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Consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024 The above consolidated financial statements of the Bank Gospodarstwa Krajowego Group is a translation from the original Polish version. In case of any discrepancies between the Polish and English version, the Polish version shall prevail.
Warsaw, 11 April 2025

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Selected financial data on consolidated financial statements

The selected financial data specified below constitutes additional information to the consolidated financial statements of the BGK Group for 2024.

| in PLN million | in EUR million
| 2024 | 2023 | 2024 | 2023
Net interest income | 4,375 | 4,309 | 1,016 | 952
Net fee and commission income/expense | 507 | 451 | 118 | 100
Operating result | 3,628 | 3,856 | 843 | 852
Profit before tax | 4,361 | 4,561 | 1,013 | 1,007
Net profit | 3,562 | 3,732 | 828 | 824
Net profit attributable to the owner of the parent entity | 3,562 | 3,732 | 828 | 824
Net comprehensive income | 3,694 | 4,283 | 858 | 946
Net cash flows | 49,099 | 670 | 11,407 | 148

| in PLN million | in EUR million
| 31 Dec 2024 | 31 Dec 2023 | 31 Dec 2024 | 31 Dec 2023
Total assets | 270,267 | 222,999 | 63,250 | 51,288
Total equity | 42,231 | 40,112 | 9,883 | 9,225
Equity attributable to the owner of the parent entity | 42,231 | 40,112 | 9,883 | 9,225
Total capital ratio including flow funds* | 30.55% | 33.42% | 30.55% | 33.42%
Total capital ratio excluding flow funds* | 32.38% | 35.29% | 32.38% | 35.29%
Basic funds (Tier 1 capital)* | 37,660 | 37,420 | 8,813 | 8,606
* Change of presentation for 2023 – Information on the calculation of the total capital ratio and own funds is presented in Note 50 “Capital adequacy and leverage risk” and in the Report on Risk Management and Capital Adequacy of Bank Gospodarstwa Krajowego as at 31 December 2024 (Pillar 3)”.

Selected financial data on the financial statements was translated to EUR in line with the following rates:
| 31 Dec 2024 | 31 Dec 2023
§ items from the statement of profit or loss, statement of comprehensive income, and statement of cash flows at the mid-exchange rate quoted by the National Bank of Poland (NBP) calculated as an arithmetic mean of the exchange rates applicable on the last day of each month in a given period | 4.3042 | 4.5284
§ items from the statement of financial position at the mid-exchange rate quoted by the NBP for the last day of the period | 4.2730 | 4.3480

As at 31 December 2023, carrying amounts denominated in foreign currencies were converted into PLN in accordance with Table No. 251/A/NBP/2023 of 29 December 2023.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Table of contents

Selected financial data on consolidated financial statements. 2 2

Consolidated statement of profit or loss 4 4

Consolidated statement of comprehensive income 4 4

Consolidated statement of financial position 5 5

Consolidated statement of changes in equity 6 6

Consolidated statement of cash flows 7 7

Notes to the consolidated financial statements 8 8

1. General information 8 8

2. Accounting policies 13 13

3. Operating segments 34 34

4. Interest income and expense 36 36

5. Fee and commission income and expense 36 36

6. Net gains (losses) on financial instruments at fair value through profit or loss and foreign exchange gains (losses)37 37

7. Net gains (losses) of investment in financial assets 37 37

8. Net gains (losses) on derecognition of financial assets 37 37

9. Other operating income and expenses 38 38

10. General administrative expenses 38 38

11. Net allowances for expected credit losses 39 39

12. Income tax 39 39

13. Earnings per share 41 41

14. Contribution to the State Budget 41 41

15. Cash in Central Bank 41 41

16. Amounts due from banks 41 41

17. Derivative financial instruments 42 42

18. Derivative hedging instruments 42 42

19. Securities 45 45

20. Receivables and liabilities under reverse repurchase/repurchase agreements 48 48

21. Loans and advances to customers 48 48

22. Investments in associates 50 50

23. Intangible assets 53 53

24. Property, plant and equipment 54 54

25. Right-of-use assets 55 55

26. Investment property 57 57

27. Other assets 57 57

28. Amounts due to banks 57 57

29. Liabilities to customers 58 58

30. Debt securities issued 58 58

31. Lease liabilities 58 58

32. Other liabilities 59 59

33. Provisions 59 59

34. Equity 61 61

35. Proposed profit distribution of the parent entity 62 62

36. Contingent liabilities in respect of financial liabilities and guarantees granted and received 63 63

37. Additional information to the consolidated statement of cash flows 63 63

38. Related party transactions 65 65

39. Remuneration of the top executives of the Group entities 65 65

40. Changes in Group constituent entities 67 67

41. Fair value of financial assets and financial liabilities 67 67

42. Assets pledged as collateral for the payment of liabilities 72 72

43. Offsetting of financial assets and liabilities 73 73

Risk management objectives and principles 74 74

44. Risk management at the Group 74 74

45. Credit risk management 76 76

46. Managing liquidity risks 98 98

47. Market risk management 101 101

48. Operational risk management 107 107

49. Other risks 109 109

50. Capital adequacy and leverage risk 114 114

Other notes 119 119

51. Custody business 119 119

52. Information on the entity authorised to audit the financial statements 119 119

53. Major events subsequent to the reporting date 119 119

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Consolidated statement of profit or loss

Continuing operations | Note | 2024 | 2023
Interest income | 4 | 14,399 | 13,796
Interest income calculated with the use of the effective interest rate method |  | 13,981 | 12,891
Income of similar nature to interest income on instruments at fair value through profit or loss |  | 418 | 905
Interest expense | 4 | -10,024 | -9,487
Net interest income |  | 4,375 | 4,309
Fee and commission income | 5 | 530 | 471
Fee and commission expense | 5 | -23 | -20
Net fee and commission income |  | 507 | 451
Net gains (losses) on financial instruments at fair value through profit or loss and foreign exchange gains (losses) | 6 | 286 | 384
Net gains (losses) on investments in financial assets | 7 | 108 | 92
Net gains (losses) on derecognition of financial assets | 8 | 43 | 29
Other operating income | 9 | 17 | 8
Other operating expenses | 9 | -56 | -150
General administrative expenses | 10 | -979 | -868
Net allowances for expected credit losses | 11 | -673 | -399
Operating result |  | 3,628 | 3,856
Share of profit or loss of associates | 22 | 733 | 705
Profit before tax |  | 4,361 | 4,561
Income tax | 12 | -799 | -829
Net profit |  | 3,562 | 3,732
Net profit attributable to the owner of the parent entity |  | 3,562 | 3,732

Consolidated statement of comprehensive income

| Note | 2024 | 2023
Net profit |  | 3,562 | 3,732
Other comprehensive income |  | 132 | 551
Items that may be reclassified subsequently to profit or loss |  | -58 | 144
Revaluation of financial assets at fair value through other comprehensive income, gross |  | 30 | 287
Deferred tax on financial assets at fair value through other comprehensive income | 12 | -5 | -54
Share in other comprehensive income of associates, gross | 22 | 4 | 5
Deferred tax on share in other comprehensive income of associates | 12 | -1 | -1
Foreign exchange gains or losses on translating subordinates, gross |  | -53 | -164
Deferred tax on foreign exchange gains or losses on translating subordinates | 12 | 10 | 30
Cash flow hedge, gross | 18 | -53 | 51
Deferred tax on cash flow hedge | 12 | 10 | -10
Items that cannot be reclassified subsequently to profit or loss |  | 190 | 407
Revaluation and gain or loss on sale of equity instruments designated as at fair value through other comprehensive income, gross |  | 235 | 511
Deferred tax on revaluation and gain or loss on sale of equity instruments designated as at fair value through other comprehensive income | 12 | -45 | -97
Gains and losses due to measurement of defined benefit plans, gross | 33 | 0 | -9
Deferred tax on measurement of defined benefit plans | 12 | 0 | 2
Total net comprehensive income |  | 3,694 | 4,283
Net comprehensive income attributable to the owner of the parent entity |  | 3,694 | 4,283

Notes to the consolidated financial statements on the pages to follow form their integral part.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Consolidated statement of financial position

| Note | 31 Dec 2024 | 31 Dec 2023
Assets |  |  |
Cash and balances with the Central Bank | 15 | 50,065 | 4,068
Amounts due from banks | 16 | 12,748 | 9,726
Derivative financial instruments | 17 | 1,171 | 1,460
Derivative hedging instruments | 18 | 60 | 85
Securities | 19 | 133,604 | 153,483
Reverse repurchase agreements | 20 | 22,178 | 5,269
Loans and advances to customers | 21 | 42,999 | 42,624
Investments in associates | 22 | 6,640 | 5,600
Intangible assets | 23 | 214 | 194
Property, plant and equipment | 24 | 214 | 185
Right-of-use assets | 25 | 104 | 63
Investment property | 26 | 16 | 18
Deferred tax assets | 12 | 125 | 129
Other assets | 27 | 129 | 95
Total assets |  | 270,267 | 222,999
Liabilities and equity |  |  |
Liabilities |  |  |
Amounts due to banks | 28 | 3,978 | 4,459
Derivative financial instruments | 17 | 1,347 | 797
Derivative hedging instruments | 18 | 11 | 0
Liabilities to customers | 29 | 203,752 | 161,582
Repurchase agreements | 20 | 8,417 | 6,436
Debt securities issued | 30 | 1,822 | 1,831
Lease liabilities | 31 | 104 | 63
Other liabilities | 32 | 7,593 | 6,403
Current tax liabilities | 12 | 339 | 574
Provisions | 33 | 673 | 742
Total liabilities |  | 228,036 | 182,887
Equity |  |  |
Statutory capital |  | 34,338 | 34,023
Supplementary capital |  | 3,043 | 1,783
Revaluation reserve | 34 | 283 | 151
Other capital reserves |  | 232 | 232
Retained earnings (accumulated loss) |  | 773 | 191
Net profit (loss) for the current year |  | 3,562 | 3,732
Equity attributable to the owner of the parent entity |  | 42,231 | 40,112
Total equity |  | 42,231 | 40,112
Total liabilities and equity |  | 270,267 | 222,999

Notes to the consolidated financial statements on the pages to follow form their integral part.

Consolidated statement of changes in equity

Equity attributable to the parent entity |  |
|  |  |  | Revaluation reserve | Other capital reserves |  |

Changes in the period from 31 December 2023 to 31 December 2024 | Note | Statutory capital | Supplementary capital | Financial assets at fair value through other comprehensive income | Cash flow hedge | Actuarial gains and losses | Share in other comprehensive income of associates | Foreign exchange gains or losses on translating subordinates | Reserve capital | General banking risk reserve | Retained earnings | Total equity
31 December 2023 |  | 34,023 | 1,783 | 207 | 49 | -13 | 8 | -100 | 77 | 155 | 3,923 | 40,112
Total comprehensive income, including: |  | 0 | 0 | 215 | -43 | 0 | 3 | -43 | 0 | 0 | 3,562 | 3,694
net profit for the current year |  | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3,562 | 3,562
other comprehensive income for the period |  | 0 | 0 | 215 | -43 | 0 | 3 | -43 | 0 | 0 | 0 | 132
Retained earnings distribution, including: | 34 | 315 | 1,260 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -3,150 | -1,575
allocation to capital |  | 315 | 1,260 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -1,575 | 0
allocation for payment to the state budget |  | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -1,575 | -1,575
31 December 2024 r. |  | 34,338 | 3,043 | 422 | 6 | -13 | 11 | -143 | 77 | 155 | 4,335 | 42,231

Equity attributable to the parent entity |  |
|  |  |  | Revaluation reserve | Other capital reserves |  |

Changes in the period from 31 December 2022 to 31 December 2023 | Note | Statutory capital | Supplementary capital | Financial assets at fair value through other comprehensive income | Cash flow hedge | Actuarial profits and losses | Share in other comprehensive income of associates | Foreign exchange gains or losses on translating subordinates | Reserve capital | General banking risk reserve | Retained earnings | Total equity
31 December 2022 |  | 26,879 | 1,608 | -440 | 8 | -6 | 4 | 34 | 77 | 155 | 2,369 | 30,688
Total comprehensive income, including: |  | 0 | 0 | 647 | 41 | -7 | 4 | -134 | 0 | 0 | 3,732 | 4,283
net profit for the current year |  | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3,732 | 3,732
other comprehensive income for the period |  | 0 | 0 | 647 | 41 | -7 | 4 | -134 | 0 | 0 | 0 | 551
Retained earnings distribution, including: | 34 | 2,003 | 175 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -2,178 | 0
allocation to capital |  | 2,003 | 175 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -2,178 | 0
Statutory capital increase | 34 | 5,141 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 5,141
31 December 2023 |  | 34,023 | 1,783 | 207 | 49 | -13 | 8 | -100 | 77 | 155 | 3,923 | 40,112

Notes to the consolidated financial statements on the pages to follow form their integral part

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Consolidated statement of cash flows

Consolidated statement of cash flows | Note | 2024 | 2023
A. Cash flows from operating activities |  |  |
Net profit/loss |  | 3,562 | 3,732
Total adjustments: |  | 48,078 | 373
Income tax recognised in in profit or loss | 12 | 799 | 829
Depreciation and amortisation | 10 | 82 | 74
Profit/loss on investing activities |  | -736 | -705
Interest and dividends | 37 | 158 | 322
Foreign exchange gain/loss |  | -18 | -30
Changes in amounts due from banks | 37 | 79 | 108
Change in assets due under derivative financial instruments |  | 289 | 127
Change in assets due under derivative hedging instruments |  | -27 | -24
Change in securities |  | 20,145 | -10,291
Change in reverse repurchase agreements |  | -16,909 | 7,472
Change in loans and advances to customers |  | -375 | -5,552
Change in other assets |  | -34 | -11
Change in amounts due to banks |  | -157 | 21
Change in liabilities under derivative financial instruments |  | 550 | -562
Change in liabilities under derivative hedging instruments |  | 11 | 0
Change in liabilities to customers |  | 42,170 | 7,766
Change in repurchase agreements |  | 1,981 | -138
Change in provisions |  | -69 | -10
Change in other liabilities |  | 1,190 | 1,479
Income tax paid |  | -1,060 | -504
Other adjustments | 37 | 9 | 2
Net cash from operating activities |  | 51,640 | 4,105
B. Cash flows from investing activities |  |  |
Inflows |  | 693 | 124
Sale of investment property | 26 | 5 | 4
Sale of shares in associate | 22 | 576 | 116
Dividends received | 37 | 112 | 4
Outflows |  | 1,051 | 1,040
Purchase of property, plant and equipment | 24 | 52 | 83
Purchase of intangible assets | 23 | 57 | 107
Purchase of shares in associates | 22 | 942 | 850
Net cash from investing activities |  | -358 | -916
C. Cash flows from financing activities |  |  |
Inflows |  | 126 | 2,192
Long-term loans received |  | 126 | 368
Debt securities issued |  | 0 | 1,818
Increase in equity of the parent entity by the State Treasury |  | 0 | 6
Outflows |  | 2,309 | 4,711
Repayment of long-term loans |  | 441 | 433
Redemption of debt securities issued |  | 0 | 3,850
Repayment of interest |  | 259 | 398
Repayment of lease liabilities |  | 34 | 30
Transfer to the state budget - profit distribution |  | 1,575 | 0
Net cash from financing activities |  | -2,183 | -2,519
D. Net cash flows |  | 49,099 | 670
E. Cash at the beginning of the period |  | 13,447 | 12,777
F. Cash at the end of the period | 37 | 62,546 | 13,447

Notes to the consolidated financial statements on the pages to follow form their integral part.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Notes to the consolidated financial statements

## 1. General information

Bank Gospodarstwa Krajowego (the parent, the parent entity, the Bank, BGK) is the parent of the Bank Gospodarstwa Krajowego Group (the Group, the BGK Group). The Bank’s name has not changed since the end of the previous reporting period. The Bank does not have a parent entity. The Bank does not have any ultimate parent entity.

Bank Gospodarstwa Krajowego is a state-owned bank within the meaning of:

§ the Act of 29 August 1997 – Banking Law (Banking Law);

§ Act of 14 March 2003 on Bank Gospodarstwa Krajowego;

§ Articles of Association established by the Regulation of the Minister of Development of 16 September 2016 on the Adoption of the Articles of Association of Bank Gospodarstwa Krajowego.

BGK operates in Poland and has its registered office in Warsaw at Al. Jerozolimskie 7, 00-955 Warsaw, with mailing address: Varso 2 Building, Chmielna 73. Its NIP tax identification number is 525-00-12-372 and REGON statistical number is 000017319.

Apart from its Head Office, BGK operates in 16 Regions located in province capitals and representative offices based in Brussels, Frankfurt am Main and Kyiv.

The Bank is the parent of the Bank Gospodarstwa Krajowego Group and a significant investor for associates held by the Bank and its subsidiaries.

Pursuant to Art. 4 of the Act on Bank Gospodarstwa Krajowego, the key objectives of BGK’s activities include supporting the economic policy of the Council of Ministers, social and economic government programmes, including surety and guarantee programmes, as well as local government and regional development programmes, in particular:

§ projects financed with EU funds and international financial institutions, as defined by Art. 4 sec. 1 item 3 of the Banking Law;

§ infrastructure projects;

§ projects related to the development of micro, small and medium-sized enterprise sector;

– including those financed with public funds.

Pursuant to Art. 5 and 6 of the Act on Bank Gospodarstwa Krajowego, Bank realizes tasks that include, in particular:

§ performance of activities specified in the Banking Law;

§ administration of funds created by, entrusted with or transferred to BGK under separate legislation;

§ administration of export transactions with the use of export support instruments, and supporting exports of Polish goods and services under separate legislation or in performance of government programmes;

§ performance of activities related to credit institutions which were liquidated or regarded as liquidated,

in accordance with Art. 5 sec. 4 of the Act;

§ administration, whether direct or indirect, of guarantee and/or surety services under government surety and guarantee programmes or on behalf of and for the account of the State Treasury in accordance with the Act on Sureties and Guarantees Granted by the State Treasury and Certain Legal Persons, in particular to the micro, small and medium-sized enterprise sector;

§ issuing declarations which have the power of public documents within the meaning of Art. 95 sec. 1 of the Banking Law, enabling the deletion of entries made in Sections III and IV of Land and Mortgage Registers or document sets;

§ supporting the development of residential construction, in particular development of residential property for rent, under separate legislation or government programmes;

§ providing bank account services to the State budget;

§ providing bank account services to the local government budget administration;

§ providing bank account services to the accounts of state or local government legal persons established under separate legislation to carry out public functions;

§ other functions carried out with the use of public funds, as specified in agreements entered into with public administration bodies.

BGK may also fulfil the function of a body implementing a financial instrument or a fund of funds as referred to in Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund,

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

European Social Fund, Cohesion Fund and European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006.

BGK initiates actions and activates partners without competing with the market. It fills the economic gap and targets areas where the development offer for other economic operators is insufficient. Consistent efforts are made to strengthen the position of the Bank and the Polish economy on the international market. The 2021-2025 strategy defines three key external pillars (strategic directions, based on which BGK developed and influenced the market):

§ Sustainable Development, where the ambition is to support the socio-economic development of the country at least so as not to deteriorate living conditions for the future generations;

§ Social Commitment, thanks to which modern Polish statehood is built through social capital development in the area of education, culture, sport and ecology;

§ International Business and Cooperation, aimed at the improvement of the competitiveness of Polish economy by increasing the internationalisation of Polish enterprises and building awareness of Poland’s attractiveness among foreign investors as a country with high intellectual capital,

as well as two internal pillars (i.e. the manner of organisation and operation aimed at maximising the efficacy of activities in the business pillars):

§ Digital and process transformation that provides optimal conditions for a dynamic growth defined by the strategy through the process perfection and digitisation,

§ Effective Management Model, which ensures an increased scale of tasks completed with a view to meeting the ever more complex needs of the growing number of stakeholders.

An important element of the BGK Strategy for 2021-2025 are business model programmes that support the implementation of the strategy pillars. Programmes represent a collection of consistent activities and carefully selected products that satisfy the needs of key stakeholders. Their goals result from the state policy, the bank’s strategy and the need to bridge the identified market gaps. Each programme seeks to develop its respective segment of the economy in the direction defined in its objective.

Eight dedicated programs are the answer to how the bank wants to reach the market, respond to needs and adapt solutions:

§ Industrial Development,

§ Infrastructure, Transport and Logistics,

§ Entrepreneurship Development,

§ Strategic Security,

§ Healthcare,

§ Public Finance,

§ Social and Territorial Cohesion,

§ Housing.

In 2024, a survey of key areas of the bank was carried out, diagnosing the state of the organization's activities. Based on the conclusions of the analysis, as well as in response to the dynamically changing economic and socio-political environment, the Bank planned to update its strategic programmes. Work has begun on a new strategy, taking into account the needs of recipients such as: enterprises, society and the state.

Composition of the Bank’s Supervisory Board

In 2024, the composition of the Bank’s Supervisory Board changed as follows:

§ The Prime Minister removed from the composition of the Supervisory Board: Jerzy Szmit and Kazimierz Kujda on 11 January 2024, Beata Gorajek, Adam Rudzewicz and Michał Gajewski on 15 February 2024, Honorata Krysiewicz on 15 March 2024, Wojciech Maj on 27 March 2024, Magdalena Tarczewska-Szymańska and Michał Kuczmierowski on 12 April 2024; Paweł Borys from the position of the Chairman of the Supervisory Board on 25 April 2024; Gertruda Uścińska on 24 June 2024 and Jarosław Dąbrowski on 5 August 2024;

§ Katarzyna Przewalska has submitted her resignation as a member of the Supervisory Board as of 31 May 2024;

§ The Prime Minister appointed as a member of the Supervisory Board: Marcin Buczyński, Jarosław Dąbrowski, Magdalena Miętus, Jacek Pierzyński, Katarzyna Przewalska, Zbigniew Stasiak and Tomasz Szałwiński on 16 February 2024; Michał Prawdzic Łaszcz for the position of a Chairman of the Supervisory Board and Bartłomiej Opaliński on 26 April 2024; Marek Hermach on 25 June 2024, Michał Świtalski on 1 July 2024, Jacek Barylski on 11 July 2024, Jakub Sawulski on 24 July 2024 and Dariusz Kacprzyk on 1 September 2024.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Composition of the Bank's Supervisory Board as at 31 December 2024:

§ Michał Prawdzic Łaszcz - Chairman of the Supervisory Board,

§ Bartłomiej Opaliński – First Deputy Chairman of the Supervisory Board,

§ Magdalena Miętus – Secretary of the Supervisory Board,

§ Jacek Barylski – Member of the Supervisory Board,

§ Marcin Buczyński – Member of the Supervisory Board,

§ Marek Hermach – Member of the Supervisory Board,

§ Dariusz Kacprzyk – Member of the Supervisory Board,

§ Jacek Pierzyński – Member of the Supervisory Board,

§ Jakub Sawulski – Member of the Supervisory Board,

§ Zbigniew Stasiak – Member of the Supervisory Board,

§ Tomasz Szałwiński – Member of the Supervisory Board,

§ Michał Świtalski – Member of the Supervisory Board.

From 31 December 2024 to the date of signing the financial statements, there were no changes in the composition of the Bank's Supervisory Board.

Composition of the Bank’s Management Board

The following changes occurred in the composition of the Bank’s Management Board in 2024:

§ The Prime Minister dismissed: Beata Daszyńska-Muzyczka from the position of the President of the Management Board of BGK on 11 January 2024, Paweł Nierada from the position of the First Vice-President of the Management Board on 11 April 2024, Marek Tomczuk from a position a Member of the Management Board on 12 April 2024, Radosław Kwiecień from the position of a Member of the Management Board on 27 June 2024 and Tomasz Robaczyński from the position of a Member of the Management Board on 2 July 2024;

§ The Prime Minister appointed Mirosław Czekaj for the position of the President of the Management Board of the Bank on 12 April 2024, under the condition of obtaining the consent of the Polish Financial Supervision Authority, at the same time entrusting the performance of the duties of the Chairman until obtaining the consent in question and Marta Postuła for the position of the First Vice-President of the Management Board; Maciej Kliś for the position of the Vice-President of the Management Board on 26 April 2024, Leszek Stypułkowski for a position of a Member of the Management Board on 28 June 2024 and Mateusz Szczurek and Jarosław Dąbrowski for a position of Members of the Management Board on 6 August 2024;

§ In addition, on 19 June 2024, the Supervisory Board adopted resolutions on the suspension of the activities of Tomasz Robaczyński, a Member of the Management Board of BGK and on the suspension of the activities of Radosław Kwiecień, a Member of the Management Board of BGK.

§ On 18 July 2024, the Polish Financial Supervision Authority consented to the appointment of Mirosław Czekaj as the President of the Management Board;

§ On 25 October 2024, the Polish Financial Supervision Authority approved Mateusz Szczurek's appointment as a Member of the Management Board supervising the management of significant risks in the operation of Bank Gospodarstwa Krajowego.

Composition of the Bank's Management Board as at 31 December 2024:

§ Mirosław Czekaj – President of the Management Board

§ Marta Postuła – First Vice-President of the Management Board,

§ Maciej Kliś – Vice-President of the Management Board,

§ Jarosław Dąbrowski – Member of the Management Board,

§ Leszek Stypułkowski – Member of the Management Board,

§ Mateusz Szczurek – Member of the Management Board.

From 31 December 2024 to the date of signing the financial statements, there were no changes in the composition of the Bank's Management Board.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

### 1.1. Composition of the Bank Gospodarstwa Krajowego Group

As at 31 December 2024, Bank Gospodarstwa Krajowego Group consists of Bank Gospodarstwa Krajowego (parent) and its following subsidiaries:

FIZ AN Fundusz Ekspansji Zagranicznej (Foreign Expansion Fund) supports foreign expansion by investing in foreign operations of Polish companies. As of April 2023, FEZ FIZ AN entered a divestment period.

Vinci S.A. is a company appointed to manage Alternative Investment Companies (AIC), in which the Bank is an investor. The purpose of the company is to implement the Bank's mission by making investments in line with the investment policies of individual AICs. Vinci S.A. currently manages the following companies: Vinci S.A. HiTech ASI S.K.A, Vinci S.A. IQ ASI S.K.A. and Vinci S.A. Da Gama ASI S.K.A.

Vinci S.A. HiTech ASI S.K.A. is an Alternative Investment Company, whose investment activities are focused on high-technology sectors, such as automotive, biotechnology, power generation, space, and ICT industries, as well as industry 4.0. The company provides support to businesses at the stage of product or service commercialisation and growth financing by engaging in investment projects at any stage between early development and maturity.

Vinci S.A. IQ ASI S.K.A is an Alternative Investment Company looking for Polish innovative research and development projects at early stages of development. The company operates in the form of an incubation investment vehicle, focusing on projects characterised by high level of scientific and technical expertise, patentability and commercial potential.

Vinci S.A. Da Gama ASI S.K.A in an Alternative Investment Company, whose business consists in financing investment projects and expansion of Polish businesses into foreign markets to increase the scale of their operations and global competitiveness. The company supports enterprises in the expansion stage or mature businesses that plan to expand their operations abroad, filling the gap in the limited offer of relevant forms of support for foreign expansion of Polish businesses.

### 1.2. Subsidiaries

Composition of the BGK Group is shown in the table below

Composition of the BGK Group |  |  |  |
Entity name | Registered office | Scope of business | Direct/indirect interest held by the parent entity in the entity’s capital (%)
31 Dec 2024 | 31 Dec 2023
Investments of Bank Gospodarstwa Krajowego
Fundusz Ekspansji Zagranicznej FIZ AN | Warsaw | investment of proceeds from fund participants | 100% | 100%
VINCI S.A. | Warsaw | fund management activities | 100% | 100%
VINCI S.A. Hitech Alternatywna Spółka Inwestycyjna S.K.A. | Warsaw | investment of proceeds from the company’s investors | 100% | 100%
VINCI S.A. IQ Alternatywna Spółka Inwestycyjna S.K.A. | Warsaw | investment of proceeds from the company’s investors | 100% | 100%
VINCI S.A. Da Gama Alternatywna Spółka Inwestycyjna S.K.A. | Warsaw | investment of proceeds from the company’s investors | 100% | 100%

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

### 1.3. Associates

BGK Group has the following associates:

Associates |  |  |  |
Entity name | Registered office | Scope of business | Interest held by the parent entity in the entity’s capital (%)
31 Dec 2024 | 31 Dec 2023
Investments of Bank Gospodarstwa Krajowego
Three Seas Initiative Investment Fund S.A. SICAV-RAIF | Luxemburg | investment activity | 80.81% | 80.81%
PFR Fundusz Inwestycyjny Fundusz Inwestycyjny Zamknięty Aktywów Niepublicznych | Warsaw | investment of proceeds from fund participants | 34.15% | 30.02%
Korporacja Ubezpieczeń i Kredytów Eksportowych S.A. | Warsaw | insurance activities | 48.45% | 48.45%
Krajowa Grupa Poręczeniowa Sp. z o.o. | Warsaw | surety activities | sale | 39.29%
Świętokrzyski Fundusz Poręczeniowy Sp. z o.o. | Kielce | surety activities | 49.99% | 49.99%
Fundusz Pomerania Sp. z o.o. | Szczecin | surety activities | 35.34% | 41.15%
Samorządowy Fundusz Poręczeń Kredytowych Sp. z o.o. of Gostyń | Gostyń | surety activities | 35.33% | 35.48%
Śląski Regionalny Fundusz Poręczeniowy Sp. z o.o. | Katowice | surety activities | 46.08% | 46.08%
Poznański Fundusz Poręczeń Kredytowych Sp. z o.o. | Poznań | surety activities | 44.44% | 44.44%
Dolnośląski Fundusz Gospodarczy Sp. z o.o. | Wrocław | surety activities | 42.62% | 42.62%
Małopolski Regionalny Fundusz Poręczeniowy Sp. z o.o. | Kraków | surety activities | 36.87% | 36.87%
Warmińsko-Mazurski Fundusz Poręczenia Kredytowe Sp. z o.o. | Działdowo | surety activities | 36.19% | 36.19%
Małopolski Fundusz Poręczeń Kredytowych Sp. z o.o. w likwidacji (in liquidation) | Nowy Sącz | surety activities | 32.86% | 32.86%
Investments of Fundusz Ekspansji Zagranicznej FIZ AN
UAB EMP Recycling | Galines (Lithuania) | acquisition, processing, and sale of recyclable waste | 49.00% | 49.00%
ASM Germany GmbH | Nuremberg (Germany) | sales support services | 49.90% | 49.90%
G+M GmbH | Marktzeuln (Germany) | manufacture of precast concrete products | 24.00% | 24.00%
White Olive A.E. | Athens (Greece) | hotel activities in Greece | 28.46% | 28.46%
Netguru LLC | Camdem (USA) | IT consultancy firm in the USA | 49.99% | 49.99%
Vinci Spółka Akcyjna Da Gama Alternatywna Spółka Inwestycyjna S.K.A.
Ready Bathroom Sp. z o.o. | Legnica | manufacture of other articles of concrete, plaster and cement | 31.59% | 31.59%*
Aicon X-Ray SPV Sp. z o.o. | Warsaw | manufacturer of X-ray inspection equipment for the food industry | 33.70% | -
Kodano S.A. | Kraków | manufacture of prescripton lenses and operation of optical stores | 21.74% | -
Vinci S.A. Hitech Alternatywna Spółka Inwestycyjna S.K.A.
MMI Sp. z o.o. | Redzikowo | manufacture of buses | 14.53% | -
Vinci S.A. IQ Alternatywna Spółka Inwestycyjna S.K.A.
Quantum Innovations Sp. z o.o. | Warsaw | research and experimental development in the field of biotechnology | 27.46% | -

* target value of the share was registered in the National Court Register (KRS) in January 2024.

BGK is the initiator and co-founder of Three Seas Initiative Investment Fund S.A. SICAV-RAIF (the Three Seas Initiative Investment Fund). It is an alternative investment fund established to implement commercial infrastructure projects which are significant growth drivers for economies of countries located in the Three Seas Region (Central and Eastern Europe between the Baltic Sea, the Black Sea and the Adriatic). The Bank’s role is to perform the arrangements regarding the Fund’s strategy and structure established with partners from development institutions of the Three Seas Initiative member states, thus it does not have control over the Fund within the meaning of IFRS. The lack of control over the Fund results from the fact that despite holding majority of the Fund’s shares and being exposed to the volatile Financial performance of the Fund, the Bank does not have the ability to direct its relevant activities that significantly affect the

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Fund’s financial performance, i.e. to make decisions on the acquisition and disposal of the Fund’s investments. The Bank is not represented by a majority of members on the Management Board and the Supervisory Board. Therefore, not all of the elements of control set out in IFRS 10 are met.

## 2. Accounting policies

### 2.1. Basis of preparation of the consolidated financial statements and statement of compliance

These consolidated financial statements of the Bank Gospodarstwa Krajowego Group contain data for the financial year from 1 January to 31 December 2024 as well as comparative financial data for the financial year from 1 January to 31 December 2023.

These consolidated financial statements of the Bank Gospodarstwa Krajowego Group for 2024 (“consolidated financial statements”) have been prepared in accordance with the International Financial Reporting Standards approved by the European Union as at 31 December 2024 and the related interpretations published as Commission Regulations (IFRS), and to the extent not regulated by the aforesaid standards in accordance with the requirements of the Accounting Act of 29 September 1994 (Polish Accounting Standards, PAS) and secondary legislation thereto.

Financial data of subsidiaries and associates which do not apply the accounting principles according to IFRS was adjusted to align it to the accounting principles used by the Group.

These consolidated financial statements of the Group were prepared based on the following measurement principles:

§ at fair value for financial assets and liabilities measured at fair value through profit or loss, including financial assets held for trading, and for financial assets measured at fair value through other comprehensive income,

§ at amortised cost for other financial assets, including loans and advances and other financial liabilities,

§ at purchase cost or manufacturing cost less accumulated depreciation and amortisation and impairment charge, for property, plant and equipment, intangible assets and right-of-use assets,

§ at fair value for investment property.

Unless otherwise stated, the financial data in the financial statements is presented in Polish zloty, rounded to PLN 1 million. In view of the above, in some cases mathematical inconsistencies may occur in totals or between individual notes, which are due to roundings.

These consolidated financial statements were approved for issue by the Management Board of Bank Gospodarstwa Krajowego on 11 April 2025. The financial statements of Bank Gospodarstwa Krajowego are published on the same date as the consolidated financial statements of the Bank Gospodarstwa Krajowego Group for 2024.

### 2.2. Going concern

These consolidated financial statements have been prepared on the assumption that the Group will continue as a going concern for at least twelve months after the reporting date. As at the date of approval of these financial statements, the Management Board of the Bank did not identify any facts or circumstances that would pose a risk for the Group to continue as a going concern as a result of intended or forced discontinuation or material limitation of its operations. The law also excludes the possibility of announcement of the Bank’s bankruptcy. Pursuant to Art. 3 sec. 2 of the Act on Bank Gospodarstwa Krajowego, BGK is subject to Art. 6 item 4 of the Bankruptcy and Restructuring Law. According to this provision, bankruptcy cannot be declared for institutions and legal persons established under an act, unless the act stipulates otherwise, and established in performance of an obligation imposed by an act.

### 2.3. Amendments to accounting standards

The accounting policies applied in preparing these financial statements for 2024 are consistent with the policies applied in preparing the Group’s annual financial statements for the year ending on 31 December 2023, save for the effect of application of new or amended standards and interpretations effective for periods beginning on or after 1 January 2024.

Standards and interpretations and amendments to standards and interpretations which were applied in the financial year 2024

The following amendments to existing standards issued by the International Accounting Standards Board (IASB) and approved for use in the European Union (EU) were applied for the first time in the Group’s financial statements for 2024:

§ Amendments to IFRS 16 Leases – Lease Liability in a Sale and Leaseback, approved in the EU on 20 November 2023 (effective for annual periods beginning on or after 1 January 2024).

§ Amendments to IAS 1 – Presentation of Financial Statements – Classification of Liabilities as Current or Non-current, approved in the EU on 19 December 2023 (effective for annual periods beginning on or after 1 January 2024),

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

§ Amendments to IAS 1 – Presentation of Financial Statements: Non-current Liabilities with Covenants, approved in the EU on 19 December 2023 (effective for annual periods beginning on or after 1 January 2024),

§ Amendments to IAS 7 – Statement of Cash Flows and IFRS 7 – Financial Instruments: Disclosures: Supplier Finance Agreements, approved in the EU on 15 May 2024 (effective for annual periods beginning on or after 1 January 2024).

The above amendments to existing standards have no material effect on the Group’s financial statements for 2024 or do not apply to the Group.

Standards and interpretations and amendments to standards and interpretations which were issued by the IASB and approved by the EU, but have not yet become effective and in respect of which the Group has not opted for early application

New standards and amendments to existing standards which were issued by the IASB and approved by the EU, but have not yet become effective and the Bank has not opted for early application:

§ Amendments to IAS 21 – Effects of Changes in Foreign Exchange Rates: No Exchangeability, approved in the EU on 12 November 2024 (effective for annual periods beginning on or after 1 January 2025).

The above amendments to existing standards have no material effect on the Group’s financial statements for 2024 or do not apply to the Group.

Standards and interpretations and amendments to standards and interpretations which were published by the IASB, but have not yet been approved for use in the EU

The EU-approved IFRS do not differ significantly from the regulations issued by the International Accounting Standards Board (IASB), with the exception of the following new standards and amendments to standards, which have not yet been approved for use in the EU:

§ Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7) (effective for annual periods beginning on or after 1 January 2026)

§ IFRS 18 – Presentation and Disclosure in Financial Statements (effective for annual periods beginning on or after 1 January 2027),

§ IFRS 19 – Subsidiaries without Public Liability: Disclosures (effective for annual periods beginning on or after 1 January 2027).

§ Annual amendments to IFRS standards (vol. 11, effective for annual periods beginning on or after 1 January 2026), including amendments to IFRS 1 – First-time Adoption of International Financial Reporting Standards, IFRS 7 – Financial Instruments; Disclosures, IFRS 7 – Financial Instruments; Disclosures, IFRS 9 – Financial Instruments, IFRS 10 – Consolidated Financial Statements, and IAS 7 – Statement of Cash Flows: Cost-Based Method,

§ Contracts relating to electric power dependent on the forces of nature (Amendments to IFRS 9 and IFRS 7) (effective for annual periods beginning on or after 1 January 2026).

The Group estimates that the above new standards (except IFRS 18) and amendments to existing standards would not have had a material effect on these financial statements if they had been applied by the Group as at 31 December 2024 or they do not apply to the Group.

The Group expects that the application of IFRS 18 will have an impact on the presentation and scope of disclosures in the consolidated financial statements. The Group is in the process of verifying the impact of the standard on the consolidated financial statements.

### 2.4. Estimates and assumptions

The Group makes certain estimates and assumptions that affect both the financial statements and the accompanying notes. The estimates and assumptions made by the Group for purposes of recognition of the respective amounts of assets and liabilities as well as revenue and costs are based on historical data and other factors which are available and considered appropriate under given circumstances.

The assumptions concerning the future and the available data are used for purposes of estimating the carrying amounts of assets and liabilities that cannot be measured reliably using other sources. While making such assumptions, the Group considers causes and sources of uncertainty that it is able to foresee at the end of the reporting period. Actual results may differ from estimates.

The estimates and assumptions made by the Group are reviewed on a regular basis. Estimation adjustments are recognised in the period when the estimates are modified, if they pertain to that period only. If the adjustments affect both the period of the modification and future periods, they are recognised in the period of the modification and in the future ones.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The most important estimates made by the Group include:

§ allowances for expected credit losses,

§ estimates of the impact of the so-called credit holidays which were introduced by the Act of 7 July 2022 on Social Financing for Business Ventures and Assistance to Borrowers,

§ fair value of financial instruments,

§ estimates of provisions for legal risk related to the CHF-indexed mortgage loan portfolio.

Allowances for expected credit losses

The Group applies provisions of IFRS 9 regarding impairment of financial assets for the sake of recognition and measurement of allowances for expected credit losses, which in case of credit exposures are measured at amortised cost or at fair value through other comprehensive income. The methods for impairment assessment and calculation of expected credit losses are described in Note 45.2.

With regards to expected credit losses, the Group proceeded further with the analysis of the situation concerning Russian aggression against Ukraine and took appropriate measures on an ongoing basis to address its potential impact on credit risk.

In 2024, there were no material changes in classification of financing in Ukrainian, Russian and Belarusian markets. The Group continued to monitor and assess ongoing debt service process. Gross loan exposure (mainly denominated in EUR) in the aforementioned markets as of 31 December 2024 was lower by approx. 30% compared to the end of 2023 and mainly resulted from repayments of financing in the Belarusian market (the decrease in 2023 amounted to approx. 33%).

In 2024, cyclical comprehensive stress tests were carried out to analyse various scenarios of the impact of ESG risk factors on the loan portfolio. ESG risks analysed also included the rise of energy commodity prices and disruptions in Eastern supply chains resulting from war sanctions imposed.

The analysis above covered the industries that are most vulnerable to the consequences of rising energy commodity prices, including the chemical and district heating industry. The results of this analysis triggered reclassification to stage 2 of exposures to customers operating in the chemical and district heating industries, which ceased to apply in June 2024.

In 2024, the Group performed a cyclical review of the “Methodology for the recognition and measurement of expected credit losses”, which resulted in changes regarding:

§ group analysis – implementation of the KNF recommendations concerning, among others, a significant increase in credit risk (SICR), testing the adequacy of allowances and its parameters, macro adjustment, eligibility criteria for exposures with low credit risk, determination and calculation of charge parameters,

§ clarifing the provisions regarding reclassification, quarantine and evidence of impairment,

§ making changes to the quarantine period,

§ updating the security recovery table,

§ clarifing the criteria for classification for the commitment reduction test,

§ supplementing the catalogue of reasons for the creation of POCI assets,

§ updating the Proof of Impairment for Special Purpose Vehicles (DUW SPV) catalogue for market practice.

Changes in the methodology did not affect the amount of expected credit losses. They involved clarification of wording and bringing it in line with the applicable regulations.

The tables below present the estimated effect of changes in the present value of cash flows as well as PD and LGD on the amount of allowances for expected credit losses – for three stages of measurement.

