Report of the Supervisory Board of ING Bank Hipoteczny S.A. for 2024
Acting pursuant to Article 382 § 1 of the Commercial Companies and Partnerships Code, the Supervisory Board of ING Bank Hipoteczny S.A. hereby submits to the Ordinary General Meeting the Review of the Supervisory Board on their operations in the period from 1 January 2024 to 31 December 2024.
I. Legal basis for the operation of the Supervisory Board in ING Bank Hipoteczny S.A.
The Supervisory Board of ING Bank Hipoteczny S.A. operates under the Banking Law, the Act on Covered Bonds and Mortgage Banks, the Commercial Companies and Partnerships Code, the Bank’s Charter and the Bylaw of the Supervisory Board. Pursuant to § 20.3 of the Charter of ING Bank Hipoteczny S.A., members of the Supervisory Board have been appointed for a joint three-year term of office. The new term of office, with the same composition, began on 9 May 2024. Accordingly, the mandates of the members of the Supervisory Board of the current term expire on the date of the General Meeting approving the financial statements for 2027.
II. The composition of the Supervisory Board of ING Bank Hipoteczny S.A., their division of functions and changes in the composition of the Board in the period from 1 January 2024 to 31 December 2024.
In 2024, there were no changes in the composition of the Supervisory Board of ING Bank Hipoteczny S.A. On 9 May 2024, i.e. on the day of the General Meeting approving the financial statements for 2023, the term of office and mandates of the current members of the Supervisory Board expired. Thus, the Ordinary General Meeting of ING Bank Hipoteczny S.A. appointed the existing members of the Supervisory Board for a new term.
As at 31.12.2024, the Supervisory Board composition was as follows:
Ms Bożena Graczyk, Chair
Mr Marcin Giżycki, Deputy Chair
Mr Jacek Michalski, Secretary (Independent Member)
Mr Brunon Bartkiewicz, Member
Ms Joanna Erdman, Member
Mr Krzysztof Gmur, Member (Independent Member)
The Supervisory Board confirms that their composition is sufficient and adequate to the nature and scale of the Bank’s operations.
III. Information on compliance with legal requirements.
The Supervisory Board performs its tasks on the basis of the specific powers granted by the Company's Charter, the Bylaw of the Supervisory Board taking into account the Statement of the Management Board on the application at ING Bank Hipoteczny S.A. of Corporate Governance Principles for Supervised Institutions adopted by the Polish Financial Supervision Authority (adopted by Supervisory Board Resolution No. 20/3/2019 of 22 March 2019).
The Supervisory Board has two members who meet the independence criteria set out in the Regulations Bylaw of the Supervisory Board.
As at 31 December 2024, these are: Mr Jacek Michalski, Secretary of the Supervisory Board, and Mr Krzysztof Gmur, Member of the Board, who is also the Chair of the Audit and Risk Committee of the Supervisory Board. The other Members of the Supervisory Board, namely Ms Bożena Graczyk, Mr Marcin Giżycki, Mr Brunon Bartkiewicz, Ms Joanna Erdman, are related to the sole shareholder of the Bank, that is, ING Bank Śląski S.A.
In accordance with the Bank’s practice, independent members make annual statements confirming that they have no relationship with the Bank, its shareholders or employees that could have a major effect on their ability to take impartial decisions. In addition, members are required to
notify the Bank immediately if circumstances affecting their independence arise. Thus, the Supervisory Board confirmed that there are no relationships or circumstances that could affect the fulfilment of the independence criteria by the members of the Supervisory Board.
The Bank’s website contains information about the Members of the Supervisory Board, their functions in the Committee of the Board included. Moreover, the website shows information on the submission of declarations regarding the fulfilment of independence criteria or existing relationships with ING Bank Hipoteczny, as well as information on the fulfilment of requirements under Article 22aa of the Banking Law Act.
The Supervisory Board confirms that its members are competent to duly perform their duties resulting from their knowledge, practical experience and skills. The individual competencies of specific members are complementary in such a way as to enable the exercise of a due level of collective supervision over all areas of the Bank’s operations. All members have appropriate experience and knowledge to supervise the Bank.
IV. Form and mode of supervision. Information on the number and frequency of Supervisory Board meetings and the number of adopted resolutions
The Supervisory Board acted based on the adopted meeting schedule and framework work plan. The Supervisory Board works in a culture of debate, analysing the company's situation against the sector and the market on the basis of materials provided to it by the company's Management Board and internal functions, as well as those obtained from outside the company, using the results of the work of its committee. In particular, the Supervisory Board approves the company's strategy and reviews the work of the Management Board in achieving the strategic objectives set and monitors the company's performance.
In 2024, the agendas included in particular current business matters, risk and internal control system matters submitted by the Management Board of the Bank, as well as any other important matters to be considered by the Supervisory Board.
The Supervisory Board supervised the Bank’s operations first and foremost during meetings, taking the required decisions in the form of resolutions. Besides the Supervisory Board members, the meetings are attended on a regular basis by members of the Management Board, as well as representatives of the Internal Auditor and Compliance positions, as well as other invited guests reporting on issues falling within their responsibility.
The Supervisory Board pays particular attention to ensuring that the Bank has an adequate and effective risk management system and an adequate and effective internal control system. In the course of its work, the Supervisory Board monitors the functioning of both systems in the organisation on an ongoing basis and periodically assesses their functioning.
In 2024, bearing in mind the requirements of the Regulation of the Minister of Finance, Funds and Regional Policy of 8 June 2021 on the risk management system and the internal control system and remuneration policy in banks, the Supervisory Board approved the 2023 Risk Management Report. In addition, taking into account the information contained in this report and the periodic reports of the Risk Area, the findings of the external auditor, the findings resulting from the supervisory activities carried out by the Polish Financial Supervision Authority and the SREP score, the Supervisory Board also made a positive assessment of the adequacy and effectiveness of the Bank's risk management system in 2023.
With regard to the functioning of the internal control system, in March 2024 the Supervisory Board approved the Report on the manner the tasks of the 2023 internal control system are fulfilled, a summary of critical and high risk recommendations included.
Furthermore, in accordance with the requirements of the aforementioned Regulation and having regard to such aspects of the functioning of the internal control system as:
• assessment of the internal control system by the Internal Audit function,
• information of the Bank Management Board, included in this report, on the manner the tasks of the internal control system are performed,
• periodical reports of the Compliance Cell,
• findings of the statutory auditor,
• findings from supervisory activities performed by authorised institutions.
The Supervisory Board made a positive assessment of the adequacy and effectiveness of the Bank's internal control system in 2023, including a positive assessment of the adequacy and effectiveness of the control function, the Compliance Cell and the Internal Audit Position. Information on the assessment of the Bank's standing in 2024, including the evaluation of the internal control systems, risk management, compliance and the internal audit function is presented on page 17.
In 2024, members of the Supervisory Board devoted indispensable time for performance of their duties. In accordance with the approved work plan, in the period from 1 January 2024 to 31 December 2024 the following meetings were held:
6 meetings by means of direct remote communication,
7 meetings by way of circulation,
during which a total of 64 Resolutions were adopted (including 11 by way of circulation).
All meetings were held in the composition and mode allowing to adopt binding resolutions, with a high attendance rate.
Irrespective of the regular meetings, the members of the Supervisory Board were in regular and direct contact with the Management Board of the Bank, taking an active part in all important issues concerning the Company’s operations.
