Hrvatska Poštanska Banka d.d.

Annual / Quarterly Financial Statement • Feb 26, 2021

HPB d.d. Q4 2020 Investor information and unaudited Financial statements

Limitation of liability

• The information and data contained in this presentation are intended to be general background information on Hrvatska poštanska banka p.l.c. (hereinafter referred to as the Bank or HPB p.l.c.) and its activities and is supplied in summary form and therefore not necessarily complete.
• This presentation may include information and data derived from publicly available sources that have not been independently verified, therefore HPB p.l.c. hereby expressly makes no representation of warranty of any kind, including, but not limited to the accuracy, completeness or reliability of the provided information and data.
• Contained statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions therefore, when making decisions based on predictions of future uncertain events, the investors and/or others should carefully consider such factors and other uncertainties and events.

In accordance with the Capital Markets Act, Hrvatska poštanska Banka p.l.c. publishes unaudited financial statements for the period from January 01 to December 31, 2020.

Original and official quarterly report is published in Croatian.

The report includes:

• Management report of Hrvatska poštanska Banka p.l.c.,
• Statement by persons responsible for compiling the report,
• Unaudited set of unconsolidated financial statements (balance sheet, profit or loss statement, statement of changes in equity, cash flow statement), and
• Notes to the 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 114/2018).

1 Executive Summary

2 Macroeconomic environment

3 Financials

4 Risk Management

5 Appendix

HPB at a glance

Bank of the people

• Our 2020 loan growth determined by macroeconomic situation influenced by COVID-19 (capital light lending);
• Strategic cooperation with Hrvatska pošta allows us to reach even our most remote customers.

Resilience through hardships

• We adapted our products and services to address earthquakes and the pandemic;
• We adapted to remote work, ensuring the necessary resources for our employees;
• We also donated HRK 1 mn to the City of Petrinja;
• We fortify our position by harnessing efficiencies in our risk and interest profile.

Geared for sustainable growth

• We stand on the strongest capital position in our recent history;
• We improved our loan portfolio quality;
• We strenghtened our market position.

Source: HPB management reports

Key Financials 2020

Operating profit (in HRK mn)

Operating profit down on COVID-driven reduction in net fee income

Profit after tax (in HRK mn)

Profit after tax up on legal provisions reversal

Capital-light lending drives growth

CET 1 capital ratio (in %)

Strongest capital position in our recent history Pro forma CET1 at end 2020 at 24.1%

Gross loans (in HRK mn)

Robust Performance in 2020

		2017	2018	2019	2020
Assets	HRK mn	19 799 ,	21 256 ,	23 844 ,	25 500 ,	5
Net loans to customers	HRK mn	10 963 ,	11 009 ,	13 341 ,	14 725 ,	5
Deposits	HRK mn	16 951 ,	18 371 ,	20 069 ,	21 214 ,	5
Equity	HRK mn	1 905 ,	2 003 ,	2 370 ,	2 473 ,	5
Income	HRK mn	1 276 ,	1 173 ,	1 227 ,	1 121 ,	6
Net profit	HRK mn	8	152	144	182	5
Cost -to-income ratio	%	54 4	60 1	61 5	64 1	5
Return equity (ROE) on	%	0 4	7 6	6 1	7 4	5
CET capital ratio 1	%	18 1	17 9	20 2	21 8	5
NPL ratio	%	12 8	11 7	10 8	10 4	6
NPL ratio excl 100% gov. guaranteed exposure	%	12 8	11 6	10 4	8 7	6
NPL coverage	%	61 1	67 3	67 5	62 2	6
NPL coverage excl 100% gov. guaranteed exposure	%	61 1	67 3	70 0	2 74	5

• Steering of risks is based on prudent assessment of primary risk but with having in mind the complete risk profile
• Cost reduction measures impeded by earthquake damages

56%

15%

Financial market State Corporate Retail Other

122

Source: HPB management reports

Gross loans development

Gross loans (in HRK mn)

• Lending in 2020 was focused on central government, retail and government support transactions;
• Overall market situation and selective growth with high-quality customers led to net reduction in the SME & Corporate segments.

Subsidised Housing Loans

Approved not yet placed Subsidised Housing Loans

^{116 274 627} 1,080 2,299 2,944 4,150 8,153** 5% 9% 15% 13% 2017 2018 2019 2020 Number of approved subsidised housing loans HPB HR* Share

• HPB financed HRK 1.1 bn in 2020, or 12% of the total volume of subsidised housing loans in Croatia in a period 2017 - 2020;
• Through this product, HPB attracts young, highly educated, and active clients (80% of subsidised housing loan clients are new to Bank).
• * Source https://mgipu.gov.hr/
• ** Data of collected requests as of 26.1.2021

Portfolio quality improves

NPL ratio development (in %)

NPL coverage development (in %)

Market NPL ratio* 5.5% Market NPL coverage* 68.4%

• Material difference in NPL ratio with or without exposure that is 100% government guaranteed;
• Overall NPL share decreased due to collection activities and capital light performing loans growth despite:
• strong COVID-19 impact and
• AQR new default entries.

* As of 30.9.2020

Business development in the channel of Hrvatska Pošta d.d.

