
	note	period	period
		from 01.01.2022	from 01.01.2021
		to 31.12.2022	to 31.12.2021
Interest income, including:	7.1.	121,385.9	83,394.1
calculated using the effective interest method, of which:	7.1.	121,385.9	83,394.1
impact of adjustment of gross carrying amount of loans due to credit moratoria	7.1.	-96,094.9	0.0
Interest costs	7.1.	-148,448.0	-28,779.9
Net interest income	7.1.	-27,062.1	54,614.2
Fee and commission income	7.2.	184.9	447.3
Commission expenses	7.2.	-687.0	-1,149.3
Net commission income	7.2.	-502.1	-702.0
FX result		-51.7	-31.8
Net income on other basic activities		-944.7	-151.9
Net income on basic activities		-28,560.6	53,728.5
General and administrative expenses, including:	7.3.	-25,626.5	-27,839.1
operating expenses	7.1.	-22,307.1	-22,700.5
regulatory costs	7.3.	-3,319.3	-5,138.6
Expected loss provision	7.4.	-1,940.7	854.3
Tax on certain financial institutions	7.4.	0.0	-63.2
Gross profit (loss)		-56,127.8	26,680.5
Income tax	7.5.	10,123.0	-5,969.3
Net profit (loss)		-46,004.8	20,711.2

Number of shares		380,000	380,000
Profit(+)/loss(-) per ordinary share - basic (in PLN)		-121.07	54.50
Profit(+)/loss(-) per ordinary share - diluted (in PLN)		-121.07	54.50

There were discontinued operations at ING Bank Hipoteczny S.A. neither in the period that ended 31 December 2022 nor in the same period last year.

The Income Statement should be read in conjunction with the notes to the financial statements being the integral part thereof.

Statement of comprehensive income


	Note	period	period
		from 01.01.2022	from 01.01.2021
		to 31.12.2022	to 31.12.2021
Profit (loss) after tax for the period		-46,004.8	20,711.2
Other net comprehensive income		-614.0	-507.7
Items which can be reclassified to income statement		-830.3	-520.5
Unrealised result on measurement of HTC&S securities	7.20	-830.3	-520.5
including deferred tax		194.8	122.1
Items which will not be reclassified to income statement		216.2	12.7
Actuarial gains/losses	7.20	216.2	12.7
including deferred tax		-50.7	-3.0
Net comprehensive income for the period		-46,618.8	20,203.5

The statement of comprehensive income should be read in conjunction with the notes to the financial statements being the integral part thereof.

Statement of financial position


	Note	as of	as of
	Note	31.12.2022	31.12.2021
Amounts due from banks	7.7	13,348.0	46,828.4
Debt securities measured at fair value through other comprehensive income	7.8	84,623.0	49,640.8
Debt securities measured at amortized cost	7.8	0.0	14,995.6
Loans and advances granted to customers	7.9	2,901,111.1	3,882,999.5
Property, plant and equipment	7.10	1,306.0	1,207.1
Intangible assets	7.11	0.0	0.1
Current income tax receivables		6,112.7	0.0
Deferred tax assets		11,382.6	1,115.5
Other assets	7.12	2,388.1	2,413.7
Total assets		3,020,271.5	3,999,200.7

Liabilities to banks	7.13	2,043,049.2	2,453,682.8
Liabilities under issue of bonds	7.14	135,927.4	654,660.0
Liabilities under issue of covered bonds	7.15	406,711.6	399,876.9
Provisions	7.16	561.7	823.6
Current tax liabilities		0.0	444.6
Other liabilities	7.17	9,009.2	7,725.9
Total liabilities		2,595,259.1	3,517,213.8
Share capital	7.19	380,000.0	380,000.0
Supplementary capital - share premium		62,002.2	62,002.2
Accumulated other comprehensive income	7.20	-1,168.2	-554.1
Retained earnings	7.21	-15,821.6	40,538.8
Total equity		425,012.4	481,986.9
Total equity and liabilities		3,020,271.5	3,999,200.7

Carrying amount		425,012.4	481,986.9
Number of shares		380,000	380,000
Carrying amount per share (in PLN)		1,118.45	1,268.39

The Statement of Financial Position should be read in conjunction with the notes to the financial statements being the integral part thereof.

