Hrvatska Poštanska Banka d.d.

Earnings Release • Apr 29, 2022

HPB d.d. 3M 202 2

Investor information

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

Zagreb, April 29 th , 2022 No: F21-4/2022-TB

Home Member State of Issuer Republic of Croatia ISIN HRHPB0RA0002 Stock Exchange Identifier HPB-R-A Regulated Market/

Segment

LEI 529900D5G4V6THXC5P79

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, 2022.

Hrvatska poštanska banka, p.l.c.

Hrvatska poštanska banka, d.d. Jurišićeva ulica 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

Successfully completed resolution of Sberbank d.d.

28 Feb 2022

ECB	assessed		and	SRB		decided
Sberbank	d.d.	in	Croatia		is	failing	or
likely to	fail

Deterioration of Sberbank d.d. liquidity position

Deposit outflows as a result of the reputational impact of geopolitical tensions

28 Feb 2022

SRB applied a suspension of payments, enforcement and termination rights (moratoria) to Sberbank d.d. Moratioria until 1 March 23:59:59 During the two-day moratoria, retail and corporate clients (depositors) were able to use a total of up to HRK 7,280 per day

1 Mar 2022

SRB in cooperation with CNB brought the decision on initiation the resolution proceedings of Sberbank d.d.

EC endorsed the resolution decision Resolution is to be carried out by sale

2 Mar 2022

HPB becomes the new owner of Sberbank d.d.

SRB has accepted HPB's binding offer to purchase a 100% ownership stake in Sberbank d.d.

CNB passed a Decision on issuing prior consent to HPB for direct acquisition of a qualifying holding in Sberbank dd

14 Apr 2022

Council of the Croatian National Bank issued a decision on ending the resolution procedure of Sberbank d.d. - u sanaciji on 13 Apr 2022 at 23:59:59, , whereby HPB takes control of the business from 14 Apr 2022

The CNB confirmed the appointment of new members of the Management Board and Supervisory Board of Nova hrvatska banka d.d.

Bank's acquisition was realized in a short time since HPB team continuously analyze competitors and potential market opportunities

Nova hrvatska banka in HPB Group

By closing the resolution procedure, the activities of growth, development and integration begin

As at 31.12.2021

Stronger market position

Bank is expected to merge with the parent company in the next year, with the inclusion of the Bank's financial results in the consolidated financial statements of HPB for 6M 2022.

Acquisition summary

7

HPB acquired 100% of Sberbank d.d. in Croatia for a total cash consideration of HRK 71 mn.

A transaction financed from accumulated equity, pro-forma consolidated CET-1 significantly above the regulatory requirement.

• Preserving financial stability and public interest;
• Empowering #6 position by total assets in the Croatian banking market;
• Strengthening the presence on the Croatian market (30 new business centres for retail clients and 12 for corporate clients);
• Complementary and qualitative loan portfolio with minimal direct exposure to entities from Russia, and additional strength for growth and expansion of business through acquired human and

financial capital

Expanded client base (cca 86 ths clients as of 31 December 2021);

• Attractive investment opportunity with manageable risks;
• Effective use of excess liquidity;
• Financial synergies (revenue, funding and cost);
• Funding and comfortable liquidity position maintained;
• Bargain purchase positively impacts P&L and capital in long-term;
• Additional growth potential.

On April 13, 2022 the resolution procedure ended;

• On April 14, 2022 HPB took control over Sberbank d.d. – u sanaciji;
• Preparatory actions for integration have already begun, preconditions have been created for productive cooperation between teams and achievement of synergy effects;
• Integration activities will be carried out in parallel with the process of adopting euro, which is an absolute priority for both institutions.

Nova hrvatska banka in HPB Group NHB's potential as of 31.3.2022

Source: Nova hrvatska banka d.d., management reports

Nova hrvatska banka in HPB Group

Financial indicators of Nova Hrvatska banka as of 31.3.2022 or for the period 1.1. – 31.3.2022

Source: Nova hrvatska banka d.d., management reports

* Net profit for the period without the effect of CHF lawsuits amounts to HRK 9.8 million; inherited CHF portfolio, possible additional provisions for litigation up to HRK 20 mn after independent confirmation by an external expert ** Preliminary calculation

Successfully acquired Sberbank d.d. despite challenging quarter

Increase in market share in 2022

• Rapid takeover of the NHB based on a robust capital position that has been intentionally created in the last three years, as well as proverbially massive liquidity;
• Largest banking business network through own branch offices and post offices; with the acquisition of NHB we are strengthening our presence on the Croatian market (30 new business centers for retail and 12 for corporate clients);
• Further focus on the EURO project as an absolute priority, and the integration of Nova hrvatska banka.

