Nordea Bank Polska S.A. Report for the Fourth Quarter of 2012

Nordea Bank Polska S.A. Report for the Fourth Quarter of 2012

Selected financial figures EUR thousand Statement of comprehensive income Period Period Period Period 01/01/2012-31/12/2012 01/01/2011-31/12/2011 01/01/2012-31/12/2012 01/01/2011-31/12/2011 1 Interest income 1,235,338 1,038,739 295,989 250,897 2 Commission income 146,524 143,482 35,107 34,657 3 Profit before income tax 209,998 381,972 50,316 92,262 4 Profit for the period 150,632 296,663 36,092 71,656 5 Decrease in cash and cash equivalents (522,907) 3,194,288 (125,289) 771,549 6 Earnings per share (PLN/EUR) 2.71 5.35 0.65 1.29 The following exchange rates were applied in order to convert financial figures in the profit and loss account into EUR: For figures relating to the period from 01/01/2012 to 31/12/2012 4.1736, i.e. the exchange rate calculated as the average of the rates quoted by the National Bank of Poland (NBP), prevailing on the last day of each month in that period and For figures relating to the period from 01/01/2011 to 31/12/2011 4.1401, i.e. the exchange rate calculated as the average of the rates quoted by the National Bank of Poland (NBP), prevailing on the last day of each month in that period. Statement of financial position EUR thousand As at As at As at As at 31/12/2012 31/12/2011 31/12/2012 31/12/2011 1 Loans and advances to banks 575,426 283,229 140,753 64,125 2 Loans and advances to customers 26,462,954 27,584,938 6,473,009 6,245,458 3 assets 33,310,218 35,325,117 8,147,893 7,997,898 4 Deposits from banks 15,945,857 18,834,996 3,900,459 4,264,399 5 Deposits from customers 13,467,278 13,291,863 3,294,183 3,009,388 6 liabilities 31,010,889 33,176,671 7,585,463 7,511,472 7 equity 2,299,329 2,148,446 562,431 486,426 8 Number of shares 55,498,700 55,498,700 55,498,700 55,498,700 9 Book value per share (PLN /EUR) 41.43 38.71 10.13 8.76 10 Solvency ratio 14.18 9.55 - - For conversion of items of the statement of financial position into EUR, the Bank used the NBP s exchange rate of 4.0882 quoted on 31/12/2012 and the NBP s rate of 4.4168 quoted on 31/12/2011. 5

Condensed Interim Financial Statements of Nordea Bank Polska S.A. for the Fourth Quarter of 2012

Table of contents: Title Page Statement of comprehensive income... 6 Statement of financial position... 7 Statements of changes in equity... 8 Statement of cash flows... 9 1. General Information about Nordea Bank Polska S.A.... 10 2. Significant accounting policies... 10 3. Key factors influencing the result achieved by the Bank in the fourth quarter of 2012... 11 4. Segment reporting... 17 Statement of comprehensive income... 22 5. Net interest income... 22 6. Net commission income... 23 7. Instruments at fair value through profit or loss and revaluation... 23 8. Other operating income... 24 9. Administrative expenses... 24 10. Impairment on loans and advances... 25 11. Income tax... 26 12. Cash and balances with central bank... 26 13. Loans and advances to banks... 27 14. Loans and advances to customers... 27 15. Financial assets designated at initial recognition as at fair value through profit or loss... 29 16. Financial assets and financial liabilities held for trading... 30 17. Other assets... 31 18. Deposits from banks... 31 19. Deposits from customers... 32 20. Other liabilities... 33 21. Subordinated liabilities... 33 22. The Management Board s view on the feasibility of earlier projections of results for the given year in the light of the figures presented in the quarterly report as juxtaposed with the forecast figure... 34 4

23. Shareholders holding more than 5% of votes at the General Meeting of Shareholders (GMS) and of the share capital of Nordea Bank Polska S.... 34 24. The holding of shares in the issuer or rights (options) to shares by executive managers and supervising directors of the issuer, according to the information available to the issuer... 35 25. Classification of financial instruments... 36 26. Suretyships for loans/advances, provided by the issuer or guarantees granted by the issuer, whose total amount per one entity exceeds 10% of the issuer s equity... 40 27. Information concerning the issuance, redemption and repayment of debt securities and equity instruments... 40 28. Contingent Liabilities... 40 29. Related party transactions... 41 30. Material events during the reporting period... 46 31. Events after the reporting period... 46 32. Important accounting estimates and judgements... 46 5

Statement of comprehensive income 01/10/2012 01/01/2012 01/10/2011 01/01/2011 Nota OPERATING INCOME Interest income 5 303,852 1,235,338 308,954 1,038,739 Interest expenses 5 (136,126) (540,280) (126,073) (403,841) Net interest income 5 167,726 695,058 182,881 634,898 Commission income 6 41,433 146,524 41,977 143,482 Commission expenses 6 (10,184) (23,829) (7,989) (27,128) Net commission income 6 31,249 122,695 33,988 116,354 Gains on instruments at fair value through profit or loss and revaluation 7 24,885 98,198 48,013 203,482 Other operating income 8 7,912 30,003 6,205 26,715 operating income 231,772 945,954 271,087 981,449 OPERATING EXPENSES 9 Administrative expenses (133,228) (476,284) (138,808) (492,038) - staff costs (64,320) (229,301) (56,882) (227,258) - other administrative expenses (68,908) (246,983) (81,926) (264,780) Other operating expenses 10,006 (32,194) - - Depreciation (10,306) (43,578) (11,567) (46,224) operating expenses 133,528 552,056 150,375 538,262 Impairment on loans and advances 10 (11,690) (159,915) (29,971) (56,272) Impairment on property, plant and equipment (1,088) (23,985) (4,943) (4,943) Profit before income tax 11 85,466 209,998 85,798 381,972 Income tax (20,129) (59,366) (19,867) (85,309) Profit for the period 65,337 150,632 65,931 296,663 comprehensive income for the period 65,337 150,632 65,931 296,663 01/10/2012 01/01/2012 Earnings per share 2.71 5.35 Diluted earnings per share 2.71 5.35 The notes presented on pages 10-47 constitute an integral part of the financial statements. The calculation of the weighted average number of ordinary shares: - as at 31/12/2012: The number of shares during the 12-month period: 01/01/2012 31/12/2012 (366 days) 55,498,700 shares The calculation of the weighted average number of shares: (55,498,700 shares)* (366 days) /(366 days )= 55,498,700 - as at 31/12/2011: The number of shares during the 12-month period: 01/01/2011 31/12/2011 (365 days) 55,498,700 shares The calculation of the weighted average number of shares: (55,498,700 shares)* (365 days) /(365 days )= 55,498,700 6

