Unaudited

Zagreb, October 24 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 Sep 30 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., $\bullet$
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 results for the reporting period are as follows:

$\checkmark$ 1H 2017 net loss amounting to HRK 64,5M due to impairment losses recognized with regard to exposure towards Agrokor and related parties - has been almost annuled. Accordingly net loss amounts to HRK 1,3M has been recorded during the reporting period, as opposed to a net profit of HRK 141,1M achieved during the same period in 2016. Had the impairment losses for Agrokor exposures not been recognized, Bank's after-tax profit would have amounted to at least HRK 150M,
operating profit amounts to HRK 276,3M, representing a y-o-y decrease consequent to no significant one-offs in 2017, as had been the case in 2016 (e.g. VISA Europe Ltd. Transaction was closed in Jun 2016, resulting in HRK 33,5M gain for the Bank). Operating profit excluding one-offs would be higher by 6 percent y-o-y,
Bank's focus on core operations resulted in an increase in client acquisition and activation, as well as higher loan & deposit volume, and is reflected in a significant icrease in net interest income (+6,0%) and net fee income (+3,6%),
$\checkmark$ over 25 thousand retail currect accounts newly opened, as well as over 1.200 corporate business accounts,
book-value per share has increased by 1,1 percent ytd, in spite of recorded net loss,
√ 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 17,5 percent.

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

Management report of HPB p.l.c.

Bank has achieved a significant improvement on its 1H results (net loss amounting to HRK 64,5M), and has accordingly recorded a net loss of HRK 1,3M during the reporting period, as a result of deterioirated creditworthiness of Agrokor group and related parties, i.e. due to impairment losses that have been recognized on these exposures (as per Sep 30 2017, HRK 193,5M of imapirments on exposure to the Agrokor group and economically and legally related parties).

Operating profit amounts to HRK 276,3M, representing a decrease of HRK 15,1 million in comparison with the same period 2016 due to significantly lower one offs and non-recurring transactions with regard to securities portfolio (excluding one-offs, operating profit ytd 2017 would amount to HRK 272,8 million, as opposed to HRK 256.6 million ytd 2016).

As a result of acquisition activities, income from core operations is increasing. ivnosti, temeljni prihodi su u porastu. Net interest income amounts to HRK 399,3 million, and has increased by 6,0% y-o-y. Albeit gross interest revenue decreased by 7,1% or HRK 38,1 million, interest expenses have been cut by a larger margin (by 37,3% or HRK 60,6 million) due to optimized funding structure and pricing policy. Net interest income is on the highest level over the course of the last seven years.

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

Net fee and commission income amounts to HRK 147,0 million, representing a 3,6 percent or HRK 5,0 million increase in comparison with the same period 2016. As with other core income categories, net fees are also on the highest ytd level over the course of the last seven years.

A growth in sustainable fees has been achieved in ytd 2017 – in retail segment (+0,8%) owing to higher number of new HPB combinations (product bundles), as well as in corporate segment (+3,0%) due to higher volume in guarantees and domestic payment operations. Increase resulted also from higher number of active clients in corporate segment due to substantial acquisition of new corporate accounts. Simultaneously, fees from card operations have increased significantly due to larger number of users and ATM transactions, in accordance with record tourism results in Croatia achieved in 2017.

Best fee income in the last 7 years 147 $135$ $142$ 134 138 $132$ $130$ ytd 2011 ytd 2012 ytd 2013 ytd 2014 ytd 2015 vtd 2016 ytd 2017

ytd net fee income development between 2011 and 2017 (in HRK million)

In conditions when external factors limit profitability, Bank endeavours to achieve internal improvements which might mitigate these effects. This is reflected in lower operating expenses in almost all relevant cost categoires (personnel, general and administrative expenses, depreciation).

Impairment losses have spiked by 82,6 percent which is almost entirely related to provisioning made on exposures towards Agrokor group and related parties (NPL coverage of balance and off-balance sheet items towards Agrokor and parties that are related legally and economically with Agrokor, equals 45,1 percent as per Sep 30 2017).

Limited capital base due to market share close to 5 percent has significantly limited potential for further balance sheet expansion over the larger part of the reporting period (until new Resolution on capital buffer for structural and systemic risk was issued by the CNB - in August 2017), so Bank's assets have remained almost unchanged, amounting to HRK 19,4 billion (+0,5%).

Owing to good trends, loans have increased by 3,3 percent, wherein retail loans increased by 5,5 percent, whilst loans to non-financial corporate sectore increased by 2,0 percent. New loan volume dominantly relates to housing loans in the retail segment (+HRK 200 million or +13,9%), while majority of new volume in corporate segment relates to investment loans (+HRK 124 million or +11,1 percent). With an increase in volume, as opposed to sector stagnation, HPB achieved market share growth in 2017.

