Hrvatska Poštanska Banka d.d.

Quarterly Report • Jul 31, 2017

Quarterly Financial Statements for the Period from Jan 01 to Jun 30 2017 Unaudited

Zagreb, July 31 2017

In accordance with the Capital Markets Act, HPB p.l.c. publishes unaudited quarterly financial statements for the period from Jan 01 2017 to Jun 31 2017).

This report includes:

• Management report of HPB p.l.c., $\bullet$
• statement by persons accountable for compiling the report of HPB p.l.c.,
• . unaudited set of unconsolidated financial statements (balance sheet, profit or loss statement, statement of changes in equity, cash flow statement), and
• notes to financial statements.

Financial statements and notes were made in accordance with the TFI-KI reporting methodology by Croatian Financial Services Supervisory Agency. Items in the profit or loss statement are complied in accordance with IFRS.

Key highlights of 1H 2017 results are as follows:

• √ due to impairments recognized with regard to exposure towards Agrokor and related parties, net loss amounting to HRK 64,5M has been recorded, as opposed to a net profit of HRK 91,3M achieved during the same period in 2016. Had the impairment losses not been recognized, Bank's pre-tax profit would have amounted to HRK 122M (net profit = 100M),
• $\checkmark$ growth in core operations, wherein net interest income (+7,3%) as well as net fee income (+6,5%) have increase owing to volume growth in loan & deposit business, optimized pricing policy and client acquisition and activation,
• √ operating profit amounts to HRK 172,4M, representing a y-o-y decrease consequent to no significant one-offs in 2017, as had been the case in 2016 (VISA Europe Ltd. Transaction was closed in Jun 2016, resulting in HRK 33,5M gain for the Bank),
• √ negligible decrease in assets level, due to limited capital base,
• $\checkmark$ market shares in assets, loans and deposits rising slightly at the beginning of 2017, ,
• √ more than 14 thousand retail current accounts newly opened, as well as almost 700 corporate business accounts,
• √ book-value per share has remained unchanged on y-o-y basis, in spite of 1H 2017 loss, and amounts to HRK 900,
• √ own funds strengthened by retaining 2016 earnings, and decreased RWA have annuled the effect that loss had on capital adequacy. As a result preliminary CAR equals around 17 percent.

Management report of HPB p.l.c.

Bank has recorded a net loss amounting to HRK 64,5M during 1H 2017, as a result of deterioirated creditworthiness of Agrokor group and related parties, and consequent impairments of these exposures that was recognized (HRK 187,0M in 1H 2017).

Operating profit amounts to HRK 172,4M, representing a decrease of HRK 20,4 million in comparison with the same period 2016 due to significantly lower one offs and non-recurring transactions with regard to AFS portfolio.

We are especially proud that endeavours we undertook to acquire new clients in 2016 are reflected in our core income growth. Accordingly, net interest income amounts to HRK 264,8M, and has increased by 7,3 percent y-o-y. In doing so, gross interest income decline was inevitable. However, we stood up to this challenge by simultaneous and continuous revision of the pricing policy, as well as by improved funding structure, so interest expenses have been cut by even more.

1H net interest income development between 2011 and 2017 (in HRK million)

Furthermore, with a y-o-y increase of 6,5 percent net fee income amounts to HRK 93,3 million, representing the best 1H result over the course of last seven years. As before, an increase in sustainable has been achieved - in retail segment due to higher number of newly opened accounts and HPB bundles, and in corporate segment because of higher volume of domestic payment operations, guarantees and undisbursed loan commitments. Growth was also underpinned by higher client activity in both segments, considering the strong account acquisition.

1H net interest income development between 2011 and 2017 (in HRK million)

Trading gains and other non-interest income amounts to HRK 38,6M, which is 45,3% less than in 1H 2016. Decline arises from the fact that no significant one-off effects have been recorded as in 2016 (e.g. gain from VISA Europe Ltd. transaction added HRK 33,5M to P&L in 1H 2016).

Operating expenses are higher by 2,9% which is mostly related to initiatives and strategic projects that have commenced, which should, apart from compliance with regulations, bring future benefits to HPB.

