TRANSLATION

Consolidated Financial Statements for the Period from Jan 01 to Jun 30 2018

Unaudited

Zagreb, July 25 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 Jun 30 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).

Parent company has, by achieving the best net result since foundation, driven the Group's result as well. Group has recorded 1H 2018 net profit amounting to HRK 94,2 million, as opposed to HRK 64,6 million loss in 1H 2017 consequent to impairments on Agrokor and related parties exposures. Profitability improvements have been achieved owing to better collection and NPL coverage, resulting in significantly lower cost-of-risk.

Apart from HRK 94,4M of net profit achieved by the parent-company, HPB Invest recorded a net profit of HRK 421T, HPB-nekretnine added a net profit of HRK 470T. Consequent to relatively adverse effects from capital markets at the end of the reporting period, HPB-Stambena štedionica recorded a net loss amounting to HRK 1,1M, in spite of increasing volume and contribution of core operations to overall result.

Bank has successfully closed the acquisition of Jadranska banka post balance-sheet date. Ownership transfer has been completed on July 12 2018, while on July 13 2018 HPB has injected HRK 110 million of new capital to Jadranska banka in order to achieve full compliance with applicable capital demands. Merger activities have been initiated.

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

Tomislav Vuić CEO

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 Jun 30 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.

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

Tea Bažant Head of Finance Division Tomislav Vuić CEO

Appendix 3. Reporting period: Jan 01 to Jun 30 2018 Quarterly financial statements for credit institutions TFI-KI 03777928 Registration number (MB): 080010698 Registration number (MBS): 87939104217 Personal identification number (OIB): HPB p.l.c. Company: 10000 ZAGREB Postal code and city Address: JURIŠIĆEVA 4 E-mail address: [email protected] Internet address: www.hpb.hr ZAGREB City code and name: 133 GRAD ZAGREB County code and name: 21 # of employees: (as per reporting date) Consolidated report: YES Industry code: Consolidated companies (in accordance with IFRS): Headquarters: Registration number:











	1.179
	6419

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 n/a n/a provided by:
Bažant Tea Contact:
Phone: 014804670 014804594 Fax:
E-mail address: [email protected]
Surname and name: Vuić Tomislav
(persons authorized for representation)
Documentation to be made public:

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

Jun 30 2018 as per			in HRK
Item	AOP label	Dec 31 2017	Jun 30 2018
1	2	3	4
ASSSETS
1. CASH AND DEPOSITS WITH THE CNB (002+003)	001	4.391.466.871	3.973.300.998
1.1.Cash	002	460.024.014	656.730.597
1.2.Deposits with the CNB	003	3.931.442.857	3.316.570.401
2. DEPOSITS WITH FINANCIAL INSTITUTIONS	004	473.330.331	487.139.081
3. SHORT-TERM TREASURY BILLS OF THE CROATIAN MINISTRY OF FINANCE	005	324.931.405	272.507.001
4. FINANCIAL ASSETS HELD FOR TRADING	006	654.815.717	711.762.646
5. FINANCIAL ASSETS AVAILABLE FOR SALE	007	2.459.982.241	2.739.906.667
6. FINANCIAL ASSETS HELD TO MATURITY	008	72.345.457	71.124.811
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	41.415.186
10. LOANS TO OTHER CUSTOMERS	012	11.013.731.914	12.082.846.167
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	137.134.408
14. OTHER ASSETS	016	455.167.665	487.124.384
A) TOTAL ASSETS (001+004 to 016)	017	20.069.837.309	21.024.261.349
LIABILITIES
1. BORROWINGS FROM FINANCIAL INSTITUTIONS (019+020)	018	651.970.981	624.533.197
1.1. Short-term	019	-	-
1.2. Long-term	020	651.970.981	624.533.197
2. DEPOSITS (022 to 024)	021	15.389.912.890	16.284.529.294
2.1. Transactional and current accounts	022	5.125.557.660	5.892.546.726
2.2. Savings deposits (demand)	023	1.538.006.561	1.754.368.145
2.3. Term deposits	024	8.726.348.669	8.637.614.423
3. OTHER BORROWINGS (026+027)	025	20.286.850	36.897.885
3.1. Short-term	026	-	-
3.2. Long-term	027	20.286.850	36.897.885
4. DERIVATIVE AND OTHER FINANCIAL LIABILITIES HELD FOR TRADING	028	-	29.846
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	2.125.826.257
B) TOTAL LIABILITIES (018+021+025+028+029+032+033+034)	035	18.159.018.066	19.071.816.479
EQUITY
1. SHARE CAPITAL	036	1.214.298.000	1.214.298.000
2. PROFIT/(LOSS) FOR THE PERIOD	037	7.898.428	94.194.068
3. RETAINED EARNINGS	038	130.368.702	137.850.456
4. REGULATORY RESERVES	039	15.708.724	16.125.397
5. STATUTARY AND OTHER CAPITAL RESERVES	040	448.288.175	391.054.733
6. FAIR VALUE RESERVE	041	94.257.214	98.922.216
7. RESERVES ARISING FROM HEDGING TRANSACTIONS	042	-	-
C) TOTAL EQUITY (036 to 042)	043	1.910.819.243	1.952.444.870
D) TOTAL LIABILITIES AND EQUITY (035+043)	044	20.069.837.309	21.024.261.349
ADDENDUM TO THE BALANCE SHEET (filled-in by the banks submitting consolidated financial statement)
1. TOTAL EQUITY	045	1.910.819.243	1.952.444.870
2. Equity attributable to the shareholders of the parent company	046	1.910.819.243	1.952.444.870
3. Minority interest (045-046)	047	0	0