Effect of an increase/decrease in the present value of cash flows on impairment allowances for impaired exposures – tested on an individual basis – Stage 3 | 31 Dec 2024 | 31 Dec 2023
Increase/decrease in the present value of cash flows | 10% | -10% | 10% | -10%
Estimated change in impairment allowances on balance sheet exposures valued on an individual basis | -152 | 195 | -135 | 175
Estimated change in allowances for off-balance sheet liabilities measured on an individual basis | -73 | 82 | -82 | 93

Effect of an increase/decrease in LGD on the level of allowances for impaired exposures – measured on a collective basis – Stage 3 | 31 Dec 2024 | 31 Dec 2023
LGD increase/decrease scenario | 10% | -10% | 10% | -10%
Estimated change in impairment allowances on balance sheet exposures valued on a collective basis | 34 | -47 | 24 | -40

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Effect of an increase/decrease in PD and LGD on impairment allowances on for non-impaired exposures – Stage 1 and 2 | 31 Dec 2024 | 31 Dec 2023
PD value increase/decrease scenario | 10% | -10% | 10% | -10%
Estimated change in impairment allowances on non-impaired balance sheet exposures | 66 | -67 | 52 | -52
Estimated change in allowances for non-impaired off-balance sheet liabilities | 36 | -36 | 30 | -30
LGD increase/decrease scenario | 10% | -10% | 10% | -10%
Estimated change in impairment allowances on non-impaired balance sheet exposures | 66 | -67 | 52 | -52
Estimated change in allowances for non-impaired off-balance sheet liabilities | 36 | -36 | 30 | -30

Estimates of the impact of the so-called credit holidays introduced by the Act on Social Financing for Business Ventures and Assistance to Borrowers

On 7 May 2024, the Act of 12 April 2024 amending the Act on assistance for borrowers who have taken out a housing loan and are in a difficult financial situation and the Act on Social Financing for Business Ventures and Assistance to Borrowers have been published in the Journal of Laws. The Act introduced, among others, the possibility for some borrowers to suspend repayment of up to 4 monthly mortgage installments in the period from 1 June to 31 December 2024. In May 2024, the Bank made a one-off charge due to the effect of recognising loan relief on interest income by PLN 50.7 million. As at 31 Dec 2024, the Bank posted a loss in the amount of PLN 50.7 million as interest income (systematically during the year together with the utilisation or expiry of the period for utilisation of holidays by eligible clients).

Fair value of financial instruments

Derivatives, unlisted debt securities and receivables recognised in the statement of financial position at fair value, with no active market identified, are measured using generally accepted valuation techniques, using inputs based on observable market data and professional judgement to the maximum extent possible. The valuation techniques and inputs are reviewed on a regular basis.

The estimated effect of changes in the fair value valuation of derivatives with a symmetrical risk profile, unlisted debt securities at fair value through other comprehensive income, and amounts due classified in the fair value through profit or loss category, due to a parallel shift in the yield curve is presented in the tables below.

Change in the valuation of derivatives with a linear risk profile due to a parallel shift in the profitability curve | 31 Dec 2024 | 31 Dec 2023
Change in the valuation due to a parallel shift in the yield curve by: | + 50bp | - 50bp | + 50bp | - 50bp
Change in measurement of derivatives (assets decreased by liabilities) | -47 | 47 | -44 | 44

Change in the fair value measurement of unlisted debt securities at fair value through other comprehensive income due to a parallel shift in the yield curve | 31 Dec 2024 | 31 Dec 2023
Change in the valuation due to a parallel shift in the yield curve by: | + 50bp | - 50bp | + 50bp | - 50bp
Change in valuation of unlisted financial instruments | -1 | 1 | -5 | 5

Estimates of provisions for legal risk related to the CHF-indexed mortgage loan portfolio

As of 31 December 2024, the Bank reassessed the provision for legal risk related to the CHF-indexed mortgage loan portfolio in terms of the size of the active portfolio, the number and dynamics of settlements concluded, the use of the provision and the impact of lawsuits in relation to the active and repaid portfolio. As a result of the estimate, no need was identified to increase the level of provisions that were created in 2023, when the provision for legal risk related to the CHF-indexed mortgage loan portfolio was updated, and the details of the calculation were described in the financial statements of Bank Gospodarstwa Krajowego for the financial year ended 31 December 2023.

As of the date of preparation of the consolidated financial statements, BGK does not anticipate the need to create additional provisions for legal risk related to mortgage loans indexed to CHF. In BGK's opinion, the estimation of legal risk should be maintained at the current level.

BGK plans to continue monitoring the amount of provisions, and any re-estimations will depend on the number of new lawsuits and settlements in 2025 – if their number exceeds expectations, this will be the basis for conducting an additional analysis in the quarter following the exceedance of the assumed threshold.

Based on the current practice, the Bank intends to continue the existing settlement process and treats this scenario as the primary one.

For details on the amount of provisions for litigation and legal risks see Note 33 “Provisions”.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

### 2.5. Significant accounting policies

2.5.1. Presentation of the statement of financial position and the statement of profit or loss of the parent entity

Apart from own activities, the parent entity carries out commissioned activities, as part of which it operates:

§ funds created, entrusted or transferred to BGK under separate legislation, balance sheets and profit or loss of which are not audited by a statutory auditor, but are presented as appendices to BGK’s financial statements (Funds):

- Inland Waterways Fund;

- National Road Fund;

- Railway Fund;

- Thermo-modernisation and Renovation Fund;

- Student Loan Fund;

- Subsidy Fund;

- Borrower Support Fund;

- National Guarantee Fund;

- Polish Science Fund;

- COVID-19 Response Fund;

- Liquidity Guarantee Fund;

- Tourist Refund Fund;

- Government Housing Development Fund (liquidated on 20 December 2024);

- Ecological Surety and Guarantee Fund;

- Medical Studies Loan Fund;

- Government Housing Fund;

- Aid Fund;

- Armed Forces Support Fund;

- Crisis Guarantee Fund;

- Government Road Development Fund.

§ social and economic programmes, as well as programmes of local governments and regional development supported by public funds, including EU funds (Programmes).

For detailed information on parent's commissioned activities see the Report of the Management Board on the Activities of the BGK Group in 2024 – Integrated report.

In the statement of financial position, the parent entity presents own activities and that part of commissioned activities which is treated as the Bank’s assets and liabilities under IFRS. In the case of the Funds, these include the amounts due of the Bank or liabilities to such Funds resulting from mutual settlements (the Funds’ cash flows are carried out through the Bank). As for the Programmes, these include in particular cash transferred to the Bank, to designated bank accounts.

The parent entity’s statement of profit or loss presents revenue and costs related to own activities and does not include revenue and costs of Funds and Programmes, except for costs incurred by the Bank for the purpose of management of commissioned activities and revenue obtained as remuneration for such management.

Pursuant to the relevant laws and agreements concluded with public administration bodies acting as coordinators for individual flow funds, the Bank performs tasks in the area of financial planning, securing debt financing, as well as management of liquidity and operating activities of the funds. Given that flow funds do not have legal personality, the Bank is also the party acting on behalf of the funds in the case of agreements signed with counterparties.

2.5.2. Consolidation principles

Subsidiaries

These financial statements comprise the financial statements of the parent entity and the financial statements of its subsidiaries, prepared for the year ending 31 December 2024. The accounting policies applied by the subsidiaries are in line with PAS.

The financial data of subsidiaries subject to consolidation, after the taking into account the adjustments to ensure compliance with IFRS, are prepared for the same reporting period as the parent company’s statement, using consistent accounting rules, based on uniform accounting policies applied for transactions and economic events of a similar nature.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Subsidiaries are consolidated in the period from the date when the parent entity assumes control of those entities, until the date when control is no longer exercised. It is assumed that the parent entity controls an investee if and only if the parent entity:

§ exercises power over the investee,

§ is exposed, or has rights, to variable returns from its involvement with the investee, and

§ has the ability to use its power over the investee to affect the amount of its returns.

If the facts and circumstances indicate that at least one of the aforesaid three elements of control has changed, the Group has to reassess whether or not it still controls the entity. When assessing whether or not the parent entity has control over an investee if it holds less than the majority of voting rights in that investee, the parent entity considers other facts and circumstances to determine whether or not it has power over that investee, with particular focus on the contractual arrangements between the Group and other holders of voting rights, rights resulting from other contractual arrangements, voting rights held by the Group as well as potential voting rights.

In the consolidated financial statements:

§ similar items of assets, liabilities, equity, income, expenses and cash flows of the parent entity and its subsidiaries are aggregated,

§ the carrying amount of the parent entity’s investment in each subsidiary and the parent entity’s portion of equity of each subsidiary is set off (eliminated),

§ intra-group assets and liabilities, equity, income, expenses and cash flows resulting from transactions between the Group entities are eliminated in whole.

Associates

An associate is an entity over which the Group has significant influence, i.e. the power to participate in decisions about the financial and operating policy of the investee, which does not involve control or joint control of those policies.

The financial statements of associates and of the parent entity are prepared for the same reporting period.

In these financial statements, associates are accounted for using the equity method. Before calculating the share in net assets of associates, relevant adjustments are made to ensure compliance of the associates’ financial information with IFRSs applied by the parent entity.

These financial statements present the Group’s share of profit or loss of associates determined by reference to its interest in their equity, from the date when significant influence begins to be exercised to the date when it expires. If the Group’s share of loss of an associate exceeds the value of stock in that associate, the carrying amount is reduced to zero. At that point, no additional losses are recognised, except those resulting from the Group’s assumption of legal or constructive obligations or from a payment made on behalf of an associate.

2.5.3. Foreign currencies

Functional and presentation currency

Polish zloty is the functional currency (the currency of the primary economic environment where the Group operates) of the parent entity and other entities presented in these financial statements, except for Fundusz Ekspansji Zagranicznej FIZ AN and the Three Seas Initiative Investment Fund.

Euro is the functional and presentation currency of Fundusz Ekspansji Zagranicznej FIZ AN and its investments, except for investments in Netguru LLC where the functional and presentation currency is the US dollar.

Euro is the functional and presentation currency of the Three Seas Initiative.

Conversion of financial data of the Group entities

Assets and liabilities and equity relating to the investment in Fundusz Ekspansji Zagranicznej FIZ AN, as recognised in these financial statements, were translated from EUR, i.e. the functional currency of the Fund, into Polish zloty at the following exchange rates:

§ conversion of balance sheet items as at 31 December 2024 – the mid-exchange rate quoted by the National Bank of Poland as at 31 December 2024, i.e. 4.2730, except for retained earnings/accumulated loss which employs an arithmetic mean of the mid-exchange rates as at the last day of each month in which the Fund carried out activity,

§ to convert the items from the profit and loss for 2024, the arithmetic mean of the average exchange rates announced by the National Bank of Poland on the last day of each month, i.e. January – December 2024, i.e. 4.3042

Any related foreign exchange gains or losses are recognised in other comprehensive income.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Conversion of foreign currency items

Foreign exchange differences arising from the balance-sheet valuation of the cash assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Foreign exchange gains (losses) arising from revaluation of equity instruments classified as financial assets measured at fair value through other comprehensive income are recognised in other comprehensive income.

At the end of each reporting period:

§ foreign currency monetary items are converted at the closing rate,

§ non-cash items that are measured in terms of historical cost in a foreign currency are converted using the exchange rate on the date of the transaction,

§ non-cash items measured at fair value in a foreign currency are converted using the exchange rates from the date when the fair value was measured.

Assets and liabilities, and off-balance-sheet liabilities in foreign currencies and indexed to a foreign exchange rate are measured at the mid-exchange rate quoted for a given currency by the NBP as at the reporting date.

Mid-exchange rates of selected foreign currencies relative to Polish zloty:

Currency | 31 Dec 2024 | 31 Dec 2023
EUR | 4.2730 | 4.3480
GBP | 5.1488 | 4.9997
USD | 4.1012 | 3.9350
CHF | 4.5371 | 4.6828

2.5.4. Cash and cash equivalents

Cash and cash equivalents include cash in nostro account at the National Bank of Poland and in the current accounts in banks and other cash with original maturity of up to 3 months. These assets are recognised at nominal value.

2.5.5. Financial assets and financial liabilities

2.5.5.1. Initial recognition

The Bank recognises a financial asset or a financial liability in its statement of financial position when, and only when, it becomes party to the contractual provisions of the financial instrument. Standardized purchase or sale transactions of financial assets are recognised on the trade date. Initially, the Bank values financial assets or financial liabilities at fair value. In the case of a financial asset or financial liability not at fair value through profit or loss, the fair value is increased or decreased by transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.

2.5.5.2. Classification and measurement

Classification of financial assets that are not equity instruments

The Group classifies financial assets that are not equity instruments to one of the following categories:

1) financial assets at amortised cost;

2) financial assets at fair value through other comprehensive income;

3) financial assets at fair value through profit or loss, including:

§ obligatorily measured at fair value through profit or loss,

§ irrevocably designated as at fair value through profit or loss at initial recognition.

Financial assets measured at amortized cost

The Group classifies financial assets that are not equity instruments to this category, if:

1) the asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and

2) the contractual terms of the financial asset give rise on specified dates to cash ﬂows that are solely payments of principal and interest on the principal amount outstanding (SPPI – solely payments of principal and interest).

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Financial assets classified in this category are measured at amortised cost with the use of the effective interest rate method and taking into account allowances for expected credit losses. Amortised cost is determined with regard to a discount or a premium as well as fees, charges and transaction costs, which form an integral part of the effective interest rate. The effect of measurement is recognised under “Interest income” in profit or loss. Loss allowance for expected credit losses are recognised in profit or loss under “Net allowances for expected credit losses”.

The financial assets at amortised cost category includes primarily: loans and advances to customers, securities (including Treasury bonds and bonds), amounts due from banks, and reverse repurchase agreements.

Financial assets measured at fair value through other comprehensive income

The Group classifies financial assets that are not equity instruments to this category, if:

a) the asset is held within a business model whose objectives are both collection of contractual cash flows and sale of financial assets, and;

b) the contractual terms of the financial asset give rise on specified dates to cash ﬂows that are solely payments of principal and interest on the principal amount outstanding.

Changes in fair value are recognised in other comprehensive income until an asset is removed from the statement of financial position, at which time accumulated gain/loss is recognised in profit or loss. The revaluation reserve is recognised in profit or loss when the asset is sold.

For financial assets classified in this category the Bank determines allowances for expected credit losses, which are recognised under other comprehensive income in correspondence with profit or loss. Allowances for expected losses do not adjust the carrying amount of financial assets measured at fair value through other comprehensive income.

Interest income and a discount or a premium related to debt instruments are deferred – with the use of an effective interest rate and recognised in net interest income as “Interest income”.

The financial assets at fair value through other comprehensive income measurement category includes in particular securities, such as: Treasury bonds, municipal and corporate bonds.

Financial assets at fair value through profit or loss

The Group classifies the following items as financial assets at fair value through profit or loss:

1) derivative financial instruments;

2) financial assets held for trading;

3) financial assets not held for trading which are included in the “sale” business model;

4) financial assets which are obligatorily classified to this category (with a negative SPPI test result);

5) financial assets, including securities, which were designated to this category at initial recognition, if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases.

Equity instruments

The Group classifies equity instruments:

1) to financial assets at fair value through profit or loss or

2) to financial assets at fair value through other comprehensive income, provided that:

§ they are not held for trading,

§ they are not contingent consideration recognised by the Group in a business combination.

Amendments of the fair value and any other items (e.g. dividend, gains/losses on sales) for equity instruments classified for the category of financial assets category at fair value through profit or loss are recognized in profit or loss.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The Group classifies for the fair value valuation through other comprehensive income measurement category those equity instruments, which are not held for trading and are held as a long-term commitment related to the implementation of the Group's strategy, implementation of government economic programmes or access to infrastructure which is material for the Group's operation. The Group may make such classification only at initial recognition of an asset in the accounting books and cannot subsequently reclassify the asset to other category.

A change in the fair value of equity instruments classified in the category of financial assets at fair value through other comprehensive income measurement category is recognized in other comprehensive income. Only dividend is recognized in profit or loss. Changes in the fair value of such equity instruments will never be reclassified to profit or loss (including upon disposal).

Business models

The Group identifies the following business models for holding financial assets:

§ the „held to collect” cash flow model,

§ the „held to collect and sell” cash flow model,

§ sale

Business models are determined at a level that reflects how groups of financial assets are managed together to achieve a particular business objective.

The Group accepts a sales transaction as consistent with the assumptions of the holding financial assets to collect cash flows model, if:

§ the sales resulted from an increase in the credit risk and were aimed at minimizing potential credit losses due to credit deterioration, or

§ the sales were made close to maturity date and the proceeds from the sales approximate the collection of the remaining contractual cash flows, or

§ the sales are infrequent, or

§ the sales are insignificant in value, both individually and in aggregate, or

§ the sales occurred in connection with the implementation of a stress test scenario for liquidity risk.

The condition of infrequent sales is deemed fulfilled if no more than 1% (by volume) of all instruments out of a portfolio are sold in a given year.

The condition of sales insignificant in value is deemed fulfilled if no more than 5% (by value) of all instruments out of a portfolio are sold in a given year.

Changes in the business model may result from the Group’s external or internal changes and must be significant to its operations and demonstrable to external parties.

The following are not changes in business model:

§ a change in intention related to particular financial assets (even in circumstances of significant changes in market conditions);

§ the temporary disappearance of a particular market for financial assets.

Assessment of the nature of cash flows

For the purposes of the assessment of the nature of collected cash flows (SPPI test) the Group defines:

§ capital as the fair value of a financial instrument at initial recognition,

§ interest as a reflection of the time value of money and the credit risk associated with the nominal value of a financial instrument in a given period, as well as margin, liquidity risk and administrative costs.

The SPPI test consists in verifying whether the contractual terms of the financial asset give rise on specified dates to cash ﬂows that are solely payments of principal and interest on the principal amount outstanding. In particular, the following conditions are verified:

§ contingent events that affect the amount of the cash flows,

§ financial leverage,

§ terms of prepayment or extension of financing,

§ terms limiting the right to seek legal claims to the collected cash flows,

§ terms modifying the consideration for a change of the value of money in time.

The assessment of the terms modifying the change of money value in time is performed based on a qualitative or quantitative analysis.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Where a qualitative assessment does not make it possible to confirm the conclusion that the SPPI test has been passed, it is necessary to perform an assessment of the impact of the trait that modifies cash flows. The objective of such assessment is to determine how different the contractual undiscounted cash flows could be from the undiscounted cash flows that would arise if a given agreement would not provide for a modified value of money element in time. If the analysed cash flows are different and exceed the materiality threshold adopted by the parent entity, the assessed asset is obligatorily classified to fair value through profit or loss measurement category, because the SPPI test has not been met, i.e. the contractual terms result in the fact that the contractual cash flows are not solely payments of principal and interest on the principal amount outstanding.

POCI assets

POCI (“Purchased or Originated Credit-Impaired”) assets are financial assets that are debt instruments:

1) purchased or granted with an impairment, which on initial recognition are deemed impaired due to credit risk (PD of 100%);

2) originated as a result of a significant modification of a credit impaired financial asset (PD of 100%), leading to the recognition of the assets in the statement of financial position as a new financial asset;

3) accourding to the provisions of Art. 70 of the Banking Law to uncreditworthy entities (does not apply to newly established entities).

An exposure is identified as POCI when new financing has been provided and there is evidence of impairment, and when the contract has been subject to a significant modification and an impairment has been identified for the modified contract.

Financial assets classified as POCI at initial recognition are treated as POCI until their derecognition, despite being cured, i.e. with impairment of the asset is no longer recognised, and regardless of future changes in estimates of the cash flows they generate.

At initial recognition, POCI assets are recognised in the statement of financial position at their fair value, in accordance with the principles applied for other financial assets that are not POCI assets.

Interest income on POCI assets is calculated based on net carrying amount using the effective interest rate adjusted for the credit risk recognised for the entire useful life of the asset.

Financial liabilities

The Group classifies all financial liabilities as measured at amortised cost, except for:

1) financial liabilities measured at fair value through profit or loss, including derivative liabilities,

2) financial guarantee contracts, which after initial recognition the Group (as an issuer of such a contract) subsequently measures at the higher of:

§ the amount of the allowance for expected credit losses, and

§ the fair value less, when appropriate, the cumulative income (settled amount of commission).

2.5.5.3. Reclassification

Reclassification of financial assets occurs only when the business model for managing financial assets is changed. In such an event, the asset is reclassified into a given category in accordance with the new business model. Financial assets are reclassified prospectively from the reclassification date.

Upon reclassification:

§ of a financial asset out of the amortised cost measurement category into the fair value through the income category, its fair value is measured at the reclassification date. Any gain or loss arising from a difference between the previous amortised cost of the financial asset and fair value is recognised in the income statement,

§ of a financial asset out of the fair value through profit or loss measurement category and into the amortised cost measurement category, its fair value at the reclassification date becomes its new gross carrying amount,

§ of a financial asset out of the amortised cost measurement category and into the fair value through other comprehensive income measurement category, its fair value is measured at the reclassification date. Any gain or loss arising from a difference between the previous amortised cost of the financial asset and fair value is recognised in other comprehensive income,

§ of a financial asset out of the fair value through other comprehensive income measurement category and into the amortised cost measurement category, the financial asset is reclassified at its fair value at the reclassification date. The cumulative gain or loss previously recognised in other comprehensive income is removed from equity and adjusted against the fair value of the financial asset at the reclassification date. As a result, the financial asset is measured at the reclassification date as if it had always been measured at amortised cost,

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

§ of a financial asset out of the fair value through profit or loss measurement category and into the fair value through other comprehensive income measurement category, the financial asset continues to be measured at fair value and the effect of measurement is recognised in other comprehensive income,

§ of a financial asset out of the fair value through other comprehensive income measurement category and into the fair value through profit or loss measurement category, the financial asset continues to be measured at fair value. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss.

2.5.5.4. Modification of financial assets

When contractual terms of a financial asset are renegotiated or modified, it is assessed whether such modification is substantial or non-substantial.

A substantial modification of contractual cash flows related to a financial asset results in derecognition of the asset and recognition of a (new) modified financial asset.

The Group considers a modification as substantial when one of the following criteria is met:

1) quantitative criteria:

§ extension of the credit period by more than one year and more than twofold extension of the period remaining until the original maturity date (when both these conditions are met jointly),

§ increase in the loan amount by at least 50%;

2) qualitative criteria:

§ loan currency conversion,

§ assumption of debt (change of borrower),

§ change in terms resulting in a change of the SPPI test result,

§ change of funded assets where the purpose of the loan is changed,

§ change of legal form/type of financial instrument,

§ forced restructuring of a financial instrument.

A non-substantial modification of contractual cash flows related to a financial asset does not result in derecognition of the asset. In such situation the Group recalculates the gross carrying amount of the financial asset and recognises a modification gain or loss in profit or loss.

The modification is treated as a change in estimates if the change in cash flows related to a financial asset results from existing contractual terms and it is solely related to the exercise by the Group’s customer of an available option.

2.5.5.5. Impairment

The Group measures and recognises an allowance for expected credit losses on financial assets that are not equity instruments, which are:

1) measured at amortised cost;

2) measured at fair value through other comprehensive income;

3) contract assets or loan commitments and financial guarantee contracts.

A financial asset is credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred.

Evidence of impairment

Evidence that a financial asset is credit-impaired includes observable data about one or more of the following events:

1) significant financial difficulty of the issuer or the borrower;

2) a breach of contract, such as a default or non-payment;

3) the Bank or other lender of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;

4) it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation;

5) the disappearance of an active market for a given financial asset due to financial difficulties;

6) the purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Measurement of allowances for expected credit losses

The Group measures an allowance for expected credit losses on financial assets in the following manner:

1) at an amount equal to 12-month expected credit losses (Stage 1) – if the credit risk on a financial instrument has not increased significantly since initial recognition; for such assets the loss allowance is measured as 12-month expected credit losses;

2) at an amount equal to lifetime expected credit losses (Stage 2) – if the credit risk on that financial instrument has increased significantly since initial recognition (whether financial assets are assessed on an individual or collective basis) – considering all reasonable and supportable information, including that which is forward-looking. For such assets, the loss allowance is measured as lifetime expected credit losses;

3) at an amount equal to accumulated changes in lifetime expected credit losses from their initial recognition (Stage 3) – for impaired financial assets, for which the allowance for expected credit losses will be measured as lifetime expected credit losses.

The classification of financial assets to three stages and the determined expected credit loss calculation method affect the recognition of interest income. Interest income on financial assets classified to Stages 1 and 2 are determined based on gross exposures (amortised cost of a financial asset, before adjustment for any allowances for expected credit losses) using the effective interest method. For Stage 3 assets – based on the amortised cost of those assets.

Recognition of allowances for expected credit losses

Allowances for expected credit losses on financial assets at amortised cost adjust the carrying amount of the relevant asset and are recognised in profit or loss.

Allowances for expected credit losses on financial assets at fair value through other comprehensive income are recognised in other comprehensive income in correspondence with profit or loss. Such loss allowances do not adjust the carrying amount of financial assets, because the assets are recognised at fair value.

Allowances for expected credit losses on trade receivables

The Group applies the simplified method of measurement of allowances for expected credit losses on trade receivables. The loss allowance is calculated based on fixed indicators dependent on actual payment default.

2.5.5.6. Derecognition of financial assets and financial liabilities from the statement of financial position

The Group derecognises a financial asset when, and only when:

1) the contractual rights to the cash flows from the financial asset expire, or

2) it transfers the financial asset.

While transferring a financial asset, the Group evaluates the extent to which it retains the risks and rewards of ownership of the financial asset. In this case:

1) if the Group transfers substantially all the risks and rewards of ownership of the financial asset, it derecognises the financial asset and separately recognises as assets or obligations all the rights and obligations arising or maintained as a result of transfer;

2) if the Group retains substantially all the risks and rewards of ownership of the financial asset, the entity continues to recognise the financial asset;

3) if the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, it determines whether it has retained control of the financial asset. In that event:

§ if the Group has not retained control, it derecognises the financial asset and recognises separately as assets or liabilities any rights and obligations created or retained in the transfer,

§ if the Group has retained control, it continues to recognise the financial asset to the extent of its continuing involvement in the financial asset.

Upon derecognition of a financial asset in whole, the difference between the carrying amount (measured at the date of derecognition) and the compensation received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.

The Group derecognises a financial liability (or its part) from its statement of financial position when the obligation specified in the contract is discharged or cancelled or expires.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

2.5.6. Fair value measurement

The Group measures the fair value of a financial asset, financial liability or off-balance-sheet liabilities using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

Determination of fair value is based on the following assumptions:

1) the financial asset or liability is exchanged in an orderly transaction between market participants to sell the financial asset or transfer the financial liability at the measurement date under current market conditions;

2) the sale of the financial asset or transfer of the financial liability is made:

§ in the principal market for the financial asset or liability; or

§ in the absence of a principal market, in the most advantageous market for the financial asset or liability.

When a quoted price for the transfer of an identical or a similar financial liability of the Bank is not available and the identical item is held by another party as a financial asset, the Bank measures the fair value of the liability from the perspective of a market participant that holds the identical item as a financial asset at the measurement date.

When a quoted price for the transfer of an identical or a similar financial liability of the Bank is not available and the identical item is not held by another party as a financial asset, the Bank measures the fair value of the liability using a valuation technique from the perspective of a market participant that owes the financial liability.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to determine the fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Inputs for valuation techniques designed to determine the fair value of financial assets and liabilities are classified into three levels:

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical financial assets or liabilities that the Bank can access at the measurement date;

2) Level 2 inputs are inputs other than quoted prices in active markets, that are observable, either directly or indirectly. Such inputs include, in particular, the following:

§ quoted prices for similar financial assets or liabilities in active markets,

§ quoted prices for identical or similar financial assets or liabilities in markets that are not active,

§ observable inputs other than quoted prices, in particular: interest rates and yield curves observable at commonly quoted intervals, implied volatilities and credit spread, or market-corroborated inputs;

3) Level 3 inputs are unobservable inputs reflecting the assumptions that market participants would have used when pricing financial assets or liabilities, including assumptions about risk.

If a quoted price in an active market is not available, the Group determines the fair value of financial assets or liabilities by applying valuation techniques incorporating all factors that market participants would consider in setting a price, which are consistent with accepted economic methodologies for pricing financial instruments.

2.5.7. Repurchase and reverse repurchase transactions

Repo and sell-buy-back as well as reverse repo and buy-sell-back transactions are transactions involving the sale or purchase of securities with a commitment to repurchase or resell the security at an agreed date and at an agreed price.

Financial assets sold with a commitment to buy them back (repo and sell-buy-back transactions) are recognised by the Group in the statement of financial position, with liabilities arising from the commitment to buy the securities back as a corresponding item of liabilities. Such a solution is possible only where the Group retains the risks and rewards of ownership of the financial asset despite its transfer. For transactions involving the purchase of securities with a commitment to resell them (reverse repo and buy-sell-back), the financial assets held are presented as receivables arising from the repurchase clause.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Reverse repurchase agreements and repurchase agreements are measured at amortised cost. The difference between the sale/purchase and repurchase/resale price is treated as interest expense or income and deferred over the term of agreement. Securities in repo and sell-buy-back transactions are not derecognised from the statement of financial position and are measured using the principles applicable to the relevant categories of financial assets.

2.5.8. Derivatives

Derivative financial instruments and forward and futures transactions with a symmetrical risk profile are measured using the NPV technique (net present value of future cash flows). The present value of future cash flows is measured for each transaction based on properly constructed projection and discount curves. Projection curves are built based on quoted prices of deposits, FRA, IRS, OIS and basis swap rates appropriate for a given currency and the reference rate. Discount curves are built based on quoted prices of deposits, FRA and IRS rates, business swaps, currency swap basis, swap points and OIS, in accordance with the CSA discounting principle. Quoted market prices for curve building purposes are obtained from widely available information systems. Instruments denominated in a currency other than Polish zloty are measured by reference to the mid-exchange rate quoted by the National Bank of Poland for the measurement date.

Transactions with an asymmetrical risk profile (option transactions) are measured using Black-Scholes and Bachelier models, which are widely used on the market and rely on the implied (if quoted market prices are available) or historical volatilities (determined with the use of statistical models based on quoted market prices).

The fair value of financial instruments reflects the credit risk and liquidity cost. In the case of debt instruments, a liquidity margin and a margin for the issuer’s credit risk is applied. For derivatives, the credit value adjustment (CVA), the debit value adjustment (DVA) and the funding value adjustment (FVA) reflecting the excess cost of variation margin for closing transactions of unsecured transactions are calculated.

In these financial statements, derivatives are presented on a net basis at the transaction level (positive fair values as assets and negative fair values as liabilities).

2.5.9. Hedge accounting

The Group applies hedge accounting in accordance with IFRS 9. The Group may apply hedge accounting for the following hedging relationships:

1) fair value hedge,

2) cash flow hedge.

For hedge accounting purposes, the Group designates hedging instruments so that a change in their fair value or cash flows covers, in whole or in part, the change in the fair value or future cash flows of the hedged item.

The Group accounts for cash flow hedges as follows:

1) the separate component of equity associated with the hedged item (cash flow hedge reserve) is adjusted to the lower of the following (in absolute amounts):

§ the cumulative gain or loss on the hedging instrument from the inception of the hedge, and

§ the cumulative change in fair value (present value) of the hedged item (i.e. the present value of the cumulative change in the hedged expected future cash flows) from inception of the hedge;

2) the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge (i.e. the portion that is offset by the change in the cash flow hedge reserve calculated in accordance with item 1) is recognised in other comprehensive income;

3) any remaining gain or loss on the hedging instrument (or any gain or loss required to balance the change in the cash flow hedge reserve calculated in accordance with item 1) is hedge ineffectiveness that is recognised in profit or loss.

The Group discontinues hedge accounting only when the hedging relationship (or a part of a hedging relationship) ceases to meet the qualifying criteria (after taking into account any rebalancing of the hedging relationship, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised, as well as a situation where there is a change in the risk management objective referring to the risk management objective specified in the documentation of the hedging relationship.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

If fair value hedge accounting is discontinued, any adjustments arising from the fair value hedge accounting are amortised to profit or loss if the hedged item is a financial instrument (or a component thereof) measured at an amortised cost. Amortisation may begin as soon as an adjustment exists, but no later than when the hedged item ceases to be adjusted for hedging gains and losses. The amortisation is based on a recalculated effective interest rate at the date that amortisation begins. In the case of a financial asset (or a component thereof) that is a hedged item and that is measured at fair value through other comprehensive income, amortisation applies in the same manner but to the amount that represents the cumulative gain or loss previously recognised in accordance with these rules instead of by adjusting the carrying amount.

When hedge accounting for a cash flow hedge is discontinued, if the hedged future cash flows are still expected to occur, that amount remains in the cash flow hedge reserve until the future cash flows occur or until a cumulative loss occurs in the cash flow hedge reserve and the Bank expects that all or a portion of that loss will not be recovered in one or more future periods. When future cash flows occur, the amount is reclassified to profit or loss as a reclassification adjustment in the same period or periods during which the hedged expected future cash flows affect profit or loss.

2.5.10. Investments in associates

The investments in associates are accounted for using the equity method.

2.5.11. Property, plant and equipment, intangible assets

Property, plant and equipment

Property, plant and equipment include controlled fixed assets and expenditure on their development. These are assets of an estimated useful life exceeding one year, which are held for internal use or to be leased to third parties under a lease agreement or for administrative purposes. Property, plant and equipment are recognised at historical cost less depreciation and impairment allowances.

Historical cost includes the cost of acquisition/construction of an asset and expenses directly related to its acquisition and bringing it to a working condition.

Intangible assets

An intangible asset is an identifiable non-monetary asset without physical substance. At initial recognition, intangible assets are measured at cost, and their value is subsequently decreased by accumulated amortisation and impairment allowances, if any.

Intangible assets of the Group include assets with an estimated useful life of over one year, in particular: copyrights, licences.

Depreciation charges related to property, plant and equipment and amortisation charges related to intangible assets

Depreciation and amortisation apply to all items of non-current assets whose value is reduced as a result of their use over their estimated useful lives.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.

Depreciation/amortisation of items of property, plant and equipment and intangible assets starts from the month when the item is made available for use.

Depreciation and amortisation periods for groups of property, plant and equipment and intangible assets, as applicable at the Group:

Property, plant and equipment | Depreciation period
Buildings, premises, cooperative rights to premises | 40 - 50 years
Leasehold improvements (to buildings and premises) | 2 - 13 years
Machines, technical equipment, tools and devices | 2 - 18 years
Computer sets | 4 - 8 years
Vehicles | 5 years
Intangible assets | Amortisation period
Software | 2 - 14 years
Other intangible assets | 2 – 10 years

The residual value and the useful life are reviewed on an annual basis and adjusted if necessary.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Impairment of property, plant and equipment and intangible assets

The Group assesses whether there is any evidence of impairment of any non-financial non-current assets. The Group estimates the recoverable amount as the fair value less cost of sale or the value in use of such assets (whichever is higher), if such evidence is identified. Impairment allowances are recognised where the book value of the asset exceeds its recoverable amount.

2.5.12. Investment property

Investment property is a property (land or a building – or part of a building – or both) held by the Group to earn rentals or for capital appreciation or both. At the same time, such property:

§ is occupied by the Group only to an inconsiderable extent,

§ is not intended for sale in the ordinary course of the Bank’s operation.

Initially, investment property is recognised at cost of acquisition or manufacture. After initial recognition, its value is measured in the fair value model. Any gains or losses resulting from changes in its value are recognised in profit or loss for a relevant period. Valuation services are provided by independent property appraisers.

Fair value measurement was recognised in profit or loss as “Other operating expenses” and “Other operating income” and in the statement of comprehensive income.

2.5.13. Leasing

The Group as a lessor

The Group is a party to lease agreements whereby it grants investment property for a fee for an agreed period of time. In the case of lease agreements which transfer virtually all risks and rewards incidental to the ownership of an underlying asset (financial lease), the leased asset is derecognised from the Group’s statement of financial position. A receivable is recognized in an amount equal to the present value of lease payments. Lease payments under agreements which do not qualify as finance leases are treated as operating leases and are recognised as revenue in profit or loss over the lease term, using the straight-line method.

The table below presents information on operating leases concluded by the Group as the lessor:

Operating lease agreements (in PLN thousand) | 2024 | 2023
Future minimum lease payments under non-cancellable operating leases: | 30 | 86
up to 1 year | 15 | 43
between 1 and 5 years | 15 | 43

The Group as a lessee

The Group is also party to lease agreements under which it accepts third parties’ property, plant and equipment to use it against consideration or to derive benefits from it over a defined term. They include agreements on lease of property (including perpetual usufruct of land), cars, IT infrastructure and equipment.

The Group uses the right of perpetual usufruct of land, whether acquired for consideration or free of charge. The right of perpetual usufruct of land acquired for consideration (from third parties) is presented as leases under right-of-use assets. The right of perpetual usufruct of land acquired free of charge from the State Treasury is not disclosed in the statement of financial position.

In the case of agreements which are, or contain, a lease, the Group presents right-of-use assets and lease liabilities in the statement of financial position. At initial recognition, right-of-use assets are measured in an amount equal to lease liabilities increased by any lease payments made before the date of initial recognition or any initial direct costs incurred by the Group. Lease liabilities are measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate determined as a risk-free interest rate (e.g. Treasury bonds interest rate) for a given agreement term, plus a margin.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The Group applies the exemptions specified in IFRS 16 with regard to short-term leases (up to 12 months) and leases of low-value assets (where the acquisition price of a new asset does not exceed PLN 10,000) and does not recognise them as leases.

In determining the lease term, the Group takes into account the non-cancellable period of a lease together with periods covered by an option to extend or terminate the lease. At the commencement date of a lease agreement, the Group assesses whether it is reasonably certain to exercise an extension option, or not to exercise a termination option. To make the assessment, the Group considers all relevant facts and circumstances that create an economic incentive to exercise, or not to exercise, the option.

In determining the lease term and assessing the length of the non-cancellable period of a lease, the Group applies the definition of an agreement and determines the period for which the agreement is enforceable. A lease is no longer enforceable when the Group and the lessor each has the right to terminate the lease without permission from the other party with no more than an insignificant penalty.

In the case of contracts executed for an indefinite term, the Group defines the lease term as a period in which the Group is the most likely to use an asset, taking into account the costs relating to the termination of the lease. If such costs may be considered significant for either party, the lease term covers a period, in which such costs remain significant. The costs include both financial penalties provided for in the agreement and other non-contractual economic losses (e.g. loss of leasehold improvements undertaken, costs of acquisition of a new lease, such as negotiation costs, relocation costs). If the lessor and the lessee have the right to terminate the agreement without permission of the other party, and if no costs were incurred in connection with a given agreement or there are no costs relating to the termination of the lease, or if such costs are insignificant, the lease term is considered equal to the termination period.

After the commencement date, the Group measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment allowances and adjusted for any remeasurement of the lease liability. Right-of-use assets are depreciated on a straight-line basis. Depreciation periods for key groups of right-of-use assets, as applicable at the Group, depend on the term of lease or use of an asset (whichever is shorter).

Average depreciation periods are presented in the table below.

Right-of-use assets | Depreciation period
Buildings and structures | 2 – 10 years
Right of perpetual usufruct of land | 71 – 74 years
Civil engineering structures | 1 year
Vehicles | 2 – 5 years
IT hardware | 2 – 8 years

After the commencement date, lease liabilities are measured at amortised cost, i.e. taking into account the interest accrued on the lease liability less any interest paid and lease payments made, and revised interest in the case of reassessment or change of the lease term or reflecting any change of in-substance fixed lease payments. For details on right-of-use assets see Note 25. The maturity analysis of liabilities is presented in Note 46.

In accordance with the requirements of IFRS 16 – Leases, the Group presents the depreciation charge for right-of-use assets, interest expense on lease liabilities, expenses relating to the use of right-of-use assets, expense relating to short-term leases and expense relating to leases of low-value assets in the statement of profit or loss.

Expense relating to leases are presented in the table below:

Amounts relating to sub-leases recognised in statement of profit or loss (in PLN thousand) | 2024 | 2023
Expense relating to leases of low-value assets presented under “General administrative expenses” | 243 | 230
Expense relating to short-term leases presented under “General administrative expenses” | 2,591 | 1,625
Interest expense on lease liabilities | 2,565 | 1,753
Expense relating to service charges and non-deductible value added tax (VAT) not included in the measurement of lease liabilities | 23,685 | 21,960

The Group assesses whether there is any indication of impairment of right-of-use assets in accordance with the principles described in Note 2.5.11 Property, plant and equipment and intangible assets.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

2.5.14. Other prepayments and deferred expenses

Prepayments are recognised if the expenses pertain to months following the month when they were incurred. Prepayments (recognised in the statement of financial position under “Other assets”) include mainly prepaid expenses and accrued revenue. Prepaid expenses include different types of expenses that will be recognised in profit or loss after the lapse of time, in future reporting periods.

Deferred expenses include costs of services provided to the Group which have not been classified as their liabilities yet. Deferred expenses include expenses to be incurred by the Bank in the future, including the cost of bonuses, outstanding annual leaves, and jubilee awards.

The Group settles deferred income where it receives payment for services or goods to be provided or delivered in future reporting periods. This in particular comprises deferred commissions and other income collected in advance whose recognition in profit or loss will be effected in future reporting periods.

Passive prepayments and deferred income are disclosed in the statement of financial position under “Other liabilities”.

2.5.15. Provisions

Provisions are liabilities the amount or due date of which are not certain. They are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, while it is probable that an outflow of resources embodying economic benefits will be required to fulfil the obligation and the amount of the obligation can be estimated reliably.

Where the effect of the time value of money is material, the amount of provision is determined by discounting estimated future cash flows to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and any potential risks specific to the liability.

The Group recognises provisions in particular for litigation and claims with its counterparties, customers and third-party institutions, provisions for legal risk, retirement, disability and post-mortem benefits.

2.5.16. Employee benefits

Short-term employee benefits of the Group include benefits due within 12 months from the end of the reporting period, in which employees performed work, in particular salaries, wages, bonuses, paid annual leave, and social security contributions. The Bank recognises the estimated undiscounted amount of short-term employee benefits as an expense and provisions for liabilities in the period they concern.

Long-term employee benefits of the Group include benefits which are due after 12 months from the end of the reporting period, in which employees performed work, in particular retirement, disability, post-mortem, and jubilee benefits. The relevant provision is measured using actuarial methods by a third-party actuary as the present value of the Group’s future liabilities to employees considering the payroll and the level of salaries and wages as at the measurement date.

Provisions calculated by an independent actuary are disclosed under “Provisions” and “Other operating income and expenses”, as appropriate, while the provision for annual holidays is presented under “Other liabilities” and “General administrative expenses”, as appropriate. A certain amount of provisions for retirement, disability, and post-mortem benefits resulting from changes in actuarial (financial, demographic and other) assumptions made for purposes of measurement is recognised in other comprehensive income.

The parent entity offers a post-employment benefit plan, known as the defined contribution plan. Under this plan, the parent entity has a contractual obligation to make specified contributions to an employee pension plan. The fund, which also includes a return on invested contributions, is used for payment of post-employment benefits to employees. As a result, the parent entity is not subject to a legal or constructive obligation to make additional contributions, if the pension fund’s assets are insufficient to finance the benefits.

2.5.17. Contingent liabilities

In the course of its operations, the Bank enters into transactions which are not recognised in the statement of financial position as assets or liabilities at the conclusion date but result in the occurrence of contingent liabilities.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

A contingent liability is:

§ a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Bank; or

§ a present obligation that arises from past events but is not recognised in the statement of financial position because it is not probable that an outflow of funds or other assets will be required to settle the obligation or the amount of obligation cannot be measured with sufficient reliability.

Contingent liabilities are disclosed as “Off-balance sheet liabilities granted”. Off-balance sheet liabilities granted include mainly credit commitments and guarantee liabilities granted.

At initial recognition, off-balance sheet liabilities granted are measured at fair value. In subsequent periods, at the reporting date exposures covered by the requirements of IFRS 9 are measured at an amount of the allowance for expected credit losses, while the remaining exposures are measured at fair value.