History of outsourcing	2011	2015	2020	2021	TO BE
	Outsourcing of payment operations	Outsourcing of consumer lending	Outsourcing of payment operations – corporate	Outsourcing of foreign exchange business	Strengthening HPB / HP business collaboration and
		KYC online		Post-sale contact	harnessing HP's potential as an
OBJECTIVES: To become the most accessible bank on the Croatian market in physical channels				New framework agreement on strategic partnership and outsourcing	acquisition tool Continuous focus on increasing market share and non-interest income
To provide the best service to cash-intensive customers harnessing the potential of cooperating with Hrvatska pošta as strategic partner				Outsourcing of payment operations – corporate (second, third and fourth phase)
				KYC online (second and third phase)
Retail – opening account	Retail - cash payment operations	Outsourcing of a part of credit business, ie	Opening business accounts and related	Outsourcing of foreign exchange business- retail
		consumer lending to the HP channel	services (first phase)	Implementation of post sale contact in HP
			Introduction of new online functionality:	channel
			opening and changes on client and account data (first phase)	Replacement of framework agreement on strategic partnership and outsourcing in part of
Source: HPB management reports				payment and other operationd of HPB d.d.

1 Executive Summary

2 Macroeconomic environment

3 Financials

4 Risk Management

5 Appendix

Socioeconomic indicators (y-o-y)

Rezultati Q3 2020. 24.2.2021. "G- WHOLESALE AND RETAIL TRADE OF MOTOR VEHICLES AND MOTORCYCLES; REPAIR OF MOTOR VEHICLES AND MOTORCYCLES " "I- ACCOMMODATION AND FOOD SERVICE ACTIVITIES " 13

COVID-19 moratoria

Total approved moratoria (in HRK mn)

• By end-2020, 1.5% of financed corporate moratoria are in default;
• Almost half of approved corporate moratoria have already expired by end-2020 (HRK 872 mn).

COVID-19 impact on loan portfolio

COVID-19 impact on corporate performing loans (in HRK mn)

28% 69% 3% Transport and support activities Trade-vehicle industry Tourism and related activities 76% 9% 6% 9% Medium impact industries Construction and related activities Wholesale Other service activities Other

• 48% of the Bank's corporate portfolio is largely unaffected by COVID-19;
• The Risk Appetite Statement (RAS) was adopted limiting new exposures to the most affected industries by the COVID-19 pandemic.

15

Strong impact industries

COVID-19 impact on loan portfolio

Approved moratoria per industry

• Approved COVID-19 moratoria to corporates of HRK 1.9 bn (22.6% of outstanding gross corporate loans);
• Tourism has an extremely low share in the Bank's total portfolio (6.0% of outstanding gross corporate loans);
• We actively manage the portfolio through the analysis of pandemic prevention measures impact on industries.

Maturity of loans under moratoria – COVID-19

• The Bank regularly monitors loans to clients who have been granted a moratorium, regardless of the COVID-19 impact, and evaluates their cash flows on an individual basis
• By the end of 2020, 1.5% of approved corporate moratoria has defaulted

*excl. loans out of moratoria as of 31.12.2020

1 Executive Summary

2 Macroeconomic environment

3 Financials

4 Risk Management

5 Appendix

Key financials – Income statement

		2019	2020	∆ y-o-y
Net interest income	HRK mn	541	543	2	5
Net fee income	HRK mn	200	176	(24)	6
Operating income	HRK mn	839	804	(35)	6
Operating expense	HRK mn	(516)	(515)	(1)	6
Operating profit	HRK mn	323	289	(34)	6
Provisioning	HRK mn	(228)	(62)	(166)	6
Net profit	HRK mn	144	182	38	5
Cost-to-income ratio	%	61.3	64.1	2.8	5
Net interest margin	%	2.4	2.2	(0.2)	6

• Operating profit reduction primarily driven by COVID-19 effects;
• A build-up (HRK +56 mn) in 2019 and consequent release (HRK -79 mn) account for intra-year provision fluctuations.

Operating profit development

Operating profit development (in HRK mn)

• COVID-19 effects on operating profits reflected in reduced interest and fee income;
• Active management of the interest profile neutralised the drop in interest income.

Net income development

Composition of net income

• Net interest income is slightly higher on better management of interest expense;
• Net fee income impacted by COVID-19, which was mostly reflected in Q2 and Q3.

21

Fees and commissions

Net fee income overview (in HRK mn)

^{185 192 192 200} 176 5.7% 5.6% 5.8% 5.5% 50 100 150 200 2016 2017 2018 2019 2020 HPB Market share*

Composition of net fee and commission income

• Net fee income decline of HRK 23.4 mn vs 2019 is caused by:
• temporary suspension of fees for cash withdrawals at ATMs of other banks (25.3.2020 1.7.2020);
• slowdown in economic activities;
• significantly lower number of tourist arrivals in the 2020 summer season;
• HPB net fee income on par with the banking sector with a relatively stable share;
• Retail and card business fees are highest contributors to net fee income.

Source: HPB management reports

Operating expenses

Composition of operating expenses (in HRK mn)

Administrative expenses development (in HRK mn)

• Employee costs up with investments on IT infrastructure optimization in house solutions;
• Cost-cutting measures effectively reduced administrative expenses in 2020;
• Rental costs up with contingency office space acquisition following earthquakes.

Provisioning

Structure of provision expenses in 2020 (in HRK mn)

• Booking and consequent reversal of significant provisions for legal proceeds drive intra-year volatility;
• Portfolio optimization efforts drive risk costs down despite COVID-19 effects.

