TRANSLATION

Consolidated Financial Statements for the Period from Jan 01 to Mar 31 2018

Unaudited

Zagreb, April 27 2018

In accordance with Capital Markets Act, HPB p.l.c. (Bank) as the parent company of HPB Group (Group), publishes unaudited consolidated financial statements for the period from Jan 01 to Mar 31 2018.

This report includes:

Management report of HPB Group,
statement by persons accountable for compiling the consolidated report of HPB Group,
unaudited set of consolidated financial statements (balance sheet, profit or loss statement, statement of changes in equity, cash flow statement), and
notes to consolidated financial statements.

Financial statements and notes have been compiled in accordance with instructions defined in Rulebook on format and content of interim financial reports of issuers (NN 47/2011). Accordingly, there can be certain differences between reporting items outlined in the statement on financial position – with regard to new IFRS 9 classificiation. However, all the effects of transactions recognized since Jan 01 2018 are presented in the income statement, as well as through other comprehensive income, in compliance with IFRS 9.

Management report of HPB Group

HPB Group is, apart from the parent company – HPB p.l.c., comprised of HPB-Stambena štedionica (savings bank), HPB Invest (investment fund management) and HPB-nekretnine (real estate agency).

Group has achieved a net profit of HRK 67,7 million in Q1 2018, which represents the Group's best quarterly result over the course of last ten years. In this way, significantly better result was achieved in comparison with Q1 2017, when the Group recorded a net profit of HRK 2,8 million as a consequence of impairments of Agrokor and related parties' exposures. Group's result is thus determined by the parent's result, which is better owing to reversal of impairments due to improved collection and better NPL portfolio structure. However, we would like to emphasize that all subsidiaries of the HPB Group achieved a net profit. Apart from HRK 66,2 million of parent's profit, HPB-Stambena recorded a profit of HRK 984 thousand, HPB Invest added a profit of HRK 223 thousand, while HPB-nekretnine achieved a net profit of HRK 227 thousand.

On behalf of HPB p.l.c., the parent company of HPB Group :

Mladen Mrvelj Board Member Domagoj Karadjole Board Member

Statement by persons accountable for compiling the consolidated report of HPB Group

In accordance with the Capital Market Act, the Management Board of HPB p.l.c., the parent company of HPB Group, states that according to their best knowledge the set of consolidated unaudited financial statements for the period from Jan 01 to Mar 31 2018, compiled in accordance with the accounting regulation applicable to credit institutions in Croatia, presents complete and accurate view of assets and liabilities, losses and gains, financial position and results of HPB p.l.c., as well as companies included in consolidation as a whole.

Mladen Mrvelj Board Member Domagoj Karadjole Board Member

David Tomašek Head of Finance Division

HPB GROUP
Appendix 3. Reporting period:		Jan 01	to		Mar 31 2018
	Quarterly financial statements for credit institutions TFI-KI
Registration number (MB):	03777928
Registration number (MBS):	080010698
Personal identification number (OIB):	87939104217
Company:	HPB p.l.c.
Postal code and city	10000	ZAGREB
	Address: JURIŠIĆEVA 4
E-mail address: [email protected]
Internet address: www.hpb.hr
City code and name:	133 ZAGREB
County code and name:	21 GRAD ZAGREB				# of employees:	1.160
Consolidated report:	YES				(as per reporting date) Industry code:	6419
Consolidated companies (in accordance with IFRS):			Headquarters:		Registration number:
HPB-Stambena Štedionica d.d.		Savska 58, 10000 Zagreb				02068001
HPB Invest d.o.o.		Strojarska 20, 10000 Zagreb				01972278
HPB-nekretnine d.o.o.		Amruševa 8, 10000 Zagreb				01972260




Book-keeping service
provided by:	n/a	n/a
Contact:	Tomašek David
Phone: 014804900				Fax:	014804594
	E-mail address: [email protected]
Surname and name: Karadjole Domagoj	Mrvelj Mladen
	(persons authorized for representation)

Financial reports (balance sheet, profit or loss statement, cash flow statement, statement on changes

in equity and notes to financial statements)

