Current Report no. 13 (2023)

17 march 2023

Individual recommendation of the Polish Financial Supervision Authority (KNF) with regard to meeting the criteria for paying dividend from the net profit earned in 2022.

The Management Board of Santander Bank Polska S.A. (Bank) hereby informs that on 17 March 2023 it received an individual recommendation from the KNF with regard to the Bank's dividend policy.

The KNF stated that based on data as at 31 December 2022, the Bank met all the key dividend policy criteria to be able to pay dividends up to 100% of its net profit earned in the period from 1 January 2022 to 31 December 2022. Additionally, having factored in the quality of the Bank's loan portfolio measured as the share of NPLs in the total portfolio of receivables from the non-financial sector, including debt instruments, the potential dividend rate remained at 100% in view of the Bank's sound credit quality. At the same time, the Bank's receivables arising from FX home loans to households do not account for more than five percent of its portfolio of receivables from the non-financial sector.

Taking into account the lack of additional adjustments, the KNF informed that the Bank met the requirements to pay out 100% of its net profit for 2022 in the form of a dividend.

However, the KNF noted "taking into account the uncertainty related to the macroeconomic situation as well as: (i) dynamic changes in the banking sector's environment; (ii) risks that the Bank is exposed to, primarily the risk related to the CJEU's decision on case C-520/21, which might have a material adverse impact on the Bank's standing; (iii) potential deterioration of credit quality related to increased inflation, slowed economic growth as well as high debt service costs for borrowers; (iv) need to ensure the stability of the Bank's business in upcoming periods and its further growth", and thus recommended that:

Santander Bank Polska S.A. does not pay dividend from the profit earned from 1 January to 31 December 2022 until the EU Court of Justice issues its decision with regard to the reimbursement of additional costs in excess of the funds paid out in performance of the CHF loan agreement invalidated on grounds of unfair clauses (in relation to the query of Regional Court for Warsaw-Śródmieście - case C-520/21);
Santander Bank Polska S.A. does not pay dividend from the profit earned from 1 January to 31 December 2022 after the EU Court of Justice issues its decision with regard to issue mentioned in it. 2 without prior consultations with the supervisory authority;
the Bank consults upfront with the supervisory authority any measures which could reduce its own funds (in particular if they go beyond the scope of the ordinary business and operational activity), including the distribution of the profit retained in previous years or the buy-backs or purchases of the Bank's own shares.