2.5.18. Equity

Classification into the items presented below is made in compliance with the requirements of the Act on Bank Gospodarstwa Krajowego and the Bank’s Articles of Association adopted by way of Regulation of the Minister of Development.

Equity capital includes:

§ statutory capital,

§ supplementary capital,

§ revaluation reserve (including in particular the value and gain or loss on sale of equity financial assets at fair value through other comprehensive income, actuarial gains and losses, and gain or loss on investment property revaluation date),

§ other capital reserves (including the general banking risk reserve and reserve fund),

§ retained earnings (accumulated loss),

§ net profit (loss) for the current year.

Items of equity of the subsidiaries, other than their share capital, to the extent that the parent entity is the owner of the subsidiary, are added to the relevant items of the parent entity’s equity.

The equity of the Group comprise only those parts of equity of subsidiaries which was created after the acquisition of shares or stock by the parent entity.

2.5.19. Income tax

Income tax consists of current tax and deferred tax. Current tax is recognised in profit or loss or the statement of comprehensive income where a profit or loss is made on equity financial instruments presented in the statement of comprehensive income. Deferred tax, depending on the source of the temporary differences, is recognised in profit or loss or in the statement of comprehensive income.

Current tax

Current tax is a tax liability related to taxable profit and determined using a tax rate in force as at the end of the reporting period.

Deferred tax

The Group recognises deferred tax assets and liabilities. Deferred tax assets and liabilities are recognised in the statement of financial position as assets or liabilities, as the case may be.

A change in the deferred tax liabilities and assets is recognised as a mandatory line item of the statement of profit or loss, except for the effects of measurement of:

§ financial assets and investment property at fair value through other comprehensive income,

§ actuarial gains and losses recognised in other comprehensive income,

§ shares in associates recognised in other comprehensive income,

§ foreign exchange gains or losses on translating subordinates, in case of which changes in the deferred tax liabilities and assets are also recognised in other comprehensive income,

§ cash flow hedge (hedge accounting).

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that future taxable profit will be available against which the deferred tax assets can be realised in whole or in part.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The deferred tax assets and liabilities are measured by reference to tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) in effect at the end of the reporting period or those certain to enter into force in the future as at the end of the reporting period.

The Group offsets deferred income tax assets against deferred tax liabilities when, and only when, there is a legally enforceable right to set oﬀ current tax assets against current tax liabilities and when the deferred tax relates to the same income tax levied by the same taxation authority.

Where the Group is a party to lease agreements under which it uses third parties’ property, plant and equipment for which it pays consideration and derives benefits from it over a defined term, thus presents right-of-use assets and lease liabilities in the statement of financial position, it is assumed that the tax value of such assets and liabilities is zero. In such cases, the Group recognises deferred tax liabilities calculated based on the current carrying amount of right-of-use asset and deferred tax assets calculated based on the current carrying amount of lease liabilities.

2.5.20. Measurement of profit/loss

Interest income and expense

Interest income comprises interest and fees (received or due) taken into account in the calculation of the effective interest rate for, inter alia: loans with agreed repayment schedules, interbank deposits, and financial instruments classified to the fair value through other comprehensive income measurement category. In addition, the item includes income of similar nature to interest income on instruments at fair value through profit or loss, in particular interest on derivative instruments in the banking book and debt instruments.

Interest expense includes interest on, inter alia, current accounts, deposits and securities.

Interest income and expenses include gains and losses on a non-substantial modification, which did not result in derecognition of an asset from the statement of financial position. Upon a non-substantial modification, the modification gain or loss in a given asset is recognised in the statement of profit or loss and is subsequently amortised until derecognition of the asset from the statement of financial position.

In the case of financial assets for which a Stage 3 allowance for expected credit losses was recognised, the item includes the adjustment of impairment interest, which is calculated on the net carrying amount of the credit exposure and reduces the basis for the allowance for expected credit losses.

The Group accounts for income from fees related to programme management as part of commissioned activities as required by IFRS 15. In order to create a fee allocation key, the Bank uses an input method, where the estimation of the appropriate level of satisfaction of a performance obligation under a given management agreement requires the application of estimates throughout the programme period (fees to be received, expenses to be incurred, deviation of the actual amounts of income/expenses from prior forecast). The Group updates its estimates at least every six months.

Fee and commission income and expense

Bank fee and commission income and expense concern mainly financial services offered by the Group and comprise in particular: commissions on credits granted and guarantee liabilities, costs of securities operations, and management fees as well as costs related to administration and management of funds and programmes. Commissions/fees are settled in the period of transactions, except for fees and commissions on administrative activities which are recognised on a one-off basis in profit or loss. The Group’s consideration under fees for services, such as asset management or commissioned activities, is recognised as income in the amount which the parent entity expects to receive for the provided services or up to the amount of costs incurred.

Commission income and expense also include fees, whether received or paid, on financial instruments without an agreed repayment schedule. Fees on overdraft facilities, guarantees granted, and other revolving facilities are deferred and classified as commission income.

In relation to bancassurance products, the parent entity, as the policyholder until 30.06.2024, offered free-of-charge insurance coverage to credit card holders in the form of an additional card functionality. This functionality was an integral feature of the payment card and did not involve any additional fees on the part of the customer. Payment card insurance costs are deferred and recognised in profit or loss as commissions.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Net gains (losses) on financial instruments at fair value through profit or loss and foreign exchange gains (losses)

Net gains (losses) on financial instruments at fair value through profit or loss comprises gains and losses resulting from changes in the fair value of assets classified as held for trading and those which were designated as at fair value through profit or loss at initial recognition or are obligatorily measured at fair value through profit or loss.

Foreign exchange gains or losses comprise gains or losses, whether realised or not, resulting from the daily measurement of foreign currency assets and liabilities at the mid-exchange rate quoted by the NBP as at the end of the reporting period. In addition, foreign exchange gains (losses) include the net realised and unrealised gain/loss, including the effects of changes in the measurement related to such derivatives as FX FORWARD, FX SWAP (including swap points), CIRS or FX options.

The item does not include the interest portion of the net gain/loss on interest rate derivatives and swap points on FX derivatives classified in the banking book, which are recognised under interest income and expenses.

Net gains (losses) on investments in financial assets

Net gains (losses) on investments in financial assets comprises gains and losses arising from the sale or cancellation of shares and investment certificates of subordinated entities as well as dividend income.

Net gains (losses) on derecognition

Net gains (losses) on derecognition include gains and losses arising from the derecognition of financial assets, in particular following the recognition of a substantial modification of cash flows or their disposal.

Other operating income and expenses

Other operating income and expenses comprise income and expenses which are not directly related to banking operations.

Other operating income includes mainly income from: positive fair value measurement of investment property, bad debt that has been recovered, received damages, penalties, fines, release of provisions for litigation and legal claims and other receivables as well as from the sale of property, plant and equipment and investment property.

Other operating expenses include mainly: costs of donations, costs of debt collection, recognition of provisions for litigation and legal claims, legal risk, other amounts due, and the costs of fair-value measurement, cost of maintenance of investment property, and loss allowance.

General administrative expenses

The item includes costs relating to: employee benefits (including payroll, social insurance and training), material costs, depreciation and amortisation (of property, plant and equipment, intangible assets, right-of-use assets) along with taxes and charges.

Net allowances for expected credit losses

The item includes increases and decreases related to allowances for expected credit losses, in particular:

§ assets measured at amortised cost (in particular loans and advances, purchased debt and fulfilled guarantees and sureties), the related loan commitments,

§ financial guarantee contracts and financial assets measured at fair value through other comprehensive income.

Share of profit or loss of associates

This item comprises the Group’s share in profits and losses of associates (in proportion to interest held), in which it invested.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

## 3. Operating segments

The presentation of information on operating segments is based on the internal management model and the nature of business of individual segments.

The model for the presentation of segment performance covers all items of the statement of financial position and the statement of profit or loss up to profit before tax. Inter-segment transactions are accounted for as if they were transactions between non-related entities.

The segments were assigned direct revenue, internal transfers of interest income based on average balances, market prices depending on currency, maturities and liquidity margins, direct operating expenses and operating expenses allocated using internal allocation models, other items of the statement of profit or loss, as well as allocation of liquidity margins and revenue from capital.

Three operating segments have been identified for the purpose of evaluation of the nature and financial consequences of the operations carried out by the Group entities:

§ Segment: Business and institutional clients

The segment’s assets and liabilities as well as net profit or loss are composed of the following items relating to services provided to the Bank’s clients:

1) in the Bank’s relational areas;

2) in relation to housing support products;

3) in relation to guarantee schemes;

4) in the area of EU and government programmes;

5) in the area of flow funds.

§ Segment: Equity investments – items related to the Bank’s capital involvement in:

1) investment certificates of closed-end private equity investment funds (FIZAN) (in the consolidated financial statements, certificates issued by funds with the majority interest held by the parent entity are recognised as shares in associates measured with the equity method);

2) shares, including in regional surety funds and their impact on the consolidated financial statements;

§ Segment: Treasury and other activities

1) items related to liquidity, foreign exchange risk and interest rate risk management, including interbank deposits and placements, buy-sell-back and sell-buy-back transactions, transactions in Treasury bonds and money bills, nostro accounts, the account at the National Bank of Poland, derivative instruments;

2) securities comprising portfolios classified as investment portfolios;

3) deposit and derivative services at the request of the Ministry of Finance as well as financing the parent entity’s operations in the medium and long term, such as loans obtained from financial institutions and issues of own bonds;

4) gain/loss on internal fund transfer pricing settlements with the remaining segments, which is based on percentage rates determined by reference to market rates and rates approved by the Bank Financial Committee, accounting for transaction currency, maturity and liquidity margins;

5) equity;

6) mortgage loans to retail clients;

7) property, plant and equipment and intangible assets, tax assets, liabilities related to: settlement of corporate income tax, lease payments, accrued fees;

8) other non-interest assets and liabilities, commissions not allocated to transactions carried out in other segments,

9) other income and expenses, including donations;

10) expenses excluded from allocation to individual segments, in accordance with the internal instruction on the business cost accounting principles at BGK.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

### 3.1. Selected items of the statement of profit or loss and the statement of financial position

The tables below present data on revenue, expenses, and performance of each operating segment of the Bank Gospodarstwa Krajowego Group for 2024 and 2023 as well as assets and liabilities as at 31 December 2024 and 31 December 2023.

Information on operating segments for the year ended 31 December 2024 | Continuing operations
Business and institutional clients | Equity investment | Treasury and other activities | Total activities of the Group
Net interest income | 1,834 | -386 | 2,927 | 4,375
Net fee and commission income/expense | 524 | 0 | -17 | 507
Net gain/loss on financial instruments at fair value through profit or loss, net gain/loss on investments in financial assets, and net gain/loss on derecognition of financial assets
| 151 | 168 | 118 | 437
Other operating income and expenses | -2 | -6 | -31 | -39
General administrative expenses | -765 | -38 | -176 | -979
Net allowances for expected credit losses | -669 | 4 | -8 | -673
Share of profit or loss of associates | 0 | 733 | 0 | 733
Management result of the segment | 1,073 | 475 | 2,813 | 4,361
Gain/loss on the transfer of liquidity margin and capital | 2,344 | 288 | -2,632 | 0
Profit before tax | 3,417 | 763 | 181 | 4,361
Income tax |  |  |  | -799
Net profit |  |  |  | 3,562

Information on operating segments for the year ended 31 December 2023 | Continuing operations
Business and institutional clients | Equity investment | Treasury and other activities | Total activities of the Group
Net interest income | 1,754 | -332 | 2,887 | 4,309
Net fee and commission income/expense | 467 | 0 | -16 | 451
Net gain/loss on financial instruments at fair value through profit or loss, net gain/loss on investments in financial assets, and net gain/loss on derecognition of financial assets
| 166 | 240 | 99 | 505
Other operating income and expenses | -3 | -29 | -110 | -142
General administrative expenses | -677 | -30 | -161 | -868
Net allowances for expected credit losses | -397 | 31 | -33 | -399
Share of profit or loss of associates | 0 | 705 | 0 | 705
Management result of the segment | 1,310 | 585 | 2,666 | 4,561
Gain/loss on the transfer of liquidity margin and capital | 2,266 | 265 | -2,531 | 0
Profit before tax | 3,576 | 850 | 135 | 4,561
Income tax |  |  |  | -829
Net profit |  |  |  | 3,732

Information on operating segments 31 Dec 2024 | Continuing operations
Business and institutional clients | Equity investment | Treasury and other activities | Total activities of the Group
Total assets | 54,681 | 7,597 | 207,989 | 270,267
Total liabilities | 169,016 | 0 | 59,020 | 228,036
Operating segments as at 31 December 2023 | Continuing operations
Business and institutional clients | Equity investment | Treasury and other activities | Total activities of the Group
Total assets | 53,831 | 7,581 | 161,587 | 222,999
Total liabilities | 154,298 | 0 | 28,589 | 182,887

### 3.2. Geography

The Group operates mostly within the territory of the Republic of Poland, with the exception of the activities related to Fundusz Ekspansji Zagranicznej FIZ AN. Its operations focus on the Polish market.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

## 4. Interest income and expense

Interest income | 2024 | 2023
Interest income calculated with the use of the effective interest rate method | 13,981 | 12,891
Income on financial instruments at amortised cost, including: | 10,979 | 10,484
amounts due from banks | 1,248 | 1,024
loans and advances to customers, including: | 3,409 | 3,457
effect of loan adjustment to gross carrying amount due to credit holidays | 0 | 83
debt instruments | 6,322 | 6,003
Income from financial instruments at fair value through other comprehensive income | 3,002 | 2,407
Income of similar nature to interest income on instruments at fair value through profit or loss | 418 | 905
Income on derivatives | 415 | 893
Income on financial assets held for trading | 1 | 1
Income on financial assets obligatorily measured at fair value through profit or loss | 2 | 11
Total | 14,399 | 13,796

In 2024, interest income on financial assets at Stage 3 was PLN 218 million, in 2023 it was PLN 255 million.

The effect of credit holiday on the Group’s interest income is presented in Note 2.4 “Estimates and assumptions”.

Interest expense | 2024 | 2023
Interest expense related to financial instruments at amortised cost, including | 9,904 | 9,408
amounts due to banks | 291 | 285
liabilities to customers | 9,503 | 8,971
issuance of securities | 107 | 150
lease liabilities | 3 | 2
Costs of derivatives | 120 | 79
Total | 10,024 | 9,487

## 5. Fee and commission income and expense

Fee and commission income relates to: | 2024 | 2023
Guarantee commitments | 192 | 154
Loans and advances granted | 146 | 139
Fund and programme management | 137 | 121
Settlement activity | 17 | 17
Account management | 6 | 7
Securities operations | 5 | 9
Custody activity | 3 | 3
Others | 24 | 21
Total | 530 | 471

Fee and commission expense relates to: | 2024 | 2023
Brokerage services | 7 | 6
Maintenance of nostro accounts | 3 | 3
Operational services | 3 | 3
Settlement activity | 2 | 2
Others | 8 | 6
Total | 23 | 20

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Fee and commission income by segment in 2024 | Segment of institutional clients | Segment of equity investments | Treasury and other activities | Total activities
Guarantee commitments | 192 | 0 | 0 | 192
Loans and advances granted | 146 | 0 | 0 | 146
Fund and programme management | 137 | 0 | 0 | 137
Settlements | 17 | 0 | 0 | 17
Securities operations | 6 | 0 | 0 | 6
Commissions for maintaining accounts | 5 | 0 | 0 | 5
Custody activity | 3 | 0 | 0 | 3
Other commissions | 23 | 0 | 1 | 24
Total | 529 | 0 | 1 | 530

Fee and commission income by segment in 2023 | Segment of institutional clients | Segment of equity investments | Treasury and other activities | Total activities
Guarantee commitments | 154 | 0 | 0 | 154
Loans and advances granted | 139 | 0 | 0 | 139
Fund and programme management | 121 | 0 | 0 | 121
Settlements | 17 | 0 | 0 | 17
Securities operations | 7 | 0 | 0 | 7
Commissions for maintaining accounts | 9 | 0 | 0 | 9
Custody activity | 3 | 0 | 0 | 3
Other commissions | 21 | 0 | 0 | 21
Total | 471 | 0 | 0 | 471

## 6. Net gains (losses) on financial instruments at fair value through profit or loss and foreign exchange gains (losses)

Net gains (losses) on financial instruments at fair value through profit or loss and foreign exchange gains (losses) | 2024 | 2023
Net gains (losses) on financial instruments at fair value through profit or loss | 11 | 68
Debt instruments | 0 | 59
Equity instruments | -31 | 5
Loans and advances | -1 | -1
Others | 43 | 5
Result on financial instruments held for trading, including: | 19 | 20
Debt instruments | 9 | 3
Derivatives | 10 | 17
Foreign exchange gains (losses) | 256 | 296
Total | 286 | 384

## 7. Net gains (losses) of investment in financial assets

Net gains (losses) on investment in financial assets | 2024 | 2023
Sale of investments in associates | 0 | -5
Dividend, including: | 108 | 97
from issuers of financial instruments measured at fair value through profit or loss | 6 | 93
from issuers of equity instruments designated as at fair value through other comprehensive income | 102 | 4
Total | 108 | 92

## 8. Net gains (losses) on derecognition of financial assets

Net gains (losses) on derecognition of financial assets | 2024 | 2023
Debt instruments at fair value through other comprehensive income, including net gain (loss) on sale | 5 | 23
Financial assets measured at amortized cost | 38 | 6
Total | 43 | 29

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

## 9. Other operating income and expenses

Other operating income | 2024 | 2023
Valuation of investment property at fair value | 3 | 5
Release of provisions for litigation and legal claims | 2 | 0
Release of impairment allowances on other assets | 1 | 0
Disposal of investment property | 0 | 1
Received damages, penalties and fines | 2 | 0
Other operating income | 9 | 2
Total | 17 | 8

Other operating expenses | 2024 | 2023
Cost of donations, including: | 16 | 102
Empiria i Wiedza Foudation | 11 | 37
State of Poland Foundation | 0 | 27
J.K. Steczkowski BGK Foundation | 4 | 21
Most the Most Foundation | 1 | 17
Cost of debt collection | 3 | 3
Cost of recognition of provisions for litigation and legal claims | 3 | 25
Cost of recognition of provisions for defined benefit plans | 5 | 3
Cost of investment property | 1 | 1
Cost of writing off past due and cancelled receivables, bad debt, damages, penalties and fines | 0 | 13
Cost of recognition of impairment allowances on other assets | 5 | 2
Other operating expenses | 23 | 1
Total | 56 | 150

The projects implemented by the foundations are described in detail in the Report of the Management Board on the Activities of the BGK Group in 2024 – Integrated Report.

## 10. General administrative expenses

General administrative expenses | 2024 | 2023
Employee benefits | 667 | 554
Material costs, including: | 191 | 206
IT and telecommunications expenses | 71 | 60
marketing expenses | 36 | 85
property lease and maintenance expenses | 32 | 13
services, including advisory, legal and consulting services | 20 | 15
costs of office supplies and equipment | 0 | 1
expenses on management fee | 3 | 5
other material expenses | 29 | 27
Depreciation and amortisation, including: | 82 | 74
property, plant and equipment | 21 | 17
intangible assets | 31 | 28
right-of-use assets | 30 | 29
PFSA fees | 27 | 24
Other taxes and charges | 12 | 10
Total | 979 | 868

Employee benefits | 2024 | 2023
Salaries and wages | 514 | 424
Social security | 95 | 77
Employee pension fund | 29 | 22
Other employee benefits | 29 | 31
Total | 667 | 554

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

## 11. Net allowances for expected credit losses

Net allowances for expected credit losses | 2024 | 2023
Amounts due from banks at amortised cost | -2 | -1
Loans and advances to customers measured at amortised cost | -726 | -370
Debt securities at amortised cost | -2 | -55
Debt securities at fair value through other comprehensive income | -12 | -3
Provisions for financial and guarantee liabilities granted | 69 | 30
Total | -673 | -399

## 12. Income tax

Major items of the tax charge and reconciliation of the effective tax rate for the year ending on 31 December 2024 and 31 December 2023:

Items of the tax charge | 2024 | 2023
Current tax charge | -826 | -715
Deferred tax related to occurrence and reversal of temporary differences | 27 | -114
Income tax in the consolidated statement of profit or loss | -799 | -829
Current income tax presented in other comprehensive income | 0 | 0
Income tax presented in other comprehensive income and related to occurrence and reversal of temporary differences | -31 | -130
Tax charge presented in other comprehensive income | -31 | -130
Total | -830 | -959

Reconciliation of the effective tax rate | 2024 | 2023
Profit before tax | 4,361 | 4,561
Income tax at Poland’s statutory tax rate (19%) | -829 | -867
Effect of permanent differences between profit before tax and taxable income, including: | 30 | 38
Non-deductible impairment allowances and provisions | -16 | -31
Effect of other differences between profit before tax and taxable income, including donations | -7 | -5
Other consolidation differences | 8 | 16
Activities exempt from taxation | 45 | 58
Income tax presented in the statement of profit or loss | -799 | -829
Effective tax rate | 18.32% | 18.18%

Pursuant to Art. 17 sec. 1 items 37 and 51 of the Corporate Income Tax Act of 15 February 1992, any income generated by the funds and government programmes is not subject to income tax where it is used for purposes related to their activities. In the light of the above, the Bank does not recognise any income tax charge on the profit generated by the funds or government programmes, which applies to the Residential Construction Support Government Programme, Social Rental Housing Government Programme, and Support of Entrepreneurship with BGK Sureties and Guarantees Government Programme.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Deferred tax for the year ending on 31 December 2024 and 31 December 2023 profit/loss from the following items:

Deferred tax assets/liabilities | 31 Dec 2024 | 2024 | 31 Dec 2023 | 2023
Consolidated statement of financial position | Consolidated statement of profit or loss | Consolidated other comprehensive income | Consolidated statement of financial position | Consolidated statement of profit or loss | Consolidated other comprehensive income
Interest accrued on credit exposures | 135 | 13 | 0 | 122 | 17 | 0
Valuation of derivative financial instruments | 79 | 8 | -10 | 81 | -26 | 10
Discount, interest and securities valuation | 672 | 186 | 47 | 439 | 158 | 59
Difference between the carrying amount and the tax base of property, plant and equipment and intangible assets, including: leases and measurement of investment property | 43 | 13 | 0 | 30 | -2 | 0
Others | 0 | -1 | 0 | 1 | -2 | 0
Gross deferred tax liabilities | 929 | 219 | 37 | 673 | 145 | 69
Interest accrued on deposit liabilities | 67 | 16 | 0 | 51 | 11 | 0
Valuation of derivative financial instruments | 144 | 80 | 0 | 64 | -32 | 0
Premium, interest and securities valuation | 137 | -8 | 6 | 139 | 44 | -59
Liabilities due to debt securities issued | 2 | 0 | 0 | 2 | -14 | 0
Provisions for employee benefits, including deferred payments | 42 | 4 | 0 | 38 | 8 | -2
Provisions for future liabilities | 12 | 3 | 0 | 9 | 4 | 0
Impairment allowances for assets and provisions for off-balance sheet liabilities | 577 | 146 | 0 | 431 | -1 | 0
Accrued commissions | 49 | -1 | 0 | 50 | 14 | 0
Accrued expenses | 4 | -2 | 0 | 6 | 1 | 0
Other, including leases | 20 | 8 | 0 | 12 | -4 | 0
Gross deferred tax assets | 1,054 | 246 | 6 | 802 | 31 | -61
Total effect of temporary differences | 125 | 27 | -31 | 129 | -114 | -130
Deferred tax assets (disclosed in the statement of financial position) | 125 | 0 | 0 | 129 | 0 | 0
Net effect of deferred tax on the statement of profit or loss | 0 | 27 | 0 | 0 | -114 | 0

The long-term portion of deferred tax to be realised or paid following the expiry of 12 months is:

| 31 Dec 2024 | 31 Dec 2023
assets – long-term portion | 667 | 511
liabilities – long-term portion | 396 | 337

| 31 Dec 2024 | 31 Dec 2023
The nature of evidence supporting recognition of deferred tax assets in connection with realisation of deferred income tax assets depending on generation of a taxable profit in the future in the amount that will exceed gains from reversal of the existing taxable temporary differences, to which the deferred tax asset relates, is: | based on future yield rate in the upcoming 5 years at the cumulative level of at least PLN 659 million | based on future yield rate in the upcoming 5 years at the cumulative level of at least PLN 678 million

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

## 13. Earnings per share

Parent entity is not a stock issuer, and its legal status is described in Note 1.

## 14. Contribution to the State Budget

In 2024, the parent entity made a contribution from its net profit for 2023 to the State Budget, in accordance with the profit distribution approved by the Supervisory Board on 17 April 2024, in the amount of PLN 1,574.9 million, in 2023, the parent company did not make a contribution to the State Budget from its profit.

## 15. Cash in Central Bank

Cash in Central Bank | 31 Dec 2024 | 31 Dec 2023
Current account | 50,065 | 2,567
Deposits | 0 | 1,501
Total | 50,065 | 4,068

The NBP current account maintains a compulsory provision, which can be used by the Bank, provided that the sum of the average monthly balance on the NBP current account is not less than the declared level.

The declared amount of the compulsory provision as at 31 December 2024 was PLN 6,958.7 million (as at 31 December 2023 PLN – 6,562.8 million). The interest rate on the funds in the minimum reserve account as at 31 December 2024 and 31 December 2023 was 5.75%.

The amount of cash depends on the current management of liquid funds and the average amount of cash deposited in the compulsory provision accounts.

## 16. Amounts due from banks

Amounts due from banks | 31 Dec 2024 | 31 Dec 2023
Current accounts | 11,939 | 8,987
Deposits in banks | 567 | 407
Loans and advances granted | 62 | 155
Purchased debt | 0 | 6
Receivables under cash collateral | 183 | 171
Other receivables | 0 | 2
Total | 12,751 | 9,728
Allowances for expected credit losses | 3 | 2
Net total | 12,748 | 9,726

The tables below present the change in gross amounts and impairment allowances on amounts due from banks by stage:

Amounts due from banks at amortised cost | Stage 1 | Stage 2 | Stage 3 | Total
Gross carrying amount as at 31 December 2023 | 9,614 | 114 | 0 | 9,728
Transfer to Stage 2 | -9 | 9 | 0 | 0
New/purchased/granted financial assets | 80,143 | 0 | 0 | 80,143
Derecognition of financial assets | -77,106 | -48 | 0 | -77,154
Other changes | 51 | -17 | 0 | 34
Gross carrying amount as at 31 December 2024 | 12,693 | 58 | 0 | 12,751
Impairment allowance |  |  |  |
Impairment allowance as at 31 December 2023 | 2 | 0 | 0 | 2
Derecognition of financial assets | -1 | 0 | 0 | -1
Changes in credit risk level (excluding transfers between stages) | 2 | 0 | 0 | 2
Impairment allowance as at 31 December 2024 | 3 | 0 | 0 | 3

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Amounts due from banks at amortised cost | Stage 1 | Stage 2 | Stage 3 | Total
Gross carrying amount as at 31 December 2022 | 9,691 | 235 | 6 | 9,932
Transfer to Stage 2 | -28 | 30 | -2 | 0
New/purchased/granted financial assets | 86,604 | 0 | 0 | 86,604
Derecognition of financial assets | -86,744 | -138 | 0 | -86,882
Other changes | 91 | -13 | -4 | 74
Gross carrying amount as at 31 December 2023 | 9,614 | 114 | 0 | 9,728
Impairment allowance |  |  |  |
Impairment allowance as at 31 December 2022 | 1 | 0 | 0 | 1
Changes in credit risk level (excluding transfers between stages) | 1 | 0 | 0 | 1
Impairment allowances as at 31 December 2023 | 2 | 0 | 0 | 2

## 17. Derivative financial instruments

Derivative financial instruments – fair value
Contract type | 31 Dec 2024 | 31 Dec 2023
Assets | Liabilities | Assets | Liabilities
FX Swap | 134 | 22 | 540 | 28
Forward | 105 | 23 | 80 | 50
CIRS | 574 | 554 | 497 | 383
IRS | 312 | 704 | 294 | 334
OIS | 46 | 44 | 49 | 2
Total | 1,171 | 1,347 | 1,460 | 797

Derivative financial instruments – nominal value
Contract type | 31 Dec 2024 | 31 Dec 2023
Call | Put | Call | Put
FX Swap | 4,473 | 17,669 | 3,093 | 12,559
Forward | 373 | 1,333 | 642 | 1,163
CIRS | 6,709 | 7,355 | 10,637 | 13,107
IRS | 12,840 | 8,914 | 5,243 | 5,699
OIS | 454 | 445 | 493 | 72
FX Option | 27 | 27 | 1 | 1
Total | 24,876 | 35,743 | 20,109 | 32,601

## 18. Derivative hedging instruments

In the period from 1 January to 31 December 2024, the Group continued its interest rate risk hedging policy by establishing hedging relationships designated as cash flow hedges, which are accounted for in accordance with IFRS 9.

Hedging relationships under the Capital Group’s hedge accounting are designed to hedge interest rate risk arising from the variability in interest cash flows from variable-rate assets using IRS derivatives. In the established hedging relationships, the hedged items include cash flows from the portfolio of PLN-denominated loans bearing interest at a floating rate, while the hedging items are IRS transactions under which the Capital Group receives interest calculated at a fixed rate and pays interest calculated at a floating rate. As a result, the hedged item and the hedging instrument are economically related in such a way that they respond in an opposite way to the risk that is being hedged, and the changes in their value will be offset in response to changes in market interest rates.

The hedge effectiveness requirements are assessed at the time of designation of the hedging relationship and at each reporting date, i.e. the end of the calendar month. An assessment is also made after any significant change in circumstances affecting hedge effectiveness requirements. The assessment of the hedging relationship effectiveness verifies whether there is an economic relationship between the hedged item and the hedging instrument, whether the effect of credit risk does not dominate the value changes that result from that economic relationship, and whether the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item. The nominal value of hedging transactions and the designated layer of the hedged item are used to calculate the hedge ratio.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

By conducting monthly effectiveness tests, changes in the fair value of the hedged item and the hedging instrument are calculated and compared. The test is carried out using the hypothetical derivative method, under which the hedged item is presented as a hypothetical derivative, fair value changes of which are compared with changes in the fair value of the hedging instrument.

Level of the hedge ineffectiveness recognised in the financial result may be impacted by the following risks:

§ misalignment of the remeasurement dates of the hedging instrument and the hedged item;

§ misalignment of the frequency of interest payments under the hedging instrument and the hedged item;

§ impact of counterparty credit risk and own credit risk on the fair value of the hedging transaction – minimised by requiring the counterparty to deposit a margin and by clearing derivatives transactions with central counterparty (CCP).

Throughout 2024, all existing hedging relationships were maintained and were highly effective. As of 31 December 2024 the Bank's hedge ineffectiveness is recognised in the statement of profit or loss in the amount of PLN -246 thousand, which is approx. 0.50% of the total value of the portfolio of hedging transactions of PLN 49,294 thousand. The Bank assesses the risk of early termination of the existing relationships as low due to the high matching of the economic terms of the hedged item and the hedging instrument in terms of:

§ the same base rate;

§ the date and the frequency of base rate‐fixing date;

§ consistent maturity dates;

§ high credit quality of the loan portfolio;

§ sufficiency of the loan portfolio over the lifetime of the relationship.

Details of the Capital Group’s hedging relationships as at 31 December 2024 and 31 December 2023 are set out below:

Description of the hedging relationship | The Group hedges the risk of changes in cash flows generated by financial assets denominated in PLN. The cash flow variability results from the interest rate risk.
Hedged item | Cash flows from the portfolio of loans denominated in PLN bearing a floating interest rate
Hedging instrument | PLN interest rate swap (IRS)
Presentation of result | The effective portion of the valuation of the derivative hedging instrument is recognised in other comprehensive income and accumulated in the cash flow hedge reserve, which is a separate component of the Capital Group’s equity related to the hedged item. The ineffective portion of the valuation of the derivative hedging instrument is recognised in net gain/loss on financial instruments at fair value through profit or loss. Interest on the hedged item and on the hedging instrument is recognised in interest income.

The following tables show the quantitative impact of applying cash flow hedge accounting on equity and the statement of profit or loss:

Nominal value of cash flow hedge derivatives, in PLN thousand

| Maturity – interest rate risk
up to 1 month | 1–3 months | 3–12 months | 1–5 years | over 5 years
31 Dec 2024
Nominal value | - | - | - | 1,500,000 | 1,000,000
Average interest rate on the fixed leg | - | - | - | 5.49% | 4.68%
31 Dec 2023
Nominal value | - | - | - | 1,500,000 | -
Average interest rate on the fixed leg | - | - | - | 5.49% | -

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Effect of cash flow hedges on the statement of financial position and the statement of profit or loss for hedging instruments, in PLN thousand

| 2024 | 2023
Types of instrument | PLN interest rate swap (IRS)
Nominal value | 2,500,000 | 1,500,000
Carrying amount | Assets | 59,961 | 85,462
Liabilities | 10,667 | 0
Line item in the statement of financial position that includes the hedging instrument | Derivative hedging instruments
Change in fair value of the hedging instrument used as the basis for recognising hedge ineffectiveness for the period | 8,394 | 61,557
Hedging gains or losses of the reporting period that were recognised in other comprehensive income | -64,951 | 44,106
Hedge ineffectiveness recognised in the statement of profit or loss | -246 | 245
Line item of the statement of comprehensive income (profit or loss) in which the hedge ineffectiveness is included | Result on financial instruments measured at fair value through profit or loss and foreign exchange gains (losses)
Amount reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment | -12,034 | -7,205
Line item of the statement of comprehensive income (statement of profit or loss) in which the reclassification adjustment is included | Net interest income

Effect of cash flow hedges on the statement of financial position and the statement of profit or loss for hedged item, in PLN thousand

| Change in value of the hedged item used as the basis for recognising hedge ineffectiveness for the period | Cash flow hedge reserve for continued hedges | Balance remaining in the cash flow hedge reserve from any hedging relationships for which hedge accounting is no longer applied
31 Dec 2024
Floating-rate loans granted in PLN | -8,198 | 8,183 | 0
Total | -8,198 | 8,183 | 0
31 Dec 2023
Floating-rate loans granted in PLN | -61,100 | 61,100 | 0
Total | -61,100 | 61,100 | 0

Change in cash flow hedge reserve | 2024 | 2023
Balance at the beginning of the period | 61,100 | 9,789
Hedging gains or losses recognised in other comprehensive income in the reporting period | -64,951 | 44,106
Portion of loss reclassified to profit or loss as no hedging instrument is expected | 0 | 0
Amount reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment, including to the following line items of the statement of profit or loss | 12,034 | 7,205
- interest income | 12,034 | 7,205
- interest expense | 0 | 0
Balance at the end of the period | 8,183 | 61,100

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

## 19. Securities

Securities – carrying amount as at 31 December 2024 | Held for trading | Not held for trading, measured at fair value through profit or loss | Measured at fair value through other comprehensive income | Measured at amortised cost | Total
Debt securities | 34 | 0 | 52,448 | 78,784 | 131,266
NBP (money market) bills | 0 | 0 | 25,697 | 68,298 | 93,995
treasury bonds | 34 | 0 | 11,485 | 3,406 | 14,925
corporate bonds | 0 | 0 | 2,592 | 3,507 | 6,099
subordinated bonds | 0 | 0 | 1,644 | 0 | 1,644
treasury bills | 0 | 0 | 7,206 | 0 | 7,206
covered bonds | 0 | 0 | 210 | 0 | 210
municipal bonds | 0 | 0 | 3,614 | 3,573 | 7,187
Equity securities | 0 | 35 | 1,585 | 0 | 1,620
listed shares in other entities | 0 | 0 | 1,534 | 0 | 1,534
unlisted shares in other entities | 0 | 35 | 51 | 0 | 86
Other financial assets | 0 | 718 | 0 | 0 | 718
Total | 34 | 753 | 54,033 | 78,784 | 133,604

Securities – carrying amount as at 31 December 2023 | Held for trading | Not held for trading, measured at fair value through profit or loss | Measured at fair value through other comprehensive income | Measured at amortised cost | Total
Debt securities | 20 | 0 | 63,471 | 87,939 | 151,430
NBP (money market) bills | 0 | 0 | 36,555 | 77,462 | 114,017
treasury bonds | 20 | 0 | 13,397 | 3,323 | 16,740
corporate bonds | 0 | 0 | 2,128 | 3,317 | 5,445
subordinated bonds | 0 | 0 | 1,611 | 0 | 1,611
treasury bills | 0 | 0 | 6,691 | 0 | 6,691
covered bonds | 0 | 0 | 144 | 0 | 144
municipal bonds | 0 | 0 | 2,945 | 3,837 | 6,782
Equity securities | 0 | 54 | 1,349 | 0 | 1,403
listed shares in other entities | 0 | 0 | 1,305 | 0 | 1,305
unlisted shares in other entities | 0 | 54 | 44 | 0 | 98
Other financial assets | 0 | 650 | 0 | 0 | 650
Total | 20 | 704 | 64,820 | 87,939 | 153,483

### 19.1. Securities held for trading

Debt securities held for trading | 31 Dec 2024 | 31 Dec 2023
Issued by the State Treasury | 34 | 20
Total | 34 | 20

### 19.2. Securities not held for trading measured at fair value through profit or loss

Securities obligatorily measured at fair value through profit or loss by carrying amount | 31 Dec 2024 | 31 Dec 2023
Equity instruments | 35 | 54
Other financial assets | 718 | 650
Total | 753 | 704

The parent entity presents debt securities with a negative SPPI test result and equity instruments for which the parent entity has not applied the option of measurement at fair value through other comprehensive income as “Securities obligatorily measured at fair value through profit or loss”, and shares in Marguerite funds and the Polish Growth Fund of Funds (PGFF) that do not meet the definition of an equity instrument under IAS 32 because they represent financial liabilities of that entities towards the parent entity in “Other financial assets”. The effect on profit or loss is presented in Note 6 as financial instruments obligatorily measured at fair value through profit or loss under “Other”.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

### 19.3. Securities at fair value through other comprehensive income

Securities at fair value through other comprehensive income | 31 Dec 2024 | 31 Dec 2023
Debt securities | 52,448 | 63,471
Issued by the State Treasury | 18,691 | 20,088
Issued by the National Bank of Poland (NBP) | 25,697 | 36,555
Issued by banks | 2,486 | 2,495
Issued by other financial entities | 811 | 315
Issued by non-financial entities | 1,149 | 1,073
Issued by local government units | 3,614 | 2,945
Equity instruments | 1,585 | 1,349
listed shares in other entities | 1,534 | 1,305
unlisted shares in other entities | 51 | 44
Total | 54,033 | 64,820
Impairment allowance on debt securities measured at fair value through other comprehensive income | 26 | 14

The impairment allowance on debt securities at fair value through other comprehensive income is recognised under other comprehensive income in correspondence with the statement of profit or loss. The impairment allowance does not decrease the carrying amount of securities.

The tables below present the change in the carrying amount of and allowances for expected credit losses on debt instruments measured at fair value through other comprehensive income by stage.

Debt securities at fair value through other comprehensive income | Stage 1 | Stage 2 | Stage 3 | Total
Carrying amount as at 31 December 2023 | 63,096 | 375 | 0 | 63,471
Transfer to Stage 1 | 288 | -288 | 0 | 0
Transfer to Stage 2 | -153 | 153 | 0 | 0
New/purchased/granted financial assets | 396,387 | 0 | 0 | 396,387
Derecognition of financial assets | -407,217 | -25 | 0 | -407,242
Other changes | -159 | -9 | 0 | -168
Carrying amount as at 31 December 2024 | 52,242 | 206 | 0 | 52,448
Impairment allowance |  |  |  |
Impairment allowances as at 31 December 2023 | 8 | 6 | 0 | 14
Transfer to Stage 1 | 2 | -2 | 0 | 0
New/purchased/granted financial assets | 5 | 0 | 0 | 5
Derecognition of financial assets | -1 | 0 | 0 | -1
Changes in credit risk level (excluding transfers between stages) | -2 | 10 | 0 | 8
Impairment allowance as at 31 December 2024 | 12 | 14 | 0 | 26

Debt securities at fair value through other comprehensive income | Stage 1 | Stage 2 | Stage 3 | Total
Carrying amount as at 31 December 2022 | 47,484 | 280 | 0 | 47,764
Transfer to Stage 2 | -135 | 135 | 0 | 0
New/purchased/granted financial assets | 287,394 | 0 | 0 | 287,394
Derecognition of financial assets | -269,712 | -22 | 0 | -269,734
Other changes | -1,935 | -18 | 0 | -1,953
Carrying amount as at 31 December 2023 | 63,096 | 375 | 0 | 63,471
Impairment allowance |  |  |  |
Impairment allowance as at 31 December 2022 | 8 | 3 | 0 | 11
New/purchased/granted financial assets | 3 | 0 | 0 | 3
Derecognition of financial assets | -1 | 0 | 0 | -1
Changes in credit risk level (excluding transfers between stages) | -2 | 3 | 0 | 1
Impairment allowance as at 31 December 2023 | 8 | 6 | 0 | 14

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

### 19.4. Securities at amortised cost

Debt securities at amortised cost | 31 Dec 2024 | 31 Dec 2023
Issued by the State Treasury | 3,861 | 3,323
Issued by the National Bank of Poland (NBP) | 68,298 | 77,462
Issued by non-financial entities | 2,434 | 3,317
Issued by local government units | 4,191 | 3,837
Total | 78,784 | 87,939

The tables below present the change in the gross carrying amount and allowances for expected credit losses on debt instruments at amortised cost.

