Independent Statutory Auditor’s Report on the Audit
of Annual Financial Statements of
BNP Paribas Bank Polska S.A.
for the financial year ended
31 December 2020
Mazars Audyt Sp. z o.o.
ul. Piękna 18
00-549 Warsaw
Mazars Audyt Sp. z o.o.
Sąd Rejonowy dla m. st. Warszawy, XII Wydział Gospodarczy KRS nr 0000086577, kapitał zakładowy: 1 268 000,00 PLN,
NIP: 5260215409, REGON: 011110970
INDEPENDENT STATUTORY AUDITOR’S REPORT
ON THE AUDIT OF ANNUAL FINANCIAL STATEMENTS
Translation of the document originally issued in Polish
To the General Meeting and the Supervisory Board of BNP Paribas Bank Polska S.A.
Report on the Audit of Annual Financial Statements
Opinion
We have audited the annual financial statements of BNP Paribas Bank Polska S.A. (“the
Bank”) which comprise the statement of financial position as at 31 December 2020, and the
income statement, statement of comprehensive income, the statement of changes in equity,
the statement of cash flows for the financial year from 1 January to 31 December 2020 and
notes, comprising a summary of significant accounting policies and other explanatory notes
(“the financial statements”).
In our opinion, the accompanying financial statements:
give a true and fair view of the Bank’s property and financial position as at 31
December 2020, and of its financial performance and its cash flows for the financial
year then ended in accordance with the applicable International Financial Reporting
Standards as adopted by the European Union and the adopted accounting principles
(policy);
comply with the applicable legislation and with the provisions of the Bank’s Articles of
Association as to the form and content;
have been prepared based on the accounting books kept properly, in accordance with
Chapter 2 of the Accounting Act of 29 September 1994 (“Accounting Act” Journal of
Laws of 2021, item 217).
This opinion is consistent with the additional report to the Audit Committee that we issued
on 26 February 2021.
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Basis for Opinion:
We conducted our audit in accordance with National Standards on Auditing as per
International Standards on Auditing adopted by resolution no. 3430/52a/2019 of the National
Council of Statutory Auditors of 21 March 2019 regarding national standards on auditing and
other documents (as amended) (National Standards on Auditing “NSA”), as well as according
to the Act on Statutory Auditors, Audit Firms and Public Supervision of 11 May 2017 (“the Act
on Statutory Auditors” - Journal of Laws of 2020, item 1415) and Regulation (EU) No 537/2014
of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities
(“EU Regulation” - Official Journal of the European Union L 158 of 27 May 2014 p. 77, as
amended). Our responsibility under those standards has been further described in “Statutory
Auditor’s Responsibilities for the Audit of the Financial Statements” section of our report.
We are independent of the Bank in accordance with the International Code of Ethics for
Professional Accountants (including International Independence Standards) issued by the
International Ethics Standards Board for Accountants (“the IESBA Code”), adopted by
resolution of the National Council of Statutory Auditors No. 3431/52a/2019 of 25 March 2019
on the principles of professional ethics for statutory auditors and other ethical requirements
which are applicable to the audit of financial statements in Poland. We have fulfilled our other
ethical responsibilities in accordance with these requirements and the IESBA Code. During
the audit the key statutory auditor and the audit firm remained independent of the Bank in
accordance with the independence requirements specified in the Act on Statutory Auditors
and EU Regulation.
We believe that the audit evidence that we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in the audit of the financial statements of the current period. These include the
most significant assessed risks of material misstatement, including the assessed risks of
material misstatement due to fraud. These matters were addressed in the context of our audit
of the financial statements as a whole and in forming our opinion thereon, and we summarized
our responses to these risks, and, where deemed appropriate, presented the most important
observations related to these risks. We do not provide a separate opinion on these matters.
Key audit matter
How the matter was addressed in our
audit
Allowance for expected credit losses on
the portfolio of loans and advances to
customers
In accordance with International Financial
Reporting Standard 9 Financial Instruments
("IFRS 9"), the Bank's management should
We critically reviewed the design and
implementation of the credit risk
assessment and expected credit loss
estimation process and evaluated the
controls in these processes.
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determine the amount of expected credit
losses that may occur within 12 months or
over the remaining life of the financial asset,
depending on the classification of each
asset into risk categories ("stages",
"phases") taking into account the impact of
future macroeconomic conditions on the
level of expected credit losses.