Key financials – Balance sheet

		31.12.2019	31.12.2020	∆ ytd
Assets	HRK mn	23,844	25,500	5 1,656
Gross loans	HRK mn	14,825	16,232	5 1,407
Deposits	HRK mn	20,069	21,214	5 1,145
Equity	HRK mn	2,370	2,473	5 103
Regulatory capital	HRK mn	2,209	2,314	5 105
Loan/deposit ratio	%	66.5	69.4	5 2.9
ROAE	%	6.6	7.5	5 0.9
NPL ratio	%	10.8	10.4	(0.4) 6
NPL ratio excl 100% gov. guaranteed exposure	%	10.4	8.7	(1.7) 6
NPL coverage	%	67.5	62.2	(5.3) 6
NPL coverage excl gov. guaranteed 100% exposure	%	70.0	74.2	5 4.2
Provision for impairment losses	HRK mn	(1,488)	(1,512)	5 24

• Assets records continuous growth +6.9% ytd, liquid assets +15.5%, securities -7.2%, gross loans +9.5%;
• Deposits up +5.7% with largest increase in the segment of financial market HRK +314.5 mn, retail HRK +308.9 mn, central state and large corporate clients HRK +295.8 mn, SMEs HRK +233.3 mn;
• Source: HPB management reports NPL coverage increases when excluding exposures covered by state guarantees (70.0% Q4 19 and 74.2% Q4 20).

Corporate portfolio industry distribution

Corporate gross loans per industry (in %)

• Construction industry growth with road and infrastructure state-owned enterprises;
• Reduction to some industry sectors is in line with general macroeconomic trends:
• Wholesale and retail trade;
• Real estate industry;

26

Source: HPB management reports Accommodation activities lending was done backed up by government guarantee schemes.

Composition of equity and liabilities

• Favorable impact on costs from observable trend of transforming term deposits into a vista deposits;
• Customer deposits dominate the funding mix with a 92% share;
• Bank holds 5.8 % of all deposits at 30.11.2020 (31.12.2016 = 5.3%);
• Source: HPB management reports Stable wholesale funding structure – attracted funds through foreign financial institutions, CBRD and CNB repo loans.

Liquidity Overview

Liquidity ratios

The Bank is highly liquid with markedly low loan-to-deposit ratio.

Highest level of CET1 ratio in recent history

• Considering the 2020 unaudited after-tax profit, pro forma CET1 stands at 24.1%;
• Contribution to improvement from both:
• Profit retention;
• Capital management optimization measures launched in Q4 19.

1 Executive Summary

2 Macroeconomic environment

3 Financials

4 Risk Management

5 Appendix

Regulatory Capital Development

Regulatory capital development (in HRK mn)

* on 31.12.2019 the Bank included 6-month profit in 2019 in the calculation of regulatory capital (retained earnings position), in accordance with the approval of the regulator. By decision of the General Assembly of the Bank this year, the net profit in 2019 was allocated equally to the position of retained earnings and other reserves. ³¹

Source: HPB management reports

RWA Development

RWA development (in HRK mn)

Despite asset growth, risk-weighted assets decreased as a result of the strengthening the capital management culture.

Exposures and coverage per stage

			31.12.2019		31.12.2020
Segment	Stage	Exposure	Exposure excl. gov. guarantees	Coverage	Coverage excl. gov. guarantees	Exposure	Exposure excl. gov. guarantees	Coverage	Coverage excl. gov. guarantees
CORPORATE	S1	61.8%		2.9%		58.5%		3.8%
CORPORATE	S2	7.8%		10.2%		6.8%		8.1%
CORPORATE	S3	30.5%	27.5%	62.9%	69.5%	34.7%	21.7%	47.7%	75.2%
SME	S1	55.3%		3.3%		49.3%		4.2%
SME	S2	10.7%		15.5%		16.8%		15.5%
SME	S3	34.0%	34.0%	72.5%	72.5%	33.9%	33.9%	71.3%	71.3%
STATE	S1	99.2%		0.8%		98.7%		1.0%
STATE	S2	0.8%		7.0%		1.3%		7.2%
STATE	S3	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%
RETAIL	S1	87.0%		0.4%		88.5%		0.5%
RETAIL	S2	4.2%		4.9%		3.2%		7.6%
RETAIL	S3	8.8%	8.8%	68.6%	68.6%	8.3%	8.3%	75.6%	75.6%
TOTAL	S1	85.3%		0.8%		85.9%		1.0%
TOTAL	S2	3.9%		9.3%		3.7%		10.5%
TOTAL	S3	10.8%	10.4%	67.5%	70.0%	10.4%	8.7%	62.2%	74.2%

1 Executive Summary

2 Macroeconomic environment

3 Financials

4 Risk Management

5 Appendix

Management report of Hrvatska poštanska Banka p.l.c.

Management report of Hrvatska poštanska Banka p.l.c. for the period from January 01 to December 31, 2020 is contained in the previous section of this material.

Marko Badurina Anto Mihaljević

President of the Management Board Member of the Management Board

Ivan Soldo

Member of the Management Board

Statement by persons accountable for compiling the report of HPB p.l.c.

In accordance with the Capital Market Act, the Management Board of HPB plc., states that according to their best knowledge the set of unaudited financial statements for the period from January 01 to December 31, 2020, 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.