As part of its monitoring of the financial reporting process, the Audit and Risk Committee meets periodically (in the first and second half of the year, respectively) with the Vice-President of the Management Board overseeing the Finance Area to discuss the Bank's financial statements prior to their publication. On the other hand, as part of its monitoring of the effectiveness of the internal control system and internal audit, the Committee (the Chair) holds periodic meetings (in the first and second half of the year, respectively) with the Internal Audit function on the specifics of the internal audit function.
A detailed description of the activities undertaken by the Supervisory Board and the Board Committees in 2024 can be found in the minutes of the Board and Committee meetings, which, together with the resolutions adopted, as well as the Committee's recommendations, opinions and decisions, are available at the Company's registered office.
V. Topics of Supervisory Board meetings
In 2024, the Supervisory Board exercised oversight over the Company’s operations by keeping watch over the Company’s adherence to the relevant regulations, including in the area of accounting, finance and reporting of public companies. The work of the Supervisory Board was carried out efficiently, with the participation of all its members.
During their meetings, the Supervisory Board considered matters arising from the provisions of the Commercial Companies and Partnerships Code, as well as matters relating to the Company's day-to-day operations.
The detailed range of topics dealt with by the Supervisory Board in 2024 is set out below. The topics indicated were also dealt with by the Audit and Risk Committee (within the scope of its powers), which issued relevant recommendations and opinions to the Supervisory Board.
In the course of the work in progress, in 1Q2024 the Supervisory Board prepared and presented to the General Meeting the 2023 Report of Supervisory Board covering:
Summary of the operations of the Supervisory Board and its Committee for the period from 1 January 2023 to 31 December 2023, including an assessment of the adequacy of the internal regulations concerning the functioning of the Supervisory Board.
Report of the Supervisory Board on the results of the evaluation of the annual financial statements of ING Bank.
Report of the Supervisory Board on the results of evaluation of the Management Board Report on Operations of ING Bank Hipoteczny S.A. from 1 January 2023 to 31 December 2023, including the Corporate Governance Statement.
Report of the Supervisory Board on the results of evaluation of the Management Board's motion concerning 2023 profit distribution.
Assessment of the ING Bank Hipoteczny S.A.’s standing in 2023 prepared by the Supervisory Board, including an assessment of the adequacy and effectiveness of the internal control, risk management, compliance and internal audit systems
Assessment by the Supervisory Board of the application of the Principles of Corporate Governance for Supervised Institutions at ING Bank Hipoteczny S.A. in 2023
Report on the evaluation of the remuneration policy of ING Bank Hipoteczny S.A.
In 2024, the Supervisory Board considered and gave a positive opinion on the draft resolutions presented to the General Meeting convened on 9 May 2024.
1) Finance, including:
Approval of the Bank's Financial Plan, financing plan and capital plan for 2024 - 2026,
Approval of the Supervisory Board's report for 2023 containing:
a summary of the activities of the Supervisory Board and its Committee for the period from 1 January 2023 to 31 December 2023, including a self-assessment of the adequacy of internal regulations concerning the functioning of the Supervisory Board and the effectiveness of its supervisory functions,
Outcome of the appraisal of:
o The annual financial statements of ING Bank Hipoteczny S.A. for the period from 1 January 2023 to 31 December 2023,
o The Management Board Report on Operations of ING Bank Hipoteczny S.A. for the period from 1 January 2023 to 31 December 2023, including the Statement of the Management Board on observance of the Principles of corporate governance,
o The Management Board's motion concerning 2023 profit distribution,
Assessment of the Bank's standing in 2023, taking into account the assessment of the adequacy and effectiveness of the risk management and internal control systems, the compliance function and internal audit cell included,
Assessment of application by the Bank of the Principles of Corporate Governance for Supervised Institutions in 2023,
Assessment of the implementation by the Management Board of their information obligations towards the Supervisory Board,
Information on the total remuneration payable by the Bank for all audits commissioned by the Supervisory Board during the financial year,
Report on the evaluation of the remuneration policy of the Bank in 2023.
Approval of the update of the Capital Management Policy at ING Bank Hipoteczny S.A.
Approval of the 2023 ICAAP Process Review Report of ING Bank Hipoteczny S.A.,
Approval of amendments to the Stress Testing Policy at ING Bank Hipoteczny S.A.,
Information on the conducted review of the dividend policy of ING Bank Hipoteczny S.A.,
Regular information from the Bank Management Board on the list of agreements with related companies,
Regular information on the results of stress tests,
Summary of ING Bank Hipoteczny's Investment Policy in 2023,
Regular information from the Bank Management Board on the Bank's compliance with the regulatory requirements of the Act on Covered Bonds and Mortgage Banks,
Regular presentation of the Quarterly Report on the performance of services provided by ING Bank Śląski S.A. to ING Bank Hipoteczny S.A. in accordance with the Cooperation Agreement,
Regular information from the outsourcing area of ING Bank Hipoteczny S.A.,
Selection of the entity authorised to carry out the statutory audit of the financial statements of ING Bank Hipoteczny S.A. for the years 2023-2025, approval of an update of the provisions of the Cooperation Agreement between ING Bank Hipoteczny S.A. and ING Bank Śląski S.A. together with the Detailed Terms and Conditions of Services in the respective business areas;
2) Execution of the internal audit tasks at the Bank, including:
Approval of the Annual Operating Budget for the Internal Audit position at ING Bank Hipoteczny S.A. in 2025,
Approval of the update of the ING Bank Hipoteczny S.A. Internal Audit Charter Policy together with the Annex,
Approval of the Long-term Audit Plan 2025-2029 and the Annual Audit Plan for 2025 at ING Bank Hipoteczny S.A.,
Acceptance for information of the Status and changes to the deadline for the implementation of the post-audit recommendations together with the opinion of the internal audit as at 31 December 2023 and 31 March 2024,
Acknowledgement of the Status Report on the Implementation of the Audit Plan for 2024 and the Status and Change of Date of Post-Audit Recommendations for the Periods 1 April 2024 - 31 May 2024 and 1 June 2024 - 15 November 2024,
Acceptance for information of the Annual Report on the achievement of the objectives, mission and strategy of internal audit, together with the assessment of the internal control and risk management system for 2023 at ING Bank Hipoteczny S.A.,
Acknowledgement of the Report on the results of the internal audit function's quality assurance and improvement programme for 2023.
3) Performing the tasks of the Bank's Compliance function, including:
Approval of the Compliance Action Plan for 2024,
Approval of the Assessment of the adequacy and effectiveness of the system for anonymous reporting of violations of law, internal regulations and ethical standards at ING Bank Hipoteczny S.A. for the period from January 2024 to November 2024,
Assessment of the adequacy and effectiveness of internal governance at ING Bank Hipoteczny S.A. for 2023 (Supervisory Board assessment),
Information on the implementation of the annual Compliance plan,
Acceptance for information of the regular quarterly Compliance Report,
Approval of amendments to the Compliance Policy of ING Bank Hipoteczny S.A. and to the Regulations of the Compliance Unit,
Approval of updated Regulations - ING Bank Hipoteczny S.A. Employee Business Ethics Standards.