Management report
Statement by persons accountable for compiling the report

BALANCE SHEET

Mar 31 2018 as per			in HRK
Item	AOP label	Dec 31 2016	Dec 31 2017
1	2	3	4
ASSSETS
1. CASH AND DEPOSITS WITH THE CNB (002+003)	001	4.391.466.871	4.115.384.141
1.1.Cash	002	460.024.014	494.378.160
1.2.Deposits with the CNB	003	3.931.442.857	3.621.005.981
2. DEPOSITS WITH FINANCIAL INSTITUTIONS	004	473.330.331	286.290.313
3. SHORT-TERM TREASURY BILLS OF THE CROATIAN MINISTRY OF FINANCE	005	324.931.405	273.293.880
4. FINANCIAL ASSETS HELD FOR TRADING	006	654.815.717	646.612.466
5. FINANCIAL ASSETS AVAILABLE FOR SALE	007	2.459.982.241	2.458.183.022
6. FINANCIAL ASSETS HELD TO MATURITY	008	72.345.457	72.051.971
7. FINANCIAL ASSETS VALUED AT FAIR VALUE THROUGH PROFIT OR LOSS, NOT ACTIVELY TRADED	009	-	-
8. DERIVATIVE FINANCIAL ASSETS	010	-	-
9. LOANS TO FINANCIAL INSTITUTIONS	011	62.450.000	40.130.000
10. LOANS TO OTHER CUSTOMERS	012	11.013.731.914	11.461.726.442
11. INVESTMENTS IN SUBSIDIARIES, ASSOCIATED COMPANIES AND JOINT VENTURES	013	20.000.000	20.000.000
12. REPOSSESSED ASSETS	014	-	-
13. TANGIBLE ASSETS (LESS DEPRECIATION)	015	141.615.708	143.541.540
14. OTHER ASSETS	016	455.167.665	417.062.909
A) TOTAL ASSETS (001+004 to 016)	017	20.069.837.309	19.934.276.684
LIABILITIES
1. BORROWINGS FROM FINANCIAL INSTITUTIONS (019+020)	018	651.970.981	649.878.185
1.1. Short-term	019	-	-
1.2. Long-term	020	651.970.981	649.878.185
2. DEPOSITS (022 to 024)	021	15.389.912.890	15.317.451.750
2.1. Transactional and current accounts	022	5.125.557.660	5.084.165.721
2.2. Savings deposits (demand)	023	1.538.006.561	1.495.675.702
2.3. Term deposits	024	8.726.348.669	8.737.610.327
3. OTHER BORROWINGS (026+027)	025	20.286.850	20.066.470
3.1. Short-term	026	-	-
3.2. Long-term	027	20.286.850	20.066.470
4. DERIVATIVE AND OTHER FINANCIAL LIABILITIES HELD FOR TRADING	028	-	6.537
5. ISSUED SECURITIES (030+031)	029	-	-
5.1. Short-term	030	-	-
5.2. Long-term	031	-	-
6. SUBORDINATED DEBT ISSUED	032	-	-
7. HYBRID INSTRUMENTS	033	-	-
8. OTHER LIABILITIES	034	2.096.847.345	2.016.693.945
B) TOTAL LIABILITIES (018+021+025+028+029+032+033+034)	035	18.159.018.066	18.004.096.887
EQUITY
1. SHARE CAPITAL	036	1.214.298.000	1.214.298.000
2. PROFIT/(LOSS) FOR THE PERIOD	037	7.898.428	67.669.663
3. RETAINED EARNINGS	038	130.368.702	129.933.669
4. REGULATORY RESERVES	039	15.708.724	15.708.724
5. STATUTARY AND OTHER CAPITAL RESERVES	040	448.288.175	399.388.192
6. FAIR VALUE RESERVE	041	94.257.214	103.181.549
7. RESERVES ARISING FROM HEDGING TRANSACTIONS	042	-	-
C) TOTAL EQUITY (036 to 042)	043	1.910.819.243	1.930.179.797
D) TOTAL LIABILITIES AND EQUITY (035+043)	044	20.069.837.309	19.934.276.684
ADDENDUM TO THE BALANCE SHEET (filled-in by the banks submitting consolidated financial statement)
1. TOTAL EQUITY	045	1.910.819.243	1.930.179.797
2. Equity attributable to the shareholders of the parent company	046	1.910.819.243	1.930.179.797
3. Minority interest (045-046)	047	0	0