Determining the amount and timing of the
recognition of expected credit losses
requires the use of significant judgment and
significant and complex estimates, including
primarily with respect to the credit risk
parameters in the expected credit loss
calculation models.
The estimate of the allowance for expected
credit losses includes consideration of the
impact of the global COVID-19 pandemic.
This estimate required the Bank's
management to apply additional
assumptions and expert adjustments that
account for uncertainties associated with
the current and future macroeconomic
environment and reflect risk factors not
included in the Bank's models.
Note 3.a Impairment of financial assets,
Note 21 Loans and advances to customers
measured at amortized cost and Note 55.2
Credit risk provide details on the methods
and models used and the level of allowance
for expected credit losses in the portfolio of
loans and advances to customers.
We performed a reconciliation of the loans
and advances to customers database to the
Bank's accounting records to confirm the
completeness of the recognition of loans
and advances to customers underlying the
allowance for expected credit losses, as
well as the value of the allowance.
We assessed the Bank's impairment
methodology for compliance with the
requirements of IFRS 9, in particular with
respect to the application of the criteria for
identifying a significant increase in credit
risk, the definition of a default, the credit risk
parameters adopted and the consideration
of the impact of future macroeconomic
conditions on the level of expected credit
losses.
For the portfolio of loans and advances to
customers assessed under the collective
method:
we analyzed the methodology used for
calculation of allowances for expected
credit losses for exposures evaluated
using the collective method, including
adequacy of risk parameters used by
the Bank,
we verified the calculation of write-offs
for expected credit losses for selected
exposures,
we assessed the verification of models
based on historical data (back-tests).
For the portfolio of loans and advances to
customers assessed on an individual basis:
we conducted an analysis of the
correctness of the impairment
identification process and classification
into stages,
on a selected sample of significant
credit exposures, we reviewed
documents related to the borrower's
financial situation and verified the
Mazars Audyt Sp. z o.o. 5
correctness of assignment to the
appropriate stage,
we assessed the correctness of the
estimation of write-downs for a selected
sample of exposures with identified
evidence of impairment as regards the
correctness of collateral values and
assumptions concerning other cash
flows.
With respect to the impact of Pandemic
COVID-19 on expected credit losses on
loans and advances to customers, our
procedures covered:
inclusion in the selected sample of
material credit exposures of industries
with increased risk due to a pandemic,
analysis of estimated impact of future
macroeconomic conditions and other
expert adjustments,
analysis of the credit base including
borrowers who benefited from moratoria
as at year-end.
We assessed the quality and verified the
accuracy of the disclosures regarding the
allowance for expected credit losses in the
Bank's financial statements.
Provisions for risk associated with the
foreign currency mortgage loan portfolio
The estimation of provisions for risk related
to the foreign currency mortgage loan
portfolio is complex and requires a
significant degree of judgment in
determining the possible scenarios, as well
as with respect to the assumptions made
regarding the number of lawsuits expected
to be filed, the likelihood of their resolution
and the amount of loss if the Bank loses a
lawsuit.
The Bank's estimates in this regard are
based on historical observations indicating
significant uncertainty as to the number of
lawsuits that will be filed in the future, as
During our audit, we performed the
procedures described below.
We performed a critical analysis of the
design and implementation of the process
for calculating litigation reserves and
contingent liabilities and evaluated the
controls in these processes.
We reviewed the list of litigation to which the
Bank is a party and the attorneys'
assessment of the resolution of such
litigation. We reviewed independent
confirmations received from law firms
representing the Bank.
We verified the methodology for estimating
provisions for litigation related to foreign
currency loans, including an analysis of the
Mazars Audyt Sp. z o.o. 6
well as the lack of a consistent line of
existing court decisions.
In addition, as described in Note 54
Litigation, in estimating the scenarios and
their likelihood of realization, management
has not included the potential impact of the
resolution of the Supreme Court's Civil
Chamber, scheduled to meet on March 25,
2021, due to the inability to predict the
shape of the Supreme Court's resolution of
specific issues. In addition, because, as
described in Note 54 Litigation,
management has not made a decision
regarding potential out-of-court settlements,
including settlements with customers, this
has not been taken into account in the
scenarios used to estimate the level of
provisions as at 31 December 2020.
Note 3 Estimates and Note 54 Litigation
provide details of the assumptions used to
calculate the provisions for the foreign
currency mortgage portfolio and the
possible alternative outcomes presented as
part of the sensitivity analysis of the
estimate.
correctness of input data and calculation of
provision estimates, an analysis of the
reasonableness and reasonableness of the
assumptions made.
