Hrvatska Poštanska Banka d.d.

Investor Presentation • Apr 30, 2021

HPB d.d. Q1 2021 Investor information

Management Board Jurišićeva 4, HR-10000 Zagreb Phone: +385 1 4804 400, +385 1 4804 409 Fax: +385 1 4810 773

Zagreb, April 30th , 2021. No: F21-4/2021-TB

Home Member Stock Exchange Identifier HPB-R-A Regulated Market/

Segment

LEI 529900D5G4V6THXC5P79

State of Issuer Republic of Croatia

ISIN HRHPB0RA0002

Zagreb Stock Exchange Inc. Official Market

Zagreb Stock Exchange Inc. Croatian Financial Services Supervisory Agency ("HANFA") Croatian News Agency OTS HINA

Subject: HRVATSKA POŠTANSKA BANKA, p.l.c.

- Other non-regulated information

Hrvatska poštanska banka, p.l.c. announces Investor's materials for the period ended March 31 st, 2021.

Hrvatska poštanska banka, p.l.c.

Hrvatska poštanska banka, d.d. Jurišićeva 4, 10000 Zagreb, Croatia phone: 072 472 472 hpb@hpb.hr www.hpb.hr Management Board: Marko Badurina, Chairman Anto Mihaljević, Member Ivan Soldo, Member Marijana Miličević, President of the Supervisory Board IBAN: HR46 2390 0011 0700 0002 9 SWIFT: HPBZHR2X OIB: 87939104217 Registered with Zagreb Commercial Court under number MBS: 080010698 Base Capital 1.214.775.000,00 kn, divided into 2.024.625 ordinary shares in nominal amount of 600,00 kn (paid in full)

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) and its activities. It is supplied in summary form and therefore not necessarily complete. Certain statements contained herein may be statements of future expectations and other forward-looking statements about HPB, which are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. In addition to statements which are forward-looking by reason of context, words such as "may", "will", "should", "expects", "plans", "contemplates", "intends", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" and similar expressions typically identify forward-looking statements. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. As such, no forward-looking statement can be guaranteed. Undue reliance should not be placed on these forward-looking statements. Many factors could cause our results of operations, financial condition, liquidity, and the development of the industries in which we compete, to differ materially from those expressed or implied by the forward-looking statements contained herein.
• This presentation contains financial and non-financial information and statistical data relating to HPB. Such information and data are presented for illustrative purposes only. This presentation may include information and data derived from publicly available sources that have not been independently verified, therefore HPB 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. This presentation is for information purposes only and contains neither a recommendation to buy or sell nor an offer of sale or subscription to shares nor does it constitute an invitation to make an offer to sell shares.
• This presentation has been prepared and the data checked with the greatest possible care. Nonetheless, rounding, transmission, typesetting and printing errors cannot be ruled out. In the summing up of rounded amounts and percentages, rounding-off differences may occur.

1 Executive Summary

2 Macroeconomic environment

3 Financials

4 Risk Management

5 Appendix

Key Financials 2021

Operating profit (in HRK mn)

Effective cost management and reduction of deposit insurance premium led to a growth in operating profit

Gross loans (in HRK mn)

Subsidized housing loans are the main growth driver

Profit after tax (in HRK mn)

Better cost management, and collection performance on defaults, counterbalanced by higher income taxes

CET 1 capital ratio (in %)

Continuously strong capital position

*Pro forma CET 1 ratio with inclusion of FY20 and Q1 21 profit after tax

• Income statement items are shown in cumulative from start of the period until the reporting date; 3M = cumulative 1.1.2021 – 31.3.2021
• Balance sheet items are shown as at reporting date; 31.12.2020 and 31.3.2021

