Additional information and other essential events between the date, for which the financial report was prepared and its publication date

Mortgage loans are an important element of the Bank’s retail business. Therefore, in June 2018, the Bank submitted a request to the Polish Financial Supervision Authority (“PFSA”) for permission to establish a mortgage bank. On June 16, 2020, PFSA issued a permission to establish a mortgage bank under the name of “Millennium Bank Hipoteczny Spółka Akcyjna” with its head office in Warsaw. Shareholders’ equity of Millennium Bank Hipoteczny Spółka Akcyjna shall be PLN 40,000,000 and has been wholly covered by Bank Millennium S.A. with a cash contribution of PLN 120,000,000. Registered ordinary shares in the number of 40,000,000 with nominal value of PLN 1 per share have been taken-up by the Bank with the issue price of PLN 3 per share.

On May 20, 2021, the PFSA issued a permit to start operations by the Bank, which actually took place on June 14, 2021. From the beginning of its operations, the Bank focused on the first and subsequent transfers of mortgage loans granted by Bank Millennium, which will become the basis for the issue of mortgage bonds secured on these loans (which activity is in Poland restricted to mortgage banks only).

The first transfer of mortgage loans from Bank Millennium was carried out on October 15, 2021. The transfer of the first pool of mortgage loans to the Bank’s balance sheet means the commencement of earning interest income from clients. Preparatory work for the second transfer has also started, and its finalization is planned for the second quarter of 2022.

The new Bank is to provide medium and long-term financing through the issuance of covered bonds to support residential mortgage lending business.

In March 2021, UK regulatory authority the FCA announced the discontinuation of publication of London interbank interest rates developed by the ICE Benchmark Administration – LIBOR CHF, EUR, GBP, JPY and USD (1W and 2M) at the end of 2021, as well as other USD LIBOR settings at the end of June 2023. In regards to the decision above, in 2021 the Bank worked on the implementation of solutions enabling a smooth transition to new rates. Furthermore, due to European Commission Regulations, from January 1, 2022 (for CHF LIBOR – London interbank interest rate for the Swiss franc) and January 3, 2022 (for EONIA – Euro Overnight index) all references to these rates in contracts and instruments financial statements were automatically replaced with references to the new rates – SARON and € STR respectively.

On 28 January 2022 the Bank’s Supervisory Board approved the Eurobond Issue Programme („EMTN Programme”) of the total nominal value not higher than EUR 3 billion („Programme Amount”).

Notes issued under the EMTN Programme shall be issued in many series and the total nominal value of issued and not purchased notes shall not, at any time, exceed the Programme Amount.

Notes shall be offered and sold outside the territory of the United States of America to an account of or for persons other than US persons in accordance with Regulation S (Regulation S) issued under the US Securities Act 1933, as later amended (U.S. Securities Act of 1993) („U.S. Securities Act”), on the basis of a basic prospectus prepared by the Bank. The notes shall not be registered in accordance with the U.S. Securities Act nor any other US state regulations regarding securities.

The Bank may apply for admission of particular series of notes for trading on the regulated market of the Luxembourg Stock Exchange, the Warsaw Stock Exchange S.A. or any other market chosen by the Bank. The EMTN Programme permits also issues of notes which will not be admitted to trading by any relevant body, stock exchange or quotation system.

On February 11, 2022, the Bank received a recommendation from the PFSA to limit the risk occurring in the Bank’s operations by maintaining both at the standalone and at consolidated basis own funds to cover the additional capital add-on in order to absorb potential losses resulting from the occurrence of stress conditions under Pillar II (P2G). The required level of total capital ratio is described in the article 92 item 1 letter c of the regulation (EU) No. 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and amending regulation (EU) No 648/2012 and equals to 0.89 p.p. on the top of total capital ratio, increased by the additional own funds requirement referred to in Article 138(2)(2) of the Banking Act and by the combined buffer requirement referred to in Article 55(4) of the Act on macro prudential supervision. The additional capital requirement should be made up of Common Equity Tier 1 capital only.

There were no other significant events affecting the financial statements and future results of the Group between the date on which the report was prepared and the date of its publication.