I. Opinion of the Supervisory Board of mBank S.A. on the situation of the bank from the consolidated perspective with consideration of the adequacy and effectiveness of the internal control system, the risk management system, the system for ensuring compliance of the bank’s business with standards or applicable practices, and the internal audit system operating at the bank

1. mBank Group activity in 2024

The Supervisory Board analysed mBank Group’s financial results and key indicators, taking into consideration external and internal conditions.

In 2024, the Polish economy was in a recovery phase despite difficult macroeconomic conditions in the external environment. According to preliminary estimates from Statistics Poland (GUS), Poland’s GDP growth rate in 2024 reached 2.9% versus 0.1% in 2023. Economic growth was driven by consumer demand fuelled by rising real household income. The influx of EU funds has started an upward trend in investments. The economic downturn faced by Germany and Poland’s other trade partners adversely affected export dynamics. The official unemployment rate was low. In December 2024 it stood at 5.1%. The prices of consumer goods and services rose by 4,7% year on year in December 2024 and the average inflation amounted to 3.6%. The rise in inflation seen in H2 was driven by increasing energy and food prices. Under these circumstances, the Monetary Policy Council (RPP) decided to keep interest rates steady in 2024 at the level set in October 2023.

In 2024, the Supervisory Board of mBank analysed, on a cyclical basis, reports provided by the Management Board and organisational units of mBank, including information prepared at the request of the Supervisory Board on matters relevant to the assessment of the Bank’s situation. The Supervisory Board supported the Management Board’s decisions regarding business and organisational initiatives designed to provide optimum conditions for continued development and achievement of strategic objectives.

In 2024, total income posted by mBank Group reached its all-time high of PLN 12,0 billion (+11.2% compared to 2023). The growth was driven mainly by net interest income. In annual terms, excluding the impact of credit holidays, it increased by 10.3%. The Supervisory Board is pleased to note that such a strong net interest income was generated thanks to effective management of the deposit and loan margins as well as the securities portfolio amid a favourable interest rate environment. Net interest margin went up from 4.18% in 2023 to 4.35% in 2024.

Net fee and commission income, despite a major rise in commission expense, grew by 2,9% in 2024, supported mostly by rising active client base, higher number of transactions and value of financial products sold, as well as selective changes in the tariff of fees and commissions.

mBank Group stands out among banks in Poland for its high cost efficiency. The C/I ratio for 2024 stood at 28.2%.

The costs of legal risk related to foreign currency mortgage loans were a major drag on the Group’s financial performance. The Supervisory Board devoted close attention to issues connected with the FX mortgage portfolio, which included the monitoring of out-of-court settlements signed with clients as well as financial settlements with clients following court judgements. In 2024, mBank concluded with borrowers almost 9,600 settlement agreements regarding foreign currency loans, and the total number of signed settlements on FX loans at the end of 2024 amounted to 22,900.

Total costs of legal risk related to FX loans recognised in profit or loss in 2024 stood at PLN 4.3 billion compared with PLN 4.9 billion in the previous y ear. This amount predominantly resulted from the updated forecast number of court cases, expected costs of court judgements unfavourable to the Bank, the number and costs of settlements with borrowers and an update of the remaining model parameters.

The legal risk provision coverage ratio for the portfolio of active CHF loans stood at 147% at the end of 2024. From quarter to quarter, a decrease in the inflow of new lawsuits concerning FX loan agreements was observed. The Supervisory Board believes that the Bank is well protected against the legal risk posed by FX mortgages and that the problems with borrowers massively challenging contractual provisions are gradually coming to an end.

mBank Group closed 2024 with a net profit of PLN 2,243 million compared with PLN 24 million in 2023. The return on equity (ROE) amounted to 14.8%.

Net profit generated by the Group’s core business, i.e. excluding the FX mortgages segment, reached PLN 5,638 million, which represents a year-on-year increase by 22.4%. The ROE for the Group’s core business reached 39.7%. This demonstrates the real strength of the Group’s business model and its ability to create value for shareholders.

In 2024, the Management Board and the Supervisory Board kept capital management under close scrutiny. In order to strengthen its capital base, mBank was the first commercial bank in Poland to place AT1 bonds to a wide group of investors, thus raising PLN 1.5 billion. Moreover, in 2024, mBank conducted another synthetic securitisation transaction. This way, by transferring a significant part of credit risk from the corporate loan portfolio worth a total of PLN 5.24 billion in nominal terms, the Bank reduced the total risk exposure amount (TREA) and increased the capital ratios.