Statement of changes in equity

period from 01.01.2022 to 31.12.2022

	Note	Share capital	Supplementary capital - share premium	Accumulated other comprehensive income	Retained earnings	Total equity
Opening balance of equity	7.19	380,000.0	62,002.2	-554.1	40,538.8	481,986.9
Net result for the current period	7.21	0.0	0.0	0.0	-46,004.8	-46,004.8
Dividend payout	7.22	0.0	0.0	0.0	-10,355.6	-10,355.6
Other net comprehensive income	7.20	0.0	0.0	-614.0	0.0	-614.0
Unrealised result on measurement of securities measured at fair value through other comprehensive income		0.0	0.0	-830.3	0.0	-830.3
Actuarial gains/losses		0.0	0.0	216.2	0.0	216.2
Closing balance of equity		380,000.0	62,002.2	-1,168.2	-15,821.6	425,012.4


period from 01.01.2021 to 31.12.2021

	Note	Share capital	Supplementary capital - share premium	Accumulated other comprehensive income	Retained earnings	Total equity
Opening balance of equity	7.19	380,000.0	62,002.2	-46.4	19,827.6	461,783.4
Net result for the current period	7.21	0.0	0.0	0.0	20,711.2	20,711.2
Other net comprehensive income	7.20	0.0	0.0	-507.7	0.0	-507.7
Unrealised result on measurement of securities measured at fair value through other comprehensive income		0.0	0.0	-520.5	0.0	-520.5
Actuarial gains/losses		0.0	0.0	12.7	0.0	12.7
Closing balance of equity		380,000.0	62,002.2	-554.1	40,538.8	481,986.9

The Statement of Changes in Equity should be read in conjunction with the notes to the financial statements being the integral part thereof.

Cash flow statement


	Note	period	period
		from 01.01.2022	from 01.01.2021
		to 31.12.2022	to 31.12.2021
Profit after tax		-46,004.8	20,711.2
Adjustments		1,211,276.8	-206,340.6
Depreciation and amortisation	7.3, 7.10, 7.11	347.1	1,179.1
Interest accrued (from the income statement)	7.1	27,062.1	-54,614.2
Interest paid		-362.0	-47,283.8
Interest received		117,267.3	79,666.0
Income tax (from the income statement)	7.5	10,123.0	-5,969.3
Income tax paid		-26,947.4	6,141.8
Change in provisions	7.22	-45.6	60.5
Change in loans and other receivables from banks	7.22	4.0	2,513.6
Change in debt securities measured at fair value through other comprehensive income	7.22	-35,906.9	-113.4
Change in loans and other receivables from customers	7.22	984,199.9	-190,857.8
Change in fixed assets due to recognition of lease		56.6	-496.5
Change in other assets	7.22	-477.1	1,042.1
Change in liabilities to other banks	7.22	0.8	366.7
Change in liabilities under issue of bonds	7.22	134,000.0	0.0
Change in liabilities under issue of covered bonds	7.22	321.6	313.9
Change in other liabilities	7.22	1,633.4	1,710.8
Net cash flow from operating activities		1,165,272.0	-185,629.3

Purchase of securities measured at amortized cost	7.8	14,995.6	-14,995.6
Interest received on debt securities		1,897.6	132.5
Net cash flow from investing activities		16,893.1	-14,863.1

Dividend payout		-10,355.6	0.0
Long-term loans received		2,361,000.0	2,792,996.9
Long-term loans repaid		-2,778,000.0	-2,308,996.9
Interest on long-term loans repaid		-115,663.8	23,201.3
Proceeds from the issue of bonds		79,000.0	654,000.0
Redemption of bonds		-733,000.0	-975,000.0
Payment of interest on issued bonds		-5,132.3	-1,238.1
Payment of interest on issued covered bonds		-13,143.9	-3,129.5
Lease liabilities repaid		-349.8	-336.6
Net cash flow from financing activities		-1,215,645.5	181,497.1

Net increase/decrease in cash and cash equivalents		-33,480.4	-18,995.3
Opening balance of cash and cash equivalents		46,828.4	65,823.7
Closing balance of cash and cash equivalents	7.7, 7.22	13,348.0	46,828.4

The Cash Flow Statement should be read in conjunction with the notes to the financial statements being the integral part thereof.