Realized profit in a challenging quarter

• Decrease in net profit is largely the result of a loss from trading due to government bond falling prices. On the other hand, record prices in real estate segment contributed to the net result of provisions, due to the realization of collateral at higher prices, being significantly above the plan;
• Asset increase HRK +893 mn in 2022;

• Improved portfolio quality with NPL ratio excluding 100% government guaranteed exposures on historically lowest level.

• Income statement items are shown in cumulative from start of the period until the reporting date; cumulative 1.1 – 31.3;

• Balance sheet items are shown as at reporting date; 31.12. and 31.3.

Key Financials 2022

Operating profit (in HRK mn)

Lower operating profit is a result of lower net interest income due to lower volume and pressure on interest rates, and net loss from trading due to rising yields and falling government bond prices, and higher administrative costs.

Gross loans (in HRK mn)

Increase in gross loans is the result of acquisition activities in the corporate, local government and SMEs segment.

40 30 3M 2021 3M 2022 Profit after tax (in HRK mn) - 59.9% - 25.0%

Despite savings in provisioning costs, net profit was lower than in the previous year, profit after tax driven by operating profit.

CET 1 capital ratio (in %)

*Pro forma CET 1 ratio with inclusion of 3M 2022 net profit

• Income statement items are shown in cumulative from start of the period until the reporting date; cumulative 1.1-31.3;
• Balance sheet items are shown as at reporting date; 31.12. and 31.3.

Resiliant to challenges in first quarter

		31 12 2020	31 12 2021	31 3 2022
Assets	HRK mn	25 500 ,	27 861 ,	28 754 ,	5
Net loans to customers	HRK mn	14 725 ,	14 243 ,	14 578 ,	5
Deposits	HRK mn	21 214 ,	23 191 ,	24 493 ,	5
Equity	HRK mn	2 473 ,	2 650 ,	2 492 ,	6
CET 1 capital ratio	%	21 8	25 7	24 0	6
NPL ratio	%	10 4	9 8	9 2	6
NPL ratio excl . 100% gov. guaranteed exposure	%	8 7	8 4	7 9	6
NPL coverage	%	62 2	61 1	62 2	5
NPL excl . 100% coverage gov. guaranteed exposure	%	74 2	72 1	5 73	5
		2020	2021 3M	2021 3M 2022
Income	HRK mn	1 121 ,	1 143 ,	274 224	6
Net profit	HRK mn	182	202	35 30	6
Cost-to-income ratio	%	64 1	62 3	64 6 80.8	5
(ROE) Return on equity	%	4 7	6 7	6 1 4.8	6

Market share by total assets as of 31.12.2021 (in HRK bn)

Results by business segments as of 31.3.2022

12

Result after tax*

-32%

23%

119%

Financial markets segment was negative in operating and after tax results due to strong yield growth and falling government bond prices.

Other

SME

Gross loans development by segment

Gross loans (in HRK mn)

▪ Retail sector recorded a decline in the gross loan portfolio in the first quarter of 2022 according to lower loan volume due to the processing a large number of APN requests and a significant focus on this type of lending in the first quarter. Time invested in these operations should be seen in the result and the gross loan portfolio (GLP) in the coming months when GLP growth is expected. In addition, the decline in the first quarter was due to the implementation of the Decision of the Civil Protection Headquarters for the mandatory use of COVID certificates when entering branches, which affected the number of received loan applications and disrupted the dynamics of receiving applications at cca 40% clients;