4) Monitoring of the effectiveness of the Bank's risk management system, including non-financial and compliance risks, along with:
Approval of ING Bank Hipoteczny S.A.'s Risk Management Strategy for 2024 - 2026 together with Credit, Market and Non-Financial Risk Appetite Limits (RAS) and approval of ING Bank Hipoteczny S.A.'s Non-Financial Risk Appetite Statement for 2024,
Approval of the Report on the manner of fulfilment of the internal control system for 2023 with a summary of critical and high risk recommendations,
Approval of the update of the ING Bank Hipoteczny S.A. Internal Control System Policy,
Approval of the Report of the Management Board of ING Bank Hipoteczny on the effectiveness and adequacy of the implementation of the Concentration Risk Management Policy for 2023,
Approval of the update of the Policy - General principles of risk management at ING Bank Hipoteczny S.A.,
Approval of the 2023 ING Bank Hipoteczny S.A. ILAAP Review Report,
Approval of the update of the Operational Risk Management Policy of ING Bank Hipoteczny S.A.,
Approval of the report on how the 2023 risk management system tasks were fulfilled and assessment of the adequacy and effectiveness of the system,
Acceptance for information of the regular quarterly Risk Report,
Acceptance for information of the results of the liquidity stress tests.
5) Monitoring and supervision of the Bank's HR and payroll area, including:
Assessing the collective suitability of ING Bank Hipoteczny S.A.'s Management Board and the individual assessments of Management Board Members,
Recommending to the Ordinary General Meeting of ING Bank Hipoteczny S.A. the individual suitability assessments of the members of the Supervisory Board of ING Bank Hipoteczny S.A. and candidates for the members of the Supervisory Board, as well as the collective suitability assessment of the Supervisory Board and the individual suitability assessment of the Members of the Audit and Risk Committee of the Supervisory Board of ING Bank Hipoteczny S.A. and candidates for the members of the Audit and Risk Committee and the collective assessment of this Committee,
Approval of an update of the ING Bank Hipoteczny S.A. Remuneration Policy, the ING Bank Hipoteczny S.A. Policy of Variable Remuneration Components for Identified Staff, together with a review of the eligibility criteria for inclusion in the List of Identified Staff and the Remuneration Bylaw for Members of the ING Bank Hipoteczny S.A. Management Board,
assessment of delivering on targets for 2023 by the Bank Management Board Members and setting and updating of bonus targets for 2024,
Approval of amendments to the Procedure for assessing the suitability of Supervisory Board Members, Management Board Members and Members of the Audit and Risk Committee at ING Bank Hipoteczny S.A.
6) Implementation of recommendations issued by supervisory authorities.
7) Issues from the Bank governance area:
approval of amendments to the Bylaws of the Supervisory Board and the Audit and Risk Committee,
approval of amendments to the Bylaw of the Management Board of ING Bank Hipoteczny S.A.,
approval of the amendments to Annex 1 to the Organisational Bylaw of ING Bank Hipoteczny S.A. - Division of Competence among Management Board Members of ING Bank Hipoteczny S.A.,
approval of the Bank Supervisory Board Work Plan for 2025,
periodic information - summary of resolutions of the Bank Management Board.
Assessment of the implementation by the Management Board of their information obligations towards the Supervisory Board,
Pursuant to Article 3801 of the Act of 15 September 2000 of the Commercial Companies and Partnerships Code and based on §15 of the Bylaw of the Management Board of ING Bank Hipoteczny S.A., the Management Board of the Bank shall provide the Supervisory Board at their meeting, at least on a quarterly basis, with the information concerning:
1) resolutions of the Management Board and their subject matter,
2) the situation of the Company, including with regard to its assets, as well as major circumstances with regard to the conduct of the Company's business, most notably in the area of operations, investments and human resources,
3) progress in the implementation of the Company's business directions, including the information on any deviations from the previously set directions together with the reasons therefor.
In addition, the Management Board is obliged to inform the Supervisory Board without delay of:
1) transactions and any other events or circumstances that materially affect or may affect the Company's financial position, its profitability or liquidity included,
2) changes to information previously provided to the Supervisory Board, if such changes materially affect or may affect the Company's position.
The Supervisory Board regularly received extensive information from the Bank Management Board on the Bank's current standing (including economic and financial situation), its operation, its action plans, progress in the implementation of the set business development directions and any significant circumstances and events that could affect its operation and asset situation.
In addition, in 2024 the Management Board ensured that the Supervisory Board was kept informed on an ongoing basis about internal and external factors affecting the Bank's operations, including changes in the Bank's business and legal and regulatory environment. A summary thereof was submitted to the Supervisory Board as part of the 2024 Management Report. In view of the comprehensive scope of the information and reports provided by the Bank Management Board, the Supervisory Board did not need to exercise its authority to request additional information, documents, reports or explanations pursuant to Article 382 § 4 of the Commercial Companies and Partnerships Code.
Taking into account the above circumstances, the Supervisory Board assesses that the Bank Management Board properly fulfilled its obligations referred to in Article 3801 of the Commercial Companies and Partnerships Code.
Information on the total remuneration payable by the Bank for all audits commissioned by the Supervisory Board during the financial year
In the period from 1 January 2024 to 31 December 2024, the Supervisory Board did not exercise the right to have, at the company's expense, examined a specific matter concerning the company's business or its assets, or to have certain analyses or opinions prepared by a selected advisor (advisor to the Supervisory Board) pursuant to Article 3821 of the Commercial Companies and Partnerships Code and pursuant to the procedure set out in § 37 of the Bylaw of the Supervisory Board of ING Bank Hipoteczny S.A.
Self-assessment of the adequacy of internal regulations concerning the functioning of the Supervisory Board
Pursuant to section 8.9 of Recommendation Z of the Polish Financial Supervision Authority, the Bank Supervisory Board performs a self-assessment of the adequacy of the internal regulations concerning the functioning of the Supervisory Board and the effectiveness of its supervisory functions.
The functioning of the Supervisory Board of ING Bank Hipoteczny S.A. is based in particular on the following internal regulations:
• Charter of ING Bank Hipoteczny S.A.,
• Bylaw of the Supervisory Board of ING Bank Hipoteczny S.A.,
• Bylaw of the Audit and Risk Committee of the Supervisory Board of ING Bank Hipoteczny S.A.
• ING Bank Hipoteczny S.A. Supervisory Board Members Appointing, Onboarding and Recalling Policy,
• Policy for the Assessment of the Suitability of Supervisory Board Members, Management Board Members and Key Function Holders at ING Bank Hipoteczny S.A. and Procedures for the Assessment of the Suitability of Supervisory Board Members, Management Board Members and Audit and Risk Committee Members at ING Bank Hipoteczny S.A.
• Diversity Policy for ING Bank Hipoteczny S.A. Management Board and Supervisory Board Members, and
• Policy of Remuneration for Members of the Supervisory Board of ING Bank Hipoteczny S.A.
The above-mentioned regulations are reviewed on a regular basis, at least once a year. These reviews analyse the need for amendments, in particular involving adaptation to changes in the Bank's regulatory environment or aimed at improving the functioning of the Supervisory Board.
The Bylaw of the Supervisory Board was also reviewed and updated in 2024, and a separate information on amendments is presented to the General Meeting, in accordance with recommendation 9 in Recommendation Z of the Polish Financial Supervision Authority on internal governance principles at banks.