Debt securities at amortised cost | Stage 1 | Stage 2 | Stage 3 | POCI | Total
Gross carrying amount as at 31 December 2023 | 86,153 | 1,030 | 852 | 18 | 88,053
Transfer to Stage 1 | 265 | -105 | -160 | 0 | 0
Transfer to Stage 2 | -157 | 280 | -123 | 0 | 0
New/purchased/granted financial assets | 1,188,276 | 0 | 12 | 529 | 1,188,817
Derecognition of financial assets | -1,197,044 | -135 | -550 | 0 | -1,197,729
Other changes | -81 | -87 | -31 | -72 | -271
Gross carrying amount as at 31 December 2024 | 77,412 | 983 | 0 | 475 | 78,870
Impairment allowance |  |  |  |  |
Impairment allowance as at 31 December 2023 | 17 | 19 | 78 | 0 | 114
Transfer to Stage 1 | 13 | -1 | -12 | 0 | 0
Transfer to Stage 2 | -8 | 17 | -9 | 0 | 0
New/purchased/granted financial assets | 13 | 0 | 0 | 0 | 13
Derecognition of financial assets | -3 | -14 | -28 | 0 | -45
Changes in credit risk level (excluding transfers between stages) | -6 | 38 | -28 | 1 | 5
Other changes (foreign exchange gains (losses)) | 0 | 0 | -1 | 0 | -1
Impairment allowance as at 31 December 2024 | 26 | 59 | 0 | 1 | 86

Debt securities at amortised cost | Stage 1 | Stage 2 | Stage 3 | POCI | Total
Gross carrying amount as at 31 December 2022 | 86,566 | 981 | 400 | 0 | 87,947
Transfer to Stage 1 | 86 | -86 | 0 | 0 | 0
Transfer to Stage 2 | -251 | 251 | 0 | 0 | 0
Transfer to Stage 3 | -23 | -552 | 575 | 0 | 0
New/purchased/granted financial assets | 1,057,712 | 552 | 0 | 18 | 1,058,282
Derecognition of financial assets | -1,058,000 | -82 | -110 | 0 | -1,058,192
Other changes | 63 | -34 | -13 | 0 | 16
Gross carrying amount as at 31 December 2023 | 86,153 | 1,030 | 852 | 18 | 88,053
Impairment allowance |  |  |  |  |
Impairment allowance as at 31 December 2022 | 27 | 16 | 29 | 0 | 72
Transfer to Stage 1 | 2 | -2 | 0 | 0 | 0
Transfer to Stage 2 | -1 | 1 | 0 | 0 | 0
Transfer to Stage 3 | 0 | -3 | 3 | 0 | 0
New/purchased/granted financial assets | 5 | 3 | 0 | 0 | 8
Derecognition of financial assets | -1 | 0 | 0 | 0 | -1
Changes in credit risk level (excluding transfers between stages) | -15 | 4 | 47 | 0 | 36
Other changes (foreign exchange gains (losses)) | 0 | 0 | -1 | 0 | -1
Impairment allowance as at 31 December 2023 | 17 | 19 | 78 | 0 | 114

### 19.5. Reclassification of financial assets

In 2024 and 2023, the Group did not reclassify any financial assets.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

### 19.6. Derecognition of investments in equity instruments measured at fair value through other comprehensive income

| Reasons for divestment | Purchase price | Revaluation | Fair value as at derecognition date | Selling price | Total gain or loss on disposal
2024
|  | - | - | - | - | -
2023
Investment 3 | Change in ownership structure | 3 | 0 | 3 | 5 | 2
Investment 4 | Divestment in a subsidiary | 33 | 16 | 53 | 53 | 16

## 20. Receivables and liabilities under reverse repurchase/repurchase agreements

Securities under repurchase agreements/reverse repurchase agreements | 31 Dec 2024 | 31 Dec 2023
Receivables | Liabilities | Receivables | Liabilities
From banks | 13,688 | 3,265 | 1,799 | 1,856
From customers | 8,490 | 5,152 | 3,470 | 4,580
Total | 22,178 | 8,417 | 5,269 | 6,436

Financial assets subject to reverse repo and buy-sell-back transactions constitute collateral accepted by the Capital Group, which the Group has the right to sell or pledge. Financial instruments pledged as collateral for reverse repos may be sold or encumbered under standard contracts but must be returned on maturity.

## 21. Loans and advances to customers

### 21.1. Loans and advances to customers measured at amortised cost

Loans and advances to customers measured at amortised cost | 31 Dec 2024 | 31 Dec 2023
Gross loans | Allowances for expected credit losses | Net loans | Gross loans | Allowances for expected credit losses | Net loans
Loans and advances to customers, including: | 46,115 | 3,183 | 42,932 | 44,763 | 2,226 | 42,537
financial sector | 5,096 | 50 | 5,046 | 4,128 | 48 | 4,080
loans and advances | 4,939 | 47 | 4,892 | 4,099 | 48 | 4,051
guarantees and sureties | 4 | 3 | 1 | 1 | 0 | 1
other receivables | 153 | 0 | 153 | 28 | 0 | 28
non-financial sector | 28,397 | 3,000 | 25,397 | 29,358 | 2,027 | 27,331
loans and advances | 27,252 | 2,175 | 25,077 | 28,294 | 1,401 | 26,893
purchased debt | 101 | 13 | 88 | 159 | 13 | 146
guarantees and sureties | 1,044 | 812 | 232 | 905 | 613 | 292
public sector | 12,622 | 133 | 12,489 | 11,277 | 151 | 11,126
loans and advances | 12,578 | 132 | 12,446 | 11,204 | 149 | 11,055
purchased debt | 43 | 1 | 42 | 72 | 2 | 70
other receivables | 1 | 0 | 1 | 1 | 0 | 1

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The tables below present the change in the gross carrying amount and allowances for expected credit losses on loans and advances to customers at amortised cost.

Loans and advances to customers measured at amortised cost | Stage 1 | Stage 2 | Stage 3 | POCI | Total
Gross carrying amount as at 31 December 2023 | 34,291 | 5,467 | 4,568 | 437 | 44,763
Transfer to Stage 1 | 2,183 | -1,890 | -293 | 0 | 0
Transfer to Stage 2 | -3,205 | 3,414 | -209 | 0 | 0
Transfer to Stage 3 | -18 | -992 | 1,010 | 0 | 0
Transfer to POCI | -1 | 0 | 0 | 1 | 0
New/purchased/granted financial assets | 20,245 | 848 | 1,468 | 93 | 22,654
Derecognition of financial assets | -6,205 | -727 | -172 | -2 | -7,106
Financial assets that have been written off in the statement of financial position | 0 | 0 | -8 | 0 | -8
Other changes | -11,737 | -1,208 | -1,156 | -87 | -14,188
Gross carrying amount as at 31 December 2024 | 35,553 | 4,912 | 5,208 | 442 | 46,115
Impairment allowance |  |  |  |  |
Impairment allowance as at 31 December 2023 | 299 | 170 | 1,744 | 13 | 2,226
Transfer to Stage 1 | 49 | -32 | -17 | 0 | 0
Transfer to Stage 2 | -25 | 59 | -34 | 0 | 0
Transfer to Stage 3 | -1 | -63 | 64 | 0 | 0
New/purchased/granted financial assets | 23 | 0 | 19 | 0 | 42
Derecognition of financial assets | -12 | -6 | -23 | 0 | -41
Financial assets that have been written off in the statement of financial position | 0 | 0 | -8 | 0 | -8
Changes in credit risk level (excluding transfers between stages) | 23 | 67 | 877 | -3 | 964
Impairment allowance as at 31 December 2024 | 356 | 195 | 2 622 | 10 | 3,183

Loans and advances to customers measured at amortised cost | Stage 1 | Stage 2 | Stage 3 | POCI | Total
Gross carrying amount as at 31 December 2022 | 29,870 | 4,672 | 3,678 | 477 | 38,697
Transfer to Stage 1 | 850 | -841 | -9 | 0 | 0
Transfer to Stage 2 | -2,883 | 2,914 | -31 | 0 | 0
Transfer to Stage 3 | -284 | -888 | 1,172 | 0 | 0
New/purchased/granted financial assets | 14,312 | 383 | 343 | 33 | 15,071
Derecognition of financial assets | -9,294 | -1,207 | -629 | -79 | -11,209
Financial assets that have been written off in the statement of financial position | 0 | 0 | -48 | 0 | -48
Other changes | 1,720 | 434 | 92 | 6 | 2,252
Gross carrying amount as at 31 December 2023 | 34,291 | 5,467 | 4,568 | 437 | 44,763
Impairment allowance |  |  |  |  |
Impairment allowance as at 31 December 2022 | 266 | 156 | 1,307 | -7 | 1,722
Transfer to Stage 1 | 38 | -33 | -5 | 0 | 0
Transfer to Stage 2 | -32 | 41 | -9 | 0 | 0
Transfer to Stage 3 | -8 | -37 | 45 | 0 | 0
New/purchased/granted financial assets | 63 | 1 | 26 | 0 | 90
Derecognition of financial assets | -10 | -8 | -48 | -5 | -71
Financial assets that have been written off in the statement of financial position | 0 | 0 | -46 | 0 | -46
Changes in credit risk level (excluding transfers between stages) | -11 | 54 | 490 | 25 | 558
Other changes (foreign exchange gains (losses)) | -7 | -4 | -16 | 0 | -27
Impairment allowance as at 31 December 2023 | 299 | 170 | 1,744 | 13 | 2,226

The total amount of expected credit losses at initial recognition for POCI assets arising in 2024 was PLN 5 470 thousand. In 2023, it was PLN 5 008 thousand.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

### 21.2. Loans and advances to customers obligatorily measured at fair value through profit or loss

Loans and advances to customers obligatorily measured at fair value through profit or loss | 31 Dec 2024 | 31 Dec 2023
Loans and advances to customers, including: | 67 | 87
financial sector | 45 | 44
loans and advances | 45 | 44
public sector | 22 | 43
loans and advances | 22 | 43

## 22. Investments in associates

Changes in investments in associates | 31 Dec 2024 | 31 Dec 2023
Investments in associates at the beginning of the period | 5,601 | 4,327
Increases, including: | 1,690 | 1,566
Share of profit in the statement of profit or loss | 743 | 708
Share of profit in comprehensive income | 5 | 8
Acquisition of shares/investment certificates | 942 | 850
Decreases, including: | 649 | 286
Share of loss in the statement of profit or loss | 10 | 3
Share of loss in comprehensive income | 52 | 161
Sale of shares | 0 | 122
Redemption of shares/investment certificates | 576 | 0
Payment of dividend | 11 | 0
Exchange | -2 | -7
Investments in associates at the end of the period | 6,640 | 5,600

In 2024, the Bank redeemed shares in the Three Seas Initiative Investment Fund (Three Seas Initiative Investment Fund SICAV-RAIF) belonging to the Bank worth EUR 134.6 million, and purchased shares in the Three Seas Fund worth EUR 68.7 million. Additionally, in 2024 the Bank purchased PFR FI FIZ AN investment certificates with a value of PLN 549.9 million. This did not cause a change of its treatment as an associate and did not affect the assessment of control.

Under the subscription agreement, the Bank has committed to invest EUR 750 million in the Three Seas Initiative Investment Fund by way of acquiring its shares. The Bank makes payments in stages as the Fund implements further investment projects and in response to the received requests for payment.

As at 31 December 2024, the total amount paid in by the Bank was EUR 535.0 million (71.34% of the commitment), while as at 31 December 2023 it was EUR 601.0 million (80.13% of the commitment).

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Condensed information about associates measured using the equity method as at 31 December 2024*
Entity name | Current assets | Non-current assets | Short-term liabilities | Long-term liabilities | Revenue | Net profit/loss | Net assets | % interest in capital | % share of total vote | Adjusted net assets | Carrying amount
Three Seas Initiative Investment Fund S.A. SICAV-RAIF | 41 | 3,437 | 7 | 0 | 397 | 319 | 3,470 | 80.81 | 80.81 | 3,470 | 2,804
PFR Fundusz Inwestycyjny FIZ AN | 9,974 | 0 | 208 | 0 | 1,632 | 1,319 | 9,765 | 34.15 | 34.15 | 9,765 | 3,335
KUKE S.A. | 1,095 | 14 | 109 | 0 | 195 | 69 | 502 | 48.45 | 48.45 | 502 | 231
Śląski Regionalny Fundusz Poręczeniowy Sp. z o.o. | 43 | 0 | 24 | 4 | 3 | 0 | 10 | 46.08 | 46.08 | 10 | 5
Poznański Fundusz Poręczeń Kredytowych Sp. z o.o. | 26 | 10 | 4 | 6 | 4 | 2 | 23 | 44.00 | 44.00 | 12 | 5
Dolnośląski Fundusz Gospodarczy Sp. z o.o. | 23 | 0 | 0 | 0 | 4 | 0 | 21 | 42.62 | 42.62 | 21 | 9
Samorządowy Fundusz Poręczeń Kredytowych Sp. z o.o. in Gostyń | 57 | 0 | 0 | 7 | 6 | 3 | 34 | 35.33 | 35.33 | 31 | 11
Fundusz Pomerania Sp. z o.o. | 38 | 0 | 0 | 0 | 7 | 1 | 33 | 35.33 | 35.33 | 18 | 6
Warmińsko-Mazurski Fundusz "Poręczenia Kredytowe" Sp. z o.o. | 19 | 2 | 0 | 4 | 3 | -1 | 14 | 36.19 | 23.49 | 5 | 2
Małopolski Fundusz Poręczeń Kredytowych Sp. z o.o. (in liquidation) | 3 | 0 | 1 | 0 | 0 | 0 | 1 | 32.86 | 32.86 | 1 | 0
Świętokrzyski Fundusz Poręczeniowy Sp. z o.o. | 27 | 2 | 0 | 20 | 2 | 1 | 8 | 49.99 | 49.99 | 7 | 3
Małopolski Regionalny Fundusz Poręczeniowy Sp. z o.o. | 33 | 0 | 14 | 0 | 3 | 0 | 14 | 36.87 | 36.87 | 14 | 5
UAB EMP Recycling | 44 | 32 | 10 | 1 | 109 | 7 | 65 | 49.00 | 49.00 | 65 | 46
ASM Germany GmbH | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 49.90 | 49.90 | 0 | 0
G+M GmbH | 30 | 23 | 14 | 10 | 64 | -1 | 26 | 24.00 | 24.00 | 26 | 15
White Olive A.E. | 17 | 219 | 67 | 30 | 51 | 11 | 135 | 28.46 | 28.46 | 135 | 45
Netguru LLC (USA) | 0 | 46 | 3 | 26 | 0 | -2 | 17 | 49.99 | 49.99 | 17 | 8
Ready Bathroom Sp. z o.o. | 40 | 35 | 37 | 13 | 46 | -21 | 25 | 31.59 | 31.59 | 25 | 14
Aicon X-Ray SPV Sp. z o.o. | 11 | 112 | 1 | 0 | 0 | 0 | 122 | 33.70 | 33.70 | 122 | 41
Kodano S.A. | 76 | 28 | 79 | 15 | 161 | -2 | 9 | 21.74 | 21.74 | 9 | 25
MMI Sp. z o.o. | 40 | 13 | 29 | 8 | 33 | 0 | 17 | 14.53 | 14.53 | 17 | 8
Quantum Innovations Sp. z o.o. | 18 | 0 | 0 | 0 | 0 | -1 | 18 | 27.46 | 27.46 | 18 | 22
Total |  |  |  |  |  |  |  |  |  |  | 6,640
* The presented information is based on financial data available as at the date of these financial statements.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Condensed information about associates measured using the equity method as at 31 December 2023*
Entity name | Current assets | Non-current assets | Short-term liabilities | Long-term liabilities | Revenue | Net profit/loss | Net assets | % interest in capital | % share of total vote | Adjusted net assets | Carrying amount
Three Seas Initiative Investment Fund S.A. SICAV-RAIF | 14 | 3,559 | 10 | 0 | 388 | 275 | 3,563 | 80.81 | 80.81 | 3,563 | 2,879
PFR Fundusz Inwestycyjny FIZ AN | 7,832 | 0 | 31 | 0 | 1,619 | 1,443 | 7,800 | 30.02 | 30.02 | 7,800 | 2,341
KUKE S.A. | 1,038 | 13 | 101 | 0 | 190 | 58 | 425 | 48.45 | 48.45 | 425 | 194
Śląski Regionalny Fundusz Poręczeniowy Sp. z o.o. | 42 | 0 | 24 | 4 | 3 | 0 | 10 | 46.08 | 46.08 | 10 | 5
Poznański Fundusz Poręczeń Kredytowych Sp. z o.o. | 33 | 5 | 0 | 10 | 4 | 2 | 21 | 44.00 | 44.00 | 11 | 5
Dolnośląski Fundusz Gospodarczy Sp. z o.o. | 23 | 0 | 0 | 0 | 4 | 0 | 21 | 42.62 | 42.62 | 21 | 9
Samorządowy Fundusz Poręczeń Kredytowych Sp. z o.o. in Gostyń | 56 | 0 | 0 | 11 | 7 | 4 | 30 | 35.48 | 35.48 | 30 | 10
Fundusz Pomerania Sp. z o.o. | 29 | 5 | 1 | 0 | 7 | 0 | 30 | 41.15 | 41.15 | 17 | 7
Warmińsko-Mazurski Fundusz "Poręczenia Kredytowe" Sp. z o.o. | 50 | 2 | 0 | 35 | 3 | -1 | 15 | 36.19 | 23.49 | 6 | 2
Małopolski Fundusz Poręczeń Kredytowych Sp. z o.o. (in liquidation) | 3 | 0 | 2 | 0 | 0 | 0 | 1 | 32.86 | 32.86 | 1 | 0
Krajowa Grupa Poręczeniowa Sp. z o.o. | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 39.29 | 39.29 | 0 | 0
Świętokrzyski Fundusz Poręczeniowy Sp. z o.o. | 27 | 1 | 0 | 20 | 1 | 0 | 7 | 49.99 | 49.99 | 7 | 3
Małopolski Regionalny Fundusz Poręczeniowy Sp. z o.o. | 38 | 0 | 18 | 0 | 6 | 0 | 14 | 36.87 | 36.87 | 14 | 5
UAB EMP Recycling | 71 | 28 | 14 | 1 | 125 | 5 | 85 | 49.00 | 49.00 | 85 | 53
ASM Germany GmbH | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 49.90 | 49.90 | 0 | 0
G+M GmbH | 23 | 16 | 4 | 8 | 75 | 5 | 27 | 24.00 | 24.00 | 27 | 15
White Olive A.E. | 16 | 210 | 40 | 46 | 49 | 9 | 140 | 28.46 | 28.46 | 140 | 43
Netguru LLC (USA) | 0 | 44 | 2 | 24 | 0 | -1 | 18 | 49.99 | 49.99 | 18 | 9
Ready Bathroom Sp. z o.o. | 32 | 40 | 27 | 14 | 111 | 0 | 42 | 31.59 | 31.59 | 42 | 20
Total |  |  |  |  |  |  |  |  |  |  | 5,600
* The presented information is based on financial data available as at the date of these financial statements.

The adjustment of net assets in surety funds relates to alignment of the funds’ accounting principles with regard to the recognition of impairment allowances on off-balance-sheet liabilities granted with the principles applied by the parent entity.

## 23. Intangible assets

Intangible assets | 31 Dec 2024 | 31 Dec 2023
Licences, copyrights (including software) | 125 | 110
Expenditure on intangible assets | 89 | 84
Total | 214 | 194

Change in intangible assets in 2024 | Licences, copyrights (including software) | Expenditure on intangible assets | Total
Gross carrying amount at the beginning of the period | 283 | 84 | 367
Increases, including: | 46 | 57 | 103
- purchase | 0 | 57 | 57
- transfer from expenditures | 46 | 0 | 46
Decreases, including: | 1 | 52 | 53
- liquidation | 1 | 0 | 1
- transfer from expenditures | 0 | 46 | 46
- other | 0 | 6 | 6
Gross value at the end of the period | 328 | 89 | 417
Accumulated depreciation at the beginning of the period | 173 | 0 | 173
Increases, including: | 31 | 0 | 31
- depreciation for the period | 31 | 0 | 31
Decreases, including: | 1 | 0 | 1
- liquidation | 1 | 0 | 1
Accumulated depreciation at the end of the period | 203 | 0 | 203
Impairment allowances on other assets at the beginning of the period | 0 | 0 | 0
Impairment allowances on other assets at the end of the period | 0 | 0 | 0
Net carrying amount at the beginning of the period | 110 | 84 | 194
Amortisation | 125 | 89 | 214

Change in intangible assets in 2023 | Licences, copyrights (including software) | Expenditure on intangible assets | Total
Gross carrying amount at the beginning of the period | 219 | 42 | 261
Increases, including: | 64 | 107 | 171
- purchase | 0 | 107 | 107
- transfer from expenditures | 64 | 0 | 64
Decreases, including: | 0 | 65 | 65
- transfer from expenditures | 0 | 64 | 64
- other | 0 | 1 | 1
Gross value at the end of the period | 283 | 84 | 367
Accumulated amortisation at the beginning of the period | 145 | 0 | 145
Increases, including: | 28 | 0 | 28
- depreciation for the period | 28 | 0 | 28
Accumulated amortisation at the end of the period | 173 | 0 | 173
Impairment allowances on other assets at the beginning of the period | 0 | 0 | 0
Impairment allowances on other assets at the end of the period | 0 | 0 | 0
Net carrying amount at the beginning of the period | 74 | 42 | 116
Amortisation | 110 | 84 | 194

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The value of intangible assets considered material for the financial statements of the Bank

Parent holds licences/copyrights for the use of the following, among other things:

§ Ferryt Enterprise platform (core system and modifications) with a net value of PLN 27.4 million. The expected useful life ends on 30 November 2037,

§ DEF system (core system and modifications) with a net value of PLN 17.9 million. The expected useful life ends on 31 July 2037,

§ the KONDOR+ system (core system and modifications) with a net value of PLN 13.2 million. The expected useful life ends on 30 June 2034.

As at 31 December 2024 and 31 December 2023, the Bank did not hold any intangible assets whose legal title would be limited or which would have been provided as collateral securing the payment of liabilities.

The parent is currently upgrading its key accounting and operational systems, therefore it entered into agreements to purchase in future periods the intangible assets of PLN 195.4 million.

## 24. Property, plant and equipment

Property, plant and equipment | 31 Dec 2024 | 31 Dec 2023
Buildings and structures | 65 | 68
Leasehold improvements | 0 | 1
Plant and equipment | 44 | 34
Vehicles | 1 | 0
Property, plant and equipment under construction | 103 | 80
Other property, plant and equipment | 1 | 2
Total | 214 | 185

Change in the status of property, plant and equipment in 2024 | Buildings and structures | Leasehold improvements | Plant and equipment | Vehicles | Fixed assets under construction | Other tangible assets | Total
Gross value of property, plant and equipment at the beginning of the period | 100 | 3 | 132 | 0 | 80 | 5 | 320
Increases, including: | 0 | 0 | 27 | 1 | 51 | 0 | 79
- purchase | 0 | 0 | 0 | 1 | 51 | 0 | 52
- transfer from expenditures | 0 | 0 | 27 | 0 | 0 | 0 | 27
Decreases, including: | 0 | 0 | 4 | 0 | 28 | 1 | 33
- sale | 0 | 0 | 0 | 0 | 0 | 1 | 1
- liquidation | 0 | 0 | 3 | 0 | 0 | 0 | 3
- donation | 0 | 0 | 1 | 0 | 0 | 0 | 1
- transfer from expenditures | 0 | 0 | 0 | 0 | 27 | 0 | 27
- other (discontinued investments, reclassification to commissioned activities) | 0 | 0 | 0 | 0 | 1 | 0 | 1
Gross amount of property, plant and equipment at the end of the period | 100 | 3 | 155 | 1 | 103 | 4 | 366
Accumulated depreciation at the beginning of the period | 32 | 2 | 98 | 0 | 0 | 3 | 135
Increases, including: | 3 | 1 | 17 | 0 | 0 | 0 | 21
- depreciation for the period | 3 | 1 | 17 | 0 | 0 | 0 | 21
Decreases, including: | 0 | 0 | 4 | 0 | 0 | 0 | 4
- liquidation | 0 | 0 | 3 | 0 | 0 | 0 | 3
- donation | 0 | 0 | 1 | 0 | 0 | 0 | 1
Accumulated depreciation at the end of the period | 35 | 3 | 111 | 0 | 0 | 3 | 152
Impairment allowances on other assets at the beginning of the period | 0 | 0 | 0 | 0 | 0 | 0 | 0
Impairment allowances on other assets at the end of the period | 0 | 0 | 0 | 0 | 0 | 0 | 0
Net carrying amount at the beginning of the period | 68 | 1 | 34 | 0 | 80 | 2 | 185
Net carrying amount at the end of the period | 65 | 0 | 44 | 1 | 103 | 1 | 214

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Change in property, plant and equipment in 2023 | Buildings and structures | Leasehold improvements | Plant and equipment | Property, plant and equipment under construction | Other tangible assets | Total
Gross value of property, plant and equipment at the beginning of the period | 100 | 2 | 125 | 14 | 4 | 245
Increases, including: | 0 | 1 | 15 | 82 | 1 | 99
- purchase | 0 | 0 | 0 | 82 | 1 | 83
- transfer from expenditures | 0 | 1 | 15 | 0 | 0 | 16
Decreases, including: | 0 | 0 | 8 | 16 | 0 | 24
- liquidation | 0 | 0 | 8 | 0 | 0 | 8
- transfer from expenditures | 0 | 0 | 0 | 16 | 0 | 16
Gross amount of property, plant and equipment at the end of the period | 100 | 3 | 132 | 80 | 5 | 320
Accumulated depreciation at the beginning of the period | 29 | 1 | 93 | 0 | 3 | 126
Increases, including: | 3 | 1 | 13 | 0 | 0 | 17
- depreciation for the period | 3 | 1 | 13 | 0 | 0 | 17
Decreases, including: | 0 | 0 | 8 | 0 | 0 | 8
- liquidation | 0 | 0 | 8 | 0 | 0 | 8
Accumulated depreciation at the end of the period | 32 | 2 | 98 | 0 | 3 | 135
Impairment allowances on other assets at the beginning of the period | 0 | 0 | 0 | 0 | 0 | 0
Impairment allowances on other assets at the end of the period | 0 | 0 | 0 | 0 | 0 | 0
Net carrying amount at the beginning of the period | 71 | 1 | 32 | 14 | 1 | 119
Net carrying amount at the end of the period | 68 | 1 | 34 | 80 | 2 | 185

As at 31 December 2024 and 31 December 2023, the Group did not hold any property or equipment whose legal title would be limited or which would have been provided as collateral securing the payment of liabilities.

In August 2022, the Bank signed a contract with the general contractor for the performance of construction and installation works at the parent entity’s Head Office building. Due to the fact that the concluded contract provides for indexation of the contract price based on indicators quoted by Statistics Poland, the contract price in the basic scope in 2024 was PLN 545.1 million gross (in 2023, it was PLN 533.4 million gross).

By 31 December 2024, the Group had capitalised a total of PLN 101.7 million of costs related to expenditures under contracts for the refurbishment of the parent entity's Head Office (PLN 59.1 million by 31 December 2023).

## 25. Right-of-use assets

Right-of-use assets | 31 Dec 2024 | 31 Dec 2023
Buildings and structures | 87 | 46
Right of perpetual usufruct of land | 12 | 12
Plant and equipment | 2 | 3
Vehicles | 3 | 2
Total | 104 | 63

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Change in right-of-use assets in 2024 | Buildings and structures | Right of perpetual usufruct of land | Plant and equipment | Vehicles | Total
Gross carrying amount of right-of-use assets at the beginning of the period | 133 | 12 | 10 | 5 | 160
Increases, including: | 69 | 0 | 0 | 3 | 72
- indexation/modification | 69 | 0 | 0 | 3 | 72
Decreases, including: | 0 | 0 | 0 | 2 | 2
- lease termination | 0 | 0 | 0 | 2 | 2
Gross carrying amount of right-of-use assets at the end of the period | 202 | 12 | 10 | 6 | 230
Accumulated depreciation at the beginning of the period | 87 | 0 | 7 | 3 | 97
Increases, including: | 28 | 0 | 1 | 2 | 31
- depreciation for the period | 27 | 0 | 1 | 2 | 30
- other | 1 | 0 | 0 | 0 | 1
Decreases, including: | 0 | 0 | 0 | 2 | 2
- lease termination | 0 | 0 | 0 | 2 | 2
Accumulated depreciation at the end of the period | 115 | 0 | 8 | 3 | 126
Impairment allowances on other assets at the beginning of the period | 0 | 0 | 0 | 0 | 0
Impairment allowances on other assets at the end of the period | 0 | 0 | 0 | 0 | 0
Net carrying amount at the beginning of the period | 46 | 12 | 3 | 2 | 63
Net carrying amount at the end of the period | 87 | 12 | 2 | 3 | 104

Change in right-of-use assets in 2023 | Buildings and structures | Right of perpetual usufruct of land | Plant and equipment | Vehicles | Total
Gross carrying amount of right-of-use assets at the beginning of the period | 131 | 13 | 9 | 5 | 158
Increases, including: | 5 | 0 | 3 | 0 | 8
- purchase (new agreements) | 1 | 0 | 0 | 0 | 1
- indexation/modification | 4 | 0 | 3 | 0 | 7
Decreases, including: | 3 | 1 | 2 | 0 | 6
- sale | 0 | 1 | 0 | 0 | 1
- lease termination | 3 | 0 | 2 | 0 | 5
Gross carrying amount of right-of-use assets at the end of the period | 133 | 12 | 10 | 5 | 160
Accumulated depreciation at the beginning of the period | 63 | 0 | 8 | 1 | 72
Increases, including: | 26 | 0 | 2 | 2 | 30
- depreciation for the period | 25 | 0 | 2 | 2 | 29
- other | 1 | 0 | 0 | 0 | 1
Decreases, including: | 2 | 0 | 3 | 0 | 5
- lease termination | 2 | 0 | 3 | 0 | 5
Accumulated depreciation at the end of the period | 87 | 0 | 7 | 3 | 97
Impairment allowances on other assets at the beginning of the period | 0 | 0 | 0 | 0 | 0
Impairment allowances on other assets at the end of the period | 0 | 0 | 0 | 0 | 0
Net carrying amount at the beginning of the period | 68 | 13 | 1 | 4 | 86
Net carrying amount at the end of the period | 46 | 12 | 3 | 2 | 63

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

## 26. Investment property

Change in investment property | 2024 | 2023
Gross carrying amount at the beginning of the period | 18 | 16
Increases, including: | 3 | 5
- fair value measurement | 3 | 5
Decreases, including: | 5 | 3
- sale | 5 | 3
Gross carrying amount at the end of the period | 16 | 18

The following items of revenue and expenses related to investment property were recognised in profit or loss:

| 2024 | 2023
Direct operating expenses (including the cost of repair and maintenance) related to property, which did not generate any rental income in the period | 1 | 0
Direct operating expenses (including the cost of repair and maintenance) related to property, which did not generate any rental income in the period | 0 | 1

In 2024, the parent entity did not enter into any material contracts for repair, maintenance or improvement of investment property in subsequent periods.

## 27. Other assets

Other assets | 31 Dec 2024 | 31 Dec 2023
Accrued income, including: | 32 | 15
- fees for asset management | 19 | 5
Sundry debtors | 76 | 51
Payment card settlements | 7 | 6
Pre-paid costs, including: | 26 | 31
- costs of telecommunication services | 20 | 23
Total other assets (gross) | 141 | 103
Allowances | 12 | 8
Total other assets (net) | 129 | 95
including financial assets (net) | 103 | 64

Change in impairment allowances on other assets | 2024 | 2023
Impairment allowances on other assets at the beginning of the period | 8 | 6
Recognition | 5 | 2
Reversal | 1 | 0
Impairment allowances on other assets at the end of the period | 12 | 8

## 28. Amounts due to banks

Amounts due to banks | 31 Dec 2024 | 31 Dec 2023
Current accounts | 287 | 504
Deposits in banks | 553 | 536
Loans and advances received, including: | 2,317 | 2,641
- European Investment Bank | 1,917 | 2,038
- Council of Europe Development Bank | 352 | 377
- KfW (Kreditanstalt für Wiederaufbau) | 48 | 226
Liabilities under cash collateral | 798 | 776
Other | 23 | 2
Total | 3,978 | 4,459

In 2024 and 2023, as part of the servicing of credits and loans received by the Group, there were no breaches of contractual covenants, the Capital Group does not identify the risk of their breach within the next 12 months.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

## 29. Liabilities to customers

Liabilities to customers | 31 Dec 2024 | 31 Dec 2023
Liabilities to the financial sector | 8,063 | 23,164
Current accounts and O/N deposits | 1,432 | 3,083
Term deposits | 6,512 | 20,001
Other liabilities | 119 | 80
Liabilities to non-financial sector | 50,574 | 35,763
Current accounts and O/N deposits | 6,684 | 4,668
Term deposits | 43,128 | 29,932
Other liabilities | 762 | 1,163
Liabilities to the public sector | 145,115 | 102,655
Current accounts and O/N deposits | 97,648 | 80,514
Term deposits | 47,215 | 21,924
Other liabilities | 252 | 217
Total | 203,752 | 161,582

## 30. Debt securities issued

Issue date | Nominal value | Currency | Maturity date | Interest rate | Carrying amount 31 Dec 2024
16 Nov 2023 | 471 | PLN | 16 Nov 2027 | 6M WIBOR + margin | 475
16 Nov 2023 | 805 | PLN | 16 Nov 2027 | 6M WIBOR + margin | 812
11 Dec 2023 | 125 | EUR | 11 Dec 2026 | fixed | 535
Total |  |  |  |  | 1,822

Issue date | Nominal value | Currency | Maturity date | Interest rate | Carrying amount 31 Dec 2023
16 Nov 2023 | 471 | PLN | 16 Nov 2027 | 6M WIBOR + margin | 475
16 Nov 2023 | 805 | PLN | 16 Nov 2027 | 6M WIBOR + margin | 812
11 Dec 2023 | 125 | EUR | 11 Dec 2026 | fixed | 544
Total |  |  |  |  | 1,831

In 2024, the nominal value of liabilities due to securities issued did not change. In 2024, the parent company made interest payments on bonds in the amount of PLN 86.8 million and EUR 4.7 million.

On February 19, 2023, the parent company repurchased bonds with a nominal value of PLN 2,000 million (interest in the amount of PLN 78 million) and on October 28, 2023, repurchased bonds with a nominal value of PLN 1,850 million (interest in the amount of PLN 68 million).

The total value of financial liabilities (including liabilities under debt securities issued) disclosed in these financial statements differs significantly from the published forecast financial liabilities as at the last day of the financial year. The increase occurred mainly in liabilities to customers. The largest item in this group are funds deposited by the Ministry of Finance on accounts maintained by BGK, which are subject to high volatility during the year.

## 31. Lease liabilities

Change in lease liabilities | 2024 | 2023
Amount at the beginning of the period | 63 | 88
Increases, including: | 77 | 10
- new agreements | 1 | 1
- indexation of payments/ modifications | 73 | 7
- interest expense on lease liabilities | 3 | 2
Decreases, including: | 35 | 31
- repayment of lease liabilities | 34 | 30
- indexation of payments/ modifications | 1 | 0
- other | 0 | 1
Foreign exchange gain/loss | -1 | -4
Amount at the end of the period | 104 | 63

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

## 32. Other liabilities

Other liabilities | 31 Dec 2024 | 31 Dec 2023
Deferred costs | 39 | 31
Deferred income | 218 | 229
Provisions for annual holidays | 13 | 12
Provisions for other employee benefits | 174 | 155
Other liabilities: | 7,149 | 5,976
- settlements with other funds and programmes, including: | 5,920 | 4,774
Aid Fund | 86 | 251
National Road Fund | 1,163 | 922
COVID-19 Response Fund | 1,687 | 0
Armed Forces Support Fund | 2,827 | 572
- interbank settlements | 52 | 71
- sundry creditors | 1,096 | 1,053
- sundry debtors | 39 | 53
- public law settlements | 20 | 16
- other | 22 | 9
Total | 7,593 | 6,403

As at 31 December 2024 and 31 December 2023, the Group had no delinquent contractual liabilities under concluded agreements.

## 33. Provisions

Provisions | 31 Dec 2024 | 31 Dec 2023
Provisions for financial and guarantee liabilities granted | 578 | 647
Provisions for litigation and legal risks | 58 | 62
Provisions for defined benefit plans | 37 | 33
Total | 673 | 742

Provisions for the year ending on 31 Dec 2024 | Provisions for financial and guarantee liabilities granted | Provisions for litigation and legal risks | Provisions for defined benefit plans | Total
Balance at the beginning of the period | 647 | 62 | 33 | 742
Recognition | 676 | 3 | 5 | 684
Reversal | 745 | 2 | 0 | 747
Utilisation | 0 | 5 | 1 | 6
Balance at the end of the period | 578 | 58 | 37 | 673
Short-term provision | 83 | 0 | 6 | 89
Long-term provision | 495 | 58 | 31 | 584

Provisions for the year ending on 31 Dec 2023 | Provisions for financial and guarantee liabilities granted | Provisions for litigation and legal risks | Provisions for defined benefit plans | Total
Balance at the beginning of the period | 684 | 37 | 22 | 743
Recognition | 730 | 25 | 3 | 758
Reversal | 760 | 0 | 0 | 760
Utilisation | 0 | 1 | 1 | 2
Reclassifications | 0 | 0 | 9 | 9
Other changes | -7 | 1 | 0 | -6
Balance at the end of the period | 647 | 62 | 33 | 742
Short-term provision | 78 | 0 | 5 | 83
Long-term provision | 569 | 62 | 28 | 659

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Provisions for financial and guarantee liabilities granted

The tables below present financial and guarantee liabilities granted, together with relevant provisions, by stage, in accordance with IFRS 9.

| Stage 1 | Stage 2 | Stage 3 | POCI | Total
Financial and guarantee liabilities granted |  |  |  |  |
Financial liabilities granted | 97,780 | 738 | 90 | 26 | 98,634
Guarantee liabilities granted | 29,740 | 2,825 | 1,279 | 0 | 33,844
Balance as at 31 Dec 2024 | 127,520 | 3,563 | 1,369 | 26 | 132,478
Provisions for financial and guarantee liabilities granted |  |  |  |  |
Provision for financial liabilities granted | 110 | 8 | 15 | 1 | 134
Provision for guarantee liabilities granted | 174 | 73 | 197 | 0 | 444
Balance as at 31 Dec 2024 | 284 | 81 | 212 | 1 | 578

| Stage 1 | Stage 2 | Stage 3 | POCI | Total
Financial and guarantee liabilities granted |  |  |  |  |
Financial liabilities granted | 82,094 | 1,349 | 442 | 0 | 83,885
Guarantee liabilities granted | 29,388 | 679 | 1,116 | 0 | 31,183
As at 31 December 2023 | 111,482 | 2,028 | 1,558 | 0 | 115,068
Provisions for financial and guarantee liabilities granted |  |  |  |  |
Provision for financial liabilities granted | 46 | 19 | 107 | 0 | 172
Provision for guarantee liabilities granted | 178 | 58 | 239 | 0 | 475
As at 31 December 2023 | 224 | 77 | 346 | 0 | 647

Provisions for legal risk related to the portfolio of CHF-indexed mortgage loans

As of 31 December 2024, the parent company carried receivables from CHF-indexed mortgage loans with a gross carrying amount of PLN 11 million (as of 31 December 2023 with a gross carrying amount of PLN 16 million).

As at 31 December 2024, 32 individual court cases were pending against the Bank, of which 8 were related to repaid loans. In 2024, it was not found justified to build up a portfolio provision. The provision for legal risk as of 31 December 2024 was PLN 40 million (PLN 19 million as the portfolio provision and PLN 21 million as the individual provision) and, according to the estimates, meets the current needs of the Bank.

As at 31 December 2023, 32 individual court cases were pending against the Bank, of which seven were related to repaid loans. In 2023, the Bank recalculated provisions for legal risk, as a result of which an additional amount of PLN 14.8 million was recognised as a portfolio provision for foreign currency mortgage loans (PLN 10.2 million for active loans and PLN 4.6 million for repaid loans). The provision for legal risk as of 31 December 2023 was PLN 45.1 million (PLN 28.2 million as the portfolio provision and PLN 16.9 million as the provision for individual cases).

Information on the estimation method for the provision is provided in Note 2.4. “Estimates and assumptions”.

Procedures initiated by the PFSA

On 22 November 2023, the PFSA initiated an administrative procedure to impose a penalty on BGK under Art. 176i.1.4 of the Act on Trading in Financial Instruments. At the current stage of the procedure, it is not possible to estimate whether any penalty will be imposed on the Bank and it is not possible to make a reliable estimate of the amount of the potential penalty.

Reconciliation of the present value of liabilities due to defined benefit plans

The table below presents the change in the present value of liabilities due to defined benefit plans.

Liabilities due to defined benefit plans | 2024 | 2023
Balance at the beginning of the period | 33 | 22
Current employment costs | 4 | 2
Interest expense | 1 | 1
Actuarial profits/losses | 0 | 9
Benefits paid | -1 | -1
Balance at the end of the period | 37 | 33

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Employment costs comprise:

§ current service cost: the increase in the present value of the defined benefit obligation resulting from employee service in the current period,

§ past service cost: the change in the present value of the defined benefit obligation for employee service in prior periods, resulting from changes to the plan,

§ any gain or loss on settlement.

Defined benefit plans expose the Bank to actuarial risks, including:

§ interest rate risk – a drop in Treasury bond yields will increase liabilities under defined benefit plans,

§ salary risk – an increase in employee salaries will result in higher liabilities under defined benefit plans,

§ longevity risk – an increase in life expectancy will result in higher liabilities under defined benefit plans,

§ employee mobility risk – changes in the expected turnover,

§ employment structure risk – the age of employees,

§ risk of change in the pensionable age.

The main assumptions made by the independent actuary as at 31 December 2024:

§ the discount rate on future benefits was assumed at 5.6% (5% as at 31 December 2023),

§ the long-term annual pay growth rate was assumed at 4.5% (5% as at 31 December 2023),

§ the probability of employees leaving the Bank was calculated on the basis of the Bank’s historical employment turnover data and information on the market in Poland and the relevant industry,

§ the mortality rate was assumed in line with the Life Expectancy Tables of Poland for males and females as published by Statistics Poland (GUS), adjusted as appropriate based on the Bank’s historical data,

§ the probability of invalidity pension was assumed at 0.2%.

Sensitivity analysis of liabilities with respect to adopted assumptions

The impact of 1 pp changes in actuarial valuations on liabilities due to defined benefit plans is presented below.

Liabilities due to defined benefit plans | 31 Dec 2024 | 31 Dec 2023
Increase/decrease in value | +1% | -1% | +1% | -1%
Discount rate | -3 | 3 | -3 | 3
Payroll growth rate | 3 | -3 | 3 | -3

Maturity of liabilities due to defined benefit plans

Maturity of liabilities due to defined benefit plans is presented in the table below.

| 31 Dec 2024 | 31 Dec 2023
Weighted average time period until occurrence of benefit payments (in years) | 10.02 | 10.75

Planned costs due to defined benefit plans – short-term part (expected for the next 12 months) PLN 3.6 million.

## 34. Equity

Statutory capital

The statutory capital of the Bank is created in accordance with the Articles of Association and the Act on Bank Gospodarstwa Krajowego and is supplied from:

§ cash and other assets contributed by the State Treasury, including treasury securities provided by the minister competent for public finance,

§ annual distribution of the Bank’s net profit, in the amount of at least 10% of the profit.

In 2024, the statutory capital was increased by PLN 315.0 million from distribution of net profit for 2023.

Reserve capital

Supplementary capital is recognised in line with the Articles of Association of the Bank and is used to cover its balance sheet losses.

In 2024, PLN 1,259.9 million was transferred to supplementary capital from distribution of net profit for 2023.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Revaluation reserve

Revaluation reserve comprises: the effects of measurement of financial assets at fair value through other comprehensive income, gain or loss on sale of equity instruments designated as at fair value through other comprehensive income, effects of revaluation of property upon its reclassification to investment property, actuarial gains and losses, cash flow hedge reserve, share in other comprehensive income of associates, exchange rates from revaluation of subsidiaries and the related deferred tax.

The tables below show movements in individual items of the revaluation reserve.