PROFIT OR LOSS STATEMENT

for th eri od fro e p m	Ja n 0 1 2 01 8	to	Ju n 3 0 2	01 8				in H R K
Ite m			AO P lab el	Ja Ju n 0 1 -	n 3 0 2 017	Ja Ju n 0 1 -	n 3 0 2 018
					Cu lat ive mu	Qu erl art y	Cu lat ive mu	Qu erl art y
1				2	3	4	5	6
1 . In t in ter es co me				04 8	34 1.8 25 .46 0	169 .27 8.1 84	31 2.2 70 .82 9	158 .56 7.8 59
. In 2 ter t e es xp en se				04 9	74 .02 6.1 29	35 .29 7.4 21	57 .75 9.7 86	29 .50 3.4 57
3 . N int inc ( 04 8-0 49 ) et st ere om e				0 50	26 99 .33 1 7.7	133 .98 0.7 63	25 4.5 11 .04 3	129 .06 4.4 02
. F d c mi ion in 4 ee an om ss co me				0 51	24 9.4 66 .29 6	13 1.7 01 .85 3	24 8.6 74 .73 2	13 1.9 54 .93 8
. F d c mi ion 5 ee an om ss ex p en se				0 52	148 .99 69 5.7	76 .68 0.3 00	149 .99 6.3 83	79 .94 0.3 22
6 . N fee d c mis ion in ( 0 51 -0 52 ) et an om s co me				0 53	10 0.4 70 .52 7	5 5.0 21 .5 53	98 .67 8.3 49	52 .01 4.6 16
Ga fro 7 ins le los ris ing inv in s tm ts ss se s a m es en u j int ntu o ve res	bs id iar ies iate d c , as so c	ies om p an an	d	0 54	-	-	-	-
Ga ins le los fro d ing tivi ties 8 tra ss se s m ac				0 5 5	18 .64 6.0 06	9.9 58 .59 4	17 .62 8.7 49	6.8 89 .99 6
9 Ga ins le los fro bu ilt-i n d iva tive ss se s m er s				56 0	-	-	-	-
10 Ga ins le los ris ing fro fina ia l as ts ss se s a m nc se va tive ly de d not tra ac	lue d a fa ir v lue th t a rou	h P & L, g		0 57	-	-	-	-
Ga fro 11 ins le los ris ing ritie ila b ss se s a m se cu s a va	for le le sa			0 58	5.4 57 .49 2	5.1 22 .57 6	-	-
12 Ga ins le los ris ing fro ritie he ld t ss se s a m se cu s	rity atu o m			59 0	-	-	-	-
Ga ins le los ris ing fro he dg ing tivi ties 13 ss se s a m ac				06 0	-	-	-	-
14 . In fro inv in s bs id iar ies tm ts co me m es en u , as so c	iate d c ies d j om p an an o	int ntu ve res		06 1	-	-	-	-
. In fro he ity ins 15 ot tru nts co me m r e qu me				06 2	81 5.6 53	79 3.9 85	80 3.1 41	78 8.6 58
16 Ga ins le los fro ha d iffe ate ss se s m exc ng e r ren ce	s			06 3	18 1.8 23	( 1.0 47 .80 8 )	( 1.0 60 .79 3 )	( 2.4 11 .90 1 )
Ot 17 he r in co me				06 4	4.5 88 .80 4	3.0 44 .85 3	3.3 27 .37 4	1.0 96 .58 7
18 Ot he ting sts r o p era co				06 5	28 .54 7.6 26	14 .48 2.8 29	34 .45 6.2 43	17 .66 6.7 30
Ge 19 l an d a dm inis tra tive ort iza tio ne ra ex p en se s, am	nd de iat ion n a p rec			06 6	196 .85 9.8 76	97 .84 8.1 44	20 0.9 90 .50 5	102 .48 8.6 37
. O ing fit ( 50 53 5-0 ) 20 t 0 +0 to 06 4-0 6 66 p era p ro				06 7	172 .5 52 .13 4	94 .54 3. 54 3	138 .44 1.1 15	67 .28 6.9 91
21 . Im irm t lo d p is ion p a en ss es an rov s				06 8	23 7.0 33 .99 3	165 .31 9.2 16	22 .78 5.0 70	34 .05 7.9 07
. P RO FIT / ( LO S S ) BE FO RE TA X ( ) 22 06 7-0 68				06 9	( 59 ) 64 .48 1.8	( 5.6 ) 70 .77 73	115 56 5 .6 .04	33 .22 9.0 84
C O S / 23 . IN ME TA X E XP EN E DE FE RR ED TA X				07 0	74 .88 1	( ) 3.3 75 .80 2	21 .46 1.9 77	6.7 04 .67 9
24 . N ET PR O FIT / ( LO S S ) FO R T HE PE RIO D ( 06	9-0 70 )			07 1	( ) 64 .5 56 .74 0	( ) 67 .39 9.8 71	94 .19 4.0 68	26 .52 4.4 0 5
. E ing ha 25 arn s p er s re				07 2	( ) 32	( ) 33	47	13
AD DE ND U M TO TH E P & L ( fill d- in by the ba nk e	bm itt ing lid ate s s co ns o u	d fin ia an c	l st ) ate nt me
1. PR O FIT FO R T HE PE RIO D				07 3	( 64 .5 56 .74 0 )	( 67 .39 9.8 71 )	94 .19 4.0 68	26 .52 4.4 0 5
2. Att rib b le the ha ho lde f th uta to nt s re rs o e p are	co mp an y			07 4	( ) 64 .5 56 .74 0	( ) 67 .39 9.8 71	94 .19 4.0 68	26 .52 4.4 0 5
3. Mi rity in ( 07 3-0 74 ) ter t no es				07 5	-	-	-	-

