NLB

Quarterly Report • May 27, 2019

NLB Group Presentation 1Q 2019 Results

Disclaimer

This presentation has been prepared by Nova Ljubljanska banka d.d., Ljubljana (the "Company"). This presentation has been prepared solely for the purpose of informative presentation of the business conduct of the Company. This presentation has not been approved by any regulatory authority and does not constitute or form part of any offer to sell or issue or invitation to purchase, or any solicitation of any offer to purchase, any securities of the Company, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision.

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NLB is regulated by The Bank of Slovenia i.e. "Banka Slovenije, Slovenska 35, 1505 Ljubljana, Slovenia" and by The Securities Market Agency i.e. "Agencija za trg vrednostnih papirjev, Poljanski nasip 6, 1000 Ljubljana, Slovenia.

Key performance indicators of NLB Group

	Medium-term targets set in 2018(1)
	YE 17	YE 18	Q1 19	Medium term
Net interest margin(2)	2.57%	2.56%	2.56%	>2.7%
Loans to deposits ratio	70.8%	68.3%	68.0%	<95%
Total capital ratio	15.9%	16.7%	16.6%	~16.25%
Cost-income ratio	58.4%	58.5%	51.6%	~50%
Cost of risk(3)	-62 bps	-43 bps	-23 bps	<90bps(6)
Return on equity (RoE)	14.4%	11.8%	14.0%	~12.0%
Dividend payout	84%(5)	(8) 70%	/	~70%(7)
ratio(4) NPE	6.7%	4.7%	4.3%	3.0 – 4.0%

Source: Company information

Note: (1) Target set by NLB management as a part of their financial projections for 2019-2023; (2) Calculated on the basis of interest bearing assets; interest margin data for 2018 are adjusted to new methodology (calculation based on the number of days for the period). (3) Calculated as credit impairments and provisions over average net loans to customers; (4) Based on EBA definition. (5) Payout calculated based on 2017 profit. Total dividend paid for 2017 amounted to EUR 270.6 million (EUR 189.1 million of profit for 2017 and EUR 81.5 million of retained profit from previous years) i.e. dividend payout 120%. (6) CoR < 90bps should be read as NLB Group's limit that should not be exceeded even in deteriorated economic conditions. (7) The payment of dividends by NLB, will depend on NLB's capital structure, risk appetite, profits, financial condition, regulatory requirements, general economic and business conditions, and future prospects. (8) The Management Board and Supervisory Board will propose to the shareholders that 70% of the NLB Group profit will be paid-out as dividend .

NLB Group – performance indicators across SEE countries

	Slovenia	North Macedonia	Bosnia and	Herzegovina	Kosovo	Montenegro	Serbia	NLB Group
	NLB d.d., Ljubljana	NLB Banka Skopje	NLB Banka Banja Luka	NLB Banka Sarajevo	NLB Banka Prishtina	NLB Banka Podgorica	NLB Banka Beograd
				Data on stand-alone	basis			Consolidated data*
Result after tax (EURm)	42.2	7.5	5.9	2.7	4.8	-0.5(8)	1.1	57.9
Net interest margin(1) %	1.92%	3.84%	2.67%	3.02%	4.43%	4.22%	4.21%	2.56%
Cost/ income %	51.7%	42.2%	42.7%	52.5%	34.4%	51.4%	75.8%	51.6%
Loans/ Deposits % (net)	62.8%	80.6%	63.8%	77.9%	81.4%	83.2%	94.2%	68.0%
NPL ratio %	5.5%	5.2%	2.6%	5.5%	2.3%	4.9%	2.4%	6.3%
RoE a.t.	12.8%	14.8%	25.9%	13.5%	25.8%	-2.8%	6.2%	14.0%
Total assets (EURm)	9,088	1,336	753	601	691	494	499	13,066
NLB ownership (%)	/	86.97%	99.85%	97.34%	81.21%	99.83%	99.99%(7)	/
No. of branches (#)	94	53	55	38	35	18	28	321
Market(2) share %	23.0%	16.3%(5)	18.3%(3,5)	5.2%(4,5)	17.1%	11.4%(6)	1.6%(5)	/

Note: Financial data as of March 2019.

* Consolidated data. Including non-core members and other activities and other core members.

(1) Calculated on the basis of interest bearing assets (calculation based on the number of days for the period); (2) Market share based on total assets; (3) Market share in the Republika Srpska; (4) Market share in the Federation of BiH; (5) Market share as of Dec-18; (6) Market share as of Feb-19; (7) NLB ownership is 99.9975% (8) Due to established provisions for legal disputes.

Income Statement

Result after tax of NLB Group – evolution YoY (EURm)

In Q1 2019, NLB Group generated EUR 57.9 million of profit after tax:

• Higher net interest income, mainly due to loan volume growth and lower interest expenses;
• Higher net fee and commission income, mostly as a result of package offer for individuals;
• Lower costs, mostly due to moderate decrease of discretionary spending in 2019;
• EUR 0.6 million of net provisions and impairments were established in Q1 2019, while in Q1 2018 EUR 2.8 million of net impairments and provisions were released.

Contribution to the NLB Group consolidated result a.t.

Result a.t.

Non-recurring items

Balance sheet structure – NLB Group

Simple client business driven balance sheet

(31 Mar 2019, in EUR million)

6

Business Performance

Net interest income & net interest margin

Net interest income increased YoY but remains under pressure

Source: Company information

NLB d.d. NLB Group Strategic foreign banks

Net interest margin(1) in NLB Group banks (in %)

Note: (1) Calculated on the basis of interest bearing assets; interest margin data for 2018 are adjusted to new methodology (calculation based on the number of days for the period).

3.71%

Net interest income drivers – NLB d.d. (1)

Net interest income drivers – Strategic foreign markets

Net non-interest income – NLB Group Good performance in Fee and Commissions

Net non-interest income (Group, EURm)

Dividend income Non-recurring items

Regular net income from financial transactions

in FUR million	1-3 2019	1-3 2018	Change YoY
Regular net other income	0.5	1.1	-0.6	-58%
DGS	-22	-2.0	-0.2	-12%
SRF	0.0	0.0	0 0
BGR	0.0	0.0	0.0	39%
External realisation NLB (IT, vault)	1.0	1 1	-0 1	-10%
Rents	1.5	2.0	-0.5	-25%
Valuation of investment property	0-0	-0.1	0.1	116%
Other	0.2	0.1	0.1	83%

Note: (1) Includes investment funds, guarantees, investment banking, insurance products and other services.

Net fee and commission income growing YoY (Group, EURm)

Net non-interest income decreased slightly YoY due to lower non-recurring income, which was almost off-set by substantial increase in net income from financial transaction, mostly due to partial repayment of larger exposure measured at fair value through profit and loss (EUR 5.1 million) and sale of debt securities held by the Bank (EUR 2.6 million)..The 2% increase in fee and commission income is mainly related to the new package offer for individuals that simplified the use of banking services.

Costs – NLB Group

Cost lower by 1% YoY

Other general administrative expenses

• EUR 0.4 million decrease in total costs due to moderate decrease of discretionary spending in 2019.
• CIR and CIR normalised(1) stood at 51.6% or 51.8% respectively.
• Headcount dropped by 19% over 2012-31 March 2019 driven primarily by Slovenia core & non-core members.
• Ongoing closures of unprofitable branches.

Operating expenses (Group, EURm) Employees and branches evolution – stronger rationalisation in tougher Slovenia market (#)

NLB d.d. Other

Impairments and provisions for credit risk & cost of risk

Cost of risk remained negative

In Q1 2019, the Group established EUR 0.6 million of net impairments and provisions while in Q1 2018 EUR 2.8 million net impairments and provisions were released.

Impairments and provisions for credit risk were net released in the amount of EUR 3.3 million, mainly as a result of a successful restructuring of several larger exposures and the recovery of NPLs, hence the cost of risk in Q1 2019 was negative.

Other impairments and provisions were established in the net amount of EUR 3.9 million.

Impairments and provisions for credit risk – contribution (EURm)

*Other includes: NLB Srbija, NLB Crna gora, Leasing companies, LHB Frankfurt and NLB InterFinanz

Negative cost of risk (Group, bps)(3)

Assets and Liabilities

NLB Group Assets

Well diversified loan book, strong liquidity position

Credit portfolio by segment (31 Mar 2019)

Banking book portfolio by asset class (Group, 31 Mar 2019, EURm)

NLB Group Assets – Loan portfolio

Balanced loan portfolio with loan growth in most of banks

Gross loans to non-banks by strategic member – contribution (EURm)

Gross loan growth in most subsidiaries banks, especially in NLB Banka Prishtina, NLB Banka Beograd and NLB Banka Podgorica.

Gross loans to individuals in subsidiary banks grew by 2.3% and to corporate by 1.6%.

NLB Group Liabilities and Equity

Funding structure driven by stable and price insensitive deposit base

Source: Company information

NLB Group NLB d.d.

NLB Group Liabilities

Deposit growth; interest rates decreasing

Deposits from customers by strategic member – contribution (EURm)

Deposit growth across most of the markets, despite low interest rate environment.

NLB d.d. charges 0.03% monthly fee on deposits volume (threshold from January 2019 at EUR 100k) to corporate deposits and account balances.

Decreasing deposit interest rates (%)*

Capital - NLB Group

CET 1 Capital slightly up YtD

NLB Group capital ratios (%) Capital structure and ratios

• At the end of March 2019, the capital ratios for NLB Group stood at 16.6% (or 0.1 p.p. lower YtD), and for NLB at 23.9% (0.2 p.p. lower YtD).
• The lower capital adequacy derives from higher RWA (EUR 133.9 million for NLB Group). In 2019 the capital increased by EUR 6.7 million, mainly due to higher Other comprehensive income (EUR 5.1 million) and lower Intangible assets (EUR 1.8 million, as deduction item).

