Hrvatska Poštanska Banka d.d.

Investor Presentation • Jul 30, 2021

HPB d.d. H1 2021 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) 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.

Type and name of prescribed information:	Quarterly financial statements for the period 01.01.2021 - 30.06.2021, HPB d.d. H1 2021 Investor information and unaudited Financial statements
Issuer name, headquarter and address:	Hrvatska poštanska banka p.l.c., Jurišićeva 4, HR-10000 Zagreb
Issuer's Legal Entity Identifier (LEI)	529900D5G4V6THXC5P79
Home Member State:	Republic of Croatia
International Securities Identification Number (ISIN)	HRHPB0RA0002
Stock code (ticker):	HPB-R-A
Regulated market and segment:	Zagreb Stock Exchage, Official market

In accordance with the Capital Markets Act, Hrvatska poštanska Banka p.l.c. publishes unaudited financial statements for the period from January 01 to June 30, 2021.

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, 27/2021).

1 Executive Summary

2 Macroeconomic environment

3 Financials

4 Risk Management

5 Appendix

Best H1 performance in our 30-year history

Highest H1 net profit ever

• Managed to preserve the absolute volume of net interest income, despite margin pressure;
• Net fee income +7.0% vs. H1 20;
• Improved cost-to-income ratio at 57.4% (-6.4 p.p. vs. H1 20).

Continuously strong capital position

• Highest CET1 in recent history;
• Continuous favourable trend in capital light performing portfolio and optimisation of RWA;
• We continue to fortify our position by harnessing efficiencies in our risk and interest profile.

Almost HRK 2 bn assets growth in 2021

• Strengthened market position;

• Improved loan portfolio quality.

• Income statement items are shown in cumulative from start of the period until the reporting date; 6M = cumulative 1.1.2021 – 30.6.2021

• Balance sheet items are shown as at reporting date; 31.12.2020 and 30.6.2021

5

Key Financials 2021

Operating profit (in HRK mn)

Growth driven by increase in net fee income & trading income, and reduction of deposit insurance premium.

Gross loans (in HRK mn)

Increase of housing loans exceeded by decrease in central government and corporate segment.

In addition to drivers generating higher operating profit, the provisioning effect is positive with neutral effect in 6M 2021 due to improved portfolio quality and regular legal provisioning.

CET 1 capital ratio (in %)

Elevated capital position.

*Pro forma CET 1 ratio with inclusion of H1 21 profit after tax

• Income statement items are shown in cumulative from start of the period until the reporting date; 6M = cumulative 1.1.2021 – 30.6.2021
• Balance sheet items are shown as at reporting date; 31.12.2020 and 30.6.2021

Excellent performance in H1 2021

		2019	2020	H1 2020	H1 2021 *
Assets	HRK mn	23,844	25,500	25,114	5 27,494
Net loans to customers	HRK mn	13,341	14,725	14,175	6 14,637
Deposits	HRK mn	20,069	21,214	20,934	5 22,470
Equity	HRK mn	2,370	2,473	2,368	5 2,604
Income	HRK mn	1,227	1,121	550	5 565
Net profit	HRK mn	144	182	115	5 147
Cost-to-income ratio	%	61.3	64.1	63.8	6 57.4
Return on equity (ROE)	%	6.1	7.4	9.7	5 11.3
CET 1 capital ratio	%	20.2	21.8	19.6	5 24.3
NPL ratio	%	10.8	10.4	11.0	6 10.0
NPL ratio excl. 100% gov. guaranteed exposure	%	10.4	8.7	9.6	6 8.5
NPL coverage	%	67.5	62.2	61.6	6 60.6
NPL coverage excl. 100% gov. guaranteed exposure	%	70.0	74.2	71.7	6 71.6

* Income statement items and comparatives are shown in cumulative from start of the period until the reporting date; 6M = cumulative 1.1.2021 – 30.6.2021

Balance sheet items and comparatives are shown as at reporting date; 31.12.2020 and 30.6.2021

• Organic growth continued despite COVID-19;
• Some clients had an increased UTP** or SICR*** caused by COVID-19 which resulted in higher loss allowance or switching to NPL, but there is still no breakthrough in DPD;
• Improved NPL ratio as a result of effective collections approaches.

** UTP=Unlikely to pay *** SICR=Significant increase in credit risk

7

*

Market share by total assets as of 31.03.2021 (in HRK bn)

54%

Retail Financial market State Corporate Other

23%

Gross loans development

Gross loans (in HRK mn)

▪ Retail loans have a continuous and steady growth;

• Decrease in Central government exposure arises from regular maturities of loans in this segment (seasonality);
• Decrease in corporate segment driven by more prudent risk procedures and overall distrust of the economy towards investing during pandemic.

Source: HPB management reports

8

Subsidised Housing Loans

Housing loans volume (in HRK mn)

Number of approved subsidised housing loans

• Applications for this year APN subsidised housing loans began on 29.3.2021;
• Approved but not-yet-placed subsidised housing loans in the amount of HRK 154 mn at 30.6.2021
• HPB offers HRK loans at EIR of 2.09%: the lowest among all 14 banks, participating in the housing subsidy program in 2021.

