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BDO

spółka

ograniczoną

odpowiedzialnością

spółka komandytowa

ul. Postępu 12

02-676 Warszawa

Polska

BDO spółka z ograniczoną odpowiedzialnością spółka komandytowa, Sąd Rejonowy dla m. st. Warszawy, XIII Wydział Gospodarczy, KRS: 00007296

84,

REGON: 141222257, NIP: 108-000-42-12. Wartość wkładu kapitałowego wynosi 10.037.500 zł. Biura BDO w Polsce: Katowice 40-

007,

ul. Uniwersytecka 13, tel.:+48 32 661 06 00, katowice@bdo.pl; Kraków 31-548, al. Pokoju 1, tel.: +48 12 378 69 00, krakow@bdo.pl; Poznań 60-

650,

ul. Piątkowska 165, tel.:+48 61 622 57 00, poznan@bdo.pl; Wrocław 53-332, ul. Powstańców Śląskich 7a, tel.: +48 71 734 28 00, wroclaw@bdo.pl

BDO spółka z ograniczoną odpowiedzialnością spółka komandytowa jest członkiem BDO International Limited, brytyjskiej spółki

i częścią międzynarodowej sieci BDO, złożonej z niezależnych spółek członkowskich.

This document is a translation.

The Polish original should be referred to in matters of interpretation.

INDEPENDENT AUDITOR’S REPORT

TO THE SUPERVISORY BOARD OF ING BANKU HIPOTECZNEGO S.A.

REPORT ON THE AUDIT OF THE YEAR-END FINANCIAL STATEMENTS

Opinion

We have audited the year-end financial statements of ING Bank Hipoteczny S.A. („Bank”), comprising

the statement of financial position as at 31 December 2021, the statement of comprehensive income,

the statement of changes in equity and the statement of cash flows for the year then ended, as well as

notes to the financial statements including a description of significant accounting methods and other

explanations (“the financial statements”).

In our opinion, the accompanying financial statements:

 give a true and fair view of the Bank’s financial position as at 31 December 2021, as well as of

its financial result and cash flows for the financial year then ended, in accordance with the

applicable International Financial Reporting Standards as adopted by the European Union, as

well as the adopted accounting methods (policies);

 are consistent, in content and in form, with the applicable laws and regulations and with the

Bank’s Statute;

 have been prepared on the basis of properly kept books of account in accordance with Chapter

2 of the Accounting Act of 29 September 1994 (“the Accounting Act” – 2021 Journal of Laws,

item 217 with subsequent amendments).

The present opinion is consistent with the additional report to the Audit Committee, which we issued

on 16 March 2022 r.

Basis for Opinion

We conducted our audit in accordance with National Standards on Auditing in the wording of

International Standards on Auditing adopted by resolution of the National Council of Certified Auditors

("NSA"), and in compliance with the Act of 11 May 2017 on Certified Auditors, Audit Firms and on Public

Oversight (“the Certified Auditors Act” – 2020 Journal of Laws, item 1415 with subsequent

amendments) and Regulation (EU) No. 537/2014 of 16 April 2014 on specific requirements regarding

statutory audit of public interest entities (“Regulation EU” – OJ L 158). Our responsibilities under those

standards are further described in the Responsibilities of the Auditor for the Audit of the Financial

Statements section of this report.

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

Accountants (including International Standards of Independence) of the International Ethics Standards

Board for Accountants ("IESBA Code") adopted by resolution of the National Council of Certified

Auditors, as well as with other ethical requirements relevant 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 auditor in charge and the audit firm remained independent of

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The Polish original should be referred to in matters of interpretation. 2

the Bank in accordance with the independence requirements laid down in the Certified Auditors Act

and Regulation EU.

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

for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of the most significance

in the audit of the financial statements for the current reporting period. They include the most

significant assessed types of risks of material misstatements, including assessed types of risks of

material misstatements resulting from fraud. We addressed these matters in the context of our audit of

the financial statements as a whole and in forming our opinion thereon, and have summarized our

response to these types of risks, and where relevant, presented our key observations relating to those

risks. We do not express a separate opinion on these matters.

