MBH Bank : Documents of the Annual General Meeting of MBH Bank Nyrt. to be held on 29 April 2024

DOCUMENTS OF THE ANNUAL GENERAL MEETING OF MBH

BANK NYRT.

TO BE HELD ON

29 APRIL 2024

Date and time of the General Meeting:

Venue of the General Meeting:

The procedure for holding the General Meeting:

Important notice

29 April 2024, 10:00 a.m.

Headquarters of MBH Bank Nyrt., 2nd floor, Ballroom (1056 Budapest, V. Váci u. Váci utca 38.)

physical attendance

"Hungarian language is the official and registered language of MBH Bank Plc's ("the Issuer") disclosures pursuant to the relevant legal and stock-exchange rules. The present English translation has been prepared on a voluntary basis, with the best care and intention of the Issuer to inform English speaking investors, however, in the event of any controversy between the Hungarian and English version, the authentic Hungarian version shall prevail."

Documents of the Annual General Meeting of MBH Bank Nyrt. to be held on 29 April 2024

AGENDA OF THE GENERAL MEETING

1. Report of the Board of Directors on business activities for 2023; the Company's financial statements for 2023 prepared according to the International Financial Reporting Standards: separate financial statements and separate management report, consolidated financial statements and consolidated management report; report of the Audit Committee and Supervisory Board; Audit report; decisions on the allocation of profits, dividend payment and performance remuneration for 2023
2. 1. Report of the Board of Directors on business activities for 2023
   2. Proposal of the Board of Directors for the approval of the separate financial statements and the separate management report of the Company for the year 2023 prepared in accordance with International Financial Reporting Standards
   3. Proposal of the Board of Directors for the approval of the consolidated financial statements and the consolidated management report of the Company for the year 2023 prepared in accordance with International Financial Reporting Standards
   4. Proposal of the Board of Directors for the appropriation of the profit after tax for 2023 and the payment of dividends
   5. Report of the Audit Committee on the Company's 2023 separate financial statements and separate management report prepared in accordance with International Financial Reporting Standards and on the proposed appropriation of profit and the 2023 consolidated financial statements and consolidated management report prepared in accordance with International Financial Reporting Standards
   6. Report of the Supervisory Board on the Company's 2023 separate financial statements and separate management report prepared in accordance with International Financial Reporting Standards and on the proposed appropriation of profit and the 2023 consolidated financial statements and consolidated management report prepared in accordance with International Financial Reporting Standards
   7. Auditor's Report on the Audit of the Company's 2023 Separate Financial Statements prepared in accordance with International Financial Reporting Standards
   8. Auditor's Report on the Audit of the Company's 2023 Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards
   9. Decisions on performance remuneration for 2023
3. Approval of the Report of the Board of Directors on the business policy of the Company for 2024
4. Opinion vote required under Act LXVII of 2019 (Hrsztv.) on the Remuneration Policy prepared pursuant to that act
5. Adoption of the 2023 Corporate Governance Report

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Documents of the Annual General Meeting of MBH Bank Nyrt. to be held on 29 April 2024

1. Granting a hold-harmless warrant to the members of the Board of Directors and the Supervisory Board of the Company and the legal predecessor Takarékbank Zrt.
2. Election of the statutory auditor and determination of their remuneration for the year 2024, approval of the appointment of the person responsible for the audit and determination of the material terms of the contract to be concluded with the auditor
3. Establishment of the remuneration of the members of the Board of Directors, Supervisory Board and Audit Committee
4. Authorisation of the Board of Directors to acquire treasury shares
5. Amendment of the Articles of Association of the Company
6. Election of a member of the Board of Directors
7. Election of a member of the Audit Committee

The Board of Directors and Supervisory Board of MBH Bank Nyrt have examined and discussed the proposals for the general meeting and recommended the contents of the general meeting proposals to be presented

to the General Meeting.