* Sourcehttps://mgipu.gov.hr/

** Data of approved loans as of 20.7.2021

^*** Includes loans placed from prior years APN tranches 9

Portfolio quality improves

NPL ratio development (in %)

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

• Despite of the COVID crisis which resulted in new NPLs there is a continuation of the positive trend in the movement of NPL ratio;
• Continuous favourable trend in capital light performing portfolio along with additional monitoring of potential NPLs and successful collection activities ensures further expected positive trends in NPL ratio.

NPL portfolio deep dive

	2018	2019	2020	30 6 2021
HRK mn	18 820 ,	18 599 ,	20 792 ,	22 277 ,
HRK mn	2 201 ,	2 009 ,	2 163 ,	2 224 ,
%	11 7	10 8	10 4	10 0
HRK mn	(1 632) ,	(1 554) ,	(1 599) ,	(1 572) ,
mil kn	(1 481) ,	(1 355) ,	(1 346) ,	(1 348) ,
mil kn	(151)	(199)	(254)	(225)
%	67 3	67 5	62 2	60 6
HRK mn	569	455	563	652
HRK guarantees mn	0	76	356	352
HRK mn	569	379	207	300
HRK mn	1 777 ,	2 209 ,	2 314 ,	2 494 ,
%	32 0	17 2	8 9	12 0

*CET 1 without inclusion of H1 2021 net profit

Uncovered NPLs to CET 1 trend

• Noticeable decline of uncovered NPLs share in total loan exposure in four consecutive reporting periods;
• Government guarantees represent a safety net on top of debt servicing for covered exposures of operating companies (fully recoverable part of NPL).

Source: FINREP regulatory reporting 11

1 Executive Summary

2 Macroeconomic environment

3 Financials

4 Risk Management

5 Appendix

Economic indicators (y-o-y)

Rezultati Q3 2020. 30.7.2021.

*Source:https://www.porezna-uprava.hr/Dokumenti (data for Q2 2020 and Q2 2021) 13

COVID-19 moratoria

• By 30.6.2021, 5.7% (HRK 111 mn) of financed corporate moratoria transferred from performing status to default status out of total HRK 1,939 mn;
• As at 30.6.2021, HRK 5 mn active approved corporate moratoria (0.3% of the total approved);
• By 30.6.2021, HRK 419 mn corporate moratoria were repaid (21.6% out of total approved moratoria).

* Number of total approved moratoria under COVID-19 measures (2020 – 30.6.2021)

Source: HPB management reports

14

COVID-19 impact on loan portfolio

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

Strong impact industries

▪ 45% of the Bank's corporate portfolio is largely unaffected by COVID-19.

15

COVID-19 impact on loan portfolio

Approved moratoria per industry

16

Approved corporate moratoria status at 30.6.2021 (in HRK mn) Approved retail moratoria status at 30.6.2021 (in HRK mn)

• HRK 5 mn in corporate and HRK 49 mn in retail segment remaining moratoria as at 30.6.2021;
• Total defaulted loans since moratoria approval at 30.6.2021 amounted HRK 130 mn (5.7% corporate, 4.3% retail in total approved moratoria);
• Tourism has an extremely low share in the Bank's total portfolio (6% of outstanding gross corporate loans);
• Source: HPB management reports ▪ 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

		Q2 2020	Q2 2021	∆ q-o-q		H1 2020	H1 2021	∆ y-o-y
Net interest income	HRK mn	133	136	2 8	5	271	271	0 3	5
Net fee income	HRK mn	41	47	6 1	5	83	88	5 8	5
Operating income	HRK mn	201	229	27 9	5	396	420	24 0	5
Operating expense	HRK mn	(127)	(125)	(1 9)	6	(252)	(241)	(11 2)	6
Operating profit	HRK mn	74	104	29 8	5	143	179	35 3	5
Provisioning	HRK mn	23	25	(1 5)	6	(7)	(1)	(6 1)	6
Net profit	HRK mn	80	106	26 6	5	115	147	31 7	5
Cost -to-income ratio	%	63 0	54 5	(8 5)	6	63 8	57 4	(6 3)	6
Net interest margin	%	2 1	2 0	(0 1)	6	2 2	2 0	(0 1)	6

• Operating profit growth primarily driven by increase in net fee income and trading income, followed by reduction of deposit insurance premium;
• Risk costs down on improved collections performance and improved quality of loan portfolio;
• Both NII and NFCI increased in Q2, when compared to the same period last year.

Operating profit development

Operating profit development (in HRK mn)

• Increase in other income driven by trading income (sale of equity instruments);
• Operating expenses decreased mainly due to lower amortization and deposit insurance premium.

Net income development

Composition of net income

• Net interest income improved when compared to PY, despite of adjustments of loan portfolio due to the COVID-19 pandemic (increase in subsidized retail loans and government support transactions with lower interest rates) and increase in deposist, mostly due to adjustments of interest rates on deposits;
• Net fee income increased as a result of increased fees from payment and credit card transactions.

Net interest income (in HRK mn)

Net fee income (in HRK mn)

20

Fees and commissions

Composition of net fee and commission income

* Market data available only for Q1 2021

• Improved net fee income as a result of slight economic recovery (mainly driven by tourism);
• 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.