In the opinion of the Supervisory Board, they ensure that the Supervisory Board properly performs its supervisory functions. These regulations describe in detail the Bank's management system, the Bank's organisation, operating principles, powers, duties and responsibilities, and the mutual relations of the Supervisory Board, the Management Board and the key functions at the Bank. In addition, they reflect the requirements of the Banking Law, the Commercial Companies and Partnerships Code, the PFSA Recommendations, the Principles of Corporate Governance for Supervised Institutions and generally applicable law.
Accordingly, based on the carried out reviews of the regulations and taking into account the implemented changes, the Supervisory Board assesses that the internal regulations for its operation are adequate and enable the Board to operate appropriately, efficiently and effectively.
Self-assessment of the work of the Supervisory Board in the period from 1 January 2024 to 31 December 2024.
In 2024, the Supervisory Board supported the Bank Management Board in all matters concerning the Bank and its operations. The Supervisory Board monitored the implementation of the Bank's Strategy on an ongoing basis.
The Supervisory Board confirm that during the period of activity of ING Bank Hipoteczny, namely from 1 January 2024 to 31 December 2024, they exercised regular and ongoing supervision over the Bank’s activity in accordance with their competencies and legal requirements concerning joint stock companies. The Board is well prepared to exercise its statutory powers and fulfils them in an appropriate manner to ensure adequate supervision over the Bank in all material areas of its operations. All members of the Board have exercised due diligence in fulfilling their duties related to their function in the Board, using their knowledge and experience as regards supervision of a joint-stock company. The Supervisory Board are of the opinion that their operations in the period from 1 January 2024 to 31 December 2024 were effective and conducted in accordance with the best market standards.
The Supervisory Board Members performed their duties with honesty and integrity. All meetings were well attended and the Supervisory Board Members were able to devote the necessary amount of time to their duties. Acting in the interests of the company, the Supervisory Board members were guided in their conduct by the independence of their own opinions and judgements. In this way, an effective assessment and review of the making and execution of decisions related to the day-to-day management of the Bank was ensured on the part of the Supervisory Board.
Cooperation with the Management Board of the Bank was very good. The Management Board presented the required information in a clear, reliable and exhaustive manner. The Supervisory Board would like to thank the Bank Management Board for preparing and submitting information, documents and reports in a way that made it possible for the Supervisory Board and its Committee to function efficiently. In particular, the Supervisory Board would like to thank the Bank Management Board for the effective implementation of the adopted Strategy for 2024.
Keeping in mind the results obtained and the overall operations, the Supervisory Board request that the members of the Bank’s authorities receive acknowledgement of the fulfilment of their duties in 2024.
Review of the Audit and Risk Committee of the Supervisory Board on their work in the period from 1 January 2024 to 31 December 2024
In order to support the Supervisory Board in the exercise of their powers, the Board appointed an Audit and Risk Committee from among its members. The Committee perform consultative and advisory functions, preparing recommendations for the Supervisory Board, and the Chairman of the Committee presents reports on its work at Supervisory Board’s meetings.
The Audit and Risk Committee support the Supervisory Board in monitoring the financial reporting process as well as the process of monitoring and supervising internal and external audit and management system in the Bank. In particular, the Committee monitor the adequacy and effectiveness of the internal control system and the risk management system, including the compliance risk, the Bank’s relations with related entities as well as the relations between the Bank and the entity auditing the Bank’s financial statements.
There were no changes in the composition of the Committee from 1 January 2024 to 31 December 2024. On 9 May 2024, the Ordinary General Meeting of ING Bank Hipoteczny S.A. appointed the existing Members of the Supervisory Board for a new term of office, and on the same day the Supervisory Board adopted a Resolution on the constitution of the Audit and Risk Committee of the Supervisory Board of ING Bank Hipoteczny S.A. for a new term of office.
The Audit Committee worked in the following composition:
Mr Krzysztof Gmur, Chair (Independent Member)
Mr Jacek Michalski, Member (Independent Member)
Ms Bożena Graczyk, Member
Majority of the members of the Audit and Risk Committee, its Chairman included, have the status of independent members. Pursuant to Article 129(1) of the Act on Certified Auditors (...) of 11 May 2017, at least one member of the Committee has knowledge and skills in accounting or auditing the financial statements - Mr Krzysztof Gmur, acting as Chairman of the Committee, is qualified as a certified auditor.
I. Information on the number and frequency of Audit Committee meetings and the number of recommendations issued
The Audit and Risk Committee supported the Supervisory Board in carrying out their tasks primarily during its meetings, providing them with relevant recommendations. Besides the Committee members, if invited by the Committee Chair, the following functions may participate in the meeting, without the right to vote: President of the Management Board, Vice Presidents overseeing the Finance and Risk Functions, Chief Accountant, representative of the entity authorised to audit financial statements, representative of the auditing firm and other invited guests.
In addition, irrespective of the invitation, the persons in the Internal Audit function and the head of the Compliance function (or their substitutes) shall attend, without voting rights, the meetings of the Audit and Risk Committee.
In the period from 1 January 2024 to 31 December 2024, five meetings were held by means of remote direct communication (in accordance with the approved work plan) and six meetings by circulation. A total of twenty-three recommendations were issued, as well as two decisions and six recommendations by way of circulation.
All meetings were held in a composition and manner that allowed for binding recommendations to be made, with high attendance by all Audit and Risk Committee Members.
II. Topics for Audit and Risk Committee meetings
As regards Audit, in 2024 the Committee's work was primarily focused on the following areas:
monitoring of the adequacy and effectiveness of the internal control system and the risk management system, including compliance risk,
supervising the relationship between the Bank and the entity auditing the Bank's financial statements, including verifying the independence of the audit firm,
evaluation of the interim and annual financial statements of ING Bank Hipoteczny S.A.,
analysis of information and materials provided periodically by the external auditor and presentations by the external auditor made directly to Committee members at Committee meetings,
continuous analysis of the periodic reports provided by the Internal Audit function on the status of the implementation of the 2024 audit plan and the status and changes in the timing of post-audit recommendations,
monitoring of compliance work.
In 2024, the Committee's other areas of work included:
monitoring of the Bank's relationships with related parties, including analysis of interim information on agreements concluded with related parties,
quarterly monitoring of the performance of services provided by ING Bank Śląski S.A. to ING Bank Hipoteczny S.A. in accordance with the Cooperation Agreement,
quarterly monitoring of information from the outsourcing area of ING Bank Hipoteczny S.A.
overseeing the compliance area at the Bank,
continuous analysis of interim reports: annual and quarterly compliance risk reports,
analysis of critical and high risk recommendations,
analysis of information concerning financial and regulatory reporting and the control environment in terms of reporting,
analysis of information on compliance with the regulatory requirements of the Act on Covered Bonds and Mortgage Banks.
In addition, in 2024 the Committee have been considering, on an ongoing basis, the issues identified in the Best Practices for Public Interest Entities published on 24 December 2019 by the Office of the Polish Financial Supervision Authority concerning the principles for the appointment, composition and operation of the audit committee. Keeping in mind the provisions of the Best Practices regarding:
monitoring of the financial reporting process,
monitoring of the effectiveness of internal control, internal audit and risk management systems,
monitoring of the performance of the financial audit activities,
and controlling and monitoring of the independence of the certified auditor and auditing firm, in particular when services other than audit ones are provided to the public interest entity by the auditing firm.
