Dear All,

in 2020 the reality took the world by surprise in an unprecedented way. The need to adjust to the new situation and limitations constituted a challenge to all of us: employees, customers and shareholders. The pandemic has affected most industries and influenced the financial standing of companies and individual customers. However, this situation has triggered the sense of community and the need to support others in all of us. Our energy and spontaneity of joint efforts was reflected in our initiative “All.Together.Now.”

In these special circumstances, everyday we delivered our mission to help people and businesses prosper, although now prosperity is measured in a different manner. We organised numerous initiatives supporting the finance and security of our individual and corporate customers, as well as our employees. We implemented new safety rules and increased the number of remote processes in order to make banking more convenient. We offered legislative and non-legislative moratoria that were aimed at supporting liquidity. These solutions were used by almost 164k customers and their gross carrying amount has exceeded PLN 25bn.

Our actions were aimed at taking special care of seniors and customers in distress. We shared our knowledge by helping senior customers learn recent technologies, teaching children how to save money and showing businesses how to use public aid; we also supported them in understanding the rules of running the business in the post-covid reality. Together with our customers we provided the necessary support: within the “Podwójna moc pomagania” (“We will double your impact”) charity campaign we raised over PLN 5m for hospitals for the purchase of the necessary equipment; in the autumn, we donated another portion of funds to children’s cancer centres. We also established RazemPokonamy.pl portal that contains useful information to facilitate operations during the Covid-19 pandemic.

Our initiatives were recognised by Euromoney: the Bank received the Excellence in Leadership award. The panel recognised us not only for our wide financial assistance provided to individuals and businesses, but also for the initiatives undertaken during the pandemic. This would not have been possible without our people and I would like to thank all of them for engagement, support, solidarity and for being ready, any day and in any circumstances, to move forward and provide our customers with professional service.

Macroeconomic environment - increasing resilience

2020 was a year like no other in the economy. The pandemic triggered recession in Poland and worldwide; it was the most significant factor shaping the economic and financial reality over the last and, probably, this year. In 2020, our GDP dropped by 2.8%, which was one of the flattest recessions across Europe, but, at the same time, it was the first recession in Poland since the beginning of the 90s. The changes in different sectors in the economy varied: private consumption went down by 3% and investments by 8.4%; the most severely affected sectors were tourism and leisure; on the other hand, industry and exports were performing particularly well. The reaction of the labour market to this economic turbulence was exceptionally mild and unemployment went up only negligibly, staying at one of the lowest levels in the European Union.

The pandemic also triggered a reaction of the National Bank of Poland. The reference rate was decreased from 1.5% to the record-low 0.1%. Bond buyback took place and at the end of the year the central bank ran an intervention on the FX market, thus weakening the zloty.

We are entering 2021 with very low interest rates and high uncertainty regarding the possibility to run the business, subsequent waves of the pandemic, potential lockdowns, but also with an expectation that the Polish economy will manage to reach the GDP exceeding 4%, with a 5% increase in private consumption and investments, if only we manage to hold coronavirus back thanks to mass vaccination.

Business development

Despite the fact that the Bank quickly adjusted to the new reality, the tough conditions were reflected in our performance. In 2020, net profit of Santander Bank Polska stood at PLN 738.4m, interest income was PLN 4.368 bn and fee income was PLN 1.765 bn. Our costs were under control and our assets stood at PLN 203bn (up by 11.9% YoY).

The performance of Santander Bank Polska in 2020 was heavily influenced by factors independent from us, including record-high interest rates cuts, a significant increase in BGF contributions, regulatory costs, taxes and provisions. However, in Q4 2020 there appeared positive signals and a rebound in customers’ interest in new financing, investment funds and transactionality. These signals constitute a positive harbinger for the future.

Digitalisation and promotion of remote banking are a response to the new normal. We simplified most of key customer service processes and we made sure customers would be able to do their banking remotely. At Santander Bank Polska, we provide services to over 5 million customers.

The number of digitally active customers went up by 10% YoY and the number of mobile banking users by 18% YoY; we also reported a visible increase in the number of mobile banking transactions. Sales in remote channels are also on the rise. We provided our customers with Santander Open banking to facilitate their daily finance management. Now they can easily access their accounts held with other banks from Santander Internet and they can make transfers. Based on a solution designed by Santander Group, we launched a new investment advisory service for Private Banking customers. We also modified our branch network by refurbishing the existing branches and opening new ones in the Work/Café model.