	NLB Group
(in EUR million)	31.3.2019	31.12.2018	Change YtD
Common Equity Tier 1 capital	1,460.1	1,453.4	6.7	0.5%
Additional Tier 1 capital	0.0	0.0	0.0
Tier 1 capital	1,460.1	1,453.4	6.7	0.5%
Tier 2 capital	0.0	0.0	0.0
Total capital	1,460.1	1,453.4	6.7	0.5%
Total risk exposure amount (RWA)	8,811.6	8,677.6	133.9	1.5%
Common Equity Tier 1 Ratio	16.6%	16.7%	-0.1%
Tier 1 Ratio	16.6%	16.7%	-0.1%
Total Capital Ratio	16.6%	16.7%	-0.1%

Capital adequacy and local requirements (31 Mar-19, %)

Capital evolution and requirements Strong capital position

Capital position fully reflective of IFRS9 impact (Group, EURm)

RWA structure (EURm)

Well above applicable regulatory requirement and the EU average (as published by EBA (2))

• Highest quality capital, CET1 only, reaching 16.6% on Group level in Mar-19 (including of H1'18 profit)
• As of 1 March 2019 Pillar 2 Requirement (P2R) lower by 0.25 p.p. (3.25%), as a result of better overall SREP assessment. Comfortable buffers against 2019 regulatory requirements of 14.75% OCR
• NLB medium term target of 16.25% total capital ratio; to be regularly revised by competent bodies to reflect each time applicable capital requirements.
• NLB issued (3) a Tier 2 instrument in the amount of EUR 45 million as part of EC commitments (subject to market conditions), as such deploying its capital optimisation potential.

Note: (1) Increase of RWA for market risk since December 2016 is a result of inclusion of FX structural position of SEE subsidiaries; (2) See EBA's Risk Dashboard data as of Q42018 for average CET1 ratio of EU banks; (3) Tier 2 was issued on May 6 2019 and therefore not yet included in Q1 2019 figures.

Solid dividend distribution

Implied payout ratio(%)	48%	58%	84%(1)	70%(2)
NLB Group dividend to shareholder (paid in year after)	44	64	271	142.6(2)
NLB Group profit after tax	92	110	225	204
o/w dividends from subsidiaries, associates and joint ventures to NLB d.d.	14	29	58	50
NLB d.d. profit	44	64	189	165
	2015	2016	2017	2018
				(NLB d.d., EURm)

• The payment of dividends by NLB, will depend on a number of factors, including NLB's capital structure, risk appetite, profits, financial condition, regulatory requirements, general economic and business conditions, and future prospects.
• As at 31 December 2018, the Group had CET 1 ratio of 16.7% which includes the H1 2018 result of EUR 109 million. The Bank intends to further strengthen and also optimize NLB Group capital structure by issuing a Tier 2 instrument in 2019.
• The Bank targets the payment of dividend in the amount of approximately 70% of its consolidated profit, subject to the decision by the Bank's General Assembly.

Note: (1) 2017 payout (84%) calculated based on 2017 profit.Total dividend paid for 2017 amounted to EUR 270.6 million (EUR 189.1 million of profit for 2017 and EUR 81.5 million of retained profit from previous years) i.e. dividend payout 120%. (2) The Management Board and Supervisory Board will propose to the shareholders that 70% of the NLB Group profit will be paid-out as dividend

Asset Quality

Diversified credit portfolio, focused on core markets and cautious risk taking

Credit portfolio(1) by currency and rate type (Group, 31 Mar 2019)

Improving structure of credit portfolio by client credit ratings (Group)(2)

Source: Company information

• No large concentration in any specific industry or client segment
• Lending strategy focuses primarily on its core markets of retail, SME and selected corporate business activities
• Great emphasis is also placed on further improvement of credit portfolio
  • Intensive and proactive handling of problematic customers
  • Cautious lending policy
  • Early warning system for detecting increased credit risk
• The Group is actively present on the market, financing existing and new creditworthy clients.

Note: (1) Credit portfolio also includes advances to banks and central banks; (2) Rating A, B and C are performing exposures. Rating A: investment grade clients with high financial stability; Rating B: clients with high ability to repay their obligations, a significant aggravation of the economic environment would cause problems to them; Rating C: performing clients with increased level of risk who may encounter problems with settlement of liabilities in the future; Ration D and E are NPLs: Default clients (article 178 of CRR), including clients in delay >90days and other clients considered 'unlikely to pay' with delays below 90 days. Numbers may not add up to 100% due to rounding.

Dec-15

Diversified credit portfolio, focused on core markets and cautious risk taking

Credit portfolio(1) by segment (Group, Mar-19, EURm)

Credit portfolio(1) by geography (Group, Mar-19, EURm)

Note: (1) Credit portfolio also includes advances to banks and central banks; (2) State includes exposures to central banks; (3) The largest part represent EU members.

NPLs fully covered by provisions and collateral

Top 20 NPLs (Group, Mar-19)

Source: Company information Note: (1) Cash coverage calculated including both individual and pool provisions.

NPL by geography (Group, Mar-19) NPL cash coverage(1) (Group, %)

NPL specific provisions Pool provisions

An important Group strength is the NPL cash coverage (CR1), which remains high at 78.6%. Further, the Group's NPL coverage ratio 2 stands at 64.9%, which is well above the EU average as published by the EBA (45.1% for Q4 2018).

As such, it enables a further reduction in NPLs without any material losses

New NPL formation very low, successfull legacy resolution

Low NPL in Retail segment throughout the economic cycle.

In Corporate segment a considerable reduction of NPL is observed in industries with the highest NPL %.

Top 10 NPL represent over 30% of the entire NPL volume; the coverage with provisions remains high, limiting the potential losses.

NPL ratio decreased from 6.9% to 6.3% YtD, while NPE ratio reduced by 0.4 p.p. YtD to 4.3%.

Note: NPL was defined until December 2014 as loan exposure to D and E clients/claims and delays over 90 days from loans to A, B and C classified clients. Since customers with loans (in arrears over) with 90 days past due should be classified in nonperforming grade (D or E), NPL definition changed and from 31.12.2014 include only D and E exposures; NPLs, NPL ratio and NPL cash coverage based on Credit portfolio; (1) Refers to corporate loans issued since 2014 and retail loans issued since 2015.

High % of Stage 1 Loan portfolio (Valued at amortized cost)

Stage portfolio at amortized costs (Group, Mar-19)

Stage 1 loans represent 88% of loan portfolio valued at amortized cost. Due to NPL reduction Strategy the share of Stage 3 loans is decreasing. Share of Stage 2 loans is reducing as well.

Strategy & IT

Track record of innovation

The pioneer of banking innovation in Slovenia

First Slovenian bank to launch contactless ATMs

First Slovenian bank to launch chat and video call functionalities

Only bank with multichannel 24/7 support (through phone, chat and video call)

Only bank with fully mobile express loan capabilities (Consumer & SME)

Top-ranked financial apps on App Store and Google Play

Mobile bank users(1) ('000s) Online bank users(1) ('000s)

Demonstrated success in moving to digital

% Penetration of client base

Use of chat and video call functionality ('000s of contacts)

Mobile wallet users & transactions (in EURk)

(1) Individual users (Klikin and NLB Klik); (2) In 2017 ~30,000 inactive NLB Klik users systematically removed; (3) Chat process improved with an additional question before putting chat to the queue, thus customers who previously clicked on a chat by mistake were removed and therefore consultans are more accessible to customers with real questions.

Clear strategy to address current challenges

Key challenges

Sector and regulation	Macro	Clients	Technology
• Regulatory interventions	• Low interest rate environment	• More demanding and knowledgeable clients	• Competition from fintechs
• Further complexity of new regulations (MREL, Basel IV)	• Potential political and geopolitical risks	• Preference for digital channels	• Enhanced customer insights through data management
• Market consolidation	• Potential economic slowdown		• Impact of social media

Strategic priorities

Source: Company information

Innovative focus on customer experience ✓ Omni-channel product distribution ✓ Partnership programmes ✓ End-to-end customer solutions	Enhanced distribution ✓ Migration to digital channels ✓ Sales process optimisation ✓ Improved value-creating customer insights
Cost containment – Simplicity champion ✓ Optimal operations and workforce ("Lean initiative") ✓ Effective procurement at group level ✓ Investment in IT transformation and shared services	Improved risk management ✓ Optimised risk processes ✓ Improved risk modelling ✓ Streamlined risk governance
Optimised product offering ✓ Pricing optimisation ✓ Simplified product offering ✓ Further focus on fee-based & advisory products	Regional specialist ✓ Exclusive strategic interest in and unique understanding of the region ✓ Consistent strategy across markets

Medium-term objectives in IT and Digital

Leverage digital and data to enhance our business model

Enhance customer experience ✓ Increase customer satisfaction ✓ Create new business opportunities Optimise operations ✓ Full (paperless) digitalisation of processes ✓ Increased process automation ✓ Reduction in cost-to-serve ✓ Concentration on value adding activities (advisory, sales) Data insights ✓ Risk scoring models ✓ Behavioral models to inform individualised customer offers ✓ Support of automated decisions ✓ Upgrading digital channels to support full customer journeys ✓ Migration of customers to new digital channels ✓ Idea management implementation ✓ Deploying partnerships to explore new concepts ✓ Open eco-system to become solution Omni-channel Strategic initiatives 1 2 Innovative solutions 3 Increase innovation capacity ✓ Agile development ✓ Pull ideas driven by customer demands ✓ Empowering employees Simplification ✓ Process and product simplification to support digital delivery ✓ Simplified IT enabling digitalisation 4 Strategic objectives Improve customer insight ✓ Data collection ✓ Data extrapolation ✓ Advanced analytics

31

NLB Group synergy opportunities

Group synergies are being addressed in all functional areas

• Established predominantly for subsidiary banks
• Core banking maintenance and development operating since the beginning of 2018
• Additional support with common teams is being added:
  • Solution for loan origination and approval process roll-out in 5 subsidiary banks
  • ESB roll-out in 4 subsidiary banks
  • CRM capability assessment followed by roll-out in 5 banks

IT regionalisation activities Procurement

• SIEM(1) and SOC(2) set up in Ljubljana are near completion
• Regional sourcing for all major categories is done on regular basis
• Implementation of a modern data management platform is progressing according to the project plan
• Regional IT strategy is currently being updated to fully reflect potential regional synergies

IT competence center Process (System) competences

• Introduction of lean principles is underway
• Loan origination and approval process is being mapped in all 6 subsidiary banks with aim to define and automate a standard regional process
• Standard and KPI definition is completed for payment processing and cash transactions

