Raport

Independent Statutory Auditor’s Report on the Audit

of Separate Annual Financial Statements of

BNP Paribas Bank Polska S.A.

for the financial year ended

31 December 2023

Mazars Audyt Sp. z o.o.

ul. Piękna 18

00-549 Warsaw

Mazars Audyt Sp. z o.o.

Sąd Rejonowy dla m. st. Warszawy, XII Wydział Gospodarczy KRS nr 0000086577, kapitał zakładowy: 1 268 000,00 PLN,

NIP: 5260215409, REGON: 011110970

INDEPENDENT STATUTORY AUDITOR’S REPORT

ON THE AUDIT OF SEPARATE ANNUAL FINANCIAL STATEMENTS

Translation of the document originally issued in Polish

To the General Meeting and the Supervisory Board of BNP Paribas Bank Polska S.A.

Report on the Audit of Separate Annual Financial Statements

Opinion

We have audited the separate annual financial statements of BNP Paribas Bank Polska S.A

(“the Bank”), which comprise the separate income statement and the separate statement of

comprehensive income for the financial year from January 1 to December 31, 2023, the

separate statement of financial position as of December 31, 2023, the separate statement of

changes in equity and the separate statement of cash flows for the financial year from January

1 to December 31, 2023, and notes comprising a summary of significant accounting policies

and other explanatory notes (“separate financial statements”).

In our opinion, the accompanying separate financial statements:

• give a true and fair view of the property and financial position of the Bank as at

December 31, 2023, and of its financial result and its cash flow 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 principles

(policy);

• comply with the applicable legislation and with the provisions of the Bank’s Articles of

Association as to the form and content;

• have been prepared based on the accounting books kept properly, in accordance with

Chapter 2 of the Accounting Act of September 29, 1994 (the Accounting Act” - Journal

of Laws of 2023, item 120 as amended).

The present opinion is consistent with the additional report to the Audit Committee that we

issued on February 29, 2023.

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Basis for Opinion

We conducted our audit in accordance with National Standards on Auditing as per

International Standards on Auditing adopted by resolution of the National Council of Statutory

Auditors No. 3430/52a/2019 of 21 March 2019 regarding national standards on auditing and

other documents, as amended, and resolution of the Council of the Polish Agency for Audit

Oversight No. 38/I/2022 of 15 November 2022 on national standards on quality control and

National Standard on Auditing 220 (Revised)

(“NSA”), as well as according to the Act on

Statutory Auditors, Audit Firms and Public Supervision of 11 May 2017 (“the Act on Statutory

Auditors” - Journal of Laws of 2023, item 1015 as amended) and Regulation (EU) No 537/2014

of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities

and repealing Commission Decision 2005/909/EC (“EU Regulation” - Official Journal of the

European Union L 158/77 of 27 May 2014, as amended). Our responsibility under those

standards has been further described in “Statutory Auditor’s Responsibility 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 Independence Standards) of the

International Ethics Standards Board for Accountants (“the IESBA Code”), adopted by

resolution of the National Council of Statutory Auditors No. 3431/52a/2019 of 25 March 2019

on the principles of professional ethics for statutory auditors, as amended, and other ethical

requirements which are applicable 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 key statutory auditor and the audit firm remained independent of

the Bank in accordance with the independence requirements specified in the Act on Statutory

Auditors and EU Regulation.

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

provide a basis for our audit opinion.

Key Audit Matters

Key audit matters are those matters that, in the auditor’s professional judgment, were of most

significance in the audit of the separate financial statements for the current reporting period.

These include the most significant assessed risks of material misstatement, including the

assessed risks of material misstatement due to fraud. These matters were addressed in the

context of our audit of the separate financial statements as a whole and in forming our opinion

thereon, and we summarized our responses to these risks, and, where deemed appropriate,

presented the most important observations related to these risks. We do not provide a

separate opinion on these matters.

