Interim report
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2025 Semi-annual Report of the Capital Group of Bank Handlowy w Warszawie S.A.
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2 In PLN ‘000 In EUR ‘000*** SELECTED FINANCIAL DATA First half of 2025 First half of 2024 First half of 2025 First half of 2024 01.01. - 30.06. 2024 01.01. - 30.06. 2024 01.01. - 30.06. 2025 01.01. - 30.06. 2024 condensed interim consolidated financial statements data Interest income and similar income 1,580,260 1,530,411 374,398 355,010 Fee and commission income 255,982 238,823 60,648 55,400 Profit before tax from continuing operations 1,091,202 1,061,932 258,530 246,336 Profit/(loss) from discontinued operations (273,638) 23,874 (64,831) 5,538 Net profit from continuing and discontinued operations 600,530 848,150 142,279 196,745 Comprehensive income 701,607 899,370 166,226 208,627 Changes in net cash 5,390,692 (732,113) 1,277,173 (169,828) Assets classified as held for sale 6,105,866 - 1,439,418 - Total assets 84,297,327 72,478,103 19,872,540 16,961,878 Amounts due to banks 4,528,912 4,435,817 1,067,661 1,038,104 Amounts due to customers 41,658,606 53,985,032 9,820,742 12,633,988 Liabilities classified as held for sale 22,359,075 - 5,271,005 - Equity 9,236,626 9,868,531 2,177,474 2,309,509 Share capital 522,638 522,638 123,208 122,312 Number of shares (in pcs) 130,659,600 130,659,600 130,659,600 130,659,600 Book value per share (PLN/EUR) 70.69 75.53 16.67 17.68 Total capital ratio (in %) 23.8 22.5 23.8 22.5 Earnings per ordinary share (PLN/EUR) 4.60 6.49 1.09 1.51 Diluted earnings per share (PLN/EUR) 4.60 6.49 1.09 1.51 condensed interim standalone financial statements data Interest income and similar income 1,580,260 1,530,411 374,398 355,010 Fee and commission income 255,992 238,843 60,650 55,404 Profit before tax 1,092,499 1,094,247 258,837 253,833 Profit/(loss) from discontinued operations (273,638) 23,874 (64,831) 5,538 Net profit from continuing and discontinued operations 602,022 880,841 142,632 204,329 Comprehensive income 703,130 932,095 166,587 216,218 Changes in net cash 5,390,692 (732,113) 1,277,173 (169,828) Assets classified as held for sale 6,105,866 - 1,439,418 - Total assets 84,390,939 72,569,193 19,894,608 16,983,195 Amounts due to banks 4,528,912 4,435,817 1,067,661 1,028,977 Amounts due to customers 41,765,170 54,090,588 9,845,864 12,547,400 Liabilities classified as held for sale 22,359,075 - 5,271,005 - Equity 9,225,101 9,855,483 2,174,757 2,286,178 Share capital 522,638 522,638 123,208 121,236 Number of shares (in pcs) 130,659,600 130,659,600 130,659,600 130,659,600 Book value per share (PLN/EUR) 70.60 75.43 16.64 17.50 Total capital ratio (in %) 23.6 22.2 23.6 22.2 Earnings per ordinary share (PLN/EUR) 4.61 6.74 1.09 1.58 Diluted earnings per share (PLN/EUR) 4.61 6.74 1.09 1.58 Declared dividends per share (PLN/EUR) 10.29 11.15 2.44 2.59 Explanations to the table: 1) The impact of the IFRS 5 reclassification on the table is the same as in the statement of financial position and income statement. 2) Comparative data according to balance sheet and total capital ratio as of 31 December 2024 after including retrospective correction. 3) Additional information on capital ratio is included in the supplementary note no . 6 in the section “Capital Adequacy” and “Information on capital adequacy of Bank Handlowy w Warszawie S.A. as of 30 June 2025” (“Disclosures Pillar 3”). Disclosures Pillar 3 as of 30.06.2025 were subject to an independent assurance service. 4) On June 27, 2025, the Ordinary General Meeting of Shareholders of the Bank Handlowy w Warszawie S.A. (hereinafter GM) adopted a resolution on distribution of the net profit for 2024. Additional information concerning dividend payout was presented in Note 31. 5) The following exchange rates were applied to convert PLN to EUR: for the statement of financial position items - average NBP exchange rate as at 30 June 2025 PLN 4.2419 (as at 31 December 2024: PLN 4.2730 and as at 30 June 2024: PLN 4.3130); for the income statement , the statement of comprehensive income and the cash flow statement items – the rate is calculated as the arithmetic mean of NBP exchange rates prevailing as at the last day of each month of the first half of 2025: PLN 4.2208 (in the first half of 2024: PLN 4.3109).
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 3 This document is a translation from the original Polish version. In case of any discrepancies between the Polish and English versions, the Polish version shall prevail. Condensed Interim Consolidated Financial Statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 4 TABLE OF CONTENTS Condensed consolidated income statement ____________________________________ 6 Condensed consolidated statement of comprehensive income ___________________ 7 Condensed consolidated statement of financial position ________________________ 8 Condensed consolidated statement of changes in equity ________________________ 9 Condensed consolidated statement of cash flows ______________________________ 10 Supplementary notes to the condensed interim consolidated financial statements 11 1. General information about the Bank and the Capital Group of Bank Handlowy w Warszawie S.A. (“The Group”) _____________________________________________ 11 2. Declaration of conformity _________________________________________________ 11 3. Significant accounting policies ____________________________________________ 12 4. Assets and liabilities classified as held for sale and profit from discontinued operations _______________________________________________________________16 5. Segment reporting _______________________________________________________19 6. Risk Management ________________________________________________________ 21 7. Net interest income ______________________________________________________ 38 8. Net fee and commission income __________________________________________ 39 9. Net income on trading financial instruments and revaluation _______________ 40 10. Net other operating income and expense__________________________________ 40 11. General administrative expenses __________________________________________41 12. Provision for expected credit losses on financial assets and provisions for contingent commitments _________________________________________________41 13. Income tax ______________________________________________________________ 42 14. Statement of changes in other comprehensive income _____________________ 43 15. Amounts due from banks ________________________________________________ 44 16. Financial assets and liabilities held-for-trading ___________________________ 44 17. Debt investment financial assets measured at fair value through other comprehensive income __________________________________________________ 45 18. Amounts due from customers ____________________________________________ 45 19. Intangible assets ________________________________________________________ 47 20. Deferred income tax asset _______________________________________________ 47 21. Other assets ____________________________________________________________ 48 22. Amounts due to banks ___________________________________________________ 48 23. Amounts due to customers _______________________________________________ 48 24. Other liabilities __________________________________________________________ 49 25. Financial assets and liabilities by maturity date ___________________________ 49 26. Financial instruments disclosures ________________________________________ 50
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 5 27. Net gain/(loss) on derecognition of asset from balance sheet _______________ 53 28. Hedge accounting _______________________________________________________ 53 29. Seasonality or periodicity of business activity _____________________________ 55 30. Issue, redemption and repayment of debt and equity securities ____________ 55 31. Paid or declared dividends _______________________________________________ 56 32. Changes in the Bank Capital Group’s structure ____________________________ 56 33. Changes in granted and received financial and guarantee commitments ____ 56 34. Information about shareholders __________________________________________ 57 35. Ownership of issuer’s shares by members of the Management Board and Supervisory Board _______________________________________________________ 57 36. Contingent liabilities and litigation proceedings ___________________________ 57 37. Transactions with the key management personnel ________________________ 60 38. Related parties __________________________________________________________ 60 39. WIRON Reform ___________________________________________________________61 40. Significant events after the balance sheet date ____________________________ 62
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 6 Condensed consolidated income statement II quarter I half of the year II quarter* I half of the year* For the period 01.04. - 30.06. 2025 01.01. - 30.06. 2025 01.04. - 30.06. 2024 01.01. - 30.06. 2024 PLN ’000 Note CONTINUING OPERATIONS Interest income 7 720,478 1,429,691 695,450 1,387,186 Similar income 7 98,471 150,569 73,127 143,225 Interest expense and similar charges 7 (288,820) (502,645) (210,122) (428,388) Net interest income 7 530,129 1,077,615 558,455 1,102,023 Fee and commission income 8 127,365 255,982 121,527 238,823 Fee and commission expense 8 (20,853) (38,836) (17,775) (34,838) Net fee and commission income 8 106,512 217,146 103,752 203,985 Dividend income 11,424 11,513 10,612 10,705 Net income on trading financial instruments and revaluation 9 92,493 174,759 135,561 262,938 Net gain/(loss) on debt investment financial assets measured at fair value through other comprehensive income 27 105,348 145,415 20,537 14,414 Net gain/(loss) on equity and other instruments measured at fair value through income statement (7,797) (6,199) (9,621) (6,660) Net gain/(loss) on hedge accounting 28 4,117 1,687 1,807 9,560 Other operating income 10 6,701 10,363 5,551 9,192 Other operating expense 10 (16,240) (19,356) (19,444) (22,582) Net other operating income and expense 10 (9,539) (8,993) (13,893) (13,390) General administrative expenses 11 (158,935) (426,798) (161,197) (421,217) Depreciation and amortization (11,626) (22,335) (12,239) (24,164) Net impairment on non-financial assets Profit on sale of other assets (569) 570 (131) 1,789 Provision for expected credit losses on financial assets and provisions for contingent commitments 12 (1,194) (8,998) (11,186) (14,208) Operating profit 660,363 1,155,382 622,457 1,125,775 Tax on some financial institutions (35,890) (64,180) (33,878) (63,843) Profit before tax from continuing operations 624,473 1,091,202 588,579 1,061,932 Income tax expense 13 (110,262) (217,034) (121,939) (237,656) Net profit from continuing operations 514,211 874,168 466,640 824,276 Net profit /(loss) from discontinued operations 4 (348,661) (273,638) (72,517) 23,874 Net profit from continuing and discontinued operations 165,550 600,530 394,123 848,150 Including: Net profit attributable to Bank’s shareholders (in PLN) 600,530 848,150 Weighted average number of ordinary shares (in pcs) 130,544,519 130,659,600 Earnings per share (in PLN) 4.60 6.49 Diluted net earnings per share (in PLN) 4.60 6.49 *Comparative data have been restated due to the fulfillment of the conditions of discontinued activity. Additional information disclosed in Note 4 “Assets and liabilities classified as held for sale and profit from discontinued operations”.
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 7 Explanatory notes are integral part of the condensed interim consolidated financial statements. Condensed consolidated statement of comprehensive income II quarter I half of the year II quarter I half of the year For the period 01.04. - 30.06. 2025 01.01. - 30.06. 2025 01.04. - 30.06. 2024 01.01. - 30.06. 2024 PLN ’000 Note Net profit from continuing and discontinued operations 165,550 600,530 394,123 848,150 Other comprehensive income, that is or might be reclassified to the income statement 51,191 101,077 (63,510) 51,220 Remeasurement of financial assets measured at fair value through other comprehensive income (net) 14 136,465 218,894 (46,887) 62,929 (Profit)/Loss reclassification to income statement after derecognition of financial assets measured at fair value through other comprehensive income (net) 14 (85,332) (117,786) (16,635) (11,675) Currency translation differences 58 (31) 12 (34) Other comprehensive income net of tax 51,191 101,077 (63,510) 51,220 Total comprehensive income from continuing and discontinued activity 216,741 701,607 330,613 899,370 Including: Comprehensive income from parent entity attributable to Bank’s shareholders 216,741 701,607 330,613 899,370 Explanatory notes are integral part of the condensed interim consolidated financial statements.
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 8 Condensed consolidated statement of financial position As at 30.06.2025 31.12.2024 PLN ’000 Note ASSETS Cash and cash equivalents 10,986,438 5,794,345 Amounts due from banks 15 8,688,151 8,787,780 Financial assets held-for-trading 16 5,891,321 4,436,319 Hedging derivatives 28 1,601 54,140 Debt financial assets measured at fair value through other comprehensive income, including: 17 31,879,823 30,088,771 Assets pledged as collateral 712,499 200,309 Equity and other instruments measured at fair value through income statement 166,749 172,948 Amounts due from customers 18 18,630,323 21,367,246 Tangible fixed assets 454,724 521,131 Intangible assets 19 874,144 872,875 Current income tax receivables 10 - Deferred income tax asset 20 150,760 82,284 Other assets 21 467,417 300,264 Assets classified as held for sale 4 6,105,866 - Total assets 84,297,327 72,478,103 LIABILITIES Amounts due to banks 22 4,528,912 4,435,817 Financial liabilities held-for-trading 16 3,092,265 2,755,905 Hedging derivatives 28 217,549 72,737 Amounts due to customers 23 41,658,606 53,985,032 Provisions 100,695 120,992 Current income tax liabilities 48,491 99,600 Deferred tax liabilities 20 25 13 Other liabilities 24 3,055,083 1,139,476 Liabilities classified as held for sale 4 22,359,075 - Total liabilities 75,060,701 62,609,572 EQUITY Share capital 522,638 522,638 Supplementary capital 3,001,260 3,001,260 Treasury shares (15,624) (20,577) Revaluation reserve 36,240 (64,868) Other reserves 5,137,255 4,039,027 Retained earnings 554,857 2,391,051 Total equity 9,236,626 9,868,531 Total liabilities and equity 84,297,327 72,478,103 Explanatory notes are integral part of the condensed interim consolidated financial statements.
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 9 Condensed consolidated statement of changes in equity PLN ‘000 Share capital Supplementary capital Treasury shares Revaluation reserve Other reserves Retained earnings Total equity Balance as at 1 January 2025 522,638 3,001,260 (20,577) (64,868) 4,039,027 2,391,051 9,868,531 Total comprehensive income, including: - - - 101,108 (31) 600,530 701,607 Net profit - - - 600,530 600,530 Other comprehensive income - - - 101,108 (31) - 101,077 Currency translation differences from the foreign operations’ conversion - - - (31) - (31) Net valuation of financial assets measured at fair value through other comprehensive income - - - 101,108 - 101,108 Capital rewards program - - 4,953 - 4,312 - 9,265 Dividends paid - - - - - (1,342,777) (1,342,777) Transfer to capital - - - - 1,059,397 (1,059,397) - Balance as at 30 June 2025 522,638 3,001,260 (15,624) 36,240 5,102,705 589,407 9,236,626 PLN ‘000 Share capital Supplementary capital Treasury shares Revaluation reserve Other reserves Retained earnings Total equity Balance as at 1 January 2024 522,638 3,001,260 - 128,406 3,190,659 2,886,528 9,729,491 Total comprehensive income, including: - - - 51,254 (34) 848,150 899,370 Net profit - - - - - 848,150 848,150 Other comprehensive income - - - 51,254 (34) - 51,220 Currency translation differences from the foreign operations’ conversion - - - (34) - (34) Net valuation of financial assets measured at fair value through other comprehensive income - - - 51,254 - - 51,254 Capital rewards program - - (18,812) - 59,377 - 40,565 Dividends paid - - - - - (1,454,930) (1,454,930) Transfer to capital - - - - 801,004 (801,004) - Balance as at 30 June 2024 522,638 3,001,260 (18,812) 179,660 4,051,006 1,478,744 9,214,496 PLN ‘000 Share capital Supplementary capital Treasury shares Revaluation reserve Other reserves Retained earnings Total equity Balance as at 1 January 2024 522,638 3,001,260 - 128,406 3,190,659 2,886,528 9,729,491 Total comprehensive income, including: - - - (193,274) (7,987) 1,760,457 1,559,196 Net profit - - - - - 1,760,457 1,760,457 Other comprehensive income - - - (193,274) (7,987) - (201,261) Currency translation differences from the foreign operations’ conversion - - - - (74) - (74) Net valuation of financial assets measured at fair value through other comprehensive income - - - (193,274) - - (193,274) Net actuarial profits/(losses) on defined benefit program valuation - - - - (7,913) - (7,913) Capital rewards program - - (20,577) - 55,351 - 34,774 Dividends paid - - - - - (1,454,930) (1,454,930) Transfer to capital - - - - 801,004 (801,004) - Balance as at 31 December 2024 522,638 3,001,260 (20,577) (64,868) 4,039,027 2,391,051 9,868,531
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 10 Explanatory notes are integral part of the condensed interim consolidated financial statements. Condensed consolidated statement of cash flows For the period 01.01.-30.06. 2025 01.01.-30.06. 2024 restated A. OPERATING ACTIVITIES I. Net profit from continuing and discontinued operations 600,530 848,150 II. Adjustments: 4,289,420 (1,851,581) Current and deferred income tax recognized in income statement 147,050 257,278 Depreciation and amortization 27,508 58,153 Net impairment due to expected credit losses 3,120 (15,131) Net impairment due to nonfinancial assets value loss - 180,064 Net provisions 11,140 17,437 Net interest income (1,551,720) (1,602,619) Dividend income (11,513) (10,705) Profit/loss on sale of fixed assets (88) (1,716) Net unrealized exchange differences 236 (384) Net gain/(loss) on equity and other instruments measured at fair value through income statement 6,199 6,660 Revaluation of assets and liabilities held for sale to fair value 467,000 - Other adjustments 24,211 29,452 Change in amounts due from banks 152,642 11,109,797 Change in amounts due from customers (3,395,303) (1,168,385) Change in debt securities measured at fair value through other comprehensive income (1,088,873) (8,956,611) Change in financial assets held-for-trading (1,394,445) (919,880) Change in derivative securities 52,539 (64,252) Change in other assets (283,585) (105,266) Change in amounts due to banks 103,147 245,222 Change in amounts due to customers 9,712,967 (947,971) Change in liabilities held-for-trading 336,360 (369,845) Change in amounts due to hedging derivatives 144,812 5,615 Change in other liabilities 826,016 401,506 Interest received 1,533,213 1,583,933 Interest paid (638,295) (606,390) Income tax paid (348,502) (630,845) III. Net cash flows from operating activities - continuing and discontinued operations 5,436,366 (656,733) B. INVESTING ACTIVITIES Inflows 30,279 15,164 Disposal of tangible fixed assets 27,190 1,273 Disposal of fixed assets/liabilities held for sale - 11,368 Dividends received 3,089 2,523 Outflows (40,187) (65,141) Purchase of tangible fixed assets (25,808) (43,629) Purchase of intangible assets (14,379) (21,512) Net cash flows from investing activities - continuing and discontinued operations (9,908) (49,977) C. FINANCING ACTIVITIES Inflows - - Outflows (27,113) (25,474) Outflows for own shares purchase - (18,812) Outflows from long term credit payments from financial sector entities (20,321) - Outflows from lease payments (6,792) (6,662) Net cash flows from financing activities - continuing and discontinued operations (27,113) (25,474)
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 11 For the period 01.01.-30.06. 2025 01.01.-30.06. 2024 restated D. Exchange rates differences resulting from cash and cash equivalent calculation (8,653) 71 E. Net increase/(decrease) in cash and cash equivalent 5,390,692 (732,113) F. Cash and cash equivalent at the beginning of reporting period 5,794,361 1,241,873 G. Cash and cash equivalent at the end of reporting period 11,185,053 509,760 *Cash flows from discontinued operations split into operating, investing and financing activities are disclosed in Note 4 „ Assets and liabilities classified as held for sale and profit from discontinued operations”. Explanatory notes are integral part of the condensed interim consolidated financial statements. Supplementary notes to the condensed interim consolidated financial statements 1. General information about the Bank and the Capital Group of Bank Handlowy w Warszawie S.A. (“The Group”) Bank Handlowy w Warszawie S.A . (“the Bank” or “parent entity” ) has the registered office in Poland at Senatorska 16, 00 - 923 Warsaw. The Bank was established on the basis of Certificate of Incorporation of 13 April 1870 and is registered under entry No. KRS 0000001538 in the Register of Companies by the District Court for the capital c ity of Warsaw, XII Economic Department of the National Court Register . Bank operates as a joint-stock company. During reporting period , the name of entity has not changed. The parent entity was granted a statistical REGON No. 000013037 and tax identification No. (NIP) 526-030-02-91. The parent entity and the entities of the Group were set up for an unspecified period. The share capital of the Bank equals PLN 522,638,400 and is divided into 130,659,600 common bearer shares, with par value of PLN 4.00 per share. The Bank is a listed company on the Warsaw Stock Exchange. The majority and strategic shareholder of the Bank is Citibank Europe Plc based in Dublin, Ireland – a company in the Citi group that brings together foreign investments (parent company of the Bank). The ultimate parent is Citigroup Inc located in Wilmington, Delaware, United States. Bank Handlowy w Warszawie S.A. is a universal commercial bank that offers a wide range of banking services for individuals and corporate clients. Following the transaction described in Note 4, the Bank will focus on developing its core business – institutional banking. The Group consists of the Bank and the following subsidiaries: Subsidiaries Registered office % of votes at the General Meeting of Shareholders 30.06.2025 31.12.2024 Entities fully consolidated Handlowy Financial Services Spółka z ograniczoną odpowiedzialnością Warsaw 100.00 100.00 Handlowy-Leasing Sp. z o.o. (apart from indirect shareholding via Handlowy-Inwestycje Sp. z o.o. where the share in equity equals 2.53%) Warsaw 97.47 97.47 Handlowy Investments S.A. Luxembourg 100.00 100.00 Handlowy-Inwestycje Sp. z o.o. Warsaw 100.00 100.00 2. Declaration of conformity The interim condensed consolidated financial statement of the Group covers the three- and six-month period ended June 30, 2025, and contains comparative data: • for the three - and six-month periods ended June 30, 2024 – with respect to the consolidated income statement and consolidated statement of comprehensive income, • or the six -month period ended June 30, 2024 – with respect to the consolidated statement of changes in equity and consolidated statement of cash flows,
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 12 • as at December 31, 2024 – with respect to the consolidated statement of financial position and consolidated statement of changes in equity. The interim condensed consolidated financial statements are presented in PLN (currency of presentation), rounded to the nearest thousand. The condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard IAS 34 ‘Interim Financial Reporting’, adopted by European Union. The financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the financial year ended 31 December 2024. These condensed consolidated interim financial statements were approved by the Management Board on 27 August 2025. This interim condensed consolidated financial statement of the Group has been prepared with the assumption of going concern in the period of at least 12 months since the date of publication. As of the day of signing the consolidated financia l statement, the Bank’s Management does not identify the existence of facts and circumstances that would indicate threats to the Group’s ability to go concern in the period of 12 months since the balance sheet date due to omission or significant limitation of the Group’s current activities. 3. Significant accounting policies The interim condensed consolidated financial statement s of the Group for the first half of 2025 has been prepared in accordance with accounting principles adopted and described in the annual consolidated financial statements of the Group for the finan cial year ended 31 December 2024, except for the income tax expense that was calculated according to the principles of IAS 34 (c). In connection with the signing by the Bank of an agreement with VeloBank S.A. („VeloBank”), Promontoria Holding 418 B.V. (the on ly shareholder of VeloBanku) („Promontoria”) and Citibank Europe Plc on May 27, 2025 regarding the division by separating the consumer business (“Retail Business”) for the benefit of VeloBank (Agreement), the criteria of IFRS 5 Non- current Assets Held For Sale ( hereinafter “ IFRS 5”) have been met to classify Retail Operations Segment as held for sale. Fixed assets held for sale a re measured at the lower of their carrying amount or fair value less costs to sell. Fixed assets reclassified as held for sale are not subject to further amortization. The resolutions of IFRS 5 do not cover financial assets in scope of IFRS 9 Financial instruments, deferred tax assets (IAS 12 Income Taxes), employee benefit assets (IAS 19 Employee Benefits), hence the method of valuation of the above-mentioned elements of the group held for sale has not changed and is consistent with the principles set out in these standards. In the connection with the fact that Retail Business Segment constitutes a separate part of the Bank's operations and was classified as held for sale, the Bank separated discontinued operations in the profit and loss account. The details regarding reclassifying assets and liabilities held for sale and the discontinued operations are disclosed in Note 4 of this financial statement. The preparation of interim condensed consolidated financial statements of the Group with accordance to International Financial Reporting Standards requires that the Management should make certain estimates and adopt related assumptions that affect the amou nts reported in the financial statements. The financial statements are based on the same estimation rules which were used in the annual consolidated financial statements of the Group for the financial year ended 31 December 2024 considering the sale transaction of the Bank's Retail Business described above and in the Note 4. The estimations and respective assumptions are made based on historical data available and other multiple factors which under given conditions are considered proper and which form the basis for estimation regarding balance sheet values of assets and liabilities whose value cannot be determined clearly based on other sources. However, actual values may differ from estimates. The estimations and respective assumptions are subject to recurring reviews. Changes of estimations are recognized in the period in which the estimation was modified if the adjustment concerns only this period or in the period of the change and future periods if the adjustment concerns both this period and the future periods. The key estimates were presented in the annual consolidated financial statements of the Group for 2024. Additionally, with respect to interim financial statements, the Group applies the principle of recognizing the financial result income tax charges based on the estimate of the annual effective income tax rate expected by the Group in the full financial year. Estimates related to the presentation of discontinued activity In the Agreement of the Bank's Retail Business transfer to VeloBank, referred to in Note 4, the separation principles were defined. In this financial statement, determination of held for sale balances was performed in accordance with the Agreement and principles of IFRS 5. Consequently, the following assumption were made: 1. The liabilities attributable to discontinued operations exceed its assets and therefore the transaction assumes the transfer of additional funds in the form of liquid assets (so called liquidity surplus to be transferred as a transaction settlement). The Expected amount of assets to be transferred as a part of the transaction settlement is not included in
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 13 the Statement of Financial Position as Assets classified as held for sale as these assets will be determined in the future and are not precisely known as at reporting date 2. The Retail Business includes dual-currency deposits with embedded derivatives. The fair value of embedded derivatives used to be presented in the statement of Financial Position in the position “Financial assets held-for- trading” and was reclassified to “Assets classified as held for sale”. 3. In connection with the recognized gross result on the Transaction, a deferred tax asset has been created. Given that the tax will be settled by the Group, the deferred tax asset is not classified as Assets classified as held for sale. The following assumptions and estimates were made to determined profit and loss from discontinued operations: 1. The result on the sale of the Retail Business was recognized in the second quarter of 2025 and was accounted for as Net profit / (loss) from discontinued operations . The transaction price assumed certain variable components, so the Group estimated the result on the transaction using best estimate which is described in Note 4. 2. Interest income attributed to discontinued operations includes income from assets classified as held for sale was adjusted for income from liquidity surplus to be transferred as a transaction settlement. A description of the adjustment is provided in Note 4. The method of reflecting this adjustment in the result from continuing operations is presented in Note 7. 3. The General administrative expenses attributed to discontinued operations relate to employee remuneration, external services, IT services, space rental and amortization and were estimated based on the allocation keys used by the Bank in segment reporting adjusted to the scope of the Transactions. 4. The effect of deferred tax assets creation as a result of the recognized gross result on the transaction, is classified within Net profit / (loss) from discontinued operations because the deferred tax is directly attributable to the disposal of business classified as discontinued. Standards and interpretations applicable from 1 January 202 5: • The amendment to IAS 21 "Effects of Changes in Foreign Exchange Rates", issued on August 15, 2023, clarifies when a currency is exchangeable for other currencies, how an entity determines the exchange rate when a given currency is not exchangeable, and spe cifies the scope of disclosures intended to help users of the financial statements assess the impact of the lack of currency convertibility on the financial position, financial performance, and cash flows of the entity. The new IAS 21 standard will not have significant impact on the financial statements. Standards and interpretations European Union’s approval: • On 9 April 2024, the IASB issued IFRS 18 “Presentation and Disclosure in Financial Statements”. The standard will be effective for annual reporting periods beginning on January 1, 2027. The new standard is intended to replace IAS 1 – “Presentation of Finan cial Statements” and will help to achieve comparability of the financial performance of similar entities. The new standard: ✓ introduces a defined structure for the statement of profit or loss. Items in the statement of profit or loss will be classified into one of five categories: operating, investing, financing, income taxes and discontinued operations. The standard requires also to present totals and subtotals, including mandatory inclusion of “Operating profit or loss”; ✓ introduces an additional note presenting management -defined performance measures which are subtotals of income and expenses an entity uses in public communications outside financial statements, an entity uses to communicate to users of financial statements management’s view of an aspect of the financial performance of the entity as a whole. The disclosure will have to contain a description of the aspect of financial performance that in management’s view, is communicated by the management - defined performance measures, how the management -defined performance measure is calculated and reconciliation between the management -defined performance measure and the position form financial statement measured in accordance with other standards; ✓ clarifies the guidelines for data aggregation and disaggregation which focus on grouping items based on their shared characteristics enabling entities to decide which items are presented in the primary financial statements and what information is disclosed in the notes. The new IFRS 18 standard will also result in certain changes to the statement of cash flows and the statement of financial position, as well as changes to other standards harmonizing disclosure requirements. The Group is in the process of assessing the impact of the new standard on the financial statements. • On May 9, 2024, the IASB issued IFRS 19 “Subsidiaries without Public Accountability: Disclosures”, which allows eligible subsidiaries to apply reduced information disclosure requirements, instead of the requirements of other IFRS Accounting Standards. The new standard will be applicable to the annual reporting periods beginning January 1, 2027, and the Group believes it will not have a significant impact on the financial statements.
