NLB

Investor Presentation • Sep 4, 2017

NLB Group Presentation − H1 2017

Disclaimer

THIS PRESENTATION AND ITS CONTENTS ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN, OR TO ANY RESIDENT THEREOF, OR ANY JURISDICTION WHERE SUCH DISTRIBUTION IS UNLAWFUL.

This presentation includes forward-looking statements within the meaning of the safe-harbour provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements typically use terms such as "believes", "targets", "aims", "projects", "anticipates", "expects", "intends", "plans", "may", "will", "would", "could" or "should" or similar terminology. Statements in this presentation that are not historical facts are forward-looking statements, including statements relating to the intentions, beliefs or current expectations and projections of Nova Ljubljanska banka d.d., Ljubljana ("NLB") about its future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, provisions, impairments, strategies and opportunities, as well as potential developments in the legal and regulatory environment to which NLB is subject and developments in the markets in which NLB operates, including changes in interest rates, inflation, foreign exchange rates, demographics, and any assumptions underlying any such statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend upon circumstances that will or may occur in the future. These forward-looking statements are based on NLB's beliefs, assumptions and current expectations regarding future events and trends that affect NLB's future performance, taking into account all information currently available to NLB, and are not guarantees of future performance. In particular, this presentation includes forward-looking statements relating but not limited to NLB's potential exposures to various types of operational, credit and market risk, such as counterparty risk, interest rate risk, foreign exchange rate risk and commodity and equity price risk. Such statements are subject to risks and uncertainties. These forward-looking statements are not historical facts and represent only NLB's beliefs regarding future events, many of which by their nature are subject to a number of risks and uncertainties, many of which are beyond NLB's control, that could cause NLB's actual results and performance to differ materially from any expected future results or performance expressed or implied by any forward-looking statements. NLB expressly disclaims any obligation or undertaking to release any updates or revisions to these forward-looking statements to reflect any change in their respective expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based after the date of this presentation or to update or to keep current any other information contained in this presentation. Accordingly, undue reliance should not be placed on the forward-looking statements, which speak only as of the date of this presentation. Past performance should not be taken as an indication or guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance.

The presentation has not been independently verified and no representation or warranty, express or implied, is made or given by or on behalf of NLB or any of their respective parent or subsidiary undertakings or associated companies, or any of such person's respective directors, officers, employees, agents, affiliates or advisers, as to, and no reliance should be placed for any purpose whatsoever on the truth, fullness, accuracy, completeness or fairness of the information or opinions contained in this presentation or any other information relating to NLB, its subsidiary undertakings or, associated companies or affiliates, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available and no responsibility or liability whatsoever is assumed by any such persons for any such information or opinions or for any errors or omissions or for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. The information in this presentation is in draft form and has not been verified. All information presented or contained in this presentation is subject to verification, correction, completion and change without notice. This presentation does not purport to contain all information that may be required to evaluate NLB. In giving this presentation, none of NLB or any of their respective parent or subsidiary undertakings or associated companies, or any of such person's respective directors, officers, employees, agents, affiliates or advisers, or any other party undertakes or is under any obligation to amend, correct or update this presentation or to provide the recipient with access to any additional information that may arise in connection with it. None of the foregoing persons accepts any responsibility whatsoever for the contents of this presentation, and no representation or warranty, express or implied, is made by any such person in relation to the contents of this presentation. To the fullest extent permissible by law, such persons disclaim all and any responsibility or liability, whether arising in tort, contract or otherwise, which they might otherwise have in respect of this presentation. Recipients should not construe the contents of this presentation as legal, tax, regulatory, financial or accounting advice and are urged to consult with their own advisers in relation to such matters.

The opinions and estimates contained herein reflect the current judgment of the author(s) on the date of this presentation and are subject to change without notice.

This presentation has not been approved by any regulatory authority. This presentation does not, and is not intended to, constitute or form part of, and should not be construed as, any offer, invitation, solicitation or recommendation to purchase, sell, subscribe for or otherwise acquire, any securities of NLB in any jurisdiction and neither the issue of the information nor anything contained herein shall form the basis of or be relied upon in connection with, or act as any inducement to enter into, any investment activity. This presentation should not be considered as a recommendation that any recipient of this presentation should purchase or sell any of the NLB financial instruments or groups of financial instruments or assets. This presentation does not include all necessary information, which should be considered by the recipient of this presentation when making a decision on purchasing any of the NLB financial instruments or assets. Each recipient of this presentation contemplating purchasing any of the NLB financial instruments or assets should make its own independent investigation of the financial condition and affairs, and its own appraisal of the NLB creditworthiness. Any purchase of securities in NLB should be made solely on the basis of the information contained in a prospectus relating to such securities. If published, any such prospectus would be available at the registered address of NLB and on its website. NLB has not finally decided whether to proceed with any transaction. Any corporate body or natural person interested in investing into NLB's financial instruments or assets should consult well-qualified professional financial experts and thus obtain additional information.