21

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. Overall increase in administrative expenses driven by government fees which are directly associated to income and legal services;
• The Bank will aspire to agile cost management in future periods.

Provisioning

Structure of provision expenses in H1 2021 (in HRK mn)

Key financials – Balance sheet

		31 12 2020	30 6 2021	ytd ∆
Assets	HRK mn	25 500 ,	27 494 ,	5 1 994 ,
Gross loans	HRK mn	16 232 ,	16 124 ,	6 (108)
Deposits	HRK mn	21 214 ,	22 470 ,	5 1 256 ,
Equity	HRK mn	2 473 ,	2 604 ,	5 131
Regulatory capital	HRK mn	2 312 ,	2 494 ,	5 182
Loan/deposit ratio	%	69 4	65 1	6 (4 3)
ROAE	%	7 5	11 1	5 3 6
NPL ratio	%	10 4	10 0	6 (0 4)
NPL ratio excl guaranteed 100% gov. exposure	%	8 7	8 5	6 (0 2)
NPL coverage	%	62 2	60 6	6 (1 6)
NPL excl 100% guaranteed coverage gov. exposure	%	74 2	71 6	6 (2 6)
Loss allowance for loans	HRK mn	(1 599) ,	(1 572) ,	6 (27)

• Assets records continuous growth +7.8% ytd, liquid assets +35.5%, securities +4.7%, gross loans -0.7%;
• Deposits up +5.9% with largest increase in the central state and large corporate segment +16.0%, SMEs +11.4% and decrease in retail -0.4%.

24

Corporate portfolio industry distribution

Corporate gross loans per industry (in %)

• Stable structure of corporate gross loans per industry in H1 2021;
• Reduction to some industry sectors is in line with general macroeconomic trends:
• Wholesale and retail trade;
• Construction & Real estate;

25

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 reduction of interest rates on deposits and continuous effective interest rate management;
• Customer deposits dominate the funding mix with an 85% share;

26

• Bank holds 5.9% of all deposits on a market at 31.3.2021 (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

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

27

Continuously strong capital position

CET1 Capital (in HRK mn) and CET1 Ratio (%)

▪ Proforma CET1 calculation includes 2021 half year profit.

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; **Regulatory capital with inclusion of H1 2021 net profit

Source: HPB management reports

RWA Development

RWA development (in HRK mn)

Credit risk Market risk Operating risk

▪ Risk-weighted assets decreased mainly driven by loan exposure decrease while at the same time strenghtening capital management culture.

31

Meeting MREL requirements

Actual CET1 ratios vs. total MREL requirement

▪ The Bank has adopted plan to meet MREL requirements during H1 2021

Exposures and coverage per stage

			31.12.2020			30.6.2021
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%		51.3%		3.8%
CORPORATE	S2	6.8%		8.1%		14.0%		8.0%
CORPORATE	S3	34.7%	21.7%	47.7%	75.2%	34.7%	24.5%	47.6%	76.4%
SME	S1	49.3%		4.2%		36.2%		4.0%
SME	S2	16.8%		15.5%		25.3%		11.7%
SME	S3	33.9%	33.9%	71.3%	71.3%	38.5%	38.5%	63.9%	63.9%
STATE	S1	98.7%		1.0%		98.7%		0.3%
STATE	S2	1.3%		7.2%		1.3%		5.6%
STATE	S3	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%
RETAIL	S1	88.5%		0.5%		87.1%		0.5%
RETAIL	S2	3.2%		7.6%		4.3%		5.9%
RETAIL	S3	8.3%	8.3%	75.6%	75.6%	8.6%	8.6%	74.6%	74.6%
TOTAL	S1	85.9%		1.0%		84.7%		0.7%
TOTAL	S2	3.7%		10.5%		5.3%		8.5%
TOTAL	S3	10.4%	8.7%	62.2%	74.2%	10.0%	8.5%	60.6%	71.6%

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 June 30, 2021 is contained in the previous section of this material.

Marko Badurina

Digitally signed by Marko Badurina Date: 2021.07.30 10:27:26 +02'00'

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 June 30, 2021, 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.

Marko Badurina
Chief Executive Officer
Anto Mihaljević
Member of the Management Board
Ivan Soldo
Member of the Management Board

Annex 1

		ISSUER'S GENERAL DATA
Reporting period:		1.1.2021	to	30.6.2021
Year:		2021
Quarter:		2
		Quarterly financial statements
Registration number (MB):	03777928		Issuer's home Member State code:	HRVATSKA
Entity's registration number (MBS):	080010698
Personal identification number (OIB):	87939104217		LEI:	529900D5G4V6THXC5P79
Institution code:	319
	Name of the issuer: HRVATSKA POŠTANSKA BANKA, p.l.c.
Postcode and town:	10000		ZAGREB
Street and house number: JURIŠIĆEVA 4
E-mail address: hpb@hpb.hr
Web address: www.hpb.hr
Number of employees (end of the reporting	1293
period):
Consolidated report:	KN	(KN-not consolidated/KD-consolidated)		KN	KD
Audited:	RN	(RN-not audited/RD-audited)		RN	RD
	Names of subsidiaries (according to IFRS):		Registered office:		MB:
Bookkeeping firm:	No	(Yes/No)		(name of the bookkeeping firm)	Da Ne
Contact person: Tea Bažant	(only name and surname of the contact person)
	Telephone: 014804670
	E-mail address: tea.bazant@hpb.hr
Audit firm: Certified auditor:	(name of the audit firm)