Executive Head of finance division Chief Executive Officer

Tea Bažant Marko Badurina

Anto Mihaljević

Member of the Management Board

Ivan Soldo

Member of the Management Board

BALANCE SHEET as at December 31, 2020
Submitter: Hrvatska poštanska banka p.l.c.			in HRK
Item	AOP code	Last day of the preceding business year	At the reporting date of the current period
1	2	3	4
Assets
Cash, cash balances at central banks and other demand deposits (from 2 to 4)	001	2,772,746,813	3,662,460,152
Cash in hand	002	961,912,026	900,072,987
Cash balances at central banks	003	1,014,563,142	2,224,401,393
Other demand deposits	004	796,271,645	537,985,772
Financial assets held for trading (from 6 to 9) Derivatives	005 006	612,871,552 852,203	719,257,423 -
Equity instruments	007	96,079,539	95,340,654
Debt securities	008	515,939,810	623,916,769
Loans and advances Non-trading financial assets mandatorily at fair value through profit or loss (from 11 to 13)	009 010	- 21,199,086	- 18,865,901
Equity instruments	011	-	-
Debt securities	012	-	-
Loans and advances Financial assets at fair value through profit or loss (15 + 16)	013 014	21,199,086 -	18,865,901 -
Debt securities	015	-	-
Loans and advances	016	-	-
Financial assets at fair value through other comprehensive income (from 18 to 20)	017	4,640,197,866	4,158,015,469
Equity instruments Debt securities	018 019	57,269,384 4,582,928,482	49,027,711 4,108,987,758
Loans and advances	020	-	-
Financial assets at amortised cost (22 + 23)	021	15,217,710,292	16,414,151,555
Debt securities Loans and advances	022 023	4,305,695 15,213,404,597	1,978,784 16,412,172,771
Derivatives - hedge accounting	024	-	-
Fair value changes of the hedged items in portfolio hedge of interest rate risk	025	-	-
Investments in subsidiaries, joint ventures and associates Tangible assets	026 027	5,490,000 324,429,807	9,760,843 326,523,749
Intangible assets	028	109,095,746	91,038,847
Tax assets	029	6,453,295	7,545,824
Other assets Fixed assets and disposal groups classified as held for sale	030 031	42,962,745 20,000,000	40,280,095 20,000,000
Total assets (1 + 5 + 10 + 14 + 17 + 21 + from 24 to 31)	032	23,773,157,202	25,467,899,859
Liabilities
Financial liabilities held for trading (from 34 to 38)	033	863,025	21,172
Derivatives	034	863,025	21,172
Short positions Deposits	035 036	- -	- -
Debt securities issued	037	-	-
Other financial liabilities	038	-	-
Financial liabilities at fair value through profit or loss (from 40 to 42)	039 040	-	-
Deposits Debt securities issued	041	- -	- -
Other financial liabilities	042	-	-
Financial liabilities measured at amortised cost (from 44 to 46)	043	21,056,875,186	22,688,405,792
Deposits Debt securities issued	044 045	20,944,398,925 -	22,569,135,023 -
Other financial liabilities	046	112,476,261	119,270,769
Derivatives - hedge accounting	047	-	-
Fair value changes of the hedged items in portfolio hedge of interest rate risk Provisions	048 049	- 196,063,323	- 125,643,877
Tax liabilities	050	1,728,314	30,445,178
Share capital repayable on demand	051	-	-
Other liabilities Liabilities included in disposal groups classified as held for sale	052 053	147,415,709 -	150,105,150 -
Total liabilities (33 + 39 + 43 + from 47 to 53)	054	21,402,945,557	22,994,621,169
Equity
Initial capital	055	1,214,775,000	1,214,775,000
Share premium Equity instruments issued other than capital	056 057	- -	- -
Other equity instruments	058	-	-
Accumulated other comprehensive income	059	319,404,893	242,230,591
Retained profit	060 061	153,174,469	200,321,464
Revaluation reserves Other reserves	062	- 539,561,769	22,743,964 611,448,026
( - ) Treasury shares	063	(477,000)	(477,000)
Profit or loss attributable to owners of the parent	064 065	143,772,514	182,236,646
(--) Interim dividends Minority interests [non-controlling interests]	066	- -	- -
Total equity (from 55 to 66)	067	2,370,211,645	2,473,278,691
Total equity and liabilities (54 + 67)	068	23,773,157,202	25,467,899,860