This presentation is for the use of the addressees only and may not be reproduced, redistributed or passed on to any other person or published, in whole or in part, for any purpose, without the prior, written consent of NLB. The manner of distributing this presentation may be restricted by law or regulation in certain countries, including (but not limited to) the United States. Persons into whose possession this presentation may come are required to inform themselves about and to observe such restrictions. By accepting this presentation, a recipient hereof agrees to be bound by the foregoing limitations. 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."

Team

Nova Ljubljanska Banka (NLB)

Blaž Brodnjak

Chief Executive Officer (CEO) Chief Marketing Officer (CMO)

• Responsible for Corporate and Retail Banking since December 2012; CEO since February 2016
• Supervisory Board experience at 11 banking, 3 insurance and 1 manufacturing company
• MBA from IEDC Bled School of Management (Slovenia)

Archibald Kremser Chief Financial Officer (CFO)

• Chief Financial Officer of NLB since July 2013
• Previously held senior management positions at Dexia Kommunalkredit Group (CEE)
• Supervisory Board experience in 2 banks
• MBA from INSEAD (France), MSc in Engineering from Vienna University of Technology (Austria)

Andreas Burkhardt Chief Risk Officer (CRO)

• Chief Risk Officer of NLB since September 2013
• Previously held senior managerial positions at Volksbank, including among others CRO at Volksbank Bosnia and CFO at Volksbank Romania
• Supervisory Board experience at 3 banks
• MBA from University of Dayton (USA), MSc in Economics from University of Augsburg (Germany)

László Pelle

Chief Operating Officer (COO)

• Chief Operating Officer of NLB since October 2016
• Previously COO at Erste Bank in Budapest, COO at HSBC CEE and Operations and Technology Director at Citibank Hungary
• Supervisory Board experience at 1 pension fund and 1 processing company
• Master's Degree from Technical University of Budapest (Hungary)

X Represents years of experience

Overview of NLB Group today

Investment highlights

• The largest banking and financial institution in Slovenia by total assets
  • 100% owned by the Republic of Slovenia
  • Leading bank for retail and corporate clients in Slovenia, with 693k active clients and 23.6% market share by total assets (as of Jun-17)
• Active in 6 attractive markets in South-Eastern Europe
  • Sizeable aggregate population of 15.4m as of Dec-16
  • 4 of the NLB Group banks are Top-3 banks in their respective markets (by total assets)
• Underwent substantial transformation since 2013, achieving turnaround in operational profitability and asset quality
  • Increasing profitability in all key business segments
  • ~21% reduction in operating costs (FY'12-FY'16), an equivalent of -6% CAGR, with 61% C/I as of FY'16
  • NPL ratio reduced from Dec-12 peak of 28.2% to 12.6% in Jun-17
• Extensive distribution network of 358 branches
  • 113 branches in Slovenia (Jun-17)
• Attractive dividend payout ratio
  • 48% of 2015 NLB Group net profit paid out in August 2016
  • 58% of 2016 NLB Group net profit paid out in April 2017(3)

Source: Company information, Bank of Slovenia

Key figures

Balance sheet (EURm)	Dec-15	Dec-16	Jun-16	Jun-17	Delta
Total assets	11,822	12,039	11,761	12,070	3%
Loans to customers (gross)	8,351	7,901	8,312	7,826	-6%
Loans to customers (net)	7,088	6,997	7,090	6,974	-2%
Customer deposits	9,026	9,439	9,068	9,491	5%
Attributable equity	1,423	1,495(4)	1,497	1,538(4)	3%
P&L (EURm)	FY'15	FY'16	H1'16	H1'17	△
Net interest income	340	317	157	149	-5%
Pre provision income	186	186	100	102	2%
Profit after tax	92	110	69	118	70%
	Dec-15	Dec-16	Jun-16	Jun-17
Key ratios (%)	/ FY'15	/ FY'16	/ H1'16	/ H1'17	△
CET1 ratio	16.2%	17.0%(5)	16.6%	16.5%(5)	-0.1pp
C/I ratio	61.6%	60.9%	58.7%	57.7%	-1.1pp
NPL ratio	19.3%	13.8%	17.9%	12.6%	-5.3pp
NPL coverage ratio	72.2%	76.1%	76.0%	76.1%	0.1pp
NPE ratio (EBA)	14.3%	10.0%	13.2%	9.0%	-4.2pp
NPE coverage ratio (EBA)	69.9%	72.2%	73.2%	72.4%	-0.8pp
RoE after tax	6.6%	7.4%	9.4%(6)	15.5%(6)	6.0pp

Gross loans by customer (Jun-17)