BALANCE SHEET

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	3,662,460,152	5,542,654,050
Cash in hand	002	900,072,987	1,181,159,587
Cash balances at central banks	003	2,224,401,393	3,696,783,619
Other demand deposits	004	537,985,772	664,710,844
Financial assets held for trading (from 6 to 9)	005	719,257,423	720,702,428
Derivatives Equity instruments	006 007	- 95,340,654	- 102,412,723
Debt securities	008	623,916,769	618,289,705
Loans and advances	009	-	-
Non-trading financial assets mandatorily at fair value through profit or loss (from 11 to 13)	010	38,865,901	16,714,103
Equity instruments Debt securities	011 012	20,000,000 -	- -
Loans and advances	013	18,865,901	16,714,103
Financial assets at fair value through profit or loss (15 + 16)	014	-	-
Debt securities	015	-	-
Loans and advances Financial assets at fair value through other comprehensive income (from 18 to 20)	016 017	- 4,158,015,469	- 4,383,827,026
Equity instruments	018	49,027,711	46,964,846
Debt securities	019	4,108,987,758	4,336,862,180
Loans and advances	020	-	-
Financial assets at amortised cost (22 + 23)	021	16,413,935,375	16,329,546,375
Debt securities Loans and advances	022 023	1,978,784 16,411,956,591	2,856,671 16,326,689,704
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	026	9,760,843	9,760,843
Tangible assets Intangible assets	027 028	326,523,749 91,038,847	327,139,919 96,350,495
Tax assets	029	2,797,956	1,568,778
Other assets	030	40,321,775	38,216,289
Fixed assets and disposal groups classified as held for sale Total assets (1 + 5 + 10 + 14 + 17 + 21 + from 24 to 31)	031 032	- 25,462,977,490	- 27,466,480,306
Liabilities
Financial liabilities held for trading (from 34 to 38)
Derivatives	033 034	21,172 21,172	73,123 73,123
Short positions	035	-	-
Deposits	036	-	-
Debt securities issued Other financial liabilities	037	-	-
Financial liabilities at fair value through profit or loss (from 40 to 42)	038 039	- -	- -
Deposits	040	-	-
Debt securities issued	041	-	-
Other financial liabilities	042	-	-
Financial liabilities measured at amortised cost (from 44 to 46) Deposits	043 044	22,688,405,792 22,569,135,023	24,239,995,793 24,124,704,363
Debt securities issued	045	-	-
Other financial liabilities	046	119,270,769	115,291,430
Derivatives - hedge accounting	047	-	-
Fair value changes of the hedged items in portfolio hedge of interest rate risk Provisions	048 049	- 125,688,739	- 375,659,266
Tax liabilities	050	25,697,310	57,221,464
Share capital repayable on demand	051	-	-
Other liabilities Liabilities included in disposal groups classified as held for sale	052	150,060,287	189,521,317
Total liabilities (33 + 39 + 43 + from 47 to 53)	053 054	- 22,989,873,300	- 24,862,470,963
Equity
Initial capital Share premium	055 056	1,214,775,000 -	1,214,775,000 -
Equity instruments issued other than capital	057	-	-
Other equity instruments	058	-	-
Accumulated other comprehensive income	059	264,974,555	249,203,161
Retained profit Revaluation reserves	060 061	200,321,464 -	291,352,537 -
Other reserves	062	611,448,026	702,479,098
( - ) Treasury shares	063	(477,000)	(477,000)
Profit or loss attributable to owners of the parent	064	182,062,145	146,676,547
(--) Interim dividends Minority interests [non-controlling interests]	065 066	- -	- -
Total equity (from 55 to 66)	067	2,473,104,190	2,604,009,343
Total equity and liabilities (54 + 67)	068	25,462,977,490	27,466,480,306