Consolidated Financial Statements for the Period from Jan 01 to Jun 30 2018 (unaudited)

CASH FLOW STATEMENT - INDIRECT METHOD

for the period from			in HRK
Item	AOP label	Jan 01 - Jun 30 2017	Jan 01 - Jun 30 2018
1	2	3	4
OPERATING ACTIVITIES
1. Cash flow from operating activities before changes in assets (002 to 007)	001	196.316.874	168.843.909
1.1. Profit/(loss) before tax	002	(64.481.859)	115.656.045
1.2. Impairment losses and provisions	003	237.033.993	22.785.070
1.3. Amortization and depreciation	004	22.445.964	23.029.332
1.4. Net unrealised gains less losses from financial assets valued at fair value through profit or loss	005	23.999	6.119.003
1.5. Gains / losses from sale of tangible assets	006	1.476.600	193.666
1.6. Other gains / losses	007	(181.823)	1.060.793
2. Net increase / decrease of operating assets (009 to 016)	008	(146.400.284)	(872.746.823)
2.1. Deposits with the CNB	009	(621.518.645)	614.872.456
2.2. Tresury bills of the Croatian Ministry of Finance	010	5.459.309	52.424.404
2.3. Deposits with and loans to financial institutions	011	297.920.067	(13.808.750)
2.4. Loans to other customers	012	(339.485.304)	(1.099.622.854)
2.5. Financial assets held for trading	013	22.223.635	(63.065.932)
2.6. Financial assets available for sale	014	311.669.025	(284.589.428)
2.7. Financial assets valued at fair value through profit or loss, not actively traded	015	-	-
2.8. Other operating assets	016	177.331.629	(78.956.719)
3. Net increase / decrease of operating liabilities (018 to 021)	017	16.097.039	923.625.162
3.1. Transactional accounts	018	266.185.130	766.989.066
3.2. Savings and term deposits	019	(387.014.602)	127.627.338
3.3. Derivative financial liabilities and other liabilities actively traded	020	(3.640.667)	29.846
3.4. Ostale liabilities	021	140.567.178	28.978.912
4. Net cash flow from operating activities before taxation (001+008+017)	022	66.013.629	219.722.248
5. Income tax paid	023	(776.410)	-
6. Net cash inflow / outflow from operating activities (022+023)	024	65.237.219	219.722.248
INVESTING ACTIVITIES
7. Net cash flow from investing activities (026 to 030)	025	148.805.259	(12.258.605)
7.1. Purchase of tangible and intangible assets	026	(16.363.476)	(14.282.392)
7.2. Investment in / disposal of subsidiaries, associated companies and joint ventures	027	-	-
7.3. Investment in / disposal of financial assets held to maturity	028	164.353.082	1.220.646
7.4. Dividends received	029	815.653	803.141
7.5. Other inflows / outflows from investing activities	030	-	-
FINANCIAL ACTIVITIES
8. Net cash flow from financial activities (032 to 037)	031	(83.785.363)	(10.826.749)