• Basic KPI framework is being defined for common core processes

• Updated regional standards in procurement that are ready to be implemented will unify local sourcing processes in the Group and maximise their financial effects

• Systematic approach to cost optimisation through Non-FTE cost optimisation project in the NLB Group was introduced in September 2015
• Central sourcing in strategic sourcing categories is in place

By actively working on Group synergies, NLB Group leverages on costs (scale), speed of implementation and knowledge sharing

Outlook

Outlook 2019

Macro outlook & risk factors affecting the business outlook

Business outlook

• ✓ Real GDP growth: most countries are likely to grow at around 3% - 4% if supported by loose monetary conditions, fiscal easing and solid domestic demand
• ✓ Public debt in all markets below EU average
• ✓ Low household indebtedness and solid savings performance
• ? Economies will be sensitive to a potential slowdown in the Eurozone
• ? Worsened interest rate outlook
• ? Regulatory & tax measures impacting banks
• ? Geopolitical uncertainties

ASSUMPTIONS:

• Moderate increase of revenues and pre-provision income
• Continued net loan growth in line with GDP dynamics and stable NIM
• Increase of cost of risk, however remaining at low levels
• Ambition to remain flat on costs, however upward pressure due to investments and labour costs

Appendixes

Appendix 1: Segment Analysis	36
Appendix 2: Macro Overview	55
Appendix 3: EC committments	69
Appendix 4: Financial statements	71

Appendix 1

Segment Analysis

NLB Group business segments

	Retail banking in Slovenia	Corporate and investment banking in Slovenia	Strategic foreign markets	Financial markets in Slovenia	Non-core members
	Retail NLB Skladi NLB Vita(1) Bankart(2)	Key corporates SME corporates Investment banking and custody Restructuring and workout	NLB Banka, Skopje NLB Banka, Banja Luka NLB Banka, Sarajevo NLB Banka, Prishtina NLB Banka, Podgorica NLB Banka, Beograd	Treasury activities Trading in financial instruments Asset and liabilities management (ALM)	Non-core members according to EC commitments REAM entities NLB Srbija NLB Crna Gora
(Mar 2019, in EUR million)	• Largest retail banking group in Slovenia by loans, deposits and number of branches • #1 in private banking and asset management • Focused on upgrading customer digital experience and satisfaction	• Market leader in corporate banking with focus on advisory and long-term strategic partnerships • Market leader in Investment Banking and Custody services • Regional know-how and experience in Corporate Finance and #1 lead organiser for syndicated loans in Slovenia • Strong trade finance operations and other fee based business • Market leader at FX and interest rate hedges	• Leading SEE franchise with 6 independent, well capitalised and largely self-funded subsidiaries • The only international banking group with exclusive focus on the SEE region	• Maintaining stable funding base • Management of well diversified liquidity reserves • Managing interest rate positions with responsive pricing policy	• Assets booked non-core subsidiaries funded via NLB d.d. • Controlled wind-down of remaining assets, including collection of claims, liquidation of subsidiaries and sale of assets
Profit b.t.	16.3	19.4	22.2	6.1	1.4
Total assets	2,441	2,014	4,293	3,911	217
total assets(3) % of	19%	15%	33%	30%	2%
CIR	62.3%	38.8%	50.0%	21.0%	80.7%
Cost of risk (bp)	5	-15	-2	/	-67

Notes: (1) 50% equity stake, under equity consolidation; (2) 39% minority stake; (3) Other activities 1%.

Estimated effects of segments metodology changes

From 2019, the new methodology for monitoring the business segment operations has been in use, due to the changes in the market segmentation criteria and the treatment of legal entities in the Bank, the release of EC commitments related to disinvestments of certain industries and other strategic decisions:

• Investment Banking and Custody Services were transferred from the Financial Markets in Slovenia to Corporate and Investment Banking in Slovenia.
• SME reorganization affected Corporate and Investment Banking in Slovenia and Retail Banking in Slovenia (transfer of micro clients from Corporate to Retail segment).
• The EC commitments regarding the reduction of credit business in specific industries (construction, transport, financial holdings, foreign clients) have ceased to apply, hence the specific monitoring and management of this segment is not needed any more. This affected the Corporate and Investment Banking in Slovenia and the segment of Non-Core Members (renamed from Non-Core Markets and Activities).
• NLB Srbija and NLB Crna Gora were transferred from the segment Strategic Foreign Markets to Non-Core Members.

Due to the new methodology, the segment results for 2019 are not directly comparable to the segment results from the previous year. In the table below, the estimated effects due to segments changes for the full year 2018 are presented.

in EUR million	Retail banking in Slovenia	Corporate and Investment banking in Slovenia	Strategic foreign markets	Financial markets in Slovenia	Non-core members	Other
Net interest income	3.1	1.8	0.5	-0.3	-5.1
Net non-interest income	4.6	2.3	-1.8	-8.2	3.2
Total costs*	-6.1	-4.4	1.4	6.1	3.0	no effects
Impairments and provisions*	-0.9	6.6	1.4	0.0	-7.1
Result before tax	0.7	6.3	1.5	-2.4	-6.1
Total assets	37.1	-9.5	-43.5	47.9	-32.1
Gross loans to customers	38.1	111.8	-69.0	-0.1	-80.8	no effects
Deposit from customers	188.1	-107.6	0.0	-71.0	-9.6

Estimated effects of segments methodology changes for 2018(1)

*negative value=increase, positive value=decrease

Note: (1) Investment banking was till 2019 officialy a part of Financial Markets in Slovenia but was presented as a separate segment within Corporate banking in Slovenia in previous reports. Under new segmentation it is included in the segment Corporate and Investment banking in Slovenia.

Retail banking in Slovenia

in EUR million consolidated	Retail banking in Slovenia
	1-3 2019	1-3 2018	Change YoY*
Net interest income	23.0	18.2	4.8
Net non-interest income	20.0	18.3	1.8
Total net operating income	43.0	36.4	6.6
Total costs	-26.8	-25.5	-1.3
Result before impairments and provisions	16.2	10.9	5.3
o/w non-recurring items	0.0		0.0
Impairments and provisions	-1.1	-1.2	0.2
Net gains from investments in subsidiaries, associates, and JVs'	1.1	1.2	0.0
Result before tax	16.3	10.9	5.4

	31 Mar 2019	31 Dec 2018	Change YtD*
Net loans to customers	2,277.1	2,217.4	59.7
Gross loans to customers	2,305.0	2,243.4	61.5
Housing loans	1,376.8	1,374.6	2.3
Interest rate on housing loans	2.54%	2.50%	0.04 p.p.
Consumer loans	628.4	599.0	29.4
Interest rate on consumer loans	6.28%	5.88%	0.40 p.p.
Other	299.7	269.9	29.8
Deposits from customers	6,095.4	5,814.5	280.9
Interest rate on deposits	0.06%	0.08%	-0.03 p.p.
Non-performing loans (gross)	43.9	43.0	0.9
	1-3 2019	1-3 2018	Change YoY*
Cost of risk (in bps)	5	4	1
CIR	62.3%	70.0%	-7.7 p.p.

* Due to the new methodology, the segment results for 2019 are not directly comparable to the segment results from the previous year.

0.32 p.p.

Interest margin 2.21% 1.89%

• The segment recorded EUR 43.0 million of net operating income. The comparison shows EUR 6.6 million increase YoY, of which approximately EUR 2 million increase is assessed as the effect of the transfer of micro clients from Corporate to Retail segment.
• Net interest income is higher due to higher interest rates and growth in volume of loans in the amount of EUR 61.5 million, of which EUR 38 million increase relates to the transfer of micro clients from Corporate segment. The production of new consumer loans in Q1 2019 amounted to EUR 100 million (EUR 82 million in Q1 2018), which led to increase of balance by EUR 29.4 million YtD. The share of consumer loans in all gross loans increased to 28% (from 25% in Q1 2018).
• Without the effect of the change in segment presentation (approximately EUR 1.5 million) the total costs remained on the level of the same period of previous year.
• Increase in deposits from customers mostly due to transfer of micro clients from Corporate segment (EUR 188.1 million) and increase in demand deposits from retail clients.

Retail banking in Slovenia

High and stable market shares across products

Market share of net loans to individuals in Slovenia Market share of deposits from individuals in Slovenia

Upside from fee generating products

NLB Private banking offering NLB Bankassurance GWP (EURm)

Long-term deposits Sight deposits Short-term deposits

• Improving macro and low household indebtedness (21% GDP) driving retail banking growth

• 1 player in Private Banking(3)

  • Limited competition and strong cross-selling capabilities with Bankassurance and asset management

• 1 player in Slovenian asset management(4); market share of NLB Skladi at mutual funds in Slovenia equals 32.2% as of 31 Mar 2019

  • AuM of 1,322 EUR m as of 31 Mar 2019 including investments in mutual funds and discretionary portfolios
• Bankassurance business
  • Life: NLB Vita has reached 15.7% market share by GWP, becoming #3 largest player in the Slovenian market as of 31 March 2019
  • Non-life: Solid growth, in partnership with #3 non-life company (Generali)

Source: Bank of Slovenia (retail loans and deposits), Company information, Slovenian Fund Management Association

Note: (1) Excluding the NPL sale effect of EUR 27m net; (2) Excludes deposits of foreign persons; (3) Company information; (4) By AuM (Slovenian Fund Management Association).