HPB GROUP

PROFIT OR LOSS STATEMENT

Ja for th iod fr e p er om	n 0 1 2 01 8	to	Ma r 3 1 2	01 8				in H R K
Ite m				AO P lab el	Ja n 0 M 1 -	31 20 17 ar	Ja n 0 M 1 -	31 20 18 ar
					Cu lat ive mu	Qu ly art er	Cu lat ive mu	Qu ly art er
1				2	3	4	5	6
1 . In t in ter es co me				04 8	17 2.5 47 .27 6	17 2.5 47 .27 6	15 3.7 02 .97 0	15 3.7 02 .97 0
2 . In ter t e es xp en se				04 9	38 .72 8.7 08	38 .72 8.7 08	28 .25 6.3 29	28 .25 6.3 29
3 . N int inc e ( 04 8-0 49 ) et st ere om				05 0	13 3.8 18 .56 8	13 3.8 18 .56 8	12 5.4 46 .64 1	12 5.4 46 .64 1
. F d c mi ion in 4 ee an om ss co me				05 1	11 7.7 64 .44 3	11 7.7 64 .44 3	11 6.7 19 .79 4	11 6.7 19 .79 4
. F d c mi ion 5 ee an om ss ex pe ns e				05 2	72 .31 5.4 69	72 .31 5.4 69	70 .05 6.0 61	70 .05 6.0 61
6 . N et fee d c mi ion in ( 05 1-0 52 ) an om ss co me				05 3	45 .44 8.9 74	45 .44 8.9 74	46 .66 3.7 33	46 .66 3.7 33
7 . G ain s l s l ris ing fro inv in bs tm ts es os se s a m es en su jo int ntu ve res	idi ari es , a ss oc	iat ed co mp	ies d an an	05 4	-	-	-	-
. G 8 ain s l s l s f din ctiv itie tra es os se rom g a s				05 5	8.6 87 .41 2	8.6 87 .41 2	10 .73 8.7 53	10 .73 8.7 53
. G ain s l s l s f bu ilt- in de riva tive 9 es os se rom s				05 6	-	-	-	-
10 . G ain s l s l ris ing fro fin cia l a ets es os se s a m an ss va ctiv ely de d t a tra no	lue d a t fa ir v alu	hro h P e t ug	&L ,	05 7	-	-	-	-
11 . G ain s l s l ris ing fro riti ail ab le es os se s a m se cu es av	for le sa			05 8	33 4.9 16	33 4.9 16	-	-
. G 12 ain s l s l ris ing fro riti he ld to es os se s a m se cu es ma	ity tur			05 9	-	-	-	-
. G ain s l s l ris ing fro he dg ing tivi tie 13 es os se s a m ac s				06 0	-	-	-	-
14 . In fro inv in bs idi ari iat tm ts co me m es en su es , a ss oc	ed ies co mp an	d j oin t ve an	ntu res	06 1	-	-	-	-
15 . In fro oth uit ins tru nts co me m er eq y me				06 2	21 .66 8	21 .66 8	14 .48 3	14 .48 3
. G 16 ain s l s l s f ch dif fer te es os se rom ex an ge ra en ce s				06 3	1.2 29 .63 1	1.2 29 .63 1	1.3 51 .10 8	1.3 51 .10 8
17 . O the r in co me				06 4	1.5 43 .95 1	1.5 43 .95 1	2.2 30 .78 7	2.2 30 .78 7
18 . O the ing rat sts r o pe co				06 5	14 .06 4.7 97	14 .06 4.7 97	16 .78 9.5 13	16 .78 9.5 13
19 . G l a nd ad mi nis tive rtiz ati tra en era ex pe ns es , a mo on	d d iat an ep rec	ion		06 6	99 .01 1.7 32	99 .01 1.7 32	98 .50 1.8 68	98 .50 1.8 68
20 . O ing ofi t ( 05 0+ 05 3 t o 0 64 -06 5-0 66 ) rat pe pr				06 7	78 .00 8.5 91	78 .00 8.5 91	71 .15 4.1 24	71 .15 4.1 24
21 . Im irm t lo d p isi pa en ss es an rov on s				06 8	71 .71 4.7 77	71 .71 4.7 77	( 11 .27 2.8 37 )	( 11 .27 2.8 37 )
22 . P RO FIT /( LO SS ) BE FO RE TA X ( 06 7-0 68 )				06 9	6.2 93 .81 4	6.2 93 .81 4	82 .42 6.9 61	82 .42 6.9 61
23 . IN CO ME TA X E XP EN SE / D EF ER RE D T AX				07 0	3.4 50 .68 3	3.4 50 .68 3	14 7.2 98 .75	14 7.2 98 .75
OF LO SS FO RIO 24 . N ET PR IT/ ( ) R T HE PE D ( 06 9-0 70 )				07 1	2.8 43 .13 1	2.8 43 .13 1	67 .66 9.6 63	67 .66 9.6 63
25 . E ing sh arn s p er are				07 2	2	2	33	33
AD DE ND UM TO TH E P &L ( fill ed -in by th e b ks bm an su	itti oli da ng co ns	ted fin cia an	l s t) tat em en
1. PR OF IT FO R T HE PE RIO D				07 3	2.8 43 .13 1	2.8 43 .13 1	67 .66 9.6 63	67 .66 9.6 63
2. Att rib ble th ha ho lde of the uta to t c e s re rs pa ren om	pa ny			07 4	2.8 43 .13 1	2.8 43 .13 1	67 .66 9.6 63	67 .66 9.6 63
3. Mi rity in t ( 07 3-0 74 ) ter no es				07 5	-	-	-	-