STATEMENT OF PROFIT AND LOSS

for the period January 01, 2020 to December 31, 2020

Submitter: Hrvatska poštanska banka p.l.c. in HRK

Item	AOP	Same period of the previous year		Current period
	code
		Cumulative	Quarter	Cumulative	Quarter
1 Interest income	2 001	3 603,977,673	4 154,214,054	5 588,918,099	6 147,709,898
(Interest expenses)	002	68,008,691	19,495,171	51,583,346	11,627,607
(Expenses on share capital repayable on demand)	003	-	-	-	-
Dividend received	004	3,645,670	23,216	3,292,513	11,671
Fees and commissions income	005	527,494,435	119,265,559	450,155,698	108,279,355
(Fees and commissions expenses)	006	327,852,440	75,488,475	273,888,635	65,272,158
Gains or (-) losses on derecognition of financial assets and liabilities not measured at fair value through
profit or loss, net	007	5,158,277	1,078,594	35,035,565	-
Gains or (-) losses on financial assets and liabilities held for trading, net	008	87,516,168	10,458,710	47,068,263	18,424,922
Gains or losses on non-trading financial assets mandatorily at fair value through profit or loss, net	009	813,430	811,403	(571,077)	(787,789)
Gains or (-) losses on financial assets and liabilities at fair value through profit or loss, net	010	-	-	-	-
Gains or (-) losses from hedge accounting, net	011	-	-	-	-
Exchange rate differences [gain or (-) loss], net	012	(3,398,215)	(607,639)	(8,624,819)	(1,037,018)
Gains or (-) losses on derecognition of non-financial assets, net	013	-	-	-	-
Other operating income	014	4,500,059	1,109,378	8,723,496	2,367,598
(Other operating expenses)	015	43,512,701	11,744,086	54,017,656	12,855,881
Total operating income, net (1 – 2 – 3 + 4 + 5 – 6 + from 7 to 14 – 15)	016	790,333,665	179,625,543	744,508,102	185,212,991
(Administrative expenses)	017	391,518,366	102,114,372	382,990,226	104,941,454
(Depreciation)	018	75,879,820	38,564,207	75,816,110	17,704,706
Modification gains or (-) losses, net	019	(15,756,307)	(2,701,140)	(3,386,347)	(2,550)
(Provisions or (-) reversal of provisions)	020	64,757,476	74,602,661	(61,671,217)	1,020,378
(Impairment or (-) reversal of impairment on financial assets not measured at fair value through profit or	021	135,818,040	56,149,366	109,876,155	26,428,653
loss)
	022	-	-	-	-
(Impairment or (-) reversal of impairment of investments in subsidiaries, joint ventures and associates)
(Impairment or (-) reversal of impairment on non-financial assets)	023	11,535,517	11,535,517	6,986,227	6,986,227
Negative goodwill recognised in profit or loss	024	-	-	-	-
Share of the profit or (-) loss of investments in subsidiaries, joint ventures and associates accounted for
using the equity method	025	-	-	-	-
Profit or (-) loss from fixed assets and disposal groups classified as held for sale not qualifying as
discontinued operations	026	-	-	-	-
Profit or (-) loss before tax from continuing operations (16 – 17 – 18 + 19 – from 20 to 23 + from 24
to 26)	027	95,068,139	(106,041,720)	227,124,253	28,129,023
	028
(Tax expense or (-) income related to profit or loss from continuing operations)		(48,704,376)	(79,452,557)	44,887,608	10,841,591
Profit or (-) loss after tax from continuing operations (27 – 28)	029	143,772,515	(26,589,163)	182,236,645	17,287,432
Profit or (-) loss after tax from discontinued operations (31 – 32)	030	-	-	-	-
Profit or (-) loss before tax from discontinued operations	031	-	-	-	-
(Tax expense or (-) income related to discontinued operations)	032	-	-	-	-
Profit or ( – ) loss for the year (29 + 30; 34 + 35)	033	143,772,515	(26,589,163)	182,236,645	17,287,432
Attributable to minority interest [non-controlling interests]	034	-	-	-	-
Attributable to owners of the parent	035	143,772,515	(26,589,163)	182,236,645	17,287,432
STATEMENT OF OTHER COMPREHENSIVE INCOME		-	-
Income or (-) loss for the current year	036	143,772,515	(26,589,163)	182,236,645	17,287,432
Other comprehensive income (38 + 50)	037	182,222,701	(60,237,230)	(82,538,216)	9,184,875
Items that will not be reclassified to profit or loss (from 39 to 45) + 48 + 49)	038	(59,646)	(59,646)	(4,527,763)	(4,527,763)
Tangible assets	039	(72,739)	(72,739)	(7,533,354)	(7,533,354)
Intangible assets	040	-	-	-	-
Actuarial gains or (-) losses on defined benefit pension plans	041	-	-	1,825,625	1,825,625
Fixed assets and disposal groups classified as held for sale	042	-	-	-	-
Share of other recognised income and expense of entities accounted for using the equity method	043	-	-	-	-
	044
Fair value changes of equity instruments measured at fair value through other comprehensive income		-	-	-	-
Gains or (-) losses from hedge accounting of equity instruments at fair value through other comprehensive	045	-	-	-	-
income, net Fair value changes of equity instruments measured at fair value through other comprehensive income
	046	-	-	-	-
[hedged item]
Fair value changes of equity instruments measured at fair value through other comprehensive income
[hedging instrument]	047	-	-	-	-
Fair value changes of financial liabilities at fair value through profit or loss attributable to changes in their
credit risk	048	-	-	-	-
Income tax relating to items that will not be reclassified	049	13,093	13,093	1,179,966	1,179,966
Items that may be reclassified to profit or loss (from 51 to 58)	050	182,282,347	(60,177,584)	(78,010,453)	13,712,638
Hedge of net investments in foreign operations [effective portion]	051	-	-	-	-
Foreign currency translation	052	-	-	-	-
Cash flow hedges [effective portion]	053	-	-	-	-
Hedging instruments [not designated elements]	054	-	-	-	-
Debt instruments at fair value through other comprehensive income	055	230,953,233	(64,703,423)	(95,134,699)	16,722,730
Fixed assets and disposal groups classified as held for sale	056	-	-	-	-
Share of other recognised income and expense of investments in subsidiaries, joint ventures and	057
associates Income tax relating to items that may be reclassified to profit or (-) loss		-	-	-	-
Total comprehensive income for the current year (36 + 37; 60 + 61)	058	(48,670,886)	4,525,839	17,124,246	(3,010,091)
Attributable to minority interest [non-controlling interest]	059 060	325,995,216 -	(86,826,393) -	99,698,429 -	26,472,307 -