Corporate and Investment banking in Slovenia

in EUR million consolidated	Corporate and Investment banking in Slovenia
	1-3 2019	1-3 2018	Change YoY*
Net interest income	10.8	9.6	1.2
Net non-interest income	15.5	8.4	7.1
Total net operating income	26.3	17.9	8.4
Total costs	-10.2	-10.5	0.4
Result before impairments and provisions	16.1	7.4	8.7
Impairments and provisions	3.3	-1.1	4.4
Result before tax	19.4	6.3	13.1

	31 Mar 2019	31 Dec 2018	Change YtD*
Net loans to customers	2,011.4	1,950.4	61.0
Gross loans to customers	2,183.8	2,061.0	122.8
Corporate	1,987.7	1,854.4	133.3
Key/SMECorporates	1,697.2	1,643.2	54.0
Interest rate on Key/SME Corporates
loans	1.87%	1.88%	-0.01 p.p.
Investment banking**	0.1	/	/
Restructuring and Workout	290.4	211.2	79.2
State	195.8	206.1	-10.4
Interest rate on State loans	2.84%	1.69%	1.15 p.p.
Deposits from customers	1,111.7	1,120.8	-9.1
Interest rate on deposits	0.07%	0.07%	0.00 p.p.
Non-performing loans (gross)	262.8	179.7	83.0

	1-3 2019	1-3 2018	Change YoY*
Cost of risk (in bps)	-15	4	-19
CIR	38.8%	58.9%	-20.1 p.p.
Interest margin	2.87%	2.32%	0.56 p.p.
* Due to the new methodology, the segment results for 2019 are not directly comparable to the segment results

**Investment banking w as show n as separate part of this segment before 2019. from the previous year.

• The segment recorded EUR 26.3 million of net operating income, EUR 8.4 million increase YoY, of which approximately EUR 2.3 million is assigned to change in segment presentation. Net non-interest income was mainly affected by partial repayment of larger exposure measured at fair value through profit and loss (EUR 5.1 million).
• The Investment Banking and Custody recorded net non-interest income in the amount of EUR 2.6 million and has increased by EUR 0.3 million YoY. Total income growth is the result of larger volume of transactions.
• Total costs decreased by EUR 0.4 million YoY, despite the transfer of the costs due to change in segment presentation.
• Impairments and provisions were released in the amount of EUR 3.3 million, which includes releases on NPL clients that were transferred from Non-core segment.
• Presented increase in gross loans to customers is mostly due to change in segment presentation (EUR 149.8 million due to transfer from NLB Non-core and EUR -38.1 million from transfer of micro clients to Retail). Key and SME clients recorded the growth due to redrawing of revolving loans and production of new loans (EUR 48.5 million). The gross loans to state recorded a decrease of EUR 10.4 million.

Corporate banking in Slovenia High market shares across products(1)

#1 in corporate and state loans

#1 in guarantees and letters of credit

• Largest bank in the country with high capacity to lend to and service large clients
  • Serves over 9k corporate clients as of 31 Mar 2019
• Competitive advantage in SME market due to largest branch network fueled the growth in Mid Corporate and Small Enterprises
• Large Corporate portfolio has declined since 2016 mainly due to EC commitments that imposed:
  • RoE targets, affecting NLB ability to participate in recent issuance by State-owned enterprises and high rated corporate clients(4)
  • Additional restrictions on cross-border lending (released in Aug-18), leasing and factoring have impacted new business opportunity
  • In 2018 sizable maturities and prepayments of some larger exposures.
• With the restrictions being lifted NLB is able to explore these and other opportunities to restore a healthy growth in Large Corporate segment

Strong local corporate fee business, across merchant acquiring, investment banking and custody services

12.9k (3) POS terminals

36.4% mkt share(3) in merchant acquiring

EUR 15.9bn assets under custody

Note: (1) Data for NLB as per 31 Mar 2019, other banks as per 31 Dec 2018 (latest available); (2) Key business excludes restructuring and workout; (3) As of 31 Mar 2019; (4) Based on NLB internal credit rating.

Source: Bank of Slovenia, Company information

Strategic foreign markets

in EUR million consolidated	Strategic foreign markets
	1-3 2019	1-3 2018	Change YoY*
Net interest income	38.6	35.5	3.1
Net non-interest income	12.1	24.6	-12.5
Total net operating income	50.7	60.1	-9.4
Total costs	-25.3	-24.1	-1.2
Result before impairments and provisions	25.4	36.0	-10.6
o/w non-recurring items	-0.3	12.2	0.0
Impairments and provisions	-3.2	3.0	-6.2
Result before tax	22.2	39.0	-16.8
o/w Result of minority shareholders	2.0	3.0	-1.0

31 Mar 2019 31 Dec 2018 Change YtD*

Net loans to customers	2,753.6	2,718.0	35.6
Gross loans to customers	2,915.8	2,932.7	-17.0
Retail	1,466.7	1,438.1	28.6
Interest rate on retail loans	6.80%	7.09%	-0.29 p.p.
Corporate	1,364.6	1,405.0	-40.3
Interest rate on corporate loans	4.71%	4.92%	-0.21 p.p.
State	84.4	89.6	-5.2
Interest rate on state loans	4.23%	4.33%	-0.09 p.p.
Deposits from customers	3,466.1	3,438.1	28.0
Interest rate on deposits	0.56%	0.61%	-0.06 p.p.
Non-performing loans (gross)	146.2	219.9	-73.6

	1-3 2019	1-3 2018	Change YoY*
Cost of risk (in bps)	-2	-9	7
CIR normalized	50.0%	40.1%	9.9 p.p.
Interest margin	3.71%	3.81%	-0.11 p.p.
* Due to the new methodology, the segment results for 2019 are not directly comparable to the segment results

from the previous year.

• The segment recorded EUR 50.7 million of net operating income. In Q1 2018 the result was positively affected by the sale of NLB Nov Penziski Fond, Skopje (EUR 12.2 million). Increase of net interest income of EUR 3.1 million was recorded in all subsidiary banks on due to loan growth despite decreasing trend of interest margins.
• Total costs increased by EUR 1.2 million YoY of which EUR 0.3 million relates to nonrecurring costs.
• Change in impairments and provisions, establishment of EUR 3.2 million in Q1 2019, while release of EUR 3.0 million in Q1 2018.
• Gross loans to customers decreased by EUR 17.0 million YtD of which due to change in segment presentation in the amount of EUR -69.0 million. Nevertheless, gross loans in most subsidiary banks increased. The largest increases were recorded in NLB Banka, Prishtina (EUR 20.9 million) and NLB Banka, Beograd (EUR 21.0 million).
• NPLs decrease mostly due to change in segment presentation.

SEE banks continuing solid performance

• ✓ 8% growth of net interest income YoY
• ✓ Net non-interest income on the same level YoY, if non-recurring income from the sale of NLB Nov Penziski Fond, Skopje in Q1 2018 is excluded
• ✓ Growing credit portfolio in most markets, with aggregate deposits balance marginally up YtD

	NLB Banka Skopje		Banja Luka	NLB Banka	NLB Banka Sarajevo		Prishtina	NLB Banka	Podgorica	NLB Banka	NLB Banka Beograd			Total
														banks(1) core
B/S (EURm)	31 Mar 2019	31 Dec 2018	31 Mar 2019	31 Dec 2018	31 Mar 2019	31 Dec 2018	31 Mar 2019	31 Dec 2018	31 Mar 2019	31 Dec 2018	31 Mar 2019	31 Dec 2018	31 Mar 2019	31 Dec 2018	Δ
Total assets	1,336	1,350	753	721	601	592	691	668	494	489	499	484	4,374	4,305	2%
Net loans to customers	850	859	382	385	371	359	488	467	323	311	340	319	2,754	2,699	2%
Deposits from customers	1,054	1,076	600	576	477	472	599	586	388	392	360	353	3,478	3,455	1%
P&L (EURm)	1-3 2019	1-3 2018	1-3 2019	1-3 2018	1-3 2019	1-3 2018	1-3 2019	1-3 2018	1-3 2019	1-3 2018	1-3 2019	1-3 2018	1-3 2019	1-3 2018	Δ
NII(2)	12.4	11.8	4.8	4.3	4.4	4.3	7.4	6.2	4.8	4.1	4.9	4.9	38.6	35.6	8%
NNII(2)	3.7	12.6	2.6	2.5	2.3	2.1	1.3	1.0	1.2	1.1	1.1	0.9	12.1	20.1	-40%(4)
OpEx	-6.8	-6.0	-3.2	-3.2	-3.5	-3.4	-3.0	-2.9	-3.1	-2.9	-4.5	-4.2	-24.0	-22.7	6%
PPI	9.3	18.4	4.2	3.6	3.1	2.9	5.7	4.3	2.9	2.3	1.4	1.5	26.7	33.0	-19%
Result a.t.	7.5	17.0	5.9	5.3	2.7	3.0	4.8	3.6	-0.5(5)	2.7	1.1	1.4	21.5	33.1	-35%
Ratios	1-3 2019	1-3 2018	1-3 2019	1-3 2018	1-3 2019	1-3 2018	1-3 2019	1-3 2018	1-3 2019	1-3 2018	1-3 2019	1-3 2018
LTD net (in %)	80.6	81.8	63.8	65.1	77.9	78.1	81.4	78.7	83.2	78.1	94.2	93.7
margin(3) Net interest	3.84%	3.99%	2.67%	2.61%	3.02%	3.26%	4.43%	4.26%	4.22%	3.89%	4.21%	5.43%
CIR	42.2%	24.6%	42.7%	46.5%	52.5%	54.0%	34.4%	40.2%	51.4%	56.5%	75.8%	73.8%
RoE a.t.	14.8%	39.2%	25.9%	23.5%	13.5%	16.5%	25.8%	20.9%	-2.8%	16.3%	6.2%	9.0%

Source: Company information

Note: (1) Calculated as simple sums for each item; (2) NII: Net interest income, NNII: Net non-interest income; (3) Calculated on the basis of interest bearing assets ; interest margin data for 2018 are adjusted to new methodology (calculation based on the number of days for the period). (4) In Q12018 one-off effect from the sale of Nov Penziski Fond, Skopje (EUR 8.5 milion effect on bank level). (5) Due to established provisions for legal disputes.