Consolidated Financial Statements for the Period from Jan 01 to Mar 31 2018 (unaudited)

HPB GROUP

CASH FLOW STATEMENT - INDIRECT METHOD

AOP Jan 01 - Mar 31 Jan 01 - Mar 31 Item 2017 2018 label 1 2 3 4 OPERATING ACTIVITIES 1. Cash flow from operating activities before changes in assets (002 to 007) 001 88.812.661 81.469.221 1.1. Profit/(loss) before tax 002 6.293.814 82.426.961 1.2. Impairment losses and provisions 003 71.714.777 (11.272.837) 004 1.3. Amortization and depreciation 11.337.253 11.460.284 1.4. Net unrealised gains less losses from financial assets valued at fair value through profit or 005 696.448 340.387 loss 006 1.5. Gains / losses from sale of tangible assets - (134.466) 1.6. Other gains / losses 007 (1.229.631) (1.351.108) 2. Net increase / decrease of operating assets (009 to 016) 008 73.565.198 115.141.766 009 2.1. Deposits with the CNB (381.110.261) 310.436.876 010 2.2. Tresury bills of the Croatian Ministry of Finance 4.246.968 51.637.525 011 2.3. Deposits with and loans to financial institutions 149.802.324 187.040.018 2.4. Loans to other customers 012 117.986.393 (483.018.687) 2.5. Financial assets held for trading 013 51.472.636 7.862.864 014 2.6. Financial assets available for sale 239.206.599 (7.125.116) 015 2.7. Financial assets valued at fair value through profit or loss, not actively traded - - 2.8. Other operating assets 016 (108.039.461) 48.308.286 3. Net increase / decrease of operating liabilities (018 to 021) 017 (194.338.203) (152.608.003) 018 3.1. Transactional accounts (79.135.050) (41.391.939) 019 3.2. Savings and term deposits (170.404.752) (31.069.201) 3.3. Derivative financial liabilities and other liabilities actively traded 020 (3.640.667) 6.537 3.4. Ostale liabilities 021 58.842.266 (80.153.400) 4. Net cash flow from operating activities before taxation 022 (31.960.344) 44.002.984 (001+008+017) 5. Income tax paid 023 - - 6. Net cash inflow / outflow from operating activities (022+023) 024 (31.960.344) 44.002.984 INVESTING ACTIVITIES 7. Net cash flow from investing activities (026 to 030) 025 151.329.397 (6.210.136) 7.1. Purchase of tangible and intangible assets 026 (4.939.641) (6.224.619) 7.2. Investment in / disposal of subsidiaries, associated companies and joint ventures 027 - - 028 7.3. Investment in / disposal of financial assets held to maturity 156.247.370 - 029 7.4. Dividends received 21.668 14.483 7.5. Other inflows / outflows from investing activities 030 - - FINANCIAL ACTIVITIES 8. Net cash flow from financial activities (032 to 037) 031 (105.306.787) (2.313.176) 032 8.1. Net increase / decrease of borrowings (105.306.787) (2.313.176) 8.2. Net increase / decrease of issued debt securities 033 - - 8.3. Net increase / decrease of subordinated debt and hybrid instruments 034 - - 035 8.4. Share capital raised - - 036 8.5. Dividends paid - - 037 8.6. Other inflows / outflows from financial activities - - 9. Net increase / decrease of cash and cash equivalents 038 14.062.266 35.479.672 (024+025+031) 039 10. Effect of foreign exchange differences on cash and cash equivalents (472.981) (1.125.526) 11. Net increase/(decrease) in cash and cash equivalents (038+039) 040 13.589.285 34.354.146 12. Cash and cash equivalents at the beginning of the year 041 421.479.852 460.024.014 13. Cash and cash equivalents as per reporting date (040+041) 042 435.069.137 494.378.160	for the period from	Jan 01 2018	to	Mar 31 2018		in HRK