STATEMENT OF CASH FLOW

for the period January 01, 2020 to December 31, 2020

Submitter: Hrvatska poštanska banka p.l.c. in HRK

Operating activities - direct method

Operating activities - indirect method

Item AOP code Same period of the previous year Current period 1 2 3 4 Interest received and similar receipts 001 - - Fees and commissions received 002 - - (Interest paid and similar expenditures) 003 - - (Fees and commissions paid) 004 - - (Operating expenses paid) 005 - - Net gains/losses from financial instruments at fair value through statement of profit or loss 006 - - Other receipts 007 - - (Other expenditures) 008 - - Profit/(loss) before tax 009 90,724,397 227,124,253 Adjustments: - - Impairment and provisions 010 227,442,554 174,933,719 Depreciation 011 75,961,605 74,952,898 Net unrealised (gains)/losses on financial assets and liabilities at fair value through statement of profit or loss 012 (93,487,877) (73,479,009) (Profit)/loss from the sale of tangible assets 013 - - Other non-cash items 014 (533,130,112) (537,334,753) Promjene u imovini i obvezama iz poslovnih aktivnosti Deposits with the Croatian National Bank 015 (138,266,736) (280,916,192) Deposits with financial institutions and loans to financial institutions 016 (912,523) 258,285,873 Loans and advances to other clients 017 (1,257,440,547) (1,316,301,519) Securities and other financial instruments at fair value through other comprehensive income 018 (406,248,652) 468,611,329 Securities and other financial instruments held for trading 019 250,303,478 (65,609,242) Securities and other financial instruments at fair value through statement of profit or loss, not traded 020 - - Securities and other financial instruments mandatorily at fair value through statement of profit or loss 021 (19,522,798) - Securities and other financial instruments at amortised cost 022 95,018,103 2,326,911 Other assets from operating activities 023 5,003,711 2,682,650

Deposits from financial institutions	024	(53,076,859)	105,943,541
Transaction accounts of other clients	025	151,009,453	1,255,559,114
Savings deposits of other clients	026	354,874,462	720,175,408
Time deposits of other clients	027	(659,126,094)	(928,046,118)
Derivative financial liabilities and other liabilities held for trading	028	417,751	5,952,655
Other liabilities from operating activities	029	-	862,044
Interest received from operating activities [indirect method]	030	509,499,920	588,918,099
Dividends received from operating activities [indirect method]	031	-	3,280,842
Interest paid from operating activities [indirect method]	032	(48,067,618)	(51,583,346)
(Income tax paid)	033	-	-
Net cash flow from operating activities (from 1 to 33)	034	(1,449,024,382)	636,339,157
Investing activities
Cash receipts from the sale / payments for the purchase of tangible and intangible assets	035	(48,408,503)	(58,989,941)
Cash receipts from the sale / payments for the purchase of investments in branches, associates and joint
ventures	036	-	-
Cash receipts from the sale / payments for the purchase of securities and other financial instruments held to
maturity	037	70,953,916	-
Dividends received from investing activities	038	(3,645,670)	2,326,911
Other receipts/payments from investing activities	039	-	-
Net cash flow from investing activities (from 35 to 39)	040	18,899,743	(56,663,030)
Financing activities
Net increase/(decrease) in loans received from financing activities	041	335,049,011	475,822,595
Net increase/(decrease) in debt securities issued	042	-	-
Net increase/(decrease) in Tier 2 capital instruments	043	-	-
Increase in share capital	044	-	-
(Dividends paid)	045	-	-
Other receipts/(payments) from financing activities	046	-	-
Net cash flow from financing activities (from 41 to 46)	047	335,049,011	475,822,595
Net increase/(decrease) of cash and cash equivalents (34 + 40 + 47)	048	(1,095,075,628)	1,055,498,721
Cash and cash equivalents at the beginning of period	049	4,132,394,524	3,037,318,898
Effect of exchange rate fluctuations on cash and cash equivalents	050	-	(8,624,819)
Cash and cash equivalents at the end of period (48 + 49 + 50)	051	3,037,318,896	4,084,192,800

STATEMENT OF CHANGES IN EQUITY

for the period January 01, 2020 to December 31, 2020 in HRK

						Attributable to owners of the parent						Non-controlling interest
AOP Item code	Equity	Share premium	Equity instruments issued other than capital	Other equity instruments	Accumulated other comprehensive income	Retained profit	Revaluation reserves	Other reserves	( ) Treasury shares	Profit or ( - ) loss attributable to owners of the parent	(-) Interim dividends	Accumulat ed other comprehen sive income	Other items	Total
1 2	3	4	5	6	7	8	9	10	11	12	13	14	15	16
Opening balance [before restatement] 001	1,214,775,000	-	-	-	319,405,173	153,174,469	-	539,561,769	(477,000)	143,772,514	-	-	-	2,370,211,925
Effects of error corrections 002					(661,142)	(24,739,262) 28,768,739						-	-	3,368,335
Effects of changes in accounting policies 003												-	-	-
Opening balance [current period] (1 + 2 + 3) 004	1,214,775,000	-	-	-	318,744,031	128,435,207 28,768,739		539,561,769	(477,000)	143,772,514	-	-	-	2,373,580,260
Ordinary shares issue 005	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Preference shares issue 006	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Issue of other equity instruments 007	-	-	-	-	-	-	-	-	-	-	-	-	-	-
008 Exercise or expiration of other equity instruments issued	-	-	-	-	-	-	-	-	-	-	-	-	-	-
009 Conversion of debt to equity	-	-	-	-	-	-	-	-	-	-	-	-	-	-
010 Capital reduction	-	-	-	-	-	-	-	-	-	-	-	-	-	-
011 Dividends	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Purchase/sale of treasury shares 012	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Sale or cancellation of treasury shares 013	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Reclassification of financial instruments from equity to liability 014	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Reclassification of financial instruments from liability to equity 015	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Transfers among components of equity instruments 016	-	-	-	-	-	71,886,257	-	71,886,257	-	(143,772,514)	-	-	-	(1)
Share based payments 017	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Other increase or ( - ) decrease of equity instruments 018	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Total comprehensive income for the current year 019	-	-	-	-	(76,513,440)		- (6,024,776)	-	-	182,236,646	-	-	-	99,698,430
020 Equity instruments increase or (-) decrease resulting from business combinations	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Closing balance [current period] (from 4 to 20) 021	1,214,775,000	-	-	-	242,230,591	200,321,464 22,743,963		611,448,026	(477,000)	182,236,646	-	-	-	2,473,278,689