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 14 Standards and their interpretations for European Union’s approval: • The amendments to IFRS 9 “Financial Instruments” and IFRS 7 “Financial Instruments: Disclosures” issued May 30, 2024, clarify: ✓ The timing of discontinuation of recognition of financial liabilities from the balance sheet, introducing an option for early derecognition of financial liabilities that are settled through an electronic payment system that meets certain criteria ✓ How to assess the characteristics of contractual cash flows from “non -recourse” financial assets and financial assets in cases where contractual provisions refer to contingent events, including, for example, related to ESG objectives (for the purpose of classifying financial assets) The amendments to the aforementioned standards also introduce additional disclosure requirements for financial assets and liabilities whose contractual terms make cash flows contingent on contingent events and for equity instruments designated at fair valu e through other comprehensive income. The amendments will be applicable from January 1, 2026. The Group is in the process of assessing the impact of the new standard on the financial statements. • In connection with the increasing role of power purchase agreements (PPA) in mitigating the effects of climate change and the decarbonization of production processes, the IAS Board has made changes to International Financial Reporting Standard 9 "Financial Instruments" and IFRS 7 "Financial Instruments: Disclosures" (issued on December 18, 2024), which are intended to better reflect the impact of such agreements on financial statements. The changes will be effective from January 1, 2026, and will not have a significant impact on the Group's financial statements. • On July 18, 2024, the IAS issued narrow amendments to IFRS Accounting Standards and accompanying guidance as part of its regular maintenance of the Standards . The amendments clarify the terms used in the reporting standards in order to improve their readability, coherence, and eliminate any potential ambiguities. The amendments introduced as part of this review concern IFRS 1 “First-time Adoption of International Financial Reporting Standards”, IFRS 7 “Financial Instruments: Disclosures”, IFRS 9 “Financial Instruments”, IFRS 10 “Consolidated Financial Statements”, ISA 7 “Statement of Cash Flows”. The amendments will be effective from 1 January 2026 and will not have a material impact on the financial statements . Due to the growing role of Power Purchase Agreements, in terms of mitigating the effects of climate change and decarbonizing production processes, the IAS Board has introduced amendments to IFRS 9 “Financial Instruments” and IFRS 7 “Financial Instruments: Disclosures” (issued on 18 December 2024) that are intended to help reflect the impact of such contracts on the financial statements. The amendments will be effective from 1 January 2026 and will not have a material impact on the Group’s financial statements. Comparative data In connection with separation of discontinued activity , the Group has made a transformation of the income statement for the period of I half of 2024 to reflect continuing and discontinued operations. The impact of this transformation on the comparative data of the consolidated income statement for I half of 2024 is presented in the table below: Consolidated income statement 01.01.2024 – 30.06.2024 after transformation Change 01.01.2024 – 30.06.2024 after transformation CONNTINUING OPERATIONS Interest income 2,063,763 (676,577) 1,387,186 Similar income 143,254 (29) 143,225 Interest expense and similar charges (604,398) 176,010 (428,388) Net interest income 1,602,619 (500,596) 1,102,023 Fee and commission income 347,975 (109,152) 238,823 Fee and commission expense (55,854) 21,016 (34,838) Net fee and commission income 292,121 (88,136) 203,985 Dividend income 10,705 - 10,705 Net income on trading financial instruments and revaluation 279,421 (16,483) 262,938 Net gain/(loss) on debt investment financial assets measured at fair value through other comprehensive income 14,414 - 14,414 Net gain/(loss) on equity and other instruments measured at fair value through income statement (6,660) - (6,660) Net gain/(loss) on hedge accounting 9,560 - 9,560
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 15 Consolidated income statement 01.01.2024 – 30.06.2024 after transformation Change 01.01.2024 – 30.06.2024 after transformation Other operating income 12,474 (3,282) 9,192 Other operating expense (31,113) 8,531 (22,582) Net other operating income and expense (18,639) 5,249 (13,390) General administrative expenses (767,014) 345,797 (421,217) Depreciation and amortization (58,153) 33,989 (24,164) Net impairment on non-financial assets (180,064) 180,064 - Profit on sale of other assets 1,716 73 1,789 Provision for expected credit losses on financial assets and provisions for contingent commitments 19,073 (33,281) (14,208) Operating profit 1,199,099 (73,324) 1,125,775 Tax on some financial institutions (93,671) 29,828 (63,843) Profit before tax 1,105,428 (43,496) 1,061,932 Income tax expense (257,278) 19,622 (237,656) Net profit from discontinued operations - 23,874 23,874 Net profit from continuing and discontinued operations 848,150 - 848,150 The impact of this transformation on the comparative data of the consolidated income statement for II half of 2024 is presented in the table below: Consolidated income statement 01.04.2024 – 30.06.2024 before transformation Change 01.04.2024 – 30.06.2024 after transformation CONNTINUING OPERATIONS Interest income 1,028,230 (332,781) 695,449 Similar income 73,148 (21) 73,127 Interest expense and similar charges (296,674) 86,552 (210,122) Net interest income 804,704 (246,250) 558,454 Fee and commission income 175,750 (54,223) 121,527 Fee and commission expense (27,927) 10,153 (17,774) Net fee and commission income 147,823 (44,070) 103,753 Dividend income 10,612 - 10,612 Net income on trading financial instruments and revaluation 143,963 (8,402) 135,561 Net gain/(loss) on debt investment financial assets measured at fair value through other comprehensive income 20,537 - 20,537 Net gain/(loss) on equity and other instruments measured at fair value through income statement (9,621) - (9,621) Net gain/(loss) on hedge accounting 1,807 - 1,807 Other operating income 6,223 (672) 5,551 Other operating expense (23,122) 3,678 (19,444) Net other operating income and expense (16,899) 3,006 (13,893) General administrative expenses (326,269) 165,072 (161,197) Depreciation and amortization (28,626) 16,388 (12,238) Net impairment on non-financial assets (180,064) 180,064 - Profit on sale of other assets (131) - (131) Provision for expected credit losses on financial assets and provisions for contingent commitments 8,635 (19,822) (11,187) Operating profit 576,471 45,986 622,457 Tax on some financial institutions (48,454) 14,576 (33,878) Profit before tax 528,017 60,562 588,579 Income tax expense (133,894) 11,955 (121,939) Net profit from discontinued operations - (72,517) (72,517) Net profit from continuing and discontinued operations 394,123 - 394,123 In the consolidated financial statement of Bank Handlowy w Warszawie S.A. for the year ended 31 December 2024, the Group changed the presentation of the variation margin for derivative instruments, cleared by central counterparty KDPW_CCP S.A..
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 16 The Group applied a similar approach in the consolidated financial statements for the first half -year ended 30 June 2025 and restated the comparative data accordingly. Liabilities arising from the variable margin, previously reported under "Amounts due to customers," have been included in the offsetting of forward and derivative transactions cleared by the central counterparty KDPW_CCP S.A. and now reduce the "Financial assets held for trading" item. This change in presentation was intended to better reflect the economic substance of the transactions. The Group has restated the comparative data, accordingly, as presented in the table below. The presentation change did not impact the income statement. The impact on the comparative data of the presented consolidated statement of cash flows is presented in the table below: Consolidated cash flow Data as of 30.06.2024 before transformation Presentation change Data as of 30.06.2024 after transformation Financial assets held for sale change (666,989) (252,891) (919,880) Liabilities due to customers change (1,200,862) 252,891 (947,971) III. Net cash flows from operations (656,733) - (656,733) Income tax in interim financial statements Income tax in interim financial statements is accrued in accordance with IAS 34. Interim period tax expense is accrued using the estimated average annual effective income tax rate applied to the pre-tax result of the interim period. The calculation of the average annual effective income tax rate requires the use of a pre -tax income forecast for the entire fiscal year and permanent differences between the carrying amounts of assets and liabilities and their tax base. Foreign currency The statement of financial position and contingent liabilities received and granted denominated in foreign currencies are converted to PLN equivalents using the average exchange rate of the currency determined by the Governor of the National Bank of Poland (“N BP”) prevailing at the date of preparation of the condensed interim consolidated statement of financial position. Foreign currency transactions are converted at initial recognition to the functional currency (PLN) using the exchange rates prevailing at the date of transactions. Foreign exchange profits and losses resulting from revaluation of the statement of financial position items denominated in foreign currencies and settlement of transactions in foreign currencies are included in net profit on foreign exchange, within the Net income on trading financial instruments and revaluation. The exchange rates of the major currencies applied in the preparation of these financial statements are: PLN 30 June 2025 31 December 2024 30 June 2024 1 USD 3.6164 4.1012 4.0320 1 CHF 4.5336 4.5371 4.4813 1 EUR 4.2419 4.2730 4.3130 4. Assets and liabilities classified as held for sale and profit from discontinued operations On May 27, 2025, the Bank signed an agreement with VeloBank S.A. (“VeloBank”), Promontoria Holding 418 B.V. (the sole shareholder of VeloBank) (“Promontoria”) and Citibank Europe Plc regarding the demerger by separation of the Bank’s retail business (“Retail Business”) to VeloBank. In accordance with the conclusion of the Agreement, the exit transaction of Bank’s Retail Business will proceed in two related stages. The firs t stage is demerger of the Bank by separation, because of which the Retail Business will be transferred to VeloBank and in exchange the Bank will receive new issue shares of VeloBank . The second stage is shares repurchase by Promotoria of all VeloBank shares that the Bank will acquire because of the demerger.This buyout will take place immediately after the registration of the division by the competent registry court, but no later than the day following such registration. In the day of registration by the registry court, VeloBank will purchase the Retail Business Segment covering activities in the scope of credit card servicing, granting retail loans and credits, including PLN mortgage loans, accepting deposits, asset management (including brokerage services of the Retail Business) and servicing entrepreneurs classified by the Bank as micro -entities, as well as the Bank's branches and other assets and liabilities of the Bank ’s Retail Business Segment , with the exception of certain assets and liabilities related to the above activities, which will not be transferred to VeloBank, including, in particular, foreign currency loans.
