SCM Poland Auto 2019-
1 DAC. In 2022, SCB S.A. lost control
over S.C. Poland Consumer 16-1 Sp. z o.o. due to the restructuring of the securitisation transaction and established a new entity to secure a retail loan portfolio: S.C. Poland Consumer 23-
1 DAC. The amounts
provided above represent profit before tax (after intercompany transactions and consolidation adjustments) of SCB Group for the periods indicated.
2)
Due to the settlement of the securitisation transaction, in 2022 Santander Bank Polska S.A. lost control over Santander Leasing Poland Securitization 01 Designated Activity Company with its registered office in
Dublin. The Bank had no capital connections with that entity.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
77
Santander Bank Polska S.A. (parent entity of Santander Bank Polska Group)
The profit before tax of Santander Bank Polska S.A. was PLN 3,598.3m, up 132.3% YoY.
The results of Santander Bank Polska S.A. are presented in detail in Part 4 “Separate Income Statement”.
Subsidiaries
The subsidiaries consolidated by Santander Bank Polska S.A. reported an increase of 37.3% YoY in their total profit before tax.
SCB Group
The contribution of Santander Consumer Bank Group to the consolidated profit before tax of Santander Bank Polska Group for 2022 was PLN 563.5m (after
intercompany transactions and consolidation adjustments) and went up by 88.1% YoY as a combined effect of the following:
A rise of 10.7% YoY in net interest income to PLN 1,312.2m, supported by 11 interest rate hikes since Q4 2021.
A decrease of 9.1% YoY in net fee and commission income to PLN 118.7m on account of lower fee and commission income from credit cards and
insurance products, partly offset by lower securitisation costs.
Net expected credit loss allowances of PLN 33.3m vs PLN 215.7m in the comparative period, resulting from an update of risk parameters,
incorporation of collateral for the mortgage loan portfolio and higher gains on debt sales.
An increase of 27.4% YoY in other non-interest and non-fee income to PLN 78.0m as a consequence of release of higher amounts of provisions for
legal claims and a lower result on transactions in financial instruments as part of trading and investment activities reflecting prevailing market
conditions.
A rise of 2.6% YoY in operating expenses to PLN 572.4m during 2022 caused by a mandatory contribution of PLN 34m to the Borrowers Support
Fund and higher provisions raised for legal claims.
Cost of legal risk connected with foreign currency mortgage loans was PLN 310.8m vs PLN 273.1m in 2021.
Other subsidiaries
Profit before tax of Santander TFI S.A. for 2022 decreased by 35.2% YoY to PLN 93.7m, as a result of a decline in net fee and commission income due to
market pressure, in relation to both management and success fees. The outflow of assets from the investment fund market observed since October 2021
was additionally worsened by Russia’s invasion of Ukraine, high inflation and monetary policy tightening by central banks. During the twelve months of
2022, customers pulled out their money from all categories of funds, but corporate bond funds were hit most severely. Apart from a decrease in the average
net asset value, investment fund management fees were also adversely affected by a lower margin reflecting the reduction of the maximum annual
management fee to 2% as of 1 January 2022 in accordance with the Regulation of the Minister of Finance of 13 December 2018 on the maximum amount
of fixed remuneration for an investment fund company for managing an open-end investment fund or a specialised open-end investment fund. The
company’s income from success fees went down too and the underlying fee calculation model was changed.
Profit before tax posted by companies controlled by Santander Finanse Sp. z o.o. went up by 12.0% YoY to PLN 174.9m.
Total profit before tax of Santander Leasing S.A., Santander Finanse Sp. z o.o. and Santander F24 S.A. grew by 12.9% YoY to PLN 106.0m reflecting higher
net interest income (+6.5% YoY) and higher net insurance income (+7% YoY). Despite deteriorating business conditions (limited availability of assets to be
financed), sales in the segment of machines and equipment and of vehicles continued at a high level comparable to the previous year, translating into an
increase of 9.0% YoY in the performing leasing portfolio. Net expected credit loss allowances were down 20.6% YoY and the quality of the leasing portfolio
was stable, with the NPL ratio of 3.58%.
Profit before tax posted by Santander Factoring Sp. z o.o. increased by 11.5% YoY to PLN 68.9m. It resulted from a dynamic rise of 28.9% YoY in net interest
income combined with a decrease of 8.1% YoY in factoring receivables. Meanwhile, the company’s cost base went up, while net expected credit loss
allowances were up PLN 9.2m.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
78
Structure of Santander Bank Polska Group’s profit before tax
Total income
During 12 months of 2022, total income of Santander Bank Polska Group increased by 35.4% YoY to PLN 12,381.5m.
Net interest income
Net interest income for 2022 was PLN 9,652.3m and grew by 61.9% YoY as an effect of a series of unprecedented increases in NBP interest rates started in
October 2021 (three hikes by 1.65 p.p. in total in Q4 2021) and continued until September 2022 (eight hikes by 5.00 p.p. in total) aimed at tightening the
monetary policy and curbing inflation.
The above amount includes a negative adjustment of PLN 1,544.4m recognised in P&L for Q3 and Q4 to account for the Act of 7 July 2022 on crowdfunding
for business and support for borrowers. Pursuant to the above legislation, borrowers who had taken out a PLN mortgage loan could have their principal and
interest payments suspended for four months in 2022 and 2023 (two months in Q3 and two months in Q4 and one month in each quarter of 2023). The
impact of payment deferrals on the performance of Santander Bank Polska Group was primarily estimated at PLN 1,358.2m based on the assumption that
50% of eligible borrowers will have all the possible loan instalments suspended. In Q4 2022, the Group increased that estimate by PLN 186.2m following
the review of the assumptions based on the more recent data indicating that 63.8% of customers will use that statutory solution.
In H2 2022, net interest income was additionally reduced by liabilities arising from the Act on mortgage loans and supervision over mortgage loan
intermediaries and agents, including a liability of PLN 37.8m in respect of reimbursement of a bridge margin (i.e. additional fees paid by customers until the
mortgage is entered in the land and mortgage register) and a liability of PLN 40.5m with regard to an obligation to settle total fees charged in connection
with early repaid mortgage loans on a pro-rata basis (agreements concluded since 22 July 2017).
1 376,1
1 410,4
1 443,4
1 732,2
2 244,0
2 934,8
1 640,7
2 832,8
Q1
2021
Q2
2021
Q3
2021
Q4
2021
Q1
2022
Q2
2022
Q3
2022*
Q4
2022*
Consolidated net interest income by quarter in 2021 and 2022
PLN m
5 742,4
6 580,2
5 888,1
5 962,1
9 652,3
2018 2019 2020 2021 2022
The Group's net interest income in years 2018-2022
PLN m
+61,9%
r/r
In a macroeconomic environment marked by high uncertainty and strong competition in the banking sector, the Group flexibly managed its pricing and
successfully acquired and retained business. The pricing of deposit and credit products was regularly adjusted to market rates and the Group’s objectives in
terms of competitive position, balance sheet structure, liquidity and profitability. A considerable YoY growth was reported in balance sheet items, both in
loans and advances to customers and deposits from customers. Loans and advances to enterprises and the public sector grew by 11.4% YoY, and lease
receivables increased by 9.7% YoY. At the same time, deposits from enterprises and the public sector went up by 12.0% YoY and retail deposit balances rose
by 1.6% YoY. Due to the dramatically rising interest rates customers turned to term deposits, which was reflected in the transfer of funds from current
accounts (including savings accounts) to term bank deposits. Deposits increased as investors backed out of investment funds amid uncertainties around the
geopolitical situation, volatility of equity and commodity markets and considerable decreases in the bond market.
In these circumstances, interest income for 2022 totalled PLN 12,538.6m and was up 97.1% YoY, supported by all categories of assets generating interest
income, mainly loans and advances to business and personal customers, and debt securities.
Interest expenses grew much faster by 621.3% YoY to PLN 2,886.3m on the back of deposits from customers (including deposits from enterprises and the
public sector and from personal customers) as well as liabilities in respect of repurchase transactions, liabilities due to debt securities in issue and deposits
from banks.
In 2022, loans to customers brought a yearly average nominal interest income of 6.2% compared with 3.6% in 2021. Customer deposits carried a yearly
average nominal interest expense of 1.0% compared with 0.1% the year before.
∗ In H2 2022, net interest income included an adjustment of PLN 1,544.4m in total in respect of payment
deferrals, of which PLN 1,358.2m was taken to P&L for Q3 2022.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
79
Loans & Advances to
Enterprises and Public Sector
30%
Financial Leases
5%
Debt Securities and Other
22%
Loans & Advances to
Individuals
43%
Structure of interest revenue for 2022
Loans & Advances to
Enterprises and Public
Sector
24%
Financial Leases
5%
Debt Securities and Other
14%
Loans & Advances to
Individuals
57%
Structure
of interest revenue in
2021
Deposits from Enterprises &
Public Sector
40%
Deposits from Individuals
27%
Subordinated Loans and
Issue of Securities
15%
Deposits from Banks
and Other
18%
Structure of interest expense for
2022
Deposits from Enterprises
& Public Sector
16%
Deposits from Individuals
22%
Subordinated Loans and
Issue of Securities
40%
Deposits from Banks
and Other
22%
Structure of interest expense for 2021
In 2022, the cumulative net interest margin (annualised on a Ytd basis) was 4.31% vs 2.72% in 2021. The above margin increase was driven by developments
in the money market and growth and performance of the Group’s assets generating net interest income, notably loans and advances to businesses and
individuals as well as lease receivables. The margin growth was also supported by the debt securities in which the Group invested its liquidity surplus. While
the value of that portfolio decreased, interest income generated by it continued to grow in 2022.
In Q4 2022, the quarterly net interest margin (annualised on a quarterly basis) was 4.94% vs 3.06% in Q3 2022 and 3.09% in Q4 2021.
The increase of 1.85 p.p. in the quarterly net interest margin compared to 2021 was driven by the same factors as those that helped the year-on-year growth
in net interest income.
The substantial QoQ rise in the net interest margin (+1.88 p.p.) was an effect of a low base, which was significantly reduced by a negative adjustment in
respect of payment deferrals and liabilities arising from regulations concerning mortgage loans. The estimated financial impact of those items was
recognised mostly in P&L for Q3 2022 whereas in Q4 2022 the additional charges to net interest income on mortgage loans accounted for changed
estimations regarding utilisation of payment deferrals and the scale of bridge margin reimbursements to eligible borrowers. On a comparative basis, i.e.
excluding the impact of additional charges to net interest income, the quarterly margin decreased by 0.30 p.p. to 5.28%, reflecting, among other things,
higher interest expense resulting from an increase in deposit balances from individuals and businesses reported at the end of 2022.
1) Net interest margin curve annualised on a quarterly and year-to-date basis. The amounts for 2021 have been restated to account for the change
of the accounting policy related to recognition of legal risk connected with foreign currency mortgage loans in accordance with IFRS 9. The
margin for Q3 2022 takes into account the estimated financial impact of payment deferrals and liabilities arising from regulations concerning
mortgage loans in the total amount of PLN 1,430.0m compared to PLN 192.7m recognised in Q4 2022. Excluding the impact of the above
adjustments on the Group’s net interest income, at the end of December 2022 the cumulative margin was 4.96% and the quarterly margin was
5.28% (2.69% and 2.95% at the end of December 2021, respectively).
2) The calculation of the net interest margin of Santander Bank Polska S.A. takes account of swap points allocation from derivative instruments
used for the purpose of liquidity management but excludes interest income from the portfolio of debt securities held for trading and other
exposures connected with trading.
2,56%
2,60%
2,66%
3,09%
4,02%
5,24%
3,06%
4,94%
2,56%
2,60%
2,61%
2,72%
4,02%
4,63%
4,10%
4,31%
2,00%
2,50%
3,00%
3,50%
4,00%
4,50%
5,00%
5,50%
Q1
2021
Q2
2021
Q3
2021
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Net interest margin
1)
by quarter in the years 2021 and 2022
(including swap points)
2)
Net interest margin
Cumulative net interest margin
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
80
Net fee and commission income
Net fee and commission income (PLN m)
2022
2021
YoY change
FX fees 730.4
572.6
27.6%
Account maintenance and cash transactions
1)
401.4
392.9
2.2%
Credit fees
2)
359.5
332.1
8.3%
Debit cards 283.0
253.5
11.6%
Insurance fees 229.3
209.6
9.4%
Asset management and distribution 199.1
276.5
-28.0%
Electronic and payment services
3)
193.7
188.9
2.5%
Credit cards 119.9
130.0
-7.8%
Brokerage activities 115.4
112.3
2.8%
Guarantees and sureties
32.7
52.8
-38.1%
Other fees
4)
(98.0) (34.1)
187.4%
Total 2,566.4
2,487.1
3.2%
Electronic and Payment Services
7%
Debit cards
11%
Account Maintenance &
Cash Transactions
16%
FX Fees
28%
Mutual Fund Distribution & Asset
Management
8%
Insurance Fees
9%
Credit Fees
14%
Credit Card Fees
5%
Brokerage Activities,
Guarantees & Others
2%
Net fee & commission income structure in 2022
Electronic and Payment Services
8%
Debit cards
10%
Account Maintenance &
Cash Transactions
16%
FX Fees
23%
Mutual Fund Distribution & Asset
Management
11%
Insurance Fees
9%
Credit Fees
13%
Credit Card Fees
5%
Brokerage Activities,
Guarantees & Others
5%
Net fee & commission income structure in 2021
611,3
600,1
634,8
640,9
660,7
620,7
665,8
619,2
Q1
2021
Q2
2021
Q3
2021
Q4
2021
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Net fee & commission income by quarter in 2021 and 2022
PLN m
2 057,8
2 128,2
2 152,1
2 487,1
2 566,4
2018 2019 2020 2021 2022
The Group's net fee & commission income in years 2018-2022
PLN m
+3,2%
r/r
1)
Fee and commission income from account maintenance and cash transactions was reduced by the corresponding expenses which are disclosed under “Other” in Note 7 to the Consolidated Financial Statements
of Santander Bank Polska Group for 2022 (PLN 20.6m in 2022 vs PLN 6.5m in 2021).
2)
Net fee income from lending, leasing and factoring activities which is not amortised to net interest income. This line item includes inter alia the cost of credit agency.
3)
Fees for payments (foreign and mass payments, Western Union transfers), trade finance, services for third party institutions as well as other electronic and telecommunications services.
4)
Issue arrangement fees and other fees.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
81
Net fee and commission income for the 12-month period ended 31 December 2022 was PLN 2,566.4m and increased by 3.2% YoY, driven by the
performance of individual business lines of Santander Bank Polska S.A. and its subsidiaries. The key changes were as follows:
FX fee income increased by 27.6% YoY on account of a 32% YoY increase in FX turnover, accompanied by a slight decline in average quotations.
The growth in the above-mentioned income was driven by transactions in electronic currency exchange platforms (eFX) and turnover generated
by all business segments. In the case of traditional channels, net fee and commission income decreased, with moderate growth in turnover
reported for retail, business and corporate customers.
An increase of 2.2% YoY in net fee and commission income from account maintenance and cash transactions reflects higher income generated by
business segments, including business entities with high liquidity resulting from the deferral of investments. The base of current and personal
accounts operated by the Bank grew considerably during the year. The most pronounced increase (+15.6% YoY) was reported in the portfolio of
Accounts As I Want It (Konto Jakie Chcę), which grew to 2.9m, supported by the special offer with preferential terms for Ukrainian citizens, among
other things. The higher number of accounts translated mainly into a higher number of transactions with debit cards.
Higher net fee and commission income from insurance (+9.4% YoY) was generated by insurance linked to bank products of Santander Bank Polska
S.A. (particularly cash loans) as well as insurance not linked to the Bank’s products such as life insurance. The above increase was also supported
by insurance products offered by Santander Leasing S.A.
A rise of 11.6% YoY in net income from debit cards results from a growing number of cards (+5.8% YoY), a higher value of non-cash transactions
(+27% YoY) and cash transactions with such cards (+11% YoY), and higher income from currency exchange transactions, particularly in the
summer.
An increase of 8.3% YoY in net credit fee income is a combined effect of the Group’s services related to overdrafts and project finance for corporate
customers, modification of fees in line with market trends and lower cost of agency services.
Net fee and commission income disclosed under the Group’s electronic and payment services went up by 2.5% YoY as a consequence of higher
turnover from international payments and increased use of existing electronic channels.
An increase of 2.8% YoY in net fee and commission income from brokerage activities results from higher income in the futures market coupled
with a slowdown in investor activity in the spot market due to surging inflation and deteriorating economic outlook (after a period of more active
trading at the beginning of the year driven by increased market volatility triggered by Russia’s invasion of Ukraine).
Net fee and commission income from distribution and asset management declined by 28.0% YoY on account of lower income from management
fees and success fees collected by funds managed by Santander TFI S.A. Lower income from management fees is attributed to lower average net
value of assets after many months of negative net sales and a growing share of lower-margin products. It was also an effect of statutory reduction
of the maximum management fee to 2% as of 1 January 2022. At the same time, developments in the financial markets reflecting macroeconomic
and geopolitical uncertainty put pressure on the performance of investment funds.
Net fee and commission income from issuance and management of a combined portfolio of credit cards of Santander Bank Polska S.A. and
Santander Consumer Bank S.A. decreased by 7.8% YoY due to lower fee and commission income generated by the portfolio of the latter bank.
Net fee and commission income from guarantees and sureties was down 38.1% YoY as a result of higher cost related to securitisation transactions
with a stable level of income. The data for 2022 include two new synthetic securitisation transactions made with international financial institutions
as part of optimisation of Tier 1 capital.
Non-interest and non-fee income
216,3
268,0
112,9
94,9
0,3
217,7
126,8
10,6
-23,1
-169,2
+0,6%
-52,7%
-90,6%
-118,0 m
-169,5 m
Other Operating Income Net Trading Income &
Revaluation
Dividend Income
Gaines/Losses on Other
Financial Instruments
Gain/loss on derecognition of
financial liabilities measured at
amortised cost
Components of consolidated other income for 2021 vs 2022
2021 2022
PLN m
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
82
Non-interest and non-fee income of Santander Bank Polska Group presented above totalled PLN 162.8m and was down 76.5% YoY on account of changes
in the following components:
Net trading income and revaluation decreased by 52.7% YoY to PLN 126.8m reflecting prevailing financial market trends, including rising bond yields
and IRS spreads, and pressure on the zloty. This line item was affected by the following portfolios and actions:
A gain of PLN 92.7m on derivatives, interbank FX transactions and FX trading transactions, down 60.5% YoY.
A positive change of PLN 3.2m in 2022 in the fair value of credit card receivables measured through profit or loss (PLN 5.7m in 2021).
Total gain of PLN 30.8m on trading in equity and debt financial instruments measured at fair value through profit or loss, up 12.7% YoY.
A loss of PLN 23.1m on other financial instruments (-PLN 118.0m YoY) on account of a loss of PLN 10.2m on bond sales compared to a profit of PLN
91.8m in the comparative period, higher loss on hedging and hedged instruments (-PLN 8.8m in 2022 vs -PLN 3.1m in 2021) and a negative change in
the valuation of Visa Inc. shares resulting from decline in the share price, among other things (a negative adjustment to the fair value of Visa Inc. shares
at PLN 3m vs a positive adjustment of PLN 2.2m for 2021). Furthermore, in 2022 there were no transactions involving conversion and sale of series A
convertible preference shares of Visa Inc. In the comparative period, such transactions generated a profit of PLN 8.1m.
Consolidated dividend income decreased by 90.6% YoY to PLN 10.6m following the divestment of three insurance companies from Aviva Group
included in the portfolio of investment financial assets of Santander Bank Polska S.A. (the transaction was closed in November 2021). In the
comparative period, the above-mentioned companies paid a dividend of PLN 95.6m in total to the Bank.
The Group incurred a loss of PLN 169.2m on derecognition of financial instruments measured at amortised cost vs a gain of PLN 0.3m in the
comparative period. This category includes settlements solutions of PLN 183.3m.
Other operating income totalled PLN 217.7m and was relatively stable as a decrease in income from modification of lease agreements and from
settlement of the divestment of three non-controlled companies from Aviva Group was offset by higher income from insurance indemnity payments
and releases of provisions for legal claims.
Expected credit loss allowances
Net expected credit loss allowances on loans
and advances measured at amortised cost
(PLN m)
Stage 1 Stage 2 Stage 3 POCI Total Total
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
Allowance on loans and advances to
customers
(120.6) (150.3) (503.9) (108.8) (427.7) (920.2) 106.2
47.4
(946.0) (1,131.9)
Recoveries of loans previously written off
-
-
-
-
52.1
3.9
-
-
52.1
3.9
Allowance on off-balance sheet credit
liabilities
4.1
(10.7) (1.6) 3.7
(3.3) 10.8
-
-
(0.8) 3.8
Total
(116.5) (161.0) (505.5) (105.1) (378.9) (905.5) 106.2
47.4 (894.7) (1,124.2)
In 2022, the charge made by Santander Bank Polska Group to the income statement on account of net expected credit loss allowances was PLN 894.7m,
down 20.4% YoY. This figure includes net allowances of Santander Consumer Bank Group, which totalled PLN 33.3m and decreased by 84.5% YoY.
Net allowances on loans and advances to the Group’s customers for 2022 are a combined effect of:
Stabilisation of or decrease in credit risk in personal, SME and corporate loan portfolios in H1 2022, followed by an increase due to deterioration of
customers’ standing and outlook as a result of record price rises (notably of energy). In H2 2022, new downgrades to the non-performing portfolio
were reported in the case of corporate customers, along with higher allowances on the performing portfolio. At the same time, however, a significant
exposure was upgraded to the performing portfolio. In the retail customer portfolio, exposures downgraded to the non-performing portfolio went up
and aid measures only partly mitigated risk connected with the mortgage loan portfolio. The level of arrears and downgrades in the SME customer
segment was stable in H2 2022.
Review and update of model parameters and macroeconomic scenarios (taking into account forecasts) as part of reviews, resulting in recognition/
derecognition of management provisions for expected credit losses to account for uncertainty about the geopolitical situation and macroeconomic
outlook. At the end of December 2022, new management provisions of Santander Bank Polska S.A. totalled PLN 101,1m and were mainly raised for
credit risk not covered by risk models. Other management adjustments were reversed.
Sale of credit receivables from retail and business customers of Santander Bank Polska S.A. and Santander Consumer Bank S.A. totalling PLN 1,689.7m
at a profit before tax of PLN 185.8m (in 2021, credit receivables of PLN 2,474.0m were sold at a profit before tax of PLN 120.9m).
In 2022, the cost of credit risk of Santander Bank Polska Group was 0.59% vs 0.76% in 2021, with a higher value of the credit portfolio measured at amortised
cost (+3.7% YoY including finance lease receivables).
The Group closely monitors its loan portfolio, and promptly responds to changes in risk by adjusting credit ratings and classifying exposures to individual
stages (taking into account the risk connected with the epidemic threat, the war in Ukraine and deteriorating macroeconomic conditions).
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
83
Total costs
Total costs (PLN m) 2022 2021 YoY change
Staff, general and administrative expenses, of which:
(3,977.5)
(3,172.1)
25.4%
- Staff expenses
(1,815.8)
(1,694.2)
7.2%
- General and administrative expenses (2,161.7) (1,477.9) 46.3%
Depreciation/amortisation
(523.6)
(579.0)
-9.6%
- Depreciation/amortisation of PP&E and intangible assets (381.7) (411.4) -7.2%
- Depreciation of right-of-use asset
(141.9)
(167.6)
-15.3%
Other operating expenses
(196.6)
(237.2)
-17.1%
Total costs
(4,697.7)
(3,988.3)
17.8%
Total operating expenses of Santander Bank Polska Group for 2022 went up by 17.8% YoY to PLN 4,697.7m on account of an increase in salaries, the Bank’s
participation in the newly established institutional protection scheme, a mandatory contribution to the Borrowers Support Fund, and dynamically growing
cost of marketing and IT usage. The level of expenses was adversely affected by indexation and revision of pricing due to an increasing inflation rate, among
other things.
On a comparative basis, i.e. excluding the impact of the contributions to the Borrowers Support Fund and contributions to the funds operated under
institutional and mandatory protection schemes to ensure stability of the banking sector, the underlying total operating expenses were up 2.4% YoY.
As total income grew faster than operating expenses, the Group’s cost to income ratio was 37.9% for 2022 vs 43.6% for 2021.
Staff expenses
Staff expenses for 2022 totalled PLN 1,815.8m and increased by 7.2% YoY. The average employment in the Group decreased by 3.4% YoY. The main
components of staff expenses, i.e. salaries, bonuses and statutory deductions from salaries, went up by 10.0% to PLN 1,784.4m on account of the periodic
salary review in line with market rates conducted in October 2021 and September 2022 and an increased bonus pool calculated against higher base salary.
In 2022, Santander Bank Polska S.A. released the unused portion of PLN 35.8m of the provision for collective redundancies completed at the end of
December 2022. In 2021, Santander Consumer Bank S.A. raised a restructuring provision of PLN 12.8m. In the reporting period, the cost of training increased
by 32.2% YoY to PLN 12.3m, reflecting a low base connected with the epidemic situation in 2021.
General and administrative expenses
General and administrative expenses of Santander Bank Polska Group for 2022 increased by 46.3% YoY to PLN 2,161.7m. The largest constituent item was
a contribution of PLN 445.7m made by Santander Bank Polska S.A. to the aid fund established together with seven other commercial banks as part of the
institutional protection scheme. The above contribution includes the amount estimated on the basis of the guaranteed funds of Santander Bank Polska S.A.
as at 31 March 2022 (PLN 407.3m) and an additional contribution requested by the Bank Guarantee Fund and approved by the General Meeting of System
Ochrony Banków Komercyjnych S.A. (PLN 38.4m).
Furthermore, the Group contributed PLN 173.6m to the Borrowers Support Fund operating in a new form since July 2022, as specified in the Act on
crowdfunding for business and support for borrowers of 7 July 2022.
Amounts payable to market regulators (BFG, KNF and KDPW) totalled PLN 298.7m, up 1.7% YoY. A charge to the Group’s income statement on account of
contributions to the Bank Guarantee Fund totalled PLN 264.6m and was relatively stable (+0.8% YoY), as an increase of 35.6% YoY to PLN 209.0m in an
annual contribution to the bank resolution fund was offset by a decrease of 48.7% YoY to PLN 55.6m in a quarterly contribution to the bank guarantee fund.
Excluding the mandatory contributions payable to the BFG and contributions to the new protection scheme for commercial banks and the Borrowers Support
Fund, the Group’s general and administrative expenses increased by 5.1% YoY, mainly on account of higher cost of IT usage and marketing. The cost of IT
usage, the second largest cost item, went up by 8.6% YoY in connection with delivery of various IT projects across Santander Group and locally and due to
processes related to support and maintenance of the existing infrastructure. The increase in marketing and entertainment (+32.9% YoY) results from
advertising campaigns (promoting e.g. solutions implemented as part of the retail business digitalisation programme), market research, sponsorship
activities and extensive correspondence to customers.
The cost of data transmission went up by 86.5% YoY on account of fees for cloud services and progress in the migration to the new Data Centre. An increase
was also reported in the costs of third party services (+7.9% YoY) in relation to the printout of mass correspondence to customers concerning changes in the
schedule of fees and charges and interest rates, an increase in back office service rates, and the launch of new external services as part of banking operations.
A rise of 9.4% YoY in consultancy and advisory fees was connected with Group projects related to new reference rates and prevention of money laundering
and terrorist financing, among other things.
At the same time, the Group reported a decrease in the costs of maintenance of premises (-12.6% YoY), security costs (-23.5% YoY) and cost of purchase of
equipment (-47.3% YoY) resulting from the optimisation of the branch network and the office space in the Business Support Centre. Cost of consumables,
printouts, cheques and cards went down too (-6.4% YoY), as did postal fees and telecommunications fees (-15.7% YoY) following the release of the provision
for mass dispatch of correspondence to customers.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
84
Tax and other charges
Tax on financial institutions for 2022 totalled PLN 781.1m and was up 27.1% YoY, reflecting an increase in assets, including loans and advances, and a
decrease in the portfolio of treasury securities which lowers the tax base.
Corporate income tax was PLN 1,344.2m and effectively lower compared to the previous year (the effective tax rate fell from 39.1% for 2021 to 30.9% for
2022), mainly due to a strong increase in profit before tax combined with higher cost of legal risk related to foreign currency mortgage loans, contributions
to the Bank Guarantee Fund, tax on financial institutions and additional costs connected with the Borrowers Support Fund.
2. Consolidated Statement of Financial Position
Consolidated assets
As at 31 December 2022, the total assets of Santander Bank Polska Group were PLN 259,167.2m, and increased by 6.6% YoY mainly on account of
receivables from repo transactions, loans and advances to customers and banks, and financial assets held for trading. The value and structure of the Group’s
financial position is determined by the parent entity, which held 91.9% of the consolidated total assets vs 89.2% as at the end of December 2021.
237 509,9
230 210,6
232 393,2
243 017,3
245 938,5
246 504,6
263 395,1
259 167,2
31-Mar-21
30-Jun-21 30-Sep-21 31-Dec-21
31-Mar-22
30-Jun-22 30-Sep-22 31-Dec-22
Total consolidated assets at the end of consecutive quarters in 2021 and 2022
1)
PLN m
157 194,6
206 656,3
209 476,2
228 748,9
243 017,3
31-Dec-2017 31-Dec-2018 31-Dec-2019 31-Dec-2020 31-Dec-2021
Total assets at the end of years 2018-2022
1)
PLN m
+6,6%
YoY
1)
The total assets for individual quarters of 2021 were restated to reflect the Group’s modified accounting policy (applicable
as of 1 January 2022) with respect
to the recognition of legal risk connected with foreign currency mortgage loans, which is
now measured and presented in accordance with IFRS 9 (previously:
IAS 37).
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
85
Structure of consolidated assets
Assets
1)
in PLN m (for analytical purposes)
31.12.2022
Structure
31.12.2022 31.12.2021
Structure
31.12.2021 YoY change
1 2 3 4 1/3
Loans and advances to customers 152,508.7
58.8% 146,391.3
60.2% 4.2%
Investment securities
55,371.1
21.4% 71,866.3
29.6% -23.0%
Buy-sell-back transactions and assets pledged as collateral 16,142.8
6.2% 987.8
0.4% 1534.2%
Cash and balances at central banks 10,170.0
3.9% 8,438.3
3.5% 20.5%
Financial assets held for trading and hedging derivatives 7,432.8
2.9% 4,183.3
1.7% 77.7%
Loans and advances to banks 9,577.5
3.7% 2,690.3
1.1% 256.0%
Property, plant and equipment, intangible assets, goodwill and right-
of-use assets
3,638.5
1.4% 3,654.9
1.5% -0.4%
Other assets
2)
4,325.8
1.7%
4,805.1
2.0%
-10.0%
Total
259,167.2
100.0%
243,017.3
100.0%
6.6%
In the above condensed statement of financial position as at 31 December 2022, net loans and advances to customers were the key item of the consolidated
assets (58.8%). They totalled PLN 152,508.7m and increased by 4.2% compared to the end of December 2021 along with a rise in loans for business
customers and the public sector and lease receivables.
The Group’s increased activity in the interbank repo market is reflected in assets under buy-sell-back transactions and assets pledged as collateral, which
went up by PLN 15,155.0m YoY. As part of ongoing liquidity management, the Group also increased the level of term deposits, loans and current account
balances disclosed under loans and advances to banks (+256.0% YoY), cash and balances with the central bank (+20.5% YoY) as well as the value of financial
assets held for trading and hedging derivatives (+77.7% YoY) on account of interest rate and FX hedging transactions made for trading purposes.
At the same time, the balance of investment securities decreased by 23.0% on account of a decline in the portfolio of debt investment securities measured
at fair value through other comprehensive income, in which the Bank has invested liquidity surpluses since 2020 by purchasing bonds issued or guaranteed
by the State Treasury. As part of the above line item, on 1 April 2022 the Bank reclassified the portfolio of debt instruments hedging interest rate risk of PLN
personal accounts to reflect the change in the business model applicable to those investments from “held to collect and for sale” (HTC&S) to “held to collect”
(HTC). Accordingly, the Bank reclassified the specific debt securities measured at fair value through other comprehensive income of PLN 10.5bn, and reversed
the related fair value adjustment, derecognised the related tax income and recognised debt investment securities measured at amortised cost of PLN 12.4bn.
Credit portfolio
31.12.2022 31.12.2021 YoY change
Gross loans and advances to customers in PLN m
1 2 1/2
Loans and advances to individuals
81,483.3
83,039.2
-1.9%
Loans and advances to enterprises and the public sector
64,833.2
58,216.2
11.4%
Finance lease receivables
11,998.3
10,937.9
9.7%
Other
77.9
58.4
33.4%
Total
158,392.7
152,251.7
4.0%
Loans to
Enterprises &
Public Sector
40%
Home
Mortgages
34%
Cash Loans
13%
Other Loans to
Individuals
5%
Finance Lease
Receivables
8%
Product structure of consolidated
loans & advances to customers as at 31.12.2022
PLN
81%
EUR
15%
CHF
3%
USD & Other
1%
FX Structure of consolidated
loans and advances to customers as at
31.12.2022
1)
As of 1 January 2022, the Group changed the accounting policy rules for recognition of legal risk connected with foreign currency mortgage loans, which are now measured and presented in accordance with IFRS 9
(previously: IAS 37). The Group reduces the gross carrying amount of mortgage loans in line with IFRS 9. If there is no exposure to cover the estimated provision or the existing exposure is insufficient, the provision is
recognised in accordance with IAS 37. The comparative data presented in the table have been restated in accordance with the revised accounting policy.
2)
Other assets include the following items of the full version of financial statements: investments in associates, current income tax assets, net deferred tax assets, assets classified as held for sale and other assets.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
86
As at 31 December 2022, consolidated gross loans and advances to customers were PLN 158,392.7m and increased by 4.0% vs 31 December 2021. The
portfolio includes loans and advances to customers measured at amortised cost of PLN 143,519.3m (+3.2% YoY), loans and advances to customers
measured at fair value through other comprehensive income of PLN 2,635.4 m (+52.1% YoY), loans and advances to customers measured at fair value
through profit or loss of PLN 239.7m (-56.7% YoY), and finance lease receivables of PLN 11,998.3m presented below.
The section below presents the Group’s credit exposures by key portfolios in terms of customer segments and products:
Loans and advances to individuals increased by 1.9% YoY to PLN 81,483.3m as at the end of December 2022. Home loans, which were the main
contributor to this figure, totalled PLN 53,175.6m and decreased by 2.9% YoY as a result of a slowdown in the mortgage loan market and an
increase in an adjustment to gross carrying amount in respect of legal risk connected with foreign currency mortgage loans. The second largest
constituent item was cash loans which totalled PLN 21,033.8m (+1.1% YoY) supported by a visible growth of sales.
Loans and advances to enterprises and the public sector (including factoring receivables) went up by 11.4% YoY to PLN 64,833.2m as a result of
higher utilisation of overdrafts by business customers from all segments, and higher exposure on account of investment loans in the Business
and Corporate Banking segment and the Corporate and Investment Banking segment.
Finance lease receivables of subsidiaries of Santander Bank Polska S.A. rose by 9.7% YoY to PLN 11,998.3m, supported by strong sales of machines
and equipment and of vehicles at the level comparable to 2021.
82 973,5
33 844,6
14 447,3
15 126,0
82 561,4
38 177,5
16 135,5
15 634,3
-0,5%
+12,8%
+11,7%
+3,4%
Retail Banking Segment Business and Corporate Banking
Segment
Corporate and Investment Banking
Segment
Santander Consumer Segment
Loans and advances to customers by business segment
as at 31.12.2021 and 31.12.2022
(excl. ALM and Central Operations Segment)
31.12.2021
31.12.2022
YoY Change (%)
PLN m
6,0%
5,8%
5,4%
5,0%
4,8%
4,7%
4,9%
57,2%
59,4%
60,3%
60,4%
61,1%
60,6%
59,9%
40%
45%
50%
55%
60%
65%
5%
6%
7%
8%
31-Mar-2021 30-Jun-2021 30-Sep-2021 31-Dec-2021 31-Mar-2022 30-Jun-2022 30-Sep-2022
Credit quality ratios by quarter in 2021
1)
and 2022
NPL ratio Loan loss coverage ratio
As at 31 December 2022, the NPL ratio was 5.0% (and more precisely: 4.95%) and the NPL provision coverage ratio was 57.5%. The corresponding ratios for
2021 after restating for comparison purposes are 5.01% and 60.8%, respectively.
1) The comparative ratios for 2021 have not been restated after the change of the accounting policy with respect to recognition of legal risk
connected with foreign currency mortage loans, effective as of 1 January 2022. The comparative values for 2021 are: 5.01% for the NPL
ratio and 60.8% for the NPL provision coverage ratio.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
87
Structure of consolidated equity and liabilities
Liabilities and equity
1)
in PLN m (for analytical purposes)
31.12.2022
Structure
31.12.2022 31.12.2021
Structure
31.12.2021 YoY change
1 2 3 4 1/3
Deposits from customers 196,496.8 75.8% 185,373.5
76.3% 6.0%
Subordinated liabilities and debt securities in issue 12,137.7 4.7% 15,555.9
6.4% -22.0%
Financial liabilities held for trading and hedging derivatives 9,087.9 3.5% 5,640.4
2.3% 61.1%
Deposits from banks and sell-buy-back transactions 6,356.2 2.5% 4,910.4
2.0% 29.4%
Other liabilities
2)
4,973.3 1.9% 4,323.5
1.8% 15.0%
Total equity 30,115.3 11.6% 27,213.6
11.2% 10.7%
Total
259,167.2
100.0%
243,017.3
100.0%
6.6%
As at 31 December 2022, deposits from customers totalled PLN 196,496.8m and were the largest constituent item of the Group’s total equity and liabilities
(75.8%) disclosed in its consolidated statement of financial position and the main source of funding for the Group’s assets. In 2022, they went up by 6.0%
YoY due to a strong inflow of funds in the last quarter.
An increase was also observed in financial liabilities held for trading and hedging derivatives (+61.1% YoY), largely supported by transactions in interest rate
and currency instruments, and in deposits from banks and sell-buy-back transactions (+29.4% YoY), reflecting the Group’s increased activity in the sell-buy-
back market.
Subordinated liabilities and liabilities in respect of debt securities in issue decreased by 22.0% YoY in 2022, with the latter item falling by 27.1% YoY to PLN
9,330.6m, as a combined effect of the issue of debt instruments with a total nominal value of PLN 5,426.4m and redemption of PLN 9,088.0m worth of
securities on their maturity dates. Under the EMTN Programme, the Bank issued fixed-coupon senior non-preferred notes with a nominal value of EUR 500m,
which were taken up in full by Banco Santander S.A. The notes mature on 30 March 2024. Santander Leasing S.A. issued three series of 1-year bonds with a
total nominal value of PLN 1,235m, a put option and an interest rate based on 3M WIBOR. The above issues are guaranteed by the Bank. Santander Factoring
Sp. z o.o. issued 6-month bonds with a nominal value of PLN 150.0m and an interest rate based on 1M WIBOR. The contribution of Santander Consumer
Bank Group to the issues made by Santander Bank Polska Group was PLN 1,716m by the nominal value.
As part of the debt securities issue programme renewed in 2022, both participants, i.e. Santander Consumer Bank S.A. and Santander Consumer
Multirent Sp. z o.o., issued tranches of 2-year variable-rate bonds based on WIBOR at PLN 300m and PLN 265m, respectively. Furthermore, both SCB S.A.
and Santander Consumer Multirent Sp. z o.o. - through their special purpose subsidiaries - renewed the securitisation transactions, obtaining the new
funding of PLN 1,000m and PLN 151m by nominal value, respectively.
Deposit base
Deposits by entities
31.12.2022 31.12.2021 YoY change
Deposits from customers in PLN m
1 2 1/2
Deposits from individuals 107,927.3 106,267.8 1.6%
Deposits from enterprises and the public sector
88,569.5
79,105.7
12.0%
Total
196,496.8
185,373.5
6.0%
As at 31 December 2022, consolidated deposits from customers totalled PLN 196,496.8m and increased by 6.0% YoY, with a high base built in 2020 and
2021 from, among other things, funds from state aid programmes aimed to contain the economic impact of the Covid-19 pandemic. At the end of 2022, a
dynamic inflow of funds was noted, particularly in the case of business accounts.
The retail deposit base totalled PLN 107,927.3m and was up 1.6% compared to 31 December 2021 owing to term deposits, which became a more
attractive option to customers due to high interest rates. Term deposits increased by 147.5% YoY to PLN 34,841.9m, mainly due to the transfer of
funds from savings accounts and current accounts (which fell by 39.1% YoY to PLN 19.7bn and by 10.9% YoY to PLN 53.1m). Another important driver
of term deposit growth during the year was the transfer of cash from investment funds affected by downturn in the equity and bond markets due to
increased uncertainty around the geopolitical and macroeconomic situation.
Deposits from enterprises and the public sector increased by 12.0% YoY to PLN 88,569.5m as a consequence of a rise of 105.6% YoY in term deposits
to PLN 21,605.6m and a fall of 4.0% YoY in current deposits to PLN 62,895.6m.
1)
The comparative data presented in the table have been restated in accordance with the revised accounting policy related to recognition of legal risk connected with foreign currency mortgage loans.
2)
Other liabilities include lease liabilities, current income tax liabilities, deferred tax liability, provisions for financial and guarantee liabilities, other provisions and other liabilities.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
88
125 698,8
38 826,4
8 513,5
9 283,2
126 640,1
40 730,1
14 913,1
10 349,9
+0,7%
+4,9%
+75,2%
+11,5%
Retail Banking Segment
Business and Corporate Banking
Segment
Corporate and Investment Banking
Segment
Santander Consumer Segment
Deposits from customers by business segment
as at
31
.12.2021 and 31.12.2022
(excl. ALM and Central Operations
Segment)
31.12.2021
31.12.2022
YoY Change (%)
PLN m
Deposits by tenors
Term Deposits
29%
Current Accounts
69%
Othe r Liabilit ies
2%
Structure of consolidated customer deposits
as at
31.12.2022
In 2022, the Group’s total term deposits from customers amounted to PLN 56,447.5m and increased by 129.6% YoY. Current account balances fell by 13.8%
YoY to PLN 135,711.8m, and other liabilities were PLN 4,337.5m, up 31.2% YoY.
Loans and advances from financial institutions (PLN 1,316.7m vs PLN 1,403.4m as at 31 December 2021) were one of the main components of other
liabilities and were disclosed under deposits from enterprises, which included loans granted by international financial organisations (the European
Investment Bank/ EIB, the European Bank for Reconstruction and Development/ EBRD and the Council of Europe Development Bank/ CEB) to finance the
lending activity of the Bank and its subsidiaries. The YoY decrease in the above line item is a combined effect of the scheduled repayments and disbursements
(PLN 921.3m in total).
22,4
20,7 20,7
24,6
29,2
33,3
44,5
56,4
153,3
149,5
153,8
157,5
153,9
145,4
139,9
135,7
3,8
3,0
2,8
3,3
4,2
4,8
5,1
4,3
31-Mar-2021 30-Jun-2021 30-Sep-2021 31-Dec-2021 31-Mar-2022 30-Jun-2022 30-Sep-2022 31-Dec-2022
Term deposits and current accounts * at quarter-ends of 2021 and 2022
Term Deposits Current Accounts Other Liabilities
PLN m
∗ Including savings accounts
Term Deposits
13%
Current Accounts
85%
Oth er L iabilit ies
2%
Structure of consolidated customer deposits
as at
31.12.2021
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
89
3. Selected Financial Ratios of Santander Bank Polska Group
Selected financial ratios of Santander Bank Polska Group
2022 2021
11)
Cost/Income 37.9% 43.6%
Net interest income/Total income 78.0% 65.2%
Net interest margin
1)
4.31%
2.72%
Net fee and commission income/Total income
20.7%
27.2%
Net loans and advances to customers/Deposits from customers
77.6%
79.0%
NPL ratio
2)
4.95%
5.01%
NPL provision coverage ratio
3)
57.5% 60.8%
Cost of credit risk
4)
0.59% 0.76%
ROE
5)
12.1% 4.7%
ROTE
6)
12.8% 5.3%
ROA
7)
1.1%
0.5%
Total capital ratio
8)
19.27%
19.05%
Tier 1 capital ratio
9)
17.54% 17.10%
Book value per share (PLN) 294.70 266.31
Earnings per ordinary share (PLN)
10)
27.39 10.88
1)
Net interest income annualised on a year-to-date basis (excluding interest income from the portfolio of debt securities held for trading and other exposures related to trading) to average net earning assets as at
the end of consecutive quarters after the end of the year preceding a given accounting year (excluding financial assets held for trading, hedging derivatives, other exposures related to trading and other loans and
advances to customers).
2)
Lease receivables and gross loans and advances to customers measured at amortised cost and classified to stage 3 and POCI exposures to the total gross portfolio of such loans and advances and lease receivables
as at the end of the reporting period.
3)
Impairment allowances for loans and advances to customers measured at amortised cost and lease receivables classified to stage 3 and POCI exposures to gross value of such loans and advances and lease
receivables as at the end of the reporting period.
4)
Net expected credit loss allowances (for four consecutive quarters) to average gross loans and advances to customers measured at amortised cost and lease receivables (as at the end of the current reporting period
and the end of the previous year).
5)
Profit attributable to the parent’s shareholders (for four consecutive quarters) to average equity (as at the end of the current reporting period and the end of the previous year), excluding non-controlling interests,
current period profit, dividend reserve/ undistributed portion of the profit and recommended dividend.
6)
Profit attributable to the parent’s shareholders (for four consecutive quarters) to average tangible equity (as at the end of the current reporting period and the end of the previous year) defined as common equity
attributable to the parent’s shareholders less revaluation reserve, current year profit, recommended dividend, undistributed portion of the profit/ dividend reserve, intangible assets and goodwill.