Key audit matter

How our audit responded to this matter

Allowance for expected credit losses

on loans and advances to customers

In accordance with International

Financial Reporting Standard 9

Financial Instruments ("IFRS 9"), the

We have conducted a critical analysis of design and

implementation of the process of credit risk

assessment and estimation of expected credit losses

and we evaluated the control mechanism implemented

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Bank's management should determine

the amount of expected credit losses

that may occur during a 12- month

period or the remaining life of a financial

asset, depending on the classification of

individual assets into risk categories

("stages", "phases") taking into account

the impact of future macroeconomic

conditions on the level of expected

credit losses.

The determination of the amount and

the moment of recognition of expected

credit losses requires the application of

significant judgment and significant and

complex estimates, including primarily

credit risk parameters in the models of

calculation of expected credit losses.

The estimate of the allowance for

expected credit losses takes into

account the issue of the impact of the

changing macroeconomic conditions in

the economy. This estimate required the

Bank's management to apply additional

assumptions and expert adjustments to

account for the uncertainty associated

with the current and future

macroeconomic environment and to

reflect risk factors not included in the

Bank's models.

Note 3.a Estimates - Impairment of

financial assets, Note 21 Loans and

advances to customers measured at

amortised cost and Note 55.2 Credit risk

provide details of the methods and

models used and the level of allowance

for expected credit losses in the portfolio

of loans and advances to customers.

by the Bank in identifying and estimating expected

credit losses.

We reconciled the loan database and loans impairment

(i.e. expected credit losses) with the Bank’s general

ledger in order to confirm the completeness of the

recognition of loan receivables that are the basis for

impairment losses calculation as well as the value of

those provisions.

We performed analytical procedures regarding the

coverage of the loan portfolio by expected credit losses

and their changes, as well as the transfer of exposures

between Stages.

We assessed the Bank's impairment methodology for

compliance with the requirements of IFRS 9, in

particular with regard to the application of the criteria

for identifying a significant increase in credit risk, the

definition of default, the credit risk parameters adopted

and the consideration of the impact of future

macroeconomic conditions on the level of expected

credit losses.

For the homogeneous loan portfolio assessed

collectively:

• We performed analysis of the methodology

applied to calculate impairment losses for

exposures assessed collectively, including the

adequacy of risk parameters applied by the

Bank;

• We verified the calculation of expected credit

losses for the whole portfolio;

• We assessed of the verification of the models

based on historical data (so called back-tests);

• We reviewed the approach and assumptions

used to Post Model Adjustments created to

reflect the impact of uncertain economic

conditions on the valuation of the allowance for

expected credit losses.

For the non-homogeneous loan portfolio assessed

individually:

• We carried out an analysis of the correctness

of the impairment identification process and

classification into stages;

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• On a selected sample of credit exposures, we

analyzed the documents concerning the

borrower’s financial standing and verified the

assignment of the loan to the respective Stage;

• For selected impaired loans and advances

(Stage 3), we tested the assumptions used in

the calculation of expected credit losses, in

particular the expected scenarios and the

probabilities assigned to them, and the timing

and amounts of expected cash flows, including

cash flows from repayments and sale of

collateral.

We assessed the quality and verify correctness of the

disclosures concerning loans impairment (expected

credit losses) in the Bank’s financial statements.

Impact of legal risk related to the

portfolio of mortgage loans in foreign

currencies

Estimates of legal risk related to FX

mortgage loans are complex and require

a significant level of judgment in

determining possible scenarios, as well

as with respect to the assumptions

made regarding the number of expected

lawsuits, the likelihood of their

resolution, the likelihood of individual

negotiations with the customer, and the

amount of loss in the event the Bank

loses a lawsuit or in the event of

individual negotiations.

The Bank's estimates in this regard are

based on historical observations

indicating significant uncertainty about

the number of lawsuits that will be filed

in court in the future, as well as the lack

of a consistent line of decisions in

existing court rulings.

Note 54 Litigation and administrative

proceedings details the assumptions

used to calculate the impact for the

foreign currency mortgage portfolio and

the possible alternative results

presented in the sensitivity analysis of

the estimate.