Statement of financial position ASSETS Note 31/12/2012 31/12/2011 Cash and balances with central bank 12 2,443,243 1,021,025 Loans and advances to banks 13 575,426 283,229 Loans and advances to customers 14 26,462,954 27,584,938 Financial assets at fair value through profit or loss 3,476,180 6,102,972 Financial assets held for trading 16 26,062 123,024 Financial assets designated at initial recognition as at fair value through profit or loss 15 3,450,118 5,979,948 Intangible assets 49,861 48,071 Property, plant and equipment 150,402 177,461 Deferred tax assets 81,695 60,710 Other assets 17 70,457 46,711 TOTAL ASSETS 33,310,218 35,325,117, PLN,thousand LIABILITIES Note 31/12/2012 31/12/2011 Deposits from banks 18 15,945,857 18,834,996 Deposits from customers 19 13,467,278 13,291,863 Debt securities issued - 248,098 Financial liabilities at fair value through profit or loss 51,363 36,452 Financial liabilities held for trading 16 51,363 36,452 Other liabilities 20 271,607 228,254 including current tax 5,725 4,049 Subordinated liabilities 21 1,259,239 536,629 Provisions 15,545 379 TOTAL LIABILITIES 31,010,889 33,176,671 Share capital 277,494 277,494 Other capital 1,870,746 1,573,832 Retained earnings and profit for the year 151,089 297,120 TOTAL SHAREHOLDERS EQUITY 23 2,299,329 2,148,446 TOTAL LIABILITIES AND EQUITY 33,310,218 35,325,117 The notes presented on pages 10-47 constitute an integral part of the financial statements. 7

Statements of changes in equity Specification Share capital Tier 1 capital Retained earnings and profit for the current year Supplement ary capital Other capital Retained earnings Profit for the period 01 January 2012 277,494 847,936 725,896 457 296,663 2,148,446 comprehensive - income for the period - - - 150,632 150,632 Bank s equity - - - - - - Share-based payment - - 251 - - 251 Profit appropriation - - 296,663 - (296,663) - 31 December 2012 277,494 847,936 1,022,810 457 150,632 2,299,329 Specification Share capital Tier 1 capital Retained earnings and profit for the current year Supplemen tary capital General risk fund Other capital Retained earnings Profit for the period 01 January 2011 277,494 847,936 300 466,298-259,337 1,851,365 comprehensive income for the - period - - - - 296,663 296,663 Bank s equity - - (300) (157) 457 - - Share-based - payment - - - 418-418 Profit appropriation - - - 259,337 - (259,337) - 31 December 2011 277,494 847,936-725,896 457 296,663 2,148,446 The notes presented on pages 10-47 constitute an integral part of the financial statements. 8

Statement of cash flows Specification 01/01/2012 01/01/2011 Operating activities Profit for the period 150,632 296,663 Adjustment for the reconciliation of the net profit against net cash from operating activities (19,964) (40,712) Interest paid and received 11,337 12,194 Income tax (75,704) (100,158) Effect of exchange differences on operating activities 825 1,028 Depreciation 43,578 46,224 Changes in operating assets 1,267,823 (6,863,010) Change in loans to financial institutions 190,745 (30,347) Change in advances (lending activity) 931,307 (6,818,363) Change in derivative instruments 96,962 (106,713) Change in other assets except financial instruments 48,809 92,413 Changes in operating liabilities (2,443,755) 9,550,773 Change in deposits by financial institutions (2,545,008) 5,630,015 Change in deposits and advances by other institutions 26,040 3,815,727 Change in other liabilities 75,213 105,031 Cash flow in operating activities (1,045,263) 2,943,713 Investing activities Acquisition of non-current assets (32,926) (90,993) Sale of non-current assets 543 Acquisition of intangible assets (6,120) (5,890) Change in other financial assets 292,649 (268,851) Cash flow in investing activities 254,146 (365,734) Financing activities Issue of subordinated debt 797,552 - Issue of debt securities 172,409 639,642 Redemption of debt securities (425,000) (730,000) Other, including loans received (276,750) 706,666 Cash flow in financing activities 268,211 616,308 Decrease in cash and cash equivalents (522,907) 3,194,288 Opening balance of cash and cash equivalents 5,940,598 2,746,310 Closing balance of cash and cash equivalents 5,417,691 5,940,598 Balance sheet change in cash and cash equivalents (522,907) 3,194,288 Interest paid 543 623 295 365 Interest received 1 051 182 644 497 The notes presented on pages 10-47 constitute an integral part of the financial statements. 9