7)
Profit attributable to the parent’s shareholders (for four consecutive quarters) to average total assets (as at the end of the current reporting period and the end of the last year).
8)
Total capital ratio was calculated on the basis of own funds and total capital requirements established for the individual risk types by means of the standardised approach, in line with the CRD IV/CRR package. The
ratio for 2021 Includes profits allocated to own funds pursuant to EBA guidelines.
9)
Tier 1 capital ratio calculated as a quotient of Tier 1 capital and risk-weighted assets for credit, market and operational risk. The ratio for 2021 Includes profits allocated to own funds pursuant to EBA guidelines.
10)
Net profit for the period attributable to shareholders of the parent entity to the average weighted number of ordinary shares.
11)
All comparative ratios (apart from NPL ratio and NPL provision coverage ratio) were calculated on the basis of data restated following the revision of the accounting policy rules with respect to the recognition of
legal risk connected with foreign currency mortgage loans, effective as of 1 January 2022.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
90
4. Separate Income Statement
Profit of Santander Bank Polska S.A.
Condensed Separate Income Statement
of Santander Bank Polska S.A. in PLN m (for analytical purposes)
2022
2021
4)
restated data
YoY change
Total income
10,486.0
7,382.8
42.0%
- Net interest income 8,040.5 4,514.0
78.1%
- Net fee and commission income 2,277.9 2,119.4
7.5%
- Other income
1)
167.6 749.4
-77.6%
Total costs
(3,908.6)
(3,251.4)
20.2%
- Staff, general and administrative expenses (3,378.7) (2,594.8) 30.2%
- Depreciation/amortisation
2)
(446.9) (504.4) -11.4%
- Other operating expenses (83.0) (152.2) -45.5%
Net expected credit loss allowances
(798.6)
(841.0)
-5.0%
Cost of legal risk connected with foreign currency mortgage loans
3)
(1,428.3)
(1,157.8)
23,4%
Tax on financial institutions (752.3) (583.8) 28.9%
Consolidated profit before tax
3,598.3
1,548.8
132.3%
Tax charges
(1,149.2)
(632.9)
81.6%
Net profit for the period 2,449.1 915.9 167.4%
In 2022, profit before tax of Santander Bank Polska S.A. increased by 132.3% YoY to PLN 3,598.3m, and the net profit for the period grew by 167.4% YoY to
PLN 2,449.1m.
The Bank’s underlying profit before tax went up by 173.8% YoY and the underlying net profit for the period grew by 183.2% YoY.
The calculation of the above line items excludes:
from the reporting period:
a negative adjustment of PLN 1,538m to interest income on home loans due to payment
deferrals;
a negative adjustment to interest income due to the Bank’s liability of PLN 37.8m in respect of
reimbursement of a bridge margin and a liability of PLN 40.5m in respect of settlement of fees
on partially or fully repaid home loans;
a contribution of PLN 445.7m made by Santander Bank Polska S.A. to the aid fund established as
part of the protection scheme for commercial banks;
a contribution of PLN 139.6m to the Borrowers Support Fund;
from both periods under review:
cost of legal risk connected with foreign currency mortgage loans at PLN 1,428.3m in 2022 and
PLN 1,157.8m in 2021;
contributions to the Bank Guarantee Fund in the total amount of PLN 245.1m in 2022 and PLN
237.8m in 2021;
dividend income of PLN 172.2m in 2022 and PLN 277.5m in 2021.
1)
Other income includes total non-interest and non-fee income of the Bank comprising the following items of the full income statement: dividend income, net trading income and revaluation, gain/ loss on other
financial instruments, gain/ loss on derecognition of financial instruments measured at amortised cost and other operating income.
2)
Depreciation/ amortisation includes depreciation of property, plant and equipment, amortisation of intangible assets and depreciation of the right-of-use asset.
3)
As of 1 January 2022, the Bank changed the accounting policy rules for recognition of legal risk connected with foreign currency mortgage loans, which is now measured and presented in accordance with IFRS 9
(previously: IAS 37). The Bank reduces the gross carrying amount of mortgage loans in line with IFRS 9. If there is no exposu
re to cover th
e estimated provision or the existing exposure is insufficient, the provision
is recognised in accordance with IAS 37. The total impact of the above risk on the Bank’s performance is presented in a separ
ate line of the income statement. It includes raised
and released provisions for legal
risk and legal claims. Those items were previously disclosed separately in other operating expenses and operating income, respectively.
4)
As a result of the above-mentioned change to the accounting policy as well as changes to the presentation of the selected items of the full income statement (i.e. introduction of the following lines: “Income
similar to interest on finance leases” and “Gain/ loss on derecognition of financial instruments measured at amortised cost”), the comparative data for 2021 needed to be restated.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
91
Changes to the components of the profit before tax earned by the Bank are presented below.
3 526,5
158,5
- 105,3
- 141,9
- 111,2
- 169,6
- 53,8
- 783,8
57,5
69,2
42,4
- 270,5
- 168,5
Net Interest Income
Net Fee & Commission Income
Dividend Income
Net Trading Income & Revaluation
Gain/Loss on Other Financial Securities
Gain/Loss on Derecognition of Financial Instruments
Other Operating Income
Staff, General and Administrative Expenses
Depreciation/Amortisation
Other Operating Expenses
Impairment Allowances for Expected Credit Losses
Cost of Legal Risk Associated with Foreign Currency Mortgage Loans
Tax on Financial Institutions
Year
-on-year changes in the main items of the income statement of Santander Bank Polska S.A. for 2022
in absolute numbers
in PLN m
Changes in the main components of the standalone profit reflect the trends relating to the consolidated profit. Similarly to the Group, the Bank’s profit
before tax was positively affected by net interest income, net fee and commission income and net expected credit loss allowances. The increase in the above-
mentioned items was partly offset by a rise in staff expenses, general and administrative expenses, cost of legal risk and settlements connected with foreign
currency mortgage loans and tax on financial institutions, as well as a decrease in gains on trading and investment financial instruments and in dividend
income.
Structure of total income of Santander Bank Polska S.A.
Total income of Santander Bank Polska S.A. for 2022 increased by 42.0% YoY to PLN 10,486.0m. Excluding dividend income, impact of payment deferrals
and negative adjustments due to the settlements of fees on mortgage loans, the underlying total income was up 67.9% YoY.
Net interest income
Interest income of Santander Bank Polska S.A. (PLN m) due to: 2022 2021
YoY change
Loans and advances to individuals
3,893.9
2,455.2
58.6%
Loans and advances to enterprises and the public sector, and leasing receivables
3,729.2
1,387.2
168.8%
Debt securities and receivables under buy-sell-back transactions
2,134.2
903.7
136.2%
IRS and loans and advances to banks
432.6
(0.9)
-
Total
10,189.9
4,745.2
114.7%
Interest expense of Santander Bank Polska S.A. (PLN m) due to: 2022 2021
YoY change
Deposits from individuals (640.7) (32.7) 1859.3%
Deposits from enterprises and the public sector and leasing liabilities
(918.3)
(45.6)
1913.8%
Liabilities under sell-buy-back transactions
(310.8)
(4.2)
7300.0%
Subordinated liabilities and debt securities in issue
(204.2)
(85.8)
138.0%
IRS and deposits from banks (75.4) (62.9) 19.9%
Total
(2,149.4)
(231.2)
829.7%
Net interest income
8,040.5
4,514.0
78.1%
The Bank’s interest income went up by 114.7% YoY, and interest expenses grew by 829.7% YoY. The dynamic growth in costs reflects trends in the money
market and increasing competition in the deposit market, which translated into repeated rises in deposit interest rates in the reporting period as part of
management of product offer parameters by Santander Bank Polska S.A.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
92
In 2022, the Bank’s net interest income grew by 78.1% YoY to PLN 8,040.5m, and the cumulative net interest margin increased from 2.47% in 2021 to 3.92%
in 2022. The above line items were particularly supported by:
a series of interest rate hikes from October 2021 to September 2022;
strong credit delivery to business customers, particularly in the Business and Corporate Banking segment and the Corporate and Investment Banking
segment, combined with accelerated sales of cash loans to retail customers;
higher yields of debt securities.
The negative factors included:
a negative adjustment of PLN 1,538.0m due to payment deferrals and a liability in respect of reimbursement of a bridge margin and settlement of
fees on repaid or prepaid mortgage loans in the total amount of PLN 78.3m;
increased asset funding costs;
change of the deposit structure in favour of term deposits.
Net fee and commission income
Net fee and commission income of Santander Bank Polska S.A. (PLN m) 2022 2021
YoY change
FX fees 730.4 572.6 27.6%
Account maintenance and cash transactions
1)
399.2 390.5 2.2%
Credit fees
2)
327.9 288.1 13.8%
Debit cards 283.0 253.6 11.6%
Electronic and payment services
3)
194.2 189.5 2.5%
Brokerage activities 115.4 112.3 2.8%
Insurance fees 91.2 72.7 25.4%
Credit cards 80.8 75.3 7.3%
Guarantees and sureties
78.6 87.9 -10.6%
Distribution fees 58.8 87.8 -33.0%
Other fees
4)
(81.6) (10.9) 648.6%
Total
2,277.9
2,119.4
7.5%
1)
Fee and commission income from account maintenance and cash transactions was reduced by the corresponding expenses disclosed under “Other” in Note 6 to the Financial Statements of Santander Bank Polska
S.A. for 2022 (PLN 20.8m in 2022 vs PLN 6.7m in 2021).
2)
Net fee and commission income from lending, factoring and lease activities which is not amortised to net interest income. This line item includes inter alia the cost of credit agency.
3)
Fees for payments (foreign and mass payments, Western Union transfers), trade finance, debit cards, services for third party institutions as well as other electronic and telecommunications services.
4)
Issue arrangement fees and other fees.
Net fee and commission income for 2022 totalled PLN 2,277.9m and increased by 7.5% YoY on account of higher net income from the key product lines,
including currency exchange (+27.6% YoY), insurance (+25.4% YoY), loans (+13.8% YoY) and debit cards (+11.6% YoY). Moderate growth was reported in
fees on account maintenance and cash transactions (+2.2% YoY), electronic and payment services (+2.5% YoY) and brokerage activities (+2.8% YoY). The
increase in the above line items was driven by the customers’ activity and growth of business volumes. It was generated in a worse macroeconomic
environment compared to 2021, the year marked by post-pandemic recovery and quite favourable conditions in the financial markets, including the equity
and securities markets.
A decrease of 33.0% in net fee and commission income from distribution reflected trends in the investment fund market. Net fee and commission income
from guarantees and sureties was down 10.6% YoY due to the cost of securitisation.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
93
Other income
Structure of non-interest and non-fee income of Santander Bank Polska S.A.
277,5
251,8
128,4
91,4
0,3
172,2
109,9
74,6
-19,8
-169,2
-37,9%
YoY
-56,4%
YoY
-41,9%
YoY
-111,2
PLN m
-169,5
PLN m
Dividend Income Net Trading Income &
Revaluation
Other Operating Income Gains on Other Financial
Instruments
Gain/loss on derecognition
of financial instruments
measured at amortised
cost
Components of other income for 2021 vs. 2022
2021 2022
PLN m
The Bank’s other income (non-interest and non-fee income) presented in the figure above decreased by 77.6% YoY to PLN 167.6m as a result of changes to
the following components:
A decrease of 37.9% YoY in dividend income to PLN 172.2m, mainly due to the divestment of three insurance companies from Aviva Group included
in the portfolio of investment securities of Santander Bank Polska S.A., which paid a dividend of PLN 95.6m in total to the Bank in the comparative
period. Furthermore, the Bank recognised a lower dividend from Santander Allianz TUnŻ S.A. and Santander Allianz TU S.A. (-PLN 36.5m YoY).
A decline of 56.4% YoY in net trading income and revaluation to PLN 109.9m, attributed to lower total gains on derivatives and interbank FX
transactions.
Transactions in other financial instruments generated a loss of PLN 19.8m (-PLN 111.1m YoY), reflecting higher bond yields, among other things.
A decrease of 41.9% YoY in other operating income to PLN 74.6m in relation to an additional payment of PLN 46.8m from Aviva Group recognised in
the comparative period in connection with the completed divestment of three companies from that Group.
The Bank incurred a loss of PLN 169.2m on derecognition of financial instruments measured at amortised cost (vs a gain of PLN 0.3m in the
comparative period), of which the amount of -PLN 183.3m related to settlements with customers.
Net expected credit loss allowances
Net expected credit loss allowances on loans
and advances measured at amortised cost
(PLN m)
Stage 1 Stage 2 Stage 3 POCI Total Total
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
Allowance on loans and advances to
customers
(146.3) (38.1) (259.6) (18.1) (449.4) (809.5) 61.4
30.3
(793.9) (835.4)
Recoveries of loans previously written off
-
-
-
-
(4.2)
(7.0)
-
-
(4.2)
(7.0)
Allowance on off-balance sheet credit
liabilities
3.9
(9.9) (1.0)
2.7
(3.4) 8.6
-
-
0.5
1.4
Total
(142.4) (48.0) (260.6) (15.4) (457.0) (807.9) 61.4
30.3
(798.6) (841.0)
Despite first signs of slowdown in the credit market in H2, a worsening financial standing of customers and growing credit risk, the year 2022 was better in
terms of net allowances of Santander Bank Polska S.A. than 2021, the year of post-pandemic recovery.
Net expected credit loss allowances totalled PLN 798.6m and decreased by 5.0% YoY, with a concurrent increase of 8.4% YoY in gross loans and advances
measured at amortised cost. In H1 2022, a gradual increase was observed in financing for businesses, combined with stabilisation or decrease in the cost of
risk of individual credit portfolios. In H2 2022, the cost of risk increased moderately as a result of deterioration in customers’ standing and prospects due to
geopolitical and macroeconomic developments, notably rising prices (including energy).
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
94
The level of net allowances was positively affected by the sale of credit receivables of Santander Bank Polska S.A. totalling PLN 1,140.2m at a profit before
tax of PLN 89.7m (in 2021, credit receivables of PLN 2,022.5m were sold at a profit before tax of PLN 41.9m).
At the end of 2022, new management provisions totalled PLN 79.1m, the majority of which was raised to account for credit risk not covered by models.
Staff, general and administrative expenses of Santander Bank Polska S.A.
Total costs of Santander Bank Polska S.A. (PLN m) 2022 2021 YoY change
Staff, general and administrative expenses, of which:
(3,378.7)
(2,594.8)
30.2%
- Staff expenses (1,494.6) (1,372.3) 8.9%
- General and administrative expenses
(1,884.1)
(1,222.5)
54.1%
Depreciation/amortisation
(446.9)
(504.4)
-11.4%
- Depreciation/amortisation of property, plant and equipment and intangible assets
(321.5)
(358.7)
-10.4%
- Depreciation of the right-of-use asset
(125.4)
(145.7)
-13.9%
Other operating expenses
(83.0)
(152.2)
-45.5%
Total costs
(3,908.6)
(3,251.4)
20.2%
Total operating expenses went up by 20.2% YoY to PLN 3,908.6m on account of an increase in salaries, the Bank’s participation in the newly established
institutional protection scheme, mandatory contribution to the Borrowers Support Fund, and dynamically growing cost of marketing and IT usage. Other
negative factors included indexation and revision of pricing due to an increasing inflation rate, among other things.
Excluding the impact of the contributions to the Borrowers Support Fund and contributions to the funds operated under institutional and mandatory
protection schemes to ensure stability of the banking sector, the underlying total operating expenses were up 2.1% YoY.
As total income grew faster than operating expenses, the Bank’s cost to income ratio was 37.3% for 2022 vs 44.0% for 2021.
Staff, general and administrative expenses increased by 30.2% YoY to PLN 3,378.7m. This included:
A rise of 8.9% YoY in staff expenses to PLN 1,494.6m, reflecting periodic salary review in line with market rates conducted in October 2021 and
September 2022 and the higher bonus pool calculated against the increased base salary. In 2022, Santander Bank Polska S.A. released the unused
portion of PLN 35.8m of the provision for collective redundancies completed at the end of December 2022.
General and administrative expenses grew by 54.1% YoY to PLN 1,884.1m, mainly on account of contributions to the aid fund established as part
of the institutional protection scheme and to the Borrowers Support Fund at PLN 445.7m and PLN 139.6m, respectively. The charge to the Bank’s
income statement on account of contributions to the Bank Guarantee Fund totalled PLN 245.1m and was relatively stable (+3.1% YoY), but its
structure changed due to an increase of 42.3% YoY to PLN 192.2m in an annual contribution to the bank resolution fund and a decrease of 48.4%
YoY to PLN 53.0m in a quarterly contribution to the bank guarantee fund. Excluding the mandatory contributions payable to the BFG and
contributions to the new protection scheme for commercial banks and the Borrowers Support Fund, the Bank’s general and administrative
expenses increased by 7.0% YoY, mainly on account of higher cost of IT usage and marketing.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
95
5. Statement of Financial Position of Santander Bank Polska S.A.
Assets of Santander Bank Polska S.A. (PLN m)
(for analytical purposes)
31.12.2022
31.12.2021
restated data
1)
YoY change
Loans and advances to customers
134,842.8
123,979.4
8.8%
Investment securities
52,124.0
68,865.4
-24.3%
Cash and balances at central banks
10,135.1
8,167.9
24.1%
Financial assets held for trading and hedging derivatives
7,417.7
4,184.0
77.3%
Buy-sell-back transactions
13,824.6
453.4
2949.1%
Property, plant and equipment, right-of-use assets, intangible assets and goodwill
3,249.1
3,285.6
-1.1%
Loans and advances to banks
9,709.8
2,744.0
253.9%
Investments in subsidiaries and associates
2,377.4
2,377.4
-
Assets pledged as collateral 2,157.4 21.5 9934.4%
Other assets
1)
2,260.2
2,636.6
-14.3%
Total
238,098.1
216,715.2
9.9%
Equity and liabilities of Santander Bank Polska S.A. in PLN m
(for analytical purposes)
31.12.2022
31.12.2021
restated data
1)
YoY change
Deposits from customers
185,655.3
175,354.6
5.9%
Subordinated liabilities and debt securities in issue 8,605.2
7,310.9 17.7%
Financial liabilities held for trading and hedging derivatives
8,989.9
5,522.7
62.8%
Deposits from banks
2,245.1
1,337.6
67.8%
Sell-buy-back transactions
2,158.5
21.4
9986.4%
Other liabilities
2)
4,148.8
3,340.6 24.2%
Total equity
26,295.3
23,827.4
10.4%
Total
238,098.1
216,715.2
9.9%
1)
The comparative data presented in the table have been restated in accordance with the revised accounting policy related to recognition of legal risk connected with foreign currency mortgage loans.
2)
Other assets include the following items of the full version of financial statements: current income tax assets, net deferred tax assets, assets classified as held for sale and other assets.
3)
Other liabilities include leasing liabilities, current income tax liabilities, provisions for financial and guarantee liabilities, other provisions and other liabilities.
As at 31 December 2022, the total assets of Santander Bank Polska S.A. were PLN 238,098.1m, an increase of 9.9% YoY.
Net loans and advances to customers were the key item of the Bank’s assets accounting for 56.6%. They totalled PLN 134,842.8m and increased by 8.8%
YoY due to acceleration of credit delivery to business customers.
Deposits from customers were the largest contributor to equity and liabilities and accounted for 78.0% of balance sheet total. They rose by 5.9% YoY to PLN
185,655.3m mainly as a consequence of an increase in business account balances at the end of the year.
The increased demand for credit and unfavourable conditions in the debt securities market resulted in a decline in the value of investment securities (-24.3%
YoY), particularly treasury bonds. At the same time, the Bank was more active in the interbank market, including with regard to repo transactions.
Receivables under buy-sell-back transactions increased by PLN 13.4bn, and loans and deposits at third party banks – by PLN 7bn.
Under the EMTN Programme, the Bank issued fixed-coupon senior non-preferred notes with a nominal value of EUR 500m, which were taken up in full by
Banco Santander S.A. The notes mature on 30 March 2024.
YoY changes in assets, equity and liabilities presented in the statement of financial position of Santander Bank Polska S.A. as at 31 December 2022 reflect
changes in the consolidated statement described in the section on the financial position of Santander Bank Polska Group.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
96
Gross loans and advances to customers of Santander Bank Polska S.A. 31.12.2022 31.12.2021 YoY change
Loans and advances to individuals
68,673.6
69,646.8
-1.4%
Loans and advances to enterprises and the public sector
70,106.9
58,026.7
20.8%
Other
69.7
49.2
41.7%
Total
138,850.2
127,722.7
8.7%
Gross loans and advances to customers totalled PLN 138,850.2m and were up 8.7% YoY as a combined effect of:
an increase of 20.8% YoY in the portfolio of loans and advances to enterprises and the public sector on account of overdrafts and term loans used,
among other things, for investment purposes;
a decrease of 1.4% YoY in the portfolio of loans and advances for individuals as a result of a slowdown in the mortgage loan market and an increase in
an adjustment to gross carrying amount in respect of legal risk connected with foreign currency mortgage loans (at the same time, the cash loan
portfolio went up by 2.5% YoY to PLN 15,042.6m with 25.6% YoY growth in sales).
The percentage share of foreign currency home loans for households in the Bank’s portfolio of loans and advances to the non-financial sector did not exceed
5% as at 31 December 2022.
NPL ratio was 4.2% as at 31 December 2022 and was relatively stable YoY (4.3% in 2021). The ratio of impairment allowances to average gross leasing and
credit receivables measured at amortised cost was 0.61% (0.68% the year before).
The provision coverage ratio for impaired loans was 53.4% compared with 55.3% as at 31 December 2021.
Total adjustment to gross carrying amount and provisions for legal risk and legal claims accounted for 42.4% of the active portfolio of CHF loans.
Deposits from customers of Santander Bank Polska S.A. 31.12.2022 31.12.2021 YoY change
Deposits from individuals
102,383.2
101,137.8
1.2%
Deposits from enterprises and the public sector 83,272.1
74,216.8 12.2%
Total
185,655.3
175,354.6
5.9%
Deposits from customers grew by 5.9% YoY to PLN 185,655.3m as a result of an increase of 1.2% YoY in personal deposits and a rise of 12.2% YoY in deposits
from enterprises and the public sector.
The main drivers of growth in deposits from customers in 2022 were term deposit balances of business and public sector entities (+161.2% YoY), as they
deferred investments and deposited surpluses in bank accounts. Term deposit balances of personal customers grew dynamically too (+217.6% YoY), but
largely due to transfers from current accounts (-10.9% YoY) and savings accounts (-39.9% YoY).
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
97
6. Selected Ratios of Santander Bank Polska S.A.
Selected financial ratios of Santander Bank Polska S.A.
2022 2021
Cost/Income
37.3%
44.0%
Net interest income/Total income
76.7%
61.1%
Net interest margin
1)
3,92%
2.34%
Net fee and commission income/Total income 21.7% 28.7%
Net loans and advances to customers/Deposits from customers
72.6%
70.7%
NPL ratio
2)
4.18%
4.29%
NPL provision coverage ratio
3)
53.4%
55.3%
Cost of credit risk
4)
0.61% 0.68%
ROE
5)
11.4% 4.1%
ROTE
6)
12.0%
4.7%
ROA
7)
1.1%
0.4%
Total capital ratio
8)
21.80%
21.56%
Tier 1 capital ratio
9)
19.74% 19.23%
Book value per share (PLN)
257.32
233.17
Earnings per ordinary share (PLN)
10)
23.97
8.96
The approach to calculation of the financial ratios of Santander Bank Polska S.A. presented and numbered in the above table i
s provided under the corresponding table with ratios of Santander Bank Polska Group
numbered in the same way.
7. Additional Financial Information about Santander Bank Polska S.A. and
Santander Bank Polska Group
Transactions with related parties
Transactions between Santander Bank Polska S.A. and its related parties are banking operations carried out on an arm’s length basis as part of their ordinary
business and mainly involve loans, bank accounts, deposits, guarantees and leases.
As at 31 December 2022, the Bank’s total exposure in respect of loans granted to banking and non-banking subsidiaries (including Santander Factoring Sp.
z o.o., Santander Leasing S.A., Santander Consumer Multirent Sp. z o.o. and Santander Consumer Bank S.A.) was PLN 17,507.0m compared with PLN
11,643.9m as at 31 December 2021.
The deposits held with the Bank by its subsidiaries (including Santander Finanse Sp. z o.o., Santander Inwestycje Sp. z o.o., Santander TFI S.A., Santander
Factoring Sp. z o.o., Santander Leasing S.A., Santander Consumer Multirent Sp. z o.o., Santander Consumer Bank S.A.) totalled PLN 401.6m vs PLN 420.7m
as at 31 December 2021.
Contingent liabilities were PLN 5,000.7m compared with PLN 6,052.2m as at 31 December 2021. Guarantees to subsidiaries totalled PLN 3,281.0m vs PLN
4,640.1m as at 31 December 2021.
The above transactions are excluded from the consolidated financial statements.
Intercompany transactions with the parent entity
The Bank’s receivables from the parent entity (Banco Santander S.A.) were PLN 6,202.3m (PLN 406.4m as at 31 December 2021), while liabilities were PLN
594.4m (PLN 138.5m as at 31 December 2021).
For more information about related party transactions see Note 53 to the Consolidated Financial Statements of Santander Bank Polska Group for 2022 and
Note 51 to the Financial Statements of Santander Bank Polska S.A. for 2022.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
98
Off-balance sheet items
Guarantees and derivatives
The tables below present contingent liabilities and nominal values of derivative transactions of Santander Bank Polska Group.
Contingent liabilities (granted) (PLNm)
31.12.2022
31.12.2021
Financial liabilities:
34,341.2
36,541.5
- credit lines
30,018.1
31,474.9
- credit cards
3,481.1
3,744.3
- import letters of credit
820.2
1,322.3
- term deposits with future term start date
21.8
-
Guarantees
8,935.7
8,997.6
Provision for off-balance sheet liabilities
(61.9)
(60.8)
Total
43,215.0
45,478.3
Contingent liabilities (received) (PLNm) 31.12.2022 31.12.2021
Financial liabilities
364.7
26.4
Guarantees
55,950.7
54,929.6
Total
56,315.4
54,956.0
Nominal values of derivatives (PLNm)
31.12.2022 31.12.2021
Forward transactions (hedging)
40,987.0 27,276.6
Forward transactions (trading) 776,623.4 661,823.5
Spot transactions
1,659.0
4,271.1
Transactions in equity instruments
16.3
48.4
Total
819,285.7
693,419.6
Description of guarantees issued
Santander Bank Polska S.A. issues guarantees to secure obligations arising from customers’ operating activities. These are: payment guarantees,
performance bonds, warranty guarantees, bid bonds, loan repayment guarantees and customs guarantees. In justified cases, the Bank issues counter-
guarantees and standby letters of credit.
All guarantees are granted in accordance with the Polish Banking Law and the Polish Civil Code. Guarantees issued by the Bank to secure cross-border
transactions may be subject to applicable rules as agreed by the parties (e.g. Uniform Rules for Demand Guarantees) or to foreign law if a guarantee is
governed by such law.
The process and information required in the case of guarantees are similar to the lending process. The Bank adopts the same approach to credit risk here as
in the case of balance sheet exposures.
Collateral
As at 31 December 2022, the value of collateral established on borrowers’ accounts and assets and leased assets in favour of Santander Bank Polska Group
was 128,546.0m, including PLN 100,045.7m in relation to Santander Bank Polska S.A. (PLN 123,797.5m as at 31 December 2021, including PLN 96,857.7m
in relation to the Bank).
Cooperation with international institutions in terms of securitisation
On 31 March 2022, Santander Bank Polska S.A. entered into a synthetic securitisation transaction with International Finance Corporation (IFC), under which
PLN 2.4bn worth of cash loans portfolio was secured with a guarantee. The secured amount can be increased in the future up to PLN 2.9bn. It is the first
transaction made by the Bank and the Group companies with that investor. The previous synthetic securitisation transactions were made in cooperation with
the European Investment Fund (EIF). The transaction made by the Bank is a synthetic securitisation which does not involve financing and covers the selected
portfolio of cash loans that remain on the Bank’s balance sheet. It is a significant risk transfer (SRT) transaction, yet not a simple, transparent and standardised
(STS) securitisation as defined in CRR. The Bank will allocate the equity released thanks to the IFC guarantee to finance climate-related projects with the
total minimum value of USD 600m.
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8. Factors Affecting the Financial Performance in the Next Year
The following external developments may have a significant impact on the financial performance and activity of Santander Bank Polska Group in the next
year:
Potential further changes in the monetary policy of the ECB, the Federal Reserve and other main central banks aimed at preventing the global rise in
inflation.
Fluctuation in credit risk pricing on the financial markets.
Changes in bond yields which are a function of monetary and fiscal policy expectations as well as of the liquidity of the banking sector.
Changes in the demand for loans in view of fluctuations in liquidity and expectations of future developments.
Changes in households’ financial situation under the influence of labour market trends.
Changes to customers’ savings allocation decisions, impacted by expected yields from different asset classes as well as changes to the approach to
saving and spending resulting from high inflation.
Evolution of the global equity markets and its impact on the demand for investment funds and equities.
Geopolitical risk, the war in Ukraine.
Prospects of unblocking funds under the National Recovery Plan.
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XII. Risk and Capital Management
1. Key risk management principles
Key Risk Management Principles
Both the Bank and other members of Santander Bank Polska Group are exposed to various risks within their day-to-day activities which adversely affect the
delivery of strategic priorities of the organisation. Top risks are defined each year as part of a specialised significant risk identification process. The main
types of risks include: credit risk (including concentration risk), market risk (in the banking book and in the trading book), liquidity risk, operational risk,
compliance risk and reputational risk.
Risk management allows Santander Bank Polska S.A. and its Group to conduct effective and safe operations that enable development and achievement of
high profitability within approved risk parameters. The Bank follows a range of external standards and requirements in this respect which are binding on
financial institutions. It also relies on best practice and standards developed by Santander Group.
The Bank and Santander Bank Polska Group have defined their risk profile which corresponds to the general risk appetite established by the Group. It is
expressed as quantitative limits and captured in the Risk Appetite Statement adopted by the Management Board and approved by the Supervisory Board.
The limits are set using stress tests and scenario analyses. They ensure stability of the Bank’s and the Group’s position even if adverse circumstances
materialise. Global limits are used to set watch limits and define risk management policies.
The integrated risk management structure includes relevant committees which have been set up to decide on identification of individual risks and internal
risk management standards and policies, and to monitor the risk level.
The Bank has also established a relevant organisational structure to mitigate risk at three independent and complementary levels (lines of defence), i.e.:
organisational units which generate risk and are required to comply with the rules ensuring high quality and correctness of their performance;
units responsible for identification, measurement, monitoring and mitigation of risks in a way that ensures independence of risk control functions
from risk-taking units;
the internal audit function, whose tasks involve assessment of the management system of the Bank and its subsidiaries, including the
effectiveness of managing the risk related to the Bank’s business and the business of its subsidiaries.
Risk management structure
The Bank’s Supervisory Board, supported by the Audit and Compliance Committee of the Supervisory Board and the Risk Committee, is responsible for
ongoing supervision of the risk management system in Santander Bank Polska S.A. The Supervisory Board approves the strategy, key risk management
policies and risk appetite, and monitors the use of internal limits from the perspective of current business strategy and the macroeconomic environment. It
reviews the key risk areas, the identification of threats and the process of defining and monitoring remedial actions. The Supervisory Board also assesses
the effectiveness of risk management measures taken by the Management Board.
The Bank’s Management Board is responsible for implementing an effective risk management system that is compliant with the regulatory requirements
and internal regulations. Specifically, the Bank’s role in this regard is to set up an organisational structure tailored to the size and profile of the risks taken,
to segregate responsibilities in order that risk measurement and control functions remain independent of operational functions, to introduce and update
the risk management strategy and ensure an adequate information policy.
The Management Board fulfils its risk management role through its committees:
The Risk Management Committee, which approves the key decisions taken by the main lower-level risk committees (mainly credit decisions),
annual limits for securities trading and ALM transactions and an annual plan of risk assessment models.
The Risk Control Committee, which monitors the risk level across different areas of the Bank’s operations and reviews the key issues that affect
the Bank’s risk exposure, issuing relevant recommendations to the Management Board. The Committee also supervises the activities of lower-
level risk management committees set up by the Bank’s Management Board.
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Credit Risk Committee
Credit Policy Forum for Retail Credit Portfolios
Credit Policy Forum for SME Credit Portfolios
Credit Policy Forum for Business and Corporate Credit Portfolios
Credit Committee
Provisions Committee
Restructuring Committee
Market and Investment Risk Committee
Model Risk Management Committee
Operational Risk Management Committee/ ORMCO
CyberTech Risk Forum
Information Management Committee
Assets and Liabilities Committee/ ALCO
Liquidity Forum
Capital Committee
Disclosure Committee
Local Marketing and Monitoring Committee
General Compliance Committee
Regulatory and Reputational Risk Committee
Anti-Money Laundering and Terrorist Financing Committee
Suppliers Panel
Responsible Banking and Corporate Culture Committee (including the ESG Forum)
The Bank has dedicated authorities which are convened in crisis situations:
Gold Committee
Silver Committee
Bronze Group
These committees, acting within the respective remits defined by the Management Board, are directly responsible for developing risk management methods
and monitoring risk levels in specific areas. Through these committees, the Bank also supervises the risk attached to the operations of its subsidiaries.
The subsidiaries implement risk management policies and procedures that reflect the approach adopted by Santander Bank Polska S.A., which ensures the
consistency of risk management processes across the Group.
Acting under the applicable law, the Bank exercises oversight of risk management in Santander Consumer Bank S.A. (SCB S.A.) in line with the same oversight
rules as applied to other Santander Bank Polska Group companies. Representatives of Santander Bank Polska S.A. on the Supervisory Board of SCB S.A. are
two Vice Presidents of the Bank's Management Board in charge of the Risk Management Division and the Retail Banking Division, respectively. Together with
SCB S.A. Supervisory Board, they are responsible for supervision over SCB S.A. and make sure that the company operates in line with the adopted plans and
operational security procedures. The Bank monitors the profile and level of SCB S.A. risk via risk management committees of Santander Bank Polska S.A.
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> Corporate governance structure for risk supervision and management
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2. Risk Management Priorities in 2022
Geopolitical risk, inflation, deterioration of macroeconomic conditions
In 2022, the importance of geopolitical risks in risk management processes increased considerably due to the outbreak of the war between Russia and
Ukraine.
The Group identifies geopolitical risk both in its activities and in relation to its loan book and financial assets. The identification process consists in defining
and assessing potential material risks that can threaten the delivery of business plans at Santander Bank Polska S.A. Both first and second line of defence
units are involved in this process. Following the outbreak of the war, the Bank activated special situation management protocols and closely monitors
external developments and their impact on the Bank’s operations. The Group continuously monitors key threats related to the conflict to ensure that it has
appropriate controls in case of materialisation of different scenarios and is fully prepared to minimise potential consequences of emerging risks. To test its
preparedness for the armed conflict scenario, the Bank performed a series of workshops and analyses, as well as practical testing of the scenario of electricity
supply shortages. These actions will be continued in the coming months.
The Bank regularly monitored its credit portfolio in terms of the impact of the geopolitical situation on the performance of borrowers in individual segments.
A particular focus was placed on:
direct impact resulting from restricted exports/ imports from/ to Ukraine, Russia and Belarus due to the war or economic sanctions; borrowers (or
their groups) having to close down or limit the business of their branches, subsidiaries or production plants;
indirect impact resulting from increased prices of energy (fuel, gas, coal, electricity) as well as materials and commodities, disruptions in the
labour market, especially as a result of many Ukrainian employees deciding to return home to fight against Russia.
The quality of loans held by Ukrainian nationals was closely monitored too.
Apart from standard monitoring performed on an ongoing basis, the Bank assessed the impact of the geopolitical situation on individual customers by:
analysing macroeconomic indicators, monitoring behavioural models (including the analysis of transactional patterns);
performing portfolio stress tests based on the assessment of the impact of selected factors (e.g. higher fuel and energy prices, higher interest
rates, inflation) on the financial performance;
monitoring of market trends using stress tests which are carried out based on both external and internal macroeconomic scenarios. As part of
stress tests, the Bank analysed in particular the depreciation of the złoty and interest rate hikes.
Analyses were also conducted to properly identify potential new risks for particular sectors and portfolios in relation to new geopolitical factors, along with
definition of relevant risk mitigants.
Due to growing interest rates, new legislation was introduced, forcing banks to offer payment deferrals to customers and increasing access to the Borrowers
Support Fund. Both processes were implemented within the statutory deadlines and provided to customers also in remote channels. The use of the above-
mentioned assistance mechanisms is closely monitored.
For more information about the impact of payment deferrals and costs of contributions to the Borrowers Support Fund, see Chapter VIII “Financial
Performance in 2022”.
Impact of the war in Ukraine on the credit portfolio quality
The Group reviewed its credit portfolio and identified customers doing business in Russia, Ukraine and Belarus: the share of loans to such borrowers in the
corporate and global portfolio does not exceed 8%.
Accordingly, customers that are directly connected with the countries involved in the war do not have a significant influence on the quality of the loan book.
However, the war is expected to have a more severe impact on macroeconomic trends in a medium- to long-term perspective, which may affect the risk
level of the portfolio.
As part of regular reviews of ECL parameter models, the Bank takes into account the latest macroeconomic projections, using its predictive models based
on historical observations of relationships between those variables and risk parameters. ECL parameters were last updated in Q4 2022 to account for the
impact of the conflict in Ukraine on the current economic situation and macroeconomic projections.
Operational measures related to the war in Ukraine
2022 started with more extensive business continuity management measures in connection with the armed conflict between Russia and Ukraine. The
consequences of Russia’s invasion are discussed on an ongoing basis by special situations management committees, which take decisions regarding financial
liquidity, legislative support, public programmes, cybersecurity, physical security, etc. New sanction regulations and their implementation are constantly
monitored and their impact on the Group’s operations is regularly assessed. Furthermore, the appropriateness of response plans is tested (in terms of
operational activities) in the case of escalation of the armed conflict.
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In response to the invasion of Ukraine, Santander Bank Polska S.A. took prompt actions to help customers, employees and contractors from Ukraine. The
Bank provided support to Ukrainian employees and waived fees for cards, account maintenance and ATM withdrawals for Ukrainian citizens in Poland.
Unlimited access to cash was facilitated through branches and ATMs. The Bank also waived fees for incoming and outgoing transfers to and from Ukraine.
The Bank’s services are available in Ukrainian via the helpline, internet and mobile banking.
The situation in Ukraine required the Bank to take ad-hoc operational measures:
Measures related to payments: Support measures:
Control measures:
Ensuring supply of cash in branches and ATMs
in view of a several-
fold increase in the
demand for cash (PLN and foreign currencies)
Implementation of payment sanctions
Enhanced monitoring of liquidity of NOSTRO
accounts during the first weeks of the war –
daily reporting to the KNF
Handling increased volumes of payments
subject to sanctions
Handling a persistently high number of alerts
arising from payment screening as part of
sanctions implemented
Daily reporting of trade finance transactions
directly and indirectly linked to Russia,
Ukraine and Belarus to the KNF
Support for payment of cash and mortgage
loans by Ukraine nationals – interest-free and
fee-free d
eferral of payments for three
months along with the extension of the
lending period
BLIK cheques – providing access to one-off
financial assistance from the UN for Ukrainian
refugees in ATMs of Santander Bank Polska
S.A. and other banks as well as Euronet and IT
Card
Cash management services for World Central
Kitchen (a public benefit organisation
providing meals to communities impacted by
humanitarian crises)
Payment deferrals –
operational support,
adjustment of procedures and RPA solutions
Modification of the control model in response
to an increased number of cash transactions
at branches
Introduction of a control model incorporating
new risks related to account opening by
Ukrainian refugees – in line with regulatory
guidelines.
Ruling practice related to foreign currency mortgage loans
Following the CJEU judgment of 3 October 2019 in case C-260/18, the number of court disputes over clauses in agreements on mortgage loans indexed to
or denominated in foreign currencies has increased. The Group expects that most of the lawsuits will be filed by mid-2025, and then the number of new
claims will decrease as the legal environment will become more structured.
The above CJEU judgment did not resolve the doubts as to the consequences of potentially unfair terms in foreign currency loan agreements. The ruling
practice of the Supreme Court will be of importance here. The expected resolution of the full bench of the Civil Chamber of the Supreme Court has not been
adopted yet. In view of the above, and taking into account the differences in the ruling practice to date (including after the judgment issued by the CJEU),
when assessing legal risk associated with lawsuits over foreign currency loans the Bank considers different court rulings in connection with potentially unfair
contractual clauses (including annulment of the entire agreement, conversion of the loan to PLN with the interest rate based on a benchmark relevant for
CHF, elimination of the loan indexation and treatment of the loan as a PLN loan with an interest rate based on WIBOR and maintenance of the indexation
mechanism along with the replacement of the Bank’s exchange rate with an objective average NBP rate). The Group raises provisions for legal risk associated
with pending court cases considering the likelihood of different judgments. The Group also includes a settlement scenario in the model used to calculate
provisions for legal risk.
As at 31 December 2022, the total impact of legal risk connected with foreign currency mortgage loans recognised in the consolidated statement of financial
position was PLN 3.6bn vs PLN 2.0bn as at 31 December 2021. The total cost in this regard recognised in the income statement was PLN 1,739.1m for 2022
and PLN 1,431.0m for 2021.
The Bank continuously monitors the ruling practice of Polish courts and the CJEU concerning foreign currency mortgage loans and adjusts its strategy
accordingly. The adequacy of the provisions will continue to be monitored and assessed in subsequent reporting periods.
For more information, see Note 48 “Legal risk connected with foreign currency mortgage loans” to the Consolidated Financial Statements of Santander Bank
Polska Group for 2022.
Interest Rate Benchmark reform
In connection with Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial
instruments and financial contracts (BMR) and a decision on cessation of LIBOR by ICE Benchmark Administration Limited (IBA) at the end of 2021, Santander
Bank Polska S.A. launched the IBOR Programme aimed at preparing and implementing changes necessary to offer products based on new benchmarks and
execute annexes to existing agreements due to the cessation of previous benchmarks.
LIBOR rates for all currencies (excluding USD LIBOR) ceased to be published by the administrator or be representative at the end of 2021. USD LIBOR will be
published until 30 June 2023 for all tenors excluding one week and two months.
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Ceased
benchmark
New
benchmark
Implementation
CHF LIBOR SARON
Commission Implementing Regulation of 22 October 2021 sets SARON as a replacement rate for CHF LIBOR.
Owing to the decision of the European Commission, agreements with customers did not have to be renegotiated
individually.
Starting from 1 January 2022, all references to CHF LIBOR in financial contracts and instruments were
automatically replaced by references to SARON.
A spread adjustment is applied to minimise the economic impact of the replacement arising from the difference
in value between CHF LIBOR and SARON.
Bilateral renegotiation of agreements is possible.
The above changes were applied to the portfolio of mortgage loan agreements based on CHF LIBOR.
EONIA
€STR
Commission Implementing Regulation of 22 October 2021 sets €STR as a replacement rate for EONIA.
A spread adjustment is applied to minimise the economic impact of the replacement arising from the difference
in value between EONIA and €STR.
EUR LIBOR
EURIBOR
For products based on EUR LIBOR, the Bank decided to use EURIBOR as an alternative rate.
Mortgage loan borrowers were sent a final annex to the agreement together with a mandatory BMR information
package (by June 2021).
In the cases where annexes were not signed, until the expiry of the agreement the Bank uses the last interest rate
based on EUR LIBOR published in 2021.
The above changes were applied to the portfolio of mortgage loans agreements based on EUR LIBOR.
GBP LIBOR
SONIA
For products based on GBP LIBOR, the Bank decided to use SONIA as an alternative rate.
In the case of nine mortgage loan agreements, borrowers were sent annexes and a mandatory BRM information
package (Q3 2021).
Where annexes were not signed, borrowers were sent a communication at the end of 2021 about the use of
synthetic GBP LIBOR as a continuation of GBP LIBOR based on a modified methodology. The synthetic rate will be
published until the end of 2022.
USD LIBOR
SOFR
For products based on USD LIBOR, the Bank decided to use SOFR as an alternative rate.
As USD LIBOR will continue to be published until 30 June 2023 for all tenors except one week and two months,
the Bank signed annexes mainly to agreements for renewable products based on USD LIBOR.
In addition, in 2022 the Polish benchmark reform accelerated due to the Act on crowdfunding for business and support for borrowers of 7 July 2022, which
forces banks to replace WIBOR. The Polish Financial Supervision Authority (KNF) appointed the National Working Group to prepare the Roadmap and the
schedule of actions to be taken to ensure the effective implementation of the process aimed to replace WIBOR and WIBID. According to the Roadmap
published on 27 September 2022, the process is to be completed at the beginning of 2025. In early September, the Steering Committee of the National
Working Group selected WIRON as a benchmark to replace WIBOR. Following that, in Q4 2022 GPW Benchmark ensured the availability of the new
benchmark and published relevant documentation to enable market participants to introduce products based on WIRON starting from 2023 (to be offered
along with products based on WIBOR).
In 2022, the IBOR Programme primarily focused on the monitoring of progress in the execution of annexes to agreements which had to be amended to
account for individual arrangements with customers regarding the discontinued LIBOR and EONIA benchmarks. The tasks performed so far as part of the
project work were transferred to relevant units to be included in BAU.
In Q4 2022, the Steering Committee extended the scope of the Programme work to include changes reflecting the measures taken by the Polish market
participants in relation to the replacement of WIBOR and WIBID.
The transition to alternative benchmarks carries business, pricing, interest rate, liquidity, accounting, litigation, regulatory and operational risks. They are
described in Part 4 “Risk Management” of the Consolidated Financial Statements of Santander Bank Polska Group for 2022. The Group has robust structures
in place to manage the transition and mitigate the foregoing risks.