We analyzed the register of customer
complaints, with particular emphasis on
issues related to foreign currency mortgage
loans.
We reviewed correspondence, reports and
analyses addressed to the Bank by
regulatory authorities.
We assessed the quality and verified the
accuracy of disclosures regarding risk
provisions related to the foreign currency
mortgage loan portfolio.
Other Matters
The Bank’s financial statements for the year ended 31 December 2019 have been audited by
a statutory auditor acting on behalf of another audit firm. This auditor expressed an unqualified
opinion on these financial statements on 31 March 2020.
Responsibilities of the Management Board and Supervisory Board for the
Financial Statements
The Bank's Management Board is responsible for preparing, based on the accounting books
properly kept, the financial statements that give a true and fair view of the Bank’s property and
financial position and its financial performance in accordance with International Financial
Reporting Standards as adopted by the European Union and adopted accounting principles
(policy), as well as with the relevant legislation and with the provisions of the Bank’s Articles
of Association. The Bank’s Management Board is also responsible for such internal control as
the Management Board determines is necessary to enable the preparation of financial
statements that are free of material misstatement, whether due to fraud or error.
Mazars Audyt Sp. z o.o. 7
When preparing the financial statements, the Bank's Management Board is responsible for
assessing the Bank’s ability to continue as a going concern, as well as for disclosing, if
applicable, matters related to going concern and for adopting the going concern assumption
as an accounting basis, unless the Management Board either intends to liquidate the Bank or
to cease operations, or has no realistic alternative but to do so.
The Bank's Management Board and members of the Supervisory Board are obliged to ensure
that the financial statements meet the requirements set out in the Accounting Act. Members
of the Supervisory Board are responsible for supervising the financial reporting process of the
Bank.
Statutory Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with the National Standards on
Auditing will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
The scope of audit does not include assurance as to the future profitability of the Bank and
effectiveness or efficiency of running the Bank’s affairs by the Management Board at present
or in the future.
According to National Standards on Auditing, we exercise professional judgement and
maintain professional skepticism throughout the audit, as well as:
we identify and assess risks of material misstatement of financial statements, whether
due to fraud or error, we design and perform audit procedures responsive to those
risks and we obtain audit evidence which is sufficient and appropriate to provide a
basis for our audit opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control;
we obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the internal control in the Bank;
we evaluate the appropriateness of the accounting principles (policy) used and the
reasonableness of the accounting estimates and related disclosures made by the
Management Board of the Bank;
we conclude on the appropriateness of the Bank’s Management Board’s use of the
going concern basis of accounting and, based on the audit evidence obtained, as to
whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Bank’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial statements or, if such disclosures are
Mazars Audyt Sp. z o.o. 8
inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Bank to cease to continue as a going concern;
we evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
We communicate to the Supervisory Board information regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We make a representation to the Supervisory Board that we have complied with relevant
ethical requirements pertaining to independence and that we will communicate all
relationships and other matters that could reasonably be considered to pose a threat to our
independence, and, where applicable, the safeguards applied.
Among matters communicated to the Supervisory Board we have determined matters that
were of most significance in our audit of the financial statements of the current period and
therefore we have determined them to be key audit matters. We describe those matters in our
auditor’s report unless law or regulation preclude their public disclosure or when, in
exceptional circumstances, we decide that a given matter should not be presented in our
report as the adverse consequences of such communication would reasonably be expected
to outweigh the public interest benefits of communicating about the matter.
Other Information, including the Report on the Activities
Other information include the report on the Bank’s activities for the year ended 31 December
2020 (“Report on the Activities”) along with corporate governance statement which is a
separate part of this report and separate report on non-financial information referred to in
Article 49b (9) of the Accounting Act, which is a part of the document entitled "CSR and
Sustainability Report presenting non-financial information of BNP Paribas Bank Polska S.A.
and BNP Paribas Bank Polska S.A. Group in 2020 (jointly referred to as “Other Information”).
Responsibility of the Management Board and Supervisory Board
The Bank’s Management Board is responsible for preparing Other Information in accordance
with the applicable regulations.
The Management Board of the Bank and members of the Supervisory Board are obliged to
ensure that the Management Report along with separate part meets the requirements set out
in the Accounting Act.