Total assets by country (Jun-17) (2)

Note: (1) Government departments, municipalities and agencies; (2) Geographical analysis based on location of assets of the NLB Group; (3) Represents dividend of EUR63.8m, approved by General Meeting of Shareholders; (4) Pre EUR63.8m Apr-17 dividend payment distribution to existing shareholders; (5) Post EUR63.8m Apr-17 dividend payment distribution; (6) Based on annualized H1'16 and H1'17 figures, respectively

Slovenia: Fully integrated into European institutions

• Member of the EU and the Eurozone
• Export-driven economy with valueadded export goods
• Well educated labour force
• Solid Parliamentary support for coalition Government (in place until Sep-18)

EUR 39.8bn nominal GDP(1)

EUR 19k GDP/capita vs EUR

4.4% real GDP growth(3)

6.4%

survey unemployment rate(3)

81.4% Govt debt/GDP(4)

11k CEE average(2)

A+/A-/Baa3 Sovereign rating (S&P/Fitch/Moody's) -1.9% of GDP primary surplus(4)

Recent milestones

Source: Republic of Slovenia, IMF WEO, Statistical Office of the Republic of Slovenia Note: (1) As of 2016

(2) 2016, CEE countries include Poland, Romania, Czech Republic, Slovakia, Hungary; (3) As of Q2 2017; (4) As of Q1 2017

Slovenian economy growing at 4.4% compared to 2.1% Eurozone growth in Q2 2017

Real GDP growth

²⁰¹⁰ 2011 2012 2013 2014 2015 2016 2017E 2018E

Recovery driving lower unemployment and higher consumer confidence(1)

Source: Statistical Office of the Republic of Slovenia, IMF, Global Insight, Press, OECD, National Bank of Slovenia

Macro update

• Slovenian economy grew by 4.4% in Q2 2017 stronger than Eurozone average of 2.1%
• Drivers included 7.4% gross capital formation growth and continued increase in private consumption (3.2% in Q1 2017)
• Economic recovery drove unemployment rate down in Q1 2017 by 4.7 p.p. since Q1 2013
• Consumer confidence increased by 42 points since its 2012(2) lows, driving household consumption growth

GDP by source and activities (EURbn)

Note: (1) Consumer confidence indicator represents score average from surveys about expected household financial situation, general economic situation, unemployment, and savings over next 12 months; Scale of -100 to +100;; (2) -45 as of September 2012; (3) Survey unemployment rate

The banking system has seen a pick-up in corporate loans lending while interest rates remained stable

Households and non-financial corporate loans in billion EUR

Resurgence of corporate loans and steady growth in retail loans

• Non-financial corporate loans stock increased by 7.3% in June 2017, from its September 2016 low
• Households loans stock increased by 8.7% vs February 2015, on the back of improving consumer confidence
• Total loans to the non-financial sector grew by 5.8% Y-o-Y (Jun-16 to Jun-17)

Interest rate evolution (%)

Stable interest rate environment

• Average interest rate for loans remained stable for the past 12 months, with increasing trend for mortgage loans and slight decrease in corporate segment for the last 3 months

NLB Group - Journey so far

Transformation into a sustainably profitable client-oriented group, focused on core markets

Key initiatives implemented

• Focus on core businesses and markets and divestment of several non-core subsidiaries and participations 1
• Emphasis on NPL recovery and improving asset quality 2
• Balance sheet reduction 3
• 6% annual cost reduction achieved(1) 4
• Focus on improved business selection and pricing with clear minimum client RoE targets 5
• Improved risk management policy and corporate governance 6

24% cost base reduction from 2012 (EURm)

Return to profitability(2) (EURm)

2013 recapitalisation Journey so far

Note: NPL ratio and NPL stock based on credit portfolio, including balances and obligatory reserves with central banks and demand deposits at banks and different scope of consolidation; (1) CAGR 2012 to 2016; (2) Profit after tax attributable to the shareholders

Staff Admin Other

Dominant player in the Slovenian banking sector 1

Market leader across products in Slovenia

Source: Net loans, deposits and branches as per Company information; Market shares calculated based on respective aggregates of Bank Of Slovenia

Note: (1) Net loans and deposits from non-banking sector for NLB as at 30 June 2017, Nova KBM as at 31 December 2016 and other banks as at 31 March 2017 (latest available). Loans for NLB without DARS bond; (2) Branches: NLB as at 30 June 2017; other banks as at 31 December 2016; (3) Loans, Deposits and Number of branches for NKBM include KBS Bank as at 31 December 2016 (merged January 2017)