Consequently, despite a significant rise in TREA caused by business growth and regulatory changes in the risk parameters in portfolios covered by the AIRB approach, mBank Group managed to keep its capital ratios at a safe level, significantly higher than the minimum supervisory requirements..

As at December 31, 2024, the consolidated Tier capital ratio stood at 14.5%, and the Total Capital Ratio (TCR) was 15.9%. Buffers above the minimum KNF requirements reached 5.4 pp and 4.8 pp, respectively .

In 2024, the Supervisory Board of the Bank approved the updated Capital Management Strategy of mBank Group, which provides for no dividend payments from the Bank’s profit generated in 2024 and 2025. The retained profit will allow the

The 2024 issue of green preferred senior bonds under the EMTN Programme, with a nominal value of EUR 500 million, enabled the Bank to meet the MREL by a significant margin. The proceeds from the issue were allocated for purposes consistent with the assumptions adopted in mBank Group Green Bond Framework.

mBank Group’s liquidity position is comfortable, as demonstrated by high LCR and NSFR and a net loans-to-deposits ratio of 60.5% as at December 31, 2024.

In 2024, the scale of the Group’s operations grew:

- total assets reached PLN 246.0 billion as at December 31, 2024 (+8.4% YoY),

- gross loans and advances to customers amounted to PLN 125.0 billion (+6.6% YoY), with growth reported in both the retail and corporate banking segments,

- amounts due to customers stood at PLN 200.8 billion (+8.3% YoY), spurred mainly by the inflow of funds to current accounts.

In 2024, the Group continued on the path towards process digitalisation, optimisation and modernisation. In addition, it expanded the range of services available in direct channels. In 2024, there was a rise in the share of digitally opened accounts, clients acquired remotely, corporate clients using mobile banking, retail processes initiated by clients in digital channels and in the mobile app’s share in the sales of non-mortgage loans.

The Bank was successful in acquiring SMEs and young clients, as reflected by the number of new Junior accounts. Also, there was an increase in the number of regularly investing clients, driven by the extended investment offering that caters for the needs of every client segment.

The mobile app for retail clients and the mBank Company Mobile app for corporate clients were expanded with new functionalities. The Bank modified the credit process and increased its financing dedicated to the promising and fastest growing sectors of the economy. 2024 was a period of dynamic development of the ecommerce area. Together with its strategic partner, mBank launched the mOkazje zakupy platform accessible directly from the bank’s mobile app.

Throughout 2024 mBank was committed to developing products and services supporting clients’ transition to a low-carbon economy and their eco-friendly investments. The Bank supported the transition of the Polish energy sector by financing renewable energy sources and arranging green bond issues. Corporate clients were offered among others financing in the form of Sustainability Linked Loans (SLL), i.e. loans related to achieving sustainable development goals. Moreover, the Bank was promoting mortgage loans for the purchase or construction of energy efficient real estate.

In 2024, mBank continued efforts to reduce and report the carbon footprint. The goal is to reach net-zero emissions from own operations (scope 1 and 2) by 2040 and to transform credit exposures (scope 3) so that they become net zero by 2050. In September 2024, mBank was the first in Poland to submit decarbonization targets for validation to the Science Based Targets Initiative (SBTi).

The Supervisory Board greatly appreciates the Bank’s commitment to society. This includes the Bank’s involvement in cultural, educational and social campaigns,

The Bank's progress in the area of social responsibility and sustainable development is indicated by the increase of the MSCI ESG Ratings rating from A to AA (leader) in 2024.

mBank is a well-established and renowned brand. It is appreciated for its broad range of high quality services, innovative nature of products and services, advanced digitalisation, qualified personnel and ESG efforts. In 2024, mBank won a number of prestigious prizes and topped the industry rankings, which reflect the opinions of both clients and experts.

In summary, the Supervisory Board’s assessment of the overall economic and financial standing of mBank is positive. The Bank meets all the requirements for safe operations, capital adequacy and liquidity, and guarantees that the clients’ money is safe. The Supervisory Board believes that the aforesaid factors and conditions determine good prospects for the Group’s future growth.

