tel.: +48 22 543 16 00

fax: +48 22 543 16 01

e-mail: office@bdo.pl

www.bdo.pl

BDO spółka z 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: 0000729684,

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.

TRANSLATORS’ EXPLANATORY NOTE

The English content of this report is a free translation of the audit report of the below mentioned Polish Company. In Poland

statutory accounts as well as the auditor’s report should be prepared and presented in Polish and in accordance with Polish

legislation and the accounting principles and practices generally adopted in Poland.

In the event of any discrepancies in interpreting the terminology, the Polish language version is binding.

INDEPENDENT AUDITOR’S REPORT

TO THE SUPERVISORY BOARD OF ING BANK HIPOTECZNY 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. (“Entity”, „Bank”),

which comprise the statement of financial position as at 31 December 2022, the statement of profit

and loss and other comprehensive income, the statement of changes in equity and the statement of

cash flows for the financial year from 1 January to 31 December 2022, as well as the notes to the

financial statements comprising a description of the significant adopted accounting policies 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 2022 and 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 and

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 maintained accounting records in accordance with

the provision of Chapter 2 of the Accounting Act of 29 September 1994 (“the Accounting Act” –

2023 Journal of Laws, item 120 with subsequent amendments).

Our opinion is consistent with the additional report to the Audit Committee, which we issued on 4 April

2023.

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 Statutory Auditors

("NSA"), and pursuant to the Law of 11 May 2017 on Registered Auditors, Registered Audit Companies

and Public Oversight (the “Law on Registered Auditors” – 2022 Journal of Laws, item 1302 with

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

regarding the 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 our 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") as adopted by resolution of the National Council of Statutory

Auditors and other ethical requirements that are relevant to the audit of financial statements in

Poland. We have fulfilled our other ethical responsibilities in accordance with these requirements and

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the IESBA Code. During the audit, the key registered auditor and the audit firm remained independent

of the Bank in accordance with the independence requirements set out in the Act on registered

Auditors and in the 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 matters that, according to our professional judgment, were most significant

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

significant risks of material misstatements, including the assessed risks of material misstatement due

to fraud. We addressed these matters in the context of our audit of the financial statements as a whole

and when formulating our opinion, 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.

1. IMPACT OF SO-CALLED “PAYMENT HOLIDAYS”

On 7 July 2022, the Parliament in Poland adopted the Act on crowdfunding for economic ventures

and borrower assistance (“the Act”), which was then signed by the President and published in the

Journal of Laws on 14 July 2022. The Act introduced the possibility of suspending the repayment of

mortgage contracts granted in the Polish currency in the years 2022-2023. Borrowers who meet the

criteria set out in the Act could apply for so-called “payment holidays” in two months each in a third

and fourth quarters of 2022 and one month in each quarter of 2023.

In accordance with International Financial Reporting Standard 9 “Financial Instruments” (IFRS 9),

such a modification of the expected cash flows from a loan contract requires a recalculation of the

gross carrying amount of the loans and recognition of loss in the reporting period in which the Act

was implemented. Based on information on the applications submitted by clients, as well as

expectations as to the applications that clients may still submit in 2023, the Bank estimated the

impact of the modification of the expected cash flows from credit contracts and recognized a loss in

the amount of PLN 96,094.9 thousand, which was accounted for as an adjustment of interest income.

We have classified the so-called “payment holidays” as a key audit matter due to their impact on the

Bank’s statement of comprehensive income and necessity to apply significant estimates and

professional judgment by the Management Board when estimating the number of applications that

may still be submitted by clients after 31 December 2022.

DISCLOSURES IN THE FINANCIAL STATEMENTS

The method used to recognize the so-called “payment holidays”, as well as the key assumptions, are

described in Note 2 “Material events in 2022”, and the effect on interest income is presented in Note

7.1 to the financial statements.

AUDIT PROCEDURES PERFORMED IN RESPONSE TO THE RISK

As part of our procedures, we obtained an understanding of the Bank’s accounting policy relating to

the recognition of the so-called “payment holidays”, as well as its estimation methods. We analyzed

the calculations by verifying the model input data and the recalculation method. We verified system

recalculations associated with recognition of the modification based on selected credit samples.