Movements in the revaluation reserve in 2024
| 31 Dec 2024 | change | 31 Dec 2023
Debt instruments at fair value through other comprehensive income, including: | -180 | 25 | -205
tax | 44 | -5 | 49
Equity instruments measured at fair value through other comprehensive income, including: | 603 | 190 | 413
tax | -142 | -45 | -97
Share in other comprehensive income of associates, including: | 10 | 3 | 7
tax | -3 | -1 | -2
Foreign exchange gains or losses on translating subordinates, including: | -143 | -43 | -100
tax | 32 | 10 | 22
Actuarial gains and losses, including: | -13 | 0 | -13
tax | 3 | 0 | 3
Revaluation reserve for hedging instruments, including: | 6 | -43 | 49
tax | -2 | 10 | -12
Total | 283 | 132 | 151

Movements in the revaluation reserve in 2023
| 31 Dec 2023 | change | 31 Dec 2022
Debt instruments at fair value through other comprehensive income, including: | -205 | 233 | -438
tax | 49 | -54 | 103
Equity instruments measured at fair value through other comprehensive income, including: | 413 | 414 | -1
tax | -97 | -97 | 0
Share in other comprehensive income of associates, including: | 7 | 4 | 3
tax | -2 | -1 | -1
Foreign exchange gains or losses on translating subordinates, including: | -100 | -134 | 34
tax | 22 | 30 | -8
Actuarial gains and losses, including: | -13 | -7 | -6
tax | 3 | 2 | 1
Revaluation reserve for hedging instruments, including: | 49 | 41 | 8
tax | -12 | -10 | -2
Total | 151 | 551 | -400

Other capital reserves

Other capital reserves comprise appropriations of net profit and are used for purposes specified in the Articles of Association or other provisions of law applicable to the Bank.

They also include the reserve for general banking risk established for unidentified risks arising from banking activity, which in line with the Bank’s Articles of Association is established from appropriations of the annual net profit of the Bank.

## 35. Proposed profit distribution of the parent entity

The parent entity plans to distribute the net profit for 2024 in the following way:

Details | Proposed distribution of net profit for 2024
Profit distribution | 2,902
Statutory capital | 290
Revaluation reserve | 1,312
Undistributed profit | 1,300

In accordance with BGK’s Articles of Association, the Bank’s Management Board submits to the Supervisory Board a proposal of the distribution of the Bank’s profit or coverage of loss. The Supervisory Board adopts a final resolution to approve the profit distribution.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

## 36. Contingent liabilities in respect of financial liabilities and guarantees granted and received

### 36.1. Off-balance sheet liabilities granted

Financial liabilities granted | 31 Dec 2024 | 31 Dec 2023
Credit lines and limits | 98,574 | 83,492
- to financial institutions | 4,740 | 6,091
- to non-financial institutions | 28,799 | 21,088
- to public sector entities | 65,035 | 56,313
Other liabilities | 60 | 393
Certificates, liability of future payments | 2,017 | 2,289
Total | 100,651 | 86,174

Guarantee liabilities granted | 31 Dec 2024 | 31 Dec 2023
Guarantees and sureties | 33,729 | 31,179
- to financial institutions | 8,373 | 9,938
- to non-financial institutions | 24,720 | 20,903
- to public sector entities | 636 | 338
Letters of credit granted | 115 | 4
- to financial institutions | 115 | 4
Total | 33,844 | 31,183

### 36.2. Off-balance-sheet liabilities received

Off-balance-sheet liabilities received – nominal value | 31 Dec 2024 | 31 Dec 2023
Financial | 14,129 | 13,798
Guarantee | 14,133 | 20,632
Total | 28,262 | 34,430

Right to sell or pledge a collateral established for the Group

As at 31 December 2024 and 31 December 2023, the Group held no collaterals which could be sold or pledged if the collateral owner met all of its obligations.

## 37. Additional information to the consolidated statement of cash flows

Cash recognised in the statement of cash flows | 31 Dec 2024 | 31 Dec 2023
Cash in Central Bank | 50,065 | 4,068
Cash in other banks | 12,481 | 9,379
Total | 62,546 | 13,447

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Differences between changes in items of the consolidated statement of financial position and changes in those items presented in the operating activity of the consolidated statement of cash flows | 2024 | 2023
Interest and dividends | 158 | 322
a) interest: | 260 | 326
- interest expense on loans and advances received | 150 | 177
- cost of interest on debt securities issued | 107 | 147
- interest expense on lease liabilities | 3 | 2
b) dividends: | -102 | -4
- from issuers of equity instruments designated as at fair value through other comprehensive income | -102 | -4
Changes of amounts due from banks | 79 | 108
a) changes in the statement of financial position | -3,023 | 206
b) assets included in change in cash | 3,102 | -98
Change in receivables under derivative financial instruments | 289 | 127
a) changes in the statement of financial position | 289 | 127
Change in receivables under derivative hedging instruments | -27 | -24
a) changes in the statement of financial position | 26 | -75
b) gain or loss on remeasurement charged to equity | -53 | 51
Change in securities | 20,145 | -10,291
held for trading | -14 | -14
a) changes in the statement of financial position | -14 | -14
not held for trading measured at fair value through profit or loss | -49 | 14
a) changes in the statement of financial position | -49 | 14
measured at fair value through other comprehensive income | 11,053 | -10,227
a) changes in the statement of financial position | 10,788 | -16,160
b) measurement recognised in revaluation reserve | 265 | 798
c) contribution of bonds by the State Treasury to increase the statutory capital | 0 | 5,135
measured at amortised cost | 9,155 | -64
a) changes in the statement of financial position | 9,155 | -64
Change in liabilities due to securities purchased with reverse repurchase agreements | -16,909 | 7,472
a) changes in the statement of financial position | -16,909 | 7,472
Change in loans and advances to customers | -375 | -5,552
measured at amortised cost | -395 | -5,562
a) changes in the statement of financial position | -395 | -5,562
obligatorily measured at fair value through profit or loss | 20 | 10
a) changes in the statement of financial position | 20 | 10
Change in other assets | -34 | -11
a) changes in the statement of financial position | -34 | -11
Change in amounts due to banks | -157 | 21
a) changes in the statement of financial position | -482 | -71
b) loans included in financing activities | 325 | 92
Change in liabilities under derivative financial instruments | 550 | -562
a) changes in the statement of financial position | 550 | -562
Change in derivative liabilities of hedging instruments | 11 | 0
a) changes in the statement of financial position | 11 | 0
Change in liabilities to customers | 42,170 | 7,766
a) changes in the statement of financial position | 42,170 | 7,766
Change in repurchase agreements | 1,981 | -138
a) changes in the statement of financial position | 1,981 | -138
Changes in liabilities due to securities issued | 0 | 0
a) changes in the statement of financial position | -9 | -2,103
b) issues included in financing activities | 9 | 2,103
Change in lease liabilities | 0 | 0
a) balance sheet changes | 41 | -25
b) leases included in financing activities | -41 | 25
Change in provisions | -69 | -10
a) changes in the statement of financial position | -69 | -1
b) remeasurement of defined benefit plan liabilities | 0 | -9
Change in other liabilities | 1,190 | 1,479
a) changes in the statement of financial position | 1,190 | 1,479
Other adjustments | 9 | 2
a) transfer of PPE and intangible assets to commissioned activities (flow funds) | 9 | 2

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

## 38. Related party transactions

BGK is a state-owned bank with the State Treasury as the sole shareholder.

The consolidated statement of financial position of the Group presents receivables and liabilities from transactions of BGK with the State Treasury, the public sector and the State Treasury related entities, with the Treasury as the shareholder. In connection with the executed transactions the parent entity receives interest and commission income and incurs interest and commission expense.

All related party transactions were entered into on arm’s length terms. Standard market transactions involving loans, current and term deposits, securities repurchase agreements, financial and guarantee liabilities granted with related interest and commissions are presented below.

Related party transactions | Associates | Other units | Transactions with the State Treasury | Transactions with entities related to the State Treasury
31 Dec 2024
Receivables, including: | 0 | 0 | 10,038 | 19,811
allowances for expected credit losses at Stage 3 | 0 | 0 | 0 | 628
Liabilities | 332 | 757 | 98,931 | 80,592
Amounts owed to related parties under financial instruments and guarantees, including | 1,568 | 448 | 63,626 | 45,644
Stage 3 provisions for financial and guarantee liabilities granted | 0 | 0 | 0 | 122
2024 |  |  |  |
Interest and commission income | 0 | 0 | 44 | 1,339
Interest and commission expense | 26 | 536 | 6,888 | 4,610
Net allowances for expected credit losses (Stage 3) | 0 | 0 | 0 | 269

Related party transactions | Associates | Other units | Transactions with the State Treasury | Transactions with entities related to the State Treasury
31 Dec 2023
Receivables, including: | 0 | 0 | 10,345 | 19,275
allowances for expected credit losses at Stage 3 | 0 | 0 | 0 | 267
Liabilities | 224 | 16,958 | 60,880 | 71,431
Amounts owed to related parties under financial instruments and guarantees, including | 1,848 | 442 | 54,931 | 34,492
Stage 3 provisions for financial and guarantee liabilities granted | 0 | 0 | 0 | 145
2023 |  |  |  |
Interest and commission income | 0 | 0 | 41 | 1,736
Interest and commission expense | 20 | 2,141 | 5,945 | 4,036
Net allowances for expected credit losses (Stage 3) | 0 | 0 | 0 | 89

In 2024 and 2023, the members of the Management Board and Supervisory Board had no loans and advances from the Bank.

## 39. Remuneration of the top executives of the Group entities

Members of the Management Board of BGK are remunerated in accordance with:

§ the Act on Remuneration of the Management of Certain Entities of 9 June 2016,

§ the Declaration of the Minister of Development and Finance of 14 October 2016 on rules for specifying the remuneration of the Members of the Management Board of Bank Gospodarstwa Krajowego,

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

§ Remuneration Rules for Members of the Management Board of Bank Gospodarstwa Krajowego,

§ The Policy governing variable remuneration components of staff identified as having a material impact on the risk profile of Bank Gospodarstwa Krajowego.

The Bank’s management staff – excluding the Chairman and Members of the Management Board – are remunerated in accordance with:

§ the Policy of remuneration for employees of Bank Gospodarstwa Krajowego,

§ the Remuneration Rules for employees of Bank Gospodarstwa Krajowego,

§ the Policy governing variable remuneration components of staff identified as having a material impact on the risk profile of Bank Gospodarstwa Krajowego.

### 39.1. Remuneration paid to members of the Management Board and Supervisory Board (in PLN thousand)

Remuneration of the Bank’s Management Board and Supervisory Board (in PLN thousand) | 2024 | 2023
Supervisory Board of the Bank | 2,008 | 1,528
Short-term employee benefits | 2,008 | 1,528
Management Board of the Bank | 9,528 | 9,170
Short-term employee benefits | 7,924 | 7,357
Long-term benefits | 1,604 | 1,813
Remuneration paid to members of management boards and supervisory boards of subsidiaries (in PLN thousand)
Supervisory Board | 577 | 71
Short-term employee benefits | 577 | 71
Management Board | 3,451 | 630
Short-term employee benefits | 1,455 | 630
Long-term benefits | 899 | 0
Benefits for termination of employment | 1,097 | 0

Short-term employee benefits consist of basic salary, bonuses and other benefits to be settled within 12 months after the reporting date. “Long-term benefits” include provisions for deferred payment of bonuses.

In 2024, benefits were paid to members of the Management Board due to termination of employment in the amount of PLN 1,094.0 thousand and post-employment benefits to members of the Bank's Management Board in the amount of PLN 2,454.0 thousand, which were included in the costs of previous years.

### 39.2. Rules of setting the policy for variable remuneration components of staff having a material impact the group’s risk profile

The Bank meets the regulatory requirements with respect to designing remuneration policies for staff having a material impact the Bank’s risk profile. The main guidelines are included in the Policy governing variable remuneration components of staff identified as having a material impact on the risk profile of Bank Gospodarstwa Krajowego (the Policy).

The Policy sets out the principles of awarding and paying variable remuneration components to staff having a material impact on the Bank’s risk profile.

The Management Board of the Bank approved the list of staff identified as having a material impact on the risk profile of Bank Gospodarstwa Krajowego.

The Bank has a Remuneration and Nomination Committee of the Bank's Supervisory Board, appointed from among the members of the Supervisory Board. The competencies of the Committee have been defined in the Committee Regulations.

The Bank uses the following rules concerning remunerations:

§ variable remuneration may not exceed 100% of the fixed remuneration component for a given year,

§ variable remuneration of a given member of identified staff awarded after the end of the assessment period is paid out in 60% of the awarded amount, while 40% of the variable remuneration is deferred,

§ the period of deferral is four years, and in the case of senior management personnel (persons holding managing director positions) – 5 years,

§ the period of adjournment in the case of identified employees acting in the capacity of Management Board members shall be 36 months, pursuant to Art. 11a of Act on Bank Gospodarstwa Krajowego of 14 March 2003,

§ if the annual variable remuneration of a member of identified staff does not exceed a PLN equivalent of EUR 50,000 or one-third of their total annual remuneration, that person is exempt from the obligation to defer their variable remuneration.

Due to BGK’s legal form (a state-owned bank) and the nature of its business, the Bank does not pay the variable remuneration portion in shares and instruments other than shares.

Depending on the outcome of individual performance assessment, the deferred part of variable remuneration may be awarded in full, in part or no such remuneration may be awarded to identified staff.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

In making the individual performance assessment of identified staff, the Bank determines whether there occurred any significant and extraordinary circumstances that justify a reduction of the basis of variable remuneration or refusal to award it to identified staff.

The Bank has developed and followed appropriate policy monitoring procedures, such as those on monitoring the limits of variable remuneration components awarded to persons covered by the Policy.

As part of variable remuneration, in 2024 employees received an annual bonus for 2023 – the payment was made in January 2024. In addition, payments related to termination of an employment contract with an employee may be treated as variable remuneration.

Variable pay is awarded based on the degree to which the employee fulfilled their tasks, evaluation of their work quality and whether the Bank has achieved a positive net Net gains (losses) cumulatively from the beginning of the year.

## 40. Changes in Group constituent entities

On December 30, 2024, Bartosz Drabikowski was appointed Chairman of the Management Board in a subsidiary of Vinci S.A., and Adam Żelezik became a member of the Management Board. The current Management Board, composed of the Chairman Piotr Woliński and the Deputy Chairman Marcin Adamczyk, was dismissed on the same day.

The full list of members of the Bank Gospodarstwa Krajowego Group as at 31 December 2024 is presented in Note 1.2.

## 41. Fair value of financial assets and financial liabilities

### 41.1. Categories of the measurement of the fair value of financial assets and financial liabilities measured at fair value in the consolidated statement of financial position

Based on fair value measurement methods, the Bank has classified its financial assets and financial liabilities to the following levels:

§ Level 1 – prices quoted in active markets,

§ Level 2 – valuation techniques based on observable market inputs,

§ Level 3 – other valuation techniques.

Level 1: prices quoted in active markets

Financial assets and liabilities, whose fair values are determined directly based on unadjusted, quoted prices for identical assets or liabilities in active markets. This category includes debt and equity instruments with an active market in place and the fair value determined based on the market value (prices on BondSpot, WSE):

§ PLN-denominated treasury bonds in the held-for-trading portfolio and the portfolio of securities at fair value through other comprehensive income,

§ shares in listed companies in continuous trading on the Warsaw Stock Exchange held in the portfolio of securities at fair value through profit or loss and in the portfolio of securities at fair value through other comprehensive income,

Level 2: Valuation techniques based on observable market inputs

Financial assets and liabilities whose fair value is measured using valuation models in which all significant inputs are directly observable on the market (as prices from Refinitiv information services). Reuters)/Bloomberg) or indirectly (based on a model of discounted future cash flows based on quotations of interest rates on deposits, OIS, IRS, FRA, basis swap, currency basis swap, swap points, Treasury bond yields). This category includes financial instruments with no active market:

§ NBP (money market) bills held in the portfolio of securities at fair value through other comprehensive income,

§ EUR-denominated treasury bills in the portfolio of securities at fair value through other comprehensive income,

§ EUR and USD-denominated treasury bonds in the portfolio of securities at fair value through other comprehensive income,

§ PLN-denominated covered bonds issued by financial institutions held in the portfolio of securities measured through other comprehensive income,

§ PLN-denominated subordinated bonds issued by financial institutions held in the portfolio of securities at fair value though other comprehensive income,

§ PLN-denominated commercial bonds issued by non-financial institutions held in the portfolio of securities measured at fair value through other comprehensive income

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

§ PLN-denominated corporate bonds and bills issued by financial institutions held in the portfolio of securities measured through other comprehensive income,

§ derivatives

§ shares in NYSE-listed companies (shares in VISA).

Level 3: other valuation techniques.

Financial assets and liabilities, whose fair value is determined based on models using unobservable market inputs as entry data. In this category, the measurement based on a model of discounted future cash flows using quotations of interest rates on deposits, OIS, IRS, FRA, basis swap, currency basis swap, Treasury bond yields, is adjusted for the risk margin. The category includes:

§ EUR-denominated subordinated bonds issued by financial institutions held in the portfolio of securities measured through other comprehensive income,

§ PLN-denominated corporate bills issued by financial institutions held in the portfolio of securities measured through other comprehensive income,

§ PLN-denominated subordinate bonds issued by non-financial institutions held in the portfolio of securities measured through other comprehensive income,

§ PLN-denominated corporate bonds issued by financial institutions held in the portfolio of securities measured through other comprehensive income,

§ PLN-denominated municipal bonds held in the portfolio of financial assets measured through other comprehensive income,

§ PLN-denominated covered bonds issued by financial institutions held in the portfolio of securities measured through other comprehensive income,

§ investment certificates and other shares not held for trading and classified in the portfolio of securities at fair value through profit or loss through other comprehensive income and through profit or loss,

§ loans that failed the SPPI test held in the portfolio of assets at fair value through profit or loss.

Inputs for valuation techniques designed to determine the fair value of financial assets and liabilities are classified into three levels:

1) entry data – Level 1 inputs are quoted prices (unadjusted) in active markets for identical financial assets or liabilities that the Bank can access at the measurement date;

2) entry data – Level 2 inputs are inputs other than quoted prices in active markets, that are observable, either directly or indirectly. Such inputs include, in particular, the following:

- quoted prices for similar financial assets or liabilities in active markets,
- quoted prices for identical or similar financial assets or liabilities in markets that are not active,
- observable inputs other than quoted prices, in particular: interest rates and yield curves observable at commonly quoted intervals, implied volatilities and credit spread, or market-corroborated inputs;

3) entry data – level 3 inputs are unobservable inputs reflecting the assumptions that market participants would have used when pricing financial assets or liabilities, including assumptions about risk.

If a quoted price in an active market is not available, the Bank determines the fair value of financial assets or liabilities by applying valuation techniques incorporating all factors that market participants would consider in setting a price, which are consistent with accepted economic methodologies for pricing financial instruments.

Financial instruments are transferred between Level 1 and Level 2 based on the availability of quoted prices from the active market at the end of the reporting period. Reclassification from Level 2 to Level 3 occurs if an observable input is replaced with an unobservable one or if a new unobservable risk is used in the valuation, which, at the same time, considerably affects the price of the instrument. Reclassification from Level 3 to Level 2 occurs if an unobservable input is replaced with an observable one or if the pricing effect of an unobservable input becomes negligible.

Transfers between individual measurement levels are recognised as at the end of the reporting period.

In 2024, PLN-denominated covered bonds issued by financial institutions, bonds and corporate bills in PLN and PLN-denominated subordinated bonds issued by financial institutions were transferred from level 3 to level 2 in the portfolio of securities measured by other comprehensive income. In 2023, no reclassifications were made between individual levels.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The carrying amounts of individual categories of financial assets and liabilities by measurement level are presented below.

Assets and liabilities at fair value as at 31 December 2024 | Carrying amount | Level 1 | Level 2 | Level 3
Prices quoted in active markets | Valuation techniques based on observable market inputs | Other valuation techniques
Derivative financial instruments | 1,171 | 0 | 1,171 | 0
Derivative hedging instruments | 60 | 0 | 60 | 0
Securities | 54,820 | 11,897 | 37,669 | 5,254
Held for trading | 34 | 34 | 0 | 0
- debt securities | 34 | 34 | 0 | 0
Not held for trading, measured at fair value through profit or loss | 753 | 0 | 0 | 753
- equity instruments | 35 | 0 | 0 | 35
- other financial assets | 718 | 0 | 0 | 718
Measured at fair value through other comprehensive income | 54,033 | 11,863 | 37,669 | 4,501
- debt securities | 52,448 | 10,329 | 37,662 | 4,457
- equity instruments | 1,585 | 1,534 | 7 | 44
Loans and advances to customers at fair value through profit or loss | 67 | 0 | 0 | 67
Total assets at fair value | 56,118 | 11,897 | 38,900 | 5,321
Derivative financial instruments | 1,347 | 0 | 1,347 | 0
Derivative hedging instruments | 11 | 0 | 11 | 0
Total liabilities at fair value | 1,358 | 0 | 1,358 | 0

Assets and liabilities at fair value as at 31 December 2023 | Carrying amount | Level 1 | Level 2 | Level 3
Prices quoted in active markets | Valuation techniques based on observable market inputs | Other valuation techniques
Derivative financial instruments | 1,460 | 0 | 1,460 | 0
Derivative hedging instruments | 85 | 0 | 85 | 0
Securities | 65,544 | 11,492 | 47,656 | 6,396
Held for trading | 20 | 20 | 0 | 0
- debt securities | 20 | 20 | 0 | 0
Not held for trading, measured at fair value through profit or loss | 704 | 0 | 0 | 704
- equity instruments | 54 | 0 | 0 | 54
- other financial assets | 650 | 0 | 0 | 650
Measured at fair value through other comprehensive income | 64,820 | 11,472 | 47,656 | 5,692
- debt securities | 63,471 | 10,167 | 47,651 | 5,653
- equity instruments | 1,349 | 1,305 | 5 | 39
Loans and advances to customers at fair value through profit or loss | 87 | 0 | 0 | 87
Total assets at fair value | 67,176 | 11,492 | 49,201 | 6,483
Derivative financial instruments | 797 | 0 | 797 | 0
Total liabilities at fair value | 797 | 0 | 797 | 0

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The reconciliation of movements in fair value in the reporting period for Level 3 is presented below.

Assets and liabilities at fair value as at 31 December 2024 | Debt securities not held for trading measured at fair value through profit or loss | Equity instruments not held for trading measured at fair value through profit or loss | Other financial assets not held for trading measured at fair value through profit or loss | Debt securities at fair value through other comprehensive income | Equity instruments measured at fair value through other comprehensive income | Loans and advances to customers at fair value through profit or loss
Opening balance | 0 | 54 | 650 | 5,653 | 39 | 87
Issues/purchases | 0 | 12 | 71 | 1,360 | 0 | 0
Redemptions/repayments/disposals | 0 | 0 | 41 | 377 | 0 | 20
Gains and losses recognised in profit or loss | 0 | -31 | 43 | -47 | 0 | -1
Gains and losses recognised in other comprehensive income | 0 | 0 | 0 | -1,646 | 5 | 0
Other changes | 0 | 0 | -5 | -486 | 0 | 1
Closing balance | 0 | 35 | 718 | 4,457 | 44 | 67
Unrealised gain/loss on financial instruments, recognised in: | 0 | -30 | 362 | 0 | 13 | 0
Statement of profit or loss | 0 | -30 | 362 | 0 | 0 | 0
Other comprehensive income | 0 | 0 | 0 | 0 | 13 | 0

Assets and liabilities at fair value as at 31 December 2023 | Debt securities not held for trading measured at fair value through profit or loss | Equity instruments not held for trading measured at fair value through profit or loss | Other financial assets not held for trading measured at fair value through profit or loss | Debt securities at fair value through other comprehensive income | Equity instruments measured at fair value through other comprehensive income | Loans and advances to customers at fair value through profit or loss
Opening balance | 74 | 1 | 643 | 5,231 | 95 | 97
Issues/purchases | 0 | 52 | 120 | 2,965 | 0 | 10
Redemptions/repayments/disposals | 74 | 0 | 230 | 2,381 | 56 | 20
Redemption | 0 | 0 | 69 | 0 | 0 | 0
Gains and losses recognised in profit or loss | 0 | 1 | 234 | 0 | 0 | 0
Gains and losses recognised in other comprehensive income | 0 | 0 | 0 | -162 | 1 | 0
| 0 | 0 | -48 | 0 | -1 | 0
Closing balance | 0 | 54 | 650 | 5,653 | 39 | 87
Unrealised gain/loss on financial instruments, recognised in: | 0 | 1 | 324 | 0 | 8 | 0
Statement of profit or loss | 0 | 1 | 324 | 0 | 0 | 0
Other comprehensive income | 0 | 0 | 0 | 0 | 8 | 0

The fair value of Level 3 instruments depends on unobservable (estimated) inputs. In particular, in the case of debt instruments (municipal, corporate, subordinated bonds, covered bonds) it depends on the discount spread that reflects the issuer’s credit risk and liquidity risk of the instrument.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

§ The table below demonstrates the sensitivity analysis of Level 3 debt securities against this parameter.

Effect of estimated parameters on fair value measurement of Level 3 financial instruments | 31 Dec 2024 | 31 Dec 2023
Change in the measurement due to a shift in discount spread | +10% | -10% | +10% | -10%
Municipal bonds | -63 | 63 | -47 | 47
Commercial bonds | -12 | 12 | -27 | 27
Subordinated bonds | -7 | 7 | -10 | 10

### 41.2. Financial assets and financial liabilities not presented at fair value in the consolidated statement of financial position

The Group holds financial instruments not presented at fair value in the statement of financial position.

The fair value of part of financial instruments was estimated using valuation techniques. In the absence of expected considerable differences between the carrying amounts and the fair values of other groups of financial instruments, resulting from the characteristics of such groups (such as short term, high correlation with market parameters), it was assumed that their carrying amounts approximate their fair values.

§ The fair values of financial assets and financial liabilities not presented at fair value in the statement of financial position are presented below.

| Fair value hierarchy | 31 Dec 2024
Carrying amount | Fair value
Cash and balances with the Central Bank | 2 | 50,065 | 50,065
Amounts due from banks | 3 | 12,748 | 12,748
Securities at amortised cost | 1 | 3,406 | 3,512
2 | 68,298 | 68,292
3 | 7,080 | 6,874
Reverse repurchase agreements | 3 | 22,178 | 22,176
Loans and advances to customers at amortised cost | 3 | 42,932 | 42,931
Amounts due to banks | 3 | 3,978 | 3,977
Liabilities to customers | 3 | 203,752 | 203,701
Repurchase agreements | 3 | 8,417 | 8,415
Debt securities issued | 3 | 1,822 | 1,828
Lease liabilities | 3 | 104 | 104

| Fair value hierarchy | 31 Dec 2023
Carrying amount | Fair value
Cash and balances with the Central Bank | 2 | 4,068 | 4,068
Amounts due from banks | 3 | 9,726 | 9,718
Securities at amortised cost | 1 | 3,323 | 3,567
2 | 77,462 | 77,434
3 | 7,154 | 6,940
Reverse repurchase agreements | 3 | 5,269 | 5,267
Loans and advances to customers at amortised cost | 3 | 42,537 | 42,575
Amounts due to banks | 3 | 4,459 | 4,459
Liabilities to customers | 3 | 161,582 | 161,519
Repurchase agreements | 3 | 6,436 | 6,433
Debt securities issued | 3 | 1,831 | 1,820
Lease liabilities | 3 | 63 | 63

The fair value of loans and advances was measured using the discounted cash flow method at an interest rate appropriate for each credit transaction (taking into account the market risk margin). For exposures with no repayment schedule and impaired exposures, the fair value is presented as a net present value.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The fair value of the Bank’s assets related to debt securities at amortised cost was estimated using a valuation technique consisting in discounting future cash flows, where a curve based on WIBOR IRS, basis swap and FRA rates were used as the projection curve, while a curve based on the yield on Treasury bonds or risk-free rates, shifted by the credit spread, was used as the discount curve.

The fair value of deposits was determined using the present value of future cash flows using discount curves based on quotations of interbank deposits maturing within one year and IRS transactions with expiration dates after more than one year, available in information systems.

The fair value of the Bank’s liabilities due debt securities issued was determined on the basis of:

§ quoted prices in the Catalyst system – for publicly traded bonds,

§ a valuation technique of discounted future cash flows – for other securities – where a curve based on WIBOR, IRS, basis swap and FRA rates were used as the projection curve, while a curve based on the yield on Treasury bonds or risk-free rates, shifted by the credit spread, was used as the discount curve. The credit spread for measurement was based on bonds issue price. Due to the latter component of measurement, which is not an observable quotation, the measurement of these bonds is classified at Level 3.

As regards other assets and liabilities (including current accounts, selected overnight and term deposits) which are not measured at fair value, it was assumed that there were no major differences between the fair value of an asset or liability and its carrying amount.

## 42. Assets pledged as collateral for the payment of liabilities

The Group’s assets include loans granted from the funds of the former National Housing Fund (NHF), which have been pledged as collateral for the State Treasury guarantees for loans obtained from International Financial Institutions (the European Investment Bank and the Council of Europe Development Bank).

The value of receivables transferred by BGK to the State Treasury in relation to loans guaranteed by the State Treasury to increase the NHF is presented below (data in PLN million).

Lender | Currency | Loan amount | Loan amount guaranteed by the State Treasury | State Treasury guarantee amount | Loan amount transferred as collateral for the loan or guarantee
31 Dec 2024 | 31 Dec 2023
European Investment Bank (EIB) | EUR | 200 | 200 | 296 | 130 | 195
- Financial Contract No. 21.607
Council of Europe Development Bank | PLN | 700 | 700 | 1,260 | 38 | 61

The liabilities of the Group have been secured with the following assets:

Type of transaction | Collateral | 31 Dec 2024 | 31 Dec 2023
Carrying amount of assets held as security against liabilities | Amount of liabilities secured | Carrying amount of assets held as security against liabilities | Amount of liabilities secured
Repurchase and reverse repurchase transactions | bonds | 8,404 | 8,417 | 6,409 | 6,436
Other loans | loans | 148 | 109 | 219 | 166
Derivative transactions | deposits | 333 | 206 | 199 | 1

Basis for securities blocking:

§ for repo and sell-buy-back transactions – under standard procedures applicable to a given type of transactions in the money market,

§ for other loans, derivative transactions – under agreements concluded by the Bank.

Guaranteed Deposit Protection Fund

In line with the Act of 10 June 2016 on Bank Guarantee Fund, the system of deposit guarantee and mandatory restructuring, the Bank was excluded from the scope of application of the Act and, as a result, it does not contribute to the Guaranteed Deposit Protection Fund as of 1 January 2017.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

## 43. Offsetting of financial assets and liabilities

In connection with derivative transactions cleared through clearing houses of CCPs or with certain customers, the Bank makes actual settlements on a net basis. In particular, if on the same day any amounts would be received and paid under different transactions with the same customer or counterparty, the Bank actually makes a single netted payment.

The table below presents derivatives measured at fair value, including instruments subject to offsetting in the circumstances described above, taking into account their cash collateral.

Assets subject to offsetting | 31 Dec 2024 | 31 Dec 2023
Gross amounts of recognised financial assets | 1,231 | 1,545
Gross amounts of financial liabilities that are offset | 0 | 0
Net value of financial assets presented in the statement of financial position | 1,231 | 1,545
Amounts subject to an enforceable master netting arrangement or similar agreement, including related to: | 329 | 299
- recognised financial instruments that do not meet the offsetting criteria | 240 | 177
- financial collateral (including cash collateral) | 89 | 122
Net amount | 902 | 1,246

Liabilities subject to offsetting | 31 Dec 2024 | 31 Dec 2023
Gross amounts of recognised financial liabilities | 1,358 | 797
Gross amounts of financial assets that are offset | 0 | 0
Net value of financial liabilities presented in the statement of financial position | 1,358 | 797
Amounts subject to an enforceable master netting arrangement or similar agreement, including related to: | 240 | 177
- recognised financial instruments that do not meet the offsetting criteria | 240 | 177
- financial collateral (including cash collateral) | 0 | 0
Net amount | 1,118 | 620

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

# Risk management objectives and principles

## 44. Risk management at the Group

The internal objective of risk management at the Group is to maintain stability and security of the Capital Group’s banking operations as well as to maintain a high quality of assets and achieve anticipated financial result within an acceptable risk level.

The main risk management guidelines are defined in the Bank’s Risk Management Strategy as well as in policies for managing particular types of risks. Risk appetite is determined by the acceptable level of total capital ratio, short-term and long-term liquidity ratios, cost of credit risk, and the acceptable level of individual risk types.

In the allocation process, the required capital is distributed among individual risk types, with limit levels defined for individual risks.

The risk management is based on:

§ Risk Management Strategy at BGK approved by the Supervisory Board of the Bank,

§ Capital Management and Internal Capital Assessment Policy at BGK approved by the Supervisory Board of the Bank,

§ risk management policies, principles, and procedures related to risk identification, measurement or assessment, monitoring, control, and reporting, developed in written form and approved by the Supervisory Board or Management Board of the Bank,

§ internal regulations on risk management approved by relevant committees appointed by the Bank’s Management Board,

§ ethical rules, principles of selection, remuneration and monitoring of employees performing crucial functions for the Bank and the Policy governing variable remuneration components of persons holding managerial positions endorsed by the Supervisory Board of the Bank or Management Board of the Bank.

The regulations are reviewed systematically so that they can be adjusted to the changes in the risk profile, economic environment, the law and market standards.

In addition, at least each year the Bank reviews:

1) the implementation of the Bank’s Risk Management Strategy and the functioning of the risk management system, including ILAAP (Internal Liquidity Adequacy Assessment Process),

2) ICAAP (Internal Capital Adequacy Assessment Process).

The risk management system is designed in such a way as to ensure an effective process of risk identification, measurement or assessment, monitoring, control, including risk mitigation and reporting of risks, together with assessment of the effectiveness of the adopted risk mitigation measures. The risk management process at the Bank is presented in the following diagram:

The risk identification process includes determination of risk types, their sources (factors), determination of areas exposed to a given risk and identification of risks related to products, projects, processes, procedures and business model programmes.

The risk measurement/assessment process includes establishment and application of methods of risk quantification and performing stress tests.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The risk monitoring process includes supervision of the level of risk taken, reviews of relevance and accuracy of the applied methods of risk assessment and evaluation of efficiency of the instruments used.

The risk control process comprises the determination and enforcement of risk control mechanisms, including risk mitigation (i.e. limit systems, ensuring independence between first-level risk management from second-level risk management, insurance, risk transfer, financing plans).

The risk reporting process includes information on the risk profile, identification of possible threats, and assessment of the effectiveness of the adopted risk mitigation measures.

The Bank also carries out comprehensive institutional stress tests to analyse the correlation between different risks and their impact on risk indicators and capital adequacy.

Organisation of risk management for the key risk types:

ESGRO – ESG Risk Office,

CLD – Controlling Department,

FRD – Financial Risk Department,

FMTPD – Financial Market and Treasury Products Department,

CRSD - Credit Risk Strategy Department,

TD – Treasury Department,

CRSD – Credit Risk Strategy Department,

CD – Compliance Department,

BESGC – Bank ESG Committee,

BCC – Bank Credit Committee,

BFC – Bank Financial Committee,

BORC – Bank Operational Risk and Internal Control Committee,

BMMC – Bank Model Management Committee.

The risk management system and the internal audit system are organised at the Bank in three different levels. The first level comprises the management of risk in operating activities of BGK. The second level comprises at least risk management by the Bank’s employees at positions or in organisational units of the Bank’s head office related to risk management, independent from risk management under the first level and the Compliance Department. The third level comprises operations carried out by the Internal Audit Department.

The composition, scope of activity, and competences of the Bank’s governing bodies and the corporate object of the Bank are defined in the Act on BGK, the Bank’s Articles of Association, and the governing bodies’ rules.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Below are presented the Bank’s governing bodies and selected Committees of the Supervisory Board that participate in the risk management process at the Bank.

Bank's Supervisory Board

The Supervisory Board exercises supervision over the implementation of risk management system and evaluates its adequacy and efficiency in particular through approving acceptable risk level and monitoring its compliance as well as approving the Risk Management Strategy and risk management policies and monitoring their implementation.

The Bank’s Supervisory Board is supported by the Risk Committee, Audit Committee and Remuneration and Nomination Committee.

Risk Committee

The Risk Committee supports operations of the Bank’s Supervisory Board, supervising the management system for all risks identified in the Bank’s operations, in particular by providing opinions on the Bank’s overall ongoing and future readiness to take risk. The Risk Committee includes persons appointed from among the members of the Bank’s Supervisory Board.

Audit Committee

The Audit Committee supports the Bank’s Supervisory Board, in particular through supervision over the internal audit area and monitoring the financial and management reporting process, as well as financial audit activities carried out at the Bank. The Audit Committee includes persons appointed from among the members of the Bank’s Supervisory Board.

Management Board of the Bank

The Management Board of the Bank is responsible for the organisation and functioning of the risk management process and ensuring the efficiency of the risk management system. One of the Management Board members, who has obtained consent of the Polish Financial Supervision Authority to be appointed as a Management Board member, supervises the banking risk area that covers organisational units managing, inter alia, credit, financial, operational risk.

In its risk management activities, the Bank’s Management Board is supported by the Bank Financial Committee (BFC), Bank Operational Risk and Internal Control Committee (BORC), Bank Credit Committee (BCC), ESG Committee (ESGC) and Bank Model Management Committee (BMMC).

Detailed information on risk management is presented in the Report on Risk Management and Capital Adequacy of Bank Gospodarstwa Krajowego as at 31 December 2024 (Pillar III).

## 45. Credit risk management

Definition

Credit risk is defined as a threat of a borrower’s default on the payment of liability under an agreement, i.e. failure to repay or only partial repayment of receivables under credit exposure along with the Bank’s remuneration within time limits defined in the agreement.

Management purpose

Main purposes of credit risk management are:

§ identification of credit risk areas and its mitigation to a level accepted by the Bank,

§ regular review of actions completed in this risk area,

§ shaping balance-sheet and off-balance-sheet items of the Bank to minimise the risk of negative deviation of the financial result from the Bank’s financial plan.

Risk monitoring

Credit risk monitoring process involves cyclical review of risk measure levels for the loan portfolio and individual counterparties. In the case of a loan portfolio it involves an analysis of the use of limits and threshold values, while in the case of individual counterparties monitoring is carried out on a continuous basis and consists in identification of elements suggesting a likely decline in creditworthiness.

Another important element of the assessment and monitoring process is a regular review of the Bank’s credit exposure collateral.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Pursuant to applicable regulations, the Bank performs - at least once a year - stress tests of credit exposure sensitivity to changes in the exchange rates, interest rate and the value of the existing mortgage collaterals.

Risk control

Control of credit risk involves the application of adequate methods, models and monitoring system and setting risk limits which are acceptable with respect to individual sectors and industries, counterparty and product segments. The limit system is subject to the risk guidelines specified by the Bank’s Supervisory and Management Boards.

Risk reporting

The Bank prepares regular reports on its credit risk and risk concentration, including:

§ a monthly report for the Bank Credit Committee and the Bank’s Management Board, also made available to the Bank Financial Committee, containing, inter alia information on the quality and structure of the loan portfolio,

§ a quarterly report for the Bank Credit Committee, the Bank’s Management Board, the Risk Committee, and the Bank’s Supervisory Board, also made available to the Bank Financial Committee, containing, inter alia information on the quality and structure of the loan portfolio, including a sub-loan portfolio of mortgage-backed exposures and results of concentration limit stress tests,

§ an annual report for the Bank's Credit Committee, the Bank's Management Board, Risk Committee and the Bank's Supervisory Board, also made available to the Bank's Financial Committee, containing inter alia detailed information on the quality and structure of the loan portfolio, including a sub-loan portfolio of mortgage-backed exposures, results of concentration limit stress tests, other credit risk aspects important to the Bank, and a number of other studies and analyses regarding the area of activity exposed to credit risk.

### 45.1. Credit risk management process at the Group

Credit risk management engages relevant units of the Risk Division.

The credit risk management process is carried out at the level of the loan portfolio and customer risk with individual credit exposure taken into account, on the basis of:

§ Risk Management Strategy at BGK,

§ planned, targeted actions defined in the credit policy,

§ internal regulations,

§ available support systems and tools,

§ recommendations and guidance for Regions and other units of the Bank.

The credit risk management process enables risk identification, measurement or assessment, monitoring, control – including mitigation, and reporting of risk, together with assessment of the effectiveness of the adopted risk mitigation measures.

The Management Board of the Bank defines the credit policy based on the risk appetite specified in the Risk Strategy, business model provided for in the Bank’s Strategy, the existing level of credit risk borne by the Bank, the structure of credit portfolio, the structure of legal collaterals, repayments of the transactions bearing credit risk, and external macroeconomic factors. Among other elements, the credit policy indicates the acceptable level of risk for the credit portfolio, credit purposes and recommendations, business model programmes, risk management process, and the related best practices.

In the process of credit risk management and estimating expected credit losses, the Bank uses the following measures, parameters and definitions:

§ EAD – exposure at default, i.e. expected value of exposure as at the date of default,

§ ECL – expected credit loss,

§ LCR (low credit risk) – credit exposure belonging to the segment of banks and branches of credit institutions with an internal rating (Banks) in the range from I to VIII or exposures to the State Treasury,

§ LtPD – lifetime probability of default, i.e. the probability of default over the entire lifetime of an exposure (from the reporting date until the maturity date of the exposure),

§ LGD – loss given default, i.e. expected loss in the case of default,

§ NPL – non-performing loans, i.e. total exposures with default, total impaired exposures,

§ PD – probability of default,

§ POCI – purchased or originated credit-impaired financial assets, i.e. purchased or originated financial assets that are credit-impaired at initial recognition,

§ RR – (recovery rate) the expected rate of recovery in case of default (RR = 1 - LGD).

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

A default is considered by the Bank to have occurred with regard to a borrower, triggering an identification of impairment, when at least one of the following have taken place:

§ The Bank considers that the borrower is unlikely to pay its credit obligations to the Bank or any of its subsidiaries in full, without recourse to actions such as realising security,

§ the borrower is past due more than 90 days on any material credit obligation to the Bank or any of its subsidiaries.

Elements to be taken as indications of unlikeliness to pay credit obligations to the Bank by the borrower in full are considered to take place if the Bank recognises impairment allowances on credit exposure due to identified evidence of impairment. As part of the cyclical review and classification of credit exposures, a detailed catalogue of evidence of impairment is used, and its scope and content result from the following:

§ catalogues of evidence of impairment as defined in IFRS 9 and Recommendation R issued by the PFSA,

§ internal analyses of the causes of default events and the adequacy of existing evidence of impairment,

§ implementation of the instructions and recommendations of the Polish Financial Supervision Authority, the Internal Audit Department and the External Auditor,

An overdue credit obligation is considered to be material, if the following cumulative conditions are met:

§ the amount which is the total of all amounts of the obligor’s credit obligations past due to the bank exceeds:

- PLN 400 – for retail exposures,

- PLN 2,000 – for exposures other than retail exposures,

§ the amount of the obligor’s credit obligation past due in relation to the total amount of the Group’s all on-balance sheet exposures to that obligor, excluding equity exposures, exceeds 1%.

The grounds for adopting the above levels of materiality of a liability past due was the specification in the Regulation of the Minister of Finance, Investment and Development of 3 October 2019 of the level of materiality of a loan liability past due referred to in Art. 178 sec. 2(d) of the 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

The Bank's portfolio is characterised by a relatively very low value of past due exposures in all phases. Details are presented in the table in note 45.3.