Resilient Performance in Q1 2021

		2018	2019	2020	Q1 2020	Q1 2021
Assets	HRK mn	21 256 ,	23 844 ,	25 500 ,	25 300 ,	26 561 ,	5
Net loans to customers	HRK mn	11 009 ,	13 341 ,	14 725 ,	13 583 ,	854 14 ,	5
Deposits	HRK mn	18 371 ,	20 069 ,	21 214 ,	21 179 ,	21 947 ,	5
Equity	HRK mn	2 003 ,	2 370 ,	2 473 ,	2 302 ,	2 517 ,	5
Income	HRK mn	1 173 ,	1 227 ,	1 121 ,	274	261	6
Net profit	HRK mn	152	144	182	35	40	5
Cost-to-income ratio	%	60 1	61 3	64 1	64 6	61 0	6
Return equity (ROE) on	%	7 6	6 1	7 4	6 1	6 4	5
CET 1 capital ratio	%	17 9	20 2	21 8	19 1	21 5	5
NPL ratio	%	11 7	10 8	10 4	10 4	10 2	6
NPL ratio excl 100% gov. guaranteed exposure	%	11 6	10 4	8 7	9 5	8 7	6
NPL coverage	%	67 3	67 5	62 2	64 7	61 9	6
NPL excl 100% coverage gov. guaranteed exposure	%	67 3	70 0	74 2	71 3	5 73	5

Rank by total assets as of 31.12.2020 (in HRK bn)

Retail Financial market State Corporate Other

• Further organic growth despite COVID-19 impact
• Notable results of successful cost management
• Improved cost-effectiveness and collections approaches drive higher profits.

Source: HPB management reports

Gross loans development

Gross loans (in HRK mn)

• Retail loans remain on an upward trend;
• Decrease in Central government exposure arises from regular maturities of loans in this segment.

Subsidised Housing Loans

Housing loans volume (in HRK mn)

• Applications for this year APN subsidised housing loans began from 29.3.2021;
• HPB offers HRK loans at EIR of 2.09%: the lowest among all 14 banks, participating in the housing subsidy program in 2021.

^*** Includes loans placed from prior years APN tranches 8

Portfolio quality improves

NPL ratio development (in %)

NPL coverage development (in %)

Market NPL ratio* 5.4% Market NPL coverage* 64.0%

• Material amount of NPL exposures that are fully government guaranteed;
• Agile approach and intensive collection activities will be aimed at neutralization of COVID crisis (third wave of the pandemic) and the expected new inflow of NPL exposure.

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

History of outsourcing	2011	2015	2020	2021	TO BE
	Outsourcing of payment operations – retail Retail – opening account	Outsourcing of consumer lending	Outsourcing of payment operations – corporate KYC online (first phase) Opening account	Outsourcing of payment operations – corporate (II, III and IV phase) – 01.04.2021	Strengthening HPB / HP business collaboration and harnessing HP's potential as an acquisition tool
			online	KYC online Phase II – identification of clients within cash transactions Phase III –risk assessment	Continuous focus on increasing market share and non-interest income
OBJECTIVES: To become the most accessible bank on the Croatian market in physical channels				New framework agreement on strategic partnership and outsourcing sending to the CNB
To provide		the best service to cash-intensive customers harnessing the		Outsourcing of foreign

potential of cooperating with Hrvatska pošta as strategic partner

exchange business – opening foreign exchange transaction and deposit accounts production

1 Executive Summary

2 Macroeconomic environment

3 Financials

4 Risk Management

5 Appendix

Economic indicators (y-o-y)

Rezultati Q3 2020. 30.4.2021.

*Source:https://www.porezna-uprava.hr/Dokumenti (data for first quarter of 2020 and 2021) 12

COVID-19 moratoria

Total approved moratoria* (in HRK mn)

Corporate Retail

▪ By 31.03.2021, only 1.9% (HRK 37 mn) of financed corporate moratoria transferred from performing status to default status out of total 1,939 HRK mn

• As at 31.03.2021, HRK 199 mn active approved corporate moratoria (10.3% of the total approved)
• 89% out of total approved corporate moratoria as at aproval date are performing exposures
• By 31.03.2021, HRK 207 mn corporate moratoria were repaid (10.7% out of total approved moratoria)

* Number of total approved moratoria under COVID-19 measures (2020 – 31.3.2021)

Source: HPB management reports

COVID-19 impact on loan portfolio

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

32% Strong impact industries Transport and related activities Trade-vehicle industry

Tourism and related activites

Medium impact industries

2%

▪ 54% of the Bank's corporate portfolio is largely unaffected by COVID-19;

COVID-19 impact on loan portfolio

• Approved COVID-19 moratoria to corporates of HRK 1.9 bn (23.0% of outstanding gross corporate loans);
• Tourism has an extremely low share in the Bank's total portfolio (6.1% of outstanding gross corporate loans);
• We actively manage the portfolio through the analysis of pandemic prevention measures impact on industries.