Impairment losses have more than doubled (+128,2%) as a consequence of impairments on expores towards Agrokor and related parties. In line with guidances set by the Croatian national bank, and based on future cash flow estimates accoring to currently available information, which are not final nor complete for several debtors from this group, impairment losses amounting to HRK 187H have been recognized. Should new facts arise in future periods, impairments shall be changed accordingly.

Bank's assets have decreased slightly during 2017, and amounts to HRK 19,3B, whereby loan growth dynamics was limited by Bank's capital position. Namely, over the course of last couple of months Bank has been on the verge of 5,00 percent market share. Should this limit be exceeded in the future, additional capital requirement would be imposed, which will significantly encumber sales activities because Bank's capital adequacy would linger on the regulatory minimum. Future activities with regard to balance sheet movement will be determined by available capital. Meanwhile, Bank's management will strive to improve it's structure and optimize yields.

Deposits have increased by 0,7%. A part of term deposits has spilled over to current accounts, with corporate term deposits increasing.

Bank had at its disposal more than enough of other sources of funding, so a portion of borrowings was has been repaid in line with repayment schedule. This has simultaneously brought down the burden on interest margin.

Bank's capital amounts to HRK 1,8B, representing a ytd decrease of 6,1 percent or HRK 119M. Decrease was caused, apart from the recorded net loss, by a correction in capital reserves amounting to HRK 53,3M, which is related to a deduction in retained earnings for incorrect FX translation differences in foreign payment operations, that had been booked between Jan 01 2011 and Dec 31 2016, considering that loss from FX translation differences was not recognized in the P&L for each of the years from 2011 to 2016. Amount relating to past periods has been corrected in the current reporting period, defficiency in the accounting is eliminated. Therefore, P&L for the period from Jan 01 to Jun 30 2017 is comprised of true effects of these transactions.

Owing to initiated measures of RWA optimization, and to increased own funds due to retaining earnings for 2016, preliminary data shows that capital adequacy per Jun 30 2016 equals approximately 17 percent.

Tomislav Vuić President of the Management Board

Statement by persons accountable for compiling the report of HPB p.l.c.

In accordance with the Capital Market Act, the Management Board of HPB p.l.c., states that according to their best knowledge the set of quarterly unaudited financial statements for the period from Jan 01 to Jun 30 2017, compiled in accordance with the accounting regulation applicable to credit institutions in Croatia, presents complete and accurate view of assets and liabilities, losses and gains, financial position and results of HPB p.l.c.

Ą, $\boldsymbol{0}$ sure Se $\overline{\omega}$ Tomislav Vuić David Tomašek $010$ President of the Management Deputy Executive Director Board Finance Division

HPB p.l.c.
Appendix 3. Reporting period:		Jan 01	to	Jun 30 2017
				Quarterly financial statements for credit institutions TFI-KI
Registration number (MB):	03777928
Registration number (MBS):	080010698
Personal identification number (OIB): Company. HPB p.l.c.	87939104217
Postal code and city	10000	ZAGREB
Address: JURIŠIĆEVA 4
E-mail address: hpb@hpb.hr
Internet address: www.hpb.hr
City code and name:	ZAGREB 133
County code and name:	GRAD ZAGREB 21			# of employees:	1.088
Consolidated report:	NO			(as per reporting date) Industry code:	6419
Consolidated companies (in accordance with IFRS):			Headquarters:	Registration number:
Book-keeping service provided by:	n/a	n/a
	Contact: Tomašek David
				Fax 014804594
	Phone: 014804900
	E-mail address: david.tomasek@hpb.hr

• in equity and notes to financial statements)
  2. Management report
• 1. Statement by persons accountable for compiling the report