In terms of estimation of the impact of the risk related

to the portfolio of mortgage loans in foreign currencies,

our audit procedures were mainly directed at

evaluating the model and the various assumptions

made by the Bank’s Management Board that have a

significant impact on the level of estimated legal risk

costs.

During the audit we have performed the following

procedures:

• We performed a critical review of the model for

estimating the cost of legal risk of CHF loans

and assumptions taken,

• We assessed the appropriateness of the

change in accounting policy regarding the

recognition of the impact of the legal risk

related to the portfolio of mortgages loans in

foreign currencies made by the Bank in 2023

as described in Note 2.6 Changes in

accounting policies and changes in the

presentation of financial data. We have

reviewed the impact of this change on the

separate financial statements,

• We discussed with the Bank’s Management

Board and specialists, including the Bank's

lawyers, the assumptions made taking into

account historical observations, including

information and events occurring after the

balance sheet date and existing and possible

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In addition, the Bank has changed its

Accounting Policy with regard to the

recognition of the impact of legal risk

arising from litigation relating to CHF

mortgages by applying the provisions of

IFRS 9. Detailed information on the

impact of the change in Accounting

Policy is provided in Note 2.6 Changes

in accounting policies and changes in

the presentation of financial data.

legal rulings, in particular those of the

European Court of Justice,

• We analysed the Bank's documentation to

estimate the statistical probability of the

various scenarios of possible outcomes,

• Based on historical data, we have reviewed the

assumptions used by the Bank to estimate the

likelihood of future settlements, both those

reached at the litigation stage and those

offered to customers as part of individual

negotiations and the level of losses realised

because of them,

• On the basis of historical data, we analysed

the approach for the calculation of the value of

potential losses under the various scenarios

adopted by the Bank,

• We verified the model used by the Bank to

estimate the cost of legal risk, checked the

correctness and completeness of the data

underlying the calculations and confirmed the

mathematical correctness of the calculations,

• We analysed events after the balance sheet

date and their impact on the estimate of

provisions,

• We analysed the customer complaints register,

with a particular focus on issues relating to

foreign currency mortgages.

We have also assessed the adequacy and

completeness of the disclosures regarding the risk

provisions for the foreign currency mortgage portfolio.

Responsibilities of the Management Board and Supervisory Board for the

Separate Financial Statements

The Bank's Management Board is responsible for preparing, based on the accounting books

properly kept, the separate financial statements that give a true and fair view of the Bank’s

property and financial position and its financial performance in accordance with International

Financial Reporting Standards as adopted by the European Union and adopted accounting

principles (policy), as well as with the relevant legislation and with the provisions of the Bank’s

Articles of Association. The Bank’s Management Board is also responsible for such internal

control as the Management Board determines is necessary to enable the preparation of

separate financial statements that are free of material misstatement, whether due to fraud or

error.

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In preparing the separate financial statements, the Bank's Management Board is responsible

for assessing the Bank’s ability to continue as a going concern, as well as for disclosing, if

applicable, matters related to going concern and for adopting the going concern assumption

as an accounting basis, unless the Management Board either intends to liquidate the Bank or

to cease operations, or has no realistic alternative but to do so.

The Bank's Management Board and members of the Supervisory Board are obliged to ensure

that the separate financial statements meet the requirements set out in the Accounting Act.

Members of the Supervisory Board are responsible for supervising the financial reporting

process of the Bank.

Statutory Auditor’s Responsibilities for the Audit of the Separate Financial

Statements

Our objectives are to obtain reasonable assurance about whether the separate financial

statements as a whole are free from material misstatement, whether due to fraud or error, and

to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of

assurance but is not a guarantee that an audit conducted in accordance with the NSA will

always detect a material misstatement when it exists. Misstatements can arise from fraud or

error and are considered material if, individually or in the aggregate, they could reasonably be

expected to influence the economic decisions of users taken on the basis of these separate

financial statements.