NLB Banka Skopje

NLB Banka AD Skopje	"on stand alone basis"
Key financial indicators			Change		Balance sheet			Change
	1-3 2019	1-3 2018	YoY		in 000 EUR	31 Mar 2019	31 Dec 2018	YtD
ROE a.t.	14.8%	39.2%	-24.5 p.p.		Total assets	1,336,123	1,350,054	-13,931
Interest margin*	3.84%	3.99%	-0.2 p.p.		Loans to customers (net)	849,792	858,592	-8,800
CIR	42.2%	24.6%	17.6 p.p.		Loans to customers (gross)	909,789	918,140	-8,351
Cost of risk net (bps)**	37	-14	51
LTD net (%)	80.6	81.8	-1.1		Gross loans to corporate	368,968	383,212	-14,244
Income statement			Change		Gross loans to individuals	537,621	531,406	6,215
in 000 EUR	1-3 2019	1-3 2018	YoY		Gross loans to state	3,200	3,522	-322
Total net operating income	16,066	24,400	-8,334	-34.2%	Financial assets	225,608	196,112	29,496
Net interest income	12,413	11,847	566	4.8%	Deposits from customers	1,054,053	1,076,154	-22,101
Net non-interest income	3,653	12,553	-8,900	-70.9%	Deposits from corporate	261,743	272,060	-10,317
o/w net fees and commissions	3,561	3,799	-238	-6.3%	Deposits from individuals	788,568	800,372	-11,804
Total costs	-6,776	-6,004	-772	-12.9%	Deposits from state	3,742	3,722	20
Employee costs	-3,416	-3,230	-186	-5.8%
Other general and administrative expenses	-2,278	-1,998	-280	-14.0%	NPL gross	56,186	56,050	136
Depreciation and amortization	-1,082	-775	-307	-39.6%	% NPL	5.2%	5.1%	0.1 p.p.
Result before impairments and provisions	9,290	18,397	-9,107	-49.5%	Capital (according to local legislation)
Impairments and provisions	-946	208	-1,154	-	Capital adequacy ratio	17.0%	16.7%	0.3 p.p.
Result after tax	7,502	16,996	-9,494	-55.9%
Number of employees	878	858	20	2.3%

* Interest margin data for 2018 are adjusted to new methodology (calculation based on the number of days for the period).

** Calculated as credit impairments and provisions over average net loans to customers.

Result after tax and before impairments and provisions

Balance sheet
in 000 EUR	31 Mar 2019	31 Dec 2018	YtD
Total assets	1,336,123	1,350,054	-13,931	-1.0%
Loans to customers (net)	849,792	858,592	-8,800	-1.0%
Loans to customers (gross)	909,789	918,140	-8,351	-0.9%
Gross loans to corporate	368,968	383,212	-14,244	-3.7%
Gross loans to individuals	537,621	531,406	6,215	1.2%
Gross loans to state	3,200	3,522	-322	-9.1%
Financial assets	225,608	196,112	29,496	15.0%
Deposits from customers	1,054,053	1,076,154	-22,101	-2.1%
Deposits from corporate	261,743	272,060	-10,317	-3.8%
Deposits from individuals	788,568	800,372	-11,804	-1.5%
Deposits from state	3,742	3,722	20	0.5%
NPL gross	56,186	56,050	136	0.2%
% NPL	5.2%	5.1%	0.1 p.p.
Capital (according to local legislation)
Capital adequacy ratio	17.0%	16.7%	0.3 p.p.

NLB Banka Banja Luka

NLB Banka A.D., Banja Luka	"on stand alone basis"
Key financial indicators			Change
	1-3 2019	1-3 2018	YoY
ROE a.t.	25.9%	23.5%	2.4 p.p.
Interest margin*	2.67%	2.61%	0.1 p.p.
CIR	42.7%	46.5%	-3.8 p.p.
Cost of risk net (bps)**	-208	-261	53
LTD net (%)	63.8	65.1	-1.3
Income statement			Change
in 000 EUR	1-3 2019	1-3 2018	YoY
Total net operating income	7,386	6,786	600	8.8%
Net interest income	4,756	4,305	451	10.5%
Net non-interest income	2,630	2,481	149	6.0%
o/w net fees and commissions	2,579	2,591	-12	-0.5%
Total costs	-3,155	-3,154	-1	0.0%
Employee costs	-2,104	-2,066	-38	-1.8%
Other general and administrative expenses	-716	-794	78	9.8%
Depreciation and amortization	-335	-294	-41	-13.9%
Result before impairments and provisions	4,231	3,632	599	16.5%
Impairments and provisions	1,914	2,294	-380	-16.6%
Result after tax	5,862	5,327	535	10.0%
Number of employees	481	485	-4	-0.8%

* Interest margin data for 2018 are adjusted to new methodology (calculation based on the number of days for the period).

* * Calculated as credit impairments and provisions over average net loans to customers.

Result after tax and before impairments and provisions (EUR million)

Balance sheet			Change
in 000 EUR	31 Mar 2019	31 Dec 2018	YtD
Total assets	753,027	720,509		4.5%
Loans to customers (net)	382,490	384,806	-2,316	-0.6%
Loans to customers (gross)	403,345	408,312	-4,967	-1.2%
Gross loans to corporate	171,546	176,353	-4,807	-2.7%
Gross loans to individuals	184,363	180,933	3,430	1.9%
Gross loans to state	47,436	51,026	-3,590	-7.0%
Financial assets	134,076	107,316	26,760	24.9%
Deposits from customers	599,828	575,775	24,053	4.2%
Deposits from corporate	130,423	135,670	-5,247	-3.9%
Deposits from individuals	416,523	402,203	14,320	3.6%
Deposits from state	52,882	37,902	14,980	39.5%
NPL gross	15,717	19,199	-3,482	-18.1%
% NPL	2.6%	3.2%
Capital (according to local legislation)
Capital adequacy ratio	16.1%	15.6%	32,518 -0.6 p.p. 0.5 p.p.
Gross loans to customers	split	(31 Mar 2019, EUR million)
State 11,7% 45,7%		Corporate 42,5%
Individuals

NLB Banka Sarajevo

NLB Banka d.d., Sarajevo	"on stand alone basis"
Key financial indicators			Change
	1-3 2019	1-3 2018	YoY
ROE a.t.	13.5%	16.5%	-3.0 p.p.
Interest margin*	3.02%	3.26%	-0.2 p.p.
CIR	52.5%	54.0%	-1.5 p.p.
Cost of risk net (bps)**	-10	-1	-9
LTD net (%)	77.9	78.1	-0.2
Income statement			Change
in 000 EUR	1-3 2019	1-3 2018	YoY
Total net operating income	6,610	6,377	233	3.7%
Net interest income	4,359	4,317	42	1.0%
Net non-interest income	2,251	2,060	191	9.3%
o/w net fees and commissions	2,010	1,708	302	17.7%
Total costs	-3,469	-3,444	-25	-0.7%
Employee costs	-2,053	-2,081	28	1.3%
Other general and administrative expenses	-1,070	-1,169	99	8.5%
Depreciation and amortization	-346	-194	-152	-78.4%
Result before impairments and provisions	3,141	2,933	208	7.1%
Impairments and provisions	-40	352	-392	-
Result after tax	2,748	2,966	-218	-7.3%
Number of employees	449	464	-15	-3.2%

* Interest margin data for 2018 are adjusted to new methodology (calculation based on the number of days for the period).

* * Calculated as credit impairments and provisions over average net loans to customers.

Result after tax and before impairments and provisions (EUR million)

Balance sheet			Change YtD
in 000 EUR	31 Mar 2019	31 Dec 2018
Total assets	601,320	592,166	9,154	1.5%
Loans to customers (net)	371,307	359,499	11,808	3.3%
Loans to customers (gross)	402,779	391,567	11,212	2.9%
Gross loans to corporate	182,970	176,368	6,602	3.7%
Gross loans to individuals	216,501	211,972	4,529	2.1%
Gross loans to state	3,308	3,227	81	2.5%
Financial assets	42,103	39,337	2,766	7.0%
Deposits from customers	476,690	472,297	4,393	0.9%
Deposits from corporate	119,645	127,175	-7,530	-5.9%
Deposits from individuals	286,099	280,207	5,892	2.1%
Deposits from state	70,946	64,915	6,031	9.3%
NPL gross	30,014	30,805	-791	-2.6%
% NPL	5.5%	5.7%	-0.2 p.p.
Capital (according to local legislation)
Capital adequacy ratio	15.8%	16.4%	-0.5 p.p.

NLB Banka Prishtina

NLB Banka sh.a., Prishtine	"on stand alone basis"
Key financial indicators			Change
	1-3 2019	1-3 2018	YoY
ROE a.t.	25.8%	20.9%	4.9 p.p.
Interest margin*	4.43%	4.26%		0.2 p.p.
CIR	34.4%	40.2%		-5.9 p.p.
Cost of risk net (bps)**	-6	1	-7
LTD net (%)	81.4	78.7	2.7
Income statement			Change
in 000 EUR	1-3 2019	1-3 2018		YoY
Total net operating income	8,695	7,198	1,497	20.8%
Net interest income	7,384	6,183	1,201	19.4%
Net non-interest income	1,311	1,015	296	29.2%
o/w net fees and commissions	1,575	1,297	278	21.4%
Total costs	-2,989	-2,896	-93	-3.2%
Employee costs	-1,490	-1,514	24	1.6%
Other general and administrative expenses	-1,053	-1,080	27	2.5%
Depreciation and amortization	-446	-302	-144	-47.7%
Result before impairments and provisions	5,706	4,302	1,404	32.6%
Impairments and provisions	-363	-311	-52	-16.7%
Result after tax	4,787	3,617	1,170	32.3%
Number of employees	470	476	-6	-1.3%

* Interest margin data for 2018 are adjusted to new methodology (calculation based on the number of days for the period).

* * Calculated as credit impairments and provisions over average net loans to customers.

Result after tax and before impairments and provisions (EUR million)

Balance sheet			Change
in 000 EUR	31 Mar 2019	31 Dec 2018	YtD
Total assets	691,186	668,127	23,059	3.5%
Loans to customers (net)	487,557	466,854	20,703	4.4%
Loans to customers (gross)	514,823	493,950	20,873	4.2%
Gross loans to corporate	331,322	315,408	15,914	5.0%
Gross loans to individuals	183,501	178,542	4,959	2.8%
Gross loans to state	0	0	0	-
Financial assets	75,302	64,733	10,569	16.3%
Deposits from customers	598,878	585,851	13,027	2.2%
Deposits from corporate	153,429	154,828	-1,399	-0.9%
Deposits from individuals	435,513	421,003	14,510	3.4%
Deposits from state	9,936	10,020	-84	-0.8%
NPL gross	14,368	14,361	7	0.0%
% NPL	2.3%	2.4%		-0.1 p.p.
Capital (according to local legislation)
Capital adequacy ratio	15.0%	14.6%	0.4 p.p.