BALANCE SHEET

Jun 30 2017 as per
Item	AOP label	Dec 31 2016	Jun 30 2017
1	$\mathbf{z}$	3	4
ASSSETS
1. CASH AND DEPOSITS WITH THE CNB (002+003)	001	2.263.303.114	3.015.981.751
	002	421.479.852	552.639.844
1.1.Cash 1.2. Deposits with the CNB	003	1.841.823.262	2.463.341.907
2. DEPOSITS WITH FINANCIAL INSTITUTIONS	004	774.135.009	476.202.986
3. SHORT-TERM TREASURY BILLS OF THE CROATIAN MINISTRY OF FINANCE	005	415.536.615	410.077.306
4. FINANCIAL ASSETS HELD FOR TRADING	006	551.322.886	534.104.665
5. FINANCIAL ASSETS AVAILABLE FOR SALE	007	2.630.574.528	2.320.703.469
6. FINANCIAL ASSETS HELD TO MATURITY	008	442.835.059	154.375.003
7. FINANCIAL ASSETS VALUED AT FAIR VALUE THROUGH PROFIT OR LOSS,		0
NOT ACTIVELY TRADED	009
8. DERIVATIVE FINANCIAL ASSETS	010	3.780.197
9. LOANS TO FINANCIAL INSTITUTIONS	011	81.579.680	26.300.164
	012	11.250.340.147	11,479.238.855
10. LOANS TO OTHER CUSTOMERS 11. INVESTMENTS IN SUBSIDIARIES, ASSOCIATED COMPANIES AND JOINT VENTURES	013	53.420.000	65.490.000
	014	$\Omega$
12. REPOSSESSED ASSETS	015	146.091.281	142.771.859
13. TANGIBLE ASSETS (LESS DEPRECIATION)	016	744.801.351	674.458.078
14. OTHER ASSETS	017	19.357.719.867	19.299.704.136
A) TOTAL ASSETS (001+004 to 016)
LIABILITIES	018	620.995.448	620.451.541
1. BORROWINGS FROM FINANCIAL INSTITUTIONS (019+020)	019	0
1.1. Short-term	020	620.995.448	620.451.541
1.2. Long-term	021	14.529.990.572	14.405.109.506
2. DEPOSITS (022 to 024)	022	4.009.237.425	4.272.075.271
2.1. Transactional and current accounts	023	1.486.719.761	1.427.919.853
2.2. Savings deposits (demand)	024	9.034.033.386	8.705.114.382
2.3. Term deposits	025	88.426.108	5.184.652
3. OTHER BORROWINGS (026+027)	026	$\Omega$
3.1. Short-term	027	88.426.108	5.184.652
3.2. Long-term	028	3.640.667	0
4. DERIVATIVE AND OTHER FINANCIAL LIABILITIES HELD FOR TRADING	029	0	$\bf{0}$
5. ISSUED SECURITIES (030+031)	030	0	$\mathbf 0$
5.1. Short-term	031	0	0
5.2. Long-term		0	$\mathbf 0$
6. SUBORDINATED DEBT ISSUED	032	$\Omega$	$\Omega$
7. HYBRID INSTRUMENTS	033	2.175.324.123	2.448.411.657
8. OTHER LIABILITIES	034	17.418.376.918	17.479.157.356
B) TOTAL LIABILITIES (018+021+025+028+029+032+033+034)	035
EQUITY		1.214.298.000	1.214.298.000
1. SHARE CAPITAL	036	188.277.328	(64.503.999)
2. PROFIT/(LOSS) FOR THE PERIOD	037	82.293.647	123.000.057
3. RETAINED EARNINGS	038		15.574.701
4. REGULATORY RESERVES	039	6.160.835	448.347.821
5. STATUTARY AND OTHER CAPITAL RESERVES	040	363.623.023	83.830.200
6. FAIR VALUE RESERVE	041	84.690.116	$\Omega$
7. RESERVES ARISING FROM HEDGING TRANSACTIONS	042	0	1.820.546.780
C) TOTAL EQUITY (036 to 042)	043	1.939.342.949
D) TOTAL LIABILITIES AND EQUITY (035+043)	044	19.357.719.867	19.299.704.136