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Documents of the Annual General Meeting of MBH Bank Nyrt. to be held on 29 April 2024

1. AGENDA ITEM

REPORT OF THE BOARD OF DIRECTORS ON BUSINESS ACTIVITIES FOR 2023; THE COMPANY'S FINANCIAL STATEMENTS FOR 2023 PREPARED ACCORDING TO THE INTERNATIONAL FINANCIAL REPORTING STANDARDS: SEPARATE FINANCIAL STATEMENTS AND SEPARATE MANAGEMENT REPORT, CONSOLIDATED FINANCIAL STATEMENTS AND CONSOLIDATED MANAGEMENT REPORT; REPORT OF THE AUDIT COMMITTEE AND SUPERVISORY BOARD; AUDIT REPORT; DECISIONS ON THE ALLOCATION OF PROFITS, DIVIDEND PAYMENT AND PERFORMANCE REMUNERATION FOR 2023

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Documents of the Annual General Meeting of MBH Bank Nyrt. to be held on 29 April 2024

1.1. AGENDA ITEM

REPORT OF THE BOARD OF DIRECTORS ON THE BUSINESS ACTIVITIES IN 2023

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Documents of the Annual General Meeting of MBH Bank Nyrt. to be held on 29 April 2024

MANAGEMENT REVIEW AND ANALYSIS1

1. HISTORY OF MBH BANK NYRT.

MBH Bank's stability is based on the combined knowledge and experience of three Hungarian financial institutions with a long history, Budapest Bank, MKB Bank and Takarékbank.

On May 15, 2020, MTB Magyar Takarékszövetkezeti Bank and MKB Bank signed a Memorandum of Understanding to establish a joint financial holding company - Magyar Bankholding - in which the two financial institutions entered with equal ownership. On 26 May, 2020, Budapest Bank also joined the strategic cooperation.

Magyar Bankholding was established to carry out the merger and transformation of Budapest Bank, MKB Bank and Takarék Group as a domestically owned financial holding company. The company started its effective operations on 15 December 2020, after the major shareholders of the three banks transferred their bank shares to the joint holding company with the approval of the Hungarian National Bank, thus creating Hungary's second largest banking group.

On 15 December 2021, the General Meeting of MKB Bank and the highest decision-making bodies of Budapest Bank and Magyar Takarék Bankholding, which owns the Takarék Group, approved the merger timetable for the merger of Budapest Bank, MKB Bank and Magyar Takarék Bankholding. As a first step, on 31 March 2022, the two member banks of the banking group, Budapest Bank and MKB Bank merged with Budapest Bank being merged into MKB Bank.

The merged bank continued to operate under the name of MKB Bank until 30 April 2023, when Takarékbank joined, and since 1 May 2023 it has continued to operate under the name of MBH Bank, with a single brand name and image.

The bank group aims to implement customer-centred, competitively priced, internationally leading digital solutions, products and services, building on the combined strengths, values and best practices of the three strong domestic commercial banks. The integration of the three member banks is unique not only in Hungary, but also in the financial market of the region, mainly due to its complexity and size.

MBH Group is a very stable, strong and dominant player in the Hungarian financial sector. Currently, it is the second largest bank group in Hungary in terms of total assets and also has

1 In the next chapter of the financial statement, we assess and analyze the financial situation of the Bank and the results of the activities in order to give the reader an overview of the financial situation and the results for 2023. The following analyses are based on the separate financial statements of MBH Bank prepared in accordance with the International Financial Reporting Standards ("IFRS") for 2023 to the accounting date of 31 December 2023, audited by the registered auditors of the PwC Auditing Ltd. Accordingly, the following analysis focuses on the performance of the Bank. Separate financial statements prepared in accordance with the IFRS requirements will be presented separately.

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Documents of the Annual General Meeting of MBH Bank Nyrt. to be held on 29 April 2024

the largest branch and ATM network. The bank group is a market leader in number of areas, including lending to corporate customers and the micro, small and medium-sized enterprise sector, which has key importance to the national economy, serving agricultural and private banking clients, and in the leasing market.

2. OPERATIONAL ENVIRONMENT

The international and domestic economic developments continued to be affected by the military conflict between Russia and Ukraine in 2023, which broke out in February 2022, and the conflict in the Middle East that started last October had a significant impact. Due to the latter, the prolonged conflict in Israel increased the oil's risk premium, which partly curbed the decrease in crude oil prices in the last quarter of 2023. In addition, since late December, some merchant ships bounded for Israel were attacked, as a result of which some ships can only safely carry goods around Africa, which could increase inflation risks in Europe in 2024 and potentially cause disruptions in supply chains.