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 17 The agreement also contains provisions for the Bank to grant indemnification for certain identified risks, with a specified amount limit. As of the date of preparation of the financial statements, the Bank does not consider the probability of their materialization to be high. Consequently, there was no need to quantify these risks in the financial statements. The number of shares acquired by Bank due to the demerger wil l be determined in relation with the mechanism specified in the division plan, provided that it does not reach 25% of all shares in the share capital of VeloBank. The shares will be repurchased by Promotoria from the Bank for the estimated amount of PLN 532 million consisting of two components based on financial indicators: 1. Permanent value component payable in connection with transaction closing in the estimated amount of PLN 432 million based on net assets transferred by the Bank to VeloBank in the moment of transaction closing and with the subject to any standard price adjustments that may occur upon closing of the transaction; and 2. Variable component payable in connection with achieved business volumes form Retail Business Segment in the day of transaction closing in the amount not higher than PLN 100 million. In connection with the conclusion of the Agreement, the Bank, at the time of reclassification of the retail operations as hel d for sale in accordance with IFRS 5, recognized a net loss in the amount of PLN 308.8 million in the II quarter of 2025 based on the fixed price component and the net asset value of the Retail Business, taking into account the tax effect . Based on transaction conditions, the Group conservatively did not account for the variable component. In the opinion of the Bank, IFRS 5 does not contain precise provisions regarding the timing and method of recognizing a loss in the case of held for sale group that mainly includes assets and financial liabilities regulated by the IFRS 9 and in connection with this the Bank decided that the recognition of the loss at the moment of reclassification of the business to the group held for sale clearly shows the expected economic consequences of the planned transaction. This loss, in terms of the balance sheet, has been accounted for as a reduction in the value of the assets of the group held for sale in the total amount, meaning without. The completion of the transaction is subject to the following activities and the fulfilment of certain conditions precedent, including, among others: 1. obtaining needed consents or decisions of the Polish Financial Supervision Authority (“KNF”) by the Bank, VeloBank and its dominant entities; 2. obtaining consents of the relevant antitrust authority and other relevant authorities; 3. obtaining tax interpretations; 4. adoption of resolutions on approval of the division at general meetings of shareholders; 5. achieving readiness of the parties to perform the technical and operational activities concerning the migration of systems in connection with the demerger. The transaction is expected to be completed in mid-2026. As at 25 July 2025, The Management Board of the Bank and the Management Board of VeloBank agreed and signed the Bank's division plan in accordance with Article 534 of the Act of 15 September 2000 – the Commercial Companies Code. In connection with the signed Agreement, in the Bank's opinion, the Retail Business meets the classification criteria required by IFRS 5, for reclassification of the sold assets and liabilities of the consumer segment as held for sale and separation of discontinued operations. Assets and liabilities held for sale at as 30 June 2025 are presented in the table below: PLN ‘000 30.06.2025 Cash and cash equivalents 198,602 Financial assets held-for-trading 17,081 Amounts due from customers 6,131,488 Tangible fixed assets 42,677 Deferred income tax asset 57,967 Other assets 125,051 Total assets 6,572,866 Impairment of assets not held for sale (467,000) Total assets held for sale 6,105,866 Amounts due to customers 22,077,833 Provisions 28,019 Other liabilities 253,223 Total liabilities 22,359,075 Net assets and liabilities held for sale (16,253,209) Expected amount of assets to be transferred as a part of the transaction settlement 16,682,664
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 18 PLN ‘000 30.06.2025 Cash and cash equivalents 198,602 Assets and liabilities held for sale after including assets to be transferred as a part of the transaction settlement 429,455 The liquidity surplus to be transferred as part of the transaction settlement is the amount that will be transferred to VeloBank in order to settle the transaction . For the purposes of these financial statements and the table above, this surplus was calculated as of June 30, 2025. At the time of transaction settlement, the surplus will be transferred to VeloBank in the form of liquid assets in the appropriate currencies (cash and/or non -cash assets in the form of treasury bonds and bills denominated in PLN, USD, and EUR, with characteristics agreed upon between the parties to the transaction). Due to the volatility of the balance sheet structure and the expected settlement dat e of the transaction, it is not possible to precisely identify them at the time of preparation of these financial statements. In connection with the recognized gross result on the transaction, a deferred tax asset was recognized in the amount of PLN 88.7 million Because the current tax will be paid by the Group, the deferred tax asset is not included in the group of assets held for sale. However, the group of assets held for sale includes the amount of the asset due to deferred tax of the value o f PLN 57 million directly related to the business held for sale. The analysis of the result on discontinued operations presented below: II kwartał I półrocze II kwartał I półrocze 01.04.- 30.06.2025 01.01.- 30.06.2025 01.04.- 30.06.2024 01.01.- 30.06.2024 w tys. zł Interest and 329,972 664,350 332,781 676,577 Similar income 72 162 21 29 Interest expense and similar expenses (98,090) (190,407) (86,552) (176,010) Net interest income 231,954 474,105 246,250 500,596 Fee and commission income 54,035 106,490 54,223 109,153 Fee and commission expense (13,721) (26,043) (10,153) (21,016) Net fee and commission income 40,314 80,447 44,070 88,137 Net income from trading financial instruments and revaluation 8,395 16,735 8,402 16,483 Other operating income 1,311 3,250 672 3,282 Other operating expenses (6,199) (12,163) (3,678) (8,532) Net income from other operating income and expenses (4,888) (8,913) (3,006) (5,250) General and administrative expenses (220,031) (415,093) (165,072) (345,797) Depreciation of property, plant and equipment and intangible assets (2,793) (5,173) (16,388) (33,989) Net impairment of non-financial assets - - (180,064) (180,064) Net income from the sale of other assets (415) (482) - (73) Net income from expected credit losses on financial assets and provisions for contingent liabilities 1,446 11,685 19,822 33,281 Operating profit 53,982 153,311 (45,986) 73,324 Tax on certain financial institutions (14,793) (26,796) (14,576) (29,828) Profit before tax 39,189 126,515 (60,562) 43,496 Income tax 82,287 69,984 (11,955) (19,622) Net income 121,476 196,499 (72,517) 23,874 Remeasurement of assets and liabilities to be disposed of at fair value less costs to sell (470,137) (470,137) - - Net profit/(loss) from discontinued operations (348,661) (273,638) (72,517) 23,874 The value of the interest income from discontinued operations includes interest income and expenses from transactions with Retail Segment clients. Due to the fact that in th e Retail Banking Segment there is a surplus of deposits over the segment's assets, these funds were invested by Corporate Banking. After the transaction is settled and the Group exits Retail Banking, the Group will no longer be able to invest funds derived from the excess of deposits over assets generated by Retail Banking. In the Management Board's opinion, presenting the interest income on the excess of deposits over assets in Retail Banking as an element of discontinued operations provides information tha t is therefore relevant to the recipients of the financial statements. The Group eliminated internal transactions entered before the settlement of the exit transaction (internal interest income and interest expense) from continuing operations. The Bank determined the level of interest income/net interest income generated by the Corporate Banking segment for the Retail Banking Segment based on this surplus using the formally adopted internal transfer rate methodology between the
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 19 mentioned segments and presented it separately in Note 7 (Adjustment for excess liquidity related to discontinued operations). The internal transfer rate system is based on market rates at the relevant dates. For products with fixed maturities, rates corresponding to the maturities are selected, while for produ cts with undefined schedules, these rates are adjusted based on behavioral assessments (primarily O/N or 1Y). The revenues thus determined in the amount of PLN 495,496 thousand in the first half of 20 25 and PLN 508,731 thousand in the first half of 2024 were reduced by the cost of financing credit products in the amount of PLN 166,934 thousand in the first half of 2025 and PLN 171,072 thousand in the first half of 2024using 3M rates for retail loans and 0/N, 3M, and 1Y rates for credit cards. For the period from January 1, 2025, to June 30, 2025, the Bank assessed the potential changes to the result regarding the excess of retail deposits over segment assets if the indicated rates changed. If the rates increased by 0.25%, the result would increase by PLN 9.4 million, while if they decreased by 0.25%, the result would decrease by the same amount. Cash flows from discontinued operations as at 30 June 2025 are presented in the table below: PLN ‘000 For the period 01.01.-30.06. 2025 01.01.-30.06. 2024 Cash flow from operating activities 535,339 167,408 Cash flow from investing activities (7,103) (2,331) Cash flow from financial activities (6,079) (5,820) 5. Segment reporting An operating segment is a separable component of the Group engaged in business activity, generating income and expenses (including those on intragroup transactions), whose operating results are regularly reviewed by the Management Board of parent entity, the chief operating decision maker of the Group, in order to allocate resources and assess its performance. The Group is managed in two main operating segments – Institutional Banking and Retail Banking. The valuation of segment’s assets and liabilities as well as calculation of its financial results is based on the Group’s accounting policies, including intragroup transactions between segments. Despite the Bank’s exit from the Retail Business as described in Note 4, the Bank’s Management Board continues to analyze the Group’s results in the division into the above -mentioned segments. The allocation of Group’s assets, liabilities, income and expenses to operating segments was made on the basis of internal information prepared for management purposes. Transfer of funding between the Group segments is based on prices derived from market rates. Transfer prices are calculated using the same rules for both segments and any difference results solely from maturity and currency structure of assets and liabilities. The basis for assessment of the segment performance is gross profit or loss. The Group conducts its operations solely on the territory of Poland. Institutional Banking Within the Institutional Banking segment, the Group offers products and provides services to commercial entities, municipalities and public sector. The offer in the Institutional Banking segment includes among others: • Banking services covering credit and deposit activities, • Cash management, • Trade finance, • Brokerage services, • Leasing, • Custody services, • Treasury products on financial and commodity markets, • Investment banking services on the local and international capital markets, including advisory services as well as obtaining and underwriting financing through public and non-public offerings. The activities also comprise proprietary transactions in the equity, debt and derivative instruments’ markets. A shared characteristic of the institutional banking clients is that they need advanced financing products and advice relating to financial services. In this area, the Group ensures a coordinated offer of investment banking, treasury and cash management products and prepares loan proposals that cover differentiated forms of financing. Retail Banking Within the Retail Banking segment, the Group provides products and financial services to individual clients, micro enterprises and individual entrepreneurs that are within the framework of Citibusiness offer . The whole range of banking products in
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 20 Retail Banking segment includes: • Current and savings accounts, • Cash loans, • Mortgage loans, • Credit cards, • Asset management services, • Acting as an agent in investment and insurance products sale. Consolidated income statement by business segment For the period 01.01 – 30.06.2025 01.01 – 30.06.2024 PLN ‘000 Institutional Banking Retail Banking Total Institutional Banking Retail Banking Total Net interest income, including: 1,032,498 519,222 1,551,720 1,055,360 547,259 1,602,619 Internal interest income, including: (328,563) 328,563 - (337,660) 337,660 - Internal income - 328,563 328,563 - 337,660 337,660 Internal expenses (328,563) - (328,563) (337,660) - (337,660) Net fee and commission income 229,576 68,017 297,593 217,242 74,879 292,121 Dividend income 2,629 8,884 11,513 2,106 8,599 10,705 Net income on financial instruments and revaluation 174,747 16,747 191,494 262,925 16,496 279,421 Net gain/(loss) on debt investment financial assets measured at fair value through other comprehensive income 145,415 - 145,415 14,414 - 14,414 Net gain/(loss) on equity and other instruments measured at fair value through income statement (950) (5,249) (6,199) 413 (7,073) (6,660) Net gain/(loss) on hedge accounting 1,687 - 1,687 9,560 - 9,560 Net other operating income (9,978) (7,928) (17,906) 5,712 (24,351) (18,639) General administrative expenses (393,537) (448,354) (841,891) (385,106) (381,908) (767,014) Depreciation and amortization (17,653) (9,855) (27,508) (13,128) (45,025) (58,153) Net impairment loss on non- financial assets loss - - - - (180,064) (180,064) Profit on sale of other assets 570 (482) 88 1,789 (73) 1,716 Net impairment loss on financial assets and provisions for contingent commitments (8,997) 11,684 2,687 (14,208) 33,281 19,073 Operating income 1,156,007 152,686 1,308,693 1,157,079 42,020 1,199,099 Tax on some financial institutions (64,180) (26,796) (90,976) (63,843) (29,828) (93,671) Revaluation of assets and liabilities held for sale of at goodwill less costs to sell - (470,137) (470,137) - - - Profit before tax from continuing and discontinued operations 1,091,827 (344,247) 747,580 1,093,236 12,192 1,105,428 Income tax expense (147,050) (257,278) Net profit from continuing and discontinued operations 600,530 848,150
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 21 As at: 30.06.2025 31.12.2024 PLN ‘000 Institutional Banking Retail Banking Total Institutional Banking Retail Banking Total Total assets 78,094,852 6,202,475 84,297,327 65,975,771 6,502,332 72,478,103 Total liabilities and shareholders’ equity, including: 61,220,506 23,076,821 84,297,327 49,237,874 23,240,229 72,478,103 Liabilities 52,996,158 22,064,543 75,060,701 40,912,716 21,696,856 62,609,572 The net profit of Retail Banking Segment differs from net income of discontinued operations due to the fact Transaction scope may differ from Retail Banking Segment. Among other things, net interest income of Retail Banking includes revenues from the equity allocated to retail while the revenue of discontinued operations ignores this element because the equity is not the part of the transaction. (Note 4 “ Assets and liabilities classified as held for sale and profit from discontinued operations”). 6. Risk Management Credit Risk The main purpose of risk management in the Group is to support a long-term plan for the stable development of the credit portfolio while maintaining its proper quality. Credit risk management is executed based on the policies and procedures that consistently and clearly define and communicate standards for risk identification, measurement, acceptance, control, monitoring and reporting. In the current reporting period, the Group continued to perform activities related to credit risk management in light of the external environment situation development, including in particular in particular, the effects of the introduction of tariffs by the US, the weakening economic situation in Germany, and the automotive industry. In both Corporate and Retail Banking, the Group did not observe a significant impact of these factors on the portfolio quality. Net result on provisions for expected credit losses regarding receivables from Retail Banking customers was driven by a stable portfolio. Due to persistent economic uncertainty, despite good quality of portfolio, impact on expected credit losses due to financial assets might not by fully reflected in impairment models. Therefore, similarly to 31 December 2024, the Group maintains additional provisions for expected credit losses for this purpose and within Institutional Banking customers. The Group manages its exposure by identifying and monitoring of limits, set within the capital limits and liquidity norms, taking into account the constraints of external regulations. The Group monitors the concentration of credit exposures on an ongoing basis, in order to avoid a situation where the portfolio depends on a small number of clients. In the first half of 2025, the Group's credit exposure to non-bank entities did not exceed the limit of concentration required by law. In the practice of credit risk management in the Bank, grouping of financial assets takes place within groups representing the level of credit risk of a given instrument. For receivables without impairment, in the area of Retail Banking Segment, grouping takes place according to the periods of delinquent days, while in the area of institutional banking, the Bank groups financial assets into risk rating ranges. Concentration of exposures – non-bank clients* - continuing operations PLN ‘000 30 Jun 2025 31 Dec 2024 Balance sheet exposure** Exposure due to granted financial commitments and guarantees Total exposure Balance sheet exposure** Exposure due to granted financial commitments and guarantees Total exposure CLIENT 1 1,493,932 212,524 1,706,456 1,352,977 229,893 1,582,870 GROUP 2 1,247,683 - 1,247,683 1,099,430 - 1,099,430 GROUP 3 1,002,508 - 1,002,508 1,002,896 - 1,002,896 CLIENT 4 1,000,152 - 1,000,152 - - - GROUP 5 21,032 832,126 853,158 197,656 679,866 877,522 GROUP 6 212,848 488,081 700,929 214,238 488,492 702,730 CLIENT 7 653,429 23,331 676,760 552,871 23,565 576,436 GROUP 8 586,941 54,699 641,640 197,920 462,406 660,326 GROUP 9 501,072 105,105 606,177 440,944 109,477 550,421
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 22 PLN ‘000 30 Jun 2025 31 Dec 2024 Balance sheet exposure** Exposure due to granted financial commitments and guarantees Total exposure Balance sheet exposure** Exposure due to granted financial commitments and guarantees Total exposure GROUP 10 515,893 685 516,578 572,896 685 573,581 Total 7,235,490 1,716,551 8,952,041 5,631,828 1,994,384 7,626,212 *Data from 31.12.2024 are comparative for items illustrating the concentration of exposure as at June 30, 2025, i.e. they do not reflect the concentration of exposure as at December 31, 2024 **Excludes exposures due to shares and other securities. ”The Group ” is understood as a capital group composed of entities in relation to which the Capital Group of Bank Handlowy w Warszawie S.A. has involvement. Concentration of exposure to industries*- continuing operations Industry according to NACE* 30 Jun 2025 31 Dec 2024 PLN’000 % PLN’000 % Wholesale trade, except motor vehicles 16,533,034 39.5% 14,050,813 35.4% Financial service activities, except insurance and pension funds 3,327,436 7.9% 1,868,664 4.7% Activities supporting financial services and insurance and pension funds 2,281,912 5.4% 1,806,950 4.5% Generation and supply of electricity, gas, steam, hot water and air for air conditioning systems 1,544,925 3.7% 1,942,595 4.9% Food production 1,537,290 3.7% 1,566,630 3.9% Activities of head offices; management consulting 1,506,496 3.6% 1,383,112 3.5% Manufacture of electrical equipment 1,346,817 3.2% 1,455,548 3.7% Retail trade, except motor vehicles 996,396 2.4% 1,033,543 2.6% Manufacture of motor vehicles, trailers and semi-trailers, except motorcycles 917,718 2.2% 950,297 2.4% Beverage production 803,587 1.9% - - First „10" industries total 30,795,611 73.5% 26,058,152 65.6% Other industries 11,122,371 26.5% 13,681,322 34.4% Total 41,917,982 100.0% 39,739,474 100.0% *Gross balance sheet and off-balance-sheet exposure to institutional customers (including banks) as of the day 30.06.2025 based on NACE Revision 2 (The Statistical Classification of Economic Activities in the European Community); data as at 31.12.2024 are comparative for items illustrating the concentration of exposure as at June 30, 2025 and do not illustrate concentration of exposures as at 31.12.2024. The process of active portfolio quality management includes, depending on client type, assigning appropriate risk ratings and internal classification, monitoring days past due as well as application of the relevant remedial or debt collection actions. The Group has put in place a uniform internal system for classification of receivables based on predetermined criteria. Risk rating assignment and classification system are crucial in defining the level of impairment allowances. The Group creates provisions for expected credit losses, for all financial assets, according to developed internal rules and methodologies. These provisions are created on an aggregated basis for each of 3 stages: • Stage 1: Credit exposures that have not had a significant increase in credit risk since initial recognition, ➢ For these assets, a 12-months ECLs are recognized (representing the portion of lifetime expected credit losses that result from default events that are possible within 12 months after the reporting date), • Stage 2: Credit exposures that have experienced a significant increase in credit risk ➢ For these assets, a lifetime ECLs are recognized, • Stage 3: Credit exposures with credit loss that has already been suffered on the assets ➢ For these assets, ECL is estimated for the whole period of exposure. Assignment of the exposure to Stages takes place, depending on the approach to management over the client (individual vs. group approach), taking into account: • the wide range of information obtained as part of standard risk management processes (including the Early Warning process) regarding both current and future events, including macroeconomic factors • the number of days past due (where days past due calculation, for the purpose of exposure assignment to Stages, is done in line with EBA/GL/2016/07 guidance and the regulation of Ministry of Finance, Investment and Development of October 3rd 2019 on the significance level of overdue credit exposure). Stage 1 All exposures not classified as Stage 2 and Stage 3 are classified as Stage 1.
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 23 Stage 2 In the area of Retail Banking Segment for the Stage 2 classification, apart from the 30 days past due criterion and forborne categories, the quantitative measure is applied - analysis of the change in PD level since the initial recognition. In accordance with the IFRS 9 standard, the Group does not use a fixed threshold above which an increase in risk would automatically be considered significant. It results from the fact that the same increase of PD in absolute terms would be more significant for exposures with lower initial risk than for those with the h igher initial risk. Therefore, the Group applies designed model that sets a threshold above which an increase in risk is considered significant. In order to determine the relative growth, the Group uses a variable being the quotient of the probability of default on the current reporting date and the contingent probability calculated for the same period at the time of initial recognition. A threshold is defined as the cut -off point, where the probability of a default event occurring when the value of an explanatory variable increases is maximised. In case of credit exposures from the Retail Banking Segment area, the overdue criterion of over 30 days is a direct trigger for identifying a significant increase in credit risk. In addition, qualitative premises are included on the modification without impairment activities carried out and the fact that information about the probability of default is not available. For credit exposures in the area of institutional banking, overdue by more than 30 days is taken into account when assessing the potential occurrence of a significant increase in credit risk, and the Group periodically, as per internal classification process and ongoing monitoring process, analyses changes in risk of default by comparing the current assessment of default with the assessment of default in the initial recognition. Assessment of change in risk of default for given credit exposure is conducted during internal classification process and monitoring process and include: • Qualitative indicators (including Early Warning System), • Quantitative information (change of the Lifetime PD at the reporting date with the Lifetime PD at initial recognition above the relative and absolute threshold for a given sensitivity class, financial data), • Expected exposure life period, • Occurrence of economic or legal reasons related to the borrower’s financial difficulties and granting to the borrower a concession to financial conditions that the lender would not otherwise consider (assuming that those changes does not imply deterioration in future payment flows). Stage 3 The Group applies the general principle that the creditor's default occurs when one or both of the following events occur: a) delay in the debtor’s repayment of any material loan obligations to the Group is 90 days or more, b) it is unlikely that the debtor fully fulfills his credit obligations towards the Group, without the institution having to undertake activities such as collateral execution. At each balance sheet date, the Group assesses whether there is objective evidence of impairment of a financial asset or a group of financial assets. A financial asset or a group of financial assets lost their value and the impairment loss was incurred only when there is objective evidence of impairment resulting from one or more events taking place after the initial recognition of the asset (event causing the loss) and the event (or events) causing a loss has an impact on the expected future cash flows resulting from a financial asset or a group of financial assets whose reliable estimation is possible. In the institutional banking area, materialization of credit exposure value loss takes place if there is an objective evidence of impairment, which can be a result of, among others, events as below: • obtaining information on significant financial difficulties of the client; • reduction of the client credit rating by an accepted by the Group External Credit Assessment Institution1; • occurrence of economic or legal reasons related to the borrower’s financial difficulties and granting to the borrower a concession to financial conditions that the lender would not otherwise consider, when it results in impairment (forborne non-performing exposure), including granting permission for emergency restructuring of credit exposure, if it might result in decreasing financial requirements, reduction of financial liabilities by redeeming a significant part of the principal, interest or, where applicable, fees or deferring their repayment ; • high likelihood of bankruptcy, gaining information on: - declaration of bankruptcy; - commencing bankruptcy proceedings or submitting a bankruptcy petition / petition for bankruptcy proceedings - putting the debtor into bankruptcy or liquidation; - dismissing the bankruptcy petition because the debtor's assets are insufficient or only sufficient to cover the costs of bankruptcy proceedings; - dissolution or liquidation or annulment of the company; - appointing a guardian; - establishing a trustee (bankruptcy administrator); 1 Below risk level corresponding to internal 7- rating (i.e. to CCC- for Standard & Poor’s, Caa3 Moody’s)
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 24 - submitting an application for restructuring proceedings within the meaning of the Restructuring Law; - or granting to the obligor a similar protection if it would allow him to avoid or delay repayment of credit obligations; • Group initiates procedure to obtain an enforcement title, • delay in payment equal to 90 days or more (where days past due are calculated in line with EBA/GL/2016/07 guidance and the regulation of Ministry of Finance, Investment and Development of October 3rd 2019 on the significance level of overdue credit exposure), • default contagion in line with EBA/GL/2016/07 guidance, • obtaining information from an external database about the delay in payment of debtor's financial liabilities in other financial institutions by 90 days or more in line with the materiality thresholds; • status of exposure has been changed from “accrual” / “performing” to “non-accrual” / “non-performing”, • exposure has been classified (as per internal classification) to category: “Substandard –non–performing” / ”non - accrual” and “Loss”, • Obligor Risk Rating (ORR) is worse than 7- which is applied for Obligors that are defaulted, • justified suspicion of extorting a credit exposure, or identifying cases of a probable criminal act related to a credit exposure, documented by submitting a notification of suspected crime to the competent state authority, • termination of the loan agreement due to high credit risk, • obtaining information on the execution of a court judgment process against the debtor in an amount which, in the opinion of the Group, may result in the loss of creditworthiness, • lack of payment by the debtor the amount of the realized Government guarantee, • death, permanent disability or serious illness of the debtor (in the case of debtors running a company in the form of entrepreneurship), resulting in the inability to continue the activity, • staying in custody or prison of the debtor (in the case of debtors running a company in the form of entrepreneurship), resulting in the inability to continue the activity • obtaining information about a customer's default under agreements with other Citi group entities, • in cease the Economic Loss (L) resulting from the sale of credit obligations is higher than 5%, all other remaining client exposures should be considered defaulted and other events that may have an impact on the estimated future cash flows from the financial asset that can be reliably estimated. Objective evidence of impairment of a financial asset or a group of assets in the Retail Banking Segment area includes the fulfillment of even one of the following conditions by any of the customer's exposures: • occurrence of delays in repayment of principal and interest, the minimum amount to be paid, commission or exceeding the permitted limit. For the purpose of default identification , it is assumed that the delay in repayment is equal to or exceeds 90 days at the moment of calculating the write -down (where days past due are calculated in line with EBA/GL/2016/07 guidance and the regulation of Ministry of Finance, Investment and Development of October 3rd 2019 on the significance level of overdue credit exposure; • granting modifications to the terms of the agreement (restructuring), as a result of which the current value of cash flows falls below the book value before the modification; • termination of the contract for reasons other than a delay in the repayment of mortgage products; • default contagion in line with EBA/GL/2016/07 guidance; occurrence of qualitative circumstances: - death, - bankruptcy, - permanent disability or serious illness, - fraud, - obtaining information about initiating bankruptcy proceedings of the client or announcing bankruptcy by the client, - impairment or threat of collateral impairment, - obtaining information about significant financial problems of the client, - justified suspicion of extortion of credit exposure or identifying cases of the substantiated criminal offense concerning credit exposure, - obtaining information about the execution of the debtor in the amount, which in the bank's opinion may result in the loss of creditworthiness, - the client's stay in custody or prison, - partial capital write-off, - agreement termination, - the Group's request to initiate enforcement proceedings against the client. In the case of clients who do not meet the restructuring criteria, and in particular, for which the legal path has been implemented (bankruptcy, enforcement, court dispute) without the prospects of returning the repayment formula from the
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 25 client's core operations, the debt collection process is carried out and the receivables are written off. The main goal of th is process is to maximize the amount of outstanding exposures recovered by the Group . In the debt collection process, the Group will develop a cooperation formula with the client, in the course of which the Group's activity is not limited only to legal actions, but also, if possible, ongoing cooperation. In the event that the repayment of the exposure is jeopardized due to the poor financial standing of the debtor or by the transfer of assets beyond the scope of recovery, the exposures can be sold in exceptional cases. The Group has established and applies a quarantine period for exposures that cease to be classified as Stage 3 assets. In the area of institutional banking, a change in status may take place when there are no arrears to the Bank within a period of 12 months and the principal amount and related additional claims under the contract are recoverable in full. The main premise for changing the status from impairment to no impairment is complete recovery of creditworthiness. In the retail area, the quarantine mechanism consists in maintaining the customer in the status of impairment for the next 9 months from the disappearance of all indications of impairment. The expected credit loss, which is the basis for determining the level of the provision for impaired receivables and receivables with a significant increase of credit risk since the initial recognition, is determined throughout the lifetime of the exposure. In the case of installment exposures, this is the period to the contractual maturity date. For revolving exposures, the contractual maturity is not specified, in replacement of the so -called behavioral maturity resulting from the empirical estimation of the life of the credit product. Provisions for expected credit losses for Retail Banking portfolio are calculated on the basis of statistical models for groups of assets combined in portfolios with common credit risk features. Financial instruments for the purpose of measurement of expected credit losses , are grouped on product level in Retail Banking and on segment level for homogenous micro - entrepreneurships portfolio with minimal shareholding in the sum of gross receivables of the Group. In terms of product aggregation, the following p ortfolios are defined: credit cards, cash loan within credit card, credit line, cash loan and mortgages. In the financial statements, the Group adjusts the value of credit exposures by provision for expected credit losses. In case individually significant exposure is impaired in Stage 3, in the area of Retail Banking, provisions are measured using individual approach. Exposures are deemed to be individually significant, if an expected credit loss for the borrower in Stage 3 exceeds 10% of average provisions related to receivables in Stage 3 in the last quarter. In the area of institutional banking, the main sources of parameters included in the methodology of expected credit losses ('ECL') are the results of internal customer assessment processes and the results of loan models. • The rate of impairment is derived from the client's rating determined based on internal rating models. The ECL methodology describes the process of applying existing migration ratings, expected in a given macroeconomic scenario, to migration schedules. In this way, in the following forecast periods, the probability of migration to a given rating range is obtained. • The value of the LGD parameter results directly from the dedicated model for impaired clients. • The exposure value for subsequent forecast periods is based on available repayment schedules as well as (for renewable products) on the expected change in exposure described by the value of the CCF parameter. The basis for estimating this parameter was int ernal data on amounts used by customers before the Group identified impairment of value. • The assignment to the stage is based on the customer assessment process used in the Group to manage the client. This process includes both quantitative factors (e.g. customer rating) and a number of qualitative factors (e.g. Early Warning Signals). • The maturity dates adopted by the Group result directly from agreements with customers and periods in which the Group is exposed to possible risks. In the area of Retail Banking Segment, the basis of parameters included in the ECL methodology are the existing internal models of the client's creditworthiness assessment in the Bank, information about the stage of debt collection proceedings and information from the Bank's data warehouse. • The rate of impairment is the submission of a number of models of customer creditworthiness assessment, connected to each other by process called integration logic. The ECL methodology, based on forecasts provided by the Chief Economist of the Bank, transforms the results of integration logic so that the result reflects the expected changes in the economy. The obtained parameters are then applied to the loss vectors during the life of the product, estimated on the basis of historically observed loss rates. Recovery value vectors are the result of the analysis of the amount of historically collected receivables for homogeneous populations. The population was segmented against similar features such as product type, time from default, amount of exposure left for repayment or historically observed repayments. • The value of the EAD parameter is based on installment products on the expected repayment schedules generated based on the length of the contract and the interest rate on the product. For renewable products, EAD is based on the internally estimated CCF vector. The Group takes into account macroeconomic information about the future in determining the expected credit losses. Scenarios are prepared by the Chief Economist of the Bank at least once a quarter in the three years horizon in division into quarters (based scenario with 60% weight and positive and negative variation from scenario with 20% weight).