NLB Banka Podgorica

NLB Banka a.d., Podgorica	"on stand alone basis"
Key financial indicators			Change
	1-3 2019	1-3 2018	YoY
ROE a.t.	-2.8%	16.3%		-19.1 p.p.
Interest margin*	4.22%	3.89%		0.3 p.p.
CIR	51.4%	56.5%		-5.1 p.p.
Cost of risk net (bps)**	-21	-97	76
LTD net (%)	83.2	78.1	5.2
Income statement			Change
in 000 EUR	1-3 2019	1-3 2018	YoY
Total net operating income	5,981	5,183	798	15.4%
Net interest income	4,788	4,100	688	16.8%
Net non-interest income	1,193	1,083	110	10.2%
o/w net fees and commissions	1,318	1,214	104	8.6%
Total costs	-3,075	-2,929	-146	-5.0%
Employee costs	-1,809	-1,770	-39	-2.2%
Other general and administrative expenses	-887	-939	52	5.5%
Depreciation and amortization	-379	-220	-159	-72.3%
Result before impairments and provisions	2,906	2,254	652	28.9%
Impairments and provisions	-3,369	478	-3,847	-
Result after tax	-489	2,729	-3,218	-
Number of employees	300	311	-11	-3.5%

* Interest margin data for 2018 are adjusted to new methodology (calculation based on the number of days for the period).

* * Calculated as credit impairments and provisions over average net loans to customers.

Result after tax and before impairments and provisions (EUR million)

		Change YtD
31 Mar 2019	31 Dec 2018
494,201	489,283	4,918	1.0%
322,866	310,692	12,174	3.9%
336,150	323,914	12,236	3.8%
95,287	90,223	5,064	5.6%
211,797	203,207	8,590	4.2%
29,066	30,484	-1,418	-4.7%
44,999	54,781	-9,782	-17.9%
387,874	391,750	-3,876	-1.0%
117,259	116,364	895	0.8%
255,602	256,975	-1,373	-0.5%
15,013	18,411	-3,398	-18.5%
19,974	20,627	-653	-3.2%
4.9%	5.2%	-0.3 p.p.
15.7%	16.2%	-0.5 p.p.

NLB Banka Beograd

NLB Banka a.d., Beograd	"on stand alone basis"
Key financial indicators			Change
	1-3 2019	1-3 2018	YoY
ROE a.t.	6.2%	9.0%	-2.9 p.p.
Interest margin*	4.21%	5.43%		-1.2 p.p.
CIR	75.8%	73.8%		2.0 p.p.
Cost of risk net (bps)**	34	5	28
LTD net (%)	94.2	93.7		0.5
Income statement			Change
in 000 EUR	1-3 2019	1-3 2018		YoY
Total net operating income	5,972	5,723	249	4.4%
Net interest income	4,913	4,860	53	1.1%
Net non-interest income	1,059	863	196	22.7%
o/w net fees and commissions	1,190	1,091	99	9.1%
Total costs	-4,528	-4,225	-303	-7.2%
Employee costs	-2,477	-2,177	-300	-13.8%
Other general and administrative expenses	-1,390	-1,722	332	19.3%
Depreciation and amortization	-661	-326	-335	-102.8%
Result before impairments and provisions	1,444	1,498	-54	-3.6%
Impairments and provisions	-392	-42	-350	-
Result after tax	1,052	1,430	-378	-26.4%
Number of employees	455	439	16	3.6%

* Interest margin data for 2018 are adjusted to new methodology (calculation based on the number of days for the period).

* * Calculated as credit impairments and provisions over average net loans to customers.

Result after tax and before impairments and provisions (EUR million)

Balance sheet			Change YtD
in 000 EUR	31 Mar 2019	31 Dec 2018
Total assets	498,510	484,492	14,018	2.9%
Loans to customers (net)	339,551	318,792	20,759	6.5%
Loans to customers (gross)	348,874	327,847	21,027	6.4%
Gross loans to corporate	214,551	198,833	15,718	7.9%
Gross loans to individuals	132,931	127,629	5,302	4.2%
Gross loans to state	1,392	1,385	7	0.5%
Financial assets	62,990	58,285	4,705	8.1%
Deposits from customers	360,466	352,940	7,526	2.1%
Deposits from corporate	155,947	160,683	-4,736	-2.9%
Deposits from individuals	189,760	182,702	7,058	3.9%
Deposits from state	14,759	9,555	5,204	54.5%
NPL gross	9,983	9,957	26	0.3%
% NPL	2.4%	2.4%		-0.1 p.p.
Capital (according to local legislation)
Capital adequacy ratio	16.7%	16.7%	0.0 p.p.

Financial markets in Slovenia(1)

in million EUR	Financial markets in Slovenia
consolidated
	1-3 2019	1-3 2018	Change YoY
Net interest income	6.0	8.6	-2.6
Net non-interest income	2.1	-0.1	2.2
Total net operating income	8.1	8.5	-0.4
Total costs	-1.7	-1.6	-0.1
Result before impairments and provisions	6.4	6.9	-0.5
Impairments and provisions	-0.3	0.0	-0.4
Result before tax	6.1	7.0	-0.9
	31 Mar 2019	31 Dec 2018	Change YtD
Balances with Central banks	666.3	575.0	91.3
Banking book securities	2,924.1	2,755.2	168.8
Interest rate on banking book securities	1.10%	1.25%	-0.14 p.p.

Wholesale funding 244.0 244.1 -0.1 Interest rate on wholesale funding 0.53% 0.48%

• Lower net interest income, EUR 2.6 million YoY, due to lower transformation margin.

• Higher net non-interest income, EUR 2.2 million YoY, due to the sale of debt securities (EUR 2.6 million), which positively affected the net income from financial transaction.

• Increase in balances with ECB (EUR 91.3 million YtD) and increase in banking book securities (EUR 168.8 million YtD), due to lower LTD ratio and consequently higher amount of liquid assets (liquidity reserves).

0.05 p.p.

Note: (1) The segment Financial markets in Slovenia was in previous reports shown without Investment banking so the results are comparable with previous year.

Financial markets in Slovenia Strong liquidity position The volume of ECB

Well positioned and funded division

• Strong liquidity buffer provides solid base for future core growth consisting of liquid assets which are not encumbered for operational or regulatory purposes
• Banking book securities portfolio is well diversified in terms of asset class and geography to minimise concentration risk, and is invested predominantly in high quality issuers on prudent tenors

Well diversified banking book by geography (31 March 2019)

Maturity profile of banking book securities(3) (31 March 2019, EURm)

Note: Numbers refer to NLB d.d. only; (1) Incl. trading and banking book securities; (2) Includes other European countries, Canada and Russian federation; (3) Including DARS bonds;

eligible credit claims decreased due to

¸ (4) Loans booked under segment Corporate Banking Slovenia.

Non-core members

in EUR million consolidated	Non-core members
	1-3 2019	1-3 2018	Change YoY*
Net interest income	1.0	3.1	-2.1
Net non-interest income	2.8	2.6	0.2
Total net operating income	3.8	5.7	-1.9
Total costs	-3.1	-4.7	1.7
Result before impairments and provisions	0.7	0.9	-0.2
o/w non-recurring items	1.3
			-1.6
			-1.8
Impairments and provisions Result before tax	0.7 1.4	2.3 3.2

	31 Mar 2019	31 Dec 2018	Change YtD*
Segment assets	216.9	263.7	-46.8
Net loans to customers	103.8	160.9	-57.1
Gross loans to customers	196.0	288.6	-92.6
Investment property and property & equipment received for repayment of loans	45.1	68.5	-23.5
Other assets	68.1	34.3	33.8
Deposits from customers	0.0	9.6	-9.6
Non-performing loans (gross)	126.3	179.7	-53.4

	1-3 2019	1-3 2018	Change YoY*
Cost of risk (in bps)	-67	-66	-1
CIR normalized	80.7%	83.5%	31.4 p.p.
* Due to the new methodology, the segment results for 2019 are not directly comparable to the segment results

from the previous year.

• The segment recorded EUR 1.9 million decrease of net operating income, partially due to transfer of NLB Non-core part to Corporate (approximately EUR -1.9 million) and transfer of NLB Srbija and NLB Crna Gora from Strategic foreign markets (EUR 0.3 million); non-recurring income from the contractual penalty (EUR 1.3 million).
• Decrease in total costs, EUR 1.7 million YoY, due to transfer of NLB Non-core part to Corporate (approximately EUR -1.0 million) and transfer of NLB Srbija and NLB Crna Gora from Strategic foreign markets (EUR 0.3 million).
• Gross loans to customers decreased, mostly due to change in segment presentation, EUR 80.8 million YtD, of which EUR 149.8 million from transfer of NLB Noncore part to Corporate and EUR 69.0 million from transfer of NLB Srbija and NLB Crna Gora from Strategic foreign markets.
• Decrease in deposits from customers, EUR 9.6 million due to transfer of NLB Noncore part to Corporate.
• NPLs decrease mostly due to new segmentation.

Other(1)

in EUR million consolidated		Other
	1-3 2019	1-3 2018	Change
Total net operating income	2.1	-0.1	2.2
Total costs	-2.2	-1.9	-0.3
Result before impairments and provisions	-0.1	-2.0	1.9
o/w non-recurring items	0.2
Impairments and provisions	0.0	-0.2	0.2
Result before tax	-0.1	-2.2	2.1

• The segment Other recorded EUR 0.1 million of loss before tax, with EUR 2.1 million net operating income and EUR 2.2 million of total costs, related mostly to IT, cash transport, external realization, restructuring costs and empty business permises.

Appendix 2: Macro Overview

NLB Group – Macro overview

NLB d.d. & 6 subsidiary banks operate in Slovenia (EU member) & 5 SEE countries (convergence to EU)

	EUR
GDP (EURbn)	45.9
Real GDP growth (%)	4.5
Population (m)	2.1
Household indebtedness(1)	21.9%
Credit ratings (S&P / Moody's / Fitch)	A+ / Baa1 / A

	EUR(3)
GDP (EURbn)	16.8
Real GDP growth (%)	3.1
Population (m)	3.5
Household indebtedness(1)	28.2%
Credit ratings (S&P / Moody's / Fitch)	B / B3 / n.a.

	EUR
GDP (EURbn)	4.6
Real GDP growth (%)	4.9
Population (m)	0.6
Household indebtedness(1)	27.1%
Credit ratings (S&P / Moody's / Fitch)	B+ / B1 / n.a.