8.1. Net increase / decrease of borrowings	032	(83.785.363)	(10.826.749)
8.2. Net increase / decrease of issued debt securities	033	-	-
8.3. Net increase / decrease of subordinated debt and hybrid instruments	034	-	-
8.4. Share capital raised	035	-	-
8.5. Dividends paid	036	-	-
8.6. Other inflows / outflows from financial activities	037	-	-
9. Net increase / decrease of cash and cash equivalents
(024+025+031)	038	130.257.115	196.636.894
10. Effect of foreign exchange differences on cash and cash equivalents	039	902.877	69.689
11. Net increase/(decrease) in cash and cash equivalents (038+039)	040	131.159.992	196.706.583
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	552.639.844	656.730.597

for th e p	eri od fro m	Jan 01	20 18	to	Jun 30	20 18			in H RK
	AO		Attr	ibu tab le t o th e sh hol are	der s of the t co pa ren mp	any
Item	P lab el	Sha api tal re c	Ow n sh are s	Reg ula tory , sta tuto ry and oth er r ese rve s	Ret ain ed nin ear gs	Pro fit/( loss ) fo r th e per iod	Fai lue r va rese rve	Min orit y in tere st	Tot al e qui ty
1	2	3	4	5	6	7	8	9	10
Bal r Ja n 0 1 20 18 anc e a s pe	001	1.2 14. 775 .00 0	( 477 .00 0)	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 cts of c han in a unti olic ies ges cco ng p and rect ions of e cor rrors	002	-	-	(57 ) .233 .443	-	-	-	-	(57 .233 .443 )
Res d b ala Ja n 0 1 20 18 ( 001 +00 2) tate nce as per	003	1.2 14. 775 .00 0	( 477 .00 0)	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 ilab le fo le sets osa ava r sa	004	-	-	-	-	-	-	-	-
Cha in t he f air v alue of f inan cial ilab le fo le ets nge ass ava r sa	005	-	-	-	-	-	94. 876 5.5	-	5.5 94. 876
Tax item nise d di ly rect on s re cog in/tr ferre d fro quit ans m e y	006	-	-	-	-	-	( 929 .874 )	-	( 929 .874 )
Oth ains and (los ) re nise d di ly in ity rect er g ses cog equ	007	-	-	-	-	-	-	-	-
Net ins/ (los ) re nise d d irec tly in e qui ty ga ses cog (004 +00 5+0 06+ 007 )	008	-	-	-	-	-	4.6 65. 002	-	4.6 65. 002
Los s fo r the iod per	009					94. 194 .06 8	-	-	94. 194 .06 8
Tot al r gni zed inc nd e fo r th erio d (0 ) 08+ 009 eco om e a exp ens e p	010	-	-	-	-	94. 194 .06 8	4.6 65. 002	-	98. 859 .07 0
Incr e/de se i n sh ital eas crea are cap	011	-	-	-	-	-	-	-	-
Pur cha se/s ale of o sha wn res	012	-	-	-	-	-	-	-	-
Oth han er c ges	013	-	-	416 .67 4	7.4 81. 754	(7. 898 .42 8)	-	-	-
Tran sfer to rese rves	014	-	-	-	-	-	-	-	-
Divi den ds p aid	015	-	-	-	-	-	-	-	-
n (0 ) Pro fit a lloc atio 14+ 015	016	-	-	-	-	-	-	-	-
Bal r th ting da te ( 003 +01 0+0 11+ 012 +01 3+0 16) anc e a s pe e re por	017	1.2 14. 775 .00 0	( 477 .00 0)	407 .18 0.1 30	137 .85 0.4 56	94. 194 .06 8	98. 922 .21 6	-	1.9 52. 444 .87 0