1. General Information about Nordea Bank Polska S.A. Nordea Bank Polska S.A. is a bank with the registered seat in Poland: 81-303 Gdynia, 2, Kielecka Street, Tax Identification Number (NIP) 586-000-78-20, REGON 190024711, registered by the District Court in Gdańsk-North in Gdańsk, 8th Commercial Division of the National Court Register under number KRS: 0000021828. The Bank offers a wide range of universal banking services to retail and institutional customers in accordance with the scope of services listed in its Statutes. The Bank's shares are listed on the Warsaw Stock Exchange. 2. Significant accounting policies Statement of compliance The condensed interim financial statements of Nordea Bank Polska S.A. for the 12-month period ended on 31 December 2012 have been drawn up in accordance with International Financial Reporting Standard 34 Interim Financial Reporting approved by the European Union and other applicable regulations, including the Regulation of the Minister of Finance dated 19 February 2009 in respect of current and periodic information published by issuers of securities and conditions for recognizing as equivalent information required by the laws of a non-member state (Dz. U., No 33 item 259). The accounting principles followed in the preparation of the Condensed Interim Financial Statements of Nordea Bank Polska S.A. for the Fourth Quarter of 2012 are consistent with the accounting principles followed and specified in the interim financial statements for the first half of 2012. An earlier application of standards that are not yet mandatory as well as amendments to the existing standards and interpretations issued by the International Financial Reporting Standards Interpretation Committee (IFRSIC). In its statements the Bank does not follow any standards which are not yet mandatory nor any changes in the existing standard or interpretations FRSIC. Comparability with previous periods In the annual report for the year ended on 31 December 2011, the Bank stated commission expenses related to insurance products amounting to PLN 8,756 thousand in the line Commission expenses (previously PLN 35,884 thousand; now PLN 27,128 thousand.). In this Report, the presentation of this item has been changed and this amount adjusts the line Interest income by PLN 8,488 thousand (previously PLN 1,047,227 thousand; now PLN 1,038,739 thousand) and line Commission income by PLN 268 thousand (previously PLN 143 750 thousand; now PLN 143,482 thousand). Furthermore, there was a change in the presentation of income from reversed unutilised provisions, which were presented in the Statement of Comprehensive Income in that reporting period in line Other operating income in the amount of PLN 2,735 thousand (previously PLN 9,450 thousand, now PLN 26,715 thousand), which now adjust the value of Other administrative expenses (previously PLN 267,515 thousand, now PLN 264,780 thousand). 10

3. Key factors influencing the result achieved by the Bank in the fourth quarter of 2012 3.1. External factors and events In Q4 2012, the Polish economy was more and more affected by the earlier deterioration in the economic climate in the external surroundings, including a decrease in the economic activity in the euro zone, a slowdown of the economic growth in Germany, which is Poland s main trading partner. At the same time, due to earlier political decisions in the euro zone and firmer steps taken by the European Central Bank (ECB), the last quarter of 2012 further pacified the fears connected with the sovereign debt crisis in the euro zone, which led to recovery on the global financial markets. The main central banks continued their ultra-mild monetary policies (and the Fed even implemented a new quantitative easing programme), which caused the money market rates on the major currencies (USD, EUR, CHF, GBP) to drop and as a result some of them were close to zero. The Swiss central bank was firm in defending the low limit on the EURCHF exchange rate at the level of 1.20 throughout 2012. Towards the end of the year, the market rate started to move away from this barrier as the alleviation of fears for the euro zone reduced demand for Swiss assets. In spite of the weak economic climate at the main trading partners, Q4 2012 saw a slight recovery in trading, which lead to a small improvement in the dynamic of Polish exports. Apart from the deferred effects of the earlier meltdown in external demand, a drop in the domestic economic activity was also caused by the on-going fiscal austerity process, which limited investments in the public sector. The investment activity of the private sector was weakened by symptoms of falling demand for goods and services by companies and a general uncertainty concerning future developments in the global and the domestic economies. What further undermined investments and demand for credit was the relatively high level of central bank rates after the hike made by the Monetary Policy Council (MPC) in May 2012. The reduction in the interest rates commenced by the MPC in November 2012 was belated and not deep enough to be a factor which could at least mitigate the negative trends in the economy by the end of 2012. The weakening of investments hit the domestic labour market. There were further redundancies and so the unemployment rate increased. The difficult situation on the labour market dampened the growth in consumer demand and demand for credit, as well as worsening the quality of the credit portfolio. On the basis of the available monthly economic activity ratios for the period from October to December 2012, one can estimate that the GDP growth decelerated in the last quarter of 2012 decelerated to about 0.5% from 1.4% in Q3 2012. In the wake of a marked decrease in demand, the appreciation of the zloty and the effect of a high statistical base, the CPI inflation took a visible downward turn in Q4 to reach 2.4% at the year end, which was below the central bank s inflationary target. Faced with the economic meltdown and given the sudden decrease in inflation, the MPC started cutting the central bank rates in November. After two cuts in November and December, by 25 bps each, at the end of 2012, the central bank s reference rate stood at 4.25%. 11

The U-turn in the domestic monetary policy resulted in speeding up the downward trend of the WIBOR rates in Q4 2012, which had emerged some time before. The average monthly WIBOR 3M, which is the reference rate for many kinds of loans, dropped to 4.26% in December, and further down to 4.11 at the end of the year. The average WIBOR 3M for the whole of 2012 amounted to 4.91% compared with 4.54% in 2011. The improvement in moods on the global markets in the wake of the ECB s decisions alleviating the sovereign debt crisis in the euro zone led to a marked appreciation of the PLN against the major currencies compared with the end of 2011. At 31/12/2012, the EUR/PLN, USD/PLN and CHF/PLN exchange rates stood at 4.09, 3.10 and 3.39 respectively, vs. 4.42, 3.42 and 3.62 at the end of 2011. The appreciation of the domestic currency reduced the cost of service of foreign currency loans, which mitigated the negative developments in the quality of such loans. During 2012, a clear deceleration trend in lending was visible. In Q4 2012, the growth in household lending, excluding the effect of exchange rates fluctuation, reached its all-time low. The contributing factors included a slowdown in mortgage lending (in spite of the popularity of the Family on their Own governmental programme, which was drawing to an end) and the continuing decrease in consumer lending. Also, the last quarter of 2012 saw a further drop in corporate lending, the downward trend having emerged earlier, with certain developments around investment loans being the biggest culprit. All in all, while the economic slowdown in 2009 had hit corporate lending the most, this time round, household lending growth decelerated more, reaching its all-time low. What illustrates the scale of the weakening in lending in the course of 2012 best is the fact that it was the second year since the beginning of the 1990s when the total loans to GDP ratio decreased (allowing for the estimates of nominal GDP). The marked decrease in the economic activity in 2012 adversely affected the finances of companies, which entailed a moderate decrease in their deposits. In the household segments, deposits growth also decelerated and their structure changed considerably term deposits surged at the expense of current and savings deposit accounts. 3.2. Internal factors and events The altered external conditions in the wake of the general macroeconomic meltdown as well as the exhaustion of the growth capacity of the previous business model forced the Bank to refocus its retail strategy on advisory banking. However, this meant having to restructure the branch network expanded in 2007-2010 to satisfy the requirements of the previous business model, but too big for the advisory approach, and also to reduce or relocate the workforce. As a result, the Bank now has a branch network which is smaller by 55 branches (a reduction from 194 at the end of December 2011 to 139 at present), while the work force decreased by 322 staff (December 2011: 2,333 staff, December 2012 : 2,011). All this entailed considerable extra costs (e.g. impairment of property, plant and equipment, accelerated depreciation of the improvements in the vacated third-party premises, costs to break lease contracts, severance pay for the dismissed staff), which reduced the Bank s profits starting from Q2 2012. The Bank s considerable exposure 12