Completeness, existence and valuation of credits granted to clients

In the years 2019-2021, after obtaining a decision from the Polish Financial Supervision Authority

permitting it to commence activities, the Bank transferred mortgage loans from ING Bank Śląski S.A. As

shown in note 7.9 of the financial statements the total of transfers in 2021 amounted to PLN 710,665.1

thousand. As of 31 December 2021, the total balance of credits and loans granted to clients and

disclosed in the statement of financial position was equal to PLN 3,882,999.5 thousand.

In accordance with the requirements of International Financial Reporting Standard 9 “Financial

Instruments” (‘IFRS 9’), entities are required to recognize and measure impairment based on the

Expected Credit Loss (ECL) model. This approach involves significant estimates and the need to make

significant assumptions for the purpose of measuring impairment, in particular with regard to

identifying significant deterioration of credit exposure quality and the related calculation of long-term

losses anticipated over the lifetime of the exposure. In applying IFRS 9 the Bank allocates credits and

loans granted to clients to three stages, i.e. exposures with no recognized significant increase in credit

risk (Stage 1), exposures with recognized significant increase in credit risk (Stage 2) and exposures with

recognized impairment (Stage 3). As of 31 December 2021, the Bank’s total allowance for expected

credit losses amounted to PLN 2,919.4 thousand, and Stage 1 credits accounted for 99.6% of the value

of all credits.

We classified the completeness, existence and valuation of credits and loans granted to clients as a key

audit matter because the balance of this statement of financial position item accounts for 97,1% of the

Bank’s assets. In addition, the measurement of credits and loans granted to clients involves significant

estimates and professional judgment on the part of the Bank’s Management during the application of

the expected credit loss model.

Disclosures in the financial statements

The Bank’s accounting policies on credits and loans granted to clients and on the expected credit loss

calculation model is described in point 5.5 “Financial assets and liabilities” of “Significant accounting

methods”.

A note containing the required disclosures relating to credits and loans granted to clients is included in

point 7.9 of the financial statements and in note 7.30 on the Bank’s credit risk management.

Audit Procedures performed in response to the risk

As part of our procedures, we obtained an understanding of the Bank’s accounting methods (policies)

relating to the classification and recognition of financial assets, as well as their measurement and

impairment. We also familiarized ourselves with the internal control environment with regard to the

transfer, monitoring and measurement of the portfolio of credits and loans granted to clients. We

assessed its design and tested the effectiveness of identified key controls, relating in particular to:

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The Polish original should be referred to in matters of interpretation. 3

• selection of credits to be transferred,

• completeness of credit documentation,

• preparation and acceptance of property mortgage lending values,

• valuation of credit portfolio by an independent entity,

• verification of completeness of the data recognized in the IT system after the transfer,

• functional control with regard to credit portfolio monitoring.

With respect to the information system used to store information about the credit portfolio, we

performed a verification of controls on the Bank side as part of IT General Controls (ITGC) procedures.

We supplemented the tests of controls with tests of details which included agreeing the analytical

credit report with the values disclosed in the financial statements, verifying accounting policies on

the recognition of the credit transfer transaction costs, as well as examining, based on a selected

example, of the system valuation of credits using the effective interest rate.

With regard to the expected credit losses impairment model, we familiarized ourselves with the

relevant accounting policies, model assumptions and allocation of credits to the different stages in

accordance with IFRS 9 as of 31 December 2021. We obtained documentation of the validation of

model parameters, performed an independent recalculation of the impairment allowance in the

financial statements based on the obtained EaD, PD and LGD parameters, and evaluated indications of

impairment relating to the credits allocated by the Bank to Stage 3.

We also performed an analysis of post-balance sheet events relating to credits and loans granted to

clients, and of the accuracy and completeness of disclosures in the accompanying financial

statements based on the requirements of IFRS.

Responsibilities of the Bank’s Management and Supervisory Board for the Financial Statements

The Bank’s Management is responsible for the preparation, based on properly kept books of account, of

the financial statements that give a true and fair view of the Bank’s financial position and financial

result in accordance with International Financial Reporting Standards as adopted by the European

Union, the adopted accounting methods (policies), the applicable binding regulations and the Bank’s

Statute. The Bank’s Management is also responsible for such internal controls as it considers necessary

to ensure that the financial statements are free from material misstatements resulting from fraud or

error.