1 Executive Summary

2 Macroeconomic environment

3 Financials

4 Risk Management

5 Appendix

Key financials – Income statement

		31.3.2020	31.3.2021	∆ y-o-y
Net interest income	HRK mn	138	135	6 (3)
Net fee income	HRK mn	42	42	6 (0)
Operating income	HRK mn	195	191	6 (4)
Operating expense	HRK mn	(126)	(116)	6 (9)
Operating profit	HRK mn	69	74	5 5
Provisioning	HRK mn	(30)	(25)	6 (5)
Net profit	HRK mn	35	40	5 5
Cost-to-income ratio	%	64.6	61.0	6 (3.6)
Net interest margin	%	2.2	2.1	6 (0.1)

• Operating profit growth primarily driven by cost reduction measures initiated in 2020 and reduction of deposit insurance premium;
• Risk costs down on improved collections performance.

Operating profit development

Operating profit development (in HRK mn)

• COVID-19 effects on operating profits reflected in reduced operating income;
• Active cost management led to OPEX reduction that neutralised the drop in interest income.

Net income development

Composition of net income

• Net interest income slightly lower, mostly due to the adjustment of loan portofolio due to the COVID-19 pandemic ie increase in subsidized retail loans and government support transactions with lower interest rates and decrease in SME and Large credit activities;
• Net fee income at a stable level but still affected by COVID-19; decrease in both income and expense, mainly in position of cash payments.

Net interest income (in HRK mn)

Net fee income (in HRK mn)

Source: HPB management reports 19

Fees and commissions

Net fee income overview in Q1 (in HRK mn)

Composition of net fee and commission income

^* Market data for first quarter of 2021 is not available at time of publishing this presentation Q1 2020 Q1 2021

• Stable long-term trend of net fee income despite COVID-19 measures imposed by the RH Government with the largest impact in 2020 Q2 and Q3;
• Decrease in both fee income and expenses (Q1 2020/2021) is a result of the expected trend of decreasing cash payments due to digitalization and changes in consumer habits (switch from cash to digital channels) especially in the COVID times;
• HPB net fee income on par with the banking sector with a relatively stable share;
• Retail and card business fees are still 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 optimization measures initiated at the end of 2019 restrained further operating expenses growth caused by earthquakes and COVID-19 pandemic, along with general prices movements, while overall expenses decreased as a result of elimination of deposit insurance premium. The Bank will aspire to agile cost management in future periods.

Provisioning

Structure of provision expenses in Q1 2021 (in HRK mn)

• Lower stage 3 provisions (y-o-y) due to planned collection activities and lower provision costs on small loans portfolio;
• Portfolio optimization efforts drive risk costs down despite COVID-19 effects.

Key financials – Balance sheet

		31 12 2020	31 03 2021	ytd ∆
Assets	HRK mn	25 500 ,	26 561 ,	5 1 061 ,
Gross loans	HRK mn	16 232 ,	16 388 ,	5 156
Deposits	HRK mn	21 214 ,	21 947 ,	5 733
Equity	HRK mn	2 473 ,	2 517 ,	5 44
Regulatory capital	HRK mn	2 312 ,	2 285 ,	6 (27)
Loan/deposit ratio	%	69 4	67 7	6 (1 7)
ROAE	%	7 5	6 5	6 (1 0)
NPL ratio	%	10 4	10 2	6 (0 2)
NPL ratio excl 100% guaranteed gov. exposure	%	8 7	8 7	6 (0 0)
NPL coverage	%	62 2	61 9	6 (0 3)
NPL excl guaranteed 100% coverage gov. exposure	%	74 2	73 5	6 (0 7)
Provision for impairment losses	HRK mn	(1 512) ,	(1 534) ,	5 22

• Assets records continuous growth +4.2% ytd, liquid assets +16.3%, securities +1.6%, gross loans +1.0%
• Deposits up +3.5% with largest increase in the central state and large corporate segment HRK +732.6 mn, retail HRK + 43.0 mn and SMEs HRK +15.4 mn.