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 26 In the area of institutional banking, the Group divided the loan portfolio into industries in terms of their sensitivity to macroeconomic conditions, identified macroeconomic variables that best explained the historical changes in credit quality and analyzed the dependence on macroeconomic factors using statistical methods. Finally, the Group has built a model for two classes with a higher level of industry sensitivity allowing for the dependence of the coefficient determining the level of client migration between ratings from these factors. For the class with low sensitivity, the Group did not make the level of migration dependent on macroeconomic factors. In the area of Retail Banking Segment, at the level of homogeneous product portfolios, the Group, using statistical methods, built equations making the level of annual loss rates dependent on macroeconomic factors. The models allow for shaping of the provision for expected credit losses depending on the expected changes in the economy. Macroeconomic scenarios in the area of institutional banking comprise the following variables: - annual amendment of index WIG, - NBP reference rate, However Retail Banking Segment uses two variables in modeling the expected credit losses: - unemployment rate „BAEL”, - WIG index. The scenarios for the variables used to estimate ECL as at 30 June 2025 are presented below Base economic scenario 2q25 3q25 4q25 1q26 2q26 3q26 4q26 1q27 2q27 3q27 4q27 1q28 2q28 NBP Reference rate 5.25 5.00 4.75 4.50 4.50 4.25 4.25 4.25 4.25 4.25 4.25 4.25 4.25 Unemployment rate „BAEL” 3.20 3.20 3.00 3.20 2.80 2.80 2.70 3.00 2.70 2.80 2.60 3.00 2.60 WIG (end of the period) 98,691 98,949 100,241 101,705 103,169 104,633 106,097 107,647 109,197 110,747 112,297 113,824 115,463 Pessimistic economic scenario 2q25 3q25 4q25 1q26 2q26 3q26 4q26 1q27 2q27 3q27 4q27 1q28 2q28 NBP reference rate 5.00 4.50 4.00 3.50 3.25 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 Unemployment rate „BAEL” 3.30 3.29 3.21 3.61 3.24 3.31 3.29 3.70 3.53 3.66 3.56 3.93 3.60 WIG (end of the period) 94,695 90,999 88,397 86,006 87,244 88,482 89,720 91,031 92,342 93,653 94,963 96,255 97,641 Optimistic economic scenario 2q25 3q25 4q25 1q26 2q26 3q26 4q26 1q27 2q27 3q27 4q27 1q28 2q28 NBP reference rate 5.75 6.00 6.25 6.50 6.50 6.25 6.00 5.75 5.50 5.25 5.00 5.00 5.00 Unemployment rate „BAEL” 3.24 3.07 2.76 2.90 2.38 2.22 1.99 2.27 1.93 1.92 1.72 2.05 1.69 WIG (end of the period) 102,687 107,233 113,098 119,460 121,180 122,899 124,619 126,439 128,260 130,081 131,901 133,695 135,621 Scenario for variables used to estimate expected credit losses at 31 December 2024 presented below Base economic scenario 4q24 1q25 2q25 3q25 4q25 1q26 2q26 3q26 4q26 1q27 2q27 3q27 4q27 NBP Reference rate 5,75 5,50 5,50 5,00 4,75 4,25 4,00 3,75 3,75 3,75 3,75 3,75 3,75 Unemployment rate „BAEL” 2,70 2,90 3,00 2,90 2,70 3,00 2,90 2,90 2,56 3,00 2,80 2,88 2,70 WIG (end of the period) 82,762 84,431 86,101 87,770 89,440 90,746 92,053 93,359 94,666 96,073 97,481 98,889 100,296 Pessimistic economic scenario 4q24 1q25 2q25 3q25 4q25 1q26 2q26 3q26 4q26 1q27 2q27 3q27 4q27 NBP reference rate 5.75 5.25 5 4.25 3.75 3 2.75 2.5 2.5 2.5 2.5 2.5 2.5
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 27 Pessimistic economic scenario 4q24 1q25 2q25 3q25 4q25 1q26 2q26 3q26 4q26 1q27 2q27 3q27 4q27 Unemployment rate „BAEL” 2.72 3.01 3.19 3.26 3.15 3.5 3.54 3.66 3.38 3.9 3.75 3.76 3.63 WIG (end of the period) 79,293 77,591 75,893 74,204 75,616 76,720 77,825 78,930 80,034 81,224 82,414 83,604 84,794 Optimistic economic scenario 4q24 1q25 2q25 3q25 4q25 1q26 2q26 3q26 4q26 1q27 2q27 3q27 4q27 NBP reference rate 5.75 6 6.5 6.5 6.75 6.25 6 5.75 5.5 5.25 5 4.75 4.5 Unemployment rate „BAEL” 2.66 2.79 2.8 2.64 2.26 2.4 2.24 2.17 1.76 2.17 1.97 1.9 1.73 WIG (end of the period) 86,230 91,560 97,184 103,116 105,078 106,613 108,148 109,683 111,217 112,871 114,525 116,179 117,832 As part of the assessment of the adequacy of the methodology used to determine expected credit losses, the Group regularly, on quarterly basis , carries out an analysis to verify to what extent the expected credit losses provisions were reflected in actual losses. In addition, the models used for determining reserves are subject to evaluation by an independent Model Risk Management and Validation Department. The Group assesses sensitivity of expected credit losses with respect to applied methods and underlying assumptions, in particular concerning macroeconomic parameters. The table below presents change of expected credit losses for not impaired exposures that were determined as a difference between the expected credit losses estimated assuming one particular scenario and expected credit losses estimated using probability-weighted approach (the sign “-“ means lower, the sign “+” means higher expected losses). Change of expected credit losses for stage 1 and 2 assuming 100% scenario weight as at 30.06.2025 Optimistic scenario Pessimistic scenario Retail Bank (2,551) 2,024 Stage 1 (453) 361 Stage 2 (2,098) 1,663 Institutional Bank (590) 849 Stage 1 (353) 439 Stage 2 (237) 410 The tables above present assets in disposal groups held for sale. Change of expected credit losses for stage 1 and 2 assuming 100% scenario weight as at 31.12.2024 Optimistic scenario Pessimistic scenario Retail Bank (2,141) 1,701 Stage 1 (365) 291 Stage2 (1,776) 1,410 Institutional Banking (1,395) 1,626 Stage 1 (924) 892 Stage 2 (471) 734 The Group identifies and manages counterparty credit risk in financial instruments transactions based on internal limits for pre-settlement and settlement commitment. These exposures are also assigned credit ratings.
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 28 The maximum Group’s credit risk exposure is presented below. PLN ‘000 Note 30.06.2025 31.12.2024 Gross receivables due from the Central Bank 10,817,144 5,794,361 Gross receivables due from banks 15 8,688,715 8,788,431 Gross receivables due from institutional customers* (below) 18,881,032 15,552,681 Gross receivables due from individual customers* (below) 6,379,387 6,360,276 Debt securities held-for-trading 16 3,459,043 1,801,904 Derivative instruments 16 2,378,082 2,623,860 Debt investment financial assets measured at fair value through other comprehensive income 17 31,879,823 30,088,771 Other financial assets 21 551,106 239,546 Contingent liabilities granted 33 19,659,473 20,724,650 102,693,805 91,974,480 The table above presents assets in disposal groups held for sale. Additional information on discontinued operations disclosed in Note 4 „Assets and liabilities classified as held for sale and profit from discontinued operations” „Assets and liabilities classified as held for sale and profit from discontinued operations” As at June 30, 2025, the value of collateral reducing the maximum exposure to credit risk for receivables from institutional clients amounted to PLN 1,876,565 thousand (31 December 202 4: PLN 1,719,596thousand) and for receivables from individual clients amounted to PLN 2,397,455 thousand (31 December 2024: PLN 2,356,824 thousand ). The table below present the mortgage-backed receivables from individual customers in a given Loan-to-value (LtV) interval. The amount of exposure is measured by unpaid principal amount. PLN’000 30.06.2025 31.12.2024 Less than 50% 1,321,222 1,340,156 51 - 80% 1,002,981 956,511 81 - 100% 39,556 27,432 2,363,759 2,324,098 The table above presents assets in disposal groups held for sale i.e. excluding the portfolio of loans denominated in foreign currencies (CHF) with a gross value of PLN 24,676 thousand, which is excluded from the transaction disclosed in Note 4 The Group's portfolio is presented below, grouped into impaired receivables (stage 3) and receivables without impairment (stages 1 and 2). The structure of the portfolio of exposures to banks and clients from the point of view of credit risk as at 30 June 2025: PLN ‘000 Receivables from institutional customers Receivables from individual customers Receivables from banks Total Including receivables from assets held for sale Receivables without recognized impairment (Stage 1) By risk rating Risk rating 1-4- 12,585,038 - 8,558,640 21,143,678 36,114 Risk rating +5-6- 3,755,418 - - 3,755,418 - By delinquency - - No delinquency - 4,638,968 - 4,638,968 4,617,932 1-30 days - 62,062 - 62,062 61,790 31-90 days - 460 - 460 460 Gross amount 16,340,456 4,701,490 8,558,640 29,600,586 4,716,296 Provision for expected for credit losses (31,986) (13,098) (387) (45,471) (13,978) Net amount 16,308,470 4,688,392 8,558,253 29,555,115 4,702,318 Receivables without recognized impairment (Stage 2) By risk rating Risk rating 1-4- 1,006,952 - 129,262 1,136,214 2,262 Risk rating +5-6- 976,912 - 813 977,725 -
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 29 The structure of the portfolio of exposures to banks and clients from the point of view of credit risk as at 31 December 2024: PLN ‘000 Receivables from institutional customers Receivables from individual customers* Receivables from banks Total Receivables without recognized impairment (Stage 1) By risk rating Risk rating 1-4- 10,173,771 - 8,779,409 18,953,180 Risk rating +5-6- 3,815,106 - 673 3,815,779 By delinquency No delinquency - 4,524,788 - 4,524,788 1-30 days - 55,909 - 55,909 Gross amount 13,988,877 4,580,697 8,780,082 27,349,656 Provision for expected for credit losses (27,095) (14,900) (307) (42,302) Net amount 13,961,782 4,565,797 8,779,775 27,307,354 Receivables without recognized impairment (Stage 2) By risk rating Risk rating 1-4- 338,066 - - 338,066 Risk rating +5-6- 757,175 - 8,349 765,524 Risk rating +7 and greater 186,980 - - 186,980 By delinquency - - - - No delinquency - 1,342,659 - 1,342,659 1-30 days - 64,109 - 64,109 PLN ‘000 Receivables from institutional customers Receivables from individual customers Receivables from banks Total Including receivables from assets held for sale Risk rating +7 and greater 271,255 - - 271,255 - By delinquency - - No delinquency - 1,290,009 - 1,290,009 1,288,861 1-30 days - 71,290 - 71,290 71,290 31-90 days - 13,486 - 13,486 12,668 Gross amount 2,255,119 1,374,785 130,075 3,759,979 1,375,081 Provision for expected for credit losses (38,048) (36,005) (111) (74,164) (36,309) Net amount 2,217,071 1,338,780 129,964 3,685,815 1,338,772 Receivables with recognized impairment (Stage 3) By delinquency - 286,158 286,158 - By risk rating - Risk rating +7 and greater 285,199 - - 285,199 298,860 Gross amount 285,199 286,158 - 571,357 298,860 Provision for expected for credit losses (164,235) (217,422) - (381,657) (227,291) Net amount 120,964 68,736 - 189,700 71,569 Receivables with recognized impairment By delinquency - 16,954 - 16,954 - By risk rating - Risk rating +7 and greater 258 - - 258 16,954 Gross amount 258 16,954 - 17,212 16,954 Provision for expected for credit losses 245 1,875 - 2,120 1,875 Net amount 503 18,829 - 19,332 18,829 Total gross value 18,881,032 6,379,387 8,688,715 33,949,134 6,407,191 Provision for expected for credit losses (234,024) (264,650) (498) (499,172) (275,703) Total net value 18,647,008 6,114,737 8,688,217 33,449,962 6,131,488
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 30 PLN ‘000 Receivables from institutional customers Receivables from individual customers* Receivables from banks Total 31-90 days - 13,027 - 13,027 Gross amount 1,282,221 1,419,795 8,349 2,710,365 Provision for expected for credit losses (36,630) (42,577) (344) (79,551) Net amount 1,245,591 1,377,218 8,005 2,630,814 Receivables with recognized impairment (Stage 3) By delinquency - 341,339 - 341,339 By risk rating Risk rating +7 and greater 280,708 - - 280,708 Gross amount 280,708 341,339, - 622,047 Provision for expected for credit losses (159,574) (265,668), - (425,242) Net amount 121,134 75,671 - 196,805 Receivables with impairment By delinquency - 18,445 - 18,445 By risk rating Risk rating +7 and greater 875 - - 875 Gross amount 875 18,445 - 19,320 Provision for expected for credit losses 166 567 - 733 Net amount 1,041 19,012 - 20,053 Total gross value 15,552,681 6,360,276 8,788,431 30,701,388 Provision for expected for credit losses (223,133) (322,578) (651) (546,362) Total net value 15,329,548 6,037,698 8,787,780 30,155,026 As described above, one of the main factors influencing the management of individual customers portfolio are days of delay, while in the institutional customers segment rating is the key determinant of credit risk. Impaired receivables are characterized by a relatively lower and, in some circumstances, positive allowance for expected credit losses. Upon initial recognition, POCI assets are recognized at fair value and the fair value adjustment, which primarily reflects credit risk, is included in the gross carrying amount of the receivable. As a consequence, the net carrying amount, in the event of a change in the estimate of expected credit losses, may be higher than the gross carrying amount, and the difference representing the allowance for expected credit losses may be positive. Structure of derivatives in terms of credit risk: PLN ’000 30.06.2025 31.12.2024 Transactions with institutional customers Transactions with individual customers Transactions with banks Transactions with institutional customers Transactions with individual customers Transactions with banks Derivatives by risk rating Risk rating 1-4- 1,316,888 83 1,042,677 1,523,080 - 1,085,301 Risk rating+5-6- 18,413 - 21 14,579 - 900 Total 1,335,301 83 1,042,698 1,537,659 - 1,086,201 The breakdown of the exposures in the portfolio of debt securities held for trading in the portfolio of debt securities measured at fair value through other comprehensive income according to Fitch agency ratings is presented below. PLN ‘000 30.06.2025 31.12.2024 Debt securities held-for-trading Debt securities at fair value though other comprehensive income Debt securities held-for-trading Debt securities at fair value though other comprehensive income Issuer rating by Fitch agency A (including: from A- to AAA) 3,459,043 31,879,823 1,801,904 30,088,771 Total 3,459,043 31,879,823 1,801,904 30,088,771
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 31 Structure of the granted contingent liabilities from the credit risk point of view as at June 30, 2025: Total PLN ‘000 Liabilities due to institutional customers Liabilities due to individual customers Liabilities due to banks w tym z tytułu działalności zaniechanej Contingent liabilities granted (Stage 1) 12,365,091 3,431,576 1,322,308 3,447,726 by risk rating Risk rating 1-4- 9,945,319 - 1,322,308 36,395 Risk rating+5-6- 2,419,742 - - - Risk rating +7 and greater 30 - - - Contingent liabilities granted (Stage 2) 720,609 1,786,254 - 1,786,254 by risk rating Risk rating 1-4- 32,013 - Risk rating+5-6- 664,675 - - - Risk rating +7 and greater 23,921 - - - Contingent liabilities granted (Stage 3) 692 5,568 - 5,568 by risk rating - Risk rating +7 and greater 692 - - - Contingent liabilities granted 27,376 - - - by risk rating Risk rating +7 and greater 27,376 - - - Total 13,113,768 5,223,398 1,322,308 5,239,548 Structure of the granted contingent liabilities from the credit risk point of view as at December 31, 2024: PLN ‘000 Liabilities due to institutional customers Liabilities due to individual customers Liabilities due to banks Contingent liabilities granted (Stage 1) 13,196,783 3,538,682 1,339,807 by risk rating Risk rating 1-4- 10,739,288 - 1,339,807 Risk rating+5-6- 2,457,495 - - Contingent liabilities granted (Stage 2) 921,188 1,693,746 - by risk rating Risk rating 1-4- 170,881 - - Risk rating+5-6- 724,178 - - Risk rating +7and greater 26,129 - - Contingent liabilities granted (Stage 3) 1,820 6,111 - by risk rating Risk rating +7 and greater 1,820 6,111 - Contingent liabilities granted 26,513 - - by risk rating Risk rating +7 and greater 26,513 - - Total 14,146,304 5,238,539 1,339,807 In addition to general principles of credit risk mitigation, the Group has defined specific rules for institutional and retai l for acceptance, assessment, establishment and monitoring of various types of collaterals, including warranties, guarantees and similar instruments of support (hereinafter called jointly: collaterals). These principles are used to minimize residual risk associated with taking collaterals.