In preparing the financial statements the Management is responsible for assessing the Bank’s ability to

continue as a going concern, disclosing, as applicable, any matters related to going concern and using

the going concern basis of accounting, except in situations where the Management intends to either

liquidate the Bank or discontinue its operations, or has no realistic alternative but to do so.

The Bank’s Management and members of its Supervisory Board are required to ensure that the financial

statements meet the requirements of the Accounting Act. Members of the Supervisory Board are

responsible for overseeing the Bank’s financial reporting process.

Responsibilities of the Auditor for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole

are free from material misstatements due to fraud or error, and to issue an independent auditor’s

report that includes our opinion. Reasonable assurance is a high level of assurance, but it is not a

guarantee that an audit conducted in accordance with NSA will always detect an existing material

misstatement. Misstatements can arise from fraud or error and are considered material if it could be

reasonably expected that they, individually or in the aggregate, could influence the economic decisions

of users made on the basis of these financial statements.

This document is a translation.

The Polish original should be referred to in matters of interpretation. 4

The concept of materiality is applied by the auditor at the planning stage and when performing the

audit and evaluating the effect of identified misstatements on the audit and of uncorrected

misstatements, if any, on the financial statements, as well as when formulating the auditor’s opinion.

In view of the above, all of the opinions and statements contained in the auditor’s report are expressed

subject to the qualitative and quantitative level of materiality set in accordance with the applicable

standards on auditing and the auditor’s professional judgement.

The scope of the audit does not include an assurance regarding the Bank’s future profitability, or

regarding the Management’s effectiveness in the handling of the Bank’s affairs now or in the future.

Throughout an audit in accordance with NSA, we exercise professional judgement and maintain

professional skepticism, as well as:

− identify and assess the risks of a material misstatement of the financial statements resulting from

fraud or error, design and perform audit procedures in response to such risks and obtain audit

evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not

detecting a material misstatement resulting from fraud is higher than the risk of not detecting a

material misstatement resulting from error, because fraud may involve collusion, forgery,

deliberate omission, misrepresentation or override of internal controls;

− obtain an understanding of the internal controls relevant to the audit in order to plan our audit

procedures, but not to express an opinion on the effectiveness of the Bank’s internal controls;

− evaluate the appropriateness of the accounting policies used and the reasonableness of the

estimates and related disclosures made by the Bank’s Management;

− conclude on the appropriateness of the Management’s use of the going concern basis of accounting

and, based on the audit evidence obtained, whether 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 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;

− evaluate the overall presentation, structure and contents of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and events

in a manner that achieves fair presentation.

We provide the Supervisory Board with information about, among others, the planned scope and timing

of the audit and significant audit findings, including any significant weaknesses of internal controls that

we identify during our audit.

We provide the Supervisory Board with a statement that we have complied with the relevant ethical

requirements relating to independence, and that we will communicate to them all relationships and

other matters that may reasonably be considered to constitute a threat to our independence, and

where applicable, inform them of the related safety measures.

From the matters communicated to the Supervisory Board we determined those matters that were of

the most significance to the audit of the financial statements for the current reporting period and were

therefore chosen as key audit matters. We describe these matters in our auditor’s report, unless law or

regulations prohibit their public disclosure or when, in exceptional cases, we find that a given matter

should not be presented in our report because the adverse consequences of doing so would reasonably

be expected to outweigh the public interest benefits of such information.

This document is a translation.

The Polish original should be referred to in matters of interpretation. 5

Other Information, Including Report on Activities

Other information comprises the report on the Bank’s activities for the financial year ended

31 December 2021 (“the Report on Activities”) along with the Statement on the Application of

Corporate Governance which constitute separate sections of the report, as well as the “Annual Report”

for the financial year ended 31 December 2021 (“Annual Report”) (together “Other Information”).

Responsibilities of the Bank’s Management and Supervisory Board

The Bank’s Management is responsible for the preparation of Other Information in accordance with

binding regulations.

The Bank’s Management and members of its Supervisory Board are required to ensure that the Report

on Activities along with its separate sections meets the requirements of the Accounting Act.