Meanwhile, developed economies have struggled to fight inflation last year, which has and could lead to high interest rates and put the brakes on economic growth. Although preliminary data suggests that the euro zone economy avoided technical recession last year, the weak growth dynamic (or recession in case of our main external trading partner, Germany) was a significant drag on the Hungarian economy: In the fourth quarter of 2023, domestic GDP stagnated compared to the same period last year, while the economic output of 2023 was 0.9% lower year-on-year according to raw (unadjusted) data.

The year 2023 was characterised by disinflationary trends, i.e. moderation in inflation. Last year, base effects, moderation in demand, the emergence of a wider range of price corrections and competition-enhancing measures for food, and the fading price increases for durable goods, reflecting the strengthening of the forint, were beneficial for the decline in inflation. The base effects reflect the fact that international commodity and energy prices fell back to 2021 levels in 2023 in most cases. The pace of disinflation has been partly moderated by the addition to the base of the gasoline price freeze, which was lifted in December 2022, as well as by the September increases in the prices of gambling and some public transport fares, as well as the emergence of a price-wage spiral in some service sectors. Despite the factors holding back the decline in the CPI, the annual rate of inflation in December was better than analysts' expectations at 5.5%, with the year-on-year average money inflation stood at 17.6%.

National Bank of Hungary (hereinafter: "NBH") has tightened interest rates sharply over 2022, raising the base rate from 2.4% to 13%, but the effective interest rate actually rose to 18% through the restructuring of the asset base. In May 2023, the Monetary Council began its cycle of rate cuts, which continued so far and contributed to the policy rate being converged to the base rate by September 2023. By the end of 2023, the base rate had fallen to 10.75%; the rate cut was facilitated by a steeper-than-expected fall in inflation in the second half of last year, a spectacular improvement in the external balance and a more favourable global investor mood towards the end of the year.

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Documents of the Annual General Meeting of MBH Bank Nyrt. to be held on 29 April 2024

According to the January release of the Ministry of Finance, the central budget cash deficit in 2023 was HUF 4,593.4 billion, 135% of the revised estimate. The cash balance of the budget is worsened by the fact that in 2023, pre-financing of EU tenders exceeded the payments received from the EU, without that cash deficit would have been HUF 573 billion lower. The fiscal picture is also affected by indirect acquisitions of public assets. The deficit is also influenced by the burden of household utility expense subsidies for the protection of the population. Based on the financial accounts, the budget could reach an accrual deficit of around 6.5% of GDP in 2023. The reduction in the debt-to-GDP ratio could continue despite the large government deficit, with the ratio falling to close to 72% by the end of 2023, thanks to the large part to strong nominal GDP growth.

A surplus of EUR 410 million was generated in the current account in the third quarter of 2023, showing a significant improvement of EUR 5 billion compared to a year earlier. Including the capital account, the net external financing position (surplus), seasonally adjusted, amounted to EUR 760 million, an improvement of EUR 5.1 billion compared to a significant deficit a year earlier. Reflecting the improvement in the external balance, the goods balance reached a surplus of EUR 298 million. The improvement in the goods balance was partly due to improving terms of trade as energy prices fell, and partly to falling domestic demand through a reduction in imports. The current account deficit could drop from 8.2% of GDP in 2022 to 0.1% in 2023.

The credit institutions sector had an outstanding year in 2023 in terms of profit after tax: preliminary data show that domestic banks reported profits of over HUF 1,370 billion, almost HUF 900 billion higher than in 2022, and a return on equity of over 20%. Two factors played a key role in the improvement compared to 2022. The interest income was almost HUF 500 billion higher, although this was largely achieved passively, namely by banks placing their free liquidity in NBH high interest paying deposit instruments. In fact, without the interest received on the liquidity held with the NBH, no improvement would have occurred. Although the margins between lending and deposit rates widened, the interest rate ceilings on the former resulted in substantial revenue shortfalls. Another factor behind the improvement was the evolution of risk costs. In net terms, more than HUF 400 billion less impairment and provisions were needed in 2023 than a year earlier, as the previously assumed deterioration in the loan portfolio did not materialise and the non-performing portfolio ratio even declined. While inflation has led to an increase in banks' operating costs, this has been broadly offset by an improvement in fee and commission income and other operating income (difference between received and paid dividend, trading profit, etc.). All in all, therefore, the banking sector has shown an outstanding performance of its domestic operations in 2023, not only in terms of profit after tax, but also in terms of key efficiency indicators (cost/income ratio, net interest margin, etc.). However, a significant part of the income improvement is not sustainable; a meaningful correction is expected in the declining yield environment.