### 45.2. Model for impairment and recognition of impairment allowances at the Group

The Bank recognises allowances for expected credit losses in line with its internal methodology, which provides for calculation of impairment allowances based on expected credit losses and taking into account forecasts and expected future economic conditions in the light of credit risk exposure assessment.

The impairment model applies to financial assets classified, in line with IFRS 9, as financial assets measured at amortised cost, as financial assets measured at fair value through other comprehensive income and as off-balance-sheet credit exposures.

In the assessment of expected credit losses a broad range of information is taken into account, including historical and current data and information on future economic conditions expected by the Bank’s unit in charge of macroeconomic forecast, such as forecast interest rates or the exchange rate of Polish zloty to foreign currencies.

The impairment model compliant with IFRS 9 is based on a division of exposures into stages depending on the changes in credit quality relative to the initial recognition in accounting records. The calculation of the allowance for expected credit losses depends on the stage:

Stage | Criterion for classification (stages) | Manner of calculation of an impairment allowance
Stage 1 | Exposures for which from the initial recognition until the reporting date no significant increase in credit risk was identified and with no impairment | 12-month expected credit loss
Stage 2 | Exposures for which from the initial recognition until the reporting date a significant increase in credit risk was identified and with no impairment | Lifetime expected credit losses
Stage 3 | Impaired exposures
POCI | Exposures impaired at initial recognition

As at 31 December 2024, in its loan portfolio the Bank held financial assets classified as POCI at initial recognition (i.e. purchased or originated credit-impaired assets). POCI financial assets remain classified as POCI in all subsequent periods until they are derecognised. This principle applies even if evidence of impairment is not identified. For POCI instruments credit losses are recognised at amounts of lifetime expected credit losses throughout the expected life of the instruments.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Impairment of credit exposures

The Bank regularly reviews credit exposures to identify credit exposures in respect of which the credit risk has increased significantly, or with impairment risk, to measure impairment of credit exposure and to recognise impairment allowances.

The process of recognising allowances for expected credit losses comprises the following stages:

§ identification of significant increases in credit risk,

§ identifying evidence of impairment and impairment triggers,

§ registering events material from the perspective of identification of a significant increase in credit risk and impairment triggers for credit exposures in IT systems of the Bank, classification of credit exposures to a relevant stage,

§ determining the method of impairment measurement,

§ measuring impairment and determining the impairment allowance,

§ reviewing and aggregating results of impairment measurement,

§ reporting results of impairment measurement.

The method of determining the amount of allowances for expected credit losses depends on the type of impairment objective evidence and an individual size of the credit exposure.

Impairment assessment methods

There are two methods of impairment testing applicable at the Bank:

§ individual − applied to exposures which are individually significant, for which an evidence of impairment was identified,

§ collective – applied to exposures:

– for which no evidence of impairment was identified and for which individual testing has not indicated an impairment;

– which are individually insignificant, for which evidence of impairment was identified.

When determining the impairment allowance amount using the individual approach, expected future cash flows are estimated for each credit exposure individually. The materiality threshold, which determines significant individual credit exposures, is determined as the amount of total exposure to a client and equals PLN 4 million or equivalent of that amount in a foreign currency.

The Bank tests the impairment amount on a collective basis using portfolio parameters estimated with statistical methods, based on historical data on exposures of the same nature.

Allowance for expected credit losses on credit exposures tested on a collective basis is equal to the difference between the carrying amount of these exposures and the present value of future cash flows estimated using statistical methods based on historical data on exposures in homogeneous portfolios.

ECL allowance on loan and financial guarantee commitments is determined as the difference between the expected value of the balance sheet exposure resulting from the off-balance-sheet liability granted (from the test date to the date of overdue debt constituting the objective evidence of impairment of individually significant exposures) and the present value of future cash flows from the balance sheet exposure resulting from the off-balance-sheet liability.

Calculation of expected credit losses

Calculation of lifetime expected credit losses requires the application of credit risk parameters for many years. For the purposes of calculation of expected credit losses, the Bank compares cash flows that it should collect under a loan agreement with the cash flows that the Bank estimates to collect. The Bank discounts the difference with the original effective interest rate, and in the case of POCI assets – with the credit risk-adjusted original effective interest rate.

Method of calculation of collective parameters – PD, RR and EAD

Multi-year PD parameters amount to an assessment of the probability of default in subsequent annual periods over the lifetime of an exposure. A PD curve for many years concerning a given exposure is dependent on the current value of the PD parameter within 12 months (and the relevant rating class) determined based on the Bank’s internal PD models and PD parameters in subsequent years determined on the basis of the internal model.

In the estimation process the Bank takes into account both existing and forecast macroeconomic conditions. To improve the estimation of macroeconomic conditions, the Department of Research and Analysis of the Bank took the following measures, among other things, to better follow the changes occurring in the macroeconomic environment:

§ monitored developments in major global economies,

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

§ monitored the financial condition of local governments,

§ generated databases of seasonal adjusted performance in individual sectors of the economy based on the data on performance in manufacturing, trade, services and construction industries,

§ used relevant tools enabling quick monitoring of consumer spending and capital expenditure (using the real-time data from the CEPiK database on vehicle registration),

§ monitored exports of sensitive raw materials by cyclical submission of inquiries for the Comext database.

Parameters are calculated depending on the type of homogeneous portfolio. Homogenous groups of exposures were defined based on the following features:

§ customer segment,

§ type of product,

§ credit rating or assessment process in line with an adopted scale,

§ stage of loan handling,

§ delay in repayment.

The most common method of LGD calculation applied at the Bank is the calculation of the expected recovery rates (RR) based on the Roll Rates model, under which within homogenous groups average monthly recoveries are calculated conditionally against the period of default.

Average monthly recovery rates represent repayments and recoveries weighted by the outstanding principal amount observed at the beginning of a given month since default.

As part of measurement of expected credit losses for exposures with a repayment schedule, the Bank determines a single amount of expected loss (ECL). The amount is first charged as an allowance against the credit exposure, up to the equivalent of the carrying amount of the gross exposure. If the total ECL is greater than the book value of the credit exposure disclosed in the statement of financial position, the difference is charged to off-balance-sheet portion of the exposure.

For exposures for which no repayment schedule is available, the allowance is measured separately for the on-balance-sheet and off-balance-sheet portion of the credit exposure (based on calculated amounts of EAD for balance-sheet items and off-balance-sheet items).

For exposures for which it is not possible to determine risk parameters based on internal models, the Bank adopts an approach based on using parameters from other portfolios with similar characteristics or expert parameters, in particular where a portfolio for which a parameter is to be determined is small or treated as a low default portfolio.

The models and parameters used to calculate allowances are periodically reviewed for their adequacy and validated on an annual basis. Back testing of the expected credit loss is performed on a quarterly basis and back testing of risk parameters is carried out annually. Validation is implemented as part of a group of processes governed by the “Rules of model management at Bank Gospodarstwa Krajowego” and carried out by the Bank’s Head Office organisational unit which is not involved in creation, implementation and use of the model. The process is aimed at assessing the model’s efficiency and consists in, among other things, analysis of whether the model concept and assumptions are adequate for the decision-making process or mechanism in which the model is applied, and whether it has been properly structured and implemented in practical and formal terms.

The outcome of the validation is documented in a validation report, which includes, inter alia, a description of actions taken and their results, together with recommendations, if any, with the assigned risk category and their materiality assessment. The report is presented at the Bank Model Management Committee and submitted to the Operational Risk Department.

Low credit risk criterion

Exposures that are considered as low risk credit exposures at the reporting date may remain in Stage 1 if the quantitative criterion of a significant increase in credit risk since initial recognition is met. If a qualitative criterion is met or if exposures become past due by more than 30 days, the exposures are transferred to Stage 2. The credit risk of a financial instrument is considered low if the financial instrument has a low default risk.

The Bank does not consider that credit exposures have low credit risk when it regards them as having a low risk of loss simply because of the value of collateral and the credit exposure without that collateral would not be considered low credit risk. Also, the Bank does not consider that credit exposures have low credit risk simply because they have a lower default risk than the borrower’s other credit exposures or relative to the credit risk of the jurisdiction within which the borrower operates.

The Group applies the low credit risk criterion LCR ( Low Credit Risk) for credit exposures belonging to the segment of banks and branches of credit institutions with an internal rating (Banks) in the range from I to VIII or exposures to the State Treasury that do not meet the overdue criterion as a criterion for a significant increase in credit risk.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Financial assets with identified significant increase in credit risk

Financial assets for which at the reporting date the Bank identifies a significant increase in credit risk since initial recognition are classified in Stage 2. The Bank considers that for a given asset a significant increase in credit risk has been identified if a quantitative or qualitative criterion is met or if contractual payments are more than 30 days past due, whereas the occurrence of a given criterion is assessed at the exposure level.

Quantitative criteria of a significant increase in credit risk

A quantitative criterion is applied only to homogenous portfolios of credit exposures with assigned internal ratings. Assessment of a quantitative criterion consists in comparing the existing (at the reporting date) level of credit risk with the level of credit risk as at the date of initial recognition. This verification is used to assess the increase in credit risk on the basis of the parameter of change in credit risk over the entire life of the exposure, i.e. LtPD.

Credit exposure transfer from Stage 1 to Stage 2 is made via the credit risk increase assessment and is solely based on the default risk. LGD changes do not impact the exposure transfer between Stage 1 and Stage 2.

Classification to Stage 2 is based on the limit of the materiality threshold, determined as a relative value above which an exposure is classified to Stage 2 by comparing the LtPD at the reporting date with the LtPD as at the date of initial recognition. For both curves, the comparison is made for identical period, i.e. from the reporting date until maturity.

Exposures are classified to Stage 2 when the rating grade drops by a specified number of grades relative to the original recognition or a when the relative change in risk deteriorates by a specified level.

A change in rating classes is determined based on comparison of a rating class as at the reporting date with the rating class as at the date of initial recognition.

Qualitative criteria of a significant increase in credit risk

Qualitative criteria of a significant increase in credit risk are selected from the catalogue of Early Warning Signals (EWS) and are defined as “strong” in accordance with the classification applied at the Bank. Their occurrence is associated with a high probability of default of an exposure. The criteria are considered indicative and require confirmation each time they occur. One of the criteria of a significant increase in risk is a credit exposure which is overdue by more than 30 days.

Financial assets with identified impairment

The Bank assesses all credit exposures (credit exposure groups) for existence of objective evidence of impairment using the most recent data available to the Bank as at the date of revaluation, based on a catalogue of impairment triggers defined in internal regulations governing the recognition and measurement of expected credit losses.

Financial assets for which at the reporting date the Bank has identified the occurrence of an impairment trigger are classified in Stage 3. The Bank analyses the occurrence of evidence of impairment at the level of an agreement/transaction and customer.

If evidence of impairment is identified for a customer of any of its credit exposures, all other credit exposures of that customer are treated as exposures for which evidence of impairment exists.

In the case of related parties, existence of evidence of impairment at either of such parties does not result in the treatment of exposures of other related parties as exposures for which evidence of impairment exists.

Inclusion of expectations regarding future macroeconomic conditions

IFRS 9 requires the Bank to take into account expectations regarding the macroeconomic situation in the calculation of expected credit losses. The Bank adjusts risk parameters to take into account forecast forward-looking macroeconomic information (such as: interest rate, foreign exchange rates), for portfolios for which it has identified a dependency. The source of information on the values of macroeconomic factors are forecasts prepared by the Bank’s business unit in charge of macroeconomic forecast.

Derivative financial instruments

In the case of derivatives (measured at fair value), the Bank is exposed to the risk of default by the counterparty to a transaction related to a given derivative, which is why it determines, among other things, a CVA (Credit Value Adjustment) which represents the expected loss related to the default risk of the other party to the transaction during its term. The adjustment is equivalent to the allowance for expected credit losses applied to credit assets, and the model for its calculation is consistent with the principles for calculating such allowances, in particular for most exposures it uses the same PD, RR parameters, and also takes into account margins received from customers.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Credit risk resulting from granted liabilities

The Bank offers their customers guarantees whereby the Bank may be obliged to make a payment on their behalf, and offers the option to extend the provided financing to satisfy liquidity needs of clients. Under the terms of letters of credit and guarantees (including standby letters of credit), the Bank is obliged to make payments on behalf of its customers in specific cases, usually related to imports and exports of goods. Such obligations expose the Bank to a risk similar to the risk related to loans which is mitigated by the same risk control processes and policies.

Write-offs

A claim may be written off in whole or in part, if it is not recoverable as a result of the expiration of contractual rights to cash flows from the debtor’s financial asset, in particular, if:

§ the debtor died without leaving an estate;

§ the irrecoverability of the claim has been documented:

– by a decision on irrecoverability issued by the competent enforcement authority,

– by a court order dismissing a bankruptcy petition or discontinuing bankruptcy proceedings, or when the insolvency estate is insufficient to cover the costs of bankruptcy proceedings, or bankruptcy proceedings have been completed or the liabilities that have not been satisfied in the bankruptcy proceedings of an individual have been cancelled, in whole or in part, pursuant to a court order;

– in a report stating that the expected litigation and enforcement costs related to enforcement of the claim would be equal to or greater than this amount,

§ the circumstances of the case indicate that there are special economic or legal grounds for cancellation or that the Bank has resolved not to carry out collection activities,

§ the entity conducting business activity has been liquidated or deleted from the relevant register of business entities, with the exception of self-employed individuals;

§ the claim has become time-barred.

### 45.3. Quality of the portfolio and rating system

The Bank manages the credit quality of assets using a whole range of methods to mitigate credit risk, including internal credit ratings. The rating system applied at the Bank uses various financial analytical tools and processed market information to obtain major input data for measuring the risk related to an individual customer. The rating models are monitored and validated on an ongoing basis. When determining and monitoring customers’ credit risk, the Bank also uses the ratings assigned to the customers by reputable rating agencies.

For the purpose of management of the credit quality of assets, the Bank applies internal ratings with respect to local government units, enterprises and healthcare entities conducting full financial reporting, SMEs, foreign entities, housing cooperatives and social housing associations.

The Bank applies a master scale for the rating methods used for individual customer segments, from 1 to 20.

Rating | range for 12-month PD | Risk level
from R 1 to R 4 | (0.00% - 0.30%) | Low risk
from R 5 to R 13 | <0.30%; 5.40%) | Acceptable risk
from R 14 to R 17 | <5.40%; 20.00%) | Higher risk
from R 18 to R 20 | 100.00% | Default

Pursuant to the adopted policy, the Bank applies risk rating to the majority of credit exposures in the loan portfolio. This helps appropriately manage the existing risk and compare the credit risk with reference to various customer and product segments.

Customers without internal ratings mainly comprise new transactions that finance investment ventures in the form of special purpose vehicles.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The tables below present the quality of the portfolio in the rating mode.

· Structure of amounts due to banks

Amounts due from banks at amortised cost as at 31 Dec 2024 | Stage 1 | Stage 2 | Stage 3 | Total
Internal rating for banks |  |  |  |
from I to VI | 12,663 | 0 | 0 | 12,663
from VII to XIII | 24 | 0 | 0 | 24
from XIV to XX | 6 | 58 | 0 | 64
Total gross carrying amount | 12,693 | 58 | 0 | 12,751
Allowances for expected credit losses | 3 | 0 | 0 | 3
Total net carrying amount | 12,690 | 58 | 0 | 12,748

Amounts due from banks at amortised cost as at 31 Dec 2023 | Stage 1 | Stage 2 | Stage 3 | Total
Internal rating for banks |  |  |  |
from I to VI | 9,015 | 0 | 0 | 9,015
from VII to XIII | 593 | 0 | 0 | 593
from XIV to XX | 5 | 114 | 0 | 119
No rating | 1 | 0 | 0 | 1
Total gross carrying amount | 9,614 | 114 | 0 | 9,728
Allowances for expected credit losses | 2 | 0 | 0 | 2
Total net carrying amount | 9,612 | 114 | 0 | 9,726

· Structure of the portfolio of derivative financial instruments

Derivative financial instruments as at 31 Dec 2024 | Banks | Other financial institutions | Non-financial entities | Total
External rating |  |  |  |
AAA | 4 | 0 | 0 | 4
AA | 105 | 0 | 0 | 105
A | 595 | 0 | 0 | 595
BBB | 170 | 0 | 0 | 170
Internal rating |  |  |  |
No rating | 0 | 108 | 189 | 297
Total carrying amount | 874 | 108 | 189 | 1,171

Derivative financial instruments as at 31 Dec 2023 | Banks | Other financial institutions | Non-financial entities | Total
External rating |  |  |  |
AA | 81 | 0 | 0 | 81
A | 750 | 0 | 183 | 933
BBB | 84 | 0 | 0 | 84
Internal rating |  |  |  |
No rating | 0 | 77 | 285 | 362
Total carrying amount | 915 | 77 | 468 | 1,460

· Structure of the portfolio of derivative hedging instruments

Derivative hedging instruments as at 31 December 2024 | Banks | Other financial institutions | Non-financial entities | Total
External rating
A | 9 | 0 | 0 | 9
No rating | 0 | 51 | 0 | 51
Total carrying amount | 9 | 51 | 0 | 60

Derivative hedging instruments as at 31 December 2023 | Banks | Other financial institutions | Non-financial entities | Total
No rating | 0 | 85 | 0 | 85
Total carrying amount | 0 | 85 | 0 | 85

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

· Structure of the debt securities portfolio

Debt securities held for trading | 31 Dec 2024 | 31 Dec 2023
External rating |  |
A / AA | 34 | 20
Total carrying amount | 34 | 20

Debt securities at fair value through other comprehensive income as at 31 Dec 2024 | Stage 1 | Stage 2 | Stage 3 | Total
External rating |  |  |  |
A | 12,180 | 0 | 0 | 12,180
BBB | 399 | 0 | 0 | 399
BB | 780 | 0 | 0 | 780
Internal rating |  |  |  |
1–13 | 2,683 | 78 | 0 | 2,761
14–17 | 0 | 19 | 0 | 19
18 and above | 0 | 109 | 0 | 109
SP | 25,697 | 0 | 0 | 25,697
Internal rating for banks |  |  |  |
from I to VI | 10,232 | 0 | 0 | 10,232
from VII to XIII | 271 | 0 | 0 | 271
Total gross carrying amount | 52,242 | 206 | 0 | 52,448
Allowances for expected credit losses | 12 | 14 | 0 | 26

Debt securities at fair value through other comprehensive income as at 31 Dec 2023 | Stage 1 | Stage 2 | Stage 3 | Total
External rating |  |  |  |
A | 75 | 0 | 0 | 75
BBB | 802 | 0 | 0 | 802
BB | 623 | 0 | 0 | 623
Internal rating |  |  |  |
1–13 | 2,174 | 223 | 0 | 2,397
14–17 | 0 | 130 | 0 | 130
18 and above | 0 | 22 | 0 | 22
SP | 49,922 | 0 | 0 | 49,922
Internal rating for banks |  |  |  |
from I to VI | 9,258 | 0 | 0 | 9,258
from VII to XIII | 242 | 0 | 0 | 242
Total gross carrying amount | 63,096 | 375 | 0 | 63,471
Allowances for expected credit losses | 8 | 6 | 0 | 14

Exposures with the rating SP are mainly exposures with attributed risk of the State Treasury, which include: the National Bank of Poland (money bills) and the Ministry of Finance (treasury bonds).

Debt securities at amortised cost as at 31 Dec 2024 | Stage 1 | Stage 2 | Stage 3 | POCI | Total
External rating |  |  |  |  |
A | 1,120 | 0 | 0 | 0 | 1,120
BBB | 1,506 | 187 | 0 | 0 | 1,693
Internal rating |  |  |  |  |
1–13 | 4,079 | 495 | 0 | 18 | 4,592
14–17 | 111 | 135 | 0 | 0 | 246
18 and above | 0 | 166 | 0 | 457 | 623
Total | 12 | 0 | 0 | 0 | 12
SP | 70,584 | 0 | 0 | 0 | 70,584
Total gross carrying amount | 77,412 | 983 | 0 | 475 | 78,870
Allowances for expected credit losses | 26 | 59 | 0 | 1 | 86
Total net carrying amount | 77,386 | 924 | 0 | 474 | 78,784

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Debt securities at amortised cost as at 31 Dec 2023 | Stage 1 | Stage 2 | Stage 3 | POCI | Total
External rating |  |  |  |  |
BBB | 1,473 | 249 | 0 | 0 | 1,722
BB | 0 | 334 | 0 | 0 | 334
Internal rating |  |  |  |  |
1–13 | 3,737 | 401 | 683 | 18 | 4,839
14–17 | 159 | 9 | 162 | 0 | 330
18 and above | 0 | 37 | 7 | 0 | 44
SP | 80,784 | 0 | 0 | 0 | 80,784
Total gross carrying amount | 86,153 | 1,030 | 852 | 18 | 88,053
Allowances for expected credit losses | 17 | 19 | 78 | 0 | 114
Total net carrying amount | 86,136 | 1,011 | 774 | 18 | 87,939

· Structure of the portfolio of reverse repurchase agreements

Reverse repurchase agreements as at 31 December 2024 | Stage 1 | Stage 2 | Stage 3 | Total
External rating |  |  |  |
A / AA | 14,321 | 0 | 0 | 14,321
BBB | 330 | 0 | 0 | 330
BB | 194 | 0 | 0 | 194
Total | 7,333 | 0 | 0 | 7,333
Total | 22,178 | 0 | 0 | 22,178

Reverse repurchase agreements as at 31 December 2023 | Stage 1 | Stage 2 | Stage 3 | Total
External rating |  |  |  |
A / AA | 2,757 | 0 | 0 | 2,757
BBB | 228 | 0 | 0 | 228
Total | 2,284 | 0 | 0 | 2,284
Total | 5,269 | 0 | 0 | 5,269

· Structure of loans and advances to customers

Loans and advances to customers at amortised cost as at 31 December 2024 | Stage 1 | Stage 2 | Stage 3 | POCI | Total
Internal rating |  |  |  |  |
1–13 | 27,019 | 3,419 | 143 | 31 | 30,612
14–17 | 5,565 | 1,125 | 441 | 43 | 7,174
18 and above | 11 | 46 | 3,666 | 368 | 4,091
Internal rating for banks and countries |  |  |  |  |
from XIV to XX | 57 | 0 | 0 | 0 | 57
Total | 2,858 | 31 | 887 | 0 | 3,776
SP | 43 | 291 | 71 | 0 | 405
Total gross carrying amount | 35,553 | 4,912 | 5,208 | 442 | 46,115
Allowances for expected credit losses | 356 | 195 | 2,622 | 10 | 3,183
Total net carrying amount | 35,197 | 4,717 | 2,586 | 432 | 42,932

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Loans and advances to customers at amortised cost as at 31 December 2023 | Stage 1 | Stage 2 | Stage 3 | POCI | Total
Internal rating |  |  |  |  |
1–13 | 27,626 | 2,973 | 918 | 11 | 31,528
14–17 | 4,224 | 1,635 | 1,077 | 61 | 6,997
18 and above | 11 | 58 | 1,708 | 365 | 2,142
Total | 2,398 | 449 | 747 | 0 | 3,594
SP | 32 | 352 | 118 | 0 | 502
Total gross carrying amount | 34,291 | 5,467 | 4,568 | 437 | 44,763
Allowances for expected credit losses | 299 | 171 | 1,743 | 13 | 2,226
Total net carrying amount | 33,993 | 5,295 | 2,825 | 424 | 42,537

· Structure of the portfolio of financial and guarantee liabilities

Financial and guarantee liabilities granted at amortised cost as at 31 December 2024 | Stage 1 | Stage 2 | Stage 3 | POCI | Total
Internal rating
1–13 | 48,588 | 3,180 | 29 | 19 | 51,816
14–17 | 5,299 | 303 | 59 | 3 | 5,664
18 and above | 0 | 2 | 1,281 | 4 | 1,287
Internal rating for banks and countries
from I to VI | 4,483 | 0 | 0 | 0 | 4,483
from VII to XIII | 367 | 0 | 0 | 0 | 367
from XIV to XX | 137 | 0 | 0 | 0 | 137
Total | 2,905 | 0 | 0 | 0 | 2,905
SP | 65,741 | 78 | 0 | 0 | 65,819
Gross total | 127,520 | 3,563 | 1,369 | 26 | 132,478
Provisions for financial and guarantee liabilities granted | 284 | 81 | 212 | 1 | 578

Financial and guarantee liabilities granted at amortised cost as at 31 December 2023 | Stage 1 | Stage 2 | Stage 3 | POCI | Total
Internal rating |  |  |  |  |
1–13 | 39,793 | 1,079 | 794 | 0 | 41,666
14–17 | 6,126 | 531 | 455 | 0 | 7,112
18 and above | 0 | 4 | 309 | 0 | 313
Internal rating for banks and countries |  |  |  |  |
from I to VI | 5,542 | 0 | 0 | 0 | 5,542
from VII to XIII | 300 | 0 | 0 | 0 | 300
from XIV to XX | 22 | 0 | 0 | 0 | 22
Total | 2,351 | 334 | 0 | 0 | 2,685
SP | 57,348 | 80 | 0 | 0 | 57,428
Gross total | 111,482 | 2,028 | 1,558 | 0 | 115,068
Provisions for financial and guarantee liabilities granted | 224 | 77 | 346 | 0 | 647

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The tables below demonstrate the quality of the portfolio of loans and advances at amortised cost by portfolio as at 31 December 2024 and in the comparative period.

· Exposures to local government units

Loans and advances at amortised cost – local government units, as at 31 December 2024 | PD scale | Loans and advances, gross | Off-balance sheet exposures | EAD post CRM and post CCF | Average PD in % – acceptable range (from 0% to 100%) | Number of exposures | Average LGD in % | Average maturity | Allowances for expected credit losses
Stage 1 | 0.00 to <0.15% | 2,276 | 841 | 3,117 | 0% | 396 | 15% | 57 | 0
0.15 to <0.25% | 1,088 | 43 | 1,131 | 0% | 178 | 15% | 70 | 0
0.25 to <0.50% | 1,527 | 60 | 1,587 | 0% | 239 | 15% | 77 | 1
0.50 to <0.75% | 1,951 | 36 | 1,987 | 1% | 154 | 15% | 96 | 2
0.75 to <2.50% | 2,323 | 10 | 2,333 | 1% | 183 | 15% | 97 | 5
2.50 to <10.00% | 387 | 0 | 387 | 4% | 28 | 15% | 118 | 2
10.00 to <45.00% | 39 | 0 | 39 | 12% | 2 | 15% | 84 | 1
Stage 2 | 0.75 to <2.50% | 17 | 0 | 17 | 1% | 6 | 15% | 48 | 0
2.50 to <10.00% | 499 | 0 | 499 | 5% | 40 | 15% | 80 | 10
10.00 to <45.00% | 39 | 0 | 39 | 14% | 10 | 15% | 97 | 1

Loans and advances at amortised cost – local government units, as at 31 December 2024 | Time in default | EAD post CRM and post CCF | Number of exposures | Average LGD in % | Allowances for expected credit losses
Stage 3 | up to 12 months | 3 | 2 | 19% | 1
13 to 24 months | 1 | 2 | 25% | 0
61 to 84 months | 0 | 1 | 83% | 0
over 84 months | 1 | 1 | 100% | 1
POCI | up to 12 months | 10 | 1 | 3% | 0

Loans and advances at amortised cost – local government units, as at 31 December 2023 | PD scale | Loans and advances, gross | Off-balance sheet exposures | EAD post CRM and post CCF | Average PD in % – acceptable range (from 0% to 100%) | Number of exposures | Average LGD in % | Average maturity | Allowances for expected credit losses
Stage 1 | 0.00 to <0.15% | 2,005 | 600 | 2,605 | 0% | 1,055 | 15% | 54 | 0
0.15 to <0.25% | 666 | 34 | 700 | 0% | 336 | 15% | 56 | 0
0.25 to <0.50% | 1,428 | 66 | 1,494 | 0% | 563 | 15% | 70 | 1
0.50 to <0.75% | 1,293 | 6 | 1,299 | 1% | 494 | 15% | 76 | 2
0.75 to <2.50% | 1,269 | 32 | 1,301 | 1% | 487 | 15% | 70 | 6
2.50 to <10.00% | 880 | 90 | 970 | 3% | 53 | 15% | 118 | 6
10.00 to <45.00% | 9 | 0 | 9 | 15% | 3 | 15% | 95 | 0
Stage 2 | 0.15 to <0.25% | 21 | 0 | 21 | 0% | 12 | 15% | 66 | 0
0.25 to <0.50% | 1 | 0 | 1 | 0% | 2 | 15% | 14 | 0
0.50 to <0.75% | 2 | 0 | 2 | 1% | 3 | 15% | 50 | 0
0.75 to <2.50% | 9 | 0 | 9 | 2% | 8 | 15% | 22 | 0
2.50 to <10.00% | 834 | 8 | 842 | 4% | 200 | 15% | 65 | 12
10.00 to <45.00% | 55 | 0 | 55 | 17% | 16 | 15% | 93 | 2
45.00 to <100.00% | 4 | 0 | 4 | 60% | 37 | 15% | 74 | 0

Loans and advances at amortised cost – local government units, as at 31 December 2023 | Time in default | EAD post CRM and post CCF | Number of exposures | Average LGD in % | Allowances for expected credit losses
Stage 3 | up to 12 months | 1 | 7 | 7% | 0
13 to 24 months | 0 | 0 | 0% | 0
25 to 36 months | 4 | 1 | 46% | 2
37 to 48 months | 0 | 1 | 52% | 0
49 to 60 months | 2 | 1 | 68% | 1
61 to 84 months | 0 | 0 | 0% | 0
over 84 months | 117 | 7 | 16% | 4

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

· Exposures to corporates

Loans and advances at amortised cost – corporates, as at 31 December 2024 | PD scale | Loans and advances, gross | Off-balance sheet exposures | EAD post CRM and post CCF | Average PD in % – acceptable range (from 0% to 100%) | Number of exposures | Average LGD in % | Average maturity | Allowances for expected credit losses
Stage 1 | 0.00 to <0.15% | 20 | 864 | 884 | 0% | 25 | 41% | 1 | 0
0.15 to <0.25% | 452 | 4,898 | 5,350 | 0% | 20 | 41% | 3 | 4
0.25 to <0.50% | 541 | 3,150 | 3,691 | 0% | 37 | 41% | 21 | 5
0.50 to <0.75% | 1,326 | 6,093 | 7,419 | 1% | 45 | 41% | 25 | 21
0.75 to <2.50% | 6,128 | 25,650 | 31,778 | 1% | 274 | 41% | 31 | 182
2.50 to <10.00% | 1,028 | 3,091 | 4,119 | 3% | 42 | 40% | 58 | 69
10.00 to <45.00% | 0 | 0 | 0 | 12% | 2 | 41% | 65 | 0
Stage 2 | 0.00 to <0.15% | 0 | 11 | 11 | 0% | 7 | 41% | 2 | 0
0.15 to <0.25% | 16 | 7 | 23 | 0% | 6 | 41% | 4 | 0
0.25 to <0.50% | 96 | 92 | 188 | 0% | 52 | 41% | 30 | 0
0.50 to <0.75% | 0 | 6 | 6 | 1% | 8 | 41% | 5 | 0
0.75 to <2.50% | 1,130 | 781 | 1,911 | 2% | 99 | 41% | 39 | 39
2.50 to <10.00% | 879 | 1,226 | 2,105 | 4% | 50 | 41% | 30 | 77
10.00 to <45.00% | 42 | 56 | 98 | 14% | 14 | 41% | 43 | 12

Loans and advances at amortised cost – corporates, as at 31 December 2024 | Time in default | EAD post CRM and post CCF | Number of exposures | Average LGD in % | Allowances for expected credit losses
Stage 3 | up to 12 months | 1,331 | 6 | 7% | 288
13 to 24 months | 1,102 | 9 | 6% | 242
25 to 36 months | 122 | 7 | 6% | 164
37 to 48 months | 493 | 13 | 6% | 396
49 to 60 months | 0 | 1 | 67% | 0
61 to 84 months | 73 | 5 | 7% | 35
over 84 months | 240 | 8 | 7% | 49

Loans and advances at amortised cost – corporates, as at 31 December 2023 | PD scale | Loans and advances, gross | Off-balance sheet exposures | EAD post CRM and post CCF | Average PD in % – acceptable range (from 0% to 100%) | Number of exposures | Average LGD in % | Average maturity | Allowances for expected credit losses
Stage 1 | 0.00 to <0.15% | 25 | 3,224 | 3,249 | 0% | 46 | 34% | 2 | 1
0.15 to <0.25% | 11 | 313 | 324 | 0% | 38 | 34% | 4 | 0
0.25 to <0.50% | 699 | 3,675 | 4,374 | 0% | 52 | 34% | 23 | 5
0.50 to <0.75% | 3,472 | 14,138 | 17,610 | 1% | 126 | 33% | 31 | 44
0.75 to <2.50% | 7,284 | 9,670 | 16,954 | 2% | 197 | 33% | 34 | 85
2.50 to <10.00% | 699 | 3,543 | 4,242 | 4% | 55 | 34% | 51 | 59
10.00 to <45.00% | 8 | 0 | 8 | 16% | 1 | 34% | 12 | 0
Stage 2 | 0.00 to <0.15% | 0 | 48 | 48 | 0% | 3 | 23% | 2 | 0
0.15 to <0.25% | 0 | 68 | 68 | 0% | 9 | 34% | 6 | 0
0.25 to <0.50% | 0 | 89 | 89 | 0% | 59 | 34% | 35 | 0
0.50 to <0.75% | 124 | 230 | 354 | 1% | 15 | 32% | 52 | 2
0.75 to <2.50% | 405 | 105 | 510 | 1% | 23 | 34% | 25 | 4
2.50 to <10.00% | 47 | 2 | 49 | 5% | 7 | 34% | 37 | 1
10.00 to <45.00% | 818 | 394 | 1,212 | 17% | 4 | 34% | 26 | 113

Loans and advances at amortised cost – corporates, as at 31 December 2023 | Time in default | EAD post CRM and post CCF | Number of exposures | Average LGD in % | Allowances for expected credit losses
Stage 3 | up to 12 months | 1,665 | 74 | 6% | 245
13 to 24 months | 696 | 23 | 5% | 377
25 to 36 months | 5 | 1 | 6% | 4
37 to 48 months | 58 | 1 | 6% | 58
49 to 60 months | 76 | 5 | 6% | 43
61 to 84 months | 137 | 4 | 6% | 43

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

· Exposures to SMEs

Loans and advances at amortised cost – SMEs, as at 31 December 2024 | PD scale | Loans and advances, gross | Off-balance sheet exposures | EAD post CRM and post CCF | Average PD in % – acceptable range (from 0% to 100%) | Number of exposures | Average LGD in % | Average maturity | Allowances for expected credit losses
Stage 1 | 0.00 to <0.15% | 732 | 417 | 1,149 | 0% | 198 | 41% | 275 | 0
0.15 to <0.25% | 313 | 181 | 494 | 0% | 90 | 41% | 251 | 0
0.25 to <0.50% | 252 | 685 | 937 | 0% | 96 | 41% | 157 | 1
0.50 to <0.75% | 330 | 364 | 694 | 1% | 107 | 39% | 162 | 2
0.75 to <2.50% | 2,612 | 1,414 | 4,026 | 2% | 140 | 41% | 49 | 24
2.50 to <10.00% | 5,998 | 4,320 | 10,318 | 4% | 217 | 41% | 151 | 187
10.00 to <45.00% | 90 | 10 | 100 | 16% | 4 | 41% | 61 | 7
Stage 2 | 0.15 to <0.25% | 0 | 0 | 0 | 0% | 1 | 41% | 1 | 0
0.25 to <0.50% | 3 | 0 | 3 | 0% | 1 | 41% | 1 | 0
0.50 to <0.75% | 79 | 1 | 80 | 1% | 5 | 41% | 116 | 0
0.75 to <2.50% | 357 | 1,184 | 1,541 | 2% | 34 | 41% | 35 | 25
2.50 to <10.00% | 775 | 89 | 864 | 5% | 83 | 40% | 90 | 57
10.00 to <45.00% | 108 | 2 | 110 | 18% | 7 | 41% | 64 | 16
45.00 to <100.00% | 19 | 0 | 19 | 60% | 4 | 41% | 65 | 6

Loans and advances at amortised cost – SMEs, as at 31 December 2024 | Time in default | EAD post CRM and post CCF | Number of exposures | Average LGD in % | Allowances for expected credit losses
Stage 3 | up to 12 months | 66 | 6 | 19% | 8
13 to 24 months | 226 | 18 | 10% | 70
25 to 36 months | 219 | 12 | 15% | 191
37 to 48 months | 24 | 8 | 14% | 12
49 to 60 months | 208 | 9 | 28% | 92
61 to 84 months | 113 | 12 | 28% | 110
over 84 months | 347 | 45 | 75% | 318
POCI | 13 to 24 months | 5 | 2 | 7% | 0
61 to 84 months | 0 | 2 | 70% | 0

Loans and advances at amortised cost – SMEs, as at 31 December 2023 | PD scale | Loans and advances, gross | Off-balance sheet exposures | EAD post CRM and post CCF | Average PD in % – acceptable range (from 0% to 100%) | Number of exposures | Average LGD in % | Average maturity | Allowances for expected credit losses
Stage 1 | 0.00 to <0.15% | 553 | 289 | 842 | 0% | 179 | 34% | 284 | 0
0.15 to <0.25% | 184 | 92 | 276 | 0% | 61 | 34% | 243 | 0
0.25 to <0.50% | 364 | 661 | 1,025 | 0% | 105 | 34% | 188 | 1
0.50 to <0.75% | 396 | 1,102 | 1,498 | 1% | 89 | 32% | 156 | 3
0.75 to <2.50% | 1,502 | 1,254 | 2,756 | 1% | 149 | 34% | 61 | 15
2.50 to <10.00% | 6,075 | 5,398 | 11,473 | 4% | 180 | 34% | 85 | 157
10.00 to <45.00% | 0 | 0 | 0 | 12% | 1 | 0% | 31 | 0
Stage 2 | 0.00 to <0.15% | 3 | 0 | 3 | 0% | 4 | 34% | 2 | 0
0.15 to <0.25% | 13 | 1 | 14 | 0% | 2 | 34% | 5 | 0
0.25 to <0.50% | 4 | 0 | 4 | 0% | 4 | 34% | 15 | 0
0.50 to <0.75% | 14 | 2 | 16 | 1% | 12 | 34% | 26 | 0
0.75 to <2.50% | 181 | 45 | 226 | 1% | 43 | 33% | 60 | 2
2.50 to <10.00% | 1,349 | 800 | 2,149 | 4% | 80 | 34% | 56 | 60
10.00 to <45.00% | 110 | 0 | 110 | 16% | 9 | 34% | 98 | 14
45.00 to <100.00% | 6 | 0 | 6 | 60% | 2 | 34% | 60 | 2

Loans and advances at amortised cost – SMEs, as at 31 December 2023 | Time in default | EAD post CRM and post CCF | Number of exposures | Average LGD in % | Allowances for expected credit losses
Stage 3 | up to 12 months | 246 | 20 | 10% | 64
13 to 24 months | 206 | 14 | 11% | 155
25 to 36 months | 177 | 14 | 9% | 35
37 to 48 months | 19 | 6 | 21% | 3
49 to 60 months | 241 | 14 | 19% | 105
61 to 84 months | 15 | 4 | 41% | 15
over 84 months | 331 | 43 | 77% | 294
POCI | 61 to 84 months | 0 | 1 | 58% | 0

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

· Exposures related to other activities

Loans and advances at amortised cost – other activities, as at 31 December 2024 | PD scale | Loans and advances, gross | Off-balance sheet exposures | EAD post CRM and post CCF | Average PD in % – acceptable range (from 0% to 100%) | Number of exposures | Average LGD in % | Average maturity | Allowances for expected credit losses
Stage 1 | 0.00 to <0.15% | 1,141 | 72,013 | 73,154 | 0% | 749 | 25% | 78 | 1
0.15 to <0.25% | 268 | 10 | 278 | 0% | 204 | 25% | 88 | 0
0.25 to <0.50% | 586 | 172 | 758 | 0% | 281 | 27% | 80 | 1
0.50 to <0.75% | 629 | 355 | 984 | 1% | 266 | 29% | 74 | 3
0.75 to <2.50% | 1,065 | 2,021 | 3,086 | 1% | 317 | 35% | 71 | 17
2.50 to <10.00% | 2,361 | 808 | 3,169 | 4% | 109 | 41% | 61 | 45
10.00 to <45.00% | 79 | 14 | 93 | 14% | 54 | 46% | 94 | 57
45.00 to <100.00% | 11 | 0 | 11 | 60% | 2 | 41% | 69 | 3
Stage 2 | 0.00 to <0.15% | 291 | 75 | 366 | 0% | 3 | 15% | 54 | 0
0.25 to <0.50% | 27 | 0 | 27 | 0% | 17 | 24% | 124 | 0
0.50 to <0.75% | 28 | 0 | 28 | 1% | 32 | 26% | 109 | 0
0.75 to <2.50% | 104 | 6 | 110 | 1% | 86 | 28% | 90 | 1
2.50 to <10.00% | 326 | 25 | 351 | 4% | 122 | 28% | 83 | 17
10.00 to <45.00% | 59 | 2 | 61 | 17% | 12 | 42% | 74 | 10
45.00 to <100.00% | 18 | 0 | 18 | 60% | 12 | 29% | 123 | 5

Loans and advances at amortised cost – other activities, as at 31 December 2024 | Time in default | EAD post CRM and post CCF | Number of exposures | Average LGD in % | Allowances for expected credit losses
Stage 3 | up to 12 months | 139 | 337 | 36% | 30
13 to 24 months | 346 | 339 | 45% | 70
25 to 36 months | 673 | 595 | 52% | 224
37 to 48 months | 326 | 1,082 | 54% | 210
49 to 60 months | 254 | 726 | 59% | 167
61 to 84 months | 114 | 331 | 59% | 71
over 84 months | 156 | 163 | 74% | 85
POCI | up to 12 months | 37 | 4 | 16% | 2
13 to 24 months | 23 | 5 | 23% | 0
25 to 36 months | 331 | 7 | 7% | 14
49 to 60 months | 34 | 4 | 7% | -6
over 84 months | 2 | 1 | 7% | 0

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Loans and advances at amortised cost – other activities, as at 31 December 2023 | PD scale | Loans and advances, gross | Off-balance sheet exposures | EAD post CRM and post CCF | Average PD in % – acceptable range (from 0% to 100%) | Number of exposures | Average LGD in % | Average maturity | Allowances for expected credit losses
Stage 1 | 0.00 to <0.15% | 1,152 | 63,171 | 64,323 | 0% | 874 | 14% | 83 | 1
0.15 to <0.25% | 274 | 44 | 318 | 0% | 208 | 14% | 84 | 0
0.25 to <0.50% | 335 | 53 | 388 | 0% | 248 | 14% | 92 | 0
0.50 to <0.75% | 542 | 640 | 1,182 | 1% | 227 | 17% | 91 | 2
0.75 to <2.50% | 1,205 | 838 | 2,043 | 1% | 344 | 24% | 76 | 10
2.50 to <10.00% | 1,789 | 1,527 | 3,316 | 5% | 238 | 40% | 87 | 34
10.00 to <45.00% | 163 | 1,022 | 1,185 | 15% | 28 | 34% | 44 | 89
45.00 to <100.00% | 10 | 0 | 10 | 58% | 2 | 34% | 74 | 2
Stage 2 | 0.00 to <0.15% | 355 | 93 | 448 | 0% | 7 | 29% | 39 | 0
0.15 to <0.25% | 31 | 62 | 93 | 0% | 9 | 34% | 41 | 0
0.25 to <0.50% | 218 | 11 | 229 | 0% | 48 | 17% | 118 | 1
0.50 to <0.75% | 152 | 25 | 177 | 1% | 34 | 21% | 78 | 1
0.75 to <2.50% | 157 | 1 | 158 | 1% | 61 | 20% | 97 | 1
2.50 to <10.00% | 468 | 20 | 488 | 4% | 184 | 18% | 94 | 15
10.00 to <45.00% | 39 | 20 | 59 | 17% | 8 | 34% | 60 | 6
45.00 to <100.00% | 47 | 4 | 51 | 59% | 15 | 23% | 122 | 12

Loans and advances at amortised cost – other activities, as at 31 December 2023 | Time in default | EAD post CRM and post CCF | Number of exposures | Average LGD in % | Allowances for expected credit losses
Stage 3 | up to 12 months | 445 | 393 | 34% | 69
13 to 24 months | 770 | 661 | 38% | 143
25 to 36 months | 318 | 1,096 | 40% | 158
37 to 48 months | 231 | 654 | 44% | 115
49 to 60 months | 85 | 245 | 42% | 40
61 to 84 months | 140 | 145 | 56% | 32
over 84 months | 141 | 174 | 73% | 84
POCI | up to 12 months | 409 | 10 | 6% | 19
37 to 48 months | 28 | 2 | 6% | -6

· Past due loans and advances to customers

Exposures past due by more than 90 days occurred only in Stage 3 and as at 31 December 2024 accounted for 0.71% of the gross loan portfolio (on 31 December 2023 it was 0.63%).