Source for sector movements: www.hnb.hr (aggregate statistical reporting for credit institutions) *projected sector movement in Aug and Sep 2017 (source: HPB)

Deposits have increased by 0,9%. Deposit growth was moderate owing to necessity to limit balance sheet growth over the course of the larger part of the reporting period due to capital constraints.

Deposits development in 2017 (base index 12/16 = 100)

Source for sector movements: www.hnb.hr (aggregate statistical reporting for credit institutions) *projected sector movement in Aug and Sep 2017 (source: HPB)

Taking into consideration that Bank's liquidity has been accumulated through sale of securities, there was no need for additional funding. Therefore, a proportion of borrowings has been repaid (-7,3%), while new borrowing deals have not been made in significant amounts.

Bank's equity as per Sep 30 2017 totals HRKi 1.908 million, representing an increase of 1,1 percent during 2017. Capital adequacy according to preliminary calculations should stand at approximately 17,5 percent, owing to RWA optimization and to increased own dunds due to retained earnings for 2016.

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 Sep 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.

David Tomašek Deputy Executive Director Finance Division

Tomislav Vuić President of the Management Board

		to	Sep 30 2017
	Quarterly financial statements for credit institutions TFI-KI
Registration number (MB): 03777928
Registration number (MBS): 080010698
Personal identification number 87939104217 $(OIB)$ :
Company: HPB p.l.c.
Postal code and city 10000	ZAGREB
Address: JURIŠIĆEVA 4
E-mail address: [email protected]
Internet address: www.hpb.hr
ZAGREB City code and name: 133
County code and name: 21	GRAD ZAGREB		# of employees:	1.113
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
Phone: 014804900			Fax: 014804594
E-mail address: [email protected]
Surname and name: Vuić Tomislav
	(person authorized for representation)
Documentation to be made public: 1. Financial reports (balance sheet, profit or loss statement, cash flow statement, statement on changes in equity and notes to financial statements) 2. Management report 3. Statement by persons accountable for compiling the report

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

BALANCE SHEET

Sep 30 2017 as per $\sqrt{\ }$

Sep 30 2017 as per			in HRK
ltem	AOP label	Dec 31 2016	Sep 30 2017
1	$\overline{2}$	3	4
ASSSETS
1. CASH AND DEPOSITS WITH THE CNB (002+003)	001	2.263.303.114	3.100.192.913
1.1.Cash	002	421.479.852	544.564.885
1.2. Deposits with the CNB	003	1.841.823.262	2.555.628.028
2. DEPOSITS WITH FINANCIAL INSTITUTIONS	004	774.135.009	436.685.012
3. SHORT-TERM TREASURY BILLS OF THE CROATIAN MINISTRY OF FINANCE	005	415.536.615	414.640.114
4. FINANCIAL ASSETS HELD FOR TRADING	006	551.322.886	457.274.094
5. FINANCIAL ASSETS AVAILABLE FOR SALE	007	2.630.574.528	2.388.859.389
6. FINANCIAL ASSETS HELD TO MATURITY	008	442.835.059	144.016.101
7. FINANCIAL ASSETS VALUED AT FAIR VALUE THROUGH PROFIT OR LOSS, NOT ACTIVELY TRADED	009	0	0
8. DERIVATIVE FINANCIAL ASSETS	010	3.780.197
9. LOANS TO FINANCIAL INSTITUTIONS	011	81.579.680	77.624.352
10. LOANS TO OTHER CUSTOMERS	012	11.250.340.147	11.602.119.603
11. INVESTMENTS IN SUBSIDIARIES, ASSOCIATED COMPANIES AND JOINT VENTURES	013	53.420.000	65.490.000
12. REPOSSESSED ASSETS	014
13. TANGIBLE ASSETS (LESS DEPRECIATION)	015	146.091.281	141.265.885
14. OTHER ASSETS	016	692.909.263	569.699.249
A) TOTAL ASSETS (001+004 to 016)	017	19.305.827.779	19.397.866.712
LIABILITIES
1. BORROWINGS FROM FINANCIAL INSTITUTIONS (019+020)	018	620.995.448	652.062.586
1.1. Short-term	019	$\Omega$
1.2. Long-term	020	620.995.448	652.062.586
2. DEPOSITS (022 to 024)	021	14.529.990.572	14.555.994.103
2.1. Transactional and current accounts	022	4.009.237.425	4.319.245.053
2.2. Savings deposits (demand)	023	1.486.719.761	1.530.372.708
2.3. Term deposits	024	9.034.033.386	8.706.376.342
3. OTHER BORROWINGS (026+027)	025	88.426.108	5.247.981
3.1. Short-term	026
3.2. Long-term	027	88.426.108	5.247.981
4. DERIVATIVE AND OTHER FINANCIAL LIABILITIES HELD FOR TRADING	028	3.640.667
5. ISSUED SECURITIES (030+031)	029	$\mathbf 0$	₀
5.1. Short-term	030	0
5.2. Long-term	031	0
6. SUBORDINATED DEBT ISSUED	032	0
7. HYBRID INSTRUMENTS	033	$\overline{0}$
8. OTHER LIABILITIES	034	2.175.324.123
B) TOTAL LIABILITIES (018+021+025+028+029+032+033+034)	035	17.418.376.918	2.276.944.235
EQUITY			17.490.248.905
1. SHARE CAPITAL	036	1.214.298.000
2. PROFIT/(LOSS) FOR THE PERIOD	037	181.261.017	1.214.298.000
3. RETAINED EARNINGS	038	37.417.870	(1.334.464)
4. REGULATORY RESERVES	039	6.160.835	124.540.223 15.574.701
5. STATUTARY AND OTHER CAPITAL RESERVES	040	363.623.023
6. FAIR VALUE RESERVE	041	84.690.116	448.347.821
7. RESERVES ARISING FROM HEDGING TRANSACTIONS	042	0	106.191.526
C) TOTAL EQUITY (036 to 042)	043
D) TOTAL LIABILITIES AND EQUITY (035+043)	044	1.887.450.861 19.305.827.779	1.907.617.807
			19.397.866.712

