Hrvatska Poštanska Banka d.d.

Investor Presentation • Jul 24, 2019

Best first half of the year since foundation

Unaudited financial results 01.01.- 30.06.2019.

Record results with continuous transformation

Balance

• Net profit at half year is HRK 123.5 million – best accomplishment since foundation of HPB (y-o-y +30.9%)
• Operating income has increased for HRK 27.2 million when compared to first half year of 2018 due to strong increase in operating income (y-o-y +19.7%)
• Net interest income has increased for 4.3% due to decrease in interest expense
• Net fees and commissions income has increased for 4.8% because of sustainable commissions income in retail and corporate
• Impairment losses significantly lower than in the same period in 2018
• Expenses on reasonable level considering large number of initiated project and merger with JABA
• Important projects: SME business model transformation, preparation for asset quality review (AQR – ECB), dana quality improvement, digital banking, diaspora business model, cooperation with Hrvatska pošta (Croatian postal office), operating excellence
• Assets at HRK 23.2 billion, market share increased at 5.54% (as of 30.4.2019) (included merger of Jadranska banka d.d.)
• Significant increase in volume of Retail, SME and large corporate loans along with deleveraging of state – loans increase for 9.8% or HRK 1.2 billion
• Retail placed HRK 1 billion of new loans
• Merger with JABA brought an increase in gross loan portfolio for HRK 191 million in retail and HRK 110 million in SME
• Deposits base increased for HRK 1.3 billion

Organic growth and effect from merger with JABA

Market shares (segmented)

NOTE: presented market shares disclose HPB integration on market share d.d. position as of 31.12.2018, while the HPB position at 30.4. includes integration effects of Jadranska banka d.d. Sector source: www.hnb.hr ; aggregated statistical report

Unaudited financial results 01.01. - 30.06.2019. 24.07.2019. 3

Increase in retail and corporate loans, decrease in public sector – portfolio diversification

Loans structure (31.12.2018) Loans structure (30.06.2019)

Increase in gross loans for 9.8% in 1H 2019

• Significant increase in loans in targeted segments retail (+11.1%) and corporate SME +18.8%, followed by incrase in large corporates also
• deleveraging of state (decrease of 7.2%) was amortized through growth in targeted segments
• Market share of integrated JABA loans is 0.1%
• Loans market share increased for 0.2 bp

Source: HPB d.d., management reports – segmented

Unaudited financial results 01.01. - 30.06.2019. 24.07.2019. 4

Deposits base strongly increased through integration of Jadranska banka

term deposits demand deposits other liabilities capital

Pasiva (u mil. HRK)

retail

other

Deposits increased by 7.3 percent in 2019

• Deposit base strenghtened by HRK 1.3 billion in 1H 2019 trough successful integration of Jadranska banka
• retail and business entities continue to increase, wherein spillover trend – from term deposits (-3.9%) to demand accounts continues (+14.5%), having a favourable effect on average prices
• deposits remain the main source of funding for HPB (84.8%), with HRK deposits having the dominant share
• Deposit growth will be dependent on future needs for funding

Newly implemented operating and business model enables SME to achieve a significant push on the market

Trend kretanja kredita SME segmentu

• 12 regional centers optimal geographical coverage
• 2 entrepreneurship centers began with operations Velika Gorica and Sv. Nedjelja (bringing us closer to the clients – successfuly piloted)
• enhanced digital services sphere (online services Online account opening and Online loan application)
• Corporate Banking academy establised we invest in human capital development and build foundations for long term client relationship,
• cooperation with HAMAG, EIB, EBRD and ZSE continues
• we put emphasis on industries that generate value for the economy as a whole: IT, exports, agriculture, tourism…
• continuous investment in client relationship and their financial education (Open Gate Days, Workshop for entrepreneus in cooperation with EBRD and similar activities)
• HRK 540 million of new loan volume in SME segment, with client number being increased by almost 3 thousand

More than HRK 1 billion of new loan placements in the retail segment

601 thousand

number of clients doing business with HPB

21% y-o-y loan growth 5% y-o-y growth in number of clients

• 9 regional centers and 57 business units throughout all of Croatia, with 3 new additions to the business network in 2019
• Simultaneously to the successful integration of Jadranska banka, we have achieved organic growth as well
• 680 thousand of different demand deposit accounts, 438 thousand of current accounts
• 50% YoY growth in new loan volume
• we have shortened the loan approval process by over 80%, while the number of new loans increased by more than 70% in comparison with the period prior to process optimization
• clients have access to an advanced model of personal banking through eBranch, in which business is mostly done online, by cellphone or computer
• HRK 1.0 billion of new loan volume placed in retail segment in 2019

Domestic market share of 9% in the number of cards, with significant step forward to be taken in autumn

From autumn 2019 HPB cards will include Croatian landmarks, reflecting our position as the largest bank in domestic ownership

12/14 01/15 02/15 03/15 04/15 05/15 06/15 07/15 08/15 09/15 10/15 11/15 12/15 01/16 02/16 03/16 04/16 05/16 06/16 07/16 08/16 09/16 10/16 11/16 12/16 01/17 02/17 03/17 04/17 05/17 06/17 07/17 08/17 09/17 10/17 11/17 12/17 01/18 02/18 03/18 04/18 05/18 06/18 07/18 08/18 09/18 10/18 11/18 12/18 01/19 02/19 03/19 04/19 05/19 06/19

continuous growth in the number of HPB cards

13% y-o-y growth in transaction volume (in 2019)

14% y-o-y growth in number of transaction (in 1H 2019)

Through mHPB we deliver simple, quick and cost effective service

Optimization of Group's operations continues with the Initiated merger of HPB-Stambena štedionica

	as per June 30 2019
Assets	HRK 438 mil
Share in the parent's assets	1.9%
Loans	HRK 192 mil
Share in the parent's loans	1.4%
Deposits	HRK 321 mil
Share in the parent's deposits	1.6%

37 thousand

number of clients who will gain simpler access to HPB's broad services offer with the merger

Optimization

of operations through possible cost costs and more efficient Group's resources management

• as a continuation of Group's optimization activities, the process of merger of HPB-Stambena štedionice d.d. has been initiatied – aimed at increasing return on invested capital
• merger should result in decreased costs, while capital challenges that HPB-Stambena štedionica d.d. is faced with will be annuled
• focus is put on time efficiency and legal merger as soon as possible in a way that will not have any effect on the clients nor the other Bank's business activities

conclusion aimed for 2019 ye

• Bank is to take over existing contracts on housing savings and loan offer
• particular care is taken to client's protection who will keep all existing rights