to construction companies, which either went bankrupt or started arrangement proceedings, meant that it was necessary to make considerable additional impairment allowances. These factors led to a drop in the dynamics of business volumes of the Bank, whereas the financial results achieved by the Bank in Q4 2012 were much lower than in the previous periods. 3.2.1. Balance sheet The table below presents changes in the most important lines of its balance sheet: Selected items (PLN million) 31/12/2012 31/12/2011 Change, % Balance sheet total 33,310 35,325-5.7% Loans and advances to customers, net Loans and advances to banks 26,463 27,585-4.1% 575 283 +103.2% *) Deposits from customers 13,467 13,540-0.5% Deposits from banks**) 17,205 19,372-11.2% Equity, excluding profit *) Including liabilities under debt securities issued (cf. p. 27) **) inclusive of the subordinated loan (cf. p. 21) 2,148 1,851 +16.0% Between 31/12/2011 and 31/12/2012, the balance sheet total of the Bank decreased by PLN 2.0bn (-5.7%) to PLN 33.3bn. On the assets side, this is a result of a decrease by PLN 2.5bn (-42.3%) in the portfolio of debt securities, which are the main components of financial assets at fair value through profit or loss, and a decrease in loans and advances to customers by PLN 1.1bn (-4.1%), with a simultaneous rise in balances with the central bank by PLN 1.4bn (+139.3%). On the liabilities side, there was first of all an increase in subordinated liabilities (by PLN 723m or 134.7%) and deposits from customers (by PLN 175m, or 1.3%). On the other hand, other liabilities towards banks decreased by nearly PLN 2.9bn (-15.3%). It should be added that because of the major percentage of FX loans in the total portfolio of loans and advances to customers and of the deposits from banks financing such loans, as mentioned above the business volumes were also pushed down by the serious appreciation of the PLN against the currencies in which the loans were made. Comparing the exchange rates as at 31/12/2011 with those as at 31/12/2012 (PLN/EUR: a drop from 4.4168 to 4.0882; PLN/CHF: a drop from 3.6333 to 3.3868), one can see the strengthening of the PLN by 7.4% towards the euro and by 6.8% towards the Swiss franc. At the end of December 2012, gross loans and advances to customers (including interest, commercial papers and municipal bonds) amounted to PLN 26,770m, having decreased by PLN 965m (-3.5%) on the previous year. PLN-denominated loans grew by PLN 667m (+7.5%), whereas the PLN equivalent of FX loans shrunk by PLN 1,632m (-8.7%), which was brought about by the appreciation of the PLN, as mentioned above, as well as a decrease in the volumes in the original currencies. This was particularly the case of mortgage loans, whose total amount decreased by nearly one billion PLN, while the balance of PLN loans grew by PLN 229m, with the balance of FX loans decreasing by the equivalent of PLN 1,223m. Assets 13

A predominant part of the bank s assets was made up of loans and advances to customers, representing 79.4% of the balance sheet total (1.3 pps up on 2011). The percentage of financial instruments at fair value through profit or loss (this category containing practically the whole portfolio of debt securities issued by the State and the National Bank of Poland) decreased from 17.3% to 10.4%, with the percentage of loans and advances to banks increasing from 0.8% to 1,7%. On the other hand, the percentage of the most liquid funds (cash and balances with central bank) grew from 2.9% to 7.3%. The scale of changes in the structure of liabilities was much less significant: total liabilities represented 93.1% of the balance sheet total (93.9% in 2011), where the percentage of loans and advances to customers grew from 37.6% to 40.4%, that of subordinated liabilities increased from 1.5% to 3.8%, whereas other liabilities to banks decreased in terms of percentages from 53.3% to 47.9%. Liabilities The value of deposits from customers, including interest (i.e. deposits and liabilities under debt securities issued), dipped 0.5% between 31/12/2012 and 31/12/2011 to PLN 13,467m. This is a consequence of an increase in customer deposits alone, by PLN 166m (+1.3%), and the expiry of certificates of deposits with the nominal amount of PLN 250m. Deposits grew in the corporate sector, by PLN 614m (or 6.9%), while household deposits decreased PLN 196m (-5.3%), as did public sector deposits, by PLN 252m (-44%). The currency structure of customer deposits changed very little during the reporting period: the share of PLN deposits (with interest) in the total amount of deposits from customers dropped by 1.6 percentage points (from 89.8% to 88.2%). PLN deposit went down by PLN 65m (-0.5%), while the volume of foreign currency deposits increased by the equivalent of PLN 240m (+17.8%, the growth being distributed among the Euro, the pound sterling, the US dollar, the Swiss franc and the Nordic currencies). The Bank s total equity, understood as the sum of the equity, retained earnings and profit for the period, was 7.1% higher at the end of 2012 than at 31/12/2011. The equity alone grew by 16.0% as a result of appropriation of the whole 2011 profit (PLN 296.7m) to reserves. 14