STATEMENT OF CHANGES IN EQUITY

HPB GROUP

NOTES TO FINANCIAL STATEMENTS

A) Income statement

1) INTEREST INCOME in HRK

		Jan 01 - Jun 30 2017		Jan 01 - Jun 30 2018
	Cumulative	Quarterly	Cumulative	Quarterly
Loans	290.748.923	145.449.321	270.609.283	137.323.837
Deposits	(1.269.860)	(660.428)	637.728	298.479
Securities	52.346.397	24.489.291	41.023.818	20.945.543
TOTAL	341.825.460	169.278.184	312.270.829	158.567.859

2) INTEREST EXPENSE in HRK

		Jan 01 - Jun 30 2017	Jan 01 - Jun 30 2018
	Cumulative	Quarterly	Cumulative	Quarterly
Borrowings	6.904.796	992.348	6.385.169	3.480.368
Deposits	67.121.333	34.305.073	51.374.617	26.023.089
TOTAL	74.026.129	35.297.421	57.759.786	29.503.457

3) FEE AND COMMISSION INCOME in HRK

		Jan 01 - Jun 30 2017	Jan 01 - Jun 30 2018
	Cumulative	Quarterly	Cumulative	Quarterly
Cash payment operations - channels	138.969.150	70.754.937	132.109.660	67.076.601
Retail and card operations	72.862.756	41.659.120	77.047.908	44.079.967
Corporate operations	27.722.194	14.434.468	29.439.960	15.644.423
Other fee and commission income	9.912.196	4.853.328	10.077.204	5.153.947
TOTAL	249.466.296	131.701.853	248.674.732	131.954.938

4) FEE AND COMMISSION EXPENSE in HRK

		Jan 01 - Jun 30 2017	Jan 01 - Jun 30 2018
	Cumulative	Quarterly	Cumulative	Quarterly
Payment operations	139.228.922	70.870.813	131.845.757	68.815.218
Other fee and commission expense	9.766.847	5.809.487	18.150.626	11.125.104
TOTAL	148.995.769	76.680.300	149.996.383	79.940.322

5) GAINS LESS LOSSES FROM TRADING ACTIVITIES in HRK

		Jan 01 - Jun 30 2017	Jan 01 - Jun 30 2018
	Cumulative	Quarterly	Cumulative	Quarterly
Securities and equity instruments	805.087	89.241	(5.796.461)	(5.688.219)
FX transactions	17.652.385	9.644.730	22.514.068	11.306.995
HRK cash transactions	209.545	201.495	151.080	143.880
Derivatives	(21.011)	23.128	760.062	1.127.340
TOTAL	18.646.006	9.958.594	17.628.749	6.889.996

6) OPERATING EXPENSES in HRK

		Jan 01 - Jun 30 2017	Jan 01 - Jun 30 2018
	Cumulative	Quarterly	Cumulative	Quarterly
General and administrative expenses	174.413.912	86.739.433	177.961.173	90.919.589
Amortization and depreciation	22.445.964	11.108.711	23.029.332	11.569.048
Savings deposit insurance costs	17.803.541	8.557.002	18.040.703	9.279.626
Other costs	10.744.085	5.925.827	16.415.540	8.387.104
TOTAL	225.407.502	112.330.973	235.446.748	120.155.367