Accounting policy and additional notes

1. Bank details

1.1. Key Bank data

ING Bank Hipoteczny Spółka Akcyjna (“Bank”, “Company”) with its registered office in Poland, in Katowice, ul. Chorzowska 50, entered to the Register of Entrepreneurs of the National Court Register maintained by the District Court Katowice – Wschód in Katowice, 8th Commercial Division of the National Court Register under the number KRS 0000723965 on 20 March 2018. The Bank statistical number is REGON 369582281, and the tax identification number is NIP 205-000-51-99.

1.2. Scope of operations and duration

ING Bank Hipoteczny S.A. is a specialised bank conducting its business on the basis of the Act of 29 August 1997 on covered bonds and mortgage banks, the Banking Law Act of 29 August 1997, the Commercial Companies and Partnerships Code and other generally applicable laws, the good banking practice principles and the Bank Charter.

ING Bank Hipoteczny S.A.'s strategic objective is to acquire and subsequently increase the share of long-term funding in the Bank's balance sheet through the issuance of long-term mortgage-backed covered bonds purchased from ING Bank Śląski S.A. or other banks and to become one of the major issuers of these debt instruments in the Polish market. The duration of the Bank is indefinite.

1.3. Share capital

The share capital of ING Bank Hipoteczny S.A. amounts to PLN 380,000,000 and is divided into 380,000 ordinary registered shares of nominal value of PLN 1,000.00 each.

Structure of the share capital


Series	Type of share	Number of shares	Nominal value of one share (PLN)	Series nominal value (PLN)	Date on which a resolution was passed by the General Meeting	Issue date	Date of registration in the National Court Register (KRS)
A	ordinary	120,000	1,000.00	120,000,000	not applicable*	26.02.2018	20.03.2018
B	ordinary	90,000	1,000.00	90,000,000	03.01.2019	03.01.2019	06.02.2019
C	ordinary	170,000	1,000.00	170,000,000	11.12.2019	11.12.2019	09.01.2020
* Issue of shares of series A stems from the Deed of Incorporation of 26 February 2018.

The share capital has been fully covered with pecuniary contributions. Each ordinary share entitles its holder to dividend and one vote during the General Meeting of ING Bank Hipoteczny S.A.

1.4. Shareholders of ING Bank Hipoteczny S.A.

ING Bank Hipoteczny S.A. is a subsidiary of ING Bank Śląski S.A., which, as at 31 December 2022, held 100% of the share capital of ING Bank Hipoteczny S.A. and 100% of the total number of votes at the General Meeting of ING Bank Hipoteczny S.A. The Bank is part of a Group that, for the purposes of these financial statements, is referred to as the ING Bank Śląski S.A. Group.

1.5. ING Bank Hipoteczny S.A. Management Board and Supervisory Board composition

Management Board

The following changes in the composition of the Management Board of ING Bank Hipoteczny S.A. took place in 2022:

o On 7 June 2022, Mr Mirosław Boda tendered his resignation from the Bank Management Board and from his position as President of the Management Board, effective at the end of 30 September 2022.

o On 13 July 2022, the Supervisory Board of ING Bank Hipoteczny S.A. appointed the current Vice President of the Bank Management Board, Mr Jacek Frejlich, as President of the Bank Management Board, subject to the approval by the Polish Financial Supervision Authority and as of the date of such approval, however not earlier than as of 1 October 2022. On 28 October 2022, Mr Jacek Frejlich took up the position of President of the Management Board of ING Bank Hipoteczny S.A. following the approval of his appointment granted by the Polish Financial Supervision Authority on the same day.

o On 1 August 2022, the Supervisory Board of ING Bank Hipoteczny appointed Mr Marek Byczek as Vice President of the Management Board of ING Bank Hipoteczny S.A. effective as of 1 October 2022.

o On 13 November 2022, Mr Roman Telepko, Vice-President of the Bank Management Board (CRO) at ING Bank Hipoteczny S.A. tendered his resignation from the position effective as of 14 November 2022.

o On 3 November 2022, the Supervisory Board of ING Bank Hipoteczny S.A. appointed Mr Paweł Serocki as Vice President of the Management Board (CRO) at ING Bank Hipoteczny S.A. with effect from 15 November 2022, following the unanimous approval of his appointment by the Polish Financial Supervision Authority on 28 October 2022.

As at 31 December 2022, the composition of the Board of ING Bank Hipoteczny S.A. was as follows:

o Mr Jacek Frejlich, President of the Management Board,

o Mr Marek Byczek, Vice-President of the Bank Management Board,

o Mr Paweł Serocki, Vice-President of the Bank Management Board.