The structure of past due loans and advances to customers at amortised cost by individual stages is presented in the table below.

Number of days past due as at 31 Dec 2024 | Gross carrying amount | Allowances for expected credit losses
| Stage 1 | Stage 2 | Stage 3 | POCI | Stage 1 | Stage 2 | Stage 3 | POCI
0 | 35,507 | 4,906 | 4,205 | 438 | 356 | 195 | 1,832 | 11
1-30 | 46 | 0 | 28 | 0 | 0 | 0 | 6 | 0
31-90 | 0 | 6 | 87 | 0 | 0 | 0 | 53 | 0
More than 90 | 0 | 0 | 888 | 4 | 0 | 0 | 731 | -1
Total | 35,553 | 4,912 | 5,208 | 442 | 356 | 195 | 2,622 | 10

Number of days past due as at 31 Dec 2023 | Gross carrying amount | Allowances for expected credit losses
| Stage 1 | Stage 2 | Stage 3 | POCI | Stage 1 | Stage 2 | Stage 3 | POCI
0 | 33,367 | 5,356 | 3,636 | 437 | 277 | 163 | 1,184 | 13
1-30 | 924 | 111 | 184 | 0 | 22 | 8 | 1 | 0
31-90 | 0 | 0 | 12 | 0 | 0 | 0 | 5 | 0
More than 90 | 0 | 0 | 736 | 0 | 0 | 0 | 553 | 0
Total | 34,291 | 5,467 | 4,568 | 437 | 299 | 171 | 1,743 | 13

As part of its lending activity BGK supports Polish businesses in their expansion into foreign markets. These operations have been carried out for many years based on KUKE guarantees, which fully cover the Bank’s risk arising from financing entities in those markets.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Written receivables

As at 31 December 2024 and as at 31 December 2023, the Group did not have credit receivables that were written during the year and are still subject to recovery activities.

Aggression of Russia against Ukraine

In connection with Russia’s armed aggression against Ukraine, the Bank decided not to make any new commitments, in particular not to advance any new loans to Russian and Belarusian banks, or submit offers to Russian and Belarusian counterparties. In February 2022, limits for Russian and Belarusian banks as well as country limits for Russia and Belarus were suspended, whereby any further cooperation with banks from these countries was frozen. Concurrently, in order to support Polish exporters in the financing and performance of concluded agreements, and to protect Polish exports from the effects of the changing international situation, the Bank has continued to implement the initiated financing, including related to documentary letters of credit, for which the Bank made binding offers concerning Ukraine, Russia and Belarus, as long as it does not breach the applicable regulations, especially those relating to sanctions. Until the start of military action in Ukraine by Russia, BGK financed investment projects in Ukraine, Russia and Belarus in the area of construction, agriculture and industry. Depending on the object of financing, the exposures are collateralised on the financed assets, most of all KUKE guarantees. The value of these exposures is steadily declining. For prudential reasons, when Russia initiated the military attack on Ukraine, the Bank immediately reclassified selected financing instruments in Ukraine, Russia and Belarus from Stage 1 to Stage 2 and this classification was maintained throughout 2023 and 2024. Decisions are made on a case-by-case basis to reclassify exposures to Stage 3 depending on the observed indications for reclassification.

The tables below show the Bank’s credit exposure to financing exports and projects undertaken by Polish businesses in Belarus and Ukraine.

· Loans and advances to customers and banks in Belarus and Ukraine at amortised cost, by sector and by stage

Loans and advances to customers and banks in Belarus and Ukraine at amortised cost, by sector and by stage, as at 31 December 2024 | Stage 1 | Stage 2 | Stage 3 | Total
Financial sector | 0 | 57 | 0 | 57
Non-financial sector | 0 | 121 | 282 | 403
Total gross carrying amount | 0 | 178 | 282 | 460
Allowances for expected credit losses | 0 | 0 | 11 | 11

Loans and advances to customers and banks in Belarus and Ukraine at amortised cost, by sector and by stage, as at 31 December 2023 | Stage 1 | Stage 2 | Stage 3 | Total
Financial sector | 1 | 114 | 0 | 115
Non-financial sector | 0 | 154 | 387 | 541
Total gross carrying amount | 1 | 268 | 387 | 656
Allowances for expected credit losses | 0 | 0 | 11 | 11

Depending on the object of financing, the exposures are collateralised on the financed assets or entirely with KUKE guarantees.

### 45.4. Financial assets subject to modification

The table below presents the gross carrying amount of financial assets that have been modified since initial recognition at a time when the loss allowance was measured at an amount equal to lifetime expected credit losses and for which the loss allowance has changed during the reporting period to an amount equal to 12-month expected credit losses.

Information on financial assets subject to modification that has not resulted in derecognition | 2024 | 2023
Financial assets subject to modification in a given period
Carrying amount at amortised cost before modification | 1,182 | 227
Gain/loss recognized on modification | 51 | 0
Financial assets subject to modification since initial recognition
Carrying amount of financial assets for which in the reporting period the Bank changed the manner of calculation of loss allowance – from lifetime to 12 months | 0 | 0

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

### 45.5. Concentration risk analysis

Concentration risk is the risk resulting from exposure to individual entities, entities with capital or organisational relations, entities operating in the same industry, economic sector or entities operating in the same geographical region, collateralised with the same type of collateral or by the same collateral provider, in the same currency, with the entities referred to in Art. 79 sec. 1 of the Banking Law, which may significantly affect the stability and security of the Bank's operations by the default on the obligation by a single entity, entities with capital or organisational links and by groups of entities where the probability of default depends on common factors.

The Bank controls the level of credit risk exposure:

§ jointly and broken down into own activities as well as related to the service of fund created, entrusted or transferred on the basis of separate acts,

§ for exposure concentration to one entity and/or entities related by capital or organisation,

§ by large exposures,

§ by individual industries,

§ separately by mortgage-backed exposures in line with the definition of Recommendation S of the PFSA,

§ by selected segments and products, such as financing of foreign expansion with KUKE insurance,

§ by currency or currency-indexed transactions,

§ by off-balance-sheet liabilities granted by the Bank (guarantees and letters of credit).

Risk of concentration of large exposures

The Bank applies regulatory concentration limits for large exposures resulting from Regulation (EU) No 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (CRR), the Banking Law and specific regulations included in the Act on BGK, the level of which is additionally limited by the resolution of the Bank’s Management Board on the maximum level of exposure to an individual customer or group of related customers as at the time of making a funding decision.

Utilisation of the concentration limit is assessed and monitored on a daily basis. If the concentration limit is exceeded, all parties involved in the lending and investment process are immediately notified of the fact.

The Bank’s adopted safe internal level of exposure to a single customer as at the end of 2024 was not exceeded. As at 31 December 2024, the level of large exposure concentration risk of the Bank's largest exposure (after taking into account the exemptions referred to in Art. 400 of Regulation 575/2013) to a single entity amounted to 23.0% of the Bank's Tier 1 capital (17.3% as at 31 December 2023).

Group’s exposure to the 20 largest non-bank customers
| 31 Dec 2024 | 31 Dec 2023
No. | Exposure | Share in the loan portfolio | Exposure | Share in the loan portfolio
1. | 8,663 | 15.0% | 7,792 | 15.0%
2. | 8,304 | 14.4% | 4,803 | 9.2%
3. | 6,526 | 11.3% | 4,617 | 8.9%
4. | 4,322 | 7.5% | 3,049 | 5.9%
5. | 3,868 | 6.7% | 2,883 | 5.6%
6. | 3,051 | 5.3% | 2,755 | 5.3%
7. | 2,804 | 4.9% | 2,626 | 5.1%
8. | 2,150 | 3.7% | 2,151 | 4.1%
9. | 2,074 | 3.6% | 1,964 | 3.8%
10. | 1,940 | 3.4% | 1,913 | 3.7%
11. | 1,846 | 3.2% | 1,771 | 3.4%
12. | 1,706 | 3.0% | 1,749 | 3.4%
13. | 1,498 | 2.6% | 1,404 | 2.7%
14. | 1,445 | 2.5% | 1,397 | 2.7%
15. | 1,400 | 2.4% | 1,325 | 2.6%
16. | 1,255 | 2.2% | 1,251 | 2.4%
17. | 1,236 | 2.1% | 1,215 | 2.3%
18. | 1,145 | 2.0% | 1,182 | 2.3%
19. | 1,103 | 1.9% | 1,110 | 2.1%
20. | 1,098 | 1.9% | 1,096 | 2.1%
Total | 57,434 | 99.6% | 48,053 | 92.6%

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Balance-sheet and off-balance-sheet credit exposure covers: loans, advances, purchased debts, promissory note discount, guarantees, debt securities, and derivative transaction limits. The amount of exposure is calculated for the purposes of external limits (large exposure concentration limits) without deductions. The data does not cover the exposure to the central government.

As at 31 December 2024, large exposure concentration risk for the Bank’s largest exposure (after taking into account exemptions) to a group of associated clients was 29.9% of the Bank’s eligible capital (22.5% as at 31 December 2023)

Group’s exposure to five largest non-bank groups
| 31 Dec 2024 | 31 Dec 2023
No. | Exposure | Share in the loan portfolio | Exposure | Share in the loan portfolio
1. | 11,444 | 19.9% | 8,325 | 16.0%
2. | 9,019 | 15.6% | 8,192 | 15.8%
3. | 8,704 | 15.1% | 6,237 | 12.0%
4. | 6,853 | 11.9% | 5,804 | 11.2%
5. | 4,327 | 7.5% | 5,019 | 9.7%
Total | 40,347 | 70.0% | 33,577 | 64.7%

Geographical concentration risk

Exposure concentration risk monitoring from the perspective of geographical areas is conducted on the base of the existing administrative division of the country, with separate monitoring of foreign exposures.

The Bank’s loan portfolio is highly concentrated in geographical terms – approximately 70% of the loan portfolio is concentrated in five provinces. However, such a high concentration follows from the exposure to large groups of entities whose head offices are located in large cities, e.g. in Warsaw, while their production plants are located in different regions of the country. This applies, inter alia, to entities from the power and fuel sectors. Due to the specific nature of the Bank’s clients and significant client concentration, the Bank does not set geographical limits.

Industry concentration risk

To ensure that the loan portfolio is secure and effective, the Bank manages industry concentration risk using a system of internal industry limits. Attribution of a given customer to an industry limit is based on customer classification into a given industry made and reviewed by the Bank’s employee based on information on the type of the customer’s business activity.

Concentration of exposures from the perspective of industries is monitored on a daily basis pursuant to the Bank’s procedures for the internal industry limits. If a given limit utilization is at least 85%, relevant measures are taken to prevent exceeding its maximum level.

The used tools and methods that support the monitoring of credit exposures and customers allow to react quickly if the quality of the portfolio or individual credit exposures deteriorate, and take remedial measures.

Concentration of exposures in national economy sectors (balance sheet exposure) | 31 Dec 2024 | 31 Dec 2023
Branch of industry | Amount of exposure | Total share in exposure | Amount of exposure | Total share in exposure
Public administration and defence, compulsory social security | 17,696 | 30.7% | 11,967 | 23.2%
Mining and quarrying | 6,163 | 10.7% | 2,289 | 4.4%
Production and supply of electricity, gas and steam | 4,915 | 8.5% | 6,793 | 13.1%
Construction | 4,883 | 8.5% | 2,707 | 5.2%
Transport, storage | 3,806 | 6.6% | 3,559 | 6.9%
Manufacturing | 3,261 | 5.7% | 4,270 | 8.2%
Professional, scientific and technical activities | 3,030 | 5.3% | 3,940 | 7.6%
Property management and administration | 2,385 | 4.1% | 5,191 | 10.0%
Financial and insurance activities | 1,643 | 2.9% | 3,546 | 6.8%
Human health services and social work activities | 620 | 1.1% | 1,831 | 3.5%
Other | 9,235 | 15.9% | 5,845 | 11.1%
Total | 57,637 | 100.0% | 51,938 | 100.0%

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The Bank applies industry limits to mitigate the risk related to financing customers operating in selected industries with a high level of credit risk and to avoid excessive levels of industry concentration.

The portfolio is dominated by public administration due to BGK’s close cooperation with the government and local governments. Another relatively large groups of exposures are the electricity, gas and water supply industry, transportation, storage and industrial processing industries. Mainly due to the fact that the Bank engages in funding ventures which are strategic from the point of view of the State Treasury, including in the sectors of energy, fuel and chemistry, and transport. Such ventures are most often implemented in the form of large investment projects.

Risk of currency concentration in the loan portfolio

The Bank monitors the currency structure of its loan portfolio and risk associated with individual portfolios on a regular basis. The prevailing currency in the portfolio is PLN (84.0%). Exposures in EUR and USD account for an aggregate of 15.8%. Exposures in CHF account for an insignificant portion of the Bank’s loan portfolio and chiefly include receivables from retail customers.

Credit risk concentration by currency | 31 Dec 2024 | 31 Dec 2023
PLN | 84.0% | 83.2%
Foreign currencies, including: | 16.0% | 16.8%
-EUR | 11.9% | 11.0%
-USD | 3.9% | 5.7%
-other | 0.2% | 0.1%
Total | 100.0% | 100.0%

Analysis of maximum credit risk exposure

The table below presents the maximum exposure to credit risk, by financial assets class.

Maximum exposure to credit risk excluding collaterals (by financial instruments class) | 31 Dec 2024 | 31 Dec 2023
Cash in Central Bank | 50,065 | 4,068
Amounts due from banks | 12,748 | 9,726
Derivative financial instruments | 1,171 | 1,460
Derivative hedging instruments | 60 | 85
Securities | 133,604 | 153,483
Reverse repurchase agreements | 22,178 | 5,269
Loans and advances to customers | 42,999 | 42,624
Other assets | 6,769 | 5,695
Total | 269,594 | 222,410

| 31 Dec 2024 | 31 Dec 2023
Maximum exposure to credit risk in connection with the provided guarantees | 33,844 | 31,183

The Bank holds a significant portfolio of guarantees granted mostly to non-financial entities, including enterprises.

### 45.6. Credit risk hedging

The main instrument used to reduce the credit risk is legal security of the Bank’s receivables. The Bank applies an internal procedure for the establishment and evaluation of legal securitty of receivables as at the inception of the transactions bearing credit risk and for monitoring the collateral during the transaction’s life.

The Bank uses the following instruments and methods to limit or reduce the credit risk to acceptable levels:

§ risk diversification,

§ risk hedging,

§ risk sharing,

§ risk compensation.

To mitigate the credit risk, when calculating the risk-weighted exposures in the Bank’s portfolio, the Bank accounts for the credit protection, in line with the internal procedures on legal protection of the Bank’s receivables.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Collateral policy

The amount and type of collateral depend on the evaluation of the credit risk related to an individual counterparty. The Bank follows specific guidelines on the acceptability and evaluation of each type of collateral.

Main types of collaterals:

§ for securities lending and reverse repo (buy sell back) − cash and securities,

§ for commercial loans − collateral in the form of mortgages and registered pledges on movables.

The Bank monitors the market value of collateral for each lending transaction and, if necessary, it demands additional collateral in line with the loan agreement.

Pursuant to the applicable policy, the Bank manages the seized collateral in an orderly manner. Any proceeds are used to reduce or repay overdue receivables. The Bank does not use seized collateral for business purposes.

The basis for calculating the recoverable amount of collaterals is the appraisal value verified by the Bank using the indicators adjusting the value of collaterals. Moreover, the fulfilment of formal and legal conditions for collateral acceptance is verified each time, as well as whether it is funded and liquid, and also its correlation to the economic and financial standing of the debtor. In the case of unfunded collaterals, the economic and financial standing of the collateral issuer is additionally examined.

The Bank monitors the legal securities of lending transactions on a periodical basis.

Collaterals and other forms of credit risk mitigation |  |
Fair value of the collateral | 31 Dec 2024 | 31 Dec 2023
Mortgages | 51,525 | 46,414
Pledges | 13,551 | 26,483
Guarantees and sureties, including: | 8,074 | 12,075
- bank guarantees | 5,131 | 5,644
- government guarantees | 1,938 | 5,181
- other guarantees and sureties | 1,005 | 1,250
Cash deposits | 479 | 988
Other | 9,054 | 13,071
Total | 82,683 | 99,031

Credit exposures are most often secured (at fair value) by mortgages, pledges over shares, equity interests and tangible assets, as well as guarantees and sureties. In terms of credit risk concentration, credit exposures secured by guarantees provided by the State Treasury (designated as government guarantees), bank guarantees and insurance with KUKE S.A. ensure the maximum risk reduction.

For credit exposures fully secured by deposit of a specific amount made in the Bank's account (pursuant to Art. 102 of the Banking Law), the Bank does not recognise the allowance for expected credit losses. The gross carrying amount of such exposures as at 31 December 2024 was PLN 2.0 million, with PLN 347.6 million recorded as at 31 December 2023.

Gross carrying amount of financial instruments for which the Bank has not recognised a loss allowance because of the collateral as at 31 December 2024 | Stage 1 | Stage 2 | Stage 3 | Total
Internal rating |  |  |  |
1–13 | 2 | 0 | 0 | 2
Total carrying amount | 2 | 0 | 0 | 2

Gross carrying amount of financial instruments for which the Bank has not recognised a loss allowance because of the collateral as at 31 December 2023 | Stage 1 | Stage 2 | Stage 3 | Total
Internal rating |  |  |  |
1–13 | 2 | 0 | 0 | 2
14–17 | 345 | 0 | 0 | 345
Total carrying amount | 347 | 0 | 0 | 347

### 45.7. Forbearance practices

The Bank applies the definition of forbearance to credit exposure which has been addressed with forbearance measures. The restructuring measures comprise concessions offered by the Bank to the borrower who experiences or will soon begin to experience difficulties with repayment of financial liabilities (financial distress).

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The following are treated as forbearance measures:

§ change in the terms and conditions of a contract underlying the credit exposure which has been classified as “non-performing” before the change or which would have been classified as “non-performing”, if it had not been changed,

§ change in the terms and conditions of a contract underlying the credit exposure consisting in a full or partial write-off on the exposure,

§ the Bank approves the use of embedded forbearance clauses for a borrower who is non-performing or who would be considered as non-performing without the use of those clauses,

§ repayment of the principal amount or interest on another credit exposure at the Bank by the borrower, if the exposure was at-risk at the time or around the time when the Bank applied the facility in the form of additional funding or would have been classified as at-risk if the facility had not been applied,

§ change leading to repayments resulting from utilisation of the collateral, if such change qualifies as a facilitation.

It is considered that the exposures are no longer forborne, if all the conditions presented below have been met:

§ the credit exposure is considered as “performing”, including if it has been reclassified from the “non-performing” category after an analysis of the financial condition of the borrower showed it no longer met the conditions to be considered as “non-performing”,

§ a minimum 2 year probation period has passed from the date the forborne exposure was considered as “performing”,

§ regular payments of interest and principal amount were made for at least 12 out of 24 months of the probation period,

§ as at the end of the probation period, none of the exposures with respect to the borrower was overdue by more than 30 days.

Forborne exposures as at 31 December 2024 | Stage 1 | Stage 2 | Stage 3 | POCI | Total
Loans and advances to customers at amortised cost, including: | 0 | 24 | 2,307 | 1 | 2,332
- financial sector | 0 | 0 | 0 | 0 | 0
- non-financial sector 0 | 0 | 24 | 2,286 | 1 | 2,311
- public sector | 0 | 0 | 21 | 0 | 21
Allowances for expected credit losses | 0 | 1 | 708 | 0 | 709
Carrying amount of loans and advances | 0 | 23 | 1,599 | 1 | 1,623
Receivables from debt instruments at gross amortised cost | 0 | 0 | 0 | 463 | 463
Allowances for expected credit losses | 0 | 0 | 0 | 2 | 2
Carrying amount of debt instruments | 0 | 0 | 0 | 461 | 461

Forborne exposures as at 31 December 2023 | Stage 1 | Stage 2 | Stage 3 | POCI | Total
Loans and advances to customers at amortised cost, including: | 2 | 14 | 1,301 | 1 | 1,318
- financial sector | 0 | 0 | 0 | 0 | 0
- non-financial sector 0 | 2 | 14 | 1,300 | 1 | 1,317
- public sector | 0 | 0 | 1 | 0 | 1
Allowances for expected credit losses | 0 | 0 | 751 | 0 | 751
Carrying amount of loans and advances | 2 | 14 | 550 | 1 | 567
Receivables from debt instruments at gross amortised cost | 0 | 0 | 0 | 0 | 0
Allowances for expected credit losses | 0 | 0 | 0 | 0 | 0
Carrying amount of debt instruments | 0 | 0 | 0 | 0 | 0

The largest group of forborne exposures comprises transactions with clients from the enterprise segment. The ratio of receivables past due by more than 90 days to total forborne exposures was 13.7% as at 31 December 2024 and 39.8% as at 31 December 2023. The decrease in the overdue rate is the result of timely servicing of restructuring agreements and total repayments.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

## 46. Managing liquidity risks

Definition

Liquidity risk is a defined threat of losing the ability to pay liabilities in a timely manner as a result of unfavourable changes in assets, liabilities and equity, off-balance-sheet transactions, maturity mismatch of current cash flows, and possible losses resulting from the foregoing.

The liquidity risk is also dealt with in the context of:

§ market (product) liquidity risk understood as a threat of losing the ability to exchange specific products on the market for cash, resulting in the need to incur financial losses on these products,

§ funding risk, understood as a threat of shortage of stable funding sources in mid- and long-term, resulting in actual or potential risk of default by the Bank in regard to financial liabilities such as payments and collaterals at their maturity in mid- and long-term, either in whole or involving unacceptable funding costs to be incurred,

§ liquidity concentration risk, understood as a threat of default in current liabilities due to dependence (lack of diversification) or overexposure to one entity or associate entities,

§ liquidity risk in individual currencies in which the Bank carries out its activities, understood as inability to fulfil the Bank’s liabilities in a given currency due to limitations in convertibility of currencies.

Management purpose

The purpose of liquidity risk management is to:

§ ensure and maintain the Bank’s ability to meet obligations related to both current and planned future liabilities, including costs of liquidity and return on equity,

§ prevent stress conditions,

§ define solutions which will enable the Bank to survive a potential crisis (contingency planning).

Risk identification and measurement

The Bank identifies internal and external sources of liquidity risk.

The adopted Bank’s liquidity risk measurement system includes the following methods:

§ liquidity ratios (both regulatory and internal), contractual and adjusted liquidity gap analysis, fund stability analyses, daily monitoring of the deposit base,

§ liquidity stress tests covering scenario analyses, sensitivity analyses, reserve tests and intraday liquidity stress tests.

Risk monitoring

The risk monitoring process involves a cyclical review of the values of limited parameters and analysis of the limit usage. Moreover, concentration of funding sources and impact of any increase in deposits on the Bank’s liquidity are also analysed.

In order to reduce the risk of concentration of funding sources, the Bank monitors and reports concentration on an ongoing basis:

§ by category of liabilities and clients entity category,

§ detailing the exposures to the largest clients.

In addition, the concentration of liabilities is taken into account in the model for estimating the stability of liabilities and as a risk factor as part of liquidity risk stress tests.

In the area of liquidity risk, cyclical forecasts of liquidity risk level are also made. The forecasts take into account primarily the levels of selected liquidity risk measures in normal conditions of the Bank’s operations and in selected stress test scenarios.

Risk control

In order to reduce risk and secure liquidity, the Bank applies the following measures:

§ transactions on the money market, including deposit transactions, reverse repo, repo, NBP money market bills, treasury bills, bonds, and other instruments,

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

§ maintaining a portfolio of liquid securities,

§ daily monitoring of the money balance and ensuring financing possibilities from the NBP,

§ facilities securing liquidity of the Bank,

§ own bond issuances and deposit level management to optimise the structure of funding sources,

§ emergency plans in case of emergency situations of reduced or endangered liquidity.

Liquidity risk management involves a system of liquidity risk limits adjusted to the scale and complexity of the Bank’s operations (external and internal limits, in particular an acceptable level of liquidity risk and strategic limits The system of limits is complemented by thresholds values and analysis thresholds, i.e. a group of early warning indicators which allow to identify adverse trends that may affect the Bank’s liquidity in a timely manner.

Additionally, pursuant to Art. 3 sec. 3 of the Act on Bank Gospodarstwa Krajowego, the minister competent for public finance provides funds to meet liquidity standards.

Reporting of risk, together with assessment of the effectiveness of the adopted risk mitigation measures

The Bank prepares current reports on liquidity risk presenting utilisation of regulatory liquidity limits and internal liquidity limits, balance of deposit at the Bank, external funds stability analysis, results of stress tests, and periodic simulations of liquidity measures and long-term liquidity analysis.

Quantitative information

In 2024, supervisory liquidity measures specified 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 (CRR), as amended, as well as internal liquidity limits standards, were not breached.

In May 2020, the European Banking Authority (EBA) published, in a single rulebook Q&A, its position regarding the moment of recognition of annual and interim profits in the capital adequacy data. According to this position, once the Bank has formally met the criteria for including its profit for a given period in the Tier 1 capital, this profit should be included retrospectively – own funds should be adjusted accordingly as at the date of the profit. Therefore, comparative information on liquidity risk as at 31 December 2023 was presented with profit for previous years included in own funds retrospectively.

Regulatory liquidity measures

Regulatory liquidity measures are presented in the table below.

Details | Limit | Information including flow funds | Information excluding flow funds
31 Dec 2024 | 31 Dec 2023 | 31 Dec 2024 | 31 Dec 2023
LCR – Liquidity coverage ratio | 100%* | 179% | 157% | 199% | 168%
NSFR – Net Stable Funding Ratio | 100%* | 167% | 163% | 232% | 184%
* The indicators are specified on an individual basis as the CRR does not require prudential consolidation.

The change in liquidity measures is mainly related to an increase in long-term funding sources, an increase in the Bank's lending activities, an increase in capital investments and an increase in off-balance sheet liabilities granted.

Liquidity gap

The Group’s adjusted liquidity gap is presented below. In particular, the following are adjusted: deposit values (based on of estimated core deposits), overdraft loans (based on the ongoing overdraft loans exposure), loans (based on impairment allowances and adjustments), liquid securities (presented in recovery values achievable in specific time periods), funds on deposit at the Payment System Department (PSD) of the NBP taking into account the obligatory reserve and the value of credit and guarantee off-balance sheet liabilities granted (in the scope of estimated amounts and deadlines).

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The Group’s adjusted liquidity gap
|  | up to 1month | 1 – 3 months | 3 – 6 months | 6 months – 1 year | 1 – 5 years | over 5 years
31 Dec 2024 | Gap | 76,509 | -3,516 | -2,870 | 59 | -65,953 | -23,660
Cumulative gap | 76,509 | 72,993 | 70,123 | 70,182 | 4,229 | -19,431
31 Dec 2023 | Gap | 56,654 | -3,610 | -2,131 | 2,865 | -41,233 | -28,256
Cumulative gap | 56,654 | 53,044 | 50,913 | 53,778 | 12,545 | -15,711

Adjusted cumulative liquidity gap is positive in the horizon of up to 5 years. The decrease in the adjusted liquidity gap in the horizon of over 12 months is mainly due to the inclusion of core deposits of more than a year. The size of the negative adjusted cumulative liquidity gap in a horizon of more than 5 years is mainly due to the level of contingent off-balance sheet liabilities granted.

Sources of funding structure

The Bank has diversified sources of funding, including deposits from customers, funds from issues of own bonds, and loans granted by international financial institutions.

Liabilities structure by contractual maturity is presented below. The amounts include cash flows from the principal amount and interest (if applicable) for the entire financing period. For off-balance-sheet liabilities, exposures are presented by contractual maturity.

Liabilities of the Group as at 31 December 2024
|  | up to 1 month | 1 – 3 months | 3 – 6 months | 6 months – 1 year | 1 – 5 years | over 5 years | Total
Balance sheet liabilities | Amounts due to banks | 4,901 | 75 | 114 | 179 | 990 | 2,288 | 8,547
Liabilities from customers | 188,599 | 15,858 | 3,522 | 1,099 | 68 | 0 | 209,146
Own issues | 0 | 0 | 43 | 62 | 1,975 | 0 | 2,080
Lease liabilities | 9 | 2 | 7 | 16 | 62 | 8 | 104
Total | 193,509 | 15,935 | 3,686 | 1,356 | 3,095 | 2,296 | 219,877
Off-balance-sheet liabilities granted | Financing commitments | 76,476 | 88 | 222 | 1,233 | 7,743 | 14,889 | 100,651
Guarantee liabilities | 1,351 | 1,341 | 550 | 5,758 | 23,836 | 1,008 | 33,844
Total | 77,827 | 1,429 | 772 | 6,991 | 31,579 | 15,897 | 134,495

Liabilities of the Group as at 31 December 2023
|  | up to 1 month | 1 – 3 months | 3 – 6 months | 6 months – 1 year | 1 – 5 years | over 5 years | Total
Balance sheet liabilities | Amounts due to banks | 3,613 | 167 | 160 | 282 | 1,175 | 2,336 | 7,733
Liabilities from customers | 146,291 | 15,858 | 2,741 | 1,512 | 34 | 0 | 166,436
Own issues | 0 | 0 | 43 | 62 | 2,050 | 0 | 2,155
Lease liabilities | 6 | 2 | 8 | 15 | 24 | 8 | 63
Total | 149,910 | 16,027 | 2,952 | 1,871 | 3,283 | 2,344 | 176,387
Off-balance-sheet liabilities granted | Financing commitments | 65,259 | 787 | 814 | 2,679 | 7,422 | 9,213 | 86,174
Guarantee liabilities | 4,243 | 825 | 1,044 | 4,793 | 19,288 | 990 | 31,183
Total | 69,502 | 1,612 | 1,858 | 7,472 | 26,710 | 10,203 | 117,357

Cash flows from derivatives

Derivatives used by the Bank include IRSs, FRAs, FX Swaps, FX Forwards, CIRSs, OIS and FX Options.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Undiscounted cash flows under derivative contracts as at 31 December 2024 and 31 December 2023 are presented below.

Cash flows from derivatives
|  | up to 1 month | 1 – 3 months | 3 – 6 months | 6 months – 1 year | 1 – 5 years | over 5 years | Total
31 Dec 2024 | Inflows | 18,378 | 6,497 | 4,739 | 4,005 | 17,152 | 1,422 | 52,193
Outflows | -18,367 | -6,366 | -4,826 | -4,098 | -17,023 | -1,380 | -52,060
31 Dec 2023 | Inflows | 13,518 | 5,842 | 2,874 | 5,766 | 16,894 | 708 | 45,602
Outflows | -13,227 | -5,681 | -2,789 | -5,632 | -16,714 | -670 | -44,713

## 47. Market risk management

### 47.1. Management of interest rate and credit spread risk in the banking book

Definition

The Bank identifies the following risks: interest rate in the banking book (IRRBB), credit spread risk in the banking book (CSRBB) and interest rate risk in the trading book.

Interest rate risk in the trading book is defined as a threat of possible deterioration in the value of the Bank’s financial instruments portfolio or the Bank’s Net gains (losses) in the trading book due to adverse fluctuations in interest rates, yields or prices of debt instruments.

Interest rate risk in the banking book (IRRBB) is the current and future risk of adverse impact on the economic value of the institution’s capital or net interest income, taking into account, where appropriate, changes in market value that result from adverse changes in interest rates affecting interest rate sensitive instruments.

Credit spread risk in the banking book (CSRBB) is the risk arising from changes in the market price for credit risk, liquidity and potentially other features of instruments burdened with credit-risk that are not included in other existing prudential frameworks, such as IRRBB or expected credit/(jump-to-) default risk.

Management purpose

The purpose of risk management within the banking portfolio is to minimise the risk of negative deviation of the Net gains (losses) from the Bank's financial and material plan and the risk of unfavourable change in the net asset value by properly shaping the portfolio structure, within the acceptable level of market risk.

The goal of risk management in relation to the trading portfolio is generation of financial benefits by entering into dealer transactions in the interbank market and hedging portfolio risk within the acceptable level of market risk.

Risk identification and measurement

The measurement of interest rate risk at BGK includes, among other things: net present value (NPV), duration, sensitivity measures of financial instruments present value to changes in interest rates (basis point value – BPV, sensitivity of economic value – EV and EVE), net interest income sensitivity to changes in interest rates (NII), and net interest income sensitivity to changes in interest rates with changes in market value (NII + FV) taken into account, repricing gap, value at risk (VaR), and stress tests measures. The Bank also prepares lists of financial instruments using a given reference rate as a benchmark (basis risk) and sets levels of termination of term deposits and loan prepayments (customer option risk). The measurement of credit spread risk in the banking book (CSRBB) includes a measure of net interest income sensitivity to changes in credit spreads, with market value changes taken into account, sensitivity of the economic value of the banking book to changes in credit spreads, and stress test analysis.

VaR is calculated for the interest rate risk assuming 99% confidence level and for 250 observation time series. The model is back-tested by comparing the model results with revaluation results.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Risk monitoring

Risk monitoring process primarily involves regular review of risk measure levels and analysis of the utilisation of limits and threshold values.

Risk control

An important element of interest rate risk management is the Bank’s system of limits, which involve regulatory limits specified by law and internal limits. Internal limits are subject to risk appetite determined by the Supervisory Board and strategic limits set by the Management Board of the Bank. The following limits apply, among others: regulatory limits for the supervisory outliers test for EVE and NII measures, limit for the economic sensitivity of the banking book, BPV limits for the banking and trading book, limits for the sensitivity of the net interest income taking into account changes in the market value for the banking book, and loss limits. In connection with the recognition of CSRBB risk as significant, the Bank introduced CSRBB risk limits for economic value sensitivity measure and net interest income sensitivity measure with market value changes taken into account. The Bank applies interest rate and credit spread risk in the banking book management procedures.

Risk reporting

Reports are submitted on a daily, monthly, quarterly, semi-annual and annual basis – each report is addressed to recipients at an appropriate level.

Quantitative information

Key market risk measures are presented below. The measures do not include flow funds.

Banking book

The table below presents BPV results of the Bank’s banking and trading book as well as on the sensitivity of net interest income, with changes in market value taken into account, and the sensitivity of the economic value of the banking book to interest rate change by 2 pp.

Selected measures of interest rate risk in the banking book | 31 Dec 2024 | 31 Dec 2023
BPV |  | -1 | -1
Sensitivity of net interest income, with changes in market value taken into account, to interest rate change by: | -2 pp | -516 | -453
+2 pp | 530 | 439
Sensitivity of economic value of the banking book to interest rate change by: | -2 pp | 597 | 544
+2 pp | -597 | -544

An increase in net interest income sensitivity as a result of shortening of repricing dates for loans granted and the decrease of the market value change component (taking into account the market value forecast). The increase in the sensitivity of the economic value in the banking book mainly caused by higher sensitivity of the Treasury debt securities.

The Bank has continued modelling and hedging its own capital base in order to stabilise long-term interest income from an investment of a certain portion of the capital in assets bearing interest based on current market interest rates. Capital hedging is realized in accordance with the hedging plan with external IRS transactions using cash flow hedge accounting and the Treasury bonds fixed interest portfolio.

In 2024, the Bank began reporting the mandatory reporting on interest rate risk in the banking portfolio (IRRBB) to the National Bank of Poland (NBP) and adapted the interest rate risk management system to the new recommendation G of the Polish Financial Supervision Authority.

The Bank calculates the supervisory outlier test (SOT) for the measures: sensitivity of economic value of capital (SOT EVE) and sensitivity of net interest income in the banking portfolio (SOT NII).

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The table below presents the change in the economic value of equity (EVE) and in the net interest income (NII) under supervisory shock scenarios for interest rate risk in the banking book.

Results of the supervisory outlier test (SOT) |  |  |  |
Supervisory scenarios | SOT EVE | SOT NII
| 31 Dec 2024 | 31 Dec 2023 | 31 Dec 2024 | 31 Dec 2023
Parallel shock up | -1,493 | -1,281 | 421 | 404
Parallel shock down | 829 | 642 | -847 | -842
Steepener shock (short rates down and long rates up) | 45 | 62 |  |
Flattener shock (short rates up and long rates down) | -384 | -369 |  |
Short rates shock up | -883 | -783 |  |
Short rates shock down | 447 | 391 |  |

The SOT (supervisory outlier test) results for the sensitivity of the economic value of equity (SOT EVE) as well as the results for the sensitivity of the net interest income in the banking book (SOT NII) in the worst-case scenarios were at a safe level and did not exceed the supervisory limits.

The table below presents the repricing gap for the banking portfolio.

Revaluation gap of the banking portfolio taking into account the modelled own capital
|  | up to 1 month | 1 – 3 months | 3 – 6 months | 6 months – 1 year | 1 – 5 years | over 5 years | Total
31 Dec 2024 | Gap | 2,064 | 7,342 | 15,672 | 345 | 5,390 | 643 | 31,456
Cumulative gap | 2,064 | 9,406 | 25,078 | 25,423 | 30,813 | 31,456 |
31 Dec 2023 | Gap | 14,335 | -743 | 12,999 | 817 | 4,998 | 13 | 32,419
Cumulative gap | 14,335 | 13,592 | 26,591 | 27,408 | 32,406 | 32,419 |

Decrease in cumulative gap up to 1 months compared to the end of the previous year was caused by, among other things, by a decrease in the balance of money market bills.

Trading book

The table below presents VaR for interest rate risk of the trading book at 99% confidence level and 1 business day time horizon.

VaR for interest rate risk of the trading book | Date | As at | Average value* | Minimum value* | Maximum value*
VaR 1D 99% | 31 Dec 2024 | 2 | 1 | 1 | 3
31 Dec 2023 | 3 | 6 | 3 | 10
BPV | 31 Dec 2024 | -0.03 | - | - | -
31 Dec 2023 | -0.03 | - | - | -
*Average, minimum and maximum value in the reporting period ending at the date specified.

Relative to the previous year end, at the end of 2024 VaR dropped due to lower volatility of interest rates in 2024.

In 2024, the Group adapted the interest rate risk management system in the trading portfolio to the new recommendation G of the Polish Financial Supervision Authority.

### 47.2. Foreign exchange risk management

Definition

Foreign exchange risk is defined as a threat of possible deterioration in the value of the Bank’s financial instruments portfolio or Group’s financial result due to adverse changes in currency exchange rates.

Management purpose

The purpose of foreign exchange risk management is to reduce the risk of losses as a result of changes in market exchange rates by management of the Bank’s currency position.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Risk identification and measurement

The Bank identifies internal and external sources of foreign exchange risk.

The measurement of foreign exchange risk at BGK covers, among other things: currency positions, value at risk (VaR), and stress tests.

VaR is calculated for the assumed 99% confidence level and for 250 observation time series. The model is back-tested by comparing the model results with revaluation and actual results.

Risk monitoring

Risk monitoring process involves, inter alia, regular review of risk measure levels and analysis of the limit utilisation.

Risk control

The Bank applies the following FX position limits: the Bank’s total currency position limit and a currency position limit for the trading book – both are subject to risk appetite determined by the Supervisory Board. Loss limits are also applied. The Bank applies foreign exchange risk management procedures.

Risk reporting

Reports are submitted on a daily, monthly, quarterly, semi-annual and annual basis – each report is addressed to recipients at an appropriate level.

Quantitative information

The table below presents the Bank’s total currency position and sensitivity of securities at fair value through other comprehensive income (FVOCI) to exchange rate change by 20%.

Selected foreign exchange risk measures of the Bank | 31 Dec 2024 | 31 Dec 2023
Total foreign currency position | 84 | 54
Sensitivity of securities at FVOCI to exchange rate change by 20% | -308 | -668

The sensitivity of securities at FVOCI to exchange rate change by 20% decreased due to the decrease in the value of this portfolio in 2024.

The table below presents VaR for foreign exchange risk at 99% confidence level in a horizon of 1 business day.

VaR for foreign exchange risk of the Bank | Date | As at | Average value* | Minimum value* | Maximum value*
VaR 1D 99% | 31 Dec 2024 | 0.56 | 0.72 | 0.13 | 2.72
31 Dec 2023 | 0.45 | 0.62 | 0.20 | 1.26
*Average, minimum and maximum value in the reporting period ending at the specified date.

Compared to the previous year, as at the end of 2024 VaR increased as a result of higher total currency position.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The tables below present the Bank’s exposure to foreign exchange risk as at 31 December 2024 and 31 December 2023. The tables below present the Bank’s assets and liabilities by carrying amount and by currency.