7) IMPAIRMENT LOSSES AND PROVISION EXPENSES in HRK

		Jan 01 - Jun 30 2017		Jan 01 - Jun 30 2018
	Cumulative	Quarterly	Cumulative	Quarterly
Impairments and provisions for losses	249.009.084	178.726.081	15.324.709	31.148.202
Other impairments and adjstuments	(11.975.091)	(13.406.865)	7.460.361	2.909.705
TOTAL	237.033.993	165.319.216	22.785.070	34.057.907

B) Balance sheet

8) CASH AND DEPOSITS WITH THE CNB in HRK

	Dec 31 2017	Jun 30 2018
CASH	460.024.014	656.730.597
DEPOSITS WITH THE CNB	3.931.442.857	3.316.570.401
Mandatory reserve	1.300.268.691	1.328.294.502
Account for transaction settlement	2.631.174.166	1.988.275.899
MANDATORY TREASURY BILLS	-
Portfolio based impairment allowance for identified losses	-
TOTAL	4.391.466.871	3.973.300.998

9) DEPOSITS WITH FINANCIAL INSTITUTIONS in HRK

	Dec 31 2017	Jun 30 2018
Deposits with foreign banking institutions	449.961.251	485.308.870
Deposits with domestic banking institutions	23.369.080	1.830.211
Portfolio based impairment allowance for identified losses	-
TOTAL	473.330.331	487.139.081

10) EQUITY INSTRUMENTS AND SECURITIES		in HRK
	Dec 31 2017	Jun 30 2018
Short term Treasury bills of the Croatian Ministry of Finance	324.931.405	272.507.001
Financial assets held for trading	654.815.717	711.762.646
Financial assets available for sale	2.459.982.241	2.739.906.667
Financial assets held to maturity	73.139.356	71.136.103
Portfolio based impairment allowance for identified losses	(775.376)	-
Deferred front-end fee	(18.523)	(11.292)
TOTAL	3.512.074.820	3.795.301.125

11) LOANS TO CUSTOMERS in HRK

	Dec 31 2017	Jun 30 2018
Loans to financial institutions	62.450.000	41.415.186
Bruto krediti	62.454.545	41.420.157
Ispravci vrijednosti	(4.545)	(4.971)
Corporate & SME loans	2.942.304.493	3.568.276.684
Bruto krediti	3.902.668.309	4.500.879.287
Ispravci vrijednosti	(960.363.816)	(932.602.603)
Retail loans	5.036.923.707	5.241.380.938
Bruto krediti	5.333.998.299	5.562.412.265
Ispravci vrijednosti	(297.074.592)	(321.031.327)
Other loans	3.192.134.584	3.461.328.016
Bruto krediti	3.198.303.415	3.468.621.555
Ispravci vrijednosti	(6.168.831)	(7.293.539)
Portfolio based impairment allowance for identified losses	(118.064.812)	-
Expected credit losses (A1 and A2 risk groups)	-	(147.025.795)
Other adjustments	-	(7.493.627)
Deferred front-end fee	(39.566.058)	(33.620.049)
LOANS TO CUSTOMERS	11.076.181.914	12.124.261.353

B) Balance sheet (continued)

12) DEPOSITS		in HRK
	Dec 31 2017	Jun 30 2018
Financial institutions	1.116.153.667	1.301.165.497
Corporations	3.574.264.999	4.157.561.027
Retail	9.282.809.836	9.531.652.627
Other	1.416.684.388	1.294.150.143
TOTAL	15.389.912.890	16.284.529.294

in HRK 13) BORROWINGS
	Dec 31 2017	Jun 30 2018
Borrowings from HBOR	656.196.151	624.110.359
Borrowings from domestic banking institutions	-	-
Borrowings from domestic non-banking institutions	-	4.300.000
Borrowings from foreign banking institutions	20.286.850	36.897.885
Deferred front-end fee	(4.225.170)	(3.877.162)
TOTAL	672.257.831	661.431.082

in HRK 14) OTHER LIABILITIES
	Dec 31 2017	Jun 30 2018
Restricted deposits	1.786.812.843	1.809.857.319
Interest and fees payable	48.664.624	51.910.770
Provisions for off-balance sheet exposure	25.193.152	33.261.457
Other	236.176.726	230.796.711
TOTAL	2.096.847.345	2.125.826.257

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 Jun 30 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%