Dominant player in the Slovenian banking sector Retail banking 1

Market	 Retail lending has been steadily growing since 2014, primarily driven by mortgages; household indebtedness remains low vs. Eurozone (22% of GDP as of 2015)	Retail net loans (EURm) 24.2% 23.9% 23.5% 23.4%	Retail deposits (EURm) 30.2% 30.2% 30.4% 30.3%
evolution	 Housing transactions increasing, while prices stabilised in 2015  Significant growth of retail deposits	10.3%	14.627 14.997 15.956 16.361
NLB positioning	 Market shares resilient across market segments (As of Jun-17: Retail net loans: 23.4%, Retail deposits: 30.3%))	7.781 7.898 8.295 8.583
	 Increasing share of new loan production in growing consumer segment, driven by wide distribution network, strong sales force and large customer base	Dec-14 Dec-15 Dec-16 Jun-17 Total sector loans / deposits	Dec-14 Dec-15 Dec-16 Jun-17 NLB mkt share %
Distribution	 Network of 113 branches offers nationwide coverage, with presence in all key cities of Slovenia	Branch network (#)	NLB Klik(1) users (000s)
network	 Key initiatives implemented in branches, including rollout of e-signature and branch refurbishment	121 121 113 113	222 219 214 208
Digital banking	 Ongoing enhancement of online and mobile banking platform with the introduction of new functionalities, including ability to initiate loan applications online and full online availability of all transaction banking services
	 First bank to introduce contactless debit and credit cards in Slovenia	dec.14 dec.15 dec.16 jun.17	dec.14 dec.15 dec.16 jun.17
	Private banking:	Private banking 1.077 1.126 1.009	GWP (EURm) 62
Upside from fee	 #1 market position, with growing customer base through conversion of existing NLB customers and limited competition  Strong cross-selling capabilities with bancassurance and asset management	858 631 554 474	62 54 1,5 1,9 1,0
generating products	Bancassurance:  Profitable and growing business segment, with ca 11.4% market share in life by GWP(2) , with upside potential from underpenetrated customer base (13% penetration)	377	60 60 53
	Asset management: # 1 player by AuM in Slovenian asset management exceeding EUR1.0bn in AuM(3) 	dec.14 dec.15 dec.16 jun.17	FY'14 FY'15 FY'16
		AuM (EURm)	Life Non-life

14.627 14.997 15.956 16.361 Dec-14 Dec-15 Dec-16 Jun-17

NLB Klik(1) users (000s)

Source: Bank of Slovenia, Company information

Note: All figures refer to full year ending 31-Dec unless stated otherwise; (1) NLB Klik refers to NLB's online banking application; (2) Slovenian Insurance Association; (3) Including investments in mutual funds and discretionary portfolios. Source: Slovenian Fund Management Association

Dominant player in the Slovenian banking sector Corporate banking 1

Market evolution	 Corporate deleveraging post-crisis, volumes decreasing 8% on average during 2014-16  Corporate credit demand demonstrated pick-up in 2016 as economic growth continues  Substantial progress in corporate NPL resolution
NLB positioning	 NLB is clear sector leader with 21.7% net loans market share(1); stable market share despite NPL resolution and repayments Loan balances in key business(2)  grew on 17% despite the sector falling by 8% on average since 2014  Market leader across deposit product lines: 19.1% market share for sight deposits, 11.8% for term deposits
Competitive advantage	 Largest bank in the country with the highest capacity to lend and best capability to service large clients  Strong pricing power, driven by largest customer base – NLB is positioned in upper third of market  International desk to leverage on network of subsidiaries in the region
Strong fee business	 Leader in merchant acquiring with 12k POS terminals, 5.8k merchants and 34% market share as at Jun-17  Strong performance of Investment Banking in H1'17, with income growing at 16% (compared to H1'16 Y-o-Y)  Assets under custody reached EUR14.5bn in Jun-17 (+41.6% vs Jun-16)  Leading market position in Brokerage (largest client base) and Treasury Sales showing strong revenue growth of 29.6% YOY.
Opportunity in small and mid business	 Mid-corporate: with wide physical presence NLB has advantage in a strongly contested market  Attractive fee business potential as relevant advisory and treasury services can be offered at smaller scale

NLB key business(2) gross loans (EURm)

Statistics per key client segment(2) (EURm, Jun-17)

	Clients	Gross loans (EURm)	Deposits (EURm)
Large	673	1,554	169
Mid	2,583	461	421
SE(3)	13,596	111	448

SME gross loans(5) (EURm)

Source: Bank of Slovenia, Company information

Note: (1) Market share of NLB d.d. excluding DARS bonds; (2) Key business excludes workout and restructuring; (3) Small enterprises, excluding Standard segment clients

in Distribution Network; (4) Non-interest income per larger scale corporate clients (includes large corporate, mid corporate and small enterprises premium plus); (5) Excluding restructuring and workout

NLB's countries of presence outside Slovenia represent attractive markets, with significant growth potential 2