Statutory Auditor’s Responsibility
Our opinion on the audit of the financial statements does not cover Other Information. Our
responsibility regarding the audit of the financial statements is to get acquainted with Other
Information and to consider whether it is not significantly incoherent with the financial
statements or with our knowledge obtained during the audit or whether Other Information
Mazars Audyt Sp. z o.o. 9
seems to be significantly misstated in other manner. If, based on work performed, we consider
that there are material misstatements in Other Information, we are obliged to inform about it
in our audit report. In accordance with the Act on Statutory Auditors, our responsibility is also
to give an opinion whether the Management Report has been prepared in accordance with
applicable regulations and whether it complies with information contained in the financial
statements. In addition, in accordance with requirements of Article 111a (3) of the Act of 29
August 1997 Banking Law (Journal of Laws of 2020, item 1896 as amended) (“Banking Law”),
our responsibility is to audit information specified in Article 111a (2) of the Banking Law
contained in the Management Report. Moreover, we are obliged to communicate whether the
Bank prepared a separate report on non-financial information and issue an opinion whether
the Bank included the required information in the corporate governance statement.
Opinion on the Report on the Activities
Based on the work performed during the audit, in our opinion, the Report on the Activities:
has been prepared in accordance with Article 49 of the Accounting Act and paragraph
70 of the Regulation of the Minister of Finance of 29 March 2018 on current and
periodic information provided by issuers of securities and on conditions under which
information required by legal regulations of a third country may be recognised as
equivalent (“Regulation on current information” – Journal of Laws of 2018, item 757 as
amended) and Article 111a (1-2) of the Banking Law,
is in line with information contained in the financial statements.
Moreover, according to our knowledge of the Bank and its environment obtained during the
audit, we declare that we have not identified any material misstatement in the Bank’s
Management Report.
Opinion on corporate governance statement
In our opinion, in its corporate governance statement the Bank included information specified
in paragraph 70 (6) item 5 of the Regulation on the current information. Moreover, information
indicated in points c-f, h and i of paragraph 70 (6) item 5 of this Regulation included in the
corporate governance statement complies with the relevant regulations and information
included in the financial statements.
Information on non-financial information
In accordance with the requirements of the Act on Statutory Auditors we confirm that the Bank
included in its Report on the Activities information on preparing a separate report on non-
financial information referred to in Article 49b (9) of the Accounting Act and that the Bank
prepared such separate report.
We have not performed any assurance work concerning the separate report on non-financial
information and we do not express any assurance about it.
Mazars Audyt Sp. z o.o. 10
Report on Other Legal and Regulatory Requirements
Information on Observing Applicable Prudential Regulations
The Bank’s Management Board is responsible for ensuring the compliance of the Bank’s
operations with prudential regulations, in which for the correct determination of capital ratios.
Our responsibility is to communicate in the auditor’s report whether the Bank complies with
applicable prudential regulations, defined in separate provisions, and in particular whether the
Bank correctly determined the capital ratios presented in note 56.
The purpose of the audit of the financial statements was not to express an opinion on the
Bank’s compliance with applicable prudential regulations and therefore we do not express
such an opinion.
Based on our audit of the financial statements we would like to inform you that we have not
identified any breaches of applicable prudential regulations by the Bank in the period from 1
January 2020 to 31 December 2020, defined by separate provisions, in particular with respect
to the correctness of the determination of capital ratios as at 31 December 2020, which could
have a significant impact on the financial statements.
Declaration on non-audit services
According to our best knowledge and belief we declare that non-audit services that we have
provided to the Bank and its subsidiaries comply with laws and regulations applicable in
Poland and that we have not provided any non-audit services that are prohibited pursuant to
Article 5 (1) of the EU Regulation and Article 136 of the Act on Statutory Auditors. Non-audit
services that we have provided to the Bank and its subsidiaries in the audited period were
mentioned in note 11.3 of the Bank’s Management Report.
Appointment of an Audit Firm
We have been appointed to audit the Bank’s financial statements pursuant to the resolution of
the Bank’s Supervisory Board of 12 December 2019. We have been auditing the Bank’s
financial statements for the first time.
The key statutory auditor responsible for the audit that was the base of this independent
statutory auditor’s report is Małgorzata Pek-Kocik.
Acting on behalf of Mazars Audyt Sp. z o.o. with its registered office in Warsaw, ul. Piękna 18,
entered on the list of audit firms under no. 186, on behalf of which the key statutory auditor
audited the financial statements.
Mazars Audyt Sp. z o.o. 11
Małgorzata Pek-Kocik
Key Statutory Auditor
No 13070
Partner
Warsaw, 26 February 2021