Cybersecurity
The importance of cybersecurity has been steadily growing because of the increasing digitalisation of the banking sector. The pandemic accelerated this
growth, including due to mass telecommuting (covering almost all processes) and the dynamically growing use of remote channels by customers in sales
and post-sales processes. The Group kept track of risks, taking mitigating measures on an ongoing basis in relation to customers and employees, and actively
warned about emerging threats. The areas exposed to the risk of fraud were covered with increased surveillance. Cyberthreats have markedly increased
since Russia’s invasion of Ukraine. The Group actively monitored such activities, analysed the risk connected with potential attacks on an ongoing basis and
took relevant measures.
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3. Material Risk Factors Projected for 2023
One of the risk factors that will become increasingly important in 2023 is the inflation in Poland and other EU member states. The inflation, combined with
increasing interest rates, will influence the performance of businesses and living expenses of households. Furthermore, different trends of such factors as
revenues during economic slowdown or individual cost items (e.g. energy, commodities, materials, remuneration) resulting from the global macroeconomic
situation will determine the performance and quality of credit portfolios. This will have a second-round effect on the evolution of the risk profile of the loan
book as well as the demand for credit.
The war in Ukraine will continue to dynamically shape social and economic conditions and, similarly to 2022, it will require prompt response and adjustment
measures.
All this uncertainty may reduce the risk appetite of investors, affecting the volatility and liquidity of equity and investment fund markets.
ESG issues become increasingly important too and are the subject of a dynamic legislative process. ESG matters are not only included in regulatory
requirements concerning compliance and management of risk (e.g. credit risk, market risk or operational risk) but they also affect the brand image and HR
strategy. Increasingly important are regulatory and non-regulatory efforts taken by the European Commission to link funds for new investments with
climate-related ratios in line with the sustainable finance concept. Financial institutions play a vital role in the transition to low-carbon economy due to their
systemic importance for the entire economy. While they have a limited direct impact on mitigation and adaptation to climate change, they can indirectly
influence the process through their significant capital exposure to sectors which are particularly affected by physical and transition risks. Accordingly, ESG
matters, notably taxonomy, customer classification rules, issues related to carbon footprint and exposure to climate risk, will directly impact sales (terms
and structure) as well as existing and future relations with customers of financial institutions, implying a continuous need to adjust the business model.
Particularly important will be to integrate climate-related factors into existing risk assessment policies and procedures for the purpose of taking investment
and credit decisions and to link the Bank’s strategy with ESG elements. In the opinion of Santander Bank Polska S.A., the environmental risk analysis enhances
the traditional credit risk analysis, and non-financial data allow for a better understanding of the borrower's exposure to environmental and climate change
risks. It is worth noting that compliance with all the requirements will directly affect relations with many stakeholders as well as the value and valuation of
companies.
The situation connected with court proceedings related to CHF mortgage loans is still unstable. The Bank raises provisions for the risk of lost cases on an
ongoing basis. While managing the risk of unfavourable court rulings, including the foreign currency position, the Bank takes into account an additional open
position that may arise in the future and potentially cause the Bank to incur losses.
Cyber risk has been a top concern for a number of years. This relates both to human behaviour and technological aspects. The key threats include the loss
or theft of sensitive data, disruption of key services, attacks against customer assets and fraudulent transactions in the wake of the dynamic growth of
modern IT technologies, digital transformation and globalisation. Cyberattacks have become more sophisticated and specialised. Particularly popular are
attacks based on new technologies offered by cybercriminals under a service model. In 2023, the risk of ransomware attacks, DDoS attacks or use of social
engineering is not likely to decrease. Supply chain attacks, cyber spying and attacks involving artificial intelligence and machine learning are expected to
remain a growing threat to cybersecurity. Due to the current geopolitical situation, a special focus should be placed on the risk of targeted attacks made by
well-structured, disciplined and sophisticated groups sponsored and coordinated by regimes.
4. Credit Risk Management
Credit risk
Credit risk is defined as the possibility of suffering a loss if the borrower fails to meet their credit obligation, including payment of interest and fees. It results
in the impairment of credit assets and contingent liabilities as a consequence of the borrower’s worsening credit quality. Credit risk measurement is based
on the estimation of credit risk weighted assets, with the relevant risk weights representing both the probability of default and the potential loss given
default of the borrower.
Credit risk in the Bank and the Group arises mainly from lending activities on the retail, corporate and interbank markets. This risk is managed as part of the
policy approved by the Management Board on the basis of the adopted credit procedures and discretionary limits. The internal system of credit grading and
monitoring used by the Bank and the Group enables early identification of potential defaults that might impair the loan book. Additionally the Bank and the
Group use a large set of credit risk mitigation tools, both collateral (financial and non-financial) and specific credit provisions and clauses (covenants).
Credit risk management in the Bank and the Group involves measures taken as a result of the ongoing analysis of the macroeconomic environment and
internal reviews of particular credit portfolios. These advanced credit risk assessment tools allow quick remedial actions to be effected in response to the
first signs of any change in the portfolio’s quality or structure.
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Credit policy
The credit policy adopted by the Bank and the Group is a set of principles and guidelines included in credit policies and procedures which are reviewed on a
regular basis. Internal limits are crucial components of the credit policy because they facilitate the monitoring of exposure concentration within individual
sectors, geographical regions and foreign currencies. Pursuant to the policy in place, the Bank and Santander Bank Polska Group ensure adequate
diversification of the credit portfolio in terms of exposure towards individual customers and sectors.
The Bank’s credit policy is defined by the Credit Risk Committee for the consolidated portfolio and cross-segment cases, and by three Credit Policy Forums
for individual portfolios (personal customers, SMEs and corporate customers). Higher-level policies are approved by the Bank’s Management Board. The
above-mentioned committees, together with the Risk Control Committee (at the Management Board level) and the Risk Committee, also monitor the Bank’s
and the Group’s credit portfolios based on regular management reports. In 2022, the Bank and the Group continued to pursue the existing credit risk
management policy, keeping credit risk at a safe level while ensuring high profitability of loan portfolios, growth of business volumes and an increase in
market share. Credit policies and processes were optimised in response to macroeconomic developments, including increasing interest rates and inflation.
The lending activity of subsidiaries is modelled on the Bank’s credit policies. In the decision making process, the Bank and Santander Bank Polska Group
follow a consistent approach to credit risk and use the same IT platform to assign rating/ scoring (this does not apply to SCB S.A.). Subsidiaries have credit
risk management procedures in place which are consistent with the regulations applied by the Bank.
Credit risk management process
Key elements of the credit risk management process in the Bank and in Santander Bank Polska Group
Credit decision making
process
The credit decision making process is based upon individual credit discretions vested in credit officers, commensurate with
their knowledge and experience relating to particular activities and specific needs of respective segments (branch banking,
SME banking, business banking and corporate banking).
Large credit exposures in excess of PLN 50m are referred to the Credit Committee composed of senior managers.
Transactions above stated thresholds (from PLN 48.75m to PLN 195m, depending on the type of financing and the
customer’s rating) are additionally signed off by the Management Board’s Risk Management Committee.
Credit grading
Credit risk assessment tools are regularly developed and adapted to the KNF’s guidelines, International Accounting
Standards/ International Financial Reporting Standards and best market practice.
Rating models are used in relation to the majority of credit portfolios, including corporate customers, SMEs, home loans,
property loans, cash loans, credit cards and personal overdrafts.
The Group periodically monitors credit grading. For all portfolios, credit grade is automatically verified based on the
number of days past due. Additionally, for the majority of portfolios, the automated process also includes an analysis of
behavioural factors.
Credit reviews
The Group performs regular reviews to determine the actual quality of the credit portfolio, confirm that appropriate credit
grading and provisioning processes are in place and verify compliance with the procedures and credit decisions.
The reviews are conducted by specialised units that are independent of credit risk-taking units.
Collateral
The Collateral and Credit Agreements Department is a central unit responsible for ensuring that any security items at
Santander Bank Polska Group are duly established and held effective in line with the lending policy for respective business
segments, and that they are properly monitored and released. The Department also provides assistance to credit units in
credit decision making and development of credit policies, collects data on security covers and ensures appropriate
management information. It also handles property valuations at the Bank.
Data about collateral are registered both in ICBS and in the Central Collateral Database (CCD) whose business owner is the
Collateral and Credit Agreements Department.
Credit risk stress testing
Stress tests are used to evaluate potential effects of specific events, movements in financial and macroeconomic ratios or
changes in the risk profile on the condition of the Group. As part of these tests, potential changes in credit portfolio quality
und
er adverse conditions are assessed. The process also provides management information about the adequacy of the
agreed limits and internal capital allocation.
Calculation of impairment
Impairment allowances for expected credit losses are made in accordance with IFRS 9, i.e. an expected credit loss (ECL)
model.
ECL allowances are determined considering macroeconomic scenarios of different probability, the time value of money
and reasonable and supportable information that is available at the reporting date and concerns past events as well as
current and projected economic conditions.
The recognition of expected credit losses depends on changes in risk after the recognition of the exposure: ECL allowances
are measured as 12-
month ECL if there has been no significant increase in credit risk since initial recognition. Otherwise,
they are measured as lifetime ECL.
The standard introduces three main stages for recognising expected credit losses and POCI.
The Group regularly reviews model parameters and updates forecasts used for estimating expected credit losses (ECL),
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
108
Key elements of the credit risk management process in the Bank and in Santander Bank Polska Group
Calculation of impairment
(cont.)
taking into account the impact of changes in economic conditions and modifications of the Group’s credit policies and
recovery strategies.
In 2022, the Group adjusted the processes of classification of credit exposures, estimation and recognition of ECL and
management of credit risk to the requirements arising from Recommendation R of the KNF. For more information, see
below
Forbearance
As part of proactive management of credit risk and credit portfolio quality, Santander Bank Polska Group takes measures
aimed at early implementation of debt restructuring (forbearance solutions) with respect to customers in financial
difficulty. The purpose of debt restructuring is to better match repayment terms with the current and projected financial
circumstances of the customer, minimise default risk and/or maximise recovery.
Changes resulting from to the implementation of Recommendation R
Santander Bank Polska Group adjusted its rules for classification of credit exposures, estimation and recognition of expected credit losses and management
of credit risk to the requirements arising from Recommendation R of the Polish Financial Supervision Authority (KNF). In particular:
The classification of credit exposures was changed as follows:
Where the Bank has on-balance sheet exposures to the borrower which are more than 90 days past due and exceed 20% of all on-balance
sheet exposures to that borrower, all on-balance sheet and off-balance sheet exposures to that borrower are considered non-performing;
Where an exposure is more than 90 days past due but the materiality threshold for past due credit obligations is not met, the exposure is
classified to Stage 2.
POCI exposures are identified based on all customer’s exposures.
If the Bank has learned about the submission of a request for any restructuring proceedings within the meaning of the Polish Restructuring
Law Act, the Bank may classify the case to the non-performing loan portfolio.
In 2021, the Bank recognised a management adjustment of PLN 17,200k to account for the above changes. After they were implemented,
the adjustment was derecognised.
The Bank adjusted its parameter models for the calculation of expected credit losses (ECLs) as well as their validation and monitoring processes:
Before the ECL parameter models are first used, the implementation process is validated.
The Audit Committee is notified of any significant changes that are planned to be introduced.
Backtesting results are reported more frequently.
The Bank enhanced credit risk management and supervision:
The Management Board and the Supervisory Board approve the regulations concerning the calculation of ECL allowances and regularly
monitor results of that process.
The member of the Bank’s Management Board in charge of risk management approves the level of ECL allowances.
The Bank analysed and adjusted a range of internal regulations.
Collateral for the selected credit exposures is monitored more frequently.
The definition of a gross carrying amount applied by the Bank includes all interest on a credit exposure accrued in accordance with the loan
agreement.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
109
> Homogeneous exposure portfolio – loans to individuals at amortised cost as at 31.12.2022 r. (PLN k)
31.12.2022 PD scale
Initial
balance
sheet
exposures
gross
Off-balance
sheet
exposures
EAD after
credit risk
mitigation and
credit
conversion
factor applied
Average PD in
%
Number of
exposures
Average
LGD in %
Average
maturity
Expected
credit loss
(ECL)
Stage
from 0.00% to <0.15% 705,728 2,552,715 11,622,585 0% 138,496 18% 21 6,474
1
from 0.15% to <0.25%
780,511
643,573
1,892,847
1%
298,326
30%
8
3,960
from 0.25% to <0.50% 355,622 0 2,971,957 1% 77,663 18% 19 5,137
from 0.50% to <0.75%
4,061,684
347,901
4,555,859
3%
249,404
38%
7
46,977
from 0.75% to <2.50%
5,862,988
412,375
6,523,766
3%
333,082
43%
8
78,179
from 2.50% to <10.0% 3,616,094 122,771 3,748,346 5% 280,810 45% 6 88,735
from 10.0% to <45.0%
390,784
15,033
377,957
10%
114,247
46%
4
16,836
from 45.0% to <100.0%
4,094
0
3,919
25%
160
48%
6
448
Stage
from 0.00% to <0.15%
18,666
19
126,732
25%
2,622
19%
19
3,905
2
from 0.15% to <0.25%
28,801
595
53,999
29%
7,301
32%
9
3,861
from 0.25% to <0.50%
13,999
496
93,415
32%
12,579
19%
20
3,569
from 0.50% to <0.75% 136,196 2,953 146,696 55% 4,767 38% 7 24,198
from 0.75% to <2.50%
233,533
12,143
267,796
51%
31,270
40%
8
43,373
from 2.50% to <10.0%
387,682
26,356
440,495
54%
114,784
41%
7
78,529
from 10.0% to <45.0%
123,366
153
119,302
43%
445,318
43%
4
18,142
from 45.0% to <100.0%
14,344
153
14,358
21%
206,098
42%
1
1,238
POCI
from 45.0% to <100.0%
25,836
14
61,114
24%
6205
26%
11
2,876
31.12.2022 Default period
EAD after credit risk
mitigation and credit
conversion factor applied Number of exposures Average LGD in %
Expected credit loss (ECL)
Stage
up to 12 months
743,127
62,524
51%
377,453
3
from 13 to 24 months
296,448
15,224
65%
195,511
from 25 to 36 months
120,644
3,363
81%
99,402
from 37 to 48 months
61,851
1,960
87%
56,445
from 49 to 60 months
26,097
1,028
86%
23,813
from 61 to 84 months
20,086 778 89% 18,597
above 84 months
7,742
353
97%
7,843
POCI
up to 12 months
94,486
9,703
48%
46,110
from 13 to 24 months
24,572 1,961 60% 15,303
from 25 to 36 months
12,049
682
73%
9,115
from 37 to 48 months
4,681
217
80%
3,893
from 49 to 60 months
21,415 329 91% 20,335
from 61 to 84 months
17,405
154
94%
17,006
above 84 months
13,216
300
100%
13,398
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
110
> Homogeneous exposure portfolio – mortgage loans to individual customers at amortised cost as at 31.12.2022 r. (PLN k)
31.12.2022 PD scale
Initial balance
sheet
exposures
gross
Off-balance
sheet
exposures
EAD after
credit risk
mitigation and
credit
conversion
factor applied
Average PD in
%
Number of
exposures
Average
LGD in %
Averag
e
maturit
y
Expected
credit loss
(ECL)
Stage
from 0.00% to <0.15%
33,906,152
798,710
34,018,805
0.3%
160,477
17%
22
16,560
1
from 0.15% to <0.25%
2,319,464
70
2,287,719
0.9%
18,894
16%
16
3,472
from 0.25% to <0.50%
7,396,105 116,796 7,261,641 0.7% 42,337 16% 21 8,982
from 0.50% to <0.75%
1,762,887
56,034
1,724,933
1.0%
10,545
16%
21
2,591
from 0.75% to <2.50% 2,249,423 37,048 2,211,284 1.3% 13,234 17% 21 5,041
from 2.50% to <10.0%
619,596
23,627
625,903
2.2%
3,835
17%
19
2,390
from 10.0% to <45.0%
168
0
159
0.4%
3
10%
8
0
from 45.0% to <100.0% 0 0 0 0.0% 0 0% 0 0
Stage
from 0.00% to <0.15%
490,961
0
474,393
19.0%
1,719
18%
22
8,564
2
from 0.15% to <0.25% 74,931 0 73,127 32.6% 363 19% 18 2,895
from 0.25% to <0.50% 279,813 0 271,046 26.2% 1,062 18% 22 7,152
from 0.50% to <0.75%
59,798
0
58,350
26.6%
262
17%
21
1,539
from 0.75% to <2.50%
147,998
1,755
142,468
29.2%
644
18%
22
4,491
from 2.50% to <10.0% 185,030 7,391 183,834 32.1% 1,003 16% 18 5,948
from 10.0% to <45.0%
5,377
72
5,236
22.3%
26
16%
17
100
from 45.0% to <100.0%
761
0
704
54.7%
2
18%
15
52
POCI
from 2.50% to <10.0%
-
171
-
-
-
-
-
-
from 10.0% to <45.0%
-
16
-
-
-
-
-
-
from 45.0% to <100.0%
108,173
21
96,329
23%
644
17%
15
2,627
31.12.2022 Default period
EAD after credit risk
mitigation and credit
conversion factor applied
Number of exposures Average LGD in %
Expected credit loss (ECL)
Stage
up to 12 months
389,586
1,962
19%
75,321
3
from 13 to 24 months
149,277
742
34%
50,593
from 25 to 36 months
73,923
375
42%
31,469
from 37 to 48 months
85,224 367 53% 48,427
from 49 to 60 months
62,245
310
67%
43,748
from 61 to 84 months
80,151
398
82%
68,362
above 84 months
42,817
176
100%
44,610
POCI
up to 12 months
55,126
229
22%
11,920
from 13 to 24 months 13,317 49 31% 4,168
from 25 to 36 months 5,943 23 38% 2,254
from 37 to 48 months
7,070
28
53%
3,893
from 49 to 60 months
15,048
49
66%
10,484
from 61 to 84 months
16,438
52
85%
14,691
above 84 months
43,968
128
100%
46,194
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
111
> Homogeneous exposure portfolio – loans to corporate customers at amortised cost as at 31.12.2022 (PLN k)
31.12.2022 PD scale
Initial balance
sheet
exposures
gross
Off-balance
sheet
exposures
EAD after
credit risk
mitigation and
credit
conversion
factor applied
Average PD in
%
Number of
exposures
Average
LGD in %
Average
maturity
Expected
credit loss
(ECL)
Stage
from 0.00% to <0.15% 18,958,027 8,253,803 18,639,406 0.1% 1,873 39% 1 6,297
1
from 0.15% to <0.25%
3,972,926
3,008,143
3,925,474
0.4%
4,845
39%
3
6,362
from 0.25% to <0.50% 13,461,463 8,740,118 12,908,100 0.5% 9,250 34% 3 24,819
from 0.50% to <0.75%
6,716,054
5,838,993
6,141,221
1.0%
6,896
38%
3
24,523
from 0.75% to <2.50%
11,673,403
8,094,311
10,951,219
1.4%
29,297
34%
3
54,826
from 2.50% to <10.0% 4,110,850 999,234 3,851,022 2.8% 41,613 37% 5 43,427
from 10.0% to <45.0%
293,405
8,456
270,475
3.2%
4,304
41%
5
4,063
from 45.0% to <100.0%
371
0
352
2.7%
35
5%
8
1
Stage
from 0.00% to <0.15%
17,293
0
16,008
33.6%
43
13%
9
577
2
from 0.15% to <0.25%
92,319
442
83,390
11.5%
124
28%
2
2,500
from 0.25% to <0.50%
244,399
0
225,910
17.2%
254
18%
3
6,334
from 0.50% to <0.75% 363,938 45,873 336,686 28.7% 203 16% 4 32,953
from 0.75% to <2.50%
1,397,861
140,617
1,297,718
30.1%
1,886
28%
4
108,125
from 2.50% to <10.0%
1,277,514
326,919
1,145,926
28.5%
20,728
32%
4
98,574
from 10.0% to <45.0%
586,712
59,035
527,825
40.8%
4,843
39%
4
86,976
from 45.0% to <100.0%
7,824
0
7,304
45.8%
25
34%
6
3,726
POCI
od 0.25% to <0.50%
-
123,836
-
-
-
-
-
-
od 0.50% to <0.75% - - - - - - - -
od 0.75% to <2.50%
-
680
-
-
-
-
-
-
od 2.50% to <10.0% - 3,320 - - - - - -
od 10.0% to <45.0%
-
-
-
-
-
-
-
-
od 45.0% to <100.0%
5,382
-
4 818
11.0%
407
50%
2
174
31.12.2022 Default period
EAD after credit risk
mitigation and credit
conversion factor applied
Number of exposures Average LGD in %
Expected credit loss (ECL)
Stage
up to 12 months
851,145
17,292
29%
396,046
3
from 13 to 24 months
409,389
15,056
54%
272,418
from 25 to 36 months
332,435
5,925
41%
232,424
from 37 to 48 months
337,989
4,069
34%
248,722
from 49 to 60 months
102,776
2,550
78%
96,223
from 61 to 84 months
364,944 1,540 19% 158,756
above 84 months
444,965
896
7%
320,862
POCI
up to 12 months
248,234
1,612
3%
30,315
from 13 to 24 months
38,832 1,697 28% 27,117
from 25 to 36 months
23,941
1,080
38%
12,827
from 37 to 48 months
164,663
1,161
7%
78,940
from 49 to 60 months
49,376
921
20%
15,139
from 61 to 84 months
14,821
350
70%
14,813
above 84 months
53,623 244 20% 44,047
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
112
Diversification of the credit portfolio
The purpose of the Group’s policy regarding the concentration of risk-generating debt to a single entity or entities linked capital- or
organisation-wise is to minimise concentration risk by, among other things, applying stricter standards than those provided for in the
Banking Law Act. This allows the Group to ensure that exposures to various customers are highly diversified.
The Group’s lending policy also assumes sectoral diversification of credit delivery to reduce the risk of excessive exposures to entities from
a particular sector.
Distribution
23%
Manufacturing
22%
Property
11%
Transportation
6%
Energy
6%
Agriculture
4%
Construction
3%
Financial sector
5%
Other industries
20%
Diversification of consolidated loans and advances to customers
by business sector as at 31.12.2022
Credit portfolio quality
> Santander Bank Polska Group loans and advances by stages
Loans and advances to customers measured at amortised cost (PLNm)
31.12.2022
31.12.2021
Stage 1
Gross value
139 572,7
135 098,8
Expected credit loss allowance
(677,5)
(694,1)
Stage 2
Gross value
8 243,5
7 353,7
Expected credit loss allowance
(775,3)
(594,2)
Stage 3
Gross value
6 921,7
6 888,0
Impairment allowance
(4 274,2)
(4 356,7)
POCI
Gross value
779,7
624,5
Expected credit loss allowance
(150,3)
(212,3)
Gross loans and advances
155 517,6
149 965,0
Expected credit loss allowance
(5 877,3)
(5 857,3)
Net loans and advances to customers measured at amortised cost and finance lease receivables
149 640,3
144 107,7
NPL ratio
4,95%
5,01%
NPL coverage ratio
57,5%
60,8%
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
113
> Santander Bank Polska loans and advances by stages
Loans and advances to customers measured at amortised cost (PLNm)
31.12.2022
31.12.2021
Stage 1
Gross value
124 238,2
114 640,2
Expected credit loss allowance
(433,1)
(359,0)
Stage 2
Gross value
6 140,7
5 513,7
Expected credit loss allowance
(534,3)
(401,7)
Stage 3
Gross value
4 945,9
4 863,3
Impairment allowance
(2 898,3)
(2 859,6)
POCI
Gross value
737,9
522,0
Expected credit loss allowance
(135,0)
(119,9)
Gross loans and advances
136 062,7
125 539,2
Expected credit loss allowance
(4 000,7)
(3 740,2)
Net loans and advances to customers measured at amortised cost
132 062,0
121 799,0
NPL ratio
4,18%
4,29%
NPL coverage ratio
53,4%
55,3%
5. Market Risk and Liquidity Risk Management
Market risk
Market risk is defined as an adverse earnings impact of changes in interest rates, FX rates, share quotations, stock exchange indices, etc. It arises both in
trading and banking activity (FX products, interest rate products, index-linked products).
Market risk within the operations of the Bank and Santander Bank Polska Group is associated mainly with customer service operations, transactions effected
to maintain liquidity in the money market and the capital market as well as proprietary trading in debt, FX, interest rate and equity instruments.
The key objective of the market risk policy adopted by the Bank and the Group is to reduce the impact of interest and FX rates movements on the Group’s
profitability and market value as well as to increase income within strictly defined risk limits and to ensure the Group’s liquidity.
Market risk management
The Market and Investment Risk Committee approves market risk management strategies and policies as well as limits that define the maximum acceptable
exposure to individual risk types, in accordance with the Risk Appetite Statement.
The Management Board takes its strategic decisions on the basis of recommendations from the Market and Investment Risk Committee, to which direct
supervision of market risk management has been delegated.
ALCO – supported by the Financial Management Division – is responsible for managing market risk in the banking book, while the market risk in the trading
book is managed by the Corporate and Investment Banking Division. Santander Brokerage Poland, a unit of the Retail Banking Division, is responsible for
managing equity risk.
Identification and assessment of market risk
Interest rate and FX risks associated with the banking book are managed by the Financial Management Division, which is also responsible for managing open
positions in interest rate and FX risks of companies from Santander Bank Polska Group.
The responsibility for measurement, monitoring and reporting of market risk and compliance with risk limits is vested in the Risk Management Division,
which is responsible for regular reviews of market risk exposure and reporting results to the Market and Investment Risk Committee. This role is performed
by the Financial Risk Department in the Risk Management Division, which is responsible for ongoing risk measurement, implementation of control
procedures and risk monitoring and reporting. The Department is also responsible for formulating the market risk policy, proposing risk measurement
methodologies and ensuring consistency of the risk management process across the Group.
With the division of roles, management of risk in the banking book is fully separate from the management of risk in the trading book, and the risk
measurement and reporting functions are separate from the risk managing and taking units.
The market risk management policies adopted by the Bank and the Group set out a number of measures in the form of obligatory and watch limits and
ratios. The limits are reviewed and the market risk appetite is updated on an annual basis. The process is coordinated by the Financial Risk Department in
the Risk Management Division.
Management Board Report on Santander Bank Polska Group Performance in 2022
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114
To control the banking book risk, the following maximum sensitivity limits have been set for the risk of interest rate changes:
NII sensitivity limit (i.e. the sensitivity of net interest income to a parallel shift of the yield curve by 100 bp);
MVE sensitivity limit (the sensitivity of the market value of equity to a parallel shift of the yield curve by 100 bp).
> Sensitivity of the banking book to interest rate movements as at 31 December 2022 and 31 December 2021
1-day holding period
(PLN k)
NII sensitivity MVE sensitivity
31.12.2022 31.12.2021 31.12.2022 31.12.2021
Maximum
426
552
595
832
Average
358
440
488
480
At the end of the period
334
291
494
356
Limit
900
700
800
875
The volatility of the use of interest rate risk limits was lower compared to 2021. There was one violation of the NII sensitivity limit (net interest income) for
EUR in 2022. This was due to the abrupt increase in Repo transaction volumes. Finally, the operational limit on the sensitivity of NII in EUR was increased.
The main factors affecting the fluctuation of measures in 2022 were the volatility of interest rates and the strategy to reduce the duration of debt securities
from the ALCO portfolio. The market of rising interest rates influenced the outflow of a significant volume of current accounts or migration to interest-
bearing accounts, which affected the unstable part and indirectly changed the stable part. In addition, the gradual shortening of the duration of debt
securities from the ALCO portfolio had a direct impact on changes in the MVE measure (economic value of capital).
The Bank and Santander Bank Polska Group use the following measures and limits to mitigate and control exposure to market risk in the trading book:
daily VaR limit and Stressed VaR limit for interest rate risk, FX risk and the repricing risk of equity instruments held by Santander Brokerage Poland;
PV01 limit set for individual currencies and transaction repricing dates;
stop-loss mechanism used to manage the risk of loss on trading positions subject to fair value measurement through profit or loss;
maximum limit of the total FX position and an open position for individual currencies;
intraday FX position limits monitored in the trading and banking books.
As these measures relate to the calculation of a potential loss under normal market conditions, the Bank and Santander Bank Polska Group also use stress
tests which show the estimated potential losses in the event of the materialisation of adverse market conditions.
> VaR as at 31 December 2022 and 31 December 2021 for interest rate, currency and equity risk in the trading book of Santander
Bank Polska Group
1-day holding period
(PLN k)
Interest rate risk
VaR
Currency risk
VaR
Equity risk
VaR
31.12.2022 31.12.2021 31.12.2022 31.12.2021 31.12.2022 31.12.2021
Average
5 321
4 395
1 021
614
261
316
Maximum
14 622
19 540
2 346
2 447
532
595
Minimum
960
657
68
62
98
113
At the end of the period
9 550
2 703
1 144
538
258
364
Limit
13 205
9 744
3 301
3 045
2 135
1 969
In 2022, VaR limits were exceeded. Excesses were recorded in the total VaR and interest rate risk VaR in the Bank's trading book (for three days in December).
The excesses resulted from significant market movements in FX Swap quotes, which in turn were caused by the sector's efforts to secure liquidity at the
turn of the year. The observed VaR values in 2022 were higher than in 2021 due to a significant increase in volatility in the financial market caused by
economic and geopolitical events (high inflation, increases in interest rate curves and the war in Ukraine). In those periods, the maximum observed VaR
levels above the limit were approved by the Supervisory Board.
In 2022, the VaR limit for currency risk and equity risk was not exceeded.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
115
Identification and assessment of market risk
The Bank and the Group use the following financial instruments in relation to repricing risk, credit risk, cash flow risk and liquidity risk:
derivative instruments held for trading – proprietary transactions in connection with treasury services rendered to the Bank’s customers in order to
mitigate market risk, maintain liquidity or as part of underwriting services;
other financial instruments, including investment securities held for sale, hedging derivatives and equity instruments.
Market risk associated with open positions in financial instruments is mitigated through a set of limits (defined separately for the trading book and the
banking book). The credit risk of such positions is reduced using concentration limits in respect of individual counterparties. In order to mitigate liquidity risk,
the Bank and the Group keep an adequate level of liquid financial assets bearing low credit risk (in particular government bonds and NBP bills) in line with
the liquidity risk appetite defined by the Bank and the Group.
No derivative instruments were used by the Bank or the Group to hedge credit risk.
The market risk of the balance sheet is managed by the Bank and the Group using, inter alia, derivative instruments and hedge accounting with respect to:
mortgage loans bearing WIBOR rate – interest rate swaps are used to receive fixed interest and pay floating interest thus hedging the risk of
movements in cash flows related to floating interest loans;
mortgage loans in CHF and EUR – basis swaps are used to hedge the risk of movements in interest rates (CHF LIBOR, EURIBOR) and exchange rates
(CHF/PLN and EUR/PLN);
fixed interest cash loans – interest rate swaps are used to receive floating interest and pay fixed interest thus hedging the fair value of positions;
selected fixed coupon bonds – interest rate swaps are used to hedge the fair value of bonds whereby the Bank and the Group receive floating interest
and pay fixed interest.
Liquidity risk
Liquidity risk is the risk of failure to meet contingent and non-contingent obligations made to customers and counterparties.
The liquidity risk policy adopted by the Bank and the Group is to ensure that all outflows expected in the short term are fully covered by anticipated inflows
or liquid assets. In addition, the aim of the policy is to ensure an appropriate structure of funding for the Bank’s and the Group’s operations by maintaining
medium- and long-term liquidity ratios at a pre-defined level and monitoring stress testing results. This policy covers all assets and liabilities as well as off-
balance sheet items impacting the liquidity level.
Liquidity risk management
ALCO and the Market and Investment Risk Committee have overall responsibility for the supervision of liquidity risk on behalf of the Management Board. As
part of their roles, they make recommendations to the Management Board on appropriate strategies and policies for strategic liquidity management.
Liquidity risk reports and stress test results are regularly reviewed by senior management.
ALCO also supervises the liquidity management process in subsidiaries.
Liquidity management is the responsibility of the Financial Management Division, which develops and updates relevant strategies and reviews the
Contingency Liquidity Plan (approved by the Management Board and the Supervisory Board). The Risk Management Division is responsible for the
independent measurement and reporting of liquidity risk and for defining liquidity risk management policies. The Financial Risk Department in the Risk
Management Division also performed regular stress tests with respect to liquidity.
Identification and assessment of liquidity risk
Liquidity risk is identified and measured daily, mainly using modified liquidity gap reports, intraday liquidity reports and regulatory reports. These reports
cover a number of internal and regulatory limits. Periodical liquidity measurement reports are supported by stress test results. The Bank regularly calculates
the measures laid down in CRD IV/CRR (LCR and NSFR) and in KNF Resolution no. 386/2008.
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> Cumulative liquidity gap for Santander Bank Polska S.A. as at 31 December 2022 and in the comparative period
(by nominal value)
31.12.2022 (PLN k)
Payable on
demand
up to 1
month
from 1 to 3
months
from 3 to 6
months
from 6 to 12
months
from 1 to 2
years
from 2 to 5
years
above
5 years
Contractual liquidity gap
(114 674 520)
(3 757 323)
(3 925 909)
4 855 245
6 703 745
30 987 858
53 635 031
61 037 340
Cumulative contractual liquidity gap
(114 674 520)
(118 431 843)
(122 357 752)
(117 502 507)
(110 798 762)
(79 810 904)
(26 175 873)
34 861 467
Net derivatives
-
-
-
-
-
( 42 977)
-
-
31.12.2021 (PLN k)
Payable on
demand
up to 1
month
from 1 to 3
months
from 3 to 6
months
from 6 to 12
months
from 1 to 2
years
from 2 to 5
years
above
5 years
Contractual liquidity gap
(137 222 415)
4 404 480
1 915 767
5 912 460
18 398 376
20 190 997
57 938 368
58 038 850
Cumulative contractual liquidity gap
(137 222 415)
(132 817 936)
(130 902 169)
(124 989 709)
(106 591 333)
(86 400 336)
(28 461 968)
29 576 882
Net derivatives
-
-
-
-
-
-
-
-
According to the Group’s policy, the Bank should have sufficient funds to cover in full outflows expected over a one-month horizon, including under the
selected stress test scenarios. The liquidity position over a longer time horizon and the level of liquid assets are also monitored.
In 2022, the Bank’s funds significantly exceeded the level required to cover the expected outflows. It also met the regulatory quantitative requirements for
liquidity. Key regulatory indicators (LCR and NSFR) exceeded the required levels.
6. Operational Risk Management
Santander Bank Polska S.A. adopted the definition of operational risk provided by the Basel Committee on Banking Supervision, according to which
operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.
The objective of operational risk management is to minimise the likelihood and/or reduce the impact of unexpected adverse events.
Santander Bank Polska Group has an integrated operational risk management framework ensuring that all risks having material impact on its operations
are identified, measured, monitored and controlled. Operational risk management at the Bank and Santander Bank Polska Group is the task of employees
at all levels of the organisation and covers a number of interrelated concepts. Operational risk is inherent in all Bank’s and Group’s business processes,
including outsourced functions or services delivered jointly with third parties.
The Bank and other Group members have developed and apply the Operational Risk Management Strategy.
The Operational Risk Management Committee (ORMCO) established by the Management Board is responsible for setting operational risk management
standards for Santander Bank Polska Group. ORMCO is the main forum for discussions on operational risk. It sets the strategic direction for operational risk
management, determines and monitors objectives for managing operational risk, including business continuity, information security, outsourcing/
insourcing and fraud prevention. The results of ORMCO’s work are reported to the Risk Control Committee.
In view of the growing global cyber threat, the Bank has the CyberTechRisk Forum, which is responsible for analysing, monitoring and – in some cases –
approving key issues related to IT, cybersecurity and operations. The main role of the Forum is to review the strategy and development directions of IT and
cybersecurity as well as to monitor technological and operational risks, including cyber risk.
Tools used by the Bank and the Group to manage operational risk
Identification and
assessment of
operational risk
As part of the Risk Control Self-Assessment, the Bank and Santander Bank Polska Group identify the risks they may be exposed
to when delivering their functions, assess inherent and residual risks in terms of their likelihood and impact, and verify the
design and effectiveness of existing controls as part of the assessment of the internal control system.
The process of identification and assessment of operational risk is additionally supported by such tools as: scenario analysis,
business impact analysis and an analysis of risk in new initiatives.
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Tools used by the Bank and the Group to manage operational risk (cont.)
Reporting
Each organisational unit must report operational risk events identified in its area of responsibility. In addition, relevant
operational risk events are escalated to senior management using a fast-track procedure.
Santander Bank Polska Group runs a databa
se of operational risk events identified across the organisation. The data are used
to analyse the causes and consequences of operational risk events, facilitate the lessons learned process and implement
remedial and preventive actions.
The Group also make
s inputs to the external database of operational risk events run by the Polish Bank Association (ZBP) and
uses information about external events from a number of sources. The analysis of external events enables benchmarking and
lesson learning from events identified outside the Group.
Analysis of risk
indicators
Santander Bank Polska Group monitors financial, operational and technological risk indicators. They provide an early warning
of emerging threats and support the monitoring of an operational risk profile.
Defining mitigation
actions
The process of managing operational risk mitigants is designed to eliminate or reduce operational risk. Risk mitigation
measures are determined based on the results of analyses carried out using various operational risk tools (including operational
risk events database, risk indicators, risk self-assessment, analysis of the control environment).
Business continuity
management (BCM)
Each organisational unit must develop and update its business continuity management plan to ensure that critical business
processes remain uninterrupted following an unplanned disruption. BCM plans are tested on a regular basis to provide
assurance to Santander Bank Polska Group that critical business processes may be restored at the required service level and
within the agreed time frame. Santander Bank Polska Group has backup locations where critical processes can be restored and
continued if a special situation occurs.
Information security
Santander Bank Polska S.A. has the Information Security Management System in place, which is certified for compliance with
the ISO/IEC 27001:2013 standard. The purpose of this system is to supervise information security in Santander Bank Polska
Group’s business environment, and assess specific information and system security requirements.
Insurance
Santander Bank Polska Group has financial risks, motor, property and professional indemnity insurance policies in place to
mitigate operational risk.
Reporting to the Risk
Control Committee and
the Supervisory Board
The aim of operational risk reporting is to provide up-to-
date and appropriate information to the management team.
Operational risk reports include details on
operational risk events and losses, information security incidents, risk indicators and
defined mitigants.
7. ESG Risk Management
Appropriate identification of risks and opportunities related to climate transition allows Santander Bank Polska Group to take measures to increase resilience
to negative climate factors and to leverage positive factors to accelerate growth, improve financial results and build reputation of the Bank and the Group.
The Bank and the Group entities considered the climate-related risks when preparing the financial statements in accordance with International Financial
Reporting Standards, and where necessary, the Standards were applied in a manner that takes this into account.
The subject of the considerations was, in particular, the impact of environmental issues on the Bank and the Group's entities in the context of the application
of:
IAS 1: Presentation of Financial Statements
IAS 12: Income Taxes
IAS 36: Impairment of Assets
IFRS 9: Financial Instruments
IFRS 13: Fair Value
IAS 37: Provisions, Contingent Liabilities and Contingent Assets
At the same time, based on the conducted analysis, no significant impact of environmental issues on the financial statements as a whole was found.
In 2022, Santander Bank Polska Group conducted an analysis to identify climate risks and opportunities based on two climate scenarios: temperature rise
by 2°C (in accordance with the Paris Agreement) and temperature rise by 4°C, and three time horizons: short-term (2025), mid-term (2030) and long-term
(2050). The analysis covered the entire value chain and all markets of Santander Bank Polska Group. In line with the TCFD approach (Task Force on Climate-
Related Financial Disclosures), two major types of risks were considered: physical risks and transition risks.
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The Group analysed the main risks from both categories. Based on the key risks identified for the region, the Group evaluated the risk of sectors in which its
customers operate. The Group considered physical and transition risks in 19 sectors in its portfolio in three time horizons. This qualitative analysis included
the concept of double materiality: the Group’s impact on climate as well as the impact of climate on the Group’s performance.
At the same time, projects were started to identify transition and physical risks under a systemic and quantitative approach at the customer level. By
estimating emissions of all business entities and retail mortgage loans it will be possible to estimate transition and physical risks connected with activities
in the key parts of the portfolio. This will also help integrate environmental aspects into standard portfolio analyses and set adequate targets and limits.
Physical risks
The sources of physical risks are among other things extreme weather conditions such as severe storms or floods which may cause infrastructure disruption
or damage in many sectors. Due to the nature of its activities, the agri sector is particularly exposed to physical risks, with an increased risk of soil erosion
affecting crop quality and yields.
In a medium and long term, there is a physical risk related to deteriorating hydrological conditions in Poland and the risk of drought. Water scarcity and the
lack of relevant retention systems may adversely affect the economy, including the energy sector. For example, the CHP plants that use river water for
cooling purposes may be forced to limit energy production during drought. Fire risk is also identified in the soft commodities sector, resulting in potential
losses e.g. in wood production.
Transition risks
The most sensitive sectors in the context of transition to a low-carbon economy are the sectors based on coal and other fossil fuels that dominate the Polish
energy mix. There are regulatory and legal risks connected with higher costs of CO
2
emissions, more stringent data reporting and gathering requirements
as well as regulatory changes that may limit the operations of some high-carbon businesses.
Regulatory risks also involve law amendments imposing more climate-friendly solutions, which may result in higher operating costs for some companies.
For example, in the automotive sector, decreasing costs of electric cars and the expected EU regulations may result in stranded assets in the petrol car supply
chain. Market competition may force companies from the Group’s portfolio to invest in more innovative vehicles.
Santander Bank Polska Group also identified market risks resulting from the impact of climate change on market variables, including consumer preferences,
interest rates and commodity prices. Reputational risks connected with an increased consumer awareness are important too. The above risks may affect the
Group’s position, both directly and through its customers.
The same exercise was conducted with respect to climate-related opportunities. The transition to a green economy allows Santander Bank Polska Group to
help existing and future customers as well as to support economic transformation by providing relevant financing solutions. The Group intends to continue
to develop new products and services (including advisory services for customers) and earn a reputation of a trusted partner. Opportunities for the Group
were identified as part of the analysis.
The climate-related opportunities and risks identified by Santander Bank Polska Group have an impact on financial instruments and are included in the
Group’s main risk management processes. The impact of climate change on the Group’s business has been defined on a high level but further analysis will
be made to quantify the influence of those risks and opportunities in more detail.
Responsibility for ESG risk management
The responsibility for managing climate risk and leveraging climate-related opportunities rests with the Management Board and the Supervisory Board.
Members of the above governing bodies support risk management strategies by approving key policies, sitting on dedicated committees, participating in
reviews and approving risks and reports.
The Bank’s Management Board is responsible for defining long-term action plans and approving the responsible banking strategy, including the climate
strategy and its main risk management objectives (in a short, medium and/or long term).
When taking decisions, the Management Board considers assessments, information and analyses of the risk management unit. Based on that, it adopts the
Risk Appetite Statement, which is then approved by the Supervisory Board. Specific limits are used to set watch limits and define risk management policies.
The Management Board member in charge of risk management provides the Supervisory Board members with relevant information about risk to ensure
they have a full picture of the Bank’s risk profile and can make informed decisions in this respect.
The Supervisory Board verifies the Bank’s management strategy and ESG risk management strategy, also in terms of the Bank’s long-term interest. When
taking decisions, the Supervisory Board also considers assessments, information and analyses of the risk management unit.
There is also the Responsible Banking and Corporate Culture Committee, which provides support to the Bank’s Management Board in the oversight of the
responsible banking and sustainability strategy both locally and at the level of Santander Bank Polska Group. The Committee, which is chaired by the
President of the Management Board, defines the strategy and annual goals related to ESG and ensures compliance with environmental and social policies
of Santander Bank Polska S.A. The Committee is supported by the ESG Forum composed of senior managers representing all Divisions. The Forum analyses
challenges, opportunities and risks related to the EU Sustainable Finance agenda (including ESG risks), plans activities and coordinates their implementation
at the Bank, and submits regular reports to the Responsible Banking and Corporate Culture Committee and the Bank’s Management Board.
In June 2021, the environmental and social risk analysis procedure was implemented for customers from the Corporate and Investment Banking (CIB)
segment and the Business and Corporate Banking (BCB) segment. It specifies the criteria consistent with best practice and standards applicable in global
Santander Group and worldwide which have to be met by customers from sensitive sectors (oil and gas, energy production and transmission, mining and
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metals and soft commodities) in order to establish a relationship with the Bank. The activities in the above sectors have been divided into two categories:
prohibited activities and activities subject to additional analysis. Specific regulations set out implementing rules and provide a detailed description of
processes for individual segments.
The risk assessment of CIB customers is performed in accordance with the solutions applied by Santander Group. ESCC (Environmental, Social and Climate
Change) risk of customers/ transactions from the sectors defined in the relevant policy is analysed on a case-by-case basis using dedicated assessment
questionnaires. Based on that, the local ESCC risk manager issues an opinion and recommendation, which can be positive, conditionally positive or negative.
An analyst or a credit partner includes the ESCC risk analysis and recommendation in a credit application for a particular customer.
The assessment of other corporate customers is largely automated and uses an algorithm which enables the preselection of environmental and social risks.
As part of that process, customers are assigned environmental flags indicating the level of risk based on the characteristics of individual companies (including
their business codes). There are four types of flags: an interim one (“To be verified”) and three final ones (“Approved”, “Higher risk”, “Prohibited activity”).
8. Legal and Regulatory (Compliance) Risk Management
Legal risk management
Operating in the complex legal and regulatory environment, the Bank and Santander Bank Polska Group are exposed to the risk of misapplication or
misinterpretation of legal provisions, regulatory requirements, industry codes and ethical codes adopted by the Bank, as well as internal policies and
procedures (including codes of best practice). Non-compliance might expose the Bank to loss of reputation or to administrative or criminal sanctions.