TRANSLATION

HPB GROUP

for th e p	eri od fro m	Jan 01	20 18	to	Ma r 3	1 2 018			in H RK
	AO		Att rib	ble the sh hol uta to are	der f th nt c s o e p are om	pan y
Item	P lab el	Sha ital re cap	Ow har n s es	Reg ula tor tatu tor y, s y and her ot re ser ves	Ret ain ed nin ear gs	Pro fit/( los s) f the or per iod	Fai lue r va re ser ve	Min orit y in ter est	To tal ity equ
1	2	3	4	5	6	7	8	9	10
Bal Jan 01 20 18 anc e a s p er	001	1.2 .00 0 14. 775	(47 7.0 00)	463 .99 6.8 99	130 .36 8.7 02	7.8 98. 428	94. 257 .21 4	-	1.9 10. 819 .24 3
Effe of cha s in ntin olic ies cts nge ac cou g p and tion f er co rrec s o rors	002	-	-	(57 .23 3.4 43)	-	-	-		(57 .23 3.4 43)
Res d b ala r Ja n 0 1 2 018 (00 1+0 02) tate nce as pe	003	1.2 14. 775 .00 0	(47 7.0 00)	406 .76 3.4 56	130 .36 8.7 02	7.8 98. 428	94. 257 .21 4	-	1.8 53. 585 .80 0
Disp l of fina ncia l as vail able for le set osa s a sa	004	-	-	-	-	-	-		-
Cha in t he f air v alue of fina ncia l as aila ble for sale set nge s av	005	-	-	-	-	-	10. 789 .18 5		10. 789 .18 5
Tax ite ised dir ly ect on ms rec ogn in/tr ferr ed from uity ans eq	006	-	-	-	-	-	(1.8 64. 850 )		(1.8 64. 850 )
Oth ains d (l es) ised dir ly in uity ect er g an oss rec ogn eq	007	-	-	-	-	-	-		-
Net ins /(lo s) r gni sed dir ect ly i qui ty ga sse eco n e (00 4+0 05+ 006 +00 7)	008	-	-	-	-	-	8.9 24. 335	-	8.9 24. 335
Los s fo r th erio d e p	009	-	-	-	-	67. 669 .66 3	-		67. 669 .66 3
Tot al r gni zed inc nd e fo r th eri od eco om e a exp ens e p (00 8+0 09)	010	-	-	-	-	67. 669 .66 3	8.9 24. 335	-	76. 593 .99 8
Incr e/d e in sh pita l eas ecr eas are ca	011	-	-	-	-	-	-		-
Pur cha se/ sale of har ow n s es	012	-	-	-	-	-	-		-
Oth han er c ges	013	-	-	8.3 33. 460	(43 5.0 33)	(7.8 98. 428 )	-		-
Tra nsf er t o re ser ves	014	-	-	-	-	-	-		-
Divi den ds paid	015	-	-	-	-	-	-		-
Pro fit a lloc atio n (0 015 ) 14+	016	-	-	-	-	-	-	-	-
Bal the ting da te anc e a s p er re por (00 3+0 10+ 011 +01 2+0 13+ 016 )	017	1.2 14. 775 .00 0	(47 7.0 00)	415 .09 6.9 16	129 .93 3.6 69	67. 669 .66 3	103 .18 1.5 49	-	1.9 30. 179 .79 7