8

PROFIT OR LOSS STATEMENT
--------------------------

PROFIT OR LOSS STATEMENT					in HRK
Jun 30 2017 Jan 01 2017 to for the period from
	AOP label	Jan 01 - Jun 30 2016		Jun 01 - Jun 30 2017
Item		Cumulative	Quarterly	Cumulative	Quarterly
	$\overline{2}$	3	4	5	6
1	048	359.436.773	182.612.428	334.883.069	165.795.194
1. Interest income	049	112.551.789	54.560.154	70.067.496	33.313.270
2. Interest expense	050	246.884.984	128.052.274	264.815.573	132.481.924
3. Net interest income (048-049)	051	236.102.117	121.975.443	241.576.365	126.991.999
4. Fee and commission income	052	148.458.407	76.260.179	148.272.770	76.310.801
5. Fee and commission expense	053	87.643.710	45.715.264	93.303.595	50.681.198
6. Net fee and commission income (051-052)
7. Gains less losses arising from investments in subsidiaries, associated companies and	054		$\Omega$	$\Omega$
joint ventures	055	21.291.847	10.206.671	19.983.290	10.287.819
8. Gains less losses from trading activities	056	$\Omega$	$\Omega$
9. Gains less losses from built-in derivatives				0
10. Gains less losses arising from financial assets valued at fair value through P&L,	057	$\Omega$
not actively traded	058	41.698.418	33.483.579	5.457.492	5.122.576
11. Gains less losses arising from securities available for sale	059	0	$\mathbf 0$	$\Omega$
12. Gains less losses arising from securities held to maturity	060	$\Omega$	$\Omega$		$\Omega$
13. Gains less losses arising from hedging activities	061	n	$\Omega$	2.200.000	$\Omega$
14. Income from investments in subsidiaries, associated companies and joint ventures	062	787.350	780.212	815.653	793.985
15. Income from other equity instruments	063	3.875.971	150.485	189.307	(910.806)
16. Gains less losses from exchange rate differences	064	2.990.908	1.094.794	4.169.154	3.394.376
17. Other income	065	27.953.907	16.442.470	28.867.356	14.376.484
18. Other operating costs	066	184.422.374	93.149.925	189.633.369	94.077.208
19. General and administrative expenses, amortization and depreciation	067	192.796.907	109.890.884	172.433.339	93.397.380
20. Operating profit (050+053 to 064-065-066)	068	103.957.043	62.781.626	237.275.839	166.313.908
21. Impairment losses and provisions	069	88.839.864	47.109.258	(64.842.500)	(72.916.528)
22. PROFIT/(LOSS) BEFORE TAX (067-068)	070	(2.457.663)	367.082	(338.501)	(3.560.204)
23. INCOME TAX EXPENSE / DEFERRED TAX	071	91.297.527	46.742.176	(64.503.999)	(69.356.324)
24. NET PROFIT/(LOSS) FOR THE PERIOD (069-070)	072	45	23	(32)	(34)
25. Earnings per share

CASH FLOW STATEMENT - INDIRECT METHOD
---------------------------------------	--	--

,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, Jun 30 2017 Jan 01 2017 to			in HRK
for the period from Item	AOP label	Jan 01 - Jun 30 2016 Jan 01 - Jun 30 2017
$\overline{1}$	$\overline{2}$	3	4
OPERATING ACTIVITIES
1. Cash flow from operating activities before changes in assets (002 to 007)	001	209.347.274	194.628.533
1.1. Profit/(loss) before tax	002	88.839.864	(64.842.500)
1.2. Impairment losses and provisions	003	103.957.043	237.275.839
1.3. Amortization and depreciation	004	21.735.702	22.221.186
1.4. Net unrealised gains less losses from financial assets valued at fair value through profit or	005	(1.309.364)	(1.313.285)
loss 1.5. Gains / losses from sale of tangible assets	006		1.476.600
	007	(3.875.971)	(189.307)
1.6. Other gains / losses 2. Net increase / decrease of operating assets (009 to 016)	008	(749.849.272)	(276.018.865)
	009	(111.498.102)	(621.518.645)
2.1. Deposits with the CNB 2.2. Tresury bills of the Croatian Ministry of Finance	010	(98.455.125)	5.459.309
2.3. Deposits with and loans to financial institutions	011	135.141.318	297.932.023
	012	(534.189.635)	(334.729.651)
2.4. Loans to other customers	013	(177.294.569)	18.531.506
2.5. Financial assets held for trading	014	20.685.409	310.730.975
2.6. Financial assets available for sale	015
2.7. Financial assets valued at fair value through profit or loss, not actively traded	016	15.761.432	47.575.618
2.8. Other operating assets	017	822.040.983	144.565.801
3. Net increase / decrease of operating liabilities (018 to 021)	018	391.906.948	262.837.846
3.1. Transactional accounts	019	345.168.947	(387.718.912)
3.2. Savings and term deposits	020		(3.640.667)
3.3. Derivative financial liabilities and other liabilities actively traded	021	84.965.088	273.087.534
3.4. Ostale liabilities
4. Net cash flow from operating activities before taxation	022	281.538.985	63.175.469
$(001+008+017)$	023	(65.680)	(363.028)
5. Income tax paid	024	281.473.305	62.812.441
6. Net cash inflow / outflow from operating activities (022+023)
INVESTING ACTIVITIES	025	(9.738.738)	151.230.037
7. Net cash flow from investing activities (026 to 030)	026	(18.696.204)	(16.138.698)
7.1. Purchase of tangible and intangible assets	027
7.2. Investment in / disposal of subsidiaries, associated companies and joint ventures	028	8.170.116	164.353.082
7.3. Investment in / disposal of financial assets held to maturity	029	787.350	3.015.653
7.4. Dividends received	030	¥
7.5. Other inflows / outflows from investing activities
FINANCIAL ACTIVITIES	031	(233.595.293)	(83.785.363)
8. Net cash flow from financial activities (032 to 037)	032	(202.833.078)	(83.785.363)
8.1. Net increase / decrease of borrowings	033
8.2. Net increase / decrease of issued debt securities	034	$\overline{\phantom{a}}$	¥
8.3. Net increase / decrease of subordinated debt and hybrid instruments	035		$\blacksquare$
8.4. Share capital raised	036	(30.762.215)	÷
8.5. Dividends paid	037
8.6. Other inflows / outflows from financial activities
9. Net increase / decrease of cash and cash equivalents	038	38.139.274	130.257.115
$(024+025+031)$	039	193.857	902.877
10. Effect of foreign exchange differences on cash and cash equivalents	040	38.333.131	131.159.992
11. Net increase/(decrease) in cash and cash equivalents (038+039)	041	412.197.218	421.479.852
12. Cash and cash equivalents at the beginning of the year	042	450.530.349	552.639.844
13. Cash and cash equivalents as per reporting date (040+041)