• NLB's SEE footprint outside of Slovenia covers 5 countries with EUR68.8bn GDP and 15.4m population
• Attractive growth markets, with 2.2% real GDP growth, EUR5k GDP/capita and 23% household indebtedness as % of GDP(5)

	Slovenia	Macedonia	Bosnia(1)	Kosovo	Montenegro	Serbia	Total / Average(4)
Population (Dec-16, m)	2.1	2.1	3.9	1.8	0.6	7.0	15.4
GDP(3) (2016, EURbn)	39.8	9.9	15.0	6.1	3.7	34.1	68.8
GDP/Capita(3) (2016, EURk)	19.3	4.8	3.9	3.4	6.0	4.9	4.6
Real GDP growth (Q1 2017)	5.3%	0.0%	2.7%	3.9%	3.2%	1.2%	2.2%
Inflation (June 2017, YoY)	0.9%	1.5%	1.0%	1.9%	2.1%	3.6%	2.0%
Government debt/GDP (Q1 2017)	81.4%	37.8%	43.5%(5)	15.0%	61.2%	69.2%	45.3%
Household debt /GDP(5) (Q1 2017)	24.5%	21.6%	29.4%	13.6%	28.0%	20.4%	22.6%
Currency	EUR	MKD	EUR(2)	EUR	EUR	RSD	n/a
Credit rating (Moody's, S&P)	Baa3 / A+	n/a / BB-	B3 / B	n/a / n/a	B1 / B+	Ba3 / BB-	n/a

Source: IMF, World Bank, Central banks data, Bloomberg

Note: (1) Bosnia and Herzegovina is comprised of 2 entities, The Federation of Bosnia and Herzegovina and Republika Srpska; (2) Official currency is BAM – Bosnia-Herzegovina Convertible Mark, pegged to EUR; (3) Converted at average FX rate for 2016; (4) Excluding Slovenia; (5) Own calculation

Top position across target SEE countries 2

Unified brand across 6 markets since 2015

Leading franchise in the region based on total assets, compared to other banks present in the same countries, with network of 245 branches and 1.1m active clients(1) in SEE

NLB Banka Skopje

NLB Banka Banja Luka

Macedonia Bosnia Kosovo Montenegro Serbia

20.7 15.7 4.0 7.9 2.4 4.2

81.4% 66.5% 78% 81.9% 78.2% 92.2%

NLB Banka Prishtina

NLB Banka Podgorica

NLB Banka Beograd

NLB Banka Sarajevo

ownership (%) 87% 100% 97% 81% 99% 100%

branches (#) ^{52 60 39 45 18 31}

share % 16.1% 19.0%(3) 5.5%(4) 15.0% 11.9%(5) 1.2%

margin % 4.7% 2.9% 3.5% 4.9% 3.9% 6.2%

income % 37.5% 45% 54% 38.5% 59.7% 75.8%

NPL ratio % 5.9% 4.8% 9.1% 3.1% 13% 8.1%

RoE a.t. 30.2% 38.8% 12.9% 24.7% 6.3% 16.6%

(EURm) 1,125 ^{645 520 526 464 328}

• The only international banking group with exclusive focus on the region
• Independent, well capitalised, self-funded and profitable subsidiaries

	NLB Group

	Source: Company disclosure
Note:	Data as of quarter ended Jun-17;

(1) Excluding NLB d.d.; (2) Market share based on total assets, as of Mar-17; (3) Market share in the Republika Srpska; (4) Market share in the Federation of BiH; (5) Market share based on total assets, as of May-17

Total assets

NLB

No. of

Market(2)

Profit after tax (EURm)

Net interest

Cost/

Loans/ Deposits % (net)

Strong revenue performance driven by stable NIM and resilient fee income 3

Net interest income relatively stable in very challenging Marginal reduction in NIM in H1'17 (Group, %) environment (Group, EURm)

Fee income growing y-o-y supported by improvement in ancillary products and payments (Group, EURm)

International supporting revenue in the Core operations (Group, EURm)(2)

Source: Company information

Note: (1) NIM of 2.63% in 2016 if normalised for NPL sale impact; (2) The sum of net revenues and costs of the segments is greater than items from the consolidated income statement of the NLB Group, difference results from the activities between the segments which are netted on the Group level. Consolidation adjustment amounts to EUR1.4m in H1'17, EUR1.9m in H1'16; EUR4.0m in 2016, EUR3.9m in 2015 and EUR5.6m in 2014

Successful business transformation results in sustainable profitability 3

Evolution of group profitability since 2014 (EURm)

All Core foreign banks profitable(1) (EURm)

Positive performance continued in 2016 and H1'17

• Continued trend of stable and profitable Group operations
• In H1 2017, NLB Group generated EUR 117.9m of profit after tax (70% increase YoY)
• All Core foreign banks profitable since 2015 going forward