With regard to the applications submitted by the borrowers, based on a sample, we verified that

those have been correctly recorded and included in the calculation. We performed a critical

assessment of the estimates of the number of applications that may still be submitted by clients in

2023 calculated based on the Bank’s experience and expectations towards the use of “payment

holidays” by its clients.

We assessed the impact of the loss on the Bank’s capital ratios, also in the context of its ability to

continue as a going concern. We also analyzed subsequent events and the accuracy and

completeness of disclosures in the accompanying financial statements in accordance with

requirements of IAS.

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In the event of any discrepancies in interpreting the terminology, the Polish language version is binding. 3

2. COMPLETENESS, EXISTENCE AND VALUATION OF LOANS AND ADVANCES TO CUSTOMERS

As at 31 December 2022, the balance of loans and advances to customers amounted to PLN

2,901,111.1 thousand and was lower by PLN 981,888.4 thousand, i.e. by 25%, from the balance as at

31 December 2021. The decrease in this item of the financial statements resulted from customer

repayments in 2022 and the lack of mortgage loan transfers from ING Bank Śląski S.A.

Under 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. 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 2022, the Bank’s total allowance for expected credit losses amounted

to PLN 4,919.4 thousand, and Stage 3 loans accounted for 0.2% of the value of total loans.

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 total assets. In addition, the measurement of credits and loans granted to clients

involves significant estimates and professional judgment from Management Board during the

application of the expected credit loss model.

DISCLOSURES IN THE FINANCIAL STATEMENTS

The Bank’s accounting policies on loans and advances to customers and on the expected credit loss

calculation model is described in note 5 of “Significant accounting methods and key judgements”, in

point 5.5 “Financial assets and liabilities”.

A note containing the required disclosures relating to loans and advances to customers is included in

point 7.9 of the financial statements and in note 7.30 regarding 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 policies relating

to the classification and recognition of financial assets, as well as their valuation and impairment.

We also familiarized ourselves with the internal control environment regarding the monitoring and

valuation of the portfolio of loans and advances to customers. We assessed its design and evaluated

the effectiveness of identified key controls.

With regard to the information system used to store information on the credit portfolio, we verified

Bank’s control mechanisms under IT General Controls (ITGC) procedures.

We supplemented the tests of controls with tests of details which included reconciliation the

analytical credit report to the values disclosed in the financial statements, verification of accounting

policies on the recognition of the credits transfer transaction costs, as well as testing, based on a

selected example, system’s valuation of credits using the effective interest rate. Due to the lack of

new transfers, we made sure that there were no new items in the loan portfolio via comparison to

the analytical data audited as at 31 December 2021.

With regard to the expected credit losses impairment model, our experts familiarized themselves

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

stages in accordance with IFRS 9 as of 31 December 2022. We obtained documentation of the

validation of model parameters, performed an independent recalculation of the impairment

allowance from the financial statements based on the obtained EaD, PD and LGD parameters.

We also performed an analysis of subsequent 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.

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In the event of any discrepancies in interpreting the terminology, the Polish language version is binding. 4

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

The Management Board of the Bank is responsible for the preparation, based on properly maintained

accounting records, of the financial statements reflect fairy and clearly the assets and financial

position of the Bank and its result in accordance with International Financial Reporting Standards as

adopted by the European Union, the adopted accounting policies, the legal regulations binding the

Bank, and its Article of Association, as well as for internal controls which the Management Board

considers to be necessary to prepare financial statements which do not include any material

misstatements caused by fraud or error.

In preparing the financial statements, the Management Board of the Bank is responsible for assessing

the Bank’s ability to continue as a going concern, for the disclosure, if necessary, any matters related

to its going concern and for adopting the going concern principle as the basis of accounting, except in

situations when the Management Board of the Bank either intends to liquidate the Bank or discontinue

its operations, or has no real alternative to liquidation or discontinuation of operations.

The Management Board and members of its Supervisory Board of the Bank are obliged to ensure that

the financial statements comply with 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 aim is to gain reasonable assurance that the financial statements as a whole are free from material

misstatements due to fraud or error, and to issue an audit report which includes our opinion.

Reasonable assurance is a high level of assurance, but it does not guarantee that the 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, individually or

in the aggregate, they could affect the business decisions of users, made on the basis of these financial

statements.

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 assurance of the Bank’s future profitability or the current or

future effectiveness of managing all matters by the Bank’s Management Board.