STATEMENT OF CHANGES IN EQUITY

HPB GROUP

NOTES TO FINANCIAL STATEMENTS

A) Income statement

1) INTEREST INCOME in HRK

	Jan 01 - Mar 31 2017		Jan 01 - Mar 31 2018
	Cumulative	Quarterly	Cumulative	Quarterly
Loans	145.299.602	145.299.602	133.285.446	133.285.446
Deposits	(609.432)	(609.432)	339.249	339.249
Securities	27.857.106	27.857.106	20.078.275	20.078.275
TOTAL	172.547.276	172.547.276	153.702.970	153.702.970

2) INTEREST EXPENSE in HRK

		Jan 01 - Mar 31 2017	Jan 01 - Mar 31 2018
	Cumulative	Quarterly	Cumulative	Quarterly
Borrowings	5.912.448	5.912.448	2.904.801	2.904.801
Deposits	32.816.260	32.816.260	25.351.528	25.351.528
TOTAL	38.728.708	38.728.708	28.256.329	28.256.329

3) FEE AND COMMISSION INCOME in HRK

		Jan 01 - Mar 31 2017	Jan 01 - Mar 31 2018
	Cumulative	Quarterly	Cumulative	Quarterly
Cash payment operations - channels	68.214.213	68.214.213	65.033.059	65.033.059
Retail and card operations	31.203.636	31.203.636	32.967.941	32.967.941
Corporate operations	13.287.726	13.287.726	13.795.537	13.795.537
Other fee and commission income	5.058.868	5.058.868	4.923.257	4.923.257
TOTAL	117.764.443	117.764.443	116.719.794	116.719.794

4) FEE AND COMMISSION EXPENSE in HRK

	Jan 01 - Mar 31 2017		Jan 01 - Mar 31 2018
	Cumulative	Quarterly	Cumulative	Quarterly
Payment operations	68.358.109	68.358.109	63.030.539	63.030.539
Other fee and commission expense	3.957.360	3.957.360	7.025.522	7.025.522
TOTAL	72.315.469	72.315.469	70.056.061	70.056.061

5) GAINS LESS LOSSES FROM TRADING ACTIVITIES in HRK

	Jan 01 - Mar 31 2017		Jan 01 - Mar 31 2018
	Cumulative	Quarterly	Cumulative	Quarterly
Securities and equity instruments	715.846	715.846	(108.242)	(108.242)
FX transactions	8.007.655	8.007.655	11.207.073	11.207.073
HRK cash transactions	8.050	8.050	7.200	7.200
Derivatives	(44.139)	(44.139)	(367.278)	(367.278)
TOTAL	8.687.412	8.687.412	10.738.753	10.738.753

6) OPERATING EXPENSES in HRK

	Jan 01 - Mar 31 2017		Jan 01 - Mar 31 2018
	Cumulative	Quarterly	Cumulative	Quarterly
General and administrative expenses	87.674.479	87.674.479	87.041.584	87.041.584
Amortization and depreciation	11.337.253	11.337.253	11.460.284	11.460.284
Savings deposit insurance costs	9.246.539	9.246.539	8.761.077	8.761.077
Other costs	4.818.258	4.818.258	8.028.436	8.028.436
TOTAL	113.076.529	113.076.529	115.291.381	115.291.381