Profitability improvement in all key business segments during H1'17 3

Profitable, client-oriented group, focused on core markets Core segments consistently profitable, retail and

Source: Company information

international increasingly profitable (PBT, EURm)

• Profit before tax of key business activities increased by EUR 28.5m primarily as a result of higher business volumes in retail and strategic foreign markets, stable margins in SEE markets, improvement of cost efficiency and continued low cost of risk.
• Foreign strategic markets continued positive trend showing an EUR 25m increase y-o-y
• Non-strategic markets profit before tax in H1 2017 was EUR 22.3 million – a significant improvement on H1 2016 (H1 2016: EUR - 3.3 million) based on much improved cost of risk and a one-off gain of EUR 9.5 million on divesting an equity exposure in Q1 2017.

Note: (1) Segment includes investment banking, custody services, ALM, trading and treasury; (2) GREAM; (3) NLB Interfinanz, Other Leasing, REAM and other Non-core members; (4) Other activities includes the categories in Bank whose operating results cannot be allocated to individual segments, costs of restructuring, HR provisions and expenses from the vacant business premises; (5) Includes workout and restructuring unit

Core foreign banks represent a self-funded source of profits, with solid capital adequacy 3

International contributes 45% of Group profit (H1'17)

Strong profitability of core foreign banks in H1'17 (RoE a.t.) Capital adequacy comfortably above local requirements

Core foreign banks self-funded by design (L/D ratio(1) , Jun-17)

Source: Company information Note: Geographical analysis based on location of assets of the NLB Group; (1) Calculation based on net loans; (2) Effective 1.4.2017 regulatory minimum CAR has been changed to 12% (before 8.0%) is valid. It will be increased to 14,25% as of 30.9.2017 and to 15,00% as of 31.3.2018

Funding structure driven by deposits and complemented by established wholesale markets access 4

Source: Company information

Strong retail franchise provides stable and price insensitive deposits base (EURm)

Decreasing deposit yields (%)

⁴ Well capitalised franchise with solid capital position…

• Highest quality capital (CET1) at Group and NLB d.d.(1), reaching 16.5% in Jun-17
• Increase in credit RWAs in H1'17 is a result of increased retail exposures due to housing and consumer loans growth. RWA on operating risks increased due to higher three-year average income, which represents the basis for the calculation.

In H1 2017 RWA increased by EUR 173 m, of which EUR 91m was on credit risk (Group, EURm) (2)

CET1 ratio comfortably above regulatory requirements

Note: (1) NLB d.d. CET1 ratio amounted to 22.3% as of Jun-17; (2) RWAs expansion in 2015 driven by one-off increase in SEE sovereign risk weighting (3) NLB d.d. recognised DTAs accrued on the basis of temporary differences in an amount that is expected to be reversed in the foreseeable future (i.e. within five years based on future profit projections); Out of EUR284m June-17 deferred tax assets, EUR207m are generated from tax losses which can be used to reduce annual tax base of NLB by 50%

Diversified loan portfolio 5

Although Slovenian assets prevail, NLB Group focuses on its core markets and cautious risk taking

Credit portfolio by currency and rate type (Group, Jun -17)

Source: Company information

• No large concentration in any specific industry or client segment
• NLB's lending strategy focuses on its core markets of retail, SME and selected corporate business activities
• Credit business restricted for certain business sectors as part of DG Comp commitments (construction, transport and financial holdings)
• Great emphasis is also placed on further improvement of credit portfolio
  • Intensive and proactive handling of problematic customers
  • Changes in the credit process
  • Early warning system for detecting increased credit risk

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

NLB has driven a turnaround in asset quality 5

Further improvements driven by active NPL management and economic recovery

Low NPL formation drove normalisation of loan provisions (Group, EURm)(2)

Increasing NPL cash coverage(3) (Group, %)

Reduction of NPLs remains a key focus

• Gross NPLs at Group level reduced by EUR 118m in H1'17
• Positive momentum expected through active portfolio management and macro recovery

High coverage of NPLs

• Coverage ratio remained high in Jun-17 (76%) despite release of provisions in H1'17

Active approach to NPL management

• Strong emphasis on restructuring (over 66% of NPLs in restructuring process)
• Other NPL management tools include: debt collection, foreclosure of collateral, sale of claims, active marketing and sale of pledged assets

Source: Company information

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 non-performing 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; EUR19m refers to cumulative NPLs 2014-16; (2) Represents credit impairments and provisions; (3) Group NPLs cash coverage calculated including both individual and pool provisions

NPLs adequately covered by provisions and collateral, with limited off balance sheet non-performing exposures 5

• Total coverage exceeds 100% across segments
• Limited non-performing exposures from off-balance sheet items (~EUR96m)

Group NPL structure (Jun-17, EURm)