Currency structure | Currency translation to PLN as at 31 December 2024
PLN | EUR | USD | CHF | Other | Total
Cash and balances with the Central Bank | 50,055 | 10 | 0 | 0 | 0 | 50,065
Amounts due from banks | 526 | 9,298 | 2,803 | 99 | 22 | 12,748
Derivative financial instruments | 990 | 135 | 46 | 0 | 0 | 1,171
Derivative hedging instruments | 60 | 0 | 0 | 0 | 0 | 60
Securities | 123,784 | 9,199 | 621 | 0 | 0 | 133,604
Reverse repurchase agreements | 13,186 | 8,992 | 0 | 0 | 0 | 22,178
Loans and advances to customers | 36,148 | 5,099 | 1,664 | 6 | 82 | 42,999
Investments in associates | 4,225 | 2,401 | 14 | 0 | 0 | 6,640
Intangible assets | 214 | 0 | 0 | 0 | 0 | 214
Property, plant and equipment | 214 | 0 | 0 | 0 | 0 | 214
Right-of-use assets | 104 | 0 | 0 | 0 | 0 | 104
Investment property | 16 | 0 | 0 | 0 | 0 | 16
Deferred income tax assets | 125 | 0 | 0 | 0 | 0 | 125
Other assets | 117 | 12 | 0 | 0 | 0 | 129
Total assets | 229,764 | 35,146 | 5,148 | 105 | 104 | 270,267
Amounts due to banks | 2,489 | 1,085 | 359 | 45 | 0 | 3,978
Derivative financial instruments | 1,186 | 117 | 44 | 0 | 0 | 1,347
Derivative hedging instruments | 11 | 0 | 0 | 0 | 0 | 11
Liabilities from customers | 189,631 | 11,812 | 2,271 | 14 | 24 | 203,752
Repurchase agreements | 8,417 | 0 | 0 | 0 | 0 | 8,417
Debt securities issued | 1,287 | 535 | 0 | 0 | 0 | 1,822
Lease liabilities | 28 | 76 | 0 | 0 | 0 | 104
Other liabilities | 1,841 | 5,217 | 534 | 0 | 1 | 7,593
Current tax liabilities | 339 | 0 | 0 | 0 | 0 | 339
Provisions | 586 | 51 | 24 | 0 | 12 | 673
Total liabilities | 205,815 | 18,893 | 3,232 | 59 | 37 | 228,036

Currency structure | Currency translation to PLN as at 31 December 2023
PLN | EUR | USD | CHF | Other | Total
Cash and balances with the Central Bank | 4,059 | 9 | 0 | 0 | 0 | 4,068
Amounts due from banks | 210 | 4,804 | 4,594 | 50 | 68 | 9,726
Derivative financial instruments | 1,261 | 151 | 48 | 0 | 0 | 1,460
Derivative hedging instruments | 85 | 0 | 0 | 0 | 0 | 85
Securities | 142,353 | 9,734 | 1,396 | 0 | 0 | 153,483
Reverse repurchase agreements | 5,269 | 0 | 0 | 0 | 0 | 5,269
Loans and advances to customers | 35,365 | 4,806 | 2,401 | 11 | 41 | 42,624
Investments in associates | 2,858 | 2,731 | 11 | 0 | 0 | 5,600
Intangible assets | 194 | 0 | 0 | 0 | 0 | 194
Property, plant and equipment | 185 | 0 | 0 | 0 | 0 | 185
Right-of-use assets | 63 | 0 | 0 | 0 | 0 | 63
Investment property | 18 | 0 | 0 | 0 | 0 | 18
Deferred income tax assets | 129 | 0 | 0 | 0 | 0 | 129
Other assets | 95 | 0 | 0 | 0 | 0 | 95
Total assets | 192,144 | 22,235 | 8,450 | 61 | 109 | 222,999
Amounts due to banks | 2,686 | 1,078 | 695 | 0 | 0 | 4,459
Derivative financial instruments | 613 | 141 | 43 | 0 | 0 | 797
Liabilities from customers | 150,196 | 7,880 | 3,462 | 18 | 26 | 161,582
Repurchase agreements | 6,436 | 0 | 0 | 0 | 0 | 6,436
Debt securities issued | 1,286 | 545 | 0 | 0 | 0 | 1,831
Lease liabilities | 25 | 38 | 0 | 0 | 0 | 63
Other liabilities | 2,116 | 1,723 | 2,564 | 0 | 0 | 6,403
Current tax liabilities | 574 | 0 | 0 | 0 | 0 | 574
Provisions | 636 | 81 | 22 | 3 | 0 | 742
Total liabilities | 164,568 | 11,486 | 6,786 | 21 | 26 | 182,887

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

### 47.3. Equity price risk management

Definition

The equity price risk is defined as a threat of possible deterioration in the value of the Bank’s portfolio or financial result due to adverse changes in equity prices, in particular investment certificates of funds and shares.

Management purpose

The purpose of equity price risk management is to reduce the risk of losses as a result of changes in equity prices by proper equity investment activities management.

Risk identification and measurement

The Bank identifies internal and external sources of equity price risk.

The measurement of equity price risk at BGK includes: share and investment certificate positions, value at risk (VaR), and stress tests.

VaR is calculated for the assumed 99% confidence level and for 250 observation time series. The model is back-tested by comparing the model results with revaluation and actual results.

Risk monitoring

Risk monitoring process chiefly involves regular review of risk measure levels and analysis of the limit utilisation.

Risk control

The Bank’s equity investments are subject to limits. The Bank applies equity price risk management procedures.

Risk reporting

Reports are submitted on a daily, monthly, quarterly, semi-annual and annual basis – each report is addressed to recipients at an appropriate level.

Quantitative information

The table below presents VaR at 99% confidence level in a horizon of 10 business days calculated for prices of listed shares.

VaR for listed share price risk of the Bank | Date | As at | Average value* | Minimum value* | Maximum value*
VaR 10D 99% | 31 Dec 2024 | 239 | 210 | 154 | 252
31 Dec 2023 | 161 | 153 | 109 | 200
*Average, minimum and maximum value in the reporting period ending at the specified date.

Compared to the previous year, VaR increased in 2024 as a result of a higher share portfolio value. The value of the share portfolio increased by PLN 229 million, mainly as a result of a rise in the price of PKO BP S.A. shares. In addition, in 2024 relative to 2023 there was an increase in exposure to investment funds as a result of BGK's contributions to funds.

### 47.4. Interest rate benchmark reform

Legal environment

A standard on the provision of benchmarks is applicable in the European Union, legal basis of which is the Regulation (EU) 2016/1011, of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds (“BMR”), which among other things: specifies the principles of provision and application of benchmarks, defines control mechanisms applicable to the provision of benchmarks, introduces a requirement to determine benchmarks using transaction-based data as a priority.

Status of NWG’s work on the WIBOR reform

The Steering Committee of the National Working Group on Benchmark Reform (NWG), established in connection with the benchmark reform in Poland in September 2022, on 29 March 2024 decided to start the process of reviewing and analyzing Risk Free Rate (RFR) indicators alternative to the WIBOR. This review was aimed at verifying the decision of the NGR Steering Committee made in September 2022 on the basis of a wider range of analyses and market information. This process included, among other things, two rounds of public consultations: from 24 May to 1 July (first round) and from 4 to 31 October (additional round). On December 6, 2024, the NWG Steering Committee decided to select an index proposal with the technical name WIRF- as the target interest rate benchmark to replace WIBOR – thus modifying its earlier decision to choose WIRON. WIRF- is based on unsecured O/N deposits (overnight) concluded by panellists with credit institutions and financial institutions, i.e. without large enterprises and the so-called other financial institutions. The administrator of the WIRF - within the meaning of the BMR will be GPW Benchmark S.A. – a company registered with the European Securities and Markets Authority (ESMA). After reviewing the opinions on legal, market and marketing aspects, the NGR Steering

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Committee decided on January 24, 2025 to select the target name POLSTR (Polish Short Term Rate) for the selected index proposal. The next step of the NGR Steering Committee will be to update the so-called WIBOR roadmap, i.e. a schedule of activities aimed at replacing WIBOR with a new indicator in accordance with the BMR. There is no change to the deadline for completing the reform, which is extended to the end of 2027.

Adaptation by the Bank

Due to the decision made at the beginning of 2024 to start reviewing indicators alternative to WIBOR, work on the Bank's adaptation to support products based on WIRON has been suspended. The resumption of these works – already in terms of the newly selected POLSTR- index – took place at the beginning of 2025, and their course will reflect the assumptions of the updated WIBOR roadmap.

The Bank’s current portfolio

Summary of items subject to the WIBOR reform by type of base rate and product group, as at 31 December 2024 (PLN thousand).

31 Dec 2024 | Assets | Liabilities | Derivative financial instruments – nominal amount
Type of rate | Loans advanced | Debt securities | Loans incurred | Other deposits | Current accounts | Issues | Call | Put
WIBID/WIBOR ON | 45,344 | 0 | 0 | 0 | 4,316,682 | 0 | 0 | 0
1M WIBID/WIBOR | 16,358,257 | 12,061 | 0 | 5,921 | 17,533,714 | 0 | 107,000 | 150,259
3M WIBID/WIBOR | 12,623,748 | 1,450,132 | 1,969,272 | 1,175 | 5,483,815 | 0 | 4,468,692 | 6,142,630
6M WIBID/WIBOR | 4,195,161 | 12,251,880 | 0 | 400 | 0 | 1,288,800 | 5,753,400 | 5,947,976
1Y WIBID/WIBOR | 0 | 14,379 | 0 | 944 | 0 | 0 | 0 | 0

Hedge accounting

As at 31 December 2023, the Bank had five active relationships as part of its strategy to hedge cash flow volatility. In these relationships, the hedged item consists of loans denominated in PLN and based on 3M WIBOR, and the hedging derivative is an interest rate swap (IRS) also based on3M WIBOR. A detailed description of the maintained hedging relationships is presented in Note 18.

Within the hedging relationships maintained by the Bank, the only benchmark is WIBOR. On the basis of the amendments to the International Accounting Standards Board (IASB) issued by the International Financial Reporting Standards (IFRS), the Bank does not perceive any risk of termination of existing hedging relationships as a result of the implementation of the WIBOR reform. However, the non-homogenous conversion of loans included in the hedged item versus the conversion of hedging IRS transactions may result in a temporary increase in ineffectiveness, which the Bank believes will not adversely affect meeting the tests of effectiveness of active relationships.

## 48. Operational risk management

Definition

Operational risk is defined as the possibility of loss resulting from inadequate or unreliable internal procedures, human resources and systems or from external events. It includes, but is not limited to, legal risk, model risk, or information and communication technology (ICT) risk. Operational risk does not include reputational risk and strategic risk. The Bank also takes into account environmental, social and governance risk factors (ESG risk factors) in its operational risk management.

The operational risk management process covers all organisational units of BGK and its subsidiaries. ESG risk factors are taken into account. In the process of the operational risk management new, existing and modified products, processes and systems are assessed, and it takes into account both internal factors (such as the organisational structure, business profile, IT systems used, client profile, client complaints, HR quality, organisational changes and employee turnover) and external factors.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The Bank manages operational risk through:

§ the function of risk partner, covering operational risk, compliance risk and reputational risk,

§ a process-based approach to the assessment of operational risk (operational risk map),

§ indicators of operational risk (KRI/RI), a centralized database of all recommendations,

§ methodology for assessing third-party operational risk related to: financial intermediaries/financing partners, outsourcing service providers and ICT service providers,

§ assessment of risk related to projects and outsourcing agreements,

§ additional risk assessment process for the bank's own product group.

Risk identification and measurement

Operational risk is identified by collecting information from operational risk data sources, which can be either internal (including operational events, security incidents reported, customer complaints, risk assessment sheets) or external (operational risk events databases of the Polish Bank Association and external analysis).

Potential risk is determined based on risk self-assessment of in the processes in active business lines of the Bank.

The actual risks are assessed using operational risk indicators and limits and the analysis of operational events, including estimations of the probability of loss entailing the need to recognise provisions for future losses.

The purpose of measuring operational risk is to determine the overall level of operational risk. The overall assessment of the level of operational risk consists of qualitative and quantitative data from the tools used in the operational risk management process. When measuring operational risk, we determine the scale of threats related to operational risk by using pre-determined risk measurements. We monitor operational risk indicators (KRI/RI), calculate the capital requirement – using the BIA method, perform stress tests, determine internal capital, assess third-party risk related to: financial intermediaries/financing partners, outsourcing contractors, risk related to projects and outsourcing agreements. We identify and assess the ESG risk embedded in the operational risk – in the process of operational risk self-assessment, as well as in outsourcing and non-outsourcing contracts, material contracts and projects. We also designate internal capital for ESG risk embedded in operational risk.

The applied risk measures take into account the specificity of operational risk occurring in the Bank.

Risk control

The Bank regularly monitors the level of operational risk and efficiency as well as timeliness of activities aimed at reducing or transferring operational risk. Operational risk control involves setting operational risk limits adjusted to the Bank's scale and operations, including risk appetite, operational risk indicators with threshold values and stress tests.

To reduce the impact of operational events, the Bank applies risk mitigants and implements various kinds of preventive actions, such as:

§ cyclical training for employees,

§ BCP emergency plans,

§ risk transfer, including outsourcing and insurance coverage,

§ other safeguards (legal, organisational and technical).

Risk monitoring

The Bank regularly monitors:

§ operational events and their effects,

§ use of the acceptable level of operational risk and loss limits,

§ indicators of operational risk (KRI) for warning and critical values,

§ outcome of operational risk self-assessment,

§ operational risk requirement required for own funds under the BIA,

§ stress test results,

§ efficiency and timeliness of activities aimed at reducing operational risk.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Risk reporting

Information on operational risk for the Bank and its subsidiaries is reported on a regular basis to executive management, the Bank Operational Risk and Internal Control Committee, the Bank’s Management Board, the Bank’s Supervisory Board and the Risk Committee. The process includes information on the risk profile, identification of possible threats, and information on the measures adopted. Reports are prepared on an ad hoc basis that present significant operational events. The following reports are periodically prepared, containing information on individual methods of measuring operational risk, i.e. analysis of the internal event database, analysis of losses in the external database, key operational risk indicators, analysis of the amount of provisions for operational risk, operational risk map, periodic assessment of risk related to outsourcing agreements and projects, assessment of risk of individual financial intermediaries, results of stress tests, control function, report on recommendations, report on the activities of BORC.

In 2023, the operational risk increased, but the amount of risk taken as part of the risk appetite remained low.

## 49. Other risks

### 49.1. Managing reputational risk

Definition

Reputational risk is the risk of negative perception of BGK by its stakeholders

and public opinion. Reputational risk is ancillary in nature and is conditional on the occurrence of other risks arising from the core business of the Bank.

The goal of the reputational risk management is the protection of the Bank’s brand image and reduction of losses resulting from any damage to the Bank’s reputation and of the probability of occurrence of such a risk.

Risk identification and assessment

Reputational risk identification consists in identifying its sources that arise from the ongoing and planned activities of the Bank or failure to perform certain activities by the Bank. The risk is identified ex ante, i.e. before the occurrence of a specific event, and ex post, i.e. after its occurrence, and the risk identification covers information from both external and internal sources used in particular in the analysis of events related to operational risk and compliance risk.

Risk identification is carried out as part of processes in place at the Bank (including product development, publication of marketing and advertising materials, procurement procedures, sponsorship, outsourcing and sub-outsourcing) and during establishment and maintenance of business relations by the Bank. As part of risk identification, we take into account ESG factors and greenwashing issues.

Assessment of the reputational risk involves determination of risk occurring at the Bank to apply appropriate safeguards (reduction techniques). The Bank makes a periodic risk assessment and assesses risk in relation to its business relations, identified cases of non-compliance, operational events and image-building materials related to the Bank.

The Bank assesses ESG risk embedded in the reputational risk as part of its annual reputational risk assessment.

Risk control

To reduce risk, we apply risk control mechanisms and we implement various kinds of preventive actions, such as:

§ approval of marketing materials and materials published on the Bank’s website,

§ issuing opinions on internal regulations regarding new and modified products, projects and processes,

§ cyclical training for employees, including on greenwashing,

§ periodic review of internal regulations in terms of reputational risk management,

§ setting limits for reputational risk strategic limit and a limit based on qualitative measures, taking into account the specific nature and scale of operations, the acceptable overall level of risk and frequency of occurrence of risk situations.

As part of risk monitoring, the Bank set a strategic limit for reputational risk and a limit based on qualitative measures, taking into account the specific nature and scale of operations. The Bank set an acceptable level of reputational risk (risk appetite). In 2024, there was no excess of appetite for reputational risk (understood as the total acceptable risk that the Bank is willing to take in its current operations).

Risk monitoring

Monitoring of the reputational risk size and profile after applying risk control mechanisms is carried out on the basis of information obtained from sources used to identify risk, in particular:

§ information obtained during ongoing verification,

§ results of testing of implementation and observance of risk control mechanisms.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Risk reporting

Periodic reporting on reputational risk is carried out together with compliance risk reporting. Reports submitted to the Management Board and the Supervisory Board include, in particular, the results of assessment of reputational risk, the most significant factors affecting the risk level, the adopted mitigating measures and information on the utilisation of limits.

### 49.2. Business risk management

Definition

Business risk is defined as the risk of failure to achieve key business goals, in particular financial results, due to changes in economic, social, legal, business and market environment or failure to achieve the business and social goals implemented by the Bank as part of missions and tasks defined by the owner. Business risk includes the strategic risk

Risk identification and measurement

Business risk identification consists in identifying and determining actual and potential risks related to the existing and planned activities of the Bank which can considerably affect its financial condition, originate or change its revenue and expenses. Business risk is identified based on the analysis of selected revenue and cost account items of the statement of profit or loss and significant interest-bearing balance sheet and off-balance-sheet items.

The assessment of business risk’s impact on financial result is carried out by the Bank through an analysis of deviations from the Bank’s strategy and the schedule of works of the Bank, including trends in the implementation of main items and expected results in the periods to follow as well as prospective assessment of business risk based on stress tests and the impact of changes in the regulatory, legal and macroeconomic environment.

Risk monitoring

Business risk is monitored by way of a monthly analysis of the Bank’s performance, a semi-annual profitability analysis of selected bank products presented at the BFC that includes a detailed list of product profitability factors, such as interest margin, net fee and commission income and liquidity margin as well as factors related to covering estimated cost of risk and operating expenses. The annual review is carried out for regulatory risk, market risk and business risk.

Apart from preparing annual and long-term plans, when the Management Board of the Bank is presented with key factors affecting the Bank’s performance and financial condition and key risks for the schedule of works and expenditures, which are tantamount to its business risks, the Bank regularly reviews its performance and balance sheet projections. The projections are aimed at assessing the probability of meeting the objectives determined in the schedule and include action plans supporting achievement of such business and financial goals.

Risk control

The Bank uses a business risk limit. Business risk management rules were also adopted.

Risk reporting

Business risk reports are prepared on a monthly, quarterly and annual basis. Monthly and semi-annual reports cover key indicators of the Bank, statement of financial position, deposit, credit and statement of profit or loss. The annual report is prepared for the Management Board, Risk Committee, Audit Committee and the Supervisory Board. The report presents performance details of the schedule of works and expenditures and the Strategy of the Bank and also contains information on the risk factors from the business environment, such as macroeconomic risk factors, changes in legal regulations for banking activity, as well as market trends and changes in the banking sector, along with the domain of offered services and banking technologies.

### 49.3. Compliance risk management

Definition

Compliance risk includes the risk of consequences of non-compliance with the provisions of applicable law, internal regulations or market standards in the Bank’s processes. In compliance risk management the Bank also considers ESG risk embedded in the compliance risk.

The compliance risk is connected with the operation of each organisational unit of the Bank in each process, and the employees of the Bank are obliged to implement the tasks assigned to them associated with the specific stages of the compliance risk management process.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Risk identification and assessment

Compliance risk identification consists in identifying actual and potential sources of risk that arise from the ongoing and planned activities of the Bank. In organisational units of the Bank, the risk is identified by heads of those units of the head office/Regions, supported by risk partners.

The compliance risk is assessed in key risk areas and the operations of the entire Bank. The process of risk identification and assessment in selected key areas also took into account ESG factors.

The Bank assesses ESG risk embedded in compliance risk as part of its annual compliance risk assessment.

Risk monitoring

Monitoring of the reputational risk size and profile after applying risk control mechanisms is carried out on the basis of information obtained from sources used to identify risk, in particular:

§ information obtained during ongoing verification,

§ test results.

If the results of the monitoring of the size and profile of compliance risk indicate that the manner of implementation and observance of compliance risk control mechanisms is insufficient in the opinion of the compliance unit, the latter makes a relevant adjustment to the size and profile of compliance risk.

Risk control

The Bank reduces the occurrence of compliance risk, in particular by:

§ imposition of the following obligations on the Bank’s employees in accordance with their roles:

– compliance with the law, internal regulations or market standards,

– use of compliance risk control mechanisms – the most common compliance risk control mechanisms include compliance risk limits and all control mechanisms involved in the control function that are designed to ensure compliance, in particular: issuing opinions on internal regulations, recommendations issued by the Compliance Department,

§ analyses of compliance with the law, internal regulations and market standards covering new products and services introduced to the Bank’s offer, changes to products and services, sales processes related to products and services,

§ participation in key implementation projects, in the context of ensuring compliance with the law, internal regulations and market standards (as long as this does not compromise the Compliance Department’s independence in the testing process),

§ determination of compliance risk indicators and limits (strategic limit and limit based on qualitative measures),

§ issuing opinions on the Bank’s internal regulations and the content of marketing communication,

§ raising awareness of compliance risk among the Bank’s employees.

In 2024, there was no excess of appetite for compliance risk (understood as the total acceptable risk that the Bank is willing to take in its current operations).

Risk reporting

Reporting information on compliance risk is carried out in a manner specified in internal regulations. Information on the assessment of the compliance risk and risk profile (including a summary of compliance risk assessments in key risk areas) including the most important types of compliance risk control mechanisms, compliance test results, and operational events that affect the compliance risk, is presented in periodic reports submitted to the Audit Committee, the Risk Committee, the Management Board and the Supervisory Board.

### 49.4. Macroeconomic risk management

Definition

Macroeconomic risk is defined as the risk of changes in macroeconomic environment, which may adversely affect the Bank and minimum capital requirements in the future.

Risk identification and measurement

The objective of macroeconomic risk management is to identify macroeconomic factors that significantly affect the operations of the Bank and to reduce the adverse impact of such macroeconomic changes on the financial condition of the Bank.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Macroeconomic risk management process involves identifying those macroeconomic factors that significantly affect the operations of the Bank and determining potential scenarios for individual factors.

Risk control and monitoring

When designing the Bank’s Strategy, schedule of works and expenditures, the credit policy, and other documents important for the activities of the Bank, the Bank takes into account its macroeconomic environment and potential changes therein.

Macroeconomic risk is measured based on stress tests of macroeconomic factors (interest rates, exchange rates, changes in real estate prices, changes of prices of selected assets on goods markets, e.g. changes in energy commodity prices), ESG tests, accounting for, inter alia, environmental factors, as well as aggregate stress tests of capital adequacy analysing the impact of given assumptions, including macroeconomic factors, on capital requirements and internal capital.

Macroeconomic risk is also measured based on the Bank’s exposure in individual industries, clients or products. Internal limits are determined in line with the expected sector risk.

Risk reporting

Macroeconomic risk is reported in monthly, quarterly and annual credit risk reports which present the impact of macroeconomic environment on the Bank’s lending activity and in individual stress test reports. The reports are drawn up for the Bank Credit Committee, the Bank Financial Committee, the Management Board, the Risk Committee, and the Supervisory Board.

### 49.5. Model risk management

Definition

Model risk means the potential loss the Bank may incur as a consequence of decisions that could be significantly based on the output of internal models used by the Bank, due to errors in the development, implementation or use of such models.

Management purpose

The risk of incurring losses as a result of wrong business decisions made based on the existing models is mitigated by operating a properly defined and implemented process for model management. One of the elements of the model management process is regular and independent validation of all material models.

Risk identification and assessment

Identification of model risk involves in particular collection of information on the models used or planned to be implemented and cyclical determination of materiality of individual models. Model risk assessment consists in an assessment of the risk for a single model and aggregate risk for all models and specification of the acceptable risk level.

Risk monitoring

All significant models subject to the processes of ownership monitoring with an annual frequency, as well as the independent periodical validation in line with the annual schedule of works approved by the Bank and prepared by an independent validation unit. In the case of irrelevant models, their independent validation is subject to individual assessment of appropriateness of such validation made by the Bank. An independent validation unit (independent in relation to the organisational units of the Bank that act as model owners or users) answers directly to the Member of the Management Board supervising the risk management area. The results of model validation and recommendations are presented by an independent validation unit to the Bank Model Management Committee.

Risk control

The purpose of model risk control is to obtain an aggregate assessment of the model risk at a level acceptable by the Bank. Model risk control consists in determination of mechanisms used for diagnosing the level of model risk as well as tools for mitigating that risk.

Risk reporting

A quarterly model report (submitted to the BMMC) and semi-annual model report (submitted to the BMMC and the Management Board) contains in particular information on: models register, models logbooks, changes in the number of models in use, the scope of their application and reasons for such changes, schedule of tasks for a given period with the evaluation of its implementation, reasons for delay (if any), and key findings of monitoring activities, model validation, and internal audits (if any), along with model risk level assessment.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

The annual report presented to the Supervisory Board of the Bank, the Risk Committee, the Management Board of the Bank, and the Bank Model Management Committee, contains information analogical to the quarterly and mid-year reports and in addition information on the system of model risk management with the list of scheduled activities associated with the management of models and their risks and efficiency assessment.

### 49.6. ESG risk management

Definition

ESG risk is the risk of negative financial consequences for the Bank, its assets, Business Partners, contractors and service providers resulting from the impact on or dependence on ESG factors. Risk of negative financial consequences for the Bank, its assets, business partners, contractors and service providers, resulting from the impact on or risk of dependence on ESG factors. The ESG risk consists of: environmental risk (which covers physical risk and transition risk), social risk and corporate governance risk. The ESG risk is a risk embedded in other risks, as well as a hybrid risk – measurable or difficult to measure, depending on the nature of the risk in which it is embedded.

ESG risk identification and assessment

ESG risk identification consists in identifying its sources, both current and potential, that arise from the ongoing and planned activities of the Bank, its employees, Business Partners, or discontinuation of activities that generate the ESG risk. Sources of ESG risk can be internal (internal events, if they arise from the Bank’s organisation and activities) and external (external events, if they are beyond the Bank’s control, such as those involving the Bank’s Business Partners, external environmental or social factors, ESG risk factors).

ESG risk assessment involves a combined analysis of relevant environmental, social and corporate governance factors. Environmental, social and governance factors are equal components of the ESG risk assessment. Environmental, social and governance risks are equally important elements of ESG risk assessment.

In the scope of processes, ESG risk assessment is conducted in credit and investment process due to their important connection with the implementation of strategy of the Bank. ESG risk monitoring in the scope of project and investment process consists in determining the level of risk related to business partners, finances activities or the capital investments of the Bank.

Risk control

As part of ESG risk control, risk control mechanisms are applied, including a limit adapted to the size of the Bank and the risk profile of its operations.

Risk monitoring

ESG risk extent and profile monitoring following the implementation of the risk control mechanisms is conducted on the basis of the information collected in the process of credit monitoring, including investment realization monitoring and investment monitoring; information acquired during the current verification and testing; results of the stress tests.

Risk reporting

ESG risk reporting includes:

§ Identification of potential threats,

§ Information on the adopted risk mitigation measures and assessment of their effectiveness.

ESG risk reporting is carried out by:

§ ESG risk disclosure – containing a qualitative report and a quantitative report presenting the methods of managing ESG risk in the Bank and the size of the Bank's exposure in the area of climate change risk analysis,

§ Taxonomy report (internal report) – presents results of the analysis of the Bank’s portfolio compliance with the taxonomy criteria,

§ ESG risk report (internal report) – presenting the results of the credit and investment processes risk management and the monitoring of the ESG risk strategic risk utilization,

§ Integrated report - in accordance with the guidelines for integrated reporting (IFRS Foundation Integrated Reporting Framework),

§ Stress test report – Results of comprehensive stress testing.

For more information on ESG risk management and sustainable development, see the Report of the Management Board on the Activities of the Bank Gospodarstwa Krajowego Group in 2024 – integrated report.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

## 50. Capital adequacy and leverage risk

The purpose of capital adequacy management is to maintain own funds at a level adequate to the scale and profile of the Bank’s operations.

The purpose of leverage risk management is to ensure a correct proportion between Tier I capital and the total exposure measure, as determined 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 process of leverage risk management is integrated with the capital adequacy management process.

Capital adequacy is monitored by:

§ capital ratios calculated in accordance with CRR provisions:

- common Equity Tier I ratio;

- Tier 1 capital ratio,

- total capital ratio,

§ internal capital ratio referred to in Art. 128 sec. 1 item 2 of the Banking Law, understood as the ratio of internal capital to own funds.

§ the leverage risk is monitored by means of the leverage ratio as defined in the CRR.

The indicators above are specified on an individual basis as the CRR does not require prudential consolidation.

In 2024, the Bank met the capital adequacy standards specified in the CRR and the Banking Law.

Capital adequacy and leverage risk management includes:

§ calculation and monitoring capital adequacy ratios and the leverage ratio,

§ setting and monitoring the use of strategic limits and capital limits for individual business model programmes and the portfolio of Treasury securities, based on the internal capital,

§ running stress tests,

§ reporting capital adequacy and leverage risk levels,

§ capital planning,

§ developing a capital contingency plan.

As part of capital adequacy and leverage risk management process, the Bank prepares regular reports on capital adequacy ratios, leverage ratio, total capital requirement, internal capital, total exposure measure and own funds, utilisation of capital limits and strategic limits, and stress tests results.

In May 2020, the European Banking Authority (EBA) published, in a single rulebook Q&A, its position regarding the moment of recognition of annual and interim profits in the capital adequacy data. According to this position, once the Bank has formally met the criteria for including its profit for a given period in the Tier 1 capital, this profit should be included retrospectively – own funds should be adjusted accordingly as at the date of the profit. Therefore, comparative information on capital adequacy as at 31 Dec 2023 was presented with profit for 2023 allocated in accordance with the profit distribution for increasing the Bank's equity capital included retrospectively in own funds.

The changes within the scope of capital adequacy introduced by the CRR3 Regulation had the largest impact on the capital requirements for credit risk and for operational risk. The changes of the capital requirements for credit risk and for counterparty credit risk were impacted the most by:

§ including contractual provisions offered by the institution but not yet accepted by the client in the calculation of assets weighed with the contractual provisions risk;

§ changing risk weights for exposures due to subordinated debt;

§ changes in the method of calculation of assets weighed with the expositions secured with property mortgage risk;

§ changing risk weights for exposures classified as exposures due to institutions;

§ introducing CCF in the amount of 40%.

In the scope of operation risk within the CRR3, a new method of capital requirements was introduced.

Capital adequacy and leverage risk ratios remain at a safe level after applying the CRR3 provisions in force from 1 January 2025.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Dynamics of capital adequacy ratios and their components and the leverage ratio are presented in the tables below.

Capital adequacy and leverage risk ratios including flow funds
No. | Ratio | 31 Dec 2024 | 31 Dec 2023
I | Common Equity Tier 1 capital ratio | 30.55% | 33.42%
II | Tier 1 capital ratio | 30.55% | 33.42%
III | Total capital ratio | 30.55% | 33.42%
IV | Internal capital ratio | 38.41% | 32.34%
V | Own funds | 37,660 | 37,420
V.1 | Tier 1 capital | 37,660 | 37,420
V.1.1 | Common Equity Tier 1 capital | 37,660 | 37,420
V.1.2. | Additional Tier 1 (AT1) capital | 0 | 0
V.2 | Tier 2 capital | 0 | 0
VI | Total capital requirement | 9,863 | 8,958
VII | Internal capital* | 14,466 | 12,102
VIII | Leverage ratio | 5.03% | 5.80%
*Also includes exposures due to the management of European programmes and BGK’s surety and guarantee activities carried out as part of government programmes.

§ Additional information

Capital adequacy and leverage risk ratios excluding flow funds
No. | Ratio | 31 Dec 2024 | 31 Dec 2023
I | Common Equity Tier 1 capital ratio | 32.38% | 35.29%
II | Tier 1 capital ratio | 32.38% | 35.29%
III | Total capital ratio | 32.38% | 35.29%
IV | Internal capital ratio | 34.71% | 29.97%
V | Own funds | 37,660 | 37,420
V.1 | Tier 1 capital | 37,660 | 37,420
V.1.1 | Common Equity Tier 1 capital | 37,660 | 37,420
V.1.2. | Additional Tier 1 (AT1) capital | 0 | 0
V.2 | Tier 2 capital | 0 | 0
VI | Total capital requirement | 9,306 | 8,482
VII | Internal capital | 13,072 | 11,213
VIII | Leverage ratio | 10.89% | 12.92%

Changes in the capital ratios, the internal capital ratio and the leverage ratio mainly resulted from:

§ an increase in the total capital requirement and internal capital for credit risk in particular in connection with a rise in total risk exposure amount to corporates and central governments,

§ an increase in the capital requirement for operational risk chiefly driven by increase of the average net interest income from the last 3 years,

§ an increase in the total exposure measure mainly due to an increase in the Bank’s sources of financing.

Own funds for capital adequacy ratio purposes

Own funds for the calculation of the total capital ratio are determined in accordance with the CRR.

For capital adequacy purposes, own funds are determined on a separate basis, as no prudential consolidation is required under the CRR.

BGK’s own funds, determined in accordance with the CRR, include:

1) Tier 1:

§ Common Equity Tier 1 (CET1) capital: Common Equity Tier 1 (CET1) capital:

- Statutory fund constituting, pursuant to Art. 3 sec. 3c of the Act on BGK, an equity instrument within the meaning of Art. 26 sec. 1(a) and Art. 28 of the CRR Regulation,

The statutory capital is created from monies and other assets contributed by the State Treasury (including Treasury securities provided by the minister competent for public finance) as well as annual contributions from the Bank’s net profit, in accordance with the principles specified in BGK’s Articles of Association.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

- Supplementary capitals, including supplementary capital and reserve fund.

The supplementary capital and the reserve fund are established from the distribution of the annual net profit, in line with the principles defined in BGK’s Articles of Association.

- general banking risk reserve

The general banking risk reserve is established from the distribution of the annual net profit, in line with the principles defined in BGK’s Articles of Association.

- accumulated other comprehensive income;

- deductions under intangible assets, except for software assets estimated on a conservative basis.

The amount deduction under intangible assets is decreased by deferred tax liabilities related to the intangible assets.

- Value adjustments resulting from the fair value requirements Additional Valuation Adjustments (AVA) is a simplified approach pursuant to Commission Delegated Regulation (EU) No. 2016/101 of 26 October 2015 supplementing Regulation (EU) No. 575/2013 of the European Parliament and of the Council with regard to regulatory technical standards for prudent valuation under Art. 105 sec. 14

- deduction of insufficient coverage for non-performing exposures calculated in accordance with Art. 47c of the CRR Regulation,

- the Bank’s direct and indirect holdings of financial sector entities, where the institution does not have a significant investment in those entities, in the form of shares or other common equity or Tier 2 instruments of those entities, if their aggregate amount exceeds 10% of the Common Equity Tier 1 capital of the Bank.

As at 31 December 2024 and 31 December 2023, the Bank did not have any such decreases.

§ The Bank does not include in any element of own funds any item referred to in Art. 33.1 of the CRR.

§ Additional Tier 1 (AT1) capital – as at 31 December 2024 and 31 December 2023, the Bank did not hold any positions in Additional Tier 1 capital.

§ If the amount of decreases lowers Tier 2 capital below zero, the surplus of those decreases over the Tier 2 capital is deducted from Tier 1 basic funds.

Own funds | 31 Dec 2024 | 31 Dec 2023
Basic funds (Tier 1 capital) | 37,660 | 37,420
Statutory capital (fund) | 34,338 | 34,023
Reserve capital (fund) | 3,043 | 1,783
Other capital reserves | 77 | 77
General banking risk reserve | 155 | 155
Accumulated other comprehensive income | 404 | 232
Previous years retained earnings | 0 | 1,575
Intangible assets | -139 | -121
Deferred tax liabilities related to intangible assets | 7 | 5
Tier 1 adjustments resulting from prudential filters | -56 | -67
(-) Insufficient coverage for non-performing exposures | -162 | -193
(-) Cash flow hedge reserve | -7 | -49
Supplementary funds (Tier 2) | 0 | 0
Total own funds | 37,660 | 37,420

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

Capital requirements (Pillar I)

In order to calculate minimum capital requirements for individual risk types (Pillar I), the Bank applies methods described in the table below.

Capital requirement under: | Approach
credit risk and counterparty credit risk | - standardised method (Art. 111 – 141 of the CRR)
- financial collateral comprehensive method (Art. 223 – 224 of the CRR)
- standardised approach for counterparty credit risk (Art. 274 – 280f of the CRR)
- own funds requirements for exposures to a central counterparty (Art. 300 – 311 of the CRR)
foreign exchange risk | standardised approach (Art. 351 of the CRR)
commodities risk | simplified approach (Art. 360 of the CRR)
position risk related to: |
- specific risk of equity instruments in the trading book | according to Art. 342 of CRR
- general risk of equity instruments in the trading book | according to Art. 343 of the CRR Regulation
- specific risk of debt instruments in the trading book | according to Art. 336 of the CRR
- general risk of debt instruments in the trading book | maturity based approach (Art. 339 of the CRR)
credit valuation adjustment (CVA) risk | - standardised method (Art. 384 of the CRR)
settlement risk | according to Art. 378-380 of the CRR
large exposures in the trading portfolio | according to Art. 397 of the CRR
qualifying holdings outside the financial sector | according to Art. 89 - 91 of the CRR
operational risk | basic indicator approach (Art. 315 – 316 of the CRR)

Capital requirements structure in BGK – including flow funds:

No. | Capital requirement under: | 31 Dec 2024 | 31 Dec 2023
I | credit risk and counterparty credit risk | 9,098 | 8,360
II. | foreign exchange risk | 0 | 0
III. | commodities risk | 0 | 0
IV. | risk of items in the trading portfolio, including: | 56 | 71
1 | - specific and general risk of equity instruments | 0 | 0
2 | - specific risk of debt instruments | 0 | 0
3 | - general risk of debt instruments | 56 | 71
V. | credit valuation adjustment (CVA) risk | 8 | 14
VI. | settlement risk | 0 | 0
VII. | large exposures in the trading portfolio | 0 | 0
VIII. | qualifying holdings outside the financial sector | 0 | 0
IX. | operational risk | 702 | 514
Total | 9,863 | 8,958

Internal capital (Pillar II)

Internal capital (Pillar II) is an amount estimated by the Bank which is necessary to cover all identified material risks occurring in the Bank’s operations as well as changes in the economic environment, which takes the expected risk level into account. The amount of internal capital is estimated to cover unexpected loss.

The internal capital is estimated to cover risks identified as material. For immaterial risks, the Bank does not estimate internal capital to cover them. The total amount of internal capital is calculated as the sum of internal capital for individual risks.

In order to estimate the internal capital for individual risks, the Bank applies the approaches used to determine capital requirements or internal methods developed by the Bank.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

As at 31 December 2024, internal capital amounted to PLN 14,466 million and the internal capital ratio was 38.41%. The chart below presents the structure of internal capital (including flow funds and exposures due to the management of European programmes and BGK’s surety and guarantee activities carried out as part of government programmes) in PLN million.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

# Other notes

## 51. Custody business

In 2024 and 2023, under the decision of 18 February 2011 of the Polish Financial Supervision Authority on granting Bank Gospodarstwa Krajowego of Warsaw an authorisation for keeping securities accounts (trust activities), the Bank maintained securities accounts (custody services) with dematerialised securities.

Securities | 31 Dec 2024 | 31 Dec 2023
KDPW | 223,553 | 203,467
Bonds on deposit accounts | 24,851 | 18,218
Bonds in the issue sponsor register | 6,677 | 5,217
Treasury bonds | 192,025 | 180,032
NBP | 686 | 564
Money bills | 686 | 564
BGK | 399 | 405
Municipal bonds on deposit accounts | 42 | 47
Other bonds on deposit accounts | 357 | 358
Total | 224,638 | 204,436

In the financial years 2024 and 2023, the Bank maintained securities accounts only with dematerialised financial instruments of its clients.

In accordance with the Act on Trading in Financial Instruments, since 1 July 2019 the Bank, as part of its trust activities, has acted as the Issue Agent for corporate and municipal bonds.

## 52. Information on the entity authorised to audit the financial statements

On 15 October 2020, The Bank entered into an agreement for the statutory audit of the financial statements with Mazars Audyt Spółka z ograniczoną odpowiedzialnością (from 13 December 2024, it changed its name to Forvis Mazars Audyt Spółka z ograniczoną odpowiedzialnością) for a term of three years (starting from the financial statements for 2020). The Bank has used the option to extend the agreement for another two years.

Total fee (in PLN thousand, gross) paid or payable to the audit firm performing an audit of financial statements, for: | 2024 | 2023
Audit of the Bank’s financial statements and the Group’s consolidated financial, together with an audit of ESEF | 856 | 856
Review of condensed interim separate financial statements and condensed interim consolidated financial statements | 234 | 234
Other assurance and related services | 331 | 325
Total | 1,421 | 1,415

The category “Other assurance and related services” includes the auditor’s fee for the audit of consolidation packages, assessment of compliance with requirements regarding safekeeping of client assets, audit of the scope and correctness for disclosures in the report on risk management and capital adequacy, audit of ESG risks (only in 2023) and audits of special purpose financial statements.

In addition, the Bank entered into agreements on assurance services for the issue of assurance letters, which relate to funds established under separate laws and are disclosed in their respective statements of profit or loss in the amount of PLN 369 thousand gross for 2024 and PLN 1,341 thousand gross for 2023.

## 53. Major events subsequent to the reporting date

§ On December 20, 2024, the share capital in HITECH ASI was increased by issuing series G shares, the share subscription agreement was concluded on December 30, 2024, the payment of PLN 10.1 million was made on January 3, 2025,

§ On January 10, 2025 BGK received from PGFF distribution of investment funds in the amount of EUR 3.1 million,

§ On February 20, 2025 the capital in Hitech ASI was increased by issuing series H shares, the share subscription agreement was concluded on February 27, 2025, payment in the amount of PLN 14.5 million was made on February 28, 2025,

§ On March 13, 2025 the capital in Hitech ASI was increased by issuing series I shares, the share subscription agreement was concluded on March 21, 2025, payment in the amount of PLN 23.0 million was made on March 24, 2025,

§ March 17, 2025 BGK received from PGFF distribution of investment funds in the amount of PLN 2.9 million EUR,

§ On March 19, 2025, shares in Marguerite II in the amount of EUR 1.0 million were acquired,

§ On March 24, 2025, shares in Marguerite III in the amount of EUR 2.5 million were acquired.

The consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024
(in PLN million)

These consolidated financial statements of the Bank Gospodarstwa Krajowego Group for the financial year from 1 January to 31 December 2024 consist of 120 pages numbered consecutively.

Warsaw, 11 April 2025

Signature of the person responsible for keeping accounting records

First name and surname | Position/function | Signature
Rafał Szadurski | Managing Director at the Financial Department | The original Polish document is signed with a qualified electronic signature

Signatures of the Members of the Management Board of Bank Gospodarstwa Krajowego:

First name and surname | Position/function | Signature
Mirosław Czekaj | President of the Management Board | The original Polish document is signed with a qualified electronic signature
Marta Postuła | First Vice-President of the Management Board | The original Polish document is signed with a qualified electronic signature
Maciej Kliś | Vice-President of the Management Board | The original Polish document is signed with a qualified electronic signature
Leszek Stypułkowski | Member of the Management Board | The original Polish document is signed with a qualified electronic signature
Mateusz Szczurek | Member of the Management Board | The original Polish document is signed with a qualified electronic signature
Jarosław Dąbrowski | Member of the Management Board | The original Polish document is signed with a qualified electronic signature