The management and control of compliance risk includes application of controls, independent monitoring of their execution and reporting. The control
function is performed under three lines of defence:
Pursuant to the Compliance Policy, the Legal and Compliance Division of Santander Bank Polska S.A. includes a compliance function, which is independent
of business units. This function acts as the second line of defence by setting and enforcing compliance standards, providing advice and reporting in the
interest of employees, customers, shareholders and the public.
The compliance function supports the Bank’s strategy with respect to managing regulatory risk, conduct risk and reputational risk. Its activity is determined
by the Bank's business profile: it carries out tasks related to the protection of consumer rights and to ongoing digitalisation and standardisation of financial
services.
In particular, the compliance function is responsible for:
independent identification, monitoring and assessment of compliance risk that the Group is exposed to (with particular focus on new products and
services, prevention of using the financial system for the purpose of money laundering and terrorist financing, protection of confidential information,
management of conflicts of interest and private account share dealing by employees);
providing advice and reporting to the Risk Management Committee, the Bank’s Management Board and the Audit and Compliance Committee on the
effectiveness of processes established to ensure compliance with legal and regulatory requirements;
communication of policies and procedures, providing the management and staff with guidance on compliance risk management;
coordination of contacts with market regulators (KNF, UOKiK, GIIF, UODO);
coordination of the approval of new products;
strengthening the principles of ethical business conduct;
cooperation with the Corporate Communication and Marketing Area and the Risk Management Division in terms of reputational risk management.
cooperation with the Money Laundering and Terrorist Financing Risk Management Department in matters related to money laundering and terrorist
financing risk.
The compliance function also coordinates the activities of committees supporting compliance risk management processes in particular areas of the Group:
General Compliance Committee
Regulatory and Reputational Risk Committee
Local Marketing and Monitoring Committee
Anti-Money Laundering and Terrorism Financing Committee.
First line of defence:
Management of operational
risk arising from the Bank’s
operations
Second line of defence:
Ongoing vertical verification
and vertical testing
Third line of defence:
The
internal audit function
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These committees are composed of representatives of key organisational units that have the necessary expertise and authority to ensure that relevant
decisions are taken and high quality advice is provided in the course of the proceedings.
Employees of the compliance function support the Bank’s senior management in effective compliance risk management and report on key compliance issues
to the Bank's Management Board, the Risk Management Committee and the Audit and Compliance Committee of the Supervisory Board.
The Management Board and the Supervisory Board (through the Audit and Compliance Committee) regularly review key compliance issues identified by the
compliance function. The review particularly includes:
product monitoring
test compliance monitoring
monitoring of employees’ own trades
information on the activity of market regulators
review of upcoming legislative initiatives
review of anti-money laundering issues
review of ethical issues
review of customer complaints.
In February 2022, the Bank's Supervisory Board positively assessed the effectiveness of compliance risk management at Santander Bank Polska S.A., based
on a positive recommendation of the Audit and Compliance Committee.
In addition to the compliance function, the second line of defence also includes other organisational units operating under internal regulations, in particular:
responsibilities related to anti-money laundering and terrorist financing – AML unit
labour law responsibilities – personnel unit
companies and partnerships law responsibilities – corporate governance unit
occupational health and safety responsibilities – health and safety unit
accounting, reporting and tax responsibilities – financial, accounting and tax units
prudential requirements – risk units.
Reputational risk management
Reputational risk is defined as the risk of actual or potential adverse impact on the Bank connected with deterioration of perception of the Bank and other
members of Santander Bank Polska Group by customers, employees, regulators, shareholders/ investors and communities at large.
Potential sources of this risk are internal operational incidents and external events, such as adverse publicity, dissemination of negative feedback by
customers, e.g. via the Internet, in social media and other mass media. They may refer directly to Santander Bank Polska Group and its products and services,
as well as the Bank’s shareholders and the entire banking or financial sector (both domestic and international).
The elements of reputational risk also include customer complaints and claims related to the process of offering banking products and services (both directly
and through third parties/ suppliers/ intermediaries), including complaints about the lack of sufficient (i.e. complete, true, reliable and non-misleading)
information about products/ services and related risks, the complexity of products, failures of systems and applications, misselling, capital loss, as well as
establishment of relationships with entities considered to be sensitive due to the type and profile of their business (high risk sectors).
The management of reputational risk is the responsibility of the Corporate Communication and Marketing Area and the Compliance Area.
The objective of reputational risk management is to protect the image of Santander Bank Polska Group and to limit and eliminate negative events which
affect the image and financial results of the Group.
The key risk mitigation measures include:
Disclosure Policy of Santander Bank Polska S.A.
Reputational risk management model consisting of: the Reputational Risk Management Policy, the Reputational Risk Management Procedure and the
Methodology for Reputational Risk Management at Santander Bank Polska S.A.
Reputational Risk Analysis Procedure of Santander Bank Polska S.A.
Guidelines on cooperation with partners at Santander Bank Polska S.A.
Sensitive Sector Financing Policy of Santander Bank Polska S.A.
Defence Sector Policy of Santander Bank Polska S.A.
Donation Policy of Santander Bank Polska Foundation and Donation Policy of Santander Bank Polska S.A.
Daily monitoring of local, nationwide and selected international mass media sources (Corporate Communication and Marketing Area)
Policy on the use of social networks (Corporate Communication and Marketing Area)
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Daily monitoring of social media sources (in particular: Facebook, Twitter) in terms of references to the Bank (Corporate Communication and
Marketing Area)
Analysis of image-sensitive information by the Press Office (Corporate Communication and Marketing Area)
Response to information which poses a threat to public perception of the Bank (Corporate Communication and Marketing Area)
Keeping the representatives of national and local media posted on new products and changes to regulations regarding existing products
Regular monitoring of reputational risk events and reputational risk profile (Compliance Area)
Monitoring of changes in laws, internal regulations and market standards as well as abusive clauses in contracts (Compliance Area)
Customer satisfaction survey (Chief Customer Officer)
Recommendations and preventive actions arising from the analysis of complaints (Chief Customer Officer)
Preparation and control by relevant units of Santander Bank Polska S.A. of all important communications and reports for shareholders, the Polish
Financial Supervision Authority (KNF) and the Warsaw Stock Exchange, and timely publication of such communications and reports
Evaluation of new products/ services or their modifications, and the related procedures, communications, commercial materials, initiatives addressed
to customers (promotions, contests) and training materials for sales staff in terms of their compliance with laws and regulatory guidelines, ethical
business conduct and reputational risk (Compliance Area)
Participation in the management of customer complaints, especially those filed with regulators (Compliance Area)
Supervision of post-sales control of investment products (Compliance Area)
Mystery shopping
Regular monitoring of reputational risk associated with products/ services offered by Santander Bank Polska Group through the analysis of customer
complaints, sales volumes, number of customers and rate of return, if applicable (Compliance Area)
Reviewing agreements with external suppliers and third parties (in particular the ones regarding outsourcing, critical services and high-risk services)
Participation in the analysis of customers and transactions from sensitive sectors (including arms, gambling, tobacco, media and cannabis industries)
(Compliance Area).
9. Capital Management
Introduction
It is the policy of Santander Bank Polska Group to maintain a level of capital adequate to the type and scale of operations and the level of risk.
The level of own funds required to ensure safe operations of the Bank and Santander Bank Polska Group and capital requirements estimated for unexpected
losses is determined in accordance with the provisions of the CRD IV/CRR package, regulations of the European Parliament and of the Council (EU) (2019/876
of 20 May 2019, 2019/630 of 17 April 2019, 2020/873 of 24 June 2020), and the Polish Macroprudential Supervision Act, taking into account KNF
recommendations.
The Management Board is accountable for capital management, calculation and maintenance processes, including the assessment of capital adequacy in
different economic conditions and the evaluation of stress test results and their impact on internal and regulatory capital and capital ratios. Responsibility
for the general oversight of internal capital estimation rests with the Supervisory Board.
The Management Board has delegated ongoing capital management to the Capital Committee which conducts a regular assessment of the capital adequacy
of the Bank and Santander Bank Polska Group, including in extreme conditions, the monitoring of the actual and required capital levels and the initiation of
transactions affecting these levels (e.g. by recommending the value of dividends to be paid). The Capital Committee is the first body that defines the capital
policy, principles of capital management and principles of capital adequacy assessment.
However, ultimate decisions regarding any increase or decrease in capital are taken by relevant authorities within the Bank in accordance with the applicable
law and the Bank’s Statutes.
In 2022, the Bank and Santander Bank Polska Group met all regulatory requirements regarding capital management.
As at 31 December 2022, the Group
had a capital surplus of PLN 10.2bn above the regulatory requirements.
Santander Bank Polska Group does not consider the full impact of introduction of IFRS 9 for the purpose of capital adequacy assessment and applies
transitional arrangements provided for in Regulation (EU) 2017/2395 amending Regulation (EU) No 575/2013, updated in accordance with Regulation (EU)
2020/873 of the European Parliament and of the Council of 24 June 2020. Based on the above-mentioned changes, the Group uses derogation in the form
of assigning a risk weight of 100% to the value of the adjustment included in own funds.
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Category measuring capital adequacy of Santander Bank Polska Group as
at 31 December 2022
Impact of transitional arrangements related to IFRS 9
Total own funds
+PLN 161,386k
Total capital ratio
+11 bps
Tier 1 capital ratio
+11 bps
Capital policy
As at 31 December 2022, the minimum capital ratios satisfying the provisions of the CRR and the Macroprudential Supervision Act as well as regulatory
recommendations regarding additional own funds requirements under Pillar 2 were as follows:
at the level of Santander Bank Polska S.A.:
9.76% for Tier 1 capital ratio;
11.76% for total capital ratio;
at the level of Santander Bank Polska Group:
9.742% for Tier 1 capital ratio;
11.746% for total capital ratio.
The aforementioned capital ratios at the Bank and Group level take into account:
Group Bank
Components of the minimum capital requirement 31.12.2022 31.12.2021 31.12.2022 31.12.2021
Minimum capital ratios
Common Equity Tier 1 capital ratio
4.5%
4.5%
4.5%
4.5%
Tier 1 capital ratio
6%
6%
6%
6%
Total capital ratio
8%
8%
8%
8%
Additional capital requirement for risk
related to foreign currency mortgage
loans for households
Common Equity Tier 1 capital ratio
0.009 p.p. 0.016 p.p.
none
Tier 1 capital ratio
0.012 p.p. 0.022 p.p.
Total capital ratio
0.016 p.p. 0.029 p.p.
Capital buffer for Santander Bank Polska S.A. as other systemically important institution
1 p.p.
0.75 p.p.
1 p.p.
0.75 p.p.
Capital conservation buffer maintained in accordance with the Macroprudential
Supervision Act
2.5 p.p. 2.5 p.p. 2.5 p.p. 2.5 p.p.
Systemic risk buffer
0 p.p.
0 p.p.
0 p.p.
0 p.p.
The Bank’s sensitivity to an adverse macroeconomic scenario measured based on the
results of the regulatory stress tests (P2G)
0.23 p.p. 0 p.p. 0.26 p.p. 0 p.p.
To mitigate the risk of credit crunch arising from the Covid-19 pandemic, on 18 March 2020 the Minister of Finance issued a regulation based on the
recommendation of the Financial Stability Committee removing banks’ obligation to keep the systemic risk buffer of 3%.
In its letter of 11 February 2022, the KNF recommended the Bank to mitigate its risk by maintaining own funds on a standalone and consolidated level to
cover an additional capital requirement to absorb potential losses resulting from materialisation of stress conditions. The recommended capital add-on is
0.31 percentage point over the total capital ratio and should consist entirely of Common Equity Tier 1 capital. Pursuant to KNF letter of 23 December 2022,
the amount of capital add-on was changed from 0.31% to 0.26% for the Bank and 0.23% for the Group.
Regulatory capital
The capital requirement for Santander Bank Polska Group is determined in accordance with Part 3 of 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 (CRR), as amended by CRR 2 and Regulation (EU) 2020/873 of 24 June 2020 amending Regulation (EU) No 575/2013 and Regulation (EU)
2019/876 as regards certain adjustments in response to the Covid-19 pandemic.
Santander Bank Polska Group uses the standardised approach to calculate the capital requirement for credit risk, market risk and operational risk. According
to this approach, the total capital requirement for credit risk is calculated as the sum of risk-weighted exposures multiplied by 8%. The exposure value for
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these assets is equal to the balance sheet total, while the value of off-balance sheet liabilities corresponds to their balance sheet equivalent. Risk-weighted
exposures are calculated by applying risk weights to all exposures in accordance with the CRR.
The table below presents the calculation of the capital ratio for Santander Bank Polska Group as at 31 December 2022 and 31 December 2021.
>
Calculation of the capital adequacy ratio for Santander Bank Polska Group as at 31 December 2022 and 31 December 2021
Santander Bank Polska Group (PLN m) 31.12.2022 31.12.2021
1)
I
Total capital requirement (Ia+Ib+Ic+Id+Ie), including:
10,891.9
10,827.6
Ia
– for credit risk and counterparty credit risk
9,377.7
9,329.0
Ib
– for market risk
160.6
190.7
Ic
– for credit valuation adjustment risk
45.9
29.9
Id
– for operational risk
1,254.3
1,250.2
Ie
– for securitisation
53.4
27.8
II
Total capital and funds
2)
28,047.9
27,915.2
III
Deductions
1,810.5
2,136.3
IV
Capital and funds after deductions (II–III)
26,237.4
25,778.9
V
Capital ratio [IV/(I*12.5)]
19.27%
19.05%
VI
Tier 1 capital ratio
17.54%
17.10%
1) Including profits allocated to own funds pursuant to applicable EBA guidelines.
> Calculation of the capital adequacy ratio for Santander Bank Polska S.A. as at 31 December 2022 and 31 December 2021
Santander Bank Polska S.A. (PLN m)
31.12.2022 31.12.2021
1)
I
Total capital requirement (Ia+Ib+Ic+Id), including:
8,691.9
8,599.4
Ia
– for credit risk and counterparty credit risk
7,488.9
7,422.8
Ib
– for market risk
158.5
188.5
Ic
– for credit valuation adjustment risk
45.2
29.6
Id
– for operational risk
975.3
958.5
Ie
– for securitisation
24.0
0.0
II
Total capital and funds
2)
26,081.3
26,057.4
III
Deductions
2,397.2
2,884.0
IV
Capital and funds after deductions (II–III)
23,684.1
23,173.4
V
Capital ratio [IV/(I*12.5)]
21.80%
21.56%
VI
Tier 1 capital ratio
19.74%
19.23%
1) Including profits allocated to own funds pursuant to applicable EBA guidelines.
Pursuant to the Bank’s disclosure strategy, details about the level of own funds and capital requirements are presented in a separate report on capital
adequacy of Santander Bank Polska Group (“Information on capital adequacy of Santander Bank Polska Group as at 31 December 2022”).
Internal capital
Notwithstanding the regulatory methods for measuring capital requirements, Santander Bank Polska S.A. carries out an independent assessment of current
and future capital adequacy as part of the internal capital adequacy assessment process (ICAAP). The purpose of the process is to ensure that the level and
nature of own funds guarantee the solvency and stability of the Bank’s and the Group’s operations.
The capital adequacy assessment is one of the fundamental elements of the Bank’s strategy, the process of defining risk appetite and the process of planning.
In the ICAAP the Group uses assessment models based on the statistical loss estimation for measurable risks, such as credit risk, market risk and operational
risk, plus its own assessment of capital requirements for other material risks not covered by the model, e.g. reputational risk and compliance risk.
The internal capital for credit risk is estimated on the basis of risk parameters including the probability of default (PD) by Santander Bank Polska S.A.
customers and the loss given default (LGD).
The Group performs an internal assessment of capital requirements, also under stressed conditions, taking into account different macroeconomic scenarios.
Internal capital estimation models are assessed and reviewed annually to adjust them to the scale and profile of the business of Santander Bank Polska S.A.
and to take account of any new risks and the management’s judgement.
The review and assessment is the responsibility of the Bank’s risk management committees, including: the Capital Committee and the Model Risk
Management Committee.
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Subordinated liabilities
Information on bond issue
Date of KNF consent
to allocate the bonds to the Tier
2 capital
Nominal value of the
issue allocated to
subordinated liabilities
Amendments (made in 2016) to the agreement under which subordinated bonds were issued
on 5 August 2010 and taken up by the European Bank for Reconstruction and Development
(including extension of the maturity date to 5 August 2025)
18 May 2017 EUR 100m
Issue of bonds of Santander Bank Polska S.A. on 2 December 2016
24 February 2017
EUR 120m
Issue of subordinated bonds of Santander Bank Polska S.A. on 22 May 2017
19 October 2017
EUR 137.1m
Issue of series F subordinated bonds of Santander Bank Polska S.A. on 5 April 2018 12 June 2018 PLN 1bn
The information on subordinated liabilities is also provided in Note 5 and in Note 35 of the Consolidated Financial Statements of Santander Bank Polska
Group for 2022.
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XIII. Statement of Santander Bank Polska S.A. on
Corporate Governance in 2022
1. Corporate Governance at Santander Bank Polska S.A.
Corporate governance sets out the rules for operation of the governing bodies, systems and processes at Santander Bank Polska S.A. Its objective is to build
good relationships with shareholders, customers and other stakeholders, and to increase effectiveness of internal oversight, key internal systems and
functions as well as statutory bodies. The corporate governance principles adopted by the Bank focus on professionalism and integrity of members of the
management and supervisory bodies, transparency and due care, which helps build trust in Santander Bank Polska Group, supports sustainable development
and increases credibility of the capital market in Poland.
The Bank’s corporate governance framework is based on applicable laws (in particular the Commercial Companies Code, the Banking Law and capital market
regulations) as well as the rules set out in Best Practice for GPW Listed Companies 2021, Principles of Corporate Governance for Supervised Institutions
issued by the Polish Financial Supervision Authority (KNF) and the Code of Banking Ethics. Since 1 January 2022, the Bank has complied with
Recommendation Z on internal governance in banks issued by the Polish Financial Supervision Authority (KNF).
In 2022, Santander Bank Polska S.A. adhered to all the rules set out in the amended Best Practice for GPW Listed Companies 2021 adopted by virtue of
Resolution no. 13/1834/2021 of the Supervisory Board of the Warsaw Stock Exchange dated 29 March 2021 and effective as of 1 July 2021.
Furthermore, the Bank applied all Principles of Corporate Governance for Supervised Institutions issued by the KNF on 22 July 2014.
In the reporting period, no departures from the above-mentioned regulations were reported.
The Bank has complied with the official corporate governance principles since 2002 when the first issue of best practice was published by the Warsaw Stock
Exchange (Best Practice for Public Companies 2002). It also follows best sector practice contained in the Banking Ethics Code developed by the Polish Bank
Association (ZBP).
The Bank has adopted the following internal regulations which specify corporate governance rules in more detail: the Group-Subsidiary Governance Model,
the General Code of Conduct, Guidelines for Subsidiaries, Specific Corporate Frameworks, Internal Governance Rules of Santander Bank Polska S.A.,
Corporate Governance Rules of Santander Bank Polska Group, the General Code of Conduct and specific bylaws and policies e.g. the Disclosure Policy, the
Conflict of Interest Prevention Policy, the Code of Conduct in the Securities Markets, the Anti-Money Laundering Policy, the Anti-Corruption Programme and
the Sustainability Policy.
This Statement on Corporate Governance in 2022 has been prepared in accordance with § 70(6)(5) of the Finance Minister’s Regulation of 29 March 2018
on current and financial reports published by the issuers of securities and the rules of equal treatment of the information required by the laws of a non-
member state.
In accordance with Commission Recommendation of 9 April 2014 on the quality of corporate governance reporting (2014/208/EU), the section below
presents details on application of corporate governance rules regarding the topics of most importance for shareholders.
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Best Practice for GPW Listed Companies 2021
The Best Practice for GPW Listed Companies 2021 effective as of 1 July 2021 was adopted by virtue of Resolution no. 13/1834/2021 of the Supervisory
Board of the Warsaw Stock Exchange dated 29 March 2021.
The full text is available on the website of the Warsaw Stock Exchange
at:https://www.gpw.pl/pub/GPW/files/PDF/dobre_praktyki/DPSN21_BROSZURA.pdf
The above version of best practice was adopted by the Bank by way of Management Board Resolution no. 160/2021 of 21 July 2021, Supervisory Board
Resolution no. 108/2021 of 27 July 2021 and Annual General Meeting Resolution no. 33 of 27 April 2022.
On 29 July 2021, the Bank published a report on application of the rules set out in Best Practice for GPW Listed Companies 2021 (it is available on the
Bank’s website at: https://www.santander.pl/regulation_file_server/time20210729112136/download?id=163350&lang=pl_PL).
Chapter
Application of Best Practice for GPW Listed Companies 2021
Disclosure policy,
investor
communications
(Chapter 1)
The Bank has an effective and transparent disclosure policy in place in relation to shareholders, investors and analysts, which is
supported by modern communication tools. Pursuant to the Disclosure Policy of Santander Bank Polska S.A. (available on the
Bank’s website: https://www.santander.pl/relacje-inwestorskie/dokumenty-korporacyjne#dokument=4), the Bank actively
communicates with its stakeholders in order to meet their information needs, with particular activities adjusted to their profile.
The communication with capital market participants is based on the following rules:
Periodic reports (including information about the Bank’s sponsorship and corporate giving activities) are published at the earliest
possible date following the end of the reporting period. The market is informed in advance, via current reports, about the planned
dates of publishing reports.
Current reports providing information required by applicable laws are published at the dates specified therein.
Each year, the Bank organises four conferences to present analysts, investors and all the interested parties with quarterly figures.
They are broadcast online in Polish and English. To the extent permitted by law, the Bank answers questions asked during the
conferences and sent by email to the email address of the Investor Relations Director (available on the Bank’s Investor Relations
website).
The corporate website is available in Polish and English at: www.santander.pl and includes the Investor Relations tab with all the
information required to be published in accordance with law and Best Practice for GPW Listed Companies 2021.
The Bank also has a website dedicated to general meetings, which is available at www.santander.pl/wza.
As part of open communication with the shareholders, the Bank (acting through the representatives of its governing bodies)
provides them with all answers and explanations, ensures the possibility to participate in the general meetings by means of
electronic communication and enables media representatives to join such meetings.
The Bank promptly replies to any questions about the published information, and in the case of questions from investors
conce
rning unpublished data, the Bank takes efforts to reply as soon as possible and no later than within 14 days (in accordance
with laws and market standards).
The Bank participates in investor conferences organised by Polish and foreign brokerage companies.
The Bank publishes its financial results achieved in a given reporting period before the deadlines prescribed by law, being one of
the leaders in this respect among the companies listed on the Warsaw Stock Exchange.
The Bank’s Investor Relations service at www.santander.pl includes a section dedicated to Best Practice for GPW Listed Companies,
which contains all the required information such as: report on application of Best Practice for GPW Listed Companies 2021,
information about the Supervisory Board committees and their composition, information about changes in the share capital and
transactions in shares, information about incentive plans, dividend policy, questions asked by investors (along with answers),
information about pay equality between men and women (including measures taken to eliminate any gaps), the Group’s structure,
schedule of corporate events, information about shareholders, the Statement on Non-Financial Information for 2021, information
about the Diversity Policy, information about members of the Bank’s governing bodies and the General Meeting, basic corporate
documents, financial statements (including presentations), development strategy, recommendations and analyses of rating
agencies, current reports, records of meetings with investors, channels of communication between investors and the Bank, and
information about mergers and acquisitions.
The Bank’s strategy addresses ESG aspects, both environmental protection and social and employee matters, defining precise
metrics and taking into account sustainable development.
Environmental protection and climate factors are one of the pillars of the Responsible Banking agenda, which is part of the Bank’s
Safety & Trust strategic direction under the business strategy of the Bank for 2021–2023.
The metrics include, among other things, the share of energy bought from renewable sources (100%), the share of used single-
use plastics (0% since 2020) or the share of green financing in line with the Sustainable Finance Classification System. This
regulation was implemented at the Bank in order to set up the criteria for identification and classification of transactions as
sustainable (it is available at https://www.santander.pl/aktualnosci/aktualnosci-lista/eko-rozwiazania). It is based on globally-
recognised industry guidelines and principles (e.g. ICMA Social and Green Bond Principles, Climate Bond Standards) and EU
Taxonomy. It allows the Bank to develop sustainable finance solutions to better support customers in their green transition.Green
finance contributes to climate change mitigation.
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Chapter (cont.) Application of Best Practice for GPW Listed Companies 2021 (cont.)
Disclosure policy,
investor
communications
(Chapter 1)
As part of measures taken to ensure gender equality, the Bank strives to increase the share of women in senior executive
positions and ensure gender balance in recruitment and development processes. It also offers development programmes
dedicated to women, ensures a relevant female representation in succession planning and promotes equal treatment and
inclusion among employees. One of the key metrics in this regard is the female representation on the Management Board (30%
by 2025), on the Supervisory Board (between 40% and 60% by 2025) and in executive positions (40% by 2025), as well as the
Equal Pay Gap (EPG); in 2022, the Bank received the Equal Pay Certificate from Business Centre Club. The Bank also undertakes
initiatives to support diversity and inclusion: there are Diversity Ambassadors (a role performed by senior executives), employee
networks (bottom-up initiatives focu
sed on the promotion of diversity), educational campaigns, training, webinars (e.g. as part
of the Diversity Month), and Santander Women podcast hosted by Dorota Strojkowska, Management Board member in charge
of the Business Partnership Division. The foregoing activities are supported by strategic partnerships with expert organisations:
Share the Care, UN Global Compact, Vital Voices, Responsible Business Forum.
Employee focus is one of the Bank’s strategic directions and its delivery is monitored on an ongoing basis, including as part of
quarterly eNPS surveys. Another measure is the title of the employer of choice in the banking sector (Top Employer Poland
certificate). The Bank implemented a hybrid work model, promotes diversity, equal treatment and inclusion, supports talent
development, and promotes a healthy and eco-friendly lifestyle as part of wellbeing programmes for employees.
Customer obsession is also one of the pillars of the Bank’s strategy. The Bank takes constant efforts to improve customer
satisfaction and all products and services are designed and implemented with a customer focus. These aspects are measured
using NPS (Net Promoter Score) – a customer loyalty metric. As part of the customer-centric strategy, the Bank accelerated
d
igitalisation and optimisation of processes, simplifies language in communication with customers and ensures that products
and distribution channels are tailored to the needs of specific customer groups (including support for refugees from Ukraine –
products and services for retail and business customers).
Since 2014, the Bank has organised 14 dialogue sessions with representatives of social and business partners in accordance with
the AA1000SES standard. Their purpose is to gather feedback and expectations
regarding the Bank’s activities in the area of
responsible banking. Suggestions made by stakeholders are analysed and taken into account in delivery of the strategy, in
planning processes and in non-financial reporting. The last dialogue sessions were held in 2022 as part of the update of the ESG
relevance matrix. Four groups of stakeholders were invited to take part in the analysis of the ESG impact on the Bank and the
Bank’s impact on the environment: external experts (interviews) and customers, employees and representatives of the third
sector (NGO) (online survey).
On its website, the Bank publishes information about its strategy, including strategic directions and objectives, results of actions
taken to implement the strategy as well as financial and non-financial metrics.
The information about the ESG strategy indicates how the decision-making processes at the Bank and the Group take into account
matters related to climate change, including associated risks (details are presented in Chapter XII “Risk
and Capital
Managemenet“ and Chapter XIV “Satatement of Non-Financial Information for 2022”). The Bank prepares annually a report on
ESG issues at the corporate website.
The Bank’s equal pay index is published on the site dedicated to the Best Practice: https://www.santander.pl/relacje-
inwestorskie/dobre-praktyki. In 2022, the index was 94.67%.
The list of expenses incurred by the Group to support culture, sports, c
harity organisations, media and civil society organisations
is included in Chapter VIII, Part 2 “Communication with Stakeholders”.
The Bank’s disclosure policy concerning investor relations is described in more detail in Chapter VII “Investor Relations”. For more
information about the arrangements facilitating communication with shareholders, see “General Meeting” below (Part 4
“Governing Bodies”).
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Chapter (cont.) Application of Best Practice for GPW Listed Companies 2021 (cont.)
Management
Board, Supervisory
Board
(Chapter 2)
All members of the Bank’s Management Board and the Supervisory Board have appropriate knowledge, experience and skills to
duly perform their duties. Detailed information about their qualifications is presented in the later part of this statement (Part 5
“Governing Bodies”, Sections: “Management Board” and “Supervisory Board”).
The Bank has a diversity
policy in place which promotes diversity among members of the Management Board and the Supervisory
Board in terms of their qualities and skills, gender, educational background, expertise, age, professional experience and
geographical provenance. It also requires the Supervisory Board to ensure at least 30% representation of women in the
Management Board by 2025.
When appointing the Supervisory Board members, the Bank is to ensure 40%–60% representation of women by 2025 (women
already account for 40% of the Supervisory Board membership).
The independence criteria (specified in the Act
on statutory auditors, audit firms and public oversight, Commission
Recommendation 2005/162/EC of 15 February 2005, and additional criteria stipulated in the Bank’s Statutes as agreed with the
KNF) are met by five of ten members of the Supervisory Board, who do not have actual and material connections with a
shareholder holding at least 5% of total voting power at the Bank’s General Meeting. These criteria are met by the Chairman and
all members of the Audit and Compliance Committee.
Members of the Management Board and the Supervisory Board commit sufficient time to perform their duties. The functions
performed on the Bank’s Management Board are the main area of the professional activity of its members, some of whom also
sit on the supervisory boards of the Bank’s subsidiaries, which facilitates oversight and operation of the Group as a whole.
Management Board members may perform roles on the boards of entities outside Santander Bank Polska Group exclusively with
the consent of the Supervisory Board.
The Supervisory Board exercises an effective oversight of the Bank’s operations, verifies the activities of the Management Board
in terms of delivery of the strategic objectives and monitors the Bank’s performance. The Management Board provides the
Supervisory Board with access to information about matters related to the Bank as well as relevant resources and opportunity
to use independent, professional advisory services if need be. The Supervisory Board provides the General Meeting with the
Report on the Supervisory Board’s activity, which includes detailed information about supervisory activities as well as the
assessment of the Bank’s position, internal control system, remuneration policy, performance of information obligations, the
sponsorship and corporate giving policy.
Internal systems
and functions
(Chapter 3)
The Bank has an effective internal control, risk management and compliance system in place, as well as an effective internal
audit function adequate to the size of the Bank and the type and scale of its operations. Their effectiveness is monitored and
assessed by the Supervisory Board in coordination with the Audit and Compliance Committee.
The Bank’s organisational structure includes units responsible for the tasks of individual systems and functions.
The Head of the Internal Audit Area adheres to international standards for the professional practice of internal auditing and
reports directly to the President of the Management Board, with a dotted reporting line to the Chairman of the Audit and
Compliance Committee.
Remuneration payable to persons responsible for risk management and compliance and the Head of the Internal Audit Area
depends on the delivery of the tasks set rather than short-term results of the Bank.
The head of the compliance function reports directly to the President of the Management Board. The Risk Management Division
is headed by the Vice President of the Management Board.
The internal audit function
meets the international standards for the professional practice of internal auditing, which is verified
as part of independent third-party assessment at least once every five years. The last assessment was carried out in June 2019
by the Institute of Internal Auditors.
The Bank has an effective internal control, risk management and compliance system in place, as well as an effective internal
audit function adequate to the size of the Bank and the type and scale of its operations. Their effectiveness is monitored and
assessed by the Supervisory Board in coordination with the Audit and Compliance Committee.
The Bank’s organisational structure includes units responsible for the tasks of individual systems and functions.
The Head of the Internal Audit Area
adheres to international standards for the professional practice of internal auditing and
reports directly to the President of the Management Board, with a dotted reporting line to the Chairman of the Audit and
Compliance Committee.
Remuneration payable to persons responsible for risk management and compliance and the Head of the Internal Audit Area
depends on the delivery of the tasks set rather than short-term results of the Bank.
The head of the compliance function reports directly to the President of t
he Management Board. The Risk Management Division
is headed by the Vice President of the Management Board.
The internal audit function meets the international standards for the professional practice of internal auditing, which is verified
as part of independent third-party assessment at least once every five years. The last assessment was carried out in June 2019
by the Institute of Internal Auditors.
General Meeting,
shareholder
relations
(Chapter 4)
Annual General Meetings are convened as soon as possible after the publication of an annual report at the date set in keeping
with the applicable legislation. In 2022, the Annual General Meeting was held on 27 April, nine weeks after the release of the
annual report for 2021.
When selecting the venue for the General Meeting, the Bank enables the participation of the highest possible number of
shareholders (the General Meetings of the Bank are held in Warsaw).
Since 2011, the Bank’s shareholders can participate in the General Meetings by means of electronic communication channels (e-
meetings) and exercise their rights from anywhere in the world. General Meetings are broadcast live on the Bank’s website. The
representatives of media can participate in General Meetings.
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Chapter (cont.) Application of Best Practice for GPW Listed Companies 2021 (cont.)
General Meeting,
shareholder
relations
(Chapter 4)
To help shareholders make informed voting decisions, on the date of the notice of the General Meeting the Bank publishes
justifications of all resolutions (except for points of order and where justification follows from the materials submitted to the
General Meeting) together with their drafts on a dedicated website (
www.santander.pl/wza). The materials to be considered
by the General Meeting are presented in a manner convenient to the shareholders.
In the case of resolutions requested by a shareholder to be included on the agenda, justifications are published immediately
after receiving the shareholder's request (in the case of requests made in the course of the General Meeting, the justification is
presented to shareholders prior to adopting a resolution). Additionally, members of the Bank’s governing bodies provide verbal
information prior to the vote on the matter if it is required so to consider the matter properly. The Bank takes efforts to ensure
that draft resolutions are submitted no later than three days before the General Meeting. In 2022, all draft resolutions were
published 26 days before the General Meeting (the shareholders did not make any subsequent requests).
The General Meeting should be attended by members of the Management Board and the Supervisory Board who will be able
to give substantive answers to questions asked during the meeting.
Answers to shareholders’ questions are provided in line with the applicable legislation within the set time limits.
The Bank strives to distribute profit to the shareholders in accordance with the dividend policy and the KNF recommendations.
In 2022, the Annual General Meeting adopted a resolution to pay a dividend in the maximum amount arising from the
individual recommendation of the KNF (i.e. 30% of the profit for 2021). The period between the dividend payment date and the
record date was seven days.
Conflict of interest,
related party
transactions
(Chapter 5)
The Bank and its subsidiaries have transparent procedures in place for managing conflicts of interest. They are described in the
General Code of Conduct and the Conflict of Interest Prevention Policy as well as policies applicable in individual companies.
They specify the criteria and circumstances in which a potential conflict of interest may arise and procedures to be followed in
such cases. They also define ways to prevent, identify and resolve conflicts of interest.
Members of the Management Board and
the Supervisory Board refrain from professional activities which might cause a conflict
of interest. They must not participate in decision-making if there is an actual or potential conflict of interest. They must also
inform the Bank about such situations. Potential conflicts of interest involving members of the Management Board and the
Supervisory Board are also considered when assessing the suitability of candidates for these bodies and as part of ongoing
suitability assessments.
The Bank ensures equal treatment of customers and suppliers. No shareholder has preference over other shareholders in
related party transactions.
Transactions with related parties are made in accordance with the Bank’s internal regulations and market standards. If the
transaction with related parties exceeds 5% of the Bank’s total assets, it must be approved by the Supervisory Board.
The Supervisory Board may seek external expert advice when making a valuation and analysing economic effects of related
party transactions. If the transaction requires the approval of the General Meeting, the Supervisory Board assesses the need for
seeking such advice.
Remuneration
(Chapter 6)
The Bank’s Remuneration Policy meets all the requirements prescribed by law and supports the Group’s growth and security. It
complies with the principles of sound and effective risk management, prudent capital management, and it is consistent with
the Bank’s business strategy, objectives, values and long-term interests.
The Bank ensures the stability of its management team through, among other things, transparent, fair, consistent and non-
discriminatory terms of remuneration.
The remuneration of members of the Management Board and the Supervisory Board and key managers is sufficient to attract,
retain and motivate persons with skills necessary for proper management and supervision of the Bank. The remuneration
structure fully reflects market practices while the remuneration levels match the ones offered in the banking sector, taking into
account the size of business. Remuneration is adequate to the scope of tasks performed.
In 2022, the Bank did not have an active stock option programme for managers. In the case of the incentive plan established
under the resolution of the Annual General Meeting of 27 April 2022, the level of remuneration depends on financial and non-
financial performance in the long term (PAT, ROTE, NPS), including sustainability factors (delivery of ESG objectives).
The remuneration of Supervisory Board members does not depend on the Bank’s results. The Supervisory Board members
receive fixed monthly remuneration irrespective of the number of Supervisory Board meetings held. Supervisory Board
members receive additional remuneration for work on the Supervisory Board committees.
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Principles of Corporate Governance for Supervised Institutions
Santander Bank Polska S.A. is required to apply the Principles of Corporate Governance for Supervised Institutions issued by the KNF on 22 July 2014.
The document describes internal and external relations of supervised institutions, including relations with shareholders and customers, their organisation,
internal oversight framework and key internal systems and functions, as well as statutory bodies and the rules of their cooperation.
The document is available on the KNF website at:
https://www.knf.gov.pl/knf/pl/komponenty/img/knf_140904_Zasady_ladu_korporacyjnego_22072014_38575.pdf
and on the Bank’s website at:
https://static3.santander.pl/asset/z/a/l/zal.-do-uchwaly-objetej-pkt-13-porzadku-obrad_pl_55449.pdf.
The Principles of Corporate Governance for Supervised Institutions were adopted by Santander Bank Polska S.A. as of 1 January 2015 by virtue of
Management Board Resolution no. 116/2014 of 9 October 2014 and Supervisory Board Resolution no. 58/2014 of 17 December 2014. They were approved
by the General Meeting of Santander Bank Polska S.A. on 23 April 2015.
Chapter
Important aspects of application of the Principles of Corporate Governance for Supervised Institutions by Santander
Bank Polska S.A.
Organisation and
organisational
structure
(Chapter 1)
The organisation of the Bank facilitates the delivery of long-term objectives, among other things by combining strategic planning
with analysis of the required resources. The Bank sets its strategic objectives taking into account the character and scale of
business activity in its strategy approved by the Management Board and the Supervisory Board.
The Bank has a transparent and appropriate organisational structure with functions assigned to organisational and tasks clearly
allocated to Management Board m
embers, head office units, branches and specific groups of positions. The effectiveness of the
Bank’s structure is analysed on an ongoing basis, taking into account market trends and benchmark data. The Bank’s structure is
available at:
https://www.santander.pl/relacje-inwestorskie/informacje-o-spolce/wladze-banku.
The organisation of the Bank makes it possible to change priorities as part of quarterly planning and business review, taking into
account the analysis of risks to which it is exposed. Furthermore, the Bank has clear procedures to be followed in a special
situation, i.e. in case of significant deterioration of its financial position or occurrence of operational events that disrupt or prevent
the Bank from conducting its business activity. The Bank also has business continuity plans to minimise losses and ensure
continuity of operations if special situations materialise.
The Bank complies with law and supervisory and regulatory recommendations and has specialised units (Legal Area, Compliance
Area) which support the Bank in adhering to regulations and monitor the performance of the Bank’s obligations in this respect.
The Bank’s internal control system is effective. Its objective is to ensure the Bank’s compliance with law and risk management
rules, reliability of financial reporting and effectiveness of the Bank’s operations. The Bank’s employees may anonymously report
breaches using the whistleblowing channels available at the Bank without fear of retaliation from managers or colleagues. The
effectiveness of the procedure for anonymous reporting of breaches is assessed at least once a year by the Supervisory Board.
Relations with
supervised
institution's
shareholders
(Chapter 2)
The Bank conducts its activity taking into account the interests of all stakeholders as long as they are not contrary to the interests
of the Bank. To that end, the Bank has adopted detailed guidelines setting out rules of conduct and principles for preventing
conflicts of interest.
The Bank provides its shareholders with appropriate access to information and facilitates their participation in General Meetings,
as described in detail in the section on Best Practice for GPW Listed Companies 2021.
By exercising oversight, the shareholders contribute to effective and proper functioning of the Management Board and
Supervisory Board. Members of the Management Board do not exercise their voting rights attached to the shares they hold. 50%
of the Supervi
sory Board members meet the independence criterion, which prevents worsening of the effectiveness of the
shareholder oversight.
The Bank’s shareholders do not hold any individual or other specific rights. Each share of the Bank gives one vote at the General
Meeting.
Transactions with related parties are made in line with legal and tax requirements. The Bank has relevant internal policies in
place, ensuring that such transactions are made in the interest of the Bank, are transparent and comply with market standards.
The purpose of the Bank’s dividend policy is to ensure stable profit distribution in the long term and optimal capital structure of
the Bank and Santander Bank Polska Group. The Bank’s Management Board recommends payment of dividend by way of a
resolution, taking into account prudent management and capital surplus over the acceptable capital ratios, as well as laws and
recommendations and individual guidance issued by the supervisory authority (KNF).
Management
body
(Chapter 3)
The Bank is managed by the Management Board which is a collective body. All members of the Management Board meet the
criteria arising from law, best practice, regulatory recommendations and principles of corporate governance for supervised
institutions, giving assurance of proper performance of their duties. It is verified by the Nominations Committee and the
Supervisory Board as part of suitability assessment conducted before the appointment of the Management Board members and
periodically (at least annually).
The
Management Board is the only body with the authorisation and duty to manage the Bank’s operations. While pursuing the
adopted strategy, the Management Board is guided by safety of the Bank, applicable law, recommendations of supervisors and
internal regulations of the Bank.
Members of the Management Board are collectively responsible for decisions which are within its remit, irrespective of the
internal of responsibility for particular areas. The internal division of powers among Management Board members is transparent
and covers all operational areas of the Bank. It is based on the organisational structure and adopted in the form of the
Management Board resolution approved by the Supervisory Board.
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Chapter
Important aspects of application of the
Principles of Corporate Governance for Supervised Institutions by
Santander Bank Polska S.A.
Management
body
(Chapter 3)
None of the Management Board members conducts an activity which could lead to a conflict of interest or adversely affect his
or her reputation as a member of the Management Board. Functions performed on the Management Board are their main area
of professional activity, which ensures that they commit relevant time and effort to their responsibilities.
There is a succession plan for Management Board members, approved by the Supervisory Board, which enables their immediate
replacement.
Supervisory body
(Chapter 4)
The Bank is supervised by the Supervisory Board. All members of the Supervisory Board meet the criteria arising from law, best
practice, regulatory recommendations and principles of corporate governance for supervised institutions, giving assurance of
proper performance of their duties. It is verified by the Nominations Committee as part of suitability assessment conducted
before appointment of the Supervisory Board members and periodically (at least annually). The suitability assessment is
submitted to the General Meeting for approval.
The composition of the Supervisory Board ensures an appropriate number of persons who speak Polish (four out of ten members)
and have appropriate experience and knowledge of the Polish financial market (six out of ten members). The Supervisory Board
members who do not speak Polish take advantage of the assistance of interpreters and documentation translated into English.
Half of the members of the Supervisory Board (including all members of the Audit and Compliance Committee and its Chairman)
have independent status (the independence criteria include in particular no direct or indirect connections with the Bank, members
of the governing bodies, major shareholders and their connected entities).
As part of its tasks described in its Terms of Reference, the Audit and Compliance Committee monitors the performance of
financial audit activities and agrees the rules of conducting these activities, including their proposed plan. The co-operation of
the Audit and Compliance Committee and of the Supervisory Board with the external auditor is documented in the reports and
letters addressed to these bodies and in the minutes of their meetings.
Members of the Supervisory Board actively perform their functions and are sufficiently engaged in the work of the Supervisory
Board, as demonstrated e.g. by high attendance at the meetings in 2022. All members of the Supervisory Board give assurance
of proper performance of their duties. Specifically, all members of the Supervisory Board meet the criteria set out in Article 22aa
of the Banking Law related to the maximum number of functions performed.
The Supervisory Board ex
ercises ongoing oversight of the Bank’s operations and takes preventive and remedial measures. The
Supervisory Board receives reports on all areas of the Bank’s operations, including reports on the delivery of strategic objectives,
significant changes in t
he level of risk or materialisation of significant risks as well as on financial reporting and the accounting
policy.
There is a succession plan for Supervisory Board members which enables their immediate replacement.
Each year, the Supervisory Board as
sesses compliance with the Principles of Corporate Governance for Supervised Institutions.
A relevant statement in this respect is an element of the report on the Supervisory Board’s activities and is available on the
website at:
https://www.santander.pl/relacje-inwestorskie/dobre-praktyki.
Remuneration
policy
(Chapter 5)
The rules regarding remuneration for members of the Management Board and the Supervisory Board are set out in the
Remuneration Policy for Members of the Management Board of Santander Bank Polska S.A. and in the Remuneration Policy for
Members of the Supervisory Board of Santander Bank Polska Group approved by the General Meeting.
The remuneration policy takes into account the Bank’s financial position and payment of variable remuneration depends on the
achievement of specific financial and non-financial objectives by the Bank.
The Supervisory Board oversees the remuneration policy, including verification of the criteria for payment of variable components
of remuneration. The Supervisory Board submits an annual report on the remuneration policy to the General Meeting, indicating
whether the policy supports the Bank’s growth and security.
The remuneration of the Management Board members is set by the Supervisory Board and the remuneration of the Supervisory
Board members is set by the General Meeting, consid
ering the functions performed and the scale of the Bank’s business. The
Supervisory Board members who sit on committees are remunerated for additional tasks performed.
Remuneration regulations for key function holders (other than Management Board members) are adopted and supervised by
the Management Board.
Variable remuneration is awarded to the Management Board members based on the evaluation of their performance. Variable
remuneration for the Bank’s Management Board members and key managers depends on the assessment of the company’s
long-term financial position, long-term growth in shareholder value, stability of the company’s operations and risk appetite.
