KomerÄnà banka as

Business model and client service organisation

Business model As a leading Czech bank, Komerční banka's has centred its business model around providing a wide range of financial services to individual, business, public sector, and institutional clients. Its core activities include retail, corporate, and investment banking.

Komerční banka is the parent company and main component of KB Group. Its subsidiaries contribute with their know-how and capacities in specific areas of the financial markets. The Group enhances its offer to clients in co-operation with external services providers, either in commercial partnerships or by acquiring ownership participations.

Komerční banka Group is active on the financial market in Czechia. Through its branch as well as via the activities of some subsidiaries, it is present also in Slovakia.

Inputs and resource management The main inputs to Komerční banka's business model are financial capital inclusive of liquidity; human capital represented by the skills, knowledge, and commitment of the staff; as well as intellectual capital in the forms of accumulated expertise and an advanced technology base. Other resources critical for the successful operation of KB Group's business are capital in the form of relationships with customers and other stakeholders, which implies responsibility in relation to the communities and the social and economic environment within which the Group operates. KB Group is dependent also on the natural environment and uses a range of natural resources. It is committed to contributing to the protection of the environment.

Key approaches to securing and developing these inputs include maintaining strong relationships with clients, regulators, investors, and communities; fostering a positive work environment and developing talent; collecting and analysing data; managing risks; developing technology and innovation; adhering to compliance and governance standards and best practices; and integrating ESG criteria into decision-making processes.

Outputs and benefits of the Group's activities for clients, investors, and other stakeholders The main benefits of KB Group's activities for customers include access to financial services. Clients benefit from a wide range of financial products and services, including payment, saving and investment solutions, mortgages, and other loans. Furthermore, clients receive financial advice and support from experienced professionals, helping them make informed decisions and achieve their financial goals.

KB is a universal bank with a multi-channel distribution model. Its business model is founded upon building long‑term relationships with customers and offering relevant solutions for situations occurring during clients' lives. KB's investment in digital banking and innovative technologies provides customers with effective, secure, and user-friendly banking services.

The business strategy focuses on reinforcing or achieving market‑leading customer satisfaction status in the target client segments. KB differentiates itself in the market by best-in-class advisory, a relevant and comprehensive product offer leveraging the global scale of the Komerční banka and Société Générale groups, and a highly effective model of servicing clients.

The services provided by subsidiaries include housing loans and building savings (Modrá pyramida), pension savings (Penzijní společnost KB), consumer financing (ESSOX), life and property insurance (Komerční pojišťovna), financing of equipment and technologies (SGEF), and factoring (Factoring KB). Another Komerční banka subsidiary, KB Smart Solutions, administers the Group's participations in several companies mainly from the fintech sector, such as upvest, Finbricks and ENVIROS.

Investors benefit from KB's prudent financial and risk management, which aims to protect their capital, provide a fair and attractive return on their investment, and ensure the long-term stability and resilience of the Group.

KB's commitment to transparent reporting and compliance with regulatory standards ensures that investors have access to accurate and timely information on the Group's performance and sustainability initiatives.

KB Group's activities contribute to economic development by financing businesses and individuals' private projects, supporting job creation, and promoting entrepreneurship and innovation.

The Group's adherence to regulatory requirements and ethical standards ensures that it operates responsibly, supports financial stability, and maintains the trust of regulators, customers, and the public.

KB's commitment to sustainable finance and environmental conservation helps mitigate climate change and promotes the transition to a low-carbon economy.

The human resources management practices applied across KB Group contribute to a fulfilling and supportive work environment, enabling employees to thrive both personally and professionally.

Through corporate social responsibility (CSR) initiatives, the Bank supports numerous activities, including environmental protection, disadvantaged families and children, palliative care, and other social programs that benefit society.