Corporate portfolio industry distribution Corporate gross loans per industry (in %)

31/12/2020 31/03/2021

• Stable structure of corporate gross loans per industry in Q1 2021
• Reduction to some industry sectors is in line with general macroeconomic trends:
• Wholesale and retail trade;
• Accommodation activities lending was done backed up by government guarantee schemes

Composition of equity and liabilities

• Favorable impact on costs from observable trend of reduction of interest rates on deposits and continuous effective interest rate management;

• Customer deposits dominate the funding mix with an 83% share;

• Bank holds 5.77% of all deposits on a market at 31.01.2021 (31.12.2020 = 5.75%);

• 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.

Continuously strong capital position

▪ 2020 after-tax profit is still not included in the calculation of CET1 ratio

1 Executive Summary

2 Macroeconomic environment

3 Financials

4 Risk Management

5 Appendix

Regulatory Capital Development

Regulatory capital development (in HRK mn)

*Note there is a difference to regulatory capital reported in Investor information for Q4 2020 (HRK 2,314 mn) due to revised deduction amount of deferred tax assets - a decrease of HRK 1.8 mn in comparison with unaudited calculation of regulatory capital presented in Investor information for Q4 2020.

RWA Development

RWA development (in HRK mn)

Credit risk Market risk Operating risk

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

Exposures and coverage per stage

		31.12.2020			31.3.2021
Segment	Stage	Exposure	Exposure excluding 100% government guarantees	Coverage	Coverage excluding 100% government guarantees	Exposure	Exposure excluding 100% government guarantees	Coverage	Coverage excluding 100% government guarantees
CORPORATE	S1	58.5%		3.8%		56.1%		3.9%
CORPORATE	S2	6.8%		8.1%		9.2%		6.5%
CORPORATE	S3	34.7%	21.7%	47.7%	75.2%	34.7%	24.9%	48.5%	76.7%
SME	S1	49.3%		4.2%		42.1%		4.1%
SME	S2	16.8%		15.5%		23.3%		14.9%
SME	S3	33.9%	33.9%	71.3%	71.3%	34.6%	34.6%	69.4%	69.4%
STATE	S1	98.7%		1.0%		99.0%		0.9%
STATE	S2	1.3%		7.2%		1.0%		8.0%
STATE	S3	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%
RETAIL	S1	88.5%		0.5%		88.1%		0.5%
RETAIL	S2	3.2%		7.6%		3.4%		6.6%
RETAIL	S3	8.3%	8.3%	75.6%	75.6%	8.5%	8.5%	74.3%	74.3%
TOTAL	S1	85.9%		1.0%		85.5%		0.9%
TOTAL	S2	3.7%		10.5%		4.4%		10.0%
TOTAL	S3	10.4%	8.7%	62.2%	74.2%	10.2%	8.7%	62.0%	73.5%

1 Executive Summary

2 Macroeconomic environment

3 Financials

4 Risk Management

5 Appendix

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 March 31, 2021 (in HRK)	460,00
Market capitalisation (in HRK million)	931,33

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

Direct channels

Transaction volume - Mobile banking (in HRK mn)

Transaction volume - Internet banking (in HRK mn)

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

Profitability

Profit development (in HRK mn)

12 185 95 227 ^{39 49} 8 152 144 182 35 40 2017 2018 2019 2020 Q1 2020 Q1 2021 Gross profit Net profit 0.4% 7.8% 6.6% 7.5% 6.0% 6.5% 5.9% 8.4% 9.8% 4.4% 2017 2018 2019 2020 Q1 2020 Q1 2021 HPB Market*

Return on Average Equity ROAE

* Market share data for first quarter of 2021 not available at the time presentation was published

▪ Better quarterly results than in pre-COVID period (Q1 2020/2021), mainly driven by cost reduction

Asset development

Comparative asset growth rates

* Market share data for first quarter of 2021 not available at the time presentation was published

• Organic growth continued in 2021;
• Asset growth reciprocated with growth in funding. Increase of liquid assets in 2021 was HRK +861.8 mn;
• LCR (Liquidity Coverage Ratio) as of 31.03.2021 is at 165%.

Accessibility

branch offices

regional centers business centers financial corners at the Croatian post

Over 1,500 cash-out points with no

fees