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 32 Forborne exposures are identified in the Group within the credit risk management. The Group takes into account "forborne" exposures according to the reporting requirements under the EBA/ITS/2013/03 Technical Standards and document 2012/852 issued by the ES MA. For non -performing and restructured exposures, the Group applies the EBA guidelines EBA/GL/2018/06 As "forborne" the Group considers exposures that are in the process of troubled debt restructuring. This is a situation when the debtor is experiencing financial difficulties and BHW grants preferential financing conditions to the debtor that it would not otherwise consi der (i.e., off -market terms). Preferential financing conditions are considered situations in which for example the yield of the modified facility is lower than the contractual yield prior to the restructuring and/or the yield on the modified loan is below a market yield for the relevant tenor and credit risk. The extent to which financing conditions are changed is set individually for each debtor affected by the situation. In particular, such activities include: • modification of the conditions of the existing commitment, including changes to the repayment schedule (e.g. extension of the loan period), change in the interest rate on the receivable or repayment method, or reduction of the repayment amount (principal amount or accrued interest), • providing new, restructured commitment to partially or fully repay the existing exposure, • repossession of assets. The process of assigning "forborne" status for exposures is closely related to the credit risk management process, including the impairment recognition process for exposures. The "forborne" status may refer to both the exposures from the impaired portfolio and the portfolio without impairment. The Group treats exposures as “forborne” without impairment when restructuring activities were carried out, while the change in financing conditions did not imply a deterioration of future payment streams. In such cases, the change in the status of the "forborne" exposure is not evidence of impairment. Exposures with modified conditions subject to forbearance rules (forborne exposures) are subject to regulatory and internal reporting. In the area of Retail Banking Segment, the Group assumes that the exposures remain in the "forborne" status until they are fully repaid. Exposure values in the "forborne" status: PLN ‘000 As of 30.06.2025 31.12.2024 Receivables without recognized impairment 24,671,850 21,271,590 Receivables without recognized impairment (Stage 1), including 21,783,022 18,569,574 non-financial sector entities 14,975,920 13,459,215 Institutional customers 10,274,431 8,878,518 Individual customers 4,701,489 4,580,697 Receivables without recognized impairment (Stage 2), including: 2,888,828 2,702,016 non-financial sector entities 2,888,674 2,702,001 Institutional customers, including: 1,513,889 1,282,206 „forborne” 497,564 848,416 Individual customers, including: 1,374,785 1,419,795 „forborne” 127 132 Receivables with recognized impairment (Stage 3), including: 571,357 622,047 non-financial sector entities 571,357 622,047 Institutional customers, including: 285,199 280,708 „forborne” 129,010 (347,897) Individual customers, including: 286,158 341,339 „forborne” 16,983 20,848 Purchased or originated credit-impaired receivables 17,212 19,320 non-financial sector entities 17,212 19,320 Institutional customers, including: 258 875 „forborne” 258 875 Individual customers, including: 16,954 18,445 „forborne” 11,542 12,549 Total gross amount, including: 25,260,419 21,912,957 non-financial sector entities 18,453,163 16,802,583 Institutional customers, including: 12,073,777 10,442,307
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 33 PLN ‘000 As of 30.06.2025 31.12.2024 „forborne” 626,832 501,394 Individual customers, including: 6,379,386 6,360,276 „forborne” 28,652 33,529 Provision for expected credit losses (498,674) (545,711) On „forborne” receivables (64,241) (63,755) Total net amounts due from customers, including: 24,761,745 21,367,246 „forborne” receivables 591,243 471,168 The table above contains ‘forborne’ receivables in disposal groups held for sale with the gross amount of PLN 6,406,081 thousand and provisions with the amount of PLN (275,703) thousand. The “forborne” exposures identification process has not undergone significant changes relative to the rules described in the Group’s consolidated financial statements for the year 2024. Liquidity Risk Liquidity risk is defined as the risk of Group’s lack of ability to meet its financial commitments to customers or counterparties when due. The objective of liquidity risk management is to ensure that the Group can meet all commitments to customers when due and to secure liquidity necessary to clear all money market transactions when due. Regarding significant changes to liquidity risk management processes, procedures, systems, and policies in the first half of 2025, the Group has initiated a review of the methodology for calculating the LCR and NSFR liquidity ratios. Due to the ongoing analysis of the calculation of operational deposits, operational deposits have been reclassified as non-operational. From March 2025 until the work is completed, the Group has decided to adopt a conservative approach to calculating the LCR and NSFR ratios, classifying all deposits as non-operational. In accordance with Regulation No. 575/2013, the Group monitors and maintains appropriate levels of the Liquidity Coverage Ratio (LCR) and the Non-Stable Funding Ratio (NSFR). As of June 30, 2025, the LCR was 1 62%, down 63 percentage points from December 31, 2024. The Non-Stable Funding Ratio reached 205%, down 4 percentage points from December 31, 2024. The decrease in LCR is primarily due to the reclassification of operational deposits to non-operational deposits in connection with the ongoing review of the methodology for determining operational deposits – this resulted in a 34-percentage point reduction in LCR. The additional reduction in LCR is the result of the completion of other work related to the review of the methodology for calculating liquidity ratios, which resulted in a 13-percentage point reduction in LCR. Another factor was the inclusion of dividend payments in the expected outflows, which led to a 11-percentage point reduction in the measure. The supervisory liquidity measures LCR and NSFR were as follows: 30.06.2025 31.12.2024 Change LCR 162% 225% (63) p.p. NSFR 205% 209% (4) p.p. The table above presents assets and liabilities in disposal groups held for sale. The exclusion of retail operations will impact liquidity ratios; after the exclusion of retail operations, the Bank will continue to maintain a safe buffer above regulatory minimums. Market risk Market risk is the risk of negative impact on the Group’s earnings and equity resulting from changes in market interest rates, foreign exchange rates, equity and commodity prices, as well all volatilities of these rates and prices. The objective of market risk management is to ensure that the extent of risk accepted within the Group corresponds to the level acceptable to the shareholders and banking supervision authorities and to ensure that all exposures to market risk are properly reflected in the calculated risk measures, communicated to relevant persons and bodies responsible for the management of the Group. In the first half of 2025 the Group has not made any changes in market risk management processes, procedures, systems and policies. In market risk management there are two types of portfolios: trading and bank portfolios. The following risk measures are applied to non-trading portfolios: • Interest rate gap analysis; • Interest Rate Exposure (IRE);
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 34 • Net interest income measures, economic value measures • Stress testing. Interest rate gap analysis uses the schedule of maturities or revaluations of balance -sheet positions, and of derivative instruments used in hedge accounting or qualified as economic hedge for the purpose of establishing the differences between positions whose maturity or interest rate revaluation fall within a given time frame. The general rule in the interest rate gap analysis is that of classifying transactions to respective bank portfolio position revaluation bands by the contracted or assumed transaction interest rate revaluation dates. It is assumed that: • transactions with a fixed interest rate (such as term deposits, interbank deposits, portfolio of debt securities at fair value through other comprehensive income with a fixed interest rate, granted loans both repaid in full at maturity and repaid in installments) are classified into appropriate revaluation bands in accordance with their maturity dates; • transactions with a floating interest rate, updated on the regular basis (primarily, loans granted with interest set based on a specific rate such as, e.g., WIBOR 1M) are classified into appropriate revaluation bands in accordance with the nearest interest rate revaluation date; • transactions with an administrated floating interest rate (i.e., any changes in the interest rate and its revaluation date are reserved to sole decision of the Bank) or undefined maturity or interest rate revaluation date are classified into appropriate revaluation bands in accordance with historically observed or expert assessed shifts in the moment and scale of change in the interest rate of given positions in relation to change in the market interest rates (model of minimizing product margin variability) . This group of transactions / balance -sheet positions includes among others: current accounts, card loans, overdraft facilities. Additionally, early loan repayments are taken into account based on analysis of actual repayments made by customers before the due date and product interest rate revaluation profiles are set on that basis. This pertains particularly to installment loans; • transactions insensitive to changes of interest rates, including cash, fixed assets, equity, other assets/liabilities, are classified into the longest revaluation band; • transactions executed directly by the Financial Markets Sub Sector for the purpose of management of interest rate risk and liquidity risk (Financial Markets Sub-Sector’s own portfolio) are always classified into appropriate revaluation bands in accordance with the contracted dates. The Interest Rate Exposure (IRE) method is used for estimation of potential impact of a specific parallel shift in the intere st rate curves on interest income from the bank portfolio before tax, which can be earned in a specific period of time. This is a prospective indicator, equivalent to Factor Sensitivity of trading portfolios. An assumption is made that under standard conditions interest rate shifts are identical for every currency and stand at 100 basis points upwards. IRE measures are calculated sepa rately for positions in each currency in the time horizon of 10 years; however, for the purpose of current monitoring and limiting of interest rate risk positions in bank portfolios, the Bank normally applies IRE measures with one - year and five-year time horizons. Furthermore, the Group estimate Interest Rate R isk by t he Income Method (cashflow net interest revenue NIR/IRE). This estimation, similarly , to IRE calculated using the gap analysis, determines the potential pre -tax impact on net interest income for items included in the banking book due to specific changes in interest rates in a specific reporting period – generally 12 months. NIR is the difference between accrued interest income ea rned on assets (e.g. loans to customers) and interest expense paid on liabilities (e.g. customer deposits). NIR/IRE is the delta between the base NIR and the NIR in the interest rate shock scenario, i.e. +/ - 100 basis points, for all currencies combined. Similar assumptions are made regarding repricing dates as described above for the gap analysis, with the difference that non-interest flow generating items and the Bank's capital (except for the AFS portfolio) are eliminated from the calculation. Group’s IRE measures as at 30 June 2025 and 31 December 2024 are presented below. The list is shown in the main currencies, i.e. PLN, USD and EUR which jointly account to over 90% of Group’s balance sheet. IRE – gap method PLN ’000 30.06.2025 31.12.2024 IRE 12M IRE 5Y IRE 12M IRE 5Y PLN (49,785) (219,297) (44,959) (152,338) USD (14,078) (31,751) (5,956) (32,698) EUR 5,696 35,654 3,445 48,704 IRE – cashflow method PLN ’000 30.06.2025 31.12.2024 IRE 12M IRE 12M +100 bp -100 bp +100 bp -100 bp Total for All currencies 103,861 (102,957) 177,097 (177,583) The tables include assets and liabilities in disposal groups held for sale.
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 35 The exclusion of retail operations will contribute to reducing the sensitivity of net interest income. Stress tests measure the potential impact of material changes in the level or directionality of interest rate curves on open interest positions in the bank portfolio. The Group runs stress tests of predefined interest rate movement scenarios, which represent combinations of market factor movements defined as large moves and stress moves occurring both in Poland and abroad. Values of the assumed market factor movements a re revised at least once a year and adjusted as appropriate to changes in the market conditions of the Group’s operation. Activities relating to securities at fair value through other comprehensive income are the responsibility of the Assets and Liabilities Management Department within the Financial Markets and Corporate Banking Sector. Three basic goals of activities in the portfolio of securities at fair value through other comprehensive income have been defined as follows: • management of the liquidity; • hedging against the risk transferred to the Financial Markets and Corporate Banking Sector from other organizational units of the Bank or the Group’s entities; • opening of own interest rate risk positions on the Group’s books by the Financial Markets and Corporate Banking Sector. In order to avoid excessive fluctuations in the Bank’s capital funds, caused by the revaluation of assets measured at fair value through other comprehensive income, the Bank sets the maximum limits of DV01 (Dollar Value of 1 basis point), that specify potential change of risk position’s value for specific curve of interest rate in its specific node (into which are brought al l of cash flows in set time interval), caused by movement of market’s interest rate up by one basic point for this kind of portfolio. The limits also concern the open positions in derivatives (i.e. interest rate swap transactions), carried out to hedge the fai r value of the portfolio. The table below presents the risk measured with DV01 for the portfolio of securities at fair value through other comprehensive income, including the economic collateral contained in the hedge program (Fair Value Hedge Accounting Program), broken down by currency: PLN ’000 30.06.2025 Total in the period 01.01.2025 – 30.06.2025 Total Securities IRS Average Maximum Minimum PLN (4,834) (7,696) 2,861 (4,329) (3,538) (5,308) USD (414) (414) - (344) (312) (426) EUR (279) (279) - (128) (41) (280) PLN ’000 30.06.2024 Total in the period 01.01.2024 – 30.06.2024 Total Securities IRS Average Maximum Minimum PLN (1,902) (5,378) 3,376 (1,767) (1,140) (2,980) USD - - - (6) (0) (11) EUR (224) (224) - (284) (224) (365) Both base risk and option risk of Bank’s portfolio were considered as immaterial. The following methods are applicable in measurement of the risk of the trading portfolios: • Factor Sensitivity, • Value at Risk (VaR), • Stress testing. Factor Sensitivity measures the change in the value of positions in an underlying instrument in the case of a specific change in a market risk factor (e.g., change of the interest rate by 1 basis point at a given point on the interest rate curve, chan ge of the currency exchange rate or share price by 1%). In the case of interest rates, the applicable sensitivity measure is DV01 (Dollar Value of 1 basis point), which determines t he potential change in the value of risk positions on a given interest rate curve at a specific nodal point (which brings together all the cash flows in a given time horizon), caused by a shift in the market interest rate by 1 basis point upwards, is established for this kind of portfolio In the case of exchange rate (FX) risk, the Factor Sensitivity value is equal to the value of the FX position in a given currency. In the case of positions held in equities, the Factor Sensitivity value is equal to the net value of the positions held in th e respective instruments (shares, indices, participation units). Value at Risk (VaR) is the integrated measure of the market risk of trading portfolios which combines the impact of positions in respective risk factors and accounts for the effect of correlation between the fluctuations of different factors. VaR is applied for the purpose of measuring the potential decrease in the value of a position or portfolio under normal market
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 36 conditions, at a specific confidence level and within a specific period. In the case of positions opened in the Group’s tradi ng portfolio, VaR is calculated at a 99% confidence level and a one-day holding period. DV01 as well as VaR for the trading portfolio are calculated net of the economic hedge of the portfolio of securities at fair value through other comprehensive income, i.e., net of derivative instruments intended to hedge the fair value of the portfolio. The exposures to the risk of such transactions are mitigated through the application of relevant risk measurement methods and by the bank portfolio risk limits. Each day, the Group runs stress tests on the assumption that the risk factors change by more than expected in the Value at Risk scenario, ignoring historical correlations of these factors. The Group keeps records of exposures of the bank portfolios to market risk in over twenty currencies both for currency positions and exposures to interest rates risk. These exposures are significant only for a few currencies. For a large group of currencies, the exposures are the consequence of a gap between transactions executed on the customer’s orders and closing transactions with other wholesale market counterparties. Significant exposures to market risk are opened for PLN, currencies of well-developed markets (predominantly USD and EUR with a lesser focus on GBP, CHF and JPY) and Central European currencies. The values of significant exposures of the bank portfolios to the interest rates risk in terms of DV01 in the first half of 2025 are listed in the table below: PLN ‘000 30.06.2025 31.12.2024 In the period 01.01.2025 - 30.06.2025 In the period 01.01.2024 - 30.06.2024 Average Maximum Minimum Average Maximum Minimum PLN 114 653 305 657 (58) (318) 186 (843) EUR 118 (259) (20) 263 (483) (35) 237 (263) USD (2) 39 0.3 47 (49) (44) 10 (125) The currency structure of the positions in the first half of 2025 has not changed in comparison with the year 202 4, as positions in domestic currency USD and EUR were still the majority. The average exposure to PLN, EUR, and USD interest rates risk has remained at the similar level. The average risk level for instruments denominated in PLN amounted to PLN 305 thousand and in EUR it was PLN (20) thousand. The largest exposures in absolute value were taken in PLN and EUR and were respectively PLN 657 thousand and PLN (483) thousand. The table below shows the level of risk measured using VaR (excluding resulting from securities at fair value through other comprehensive income portfolio’s economic), divided into currency risk and interest rate risk positions in the first half of 2025: PLN ’000 30.06.2025 31.12.2024 In the period 01.01.2025 – 30.06.2025 In the period 1.01.2024 – 30.06.2024 Average Maximum Minimum Average Maximum Minimum FX risk 210 237 660 2,586 144 874 6,008 136 Interest rate risk 15,612 17,179 18,208 26,606 8,476 10,848 20,395 6,121 Spread risk 3,156 7,493 5,314 7,730 2,871 20,999 26,609 9,456 Overall risk 16,295 20,859 20,334 27,753 10,210 21,764 28,315 10,779 The main risk factor is the direct interest rate risk. The overall average price risk (currency, interest rate, spread) of trade portfolios in the first half of 2025 increased by 1 0% comparing to the average price risk in the I half of 202 4 and reached the level of PLN 16.3 million, mainly because of the spread risk and interest rate risk exposure. Considering maximum risk levels, in case spread risk and price risk of the currency portfolio they also decreased in comparison with the previous year. Maximum price risk expressed as Total VaR (Overall risk) amounted to PLN 27.8 million, while in the I half 2024 it settled at PLN 28.3 million. Equity instruments risk The Group is active in the field of trading in equity instruments through the Brokerage Department of Bank Handlowy (DMBH). In accordance with its core scope of activity, DMBH is entitled to take the price risk of the trading book of shares, rights to shares listed or to be traded on the Warsaw Stock Exchange (WSE) or BondSpot, Futures contracts on the WIG20 index and Indexed Equity Units, as well as shares on foreign exchanges of these companies that are listed simultaneously on the WSE. The price risk of a portfolio of DMBH instruments is limited by volume limits for individual types of financial instruments and concentration warning threshol ds for individual issuers. DMBH is also subject to warning thresholds of potential loss for stress scenarios and cumulative realised loss on the trading book. Among the equity instruments measured at fair value through profit and loss which are not subject to the Group’s active trading are, i.a., Visa Inc. shares, the valuation method of which is presented in the note no. 26. Currency exposure Currency exposure of Group’s assets and liabilities is presented in main currencies in the following table: 30 June 2025
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 37 PLN ‘000 Balance-sheet transactions Contingent derivative transactions Net position Assets Liabilities Assets Liabilities EUR 8,253,049 11,201,646 42,995,706 40,034,361 12,748 USD 6,909,084 7,079,567 34,751,998 34,562,529 18,986 GBP 66,907 591,898 671,164 144,857 1,316 CHF 35,115 331,725 512,788 215,302 876 Other currencies 22,897 171,729 1,595,183 1,433,961 12,390 15,287,052 19,376,565 80,526,839 76,391,010 46,316 The table above presents assets and liabilities in disposal groups held for sale. 31 December 2024 PLN ’000 Balance-sheet transactions Contingent derivative transactions Net position Assets Liabilities Assets Liabilities EUR 9,200,104 10,540,123 42,021,904 40,675,770 6,115 USD 8,084,739 7,253,740 20,633,407 21,489,359 (24,953) GBP 23,007 466,786 495,617 52,491 (653 CHF 34,475 327,864 298,726 7,041 (1,704) Other currencies 187,334 186,607 2,183,931 2,173,278 11,380 17,529,659 18,775,120 65,633,585 64,397,939 (9,815) Operational risk Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition of operational risk includes legal risk - which is the risk of loss (including litigation costs, settlements and penalties) resulting from instable legal environment as well as wrongly defined contractual obligations in any aspect of the bank’s business - but excludes strategic and reputation risks. Bank also recognises the impact of Operational Risk on the reputation risk associated with Bank’s business activities. Operational risk definition includes conduct risk and information, communication and technology risk (ICT risk). The operational risk framework enables effective management of operational risks across the Bank, by amongst other things bringing or maintaining operational risk exposures within operational risk appetite and adhering to regulatory requirements. In the area of operational risk, the strategic objective of operational risk management is to ensure a permanent and effective approach to the identification, measurement/assessment, mitigation, control, monitoring and reporting of the risk, as well as the effective reduction of the level of exposure to operational risk and, as a consequence, to reduce the number and scale of operational risk events (policy of low tolerance to operational losses).. In the first half of 202 5 the Bank has not introduced significant changes to processes, procedures, systems and policies associated with operational risk management. Capital adequacy Capital ratios have been calculated in accordance with the principles set out in Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 as amended ("CRR"). The table below presents financial data for the calculation of the Group's total capital ratio. PLN ‘000 30.06.2025 31.12.2024 I Own funds 7,618,392 7,543,213 Common capital Tier I 7,618,392 7,543,213 II Total capital requirement of which: 2,562,547 2,687,736 Credit risk capital requirements 2,046,449 1,751,377 Counterparty capital requirements 88,370 101,817 Credit valuation adjustment capital requirements 14,330 8,688 Sum of capital requirements for market risk 73,787 113,887 Capital requirement for operational risk 339,611 711,967 Common Equity Tier 1 Capital ratio 23.8% 22.5%
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 38 PLN ‘000 30.06.2025 31.12.2024 Total Capital ratio 23.8% 22.5% Own funds and total capital ratio as at 31 December 2025 were recalculated retrospectively, taking into account the profit for 2024 after its approval by the General Meeting of Shareholders. On December 16, 2024, the Polish Financial Supervision Authority announced that in the supervisory assessment process, the Bank's sensitivity to the possible materialization of stress scenarios affecting the level of own funds and risk exposure was assessed as low and it did not set an additional capital charge (P2G) for the Bank to absorb potential losses resulting from the occurrence of stress conditions. The Group's capital ratios remain above the minimum requirements under the CRR, the Act on Macroprudential Supervision and the recommendation of the supervisory authority. The Group as a resolution entity that is part of a global systemically important institution outside the EU (Citigroup ) entity that is part of a global systemically important institution in accordance with the definition contained in CRR and according to Art. 92a CRR must satisfy the following requirements for own funds and eligible liabilities: a) a risk-based ratio of 18%, representing the own funds and eligible liabilities of the institution expressed as a percentage of the total risk exposure amount (TLAC TREA); b) a non -risk-based ratio of 6 .75%, representing the own funds and eligible liabilities of the institution expressed as a percentage of the total exposure measure (TLAC TEM). In accordance with the CRR regulations, the amount of the required TLAC TREA plus the combined buffer requirement for the Group as of June 30, 2025, is 20.83%, while TLAC TREA of the Group on a consolidated level was 27,09%. The TLAC TEM ratio as of June 30, 2025, is 9.21%. Eligible liabilities counted towards meeting the TLAC requirement include a subordinate loan granted by Citibank Europe PLC based in Dublin pursuant to an agreement entered on 6 June 2024. The value of the loan drawn is presented in Note 22 in the line Loans and advances received. As of 1 January 2025, changes to regulations affecting the level of the Group's capital requirements came into force, resulting from Regulation (EU) 2024/1623 of the European Parliament and of the Council of 31 May 2024 amending Regulation (EU) 575/2013 with regard to requirements for credit risk, credit valuation adjustment risk, operational risk, market risk and the output floor (CRR3). The values as of the end June 2025 include changes to regulations applicable from 1 January 2025. The influence of the new regulations led to credit risk’s requirement increase while decreasing the operational risk requirements. According to the CRR regulations in force on the date of publication of this document, changes in capital requirements for market risk estimating methods come into force on 1 January 2026. However, on 12 June 2025, the European Commission adopted a delegated act deferring the implementation of these provisions for an additional year, i.e. until 1 January 2027. This act will apply from the date of publication in the Official Journal of the EU. 7. Net interest income PLN ‘000 II quarter I half of the year II quarter I half of the year 01.04. - 30.06. 2025 01.01. - 30.06. 2025 01.04. - 30.06. 2024 01.04. - 30.06. 202 Interest income from: 885,730 1,758,254 864,027 1,724,846 Financial assets measured at amortized cost 423,307 813,720 375,600 752,786 Balances with the Central Bank and current accounts in other banks 33,882 90,312 41,554 82,144 Term deposits in banks 105,980 194,501 113,200 226,949 Amounts due from customers, in respect of: 283,445 528,907 220,846 443,693 financial sector entities 96,633 188,789 70,014 131,443 non-financial sector entities, including: 186,812 340,118 150,832 312,250 Financial assets measured at fair value through other comprehensive income 462,423 944,534 488,427 972,060 Debt investment financial assets measured at fair value through other comprehensive income 462,423 944,534 488,427 972,060 Similar income from: 98,471 150,569 73,127 143,225 Debt securities held-for-trading 46,720 67,093 20,973 36,728 Liabilities with negative interest rate 21 35 1 3 Derivatives in hedge accounting 51,730 83,441 52,153 106,494 Correction due to excess liquidity from discontinued operations (165,252) (328,563) (168,577) (337,660)