2. Assessment of the adequacy and effectiveness of the company’s system of internal control, risk management, compliance with standards or applicable practices and internal audit

The Bank’s risk management system and internal control system are organised on three independent levels – lines of defence.

The internal control system supports the management of the Bank by contributing to ensuring the effectiveness and efficiency of the Bank’s operations, the reliability of financial reporting, compliance with risk management principles, and the Bank’s compliance with laws and internal regulations.

The internal control system includes:

1. The control function which aims to ensure compliance with control mechanisms relating in particular to risk management in the Bank, which includes positions, groups of people or organisational units responsible for the performance of tasks assigned to this function. The function is carried out in a systematic manner by employees at all organisational levels by means of:

■ continuous monitoring, consisting of the examination of selected operations or activities performed at the Bank,

■ periodic verification, consisting of an examination of selected operations or activities already completed in order to check the adequacy and effectiveness of the continuous monitoring.

2. The compliance function which is responsible for identifying, assessing, controlling and monitoring the risk of non-compliance of the Bank’s operations with the law, internal regulations and market standards, as well as for

presenting reports in this respect. The tasks of the compliance function are performed by the Compliance Department.

3. An independent internal audit function which aims to examine and assess, in an independent and objective manner, the adequacy and effectiveness of the risk management system and the internal control system. The tasks of the independent internal audit function are performed by the Internal Audit Department.

The Audit Committee provides the Supervisory Board with its opinion on the assessment of the internal control system based on information from the Bank’s Management Board on the functioning of the internal control system, reports on the effectiveness of the control function, significant and critical irregularities and the status of recovery plans, reports on compliance risk management, the assessment from an internal audit perspective, as well as the results of audits. The Committee takes into account in its opinion information from the parent company, subsidiaries, the auditor, supervisory institutions (e.g., the Polish Financial Supervision Authority), as well as from other third parties. The Committee assesses the performance of the Compliance Department and the Internal Audit Department on the basis of annual activity reports presented directly by the Directors of the Compliance and Internal Audit Departments.

The Internal Audit Department included sustainability issues in its audit testing and assessment of the internal control system.

The Directors of the Compliance Department and the Internal Audit Department took measures on an on-going basis to ensure that adequate human resources and the necessary financial resources were available to systematically improve the qualifications, experience and skills of the staff of those units.

Based on the information received in 2024, the Supervisory Board assesses the adequacy and effectiveness of the internal control system (including the control function, the compliance function, and the internal audit function) in relation to the complexity of the Bank’s activities, organisational structure, and risk management system as fair. As part of the assessment of the internal control system, on the basis of an opinion of the Audit Committee, the Supervisory Board identified the strengths of the system and areas for further improvement. The Supervisory Board assessed that the units responsible for the control function, compliance risk management, and internal audit carried out their tasks in accordance with the internal regulations on a continuous basis, and that the Bank’s Management Board and Audit Committee, as well as the Supervisory Board, received adequate reports and information on the effects of such activities. The independence of the Compliance Department and the Internal Audit Department was ensured as defined in the Rules of the Compliance Department and the Audit Charter, respectively. In performing their duties, employees of those units performed their activities with independence and objectivity, did not execute processes which were subject to their controls, and did not engage in activities which could give rise to a conflict of interest with their duties.

The Bank has in place risk committees for each business line: the Retail Banking Risk Committee, the Corporate and Investment Banking Risk Committee, and the Financial Markets Risk Committee, which define the risk management principles and determine the risk appetite of the business line. Risks are also an important focus of the work of other committees in the Bank chaired by members of the Management Board.

The Bank has in place methodologies and processes where risks are identified and assessed to determine their potential impact on current and future operations. The comprehensive risk management structure is complemented by a consistent system for monitoring and reporting risk levels and breaches of limits set. The reporting system covers the key management levels.

The Supervisory Board receives periodic reports presenting an assessment of the level of risk identified and the effectiveness of the actions taken by the Management Board. In matters of risk, the Supervisory Board acts through the Risk Committee, which exercises on-going oversight of individual risks, in particular credit risk (including concentration risk), market risk, operational risk, liquidity risk, reputation risk, and business risk. The Committee makes recommendations on significant exposures with single business entity risk.