	EUR	Serbia
GDP (EURbn)	45.9	GDP (EURbn)
Real GDP growth (%)	4.5	Real GDP growth (%)
Population (m)	2.1	Population (m)
indebtedness(1) Household	21.9%	Household indebtedness(1)
ratings (S&P / Moody's / Fitch)	EUR A+ / Baa1 / A	Credit ratings (S&P / Moody's / Fitch)

Kosovo
GDP (EURbn)	6.5
Real GDP growth (%)	3.9
Population (m)	1.8
indebtedness(1) Household	15.3%
Credit ratings (S&P / Moody's / Fitch)	n.a. / n.a. / n.a.

North Macedonia
GDP (EURbn)	10.7
Real GDP growth (%)	2.7
Population (m)	2.1
indebtedness(1) Household	23.6%
Credit ratings (S&P / Moody's / Fitch)	BB- / n.a. / BB

Source: IMF, World Bank, Central banks data, National Statistics Offices, FocusEconomics.

Note: GDP volume and growth estimated for 2018; (1) Includes households loans as % of GDP, Q4 2018, own calculation; (2) Bosnia and Herzegovina is comprised of 2 entities, The Federation of Bosnia and Herzegovina and Republic of Srpska; (3) Official currency is BAM – Bosnia-Herzegovina Convertible Mark, pegged to EUR.

Macro Overview

Economic data Fiscal data Monetary data

• Most countries are likely to grow at around 3% if supported by loose monetary conditions, fiscal easing and solid domestic demand.
• Inflation is likely to remain within target ranges throughout the region.

• Economic growth will be sensitive to a potential slowdown in the Eurozone and tighter global financial conditions.

• Environment for necessary reforms seen slightly improved.

• Fiscal imbalances should not aggravate general government borrowing position and public debt seems manageable, nevertheless caution still recommended.

• Large current account deficits and geographical contagion are important drivers to capital flows.

• Positive momentum for higher lending volumes seen ahead.

• As loan to deposit ratios remain firm, a future expansion of the regional banking sectors should not be capped from a refinancing perspective.
• A more pronounced slowdown in Europe or larger capital outflows from EM would moderate favourable trends in the region.

Real GDP growth, %

KEY FINDINGS:

Highest YoY increase of economic growth was registered by North Macedonia, growing from 0.2% to 2.7% in 2018, followed by Serbia (from 2% to 4.3% in 2018).

Five countries with above 3% growth of GDP in 2018.

Growth is likely to decelerate sligthly in 2019, but, overall, real GDP growth in the region will remain strong, well above the EMU.

Real GDP growth, %	2014	2015	2016	2017	2018	2019	2020	2021
BiH	0.7	4.1	3.4	3.4	3.1	3.0	3.0	3.1
North Macedonia	3.6	3.9	2.8	0.2	2.7	3.0	3.2	3.1
Kosovo	1.2	4.1	4.1	4.2	3.9	4.1	3.9	3.6
Serbia	-1.6	1.8	3.3	2.0	4.3	3.4	3.3	3.2
Montenegro	1.8	3.4	2.9	4.7	4.9	3.0	2.8	2.8
Slovenia	3.0	2.3	3.1	4.9	4.5	3.3	2.9	2.6
EMU	1.4	2.1	2.0	2.4	1.8	1.3	1.4	1.4

Sources: National Statistical Offices, FocusEconomics, Eurostat

Note: Consensus Forecasts for 2019, 2020 and 2021

Average inflation rate, %

KEY FINDINGS:

There seems to be a favourable inflation development in all countries. Minor pressures noted in Serbia, yet with no material impact on the local currency.

CPI continues to be driven by exogenous factors, nonetheless robust domestic demand is expected to lift inflation over the medium term.

The inflation rates are projected to remain stable close to 2.0 %.

Average inflation rate, %	2014	2015	2016	2017	2018	2019	2020	2021
BiH	-0.9	-1.1	-1.6	0.8	1.4	1.5	1.7	1.8
North Macedonia	-0.3	-0.3	-0.2	1.4	1.4	1.6	2.0	2.1
Kosovo	0.4	-0.5	0.3	1.5	1.1	1.9	1.7	1.9
Serbia	2.1	1.4	1.1	3.2	2.0	2.4	2.7	2.8
Montenegro	-0.7	1.5	-0.3	2.4	2.6	2.1	2.0	1.9
Slovenia	0.2	-0.5	-0.1	1.4	1.7	1.6	1.8	1.9
EMU	0.4	0.2	0.2	1.5	1.8	1.3	1.5	1.6

Sources: National Statistical Offices, FocusEconomics

Note: Consensus Forecasts for 2019, 2020 and 2021

Unemployment rate, % 4 0

KEY FINDINGS:

Despite strong growth, unemployment is projected to stay at relatively high levels across the whole region, with the exception of Slovenia.

In 2018, the biggest improvement was recorded by BiH, North Macedonia, Slovenia. Future rates of unemployment are expected to continue to improve at a slower pace.

Official unemployment rates seem to be affected by various factors such as shrinking labour force on one side and permanent unemployment on the other.

Unemployment rate, %	2014	2015	2016	2017	2018	2019	2020	2021
BiH	27.5	27.7	25.4	20.5	18.4	18.0	18.0	18.0
North Macedonia	28.0	26.1	23.7	22.4	20.7	19.5	18.8	18.6
Kosovo	35.3	32.9	27.5	30.5	29.5	27.8	27.3	26.7
Serbia	19.2	17.7	15.3	13.5	12.7	11.5	10.9	10.4
Montenegro	18.0	17.6	17.7	16.1	15.2	14.8	14.4	14.0
Slovenia	9.7	9.0	8.0	6.6	5.1	4.8	4.7	5.1
EMU	11.6	10.9	10.0	9.1	8.2	7.8	7.7	7.6

Sources: FocusEconomics, ILO

Note: Consensus Forecasts for 2019, 2020 and 2021

Current account, % GDP

KEY FINDINGS:

Huge difference between countries due to various reasons. Trade deficit is being covered either by capital inflows or remittances.

Montenegro continues to underperform heavily in the region.

In general, no large reductions of current account deficits can be expected in the near future.

Current Account, % GDP	2014	2015	2016	2017	2018	2019	2020	2021
BiH	-7.1	-5.1	-4.5	-4.5	-4.0	-4.8	-4.5	-4.7
North Macedonia	-0.5	-1.9	-2.9	-1.0	-0.3	-1.2	-1.5	-1.5
Kosovo	-6.9	-8.6	-7.9	-6.1	-8.3	-8.2	-8.0	-8.1
Serbia	-5.6	-3.5	-2.9	-5.2	-5.2	-5.1	-4.8	-4.6
Montenegro	-12.4	-11.0	-16.2	-16.1	-18.2	-17.3	-15.7	-15.1
Slovenia	5.8	4.5	5.5	7.2	7.3	6.5	6.0	5.8
EMU	4.8	7.5	4.2	4.1	2.9	2.9	2.8	2.5

Source: FocusEconomics

International reserves, import coverage in months

KEY FINDINGS:

International reserves expressed as import coverage in months remain stable and seem sufficient.

Favourable trendline adds to the stability of foreign exchange rate in Serbia, North Macedonia and BiH. Unless major geopolitical tensions realize, stable currency regimes remain our baseline scenario.

Int. Reserves (months of imports)	2014	2015	2016	2017	2018	2019	2020	2021
BiH	6.4	7.2	7.7	7.6	7.9	7.8	7.8	7.6
North Macedonia	6.3	5.6	5.9	4.8	5.2	5.1	5.1	4.8
Kosovo	3.3	3.5	2.8	2.9	3.0	3.2	3.2	3.2
Serbia	8.1	8.2	7.7	6.6	6.6	6.1	5.9	5.7
Montenegro	3.8	4.5	4.8	4.8	5.3	5.5	5.4	5.5

Source: FocusEconomics

Macro Overview – Fiscal data

Fiscal Balance, % GDP

KEY FINDINGS:

A slight deterioration in the fiscal performance throughout most of the region expected for 2019-20.

BiH and Slovenia are expected to keep balanced public finances, while budget deficit will stay at relatively high levels in North Macedonia and Kosovo. Levels are expected to improve in Montenegro.

Fiscal balance, % GDP	2014	2015	2016	2017	2018	2019	2020	2021
BiH	-2.0	0.7	1.2	2.6	0.8	0.5	0.5	0.4
North Macedonia	-4.2	-3.5	-2.7	-2.7	-1.8	-2.5	-2.4	-2.2
Kosovo	0.9	-1.6	-0.3	-1.4	-0.4	-2.2	-2.2	-2.4
Serbia	-6.2	-3.5	-1.2	1.1	0.6	-0.3	-0.6	-0.6
Montenegro	-3.0	-8.0	-3.4	-5.5	-3.7	-2.4	0.5	0.5
Slovenia	-5.5	-2.8	-1.9	0.0	0.7	0.5	0.4	0.7
EMU	-2.5	-2.0	-1.6	-1.0	-0.5	-1.0	-1.0	-1.1

Source: FocusEconomics

Macro Overview – Fiscal data

Public Debt, % GDP

KEY FINDINGS:

Public debt varies intensively between the countries.

Slow convergence of public indebtedness is projected. Reduction of public debt is expected in BiH, Serbia, Montenegro and Slovenia, while an increase is forecasted for Kosovo.

All the countries in the region are below the EMU level.

Public debt, % GDP	2014	2015	2016	2017	2018	2019	2020	2021
BiH	45.9	45.5	44.1	39.0	37.6	36.5	35.9	34.1
North Macedonia	38.1	38.1	39.9	39.5	40.5	40.6	40.3	39.6
Kosovo	10.7	13.1	14.6	16.2	17.1	19.2	20.7	23.0
Serbia	64.2	69.5	67.6	59.3	53.6	51.8	49.9	47.8
Montenegro	59.9	66.2	64.4	64.2	70.8	68.7	66.8	65.2
Slovenia	80.4	82.6	78.7	74.1	70.1	66.3	63.6	61.3
EMU	92.0	90.1	89.2	87.1	85.1	84.1	82.9	81.9

Source: FocusEconomics

Loans growth (NFC + Households), %

KEY FINDINGS:

Encouraging levels of credit growth in both corporate and retail segment, much higher than in EMU.