Members of the Bank’s Management Board do not receive remuneration for performing duties of supervisory board members
in the companies to which they have been designated by the Bank.
Disclosure policy
(Chapter 6)
The Bank has a disclosure policy in place, providing clear and reliable information to its shareholders, customers and other
stakeholders. The policy provides for active measures to be taken by the Bank to satisfy information requirements of its
stakeholde
rs. The Bank communicates with capital market participants in a way that is adjusted to the needs of specific groups.
The Bank’s disclosure policy is available on the Bank’s website:
https://www.santander.pl/relacje-inwestorskie/dokumenty-korporacyjne#dokument=5. Detailed information about its
assumptions is presented in the section on application of Best Practice for GPW Listed Companies 2021.
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Recommendation Z of the Polish Financial Supervision Authority (KNF) on corporate governance in
banks
Recommendation Z has been effective as of 1 January 2022. To ensure full compliance with the recommendation, the processes and corporate governance
rules were already reviewed and refined in 2021 both at the Bank and the Group level, including as part of the review or update of several dozen internal
regulations.
Recommendation Z is a set of best practice on internal governance for banks. It supplements, refines and develops existing laws in this respect as well as
KNF documents, in particular the Principles of Corporate Governance for Supervised Institutions described above.
The section below presents the main aspects of application of Recommendation Z by the Bank. Recommendation Z is available on the KNF’s website at:
https://www.knf.gov.pl/knf/pl/komponenty/img/Rekomendacja_Z_70998.pdf.
Chapter
Important aspects of application of the Principles of Corporate Governance for Supervised Institutions by Santander
Bank Polska S.A.
Promotional
activities and
client relations
(Chapter 7)
Customer focus is one of the Bank’s strategic priorities. The Bank’s Consumer Protection Policy establishes the criteria for
identification, organisation and protection of consumer rights in all activities of the Bank, including as part of the use of customer-
centric model of products and services, agreed rules for communication, complaints handling and application of predefined
control mechanisms.
When offering financial products and services, the Bank is focused on providing customers with accurate information and
meaningful explanations. Before entering into an agreement, customers receive necessary information about products and
services in due course. The Bank makes sure that documents provided to customers are made in plain language and are easy to
understand.
Customer complaints are handled by the Customer Care Office in accordance with clear and transparent rules. They are also
periodically analysed to identify causes and take remedial actions.
The Bank has formal rules in place with respect to marketing communication and advertising messages, ensuring that they are
accurate and not misleading and that they comply with applicable laws, principles of fair trade and good conduct.
Key internal
systems and
functions
(Chapter 8)
The Bank has an effective and appropriate internal control system in place that covers all levels of the Bank’s organisational
structure and is annually assessed by the Audit and Compliance Committee and the Supervisory Board.
The Bank ensures independenc
e of the internal audit function and the compliance function. The Head of the Internal Audit Area
adheres to international standards for the professional practice of internal auditing and reports directly to the President of the
Management Board, with a dotted reporting line to the Chairman of the Audit and Compliance Committee. The head of the
compliance function reports directly to the President of the Management Board. The Head of the Audit Area and the head of the
compliance function take part in all me
etings of the Management Board, the Audit and Compliance Committee, the Risk
Committee and the Supervisory Board.
The Bank’s risk management system is organised according to the nature, scale and complexity of the business, taking into
account the strateg
ic objectives, the risk management strategy and the risk appetite. It is assessed by the Risk Committee and
the Supervisory Board on an annual basis.
Execution of
rights resulting
from assets
acquired at
customer's risk
(Chapter 9)
When buying assets at
the customer’s risk, the Bank (Santander Brokerage Poland) executes the customer’s orders in line with
the terms and conditions and the general terms of providing services which include the principle of best execution (Best Execution
Policy). The decision-making process is duly documented.
Chapter of
Recommendation Z
Important aspects of application of Recommendation Z by Santander Bank Polska S.A.
A. General principles of internal
governance in the Bank
The Bank has a transparent, effective and legally compliant internal governance framework, defined in the Bank’s
Statutes and the hierarchical system of internal regulations, i.e. internal governance rules, operational models,
policies, terms of reference, procedures, guidelines and other internal regulations. The Bank also ensures
appropriate internal governance across the Group and exercises effective shareholder oversight of its subsidiaries.
The Bank developed the internal governance assessment methodology to support the Management Board and the
Supervisory Board in making that assessment and verifying if internal governance is adjusted to the changing
situation in the Bank and its external environment. The Supervisory Board assesses the Bank’s internal governance
and its implementation at least once a year.
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Chapter of
Recommendation Z
Important aspects of application of Recommendation Z by Santander Bank Polska S.A. (cont.)
B. Rules of procedure, powers,
duties and responsibilities of
the Supervisory Board
members, the Management
Board members and key
function holders in the Bank,
their mutual relations and
suitability
The Bank’s Management Board defines the purpose, long-term plans and strategic objectives of the Bank.
The Bank provides the Supervisory Board with access to information, resources and support necessary to perform
its tasks.
The Bank has regulations in place governing the appointment and removal of members of the Management Board
and the Supervisory Board. The composition of the governing bodies takes into account the ownership structure,
business profile and business plans of the Bank.
Members of the Supervisory Board and the Management Board and key function holders at the Bank meet the
suitability requirements, i.e. they have the knowledge, skills and experience required to perform their functions
and can commit sufficient time to the performance of their duties (they meet the minimum time commitment). At
least once a year, the Bank assessed the suitability of all the persons mentioned above.
The Supervisory Board and the Management Board perform their tasks based on written terms of reference. The
General Meeting is informed about any amendments to the Terms of Reference of the Supervisory Board. The
appropriateness of internal regulations on the Supervisory Board and the Management Board operations as well
as effectiveness of these bodies are subject to regular assessment (including with the participation of independent
advisors – the report on independent assessment of the Bank’s Supervisory Board by KPMG Advisory spółka z
ograniczoną odpowiedzialnością sp.k. was presented to the Extraordinary General Meeting on 12 January 2023) is
available at website address: santander.pl.
C. Rules of conduct and
conflicts of interest at the Bank
The Bank adheres to ethical standards set out in the General Code of Conduct. The Code regulates basic standards
of behaviour and is an important element of the corporate culture. When making business decisions, the Bank is
guided not only by legal or regulatory requirements but also by ethical standards adopted by the organisation.
Those values are the foundation for building an effective internal governance framework in the Bank (the General
Code of Conduct is available on the Bank’s Internal Relations site, “Corporate documents” tab:
link ). At least one a
year, the Management Board verifies and assesses the compliance with ethical standards and informs the
Supervisory Board about the results.
The Bank has effective and transparent rules for managing conflicts of interest. The internal regulations in this
respect cover in particular relations, agreements and transactions with connected entities and between the Bank
and:
the Bank’s customers;
the Bank’s shareholders;
members of the Supervisory Board and the Management Board;
the Bank’s employees;
material suppliers and business partners;
other connected parties than those listed above.
Price
s of transactions made between the Bank and its connected entities must be made on an arm’s length basis.
Transactions are made upon the verification of conflicts of interest (even potential ones). If the transaction with
related parties exceeds 5% of the Bank’s total assets, it must be approved by the Supervisory Board.
D. Outsourcing policy,
remuneration rules and
dividend policy of the Bank
The Bank has relevant internal regulations setting out the rules for outsourcing activities to third parties and
ensures strict supervision over the outsourced activities. Every six months, the Management Board reports to the
Supervisory Board on the assessment of contracts in terms of their correctness and compliance with law as well
as quality and timeliness of outsourced activities.
The remuneration rules in the Bank support in particular:
appropriate and effective management of risk and avoidance of excessive risk-taking beyond the maximum risk
appetite approved by the Supervisory Board;
implementation of the Bank management strategy and risk management strategy and prevention of conflicts of
interest.
The Bank’s dividend policy takes into account in particular the Bank’s current economic and financial standing,
macroeconomic environment, assumptions arising from internal regulations on the Bank management strategy
and risk management strategy, the KNF’s position on the dividend policy for financial institutions, limitations arising
from the Act on macroprudential supervision over the financial system and crisis
management in the financial
system, and the assumed dividend payout ratio. The policy is regularly updated as part of the review of the Bank’s
internal regulations.
E. Risk management
The Bank has the risk management system developed and implemented by the Management Board and covering
the Bank’s organisational units. It is based on three independent and complementary levels (lines of defence). The
risk management system at the Bank in particular:
takes into account the significance of the Bank’s exposure to risk;
covers all significant risk types (including environmental, social and management risks), including adequacy
and effectiveness and interdependencies between particular risk types;
enables effective decision making with regard to the execution of the Bank’s management strategy.
The risk culture principles applicable at the Bank cover the entire organisation and are aimed to raise the awareness
of risk management obligations of all employees. The risk culture is promoted through numerous training sessions
and initiatives.
The Bank’s product approval policy ensures compliance with regulatory requirements and takes into account
valuation models and the impact on the risk profile, capital adequacy, profitability and availability of resources. The
risk management unit and the compliance unit are involved in approving new products.
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Code of Banking Ethics
In addition to the foregoing corporate governance principles, Santander Bank Polska S.A. follows best sector practice established by the Polish Bank
Association (ZBP) in the Code of Banking Ethics adopted by the 25th General Meeting of ZBP dated 18 April 2013.
The Code of Banking Ethics is composed of two parts:
Code of Best Banking Practice – a set of rules to be followed by banks in their relations with customers, employees, business partners and competitors;
Bank Employee Code of Ethics – rules of conduct for bank employees.
The Code of Banking Ethics is available on the website of the KNF at: https://www.zbp.pl/dla-klientow/poradniki-i-rekomendacje.
Internal regulations
The general corporate governance principles are described in detail in the Bank’s internal regulations.
The Bank has the Group-Subsidiary Governance Model and Guidelines for Subsidiaries as well as Specific Corporate Frameworks in place. The above-
mentioned model sets out the basic rules to be followed by the Group in its relations with subsidiaries. It also includes guidelines on management and
supervisory bodies and corporate governance concerning key business, support and control functions.
The Internal Governance Rules of Santander Bank Polska S.A. define the key rules applied by the Bank with regard to the management system, organisational
structure, internal and external relations, including relations with shareholders and customers, internal supervision and key internal systems and functions,
as well as the rules of procedure, powers, obligations and responsibilities of members of the Supervisory Board and the Management Board and key function
holders and mutual relations between them. Furthermore, the Corporate Governance Rules of Santander Bank Polska Group define the organisation and
functioning of the Group entities as well as the rules for cooperation and intragroup reporting.
Irrespective of their role, all employees of the Bank and the Group must follow ethical principles and rules of conduct established in the General Code of
Conduct. It is a set of key principles and values reflecting the corporate culture of Santander Group, whose aim is to build trust and lasting loyalty of
employees, customers, shareholders and communities. These rules are strictly connected with the Bank’s business strategy and purpose, which is to help
people and businesses prosper in a Simple, Personal and Fair way.
In 2022, the Bank’s corporate behaviours were reshaped to speed up transformation of the organisation and make it more attractive for customers. The five
reshaped behaviours create an acronym: “T.E.A.M.S.” (Think customer, Embrace change, Act now, Move together, Speak up). They emphasise that people,
teams and customers are the top priority for the Bank. They are also used as performance review criteria.
The General Code of Conduct is complemented with the following regulations: Code of Conduct in the Securities Markets, Anti-Money Laundering Policy,
Anti-Corruption Programme, Conflict of Interest Prevention Policy.
The formal framework of the Bank’s corporate culture also includes the Sustainability Policy, which defines the organisation’s approach to sustainable
development in terms of responsible banking as well as the Bank’s voluntary ethical, social and environmental commitments. Details are provided in Chapter
XIV “The Statement on Non-financial Information for 2022”.
Chapter of
Recommendation Z
Important aspects of application of Recommendation Z by Santander Bank Polska S.A. (cont.)
F. Disclosures
The Bank has the disclosure strategy, whose main purpose is to provide market participants with reliable and
exhaustive information about the Bank’s risk profile. The strategy sets out the scope, frequency, time limits
and forms of disclosure and rules for approval and verification of information subject to disclosure, and
assessment whether market participants are provided with a comprehensive picture of the risk profile (the
strategy is available on the Bank’s Investor Relations site, “Corporate documents” tab).
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2. Issuer’s Securities
Structure of share capital
The table below presents the entities with significant holdings of Santander Bank Polska S.A. shares as at 31 December 2022 and 31 December 2021.
Shareholders with a stake of 5% and higher
Number of shares and voting rights % in the share capital and total voting power
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Banco Santander S.A. 68,880,774 68,880,774 67.41% 67.41%
Nationale-Nederlanden OFE
1)
5,123,581
5,123,581
5.01%
5.01%
Other shareholders 28,184,959 28,184,959 27.58% 27.58%
Total 102,189,314 102,189,314 100.00% 100.00%
1) Nationale-Nederlanden Otwarty Fundusz Emerytalny (OFE) is managed by Nationale-Nederlanden Powszechne Towarzystwo Emerytalne (PTE) S.A.
As at 31 December 2022, Banco Santander S.A. held a controlling stake of 67.41% in the registered capital of Santander Bank Polska S.A. and in the total
number of votes at the Bank’s General Meeting. The remaining shares were held by the minority shareholders, of which, according to the information held
by the Bank’s Management Board, only Nationale-Nederlanden Otwarty Fundusz Emerytalny (OFE) exceeded the 5% threshold in terms of share capital and
voting power.
According to the information held by the Management Board, the ownership structure did not change in the period from the end of the financial year of
2022 until the date the Annual Report of Santander Bank Polska Group for 2022 was authorised for issue.
Rights and restrictions attached to the issuer’s securities
The shares of Santander Bank Polska S.A. are ordinary bearer shares. Each share carries one vote at the General Meeting. The nominal value is PLN 10 per
share. All shares are fully paid.
The Bank did not issue any series of shares that would give their holders any special control rights towards the issuer or would limit their voting power or
other rights. Neither are there any restrictions on the transfer of title to the issuer’s shares.
Planned share buyback in relation to Incentive Plan VII
The Bank’s Annual General Meeting of 27 April 2022 established Incentive Plan VII and determined its terms and conditions. For the purpose of the Plan,
between 2023 and 2033 the Bank will buy back up to 2,331,000 shares in accordance with the revised remuneration strategy for key employees of the Bank
for 2022–2026, which introduced variable remuneration based on the Bank’s shares. In the case of participants of Incentive Plan VII who are material risk
takers within the meaning of Article 9ca(1a) of the Banking Law Act, the form of variable remuneration will be changed from phantom stock to the Bank’s
actual shares.
In order to fulfill the Bank’s obligations under Incentive Plan VII the Extraordinary General Meeting of 23 January 2023 authorised the Bank’s Management
Board to purchase (buy-back) the fully paid-for Bank’s own shares. In 2023, the Bank intends to buy back up to 207,000 own shares.
3. Amendment of the Statutes of Santander Bank Polska S.A.
Any amendments to the Statutes of Santander Bank Polska S.A. may be made by way of a resolution of the General Meeting and must be entered into the
register of entrepreneurs of the National Court Register in order to be valid. In accordance with the Banking Law, such amendments also require consent
from the Polish Financial Supervision Authority (KNF). In 2022, the Bank’s Statutes were not amended.
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4. Governing Bodies
General Meeting
Organisation and powers of the General Meeting
The Bank’s General Meeting is held as provided for in the Commercial Companies Code of 15 September 2000, the Bank’s Statutes and the Terms of
Reference of the General Meeting. The Statutes as well as the Terms of Reference are available on the Bank’s website:
https://www.santander.pl/relacje-inwestorskie/dokumenty-korporacyjne#dokument=6
The Annual General Meeting is held once a year by 30 June. The Extraordinary General Meeting is convened when it is required to take a decision on a specific
matter or when such a meeting is requested by eligible parties.
The General Meeting agrees on the issues within its remit, as defined by the above-mentioned laws and internal regulations. The Annual General Meeting:
reviews and approves the Management Board’s report on the Bank’s performance and the financial statements for the previous financial year;
adopts a resolution on profit distribution or loss coverage;
gives discharge to the members of the company’s governing bodies;
reviews and approves the financial statements of the Group within the meaning of the accounting regulations;
reviews other reports (e.g. report on the activities of the Supervisory Board).
The Annual General Meeting or the Extraordinary General Meeting may:
adopt a resolution to amend the Bank’s Statutes;
appoint members of the Supervisory Board;
remove members of the Management Board;
adopt a resolution to increase share capital;
decide on a merger with another company;
adopt a resolution on remuneration policies for members of the Management Board and the Supervisory Board;
set remuneration for members of the Supervisory Board.
Since 2011, the Bank’s shareholders may participate in the General Meeting using electronic communication channels (without the physical presence of
themselves or their proxies). This enables two-way real-time communication and makes it possible for shareholders to exercise their voting rights. The
Bank’s approach, applied and improved for years, proved particularly effective during the Covid-19 pandemic, when business travel and participation in the
General Meeting was significantly impeded.
Voting (including via electronic communication channels) takes place using an electronic voting system which returns the number of votes ensuring that
they correspond to the number of shares held, and in the case of a secret ballot – allows shareholders to remain anonymous. Shareholders may vote in
person or by proxy.
The General Meeting is broadcast live online to all interested parties and a recording is available on the Bank’s website dedicated to the General Meeting for
later review. The information about the planned broadcast is published at least seven days before the date of the General Meeting.
Draft resolutions, rationale, and other submissions to the General Meeting (assessments, reports and opinions of the Bank’s Supervisory Board) are
published on the Bank’s website early enough for the General Meeting participants to read them.
The representatives of the press, radio and TV may also attend the General Meeting.
General Meeting in 2022
On 27 April 2022, the Annual General Meeting of Santander Bank Polska S.A. was held. It approved the 2021 reports submitted by the Management Board
and the Supervisory Board, and the Supervisory Board’s assessments of the required areas. It also considered the Management Board's proposal regarding
the distribution of the profit for 2021 and the retained profit for 2019, approved the collective suitability assessment of the Supervisory Board and the
individual suitability assessment of the Supervisory Board members, granted discharge to the members of the Management Board and the Supervisory
Board, introduced five-year Incentive Plan VII, reviewed the report on remuneration of the Management Board and the Supervisory Board for 2021, set the
maximum ratio of variable to fixed remuneration for material risk takers, updated the Remuneration Policy for members of the Management Board of
Santander Bank Polska S.A. and the Remuneration Policy for members of the Supervisory Board of Santander Bank Polska S.A. and adopted the Best Practice
for GPW Listed Companies 2021.
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Shareholders' rights
The rights of shareholders of Santander Bank Polska S.A. are set out in the Terms of Reference of the Bank’s General Meeting in line with the Commercial
Companies Code.
The fundamental right of shareholders is to attend the General Meeting and vote (personally or through proxies).
Pursuant to the Terms of Reference of the General Meeting, shareholders or their proxies may participate in the General Meeting via electronic
communication channels (i.e. they may vote, make an objection, communicate with the meeting room, ask questions, etc.). Each share carries one vote at
the General Meeting.
Shareholders have certain rights with respect to the General Meeting, as specified in the Commercial Companies Code. In particular, they may:
object to adopting a resolution;
appeal against resolutions adopted by the General Meeting to the court (action for revocation or cancellation of a resolution);
request voting by secret ballot;
submit draft resolutions and propose amendments and supplements to draft resolutions concerning the business of the General Meeting by
the end of discussion of a particular agenda item;
ask questions and request information from the Management Board regarding issues on the General Meeting agenda, as provided for by the
Commercial Companies Code;
apply for the role of the Chairman of the General Meeting or propose a candidate for that role;
challenge decisions made by the Chairman of the General Meeting;
give a brief presentation and a short response to questions concerning individual items of the agenda.
Shareholders may also:
request that a list of shareholders be emailed to them free-of-charge to the indicated address, inspect the list of shareholders available in
the Bank’s Management Board office and request a copy of the list at their own expense;
demand copies of requests included in the General Meeting agenda one week before the General Meeting;
have access to the General Meeting minutes and request copies of resolutions confirmed by the Bank’s Management Board as true copies.
The Management Board members, acting within their powers and in accordance with the act on trading in financial instruments, have an obligation to
respond to shareholders’ questions which are relevant to the business of the General Meeting (for important reasons only – the response must be given in
writing within two weeks of the request). The Management Board refuses to provide the requested information if it might:
be prejudicial to the company or its subsidiaries or affiliates due to disclosure of technical, trade or organisational secret;
cause a member of the Management Board to face criminal, civil or administrative liability.
Shareholders may request the Bank to provide information concerning the Bank outside of the General Meeting. In such a case, the Management Board may
provide the requested information in writing, unless it might be prejudicial to the Bank, its subsidiary or affiliate, in particular due to disclosure of the
company’s technical, trade or organisational secret.
If the Bank provides information outside of the General Meeting, it publishes a current report with answers to the questions asked.
Supervisory Board
Rules of the procedure of the Supervisory Board
The Supervisory Board of Santander Bank Polska S.A. operates under the Banking Law of 29 August 1997, the Commercial Companies Code of 15 September
2000, the Bank’s Statutes and the Terms of Reference of the Supervisory Board, available on the Bank’s website.
Composition, rules for appointment and removal of Supervisory Board members
The Supervisory Board consists of at least five members appointed for a joint three-year term of office. The Supervisory Board members, including the
Chairman of the Supervisory Board, are appointed and removed by the General Meeting. The Management Board informs the KNF about the composition of
the Supervisory Board. The term of office of the Supervisory Board member expires no later than on the date of the General Meeting held to approve the
financial statements for the last full financial year in which the member served on the Supervisory Board. It also expires as a result of the member’s death,
resignation or removal. The term of office of the Supervisory Board member who was appointed before the end of the term of the Supervisory Board expires
at the same time as those of the remaining members.
Pursuant to the Bank’s Statutes, at least half of the Supervisory Board members should be of independent status.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
138
Powers of the Supervisory Board
The Supervisory Board exercises ongoing oversight of the Bank’s operations. Apart from the rights and obligations provided for by the law and the Statutes,
the Supervisory Board also has the following powers:
to assess the financial statements in terms of their consistency with the books of account, documents and factual circumstances;
to approve the Bank’s annual and long-term development and financial plans, strategy and rules of prudential and stable management established
by the Management Board;
to approve the Management Board’s proposals as regards setting up and winding up the Bank’s units abroad;
to give consent to equity investments to be made by the Bank if:
the value of such investment exceeds the PLN equivalent of EUR 4,000,000;
the value of such investment exceeds EUR 400,000 and, concurrently, as a result of such investment, the Bank’s share in another entity will
be equal to, exceed or will be reduced below 20% of the votes at the General Meeting;
with the exception of underwriting agreements, the total exposure of the Bank under such agreements does not exceed one tenth of the total own
funds of the Bank;
to give consent to buy, sell or encumber non-current assets (as defined in the Accounting Act), in particular real property, if the value of a non-current
asset exceeds the PLN equivalent of EUR 4,000,000, except for foreclosure of real property by the Bank as a mortgagee, as a result of an unsuccessful
auction held as part of enforcement proceedings or foreclosure of another fixed asset or securities by the Bank, as a creditor secured by a registered
pledge pursuant to the provisions of the Act on registered pledge and the register of pledges, or as a creditor secured by a transfer of title to secure
loan repayment pursuant to the provisions of the Banking Law;
to review the Management Board reports and proposals concerning profit distribution and loss coverage;
to set remuneration for the President and members of the Management Board;
to conclude agreements on behalf of the Bank with members of the Management Board (where authorised to do so), including employment
contracts and management contracts (the Supervisory Board may appoint its Chairman or another member of the Supervisory Board to make
statements of will in this respect);
to adopt the Terms of Reference of the Bank’s Management Board and other terms of reference and rules provided for by the Statutes or law, and to
approve the Bank’s Organisational Regulations and Policy on internal control system;
to appoint an entity authorised to audit the Bank’s financial statements and to conduct financial audits in the Bank;
to request consent from the KNF to appoint two Management Board members, including the President of the Management Board;
to inform the KNF about:
other Management Board members and each change in the Management Board composition;
compliance of the Management Board members with the criteria set out in the Banking Law, after performing the compliance assessment;
approving and changing the distribution of duties within the Management Board;
including the information on the Management Board member in charge of material risk in the Bank’s operations;
to appoint and remove the President and other members of the Management Board;
to suspend the Management Board members for important reasons and delegate the Supervisory Board members to perform the role of the
suspended Management Board members;
to present the Annual General Meeting with a brief assessment of the Bank’s situation, including the assessment of the internal control system and
the material risk management system;
to approve the policies developed by the Management Board: risk management policy, risk appetite, internal capital assessment and maintenance
policy, internal control policy, remuneration policy, for each category of material risk takers;
to approve the distribution of duties within the Management Board as decided by the Management Board;
to review the matters to be considered by the General Meeting.
The Supervisory Board takes decisions in the form of resolutions which are adopted by absolute majority in open voting. The Supervisory Board adopts
resolutions in a secret ballot in the cases stipulated by law. The Supervisory Board meetings are held as and when required and at least three times in any
financial year. The Supervisory Board members convene in a single location, or in different locations using remote communication channels.
Selected forms of communication with the shareholders
Each year, the Supervisory Board prepares and presents to the Annual General Meeting a report on its activities in the previous year, including a summary of
operations of the Supervisory Board committees, a report from the audit of the annual financial statements of the Group and the Management Board’s
proposal of profit distribution, as well as assessment of the Group’s activities (including internal control, risk management and compliance systems and
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
139
internal audit function), corporate governance practices, remuneration policy and sponsorship and corporate giving policy. The above report of the
Supervisory Board is published on the Bank’s website at least 26 days before the General Meeting.
Suitability assessment
All Supervisory Board members are subject to individual suitability assessment (initial and ongoing). The Supervisory Board is also subject to collective
suitability assessment. The foregoing processes are delivered in accordance with the Policy on suitability assessment of Supervisory Board members in
Santander Bank Polska S.A. developed in line with the Joint Guidelines of the European Securities and Markets Authority and the European Banking Authority
no. EBA/GL/2021/06, Guidelines of the European Banking Authority no. EBA/GL/2021/05 on internal governance, taking into account applicable laws, in
particular the Banking Law Act and the Commercial Companies Code. The assessment is conducted according to the Suitability assessment methodology
for members of governing bodies of supervised entities published by the KNF. The individual and collective suitability assessments are conducted at least
once a year and as required under the above-mentioned policy, e.g. when candidates are proposed for the Supervisory Board positions (in this case, the
assessment should be generally performed before the formal appointment), when membership of the Supervisory Board changes or when the Bank’s
business model is significantly modified. The Supervisory Board presents the results of the suitability assessment at the next General Meeting.
Composition of the Supervisory Board
The table below presents the composition of the Supervisory Board of Santander Bank Polska S.A. as at 31 December 2022 and 31 December 2021.
Role in the Supervisory Board No.
Composition as at
31.12.2022
No.
Composition as at
31.12.2021
Chairman of the Supervisory Board: 1. Antonio Escámez Torres 1. Antonio Escámez Torres
Deputy Chairman of the Supervisory Board: 2. José Luis de Mora 2. José Luis de Mora
Members of the Supervisory Board:
3.
Dominika Bettman 3. Dominika Bettman
4. José García Cantera 4. José García Cantera
5. Danuta Dąbrowska 5. Danuta Dąbrowska
6. Isabel Guerreiro 6. Isabel Guerreiro
7.
David Hexter
7.
David Hexter
8.
John Power
8.
John Power
9.
Jerzy Surma
9.
Jerzy Surma
10.
Marynika Woroszylska-Sapieha
10.
Marynika Woroszylska-Sapieha
In 2022, the Nominations Committee of the Supervisory Board of Santander Bank Polska S.A. assessed the individual suitability of the Supervisory Board
members as well as collective suitability of the Supervisory Board of Santander Bank Polska S.A. in accordance with the applicable regulations and the
Suitability assessment methodology for members of governing bodies of supervised entities published by the KNF. These were ongoing annual suitability
assessments. The Annual General Meeting held on 27 April 2022 approved the results of the suitability assessments.
In 2022, the composition of the Supervisory Board did not change.
Pursuant to the Bank’s Statutes, Terms of Reference of the Supervisory Board and Terms of Reference of the Audit and Compliance Committee, half of the
members of the Supervisory Board meet the independence criteria The following members of the Supervisory Board held independent status: Dominika
Bettman, Danuta Dąbrowska, David Hexter, Jerzy Surma and Marynika Woroszylska-Sapieha. Each of the above persons made a relevant statement which
is subject to suitability assessment. The results of individual and collective suitability assessments of the Supervisory Board are approved by the Supervisory
Board in the form of a resolution, and then approved by the General Meeting.
In 2022, the members of the Supervisory Board committed sufficient time to perform their functions. 23 Supervisory Board meetings were held during the
year at which 153 resolutions were passed. The average attendance of the Supervisory Board members was 96.1%.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including Report on Santander Bank Polska S.A. Performance)
140
The table below presents the attendance of Supervisory Board members:
Role in the Supervisory Board No.
Composition as at
31.12.2022
Attendance at
the meetings
in 2022
No.
Composition as at
31.12.2021
Attendance at
the meetings
in 2021
Chairman of the Supervisory Board: 1. Antonio Escámez Torres
23/23 100% 1. Antonio Escámez Torres
17/17 100%
Deputy Chairman of the Supervisory
Board:
2. José Luis de Mora 21/23 91% 2. José Luis de Mora 19/23 83%
Members of the Supervisory Board:
3.
Dominika Bettman
23/23
100%
3.
Dominika Bettman
23/23
100%
4. José García Cantera 21/23 91% 4. José García Cantera 20/23 87%
5. Danuta Dąbrowska 22/23 96% 5. Danuta Dąbrowska 22/23 96%
6. Isabel Guerreiro 20/23 87% 6. Isabel Guerreiro 21/23 91%
7.
David Hexter
23/23
100%
7.
David Hexter
22/23
96%
8.
John Power
22/23
96%
8.
John Power
23/23
100%
9.
Jerzy Surma
23/23
100%
9.
Jerzy Surma
21/23
91%
10.
Marynika Woroszylska-
Sapieha
23/23 100% 10.
Marynika Woroszylska-
Sapieha
21/23 91%
Members of the Bank’s Supervisory Board have various academic background, extensive expertise and considerable professional experience in banking and
business, including finance, accounting, financial analysis, IT law and economics. Individual competencies and experience of the Supervisory Board members
guarantee due performance of the obligations entrusted with them, while their complementarity ensures effective discharge of collective supervisory
obligations. The diversity of the Supervisory Board in terms of gender, age, geographical provenance and length of service with the Bank is presented in Part
7 “Diversity Policy” (Section “Diversity policy regarding the governing bodies”).
The information about the academic background and professional experience of the Bank’s Supervisory Board members is presented below. It is also
published on the Bank’s website at: https://www.santander.pl/relacje-inwestorskie/informacje-o-spolce/wladze-banku.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including the Report on Santander Bank Polska S.A. Performance)
141
Members of Supervisory Board of Santander Bank Polska S.A.
Antonio Escámez Torres
Chairman of the Supervisory Board
Academic background:
Law degree from Complutense University of Madrid
Professional background:
1973–1999: Banco Central (including the role of the Chairman and Chief Executive Officer with responsibility for the North
American operations of Banco Central, Member of the Board of Directors, Member of the Executive Committee and Member
of the Management Committee)
since 1999: Santander Group (including the role of the Member of the Board of Directors, Member of the Executive
Committee, Member of the Management Committee, Member of the Banco Santander International Advisory Board and
Member of Technology and International Committees)
2009–2018: Chairman of Spain India Council Foundation
2007–2018: Chairman of Banco Santander Foundation
1994–2018: Vice Chairman of Attijariwafa Bank
since 1999: Santander Consumer Finance S.A.: Chairman of the Board of Directors (1999–2020) and Non-Executive Director
(since 2020)
José Luis de Mora
Deputy Chairman of the Supervisory Board
Academic background:
Graduate of ICADE University (Law and Economics)
MBA degree from Boston College
Chartered Financial Analyst
Professional background:
1992–1994: Corporate Finance at Bank of Spain and Daiwa Securities
1994–1998: Analyst with Kleinwort Benson (London), responsible for Spain’s equity and banking market
1998–2003: Analyst with Merrill Lynch (London), responsible for pan-European banks, including Spanish, French and Italian
banks
since 2003: Santander Group (currently: Senior Vice President supervising financial planning and corporate development,
responsible for planning an organic growth strategy, corporate acquisitions and Group’s expansion)
2012–2015: Member of the Board of Sovereign Bank NA
2012–2013: Member of the Board of Santander Consumer USA
since 2015: Member of the Board of Santander Consumer Finance S.A.
since 2011: Deputy Chairman of the Supervisory Board of Santander Bank Polska S.A.
Dominika Bettman
Independent Member of the Supervisory
Board
Academic background:
Graduate of Warsaw School of Economics, Foreign Trade Faculty, and IESE
Advanced Management Programme in Barcelona
Professional background:
Employed for approx. 25 years with Siemens Polska:
1995–1997: Logistics Manager, Siemens Nixdorf Polska
1997–2002: Senior Commercial Manager, Siemens sp. z o.o.
2002–2007: Finance Director at Siemens IT (until 2004) and Siemens Telecommunication (from 2004)
2007–2009: Member of the Management Board and Chief Financial Officer, Nokia Siemens Network
2009–2018: Chief Financial Officer, Siemens sp. z o.o.
2018–2021: President of the Management Board of Siemens sp. z o.o.
2019–2021: Head of Digital Industries at Siemens Polska
2015–2019: Member of the Supervisory Board of Eurobank S.A.
since 2021: President of the Management Board of Microsoft Polska sp. z o.o.
since 2020: Member of the Supervisory Board of Santander Bank Polska S.A.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including the Report on Santander Bank Polska S.A. Performance)
142
José García Cantera
Member of the Supervisory Board
Academic background:
MBA degree from IE Business School
Professional background:
until 2003: Latin America stock analyst; senior executive positions at Salomon Brothers-Citigroup
2003: Senior Vice President in charge of Global Banking and Markets Division of Banesto
2006–2012: CEO of Banesto
2012–2015: Head of Global Banking and Markets of Santander Group
since 2015: Senior Vice President, Chief Financial Officer and Head of the Finance Division of Banco Santander S.A.
Chairman of the Board of Santander de Titulizaciones SGFT and Santander Investment S.A.
since 2015: Member of the Supervisory Board of Santander Bank Polska S.A.
Danuta Dąbrowska
Independent Member of the Supervisory
Board
Academic background:
MA degree from the University of Horticulture and Food Industry in Budapest
since 1999: Member of the Association of Chartered Certified Accountants
(ACCA)
Completed the Advanced Strategic Management Programme at IMD,
Switzerland, and “Best-In-Retail” Programme at Harvard Business School
Founding Member of FINEXA (Polish Association for Finance Directors)
Professional background:
1991–1993: Financial Assistant, Arthur Andersen & Co., Warsaw
1993–1997: Audit Manager, Coopers & Lybrand
1997–2001: Head of Financial and Business Control Department of Ericsson, Warsaw and Stockholm
2002–2003: CFO of TP Internet (France Telecom Group)
2004–2008: Member of the Board, CFO (for Eastern Europe and Middle East) at ECCO Sko A/S
2009–2019: Member of the Board, Vice President, CFO for Eastern Europe, Pandora Jewelry CEE
2012–2017: Member of the Supervisory Board of Herkules S.A.
2016–2018: Member of the Board, Vice President, CFO for Middle East and Africa in Panmeas Jewellery LLC (Pandora)
since 2014: Member of the Supervisory Board of Santander Bank Polska S.A.
2018–2021: Member of the Audit Committee at the Polish Council of Shopping Centres (Polska Rada Centrów Handlowych)
since 2019: Member of the Supervisory Board and Chairman of the Audit Committee at Budimex S.A.
since 2022: Co-founder of Grupa Oryx sp. z o.o.
Isabel Guerreiro
Member of the Supervisory Board
Academic background:
MEng degree in Computer Software Engineering from Instituto Superior
Técnico in Lisbon and MBA degree from INSEAD
Graduate of Strategic Finance in Banking at Wharton Business School
Completed a number of specialist courses for senior executives, e.g. Design
Thinking BootCamp at Stanford University, and Driving Digital and Social
Strategy at Harvard University
Professional background:
1992–1994: Lecturer in Computer Science at Instituto Superior Técnico in Lisbon
1995–2003: Programmer, System Analyst, Project Manager and Senior Manager at Novabase Sistemas de Informação S.A.
Since 2005, employed with Banco Santander Totta S.A., Portugal:
2005–2006: Sub-Director of Retail Banking
2006–2008: Member of the Retail Banking Office
2009–2013: Head of Branch Network Dynamics
2013–2014: Head of Wholesale Strategy
2014–2018: Head of Digital Transformation in charge of traditional and digital channels
Board Member in charge of Digitalisation and Transformation (since January 2019)
since 2019: Member of the Supervisory Board of Santander Bank Polska S.A.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including the Report on Santander Bank Polska S.A. Performance)
143
David R. Hexter
Independent Member of the Supervisory
Board
Academic background:
Graduate of Oxford University (Philosophy, Politics and Economics) and
University College London (Legal and Political Theory)
MBA degree from Cranfield School of Management
MPhil degree from Birkbeck College London and PhD degree from Queen
Mary University of London
Professional background:
1970–1992: Executive positions at Citibank N.A. in Europe and the USA, including:
1986: Senior Credit Officer
1989–1992: Division Executive for Central and Eastern Europe
1992–2004: European Bank for Reconstruction and Development:
1992–1996: Head of the Financial Institutions Department
1996–2004: Deputy Vice President of the Banking Department; Chairman of the Equity Investment Committee,
responsible for approval of EBRD loans and projects
since 2004: Independent Director and Consultant to a number of commercial firms, banks and equity funds operating in
Russia, Kazakhstan, Denmark, Vietnam and Greece
since 2013: Member of the Supervisory Board of Santander Bank Polska S.A.
since 2016: Member of the Board of Piraeus Bank
John Power
Member of the Supervisory Board
Academic background:
Financial Consultant
1992: Fellow of Institute of Bankers
1997: Fellow of Association of Chartered Certified Accountants
1998: Fellow of Institute of Chartered Secretaries and Administrators
Professional background:
Chairman of Lelewela Enterprises Ltd. operating the Roche-Bobois franchise network in Ireland
General Director at Allied Irish Banks plc, key person in the development of the Capital Markets
2008–2011: Member of the Board and Chairman of the Audit and Risk Committee of Bulgarian American Credit Bank
Member of the Supervisory Board and Chairman of the Audit Committee of BZ WBK Asset Management S.A. (2009–2016),
Dom Maklerski BZ WBK S.A. (2009–2014), Santander TFI S.A. (2016–2018)
Member of the Supervisory Board of Santander Securities S.A. (2018–2019) and Santander Leasing S.A. (since 2018)
since 2002: Member of the Supervisory Board of Santander Bank Polska S.A.
Jerzy Surma
Independent Member of the Supervisory
Board
Academic background:
Graduate of the Wrocław University of Technology (Computer Science and
Management)
PhD in Economic Science from the Wrocław University of Economics
Completed the IFP programme at IESE Business School and Executive
Programme at MIT Sloan School of Management
Professional background:
1999–2002: Head of the Software Development Department of T-Systems Polska
2002–2006: Director in charge of Business Consulting in IMG Information Management Polska responsible for the
implementation of Business Intelligence systems, re-engineering business processes, IT advisory
since 2006: Academic at Warsaw School of Economics (currently: Associate Professor in Collegium of Economic Analysis,
2018–2019: Head of Post-graduate Business Intelligence and Cybersecurity Management Studies)
2008–2017: Member of the Supervisory Board of Kęty Group
2011–2014: Visiting Scholar at Harvard Business School and University of Massachusetts
since 2012: Member of the Supervisory Board of Santander Bank Polska S.A.
2018–2019: Head of the National Cryptology Centre (Narodowe Centrum Kryptologii)
Management Board Report on Santander Bank Polska Group Performance in 2022
(including the Report on Santander Bank Polska S.A. Performance)
144
Marynika Woroszylska-Sapieha
Independent Member of the Supervisory
Board
Academic background:
Graduate of the Medical University of Warsaw and INSEAD International
Executive Programme in Fontainebleau
Member of INSEAD Alumni Club; awarded the National Order of the Legion of
Honour
Professional background:
Many years of service with the Institute of Cardiology in Anin as part of the team responsible for introducing new techniques
in the field of interventional cardiology
Started her professional career in the pharmaceutical industry in 1994: until 1996 with Infa Biocom, since 1998 with Sanofi
Group (President of the Management Board and General Manager of the branch in Poland in 2004–2015)
since 2016: Advisor to the President of the Management Board of Polpharma Group
since 2017: Member of the Supervisory Board of Polpharma Group
2005–
2012: Member of the Management Board of INFARMA (Employers’ Union of Innovative Pharmaceutical Companies) in
charge of activities related to the code of ethics and the transparency directive, protection of intellectual property rights and
promotion of innovation in Poland
2012–2014: President of the Management Board of INFARMA
since 2014: Member of the Supervisory Board of Santander Bank Polska S.A.
Supervisory Board committees
The Supervisory Board may establish committees and designate individuals responsible for managing the work of such committees. These committees are
designed to facilitate the current activities of the Supervisory Board by preparing draft Supervisory Board recommendations and decisions with regard to
their own motions or the motions presented by the Management Board.
The following Supervisory Board committees operate in Santander Bank Polska S.A.: Audit and Compliance Committee, Risk Committee, Nominations
Committee and Remuneration Committee. The responsibilities of these committees are set out in their respective terms of reference introduced by virtue
of the Supervisory Board resolutions.
The table below presents the membership of the Supervisory Board committees and attendance at the their meetings.
Composition of the Supervisory Board committees and attendance of their members
at the meetings in 2022 and 2021
Role in the Supervisory Board No.
Members
of the Supervisory Board
as at 31.12.2022
Audit and
Compliance
Committee
Risk Committee
Nominations
Committee
Remuneration
Committee
2022 2021 2022 2021 2022 2021 2022 2021
Chairman of the Supervisory Board:
1.
Antonio Escámez Torres
1)
Deputy Chairman of the Supervisory
Board:
2. José Luis de Mora
4/4 6/6
6/6 4/5
Members of the Supervisory Board:
3.
Dominika Bettman
2)
8/8
9/9
6/6
7/7
6/6
5/5
4.
José García Cantera
5. Danuta Dąbrowska
8/8
9/9
4/4
6/6
6/6 5/5
6.
Isabel Guerreiro
7. David Hexter
3)
7/8
9/9
5/6
7/7
4/4
1/1
8. John Power
5/6
7/7
9.
Jerzy Surma
8/8
9/9
6/6
7/7
4/4
6/6
10.
Marynika Woroszylska-
Sapieha
8/8
9/9
4/4 6/6
6/6 5/5
Number of meetings in a given year
8
9
6
7
4
6
6
5
Chairman
Member
1) Antonio Escámez Torres has been the Chairman of the Supervisory Board since 22 March 2021. He replaced Gerry Byrne, who attended all meetings of the Nominations Committee (2) and the
Remuneration Committee (3) held in 2021 until his resignation.
2) Dominika Bettman has been a member of the Supervisory Board and the above-mentioned Committees since 22 June 2020 and was present at all meetings of those Committees held after that
date.
3) David Hexter has been a member of the Nominations Committee since 29 September 2021 and was present at all meetings of that Committee held after that date.
The operations of the Supervisory Board committees in the last year will be presented in the report on activities of the Supervisory Board in 2022, which will
be submitted to the next General Meeting of Santander Bank Polska S.A. and published in due course before that meeting.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including the Report on Santander Bank Polska S.A. Performance)
145
Audit and Compliance Committee
The
Audit and Compliance Committee
supports the Supervisory Board in fulfilment of its oversight obligations towards shareholders and other
stakeholders in terms of:
the quality and integrity of the accounting policies, financial statements and disclosure practices;
compliance of the Bank’s business with laws and internal regulations;
independence and effectiveness of activities undertaken by internal and external auditors;
internal control system and risk management system.
The Committee also establishes procedures for auditor selection by the Bank (the main assumptions are included in the Policy of Auditor
Selection at Santander Bank Polska S.A. presented in Section 9 “External Auditor”, Subsection “Selection of the external auditor”), develops the
auditor services policy, as well as prepares and submits recommendations to the Supervisory Board regarding appointment, reappointment and
removal of the external auditor in accordance with the applicable laws and the Policy of Auditor Selection at Santander Bank Polska S.A. The
Committee assesses the independence of the statutory auditor, gives consent for such auditor to render other permitted non-audit services at
the Bank and monitors financial audits.
An important role of the Committee is also to support the Supervisory Board in overseeing the compliance function and compliance risk
management. To that end, the Committee conducts regular reviews of key compliance matters and changes in the regulatory environment, and
assesses measures taken by the Management Board in this respect.
In 2022, the Committee exercised ongoing oversight of the Bank’s financial reporting and reviewed key controls, particular financial, operational, and
regulatory compliance controls. As part of monitoring of the internal audit function, compliance function and control function, the Committee obtained
information required to assess the effectiveness and efficiency of the internal control system and presented a relevant opinion to the Supervisory Board in
this respect, noting that the system is adequate and effective in the context of the assessment criteria established by the Management Board and approved
by the Supervisory Board. Likewise, the Committee deemed the risk management system of the Bank to be adequate and effective.
The Committee conducted an ongoing review of matters within its remit, including regulatory, compliance, corporate governance, bancassurance and anti-
money laundering issues, ICM/ SOX certification, Respect and Dignity Policy (breaches reported in confidence by employees) and other supervisory matters.
In 2022, the Committee regularly supervised the activities of the Internal Audit Area and positively assessed its operations in 2021, concluding that the Area
was independent of other functions and that its operations were appropriate, effective and efficient.
Pursuant to its Terms of Reference, the Audit and Compliance Committee should convene at least four times per year at dates corresponding to the reporting
and audit cycle. Additional meetings are held when necessary. In 2022, eight Committee meetings were held.