The composition of the Management Board of ING Bank Hipoteczny S.A. was changed prior to the approval of these financial statements, as presented in Chapter 3. Significant events after the balance sheet date - The resignation of Mr Paweł Serocki from the position of Vice President of Management Board (CRO) of ING Bank Hipoteczny S.A. and the appointment of Mr Roman Telepko as Vice President of Management Board of ING Bank Hipoteczny S.A.

Supervisory Board

In 2022 there were no changes in the composition of the Supervisory Board of ING Bank Hipoteczny S.A.

As at 31 December 2022, the Supervisory Board of ING Bank Hipoteczny S.A. worked in the following composition:

o Ms Bożena Graczyk, Chairwoman,

o Mr Marcin Giżycki - Deputy Chairman,

o Mr Jacek Michalski, Secretary (independent member),

o Mr Brunon Bartkiewicz, Member,

o Ms Joanna Erdman, Member,

o Mr Krzysztof Gmur, Member (independent member).

1.6. Auditing firm authorised to audit the financial statements

BDO Spółka z ograniczoną odpowiedzialnością Sp. k. with its registered office in Warsaw is the auditing firm authorised to audit the financial statements of ING Bank Hipoteczny S.A.

1.7. Approval of financial statements

These annual financial statements of the ING Bank Hipoteczny S.A. for the period from 1 January 2022 to 31 December 2022 were approved by the Bank Management Board on 31 March 2023.

The annual financial statements of ING Bank Hipoteczny S.A. for the period from 1 January 2021 to 31 December 2021 were approved by the General Meeting of ING Bank Hipoteczny S.A. on 7 April 2022.

2. Significant events that occurred in 2022

The outbreak of war in Ukraine

On 24 February 2022, Russia launched a large-scale war against Ukraine. The international community reacted by imposing sanctions against Russia and Belarus.

The Bank continuously monitors the development of events related to the ongoing armed conflict in Ukraine and analyses its impact both on the macroeconomic environment and on the Bank itself. The direct impact of this situation may be reflected in future credit, market and operational risks.

The Bank has a small exposure of mortgage loans granted to individual customers who are citizens of Ukraine, Russia and Belarus. Additionally, absolute majority of these loans were granted to individuals being residents of Poland. The loan portfolio towards the citizens of Ukraine, Russia and Belarus is limited and its share in the loan portfolio does not exceed 1%. It shall be emphasised that this portfolio relates only to mortgage-backed loans, for which the real estate constituting collateral is located in Poland. As at the date of signing this report, the Bank has not identified any significant delays in repayment of mortgage loans by the above mentioned customers. In the opinion of the Bank Management Board, no material direct impact of the armed conflict in Ukraine on the Bank's liquidity and capital position is identified. As the Bank’s business model is based on the outsourcing of some of its activities, the Bank has also reviewed its suppliers and business continuity plans.

Information on the impact of the economic situation on the operations of ING Bank Hipoteczny S.A.

In 2022, the Bank’s operating, business and financial activities were still influenced by the COVID-19 pandemic, and the outbreak of armed conflict in Ukraine. The Polish and global economy are in the period of uncertainty, and state institutions take a number of steps and offer aid programmes to limit the recession. During the reporting period the Bank’s Management Board analysed the COVID‑19 pandemic related developments on a current basis. They identified the risks attributable to increased delay in loan repayment and a potential decrease in property prices. Throughout 2022, the Bank monitored, among other things, the number and volume of loans for which borrowers requested a suspension of the execution of the loan agreement (so-called "statutory holidays") or a suspension of instalment payments (so-called "credit holidays"), as well as monitored the impact of the solutions offered to customers on issues related to securing the issue of covered bonds, the cost of risk and the Bank's result. The Bank also analyses the market situation regarding covered bonds and changes in the regulatory and economic environment on an ongoing basis. Moreover, it is monitored all the time whether the suppliers are able to provide services.

The Bank’s standing is good in terms of its liquidity and capital position. In fact, it significantly exceeds the required regulatory levels. As at 31 December 2022, the Bank’s LCR was 142%. Common Equity Tier 1 ratio, equal to the Bank’s total capital ratio, was 36.06% as at 31 December 2022. The level of this ratio is currently almost 3 times higher than required by law.

Adjustment of gross carrying amount of PLN mortgage loans due to credit moratoria

In 2022, the President of the Republic of Poland signed the Act on crowdfunding for business ventures and assistance to borrowers. Among other things, it introduced the possibility for borrowers with a PLN mortgage loan to suspend repayment of up to 8 monthly mortgage instalments - two in each quarter of the second half of 2022 and one in each quarter of 2023 ("credit moratoria", "credit holidays").

The change in the law made the Bank to recognise an adjustment to the gross carrying amount of mortgage loans in PLN in the 2022 result. As at 31 December 2022 the amount of the adjustment was PLN -96,094,900 - as presented in Note 7.1. Net interest income, in the line the impact of adjustment of gross carrying amount of loans due to credit moratoria, was determined as the difference between the present value of the estimated cash flows under the loan agreements taking into account the suspension of instalment payments in the quarters 2022 and 2023 specified above and the present gross carrying amount of the loan portfolio, taking into account the percentage of customers who suspend instalment payments.

In 2H2022, an average of 64% of the PLN mortgage portfolio was subject to credit holidays (in value terms relative to the total portfolio meeting the criteria required in order to avail onself of credit holidays). The ratio was defined as the average customer interest in the credit holidays based on the four periods in which customers were eligible for the said holidays. As at 31 December 2022, the Bank assumed in its estimates that in 2023 customer interest would be, in value terms, 75% in the first half and 77.5% in the second half of 2023.

The estimated percentage of customer interest is the main parameter affecting the value of the adjustment. A +/-5 p.p. change in the estimated percentage of customers throughout 2023 would result in a change in the amount of the adjustment of approximately +/- PLN 3.8 million.

At the end of 2022, PLN mortgage loans covered by credit holidays were more than 91% (in value terms) in Stage 1 of the expected credit loss valuation.

Contribution to the Borrower Support Fund

The aforementioned law on crowdfunding for business ventures and borrower assistance also introduced an obligation for the banking sector to make an additional contribution of PLN 1.4 billion to the Mortgage Support Fund (MSF) by the end of 2022. The amount attributable to ING Bank Hipoteczny S.A. amounted to PLN 28,900 and was paid in full. The Bank recognised the cost of this in the income statement for 2022, which are presented in Note 7.3. General and administrative expenses

Redemption of own bonds series INGBH004, INGBH005, INGBH006

o On 25 January 2022, own bond series INGBH004 of the total nominal value of PLN 150,000,000 issued by the Bank on 25 March 2021 was redeemed.

o On 21 March 2022, own bond series INGBH005 of the total nominal value of PLN 79,000,000 issued by the Bank on 20 September 2021 was redeemed.

o On 9 March 2022 own bond series INGBH006 of the total nominal value of PLN 425,000,000 issued by the Bank on 9 December 2021 was redeemed.

Issue and redemption of own bonds series INGBH007, INGBH008, INGBH009

o On 22 March 2022, the Bank carried out a further issue of own bonds of series INGBH007 of a nominal value of PLN 79,000,000 (i.e. 158 bonds of a nominal value of PLN 500,000 each). The price was determined based on the sum of the 3M WIBOR and a margin. The bonds were fully subscribed by an entity from the ING Bank Śląski S.A. Group. On 22 June 2022 (in accordance with the contractual terms), the aforementioned bond series was redeemed.

o On 15 July 2022, ING Bank Hipoteczny S.A. issued the INGBH008 series of unsecured 3-month own bonds. The issue amounted to PLN 148,000,000 (i.e. 296 bonds of a nominal value of PLN 500,000 each) and a redemption period set at 3 months. The price was set based on a fixed interest rate. The entire issue was redeemed by an ING Bank Śląski S.A. Group entity and was not subject to the issuer's application for listing on a regulated market. On 14 October 2022, the aforementioned series of bonds were redeemed.

o On 18 October 2022, the Bank carried out a further issue of own bonds of series INGBH009 of a nominal value of PLN 134,000,000 (i.e. 268 bonds of a nominal value of PLN 500,000 each) and a maturity set at 3 months. The price was set based on a fixed interest rate. The bonds were fully subscribed by an entity in the ING Bank Śląski S.A. Group. The issue was not subject to the issuer's application for admission to listing on a regulated market.

Imposition by the Polish Financial Supervision Authority of a capital charge recommended under Pillar II (P2G)

On 23 December 2022, the Bank received a letter from the Polish Financial Supervision Authority (“PFSA”) on the recommendation to mitigate the risks inherent in the Bank's activities by maintaining by the Bank its own funds allocated for covering the additional capital charge (“P2G”) at 1.76 p.p. in order to absorb potential losses resulting from stress events. The recommendation should be met above the total capital ratio (as referred to in Article 92(1)(c) of Regulation No 575/2013), plus the additional own funds requirement (“P2R”, as referred to in Article 138(2)(2) of the Banking Law Act) and the combined buffer requirement (as referred to in Article 55(4) of the Act on macroprudential supervision). The P2G capital charge should consist entirely of Common Equity Tier 1 capital. According to PFSA's methodology for determining the capital charge recommended under Pillar II (P2G), the maximum level of the P2G capital charge may amount to 4.5 p.p. Details in this respect are described in chapter Risk and Capital Management in item 7.29. Qualitative information - Capital management. The Bank has a high and safe level of capital adequacy, significantly exceeding regulatory requirements including also P2G capital charge. The P2G recommendation is binding for the Bank from the moment of receiving the PFSA information.

Individual recommendation of the Polish Financial Supervision Authority on meeting the criteria for dividend payout from net profit for 2021

On 25 February 2022, the Bank received a letter from the Polish Financial Supervision Authority (PFSA), in which the PFSA indicated that the Bank meets the requirements to pay dividend of up to 100% of the net profit for 2021. At the same time, the PFSA recommended mitigating the inherent risk of the Bank by not taking, without prior consultation with the supervisory authority, other actions, in particular those outside the scope of current business and operational activities, which could lead to lowering the Bank’s own funds, including possible dividend payout from undivided profit from previous years and buy-back of own shares.

Amount of the annual contribution to the BGF compulsory resolution fund in 2022

On 15 April 2022, the Management Board of the Bank was informed by the Bank Guarantee Fund about the amount of the annual contribution to the banks’ compulsory resolution fund in 2022. The total cost to the Bank is PLN 2.8 million, the 2020 and 2021 contribution adjustment included. The entire amount has been recognised under the costs of the first quarter of 2022.

Information on 2021 dividend payout.

On 7 April 2022, the Ordinary General Meeting of the Bank passed a resolution on the dividend payout for 2021. On the basis of this resolution, the Bank paid a total dividend of PLN 10,355,608.91. The record date (i.e. the date on which the owner of the shares acquires the right to the dividend) was set at 7 April 2022 and the dividend payout date was set at 8 April 2022. The dividend covered all shares issued by the Bank, i.e. 380,000 shares.

General Meeting of ING Bank Hipoteczny S.A.

On 7 April 2022, the General Meeting of the Bank took place. The resolutions that were passed there concerned:

o consideration and approval of the financial statements of ING Bank Hipoteczny S.A. for 2021,

o consideration and approval of the Management Board Report on Operations of ING Bank Hipoteczny S.A. for 2021 inclusive of Statements of the Management Board on observance of corporate governance principles,

o approval of the Supervisory Board Report on assessment results for the financial statements of ING Bank Hipoteczny S.A. for 2021, the Management Board Report on Operations of ING Bank Hipoteczny S.A. for 2021 and the Management Board’s motion regarding allocation of the profit generated by ING Bank Hipoteczny S.A in the period from 1 January 2021 to 31 December 2021,

o acceptance of reports of the Supervisory Board of ING Bank Hipoteczny S.A. for 2021, comprising:

1) assessment of the Bank’s standing, taking into account the assessment of the risk management and internal control systems, the compliance and internal audit cell included;

2) report on the operations of the Supervisory Board and its Committee;

3) report on the evaluation of the remuneration policy of the Bank;

4) assessment of application by the Bank of the Principles of Corporate Governance for Supervised Institutions.

o acknowledgement of the fulfilment of duties in 2021 by all Management Board Members and Supervisory Board Members,

o approval of the Management Board’s motion regarding allocation of the net profit generated by ING Bank Hipoteczny S.A in the period from 1 January 2021 to 31 December 2021,

o resolution of the ING Bank Hipoteczny S.A. Supervisory Board Members Appointing, Onboarding and Recalling Policy,

o adoption of an amendment to the Remuneration Policy for Members of the Supervisory Board of ING Hipoteczny S.A.,

o adoption for information the amendment to the Bylaw of the Supervisory Board of ING Bank Hipoteczny S.A.

Reduction in the amount of committed funding granted by ING Bank Śląski S.A

In March 2022, the Bank, adjusting its credit lines to the current and planned scale of issuance of unsecured bonds, reduced the maximum limit of available funding granted to the Bank under unconditional credit lines by ING Bank Śląski S.A. As a result of this operation, at the end of 2022, the total amount of unconditional credit lines granted to the Bank was PLN 1.7 billion.

Work on reforming the WIBOR reference rate

In July 2022, a National Working Group (NWG) on the reform of the WIBOR benchmark was established. The objective of the NWG's work is to prepare the process for the effective implementation of the new benchmark on the Polish financial market and the replacement of the currently used WIBOR interest rate benchmark with it. To achieve the above-mentioned objectives the NWG acts in a compliant, orderly manner and avoids threats to the stability of the Polish financial sector and the Polish economy. The Office of the Polish Financial Supervision Authority has invited participants of the domestic financial market to take part in the work of the NWG. The work of the NWG is supervised and coordinated by the Steering Committee of the National Working Group, which includes representatives of key institutions.

In the course of the work of the NWG the time-consuming tasks that all market participants are required to complete in order to correctly and safely replace the previously used WIBOR and WIBID benchmarks with a new one were identified, prioritised and estimated. The selected WIRON (Warsaw Interest Rate Overnight) index is to ultimately become the key interest rate benchmark within the meaning of the BMR Regulation.

The Roadmap published by the NWG aims at ensuring that the process of replacing the benchmarks complies with the provisions of the BMR Regulation, creating a liquid market in cash and derivative financial instruments using the chosen RFR (Risk Free Rate) benchmark for the Polish zloty (PLN), preparing operationally and technically all financial market participants (issuers, investors, market infrastructure institutions) for the replacement of the WIBOR and WIBID benchmarks by WIRON, carrying out the required changes in legislation and building full awareness of the reform in progress and its consequences among all financial market participants, most notably consumers.

Due to the fact that the benchmark reform consists of numerous interwoven elements, the process will be split over time. The NWG specified in the Roadmap that, with the effective cooperation of all parties involved, the benchmark reform in Poland would have been fully implemented by the end of 2024, with the implementation by market participants of a new range of financial products using the WIRON index planned for 2023 and 2024. The Roadmap indicates a readiness to cease developing and publishing the WIBOR and WIBID benchmarks from the beginning of 2025.

As recommended by the Financial Stability Board (FSB), regulators have committed to a thorough review and reform of the relevant benchmark rates. This review and reform has already taken place.

As at 31 December 2022, the Bank has exposures to the benchmark rate, which is expected to be no longer published:

o WIBOR, which is expected to be no longer published after 31 December 2024 and be replaced by WIRON.

This change in the benchmark rate affects the Bank, its customers and the financial sector as a whole and exposes the Bank to risks. Among these risks are legal, operational and financial risks. Legal risk refers to all required changes in documentation for new as well as existing transactions. Operational risk refers to the required changes to IT systems, reporting infrastructure and operational processes for new benchmark rates. Financial risk (predominantly limited to interest rate risk), as a consequence of changes in the valuation of financial instruments referencing these benchmark rates and decreasing market liquidity may have a direct impact on transactions or may affect the ability to hedge the risk arising from these transactions. Changes in valuation, interest calculation methodology or documentation may also result in customer complaints and litigation.

In order to mitigate these risks, the Bank's representatives participate in the meetings of the IBOR reform implementation project set up by ING Bank Śląski S.A. Group. This project has an elaborate structure and the progress of the work is monitored by a steering committee. The project analyses and coordinates any and all indispensable actions to implement the required changes to internal processes and systems, taking into account pricing, risk management, legal documentation and the impact on customers. The bank continues to monitor market studies and the results of the analysis of several remaining uncertainties, such as the availability of rates in the term structure and regulatory standards for transformation, in order to assess the impact on the project, customers and related risks.

3. Significant events after the end of the reporting period

Issue of own bonds of INGBH010 series

On 26 January 2023, ING Bank Hipoteczny S.A. issued another series of unsecured three-month own bonds. The issue amounted to PLN 124,000,000 (i.e. 248 bonds of a nominal value of PLN 500,000 each). The price was set based on a fixed interest rate. The entire issue was redeemed by an ING Bank Śląski S.A. Group entity and was not subject to the issuer's application for listing on a regulated market.

Change in the frequency of monitoring of the mortgage lending value of the real estate

On 30 January 2023, the mode and principles of the periodic monitoring of mortgage lending value of the real estate were aligned with existing market practice and the requirements of Article 129 of Regulation 575/2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (CRR).

The above change affected the possibility of preferential treatment of covered bonds issued by the Bank (pursuant to Article 129 of the CRR). With regard to the rules and procedure for the monitoring of mortgage lending value of the real estate, the aforementioned provision introduces the need to comply with the annual cycle of monitoring of the mortgage lending value of the real estates pledged as collateral for covered bonds.

Resignation from the position of Vice President of the Management Board (CRO) of ING Bank Hipoteczny S.A. and appointment of a new Vice President of Management Board of ING Bank Hipoteczny S.A.

On 8 February 2023, for personal reasons, Mr Paweł Serocki resigned from holding a position at the Management Board of ING Bank Hipoteczny S.A. and from his function effective as of 9 February 2023. The Supervisory Board appointed Mr Roman Telepko as Vice President of the Management Board of ING Bank Hipoteczny S.A. as of 9 February 2023, for the period until the expiry of the current joint term of office of the Management Board of the Company.

Purchase of mortgage debt claims portfolio

Under the Debt Transfer Contract to Issue Covered Bonds No. 13 that was signed with ING Bank Śląski S.A. on 3 March 2023, ING Bank Hipoteczny S.A acquired another mortgage-backed housing loans debt claims portfolio for the total amount of PLN 637,276,200.

4. Compliance with International Financial Reporting Standards

These annual financial statements of ING Bank Hipoteczny S.A. for the period from 1 January 2022 to 31 December 2022 were prepared in compliance with the International Financial Reporting Standards (“IFRS”) approved by the European Union.

The financial statements incorporate the requirements of standards and interpretations endorsed by the European Union with the exception of the standards and interpretations listed in section 4.1 below, which are either pending endorsement by the European Union or have been endorsed by the European Union but become effective after the balance sheet date.

The Income Statement, Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the period 1 January 2022 to 31 December 2022 and the Statement of Financial Position as at 31 December 2022, together with the comparatives, have been prepared using the same accounting policies for each period, except for the changes in accounting policies described in Section 5.5.7 Modification of contractual cash flows.

4.1. Changes to accounting standards

In these annual financial statements the following binding standards and new interpretations approved by the European Union for annual periods starting on or after 1 January 2022 were taken into account by the Bank:

Change

Influence on the Bank’s statements

Changes resulting from the cyclical review of IFRS 2018-2020

Changes in terms of:

IFRS 1 - a subsidiary applying accounting standards for the first time

IFRS 9 - Fees in the "10%" test (to determine the exclusion of financial liabilities from the statement of financial position) - under the amendment, all fees paid or received should be included in the test, including those that have been settled by the borrower or lender on behalf of other entities

Illustrative examples to IFRS 16 - lease incentives

IAS 41 - agriculture: taxation at fair value.

The implementation of the amendments did not have a material impact on the Bank's financial statements.

IFRS 3

Reference to the conceptual framework

Amendment introducing references to the conceptual framework published in March 2018 into the text of the standard.

The implementation of the amendments did not have a material impact on the Bank's financial statements.

IAS 37

Burdensome contracts - costs of compliance

An amendment to clarify the concept of costs of meeting contractual obligations where the costs exceed the economic benefits arising from them. The implementation of the amendments did not have a material impact on the Bank's financial statements.

IAS 16

Property, plant and equipment - benefits before planned use

An amendment to exclude the possibility of deducting from the cost of property, plant and equipment amounts received from the sale of products produced during the pre-implementation testing phase. This is because such sales revenues and corresponding costs should be recognised in the income statement. The implementation of the amendments did not have a material impact on the Bank's financial statements

IFRS 16:

Rent concessions arising from COVID-19 after 30 June 2021

Lease modification amendment to extend by 1 year the period in which a lease modification assessment can be waived when the change in lease payments is a direct consequence of the COVID-19 pandemic. The application of the amendment has not had a material impact on the financial statements of the Bank.

The published standards and interpretations which were issued by 31 December 2022 and approved by the European Union but were not previously applied by the Bank:

Change

(EU effective date is given in the parentheses)

Influence on the Bank’s statements

IFRS 17

Insurance contracts, taking into account the extension of the temporary exemption from the application of IFRS 9.