3.2.2. Profit and loss account The altered market conditions reshaped the structure of income and expenses, but the overall financial results of the fourth quarter of 2012 are close to the figures reported for the comparable period of 2011. The following table presents the growth dynamic of the key lines of the profit and loss account of Nordea Bank Polska S.A. for the fourth quarter of 2012, in juxtaposition with the comparable figures for the fourth quarter of 2011: Selected items of the statement of comprehensive income (PLNm) Q4 2012 Q4 2011 Change operating income 231.8 271.1-14.5% operating expenses (133.5) (150.4) -11.2% Operating profit 98.2 120.7-18.6% Profit before income tax 85.5 85.8-0.4% Income tax (20.1) (19.9) +1.3% Profit for the period 65.3 65.9-0.9% Operating income In Q4 2012, operating income reached PLN 231.8m, a figure 14.5% lower than the one reported in Q4 2011. The main reasons for the decrease was a considerably reduced net interest income and gains on instruments at fair value through profit or loss and on revaluation: - net interest income (PLN 167.7m) was 8.3% lower, where interest income dropped by 1.7%, and interest expenses rose by 8.0%. The contributing factors included a lower volume of and interest rates on FX loans and lower interest rates on PLN loans. As far as liabilities are concerned, the struggle to keep up the deposits volume continued with higher cost to attract deposits (growing interest rates on customer deposits due to fierce market competition, replacement of some regular deposits from banks with subordinated debt priced higher but on the other hand increasing the capital base from the point of view of the capital adequacy requirements); - net commission income (PLN 31.2m) decreased by 8.1%, where commission income dipped 1.3% and commission expenses soared by 27.5%, mainly driven by the cost of the guarantee received from the Nordea Group as security for the portfolio of mortgage loans denominated in Swiss francs; 15

- - gains on instruments measured at fair value through profit or loss and on revaluation (PLN 24.9m) represented 48.2% of the figure reported in 2011. The result was affected by totally different market conditions observed in the two reporting periods: the depreciation of the PLN and the increase in the interest rates on the Polish money market in Q4 2011 compared with the appreciation of the PLN and the decrease in the interest rates in Q4 2012. Other negative factors at play included a subdued demand for FX transactions, resulting from the discontinuation of sales and disbursement of new FX mortgages, a growing scale of repayment of mortgage loans in cash by customers and a smaller volume of FX trading by corporates, accompanied by the lowering of the FX spread caused by competition. In such circumstances, the FX profit (PLN 13.8m) accounted for a mere 7% of the previous year s figure. On the other hand, the revaluation of the holdings in securities turned out a profit of PLN 10.5m, whereas in Q4 2011, there was a loss of PLN 0.5m. There was also a positive result on derivative instruments (PLN 0.6m), vs. a loss of PLN 151.7m in Q4 2011. Operating expenses In Q4 2012, operating expenses reached PLN 133.5m, 11.2% less than in Q4 2011, by and large driven by costs and provisions (totalling PLN 10m), previously set aside for expenses on the restructuring of the branch network and work force of the Bank. Looking at the main components of operating expenses, one can see that: - staff costs (PLN 64.3m) were 13.1% higher as a result of the shifting of some staff from the closed units to positions with higher unit labour cost and the surcharge on pension insurance paid by the employer, which was raised by 2 percentage points; - other administrative expenses (PLN 68.9m) went down by 15.9%, on the back of the positive results of the restructuring efforts (reduced expenses related to rents, maintenance of premises, as well as to marketing, credit administration and training, as a result of the altered product strategy). On the other hand, IT expenses, costs of cleaning and services, expert services, the deposit guarantee scheme (BGF) contribution as well as other taxes and levies, were higher; - depreciation chargé on non-current assets (PLN 10.3m) dropped by 10.9% following the decrease in property, plant and equipment in use. - As operating income decreased relatively more than operating expenses, the Cost/Income ratio deteriorated by 2 percentage points, growing from 55.5% to 57.6% Impairment allowances on loans and advances The absolute amount of impaired loans increased between December 2011 and December 2012 from PLN 318.1m to PLN 487.6m (+ 53.3%), chiefly in the corporate segment. With the decrease in total gross loans, the average percentage of impaired loans in gross loans and advances to customers grew from 1.15% to 1.82 % (households: 1.35 %, corporates: 3.97 %). The balance of impairment allowances on loans and advances also grew, by 185%: the cost of impairment allowances reduced the profit by PLN 159.9m 16

(PLN 56.3m in 2011). Most loan losses materialised in Q2 and Q3 2012, with only PLN 11.7m booked in Q4 2012, whereas in 2011, more than a half of the annual loan loss provision cost (PLN 30.0m) was incurred in the last quarter. In spite of the losses, the ratio of impaired loans to total loan portfolio is much lower than the average for all the commercial banks, where the ratios reached 7.5% regarding loans for households and 11.4% regarding loans for corporates (NBP figures as at the end of November 2012). 4. Segment reporting The operating activities of Nordea Bank Polska S.A. are divided into three principal segments: Retail Banking, Corporate Banking and Financial Segment. The Retail Banking segment comprises transactions (other than markets transactions) made at the Bank s branch network, the Internet Branch and the Call Centre as well as the bank outlets being part of the Retail Banking Centre Main Branch. Retail services concern the following groups of customers: small businesses, sole proprietors and household customers. The Corporate Banking segment comprises transactions made with corporate customers (companies of high turnover), Nordic customers, municipalities, hospitals, as well as debt paper trading. It also trades with customers in markets products (foreign exchange and securities trading). The Financial Segment deals with money market transactions, foreign exchange transactions, trading in derivative instruments and debt securities on the interbank market. The banking income and expenses of a segment are income and expenses earned/incurred on sales to external customers, as well as internal settlements between the Bank's segments. External banking income and expenses were allocated to segments based on the allocation of groups of customers to specific business segments (so called customer responsible units). The internal banking result is based on defined assumptions on internal transfer prices. Segment operating expenses are costs of operation of a given segment that may be directly attributed or allocated to the segment. Internal transfer prices used in sales transactions between the segments are based on market prices with appropriate mark-ups. The Bank's assets and liabilities are allocated to segments based on the so-called customer responsibility. The Corporate and Retail Divisions are assigned the customer deposits and loans for which they are respectively responsible. The assets and liabilities that are not allocated to the separate segments are accounted for under "unallocated assets" and "unallocated liabilities". Nordea Bank Polska S.A. operates exclusively in Poland. No material differences in the risk resulting from the geographical location of its outlets have been identified, therefore no geographical segment information is provided. 17