$10$

				STATEMENT OF CHANGES IN EQUITY					in HRK
		Jan 01 2017		to	Jun 30 2017
	for the period from			Attributable to the shareholders of the parent company				Minority interest	Total equity
Item	AOP label	Share capital	Own shares	Regulatory, statutory and other reserves	Retained earnings	Profit/(loss) for the period	Fair value reserve
								9	10
	$\overline{2}$	3		369.783.858	82.293.647	188.277.328	84.690.116	$\blacksquare$	1.939.342.949
Balance as per Jan 01 2017	001	1.214.775.000	(477.000)
Effects of changes in accounting policies	002				(53.432.254)			۰	(53.432.254)
and corrections of errors				369.783.858	28.861.393	188.277.328	84.690.116	$\omega$	1.885.910.695
Restated balance as per Jan 01 2017 (001+002)	003	1.214.775.000	(477.000)				817.457	$\overline{\phantom{a}}$	817.457
Disposal of financial assets available for sale	004
	005				$\overline{\phantom{a}}$		(1.797.966)		(1.797.966)
Change in the fair value of financial assets available for sale		$\blacksquare$							120.593
Tax on items recognised directly	006	$\sim$			$\overline{\phantom{a}}$		120.593
in/transferred from equity					$\overline{\phantom{a}}$	$\overline{\phantom{0}}$
Other gains and (losses) recognised directly in equity	007	$\overline{\phantom{a}}$
Net gains/(losses) recognised directly in equity	008		$\blacksquare$	۰.	$\bullet$		(859.916)		(859.916)
$(004+005+006+007)$		$\blacksquare$			$\overline{\phantom{a}}$	(64.503.999)		$\sim$	(64.503.999)
Loss for the period	009	$\mathcal{C} = \mathcal{C}$
Total recognized income and expense for the period	010					(64.503.999)	(859.916)		(65.363.915)
$(008 + 009)$		$\qquad \qquad \blacksquare$		$\blacksquare$	$\sim$
hcrease/decrease in share capital	011	٠	$\blacksquare$		$\overline{\phantom{a}}$		٠
Purchase/sale of own shares	012	$\overline{\phantom{a}}$						$\overline{\phantom{a}}$
Other changes	013	$\overline{\phantom{a}}$	$\blacksquare$		94.138.664	(188.277.328)	۰	$\overline{\phantom{a}}$
Transfer to reserves	014	$\overline{\phantom{a}}$		94.138.664					$\frac{1}{2}$
Dividends paid	015				94.138.664	(188.277.328)	$\sim$	٠	$\sim$
Profit allocation (014+015)	016	$\overline{\phantom{a}}$	۰.	94.138.664
Balance as per Jun 30 2017 (003+010+011+012+013+016)	017	1.214.775.000	(477.000)	463.922.522	123.000.057	(64.503.999)	83.830.200		1.820.546.780