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Documents of the Annual General Meeting of MBH Bank Nyrt. to be held on 29 April 2024

3. THE CONSOLIDATED PERFORMANCE OF MBH GROUP IN 2023

The consolidated total assets of the Bank increased by 4.6% to HUF 11,107.0 billion by the end of 2023. The stock of customer loans measured at amortised cost amounted to HUF 4,390.4 billion, while the stock of customer deposits reached HUF 6,957.1 billion. Profit after tax increased by HUF 92.0 billion to HUF 183.2 billion.

The Bank's financial and business fundamentals were strengthened further, including capitalization, liquidity, funding structure, balance sheet structure and the performance of its business lines.

	Key figures			31.12.2023			31.12.2022		change (%)			change
	(HUF million)
Total assets	11,107,048	10,614,422	4.6%	492,626
Financial assets measured at amortised
cost	7,689,462	7,377,255	4.2%	312,207
	o/w net client loans	4,390,428	4,342,801	1.1%	47,627
Financial liabilities valued at amortized
costs	9,789,825	9,416,275	4.0%	373,550
	o/w client deposits	6,957,100	6,574,357	5.8%	382,743
Equity	1,023,371	808,736	26.5%	214,635
Profit/Loss before tax	221,876	103,390	114.6%	118,486
Profit/loss for the year	183,190	91,168	100.9%	92,022
Total comprehensive income	241,103	95,930	151.3%	145,173

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Documents of the Annual General Meeting of MBH Bank Nyrt. to be held on 29 April 2024

4. PERFORMANCE OF THE INDIVIDUAL BUSINESS LINES2

Retail clients

On 30 April the merger of MKB Bank Plc. and Takarékbank Ltd. was completed, and from 1 May the new credit institution continued its activities under the name of MBH Bank Plc.

The merger process, which lasted for more than two years, has thus been completed, creating Hungary's second largest credit institution in pure Hungarian ownership.

At the same time, the bank card portfolio of MBH Investment Bank Ltd. (former MTB Magyar Takarékszövetkezeti Bank Ltd.) was transferred to MBH Bank Plc., which, as the acquiring credit institution, replaced the former issuer in terms of the bank card portfolio.

In retail account products, the focus was on supporting the achievement of business objectives and digital developments. The account sales channel was further expanded through the MBH Bank Digital kiosks and, thanks to a successful tender, through a contract between the Bank and Diákhitel Központ Ltd. On the bank card side, there have been several developments and measures to support the use of digital channels and to enhance customer convenience. Google's own mobile payment solution, Google Pay, has been made available to MBH Bank customers for all Mastercard and Visa retail debit and credit cards.

In August 2023, the Bank launched, first in the Hungarian financial market, the Mastercard Touch Card, an accessible bank card for blind and partially sighted people. The Touch Card debit and credit cards have notches on the side to help distinguish between the cards and how to insert them into the card reader.

In 2023, the premium services of the Go! Platinum credit card were further enhanced with exclusive benefits from Müpa Budapest. On August 1, 2023, MBH Bank was the first card issuer in Hungary to introduce the Mastercard Touch Card feature. The Go! credit card was the first credit card to offer this new feature and throughout the year it was continuously extended to partner-issued credit cards.

Among savings and investment solutions, investment funds were particularly popular in 2023. The Bank met customer needs primarily through wide range of products offered by MBH Fund Manager. Short bond funds combining high return potential with flexible investment horizons were particularly popular among the investment funds, with portfolios multiplying during the year. The total assets under management in private investment funds in the banking group increased by 47.6% compared to 2022. From May 2023, newly-issued MBH bonds with multiple maturities became available to retail customers, and these schemes were also popular with savers.

2 The source of individual market data: NBH (National Bank of Hungary), KAVOSZ, BAMOSZ (Association of Hungarian Investment Funds and Asset Management Companies), Exim Bank, MFB (Hungarian Development Bank), MBH's own calculation

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