The balance sheet of Nordea Bank Polska S.A. (as at 31/12/2012) ASSETS 31/12/2012 Corporate Segment Retail Segment Financial Segment 1. Segment s assets 33,228,523 9,504,698 17,766,216 5,957,609 including non-current assets and intangible assets 200,263 17,035 130,252 52,976 2. Other assets (unallocated) 81,695 - - - TOTAL ASSETS 33,310,218 9,504,698 17,766,216 5,957,609 LIABILITIES 31/12/2012 Corporate Segment Retail Segment Financial Segment 1. Segment s liabilities 30,995,344 6,828,608 6,625,930, 17,540,806 2. Other liabilities (unallocated) 15,545 - -, - 3. Equity 2,299,329 - -, - TOTAL LIABILITIES AND EQUITY 33,310,218 6,828,608 6,625,930 17,540,806 18

The profit and loss account of Nordea Bank Polska S.A. (01/01/2012-31/12/2012) Corporate Segment Retail Segment Financial Segment Eliminations segment s income 1,510,063 808,783 857,482 266,919 (423,121) Segment s income (external) 1,510,063 532,784 634,637 342,642 - Segment s income (internal) - 275,999 222,845 (75,723) (423,121) segment s costs (1,044,014) (586,806) (728,309) (152,020) 423,121 Segment s costs (external) (1,000,436) (338,096) (561,189) (101,151) - Segment s costs (internal) - (242,425) (130,379) (50,317) 423,121 Depreciation (43,578) (6,285) (36,741) (552) - Change in impairment allowances for receivables (159,915) (129,100) (30,815) - - Segment s profit (loss) 306,134 92,877 98,358 114,899 - Other income (unallocated) - - - - - Other costs (unallocated) (72,151) - - - - Impairment on property, plant and equipment (23,985) - - - - Profit before income tax 209,998 - - - - Income tax (59,366) - - - - Profit for the period 150,632 - - - - The profit and loss account of Nordea Bank Polska S.A. (01/10/2012-31/12/2012) Corporate Segment Retail Segment Financial Segment Eliminations segment s income 373,081 209,760 202,732 61,690 (101,101) Segment s income (external) 373,081 134,803 151,746 86,532 - Segment s income (internal) - 74,957 50,986 (24,842) (101,101) segment s costs (268,753) (151,560) (180,047) (38,247) 101,101 Segment s costs (external) (258,447) (92,405) (141,459) (24,583) - Segment s costs (internal) - (57,822) (29,709) (13,570) 101,101 Depreciation (10,306) (1,333) (8,879) (94) - Change in impairment allowances for receivables (11,690) (12,067) 377 - - Segment s profit (loss) 92,638 46,133 23,062 23,443 - Other income (unallocated) - - - - - Other costs (unallocated) (6,084) - - - - Impairment on property, plant and equipment (1,088) Profit before income tax 85,466 - - - - Income tax (20,129) - - - - Profit for the period 65,337 - - - - 19

The balance sheet of Nordea Bank Polska S.A. (as at 31/12/2011) ASSETS 31/12/2011 Corporate Segment Retail Segment Financial Segment 1. Segment s assets 35,264,407 9,570,535 18,825,871 6,868,001 including non-current assets and intangible assets 225,532 11,771 164,025 49,736 2. Other assets (unallocated) 60,710 - - - TOTAL ASSETS 35,325,117 9,570,535 18,825,871 6,868,001 LIABILITIES 31/12/2011 Corporate Segment Retail Segment Financial Segment 1. Segment s liabilities 33,176,671 5,742,600 7,019,642 20,414,429 2. Equity 2,148,446 - - - TOTAL LIABILITIES AND EQUITY 35,325,117 5,742,600 7,019,642 20,414,429 The profit and loss account of Nordea Bank Polska S.A. (01/01/2011-31/12/2011) Corporate Segment Retail Segment Financial Segment Eliminations segment s income 1,391,247 680,098 938,902 154,603 (382,356) Segment s income (external) 1,391,247 503,732 761,785 125,730 - Segment s income (internal) - 176,366 177,117 28,873 (382,356) segment s costs (941,708) (460,643) (759,334) (104,087) 382,356, Segment s costs (external) (895,484) (230,972) (594,252) (70,260) - Segment s costs (internal) - (224,351) (124,930) (33,075) 382,356 Depreciation (46,224) (5,320) (40,152) (752) - Change in impairment allowances for receivables (56,272) (4,254) (53,858) 1,840 - Segment s profit (loss) 388,324 215,201 120,766 52,357 - Other income (unallocated) 21,171 - - - - Other costs (unallocated) (27,523) - - - - Profit before income tax 381,972 - - - - Income tax (85,309) - - - - Profit for the period 296,663 - - - - 20

The profit and loss account of Nordea Bank Polska S.A. (01/10/2011-31/12/2011) Corporate Segment Retail Segment Financial Segment Eliminations segment s income 390,963 208,028 251,817 40,404 (109,286) Segment s income (external) 390,963 161,879 197,412 31,672 - Segment s income (internal) - 46,149 54,405 8,732 (109,286) segment s costs (268,319) (140,234) (217,489) (19,882) 109,286 Segment s costs (external) (256,752) (74,563) (173,744) (8,445) - Segment s costs (internal) - (64,346) (33,690) (11,250) 109,286 Depreciation (11,567) (1,325) (10,055) (187) - Change in impairment allowances for receivables (29,971) 764 (32,284) 1,549, - Segment s profit (loss) 92,673 68,558 2,044 22,071 - Other income (unallocated) 7,592 - - - - Other costs (unallocated) (9,524) - - - - Impairment on property, plant and equipment (4,943) Profit before income tax 85,798, - - - - Income tax (19,867) - - - - Profit for the period 65,931 - - - - 21