$\begin{matrix} 8 \end{matrix}$

PROFIT OR LOSS STATEMENT

Jan 01 2017 to for the period from	Sep 30 2017				in HRK
Item	AOP label	Jan 01 - Jun 30 2016		Jun 01 - Jun 30 2017
		Cumulative	Quarterly	Cumulative	Quarterly
1	$\overline{2}$	3	4	5.	6
1. Interest income	048	539.165.281	179.728.508	501.026.942	166.143.873
2. Interest expense	049	162.268.732	49.716.943	101.699.606	31.632.110
3. Net interest income (048-049)	050	376.896.549	130.011.565	399.327.336	134.511.763
4. Fee and commission income	051	373.151.521	137.049.404	400.184.087	158.607.722
5. Fee and commission expense	052	231.161.522	82.703.115	253.153.398	104.880.628
6. Net fee and commission income (051-052)	053	141.989.999	54.346.289	147.030.689	53.727.094
7. Gains less losses arising from investments in subsidiaries, associated companies and joint ventures	054
8. Gains less losses from trading activities	055	53.191.512	31.899.665	39.150.514	19.167.224
9. Gains less losses from built-in derivatives	056
10. Gains less losses arising from financial assets valued at fair value through P&L, not actively traded	057
11. Gains less losses arising from securities available for sale	058	41.698.418	$\Omega$	5.457.492
12. Gains less losses arising from securities held to maturity	059
13. Gains less losses arising from hedging activities	060
14. Income from investments in subsidiaries, associated companies and joint ventures	061			2.200.000
15. Income from other equity instruments	062	794.185	6.835	835.012	19.359
16. Gains less losses from exchange rate differences	063	(1.125.462)	(688.065)	2.094.430	1.905.123
17. Other income	064	3.666.006	675.098	4.508.162	339.008
18. Other operating costs	065	44.424.913	16.471.006	40.971.160	12.103.804
19. General and administrative expenses, amortization and depreciation	066	281.281.740	96.859.366	283.345.957	93.712.588
20. Operating profit (050+053 to 064-065-066)	067	291.404.554	102.921.015	276.286.518	103.853.179
21. Impairment losses and provisions	068	151.359.550	47.402.507	276.395.996	39.120.157
22. PROFIT/(LOSS) BEFORE TAX (067-068)	069	140.045.004	55.518.508	(109.478)	64.733.022
23. INCOME TAX EXPENSE / DEFERRED TAX	070	(1.092.082)	1.365.581	1.224.986	1.563.487
24. NET PROFIT/(LOSS) FOR THE PERIOD (069-070)	071	141.137.086	54.152.927	(1.334.464)	63.169.535
25. Earnings per share	072	70	27	(1)	31

CASH FLOW STATEMENT - INDIRECT METHOD

Sep 30 2017
AOP label	Jan 01 - Sep 30 2016	in HRK Jan 01 - Sep 30 2017
$\mathbf{z}$	3	4