Responsibilities of the Auditor

Our opinion on the financial statements does not cover Other Information. In connection with our audit

of the financial statements, our responsibility is to read Other Information and, in doing so, consider

whether it is materially inconsistent with the financial statements or with our knowledge obtained

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

performed, we find a material misstatement of Other Information, we are required to state this fact in

our auditor’s report. In accordance with the requirements of the Certified Auditors Act, it is also our

responsibility to issue an opinion whether the Report on Activities has been prepared in accordance

with binding regulations, and whether it is consistent with the information presented in the financial

statements. We are also required to report whether the Bank has prepared a Statement on

Non-financial Information and to issue an opinion whether the Statement on the Application of

Corporate Governance contains the required information.

We received the Report on Activities prior to the issue of the present auditor’s report, whereas the

Annual Report will be available after this date. In the event that we find a material misstatement in

the Annual Report, we are required to communicate this to the Bank’s Supervisory Board.

Opinion on the Report on Activities

Based on the work we have performed during the audit, in our opinion the Report on Activities:

 has been prepared in accordance with Article 49 of the Accounting Act and par. 70 of the

Minister’s of Finance Decree of 29 March 2018 on the current and periodic information reported

by the issuers of securities and on the conditions for recognizing as equally valid the

information required by the regulations of a state that is not a member state (the “Current

Information Decree” – 2018 Journal of Laws, item 757 with subsequent amendments);

 is consistent with the information presented in the financial statements.

Furthermore, based on our knowledge obtained during the audit about the Bank and its environment

we have identified no material misstatements in the Report on Activities.

Opinion on the Statement on the Application of Corporate Governance

In our opinion, the Bank’s Statement on the Application of Corporate Governance contains the

information specified in paragraph 70 section 6 point 5 of the Current Information Decree. In addition,

in our opinion, the information indicated in paragraph 70 section 6 point 5 letters

c-f, h and i of the Decree contained in the Statement on the Application of Corporate Governance is

consistent with the applicable regulations and with the information contained in the financial

statements.

This document is a translation.

The Polish original should be referred to in matters of interpretation. 6

Information on Non-financial Information

In accordance with the requirements of the Certified Auditors Act we confirm that the Bank has

prepared a Statement on Non-financial Information referred to in Article 49b par. 1 of the Accounting

Act as a separate section of the Report on Activities.

We have performed no assurance work on the Statement on Non-financial Information and, accordingly,

do not express any assurance thereon.

Report on Other Legal and Regulatory Requirements

Declaration on the Provision of Non-audit Services

To the best of our knowledge and belief we declare that any non-audit services we have provided to

the Bank and its subsidiaries were consistent with the law and the regulations binding and Poland and

that we have not provided any non-audit services prohibited by virtue of Article 5 par. 1 of Regulation

EU and Article 136 of the Certified Auditors Act.

Information on the Bank's compliance with prudential regulations

The Bank's Management Board is responsible for ensuring the compliance of the Bank's operations with

the law, including prudential regulations, and for the correct determination of capital ratios. Our duty

was to inform in the audit report whether the Bank complies with the applicable prudential regulations

set out in separate regulations, and in particular whether the Bank correctly determined the capital

ratios presented in Note 7.32 to the Bank's financial statements. The purpose of our audit of the Bank's

financial statements was not to express an opinion on its compliance with the aforementioned

regulations. As part of the audit of the Bank's financial statements, we performed audit procedures

aimed at detecting cases of non-compliance with the law, including breaches of prudential regulations.

In the course of the audit, we did not identify any breach by the Bank of the applicable prudential

requirements set out in separate regulations in the period from January 1 to 31 December 2021, in

particular with regard to the correctness of the Bank's determination of capital ratios as at 31

December 2021, which could be significant impact on the financial statements of the Bank.

Appointment of the Auditor

We were appointed as auditors of the Bank’s financial statements in a resolution passed by the Bank’s

Supervisory Board on 29 June 2020. The total uninterrupted audit engagement period is 4 years starting

from the financial year ending 31 December 2018.

The auditor in charge of the audit resulting in this independent auditor’s report is Michał Tomczyk.

BDO spółka z ograniczoną odpowiedzialnością sp.k. with its registered office in Warsaw

entered on the list of audit firms in number 3355

on behalf of which the audit was performed by the auditor in charge

gned with a qualified

electronic signature

Michał Tomczyk

Certified Auditor

Registration No. 13503

Signed with a qualified

electronic signature

Dr. André Helin

Managing Partner of the General Partner

Certified Auditor

Registration No. 90004

Warsaw, 16 March 2022