Statement of comprehensive income 5. Net interest income 01/10/2012 01/01/2012 01/10/2011 01/01/2011 Interest income Loans and advances to banks 5,310 14,577 3,257 7,724 Loans and advances to customers: 257,944 1,052,072 261,424 908,304 - other financial institutions (non-banks) 10,087 43,445 10,317 33,915 - private individuals 116,350 485,530 125,660 443,951 - businesses 83,754 342,898 81,160 278,028 - public sector 47,753 180,199 44,287 152,410 Debt securities 40,598 168,689 44,273 122,711 303,852 1,235,338 308,954 1,038,739 01/10/2012 01/01/2012 01/10/2011 01/01/2011 Interest expenses Deposits from banks (20,522) (74,827) (17,801) (71,603) Deposits from customers (115,548) (460,960) (104,644) (318,290) - other financial institutions (non-banks) (27,009) (104,736) (20,955) (77,613) - private individuals (25,243) (109,528) (28,445) (90,255) - businesses (61,097) (234,962) (52,524) (140,061) - public sector (2,199) (11,734) (2,720) (10,361) Debt securities (56) (4,493) (3,628) (13,948) (136,126) (540,280) (126,073) (403,841) Net interest income 167,726 695,058 182,881 634,898 The net interest income for the 12-month period ended on 31/12/2012 includes interest accrued on impaired loans in the amount of PLN 10,237.00 thousand The net interest income for the 12-month period ended on 31/12/2011 includes interest accrued on impaired loans in the amount of PLN 7,345 thousand. 22

6. Net commission income 01/10/2012 01/01/2012 01/10/2011 01/01/2011 Commission income Payment commission 11,231 47,501 13,290 48,436 Card commission 6,779 26,172 6,767 24,723 Financial intermediation commission 7,892 23,224 6,155 24,589 Loan commission 6,419 18,766 7,044 23,199 Commission on guarantee-related offbalance sheet commitments 16,944 13,648 3,733 2,923 Securities commission 4,634 13,100 6,127 7,260 Other commission income 745 817 (329) 1,627 41,433 146,524 41,977 143,482 01/10/2012 01/01/2012 01/10/2011 01/01/2011 Commission expenses Payment commission (5,270) (16,920) (7,190) (24,180) Other commission expenses (4,914) (6,909) (799) (2,948) (10,184) (23,829) (7,989) (27,128) Net commission income 31,249 122,695 33,988 116,354 7. Instruments at fair value through profit or loss and revaluation 01/10/2012 01/01/2012 01/10/2011 01/01/2011 Profit from foreign exchange transactions 13,792 83,837 200,278 204,876 Debt securities 10,478 12,475 (497) (2,028) Derivative financial instruments 599 1,861 (151,718) 730 Equity instruments 16 25 (50) (96) 24,885 98,198 48,013 203,482 The result presented under Debt securities and Equity instruments is the result achieved in financial assets designated at initial recognition for measurement at fair value through profit or loss. The figure presented under Profit from foreign exchange transactions and FX financial instruments closing the FX position includes, among other things, gains on revaluation and gains on derivative FX transactions classified as held for trading, including FX Spot and FX Swap whereas the result on other derivative financial instruments is a result generated on financial instruments classified as held for trading, which includes, among other things, the result on IRS, CIRS, FX Forward and FX Option transactions. 23

8. Other operating income 01/10/2012 01/01/2012 01/10/2011 01/01/2011 Income from IT projects 2,729 13,226 6,056 13,372 Other 4,029 9,707 (2,336) 2,804 Reimbursements for costs of the Bank Guarantee Fund - 2,774-1,715 Sale of goods and services 594 1,979 1,594 3,592 Reimbursement for the fees paid for expert services 425 1,921 1,389 4,920 Receivables related to court proceedings and enforcement proceedings 135 396 (498) 312 7,912 30,003 6,205 26,715 9. Administrative expenses Staff costs 01/10/2012 01/01/2012 01/10/2011 01/01/2011 Salaries: (57,734) (200,550) (50,847) (199,901) - salaries of Bank s authorities (1,239) (5,341) (6,945) (11,606) - salaries of employees (56,495) (195,209) (43,902) (188,295) Social security payments (6,286) (27,961) (5,872) (26,760) Other staff costs (300) (790) (163) (597) (64,320) (229,301) (56,882) (227,258) As at 31/12/2012 there were 2,011 people employed in the Bank, whereas as at 31/12/2011 2,333. Other administrative expenses 01/10/2012 01/01/2012 01/10/2011 01/01/2011 Cost of lease (20,831) (88,336) (29,097) (96,985) Costs of information services, cleaning, (12,858) (14,628) medical and archiving services (41,894) (38,547) Fee for Bank Guarantee Fund (6,083) (24,333) (4,600) (18,402) Expenses relating to property maintenance (6,317) (20,117) (10,168) (29,303) Postal and telecommunications services (4,660) (19,346) (4,725) (19,834) Marketing (7,187) (11,466) (7,484) (20,011) Maintenance of information systems (3,671) (11,493) (2,329) (9,654) Other, including the cost of expert services (3,717) (7,600) 721 (2,664) Taxes and charges (866) (7,053) (1,098) (6,573) Legal services 833 (3,614) (2,121) (5,166) Business travel (1,890) (5,111) (1,653) (5,821) Training (1,178) (3,792) (3,405) (6,840) Additional costs of loan service (467) (2,023) (1,325) (4,954) Damages, penalties and fines paid (16) (145) (14) (26) (68,908) (246,983) (81,926) (264,780) 24

10. Impairment on loans and advances 01/10/2012 Loans and Loans and advances to advances to banks customers Loans and advances to banks 01/01/2012 Loans and advances to customers Allowances for loans and advances Allowances for identified impairment, collective measurement - (5,722) (5,722) - (45,741) (45,741) Allowances for identified impairment, individual measurement - (14,146) (14,146) - (146,407) (146,407) Reversal of allowances for identified impairment, collective measurement - 4,664 4,664-23,971 23,971 Reversal of allowances for identified impairment, individual measurement - 1,183 1,183-9,681 9,681 Allowances for Incurred but not reported impairment losses (IBNR) - - - - (4,656) (4,656) Reversal of allowances for Incurred but not reported impairment losses (IBNR) - 1,167 1,167-1,167 1,167 Recoveries of loans previously charged to provisions - 733 733-1,639 1,639 Gains from sale of claims - 431 431-431 431 (11,690) (11,690) (159,915) (159,915) 01/10/2011 Loans and Loans and advances advances to to banks customers Loans and advances to banks 01/01/2011 Loans and advances to customers Allowances for loans and advances Allowances for identified impairment, collective measurement - - - - - - Allowances for identified impairment, individual measurement - (24,601) (24,601) - (43,559) (43,559) Reversal of allowances for identified impairment, collective measurement - - - - - - Reversal of allowances for identified impairment, individual measurement - 1,075 1,075-5,387 5,387 Allowances for Incurred but Not Reported impairment losses (IBNR) - (7,994) (7,994) - (19,940) (19,940) - Recoveries of loans previously charged to provisions - 1,174 1,174-1,204 1,204 Write-offs due to claims becoming prescribed - (261) (261) - - Gains from sale of claims - 636 636-636 636 - (29,971) (29,971) - (56,272) (56,272) 25

