Letter of the President of the Management Board

Dear Shareholders,

I am pleased to present to you the annual report of the Bank Pekao Group for 2023.

Last year brought normalization of operating conditions for the Polish banking market. It was a year of return to normality after two external shocks – a pandemic shock and an energy shock, caused by the aggression of the Russian Federation in Ukraine, which also translated into a significant increase in inflation. During 2023, the disinflation process continued, and the banking sector did not incur any extraordinary operating costs that had a strong impact on the results of previous periods. The Bank Pekao Capital Group made good use of the improved market situation, increasing the scale of its operations, including involvement in many new customer and employee initiatives, and also recording record-breaking financial results in history.

Let me start with customers, who are always at the center of our strategy. Pekao continued its digital transformation, increasing the process digitization rate from 69% to 84% during 2023 (50% at the beginning of the strategy). Our digital banking offer convinced another 0.4 million customers, which led to an increase in the total number of active mobile banking customers by 14% to 3.1 million. We have expanded the range of products available to customers, including: o the First Housing offer (over 30% of the bank’s market share) and the Housing Account, an offer of loans with subsidies for agricultural producers, financing based on WIRON and new, favorable guarantee solutions and credit lines. We increased sales of SME loans and consumer loans at a double-digit rate, and mortgage sales tripled. I would also like to draw attention to the positive impact on the market by limiting relations with entities involved in operations on the Russian market (Yale University list).

Our successes would not be possible without our most valuable resource – our employees. Their diligence, expert knowledge, dedication and flexibility enable us to meet our clients’ needs. Bank Pekao makes every effort to remunerate this work fairly on market principles, flexibly adapt work standards to the pandemic reality and ensure that our bank is a valued employer. Last year, we significantly improved the quality of our offices for the headquarters and in the regions. Labor issues are also at the heart of our own sustainability strategy for 2021-2024. As part of this part of the strategy, we ensure high standards of supervisor behavior, closing the pay and development gaps between women and men, and increasing our involvement in volunteering. We also conduct continuous dialogue with the social side and trade unions operating in the Pekao Group. We are pleased with the consistently high rating of the Pekao Group as a desirable employer.

Bank Pekao takes a responsible approach to its role in the economic environment as an institution that cares for our other stakeholders. In 2022, we were again among the largest Polish payers of income tax and sectoral tax on financial institutions. In 2023, the Bank’s volunteering partners were: UNEP/GRID-Warsaw Center – Department of the National Environmental Protection Foundation, Apiterra Foundation, Warsaw Banking Institute Foundation, Zdrowy Ruch Foundation, Warsaw Uprising Museum, Polish Red Cross, Anthill Association, SOS Children’s Villages Association, Society for the Protection of Animals in Poland. We are actively involved in voluntary blood donation and organize competitions as part of the „We are close” campaign, addressed to employees working for the benefit of local communities in their surroundings and recognizing their needs. The direct beneficiaries of the competition are members of organizations receiving aid, residents of care and educational institutions, participants of workshops and thematic classes, patients staying in medical facilities, members of sports clubs, music clubs, and animals in shelters. In 2023, we carried out 120 local aid actions in 100 towns. The beneficiaries of volunteering were nearly 18,000 people, including: children and youth, people with disabilities, refugees from Ukraine, people practicing sports, recipients of health and life protection campaigns, and animals under the care of shelters and shelters.

The lack of one-off charges revealed the high profitability of our business; The consolidated net profit of the Bank Pekao Capital Group turned out to be record-breaking in our almost hundred-year history and amounted to PLN 6.6 bn. We have a large capital surplus above regulatory minimums, including dividend minimums. The liquidity position is also characterized by large buffers above regulatory minimums. Last year’s great success was the debt issues of the SNP and the State Treasury, the implementation of which allowed for the construction of a safe MREL buffer. Especially the November debt issue on the Eurobond market, with only 2.4 p.p. margin, showed the good perception of Bank Pekao by debt investors.

At the end of my letter, I will allow myself a personal reflection that goes beyond just the past year. I am very pleased to announce that over the last 3 years of my tenure as the CEO the total return on Pekao stock has by approximately 50 p.p. exceeded the return on the WIG-Banks’ index, and most of this outperformance was delivered last year. Pekao is on a path of further digitalization, with an expanded product range, including public sector subsidies. The results achieved are of good quality, which is confirmed by the market-leading ability to pay dividends. Internal research shows increasing rates of employee satisfaction and the quality of cooperation. We are also very satisfied with the assessment of the bank by debt investors from the Euromarket, where the bank has been absent for many years.

I would like to thank all employees, customers, shareholders and other stakeholders of the Pekao Capital Group.