Notes to financial statements
1) INTEREST INCOME				in HRK
AOP 001	Same period of the previous year 01.01.- 31.12.2019			Current period 01.01. – 31.12.2020.
Debt securities	Cumulative 93,737,077	Quarter 23,930,631	Cumulative 81,200,505	Quarter 19,781,507
Loans and advances	509,816,505	130,273,720	507,402,688	127,826,158
Other assets Deposits	424,091 -	9,704 -	314,906 -	102,233 -
Other liabilities Total	- 603,977,673	- 154,214,054	- 588,918,099	- 147,709,899
2) INTEREST EXPENSE				in HRK
AOP 002	Same period of the previous year 01.01.- 31.12.2019			Current period 01.01. – 31.12.2020.
Debt securities	Cumulative -	Quarter -	Cumulative -	Quarter -
Loans and advances Other assets	2,658,894 -	774,888 -	2,873,659 -	847,064 -
Deposits	64,311,373	18,430,199	47,526,686	10,310,091
Other liabilities Total	1,038,423 68,008,691	290,083 19,495,171	1,183,001 51,583,346	470,451 11,627,606
3) FEE AND COMMISSION INCOME				in HRK
AOP 005	Same period of the previous year 01.01.- 31.12.2019			Current period 01.01. – 31.12.2020.
Securities	Cumulative 397,609	Quarter 80,066	Cumulative 3,269,735	Quarter 3,037,509
Asset management Custody [according to the type of client]	84,655 5,041,832	46,521 1,348,090	44,754 3,651,553	10,656 97,941
Loan commitments	151,466	34,698	72,553	13,757
Other Total	521,818,873 527,494,435	117,756,183 119,265,558	443,117,102 450,155,698	105,119,492 108,279,355
4) FEE AND COMMISSION EXPENSE				in HRK
AOP 006	Same period of the previous year 01.01.- 31.12.2019			Current period 01.01. – 31.12.2020.
Bank clearing and settlement	Cumulative 1,552,230	Quarter 413,905	Cumulative 1,726,624	Quarter 454,600
Other Total	326,300,211 327,852,440	75,074,570 75,488,476	272,162,011 273,888,635	64,817,558 65,272,158
5) GAIN/LOSSES ON TERMINATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES				in HRK
AOP 007	Same period of the previous year 01.01.-			Current period 01.01. – 31.12.2020.
	31.12.2019 Cumulative	Quarter	Cumulative	Quarter
Debt securities Loans and advances	5,158,277 -	1,078,594 -	35,035,565 -	- -
Deposits Debt Securities issued	- -	- -	- -	- -
Other financial liabilities Total	- 5,158,277	- 1,078,594	- 35,035,565	- -
6) GAINS OR (-) LOSSES ON FINANCIAL ASSETS AND LIABILITIES HELD FOR TRADING				in HRK
AOP 008	Same period of the previous year 01.01.- 31.12.2019			Current period 01.01. – 31.12.2020.
	Cumulative	Quarter	Cumulative	Quarter
Equity instruments Debt securities	17,025,588 20,243,874	958,913 (2,244,700)	(770,953) (7,006,878)	(770,953) 5,373,210
FX transactions and derivatives Total	50,246,706 87,516,168	11,744,496 10,458,709	54,846,094 47,068,263	13,822,665 18,424,922
7) GAINS OR LOSSES ON NON-TRADING FINANCIAL ASSETS MANDATORILY AT FAIR VALUE THROUGH PROFIT OR LOSS
AOP 009	Same period of the previous year 01.01.- 31.12.2019			Current period 01.01. – 31.12.2020.
	Cumulative	Quarter	Cumulative	Quarter
Equity instruments Debt securities	- 813,430	- 811,403	- -	- -
Loans and advances Total	- 813,430	- 811,403	(571,077) (571,077)	(787,788) (787,788)
8) OPERATING EXPENSES				in HRK
AOP 015 & AOP 017 & AOP 018	Same period of the previous year 01.01.- 31.12.2019			Current period 01.01. – 31.12.2020.
Other operating expenses	Cumulative 43,512,701	Quarter 11,744,087	Cumulative 54,017,656	Quarter 12,855,881
Administrative expenses Employee expenses	391,518,366 221,778,276	102,114,372 70,834,782	382,990,226 229,034,086	104,941,454 62,111,670
Other administrative expenses Amortization	169,740,090 75,879,820	31,279,589 38,564,207	153,956,140 75,816,110	42,829,783 17,704,706
Property, plant and equipment	41,291,006	27,476,950	42,995,932	10,798,118
Investment property Other intangible assets	- 34,588,814	- 11,087,256	- 32,820,178	- 6,906,588
Total	510,910,886	152,422,665	512,823,992	135,502,040
9) IMPAIRMENT LOSSES AND PROVISION EXPENSES	Same period of the previous year 01.01.-			in HRK
AOP 019 & AOP 020 & AOP 021 & AOP 023	31.12.2019 Cumulative	Quarter	Cumulative	Current period 01.01. – 31.12.2020. Quarter
Modification gains or (-) losses, net Financial assets at fair value through other comprehensive income	(15,756,307) -	(2,701,140) -	(3,386,347) -	(2,549) -
Financial assets at amortized cost	(15,756,307)	(2,701,140)	(3,386,347)	(2,549)
(Provisions or (-) reversal of provisions) (Liabilities and Guarantees)	64,757,476 8,774,476	74,602,661 2,793,555	(61,671,217) 17,214,299	1,020,378 6,384,646
(Other Provisions) (Impairment or (-) reversal of impairment on financial assets that are	55,983,000	71,809,105	(78,885,516)	(5,364,268)
not measured at fair value through profit or loss) (Financial assets at fair value through other comprehensive income)	135,818,040 3,400,611	56,149,366 (1,677,861)	109,876,155 577,174	26,428,653 (99,553)
(Financial assets at amortized cost) (Impairment or (-) reversal of impairment off of investments in subsidiaries,	132,417,429	57,827,227	109,298,981	26,528,206
joint ventures, and associates)	-	-	-	-
(Impairment or (-) reversal of impairment off non-financial assets)	11,535,517	11,535,517	-	-
(Property, plant and equipment) (Investment property)	7,366,949 3,599,080	7,366,949 3,599,080	- -	- -
(Goodwill) (Other intangible assets)	- -	- -	- -	- -
(Other) Total	569,488 227,867,340	569,488 144,990,710	- 51,591,285	- 27,451,580
10) LOANS AND ADVANCES						in HRK
AOP 023	Stage 1	31.12.2019. Stage 2	Stage 3	Stage 1	31.12.2020. Stage 2	Stage 3
Central banks Gross loans	1,558,206,655 1,558,206,655	- -	- -	1,219,156,918 1,219,156,918	- -
Allowance Government	- 2,244,696,909	- 4,456,728	- -	- 2,513,669,837	- 10,294,601
Gross loans	2,250,085,612	5,026,891	383,503	2,520,514,249	10,456,303
Allowance Credit institutuions	(5,388,703) 233,379,950	(570,163) -	(383,503) -	(6,844,412) 368,510,087	(161,702) -
Gross loans Allowance	574,599 (547,979)	- -	- -	57,300 27	- -
Deposits Allowance	233,416,895 (63,565)	- -	- -	368,996,913 (544,154)	- -
Other financial institutions Gross loans	129,436,444 117,745,218	461,201 466,361	- 15,995	178,937,655 168,353,095	3,893 3,983
Allowance Deposits	(398,194) 12,197,705	(5,160) -	(15,995) -	(584,453) 11,262,954	(90) -
Allowance Non - financial institutions	(108,285) 3,632,345,296	- 170,418,701	- 441,502,507	(93,941) 3,626,813,947	- 422,197,574	636,986,564
Gross loans Allowance	3,729,047,913 (96,702,617)	219,244,197 (48,825,496)	1,343,775,272 (902,272,765)	3,753,243,005 (126,429,057)	480,885,197 (58,687,623)	1,456,527,825 (819,541,261)
Retail Gross loans	6,301,397,489 6,330,026,490	304,661,307 322,194,397	192,441,409 644,630,416	7,022,395,635 7,060,888,859	251,126,985 272,846,699	162,079,076 688,049,269
Allowance	(28,629,002)	(17,533,090)	(452,189,007)	(38,493,224)	(21,719,714)	(525,970,193)
Total	14,099,462,743	479,997,937	633,943,916	14,929,484,079	683,623,053	799,065,640
11) NON-TRADING FINANCIAL ASSETS MEASURED AT FAIR VALUE THROUGH PROFIT OR LOSS AOP 013	31.12.2019.	31.12.2020.				in HRK
Central banks Local state	- -	- -
Credit institutions Other financial institutions	- -	- -
Non - financial institutions Retail	6,692,018 14,507,069	5,093,283 13,772,618
Total	21,199,086	18,865,901
12) DEPOSITS						in HRK
AOP 044 Government	31.12.2019. -	31.12.2020. 400,000,000
Local state Credit institutions	4,896,096,420 127,248,024	5,325,746,428 209,013,088
Other financial institutions Non - financial institutions	1,443,658,667 2,739,494,692	1,397,035,135 3,162,990,953
Retail Total	11,737,901,121 20,944,398,925	12,074,349,419 22,569,135,023