STATEMENT OF PROFIT AND LOSS

for the period January 01, 2021 to June 30, 2021

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

Item		Same period of the previous year		Current period
	code	Cumulative	Quarter	Cumulative	Quarter
1	2	3	4	5	6
Interest income	001	295,180,417	144,921,778	287,009,820	143,235,247
(Interest expenses)	002	27,118,318	13,200,053	18,919,654	8,926,693
(Expenses on share capital repayable on demand)	003	-	-	-	-
Dividend received	004	2,227,280	2,026,667	1,077,695	1,077,695
Fees and commissions income	005	213,553,554	103,958,551	218,458,416	114,661,249
(Fees and commissions expenses)	006	130,905,856	63,325,812	130,051,416	67,895,930
Gains or (-) losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss, net	007	35,035,565	11,165,173	169,597	75,768
Gains or (-) losses on financial assets and liabilities held for trading, net	008	7,815,497	13,232,190	27,721,428	12,960,908
Gains or losses on non-trading financial assets mandatorily at fair value through profit or loss, net	009	200,027	97,634	29,175,562	27,815,520
	010	-	-	-	-
Gains or (-) losses on financial assets and liabilities at fair value through profit or loss, net
Gains or (-) losses from hedge accounting, net	011	-	-	-	-
Exchange rate differences [gain or (-) loss], net	012	(6,656,755)	(1,824,817)	(4,115,310)	(819,326)
Gains or (-) losses on derecognition of non-financial assets, net	013	-	-	-	-
Other operating income	014	4,159,550	3,231,043	4,909,411	2,679,298
(Other operating expenses)	015	23,585,061	13,399,661	5,914,838	3,556,129
Total operating income, net (1 – 2 – 3 + 4 + 5 – 6 + from 7 to 14 – 15)	016	369,905,900	186,882,693	409,520,711	221,307,607
(Administrative expenses)	017	183,664,427	92,145,229	191,774,126	99,069,657
	018	5,482,500	3,232,500	6,958,179	4,216,929
(Depreciation)	019	40,342,918	19,692,825	33,724,172	16,746,259
Modification gains or (-) losses, net	020	2,512,470	2,541,861	(1,457,954)	1,851,610
(Provisions or (-) reversal of provisions)	021	(59,629,807)	(60,514,125)	22,472,806	19,260,570
(Impairment or (-) reversal of impairment on financial assets not measured at fair value through profit or
loss)	022	65,769,974	37,061,274	(24,992,891)	(45,264,569)
(Impairment or (-) reversal of impairment of investments in subsidiaries, joint ventures and associates)	023	-	-	-	-
(Impairment or (-) reversal of impairment on non-financial assets)	024	-	-	-	-
Negative goodwill recognised in profit or loss	025	-	-	-	-
Share of the profit or (-) loss of investments in subsidiaries, joint ventures and associates accounted for	026	-	-	-	-
using the equity method Profit or (-) loss from fixed assets and disposal groups classified as held for sale not qualifying as
discontinued operations	027	-	-	-	-
Profit or (-) loss before tax from continuing operations (16 – 17 – 18 + 19 – from 20 to 23 + from
24 to 26)	028	136,788,358	97,806,851	178,126,365	129,130,371
(Tax expense or (-) income related to profit or loss from continuing operations)	029	21,813,853	18,062,462	31,449,818	22,794,378
Profit or (-) loss after tax from continuing operations (27 – 28)	030	114,974,505	79,744,389	146,676,547	106,335,993
Profit or (-) loss after tax from discontinued operations (31 – 32)	031	-	-	-	-
Profit or (-) loss before tax from discontinued operations	032	-	-	-	-
(Tax expense or (-) income related to discontinued operations)	033	-	-	-	-
Profit or ( – ) loss for the year (29 + 30; 34 + 35)	034	114,974,505	79,744,389	146,676,547	106,335,993
Attributable to minority interest [non-controlling interests]	035	-	-	-	-

Attributable to owners of the parent 036 114,974,505 79,744,389 146,676,547 106,335,993

STATEMENT OF OTHER COMPREHENSIVE INCOME

Income or (-) loss for the current year Other comprehensive income (38 + 50)	037	114,974,505 (117,354,992)	79,744,389 (14,129,910)	146,676,547 (15,771,394)	106,335,993 (19,795,736)
Items that will not be reclassified to profit or loss (from 39 to 45) + 48 + 49)	038 039	-	-	(457,723)	-
Tangible assets	040	-	-	-	-
Intangible assets	041	-	-	-	-
Actuarial gains or (-) losses on defined benefit pension plans	042	-	-	-	-
Fixed assets and disposal groups classified as held for sale	043	-	-	-	-
Share of other recognised income and expense of entities accounted for using the equity method	044	-	-	-	-
Fair value changes of equity instruments measured at fair value through other comprehensive income	045	-	-	-	-
Gains or (-) losses from hedge accounting of equity instruments at fair value through other comprehensive income, net	046	-	-	-	-
Fair value changes of equity instruments measured at fair value through other comprehensive income [hedged item]	047	-	-	-	-
Fair value changes of equity instruments measured at fair value through other comprehensive income [hedging instrument]	048	-	-	-	-
Fair value changes of financial liabilities at fair value through profit or loss attributable to changes in their credit risk	049	-	-	-	-
Income tax relating to items that will not be reclassified	050	-	-	(457,723)	-
Items that may be reclassified to profit or loss (from 51 to 58)	051	(117,354,992)	(14,129,910)	(15,313,671)	(19,795,736)
Hedge of net investments in foreign operations [effective portion]	052	-	-	-	-
Foreign currency translation	053	-	-	-	-
Cash flow hedges [effective portion]	054	-	-	-	-
Hedging instruments [not designated elements]	055	-	-	-	-
Debt instruments at fair value through other comprehensive income	056	(143,115,844)	(17,231,597)	(18,675,208)	(24,141,142)
Fixed assets and disposal groups classified as held for sale	057	-	-	-	-
Share of other recognised income and expense of investments in subsidiaries, joint ventures and
associates	058	-	-	-	-
Income tax relating to items that may be reclassified to profit or (-) loss	059	25,760,852	3,101,687	3,361,537	4,345,406
Total comprehensive income for the current year (36 + 37; 60 + 61)	060	(2,380,487)	65,614,479	130,905,153	86,540,257
Attributable to minority interest [non-controlling interest]	061	-	-	-	-
Attributable to owners of the parent	062	(2,380,487)	65,614,479	130,905,153	86,540,257