• Corporate segment showed strong recovery in 2021 after the COVID pandemic, and significant credit growth in the first quarter was the result of intensive acquisition activities started in Q4 2021. Although lack of significant investments affected lending activities, the focus was on liquidity requirements and refinancing existing liabilities;
• SME growth is the result of portfolio diversification to a larger number of clients, client acquisitions made through quality refinancing exposures in other banks, monitoring of clients' investments (production plants, warehouses, hotels, ships, halls) which indicate stability and positive trends in their business, monitoring clients in working capital in accordance with their growth and potential. All of the above, although the pressure to reduce interest rates is daily, indicates the sustainable operation of SMEs in the context of income (interest and non-interest).
• Source: HPB management reports 13

Portfolio quality improves

NPL ratio development (in %)

NPL coverage development (in %)

10.8 10.4 9.8 9.2 11.6 10.4 8.7 8.4 7.9 2018 2019 2020 2021 31.3.2022 NPL NPL (excl. 100% gov. guar. exp.)

Market NPL ratio* 4.3% Market NPL coverage* 63.2%

* As of 31.12.2021

• Trend of reducing the NPL ratio ensured by efficient collection activities continued in 2022, which with the continuous growth of performing loans contributes to the continuation of the long-term trend of reducing the NPL ratio;
• Excluding 100% government guaranteed exposures, the NPL ratio falls significantly below the long-term average, to a record low level;
• NPL coverage is still stable and if we exclude 100% government guaranteed exposures NPL coverage is record high and significantly above the market average level.

Strong NPL coverage

		3M 2019	3M 2020	3M 2021	3M 2022
(total loans) Exposure	HRK mn	17 458 ,	20 607 ,	21 678 ,	23 494 ,
Total NPL stock	HRK mn	2 160 ,	2 149 ,	2 200 ,	2 164 ,
NPL %	%	12 4	10 4	10 1	9 2
Loss allowance for loans	HRK mn	(1 603) ,	(1 600) ,	(1 625) ,	(1 588) ,
NPL	HRK mn	(1 453) ,	(1 390) ,	(1 364) ,	(1 346) ,
PL provision	HRK mn	(150)	(209)	(262)	(242)
Coverage NPL	%	67 3	64 7	62 0	62 2
NPLs covered by provisions not	HRK mn	557	549	575	576
NPLs with 100% goverment guarantees	HRK mn	0	204	357	341
Uncovered NPLs	HRK mn	557	345	219	235
CET1	HRK mn	1 892 ,	2 104 ,	2 285 ,	2 528 ,
CET Uncovered NPLs 1 to	%	29 4	16 4	9 6	9 3

Uncovered NPLs to CET 1 trend

• Active NPL portfolio management with an objective to maintain uncovered NPLs to CET1 ratio at low level;
• NPL coverage by total provisions is 73.4%.

1 Executive Summary

2 Macroeconomic environment

3 Financials

4 Risk Management

5 Appendix

Economic indicators (y-o-y)

Number of accounts* (in mn)

28/04/2022

*Source:https://www.porezna-uprava.hr/Dokumenti (data for first quarter 2020, 2021 and 2022) "I- ACCOMMODATION AND FOOD SERVICE ACTIVITIES " 17

"G- WHOLESALE AND RETAIL TRADE OF MOTOR VEHICLES AND MOTORCYCLES, REPAIR OF MOTOR VEHICLES AND MOTORCYCLES "

1 Executive Summary

2 Macroeconomic environment

3 Financials

4 Risk Management

5 Appendix

Key financials – Income statement

• NII lower by 7.1% due to lower market interest rates, lower gross loans portfolio and strong price competition on banking market; interest expenses management in first quarter 2022 (-35.5%) did not neutralise decrease in interest income (-8.6%) vs PY;
• NFCI higher by 4.2% due to recovery of economic activity, in first quarter highest net income from fees and commissions in the last five years was achieved;
• Net loss from trading is main driver for lower operating income (-28.8 mn vs Q1 21), as a result of strong yield growth and falling government bond prices due to accelerated inflation, tightening monetary policies of the ECB and FED, which was further intensified by the war in Ukraine;
• Lower operating profit (-44.3 mn) as a result of realized loss from trading activities, lower NII and increased administrative costs due to intensive activities initiated on all regulatory projects (EURO, ESG and other);
• Despite savings in provisioning costs, net profit driven by lower operating profit.
• Source: HPB management reports 19

Net income development

Composition of net income

• Higher NFCI as a result of increased fees from credit card transactions, in 3M 2022 recovery above pandemic years and highest in last 5 years;;
• NII lower in comparison with PY due to the strong price competition on the market and lower loan portfolio;
• Lower other income in 2022 as a result of realized losses from trading due to the falling government bond prices.