NOTES TO FINANCIAL STATEMENTS

A) PROFIT OR LOSS STATEMENT

1) INTEREST INCOME	Jan 01 - Jun 30 2016		Jan 01 - Jun 30 2017
	Cumulative	Quarterly	Cumulative	Quarterly
		150.353.955	287.494.307	143.805.324
Loans	294,722.523 863.215	428.378	(1.269.866)	(655.007)
Deposits	63.851.035	31.830.095	48.658.628	22.644.877
Securities	359.436.773	182.612.428	334.883.069	165.795.194

2) INTEREST EXPENSE	Jan 01 - Jun 30 2016		Jan 01 - Jun 30 2017
	Cumulative	Quarterly	Cumulative	Quarterly 2.966.830
		4.750.610	6.904.796
Borrowings	9.809.647	49.809.544	63.162.700	30.346.440
Deposits	102.742.142	54.560.154	70.067.496	33.313.270
TOTAL	112.551.789

3) FEE AND COMMISSION INCOME	Jan 01 - Jun 30 2016		Jan 01 - Jun 30 2017
	Cumulative	Quarterly	Cumulative	Quarterly
		72.279.084	138.969.149	70.754.937
Cash payment operations - channels	142.299.923 63.530.439	33.543.741	70.767.176	39.893.459
Retail and card operations	26.791.777	14.504.588	27.722.194	14.434.468
Corporate operations	3.479.978	1.648.030	4.117.846	1.909.135
Other fee and commission income		121.975.443	241.576.365	126.991.999
TOTAL	236.102.117

4) FEE AND COMMISSION EXPENSE

4) FEE AND COMMISSION BY, ENGE		Jan 01 - Jun 30 2016		Jan 01 - Jun 30 2017
		Quarterly	Cumulative	Quarterly
	Cumulative	72.191.340	139.228.922	70.870.813
Payment operations	141.241.685 7.216.722	4.068.839	9.043.848	5.439.988
Other fee and commission expense		76.260.179	148.272.770	76.310.801
TOTAL	148.458.407

5) GAINS LESS LOSSES FROM TRADING ACTIVITIES		Jan 01 - Jun 30 2016		Jan 01 - Jun 30 2017
	Cumulative	Quarterly	Cumulative	Quarterly
Securities and equity instruments FX transactions HRK cash transactions	1.698.953 20.729.422 189.105	(736.007) 10.942.795 166.922 (167.039)	2.148.509 17.652.385 209.545 (27.149)	420.779 9.644.730 201.495 20.815
Derivatives TOTAL	(1.325.633) 21.291.847	10.206.671	19.983.290	10.287.819

6) OPERATING EXPENSES		Jan 01 - Jun 30 2016
	Cumulative	Quarterly	Cumulative	Quarterly
General and administrative expenses Amortization and depreciation	162.686.672 21.735.702	82.363.193 10.786.732	167.412.183 22.221.186	83.083.177 10.994.031 8.805.541
Savings deposit insurance costs Other costs	17.095.868 10.858.039	8.535.868 7.906.602	17.803.541 11.063.815 218.500.725	5.570.943 108.453.692
TOTAL	212.376.281	109.592.395

7) IMPAIRMENT LOSSES AND PROVISION EXPENSES	Jan 01 - Jun 30 2016		Jan 01 - Jun 30 2017
	Cumulative	Quarterly	Cumulative	Quarterly
Individually identified impairment losses (risk group B i C) Portfolio based provisions for identified losses (risk group A)	81.468.474 5.514.809 16.973.760	36.714.066 9.181.605 16.885.955	249.666.621 (312.494) (12.078.288)	172.553.036 6.184.880 (12.424.008)
Other provisions TOTAL	103.957.043	62.781.626	237.275.839	166,313,908