Group NPL to NPE bridge (Jun-17, EURm)

Source: Company information Note: (1) Cash coverage calculated including both individual and pool provisions; (2) Calculated based on collateral capped at NPL exposure

Medium-term objectives 6

Delivering growth, sustainable returns and attractive payout to shareholders

Source: Company information

Note: (1) Target set by NLB management as a part of their 5-year plan for 2017-2021; (2) Calculated as credit impairments and provisions over average net loans to NBS; (3) Negative Cost of risk in H1'17; (4) H1'17 refers to FY'16 dividend payout; Calculated as % of consolidated group profit; (5) Based on EBA definition

Appendix

Financial statements

Key financial data and performance NLB Group (1/2)

	FY'14	FY'15	FY'16	H1'16	H1'17
Net interest income	330	340	317	157	149
Net fee and commission income	148	147	146	71	76
Income from financial operations	38	4	20	16	17
Other Income	(5)	(8)	(7)	(1)	(0)
Operating Income	511	483	476	243	241
Staff costs	(163)	(163)	(165)	(82)	(80)
General expenses	(105)	(103)	(96)	(47)	(45)
Depreciation and amortization expenses	(36)	(32)	(28)	(14)	(14)
Operating expenses	(304)	(298)	(290)	(143)	(139)
Pre Provision Income	208	185	186	100	102
Extraordinary measures	0	0	0	0	0
Impairment losses on credit risk	(120)	(51)	(26)	(16)	28
Other(1)	(22)	(32)	(35)	(5)	(2)
Investments in subsidiaries, associates and JVs	3	4	5	3	3
Profit before income tax	69	107	131	82	130
Income Tax	(4)	(11)	(15)	(10)	(8)
Profit after income tax	65	95	116	72	122
Profit attributable to shareholders	62	92	110	70	118

Key financial data and performance NLB Group (2/2)

	Dec-14	Dec-15	Dec-16	Jun-17
ASSETS
Cash and balances with Central Banks	1,128	1,162	1,299	1,289
Financial instruments(1)	2,529	2,578	2,778	2,828
Loans and advances to banks (net)	271	432	436	451
Loans and advances to customers	7,415	7,088	6,997	6,974
Investments in subsidiaries, associates and JV	38	40	43	41
Intangible assets	43	39	34	37
PP&E	215	208	197	192
Other assets	270	275	255	258
Total Assets	11,909	11,822	12,039	12,070
LIABILITIES & EQUITY
Deposits from banks	62	58	42	63
Deposits from customers	8,949	9,026	9,439	9,491
Borrowings	731	551	455	391
ECB funding	120	120	0	0
Securities and other liabilities	678	616	576	556
Total Liabilities	10,540	10,371	10,513	10,501
Shareholders' funds	1,343	1,423	1,495	1,538
Non Controlling Interests	26	28	30	31
Total Equity	1,369	1,450	1,526	1,569
Total Liabilities & Equity	11,909	11,822	12,039	12,070

Key financial data and performance NLB d.d. (1/2)

	FY'14	FY'15	FY'16	H1'16	H1'17
Net interest income	227	208	175	87	76
Net fee and commission income	101	98	95	47	49
Income from financial operations	34	9	13	13	13
Other Income	3	(2)	0	0	(1)
Operating Income	364	313	284	148	136
Staff costs	(102)	(102)	(103)	(52)	(50)
General expenses	(67)	(64)	(59)	(29)	(27)
Depreciation and amortization expenses	(24)	(21)	(19)	(10)	(9)
Operating expenses	(193)	(187)	(181)	(90)	(86)
Pre Provision Income	171	126	103	58	51
Extraordinary measures	0	0	0	0	0
Impairment losses on credit risk	(84)	(28)	(15)	(10)	16
Other(1)	(9)	(60)	(49)	0	0
Investments in subsidiaries, associates and JVs	5	14	29	30	42
Profit before income tax	83	52	68	77	108
Income Tax	(1)	(8)	(4)	(6)	(3)
Profit after income tax	82	44	64	71	105
Profit attributable to shareholders	82	44	64	71	105

Key financial data and performance NLB d.d (2/2)

	Dec-14	Dec-15	Dec-16	Jun-17
ASSETS
Cash and balances with Central Banks	434	497	617	693
Financial instruments(1)	2,038	2,087	2,295	2,318
Loans and advances to banks (net)	159	345	408	423
Loans and advances to customers	5,700	5,221	4,929	4,793
Investments in associates and JV	353	353	347	358
Intangible assets	34	30	23	26
PP&E	97	95	90	87
Other assets	70	80	68	90
Total Assets	8,886	8,707	8,778	8,789
LIABILITIES & EQUITY
Deposits from banks	91	97	75	80
Deposits from customers	6,300	6,298	6,617	6,660
Borrowings	557	416	343	292
ECB funding	120	120	0	0
Securities and other liabilities	613	534	478	464
Total Liabilities	7,681	7,465	7,513	7,496
Shareholders' funds	1,205	1,242	1,265	1,293
Non Controlling Interests	0	0	0	0
Total Equity	1,205	1,242	1,265	1,293
Total Liabilities & Equity	8,886	8,707	8,778	8,789