STATEMENT OF CASH FLOW for the period January 01, 2021 to June 30, 2021

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

Item	AOP code	Same period of the previous year	Current period
1	2	3	4
Operating activities - direct method
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 (Other expenditures)	007	-	-
Operating activities - indirect method	008	- -	- -
Profit/(loss) before tax	009	136,788,358	178,126,367
Adjustments:		-	-
Impairment and provisions	010	3,627,697	(1,062,131)
Depreciation	011	40,342,918	33,724,172
Net unrealised (gains)/losses on financial assets and liabilities at fair value through statement of profit or loss	012	(36,194,307)	(57,066,587)
(Profit)/loss from the sale of tangible assets	013	-	-
Other non-cash items	014	(262,208,543)	(268,090,166)
Promjene u imovini i obvezama iz poslovnih aktivnosti		-	-
Deposits with the Croatian National Bank	015	297,637,834	(55,561,516)
Deposits with financial institutions and loans to financial institutions	016	-	(126,725,072)
Loans and advances to other clients	017	(836,990,918)	164,363,340
Securities and other financial instruments at fair value through other comprehensive income	018	418,241,818	(240,109,840)
Securities and other financial instruments held for trading	019	(95,311,790)	57,603,783
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	-	20,000,000
Securities and other financial instruments at amortised cost	022	1,651,404	(877,887)
Other assets from operating activities	023	769,583	2,105,485
Deposits from financial institutions	024	186,426,000	(135,636,590)
Transaction accounts of other clients	025	717,454,823	1,021,093,171
Savings deposits of other clients	026	311,744,259	986,663,638
Time deposits of other clients	027	(351,908,193)	(554,268,402)
Derivative financial liabilities and other liabilities held for trading Other liabilities from operating activities	028	3,749,909	(3,927,388)
Interest received from operating activities [indirect method]	029 030	(10,826,219) 296,386,624	266,958,751 287,009,820
Dividends received from operating activities [indirect method]	031	2,227,280	1,077,695
Interest paid from operating activities [indirect method]	032	(34,178,081)	(18,919,654)
(Income tax paid)	033	-	-
Net cash flow from operating activities (from 1 to 33)	034	789,430,456	1,556,480,989
Investing activities		-	-
Cash receipts from the sale / payments for the purchase of tangible and intangible assets Cash receipts from the sale / payments for the purchase of investments in branches, associates and joint	035	(24,871,686)	(39,651,990)
ventures	036	-	-
Cash receipts from the sale / payments for the purchase of securities and other financial instruments held to	037	-	-
maturity
Dividends received from investing activities Other receipts/payments from investing activities	038	1,651,404	(877,887)
Net cash flow from investing activities (from 35 to 39)	039 040	- (23,220,282)	- (40,529,877)
Financing activities		-	-
Net increase/(decrease) in loans received from financing activities	041	433,105,189	289,244,441
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	433,105,189	289,244,441
Net increase/(decrease) of cash and cash equivalents (34 + 40 + 47)	048	1,199,315,363	1,805,195,553
Cash and cash equivalents at the beginning of period	049	3,037,318,898	4,084,192,801
Effect of exchange rate fluctuations on cash and cash equivalents	050	(6,656,755)	(4,115,310)
Cash and cash equivalents at the end of period (48 + 49 + 50)	051	4,229,977,506	5,885,273,044

STATEMENT OF CHANGES IN EQUITY for the period January 01, 2021 to June 30, 2021 in HRK

	Non-controlling Attributable to owners of the parent interest
Item	AOP 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	-	-	-	264,974,555	200,321,464	-	611,448,026	(477,000)	182,062,145	-	-	-	2,473,104,190
Effects of error corrections	002	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Effects of changes in accounting policies	003	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Opening balance [current period] (1 + 2 + 3)	004	1,214,775,000	-	-	-	264,974,555	200,321,464	-	611,448,026	(477,000)	182,062,145	-	-	-	2,473,104,190
Ordinary shares issue	005	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Preference shares issue	006	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Issue of other equity instruments	007	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Exercise or expiration of other equity instruments issued	008	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Conversion of debt to equity	009	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Capital reduction	010	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Dividends	011	-	-	-	-	-	-	-	-	-	-	-	-	-	-
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	-	-	-	-	-	91,031,073	-	91,031,073	-	(182,062,146)	-	-	-	-
Share based payments	017	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Other increase or ( - ) decrease of equity instruments	018	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Total comprehensive income for the current year	019	-	-	-	-	(15,771,394)	-	-	-	-	146,676,547	-	-	-	130,905,153
Equity instruments increase or (-) decrease resulting from business combinations	020	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Closing balance [current period] (from 4 to 20)	021	1,214,775,000	-	-	-	249,203,161	291,352,537	-	702,479,099	(477,000)	146,676,546	-	-	-	2,604,009,343