As of 31 December 2020 the Bank has recorded corrections of tangible assets s immaterial effect of HRK 2.6 million on net assets.

HPB-R-A stock during the reporting period

Stock data and details

Issue date	December 12, 2000
ISIN	HRHPB0RA0002
Segment	Official market of the Zagreb Stock Exchange
Listed quantity	2,024,625
Share price as at December 30, 2020 (in HRK)	470.00
Market capitalisation (in HRK million)	992.07

Shareholders	Ownership stake (%)
Republic of Croatia	42.43
Croatian Post PLC	11.93
Croatian Deposit Insurance Agency	8.98
Croatian Pension Insurance Institute	8.76
Hrvatska poštanska banka p.l.c. – treasury shares	0.04
Other shareholders (each under 5% of share of the equity capital)	27.86
Total shares	100.00

Direct channels

Number of transactions (in mn)

Transaction volume - Mobile banking (in HRK mn)

Corporate

Expected further increase in mobile banking – both in the volume and number of transactions.

24,532

28,354

Profitability

Profit development (in HRK mn)

Return on Average Equity ROAE

Marked improvement in ROAE in 2020 over 2019 despite growing equity base from incorporation of previous year profits.

Asset development

HPB's Asset development (in HRK bn)

• Rapid organic growth in 2020;
• Asset growth reciprocated with growth in funding. Increase of liquid assets in 2020 was HRK +707.2 mn;
• LCR (Liquidity Coverage Ratio) as of 31.12.2020 is at 158%.

Accessibility

branch offices

regional centers business centers financial corners at the Croatian post Over 1,500 cash-out points with no

fees