Current Report no. 8 (2019)

The proposal on dividend

The Management Board of Santander Bank Polska S.A. (the "Bank") hereby informs that in full compliance with the individual recommendation issued by the Polish Financial Supervision Authority on 25th February 2019 (the "PFSA's Recommendation"), regarding to increase the own funds, has adopted a resolution which recommend to allocate 25% of net profit for 2018 to dividend. The Supervisory Board also approved that recommendation. The Bank informed about the PFSA's Recommendation in current report no. 6/2019 dated 25th February 2019.At the same time, taking into account a good capital position of the Bank and Group, the Bank's Management Board decided to propose to allocate to the dividend for shareholders:

• PLN 514.026 364,32 from the Bank's undivided net profit for 2016,
• PLN 957 588 300,90 from the Bank's undivided net profit for 2017,
• PLN 541 068 016,50 from the Bank's net profit for 2018

which means that the proposed dividend:

• per one: A, B, C, D, E, F, G, H, I, J, K, L and N series share will be PLN 19,72,
• per on M series share will be PLN 14,68.

The Management Board of the Bank proposes to set the dividend registration date for 30th May 2019, while the dividend pay-out date for 14th June 2019. This proposition has been approved by the Supervisory Board.In accordance with the resolution no. 43 of the Annual General Meeting of the Bank dated 17th May 2017 the M series shares of the Bank are not eligible for the dividend paid from the profit for 2016.The Management Board and the Supervisory Board will submit the above proposal along with the recommendation to the Annual General Meeting of the Bank.Management Board's recommendation regarding proposed dividend paymentThe Bank received on 25th February 2019 the Polish Financial Supervision Authority ("Commission") recommendation increasing the own funds of the Bank by retaining at least 75% of the net profit for the period from 1st January 2018 to 31st December 2018 ("Recommendation").The PFSA's Recommendation states that the Bank meets the criteria to pay up to 25% of the Bank's net profit for the period from 1st January 2018 to 31st December 2018 as a dividend for shareholders. At the same time, in the received recommendation, the Commission emphasized that the Bank, when making dividend payments from retained earnings from previous years, should follow the guidelines of the Banking Law, Article 129(3).

Pursuant to Article 129(3) of the Banking Law, a consent of the Polish Financial Supervision Authority is required to distribute between shareholders an amount higher than the net profit for the last financial year less uncovered losses, own shares and amounts that may not be paid out as dividend, i.e. PLN 2,167,161,368 in the case of the Bank. The amount that can be paid out as the dividend to the Bank's shareholders, that comprises 25% of the profit earned between 1 January 2018 and 31 December 2018 and the non-distributed profit from the years 2016-2017, does not exceed the Bank's net profit for the last financial year.

The recommendation of the Bank's Management Board regarding the payment of a dividend from the profit for 2018 and the payment of dividend from undistributed profit from previous years, i.e. 2016-2017 is fully in line with the recommendation and guidelines of the Commission.Conducting the dividend policy, the Bank's Management Board and the Bank's Supervisory Board are intended to preserve the strong capital position of the Bank and the Bank's Capital Group, by maintaining optimal and adjusted to the degree of risk the size and structure of own funds guaranteeing maintaining the appropriate level of capital adequacy ratios.The following are arguments to support the notified proposals, i.e. paying dividends from the net profit 2018 and undistributed net profit of the Bank for the year 2016 and 2017.

The Management Board would like to present following arguments, supporting this proposal. The following indicators achieved on the day 31.12.2018 confirm the good capital standing of the Bank and the Group of Santander Bank Polska S.A.

• Tier I capital ratio of the Bank 15.85%
• Total capital ratio TCR of the Bank 18.04%
• Tier I capital ratio of the Group 14.11%
• Total capital ratio TCR of the Group 15.98%

Capital ratios on an individual and consolidated basis are above the minimum capital ratios resulting from decisions and Recommendations of Polish Financial Supervision Authority.

When taking decisions on changes to the level of own funds, the Bank's Management Board also bears in mind the level and risk of excessive leverage defined in Regulation no. 575/2013. As at 31 December 2018, the financial leverage was 9.53% and 9.50% on the standalone and consolidated basis, respectively. The leverage is much above the regulatory requirement and dividend eligibility level of 5%.The Management Boards is of the opinion that:

• level of retained profits is sufficient to conduct the strategy of the Bank/Group and provides adequate balance between efficient capital utilization and growth.
• accumulated capital base reflects prudent approach to acceptable risk level associated to current and future Bank business and ensuring safeness of placed deposits.

Legal basis:
Art. 17 clause 1 MAR