Net fee income (in HRK mn)

Net interest income (in HRK mn)

Fees and commissions

Net fee income overview in 3M (in HRK mn)

* Market data available for 12M 2021

• NFCI in the in the first quarter 2022 exceeded its pre-COVID levels;
• Increase in NFCI mainly driven by recovery of economic activities (net income from card business +38.2%);
• HPB net fee income on par with the banking sector with a relatively stable share.

Operating expenses

Composition of operating expenses (in HRK mn)

Administrative expenses development (in HRK mn)

• Higher operating expenses (+ 10.1 mn or +8.6%) coming from higher administrative costs;
• Employee costs up as a result of investing in IT internal resources and intensive activities on regulatory project Euro;
• Administrative expenses increased (+10.9%) due to the timely addresing regulatory requirements and improvements of Bank's processes in order to eliminate technological debt:
• Maintenance of IT equipment;
• Intensive marketing activities used as an acquisition tool due to participation in the new APN tranche;
• Consultation services due to initiated regulatory projects (Euro, ESG and other).

Provisioning

Structure of net provision expenses in 3M 2021/2022 (in HRK mn)

• Provisions for Stage 1 & 2 significantly lower in 2022 due to improved portfolio quality after COVID 19 pandemic;
• Lower stage 3 provisions compared to the realization in 2021 due to record levels of collateral realization where real estates are sold at the first public auctions, which has not been the case so far.

Key financials – Balance sheet

		31 12 2021	31 03 2022	ytd ∆
Assets	HRK mn	27 861 ,	28 754 ,	893
Gross loans	HRK mn	15 727 ,	16 065 ,	339
Deposits	HRK mn	23 443 ,	24 493 ,	1 050 ,
Equity	HRK mn	2 650 ,	2 492 ,	(159)
Regulatory capital	HRK mn	2 631 ,	2 528 ,	(103)
Loan/deposit ratio	%	60 8	59 5	(1 2)
ROAE	%	9 7	4 6	(3 3)
NPL ratio	%	9 8	9 2	(0 5)
NPL ratio excl guaranteed 100% gov. exposure	%	8 4	7 9	(0 5)
NPL coverage	%	61 1	62 2	1 1
NPL excl 100% guaranteed coverage gov. exposure	%	72 1	5 73	1 3
Loss allowance for loans	HRK mn	(1 575) ,	(1 588) ,	14

• Assets records continuous growth +3.2% ytd as a result of increase in liquid assets +9.3% primarily due to continuous increase in deposits; gross loans increased +2.2% while securities decreased -5.0%;
• Deposits up +4.5% with largest increase in SMEs +12.1%, the central state and large corporate segment +8.0%, and financial markets +5.2%.

Corporate portfolio industry distribution

Corporate gross loans per industry (in %)

• Recovery of the corporate segment after COVID-19 pandemic is continued in 2022;
• Corporate lending activity is primarily focused on loans for liquid assets and refinancing of existing liabilities and to a lesser extent on lending to investment projects that are partly co-financed by grants from EU funds;
• Increase in the manufacturing and wholesale and retail trade segment is mostly result of new acquisitions;
• Reduction in the electricity supply segment is result of repayment of the part of the allowed overdraft;
• In the real estate segment, a new placement was approved for the purpose of refinancing existing liabilities.

Source: HPB management reports

Composition of equity and liabilities

• Favourable 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 85.2% share
• Additionally strengthened market position, Bank holds 5.97% of all deposits on a market at 31.1.2022 (31.12.2021 = 5.93%);
• Stable wholesale funding structure attracted funds through foreign financial institutions, CBRD and CNB repo loans.

Source: HPB management reports 26

Liquidity Overview

Liquidity ratios

• Optimization of LCR in 2022 through more efficient liquidity management;
• Continuously low loan-to-deposit ratio;
• High share of customer deposits (85.2%) in financing mix.

Continuously strong capital position

• CET-1 lower than in the previous quarter as a result of growth in loans and consequent risk-weighted assets;
• Pro forma CET1 calculation includes 3M 2022 net profit.