Members of the Audit and Risk Committee received reports on the audits carried out by the Internal Audit Position on an ongoing basis. As part of their work, the Committee concluded that the Internal Audit Position is able to perform its tasks in an independent and impartial manner. The Audit and Risk Committee thus confirms that it has no reservations about the independence of the audit process at the Bank.
Audit and Risk Committee - based on information and documents provided by the Bank Management Board and analyses that were conducted during the meetings - carried out risk assessments of the monitored processes and areas. The Committee's assessment did not differ from the assessments made by the Management Board. The work carried out did not identify any areas for which the actions taken by the Management Board were inadequate to the Bank's situation, market requirements or regulatory recommendations. As in previous years, particular attention was paid to the Bank's compliance area, and to model and outsourcing risks.
As part of the Bank's risk monitoring process, a regular item on the 2024 agenda was the risk report composed of credit, market, operational (non-financial) and model risks reports. Information on the impact of the credit holidays on the mortgage portfolio, the quality of the portfolio itself (including delays in repayments), as well as the amortisation of the mortgage portfolio (the number of loan repayments) and the conversion of variable-rate loans into fixed-rate periodic loans were an important element of the said report. Following the outbreak of war in Ukraine, the Bank is particularly monitoring exposures granted to citizens of Ukraine, Russia and Belarus.
In 2024, the Committee's work was also focused on, inter alia, the following areas:
preparing and making recommendations to the Supervisory Board on the following documents:
ING Bank Hipoteczny S.A.'s Risk Management Strategy for 2024 - 2026 together with Credit, Market and Non-Financial Risk Appetite Limits (RAS) and approval of ING Bank Hipoteczny S.A.'s Non-Financial Risk Appetite Statement for 2024,
ING Bank Hipoteczny S.A.'s Capital Management Policy,
Operational Risk Management Policy at ING Bank Hipoteczny S.A.,
ING Bank Hipoteczny S.A. Internal Control System Policy,
Analysis of the 2023 Internal Capital Adequacy Assessment Process (ICAAP) Report for ING Bank Hipoteczny S.A.,
Analysis of the 2023 Internal Liquidity Adequacy Assessment Process (ILAAP) Review Report for ING Bank Hipoteczny S.A.,
ING Bank Hipoteczny S.A.'s Stress Testing Policy,
Analysis of the 2023 Risk Management System Performance Report and assessment of the adequacy and effectiveness of the system
ING Bank Hipoteczny S.A. Audit Charter Policy.
Conclusion and acknowledgements
The Supervisory Board highly assesses the work of the Audit and Risk Committee. The activities undertaken during the year on a regular and ad hoc basis, including the in-depth analyses carried out on the issues discussed and the recommendations and opinions submitted to the Supervisory Board, provide added value and have enabled the Supervisory Board to carry out its statutory tasks effectively and competently.
The Chair of the Supervisory Board would like to thank in particular for the commitment and availability of the members of the Supervisory Board during the year, as well as the constant readiness of the Supervisory Board to deal with urgent matters by way of circulation in periods between standard meetings. Given the changing market and economic conditions, the Chair would particularly like to thank the Bank Management Board for their positive cooperation, flexible approach and commitment to the implementation of the tasks entrusted to it and the adopted Bank Strategy.
Cooperation with the Management Board of the Bank was very good. The Bank Management Board presented the required information in a clear, reliable and exhaustive manner, while ensuring the transparency of the information provided. The Supervisory Board would like to thank the Bank Management Board for preparing and submitting information, documents and reports in a way that made it possible for the Supervisory Board and its Committee to function efficiently.
Recommendations for the General Meeting
Keeping in mind the results obtained and the overall operations, the Supervisory Board request that the members of the Bank’s authorities receive acknowledgement of the fulfilment of their duties in 2024.
In addition, the Supervisory Board recommend to the General Meeting:
1. to approve the annual financial statements of ING Bank Hipoteczny S.A. for the period from 1 January 2024 to 31 December 2024,
2. to approve the Management Board Report on Operations of ING Bank Hipoteczny for the period from 1 January 2024 to 31 December 2024, including the Corporate Governance Statement,
3. to adopt a resolution on the distribution of profit for 2024,
4. to adopt the report of the Supervisory Board of ING Bank Śląski S.A. for 2024, assessment of the functioning of the Remuneration Policy of ING Bank Hipoteczny S.A. in 2024 and assessment of the adequacy of the internal regulations concerning the functioning of the Supervisory Board of ING Bank Hipoteczny S.A. and its effectiveness.
Pursuant to Article 382 § 3.1 of the Act of 15 September 2000 on Commercial Companies and Partnerships Code, having read the annual financial statements of ING Bank Hipoteczny S.A. for the period from 1 January 2024 to 31 December 2024, as well as the report on the audit of the separate financial statements for the period from 1 January 2024 to 31 December 2024, prepared by Forvis Mazars Audyt Spółką z ograniczoną odpowiedzialnością, the Supervisory Board of ING Bank Hipoteczny S.A:
1. state that the financial statements of ING Bank Hipoteczny S.A. for the period from 1 January 2024 to 31 December 2024 presented by the Management Board have been prepared, in all material respects, in a reliable and clear manner, to reflect the Company’s assets and financial position as at 31 December 2024 and the financial result and cash flows for the financial period from 1 January 2024 to 31 December 2024, in accordance with the relevant regulations applicable to the financial statements, and are consistent with the accounts, documents and facts,
2. with the above in mind, the Supervisory Board decide to recommend that the General Meeting approve the financial statements of ING Bank Hipoteczny S.A. for the period from 1 January 2024 to 31 December 2024,
3. present this report on the results of evaluation to the General Meeting of ING Bank Hipoteczny S.A.
Pursuant to Article 382 §3.1 of the Act on Commercial Companies and Partnerships Code of 15 September 2000, in conjunction with Article 49 of the Accounting Act of 29 September 1994, having read the annual report of the Management Board on the operations of ING Bank Hipoteczny S.A. for the period from 1 January 2024 to 31 December 2024, including the Corporate Governance Statement as well as the independent auditor’s report on the audit of the annual separate financial statements for the financial year ending on 31 December 2024, prepared by Forvis Mazars Audyt Spółka z ograniczoną odpowiedzialnością, the Supervisory Board of ING Bank Hipoteczny S.A:
1. state that the Management Board Report on Operations of ING Bank Hipoteczny for the period from 1 January 2024 to 31 December 2024, including the Corporate Governance Statement, contains material information about the assets and financial situation of ING Bank Hipoteczny S.A., including an assessment of the achieved results and an indication of risk factors together with a description of the threats, has been made in accordance with the relevant regulations in force concerning reports on operations and is consistent with the accounts, documents and the facts,
2. with the above in mind, they decide to recommend that the General Meeting approve the Management Board Report on Operations of ING Bank Hipoteczny S.A. for the period from 1 January 2024 to 31 December 2024, including the Corporate Governance Statement,
3. present this report on the results of evaluation to the General Meeting of ING Bank Hipoteczny S.A.
Pursuant to Article 382 §3.2 of the Act on Commercial Companies and Partnerships Code of 15 September 2000, the Supervisory Board of ING Bank Hipoteczny S.A:
1. having reviewed the Management Board's motion concerning the method of distribution of the profit of PLN 31,506,428.64 earned by the Bank in 2024, has no objections to the submitted motion and decides to recommend to the General Meeting to adopt a resolution as requested by the Management Board,
2. present this report on the results of evaluation to the General Meeting of ING Bank Hipoteczny S.A.