The scope of audit does not include assurance as to the future profitability of the Bank and

effectiveness or efficiency of running the Bank’s affairs by the Management Board at present

or in the future.

According to principles of the NSA, we exercise professional judgement and maintain

professional skepticism throughout the audit, as well as:

• we identify and assess risks of material misstatement of separate financial statements,

whether due to fraud or error, we design and perform audit procedures responsive to

those risks and we obtain audit evidence which is sufficient and appropriate to provide

a basis for our audit opinion. The risk of not detecting a material misstatement resulting

from fraud is higher than for one resulting from error, as fraud may involve collusion,

forgery, intentional omissions, misrepresentations, or the override of internal control;

• we obtain an understanding of internal control relevant to the audit in order to design

audit procedures that are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the internal control in the Bank;

• we evaluate the appropriateness of the accounting principles (policy) used and the

reasonableness of the accounting estimates and related disclosures made by the

Management Board of the Bank;

• we conclude on the appropriateness of the Bank’s Management Board’s use of the

going concern basis of accounting and, based on the audit evidence obtained, as to

whether a 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 separate financial statements or, if such

disclosures are inadequate, to modify our opinion. Our conclusions are based on the

Mazars Audyt Sp. z o.o. 8

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;

• we evaluate the overall presentation, structure and content of the separate financial

statements, including the disclosures, and whether the separate financial statements

represent the underlying transactions and events in a manner that achieves fair

presentation.

We communicate with the Audit Committee regarding, among other matters, the planned

scope and timing of the audit and significant audit findings, including any significant

deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant

ethical requirements regarding independence and that we will communicate all relationships

and other matters that may reasonably be thought to bear on our independence, and, where

applicable, related safeguards.

From the matters communicated to the Audit Committee, we determine those matters that

were of most significance in the audit of the separate financial statements of the current period

and are therefore the key audit matters. We describe these matters in our auditor’s report

unless law or regulation precludes public disclosure or when, in exceptional circumstances,

we determine that a 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 communication.

Other Information, including the Management report

Other Information includes:

• the Management report of BNP Paribas Bank Polska S.A. Group in 2023, including the

Management report of BNP Paribas Bank Polska S.A. in 2023 (“the Management

report”) with the corporate governance statement which is a separate part of this

Management report,

• Report on non-financial information of the BNP Paribas Bank Polska Group in 2023

(covering non-financial information of BNP Paribas Bank Polska S.A. in 2023),

specified in Article 49b (9) of the Accounting Act,

• Statements of the Supervisory Board of BNP Paribas Bank Polska S.A. to the Annual

Report of BNP Paribas Bank Polska S.A. for the year ended December 31, 2023.

(together “Other Information”).

Under Article 55 (2a) of the Accounting Act the Management report of the BNP Paribas Bank

Polska S.A. Group and of the Bank for 2023 were prepared jointly.

Responsibility of the Management Board and Supervisory Board

The responsibility for the preparation of the Other Information in accordance with the

applicable regulations lies with the Bank’s Management Board.

The Bank’s Management Board and members of the Supervisory Board are obliged to ensure

that the Management report along with the corporate governance statement, which is a

separate part of this Management report and a separate non-financial report specified in

Article 49b (9) of the Accounting Act, meet the requirements set out in the Accounting Act.

Mazars Audyt Sp. z o.o. 9

Statutory Auditor’s Responsibility

Our opinion on the audit of the separate financial statements does not cover the Other

Information. In connection with our audit of the separate financial statements, our responsibility

is to read the Other information and, in doing so, consider whether the Other Information is

materially inconsistent with the separate financial statements, or our knowledge obtained in

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

performed, we conclude that there is a material misstatement of this Other Information, we are

required to report that fact. In accordance with the Act on Statutory Auditors, our responsibility

is also to give an opinion whether the management report has been prepared in accordance

with applicable regulations and whether it complies with information contained in the separate

financial statements. In addition, in accordance with requirements of Article 111a (3) of the

Act of 29 August 1997 Banking Law (Journal of Laws of 2023, item 2488 as amended)

(“Banking Law”), our responsibility is to audit information specified in Article 111a (2) of the

Banking Law contained in the Management Report. Moreover, we are obliged to communicate

whether the Bank prepared a non-financial statement and issue an opinion whether the Bank

included the required information in the corporate governance statement.