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 39 PLN ‘000 II quarter I half of the year II quarter I half of the year 01.04. - 30.06. 2025 01.01. - 30.06. 2025 01.04. - 30.06. 2024 01.04. - 30.06. 202 818,949 1,580,260 768,577 1,530,411 Interest expense and similar charges for Financial liabilities measured at amortized cost (247,050) (443,017) (173,143) (346,481) Balances with the Central Bank (1) (2) (1) (2) Amounts due to banks (14,524) (34,786) (22,258) (56,915) Amounts due to customers, in respect of: (222,468) (387,000) (149,848) (287,491), amounts due to financial sector entities (41,459) (79,629) (37,104) (71,569) amounts due to non -financial sector entitie s (181,009) (307,371) (112,744) (215,922) Credits and deposits (9,169) (19,471) - - Leasing liabilities (888) (1,758) (1,036) (2,073) Derivatives in hedge accounting (41,770) (59,628) (36,979) (81,907) (288,820) (502,645) (210,122) (428,388) Net interest income 530,129 1,077,615 558,455 1,102,023 The table above does not present discontinued operations income in the amount of PLN 474,105 thousand for the I half of 2025 and in the amount of PLN 500,596 thousand for the I half of 2024. Information on discontinued operations disclosed in Note 4 „Assets and liabilities classified as held for sale and profit from discontinued operations” In particular, Note 4 explains the methodology for calculating excess liquidity income attributed to discontinued operations, (included in the interest result on discontinued operations amounting to PLN 474,105 thousand for the first half of 2025 and PLN 500,596 thousand for the first half of 2024 ) which reduces the result from continuing operations, as disclosed in the table above in the line “Adjustment for excess liquidity to be transferred as part of the transaction settlement”. 8. Net fee and commission income PLN ‘000 II quarter I half of the year II quarter I half of the year 01.04. - 30.06. 2025 01.01. - 30.06. 2025 01.04. - 30.06. 2024 01.01. - 30.06. 2024 Fee and commission income Credit activity (other than included in the calculation of the effective interest rate) 10,007 21,104 10,909 21,622 Maintaining bank accounts 18,743 38,094 20,417 43,100 Payment and credit cards 3,208 6,311 3,389 6,477 Payment services 27,206 54,086 29,027 57,093 Custody services 41,828 75,866 33,686 63,641 Brokerage activity 9,588 26,467 8,924 14,620 Clients’ cash on account management services 5,294 10,597 5,432 13,002 Financial liabilities granted 10,671 21,588 8,442 16,646 Other 820 1,869 1,301 2,622 127,365 255,982 121,527 238,823 Fee and commission expense Payment and credit cards (347) (684) (334) (659) Brokerage activity (3,508) (6,758) (3,426) (6,741) Fees paid to the National Depository for Securities (KDPW) (10,094) (18,740) (9,065) (17,372) Brokerage fees (1,440) (2,290) (877) (2,079) Other (5,464) (10,364) (4,073) (7,987) (20,853) (38,836) (17,775) (34,838) Net fee and commission expense 106,512 217,146 103,752 203,985 The table above do es not present discontinued operations income in the amount of PLN 80,447 thousand for the I half of 2025 and in the amount of PLN 88,137 thousand for the I half of 2024. Information on discontinued operations disclosed in Note 4 „Assets and liabilities classified as held for sale and profit from discontinued operations ” „Assets and liabilities classified as held for sale and profit from discontinued operations”
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 40 9. Net income on trading financial instruments and revaluation PLN ‘000 II quarter I half of the year II quarter I half of the year 01.04. - 30.06. 2025 01.01. - 30.06. 2025 01.04. - 30.06. 2024 01.01. - 30.06. 2024 Net income on financial instruments valued at fair value through profit or loss Debt instruments 16,409 23,261 (6,846) (13,164) Equity instruments 938 3,579 (649) 2,633 Derivative instruments, including: (38,254) (82,742) (3,704) 214 Interest rate derivatives (38,009) (80,882) (5,413) 253 Equity (245) (1,861) 1,676 (12) Commodities - - 33 (27) (20,907) (55,902) (11,199) (10,317) Net income on FX operations Operations on FX derivative instruments 259,423 209,489 278,794 395,707 FX gains and losses (revaluation) (146,023) 21,172 (132,034) (122,452) 113,400 230,661 146,760 273,255 Net income on trading financial instruments and revaluation 92,493 174,759 135,561 262,938 The table above do es not present discontinued operations income in the amount of PLN 16,735 thousand for the I half od 2025 and in the amount of 16,483 thousand for the I half of 2024. Information on discontinued operations disclosed in Note 4 „Assets and liabilities classified as held for sale and profit from discontinued operations” Net income on trading financial instruments and revaluation for the first half of 2025 includes net change in the adjustment of the valuation of derivatives reflecting counterparty credit risk and in the adjustment of the valuation of derivatives reflecting own credit risk in the amount of PLN (471) thousand (for the first half of 2024: PLN (1,617) thousand). Net income on debt instruments includes the net result on trading in : government securities, corporate debt securities, EBI securities (European Investment Bank) and money market instruments held-for-trading. Net income on equity instruments includes the net result of shares in other entities. Net income on derivative instruments comprises net income on transactions regarding interest rate swaps, options, futures and other derivatives. Net profit on foreign exchange includes profit and losses on valuation of assets and liabilities denominated in foreign currency and foreign currency derivatives , such as: forward, CIRS and option contracts . It additionally contains a margin realized on spot and forward currency transactions. 10. Net other operating income and expense PLN ‘000 II quarter I half of the year II quarter I half of the year 01.04. - 30.06. 2025 01.01. - 30.06. 2025 01.04. - 30.06. 2024 01.01. - 30.06. 2024 Other operating income Income from provision of services for related parties outside the Group 3,379 4,643 2,400 4,408 Income from office rental 151 518 1,106 2,322 Other 3,171 5,202 2,045 2,462 6,701 10,363 5,551 9,192 Other operating expenses Amicable procedure and vindication expenses - - - (1) Net provision for litigation* (13,592) (13,769) (17,418) (18,890) Other** (2,648) (5,587) (2,026) (3,691) (16,240) (19,356) (19,444) (22,582) Net other operating income (9,539) (8,993) (13,893) (13,390) *The item includes the (net) costs of provisions for litigation proceedings including those related to TSUE judgements **The item “Other” includes i.a. operating losses and donation costs
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 41 The table above does not present discontinued operations income in the amount of PLN 8,913 thousand for the I half of 2024 and in the amount of PLN (5,250) thousand for the I half of 2024. Information on discontinued operations disclosed in Note 4 ”Assets and liabilities classified as held for sale and profit from discontinued operations” 11. General administrative expenses PLN ‘000 II quarter I half of the year II quarter I half of the year 01.04. - 30.06. 2025 01.01. - 30.06. 2025 01.04. - 30.06. 2024 01.01. - 30.06. 2024 Staff expenses Remuneration costs, including: (84,809) (170,704) (78,501) (158,180) Costs of retirement benefits (6,488) (13,201) (5,919) (12,174) Bonuses and rewards (7,473) (21,522) (13,831) (28,317) Social insurance costs (13,511) (30,096) (11,987) (27,260) (105,793) (222,322) (104,319) (213,757) Administrative expenses - - - - Communication costs and hardware purchase costs (19,820) (44,076) (23,488) (46,907) Costs of external services, including advisory, audit, consulting services (12,204) (23,193) (10,136) (20,754) Building maintenance and rent costs (10,428) (23,256) (11,670) (29,948) Advertising and marketing costs (1,078) (2,317) (921) (1,788) Costs of cash management services, costs of clearing services and other transaction costs (8,972) (16,018) (8,783) (17,224) Costs of external services related to distribution of banking products (1,352) (2,518) (1,226) (2,259) Postal services, office supplies and printmaking costs (225) (506) (195) (456) Banking and capital supervision costs - (7,485) - - Costs paid to Bank Guarantee Fund (185) (80,864) - (76,872) Other expenses 1,122 (4,243) (459) (3,968) (53,142) (204,476) (56,878) (207,460) General administrative expenses, total (158,935) (426,798) (161,197) (421,217) The table above does not present discontinued operations income in the amount of PLN (415,093) thousand for the I half of 2025 and in the amount of PLN (345,797) thousand for the II half of 2024. Information on discontinued operations disclosed in Note 4 ”Assets and liabilities classified as held for sale and profit from discontinued operations”. Staff expenses include costs of the following benefits paid and payable to current and former members of the Bank’s Management Board: PLN ‘000 01.01 – 30.06.2025 01.01 – 30.06.2024 Short-term employee benefits (services) 8,817 8,866 Long-term employee benefits (services) 61 84 Capital rewards, including: 5,906 5,706 settled in cash 896 32 settled in capital instruments 5,010 5,674 Total 14,784 14,656 12. Provision for expected credit losses on financial assets and provisions for contingent commitments
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 42 II quarter I half of the year II quarter I half of the year PLN ‘000 01.04. - 30.06. 2025 01.01. - 30.06. 2025 01.04. - 30.06. 2024 01.01. - 30.06. 2024 Provision for expected credit losses on amounts due from banks Provision creation (877) (1,325) (398) (1,071) Provision reversal 664 1,466 144 1,657 (213) 141 (254) 586 Provision for expected credit losses on amounts due from customers Provision creation and reversals (10,898) (12,588) 888 7 783 Provision creation (47,225) (96,374) (53,840) (109,540) Provision reversal 39,491 89,993 57,716 123,864 Other (3,164) (6,207) (2,988) (6,541) Recoveries from debt sold 10,125 10,134 10,266 10,276 (773) (2,454) 11,154 18,059 Provision for expected credit losses on debt investment financial assets measured at fair value through other comprehensive income Provision creation (1,367) (3,083) (1,017) (4,472) Provision reversal 1,258 2,276 383 958 (109) (807) (634) (3,514) Provision for expected credit losses on financial assets (1,095) (3,120) 10,266 15,131 Created provisions for granted financial and guarantee commitments (4,241) (9,832) (8,625) (13,355) Release of provisions for granted financial and guarantee commitments 5,588 15,639 6,994 17,297 Provision for expected credit losses for contingent commitments 1,347 5,807 (1,631) 3,942 Provision for expected credit losses on financial assets and provisions for contingent commitments 252 2,687 8,635 19,073 The table above does not present discontinued operations income in the amount of PLN 11,685 thousand for I half of 2025 and in the amount of PLN 33,281 thousand for I half of 2024. Information on discontinued operations disclosed in Note 4 “ “Assets and liabilities classified as held for sale and profit from discontinued operation”. In the II half of 2025 the Group sold a portfolio of retail non-performing credit exposures with a net carrying amount of PLN 7.5 million, achieving a positive result on sales of PLN 10 million. 13. Income tax Recognized in the income statement PLN ‘000 II quarter I half of the year II quarter I half of the year 01.04. - 30.06. 2025 01.01. - 30.06. 2025 01.04. - 30.06. 2024 01.01. - 30.06. 2024 Current tax Current year CIT (192,529) (296,142) (189,812) (306,050) Adjustments for prior years - (1,449) (2,056) (2,056) (192,529) (297,591) (191,868) (308,106) Deferred tax Net changes on temporary differences 164,555 150,541 57,974 50,828 164,555 150,541 57,974 50,828 Total income tax expense in income statement (27,974) (147,050) (133,894) (257,278)
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 43 Reconciliation of the effective tax rate PLN ‘000 II quarter I half of the year II quarter I half of the year 01.04. - 30.06. 2025 01.01. - 30.06. 2025 01.04. - 30.06. 2024 01.01. - 30.06. 2024 Profit before tax 193 524 747 580 528,017 1,105,428 Income tax at the domestic corporate tax rate of 19% (36 770) (142 041) (100,323) (210,031) Provisions for impairment losses not tax deductible (2 910) (3 605) (1,948) (1,785) Taxable income not recognized in the income statement (55) 5 470 2,126 5,889 Non-taxable income 2 155 2 155 2,001 2,003 Tax on some financial institutions (9 630) (17 286) (9,207) (17,798) Costs paid for Bank Guarantee Fund (455) (19 121) - (17,072) Asset from average tax rate (18 245) (6 606) 14,068 25,668 Other permanent differences, including other expenses not deductible for income, including: 37 954 33 972 - - depreciation and amortization of fixed assets and intangible assets in retail activities* 39 262 41 451 (40,611) (44,152) Income tax expense (27 974) (147 050) (133,894) (257,278) Effective tax rate 14.46% 19.67% 25.36% 23.27% *In the II half the Bank received an individual tax interpretation confirming the possibility of including in tax-deductible costs the depreciation of fixed assets and intangible assets of the Retail Banking Segment covered by a write-off in 2024 resulting from the impairment test of the income-generating unit, which were not recognized in the deferred tax asset as at the date of the write-off. The tables above present income tax attributable to discontinued operations income in the amount of PLN 69,984 thousand for the I half of 2024 and in the amount of PLN (19,622) thousand for the I half of 2024. Information on discontinued operations disclosed in Note 4 ”Assets and liabilities classified as held for sale and profit from discontinued operations” Deferred tax recognized directly in equity Deferred tax recognized directly in equity of continuing operations covering the period of condensed interim consolidated financial statement s for the first half of 2025 is related to financial assets measured at fair value through other comprehensive income and valuation of defined benefit program and amounted to PLN 23,716 thousand (for the first half of 2024: PLN 12,022 thousand). 14. Statement of changes in other comprehensive income Deferred income tax and reclassification recognized in other comprehensive income relate s to the valuation of financial assets measured at fair value through revaluation reserve and the valuation of defined benefit program recognized in the other reserves. PLN ‘000 Gross amount Deferred income tax Net amount Balance as at 1 January 2025 (108,508) 20,617 (87,891) Remeasurement of financial assets measured at fair value through other comprehensive income (net) 270,239 (51,345) 218,894 (Profit) or loss reclassification to income statement after derecognition of financial assets measured at fair value through other comprehensive income (net) (145,415) 27,629 (117,786) Total comprehensive income connected with financial assets measured at fair value through other comprehensive income 16,316 (3,099) 13,217 Balance as at 30 June 2025 16,316 (3,099) 13,217 PLN ‘000 Gross amount Deferred income tax Net amount Balance as at 1 January 2024 139,871 (26,575) 113,296 Remeasurement of financial assets measured at fair value through other comprehensive income (net) 77,690 (14,761) 62,929 (Profit)/Loss reclassification to income statement after derecognition of financial assets measured at fair (14,414) 2,739 (11,675)
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 44 PLN ‘000 Gross amount Deferred income tax Net amount value through other comprehensive income (net Total comprehensive income connected with financial assets measured at fair value through other comprehensive income 203,147 (38,597) 164,550 Balance as at 30 June 2024 203,147 (38,597) 164,550 15. Amounts due from banks PLN ‘000 30.06.2025 31.12.2024 Deposits 131,575 5,258 Loans, placements and advances 233,618 235,635 Receivables due to purchased securities under repurchase agreement 8,017,325 8,217,515 Deposits pledged as collateral for derivative transactions and stock exchange transactions 306,179 324,170 Other receivables 18 5,853 Total gross value 8,688,715 8,788,431 Provision for expected credit losses (498) (651) Total net value 8,688,217 8,787,780 16. Financial assets and liabilities held-for-trading Financial assets held-for-trading PLN ‘000 30.06.2025 31.12.2024 Debt securities held-for-trading Bonds issued by: Banks and other financial entities* 361,092 963,254 Central governments 3,097,951 838,650 3,459,043 1,801,904 Including: Listed on the active market 3,459,043 1,801,904 Equity instruments held-for-trading 71,277 10,555 Including: Listed on the active market 71,277 10,555 Derivatives 2,378,082 2,623,860 Financial assets held-for-trading, total 5,908,402 4,436,319 *As at 30 June 2025 securities (bonds) issued by banks in the amount of PLN 357,941 thousand are covered by the state guarantee (31 December 2024: PLN 956,638 thousand). The table above presents assets in disposal groups held for sale. In the amount of PLN 17,081 thousand (embedded derivatives) as at 30 June 2025. Additional information on discontinued operations disclosed in Note 4 ”Assets and liabilities classified as held for sale and profit from discontinued operations” Financial liabilities held-for-trading PLN ‘000 30.06.2025 31.12.2024 Liabilities related to short sale of securities 380,793 156,708 Derivatives 2,711,472 2,599,197 Financial liabilities held-for-trading, total 3,092,265 2,755,905 As at 30 June 2025 and 31 December 2024 the Group did not hold any financial assets and liabilities designated at fair value through profit or loss initial recognition.
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 45 Derivative financial instruments as at 30 June 2025 The table above presents assets in disposal groups held for sale. In the amount of PLN 17,081 thousand (embedded derivatives) as at 30 June 2025. Additional information on discontinued operations disclosed in Note 4 ”Assets and liabilities classified as held for sale and profit from discontinued operations”. Derivative financial instruments as at 31 December 2024 17. Debt investment financial assets measured at fair value through other comprehensive income PLN ‘000 30.06.2025 31.12.2024 Bonds and notes issued by: Central Banks 1,498,251 999,202 Other banks*, including: 11,986,508 13,889,991 Covered bonds in fair value hedge accounting 1,817,720 3,225,777 Other financial sector entities, including: 1,720,856 1,843,248 Covered bonds in fair value hedge accounting 512,058 505,371 Central governments, including: 16,674,208 13,356,330 Covered bonds in fair value hedge accounting 2,989,325 2,836,707 Debt securities measured at fair value through other comprehensive income, total 31,879,823 30,088,771 Including: Instruments listed on the active market 30,381,572 29,089,569 Instruments unlisted on the active market 1,498,251 999,202 *As at 30 June 2025 securities (bonds) issued by banks in the amount of PLN 11,986,508 thousand are covered by the state guarantee (31 December 2024: PLN 13,889,991 thousand). 18. Amounts due from customers PLN ‘000 30.06.2025 31.12.2024 Amounts due from financial sector entities Loans, placements and advances 2,616,357 2,190,586 Unlisted debt financial assets 1,002,508 1,002,896 Receivables due to purchased securities with a repurchase agreement 1,306,404 303,408 Guarantee funds and deposits pledged as collateral 1,881,987 1,613,484 Total gross value 6,807,256 5,110,374 PLN ‘000 Notional value of derivatives with remaining life of Total Fair value less than 3 months between 3 months and 1 year between 1 year and 5 years more than 5 years Assets Liabilities Interest rate instruments 23,922,860 29,866,279 91,242,287 25,255,950 170,287,376 884,766 1,569,125 Currency instruments 76,630,126 41,891,651 14,035,837 288,061 132,845,675 1,492,293 1,141,299 Securities transactions 1,745,357 9,269 - - 1,754,626 1,023 1,048 Derivative instruments total 102,298,343 71,767,199 105,278,124 25,544,011 304,887,677 2,378,082 2,711,472 PLN ‘000 Notional value of derivatives with remaining life of Total Fair value less than 3 months between 3 months and 1 year between 1 year and 5 years more than 5 years Assets Liabilities Interest rate instruments 32,557,968 42,871,630 82,384,391 29,605,070 187,419,059 608,997 1,299,743 Currency instruments 60,391,684 18,570,602 38,722,067 293,340 117,977,693 1,997,438 1,282,595 Securities transactions 455,977 9,090 - - 465,067 1,328 761 Commodity transactions 21,843 - - - 21,843 16,097 16,098 Derivative instruments, total 93,427,472 61,451,322 121,106,458 29,898,410 305,883,662 2,623,860 2,599,197
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 46 PLN ‘000 30.06.2025 31.12.2024 Provision for expected credit losses (5,256) (2,623) Total net value 6,802,000 5,107,751 Amounts due from non-financial sector entities Loans and advances 15,820,759 13,920,199 Purchased receivables 2,572,799 2,840,285 Realized guarantees 30,479 30,533 Other receivables 29,126 11,566 Total gross value 18,453,163 16,802,583 Provision for expected credit losses (493,418) (543,088) )Total net value 17,959,745 16,259,495 Total net value of receivables from customers 24,761,745 21,367,246 The table above presents assets in disposal groups held for sale in the amount of PLN 6,131,422 thousand Additional information on discontinued activity disclosed in Note 4 ”Assets and liabilities classified as held for sale and profit from discontinued operations” Movement in provision for expected credit losses - amounts due from customers presents as follows: PLN ‘000 Stage 1 Stage 2 Stage 3 Originated credit- impaired assets Total Provision for expected credit losses - amounts due from customers Provision for expected credit losses as at 1 January 2025 (41,995) (79,207) (425,242) 733 (545,711) Transfer to Stage 1 (11,245) 10,688 557 - - Transfer to Stage 2 2,881 (4,422) 1,541 - - Transfer to Stage 3 224 9,499 (9,723) - - Transfer to purchased or originated credit- impaired assets - - 5,176 (5,176) - (Creation)/Releases in the period though the income statement 4,910 (10,904) (6,827) 233 (12,588) Decrease in provisions due to write-offs - - 3,613 - 3,613 Decrease in provisions in connection with the sale of receivables - - 68,344 1,470 69,814 Changes in accrued interest in Stage 3 other than written off and sale of receivables - (14) (18,264) (317) (18,595) Decrease in provisions due to derecognition from the balance sheet as a result of significant change - - - 5,149 5,149 Foreign exchange and other movements 141 307 (832) 28 (356) Provision for expected credit losses as at 30 June 2025 (45,084) (74,053) (381,657) 2,120 (498,674) The table presents the value of write -offs included in disposal groups classified as held for sale in the amount of PLN (275,704) thousand. Additional information on discontinued operations disclosed in Note 4 ”Assets and liabilities classified as held for sale and profit from discontinued operations”. PLN ‘000 Stage 1 Stage 2 Stage 3 Originated credit- impaired assets Total Provision for expected credit losses - amounts due from customers Provision for expected credit losses as at 1 January 2024 (52,475) (99,751) (585,436) 470 (737,192) Transfer to Stage 1 (19,025) 17,839 1,186 - - Transfer to Stage 2 7,181 (10,083) 2,902 - - Transfer to Stage 3 1,088 17,520 (18,608) - -
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 47 PLN ‘000 Stage 1 Stage 2 Stage 3 Originated credit- impaired assets Total Transfer to purchased or originated credit- impaired assets - - 13,295 (13,295) - (Creation)/Releases in the period though the income statement 24,064 (8,339) (14,788) 1,961 2,898 Decrease in provisions due to write-offs - - 115,024 - 115,024 Decrease in provisions in connection with the sale of receivables - - 90,521 2,141 92,662 Changes in accrued interest in Stage 3 other than written off and sale of receivables 10 3 (32,884) (3,400) (36,271) Decrease in impairment losses due to removal from balance sheet as a result of a material change - - - 12,188 12,188 Foreign exchange and other movements (2,838) 3,604 3,546 668 4,980 Provision for expected credit losses as at 31 December 2024 (41,995) (79,207) (425,242) 733 (545,711) 19. Intangible assets Intangible assets in the amount of PLN 874,144 thousand as at 30 June 202 5 (as at 31 December 202 4: PLN 872,875thousand) include goodwill in the amount of PLN 851,206 thousand (as at 31 December 202 4: PLN 851,206 thousand). In Group’s consolidated financial statement, goodwill arises as a result of the merger between Bank Handlowy w Warszawie S.A. and Citibank (Poland) S.A. which happened on 28 February 2001 and from acquisition of organized part of the banking enterprise ABN Amro Bank (Polska) S.A which happened on 1 March 2005. The Group has separated two cash -generating unit (the Retail Banking Segment and the Institutional Banking Segment) and allocated its goodwill there. The goodwill is stared at cost minus any accumulated impairment losses. The goodwill is not amortized but is only subject to impairment testing. Goodwill is tested for impairment at least annually, unless evidence of impairment is identified. Goodwill allocated to the Retail Banking Segment was fully written off in prior periods. The impairment loss related to goodwill is no t subject to reversal. As of the date of these financial statements, the Group did not identify any evidence of impairment with respect to the Institutional Banking Segment. The allocation of goodwill to cash -generating units is presented in the table below. PLN’000 30.06.2025 31.12.2024 Corporate Bank 851,206 851,206 Retail Bank - - 851,206 851,206 There are no intangible assets classified as groups of assets held for sale. 20. Deferred income tax asset PLN ’000 30.06.2025 31.12.2024 Deferred income tax asset 920,836 842,941 Deferred income tax liability (713,845) (762,775) Deferred income tax net asset 206,991 80,166 The table above presents deferred income tax net assets in disposal groups held for sale in the amount of PLN 57,966 thousand. Information on discontinued operations is disclosed in Note 4 ”Assets and liabilities classified as held for sale and profit from discontinued operations”. Deferred income tax asset and liabilities are presented in the statement of financial position on net basis. Deferred tax on the acquisition of an organized part of an enterprise in the amount of PLN 1,710 thousand as at 30 June 2025, will be settled with the liability to the Tax Office until August 2027.