To enhance services for SMEs, we introduced remote processes: credit process, update of data about the business activity and sign-off of annexes. Sole traders who use electronic banking can now avail of additional services: eUmowy (eAgreements), eWindykacja (eEnforcement) and eFaktoring (eFactoring). We made it possible for our customers to apply for the Financial Shield 1.0 aid in electronic banking; our share in the Polish Development Fund subsidies paid to customers is 16%. The segment reported an 11% increase in the number of serviced customers, 73% of whom are digitally active.

In Business and Corporate Banking, we reported a stable increase in our key lines while optimising costs. We also see an increase in Trade Finance sales (up by 20%) and in the turnover on our eFX platform (up by 30%). We paid a lot of attention to aligning and simplifying the credit process for customers and to promoting remote solutions. We upgraded the Santander Trade and Trade Club Alliance platform to support international business development of our customers and facilitate their contacts with partners operating on other markets. We were the first financial institution in Poland to implement a cloud-based CRM solution. Salesforce is one of the most innovative systems on a global scale; it enables us to service our business customers more efficiently and faster. manner.

2020 was a successful year for the Business and Investment Banking Division. We ran the largest IPO in the history of the Warsaw Stock Exchange for an eCommerce company, as well as arranged the 2nd and 3rd biggest tender offers for telecoms and hotels. Last year saw a 110% increase in revenues from transactions on financial markets and a 184% increase in revenues from share issue and buybacks.

Despite the pandemic, Santander Bank Polska is not losing momentum with regard to actions aimed at supporting our customers in delivering their long-term strategy to promote the necessary changes and reduce their ecological footprint. We were the first institution in Poland to offer financial ESG-based or SDG-based solutions (Environmental, Social, Governance and Sustainable Development Goals, respectively). These include, among others, green certificates, loans, ESG-linked bonds and IRS transactions based on sustainable development rules. We are also involved in financing wind and solar farms; in 2020, we participated in the biggest-to-date financing of a photovoltaic farm portfolio in Poland. We actively participate in the transformation of the Polish energy sector; in the upcoming years, we will continue financing the switch from coal-based to green energy.

An issue that remains unsolved is related to Swiss franc loans; however, a task force is cooperating with the regulator to find a solution. In 2021 we will jointly analyse the possible scenarios to deliver proposals that would satisfy all the parties.

Our responsibility

In 2020 we undertook many initiatives and organised many projects aimed at promoting ecological solutions and supported inclusive banking understood as helping disadvantaged populations access the financial services market.

In 2020, the Foundation of Santander Bank Polska delivered many projects together with volunteers (including Christmas and Easter campaigns and donating 15k of face masks to hospitals and other organisations) and invested in education of children and teenagers through their Grant Programme and “Korki.tv” learning initiative aimed at Polish A-Level students. It also supported NGOs and development of local communities through the grant programme “Here I live, here I make ECO changes”; we donated PLN 500k for the delivery ecological projects.

We offered Santander Grants within two campaigns: #ZostańWDomu (#StayAtHome) and #ZainwestujWSiebie (#InvestInYourself), which were Santander Universidades’ response to the Covid-19 pandemic. Almost 3000 people received support in the form of online intensive development trainings organised by prestigious universities in Poland and worldwide, as well as financial prizes for the best students. Our objective is to support young people in entering the labour market through developing and adjusting their competencies to the constantly changing employers’ expectations.

The past year showed what we can achieve if we act together. We observed unprecedented mobilisation in a number of fields of our business: starting from implementation of digital banking solutions to voluntary support for those in need. This flexibility and pace of adapting to the new reality combined with cooperation and mutual understanding of the needs are a good harbinger for 2020 which we are entering with optimism. The experience we have gathered over that period will be used for building competitive edge and even better relations with our customers.

I would like to thank all our Customers, Employees, Partners and Shareholders. Thank you for your continued trust and for being with us. Together we have faced a number of problems and we have shown the value of our relationship.

Michał Gajewski

President of the Management Board of Santander Bank Polska S.A.

The original Polish document is signed with a qualified electronic signature