ING Bank Hipoteczny S.A. is a subsidiary of ING Bank Śląski S.A. which as at 31 December 2024 held 100% shares in the share capital of ING Bank Hipoteczny S.A. The latter is a member of the Group which in this document is referred to as the ING Bank Śląski S.A. Group (the Group).
As at 31 December 2024, the share capital of ING Bank Hipoteczny S.A. amounted to PLN 380,000,000 and was fully taken up by ING Bank Śląski S.A. ING Bank Hipoteczny S.A.’s shares were paid in cash.
The Bank runs business based on the strategic cooperation with ING Bank Śląski S.A., acquiring debt under mortgage-backed loan agreements. The strategic objective of the Bank is to provide the Group with long-term and stable funding by way of issue of covered bonds.
Business landscape
As of 31 December 2024, banks' housing loan receivables from households in Poland amounted to PLN 447.5bn, down by 3.3% y/y, according to data published by the NBP. The balance of loans granted in PLN increased by 4.6% y/y to PLN 409.3bn.
The ING Bank Śląski S.A. Group has a 15.2% market share of mortgage volumes in Polish zlotys.
Operations of ING Bank Hipoteczny S.A.
The year 2024 was full of events that affected the economic situation in Poland. We faced challenges related to inflation and monetary policy, geopolitical tensions and changes in the political scene in many States, as well as the devastating flooding in the south of our country. The ongoing armed conflict across our eastern border has affected the economic condition of our country and is a source of higher uncertainty. Increased inflation and high interest rates have kept pressure on household budgets and businesses.
The Bank shows a very good liquidity and capital position, exceeding the required regulatory levels by far. At the end of 2024, the total capital ratio stood at 20.28%. The covered bonds issued by the Bank are characterised by a high level of safety, reflected in a rating of Aa1. The Bank's business activities were reflected in a net financial result of PLN 31.5 million.
The Bank's objective is to continue its efforts to acquire and then gradually increase the share of long-term financing through the issuance of covered bonds. However, these activities must be adjusted to the external situation and market potential. Changes in the market caused by external factors are analysed by the Bank Management Board on an ongoing basis. This refers also to the covered bond market as well as changes in the regulatory and economic environment and the situation of customers. Despite unfavourable external factors and a volatile regulatory environment, the Bank consistently pursued its business strategy, continuing to rebuild its loan portfolio by acquiring high-quality mortgage-backed debt claims from ING Bank Śląski in 2024. In addition, the Bank successfully placed a second series of covered bonds on the Polish market in the autumn.
The Supervisory Board supervises the Bank’s operations, ensuring compliance with relevant legal regulations, in particular those concerning accounting, finance and reporting. The duties of the Supervisory Board also include supervision over processes related to management of particular risks in ING Bank Hipoteczny S.A. with the support of the Audit and Risk Committee. Based on the Committee’s recommendations, the Supervisory Board accept and approve the risk management strategy in the Bank’s operations, the main principles of the policy in this respect as well as the risk appetite level. Further, the Supervisory Board monitors the utilisation of internal limits vis-à-vis the current strategy of the Bank.
The Audit and Risk Committee provides support to the Supervisory Board in monitoring the risk management process, including (non-financial) operational risk, non-compliance risk, credit risk, market risk and liquidity risk. The Committee also supervises: the process of internal capital estimation, capital adequacy assessment and risk assessment of models related to calculation of capital and other models. The Committee voices its opinion about the overall readiness of the Bank to take the risk in the current and long term perspective.
The Committee is also responsible for monitoring the financial reporting process. In this context, the Committee analyses from time to time the Bank’s financial statements and the results of the audit of those statements. The Audit Committee actively participates in the process of selecting an entity authorised to audit financial statements of the company and analyses the results of the auditor's work, ensuring its independence and effectiveness.
Moreover, the Committee monitors the effectiveness of internal control, internal audit and risk management systems and assesses the effectiveness of measures taken to mitigate the risk and assesses the quality of risk management.
The Supervisory Board assesses that the risk management system is adequate and effective. It covers all material risks and the processes for their identification, measurement, management and reporting use risk-specific instruments and techniques. The main objectives of the risk management system have been achieved in 2024 and the independence of the organisational units for risk management is ensured, as well as adequate human resources necessary for the effective performance of tasks by these units.
In 2024, ING Bank Hipoteczny S.A. satisfied the requirements of safe operation and capital adequacy, in particular:
pursued a prudent lending policy - the Bank had in its portfolio only loans granted in Polish zloty. The lending processes and procedures were compliant with the regulatory requirements and best practices on the market. The Bank had a loan portfolio of very good quality. The share of non-performing loans represented approximately 0.06% at the end of 2024, i.e. it was significantly lower than the average across the banking sector. Throughout 2024, no designated credit risk limits were exceeded;
had market risk management policies and systems in place that were in line with market standards. During 2024, the market risk was at a moderate level;
maintained a stable liquidity position. In 2024, supervisory liquidity measures were above regulatory limits, stress test results show a good liquidity position of the Bank;
effectively managed operational risks, including model risks, within the limits of the accepted risk appetite, meeting market standards in this respect;
had an adequate level of equity to meet supervisory requirements.
The internal control system in place at the Bank adequately and effectively ensures the achievement of the main objectives of the internal control system, which were achieved at a very high level in 2024. This system covers all business units of the Bank and all three lines of defence.
The Bank has a formal reporting path for the scale and nature of the identified irregularities, as well as the status of corrective actions and disciplinary measures taken. In particular, information on open critical and high risk recommendations (if any) is submitted to the Audit and Risk Committee on a quarterly basis. Corrective actions are planned, implemented and their status is monitored on an ongoing basis.
In the area of the Compliance Cell and in the area of operations of the Internal Audit Position, adequate human resources are provided for the effective performance of these units in 2024.
In 2024, no gaps were identified as regards the independence and resources of the Compliance Cell and the Internal Audit Position.
The internal control system that is in place at the Bank secures the Bank effectively enough against unexpected events with respect to granted financing, non-financial, market, liquidity or capital adequacy risks.
The Supervisory Board is of the opinion that the Bank's attention should continue to be focused on the activities set out in the Bank's strategy while maintaining a secure approach to the Bank's management, such as:
adequate capital management in order to ensure safe lending portfolio growth and fulfilment of all present and future regulatory requirements,
increase in the volume of mortgage loans which are used for the issue of covered bonds,
obtaining financing through another issue of covered bonds,
maintaining an adequate level of liquid assets,
further improvement of cost effectiveness while maintaining high quality processes, through the optimal use of existing resources.
In the opinion of the Supervisory Board, the Bank's current strategy of increasing the scale of its operations, while maintaining a conservative and safe approach that takes into account the ongoing analysis of the external situation, builds a good foundation for the Bank's stable development and the generation of good financial results in the future reporting periods.
In 2025, the Bank will keep on following the adopted strategy while maintaining adequate capital base in relation to the planned increase in the volume of mortgage loans.
With Resolution No. 218/2014 of 22 July 2014 (Official Journal of PFSA, item 17), the Polish Financial Supervision Authority adopted the Principles of Corporate Governance for Supervised Institutions (“The Principles”).