Kosovo (10.9%), Serbia (9.5%) and Montenegro (9.1%) leading the credit growth in the region.

In Serbia and Montenegro healthy loan dynamics driven by rising consumption and fixed investments.

Loan growth (NFC + Households), %	2014	2015	2016	2017	2018	2019 (1)
BiH	1.8	2.4	3.8	7.3	5.5	5.3
North Macedonia	10.0	9.5	0.2	5.3	7.2	8.3
Kosovo	4.2	7.3	10.4	11.4	10.9	11.4
Serbia	0.5	3.3	5.5	3.6	9.5	9.5
Montenegro	-1.1	2.5	5.4	7.7	9.1	10.0
Slovenia	-12.4	-5.1	1.8	4.6	4.7	4.4
EMU	-1.9	1.0	1.3	1.9	2.8	2.7

Sources: National Central banks, ECB, Own calculations

Note: (1) February 2019 YoY growth

Total Loans (NBS), % GDP

KEY FINDINGS: Entire region below EMU average with growth potential. Stable loan to GDP ratio in BiH and North Macedonia.

In Montenegro, the negative trend stabilized last year. In Slovenia, the ratio is continuing to fall.

In Kosovo, the share of loans in GDP is steadily increasing, but still the lowest among peers.

Total loans, % GDP	2013	2014	2015	2016	2017	2018
BiH	59.8	60.2	59.0	57.5	58.7	59.5
North Macedonia	47.1	49.3	51.0	47.6	48.7	48.8
Kosovo	33.9	33.8	34.9	36.9	38.9	42.4
Serbia	57.0	61.0	62.3	59.1	60.5	57.5
Montenegro	71.8	68.5	65.8	64.0	62.8	63.4
Slovenia	67.2	57.3	52.2	50.9	50.1	48.4
EMU	97.7	96.4	94.0	92.7	91.2	90.8

Sources: National Central banks, ECB, Own calculations

Note: EMU Total loans includes only NFC + Households loans

Deposits growth (NFC + Households), %

KEY FINDINGS:

There are substantial differences in deposit growth numbers.

Serbia (14.9%) is far ahead of the rest and leads the deposit growth in the region in 2018, followed by strong growth of other countries in the region.

An exception is Montenegro (3.2%), which went from having the highest growth in 2017 to the lowest in 2018 and is the only country with growth under the EMU level.

Underdeveloped capital markets participating importantly to deposit growth record.

Deposit growth (NFC + Households), %	2014	2015	2016	2017	2018	2019 (1)
BiH	9.1	8.2	7.8	8.6	8.7	8.0
North Macedonia	10.5	6.4	5.4	5.0	9.5	9.0
Kosovo	2.7	7.5	8.2	4.5	8.9	7.7
Serbia	9.7	7.1	11.5	3.1	14.9	15.2
Montenegro	9.6	11.8	10.5	13.7	3.2	1.3
Slovenia	6.5	5.6	7.1	6.9	6.8	5.7
EMU	3.7	3.0	4.6	4.2	4.1	4.8

Sources: National Central banks, ECB, Own calculations

Note: (1) February 2019 YoY growth

Total Deposits (NBS), % GDP 9 0

KEY FINDINGS:

Slightly falling, but stable deposit to GDP ratio in Montenegro and Slovenia.

Growing trend in the rest of the region with the highest increase in BiH and Kosovo.

Across the whole region the share of deposits in GDP is lower than in EMU.

Total deposits, % GDP	2013	2014	2015	2016	2017	2018
BiH	53.2	56.2	57.8	59.4	62.7	66.4
North Macedonia	51.6	54.2	54.6	53.7	55.0	56.8
Kosovo	46.0	45.6	46.6	47.9	48.5	52.0
Serbia	41.6	45.2	46.6	46.1	47.6	48.2
Montenegro	62.4	66.7	72.4	76.1	76.0	74.9
Slovenia	62.2	65.0	64.7	64.8	64.0	63.1
EMU	81.8	82.9	82.5	84.0	84.5	85.3

Sources: National Central banks, ECB, Own calculations

Note: EMU Total deposits includes only NFC + Households deposits

Appendix 3: EC committments

EC Commitments

Pursuant to EC decision of 10 August 2018, NLB and RoS must comply with certain commitments until specified deadlines.

Risk management and credit policies commitment (minimum specified RoE on either individual loan or each client relationship): currently ceased to apply due to divestment of more than 50% plus one share of the RoS shareholding in NLB, but could apply again from a specified date on and until RoS reduces its shareholding in NLB to the Blocking Minority.

NLB must also comply with the following:

• issue Tier 2 instrument by end of 2019, to investors who are totally independent from RS commitment completed with issuance of Tier 2 bond on 6 May 2019;
• close 15 outlets in Slovenia by end of June 2019 (1) o/w 14 already closed;
• EC decision also states that if RoS shareholding in NLB is not reduced to Blocking Minority until end of 2018, NLB has to divest its insurance subsidiary NLB Vita by a specified deadline.

Commitments valid until 31 December 2019:

• NLB will not acquire any stake in any undertaking (acquisition ban).
• RoS will:
  • o allocate all of the seats and voting rights on the SB and its committees to independent experts;
  • o ensure each state-owned bank remains a separate economic unit with independent powers of decision;
  • o ensure non-discrimination of non-state-owned companies.

Commitments valid until RoS reduces its shareholding in NLB to Blocking Minority, except for Monitoring Trustee commitment which applies until end of 2019):

• Reduction of Costs: capped at EUR 297.7 million;
• Divestment of Non-core Subsidiaries: NLB will not re-enter business and activities which it had to divest;
• Bans of Advertising and Aggressive commercial strategies;
• Capital Repayment Mechanism: based on audited year-end accounts, NLB will pay to its shareholders for each fiscal year in form of dividend at least the amount of net income for such fiscal year, subject to regulations and capital requirement on the consolidated level;
• Monitoring Trustee;
• Divestiture Trustee.

Other commitments set out in 2013 EC decision (e.g. ban on cross-border business, reduction of balance sheet) no longer apply.

Appendix 4: Financial statements

NLB Group Income Statement

(EURm)	1-3 2019	1-3 2018	YoY	Q1 2019	Q4 2018	Q1 2018	QoQ
Interest and similar income	90.4	86.9	4%	90.4	92.1	86.9	-2%
Interest and similar expense	-11.1	-11.9	7%	-11.1	-11.1	-11.9	0%
Net interest income	79.4	75.0	6%	79.4	81.0	75.0	-2%
Fee and commission income	53.8	51.6	4%	53.8	56.5	51.6	-5%
Fee and commission expense	-13.8	-12.3	-12%	-13.8	-15.9	-12.3	13%
Net fee and commission income	40.1	39.3	2%	40.1	40.7	39.3	-1%
Dividend income	0.1	0.0	-	0.1	0.0	0.0	-
Net income from financial transactions	12.3	2.7	-	12.3	3.1	2.7	-
Other operating income	2.0	13.3	-85%	2.0	-0.5	13.3	-
Total net operating income	133.8	130.4	3%	133.8	124.3	130.4	8%
Employee costs	-40.1	-40.3	1%	-40.1	-43.2	-40.3	7%
Other general and administrative expenses	-21.2	-22.3	5%	-21.2	-28.4	-22.3	25%
Depreciation and amortisation	-7.7	-6.8	-14%	-7.7	-6.7	-6.8	-15%
Total costs	-69.0	-69.4	1%	-69.0	-78.3	-69.4	12%
			-				-
Result before impairments and provisions	64.8	61.0	6%	64.8	46.0	61.0	41%
Impairments and provisions for credit risk	3.3	3.3	1%	3.3	7.0	3.3	-53%
Other impairments and provisions	-3.9	-0.5	-	-3.9	-2.7	-0.5	-46%
Gains less losses from capital investments in subsidiaries, associates and joint ventures	1.1	1.2	-4%	1.1	1.3	1.2	-16%
Result before Tax	65.3	65.0	1%	65.3	51.7	65.0	26%
Income tax expense
Non Controlling Interests	-5.4	-4.3	-28%	-5.4	-5.1	-4.3	-6%
Net Profit / (Loss) Attributable to Shareholders	2.0 57.9	3.0 57.7	-35% 0%	2.0 57.9	1.2 45.3	3.0 57.7	61% 28%

NLB Group Statement of Financial Position

(EURm)	31 Mar 2019	31 Dec 2018	YtD
ASSETS
Cash and balances with Central Banks	1,589.0	1,588.3	0%
Financial instruments	3,608.0	3,399.2	6%
o/w Trading Book	38.4	63.6	-40%
o/w Non-trading Book	3,569.6	3,335.6	7%
Loans and advances to banks (net)	108.9	118.7	-8%
o/w gross loans	109.0	118.8	-8%
o/w impairments	-0.1	-0.1	-13%
Loans and advances to customers	7,264.3	7,148.4	2%
o/w gross loans	7,719.0	7,627.5	1%
- Corporates	3,593.1	3,540.4	1%
- State	345.2	360.5	-4%
- Individuals	3,780.7	3,726.5	1%
o/w impairments and valuation	-454.7	-479.0	5%
Investments in associates and JV	42.9	37.1	16%
Goodwill	3.5	3.5	0%
Other intagible assets	29.7	31.4	-6%
Property, plant and equipment	193.8	177.4	9%
Investment property	58.4	58.6	0%
Other assets	167.3	177.1	-6%
Total Assets	13,065.8	12,740.0	3%
LIABILITIES & EQUITY
Deposits from banks and central banks	24.6	26.8	-8%
Deposits from customers	10,675.8	10,464.0	2%
- Corporates	2,255.3	2,337.3	-4%
- State	403.1	261.1	54%
- Individuals	8,017.4	7,865.6	2%
Borrowings	317.4	320.3	-1%
Debt securities in issue	-	-	-
Subordinated liabilities	15.3	15.1	2%
Other liabilities	305.7	256.5	19%
Total Liabilities	11,338.8	11,082.6	2%
Shareholders' Equity	1,683.8	1,616.2	4%
Non Controlling Interests	43.2	41.2	5%
Total Equity	1,727.0	1,657.4	4%
Total Liabilities & Equity	13,065.8	12,740.0	3%