7) IMPAIRMENT LOSSES AND PROVISION EXPENSES in HRK

		Jan 01 - Mar 31 2017	Jan 01 - Mar 31 2018
	Cumulative	Quarterly	Cumulative	Quarterly
Impairments and provisions for losses	70.283.003	70.283.003	(15.823.493)	(15.823.493)
Other impairments and adjstuments	1.431.774	1.431.774	4.550.656	4.550.656
TOTAL	71.714.777	71.714.777	(11.272.837)	(11.272.837)

B) Balance sheet

8) CASH AND DEPOSITS WITH THE CNB		in HRK
	Dec 31 2017	Mar 31 2018
CASH	460.024.014	494.378.160
DEPOSITS WITH THE CNB	3.931.442.857	3.621.005.981
Mandatory reserve	1.300.268.691	1.306.069.829
Account for transaction settlement	2.631.174.166	2.314.936.152
MANDATORY TREASURY BILLS	-	-
Portfolio based impairment allowance for identified losses	-	-
TOTAL	4.391.466.871	4.115.384.141

9) DEPOSITS WITH FINANCIAL INSTITUTIONS		in HRK
	Dec 31 2017	Mar 31 2018
Deposits with foreign banking institutions	449.961.251	284.974.313
Deposits with domestic banking institutions	23.369.080	1.316.000
Portfolio based impairment allowance for identified losses	-
TOTAL	473.330.331	286.290.313

10) EQUITY INSTRUMENTS AND SECURITIES		in HRK
	Dec 31 2017	Mar 31 2018
Short term Treasury bills of the Croatian Ministry of Finance	324.931.405	273.293.880
Financial assets held for trading	654.815.717	509.069.639
Financial assets available for sale	2.459.982.241	2.458.183.022
Financial assets held to maturity	73.139.356	72.060.164
Portfolio based impairment allowance for identified losses	(775.376)	-
Deferred front-end fee	(18.523)	(8.193)
TOTAL	3.512.074.820	3.312.598.512

11) LOANS TO CUSTOMERS	in HRK
	Dec 31 2017	Mar 31 2018
Loans to financial institutions	62.450.000	40.130.000
Bruto krediti	62.454.545	40.134.746
Ispravci vrijednosti	(4.545)	(4.746)
Corporate & SME loans	2.942.304.493	3.422.236.134
Bruto krediti	3.902.668.309	4.380.499.049
Ispravci vrijednosti	(960.363.816)	(958.262.915)
Retail loans	5.036.923.707	5.121.461.114
Bruto krediti	5.333.998.299	5.421.830.675
Ispravci vrijednosti	(297.074.592)	(300.369.561)
Other loans	3.192.134.584	3.110.684.223
Bruto krediti	3.198.303.415	3.119.779.559
Ispravci vrijednosti	(6.168.831)	(9.095.336)
Portfolio based impairment allowance for identified losses	(118.064.812)	-
Expected credit losses (A1 and A2 risk groups)	-	(151.437.843)
Other adjustments	-	(3.330.654)
Deferred front-end fee	(39.566.058)	(37.886.532)
LOANS TO CUSTOMERS	11.076.181.914	11.501.856.442

B) Balance sheet (continued)

12) DEPOSITS		in HRK
	Dec 31 2017	Mar 31 2018
Financial institutions	1.116.153.667	1.156.108.683
Corporations	3.574.264.999	3.755.918.172
Retail	9.282.809.836	9.398.634.632
Other	1.416.684.388	1.006.790.263
TOTAL	15.389.912.890	15.317.451.750

13) BORROWINGS		in HRK
	Dec 31 2017	Mar 31 2018
Borrowings from HBOR	656.196.151	653.994.908
Borrowings from domestic banking institutions	-	-
Borrowings from domestic non-banking institutions	-	-
Borrowings from foreign banking institutions	20.286.850	20.066.470
Deferred front-end fee	(4.225.170)	(4.116.723)
TOTAL	672.257.831	669.944.655