11. Income tax Income tax charge 01/10/2012 01/01/2012 01/10/2011 01/01/2011 Current tax (17,909) (81,429) (26,878) (104,164) Adjustment of tax for previous period 1 1,496 1 1,908 Deferred tax (2,221) 20,567 7,010 16,947 income tax in P&L (20,129) (59,366) (19,867) (85,309) Reconciliation of tax charges and the product of profit before income tax and the tax rate 01/10/2012 01/01/2012 01/10/2011 01/01/2011 Profit before income tax 85,466 209,998 85,799 381,973 Tax rate 19% 19% 19% 19% Income tax (16,239) (39,900) (16,302) (72,575) Other tax-exempt income and nondeductible expenses (3,384) (4,447) (80) (3,522) Permanent differences (530) (16,538) (3,522) (11,156) Donations 23 23 36 36 Adjustment of current tax for previous period 1 1,496 1 1,908 charges to profit before income tax (20,129) (59,366) (19,867) (85,309) Statement of financial position 12. Cash and balances with central bank 31/12/2012 31/12/2011 Cash 79,962 94,435 Balances with central bank 2,208,768 772,555 Other 154,513 154,035 2,443,243 1,021,025 The Bank holds an obligatory reserve on a current account in the National Bank of Poland. The figure is calculated as 3.5% of the average monthly balance deposits received by the Bank. The amount of the reserve is reduced by the equivalent of EUR 500 thousand, in accordance with the relevant regulations. 26

13. Loans and advances to banks 31/12/2012 31/12/2011 Current accounts 273,919 282,253 Term deposits and loans 300,000 - Other 1,366 976 575,285 283,229 Interest 141 - Gross loans and advances to banks 575,426 283,229 Impairment allowance - - Net loans and advances to banks 575,426 283,229 Gross loans and advances to banks (by currency) 31/12/2012 31/12/2011 PLN 337,198 46,016 foreign currencies (translated into PLN) 238,228 237,213 EUR 116,602 31,187 USD 91,076 47,597 CHF 3,699 10,948 SEK 2,665 34,353 GBP 2,237 13,718 other 21,949 99,410 575,426 283,229 Gross loans and advances to banks (by maturity) 31/12/2012 31/12/2011 Unspecified term 270,964 282,479 Up to and including 3 months 301,366 750 From 3 months up to and including 1 year 25 - From 1 year up to and including 5 years 3,071-575,426 283,229 14. Loans and advances to customers 31/12/2012 31/12/2011 Private individuals 17,120,070 18,072,343 Business entities 6,391,660 6,755,426 Public sector 3,197,425 2,846,916 26,709,155 27,674,685 Interest 60,386 60,076 Gross loans and advances to customers 26,769,541 27,734,761 Impairment allowance (306,587) (149,823) Net loans and advances to customers 26,462,954 27,584,938 27

Impairment allowance 31/12/2012 31/12/2011 Private individuals (71,278) (47,357) Business entities (176,339) (46,985) Public sector (576) (576) Allowance for incurred but not reported impairment losses (IBNR) (58,394) (54,905) (306,587) (149,823) Gross loans and advances to customers (by currency) 31/12/2012 31/12/2011 PLN 9,607,163 8,940,411 foreign currencies (translated into PLN) 17,162,378 18,794,350 EUR 3,926,843 4,247,093 USD 170,755 286,607 CHF 13,047,594 14,240,796 SEK 5,898 6,782 other 11,288 13,072 26,769,541 27,734,761 Gross loans and advances to customers (by maturity) 31/12/2012 31/12/2011 Unspecified term 1,583,105 1,485,039 Up to and including 3 months 529,334 601,474 From 3 months up to and including 1 year 1,336,106 1,405,081 From 1 year up to and including 5 years 4,806,206 8,623,766 Over 5 years 18,514,790 15,619,401 26,769,541 27,734,761 Change in impairment allowances for loans and advances to customers 31/12/2012 31/12/2011 Opening balance 149,823 94,940 Impairment allowances created in current period 196,804 63,499 Impairment allowances reversed in current period (34,819) (5,387) Write-offs and reversals of provisions for irrecoverable loans (2,249) (14,881) Change due to exchange differences (2,972) (90), Other - 11,742 Closing balance 306,587 149,823 28

15. Financial assets designated at initial recognition as at fair value through profit or loss 31/12/2012 31/12/2011 Debt securities 3,449,627 5,979,474 State and municipal securities 1,050,465 1,343,130 - bonds 752,727 504,983 - bills 297,738 838,147 Central Bank s securities 2,399,162 4,636,344 - bills 2,399,162 4,636,344 Equity investments 491 474 3,450,118 5,979,948 Financial assets designated at initial recognition as at fair value through profit or loss (by maturity) 31/12/2012 31/12/2011 by maturity Up to and including 3 months 2,696,900 5,559,194 From 3 months up to and including 1 year - 96,980 above 1 year 752,727 323,300 Without a fixed maturity Equity investments 491 474 3,450,118 5,979,948 Interest income from debt instruments and other fixed-yield instruments is shown under interest income. The Bank designated securities as financial instruments measured at fair value through profit or loss due to the fact that it manages the portfolio and reports on its performance to the Management Board on the basis of the fair value of such instruments. 29