Principles of activity The principles of Komerční banka's activities constitute a part of KB's governance. KB shall respect legal regulations, inclusive of international conventions to which it adheres. In its operations, KB shall respect, among others, the following general principles:

■ KB's activities shall be conducted with respect for fundamental human rights and the rights of workers. No discrimination of any kind with regard to employees, job seekers, customers, business partners, or suppliers shall be permitted. ■ KB shall respect intellectual property rights, and special emphasis shall be placed upon the honouring of software product licences. ■ KB shall respect the rules of economic competition in its activities and, especially, in its contacts with the representatives and employees of other banks and financial institutions. ■ KB shall comply with the rules for disclosure of information to the shareholders, investors in financial markets, and the general public. KB shall publish the information regarding its current situation and expected development in a timely manner, in an accessible form, sufficiently, and proportionally. ■ KB shall be active in performing its duties in fighting corruption, money laundering, and the financing of terrorism. ■ KB shall respect the privacy of its customers, business partners, and employees. Therefore, it shall request and use only such information about its customers, business partners, and employees as is needed to serve these, to enhance the quality of KB's services, to manage KB's human resources, and to comply with the obligations specified by legal regulations. ■ KB applies recognised and proven principles and procedures of corporate governance (so-called recognised standards) that it has chosen as well as policies that the controlling company, Société Générale, requires to be applied in its subsidiaries. On a standalone basis, KB applies the Code of Corporate Governance that is based upon principles of the Organisation for Economic Co-operation and Development (OECD) and the Guidelines on internal governance of credit institutions issued by the European Banking Authority (EBA Guidelines). ■ KB shall co-operate with the Czech National Bank and other regulatory bodies responsible for supervising KB's activities. It shall provide correct, complete, current, and transparent information about its activities. ■ KB supports the principle of social responsibility. It shall seek to minimise the impact of its activities on the environment and use natural resources and energy in a conservative manner. KB is governed by international conventions to which it has acceded or which were acceded to by the SG Group. ■ KB shall maintain political neutrality. It shall not back any political party or political movement through donations or any other kind of support. ■ KB shall continuously strive for long-term creation of value for its shareholders.

Moreover, KB respects a range of principles relating to specific areas, including principles regarding business conduct, dealing with clients, the management and control system, and remuneration.

Ethical conduct Only by taking an ethical approach to doing business and providing financial services can Komerční banka hope to maintain and even strengthen its market position over the long term. A fundamental prerequisite to successfully developing the company consists in professional conduct and behaviour on the part of its employees, as exemplified in particular by fostering and preserving direct and open relationships with clients and by fortifying mutual trust. Komerční banka expects all its employees to be fully aware of and committed to their obligation to act in accordance with the ethical standards set forth in its Code of Ethics and to endeavour always to adhere to those standards.

Corporate governance Komerční banka acceded to and upholds all the principal standards of the Code of Corporate Governance of the Czech Republic (2018) issued by the Institute of Administrative Bodies on the basis of international standards of corporate governance, in particular the G20/OECD Principles of Corporate Governance from 2015. Komerční banka's Board of Directors applies and develops the aforementioned principles of corporate governance in a spirit of transparency, accountability, and with a view to the long term, and it translates these best practices into its internal procedures and regulations.

Tax policy Komerční banka ensures that all KB Group companies fully respect the tax rules of all countries wherein the Group operates. Within its tax policy, Komerční banka complies with all applicable reporting obligations. Komerční banka does not encourage or promote tax evasion for itself or its clients and refrains from operations whose main purpose is tax-motivated unless this is consistent with the intention of the law.

Komerční banka strictly respects correct tax procedures and maintains open and transparent relations with tax authorities while guarding its good reputation. KB adheres to the SG Group Tax Code of Conduct, and all of KB's employees are obliged to comply with this Code. Tax policy is internally supervised by the Internal Audit arm. External oversight in relation to Czech tax law is performed by the Specialised Tax Office.

Principles of business activities and dealing with clients Business activities of KB Group companies shall be carried out in a transparent, fair, and disciplined manner in compliance with best market practice and be performed within the global framework of Société Générale Group operating rules.

KB shall not participate in transactions which might lead to the breach of any legal regulation or international agreements. KB does not, however, rule out any transaction a priori for geographical or sector reasons if the related risks are duly assessed and managed.

Clients come first. Client relations management is conducted in accordance with the know-your-customer principle and takes into account all aspects of a relationship so that the client's needs will be met under optimal service and cost conditions and at an appropriate professional level in order to promote the client's loyalty and trust in the Bank while respecting the client's legitimate interests.

The level of a client's knowledge and experience with the products and risks associated with a provided product is taken into account in providing advice.