Notes to financial statements

1) INTEREST INCOME				in HRK
AOP 001	Same period of the previous year 01.01.-			Current period 01.01. – 30.06.2021.
	30.06.2020. Cumulative	Quarter	Cumulative	Quarter
Debt securities Loans and advances	41,777,442 253,190,309	19,750,163 125,168,515	39,340,466 247,665,494	19,843,714 123,387,674
Other assets Deposits	212,665 -	3,100 -	3,860 -	3,860 -
Other liabilities Total	- 295,180,417	- 144,921,778	- 287,009,820	- 143,235,247
2) INTEREST EXPENSE				in HRK
AOP 002	Same period of the previous year 01.01.- 30.06.2020.			Current period 01.01. – 30.06.2021.
Debt securities	Cumulative -	Quarter -	Cumulative -	Quarter -
Loans and advances Other assets	1,282,607 -	753,597 -	1,321,432 -	716,423 -
Deposits	25,346,742	12,410,434	17,594,976	8,207,784
Other liabilities Total	488,969 27,118,318	36,021 13,200,053	3,246 18,919,654	2,486 8,926,693
3) FEE AND COMMISSION INCOME				in HRK
AOP 005	Same period of the previous year 01.01.- 30.06.2020.			Current period 01.01. – 30.06.2021.
Securities	Cumulative 196,165	Quarter 68,308	Cumulative 1,457,267	Quarter 744,506
Asset management Custody [according to the type of client]	23,531 2,346,177	10,729 1,104,552	21,643 2,586,218	10,138 1,356,267
Loan commitments Other	43,643 210,944,038	15,549 102,759,414	17,295 214,375,993	5,902 112,544,436
Total	213,553,554	103,958,551	218,458,416	114,661,249
4) FEE AND COMMISSION EXPENSE	Same period of the previous year 01.01.-			in HRK
AOP 006	30.06.2020. Cumulative	Quarter	Cumulative	Current period 01.01. – 30.06.2021. Quarter
Bank clearing and settlement	828,227	393,361	982,481	536,226
Other Total	130,077,629 130,905,856	62,932,451 63,325,812	129,068,935 130,051,416	67,359,703 67,895,930
5) GAIN/LOSSES ON TERMINATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES				in HRK
AOP 007	Same period of the previous year 01.01.- 30.06.2020.			Current period 01.01. – 30.06.2021.
Debt securities	Cumulative 35,035,565	Quarter 11,165,173	Cumulative -	Quarter -
Loans and advances Deposits	- -	- -	- -	- -
Debt Securities issued Other financial liabilities	- -	- -	- 169,597	- 75,768
Total	35,035,565	11,165,173	169,597	75,768
6) GAINS OR (-) LOSSES ON FINANCIAL ASSETS AND LIABILITIES HELD FOR TRADING				in HRK
AOP 008	Same period of the previous year 01.01.- 30.06.2020.			Current period 01.01. – 30.06.2021.
Equity instruments	Cumulative (4,975,117)	Quarter 6,319,741	Cumulative 7,136,717	Quarter 2,806,825
Debt securities FX transactions and derivatives	(12,411,896) 25,202,510	(4,824,778) 11,737,227	(4,087,657) 24,672,367	(2,763,481) 12,917,564
Total	7,815,497	13,232,190	27,721,428	12,960,908
7) GAINS OR LOSSES ON NON-TRADING FINANCIAL ASSETS MANDATORILY AT FAIR VALUE THROUGH PROFIT OR LOSS	Same period of the previous year 01.01.-
AOP 009	30.06.2020. Cumulative	Quarter	Cumulative	Current period 01.01. – 30.06.2021. Quarter
Equity instruments	-	-	30,800,000	30,800,000
Debt securities Loans and advances	- 200,027	- 97,634	- (1,624,438)	- (2,984,480)
Total	200,027	97,634	29,175,562	27,815,520
8) OPERATING EXPENSES AOP 015 & AOP 017 & AOP 018	Same period of the previous year 01.01.-			in HRK Current period 01.01. – 30.06.2021.
	30.06.2020. Cumulative	Quarter	Cumulative	Quarter
Other operating expenses Administrative expenses	23,585,061 183,664,427	13,399,661 92,145,229	5,914,838 191,774,124	3,556,129 99,069,657
Employee expenses Other administrative expenses	109,296,780 74,367,647	55,095,413 37,049,816	115,471,619 76,302,505	58,024,106 41,045,551
(Contributions in cash rehabilitation committees and Deposit Insurance Schemes) 5,482,500 Amortization	40,342,918	3,232,500 19,692,825	6,958,179 33,724,172	4,216,929 16,746,259
Property, plant and equipment Investment property	21,535,910 -	10,352,260 -	21,275,304 -	10,484,276 -
Other intangible assets Total	18,807,008	9,340,565	12,448,868	6,261,983
	253,074,906	128,470,216	238,371,313	123,588,973
9) IMPAIRMENT LOSSES AND PROVISION EXPENSES AOP 019 & AOP 020 & AOP 021 & AOP 023	Same period of the previous year 01.01.-			in HRK Current period 01.01. – 30.06.2021.
	30.06.2020. Cumulative	Quarter	Cumulative	Quarter
Modification gains or (-) losses, net Financial assets at fair value through other comprehensive income	2,512,470 -	2,541,860 -	(1,457,954) -	1,851,610 -