The Principles were adopted by ING Bank Hipoteczny S.A. (“the Bank”) to the extent specified in the Representation of the Bank’s Management Board dated 13 May 2024, published on the Bank’s website at: https://www.inghipoteczny.pl/inghipoteczny/o-nas.
The draft Representation of the Management Board was endorsed by the Supervisory Board on 19 April 2024. On the same day, the Supervisory Board adopted the Principles concerning operation of the Supervisory Board and its members.
In accordance with the Representation of the Management Board, the principles set out in the following regulations were excluded from application:
§8.4 and §9.6;
§32.1 and §34;
§49.4 and §52.2;
Chapter 9 of the Principles.
The exclusion of application of the above mentioned Principles results mainly from the fact that the sole shareholder holding 100% shares of ING Bank Hipoteczny S.A. is ING Bank Śląski S.A and ING Bank Hipoteczny S.A. does not sell new products.
The Principles adopted for partial application in ING Bank Hipoteczny S.A:
§9.1;
§29.1 and §29.2;
§35, §37, §38.1 and §38.2.
As in the case of the exclusion of the application of the Principles, their limitation results from the fact that the sole shareholder holding 100% shares of ING Bank Hipoteczny S.A. is ING Bank Śląski S.A. and ING Bank Hipoteczny S.A. does not sell new products.
At the same time, with Resolution No. 31 dated 9 May 2024, the Ordinary General Meeting of the Bank accepted the Representation of the Bank’s Management Board and declared their readiness to apply the Principles in the part referring to the shareholders and to the Bank’s relations as a supervised institution with its shareholders, under the principles set out in this resolution. The Resolution is available on the Bank’s website: https://www.inghipoteczny.pl/_fileserver/item/dubstfj
In the opinion of the Supervisory Board, after the adoption of the Principles, the Bank took appropriate actions to adjust the relevant internal regulations to the Principles and to ensure that the Principles are applied in the ongoing operations of the Bank.
The Bank’s authorities apply the Principles, in particular those relating to their operation and mutual relations. The Principles are also applied by the Bank’s employees and are reflected in the ongoing operations of the Bank. This applies to the Principles relating to internal relations, organisation of the Bank’s key systems and functions, and the Principles relating to external relations with the Bank’s shareholders, customers and other stakeholders.
Having regard to the above, the Supervisory Board assess that in 2024 the Bank applied the Principles of Corporate Governance for Supervised Institutions correctly.
The remuneration policy in place at ING Bank Hipoteczny S.A. is assessed on the basis of:
Regulation of the Minister of Finance, Funds and Regional Policy of 8 June 2021 on the risk management system and internal control system, as well as the remuneration policy and the detailed manner of estimating internal capital at banks;
§28.3 of the Principles of Corporate Governance for Supervised Institutions adopted with Resolution No. 218/2014 of 22 July 2014 of the Polish Financial Supervision Authority (Official Journal of the Polish Financial Supervision Authority, item 17) (“the Principles”);
Since 9 April 2018, ING Bank Hipoteczny S.A. has had a Remuneration Policy (the "Policy") in place, which is reviewed and updated annually - the last update of the regulation was approved on 6 December 2024 by Supervisory Board Resolution No. 62/11/2024. The document was prepared based on standards in force in the ING Bank Śląski S.A. Group. The Policy defines the key assumptions for the remuneration policy used to attract and retain employees by ensuring a market competitive remuneration and defines the component parts of the remuneration.
The Bank identifies social and environmental risks diagnosed as part of its sustainability strategy.
The Remuneration Policy is consistent with the introduction of ESG risks into the Bank's operations, understood as environmental, social or governance events and conditions that could have a material negative financial impact on the Bank or its customers. In particular, the Remuneration Policy:
1) ensures transparent remuneration principles and their link to the Bank's risk management strategy and corporate social responsibility, as reflected in the objectives set for employees for the year;
2) creates conditions so that the remuneration of the Bank's executive staff, in particular Identified Staff, is linked to the material ESG risks identified in the Bank's risk management strategy in all key management processes, including risk management, strategic planning, innovation, capital investment and employee management,
3) implies differentiating staff remuneration on the basis of quantitative and qualitative criteria, taking into account the actual contribution of the work to maintaining customer satisfaction, not encouraging excessive risks, including ESG risks, ensuring that the activities carried out comply with regulatory requirements and internal regulations.
At the same time, the Policy does not promote actions that are against sustainable growth.
I. PRINCIPLES OF THE REMUNERATION POLICY OF ING BANK HIPOTECZNY S.A.
1. The remuneration policy:
1) supports the implementation of the business strategy, as well as the short-, medium- and long-term interests of the Bank and its clients,
2) supports proper and effective risk management in order to maintain and protect the Bank’s safe capital base and does not encourage taking excessive risk beyond the risk appetite approved by the Supervisory Board of ING Bank Hipoteczny S.A.,
3) is gender neutral, which means that it does not create conditions for any gender to be favoured in an unjustified manner with regard to employment, career development, promotions, as well as awarding and paying remuneration.
2. The purpose of this Remuneration Policy is to ensure that the conflicts of interest relating to remuneration are identified and mitigated properly. Adequate risk mitigation measures, that is, a layered approval process, clear and transparent performance appraisal principles which are communicated to all employees, are part of the variable remuneration process.
3. ING Bank Hipoteczny S.A. does not provide for any form of remuneration that might encourage employees to favour their own interests or those of the Bank while acting to the detriment of clients.
4. The rules of remuneration of persons acting on behalf of the Bank do not constitute an incentive to take excessive risk of misselling products.
5. The Bank reviews the level of remuneration every year. Market data – payroll reports and business and economic information – are analysed. The decision on the amount of the employee’s salary rise is taken, first and foremost, based on the place of his or her base remuneration in the salary brackets within a given pay grade and the annual performance outcome.
As part of its annual remuneration review, the Bank monitors also:
1. the gender pay ratio and takes appropriate action to address any gender imbalance in this respect.
2. the relation of the average annual gross total remuneration of the individual Management Board Members to the average gross total remuneration of the other employees (the average annual gross total remuneration of individual Management Board Members shall not exceed 40 times the average annual gross total remuneration of other employees).
3. individuals whose salary level differs significantly (upwards or downwards) from the average salary offered in a homogeneous job group, together with a proposal for remedial action, unless the situation is justified by, for example, appraisal, knowledge and experience.
6. The remuneration system is open and transparent, and its rules are communicated to all employees of the Bank.
II. ELEMENTS OF REMUNERATION
1. The total remuneration consists of fixed and variable parts.
2. Fixed remuneration represents a sufficiently high part of total remuneration to allow a fully flexible variable remuneration policy, reduction or non-payment of variable remuneration, included.
3. Variable remuneration stands for all forms of remuneration and other benefits provided in return for performance. Variable remuneration includes an annual bonus, which is determined for each employee on the basis of an appraisal of sustainable and risk-adjusted performance, taking into account quantitative and qualitative criteria. As part of variable remuneration, employees may also receive an additional individual pecuniary award aimed at recognising and rewarding employees showing above-average performance and special potential.
4. For a group of employees holding positions that have a material impact on the Bank’s risk profile, there are separate principles regarding variable remuneration set out in the Variable Remuneration Policy for Identified Staff of ING Bank Hipoteczny S.A. For Identified Staff being Management Board Members or the Bank's Chief Accountant, mandatory deferral and partial payment of bonuses in financial instruments apply. For other Identified Staff, a limited variable remuneration policy applies. The Policy of variable remuneration components sets out in detail the components of variable remuneration that may be awarded to Identified Staff and the rules for the payment of this remuneration.
The most important ones include:
a) the financial and non-financial criteria and risk-adjusted criteria - to assess individual performance, where non-financial criteria represent minimum 50% of all goals, excluding those responsible for control functions;
b) financial criteria are not used for the persons responsible for control functions. The objectives for these persons derive from their functions and are not linked to performance in the areas they control.
c) for the Management Board Members and a person acting as the Chief Accountant of the Bank granting a part of variable remuneration (at least 50%) in the form of phantom stock entitling to receive cash linked to the stock value (1 share represents the net asset value of ING Bank Hipoteczny S.A. at the end of the financial year).
d) The deferral period for part of the variable remuneration is five years from the variable remuneration determination by the Management Board or Supervisory Board. The vesting of the deferred variable remuneration takes place annually over a period of five years, in five equal parts, unless there are grounds for reduction or non-payment.
5. Fringe benefits under the remuneration policy of the Bank:
under the four pillars, namely Health, Energy, Activity and Finance, i.e.:
a) Health - the employer cares about the health of its employees, in particular by providing access to medical care, including the family and dental packages, and by offering access to programmes promoting preventive health checks, cancer prevention and seasonal health promotion campaigns;
b) Energy - the employer offers a range of dedicated initiatives to support mental health and provides employees with a mental health platform;
c) Activity - the employer keeps employees active and provides a dedicated platform to promote a healthy lifestyle and organises sports challenges and tournaments;
d) Finance - the employer cares about the financial education of employees, secures the financial future of employees and offers additional benefits including:
i. employee pension programme - organised on the basis of the Employee Pension Programmes Act, through which the employer enables employees to voluntarily accumulate additional funds for retirement,
ii. life insurance - the Bank provides a sponsored package of insurance which covers: death of the employee, death of the employee due to an accident and serious illness,
iii. benefits granted under the Cafeteria Plan General Terms and Conditions;
iv. remote work / office allowance in accordance with the Employee Remuneration Bylaw of ING Bank Hipoteczny S.A. and Regulations in force in ING Bank Śląski S.A. Group companies;
v. company car - allocated on the basis of position in the organisational structure, in accordance with ING Bank Hipoteczny S.A.'s Company Car Policy.
III. SUPERVISION OF REMUNERATION POLICY
1. Compliance with the remuneration policy in the Bank is supervised by:
1) General Meeting - assess, on the annual basis, whether the approved remuneration policy is conducive to the development and security of the Bank’s operations,
2) Supervisory Board of ING Bank Hipoteczny S.A. - approve the Policy and supervise its observance,
3) The control functions actively participate and cooperate in the review of the Bank’s remuneration policy to ensure its consistency with the risk management strategy and framework, and assess the adequacy of the capital base and the fulfilment of the conditions necessary to activate the bonus pool.
2. The remuneration policy is subject to an independent review by the Internal Audit position. The review is carried out at least once a year.
3. The Polish Financial Supervision Authority supervise the compliance of the Bank’s activity with the regulations concerning the variable remuneration components policy.
4. The Bank communicates the Remuneration Policy to the competent authorities and to the public in accordance with generally applicable legislation.
IV. REPORT ON THE EVALUATION OF THE REMUNERATION POLICY AT THE BANK IN 2024
1. The Bank’s remuneration policy is consistent with its strategy, values and risk appetite, and supports the long-term interests of the Bank and its customers. Moreover, it promotes and supports the process of effective risk management in order to maintain and protect the secure capital base of the Bank, does not encourage taking excessive risk beyond the Bank’s risk appetite accepted by the Supervisory Board and is based on performance management, which combines individual goals with short-, medium- and long-term business strategy and ensures stable development.
2. The Bank has a step up system used for goals settlement, which combines the assessment of: performance, strong corporate culture. In accordance with the Employee Evaluation Bylaw of ING Bank Hipoteczny S.A. (Step Up), in February 2024, a bonus was paid to the Bank’s employees as part of the provision created for this purpose.
3. In March 2024, bonuses for Identified Staff were settled in accordance with the Policy of variable remuneration for Identified Staff of ING Bank Hipoteczny S.A., variable remuneration was determined for 2024 and the non-deferred part of the bonus was granted.
4. In accordance with the provisions of the ING Bank Hipoteczny S.A. Employee Evaluation Bylaw (Step up) and the ING Bank Hipoteczny S.A. Identified Staff Evaluation Bylaw, the Bank Management Board, in consultation with the Supervisory Board, determine the amount of the employees variable remuneration pool.
With regard to the 2024 bonus, the Supervisory Board approved an adjustment factor of 1.1 for employees and Identified Staff of ING Bank Hipoteczny S.A.
In 2024, the ING Bank Hipoteczny S.A. Employee Evaluation Bylaw (Step up) and the ING Bank Hipoteczny S.A. Identified Staff Evaluation Bylaw have provisions stipulating that:
if the Bank's gross profit is less than 80% on the accrual basis for a given year, the rules for triggering the annual bonus set out in the Evaluation Bylaw do not apply and the decision on granting the bonus shall be taken by the Bank Management Board on a discretionary basis,
the deferral period for variable remuneration is up to 5 years (for Identified Staff to whom the variable remuneration policy applies in full, i.e. the Management Board Members and the Bank's Chief Accountant).
5. In accordance with the Update Procedure for the ING Bank Hipoteczny S.A.'s List of Identified Staff, the list of interpretations of the qualitative and quantitative criteria and the additional eligibility criteria for an employee to be included in the List of Identified Staff for 2025 was revised in November 2024. The changes that took place in the Bank's organisational structure and job structure did not affect the IDS List. In 2024, Directive (EU) 2024/1619 of the European Parliament and of the Council of 31 May 2024 introduced a new risk category in the new Article 87a, i.e. Environmental, Social and Corporate Governance Risks. During the review, responsibility for the listed new risks was assigned to the Vice President in charge of the Risk Area, who is also responsible for all other risks listed in the Directive. The indicated changes in the approach to the individual criteria had no impact on the 2025 IDS List.
Przeglądu dokonano w oparciu o finalne brzmienie regulacji:
THE ACT of 25 February 2021 amending the Banking Law Act and Certain Other Acts - implemented the provisions of CRD V in Poland, including the criteria for employees with a material impact on the risk profile of the institution
Commission Delegated Regulation (EU) 2021/923 of 25 March 2021 supplementing Directive 2013/36/EU of the European Parliament and of the Council with regard to regulatory technical standards setting out the criteria to define managerial responsibility, control functions, material business units and a significant impact on a material business unit’s risk profile, and setting out criteria for identifying staff members or categories of staff whose professional activities have an impact on the institution’s risk profile that is comparably as material as that of staff members or categories of staff referred to in Article 92(3) of that Directive
EBA Guidelines on sound remuneration policies EBA/GL/2021/04 of 2 July 2021
CRD 6, namely Directive (EU) 2024/1619 of the European Parliament and of the Council of 31 May 2024 amending Directive 2013/36/EU as regards supervisory powers, sanctions, third-country branches and environmental, social and corporate governance risks.
The Supervisory Board are of the view that in 2024 the Bank respected the principles of its remuneration policy.