Current Report No. 5/2020

31 Mar, 2020

Bank's Management Board recommendation regarding proposed profit distribution for 2019

The Management Board of Santander Bank Polska S.A. (the "Bank") hereby informs that in compliance with the expectations issued by the Polish Financial Supervision Authority ("PFSA") in the letter dated 26th March 2020, has adopted today a resolution recommending the retention of the entire net profit achieved by the Bank in the accounting year commenced on 01.01.2019 and ended on 31.12.2019 in the amount of PLN 2,113,523,989.28 and the allocation of 50% of the Bank's net profit in amount of PLN 1,056,761,994.64 to the reserve capital and the amount of PLN 1,056,761,994.64 left undivided.

The Bank's Supervisory Board approved this recommendation.

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

The following are arguments to support the notified proposals regarding profit distribution for 2019.

As at 31st December 2019 the capital ratios amounted:
- Tier I ratio (T1) for the Bank 17,38% and for the Group 15,21%
- Total Capital Ratio for the Bank 19,58% and for the Group 17,07%

Considering above and the criteria regarding dividend payment presented in the PFSA's letter dated 24th December 2019 The Bank received from the PFSA recommendation dated 9th March 2020 regarding increasing the own funds of the Bank by retaining at least 50% of the net profit for the period from 1st January 2019 to 31st December 2019 ("Recommendation").

The PFSA's recommendation shows that as at 31st December 2019 the Bank met the criteria to pay to shareholders a dividend up to 50% of the Bank's net profit for the period from 1st January 2019 to 31st December 2019.

However, in the letter dated 26th March 2020 the PFSA pointed that taking into account current situation related to the state of the epidemic announced in Poland and possible further negative economic consequences of this state, as well as their expected impact on banks, the PFSA expects that banking sector - regardless of any actions already undertaken in this respect - will retain entire profit earned in previous years.

The PFSA expects that no other actions are undertaken without agreement with the PFSA, in particular those actions outside of the scope of ongoing business and operating activities, which may result in weakening of capital position.

Considering the PFSA's recommendation and expectation respectively of 9th March 2020 and 26th March 2020 and current changes in the macroeconomic environment, the Bank's Management Board recommends to retain the entire net profit for the period from 1 January to 31st December 2019 by allocating 50% of 2019 profit to the reserve capital and 50% of profit will be left undivided.

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

Santander Bank Polska S.A. with its registered office in Warsaw, al. Jana Pawła II 17, 00-854 Warszawa, registered by the District Court for the capital city of Warsaw, 12th Commercial Division, set up under regulation of the Council of Ministers of 11 April 1988 on setting up Bank Zachodni in Wrocław (Journal of Laws of 1 July 1988, No. 21, item 142), registered under KRS number 0000008723, REGON 930041341, NIP 896 000 56 73, share capital of PLN 1,020,883,050 paid-up in full. Helpline: 1 9999 – fee as per the operator’s tariff.

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