1 Executive Summary

2 Macroeconomic environment

3 Financials

4 Risk Management

5 Appendix

Regulatory Capital Development

Regulatory capital development (in HRK mn)

*Regulatory capital with inclusion of 3M 2022 net profit

RWA Development

RWA development (in HRK mn)

▪ Risk-weighted assets higher than in the previous quarter due to the corporate loans growth.

Meeting MREL requirements

Actual CET1 ratios vs. total MREL requirement

^* Pro forma CET 1 ratio with inclusion of 3M 2022 net profit

▪ Bank's total capital ratio in first quarter 2022 above first binding transitional MREL requirement (23.4%) which entered into force on 1 January 2022.

Exposures and coverage per stage

		31 12 2021		31 3 2022
Segment	Stage	Exposure	Exposure excluding100% government guarantees	Coverage	Coverage without 100% government guarantees	Exposure	Exposure excluding 100% government guarantees	Coverage	Coverage excluding100% government guarantees
CORPORATE	S1	45 9%		1 4%		62 6%		1 6%
CORPORATE	S2	18 2%		7 6%		7 3%		10 1%
CORPORATE	S3	35 9%	25 8%	47 8%	7% 75	30 1%	21 0%	45 9%	72 8%
SME	S1	41 4%		1 8%		44 3%		1 8%
SME	S2	26 6%		8 2%		25 2%		8 0%
SME	S3	31 9%	31 9%	66 7%	66 7%	30 5%	30 5%	68 0%	68 0%
STATE	S1	98 6%		0 4%		98 4%		0 2%
STATE	S2	1 4%		2 9%		1 6%		2 7%
STATE	S3	0 0%	0 0%	2 0%	* 2 0%	0 0%	0 0%	2 0%	* 2 0%
RETAIL	S1	86 1%		1 3%		85 7%		1 3%
RETAIL	S2	4 4%		10 8%		4 7%		10 5%
RETAIL	S3	9 5%	9 5%	72 7%	72 7%	9 6%	9 6%	76 8%	76 8%
TOTAL	S1	84 5%		0 7%		86 3%		0 7%
TOTAL	S2	5 7%		8 5%		4 5%		9 1%
TOTAL	S3	9 8%	8 4%	61 1%	72 0%	9 2%	7 9%	62 2%	73 3%

*Relates to the exposure below HRK 0.5 mn.

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
	Official of market the
Segment	Zagreb Stock Exchange
Listed quantity	2 024 625 , ,
Share price March (in HRK) 31 2022 at as ,	940 00
Market capitalisation (in HRK million)	1 903 15 ,

Shareholders	Ownership stake (%)
of Croatia Republic	44 90
Croatian Post PLC	11 93
Croatian Deposit Insurance Agency	8 98
Croatian Pension Insurance Institute	8 76
Other shareholders (each under of share of the 5%
equity capital)	25 43
Total shares	100 00

Direct channels

• Continuous growth in digital channels with focus on m-banking; m-banking users + 9.65% and transaction volume + 57.89% vs 3M 2021;
• In retail segment m-banking transaction volume is continuously growing; 83% in 3M 2022;
• Further increase in e-banking users (+ 2.48%) and transaction volume (+ 31.6%) is generated primarily by growth in the corporate segment.

Transaction volume - Mobile banking (in HRK mn)

Transaction volume - Internet banking (in HRK mn)

Profitability

Profit development (in HRK mn)

Return on Average Equity ROAE

* Market share data for 3M 2022 not available at the time presentation was published

Asset development

HPB's Asset development (in HRK bn)

Comparative asset growth rates

* Market data were not available for 3M 2022 at the time this presentation was published

• Bank's growth continued in 2022, asset up HRK +0.9 bn;
• LCR (Liquidity Coverage Ratio) as of 31.3.2022 is at 138.3%.

HPB together with strategic partner Hrvatska pošta is accessible at over 1,000 locations

Products and services are offered to our current and potential clients in:

• 51 offices and 6 branch offices for retail clients;
• 12 offices for corporate clients.

Post offices

• Payment services in HRK and contracting Bank's products and services in 1,015 post offices for retail clients while services for corporate clients are available at 987 locations;
• Loan services to retail clients in HP financial corner at 142 locations.