Financial assets at amortized cost (Provisions or (-) reversal of provisions)	2,512,470 (59,629,807)	2,541,860 (60,514,125)	(1,457,954) 22,472,806	1,851,610 19,260,570
Liabilities towards resolution committees and deposit insurance systems (Liabilities and Guarantees)	- 13,850,186	- 13,511,033	- 7,078,587	- 4,164,052
(Other Provisions) (Impairment or (-) reversal of impairment on financial assets that are not	(73,479,993)	(74,025,158)	15,394,220	15,096,518
measured at fair value through profit or loss)	65,769,974	37,061,273	(24,992,891)	(45,264,569)
(Financial assets at fair value through other comprehensive income) (Financial assets at amortized cost)	890,424 64,879,550	2,018,346 35,042,927	(1,373,211) (23,619,680)	(1,704,962) (43,559,607)
(Impairment or (-) reversal of impairment off of investments in subsidiaries, joint ventures, and associates)	-	-	-	-
(Impairment or (-) reversal of impairment off non-financial assets) (Property, plant and equipment)	- -	- -	- -	- -
(Investment property) (Goodwill)	- -	- -	- -	- -
(Other intangible assets) (Other)	- -	- -	- -	- -
Total	3,627,698	(25,994,712)	(1,062,130)	(27,855,608)
10) LOANS AND ADVANCES AOP 023		31.12.2020.			30.06.2021.	in HRK
Central banks	Stage 1 1,219,156,918	Stage 2 - -	Stage 3 -	Stage 1 1,274,718,434	Stage 2 -	Stage 3 -
Gross loans Allowance	1,219,156,918 -	- -	- -	1,274,718,434 -	- -	- -
Government Gross loans	2,513,669,837 2,520,514,249	10,294,601 - 10,456,303	- -	2,458,635,489 2,465,173,215	3,301 3,448	- -
Allowance Credit institutuions	(6,844,412) 368,510,087 -	(161,702) - -	- -	(6,537,726) 308,871,374	(147) -	- -
Gross loans	57,300	-	-	74,509	-	-
Allowance Deposits	27 368,996,913	- -	- -	(0) 309,300,318	- -	- - -
Allowance Other financial institutions	(544,154) 179,270,857 -	- 3,893 -	- -	(503,453) 117,221,091	- 776	-
Gross loans Allowance	168,686,297 (584,453)	3,983 (90)	- -	107,157,749 (863,712)	830 (53)	- -
Deposits Allowance	11,262,954 (93,941)	- -	- -	11,540,659 (613,605)	- -	- -
Non - financial institutions Gross loans	3,626,480,744 3,752,909,802	422,197,574 - 480,885,197	636,986,564 1,456,527,825	3,067,844,929 3,144,648,200	698,474,433 775,639,919	665,441,581 1,456,435,349
Allowance Retail	(126,429,057) 7,022,179,455	(58,687,623) 251,126,985 -	(819,541,261) 162,079,076	(76,803,271) 7,161,784,448	(77,165,486) 378,996,766	(790,993,768) 194,697,082
Gross loans Allowance	7,060,672,678 (38,493,224)	272,846,699 (21,719,714)	687,755,861 (525,676,785)	7,200,496,303 (38,711,855)	402,161,077 (23,164,311)	751,554,662 (556,857,580)
Total	14,929,267,898	683,623,053 -	799,065,640	14,389,075,764 1,077,475,276		860,138,664
11) NON-TRADING FINANCIAL ASSETS MEASURED AT FAIR VALUE THROUGH PROFIT OR LOSS AOP 013	31.12.2020.	30.06.2021.				in HRK
Central banks Local state	- -	- -
Credit institutions Other financial institutions	- -	- -
Non - financial institutions	5,093,283	3,279,097
Retail Total	13,772,618 18,865,901	13,435,005 16,714,103

12) DEPOSITS in HRK

AOP 044	31.12.2020.	30.06.2021.
Government	400,000,000	401,285,507
Local state	5,325,746,428	6,249,641,931
Credit institutions	209,013,088	416,390,107
Other financial institutions	1,397,035,135	1,318,237,690
Non - financial institutions	3,162,990,953	3,688,322,706
Retail	12,074,349,419	12,050,826,423
Total	22,569,135,023	24,124,704,363

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 June 29, 2021 (in HRK) 540.00 Market capitalisation (in HRK million) 1,093.30

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

Number of transactions (in ths)

Transaction volume - Mobile banking (in HRK mn)

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

Profitability

Profit development (in HRK mn)

Return on Average Equity ROAE

* Market share data for Q2 2021 not available at the time presentation was published

▪ Better quarterly results than in pre-COVID years, mainly driven by increase in net fee income, trading income and cost reduction measures.

Asset development

HPB's Asset development (in HRK bn)

Comparative asset growth rates

* Market share data for Q2 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 +1,874 mn;
• LCR (Liquidity Coverage Ratio) as of 30.6.2021 is at 184%.

Accessibility

branch offices

regional centers business centers financial corners at the Croatian post

Over 1,500 cash-out points with no

fees