In 2022, the Committee issued a recommendation to the Supervisory Board to appoint PricewaterhouseCoopers Polska spółka z ograniczoną
odpowiedzialnością Audyt sp.k. (formerly: PricewaterhouseCoopers Sp. z o.o.) to review and audit the financial statements of the Bank and Santander Bank
Polska Group for 2023. The recommendation met all the required criteria and was presented to the Supervisory Board as part of the selection procedure
carried out in accordance with the applicable principles (reappointment of the auditor). The process included, among other things, the assessment of PwC’s
independence and the quality of services provided to date.
Furthermore, in 2022 the Committee gave consent to PwC and other entities from its network to provide permitted non-audit services. Before the relevant
recommendations were presented to the Supervisory Board, the independence of the auditor had been verified with a positive outcome. Detailed
information about the foregoing services is presented in Section 9 “External Auditor”, Subsection: “Permitted non-audit services”.
Pursuant to the Act of 11 May 2017 on statutory auditors, audit firms and public oversight, the majority of audit committee members should meet the
statutory independence criteria, which are also specified in the Bank’s Statutes. In accordance with the Principles of Corporate Governance for Supervised
Institutions, particularly members of the audit committee should have an independent status. In 2022, all members of the Audit and Compliance Committee
met those formal criteria. It means that no Committee member has been a member of the Management Board of the Bank or its connected entity over the
last five years, has not been an employee of the Bank or its connected entity over the last three years, has not received additional substantial remuneration
from the Bank or its connected entity except for remuneration for performing their role on the Supervisory Board, is not a shareholder of the parent entity
and does not represent it, has not had actual and material connections with a shareholder holding at least 5% of total voting power at the Bank’s General
Meeting.
Furthermore, all members of the Audit and Compliance Committee have independence of mind understood as an ability to make their own sound, objective
and independent decisions and judgments when performing their functions and responsibilities. Such behavioural skills are assessed at least once a year as
part of assessment of suitability of individual Supervisory Board members conducted in accordance with the Suitability assessment methodology for
members of governing bodies of supervised entities published by the KNF.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including the Report on Santander Bank Polska S.A. Performance)
146
The following Committee members have knowledge and skills in compliance with Audit Committee Best Practices 2021:
Danuta Dąbrowska: ACCA certificate and membership since 1999.
Dominika Bettman: degree in economics and extensive professional experience gained in previous positions, including as CFO at companies from
Siemens Group.
David Hexter: degree in economics, professional experience gained in executive positions in financial institutions.
The following Committee members have knowledge and skills in the area of banking:
David Hexter: competencies gained in executive positions in the banking and financial services sectors, including in Citibank and the EBRD.
Dominika Bettman: competencies gained as the Member of the Supervisory Board of Eurobank S.A.
Apart from the Committee members, the regular attendees also include representatives of the Bank’s Auditor, the Vice President of the Management Board
in charge of the Risk Management Division, the member of the Management Board in charge of the Financial Accounting and Control Division, the member
of the Management Board in charge of the Financial Management Division, the Head of the Internal Audit Area and the Bank Director in charge of the Legal
and Compliance Division. Other members of the Management Board and executives are also invited to attend the Committee meetings to present reports
and discuss issues related to the areas under their management.
Risk Committee
The
Risk Committee
is specifically responsible for:
issuing opinions on the Bank’s current and future risk propensity;
issuing opinions on the risk management strategy developed by the Bank's Management Board and supervising its delivery;
supporting the Supervisory Board in overseeing the implementation of the risk management strategy by the senior management;
checking if the prices of liabilities and assets offered to customers match the Bank’s business model and risk management
strategy, and if not – making a proposal to the Management Board to ensure adequacy of asset and liability prices in relation to
different risk types;
issuing opinions in relation to appointment and removal of the Management Board member in charge of risk management and
opinions on his/her annual objectives and their delivery.
The Risk Committee convenes at least four times per year at dates corresponding to the reporting and audit cycle. Additional meetings are held when
necessary. In 2022, six Committee meetings were held.
Nominations Committee
The
Nominations Committee
supports the Supervisory Board in performing its tasks, issues recommendations on the appointment and removal
of members of the Supervisory Board, Management Board and other key function holders by the Bank’s relevant bodies, and contributes to the
performance of the Bank's duties with respect to the assessment of the suitability of members of the Supervisory Board, Management Board and
key function holders
The Nominations Committee holds meetings four times a year, as per the schedule agreed upon at the beginning of the year. Additional meetings are held
when necessary. In 2022, four Committee meetings were held.
Remuneration Committee
The
Remuneration Committee
supports the Supervisory Board in performing its tasks concerning remuneration of members of the Bank’s
governing bodies and key function holders, reviews and monito
rs the Remuneration Policy and supports the General Meeting, the Supervisory
Board and the Management Board in developing and implementing that Policy.
The Committee holds regular meetings four times a year, as per the schedule agreed upon at the beginning of the year. Additional meetings are held when
necessary. In 2022, six Committee meetings were held.
Management Board Report on Santander Bank Polska Group Performance in 2022
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147
Management Board
Appointment and removal of executives
Members of the Management Board of Santander Bank Polska S.A. are appointed and removed in accordance with the Commercial Companies Code,
Banking Law and the Bank’s Statutes.
The Bank’s Management Board consists of at least three persons (including the Management Board President) appointed by the Supervisory Board for a
joint three-year term of office. At least half of the Management Board members (including the Management Board President) are required to speak Polish,
have a university degree, be permanent residents of Poland, have good knowledge of the Polish banking sector and experience of the Polish market to
manage a Polish banking institution. Two Management Board members, including the Management Board President, are appointed with the approval of
the KNF. Management Board members may be removed by the Supervisory Board or the General Meeting at any time.
The term of office of the Management Board member expires no later than on the date of the General Meeting held to approve the financial statements for
the last full financial year in which the member served on the Management Board. It also expires as a result of the member's death, resignation or removal.
The term of office of the Management Board member who was appointed before the end of the term of the Management Board expires at the same time
as those of the remaining members.
All Management Board members are subject to individual suitability assessment (initial and ongoing). The Management Board is also subject to collective
suitability assessment. The foregoing processes are delivered in accordance with the Policy on suitability assessment of Management Board members and
key function holders in Santander Bank Polska S.A. developed in line with the Joint Guidelines of the European Securities and Markets Authority and the
European Banking Authority no. EBA/GL/2021/06, Regulation of the Minister of Finance of 7 May 2018 on specific tasks of the nomination committees in
significant banks, and other applicable laws, in particular the Banking Law Act and the Commercial Companies Code. The assessment is also conducted
according to the Suitability assessment methodology for members of governing bodies of supervised entities published by the KNF. The individual and
collective suitability assessments are conducted at least once a year and as required under the above-mentioned policy, e.g. when candidates are proposed
for the Management Board positions (in this case, the assessment should be generally performed before the formal appointment), when membership of
the Management Board changes or when the Bank’s business model is significantly modified.
Since 1 January 2023, there has been a new member of the Management Board in charge of the Financial Accounting and Control Division. On 31 May 2022,
Carlos Polaino Izquierdo resigned from this position, effective as of 1 January 2023. On 13 December 2022, the Supervisory Board appointed María Elena
Lanciego Pérez in his place. The individual and collective suitability assessments confirmed that each member of the Management Board and the
Management Board as a whole have appropriate knowledge and skills and meet all the suitability criteria to perform their functions.
Pursuant to Article 22b(1) of the Banking Law Act, the Management Board President and the Management Board member in charge of material risk
management are appointed with the approval of the KNF. Such approval was required in relation to the appointment of Michał Gajewski as the President of
the Management Board and Andrzej Burliga as the Vice President of the Management Board in charge of the Risk Management Division and the Business
Intelligence Area.
Powers of executives
The Management Board of Santander Bank Polska S.A. manages and represents the Bank.
The Management Board takes decisions to raise obligations or transfer assets where the total value for one entity exceeds 5% of the Bank’s own funds. It
may also, by way of resolution, delegate its powers to take such decisions to other committees or persons at the Bank. The Management Board members
run the Bank’s affairs jointly, and in particular: define the Bank’s mission, set long-term action plans and strategic objectives, prepare assumptions for the
Bank’s business and financial plans, approve proposed plans and monitor their performance, regularly report to the Supervisory Board on the Bank’s position
in the scope and at the dates agreed with the Supervisory Board, appoint permanent or ad hoc committees and designate individuals responsible for
managing the work of such committees. The committees are composed of both Management Board members and persons from outside the Management
Board.
Management Board members acting severally do not have any specific powers and cannot take decisions on issuing or redeeming shares.
Standing committees operating at the Bank include:
• Assets and Liabilities Committee (ALCO)
• Credit Policy Forum for Retail Credit Portfolios
• Credit Policy Forum for SME Credit Portfolios
• Credit Policy Forum for Business and Corporate
Credit Portfolios
• Provisions Committee
• Operational Risk Management Committee
(ORMCO)
• Disclosure Committee
• Information Management Committee
• Risk Management Committee
• Model Risk Management Committee
• Marketing Forum
• Regulatory and Reputational Risk Committee
• Anti-Money Laundering and Terrorism Financing
Committee
• Procurement and Investment Committee
• Credit Committee
• Local Marketing and Monitoring Committee
• Public Policy Committee
• Restructuring Committee
• Responsible Banking and Corporate Culture
Committee
• Capital Committee
• Suppliers Panel
• Capital Stress Test Forum
• Investment Advisory Committee
• Risk Control Committee
• Special Situations Management Committees
(Gold, Silver, Bronze Group)
• General Compliance Committee
Management Board Report on Santander Bank Polska Group Performance in 2022
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148
Rules of procedure of the Management Board
The Management Board operations are primarily governed by Banking Law, the Commercial Companies Code, the Bank’s Statutes and the Terms of
Reference of the Management Board, available on the Bank’s website.
According to the Bank’s Statutes, the following individuals are authorised to represent and bind the Bank: a) the Management Board President acting
individually, and b) two members of the Management Board acting jointly, or a member of the Management Board acting jointly with a commercial
representative (prokurent), or two commercial representatives acting jointly. Attorneys may be appointed and authorised to act individually or jointly with
any of the persons indicated in b) or with another appointed and authorised attorney.
The Management Board deals with all issues which have not been restricted to the remit of the General Meeting or the Supervisory Board. The Management
Board takes decisions in the form of resolutions which are adopted by absolute majority in open voting.
The Management Board adopts resolutions in a secret ballot in cases stipulated by law. Management Board meetings are held as required. The
Management Board members convene in a single location, or in different locations using remote communication channels.
The table below presents the composition of the Management Board of Santander Bank Polska S.A. as at 31 December 2022 and 31 December 2021 and
the roles and responsibilities of its members. The Bank’s organisational structure is presented in Part 1 of Chapter X “Organisational and Infrastructure
Development”.
Role in the
Management
Board
No.
Composition as at
31.12.2022
Reporting area as at 31.12.2022
No.
Composition as at
31.12.2021
Reporting area as at 31.12.2021
President of the
Management
Board:
1.
Michał Gajewski
Units reporting directly to the President:
1) Legal and Compliance Division
2) Units outside the divisional structure:
Internal Audit Area, Corporate
Communication and Marketing Area,
Corporate Governance Department,
Classified Data Protection Unit
1. Michał Gajewski
Units reporting directly to the President:
1) Legal and Compliance Division
2) Units outside the divisional structure:
Internal Audit Area, Corporate
Communication and Marketing Area, Strategy
and Transformation Area, Corporate
Governance Department, Classified Data
Protection Unit
Vice Presidents
of the
Management
Board:
2.
Andrzej Burliga
1) Risk Management Division
2) Business Intelligence Area (unit
outside the divisional structure)
2. Andrzej Burliga
1) Risk Management Division
2) Business Intelligence Area (unit outside the
divisional structure)
3.
Juan de Porras
Aguirre
Corporate and Investment Banking
Division
3. Juan de Porras Aguirre Corporate and Investment Banking Division
4. Arkadiusz Przybył Retail Banking Division 4. Arkadiusz Przybył Retail Banking Division
Members of the
Management
Board:
5.
Lech Gałkowski Business and Corporate Banking Division 5.
Lech Gałkowski
Business and Corporate Banking Division
6.
Patryk Nowakowski
Digital Transformation Division
6.
Patryk Nowakowski
Digital Transformation Division
7.
Maciej Reluga
Financial Management Division
7.
Maciej Reluga
Financial Management Division
8.
Carlos Polaino
Izquierdo
Financial Accounting and Control Division 8.
Carlos Polaino
Izquierdo
Financial Accounting and Control Division
9. Dorota Strojkowska Business Partnership Division 9. Dorota Strojkowska Business Partnership Division
All members sitting on the Bank’s Management Board as at 31 December 2022 were appointed by the Supervisory Board for a joint three-year term of office
on 22 March 2021, except for Lech Gałkowski, who joined the Management Board on 26 May 2021. In 2022, the composition of the Management Board did
not change compared with 31 December 2021. As a result of the resignation of Carlos Polaino Izquierdo, María Elena Lanciego Pérez was appointed a
member of the Bank’s Management Board in charge of the Financial Accounting and Control Division, effective as of 1 January 2023.
The professional activities of the Management Board members focused on the performance of obligations connected with their role in the Management
Board. The Management Board members complied with the limitation of the positions held with other companies, as stipulated in Article 22aa of the Banking
Law Act. The succession of the Management Board members and the continued delivery of the business processes at the senior management levels is
ensured by the Nomination and Succession Planning Policy for Management Board Members and Key Function Holders at Santander Bank Polska S.A. and
the succession plans in place.
The information about the academic background and professional experience of the Bank’s Management Board members is presented below. It is also
published on the Bank’s website at: https://www.santander.pl/relacje-inwestorskie/informacje-o-spolce/wladze-banku
.
Management Board Report on Santander Bank Polska Group Performance in 2022
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149
Management Board Members of Santander Bank Polska S.A.
Michał Gajewski
President of the Management Board
Academic background:
Legal counsel
Graduate of the Adam Mickiewicz University in Poznań, Northwestern
University in Chicago and London Business School
Professional background:
1992–2008: WBK Group and BZ WBK Group (including the role of BZ WBK Management Board Member in charge of Retail
Banking)
2008–2011: Vice President of the Management Board of BGŻ S.A. in charge of Retail, SME and Corporate Banking
2012–2015: Macroregional Director in the Retail Banking Division of Bank Millennium S.A.
2015: Member of the Management Board of Bank Millennium S.A. in charge of the Retail Banking Division
since 2016: President of the Management Board of Santander Bank Polska S.A.
Andrzej Burliga
Vice President of the Management Board
Risk Management Division
Academic background:
Graduate of the Faculty of Theoretical Mathematics at Wrocław
University
Completed programmes in management and risk management (e.g.
INSEAD International Executives Development Programme, BZ WBK
Development Programme for Executives, LMC Consulting – Lilley
Moncrieff Taylor)
Member of Professional Risk Managers’ International Association
(PRMIA)
Professional background:
1995–2001: Treasury Department of Bank Zachodni S.A. (including the role of the Head of the Department)
2001–2006: Head of the Risk Management Department at Bank Zachodni WBK S.A.
2007–2017: Member of the Management Board
of Bank Zachodni WBK S.A.
since 2017: Vice President of the Management Board of Santander Bank Polska S.A. in charge of the Risk Management
Division
Juan de Porras
Vice President of the Management Board
Corporate and Investment Banking Division
Academic background:
Graduate of Universidad de Granada (Law)
MBA degree from Escuela Superior de Administración y Dirección de
Empresas in Barcelona
Completed the Investment Banking Executive Programme at
Northwestern University in Chicago
Professional background:
1989–1998: Commerzbank and Lloyds Bank (credit risk)
1997–2004: Société Générale (manager of relationships with telecommunication and energy companies, Deputy Head of
the Madrid-based Corporate & Investment Banking)
2004–2005: Rabobank in Madrid (responsible for building the Spanish energy and telecom sector portfolio)
2005–2007: Senior Director at Royal Bank of Scotland in Madrid, responsible for the energy, oil and gas sectors
since 2007: Managing Director of Global Banking & Markets at Banco Santander S.A.
2011–2017: Member of the Management Board of Bank Zachodni WBK S.A.
since 2017: Vice President of the Management Board of Santander Bank Polska S.A. in charge of the Corporate and
Investment Banking Division
Management Board Report on Santander Bank Polska Group Performance in 2022
(including the Report on Santander Bank Polska S.A. Performance)
150
Arkadiusz Przybył
Vice President of the Management Board
Retail Banking Division
Academic background:
Graduate of the University of Łódź (Management, Finance and Banking)
MBA degree from INSEAD, France
Professional background:
1997–2005: Engagement Manager
at McKinsey & Company in Warsaw
2005–2008: Head of Retail Banking at GE Money for Central and Eastern Europe, Zurich/Paris Headquarters
2009–2010: Executive Director at GE Money Bank (Latvia) and GE Money (Latvia)
2011–2012: Business Director in the Headquarters of Santander Consumer Finance in Madrid, responsible for strategy
development, market integration and company acquisition projects
2012–2017: President of the Management Board of Santander Consumer Bank S.A. in Wrocław
2017: Member of the Management Board of Santander Bank Polska S.A.
since 2018: Vice President of the Management Board of Santander Bank Polska S.A. in charge of the Retail Banking Division
Lech Gałkowski
Member of the Management Board
Business and Corporate Banking Division
Academic background:
Graduate of the SGH Warsaw School of Economics (Finance and
Banking)
Holder of scholarship at Staffordshire University Business School
Professional background:
1996–1998: Senior Auditor responsible for the banking sector, Coopers & Lybrand sp. z o.o.
1998–2003: Senior Banker responsible for the automotive, consumer and healthcare sectors, ABN AMRO Bank (Polska) S.A.
2003–2007: CFO and commercial representative, Volvo Auto Polska sp. z o.o.
2008–2012: Member of the Management Board in charge of Corporate and Investment Banking, RBS Bank (Polska) S.A.
(formerly ABN AMRO Bank (Polska) S.A.)
since 2010: Chairman of the Supervisory Board of Telestrada S.A.
2012–2021: Head of the Corporate and Investment Banking Department (until 2018) and – following an organisational
change – Head of the Investment Banking Department of Santander Bank Polska S.A. responsible for development and
implementation of a customer relationship strategy
since 2021: Member of the Management Board of Santander Bank Polska S.A. in charge of the Business and Corporate
Banking Division
Patryk Nowakowski
Member of the Management Board
Digital Transformation Division
Academic background:
MSc in Economics from the Poznań University of Economics (IT and
Econometrics)
Professional background:
2004–2007: gained international experience as Business Intelligence Consultant at Business & Decision AG Zurich, and then
as Associate Director in UBS AG and Senior Principal Consultant in Oracle
since 2002 (except the period above): employed with Bank Zachodni WBK S.A., initially as IT Systems Development Specialist
2008–2016: in charge of the Management Information Team, Information Management Competence Centre, Systems
Development Area and CRM and Business Development Area
2016–2019: Chief Information Officer, including from 2017 to 2018 he managed acquisition of the demerged part of
Deutsche Bank Polska S.A. and completed the legal and operational merger as well as migration of products held by retail
and business customers of the acquired bank to the systems of Santander Bank Polska S.A.
since 2019: Member of the Management Board of Santander Bank Polska S.A. in charge of the Digital Transformation
Division
Management Board Report on Santander Bank Polska Group Performance in 2022
(including the Report on Santander Bank Polska S.A. Performance)
151
María Elena Lanciego Pérez
Member of the Management Board
Financial Accounting and Control Division
Academic background:
Graduate of University of Salamanca, Spain (Economics and Business
Administration)
Dual MBA (EU&USA) of Deusto University Business School and Adolfo
Ibanez School of Economics
Completed a number of specialist courses for senior executives at
Stanford and IESE (Board members program at IESE Business School)
CFA ESG certificate
Professional background:
Control and management functions in International Private Banking and Internal Audit (1993–2001)
Vice President of Compliance and Risk Management in Banco Santander International Miami (2001–2002)
Member of the Board of Integritas Trust S.A. and Banco Santander Suisse S.A. (2002–2008)
Financial Control Director in Santander Group Global Banking and Markets Division (2008–2010)
Advisor to the CEO of Santander Group (2010–2013)
Head of Select and Affluent Business in Banco Santander (2013–2016)
Director at Santander Consulting Beijing Co Ltd and Senior Advisor for International Control and Compliance at Banco
Santander S.A. Consumer Area (BOBCFC) (2017–2019)
Vice President in Banco Santander S.A. responsible for Strategic and Corporate Development (2019-2022)
since 2022: Member of the Management Board of Santander Bank Polska S.A. in charge of the Financial Accounting and
Control Division
Maciej Reluga
Member of the Management Board
Financial Management Division
Academic background:
Graduate of the faculty of Economic Science at Warsaw University;
completed the Finance Management Programme at the University of
Namur (Belgium)
Studied at ICAN Institute’s Strategic Leadership Academy and
completed Senior Management Programme in Banking at Swiss
Finance Institute
Attended a number of programmes and training courses (including at
the University of Cambridge)
Professional background:
1996–1998: Analyst at NBP
1998–2002: Economist at ING Bank Śląski and ING Barings
since 2002: Chief Economist at Bank Zachodni WBK S.A.
since 2017: Member of the Management Board of Santander Bank Polska S.A. in charge of the Financial Management
Division
Dorota Strojkowska
Member of the Management Board
Business Partnership Division
Academic background:
Graduate of Polish and Classical Philology at the Adam Mickiewicz
University in Poznań
Postgraduate of Poznań University of Economics and Business and
Kozminski University
Completed a number of training courses on HR management,
coaching, strategic planning, financial management and business
psychology, including Development of Managerial Skills at Nottingham
Trent University and Advanced Leadership Programme at ICAN
Institute, Harvard Business Review
Professional background:
2005–2012: Team Manager in the CRM and Sales Support Department of Bank Zachodni WBK S.A.
2012–2013: Retail Banking Business Model Coherency Director at Bank Zachodni WBK S.A.
2013–2016: Head of the Organisational Effectiveness Area at Bank Zachodni WBK S.A.
from April to December 2016: Head of the HR Division at PKO BP
since 2017: Member of the Management Board of Santander Bank Polska S.A. in charge of the Business Partnership Division
Management Board Report on Santander Bank Polska Group Performance in 2022
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152
5. Remuneration Policy
Remuneration of Management and Supervisory Board members
Remuneration of Supervisory Board members
Internal regulations concerning remuneration for supervisory function holders
As at 31 December 2022, the remuneration for Supervisory Board members was set in accordance with the Remuneration Policy for Members of the
Supervisory Board of Santander Bank Polska S.A., which was adopted by virtue of Resolution no. 31 of the Annual General Meeting of 27 April 2022. The
foregoing policy complies with EU regulations, Polish laws and corporate governance principles for supervised entities.
Remuneration principles
The remuneration of members of the Supervisory Board of Santander Bank Polska S.A. is set by the Bank’s General Meeting, depending on their function
performed on the Supervisory Board, membership of the Supervisory Board Committees and the related additional tasks performed. The General Meeting
may authorise the Supervisory Board to determine additional remuneration for the Supervisory Board members entrusted with ongoing individual oversight.
The remuneration for Supervisory Board members is paid in cash only.
No additional discretionary pension benefits or early retirement programmes are envisaged for Supervisory Board members.
Amount of remuneration
The amount of remuneration of Supervisory Board members is specified in Resolution no. 50 of the Annual General Meeting of 22 July 2020 which was
amended with Resolution no. 30 of the Annual General Meeting of 22 March 2021. Members of the Supervisory Board are paid monthly remuneration for
performing their role on the Supervisory Board and additional remuneration for participating in each of the meetings of the Supervisory Board Committees
on which they sit. Three members of the Supervisory Board related to Santander Group did not receive remuneration: José García Cantera, Isabel Guerreiro
and José Luis de Mora.
The table below presents the remuneration paid to members of the Supervisory Board of Santander Bank Polska S.A. in 2021 and 2022.
2022 2021
Name and surname
Position
on the Supervisory Board
Period
Amount
(PLN k)
Period
Amount
(PLN k)
Antonio Escámez Torres
Chairman 01.01.2022-31.12.2022
338 22.03.2021-31.12.2021 227
José Luis de Mora
1)
Deputy Chairman 01.01.2022-31.12.2022
- 01.01.2021-31.12.2021 -
Dominika Bettman Member 01.01.2022-31.12.2022
296 01.01.2021-31.12.2021 303
José García Cantera
1)
Member 01.01.2022-31.12.2022
- 01.01.2021-31.12.2021 -
Danuta Dąbrowska Member 01.01.2022-31.12.2022
258 01.01.2021-31.12.2021 283
Isabel Guerreiro
1)
Member 01.01.2022-31.12.2022
- 01.01.2021-31.12.2021 -
David Hexter Member 01.01.2022-31.12.2022
358 01.01.2021-31.12.2021 346
John Power Member 01.01.2022-31.12.2022
288 01.01.2021-31.12.2021 307
Jerzy Surma Member 01.01.2022-31.12.2022
298 01.01.2021-31.12.2021 329
Marynika Woroszylska-Sapieha Member 01.01.2022-31.12.2022
253 01.01.2021-31.12.2021 282
John Power additionally received PLN 98k in 2022 (PLN 90k in 2021) for his membership of the Supervisory Boards of the Bank’s subsidiaries.
Remuneration of Management Board members
Internal regulations concerning remuneration for executives
The rules regarding fixed and variable components of remuneration for Management Board members are set out in the Remuneration Policy for Members
of the Management Board of Santander Bank Polska S.A. introduced by virtue of Supervisory Board Resolution no. 31 of 27 April 2022 and in the
Remuneration Policy of Santander Bank Polska Group updated on 8 December 2022.
1) José García Cantera, José Luis de Mora and Isabel Guerreiro did not receive remuneration for their membership of the Supervisory Board.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including the Report on Santander Bank Polska S.A. Performance)
153
Agreements between Santander Bank Polska S.A. and its executives
The Management Board members signed employment contracts with Santander Bank Polska S.A. for the current term of office. The contractual terms and
conditions comply with general laws and internal regulations, in particular with the Remuneration Policy for Members of the Management Board of
Santander Bank Polska S.A. The Management Board members also signed agreements prohibiting competitive activity after termination of their
employment with Santander Bank Polska S.A.
A Management Board member who is not appointed for a new term of office or is removed from the Board is entitled to one-off severance pay. It does not
apply to Management Board members who accept a new role in the Bank, are removed due to gross violation of their obligations or standards of integrity,
culture and professional conduct, resign or are not granted discharge.
Santander Bank Polska S.A. does not have an obligation to pay pension or other similar benefits to former members of the Management Board or the
Supervisory Board.
Fixed remuneration
Pursuant to the Statutes of Santander Bank Polska S.A. and the aforementioned regulations, the remuneration of the President and members of the
Management Board is set by the Supervisory Board, taking into account recommendations of the Remuneration Committee. The Committee defines the
remuneration policy for Management Board members and individual terms and conditions as part of remuneration packages for each Management Board
member.
Fixed remuneration includes base salary, additional benefits specified in the internal awarding regulations (e.g. health insurance) as well as severance pay
and compensation arising from external regulations.
When determining the amount of the base salary of a Management Board member, the following criteria are specifically taken into account: function
performed, scope of organisational responsibility at the Bank, qualifications and professional experience and market competitiveness of the remuneration
offered. No additional discretionary pension benefits or early retirement programmes are envisaged for Management Board members.
The table below presents the total remuneration and additional benefits received by members of the Management Board of Santander Bank Polska S.A. in
2022 and 2021 for their membership of the Management Board.
2022
2021
Name and surname
Position on the
Management
Board
Period
Remuner-
ation
(PLN k)
Additional
benefits
2)
(PLN k)
Period
Remuner-
ation
(PLN k)
Additional
benefits
2)
(PLN k)
Michał Gajewski President
01.01.2021-31.12.2022
3,150
214
01.01.2021-31.12.2021
2,817 174
Andrzej Burliga Vice President
01.01.2021-31.12.2022
1,344
160
01.01.2021-31.12.2021
1,296 131
Juan de Porras Aguirre Vice President
01.01.2021-31.12.2022
1,582 570
01.01.2021-31.12.2021
1,029 701
Arkadiusz Przybył Vice President
01.01.2021-31.12.2022
1,536
125
01.01.2021-31.12.2021
1,320 101
Lech Gałkowski Member
01.01.2021-31.12.2022
1,320 145
26.05.2021-31.12.2021
637 62
Patryk Nowakowski Member
01.01.2022-31.12.2022
1,392
115
01.01.2021-31.12.2021
1,053 101
Carlos Polaino Izquierdo
1)
Member
01.01.2021-31.12.2022
1,492
802
01.01.2021-31.12.2021
1,300 630
Maciej Reluga Member
01.01.2021-31.12.2022
1,176
149
01.01.2021-31.12.2021
1,053 127
Dorota Strojkowska Member
01.01.2021-31.12.2022
1,260
125
01.01.2021-31.12.2021
1,076 101
No Management Board member received remuneration for their membership in the governing bodies of the subsidiaries or associates in any of the analysed
periods.
Variable remuneration
The general rules for determining variable remuneration for Management Board members of Santander Bank Polska S.A. are laid down in the Remuneration
Policy of Santander Bank Polska Group, and defined in more detail in the Remuneration Policy for Members of the Management Board of Santander Bank
Polska Group.
The annual bonus of a Management Board member depends on the annual base bonus, the availability of the bonus pool and the overall evaluation of the
Management Board member’s performance.
Variable remuneration is awarded to Management Board members based on the evaluation of their performance. The selection of metrics (as well as their
granularity) for individual Management Board members takes into account their individual duties and responsibilities in the process of managing the Bank.
1)
Changes to the composition of the Management Board in 2022 are presented above in Section “Management Board”.
2) Additional benefits received by Management Board members include, among other things, life insurance cover without pension option and, in the case of Juan de Porras Aguirre and Carlos Polaino
Izquierdo, also medical cover, accommodation and travel expenses.
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Based on the metrics and evaluation of performance against the objectives under WHAT, HOW and RISK categories as well as relevant weights assigned to
them, the rating is established and adjusted by a multiplier, which arises, among other things, from the assessment of performance against a three-year
horizon, as proposed by the Supervisory Board Remuneration Committee and approved by the Supervisory Board.
The base bonus is set on the basis of an individual scope of responsibility, taking into account market conditions and other criteria. Each year, the
Remuneration Committee reviews the performance of each Management Board member in line with a separate policy and a detailed procedure for
evaluating the performance of Management Board members. The final decision on the amount of the annual bonus for Management Board members is
taken by the Supervisory Board based on the Remuneration Committee’s recommendation.
The level of the annual bonus is determined on the basis of global quantitative, qualitative and risk indicators as well as potential adjustments in respect of
unexpected events. The indicators are set in accordance with the Bank’s financial plan and strategic goals and take into account risk management
requirements. The Bank’s performance used to define variable components of remuneration considers the cost of credit, the cost of capital, and liquidity risk
in a long-term perspective.
The total variable remuneration paid to Management Board members and material risk takers for a given calendar year cannot exceed 100% of the total
fixed remuneration paid for that year. However, in exceptional cases, this limit may be increased up to 200% of fixed remuneration subject to the approval
of the Bank’s General Meeting.
Variable remuneration is awarded in accordance with bonus regulations and paid in cash or financial instruments (shares or related instruments such as
phantom stock). The remuneration paid in financial instruments may not be lower than 50% of the total amount of variable remuneration. Payment of min.
40% of variable remuneration (min. 60% in the case of variable remuneration exceeding an equivalent of EUR 1m) is conditional and deferred for the period
of at least four years (five years in the case of Management Board members and senior executives). It is paid in equal annual instalments in arrears during
the deferral period, unless there are reasons for reduction or non-payment.
The Management Board members may also receive variable remuneration provided for in the long-term incentive plans designed to reinforce the connection
between the long-term financial effectiveness of the Bank, expectations of shareholders and awards for executives while adhering to market standards.
Subject to certain criteria, the plans enable their participants to take up a certain number of the Bank's shares.
The table below presents variable remuneration paid to Management Board members in 2022 and 2021.
Name and surname
Position on the
Management Board
2022 2021
Period
Variable
remuneration paid
2)
(PLN k)
Period
Variable
remuneration paid
2)
(PLN k)
Michał Gajewski President 01.01.2022-31.12.2022
2,721
01.01.2021-31.12.2021
1,713
Andrzej Burliga Vice President 01.01.2022-22.12.2022
924
01.01.2021-22.12.2021
617
Juan de Porras Aguirre Vice President 01.01.2022-31.12.2022
1,745
01.01.2021-31.12.2021
1,008
Arkadiusz Przybył Vice President 01.01.2022-31.12.2022
1,241
01.01.2021-31.12.2021
744
Lech Gałkowski
Member 01.01.2022-31.12.2022
344
26.05.2021-31.12.2021
nd.
Patryk Nowakowski Member 01.01.2022-31.12.2022
709
01.01.2021-31.12.2021
294
Carlos Polaino Izquierdo
1)
Member 01.01.2022-31.12.2022
1,138
01.01.2021-31.12.2021
616
Maciej Reluga Member 01.01.2022-31.12.2022
896
01.01.2021-31.12.2021
558
Dorota Strojkowska Member 01.01.2022-31.12.2022
926
01.01.2021-31.12.2021
533
Pursuant to the remuneration system applicable at the Bank, Management Board members may be conditionally entitled to a bonus for 2022 which would
be paid in part in 2023 and thereafter, if specific criteria are met. As at the date of these financial statements, the Supervisory Board did not take a decision
in this respect.
Incentive Plan VII
In 2022, Santander Bank Polska S.A. introduced Incentive Plan VII under Resolution no. 30 of the Annual General Meeting. The plan is addressed to the
employees of the Bank and its subsidiaries who significantly contribute to growth in the value of the organisation. Its purpose is to motivate the participants
to achieve business and qualitative goals in line with the Group’s long-term strategy and to provide an instrument that strengthens the employees’
relationship with the organisation and encourages them to act in its long-term interest.
The plan will obligatorily cover all persons with an identified employee status in Santander Bank Polska Group. The list of other key participants will be
determined by the Management Board members and approved by the Bank’s Supervisory Board. Those employees will participate in the plan on a voluntary
basis.
1)
Changes to the composition of the Management Board in 2022 are presented above in Section “Management Board”.
2)
Variable remuneration paid in 2022 includes deferred part for years 2018-2021 which was conditional and deferred in time, and non-deferred part of the award paid in 2022.
3)
Variable remuneration paid in 2021 includes deferred part for years 2020, 2019, 2018 and 2017 which was conditional and deferred in time, and non-deferred part of the award paid in 2021.
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The participants will be entitled to variable remuneration in the form of the Bank’s shares provided that they meet the terms and conditions stipulated in
the Participation Agreement and the Resolution. To that end, Santander Bank Polska S.A. will buy back up to 2,331,000 shares from 1 January 2023 until 31
December 2033.
The plan covers the period of five years (2022–2026). However, as the payment of variable remuneration is deferred, the share buyback and allocation will
be completed by 2033.
Bank’s shares held by Supervisory and Management Board members
As at the release dates of the financial reports for the periods ended 31 December 2022, 30 September 2022 and 31 December 2021, no member of the
Supervisory Board held any shares of Santander Bank Polska S.A.
The table below shows shares of Santander Bank Polska S.A. held by Management Board members as at the release dates of the above-mentioned reports.
22.02.2023 26.10.2022 23.02.2022
Management Board members as at the end of the
reporting period and the relelase date of the annual report
Number of shares of Santander Bank Polska S.A.
Michał Gajewski 4,795
4,795 4,795
Andrzej Burliga 1,884
1,884 1,884
Lech Gałkowski
951
951 951
María Elena Lanciego Pérez
1)
(as of 1 January 2023)
Patryk Nowakowski
2)
-
- -
Carlos Polaino Izquierdo
2) 3)
(till 31 December 2022) -
- 3,126
Juan de Porras Aguirre 3,379
3,379 3,379
Arkadiusz Przybył 2,999
2,999 2,999
Maciej Reluga 2,301
2,301 2,301
Dorota Strojkowska 2,732
2,732 2,732
Total
19,041
19,041
22,167
1) Ms. María Elena Lanciego Pérez took up the position of Member of the Bank's Management Board as of January 1, 2023 and as at the date of publication o
f the annual report for 2022, she did not hold any shares of
Santander Bank Polska S.A.
2) Mr. Patryk Nowakowski and Mr. Carlos Polaino Izquierdo sold all of their shares of Santander Bank Polska S.A. on 24 November 2021 and 10 March 2022 respectively.
3) Mr. Carlos Polaino Izquierdo resigned from the position of Member of the Bank's Management Board as of December 31, 2022 and as at that date he did not hold any shares of Santander Bank Polska S.A.
Relationship between the remuneration paid to Management Board members and key managers and
long-term business and financial objectives of the company
The remuneration policy of Santander Bank Polska S.A., which regulates variable components of remuneration paid to material risk takers (identified
employees), has an overall objective to incentivise employees to meet short-, medium- and long-term objectives of the Group, exceed plans, and achieve
progress in individual performance.
The criteria that affect the type and amount of fixed and variable remuneration paid to Management Board members were defined so as to support the
delivery of the Bank’s business strategy, long-term interests and stability, in particular by:
setting annual objectives in accordance with the Bank’s financial and strategic plans, and assessing the performance of individual Management
Board members;
applying a flexible remuneration policy by maintaining a proper balance between fixed and variable components;
awarding part of remuneration in the form of financial instruments and deferring payment of variable remuneration for a minimum of five years
ensuring that the Bank’s financial performance has influence on remuneration in the long-term perspective;
applying malus clauses, which ensures proper and effective risk management and discourages excessive taking of risk which might materialise in the
deferral period;
awarding the variable components of remuneration only if it does not represent any threat to the solid capital base of the Bank or the Group in the
long-term horizon;
a possibility to set up incentive plans to support delivery of the Bank’s strategy in the long-term perspective.
Variable remuneration of identified persons (including Management Board members) depends on the assessment of their individual performance and on
the results of their organisational unit, area under management and the Bank. The individual performance is assessed in accordance with the standard
procedure, based on financial and non-financial criteria.
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The performance review covers the period of minimum three years and takes into account the Bank’s economic cycle and business risk. At least 50% of
variable remuneration is paid in the form of phantom stock based on the Bank’s shares. In addition, payment of min. 40% of variable remuneration is deferred
for the period of at least four years (five years in the case of Management Board members and senior executives). It is paid in equal annual instalments in
arrears during the deferral period, unless there are reasons for reduction or non-payment.
Santander Bank Polska Group has a formal process in place for identification, assessment and ex-post review of performance resulting in the adjustment of
the variable remuneration for identified employees (material risk takers) and other employees subject to those regulations.
The variable components of remuneration for the identified employees responsible for risk management, compliance with the law, internal regulations,
and market and internal audit standards are reviewed and monitored by the Remuneration Committee of the Supervisory Board. Variable remuneration of
the heads of the compliance and internal audit areas is approved by the Supervisory Board.
The Management Board members and key employees may receive awards under long-term incentive plans established to retain the above-mentioned staff
and improve the efficiency and value of the organisation. The plans set out in detail the criteria that must be met by Management Board members and other
participants for an award to be granted, and the right of the Bank’s Supervisory Board to change the terms and conditions of the incentive plan, e.g. in the
event of any substantial deterioration of the financial standing or risk profile.
6. Other Transactions with the Bank’s executives
Loans and advances
Loans and advances granted by Santander Bank Polska S.A. to the Bank’s executives and their relatives totalled PLN 4,799k as at 31 December 2022 vs
PLN 5,996k as at 31 December 2021. These facilities were sanctioned on regular terms.
Deposits placed with Santander Bank Polska S.A. by the Bank’s executives and their relatives totalled PLN 10,197k as at 31 December 2022 (PLN 14,014k as
at 31 December 2021).
Accruals for employee benefits
The pension and disability accrual and the accrual for unused holidays of executives totalled PLN 966k in 2022 (PLN 660k in 2021) and were recognised in
accruals for retirement benefits and accruals for unused holidays of employees disclosed in Note 55 to the Consolidated Financial Statements of Santander
Bank Polska Group for 2022.
7. Diversity Policy
Foundations of the diversity management approach
Santander Bank Polska S.A. complies with the laws on diversity, inclusion and equal opportunities. It is committed to promoting diversity in accordance with
best practice and ensuring equal treatment of employees and other stakeholders regardless of their gender, age, education, health conditions, race, religion,
national or ethnic origin, political beliefs, trade union membership, family status or sexual orientation.
Aspects such as respect for individuality, promotion of equal treatment and the prevention of discrimination are addressed by a number of policies and
procedures applicable at the Bank, including the Sustainability Policy, the Diversity Policy, the Human Rights Policy, the Respect and Dignity Policy and the
Corporate Culture Policy of Santander Bank Polska Group. They are presented in the Statement on Non-Financial Information for 2022.
As a signatory to the Diversity Charter (the international initiative supported by the European Commission), Santander Bank Polska S.A. committed itself to
respecting and supporting diversity.
The diversity and inclusion culture is supported at the Bank by such initiatives as: Diversity Ambassadors (role performed by senior executives), employee
networks (bottom-up initiatives focused on promotion of diversity), educational campaigns, training, webinars (e.g. Diversity Month) and Santander Women
podcast hosted by Dorota Strojkowska, Management Board member in charge of the Business Partnership Division. The Bank’s activities in this respect are
supported by strategic partnerships with expert organisations: Share the Care, UN Global Compact, Vital Voices, Responsible Business Forum.
Diversity policy regarding the governing bodies
The Bank pursues its diversity strategy as part of selection, assessment of suitability and succession of members of supervisory and management bodies.
The above processes are delivered in a way that prevents discrimination on any grounds, particularly based on gender, race, colour, ethnic or social origin,
genetic features, religion or beliefs, membership of a national minority, property, birth, disability, age or sexual orientation.
The Bank’s internal regulations in this respect are based on the Joint ESMA and EBA Guidelines EBA/GL/2021/06 and comply with the applicable laws,
including the Banking Law Act and the Commercial Companies Code.
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The Bank strives to ensure that members of the Management and Supervisory Boards have a wide range of competencies, professional skills, adequate
professional experience, capabilities and impeccable reputation, while ensuring diversity in terms of age, academic and professional background and
geographical origin. The Bank’s ambition is also to have an adequate representation of women and men on these boards.
The Management Board Diversity Policy of Santander Bank Polska S.A. promotes diversity among Management Board members in terms of their qualities
and skills to ensure different perspectives and extensive experience, prevents exclusion (promotes inclusion) and supports independent judgment and
informed decision making based on a wide range of criteria.
Pursuant to the above policy, the Supervisory Board strives to achieve minimum 30% representation of women on the Management Board by 2025 and
increase diversity in terms of age and geographical provenance.
Furthermore, the Nomination and Succession Policy for Management Board Members and Key Function Holders of Santander Bank Polska S.A. is to ensure
the continuity of business processes delivered by senior managers, while maintaining the best possible balance of the management team in terms of gender,
knowledge, skills and experience.
The diversity of the Supervisory Board is governed by the Policy on the Suitability Assessment of Supervisory Board Members in Santander Bank Polska S.A.
and the Nomination and Succession Planning Policy for Supervisory Board Members in Santander Bank Polska S.A., which require that – apart from having
adequate education, professional experience and good repute – the candidates for the Supervisory Board and the Management Board positions should
possess a wide spectrum of qualities and skills and independence of mind. Moreover, the former policy sets out an objective of 40%–60% female
representation on the Supervisory Board by 2025.
To ensure the above representation of women and men on the Management and Supervisory Boards, the Nominations Committee of the Supervisory Board
takes into account all personnel of Santander Group and business objectives related to cross-border activities. Further to this, it takes measures to ensure
that the succession plans include an appropriate percentage of women to achieve the set objective and that the women considered in such plans are ready
to take up their role within the prescribed time frame.
As at 31 December 2022, there were four women on the Bank’s Supervisory Board: Danuta Dąbrowska, Dominika Bettman, Isabel Guerreiro and Marynika
Woroszylska-Sapieha (40% of membership) and one woman on the Management Board: Dorota Strojkowska, Head of the Business Partnership Division
(11% of membership). Women accounted for 26% of both the supervisory and management bodies and taking into account key managers –29%. They
represented 35% of senior management and 56% of middle management.
The current composition of the Supervisory and Management Boards ensures diversity in terms of gender, age, experience and academic background. The
tables and graphs below show diversity of the above-mentioned bodies:
Gender
Women
1)
Men
Supervisory Board
4
6
Management Board
1
8
1) As a result of resignation of Mr. Carlos Polaino Izquierdo from the function of Member of the Management Board
and the appointment in his place of Ms. María Elena Lanciego Pérez as of1 January 2023, the Management Board
consists of 2 women and 7 men.
Age 31–40 41–50 51–60 above 60
Supervisory Board
-
-
6
4
Management Board
-
5
4
-
Years of service with Santander Bank Polska S.A.
1)
up to 5
6–10
11–15 16–20 21–25
Supervisory Board
3 5 1 - 1
Management Board
5
3
1
-
-
1) From the date of the first appointment to perform the function in the Supervisory Board or the Management Board.
International experience
Number of members
Supervisory Board
7
Management Board 4
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Women
26%
Men
74%
Gender of supervising and executive staff
of Santander Bank Polska S.A.
41-50 yrs
26%
51-60 yrs
53%
over 60 yrs
21%
Age of supervising and executive staff
of Santander Bank Polska S.A.
up to 5 yrs
42%
6-10 yrs
42%
11-15 yrs
11%
21-25 yrs
5%
Work experience of supervising and executive staff with
Santander Bank Polska S.A.
8. Internal Control and Risk Management Systems
Objective of the internal control system
Santander Bank Polska Group has an internal control system in place, which together with the risk management system (described in Chapter XII “Risk and
Capital Management”) is a fundamental element of the Group’s management system.
