Current Report no. 5 (2021)

23 february 2021

Bank's Management Board recommendation regarding proposed profit distribution for 2020.

The Management Board of Santander Bank Polska S.A. (the "Bank") in relation to the current report no. 1/2021 dated 15 January 2021, hereby informs that in compliance with the expectations issued by the Polish Financial Supervision Authority ("PFSA") in the letter dated 11 January 2021, has adopted today a resolution recommending the retention of the entire net profit achieved by the Bank in the accounting year commenced on 01.01.2020 and ended on 31.12.2020 in the amount of PLN 738,411,718.72 and the allocation of 50% of the Bank's net profit in amount of PLN 369,205,859.36 to the reserve capital and the amount of PLN 369,205,859.36 left undivided.

The Bank's Supervisory Board approved this recommendation.

The Management Board and the Supervisory Board will submit the above proposal along with the recommendation to the Annual General Meeting of the Bank.

The following are arguments to support the notified proposals regarding profit distribution for 2020.

As at 31 December 2020 the capital ratios amounted:
- Tier I ratio (T1) for the Bank 20,94% and for the Group 18,01%
- Total Capital Ratio for the Bank 23,34% and for the Group 20,04%

In the letter of 16 December 2020 the KNF presented its stance on the dividend policy of commercial banks in 2021. Due to significant uncertainty as to the further developments related to the COVID-19 pandemic, the KNF considered it necessary to suspend the payment of dividends by commercial banks in the first half of 2021.

In reference to the above, on the 14 January 2021 the Bank received a letter from the KNF dated the 11 January 2021 including the following recommendations for the Bank:
1) to suspend the dividend payment in the first half of 2021;
2) not to undertake, without prior consultation with the supervisory authority, other actions, in particular those beyond the scope of the Bank's day-to-day business and operational activity that may result in a reduction of the capital position, including undistributed earnings from previous years or buyback of own shares.

According to the above letter, the position of the KNF on the dividend policy of commercial banks in the second half of 2021 will be presented separately, following an analysis of the conditions of the banking sector in the first half of the year.

Considering the KNF's recommendation and expectation, The Management Board recommends to retain the entire net profit for the period from 1 January to 31 December 2020 by allocating 50% of 2020 profit to the reserve capital and 50% of profit is left undivided.

Legal basis:
Article 17 (1) of Regulation (EU) No 596/2014 of the European Parliament and the Council of 16 April 2014 on market abuse (MAR).