Opinion on the Management Report

Based on the work performed during the audit, in our opinion, the Bank’s Management Report:

• has been prepared according to Article 49 of the Accounting Act and paragraph 70 of

the Regulation of the Minister of Finance of 29 March 2018 on Current and Periodic

Information Provided by Issuers of Securities and Conditions of Recognition of

Information Required under the Regulations of the non-EU Member State as

Equivalent (“Regulation on Current Information” - Journal of Laws of 2018, item 757

as amended) and Article 111a (2) of the Banking Law,

• is in line with information contained in the separate financial statements.

Opinion on Corporate Governance Statement

In our opinion, the Bank included information specified in paragraph 70 (6) item 5 of the

Regulation on Current Information in the corporate governance statement. Moreover, in our

opinion, information specified in paragraph 70 (6) item 5 c-f, h and i of this Regulation

comprised in the corporate governance statement is compliant with the applicable provisions

and information contained in the separate financial statements.

Information on Non-financial Information

In accordance with the Act on Statutory Auditors we inform that the Bank included information

on preparing a separate non-financial report specified in Article 49b (9) of the Accounting Act

in its Management report and that the Bank prepared such a separate report.

We have not performed any assurance work concerning the separate non-financial report and

we do not express any assurance about it.

Other Information Statement

Moreover, according to our knowledge of the Bank and its environment obtained during the

audit, we declare that we have not identified any material misstatement in the Bank’s

Management Report and the Other Information.

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Report on Other Legal and Regulatory Requirements

Information on Observing Applicable Prudential Regulations

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

operations with prudential regulations, in which for the correct determination of capital ratios.

Our responsibility is to communicate in the auditor’s report whether the Bank complies with

applicable prudential regulations, defined in separate provisions, and in particular whether the

Bank correctly determined the capital ratios presented in note 56.

The purpose of the audit of the separate financial statements was not to express an opinion

on the Bank’s compliance with applicable prudential regulations and therefore we do not

express such an opinion.

Based on our audit of the separate financial statements we would like to inform you that we

have not identified any breaches of applicable prudential regulations by the Bank in the period

from 1 January 2023 to 31 December 2023, defined by separate provisions, in particular with

respect to the correctness of the determination of capital ratios as at 31 December 2023, which

could have a significant impact on the separate financial statements.

Declaration on Non-audit Services

According to our best knowledge and belief we declare that non-audit services that we have

provided to the Bank and its subsidiaries comply with laws and regulations applicable in

Poland and that we have not provided any non-audit services that are prohibited pursuant to

Article 5 (1) of the EU Regulation and Article 136 of the Act on Statutory Auditors. Non-audit

services that we have provided to the Bank and its subsidiaries in the audited period were

mentioned in Paragraph Information about the certified auditor of the Bank’s Management

Report.

Appointment of an Audit Firm

We were appointed to conduct the audit of the Bank’s separate financial statements based

on the resolution of the Supervisory Board of December 12, 2019 and again based on the

resolution December 9, 2021. We have been auditing the separate financial statements of

the Bank continuously, starting from the financial year ended December 31, 20202, i.e. for 4

consecutive years.

The key statutory auditor responsible for the audit that was the base of the present

independent statutory auditor’s report is Małgorzata Pek.

Acting on behalf of Mazars Audyt Sp. z o.o. with its registered office in Warsaw, ul. Piękna 18,

entered on the list of audit firms under no. 186, on behalf of which the key statutory auditor

audited the separate financial statements.

Mazars Audyt Sp. z o.o. 11

Małgorzata Pek

Key Statutory Auditor

No 13070

Warsaw, February 29, 2023