The internal control system supports decision-making processes, contributes to an increase in operational efficiency of the organisation, and ensures
adherence to risk management principles, laws, internal regulations and standards, regulatory requirements and best market practice. The effective system
allows the Bank to ensure the reliability of financial reporting and its compliance with laws, international standards, internal regulations and supervisory
recommendations.
Organisation and operation of the internal control system
The Bank’s Management Board is responsible for developing and implementing an effective internal control system in all organisational units, and for
updating internal regulations and establishing adequacy and effectiveness criteria for evaluating that system. Its role is also to ensure the continuity of the
system and to verify control mechanisms and procedures, as well as to define and take relevant measures to remove any deficiencies after they are
identified.
The Supervisory Board monitors the effectiveness of the internal control system and performs annual assessment of adequacy and effectiveness of the
control function based on the opinion of the Audit and Compliance Committee.
The internal control system of Santander Bank Polska Group is tailored to the organisational structure, risk management system and market environment.
It covers the Business Support Centre, branches, partner outlets and subsidiaries. It includes but is not limited to:
The Internal Control Model function, which verifies and reports on the adequacy and effectiveness of the internal control system with regard to the
achievement of each of its objectives and identifies significant and critical deficiencies, among other things;
The Risk Management function, whose role is to provide assurance that the key risks are identified and managed by the management, and that the
Bank acts in line with internal risk policies;
The Compliance Function, which is represented by separate organisational units (Compliance Area and Money Laundering and Terrorist Financing
Risk Management Department) and whose goal is to support Santander Bank Polska Group’s executives in managing compliance risks to ensure that
the Group adheres to laws, regulatory requirements and best practice;
The Internal Audit function, i.e. an independent and unbiased organisational unit (Internal Audit Area), which assesses the adequacy and effectiveness of
the risk management and internal control systems as part of the first and second line of defence, reports critical deficiencies to the Bank’s Management
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Board and to the Supervisory Board or its Audit and Compliance Committee, and recommends measures to be taken to improve existing processes in the
Group.
The internal control and risk management systems are based on three lines of defence.
Three lines of defence in the internal control and risk management systems
The Internal Control System Policy of Santander Bank Polska S.A. defines, among other things, the objective, structure and scope of the internal control
system. Detailed regulations describe responsibilities as part of the internal control system, rules for identifying material processes at the Bank, key control
mechanisms and inspections carried out as part of independent monitoring of control mechanisms. The purpose of monitoring, testing and reporting is to
ensure that the control environment is effective in terms of design and operation of the controls, and to strengthen the control culture at all levels of the
organisation.
The Group’s internal control system enables regular verification of control mechanisms in terms of their effectiveness. The results are escalated to and
reviewed by the Bank’s Management Board and the Audit and Compliance Committee of the Supervisory Board of Santander Bank Polska S.A.
Internal control as per regulatory requirements and best practice
The internal control system of Santander Bank Polska Group was developed on the basis of the requirements defined in the Regulation of the Minister of
Finance, Funds and Regional Policy on the risk management system, internal control system and remuneration policy in banks, and KNF’s Recommendation
H on the internal control system in banks.
Furthermore, the internal control system meets specific requirements arising from such regulations as:
the Sarbanes-Oxley Act (SOX);
the Volcker Rule (section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act);
RDA/RRF (Basel Committee on Banking Supervision 239: Principles for effective risk data aggregation and risk reporting);
FATCA (Foreign Account Tax Compliance Act);
GDPR;
EMIR;
MiFID 2.
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The assessment of the design and effectiveness of the internal control system covers all available information and related audit and regulatory
recommendations. Results of assessments and tests form the basis for the Bank's management to make representations on the effectiveness of the control
environment.
Control mechanisms related to financial reporting
One of the key objectives of the internal control system is to ensure full accuracy and reliability of financial reporting.
Data inputs in the source systems are subject to formal operational and approval procedures which state the responsibilities of individual staff members.
Data processing for the purpose of financial reporting is subject to relevant control mechanisms including specialist internal controls whose objective is to
monitor and test the correctness and accuracy of data. All manual adjustments, including management overrides, are under strict control, which covers all
IT systems used to prepare financial reports that have a business continuity plan in place updated on an ongoing basis.
To manage risk associated with the preparation of financial statements, the Bank monitors legal and regulatory changes to reporting obligations of banks.
It updates its accounting policies and the scope and form of disclosures in financial statements on an ongoing basis. The Bank also controls its consolidated
entities through its representatives sitting on the supervisory boards of individual subsidiaries.
Financial reporting is subject to multi-stage verification:
Financial statements are formally approved by the Disclosure Committee, which is responsible for ensuring that the financial disclosures of
Santander Bank Polska Group comply with all legal and regulatory requirements before they are released.
The Bank’s management confirms that the control mechanisms in place effectively mitigate the risk of any failure to identify any material error in the
financial statements.
Annual and interim financial statements are also reviewed by the Audit and Compliance Committee of the Supervisory Board and approved by the
Supervisory Board.
The Audit and Compliance Committee monitors the financial reporting process, taking into account information about changes in the accounting and
reporting policies, and analyses all recommendations issued for the Bank’s Management Board by an external auditor (along with the Management
Board’s response) and supervises their implementation.
The effectiveness of control mechanisms related to financial reporting is additionally assessed by an independent external auditor as part of the
annual certification process for compliance with the Sarbanes-Oxley Act.
Internal control under the Sarbanes-Oxley Act and other regulations
In the light of the Sarbanes-Oxley Act, Santander Bank Polska Group operates as a material and independent organisation within the structure of Santander
Group and as such is required to implement, maintain and assess the effectiveness of the internal control environment pursuant to the above-mentioned
act.
The certification process for compliance with the Sarbanes-Oxley Act in 2022 covered all key business areas of Santander Bank Polska S.A. and was carried
out using solutions and methodology based on Santander Group’s approach. The scope of testing included risk factors which were particularly significant
for the reliability and accuracy of financial statements, taking into account the local control environment.
As part of the SOX certification process for 2022, the Bank's management confirmed that no incidents had been identified in Santander Bank Polska Group
which could significantly affect the relevant processes or threaten the effectiveness of the internal control over financial reporting.
9. External Auditor
Entity authorised to audit financial statements
In accordance with the Bank’s Statutes and applicable regulations and pursuant to the recommendation of the Audit and Compliance Committee issued in
line with the applicable principles, on 23 February 2021 the Bank’s Supervisory Board adopted Resolution no. 24/2021 reappointing
PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. (PwC) to:
• review the Bank’s semi-annual financial statements and the Group’s semi-annual consolidated financial statements for H1 2021 and H1 2022;
• audit the Bank’s financial statements and the Group’s consolidated financial statements for 2021 and 2022.
On 27 June 2022, the Bank signed an agreement with PwC on the audit and review of financial statements for the accounting period from 1 January 2022
to 31 December 2022.
The foregoing audit firm has been providing services to the Bank since 2016. The Bank also uses advice services provided by this firm and other entities from
the PwC network. In the Bank's view, the above services do not affect the impartiality or independence of the auditor.
Santander Bank Polska S.A. and Banco Santander S.A. retain auditors from the same network, which ensures a consistent approach to the audit process
across Santander Group.
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Santander Bank Polska S.A. selects an entity authorised to audit financial statements pursuant to the Auditor Appointment Policy (adopted by the Supervisory
Board on 4 October 2017 pursuant to the recommendation of the Audit and Compliance Committee, and amended on 25 April 2019). The Policy complies
with Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of
public-interest entities and the Polish Act of 11 May 2017 on statutory auditors, audit firms and public oversight.
Detailed rules of cooperation with the audit firm and the audit team are specified in the Audit Services Policy of Santander Bank Polska S.A. of 6 May 2021.
Selection of an external auditor
A decision to appoint or reappoint an entity authorised to audit the Bank’s and the Group’s financial statements is made by the Bank’s Supervisory Board
based on the recommendation of the Audit and Compliance Committee.
Pursuant to the Auditor Appointment Policy of Santander Bank Polska S.A., the Bank selects an audit firm pursuant to the following rules:
The Bank and the Committee may invite any audit firm to place bids for carrying out statutory audits on condition of a four-year cooling-off period
after the end of the relationship following the expiry of the maximum duration of the engagement.
An audit firm is selected taking into account findings and conclusions made in the annual report of the Audit Supervision Authority (KNA) published on
its website.
The Audit and Compliance Committee’s recommendation regarding the selection of an entity authorised to audit financial statements takes into
consideration the following aspects where applicable:
The Bank/ the Group complies with the applicable laws with respect to the minimum and maximum duration of an audit engagement and the
minimum cooling-off period.
The recommendation issued by the Audit and Compliance Committee before the appointment of PricewaterhouseCoopers Polska spółka z ograniczoną
odpowiedzialnością Audyt sp.k. (formerly: PricewaterhouseCoopers sp. z o.o.) to review and audit the financial statements of Santander Bank Polska S.A.
and Santander Bank Polska Group for 2021 and 2022 met all the required criteria and was presented to the Supervisory Board as part of the selection
procedure carried out in accordance with the applicable principles (reappointment of the auditor). The process included, among other things, the assessment
of PwC’s independence and the quality of services provided to date.
Permitted non-audit services
The rules for provision of permitted non-audit services to Santander Bank Polska S.A. by the audit firm performing the audit, entities connected with the
audit firm or by members of the audit firm network are laid down in the Policy for audit-related and non-audit services rendered by the auditor, which was
reviewed by the Audit and Compliance Committee and approved by the Supervisory Board on 29 September 2021. The Policy meets the requirements arising
from Act of 11 May 2017 on statutory auditors, audit firms and public oversight as well as EU regulations, including Regulation (EU) No 537/2014 of the
European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities and Directive
2014/56/EU of the European Parliament and of the Council of 16 April 2014 on statutory audits of annual accounts and consolidated accounts.
Pursuant to the foregoing Policy:
INITIAL ENGAGEMENT OF AN AUDITOR:
at least two audit firms to choose from, along with
the rationale and the Audit and Compliance
Committee’s justified preference for one of them;
competencies of the audit firms and their ability to
perform the required services;
independence of the entity authorised to audit
financial statements;
legal requirements;
consistency and effectiveness of the audit from the
Group’s perspective as well as from the higher-level
consolidation perspective;
comparison of individual proposals in accordance with
the agreed criteria, having regard to the weights
allocated on the basis of a relevant questionnaire.
REAPPOINTMENT OF THE AUDITOR:
assessment of the quality of services provided
to date;
independence of the entity authorised to audit
financial statements;
legal requirements;
consistency and efficiency of the audit from
local Group perspective as well as from the
higher level consolidation perspective.
In view of the amendment of the Polish Auditors Act of 31 March 2020 repealing the 5-year rotation period for the audit of public-interest entities,
currently, EU Regulation No 537/2014 is directly applicable, stipulating that the maximum engagement of the same audit firm cannot exceed 10 years.
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Appointment of an auditor to render audit-related or permitted non-audit services must be approved by the Audit and Compliance Committee
based on the assessment of whether such services will not affect the independence of the auditor.
Once a year, before the conclusion of the audit of the Group’s annual financial statements, summary information on non-audit services is sent to
the Committee for assessment of their potential impact on the auditor’s independence and objectivity.
When the statutory auditor or the audit firm provides permitted non-audit services to the audited entity, its parent undertaking or its controlled
undertakings, for a period of three or more consecutive years, the total fees for such services must not exceed 70% of the average total fees paid
in the last three consecutive years for statutory audits of separate and consolidated financial statements of the above-mentioned entities. The
above limit does not apply if the auditor has not rendered non-audit services for at least one year.
The scope of permitted services (i.e. services which, under the existing regulations, the statutory auditor can provide when auditing the financial statements
of the Bank/ Group) includes audit-related services (e.g. review of interim financial statements, assurance services) and non-audit services (e.g. tax services
and general advisory services).
The Policy also lists prohibited services. Specifically, the auditor must not:
audit and/or review its own work (self-review);
perform a management role in the audited company or in relation to the services provided (management functions);
represent the audited company or Group (advocacy).
In addition, it is not permitted to provide accounting, financial, actuarial, outsourcing (as part of internal audit) and mediation services as well as services
related to valuation, design and implementation of financial information systems and specific tax services.
In 2022, PwC, the audit firm appointed to audit the financial statements of Santander Bank Polska S.A. and its Group for 2021 and 2022 (along with other
entities from the PWC network) provided the following permitted non-audit services:
review of interim financial statements of the Bank/ Group;
verification of consolidation packages;
verification of capital adequacy disclosures;
verification of reports on remuneration of the Management and Supervisory Boards;
services connected with an issue prospectus;
assurance services related to safekeeping of customers’ assets.
The Audit and Compliance Committee approved the appointment of PwC and other entities from its network to provide the foregoing permitted non-
audit services. Before the relevant recommendations were presented to the Supervisory Board, the independence of the auditor had been verified with
a positive outcome.
Remuneration of external auditor
The table below shows the remuneration paid to PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k. (PwC) in 2021 and
2022 for the audit of the financial statements of Santander Bank Polska S.A. and its subsidiaries, and for audit-related services and other permitted services
rendered under the agreements in place.
Remuneration of external auditor (PLN k)
Financial year ended
31 December 2022
Financial year ended
31 December 2021
Audit fees in respect of the parent entity
1)
3 092
3 693
Audit fees in respect of the subsidiaries
2 419
2 239
Fees in respect of other assurance services, including the review of the accounts of the parent entity
and subsidiaries
2)
1 236 1 258
Fees in respect of non-assurance services
3)
363
354
1) Fees in respect of audits performed by PricewaterhouseCoopers sp. z o.o. Audyt sp.k. in 2021 and 2022 under the agreements wi
th Santander Bank Polska S.A. on audit and review of financial statements of 9 June 2021
and 27 June 2022, including assurance services with respect to the compliance of annual financial statements with the requirements of the European Single Electronic Fo
rmat (ESEF). Pursuant to Annex 1 of 3 August
2021 to the Agreement of 9 June 2021, in 2021 PwC also performed the audit of the Interim Condensed Special Purpose Financial Statements of Santander Bank Polska S.A. for the 6-month period ended on 30 June
2021.
2)
Fees in respect of the review of financial statements under the agreements referred to in point 1 and for services related to verification of capital adequacy disclosures, verification of the report on remuneration of
Management and Supervisory Board members and report on risk management and information prospectus for Santander TFI S.A., as well as for services related to assessme
nt of compliance with requirements regarding
the custody of customers’ assets.
3) Fees in respect of non-assurance services refer to the issuance of attestation letters made in connection with the EMTN prospectus and additionally to the agreed procedures related to the Jessica project in 2021.
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10. Court Proceedings
The table below presents the amounts disputed in pending court proceedings with regard to claims made by or against the Bank or its subsidiaries as at
31 December 2021 and 31 December 2022.
Court proceedings with Santander Bank Polska Group as a party (PLN m) 31.12.2022 31.12.2021
Value of claims in lawsuits filed by the Group
1,384.9
1,133.8
Value of claims in lawsuits filed against the Group
4,175.4
2,533.3
Receivables of the Group in arrangement or bankruptcy cases 74.3 54.8
Value of claims in all pending court proceedings
5,634.6
3,721.9
Value of claims in completed proceedings
254.5
659.3
As at the end of 2022 there were 1,403 cases against Santander Bank Polska Group, where the claim value was high (equal or above PLN 500 k). The total
amount of provisions recognized in accordance with IAS 37 and the adjustment to gross carrying amount under IFRS 9 related to such legal claims was
PLN 656.6m.
12,225 lawsuits were filed against the Group over loans indexed to or denominated in CHF, with the disputed amount totalling PLN 3.6bn (vs 8 474 with the
disputed amount of PLN 2.1bn as at 31 December 2021). This included two class actions filed under the Class Action Act.
For more information on legal claims in respect of foreign currency mortgage loans, see Note 48 “Legal risk connected with foreign currency mortgage
loans” and Note 49 “Contingent liabilities” to the Consolidated Financial Statements of Santander Bank Polska Group for 2022.
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XIV. Statement on Non-Financial Information for
2022
1. Business Model, Strategy and Key Performance Indicators
Business model
The business model of Santander Bank Polska Group is based on modern financial solutions offered to personal customers, micro, small and medium
enterprises, and domestic and international corporations. The Group provides a wide range of banking and financial services in relation to domestic and
international transactions. It focuses above all on customer loyalty and employee engagement, which translates into higher income, loans and deposits.
> Value creation model
The comprehensive offer meets customers’ needs with regard to personal and business accounts, credit, savings, investment, settlement, insurance and
card products.
The financial services include cash management, payments, transactions in the capital, money, FX and derivative markets, as well as guarantees, trade
finance and brokerage services.
The Bank’s customers also have access to products offered by other companies from Santander Bank Polska Group, such as investment funds, asset
portfolios as well as insurance, lease and factoring products.
Development strategy
The strategic directions set by the Group are interrelated and interdependent. Six strategic directions have been defined as part of the strategy for 2021–
2023: Customer Obsession, Employee Focus, Simplification, Smart Omnichannel, Innovate to Open Platform, Safety and Trust. They are the key focus areas
of the Group’s transformation. The strategic directions set by the Group:
consolidate specific objectives set to increase loyalty of individual stakeholder groups: employees (employee focus), customers (customer obsession),
communities and shareholders (safety and trust);
place the highest transformational value on the objectives related to development of the Group’s operating model: simplification and smart
omnichannel;
comply with the aim of Santander Group’s regional strategic plan One Europe, emphasising the foundations for the development of the organisation
(safety and trust), with a particular focus on responsible banking (CSR/Corporate Social Responsibility);
reflect the Group’s ambition to build competitive advantages through innovation to an “Open platform”.
The strategy of Santander Bank Polska S.A. is focused on creating value for customers. The Bank continuously improves the quality of its products and
services, placing the customers’ needs and requirements at the heart of its business. In operational terms, a special focus is placed on automation and
simplification of processes to increase service quality, operational efficiency, simplicity of solutions and transparency.
The delivery of the strategy is underpinned by innovative solutions and the corporate culture which is focused on increasing engagement and motivation of
employees as well as social responsibility of the Bank.
Em ployees
Cust om ers
Communities
Shareholders
…. resulting in higher investment
in the community
...
driving profitability and
sust ainable growt h …
... mean more satisfied and loyal
cust omers...
Motivated and engaged
employees....
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> Key strategic dimensions for 2021–2023
The activities undertaken as part of the six strategic directions are based on strategic initiatives, i.e. strategic programmes, bets (initiatives in the Agile model)
and group programmes. They are regularly monitored and their results are reviewed on the basis of qualitative and quantitative metrics.
> Financial and non-financial measures of Santander Bank Polska Group
(as at 31 December 2022 and 31 December 2021)
Number of customers
Number of employees
Number of branches*
2022
7.4m
11,309 (FTEs)
351
2021
7.3m
11,323 (FTEs)
396
NPS Mass*
Number of digital
customers*
Number of internet and
mobile banking* transactions
2022
TOP 4
3,285k
438m
2021
TOP 3
2,998k
386m
C/I
Dividend payout ratio*
TCR
CoR
2022
37.9%
29.90%
19.27%
0.59%
2021
43.6%
29.89%
19.05%
0.76%
Our Purpose
/Mission
Our Aim
/Vision
Values
Behaviours
&
Leadership Commitment
Strategic
Directions
Initiatives
Metrics
Help people and businesses prosper
Be the Best Open Financial Services
PLATFORM by acting RESPONSIBLY
and earning the lasting LOYALTY of our people, customers, shareholders and communities
Simple – Personal - Fair
•
Think customer
•
Embrace change
•
Act now
•
Move together
•
Speak up
•
Being open and inclusive
•
Inspiring and executing transformation
•
Encouraging the team to prosper
•
Leading by example
Customer
Obsession
Simplification
Employee
Focus
Omnichannel
Evolution to
Open Platform
Safety
& Trust
•
Strategic programs
•
Bets
•
Group programs
•
Hotspots
•
TCR
•
ROTE
•
C/I
•
C/I
•
NPS
•
Loyal Customers
•
eNPS
* Only Santander Bank Polska S.A. (the number of branches also includes off-site locations and Santander Zones)
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2. Responsible Banking/ ESG Strategy
Pillars of Responsible Banking at Santander Bank Polska S.A.
Santander Bank Polska Group creates long-term value for all stakeholders in a sustainable way. The Responsible Banking Strategy is an integral part of the
Group’s overall business strategy. It presents the approach to ESG matters and defines sustainable development.
The Group aligns its Responsible Banking agenda with the challenges and requirements of society to help people and meet their needs in accordance with
the best international standards, in particular the Sustainable Development Goals (SDG), the Paris Agreement, the Principles for Responsible Banking (PRB),
and Net Zero Banking Alliance.
In its business activity, the Group focuses on the areas on which it has real impact as a financial institution. They are presented below:
> Key UN Sustainable Development Goals pursued by Santander Bank Polska Group
The Responsible Banking Strategy is based on two key pillars: corporate culture and sustainable finance.
> Pillars of Responsible Banking at Santander Bank Polska S.A.
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The Group’s commitments and ethical, social and environmental standards that go beyond the legal framework are set in the Sustainability Policy. The
Policy is supplemented by the following documents:
Environmental, Social & Climate Change Risk Management Policy;
Human Rights Policy;
Corporate Volunteering Policy;
policies on sectoral risk management for high risk sectors such as defence, energy, mining and metals, and wood industry.
Key ESG aspects in 2022
In 2022, the Group conducted a materiality assessment of ESG aspects using a pilot methodology developed by Santander Group. Stakeholders were
involved in the process of defining material aspects. Based on the analysis, the following material topics were selected:
> Key ESG achievements in 2022
Delivery of the Responsible Banking objectives
Ref.
no.
2022 Results 2021 Results
1.
Top 10 company to work for (position in ranking) Top Employer certificate Top Employer certificate
2.
Women in managerial positions
34.7%
34.7%
3.
Equal pay measured by EPG
2%
2.4%
4.
Number of financially empowered people since 1 January 2019
(in thousands)
651,453 130,992
5.
Green finance compliant with SFCS (EUR m)*
566.4
214
6.
Electricity from renewable sources (%)**
83.5%
82%
7.
Reduction of single-use plastics (%) 100% 100%
8.
Scholarships, internships and entrepreneurship programmes
5,915
6,422
9.
Number of people helped 493,461 305,652
* The presentation of the ratio has been changed: results of the Corporate and Investment Banking Division have been included and the compliance with the Sustainable Finance Classification System has been indicated.
** Electricity bought directly by the Bank.
Values and ethics
Security of services,
transactions and customer
data
Positive customer
experience (NPS)
Integration of ESG into the
risk management system
Operational and business
resilience
Compliance with ESG
regulatory requirements
Inclusive and sustainable
banking
Adjustment of the portfolio
to the Net Zero targets by
2050
Green finance
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Additional achievements in the ESG area:
E
ENVIRONMENT
Value of green finance: PLN 2,668m, in line with the SFCS. This includes:
Green buildings: PLN 1,433m
RSE: PLN 1,153m
Launch of the ESG Database project –
preparation for reporting in compliance with EU regulations (EU Taxonomy,
Pillar 3 and EBA stress tests)
Cooperation with IFC in the financing of climate projects and supporting the green transition in Poland
Launch of a website dedicated to green solutions offered by the Bank
S
SOCIETY
Aid for Ukraine:
Implementation of BLIK cheques (awarded with e-
Commerce Polska Awards, Fintech Project 2022 and awards
by Euromoney)
Advantageous solutions and fee waivers for customers (PLN 5m)
Charity initiatives (PLN 5.2m)
Support for employees
Number of persons who have received financial support since 2019: over 520k
Financing of social and higher education projects
Participation in “Zrównoważone jutro” (“Sustainable tomorrow”) education project:
214 students from 3 universities in 2022/2023
387 students to participate in the coming years
Presence on the Diversity IN Check list for the second time –
the ranking of the most advanced employers who support
diversity and create inclusive workplaces.
“Don't believe in fairy tales for adults” educational campaign recognised with three awards in the “Golden Clip”
contest
The Banker award in the inclusive banking category
G
GOVERNANCE
Implementation of the corporate Sustainable Finance Classification System (SFCS)
First analysis of climate-related opportunities and risks carried out in line with TCFD recommendations
Improvement in ESG rating results
Sustainalytics (from Medium Risk to Low Risk)
MSCI (from AA to A)
CSA (from 34 to 46)
Second place in the 2022 Responsible Company Ranking
2021 Ethical Company award from Puls Biznesu
CSR Golden Leaf award (received for the second year in a row)
Main award for the 2021 ESG Report received in the Sustainable Development Reports contest organised by FOB
and Deloitte
3. Risk Management System
Santander Bank Polska Group modifies and develops risk management methods on an ongoing basis, taking into consideration changes in the Group’s risk
profile and in the economic environment as well as regulatory requirements and best market practice. The directions are set by the Management Board and
the Supervisory Board, which actively support the risk management strategy by approving key risk management policies, having its representatives on the
committees responsible for risk management, participating in risk reviews and approving risks and risk reports.
The risk management system of the Bank and the Group complies with the banking industry standards and legal and regulatory guidelines and
recommendations. Selected units are responsible for identification, measurement, monitoring and mitigation of risks. Based on the overall risk level, a risk
profile is defined. Risk appetite, together with risk limits, is reflected in the Risk Appetite Statement adopted by the Management Board and approved by the
Supervisory Board.
The risk management system of Santander Bank Polska S.A. covers the following material risks:
credit risk (including concentration risk)
operational risk
market risk (in the banking book and in the trading book)
liquidity risk
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model risk
reputational risk
compliance risk
business risk
capital risk
risk of excessive leverage.
From the point of view of negative impact of those risks on society, environment, employees, human rights and anti-corruption measures, particular
importance is attached to operational risk, compliance risk and reputational risk. In addition, the Bank has identified social and environmental risks (including
climate risks) related to financing customers from sensitive sectors.
Management of social, environmental and climate change risk in sensitive sectors
The integration of ESG factors in decision-making is outlined in the Sustainability Policy. These matters are regulated in more detail in the Social,
Environmental and Climate Change Risk Management Policy. It sets out the criteria for identifying, assessing, monitoring and managing social and
environmental risks and defines specific standards for investing and working with customers operating in sectors that have an impact on climate change:
oil and gas extraction, production and processing
power generation and transmission
mining
metals (including processing of ores to extract the metal)
soft commodities.
In the Social, Environmental and Climate Change Risk Management Policy, the Bank identified areas of activity that it will not support with its financial
services or products. They include, among other things, projects located in the areas classified as Ramsar Sites or World Heritage Sites, projects located
north of the Arctic Circle as well as extraction, processing or distribution of asbestos.
In 2022, the Environmental, Social and Climate Change Risk Management Policy was amended as follows:
A statement was added setting out the directions for achieving carbon neutrality by 2050.
The following sections were refined: Ramsar and World Heritage site exclusions, the scope of coal power and infrastructure associated with coal
mining, and the exceptional treatment of new customers with coal-fired power plants or coal mines.
New exclusions were added in relation to new customers and direct financing of greenfield projects – oil upstream customers (oil exploration and
extraction).
In 2021, the Bank implemented the Environmental and Social Risk Analysis Procedure in relation to business and corporate banking customers. It is based
on a special algorithm enabling preselection in terms of the above risk. Customers are assigned environmental flags which indicate their risk level. There
are four types of flags: “To be verified”, “Approved”, “Higher risk”, “Prohibited activity”.
ESG criteria are also considered when taking investment decisions. Santander Bank Polska Group, particularly Santander TFI S.A., adheres to the Responsible
and Sustainable Investment Policy and the Policy on exposure to companies listed on regulated markets and on corporate oversight. The integration of
environmental, social and governance aspects into investments makes it possible to improve risk management and create value added – both for customers
and society at large. Consideration of both financial and non-financial factors allows the Group to have a more complete picture of the assets it manages
and make more balanced investment decisions.
Investments in assets are preceded by a detailed assessment conducted in accordance with the ESG criteria to identify issuers that are well prepared for the
challenges ahead – those which have policies and management systems in place that are likely to have a significant positive impact on society and the
environment. The ESG assessment includes but is not limited to:
An internal methodology for assessing issuers' attitudes towards environmental and social factors (using information supplied by external data
providers). The methodology is based on market reference data and international guidelines and standards. Its outcome is an assessment of
individual issuers;
Exclusions based on the nature of the issuers' business.
The ESG assessment of companies is based on the double materiality concept. The Group considers the impact of ESG criteria on investments as well as the
impact of investments on sustainability factors. The assessment covers general analysis criteria which are common to all sectors and specific criteria
depending on the sector and type of business. The Group expects issuers to publish ESG reports and makes relevant disclosures in this regard itself.
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> Examples of ESG criteria included in an investment analysis:
Environmental criteria:
environmental strategy and management
climate change
natural resources
prevention and control of pollution
natural habitats
Social criteria:
human capital
local community
social products and services
human rights
Governance criteria:
corporate governance
business ethics
Climate risk management is part of a broader and comprehensive risk management process at the Bank. As recommended by the TCFD, findings from the
analyses of physical and transition risks are integrated into the taxonomy of risks typical for the Bank.
4. Environmental Policies and their Outcomes
Climate risk strategy
Measures related to the environment and climate are defined in the global Net Zero strategy adopted by Santander Group in 2021.
Santander Group has set climate objectives that are pursued by entities from all the countries in which the Group operates. These objectives include:
acquiring and providing EUR 120bn in green finance by 2025;
ensuring that by 2025 all the energy used originates from renewable sources;
achieving net zero carbon emissions by 2050;
becoming carbon neutral in own business in 2020 (net zero carbon emissions) – target achieved with a carbon offset mechanism applied;
To date, the Group has taken the following climate-related measures towards customers, reducing its exposure to climate risk:
In 2019
The Group decided not to engage in financing any new thermal coal mines or new power units fired by
steam coal.
From 2020
All agreements made by the Group with entities using coal explicitly forbid allocating the funds
granted by the Group for coal mining or production.
To meet the Paris Agreement objectives, the Group committed to take the following steps:
By 2030
Completely reduce the exposure to thermal coal producers (all contracts left to expire).
From 2030
Discontinue financing energy companies whose revenues from thermal coal production accounts for
more than 10%.
From 2050
Become carbon neutral.
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The key documents related to environmental protection and climate change include:
Responsible Banking Strategy;
Sustainability Policy;
Global Net Zero Strategy;
Sectoral policies;
Environmental, Social and Climate Change Risk Management Policy.
Santander Bank Polska Group supports the delivery of the global Net Zero strategy through:
Efforts to reduce emissions in own operations, including the use of energy, business travel, use of company cars, etc.
Focus on emissions connected with the financing provided (as part of lending, advisory or investment services). The Group wants to reduce indirect
emissions in its value chain, i.e. from suppliers to end users, e.g. users of services provided by the Group’s business and corporate customers. The
key is to ensure sustainable finance and offer advisory services in relation to investments that comply with the Paris Agreement. For the strategy
to become fully operational, specific transition plans must be defined, including ways to decarbonise the portfolio. In 2022, Santander Bank Polska
S.A. implemented the Sustainable Finance Classification System (SFCS) for selected customer segments (largest customers, mortgage borrowers
and leasing customers) to facilitate the classification, tracking and reporting of measures related to sustainable finance. The classification system
is based on globally-recognised industry guidelines and principles, including ICMA Social and Green Bond Principles, Climate Bond Standards and
EU Taxonomy. The Bank sets green finance targets in line with the classification system. In 2022, EUR 566.4m worth of green finance was
provided, which means that the target of EUR 400m set as part of the Responsible Banking agenda was met.
In 2022, Santander Bank Polska Group conducted an analysis to identify climate risks and opportunities based on climate scenarios. The assessment also
included the risk connected with sectors in which the Group’s customers operate, particularly those most affected by climate change. At the same time, the
Bank launched projects to identify transition and physical risks under a systemic approach at the customer level.
For more information about climate risk, see Chapter XII “Risk and Capital Management”, Part 7 “ESG Risk Management”.
Green finance
Pursuant to the strategic commitment to be a green bank, the Group integrates environmental factors in its products and services. The ESG criteria are part
of a credit analysis. The Group also offers sustainable financial products.
The sustainable finance offer is addressed to a diverse range of customers, including those operating in the sectors which have the greatest impact on
climate issues, namely energy, oil and gas and industry sectors. The increase in customer awareness observed in recent years has been accompanied by
growing interest in this type of financing in other sectors.
Below is the list of documents concerning green finance at Santander Bank Polska Group:
Responsible Banking strategy;
Sustainability Policy;
Environmental, Social and Climate Change Risk Management Policy;
Sectoral policies related to sensitive sectors;
Policy on exposure to companies listed on regulated markets and on corporate oversight (Santander TFI S.A.);
Global Net Zero Strategy;
Corporate Sustainability Bonds Framework Policy;
Green Bonds Framework Policy.
The green finance offer includes:
loans designed to support sustainable projects, including investments in renewable energy;
loans linked to the Sustainable Development Goals;
green bonds and sustainability bonds;
sustainability-linked bonds;
advisory services related to sustainable finance;
financial advice in the ESG area;
SolarLease – lease of photovoltaic panels;
lease of electric cars;
lease of zero-emission heat sources, energy reservoirs, electric car charging stations.
Santander Bank Polska Group applies the Corporate Sustainability Bonds Framework Policy and the Green Bonds Framework Policy, pursuant to which funds
from the issue of green bonds are allocated to projects related to renewable energy (solar and wind energy).
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Dedicated products:
A cash loan for environmental purposes.
Reimbursement of a fee for the purchase of green
products encourages borrowers to, among other
things, modernise their heat sources, replace lighting,
build domestic water treatment plants or instal
biomass equipment. With this loan, it is also possible to
finance the purchase of energy-efficient household
appliances as well as electric cars and bicycles.
Simplified application rules for
photovoltaic financing
offered by
Santander Leasing. The maximum financing
period is 10 y
ears with the transaction
secured by a BGK guarantee. In 2022,
Santander Leasing also launched subsidised
lease of electric cars under the
government's “My Electric Car” programme.
Payment cards made in 85% of
recycled plastic. Thanks to the use of
susta
inable materials, the carbon
footprint was reduced to 75%.
The first card made of
biodegradable plastic was issued in
Q1 2022.
Disclosures under Regulation no. 2020/852
Regulation (EU) 2020/852 of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment, and
amending Regulation (EU) 2019/2088 (the “EU Taxonomy”) lays down a unified classification system for sustainable activities designed to support investors
in taking investment decisions. Under the EU Taxonomy, institutions that are obliged to publish non-financial information must meet a number of reporting
obligations, which in the case of credit institutions will become effective in the broad scope in 2024 and in the full scope in 2026. Ultimately, the key
performance indicator for sustainable activities of credit institutions will be the green asset ratio (GAR), which shows the percentage share of investments
and exposures related to taxonomy-aligned activities with respect to the defined environmental objectives in the covered assets. During the two-year
transitional period, the main subject of disclosure is the eligibility ratio reflecting the taxonomy-eligible activities in terms of two climate objectives:
contribution to climate change mitigation and to climate change adaptation. The identification of taxonomy-eligible economic activities is the first stage of
assessing compliance of economic activities with technical screening criteria laid down in the taxonomy.
The tables below contain quantitative information of Santander Bank Polska Group to be disclosed in the transitional period in accordance with Article
10.3(a)(b) and (c) of Commission Delegated Regulation (EU) 2021/2178 supplementing Regulation 2020/852. Source data used for the calculation of the
required percentage shares are derived mainly from FINREP reports, i.e. financial statements consolidated for prudential purposes, prepared for central
banks. The components and aggregates have the same information content and limitations as FINREP reports. Information about individual customers which
was not available in FINREP was taken from the corporate data warehouse.
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> Structure of gross total assets as at 31 December 2022
Ref.
no.
Items included in covered assets (PLN m)
Carrying amount
31.12.2022
Share in gross assets
31.12.2022
Share in gross assets
31.12.2021
I.
Exposures to households 84,641.0 31.9% 35.1%
II.
Exposures related to activities subject to an obligation to publish
non-financial information
1)
4,040.1 1.5% 12.9%
III. Exposures related to activities that are not subject to an
obligation to publish non-financial information
2)
106,760.7 40.3% 20.0%
IV.
Derivatives
3)
7,187.7 2.7% 1.5%
V.
On-demand interbank loans 971.6 0.4% 0.3%
VI.
Other assets 18,134.4 6.8% 6.7%
A.
Total assets included in calculation (I+II+III+IV+V+VI)
221,735.5
83.6%
76.5%
Ref.
no.
Items excluded from covered assets (PLN m)
Carrying amount
31.12.2022
Share in gross assets
31.12.2022
Share in gross assets
31.12.2021
VII.
Exposures to central governments
4)
39,294.3 14.8% 20.5%
VIII.
Exposures to central banks 3,898.1 1.5% 2.8%
IX.
Trading portfolio
5)
245.0 0.1% 0.2%
B.
Total exclusions (VII+VIII+IX)
43,437.4
16.4%
23.5%
Total gross assets (A+B) 265,172.9 100% 100%
1)
The value for 2022 represents exposures to non-financial undertakings and financial institutions which are subject to Directive 214/95/EU as regards disclosure of non-financial information (Non-Financial Reporting
Directive, NFRD). The value for 2021 is based on data from the FINREP report and takes into account all exposures to financial institutions and non-financial undertakings reduced by the portfolio of loans and advances to
SMEs.
2)
The value for 2022 includes all exposures to financial institutions and non-financial undertakings excluding the portfolio of entities subject to the NFRD regime. The value for 2021 represents the portfolio of loans and
advances to SMEs.
3)
The balance of derivative transactions includes derivatives from the portfolio of financial assets held for trading and derivatives recognised as part of hedge accounting.
4)
The value for 2022 does not include exposures to local governments, which in the previous year were disclosed together with exposures to central governments in line with the presentation criteria of FINREP reporting.
5)
Trading portfolio excluding derivatives.
Taxonomy eligibility reporting uses the category of covered assets, which will also be used for the purpose of compliance reporting. Covered assets are total
gross balance sheet assets excluding exposures to central governments, central banks, supranational issuers and the trading portfolio. These assets account
for 83.6% of total assets of Santander Bank Polska Group as at 31 December 2022. The eligibility analysis covers 73.7% of total assets (excluding derivatives,
on-demand interbank loans, cash and cash-related assets and other assets).
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> Share of taxonomy-eligible activities as at 31 December 2022 and 31 December 2021
Mandatory approach in 2022
Mandatory approach
in 2021
Eligible exposures by entity (PLN m)
Eligible exposures
including
CAPEX ratio
for non-financial
undertakings
31.12.2022
Eligible exposures
including
TURNOVER ratio
for non-financial
undertakings
31.12.2022
Eligible exposures
31.12.2021
Non-financial undertakings and financial institutions 849.4 313.4
no data
Households (loans collateralised with residential immovable property
and motor vehicle loans)
1)
51,851.5 51,851.5 51,063.3
Total taxonomy-eligible activities
52,700.9 52,164.9
51,063.3
Share of taxonomy-eligible activities in total assets
2)
Share of taxonomy non-eligible activities in total assets
3)
19.9% 19.7% 20.4%
80.1% 80.3% 79.6%
Eligibility ratio 23.8% 23.5% 26.6%
The key performance indicator in the transitional period, i.e. the eligibility ratio, defines the proportion of activities which are taxonomy eligible in terms of
two environmental objectives developed so far (out of six objectives defined) in covered assets, regardless of whether such activities meet technical
screening criteria laid down in a relevant delegated act. The classification of sustainable activities is based on the terminology of NACE i.e. statistical
classification of economic activities in the European Union.
The numerator of the eligibility ratio includes taxonomy-eligible financial assets, including loans and advances as well as debt and equity securities of
financial institutions and non-financial undertakings that are subject to the reporting obligation in accordance with the NFRD and specific loans and advances
to households and local governments (mainly loans collateralised with residential immovable property). The denominator of the eligibility ratio includes
covered assets.
As part of non-financial reporting for the year ended 31 December 2022, Santander Bank Polska Group prepared quantitative information about eligibility
within the mandatory scope. Broader information based on estimates which may be disclosed voluntarily is not provided.
The Group identified exposures to non-financial undertakings and financial institutions which meet the criteria specified in Article 19a or Article 29a of
Directive 2013/34/EU on accounting and are subject to Directive 214/95/EU as regards disclosure of non-financial information (NFRD) based on the source
data warehouse in accordance with the FINREP granularity.
As part of the mandatory disclosure, the taxonomy eligibility of general purpose debt instruments was calculated using publicly available ratios reported by
the above-mentioned counterparties (public interest entities), i.e. TURNOVER and CAPEX ratios in the case of non-financial undertakings and eligibility ratios
in the case of financial institutions. Where the use of proceeds from a debt instrument was known and was taxonomy eligible, such proceeds were allocated
in their full amount to taxonomy-eligible economic activities. Green debt instruments were treated as taxonomy eligible in their full amount, as were
mortgage loans and motor vehicle loans for households.
Environmental impact of operations
By pursuing its Sustainability Policy and the Global Net Zero Strategy, the Bank reduces emissions in own operations (including the use of energy, business
travel, use of company cars). Since 2020, the Bank has been neutral in terms of internal carbon emissions. The energy the Bank purchases directly comes
exclusively from renewable sources. The Bank’s emissions are offset through the purchase of carbon credits by Santander Group for all subsidiaries (in
2022, carbon credits were not bought due to the surplus from 2021).
1)
The value for 2021 does not include motor vehicle loans for households.
2)
Taxonomy-eligible economic activities mean activities defined in dedicated delegated acts regardless of whether or not they meet technical screening criteria. The climate delegated act effective during the reporting
periods ended 31 December 2021 and 31 December 2022 covered two climate objectives (climate change mitigation and climate change adaptation).
3)
Taxonomy non-eligible activities mean activities which do not meet the conditions specified in point 2 above.
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Greenhouse gas emissions
tCO2e
Location-based
Market-based
Scope 1
5,264.9
5,264.9
Scope 2
26,348.7
14,234.9
Scope 3 (business travel)
870.1
870.1
Total Scope 1+2
31,613.6
19,499.8
*Only location-based data from DEFRA were used.
Source of emissions Consumption Unit Data type
Emission
factor
(kgCO2e/uni
t)
Source
Emissions
(tCO2e)
(location
based)
Emissions
(tCO2e)
(market
based)
Petrol cars
1,574,765.3
litres
Real
2.1619
DEFRA 2022
3,404.4
3,404.4
Diesel cars
7,538.8
litres
Real
2.5578
DEFRA 2022
19.3
19.3
Natural gas for central heating and
hot water
9,227.1 MWh Real 0.1825 DEFRA 2022 1,684.3 1,684.3
Heating oil for central heating and
hot water
30,000.0 litres Real 2.5401 DEFRA 2022 76.2 76.2
Diesel oil for aggregates
1,500.0
litres
Real
2.5578
DEFRA 2022
3.8
3.8
Refrigerant R410A
23.0
kg
Real
2,088.0000
DEFRA 2022
48.0
48.0
Refrigerant R407C
14.2
kg
Real
1,774.0000
DEFRA 2022
25.2
25.2
Refrigerant R32
5.4 kg Real 675.0000 EPA / Schiessel 3.6 3.6
Total
5,264.9
5,264.9
> Scope 1
> Scope 2
Source of emissions Consumption Unit Data type
Emission
factor
Source
Emissions
(tCO2e)
(location
based)
Emissions
(tCO2e)
(market
based)
Electricity – offices
21 670,2
MWh
Real
0.0007
KOBiZE
14 432,5
2 3183,6
Electricity – remote work
793,0*
MWh
Estimate
0.0007
KOBiZE
528,1
528,1
District heating
111 567,5**
GJ
Estimate
0.1020
URE
11 383,2
11 383,2
Total
26,066.0
13,975.3
* Estimate based on man-days spent working remotely and the assumption that a person working remotely consumes 0.12 KWh per working hour.
** Estimate based on benchmarks of annual heat consumption per sqm (from the 2020 Statutory Energy Audit) and the area of occupied premises (heated with district heating).
The calculation takes into account locations vacated during 2022, but only for the number of days they were used by the Bank.
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> Scope 3
Source of emissions Consumption Unit Data type
Emission
factor
Source
Emissions
(tCO2e)
(location
based)
Emissions
(tCO2e)
(market
based)
Car – rental
772,209.0
km
Real
0.1694
DEFRA 2022
130.8
Bus*
20,200.0
km
Estimate
0.0268
DEFRA 2022
0.5
Train**
1,349,200.0
km
Estimate
0.0351
DEFRA 2022
47.4
Plane – domestic flight
215,136.8
km
Real
0.2446
DEFRA 2022
52.6
Plane – flight within Europe
3,172,199.2
km
Real
0.1528
DEFRA 2022
484.6
Plane – flight outside Europe
802,386.7
km
Real
0.1921
DEFRA 2022
154.2
Total
870.1
* Due to the lack of data, a distance of 100 km was assumed per each bus journey.
** Due to the lack of data, a distance of 200 km was assumed per each train journey.
The Group uses several metrics to measure climate impact, including kilograms of carbon dioxide emissions converted into litres of petrol consumed by
company cars, emissions from electricity consumption in offices and district heating consumption. The table above provides a summary of the Group’s
emissions with a description of their sources, consumption of the resources expressed in the relevant unit of measurement, the type of data and the emission
factor together with the source of data used for the purpose of calculation.
The Group took steps to reduce own emissions by using energy from renewable sources. In 2022, the offices used renewable electricity under a grid contract
with Tauron for the supply of zero-emission energy (the Group purchased 18,105 MWh of such energy). The Group also uses electricity not purchased under
this contract (3,146 MWh). The Bank received the ECO Premium certificate from Tauron Group, which confirms that 100% of electricity sold to the Bank is
covered by the Green Energy Sale Guarantee scheme and is generated from renewable energy sources (mainly hydroelectric power plants). In addition, the
Group focuses on increasing energy efficiency in own operations. In 2022, electricity consumption in the Bank's offices fell by 19.6% compared to 2021, and
natural gas consumption for central heating and hot water was reduced by a quarter compared to 2021.