Structure of NLB Group

Note: Organisational structure of operating activities only. Support functions (eg. controlling, global risk, IT, HR, etc) are omitted; (1) Micro corporate clients are included in retail; (2) Includes entity Kreditni Biro Sisbon (in liquidation), 28% minority stake in Skupna pokojninska družba and 39% stake in Bankart respectively; (3) 50% equity stake, under equity consolidation; (4) Pension fund; (5) Main objective is NPL management; (6) Real-estate SPVs

Key segment financials – H1'17

	Core markets and activities						NLB
EURm	Retail banking in Slovenia	Corporate banking in Slovenia	Financial markets in Slovenia	Foreign Strategic markets	Total	Non-Core	Other(3)	Group
P&L (H1 2017)
Net interest income	35.1	20.3	16.0	70.3	141.8	7.0	(0.2)	148.6
Net non-interest income	31.8	14.9	2.9	23.0	72.6	17.9	3.5	93.9
Net operating income	66.9	35.3	18.9	93.2	214.3	24.8	3.4	(1) 242.5
Total costs	(49.4)	(21.6)	(6.0)	(46.9)	(124.0)	(11.2)	(5.3)	(1) (140.5)
Result before impairments and provisions	17.5	13.6	12.9	46.3	90.3	13.7	(1.9)	(1) 102.0
Impairments and provisions	(0.1)	4.6	(0.0)	12.5	16.9	8.7	0.0	25.6
Other(2)	2.6	-	0.2	-	2.6	-	-	2.6
Result before tax	20.0	18.2	13.0	58.8	110.0	22.3	(1.9)	130.4
Balance sheet (Jun-17)
Gross loans	2,051	2,338	237	2,561	7,187	639	0	7,826
Assets	2,172	2,178	3,478	3,608	11,436	479	154	12,070
Deposits	5,337	1,070	232	2,836	9,476	15	0	9,491
Liabilities	5,343	1,118	900	3,034	10,396	31	73	10,501

Note: (1) Incl. EUR1.4m intersegment consolidation adjustment. The sum of net revenues and costs of the segments is greater than items from the consolidated income statement of the NLB Group, difference results from the activities between the segments which are netted on the Group level; (2) Includes contribution to the NLB Group profit from joint venture NLB Vita and associates Skupna pokojninska družba, Bankart and Kreditni biro Sisbon (in liquidation); (3) Other activities includes the categories in Bank whose operating results cannot be allocated to individual segments

Key segment financials – H1'16

	Core markets and activities							NLB
EURm	Retail banking in Slovenia	Corporate banking in Slovenia	Financial markets in Slovenia	Foreign Strategic markets	Total	Non-Core	Other(3)	Group
P&L (H1 2016)
Net interest income	37.2	24.1	22.3	65.9	149.5	7.4	(0.3)	156.7
Net non-interest income	33.4	14.7	(0.4)	20.3	67.9	8.8	11.6	88.3
Net operating income	70.6	38.8	21.8	86.2	217.5	16.2	11.3	(1) 245.0
Total costs	(52.3)	(22.9)	(6.1)	(45.6)	(126.9)	(12.0)	(5.8)	(1) (144.7)
Result before impairments and provisions	18.3	15.9	15.7	40.6	90.6	4.2	5.5	(1) 100.3
Impairments and provisions	(7.3)	0.1	(0.0)	(6.3)	(13.4)	(7.5)	(0.0)	(21.0)
Other(2)	2.5	-	-	-	2.5	-	-	2.5
Result before tax	13.5	16.1	15.7	34.3	79.6	(3.3)	5.5	81.8
Balance sheet (Jun-16)
Gross loans	1,960	2,499	598	2,377	7,435	868	9	8,312
Assets	2,047	2,186	3,433	3,336	11,003	646	113	11,761
Deposits	5,085	1,143	149	2,659	9,036	32	1	9,068
Liabilities	5,090	1,201	924	2,879	10,094	86	57	10,237

Note: (1) Incl. EUR1.4m intersegment consolidation adjustment. The sum of net revenues and costs of the segments is greater than items from the consolidated income statement of the NLB Group, difference results from the activities between the segments which are netted on the Group level; (2) Includes contribution to the NLB Group profit from joint venture NLB Vita and associates Skupna pokojninska družba, Bankart and Kreditni biro Sisbon (in liquidation); (3) Other activities includes the categories in Bank whose operating results cannot be allocated to individual segments