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 48 21. Other assets PLN ‘000 30.06.2024 31.12.2024 Interbank settlements 57,913 35,132 Settlements related to brokerage activity 315,006 114,269 Income to receive 32,160 52,427 Staff loans out of the Social Fund 5,132 11,711 Sundry debtors 48,004 78,434 Prepayments 9,202 8,291 Other assets, total 467,417 300,264 Including financial assets* 426,055 239,546 *Financial assets include all the positions “Other assets”, except the positions “Income to receive” and “Prepayments”. The table above do es not present deferred income tax net assets in disposal groups held for sale in the amount of PLN 125,051 thousand. Information on discontinued operations disclosed in Note 4 “Assets and liabilities classified as held for sale and profit from discontinued operations”. 22. Amounts due to banks PLN ‘000 30.06.2025 31.12.2024 Current accounts 2,820,272 1,871,173 Time deposits 443,852 714,223 Credits and deposits 1,064,407 1,073,387 Liabilities due to sold securities under repurchase agreements - 1,073,387 Other liabilities, including: 200,594 777,034 Hedge deposits 199,179 775,767 Total amounts due to banks 4,529,125 4,435,817 The table above presents liabilities in disposal groups held for sale in the amount of PLN 213 thousand . Information on discontinued operations disclosed in Note 4 ”Assets and liabilities classified as held for sale and profit from discontinued operations”. 23. Amounts due to customers PLN ‘000 30.06.2025 31.12.2024 Deposits from financial sector entities Current accounts 2,587,862 1,748,848 Time deposits 2,396,391 2,249,188 4,984,253 3,998,036 Deposits from non-financial sector entities Current accounts, including: 31,685,592 34,350,246 institutional customers 17,245,342 20,334,301 individual customers 11,649,253 11,385,244 budgetary units 2,790,997 2,630,701 Time deposits, including: 26,022,392 15,088,950 institutional customers 13,110,523 5,793,514 individual customers 8,894,548 8,694,430 budgetary units 4,017,321 601,006 57,707,984 49,439,196 Total deposits 62,692,237 53,437,232
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 49 PLN ‘000 30.06.2025 31.12.2024 Other liabilities Liabilities arising from securities sold under repurchase agreements 666,003 - Other liabilities, including: 377,986 547,800 cash collateral 261,514 446,647 hedging deposits 50,947 53,863 Total other liabilities 1,043,989 547,800 Total amounts due to customers 63,736,226 53,985,032 The table above presents liabilities in disposal groups held for sale in the amount of PLN 22,077,620 thousand. Additional information on discontinued operations disclosed in Note 4 “Assets and liabilities classified as held for sale and profit from discontinued operations” 24. Other liabilities PLN ‘000 30.06.2025 31.12.2024 Staff benefits 16,519 20,835 Interbank settlements 646,802 198,432 Inter-system settlements 4,813 2,543 Settlements related to securities trade - Settlements related to brokerage activity 313,639 90,953 Liabilities due to leasing assets 83,617 121,165 Sundry creditors 152,595 159,403 Accruals, including: 386,245 385,015 Provision for employee payments 76,408 116,001 Provision for employee retirement 78,389 113,117 IT services and bank operations support 82,780 68,619 Consultancy services and business support 10,652 8,591 Other 138,016 78,687 Deferred income 34,694 38,318 Settlements with Tax Office and National Insurance (ZUS) 73,382 122,812 Dividends to be paid 1,342,777 - Other liabilities, total 3,055,083 1,139,476 Including financial liabilities* 2,560,762 593,331 *The dividend payable to shareholders paid on July 14, 2025, was included in operating activities as Other adjustments in the Cash Flow Statement for the first half of 2025. *Financial liabilities include all the positions “Other liabilities”, except the positions “Settlements with Tax Office and Na tional Insurance (ZUS)” and “Deferred income”. The table does not present liabilities in disposal groups held for sale in the amount of PLN 253,223 thousand. Additional information on discontinued operations disclosed in Note 4 “Assets and liabilities classified as held for sale and profit from discontinued operations”. 25. Financial assets and liabilities by maturity date As at 30 June 2025 PLN ‘000 Note Total Up to 1 month 1 to 3 months 3 months to 1 year 1 year to 5 years More than 5 years Cash and cash equivalents 11,185,053 11,185,053 - - - - Amounts due from banks (Gross) 15 8,688,715 1,831,729 969,435 5,655,039 - 232,512 Financial assets held-for-trading Debt securities held-for-trading 16 3,459,043 10,224 - 37,878 2,831,594 579,347 Financial assets measured at fair value through other comprehensive income Debt securities measured at fair value through other comprehensive income 17 31,879,823 1,951,236 - - 23,190,063 6,738,524 Amounts due from customers (gross)
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 50 PLN ‘000 Note Total Up to 1 month 1 to 3 months 3 months to 1 year 1 year to 5 years More than 5 years Amounts due from financial sector entities 18 6,807,256 3,655,506 76,048 31,236 3,044,466 - Amounts due from non-financial sector entities 18 18,453,163 6,750,068 1,531,562 1,949,726 5,403,521 2,818,286 Amounts due to banks 22 4,529,125 3,363,650 20,000 85,000 1,060,475 - Amounts due to customers Amounts due to financial sector entities: 23 5,660,019 5,615,607 42,823 1,535 54 - Amounts due to non-financial sector entities 23 58,076,207 46,719,899 8,492,641 2,718,490 94,269 50,908 The table above presents assets and liabilities in disposal groups held for sale. Additional information on discontinued operations disclosed in Note 4 „Assets and liabilities classified as held for sale and profit from discontinued operations” As at 31 December 2024 PLN ‘000 Note Total Up to 1 month 1 to 3 months 3 months to 1 year 1 year to 5 years More than 5 years Cash and balances with the Central Bank 5,794,361 5,794,361 - - - - Amounts due from banks (Gross) 15 8,788,431 2,207,277 1,909,437 4,437,500 - 234,217 Financial assets held-for-trading Debt securities held-for-trading 16 1,801,904 15,711 3,551 130,147 603,542 1,048,953 Financial assets measured at fair value through other comprehensive income Debt securities measured at fair value through other comprehensive income 17 30,088,771 3,044,865 44,569 3,725,093 14,102,723 9,171,521 Amounts due from customers (gross) Amounts due from financial sector entities 18 5,110,374 2,034,675 75,699 700,000 2,300,000 - Amounts due from non-financial sector entities 18 16,802,583 7,108,999 1,503,255 1,804,731 3,803,684 2,581,914 Amounts due to banks 22 4,435,817 3,367,567 - - 1,068,250 - Amounts due to customers Amounts due to financial sector entities: 23 4,033,464 3,983,791 46,770 2,903 - - Amounts due to non-financial sector entities 23 49,951,568 43,661,121 4,265,820 2,023,175 1,452 - Maturity understood as the period remaining from the reporting date to the date of payment of receivables specified in the contract, for receivables repaid at one time it is the date of repayment of the entire debt specified in the contract, and for receivables repaid in installments it is the date of repayment of individual installments specified in the contract. 26. Financial instruments disclosures Fair value of financial assets and liabilities The summary below provides statement of financial position (by category) and fair value information for each category of financial assets and liabilities. PLN ‘000 30.06.2025 31.12.2024 Note Balance value Fair value Balance value Fair value Assets Amounts due from banks 15 8,688,217 8,688,348 8,787,780 8,787,781 Amounts due from customers 18 24,761,745 24,896,288 21,367,246 21,381,622 Amounts due from institutional customers 18,647,008 18,695,141 15,329,548 15,321,332 Amounts due from individual customers 6,114,737 6,201,147 6,037,698 6,060,290 Liabilities
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 51 PLN ‘000 30.06.2025 31.12.2024 Note Balance value Fair value Balance value Fair value Amounts due to banks 22 4,529,125 4,529,080 4,435,817 4,435,873 Amounts due to customers 23 63,736,226 63,706,423 53,985,032 53,963,225 The table above presents assets and liabilities in disposal groups held for sale. Additional information on discontinued operations disclosed in Note 4 “Assets and liabilities classified as held for sale and profit from discontinued operations” Valuation methods and assumptions used for the purposes of measurement at fair value Fair value of assets and financial liabilities are estimated as follows: • The fair value of financial instruments not quoted on active markets is determined using valuation techniques. If valuation techniques are used to determine the fair values, these methods are periodically assessed and verified. All the models are tested and approved before application. As far as possible, only observable data are used in the models, although in some areas, the Bank’s management must use estimates. Changes in the assumptions relating to the estimated factors may affect the fair value of financial instruments disclosed. The Group applies the following methods of measurement of particular types of derivative instruments: - FX forwards: discounted cash flow model; - options – option market-based valuation model; - interest rate transactions – discounted cash flow model; - futures – current quotations. • For valuation of securities’ transactions current quotations are used. In case of lack of quotations, adequate models based on discount and forward curves, including decrease of credit spread, if needed, are used for valuation. • The fair value of other assets and financial liabilities (excluding described above) are estimated in accordance to commonly accepted models of valuation based on discounted cash flow analysis, taking into account fluctuations in market interest rates and changes in margins during the financial period. Fair value included in consolidated statement of financial position Depending on the method of determining fair value, individual financial assets or liabilities are classified into the followi ng categories: • Level I: financial assets / liabilities valued directly on the basis of prices from an active market where the regular quotations are available and turnover is sufficient. The active market includes stock and brokerage quotes and quotes in pricing services type systems, such as Reuters and Bloomberg, which represent the actual market transactions concluded on the market conditions. Level I mainly include securities held-for-trading or measured at fair value through other comprehensive income. • Level II: financial assets / liabilities valued on the basis of models based on input data from the active market, presented in Reuters and Bloomberg systems. Depending on financial instruments, the following specific valuation techniques are used: - listed prices for a given instrument or listed prices for an alternative instrument, - fair value of interest rate swaps and forward foreign exchange contracts is calculated as the current value of future cash flows based on the market yield curves and current NBP fixing exchange rate in case of foreign currency instruments, - other techniques, such as yield curves based on alternative prices for a given financial instrument. • Level III: financial assets / liabilities valued on the basis of valuation techniques using relevant, non-market parameters. The tables below present values of financial instruments in the consolidated statement of financial position, in accordance with a fair value classified by above levels. As at 30 June 2025 PLN ‘000 Note Level I Level II Level III Total Financial assets Financial assets held-for-trading 16 3,541,889 2,366,513 - 5,908,402 derivatives 11,569 2,366,513 - 2,378,082 debt securities 3,459,043 - - 3,459,043 equity instruments 71,277 - - 71,277
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 52 PLN ‘000 Note Level I Level II Level III Total Hedging derivatives - 1,601 - 1,601 Debt financial assets measured at fair value through other comprehensive income 17 30,381,572 1,498,251 - 31,879,823 Equity and other investments measured at fair value through income statement 37,497 - 129,252 166,749 Financial liabilities Financial liabilities held-for-trading 16 380,904 2,711,361 - 3,092,265 short sale of securities 380,793 - 380,793 derivatives 111 2,711,361 - 2,711,472 Hedging derivatives - 217,549 - 217,549 The table above presents assets in disposal groups held for sale in the amount of PLN 17,081 thousand (embedded derivatives) as of June 30, 2025. Additional information on discontinued operations disclosed in Note 4 “Assets and liabilities classified as held for sale and profit from discontinued operations” As at 31 December 2024 PLN ‘000 Note Level I Level II Level III Total Financial assets Financial assets held-for-trading 16 1,847,453 2,588,866 - 4,436,319 Derivatives 34,994 2,588,866 - 2,623,860 Debt securities 1,801,904 - 1,801,904 Equity instruments 10,555 - 10,555 Hedging derivatives - 54,140 - 54,140 Debt investment financial assets measured at fair value through other comprehensive income 17 29,089,569 999,202 - 30,088,771 Equity and other instruments measured at fair value through income statement 38,117 - 134,831 172,948 Financial liabilities Financial liabilities held-for-trading 16 156,708 2,599,197 - 2,755,905 short sale of securities 156,708 - 156,708 derivatives - 2,599,197 - 2,599,197 Hedging derivatives - 72,737 - 72,737 As at June 30, 2025 the structure of VISA stocks owned by the Bank have not been changed in relation to December 31, 2024. As at June 30, 2025, the amount of financial assets classified to level III includes the value of the share in Visa Inc. (preference series C) in the amount of PLN 10,946 thousand and the value of other minority shareholding in the amount of PLN 118,306 thousand (as at December 31, 2024 respectively PLN 10,949 thousand and PLN 123,882 thousand). The sensitivity analysis for equity instruments classified to level III as at 30 June 2025 is presented in the table below: PLN ‘000 Fair Value Scenario Fair value in positive scenario Fair value in negative scenario Capital instruments compulsorily measured at fair value through profit or loss 129,252 Change of the key parameter (cost of capital by - 10% / + 10% or conversion rate by + 10% / - 10%) 147,003 115,190 The method of estimating the fair value of series C Visa Inc preference shares takes into account the value of Visa Inc. shares and corrections resulting from disputes (current or potential) to which Visa or the Bank would be a party. Minority shareholding in structured companies is measured at fair value taking into account, inter alia, the expected discounted dividends using an assumed cost of capital and the history of profit distribution in the particular companies. Changes in the valuation are taken to the Income statement and presented in the Net gain/(loss) on equity and other instruments measured at fair value through income statement. Changes in financial assets and liabilities, measured at a fair value that was estimated using relevant parameters not-market based are presented below:
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 53 Equity and other investments measured at fair value through income statement PLN ‘000 01.01.-30.06.2025 01.01.-31.12.2025 As at the beginning of period 134,831 121,756 VISA stock conversion – transfer to Level I - (8,346) Revaluation (5,579) 21,421 As at the end of period 129,252 134,831 In the first half of 2025, the Group has not made any changes in classification criteria of financial instruments (presented in the consolidated statement of financial position at fair value) to each category reflecting the fair value (level I, level II, level III). In the same period, the Group did not change the classification of financial assets as a result of a change in the purpose or use of the asset. 27. Net gain/(loss) on derecognition of asset from balance sheet The net gain/(loss) on derecognition of financial assets in Group relates to the gain/(loss) on debt investment financial assets measured at fair value through other comprehensive income. II quarter I half of the year II quarter I half of the year PLN ‘000 01.04.- 30.06.2025 01.01. - 30.06. 2025 01.04. - 30.06. 2024 01.01. - 30.06. 2043 Net gain/(loss) on debt investment financial assets measured at fair value through other comprehensive income Polish treasury bonds 27,541 40,629 20,525 14,402 EBI securities - 1,932 12 12 Others 77,807 102,854 - - 105,348 145,415 20,537 14,414 Due to specific activity of the Group, changes in debt investment financial assets measured at fair value through other comprehensive income are presented in operating activities in the statement of cash-flows. 28. Hedge accounting The Group hedges the risk of change in fair value of fixed interest rate debt securities measured at fair value though other comprehensive income. The hedged risk results from changes in interest rates. IRS is the hedging instrument denominated in the same currency as hedged instruments in which the Groups receives variable inflows and pays fixed. The gain or loss on the hedged item attributable to the hedged risk is recognized in result on hedge accounting in the income statement. The remainder of the change in the fair value of debt securities measured at fair value through other comprehensive income is recognized in other comprehensive income. Interest income on debt securities is recognized in net interest income. Changes in the fair value of derivatives designated as qualifying hedging instruments are recognized in result on hedge accounting in the income statement. Interest income and interest expenses related to the hedging derivatives under fair value hedge are presented in the net interest income. As at 30 June 202 5 and as at 31 December 202 4, the Group had active hedging relationships . Details of the positions designated as hedging instruments and the effectiveness of the designated hedging relationships are set out in the tables below:
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 54 As at 30 June 2025: PLN ‘000 Notional value Balance value Listing in the statement of financial position Change in fair value used to take hold of hedge ineffectiveness Assets Liabilities Fair value hedge accounting Interest rate risk IRS Transactions 5,391,500 1,601 218,646 Hedging derivatives (218,950) Details of hedged items as at 30 June 2025 are presented in the table below: PLN ‘000 Balance value Cumulative amount of hedging fair value in balance value of heged item corrections Listing in the statement of financial position Change in fair value used to take hold of hedge ineffectiveness Assets Liabilities Fair value hedge accounting Interest rate risk Bond issued by banks 2,989,325 - 105,110 Debt investment securities measured at fair value through other comprehensive income 129,477 Bond issued by financial institutions 2,329,778 - 83,524 Debt investment securities measured at fair value through other comprehensive income 91,160 The cumulative amount of fair value hedge adjustments remaining in the statement of financial position for all hedged items for which adjustments for fair value hedge gains and losses were discontinued as at 30 June 2025 amounted to PLN (94,445) thousand. Information on the effectiveness of designated hedging relationships as at 30 June 2025 is presented in the table below: Hedge ineffectiveness recognized in income statement Listing in the statement of financial position Fair value hedge accounting Interest rate risk 1,687 Net income on hedge accounting As at 31 December 2024: PLN ‘000 Notional value Balance value Listing in the statement of financial position Change in fair value used to take hold of hedge ineffectiveness Assets Liabilities Fair value hedge accounting Interest rate risk IRS Transactions 7,024,500 54,615 72,737 Hedging derivatives 154,407 Details of hedged items as at 31 December 2024 are presented in the table below:
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 55 PLN ‘000 Balance value Cumulative amount of hedging fair value in balance value of heged item corrections Listing in the statement of financial position Change in fair value used to take hold of hedge ineffectiveness Assets Liabilities Fair value hedge accounting Interest rate risk Treasury bonds 2,836,707 - (24,366) Debt investment securities measured at fair value through other comprehensive income (38,107) Bond issued by banks 3,731,148 - (8,546) Debt investment securities measured at fair value through other comprehensive income (107,426) The cumulative amount of fair value hedge adjustments remaining in the statement of financial position for all hedged items for which adjustments for fair value hedge gains and losses were discontinued as at 31 December 202 4 amounted to PLN (108,981) thousand. Information on the effectiveness of designated hedging relationships as at 31 December 2024 is presented in the table below: Hedge ineffectiveness recognized in income statement Listing in the statement of financial position Fair value hedge accounting Interest rate risk 8,874 Net income on hedge accounting 29. Seasonality or periodicity of business activity The business activity of the Group does not involve significant events that would be subject to seasonal or cyclical variations. 30. Issue, redemption and repayment of debt and equity securities In the first half of the year 2025 no issue or pay back of debt or equity securities took place. On February 14, 2025, the Bank received a decision from the Polish Financial Supervision Authority (“KNF”) dated February 13, 2025, in which the Bank was granted permission to continue purchasing its own shares in 2025 for the purpose of offering them to eligible employees under the incentive program. Under the above authorization issued for the period until December 16, 2025, the Bank may acquire a maximum of 477,450 own shares and the price of the repurchased own shares of the Bank may not exceed a total of PLN 16,667,000. In the first half of 2025, the Bank has not been purchasing own shares under the above authorization of Polish Financial Supervision Authority (“KNF”). In the period from 9 July 2025 to 24 July 2025, the Bank purchased a total of 150,019 shares with the nominal value of PLN 4.00 representing 0.1148167% of the Bank’s share capital and authorizing to 150,019 votes at the General Meeting of Shareholders of the Bank which constitutes 0.1148167%of the total number of votes at the General Meeting of Shareholders of the Bank of the total number of votes at the General Meeting of Shareholders of the Bank in the amount of PLN 16,666,927. Since the beginning of the share buyback, i.e. from January 2024 until the date of submission of this report, the Bank has acquired a total of 485,920 shares with the nominal value of PLN 4.00 representing 0.3718977% of the Bank’s share capital and authorizing to 485,920 votes at the General Meeting of Shareholders of the Bank which constitutes 0.3718977% of the total number of votes at the General Meeting of Shareholders of the Bank. During the period in which the Bank owned its own shares, the Bank did not exercise the voting rights attached to these shares. In 2025 the Bank issued free of charge. (i.e. initiated the transfer) to eligible Bank employees a total of 102,139 treasury shares previously acquired by the Bank. Issued shares represent 0.0781718% of the Bank’s capital and authorize to 0.0781718% of the total number of votes at the General Meeting of Shareholders of the Bank and completed the issuance of treasury shares in 2025.