Other environmental indicators
> Electricity consumption in 2021 and 2022
Energy consumption [MWh]
2021
2022
Total electricity consumption
26,449.30
21 2670,2
Of which total consumption of energy from non-renewable sources
14,174.30
9,551.29
Including from:
natural gas
12,399.38
9,227.1
fuel oil
1,549.37
308.28
diesel oil
225.55
15.91
> Bank’s car fleet
2021 2022
Number of petrol cars
13
12
Number of diesel cars
2
3
Number of hybrid/ electric cars
1303
1310
> Business travels
Indicator 2019 2020 2021 2022
Number of business trips per employee
3.17 1.55 0.60 1.05
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> Water consumption
Tap water is used for drinking and sanitary purposes at all Santander Bank Polska S.A. locations. Wastewater is discharged into municipal sewerage
networks.
> How water is saved:
Dishwashers are
installed upon
each branch
renovation
In Atrium office in Warsaw, a grey
water system is used. In addition,
efficient bathroom fittings and
waterless urinals reduce water
consumption by 69% and save 10
million litres a year, an amount
com
parable to the capacity of four
Olympic-sized swimming pools.
At the Business Support Centre office
in Poznań, rainwater is collected on
the roofs of buildings and then used
to water green areas. Low-
flow
toilets and taps as well as waterless
urinals red
uce water consumption
and save around 6.8 million litres of
water a year.
In the Business
Support Centre
office in Wrocław,
water consumption
was reduced by half
thanks to low-
flow
toilets and taps.
> Consumables used at the Bank by weight and volume
Paper (kg) Magnetic data storage media (kg)
Branches
150,015
4,670
Business Support Centre
18,077.5
13,575
Total for 2022
186,337.5
18,245
Total for 2021
1,216,560
13,770
> Reduction of diesel and petrol consumption associated with business travel by company cars in 2022
Fuel consumption 2022
Diesel consumption (litres)
8776
Change in diesel consumption compared to 2021
212.48
Petrol consumption (litres)
1,664,440.00
Change in petrol consumption compared to 2021
217,938.00
Average fuel consumption per employee:
0.0059
5. Anti-corruption Policies and their Outcomes
Ethics
The ethical standards adopted in Santander Bank Polska Group are defined in the General Code of Conduct (the Code), which establishes ethical principles,
provides information about the consequences of breaches and gives examples of behaviours that should be displayed in specific situations. The Code
regulates such matters as:
non-competition
conflicts of interest
relations with suppliers
relations with customers
acceptance of benefits
prevention of corruption;
confidentiality of information
personal data protection;
marketing and sale of financial services
prevention of money laundering and terrorist financing;
conduct in the securities markets
accounting and financial information obligations
relations with public officials
intellectual property rights.
Furthermore, the Code specifies the scope of responsibility of individual units for implementing ethical principles and defines the role of the compliance
function’s management, Corporate Regulatory Compliance Committee, Internal Audit, Audit and Compliance Committee, Supervisory Board, the HR
management units and the Business Ethics Council.
The Code is subject to annual reviews. In 2022, the section on corporate behaviours (TEAMS) was modified.
The General Code of Conduct and the Whistleblowing Policy describe how to report breaches of law and corporate standards. In particular, employees can
make reports:
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1. using the KLAKSON application;
2. by phone:
ethics helpline
employee relations helpline
3. by email: etyka@santander.pl
4. by post to the following address: Santander Bank Polska S.A., Pl. Wł. Andersa 5, 51-894 Poznań
The reports can be made anonymously. Whistleblowers are ensured that the case will be thoroughly investigated and that the report will be kept in strict
confidence. Once the information gathered has been clarified and verified, disciplinary or other action may be taken against the reported persons.
Whistleblowers must not be subject to any retaliation or other type of negative action. The Bank also follows best sector practice contained in the Banking
Ethics Code developed by the Polish Bank Association (ZBP).
In 2022, employees reported 131 cases via whistleblowing
channels (including via email, application and helpline).
The Bank's Chief Compliance Officer is responsible for the operation of the Bank's whistleblowing procedures, and designated employees of the Compliance
function are authorised to receive reports and take follow-up action. The above channels are also used by the subsidiaries (Santander Factoring Sp. z o.o.,
Santander Leasing S.A., Santander Towarzystwo Funduszy Inwestycyjnych S.A.).
Conflicts of interest
The employees are obliged to prioritise the interests of the Bank, customers and other stakeholders over their private interests. These matters are governed
by the Conflict of Interest Prevention Policy of Santander Bank Polska S.A., which elaborates on the relevant provisions of the General Code of Conduct
concerning:
prohibition against special treatment or offering special conditions of employment due to personal or family ties;
prohibition against deriving additional benefits from the position held in Santander Bank Polska Group, with the exception of explicitly permitted
cases;
prohibition against participating in the approval of transactions or influencing transactions with parties related through economic or family ties acting
as beneficiaries or guarantors.
The Conflict of Interest Prevention Policy of Santander Bank Polska S.A. also regulates conflicts of interest:
between customers;
between the Bank and its customers;
arising from relationship between a subsidiary and the Bank acting as the parent entity;
between the Group entities and members of their management bodies;
with major shareholders of the subsidiaries;
between the Bank and its suppliers, third parties or major business partners;
between the lines and/ or business units of the Bank;
between two subsidiaries;
between members of the Supervisory Board or the Management Board or between members of these bodies and other employees (e.g. due to non-
business relationships arising from kinship or affinity);
the Bank and related parties other than those listed above.
Potential conflicts of interest involving the Bank’s employees are assessed by experts from the Compliance Area. They may request certain data or
information on personal or professional circumstances that may affect the performance of employees' duties and their decisions.
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Prevention of corruption
Anti-corruption matters are governed by the General Code of Conduct, and further specified by the Anti-Corruption Program, which addresses such topics
as:
gifts and hospitalities for public officials
gifts and hospitalities for employees
relations with third parties;
application of additional control mechanisms;
whistleblowing channels.
In 2022, no case of corruption was reported.
As in the previous year, employees and Management Board members were:
informed about anti-corruption policies and procedures as part of the standard internal regulation communication process;
provided with access to e-learning training on issues related to the General Code of Conduct, the Anti-Corruption Programme and Corporate
Defence.
Anti-corruption training
in 2022 in numbers
Number of
employees per
employment
category
Number of employees
informed about anti-
corruption policies and
procedures
% of employees
informed about anti-
corruption policies and
procedures
Number of
employees who
completed anti-
corruption training
% of employees who
completed anti-
corruption training
Group
464
464
100%
423
91%
Bank
9781
9779
99%
9588
98%
Management Board members
9
9
100%
9
100%
Senior managers
66
66
100%
65
98%
Middle managers
613
613
100%
603
98%
Other employees
9093
9091
99%
8911
98%
Total
10 243
10 011
6. Human Rights Policies and their Outcomes
Human rights
The importance of human rights due diligence processes has been increasing. They are the foundations of both recommended acts (UN Guiding Principles
on Business and Human Rights, OECD Guidelines for Multinational Enterprises) and applicable regulations that refer to these guidelines (minimum
safeguards from the EU Taxonomy Regulation or the new EU Directive on Corporate Sustainability Reporting).
The Group’s approach is defined in the Human Rights Policy of Santander Bank Polska Group. It describes the Group’s commitments in the area of human
rights in relations with employees and customers, business partners and with the communities in which it operates.
In own operations, the Bank is committed to, among other things, preventing discrimination at work and ensuring decent employment conditions.
In the supply chain, the Bank is committed to analysing and assessing the human rights policies and practices of its counterparties as part of due diligence
processes preceding the execution of loan agreements or other agreements.
With regard to business partners other than suppliers, the Bank is committed to promoting the Human Rights Policy, especially where it is required due to
the origin, activity or importance to the Bank.
With regard to the communities in which it operates, the Bank is committed to minimising the environmental impact of its activities and helping to combat
corruption.
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Sustainable supply chain
The supply chain management is governed by:
Procurement Policy of Santander Bank Polska S.A.
Supplier Selection Procedure of Santander Bank Polska S.A.
Policy on Cooperation with Suppliers and Outsourcing of Santander Bank Polska S.A.
Supplier Management and Outsourcing Procedure of Santander Bank Polska S.A.
When selecting suppliers, the Bank checks:
if they diversify their income and if they are not dependent on the Bank;
the certificates they hold, e.g. the ones related to environmental protection, employee relations, etc.;
if they adhere to ESG principles, have the codes of ethics, anti-corruption procedures and programmes in place and reports they publish;
if they have an ethical approach to finance by controlling payment of wage contributions and taxes as well as debt to counterparties, if any.
In 2022, the Bank continued to work on the change from a CSR survey to an ESG survey, as mentioned in the previous report. The new survey will reflect
current expectations towards suppliers. The project is planned to be completed in 2023.
> Key Performance Indicators of procurement policies in 2022:
Number of suppliers with an annual turnover above PLN 50k
1595
of which the number of suppliers subject to certification
1038
Percentage share of suppliers – Polish or foreign companies with headquarters or branch registered in Poland
89.6%
Number of procurement processes completed
520
Percentage share of new suppliers that have been assessed in terms of environmental factors
100.0%
Percentage share of new suppliers that have been assessed in terms of social factors
100.0%
7. HR Policies and their Outcomes
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. They
include specialist recruitment portals, the Referrals Programme, recruitment agencies, PR campaigns and targeted recruitment campaigns in social media,
practical training and internships and cooperation with Santander Universidades.
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 Bank’s recruitment policy describes the recruitment process, establishes the criteria for defining recruitment needs and sets FTE limits.
Management by objectives
Santander Bank Polska S.A. has an objectives management process in place which supports delivery of strategic objectives and staff development and
promotes attitudes in accordance with the Simple | Personal | Fair values and five 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 OneHR system).
In 2022, the Bank implemented a new management-by-objectives process common for entire Santander Group. It is based on three dimensions: WHAT
(business objectives), HOW (the way the objectives are achieved) and RISK. A new rating scale and a new system were also implemented. The change
implementation was supported by a series of webinars, meetings and training sessions for managers and employees.
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Remuneration policy and bonus schemes
Scope and perimeter of the remuneration policy
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 identified employees (known as Material Risk Takers, i.e. employees whose professional activity has a significant impact on the risk
profile of the organisation) excluding members of the Management and Supervisory Boards. The remuneration for members of the management and
supervisory bodies is governed by separate policies described in Chapter XIII “Statement on Corporate Governance”, Part 4 “Governing Bodies”.
The Group’s Remuneration Policy covers a wide range of topics. It defines the rules for determining fixed and variable remuneration, awarding bonuses for
sales staff, identifying and awarding bonuses to material risk takers in the Group, determining remuneration of control function employees and applying
malus clauses (identification, assessment and ex-post adjustment to variable remuneration payable to material risk takers of the Group).
The purpose of the policy is to ensure long-term sustainable growth of the Group by ensuring that employees are adequately remunerated and effectively
motivated to deliver best results and to achieve the strategic goals. The remuneration system is consistent with the interests of key stakeholder groups
(shareholders, employees, customers and communities) and supports long-term value creation, while taking into account such aspects as risk management,
strategy, interests of the organisation, capital requirements and corporate culture. The practices related to the Remuneration Policy are gender neutral. They
allow the Group to recruit and retain top talent using a competitive remuneration package including base salary, bonus schemes and attractive benefits.
Changes to the remuneration policy
The Remuneration Policy of Santander Bank Polska Group was updated in 2022 to bring it in line with new regulations including:
revised EBA Guidelines on sound remuneration policies under Directive 2013/36/EU (EBA/GL/2021/04);
revised Remuneration Policy of Santander Group;
KNF recommendation on the maximum ratio of variable to fixed remuneration (arising from the Regulation of the Minister of Finance).
The new version was adopted in accordance with the Bank’s Management Board resolution of 16 February 2022, which was approved by the Supervisory
Board on 23 February 2022. The key changes included:
alignment of the general rules with EBA guidelines and Santander Group’s Remuneration Policy;
introduction of a principle of equal pay for equal work or work of equal value;
introduction of rules for measurement, analysis and definition of action plans for Gender Pay Gap (GPG) and Equal Pay Gap (EPG);
incorporation of a general rule on ESG targets/ limits for key function holders;
introduction of general rules on discretionary pension benefits;
refinement of the procedure with respect to a resolution increasing the ratio of fixed and variable remuneration.
Fixed remuneration
The key component of remuneration at Santander Bank Polska S.A. 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 Bank’s remuneration unit 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 2022 and its objective was to:
ensure that base salaries reflect market rates;
increase the pay of the lowest earners across the Bank;
ensure equal pay for women and men performing the same roles;
reward employees engaged in the Bank’s digital transformation and in strategic projects and initiatives;
reward top performers who demonstrate the Bank’s corporate values.
As a result of the review, the salary of 70% of the Bank’s employees was increased in Q3–Q4 2022. The salary review enabled the Bank to increase
competitiveness of remuneration and reduce the gender pay gap. The Bank constantly monitors salary rates across the market (based on e.g. payroll reports)
and takes relevant decisions as part of the remuneration strategy.
Variable components of remuneration
The employees of Santander Bank Polska Group are subject to bonus schemes defining the variable component of their remuneration. The bonus schemes
enhance staff motivation and support the delivery of strategic objectives set by the organisation. The awarding criteria and bonus levels are strictly linked
to business and qualitative results of the Group and individual employees, whose performance, delivery of objectives, behaviours and engagement are
reviewed on a regular basis.
The Group’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 (internal audit, compliance area, risk management units and HR units) arise from the roles they perform and their remuneration does not
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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 front-office staff, back-office staff and
employees of control units). Individual bonus schemes differ in terms of eligibility criteria, bonus amount and payment frequency. Bonus payment is
conditioned upon the delivery of specific quantitative 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). It also has an option of awarding individual discretionary awards pursuant to the internal
regulations.
The rules for determination and payment of variable remuneration for Material Risk Takers are presented in Chapter XIII “Statement on Corporate
Governance in 2022”, Part 5 “Remuneration Policy”.
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 incentive programmes addressed to key employees of the Bank. Pursuant to resolution no. 30
of the Annual General Meeting of Santander Bank Polska S.A. held on 27 April 2022, the Bank introduced five-year Incentive Plan VII for the employees of
the Bank and its subsidiaries who contribute materially to the growth in the value of the organisation. For more information about the rules of the Plan, see
Chapter XIII “Statement on Corporate Governance”, Part 5 “Remuneration Policy”, Section “Incentive Plan VII”.
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.
As the criteria stipulated in the bonus regulations were met, in 2022 the Bank’s employees were paid an annual bonus for 2021. The bonuses were paid in
March 2022.In the comparative period, the bonus payment criteria were not met. However, pursuant to the Remuneration Policy of Santander Bank Polska
Group, the discretionary awards were granted to top performers.
Social and employee benefits
The Bank offers a broad range of employee benefits which help make it a more attractive workplace. Employees can use benefits which:
encourage them to lead a healthy lifestyle (e.g. Multisport card);
enhance their comfort and security (e.g. reimbursement of costs related to purchase of prescription glasses, financial aid for employees in a
difficult life situation, group life insurance);
help achieve work-life balance (e.g. a cafeteria system offering a variety of hotel, tourist, cultural, sports and shopping options, which can be
paid for using points awarded to each employee, including hotel vouchers with a deferred expiry date).
The Bank offers a wide array of free ancillary medical services with one of Poland’s largest healthcare providers including access to doctors of all specialties,
laboratory testing, outpatient services, home visits and rehabilitation. Moreover, employees may purchase dental packages, medical packages for family
members, as well as hospital packages (for them and their families) on attractive terms.
Due to the pandemic, the limit for free consultations with a psychologist, psychiatrist or physiotherapist was increased. After the limit is used, employees
can continue to make appointments with a 20% discount.
In 2022, the Bank increased the competitiveness of employee benefits, in particular it:
waived the age limit for employees’ children with the healthcare package;
joined the free flu vaccination programme;
participated in the state Covid-19 vaccination programme for employees and their relatives;
provided employees with special discounts on Covid-19 tests (including certificates in English);
ran a number of health-promoting campaigns (e.g. “Pink October – Breast Cancer Awareness Month”, “Everything you should know about
monkeypox”, “Take care of yourself and your health – do a Pap test”);
significantly speeded up application for financial aid by employees in distress.
The Bank supports families with children by co-financing or reimbursing costs of school starter kits and costs of care over children (in nurseries, kindergartens
and children’s clubs), as well as summer, winter, day and rehabilitation camps for children. The parental support policy also includes an additional paid leave
for new parents, an induction period after the parental leave and reduced working hours.
In addition, once a year, each employee of the Bank may use additional time off during working hours (“Two hours for the family”).
The Bank also cares about retired employees – since 2022, they may apply each year for co-funding for their holidays with the Social Fund.
The Bank makes sure that employees know what social benefits they are eligible for.
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Key HR initiatives
The HR strategy of Santander Bank Polska Group focuses particularly on creating an employee-focused corporate culture, improving employee experience
by modelling the corporate culture, ensuring employee wellbeing, digitalising processes and ensuring flexible work environment.
Both the HR strategy and the strategic priorities pursued by the Bank are described in detail in Chapter V “Relations with Employees”. It also presents the
structure of the Group’s employment in various dimensions. The table below displays the employment structure by gender.
> Employment structure by gender
Number of employees 2022 2021
Women
Men
Women
Men
Group
6,580
3,816
7,877
3,704
Bank 7,887 3,152 6,546
3,038
Below is an overview of selected HR activities carried out in 2022 as part of the strategy implementation.
HR projects Activities delivered in 2022
Creating an
employee-
focused
corporate culture
In 2022, the Bank continued to deliver development initiatives, including:
“Young Leaders” – a global talent programme that develops leadership skills of employees with highest leadership potential;
“Development Booster” – a series of articles and inspirational sessions mainly about personal performance and emotions
management available to all Bank’s employees;
“Be Tech&Business” – a global talent development programme for people with STEM (Science, Technology, Economics,
Mathematics) background;
“Dojo” – a global portal supporting staff development with un
limited access to Santander materials and popular commercial
tools such as LinkedLearning, O’Reily, Netex or Bookmark.
Implementation of the “Digitalisation Fan” internship programme and the “Advisor of the Future” development programme in the
branch network.
Building positive
employee
experience
A range of initiatives were undertaken to enhance employee experience based on the YourVoice survey that identifies areas for
improvement. The eNPS target for 2022 was set at 40, and the score at the end of December 2022 was 41.
Pursuant to the employee experience management model, HR initiatives in this respect are delivered on three levels:
Hot Spots – cross-functional teams that deliver projects based on pain points identified in the eNPS survey;
Task Forces – groups of employees set up in employee service units to consider employee feedback in process improvement;
Divisional Employee Experience Champions –
change leaders in individual Divisions responsible for managing the local
employee experience agenda with the support of EX and HRBP teams.
Selected employee experience initiatives delivered by Hot Spots (HS):
HS “I work in a hybrid model”: implementation of a hybrid work model.
HS “My job is appreciated”: salary review covering 76% of employees; launch of work on benefits in appreciation of long-
serving employees.
HS “I am well onboarded”: development and implementation of the Induction Programme for Branch Banking employees;
set-up of the Employee Zone and the Manager Zone with comprehensive information about the induction process.
HS “Customer
service is simple and efficient”: implementation of active forms for inheritance and garnishment processes;
launch of work connected with implementation of a navigation tool to limit the necessity to switch between systems and
reduce the number of steps in processes handled by customer advisors.
HS “I am an ambassador of our services”: delivery of a range of campaigns for employees in cooperation with partners (e.g.
discounts on products and services for employees), start of the promotional campaign “Double cashback on bills with the
Account As I Want It”.
HS “My workload gives me time to take care of myself”: in-depth analysis of reasons for increased workload; development
and testing of materials for managers and employees, preparation of workshops for
Champions (Employee Experience
Leaders in Divisions) about the available solutions to be held in January 2023.
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HR projects Activities delivered in 2022
Wellbeing &
Mental Health
As part of the Wellbeing & Mental Health strategy covering physical health, mental health, good relationships and financial
education, periodical activities and WELLbinars were held depending on the current needs.
In April, the BeHealthy Week was organised. 1.2k people took part in various events such as webinars. Employees also had access
to articles, podcasts and tips for living a healthy lifestyle.
In June, preventive dermoscopic and trichological examinations were organised (500 employees were tested).
In September, two events were organised as part of the Santander Helps initiative: RakReaton as part of the Golden Ribbon
campaign (a fundraiser for young cancer patients) and the 5th North Macroregion Helps charity run (a fundraiser for the Hospice
Foundation).
Nearly 300 branch and Business Support Centre employees took part in first aid training.
A new Occupational Health and Safety and Wellbeing Policy was implemented combining issues related to health and safety at
work with employee wellbeing and promotion of a healthy lifestyle.
Leadership
The Bank continued to transform its leadership towards human-centred leadership, which puts people first and assumes that a
leader has a special role in building employee experience. Development initiatives were mainly addressed to Management Board
members
and senior managers. They focused on courage and resilience, empathy and mindfulness, mental wellbeing of
employees, creation of safe working conditions, contextualisation and flexibility. These managerial skills were considered to be
particularly important in the face of current challenges (hybrid work, geopolitical crisis).
Succession planning processes were completed in relation to 150 key positions at the Bank to ensure business continuity. They
considered employment diversity in terms of geography, business unit and gender.
Digitalising
processes and
ensuring flexible
work
environment
An application for electronic exchange of HR documents using a qualified signature was implemented in the self-service HR
platform for employees and managers. The new
process simplifies, accelerates and fully digitalises the submission and
confirmation of HR documents. It also supports the strategy to become a paperless bank. The next step is to digitalise personal
files.
HR processes were further simplified and new Digital HR solutions were designed and delivered (based on HR Portal) in
cooperation with all Bank units to improve employee experience using best Design Thinking and UX practices. Managers can now
monitor training progress, calibrate employee ratings and c
onduct skill assessments, while employees have access to a new
personalised My Benefits service and new online HR requests.
In 2022, great efforts were made to align HR processes to the Workday platform. System and process changes and optimisations
were introduced in cooperation with Digital HR to create a tool that will be user- and admin-friendly. Workday 2.0 initiative was
started to further develop the functionality of the tool and increase the effectiveness of the global OneHR (Workday) platform.
8. Diversity Policy and its Outcomes
Foundations of the diversity management approach
Santander Bank Polska Group complies with the laws on diversity, inclusion and equal opportunities. It is committed to promoting diversity in accordance
with best practice and ensuring equal treatment of employees and other stakeholders regardless of their gender, age, education, health conditions, race,
religion, national or ethnic origin, political beliefs, trade union membership, family status or sexual orientation.
Aspects such as respect for individuality, promotion of equal treatment and prevention of discrimination are addressed by a number of policies and
procedures applicable at the Bank, including the Sustainability Policy, the Diversity Policy, the Human Rights Policy, the Respect and Dignity Policy and the
Corporate Culture Policy of Santander Bank Polska Group.
Furthermore, as a signatory to the Diversity Charter (the international initiative supported by the European Commission), Santander Bank Polska S.A.
committed itself to respecting and supporting diversity. Respect for individualism, equal treatment and prevention of discrimination are the cornerstones of
the Bank’s corporate culture.
The diversity and inclusion culture is supported at the Bank by such initiatives as: Diversity Ambassadors (role performed by senior executives), employee
networks (bottom-up initiatives focused on promotion of diversity), educational campaigns, training, webinars (e.g. Diversity Month) and Santander Women
podcast hosted by Dorota Strojkowska, Management Board member in charge of the Business Partnership Division. The Bank’s activities in this respect are
supported by strategic partnerships with expert organisations: Share the Care, UN Global Compact, Vital Voices, Responsible Business Forum.
The Bank’s measures with respect to the promotion of diversity and inclusion were recognised in the Euromoney Market Leaders 2022 ranking, in which
Santander Bank Polska S.A. was hailed the Market Leader in this category.
In addition, for the second year in a row, the Bank was included in the list of the most advanced employers in Poland in terms of diversity and inclusion. The
list was based on the Diversity IN Check survey, which checks the maturity of organisations in managing diversity and building an inclusive work environment.
The survey is conducted by the Responsible Business Forum, which coordinates the Diversity Charter in Poland.
The Bank pursues its diversity strategy as part of selection, assessment of suitability and succession of members of supervisory and management bodies.
The above processes are delivered in a way that prevents discrimination on any grounds, particularly based on gender, race, colour, ethnic or social origin,
genetic features, religion or beliefs, membership of a national minority, property, birth, disability, age or sexual orientation.
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The diversity policy with respect to supervisory and management bodies is described in Chapter IV “Statement on Corporate Governance”.
9. Customer Experience Management
New customer experience management policy
In 2022, Santander Bank Polska S.A. adopted the Customer Experience Management Policy (CX Policy) to complete the customer-centric transformation
process in 2019–2022. The individual elements of the Policy were developed and implemented over the past few years to increase satisfaction of customers
and their propensity to recommend the Bank. The Policy increases the maturity of the Bank and its employees in terms of customer centricity and improves
effectiveness of building positive customer experience.
The CX Policy describes the process of customer experience management and key customer-centric standards applicable at the Bank. Customer experience
management starts with the identification of customer’s needs, followed by definition of NPS targets and planning of relevant initiatives which are then
implemented, monitored and reported on. Customer-centric standards set the framework for delivery of initiatives improving customer experience. In 2022,
a special focus was placed on three standards: KOMPAS product and service design standard, empathic service standard and plain language standard.
Complaints management
Customers of Santander Bank Polska S.A. may file complaints at their convenience: in branch, by phone, via electronic banking or by traditional mail.
In 2022, 67% of complaints were filed in remote channels (by phone or via electronic banking, including through a video conversation and text chat).
Responses to complaints are provided in the customer’s preferred form: by letter, text message or via online and mobile banking. Text messages are used
to acknowledge receipt of the complaint, close the case and communicate the form of providing response. If the case takes more than five (and subsequently
ten) days to process, a text message is also sent to communicate that fact to the customer.
81% of replies were sent electronically.
In 2022, the quality of responses was further improved and measures were continued to shorten the turnaround times. The Bank takes efforts to ensure
that responses are clear and comprehensive. Banking jargon and complicated language are avoided. Robotisation is employed in complaint-handling, which
greatly increases routine tasks:
Effectiveness of complaints handling in 2022
98% of cases covered by the simplified process were resolved within one business day.
61% of cases were resolved within three business days.
27% of cases were resolved at first contact by authorised Bank employees who had received the complaint. The decision was communicated to the
customer immediately after filing the complaint.
The quality and speed of complaint handling and customer satisfaction (measured by surveys) are verified on a regular basis. The complaint handling process
also meets regulatory requirements. All conclusions and results of analyses and surveys are implemented across the organisation and used to enhance the
entire complaint handling process (from the moment of filing the complaint to its resolution). Customers who are not satisfied with the resolution may
appeal to the Customer Care Officer, who provides the relevant support.
Barrier-Free banking and digital solutions
For 12 years, Santander Bank Polska S.A. has delivered the “Barrier-Free Banking” (“Obsługa bez Barier”) programme, designed to ensure access to the
Bank’s services and products for customers with diverse needs (people with disabilities, the elderly). The Bank steadily improves accessibility using advanced
technologies and ensuring appropriate conditions in traditional branches. Inclusive banking is one of the pillars of the Responsible Banking strategy.
Barrier-free banking
All branches and partner outlets adhere to the barrier-free banking standards which take into account diverse customer needs, including the needs of people
with disabilities. At branches, customers may use priority-service points. There are mini magnifying glasses and signature frames for blind or visually-
impaired customers. At each outlet and branch, 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.
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Barrier-free branches
The Bank conducts regular audits at branches to make sure they are accessible to customers with disabilities. At present, nearly 40% of the Bank’s branches
(153) are certified for architectural accessibility for such customers. 100% of branches have solutions for visually impaired people and offer support of an
advisor who speaks Polish Sign Language.
44 branches (as at 10 December 2022) are equipped with portable induction loops, which facilitate interactions with customers who use hearing aids.
The Bank equips branches with tactile ground surface indicators and maps in Braille with a bell to be rung for assistance, and the TOTUPOINT navigation and
information system. These solutions support spatial awareness and increase safety for people with visual impairment. They are an integral part of the
barrier-free branch design standard.
There are special procedures in place regarding statements of will made by customers who cannot read and/or write.
Barrier-free remote channels
Special solutions were also implemented in remote channels. 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. Contact Centre (helpline) uses voice recognition, an
option that is also available as part of the IVR.
Customers calling 1 9999 can use Call Steering, a technology that recognises and interprets speech and gets callers to the right destination based on their
responses. CS shortens call times, reduces times to be connected with a customer advisor and increases customer satisfaction.
ATMs of Santander Bank Polska S.A. have features that make them more accessible to people with different needs. They include e.g. an audio system
(“talking” ATMs), a high-contrast mode, a screen switch-off mode and Braille symbols. At present, 95% of nearly 1,500 of the Bank’s ATMs are equipped
with at least one such solution.
The Bank offers a card with a blind notch on the side, which makes it easier to use for blind and partially sighted people when using ATMs or making
payments.
Barrier-free communication
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, audio description (voice-over) and translation by the Polish Sign Language
interpreter.
In accordance with the Polish Accessibility Act of 19 July 2019, the Bank also provides an option to request the accessible documents (e.g. non-personalised
contract templates, terms and conditions) remotely or in branches.
Differently Abled project
Santander Bank Polska S.A. runs the Differently Abled project to create an inclusive and diverse work environment. The Bank conducts various educational
activities to ensure the organisation is prepared to employ people with disabilities and to raise the awareness of the needs of this employee group.
The Bank is also a founding member of the Business Accessibility Forum, a platform for discussion of matters arising from the European Accessibility Act to
support and inspire Polish businesses to improve the accessibility of products and services.
In 2022, the Bank ran regular communication and education campaigns addressed to its employees and customers, through training sessions, meetings
and webinars with experts as well as social media campaigns.
For more information about the Barrier-Free Banking programme and the Differently Abled project, see “Statement on Non-Financial Information of
Santander Bank Polska Group for 2022”.
10. Social Policies and their Outcomes
Santander Bank Polska Group 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. The Bank takes measures to addresses important social aspects such as:
education – support for higher education by funding scholarships for students, promotion of knowledge of finance and cybersecurity;
development of a civil society;
support for entrepreneurship;
culture and sports patronage.
In 2022, following the outbreak of the war in Ukraine, the Bank also undertook various initiatives to support Ukrainian citizens.
The section below presents sponsorship, corporate giving and corporate volunteering activities.
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Key sponsorship projects in 2022
In 2022, the sponsorship initiatives of Santander Bank Polska S.A. continued to focus on the following three main areas: education (particularly financial
education), sports, and culture. The pandemic, which continued during the first months of the year, and the related sanitary regime affected the form of
projects as well as intensity of measures taken, with a wider use of remote communication and promotion tools. The Bank focused particularly on long-
term projects which give a bigger opportunity to create lasting association between a given event and the Bank. New image-building projects were also
delivered involving the Bank’s experts from different areas. The Bank was actively involved in the promotion and communication activities related to the two
global sponsorship projects of Santander Group, i.e. partnership with Scuderia Ferrari and League of Legends European Championship (LEC).
Key sponsorship projects continued/ started in 2022
Scuderia Ferrari
In December 2021, Banco Santander S.A. announced an alliance to become once again one of the premium partners of Scuderia
Ferrari, the team the bank has cooperated with since 2010. Since the start of the 2022 season, Santander logo has featured
prominently on the team's cars, race suits and caps.
Over the term of the partnership, Santander will offer Scuderia Ferrari a wide range of solutions to support the team’s efforts to
become carbon neutral by 2030.
In 2022, Santander Group and Formula 1® launched a global programme targeted at start-ups and scale-ups from 11 countries
(Germany, Argentina, Brazil, Chile, USA, Spain, Mexico, Portugal, Poland, UK and Uruguay). The programme aims to develop
innovative and sustainable solutions for the automotive sector in various areas: mobility, logistics and transport, as well as
carbon offsetting.
League of Legends
European
Championship (LEC)
In 2022, Banco Santander S.A. signed a multi-year partnership agreement with the League of Legends European Championship
(LEC), becoming the main sponsor of League of Legends in Europe and Latin America (the most successful esports worldwide).
The partnership agreement with LEC helps the Bank promote innovation, diversity and digitalisation.
With the claim “Level up your dreams”, Santander Group wants to build a new community and connect with younger
generations to help them prosper.
“Finansiaki”
economic education
project
“Finansiaki” is a project set up and run by Santander Bank Polska S.A. to support development of educational capabilities of
parents and teachers in the area of finance and entrepreneurship by providing relevant materials.
The key element of the project is the internet portal https://finansiaki.pl/ launched in December 2016. The educational
materials available on that website were developed by experts and include a variety of ideas how to introduce children to the
world of finance and teach finance management in a fun and playful way.
The programme is accompanied by financial education classes run by the Bank’s employees in kindergartens and primary
schools as part of corporate volunteering, a free tutorial for parents “Finansiaki. To My!” on how to teach entrepreneurship to
children and “Finansiaki to My” Facebook and Instagram profiles including tips for parents and teachers on how to talk with
children about finance in a simple and fun way.
In 2022, the following activities were completed as part of the project:
a wide-reaching educational campaigns with Onet.pl (“The ABC of finance: how to talk to children about money”) and
with naTemat.pl i mamaDu.pl;
a series of ten workshops in ten Polish cities on financial education for over 2.3k teenagers (fifth to eighth graders) on
such topics as: cybersecurity, prices, advertisement, budgeting, loans and savings;
audiobooks for children aged 6–10 on financial education (available on finansiaki portal).
How's Your Driving
(Jak Jeździsz)
The “How’s Your Driving” (“Jak Jeździsz”) project was launched by the Bank in 2015 in cooperation with BSS PRO Sp. z o.o. Sp.
kom. to promote responsible behaviour and good road manners via social media and www.jakjezdzisz.pl.
The main purpose of this communication campaign is to promote safe driving among new and experienced drivers and raise
the awareness of risks caused by speeding, drink driving and using a mobile phone whilst driving.
Since the start of the project, the number of fans on Facebook and Instagram has grown to 159k (as at 31 December 2022).
“Security in
Cyberspace”
education project
Santander Bank Polska S.A. is a partner of the “Security in Cyberspace” (“Bezpieczeństwo w Cyberprzestrzeni”) project, which
was launched in 2017 and is coordinated by the Warsaw Institute of Banking (WIB). The purpose of the project is to raise the
awareness of online safety and to develop practical skills related to the use of new technologies.
In 2022, nearly 2k classes, lectures, webinars, training sessions, e-learning courses, conferences and contests were organised
for more than 220k participants (children and teenagers, students, seniors). Educational materials (including videos, brochures
and leaflets) were distributed by the WIB through the local, industry and Poland-wide media, newsletters and social media.
Santander Orchestra
Santander Orchestra is a cultural and educational project run by Santander Bank Polska S.A. since 2015 to support the careers
of talented young musicians. The project combines top class musical workshops with lectures on a variety of topics, an element
that is often not included in the traditional curriculum.
In 2022, six lullabies were recorded, featuring Santander Orchestra musicians and two talented singers.
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Key sponsorship projects continued/ started in 2022 (cont.)
Digital Festival 2022
(4th edition)
For the second time in a row, Santander Bank Polska S.A. was a partner of Digital Festival, the largest education and
technology initiative in Poland aimed at promoting digital technologies. The fourth edition, which was organised by the
Digital Poland Foundation under the slogan: “Get ready for more”, was held from 1 October to 10 November 2022.
The project is addressed to people who want to acquire or develop their knowledge and skills. Selected festival initiatives
are available through a year, e.g. Knowledge Zone (Strefa Wiedzy), SkillUp Academy (Akademia SkillUp).
The Bank’s experts delivered training, gave interviews and commented on research results presented in the report provided
to participants (“Technology in the service of society”).
Training presentations of three Bank’s experts are now available on
the Akademia SkillUp platform, which offers free training courses aimed to develop digital skills.
The Bank is a partner of the publication: “Modern Senior: A Guide to the Cyber World”, which was pronted and distributed to
seniors from universities of the third age and country clubs and for sale in traditional and online stores. The chapter on online
ba
nking was prepared by the Bank’s experts. More than 150 training sessions for seniors were delivered based on this
material.
The campaign promoting the Festival reached 13.5m people via national media and 6.5m people via social media.
Open Eyes Economy
Summit 2022
(7th edition)
The Bank sponsored the 7th edition of Open Eyes Economy Summit – International Congress of the Economy of Values,
which was held on 22–23 November 2022 in ICE Kraków Congress Centre. The theme of this edition was credibility and its
reflection in socio-
economic and political life. The event organised since 2016 brings together renowned representatives of
the world of science, economics and culture. It is devoted to economy based on social values.
Thanks to the Bank’s financial support, all presentations in the Firm–Idea thematic track were translated into Polish Sign
Language.
The Bank’s experts took part in three panels: “Financing green investments in cities”, “City for the youth” and “Accessible
goods and services: a requirement or a business necessity?”.
The special session on accessibility of goods and services was held under the patronage of the Bank, whose intention was to
focus on the new legislation and stress the importance of a debate in this respect, among other things.
The Summit was attended by 3.2k participants onsite and 2k participants online (from 30 countries).
Trendbook
The Bank became a partner of Trendbook, a series of interesting live interviews with guests from the world of business,
organised in cooperation with the Puls Biznesu daily and aired on Radio 357. The series presents the impact that changes in
the world ha
ve on business and decisions taken. The authors track trends in the world of technology, business and media
that impact the way we live, work and buy.
The first season consisting of six episodes was launched on 27 October 2022. The Bank’s representatives were invited as
experts in two episodes.
The series is a regular item on Radio 357. The project will be continued in 2023.
Let’s talk about HER
money podcast
Santander Bank Polska S.A. was also a titular partner of the series of podcasts on finance called “Let’s talk about HER money”
powered by Santander. The series comprised five thematic seasons, 25 episodes hosted by Magdalena Linke-Koszek, an
author of Her Impact – a platform that helps ambitious women to discover their potential.
The podcasts we
re made available from August 2022 to January 2023 on the Spotify Her Impact channel, and promoted on
the Bank’s social media profiles (LI, FB).
Sustainable
development as part
of curriculum
In 2022, the Bank became a strategic partner of a project aimed to introduce sustainable development as part of academic
curriculum. Since October 2022, this subject has been taught at 13 faculties of three universities: the University of Warsaw,
the University of Opole and the University of Wrocław.
As part of the project, academics from the above universities developed a multimedia guide for students. It is available for
free at https://zr.humandoc.pl/.
The project is delivered by the HumanDoc Foundation and is co-financed with EUR 188.1k worth of subsidy from EEA funds.
Santander Bank Polska Foundation
Activities in 2022
In 2022, Santander Bank Polska Foundation performed the following donation agreements in cooperation with social partners:
educational budget: PLN 32,500
charity budget: PLN 397,067
cultural budget: PLN 81,700
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The key cyclical projects delivered by the Foundation include grant programmes.
Selected grant programmes run in 2022:
Here I live, here I make eco-friendly changes
The aim of the “Here I live, here I make eco-friendly changes” (“Tu mieszkam,
tu zmieniam EKO”) programme is to introduce changes in local communities,
promote environmental education and bring together residents. The jury of
the competition particularly f
ocuses on original ecological initiatives
responding to social needs. Projects delivered as part of the programme
included creation of vertical gardens, pocket parks, rain gardens, plant
murals, green libraries and public transport stops.
Number of applications: 323
Number of organisations helped: 20
Number of beneficiaries: 10,756
Programme budget: PLN 200,000
Bank of Young Sports Champions
The “Bank of Young Sports Champions” (“Bank Młodych Mistrzów Sportu”)
programme promotes active lifestyle. As part of the 2022 edition, grants
were awarded to sports projects and events for young people aged 5–26
such as team sports events, competitions for people with disabilities, training
and other initiatives promoting fair play and sportsmanship.
Number of applications: 507
Number of organisations helped: 25
Number of beneficiaries: 6,245
Programme budget: PLN 150,000
“TO(działa)MY!” educational and social project
The project is a proposition for teachers working with students from the 4th
grade of primary schools onwards. Its aim is to inspire children and young
people to act beyond the framework of traditional education. It allows
students to develop their skills and competencies required in today’s world.
It gives an opportunity to act in the areas they find important and interesting.
The project made it possible to obtain PLN 2k, PLN 5k, PLN 10k or PLN 15k for
the implementation of a social project prepared by students.
Number of applications: 65
Number of organisations helped: 13
Number of beneficiaries: 10,776
Programme budget: PLN 50,000
Other selected programmes:
2022/23 Scholarship Programme – as part of the fifth edition of the Programme, scholarships were awarded to 25 out of 563 applications submitted
in the 2022/2023 school year.
“Flicker Club” (“Klub Płomyka”) – a continuation of the project aimed to renovate units in educational care centres and hospitals and provide necessary
equipment, books and toys. In 2022, the facilities in the University Hospital in Wrocław were renovated. A waiting room for the youngest patients was
built. Since the beginning of the project, 11 units in 9 locations were renovated.
“We Will Double Your Impact” – a joint initiative of the Santander Foundation, Santander Bank Polska Group, its customers and employees (budget of
PLN 1.5m). The fundraiser was organised for the third time, this time for people from Ukraine. The number of participants exceeded 26.5k. More than
4,250k was raised and transferred to organisations coordinating aid for people affected by the war in Ukraine – PAH, Unicef, the Polish Red Cross and
the city of Przemyśl.
Aid to people in need - non-refundable financial support was provided to 70 Bank employees from Ukraine, which was at war.
Kilometres for Ukraine – a fundraiser for children from Ukraine staying at children’s homes in Poland. The funds were donated to three children’s
homes, mainly to finance repairs and equipment.
Management Board Report on Santander Bank Polska Group Performance in 2022
(including the Report on Santander Bank Polska S.A. Performance)
190
Corporate volunteering
Corporate volunteering at the Bank is supported by Santander Bank Polska Foundation. In 2022, 210 projects were carried out for social organisations and
people in need. The volunteers include 1,972 employees Poland-wide.
> Corporate volunteering in 2022 in numbers
210 11,430 1,972 PLN 104,249.70
Number of corporate
volunteering projects completed
Number of beneficiaries of corporate
volunteering projects
Number of volunteers
Funds set aside by the Santander
Foundation towards corporate
volunteering projects
The initiatives undertaken by the Bank’s employees were aimed to help Ukrainian refugees, children and teenagers with cancer, hospice patients, lonely
elderly individuals, and children and teenagers in educational care centres. They also included ecological projects.
The volunteers took part in financial education projects for young people, e.g. in the “Bakcyl” project run in partnership with the Warsaw Institute of Banking,
and in the “First-class Fridge” project designed to teach children how to avoid food waste. As part of skill-based volunteering, employees shared their
knowledge of cybersecurity, civil law and labour law with children and teenagers from educational care centres.
Expenses on social and other projects
The table below presents the expenses incurred by Santander Bank Polska Group on social projects and other non-core projects.
1) Financial data for 2021 have been restated to take account of a separate line item: “climate education” introduced in 2022.
Expenses of Santander Bank Polska Group in 2022 on non-core activities (PLN m) 2022 20211
)
Education, including:
4.4
5,6
- Financial education 1.3 2.4
-
Climate education
0.6
0.3
Sports
5.0
3.2
Culture
0.7
1.4
Environmental protection 0.3 1,2
Charity events and statutory activities of foundations/associations, including: 5.6 4,1
-
“We Will Double Your Impact” fundraiser
1.5
2.0
Industry conferences
0.9
0.2
Management Board Report on Santander Bank Polska Group Performance in 2022
(including the Report on Santander Bank Polska S.A. Performance)
191
XV. Statement of the Management Board
True and Fair Presentation of the Financial Statements
To the best of the Management Board’s knowledge, the financial figures and the comparable data presented in the financialstatements incorporated in the
“Annual Report of Santander Bank Polska S.A. for 2022” and “Annual Report of Santander Bank Polska Group for 2022” were prepared in keeping with the
applicable accounting policies and give a true and fair view of the state of affairsand earnings of Santander Bank Polska S.A. and Santander Bank Polska
Group. The Management Board’s Report contained in this document shows a true picture of the development, achievements and position of Santander Bank
Polska S.A. and its Group (including the underlying risks) in 2022.
Auditor selection
The audit firm responsible for auditing the unconsolidated and consolidated financial statements of Santander Bank Polska S.A. for 2022 was selected in
compliance with the applicable legislation. The bank has the “Auditor Appointment Policy at Santander BankPolska S.A.”, the “Auditor Services Policy at
Santander Bank Polska S.A.” and the “Policy for Non-Audit Services Rendered by theAuditor”, which relate to the policy of selection of an audit firm and the
policy of provision of non-audit services by an audit firm, an affiliate of an audit firm or a member of its network. The bank complies with the applicable legal
provisions relating to the rotation of audit firms and the key statutory auditor, and the appropriate
The following persons have signed this Management Board Report with an electronic qualified signature.
Date Name Function Signature
21.02.2023 Michał Gajewski President
The original Polish document is signed with
a qualified electronic signature
21.02.2023 Andrzej Burliga Vice-President
The original Polish document is signed with
a qualified electronic signature
21.02.2023 Juan de Porras Aguirre Vice-President
The original Polish document is signed with
a qualified electronic signature
21.02.2023 Arkadiusz Przybył Vice-President
The original Polish document is signed with
a qualified electronic signature
21.02.2023 Lech Gałkowski Member
The original Polish document is signed with
a qualified electronic signature
21.02.2023 María Elena Lanciego Pérez Member
The original Polish document is signed with
a qualified electronic signature
21.02.2023 Patryk Nowakowski Member
The original Polish document is signed with
a qualified electronic signature
21.02.2023 Maciej Reluga Member
The original Polish document is signed with
a qualified electronic signature
21.02.2023 Dorota Strojkowska Member
The original Polish document is signed with
a qualified electronic signature