Throughout an audit performed in accordance with NSA, we apply professional judgement and

professional skepticism, as well as:

− we identify and assess the risks of a material misstatement in the financial statements due to fraud

or error, we design and conduct audit procedures in response to those risks, and we obtain audit

evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of non-

detection of a material misstatement which is result of fraud is higher than that resulting from an

error because fraud may relate to conspiracy, falsification, intentional omission, misleading or

overriding internal controls;

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

audit procedures suitable in the given circumstances, but not to express an opinion on the

effectiveness of the Bank’s internal controls;

− we assess the appropriateness of the accounting policies applied and the reasonableness of the

accounting estimates and related disclosures made by the Management Board of the Bank;

− we reach a conclusion as to the appropriateness of the Bank’s Management Board application of the

going concern principle as the basis of accounting and, based on the audit evidence collected, we

assess whether there is material uncertainty related to events or conditions that may raise

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significant doubts on the Bank’s ability to continue in operation as a going concern. If we reach the

conclusion that a material uncertainty exists, we have to draw the attention in our audit report to

the related disclosures in the financial statements or, if such disclosures are inadequate, we modify

our opinion. Our conclusions are based on the audit evidence obtained to the date of preparing our

audit report, however, future events or conditions may cause the Bank to discontinue operations;

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

disclosures, and whether the financial statements present the transactions and events which

constitute their basis in a manner ensuring their fair presentation.

We communicate with the Supervisory Board regarding, among others things, the planned scope and

timing of conducting the audit and significant audit findings, including any significant weaknesses of

internal controls which will be identified by us during the audit.

We hereby submit statement to the Supervisory Board that we complied with the relevant ethical

requirements relating to independence and we communicate all the relationships and all issues which

could rationally be considered hazardous to our independence, and where applicable we inform you of

the related safety measures applied.

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

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

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

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

Other Information, Including Report on Activities

The other information comprises the Management Board Report on Performance for the financial year

ended 31 December 2022 (the “Report on Activities”) along with the Corporate Governance Statement,

the letter of the Chairman of the Management Board and the statement of the Management Board

which are separate sections of the report and which we have obtained prior to issue this audit report,

as well as the Supervisory Board statements which we expect to obtain after the issue of this audit

report (together the “Other Information”).

Responsibilities of the Bank’s Management and Supervisory Board

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

accordance with applicable law.

The Management Board and members of its Supervisory Board of the Bank are obliged to ensure that

the Report on Activities along with its separate sections comply with the requirements set forth in the

Accounting Act.

Responsibilities of the Auditor

Our opinion on the financial statements does not cover the 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 in the Other Information, we are required to report

that fact in our auditor’s report. In accordance with the requirements of the Act on Statutory Auditors,

it is also our responsibility to issue an opinion whether the Report on Activities has been prepared in

accordance with applicable laws and 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 Corporate Governance

Statement contains the required information.

In the event that we find a material misstatement in the Supervisory Board statements, we are

required to communicate this to the Bank’s Supervisory Board.

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In the event of any discrepancies in interpreting the terminology, the Polish language version is binding. 6

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 about the Bank and its environment obtained during the audit,

we have not identified material misstatements in the Report on Activities.

Opinion on the Statement on Corporate Governance

In our opinion, the Bank’s Statement on Corporate Governance contains the information specified in

paragraph 70 section 6 point 5 of the Current Information Decree. Furthermore, 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 Corporate Governance is consistent with the applicable laws and with the

information contained in the financial statements.

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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 we have not provided services other than the

audit and review of financial statements, which are prohibited under Art. 5 sec. 1 of the Regulation EU

and art. 136 of the Act on Statutory Auditors.

Information on the Bank's compliance with prudential regulations

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

with the laws, including prudential regulations, and for the correct determination of capital ratios.

Our responsibility 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 have not identify any instances of non-compliance of the Bank with the

applicable prudential regulations defined in separate laws in the period from 1 January to 31 December

2022, in particular with regard to the correctness of the Bank's determination of capital ratios as at 31

December 2022, that could have a material 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 27 May 2022. The total uninterrupted audit engagement period is 5 years starting

from the financial year ending 31 December 2018.

Key register auditor who is main person responsible for performing the audit, which result is 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 key registered auditor

Signed with a qualified electronic signature.

Michał Tomczyk

Certified Auditor

Registration No. 13503

Warsaw, 4 April 2023