14) OTHER LIABILITIES		in HRK
	Dec 31 2017	Mar 31 2018
Restricted deposits	1.786.812.843	1.718.982.966
Interest and fees payable	48.664.624	51.672.217
Provisions for off-balance sheet exposure	25.193.152	41.369.799
Other	236.176.726	204.668.963
TOTAL	2.096.847.345	2.016.693.945

C) Changes in accounting policies

During the reporting period, Group has transitioned to new reporting standard IFRS 9 "Financial instruments". Standard supplants the old IAS 39: "Financial instruments: classification and measurement" and consists of conditions relating to classification and measurement, impairment, derecognition and hedge accounting in general.

Classification and measurement – IFRS 9 introduces a new approach to classification of financial assets, based on cash flow features and business model in which certain financial assets is maintained. New model introduces the unique model of impairment.

Impairment – IFRS 9 introduces the new model of impairment based on expected losses. This model instructs that expected credit losses should be recorded in a more timely manner.

Hedge accounting - IFRS 9 brings significant changes to hedge accounting. Based on this changes, more information must be disclosed about risk management activities.

Bank and its subsidiaries have initiated the project of IFRS 9 implementation in 2016, and have succeeded in implementing it with first adoption as of Jan 01 2018.

From the impairment aspect, adoption of this standard has significant effects on the Group's capital. Migration from IAS 39 to IFRS 9 resulted in an initial effect on the Group's capital reserves amounting to HRK 57.233 thousand (reduction).

D) Parent company's ownership structure

Ownership structure of HPB p.l.c., parent company of HPB Group as per Mar 31 2018 was as follows:

Shareholder	Ownership stake
Republic of Croatia (Ministry of State Assets)	42,43%
HP Hrvatska pošta Plc	11,93%
State Agency for Deposit Insurance and Bank Resolution	8,98%
Croatian Pension Insurance Insitute (Ministry of State Assets)	8,76%
Prosperus Invest d.o.o., for Prosperus FGS	4,94%
PBZ CROATIA OSIGURANJE OMF (B category)	4,12%
ERSTE d.o.o. for ERSTE PLAVI OMF (B category)	3,90%
Allianz ZB d.o.o., for AZ OMF (B category)	2,88%
CROATIA osiguranje Plc	2,47%
Fund for Financing the Decommissioning of the Krško Nuclear Power Plant and the Disposal of NEK Radioactive Waste and Spent Nuclear Fuel	2,36%
RAIFFEISEN D.D., for Raiffeisen OMF (B category)	2,20%
Minorities	4,99%
Own shares	0,04%

TRANSLATION

E) HPB stock

HPB Stock is listed on ZSE's Official market. Last share price at the end of the 2018 reporting period amounted to HRK 486,00 (trading day Mar 29 2018), representing a decline of 4,0 percent in comparison with the last price achieved in 2017 (=HRK 506,00 as per Dec 29 2017 trading day).

Trading during the reporting period was as follows:

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Hrvatska Poštanska Banka d.d.

2090_10-q_2018-04-27_635c6a92-80dd-460c-ba89-35de657ec200.pdf

Consolidated Financial Statements for the Period from Jan 01 to Mar 31 2018

Management report of HPB Group

Statement by persons accountable for compiling the consolidated report of HPB Group

BALANCE SHEET

HPB GROUP

PROFIT OR LOSS STATEMENT

CASH FLOW STATEMENT - INDIRECT METHOD

STATEMENT OF CHANGES IN EQUITY

NOTES TO FINANCIAL STATEMENTS

A) Income statement

2) INTEREST EXPENSE in HRK

3) FEE AND COMMISSION INCOME in HRK

4) FEE AND COMMISSION EXPENSE in HRK

5) GAINS LESS LOSSES FROM TRADING ACTIVITIES in HRK

6) OPERATING EXPENSES in HRK

7) IMPAIRMENT LOSSES AND PROVISION EXPENSES in HRK

B) Balance sheet

B) Balance sheet (continued)

C) Changes in accounting policies

D) Parent company's ownership structure

E) HPB stock

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