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 56 31. Paid or declared dividends On June 27, 2025, the Ordinary General Meeting of Shareholders of the Bank adopted a resolution on distribution of net profit for 2024. Pursuant to the resolution the net profit for 2024 in the amount of PLN1,791,978,477.05 was distributed as follows: • Dividend for shareholders: PLN 1,342,776,931.65, i.e. PLN 10.29/per share, • Reserve capital: PLN 449,201,545.40 was left undivided. Dividend day was set for July 7, 2025, and the dividend payment date for July 14, 2025. The dividend amount per share was calculated by dividing the dividend amount for shareholders by the total number of the Bank's shares, reduced by the number of treasury shares held by the Bank on the dividend date. Consequently, 130,493,385 shares participate in the dividend distribution. The dividend accounted for 75% of the net profit for 202 4, and the payment of funds in this amount was in line with the individual recommendation of the Polish Financial Supervision Authority regarding fulfilling by the Bank of requirements for dividend payment from net profit generated in 2024. 32. Changes in the Bank Capital Group’s structure In the first half of 2025 the structure of the Bank's Capital Group has not changed compared to the end of 2024 33. Changes in granted and received financial and guarantee commitments The detailed specification of granted and received financial and guarantee commitments as at 30 June 2025 and changes in comparison with the end of 2024 are as follows: PLN ’000 State as at Change 30.06.2025 31.12.2024 PLN ’000 % Contingent commitments and guarantees granted Letters of credit 142,941 245,189 (102,248) (41.7%) Guarantees granted 3,826,150 4,035,116 (208,966) (5.2%) Credit lines granted 15,142,483 16,261,305 (1,118,822) (6.9%) Other financial liabilities 525,155 160,607 364,548 227.0% Other guaranteed liabilities 22,744 22,433 311 1.4% 19,659,473 20,724,650 (1,065,177) (5.1%) Letters of credit Import letters of credit issued 142,941 245,189 (102,248) (41.7%) 142,941 245,189 (102,248) (41.7%) The table above presents liabilities in disposal groups held for sale in the amount of PLN 5,239,548 thousand. Additional information on discontinued operations disclosed in Note 4 “Assets and liabilities classified as held for sale and profit from discontinued operations” The provisions of contingent commitments and guarantees granted by the Group are established. As at 30 June, 2025 the amount of provisions of granted contingent commitments and guarantees was PLN 27,098 thousand while the amount of discontinued operations was PLN 10,879 thousand (31 December 2024: PLN 33,256 thousand). Guarantees granted include guarantees of credit repayment for payer, other guarantees of payment, guarantees on advance payments, guarantees on properly performance, tender guarantees and endorsements on bills. PLN ‘000 State as at Change 30.06.2025 31.12.2024 PLN ‘000 % Contingent commitments and guarantees received Guarantees 12,696,014 12,910,800 (214,786) (1.7%) 12,696,014 12,910,800 (214,786) (1.7%)
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 57 34. Information about shareholders In the period from the publication of the previous interim report, i.e. from 8 May 2025 to the date of publication of this half- year report for the first half of 2025, the ownership structure of significant blocks of the Bank's shares has not changed. As at the date of publication of this report for the first half-year of 2025, in accordance with the information held by the Bank on shareholders holding, directly or indirectly, through subsidiaries, at least 5% of the total number of votes at the General Meeting or at least 5% of the Bank's share capital, the following entities were: Number of shares % Shares Number of votes at GM % votes at GM Citibank Europe PLC, Ireland 97,994,700 75.00 97,994,700 75.00 Other shareholders 32,664,900 25.00 32,664,900 25.00 130,659,600 100.00 130,659,600 100.00 35. Ownership of issuer’s shares by members of the Management Board and Supervisory Board Information on the total number and nominal value of the Bank’s shares held by members of the Management Board and Supervisory Board as at 30 June 2025 is presented in the table below: Name and surname Function Shares of Bank Handlowy w Warszawie SA Number of shares (in pcs) Par value (PLN) Elżbieta Światopełk- Czetwertyńska President of the Management Board 75 300 Andrzej Wilk Vice President of the Management Board 9,751 39,004 Patrycjusz Wójcik Vice President of the Management Board 1,670 6,680 Ivan Vhrel Board Member 3,086 12,344 Sławomir Sikora President of the Supervisory Board 20,117 80,468 Total 34,699 138,796 Information on the total number and par value of the Bank’s shares held by members of the Management Board and members of the Supervisory Board as of the date of this interim report is presented in table below: Name and surname Function Shares of Bank Handlowy w Warszawie SA Andrzej Wilk Board Member 4,283 17,132 Patrycjusz Wójcik Board Member 1,670 6,680 Sławomir Sikora President of the Supervisory Board 11,199 44,796 Total 17,152 68,608 Managing and supervising officers have not declared any options for Bank’s shares. 36. Contingent liabilities and litigation proceedings No proceedings regarding receivables or liabilities of the Group conducted in the first half of 2025 in court, public administration authorities or an arbitration authority is of significant value. In Group’s opinion no proceedings conducted in court, public administration authority or an arbitration authority, pose a threat to the Group’s financial liquidity, individually or in total. In the case of legal proceedings involving the risk of cash outflow as a result of meeting the Group’s commitments, the appropriate provisions are created. The value of provisions for disputes as at June 30, 2025 and December 31, 2024 are presented in the table below:
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 58 PLN ‘000 30.06.2025 31.12.2024 Provisions for disputes, including: provisions for option cases on derivative instruments 17,127 16,718 provisions for individual cases relating TSUE judgements 26,623 25,446 Other provisions 25,090 10,882 Provisions for disputes 68,840 53,046 The table above does not present liabilities in disposal groups held for sale. At as 30 June 2025, the value of provisions for disputes from discontinued operations was PLN 3,838 thousand. The above values do not include portfolio provision created in connection with the CJEU judgments No significant settlements occurred in the first half of 2025 due to court cases concluded with a final judgment. • On 27 May 2019 the Bank received a statement of claim submitted by Rigall Arteria Management spółka z ograniczoną odpowiedzialnością sp. k. for the payment of PLN 386,139,180.89 along with statutory interest for delay from the date of filing the claim to the payment date and the amount of PLN 50,017,463.89 including statutory interest for delay from the date of filing the claim to the date of payment. The statement of claim refers to the agency agreement, which covered intermediary services for the Bank’s p roducts and services, primarily in the segment of Retail Banking , and was terminated in 2014. The Court has referred the matter to mediation proceedings, which have not resulted in a mutual agreement, so the case is pending before the court of first instance. On 10 February 2020 the Bank received a statement of claim submitted by Rotsa Sales Direct sp. z o.o. for the payment of PLN 419,712.468.48 along with statutory interest for delay from the date of filing the claim to the payment date and the amount of PLN 33,047,245.20 including statutory interest for delay from the date of filing the claim to the date of payment. The statement of claim refers to the agency agreement, which covered intermediary services for the Bank’s products and services, primarily in the segment of Retail Banking, and was terminated in 2014. The court referred the matter to mediation proceedings, so the case is pending before the court of first instance. In the Bank's opinion, the amount of claims filed by the companies is not justified. The Bank's position is confirmed by legally binding resolutions of legal actions taken by the companies against the Bank, which are beneficial for the Bank , as well as by the judgement expressed in the proceedings with reference number C -64/21 pending before the Court of Justice of the European Union in connection with preliminary ruling from the Supreme Court of October 13, 2022. The court proceedings described in this section are excluded from the business transfer transaction of Retail Segment to VeloBank S.A. on the basis of the Agreement on the division by separation of the Bank's retail operations in favour of VeloBank S.A. concluded on May 27, 2025, by ValoBank S.A., Promotoria Holding 418 B.V. and Citibank Europe Plc. • As at June 30, 2025, the Bank was among others a party to 10 court proceedings associated with derivative transactions. Among these, 8 proceedings have not been terminated with a legally binding conclusion, and 2 have been terminated with a legally binding conclusion, and the cassation proceedings took place . In 6 proceedings the Bank acted as a defendant and in 4 as a plaintiff. The claims and allegations in the individual cases against the Bank are based on various legal bases. The subject of the dispute refers mainly to the validity of the derivative transactions and clients’ liabilities demanded by the Bank wit h respect to those derivative transactions, as well as potential claims regarding potential invalidation of such demands by court decisions. Clients try to prevent the Bank from seeking claims resultin g from derivative transactions; they dispute their liabilities towards the Bank, question the validity of the agreements and, in some cases, demand payment from the Bank. The court proceedings described in this section are not included in the Retail Banking Segment. They are not subject to transfer to VeloBank SA. • The Bank was a party to proceedings initiated by the President of the Office of Competition and Consumer Protection (UOKiK) against the Visa and Europay payment system operators and banks - issuers of Visa cards and Europay/Eurocard/Mastercard cards. The Bank was one of the addressees of the President of UOKiK’s decision in the case. The proceedings have concerned alleged practices limiting competition on the payment cards market in Poland consisting in the fixing of interchange fees for transactions made with Visa and Europay/Eurocard/Mastercard cards, as well as limiting access to the market for operators who do not belong to the unions of card issuers, against whom the proceedings were initiated. The President of UOKiK’s decision was the subject of legal analyses in appeal proceedings. On April 22, 2010, the Appeal Court overturned the verdict of the Court of Competition and Consumer Protection (SOKiK) and referred the case back to the court of first instance. On 21 November 2013 SOKiK gave a judgment, und er which a penalty imposed on the Bank was modified and set in the amount of PLN 1,775,720. On October 6, 2015 the Appeal Court modified the verdict of the Competition and Consumer Protection Court and denied all appeals from the decision of the President of the Competition and Consumer Protection Office, including the changes of amounts of the fines that were imposed upon banks. As a result, the fine in the amount of 10,228,470 PLN that was originally imposed upon the Bank has been reinstated. As the Bank submitted extraordinary appeal on the 25 October 2017 the Supreme Court has overturned the Appeal Court’s verdict and the case has been returned to the Appeal Court for a second review. The appeals proceedings has begun again. In the first quarter of 2018, the Bank received the reimbursed. By the
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 59 judgment of November 23, 2020, the Appeal Court set aside the judgment of November 21, 2013, and remitted the case to the court of first instance for reconsideration. The court proceedings described in this section are excluded from the business transfer transaction of Retail Segment to VeloBank S.A. on the basis of the Agreement on the division by separation of the Bank's retail operations in favour of VeloBank S.A. concluded on May 27, 2025 by ValoBank S.A., Promotoria Holding 418 B.V. and Citibank Europe Plc. The Bank is carefully following the changes of the legal environment arising out of the courts’ case law regarding mortgage loans indexed to foreign currencies . On 15 June 2023, the Court of Justice of the European Union (CJEU) in case C 520/21 essentially duplicated the opinion of the Advocate General from February 16, 2023 and ruled that only the consumer may demand additional benefits resulting from the cancellation of the Swiss franc loan agreement. The Bank may only demand the return of the loan capital together with statutory interest for delay without the possibility of demanding remuneration from the customer (consumer) for no n-contractual use of capital. It has been held that Directive 93/13 does not directly govern the consequences of the invalidity of a contract concluded between a seller or supplier and a consumer after the unfair terms have been removed. It is for the Memb er States to determine the consequences of such a finding and the measures which they adopt in that regard must comply with EU law and, in particular, with the objectives of that directive. It will be for the national courts to assess, in the light of all the circumstances of the dispute, whether the acceptance of such consumer claims is compatible with the principle of proportionality. When estimating the risk resulting from court litigations regarding indexation clauses in mortgage loan agreements, Bank Handlowy w Warszawie S.A. continuously did not factor in receivables under its claims against borrowers for the payment of amounts equivalent to a fee for using the loan capital, therefore, the Bank does not have to revise its assumptions following the Advocate General's and CJEU’s opinion. As at June 30, 2025, the Bank had receivables under CHF -indexed retail mortgage loans at the gross carrying amount of PLN 24.7 million. The Bank maintained a collective provision in the amount of PLN 19.9million (compared to PLN 22,8 million as at December 31, 2024). Estimation of the provision assumes the expected level of probability of settlement or litigation resolution and an estimate of the Bank’s loss should a dispute be settled in court. This value, as well as provisions for individual litigation cases, is included in the group’s consolidated semi-annual financial statement under Provisions. As at June 30, 2025, the Bank was sued in 92 cases relating to a CHF-indexed loan for a total amount of approximately PLN 40.4 million. 48 cases were legally lost, and the Bank decided to file two cassation appeals (one appeal was rejected on formal grounds, as to the second the Supreme Court refused to accept the cassation appeals for consideration). Most of the cases are in the first instance. The court proceedings described in this section are excluded from the business transfer transaction of Retail Segment to VeloBank S.A. on the basis of the Agreement on the division by separation of the Bank's retail operations in favour of VeloBank S.A. concluded on May 27, 2025 by ValoBank S.A., Promotoria Holding 418 B.V. and Citibank Europe Plc. • On 22 June 2021, the President of the Office of Competition and Consumer Protection initiated explanatory proceedings to initially determine whether the Bank's actions taken after consumers reported unauthorized payment transactions may justify the initiation of proceedings regarding practices violating the collective interests of consumers or proceedings regarding to recognize the provisions of the standard contract as prohibited. On 8 February 2024, the President of the Office of Competition and Consumer Protection initiated proceedings (decision delivered on 13 February 2024) regarding practices violating the collective interests of consumers regarding unauthorized payment transactions. The charges brought are: • failure to refund the amount of an unauthorized payment transaction to the customer within the D+1 deadline despite the lack of premises for such refusal, • misleading consumers as to the Bank's obligations and the distribution of the burden of proving the authorization of a payment transaction. The proceedings are the result of the explanatory proceedings of the President of the Office of Competition and Consumer Protection initiated in June 2021. As at June 30, 2025, the Bank did not create any provision in this respect because it is not possible to reliably estimate its potential outcome. • As of June 30, 2025, the Bank was the defendant in a total of 225 court cases concerning claims arising from the sanction of free credit related to consumer loans offered by the Bank. The total value of the subject matter of these cases as of the above-mentioned date was PLN 4.5 million. The Bank has taken note of the preliminary questions asked by Polish courts in cases concerning Polish financial market entities, which concern issues related to the sanction of free credit and is closely monitoring the course of proceedings in which these questions are to be resolved. The Bank closely monitors court decisions in cases concerning the sanction of a free credit. Currently, the advocacy in the Bank's cases is overwhelmingly favorable to the Bank. The court proceedings described in this section are included in the business transfer transaction of Retail Segment to VeloBank S.A. on the basis of the Agreement on the division by separation of the Bank's retail operations in favour of VeloBank S.A. concluded on May 27, 2025, by ValoBank S.A., Promotoria Holding 418 B.V. and Citibank Europe Plc.
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 60 37. Transactions with the key management personnel PLN ’000 30.06.2025 31.12.2024 Members of the Management Board Members of the Supervisory Board Members of the Management Board Members of the Supervisory Board Loans granted 3,437 60 3,537 56 Deposits Current accounts 13,011 5,251 11,062 8,810 Term deposits 2,238 28,755 1,074 26,730 Total Deposits 15,249 34,006 12,136 35,540 As at 30 June 2025 and 31 December 2024, no guarantees were granted to members of the Management Board and the Supervisory Board. All transactions of the Bank with members of the Management Board and the Supervisory Board are at arm’s length. Staff expenses for current and former members of the Management Board are presented in note 11. Changes in the composition of the Management Board of the Bank On April 9, 2025 Ms. Katarzyna Majewska resigned from the role of Member of the Management Board effective May 31, 2025 due to the acceptance of the role of Europe Cluster Chief Financial Officer (CFO) for Citi. On May 29, 2025, the Supervisory Board of the Bank decided to appoint Mr. Tomasz Dziurzyński to the Management Board of Bank Handlowy w Warszawie S.A. with the position of the Vice President of the Management Board as of 1 June 2025 for a four-year term of office. As part of the internal division of powers in the Management Board, Mr. Tomasz Dziurzyński will be a Vice President of the Bank’s Management Board responsible for operations and technology. On August 21, 2025, Mr. Ivan Vrhel resigned from the position of Member of the Management Board of the Bank affective as of November 30, 2025. Changes in the composition of the Supervisory Board of the Bank In the first half of 2025, the composition of the Supervisory Board did not change. Among all employment contracts between the Bank and the members of the Management Board of the Bank, there is no contract that provides for financial compensation in the case of termination with prior notice or for reasons specified in Article 53 of the Labour Code. A separate non-competition agreement conducted with the Bank applies to each member of the Bank’s Management Board. According to its provisions, in case of termination of employment in the Bank, in the period of 12 months (in case of one member of the Management Board – of 6 months) from the date of employment termination, the member of the Management Board is obligated to refrain from competitive activities against the Bank. Due to limitations mentioned above, the Bank will be obliged to pay the compensation to the member of the Management Board. 38. Related parties Transactions with related parties The Bank is a member of Citigroup Inc., which is the ultimate controlling party . The parent entity of the Bank is Citibank Europe PLC based in Ireland. Within its normal course of business activities , the Group enters into transactions with related entities, in particular with entities of Citigroup Inc. The transactions with related entities result from current activity of the Group, and mainly include deposits, guarantees and derivatives transactions. Apart from the transactions described in this section, in the presented period neither the Bank nor the Bank’s subsidiaries conducted any transactions with related entities, which would be individually or jointly significant. No transaction with related entities was concluded on terms other than market terms. Transactions with Citigroup Inc. entities The receivables and liabilities towards Citigroup Inc. companies are as follows:
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 61 PLN ‘000 30.06.2025 31.12.2024 Receivables 8,365,675 7,304,663 Liabilities, including*: 3,683,024 3,197,334 Deposits 1,406,102 2,096,072 Credits and deposits 1,064,407 1,073,387 Balance-sheet valuation of derivative transactions Assets held-for-trading 874,113 1,595,239 Liabilities held-for-trading 905,158 942,136 Contingent liabilities granted 255,622 269,064 Contingent liabilities received 205,424 220,724 Contingent derivative transactions (liabilities granted/received), including: 109,247,448 119,673,376 Interest rate instruments 18,442,753 44,035,640 Currency instruments 90,350,675 75,382,595 Securities transactions 454,020 244,219 Commodity transactions - 10,922 *Including deposits of parent undertaking in amount of PLN 1,897 million as of 30 June 2025 (31 December 2024: PLN 1,713 million) PLN ‘000 01.01. – 30.06. 2025 01.01. – 30.06. 2024 Interest and commission income* 186,351 97,272 Interest and commission expense* 35,127 24,355 General administrative expenses 104,434 96,836 Other operating income 4,643 4,408 *Interest and commission income in amount of PLN 8,694 thousand for the first half of 2025 (for the first half of 2024: PLN 8,153 thousand) refer to parent undertaking, whereas interest and commission costs refer to parent undertaking in amount of PLN 20,586 thousand for the first half of 2024 (for the first half of 2024: PLN 1,303 thousand ) The Group receives income and incurs costs on derivative transactions with entities of Citigroup Inc. in order to hedge market risk. These are back-to-back derivative transactions, opposite to transactions with Group’s other clients and closing Bank’s own position. On 30 June 2025 net balance valuation of transactions on derivatives amounted to PLN (31,045) thousand (31 December 2024: PLN 653,103 thousand). Furthermore, the Group incurs costs and receives income from agreements between Citigroup Inc. entities and the Bank, regarding the provision of mutual services. The costs incurred and accrued (including VAT reflected in the Bank’s costs) in the first half of 2025 and also in the first half of 2024, due to the concluded agreements were concerned, in particular, with costs of services regarding maintenance of the Bank’s information systems and advisory support. The income was related to data processing and other services rendered by the Bank. In the first half of 2025, capitalization of capital expenditures related to work on modifying the functionality of the Bank's IT systems did not take place. The total amount of payments to Citigroup Inc. entities in this respect amounted to PLN 31,748 thousand in the first half of 2024. Citibank Europe PLC is absorbing interest rate exposures associated with the transferred asset and liabilities from the date of the Group entering into an agreement to sell its Retail Banking Business through to completion. Additionally, the Group may incur certain migration costs from various Citigroup affiliates related to the transaction described in Note 4. Amounts will be billed at market rates by Citigroup. At the end of Q2 2025, there are no outstanding balances between the Group and it related parties related to the transaction. No guarantees have been given to or received by the Group from its related parties in connection to the disposal of Retail Business Details of the sale transactions are disclosed in Note 4’ 39. WIRON Reform For the past few years, on developed foreign markets, we observe activities involving the introduction of alternatives to the existing reference rates such as IBOR (Interbank Offered Rate), which also include the WIBOR index. As well i n Poland, appropriate work has begun to reform reference rates, including the introduction of a new reference interest rate, which would ultimately replace the WIBOR reference rate. In 2022, the National Working Group for Benchmark Reform (NGR) was established in Poland. The NGR includes representatives of the Minister of Finance, the National Bank of Poland, the Polish Financial Supervision Authority, the Bank Guarantee Fund, the War saw Stock Exchange, the National Depository for Securities, and BPW Benchmark, as we ll as commercial banks, cooperative banks, investment fund companies, insurance companies, and industry organizations representing financial market entities. The NGR's work is
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 62 overseen and coordinated by a Steering Committee, which includes representatives of the Ministry of Finance, the Polish Financial Supervision Authority, GPW Benchmark, the Bank Guarantee Fund, BondSpot, and the Polish Bank Association. The NGR's work is being conducted based on a Roadmap outlining the timeline and scope of detailed actions necessary to implement the reform. According to the timeline, the reform, which involves the introduction of a new interest rate reference index to replace the WIBOR reference index, is expected to be completed by the end of 2027. The ongoing reform also applies to the WIBID reference index. As part of this work, the WIRON (Warsaw Interest Rate Overnight) reference index was initially identified as an alternative to WIBOR. However, in 2024, following additional verification and public consultations, the NGR Steering Committee selected an index from the WIRF family, technically called WIRF - (based on unsecured deposits from credit institutions and financi al institutions), as the target alternative index, for which it chose the official name POLSTR (Polish Short Term Rate). Detailed information on the ongoing work of the NGR and the decisions of the NGR Steering Committee is published by the Polish Financial Supervision Authority on its official website under the "Benchmarks" tab. Since the first days of the reform, the Bank has actively participated in all NGR work. To prepare the Bank for the efficient and safe implementation of the new benchmark and the planned conversion, it has also been conducting a key internal project in whi ch all members of the Bank's Management Board, senior management, and representatives of the Bank's organizational units relevant to the project's smooth implementation are actively involved. 40. Significant events after the balance sheet date On 22 August 2025, it was advised by the Polish Financial Supervision Authority ("PFSA") that the PFSA did not have any objections to the potential payout by the Bank of the dividend (advance dividend) from the 2019 profit in the amount of PLN 449,201, 545.40. The payment of advance dividend to shareholders depends on the final decisions of the Management Board and the Supervisory Board of the Bank. After the balance sheet date, there were no other material events that should be additionally included in these financial statements.
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Condensed interim consolidated financial statements of the Capital Group of Bank Handlowy w Warszawie S.A. for the 6 month period ended 30 June 2025 TRANSLATION 63 Members of the Management Board 27 August 2025 Elżbieta Światopełk- Czetwertyńska President of the Management Board ........................... ............................................. ................................ Date Name Position/Function 27 August 2025 Maciej Kropidłowski Vice-president of the Management Board ........................ ............................................. ................................ Date Name Position/Function 27 August 2025 Barbara Sobala Vice-president of the Management Board ........................ ............................................. ................................ Date Name Position/Function 27 August 2025 Andrzej Wilk Vice-president of the Management Board ........................ ............................................. ................................ Date Name Position/Function 27 August 2025 Patrycjusz Wójcik Vice-president of the Management Board ........................ ............................................. ................................ Date Name Position/Function 27 August 2025 Tomasz Dziurzyński Member of the Management Board ........................... ............................................. ................................ Date Name Position/Function 27 August 2025 Ivan Vrhel Member of the Management Board ........................... ............................................. ................................ Date Name Position/Function