Dear Sir/Madam,


2020 was a time of unusual challenges. The COVID-19 pandemic took the world by surprise and forced a shift of priorities, putting health and safety first. PKO Bank Polski successfully passed this exam and, despite difficult conditions, it maintained business continuity, its facilities were available for costumers at all times. The Bank immediately made remote work available to thousands of its employees and organized customer service in its branches so as to minimize the risks associated with the spread of SARS-CoV-2 virus.

PKO Bank Polski Group actively supported Poland and Poles in the fight against the pandemic. The bank transferred funds, incl. for hospitals and sanitary services, and also companies of the group joined in providing assistance. At the same time, the bank supported the rescue of Polish companies and the jobs they created. Together with KIR, we created a system for applying for subsidies from the PFR financial shield, which was then made available to other market participants. It was also a leader in the distribution of funds from the PFR Financial Shield and distributed aid for companies provided by BGK.

Despite operating in the conditions of a pandemic and interest rate decreases, the group's assets in 2020 increased to PLN 377 billion, and the result on business activities amounted to PLN 14.6 billion, which is the same as the year before. The net result of the bank's group in 2020 amounted to PLN -2.6 billion. The decrease in the annual result was mainly due to write-offs related to the planned launch of a wide program of settlements with customers who took out housing loans in foreign currencies. The cost included in the results for 2020 is nearly PLN 6.6 billion.

In the opinion of the bank, the settlement program is a good solution that has a chance for real implementation and that will reconcile the interests of banks, foreign and polish currency borrowers and depositors with whom the banks have incurred their debt. This solution will eliminate the legal risk of FX housing loans, which will allow the bank to focus on faster business development. It will also be beneficial for the bank's customers, who will not have to engage in lengthy lawsuits with uncertain resolution. Therefore, despite the high costs, we decided to subject them to the assessment of our shareholders who accepted this solution.

The capital group's result in 2020 was also significantly affected by the deterioration in the economic environment caused by the COVID-19 pandemic, which forced the bank to create additional write-offs in the amount of PLN 1.2 billion. In turn, the bank was helped to limit the decline in its financial result by a strong cost discipline, thanks to which the group's operating costs in 2020 were lower than the year before.

The bank maintains a strong capital and liquidity position, and it was helped by good preparation of the company for more difficult economic conditions in mitigating the effects of the pandemic in 2020. The bank ended 2019 - the last year of a stable economic situation - with the lowest costs of risk on the banking market in Poland and the best cost-effectiveness C/I ratio. The bank's good preparation for more difficult economic conditions has already been confirmed by the results of European stress-tests from 2018, which showed that PKO Bank Polski is the safest bank in the entire European Economic Area.

The effects of the digital transformation, which for over a decade have changed the PKO Bank Polski Group into an agile organization equipped with state-of-the-art technological solutions, helped to conduct business during the pandemic. The pandemic accelerated the transition of customers to remote channels. Three-quarters of customers already use the bank's services in this way. The IKO mobile application is still gaining in popularity, and has already been activated over 5 million times. From the moment it was made available nearly eight years ago, customers have logged in to it 2.9 billion times, of which in 2020 alone, almost 1.2 billion times. Using the bank's services without leaving your home is supported by consistently developed additional services, such as the Automarket platform launched in July 2020

One of the important technologies that supported the activities of PKO Bank Polski in 2020 was artificial intelligence (AI). It helps in robotization and is more and more widely used in its daily operations of the company. Artificial intelligence is used, among others, by voicebots supporting the work of the bank's costumer service helpline and the IKO voice assistant, which was launched in May 2020. Every third person calling the bank's helpline is already supported by a voicebot, and the total number of calls with the banking artificial intelligence has exceeded 1 million. AI also helps in soft debt collection, verifies the authenticity of ID cards and analyses tens of thousands of opinions of IKO users every month. As part of the processes subject to robotization and automation, from the beginning of the year, work equal to the equivalent of 1.7 thousand full time jobs.

Access to modern cloud infrastructure brings particularly great potential for the bank. In 2020, PKO Bank Polski transferred 12 thousand terminals to the cloud where bank advisers work in 1,000 branches. It also provided over 13,000 employees with the cloud-based MS Teams tool that supports remote teamwork. The bank's customers, in turn, can use a new service - the support of Video Advisor, which was created using the cloud. The Bank also implemented the Dzień Dobry HR platform, which operates in the SAP public cloud and supports soft HR processes for over 26 thousand bank employees. In the coming years, the use of cloud computing by the bank will increase. Currently, PKO BP is moving the heart of the banking IT infrastructure, the Alnova system, to a cloud-friendly platform and wants the bank's key business IT systems to operate in a cloud based on hybrid architecture in three years at the latest.

In its activities, in addition to caring for results, the bank is also guided by the principle of sustainable development and attaches more and more importance to the way natural resources are used. In 2020, the group by 7.8 percent reduced energy consumption and 32 percent reduced CO2 emissions generated by its activities. The bank also implemented the ESG risk assessment into the credit assessment process of corporate customers, tightened its credit policies towards high-emission sectors and opened up more broadly to financing renewable energy sources.

In the coming years, the development of the PKO Bank Polski Group will be determined by the extent to which we will be able to use the potential of digital transformation. This global trend is our greatest inspiration, and its skilful adaptation brings measurable benefits. We still believe in our mission and constantly increase our appetite for further successes, the beneficiaries of which will be both our shareholders, customers, employees, and the entire Polish economy.



Zbigniew Jagiełło

President of the Management Board of PKO Bank Polski