$in$ HRK

$H = H$

$in$ HRK

B) BALANCE SHEET

8) CASH AND DEPOSITS WITH THE CNB		in HRK
	Dec 31 2016	Jun 30 2017
CASH	421.479.852	552.639.844
DEPOSITS WITH THE CNB Mandatory reserve Account for transaction settlement MANDATORY TREASURY BILLS	1.841.823.262 1.300.796.321 541.026.941	2.463.341.907 1.215.090.831 1.248.251.076
Portfolio based impairment allowance for identified losses TOTAL	2.263.303.114	3.015.981.751

	Jun 30 2017
	451.763.427
	24.439.559
$\overline{a}$
	476.202.986
	Dec 31 2016 753.064.739 21.070.270 774.135.009

10) EQUITY INSTRUMENTS AND SECURITIES	Dec 31 2016	Jun 30 2017
Short term Treasury bills of the Croatian Ministry of Finance Financial assets held for trading	415.536.615	410.077.306
	551.322.886	534.104.665
	2.630.574.528	2.320.703.469
Financial assets available for sale Financial assets held to maturity	450.105.787	155.168.902
Portfolio based impairment allowance for identified losses Deferred front-end fee TOTAL	(6.771.524)	(775.376)
	(499.204)	(18.523)
	4.040.269.088	3.419.260.443

11) LOANS TO CUSTOMERS	Dec 31 2016	Jun 30 2017
	81.579.680	26.300.164
Loans to financial instutitions	81.583.376	26.304.310
Gross Ioans	(3.696)	(4.146)
Impairment allowance	2.783.381.353	2.981.133.316
Loans to companies	3.880.932.056	4.081.196.395
Gross loans	(1.097.550.703)	(1.100.063.079)
Impairment allowance	4.577.784.714	4.726.093.625
Retail loans	4.799.866.200	4.983.804.053
Gross Ioans	(222.081.486)	(257.710.428)
Impairment allowance	1.423.592.367	1.516.005.128
therein: housing loans	1.441.669.433	1.532.409.219
Gross Ioans	(18.077.066)	(16.404.091)
Impairment allowance	4.037.506.783	3.929.694.058
Other loans	4.040.077.723	3.935.230.902
Gross Ioans		(5.536.844)
Impairment allowance	(2.570.940)
	(103.076.997)	(109.739.911)
Portfolio based impairment allowance for identified losses	(45.255.706)	(47.942.233)
Deferred front-end fee TOTAL	11.331.919.827	11.505.539.019

Quarterly Financial Statements for the Period from Jan 01 - Jun 30 2017 (unaudited)

B) BALANCE SHEET (continued)

in HRK
Dec 31 2016	Jun 30 2017
1.180.254.901	1.181.122.917
3.010.655.654	3.203.854.099
8.886.016.253	8.781.743.086
1.453.063.764	1.238.389.404
14.529.990.572	14.405.109.506

13) BORROWINGS	Dec 31 2016	Jun 30 2017
Borrowings from HBOR	624.696.401	624.712.782
Borrowings from domestic banking institutions	a.
Borrowings from domestic non-banking institutions	88.426.109	5.184.652
Borrowings from foreign banking institutions	(3.700.954)	(4.261.241)
Deferred front-end fee TOTAL	709.421.556	625.636.193

14) OTHER LIABILITIES	Dec 31 2016	Jun 30 2017
	1.715.292.949	1.946.450.797
Restricted deposits	58.731.565	52.160.373
Interest and fees payable	22.269.210	35.349.328
Provisions for off-balance sheet exposure	379.030.399	414.451.159
Other TOTAL	2.175.324.123	2.448.411.657

C) CHANGES IN ACCOUNTING POLICIES

There were no changes in accounting policies of the Bank during 1H 2017 which might have impact on financial position or results of the Bank.

BANK'S OWNERSHIP STRUCTURE D)

Bank's ownership structure as per Jun 30 2017 was as follows:

Vlasnički udio
42,43%
11,93%
8,98%
8,76%
4,94%
4,12%
3,90%
2,88%
2.47%
2,36%
2,20%
4,99%
0,04%

HPB-R-A STOCK $E)$

Share HPB-R-A is listed on the Official Market of ZSE. The last price per share at the end of the reporting period was HRK 549,99 (Jun 30 2017) representing a decrease of 26,8% when compared to the last traded price in 2016 (HRK 751,00 on Dec 30 2016).

Trading during the reporting period was as follows: