Raport

Independent Statutory Auditor’s Report on the Audit

of Separate Annual Financial Statements of

ING Bank Śląski S. A.

for the financial year ended

31 December 2023

Mazars Audyt Sp. z o.o.

ul. Piękna 18

00-549 Warsaw

Mazars Audyt Sp. z o.o.

Sąd Rejonowy dla m. st. Warszawy, XII Wydział Gospodarczy KRS nr 0000086577, kapitał zakładowy: 1 268 000,00 PLN,

NIP: 5260215409, REGON: 011110970

INDEPENDENT STATUTORY AUDITOR’S REPORT

ON THE AUDIT OF SEPARATE ANNUAL FINANCIAL STATEMENTS

Translation of the document originally issued in Polish

To the General Shareholders’ Meeting and the Supervisory Board of ING Bank Śląski S.A.

Report on the Audit of Separate Annual Financial Statements

Opinion

We have audited the separate annual financial statements of ING Bank Śląski S.A. (“the

Bank”), which comprise the statement of financial position as at 31 December 2023, the

income statement, the statement of comprehensive income, the statement of changes in

equity, the cash flow statement for the financial year from 1 January to 31 December 2023

and accounting policy and additional notes (“separate financial statements”).

In our opinion, the accompanying separate financial statements:

• give a true and fair view of the property and financial position of the Bank as at 31

December 2023, and of its financial result and its cash flow for the financial year then

ended in accordance with the applicable International Financial Reporting Standards

as adopted by the European Union and the adopted accounting principles (policy);

• comply with the applicable legislation and with the provisions of the Bank’s Articles of

Association as to the form and content;

• have been prepared based on the accounting books kept properly, in accordance with

Chapter 2 of the Accounting Act of 29 September 1994 (the Accounting Act” - Journal

of Laws of 2023, item 120 as amended).

The present opinion is consistent with the additional report to the Audit Committee that we

issued on 7 March 2024.

Mazars Audyt Sp. z o.o. 3

Basis for Opinion

We conducted our audit in accordance with National Standards on Auditing as per

International Standards on Auditing adopted by resolution of the National Council of Statutory

Auditors No. 3430/52a/2019 of 21 March 2019 regarding national standards on auditing and

other documents, as amended, and resolution of the Council of the Polish Agency for Audit

Oversight No. 38/I/2022 of 15 November 2022 on national standards on quality control and

National Standard on Auditing 220 (Revised)

(“NSA”), as well as according to the Act on

Statutory Auditors, Audit Firms and Public Supervision of 11 May 2017 (“the Act on Statutory

Auditors” - Journal of Laws of 2023, item 1015 as amended) and Regulation (EU) No 537/2014

of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities

and repealing Commission Decision 2005/909/EC (“EU Regulation” - Official Journal of the

European Union L 158/77 of 27 May 2014, as amended). Our responsibility under those

standards has been further described in “Statutory Auditor’s Responsibility for the Audit of the

Financial Statements” section of our report.

We are independent of the Bank in accordance with the International Code of Ethics for

Professional Accountants (including International Independence Standards) of the

International Ethics Standards Board for Accountants (“the IESBA Code”), adopted by

resolution of the National Council of Statutory Auditors No. 3431/52a/2019 of 25 March 2019

on the principles of professional ethics for statutory auditors, as amended, and other ethical

requirements which are applicable to the audit of financial statements in Poland. We have

fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA

Code. During the audit the key statutory auditor and the audit firm remained independent of

the Bank in accordance with the independence requirements specified in the Act on Statutory

Auditors and EU Regulation.

We believe that the audit evidence that we have obtained is sufficient and appropriate to

provide a basis for our audit opinion.

Key Audit Matters

Key audit matters are those matters that, in the auditor’s professional judgment, were of most

significance in the audit of the separate financial statements for the current reporting period.

These include the most significant assessed risks of material misstatement, including the

assessed risks of material misstatement due to fraud. These matters were addressed in the

context of our audit of the separate financial statements as a whole and in forming our opinion

thereon, and we summarized our responses to these risks, and, where deemed appropriate,

presented the most important observations related to these risks. We do not provide

a separate opinion on these matters.

Key audit matter

How our audit responded to this matter

Impairment for expected credit losses

on loans and other receivables to

customers

In accordance with the International

Financial Reporting Standard Financial

Instruments 9 ("IFRS 9"), the Bank's

We critically analyzed the design and implementation

of the process for assessing credit risk and estimating

expected credit losses and verified the effectiveness of

the controls implemented by the Bank for identifying

and estimating expected credit losses.

Mazars Audyt Sp. z o.o. 4

management should determine the

value of expected credit losses that may

occur during the 12-month period or the

remaining life of the financial asset,

depending on classification of individual

assets into risk categories ("stages")

taking into account the impact of future

macroeconomic conditions on the level

of expected credit losses.

Determining the amount and timing of

recognition of expected credit losses

requires the use of significant judgment

and significant and complex estimates,

including primarily in terms of the

parameters of credit risk in the models

for calculating expected credit losses.

The estimate of the allowance for

expected credit losses takes into

account the issue of the impact of

changing macroeconomic conditions of

the economy. This estimate required the

application by the Bank's Management

Board additional assumptions and

expert adjustments, which take into

account the uncertainties associated

with the current and future

macroeconomic environment and reflect

risk factors that were not included in the

Bank's models.

We considered this area to be a key

audit matter because the estimation of

the impairment for expected credit

losses involves significant inherent risks

of misstatements as well as uncertainty

in the estimates made and requires the

Bank's management to exercise

significant judgment and, given the size

of the loan portfolio, has a material

impact on the financial statements.

Note III.3.1.1 Estimation of expected

credit losses for financial assets and

Note II.2 Credit risk provide details on

the methods and models used and the

level of impairment for expected credit

We performed a reconciliation of the base of loans and

other receivables to customers with the Bank's general

ledger to confirm the completeness of the recognition

of loans and other receivables to customers that are

the basis for the impairment for expected credit losses,

as well as the value of the impairment.

We performed analytical procedures for the coverage

of the loan portfolio with expected credit losses and

their changes, as well as the transfer of exposures

between stages.

We evaluated the Bank's impairment methodology for

compliance with the requirements of IFRS 9, in

particular with regard to the application of the criteria

for identifying a significant increase in credit risk, the

definition of default, the credit risk parameters adopted

and the consideration of the impact of future

macroeconomic conditions (forward looking

information) on the level of expected credit losses.

For the portfolio of loans and other receivables to

customers assessed using the collective method:

• we conducted an analysis of the methodology

used to calculate the impairment for expected

credit losses for exposures evaluated using the

collective method, including the adequacy of

the risk parameters used by the Bank,

• we conducted an independent verification of

the calculation of impairment for expected

credit losses for the entire population of loans,

• we conducted an assessment of the

verification of models based on historical data

(so-called back-tests),

• we verified the approach and assumptions

used to create adjustments not included in the

models created to reflect the impact of

uncertain economic conditions on the valuation

of the impairment for expected credit losses.

For the portfolio of loans and other receivables to

customers assessed using the individual method:

• we conducted an analysis of the correctness of

the impairment identification process and

classification into stages,

Mazars Audyt Sp. z o.o. 5

losses on loans and other receivables to

customers.

• on a selected sample of credit exposures, we

reviewed documents on the borrower's

financial situation and verified the correctness

of the assignment to the appropriate stage,

• for selected impaired loans and advances

(stage 3), we tested the assumptions used in

calculating expected credit losses, in particular

the expected scenarios and the probabilities

assigned to them, as well as the timing and

amounts of expected cash flows, including

cash flows from repayments and realization of

collateral.

We also assessed the adequacy and completeness of

disclosures regarding the impairment for expected

credit losses in the separate financial statements.

Impact of the legal risk of CHF-

indexed mortgage loans

The estimate of the impact of the legal

risk of CHF-indexed mortgage loans

resulting in the recognition of

adjustments to the gross carrying value

of these loans or related litigation

provisions is complex and requires a

significant degree of judgment in

determining the possible scenarios, as

well as with respect to the assumptions

made regarding the number of expected

lawsuits, the likelihood of their resolution

with consideration of the possibility of a

court settlement, and the amount of loss

if the Bank loses a lawsuit or enters into

a court settlement.

The Bank's estimates in this regard are

based on historical observations

indicating considerable uncertainty

about the number of lawsuits that will be

filed in court in the future, as well as the

lack of a consistent line of existing court

rulings.

Note III.3.6 Write-downs and portfolio

provisions related to the portfolio of

mortgage loans indexed to the CHF

exchange rate details the assumptions

used to calculate the adjustment to the

In terms of estimating the amount of the impact of the

legal risk of CHF-indexed mortgage loans, our audit

procedures were mainly directed at evaluating the

model and the various assumptions made by the

Bank's Management Board that have a significant

impact on the level of estimated legal risk costs.

In particular, we carried out the procedures described

below:

• we carried out a critical evaluation of the model

for estimating the impact of legal risk on CHF-

indexed mortgage loans and the various

assumptions,

• we held discussions with the Bank's

Management Board and specialists, including

the Bank's lawyers, on the assumptions made,

taking into account historical observations,

including information and events subsequent to

the balance sheet date, past and possible legal

settlements, in particular settlements of the

Court of Justice of the European Union

(CJEU),

• we analyzed the Bank's documentation for the

purpose of estimating the statistical probability

of realization of the various scenarios of

possible settlements,

• we verified the assumptions adopted by the

Bank based on historical data for estimating

Mazars Audyt Sp. z o.o. 6

gross carrying value of CHF-indexed

mortgages and related provisions for

litigation, as well as possible alternative

results presented as part of the

sensitivity analysis of the estimate.

the probability of future settlements and the

level of losses realized because of them,

• we analyzed the calculation of the value of

potential losses under the various scenarios

adopted by the Bank based on historical data,

• we verified the model used by the Bank to

estimate the impact of legal risk, verified the

correctness and completeness of the data

underlying the calculations, and confirmed the

mathematical correctness of the calculations,

• we analyzed events after the balance sheet

date and their impact on the estimate of

provisions,

• we analyzed the register of customer

complaints, with a particular focus on issues

related to and mortgage loans indexed to CHF.

We also assessed the adequacy and completeness of

the disclosures regarding the impact of legal risk on

CHF-indexed mortgage loans in the separate financial

statements.

Responsibilities of the Management Board and Supervisory Board for the

Separate Financial Statements

The Bank's Management Board is responsible for preparing, based on the accounting books

properly kept, the separate financial statements that give a true and fair view of the Bank’s

property and financial position and its financial performance in accordance with International

Financial Reporting Standards as adopted by the European Union and adopted accounting

principles (policy), as well as with the relevant legislation and with the provisions of the Bank’s

Articles of Association. The Bank’s Management Board is also responsible for such internal

control as the Management Board determines is necessary to enable the preparation of

separate financial statements that are free of material misstatement, whether due to fraud or

error.

In preparing the separate financial statements, the Bank's Management Board is responsible

for assessing the Bank’s ability to continue as a going concern, as well as for disclosing, if

applicable, matters related to going concern and for adopting the going concern assumption

as an accounting basis, unless the Management Board either intends to liquidate the Bank or

to cease operations, or has no realistic alternative but to do so.

The Bank's Management Board and members of the Supervisory Board are obliged to ensure

that the separate financial statements meet the requirements set out in the Accounting Act.

Members of the Supervisory Board are responsible for supervising the financial reporting

process of the Bank.

Mazars Audyt Sp. z o.o. 7

Statutory Auditor’s Responsibilities for the Audit of the Separate Financial

Statements

Our objectives are to obtain reasonable assurance about whether the separate financial

statements as a whole are free from material misstatement, whether due to fraud or error, and

to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of

assurance but is not a guarantee that an audit conducted in accordance with the NSA will

always detect a material misstatement when it exists. Misstatements can arise from fraud or

error and are considered material if, individually or in the aggregate, they could reasonably be

expected to influence the economic decisions of users taken on the basis of these separate

financial statements.

The scope of audit does not include assurance as to the future profitability of the Bank and

effectiveness or efficiency of running the Bank’s affairs by the Management Board at present

or in the future.

According to principles of the NSA, we exercise professional judgement and maintain

professional skepticism throughout the audit, as well as:

• we identify and assess risks of material misstatement of separate financial statements,

whether due to fraud or error, we design and perform audit procedures responsive to

those risks and we obtain audit evidence which is sufficient and appropriate to provide

a basis for our audit opinion. The risk of not detecting a material misstatement resulting

from fraud is higher than for one resulting from error, as fraud may involve collusion,

forgery, intentional omissions, misrepresentations, or the override of internal control;

• we obtain an understanding of internal control relevant to the audit in order to design

audit procedures that are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the internal control in the Bank;

• we evaluate the appropriateness of the accounting principles (policy) used and the

reasonableness of the accounting estimates and related disclosures made by the

Management Board of the Bank;

• we conclude on the appropriateness of the Bank’s Management Board’s use of the

going concern basis of accounting and, based on the audit evidence obtained, as to

whether a material uncertainty exists related to events or conditions that may cast

significant doubt on the Bank’s ability to continue as a going concern. If we conclude

that a material uncertainty exists, we are required to draw attention in our auditor’s

report to the related disclosures in the separate financial statements or, if such

disclosures are inadequate, to modify our opinion. Our conclusions are based on the

audit evidence obtained up to the date of our auditor’s report. However, future events

or conditions may cause the Bank to cease to continue as a going concern;

• we evaluate the overall presentation, structure and content of the separate financial

statements, including the disclosures, and whether the separate financial statements

represent the underlying transactions and events in a manner that achieves fair

presentation.

Mazars Audyt Sp. z o.o. 8

We communicate with the Audit Committee regarding, among other matters, the planned

scope and timing of the audit and significant audit findings, including any significant

deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant

ethical requirements regarding independence and that we will communicate all relationships

and other matters that may reasonably be thought to bear on our independence, and, where

applicable, related safeguards.

From the matters communicated to the Audit Committee, we determine those matters that

were of most significance in the audit of the separate financial statements of the current period

and are therefore the key audit matters. We describe these matters in our auditor’s report

unless law or regulation precludes public disclosure or when, in exceptional circumstances,

we determine that a matter should not be communicated in our report because the adverse

consequences of doing so would reasonably be expected to outweigh the public interest

benefits of such communication.

Other Information, including the Management report

Other Information includes:

• the Management Report on Operations of the ING Bank Śląski S.A. Group in 2023

(“the Management report”) with the Letter from the CEO and corporate governance

statement, which is a separate parts of this Management report,

• a separate report on non-financial information specified in Article 49b (9) of the

Accounting Act,

• Letter from the Supervisory Board Charmain,

• Representation of the Supervisory Board concerning the Audit Committee,

• Assessment of the annual financial statements of ING Bank Śląski S.A. for 2023

prepared by the Supervisory Board,

• Assessment of the ING Bank Śląski S.A. Group’s Operations in 2023 prepared by the

Supervisory Board.

(together “Other Information”).

Under Article 55 (2a) of the Accounting Act the Management report of the ING Bank Śląski

S.A. Group and of the Bank for 2023 were prepared jointly.

Responsibility of the Management Board and Supervisory Board

The responsibility for the preparation of the Other Information in accordance with the

applicable regulations lies with the Bank’s Management Board.

The Bank’s Management Board and members of the Supervisory Board are obliged to ensure

that the Management report along with the corporate governance statement, which is

a separate part of this Management report and a separate non-financial report specified in

Article 49b (9) of the Accounting Act, meet the requirements set out in the Accounting Act.

Mazars Audyt Sp. z o.o. 9

Statutory Auditor’s Responsibility

Our opinion on the audit of the separate financial statements does not cover the Other

Information. In connection with our audit of the separate financial statements, our responsibility

is to read the Other information and, in doing so, consider whether the Other Information is

materially inconsistent with the separate financial statements, or our knowledge obtained in

the audit or otherwise appears to be materially misstated. If, based on the work we have

performed, we conclude that there is a material misstatement of this Other Information, we are

required to report that fact. In accordance with the Act on Statutory Auditors, our responsibility

is also to give an opinion whether the management report has been prepared in accordance

with applicable regulations and whether it complies with information contained in the separate

financial statements. In addition, in accordance with requirements of Article 111a (3) of the

Act of 29 August 1997 Banking Law (Journal of Laws of 2023, item 2488 as amended)

(“Banking Law”), our responsibility is to audit information specified in Article 111a (2) of the

Banking Law contained in the Management Report. Moreover, we are obliged to communicate

whether the Bank prepared a non-financial statement and issue an opinion whether the Bank

included the required information in the corporate governance statement.

Opinion on the Management Report

Based on the work performed during the audit, in our opinion, the Bank’s Management Report:

• has been prepared according to Article 49 of the Accounting Act and paragraph 70 of

the Regulation of the Minister of Finance of 29 March 2018 on Current and Periodic

Information Provided by Issuers of Securities and Conditions of Recognition of

Information Required under the Regulations of the non-EU Member State as

Equivalent (“Regulation on Current Information” - Journal of Laws of 2018, item 757

as amended) and Article 111a (2) of the Banking Law,

• is in line with information contained in the separate financial statements.

Opinion on Corporate Governance Statement

In our opinion, the Bank included information specified in paragraph 70 (6) item 5 of the

Regulation on Current Information in the corporate governance statement. Moreover, in our

opinion, information specified in paragraph 70 (6) item 5 c-f, h and i of this Regulation

comprised in the corporate governance statement is compliant with the applicable provisions

and information contained in the separate financial statements.

Information on Non-financial Information

In accordance with the Act on Statutory Auditors we inform that the Bank prepared non-

financial statement specified in Article 49b (1) of the Accounting Act as a separate part of the

Management report.

We have not conducted any assurance activities regarding the non-financial statement and

we do not express any assurance about it.

Mazars Audyt Sp. z o.o. 10

Other Information Statement

Moreover, according to our knowledge of the Bank and its environment obtained during the

audit, we declare that we have not identified any material misstatement in the Bank’s

Management Report and the Other Information.

Report on Other Legal and Regulatory Requirements

Information on Observing Applicable Prudential Regulations

The Bank’s Management Board is responsible for ensuring the compliance of the Bank’s

operations with prudential regulations, in which for the correct determination of capital ratios.

Our responsibility is to communicate in the auditor’s report whether the Bank complies with

applicable prudential regulations, defined in separate provisions, and in particular whether the

Bank correctly determined the capital ratios presented in note I.3.4 “Capital Adequacy”.

The purpose of the audit of the separate financial statements was not to express an opinion

on the Bank’s compliance with applicable prudential regulations and therefore we do not

express such an opinion.

Based on our audit of the separate financial statements we would like to inform you that we

have not identified any breaches of applicable prudential regulations by the Bank in the period

from 1 January 2023 to 31 December 2023, defined by separate provisions, in particular with

respect to the correctness of the determination of capital ratios as at 31 December 2023, which

could have a significant impact on the separate financial statements.

Declaration on Non-audit Services

According to our best knowledge and belief we declare that non-audit services that we have

provided to the Bank and its subsidiaries comply with laws and regulations applicable in

Poland and that we have not provided any non-audit services that are prohibited pursuant to

Article 5 (1) of the EU Regulation and Article 136 of the Act on Statutory Auditors. Non-audit

services that we have provided to the Bank and its subsidiaries in the audited period were

mentioned in section “Selection of an entity authorized to audit financial statements” of the

Bank’s Management Report.

Appointment of an Audit Firm

We were appointed to audit the Bank’s separate financial statements pursuant to the

resolution of the Bank’s Supervisory Board of 9 December 2022. We have been auditing the

Bank’s separate financial statements for the first time.

Mazars Audyt Sp. z o.o. 11

The key statutory auditor responsible for the audit that was the base of the present

independent statutory auditor’s report is Małgorzata Pek.

Acting on behalf of Mazars Audyt Sp. z o. o. with its registered office in Warsaw, ul. Piękna

18, entered on the list of audit firms under no. 186, on behalf of which the key statutory auditor

audited the separate financial statements.

Małgorzata Pek

Key Statutory Auditor

No 13070

Warsaw, 7 March 2024