001	306.789.438	301.125.401
002	140.045.004	(109.478)
003		276.395.996
004		33.002.741
005	(19.274.706)	(7.522.280)
006	144.555	1.452.852
007	1.125.462	(2.094.430)
008		(528.662.937)
009		(713.804.766)
		896.501
		337.449.997
		(351.779.456)
		101.571.072

		220.213.729

		(123.210.014)
		123.982.976
		310.007.628
		(284.004.097)
		(3.640.667)
		101.620.112
022	197.591.647	(103.554.560)
		(421.217)

		(103.975.777)

		277.853.092
		(24.000.878)

		298.818.958
		3.035.012


		(52.110.989)
		(52.110.989)
		$\bar{a}$
		÷
		$\sim$
		$\overline{a}$
		$\sim$
038	38.856.648	121.766.326
039	(50.809)	1.318.707
040		123.085.033
041	412.197.218	421.479.852
042		544.564.885
	1.4. Net unrealised gains less losses from financial assets valued at fair value through profit or 010 011 012 013 014 015 016 017 018 019 020 021 023 024 025 026 027 028 029 030 031 032 033 034 035 036 037	151.359.550 33.389.573 (1.531.584.556) (94.697.304) (111.685.601) 33.777.602 (1.140.853.033) 33.625.053 (224.504.767) (27.246.506) 1.422.386.765 882.791.474 909.668.111 53.688 (370.126.508) (199.988) 197.391.659 93.686.114 (31.253.471) 124.145.400 794.185 $\sim$ (252.221.125) (221.458.910) $\omega$ (30.762.215) 38.805.839 451.003.057

$\frac{10}{ }$

				STATEMENT OF CHANGES IN EQUITT
	for the period from	Jan 01 2017		to	Sep 30 2017				in HRK
	AOP			Attributable to the shareholders of the parent company
Item	label	Share capital	Own shares	Regulatory, statutory and other reserves	Retained earnings	Profit/(loss) for the period	Fair value reserve	Minority interest	Total equity
	$\overline{2}$	3	4	5	6	$\overline{7}$	8	9	10
Balance as per Jan 01 2017	001	1.214.775.000	(477.000)	369.783.858	82.293.647	188.277.328	84.690.116		1.939.342.949
Effects of changes in accounting policies and corrections of errors	002				(44.875.777)	(7.016.311)			(51.892.088)
Restated balance as per Jan 01 2017 (001+002)	003	1.214.775.000	(477.000)	369.783.858	37.417.870	181.261.017	84.690.116		1.887.450.861
Disposal of financial assets available for sale	004	$\overline{\phantom{a}}$					(1.797.966)		(1.797.966)
Change in the fair value of financial assets available for sale	005	.				$\qquad \qquad \blacksquare$	26.249.225		26.249.225
Tax on items recognised directly in/transferred from equity	006	$\overline{a}$			$\overline{\phantom{a}}$		(2.949.849)		(2.949.849)
Other gains and (losses) recognised directly in equity	007	$\sim$	the con-	$\overline{\phantom{a}}$	$\qquad \qquad \blacksquare$
Net gains/(losses) recognised directly in equity $(004+005+006+007)$	008	$\bullet$	$\sim$	$\bullet$	$\sim$		21.501.410		21.501.410
Loss for the period	009	$\overline{\phantom{a}}$	$\overline{\phantom{0}}$			(1.334.464)			(1.334.464)
Total recognized income and expense for the period (008+009)	010	$\bullet$				(1.334.464)	21.501.410		20.166.946
Increase/decrease in share capital	011	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$				$\overline{a}$
Purchase/sale of own shares	012	$\alpha$	$\overline{a}$				$\overline{\phantom{a}}$
Other changes	013	$\overline{\phantom{a}}$	$\sim$		(7.016.311)	7.016.311	$\sim$		$\overline{\phantom{a}}$
Transfer to reserves	014	$\bullet$		94.138.664	94.138.664	(188.277.328)	$\overline{\phantom{a}}$		$\sim$
Dividends paid	015	$\overline{\phantom{a}}$					$\sim$	$\sim$	$\sim 10^{-1}$
Profit allocation (014+015)	016	$\blacksquare$		94.138.664	94.138.664	(188.277.328)	$\bullet$	$\blacksquare$
Balance as per Jun 30 2017 (003+010+011+012+013+016)	017	1.214.775.000	(477.000)	463.922.522	124.540.223	(1.334.464)	106.191.526		1.907.617.807

CTATEMENT OF CHANGES IN EQUITY

NOTES TO FINANCIAL STATEMENTS

A) PROFIT OR LOSS STATEMENT

1) INTEREST INCOME

		Jan 01 - Sep 30 2016		$in$ HRK
Loans	Cumulative	Quarterly	Jan 01 - Sep 30 2017 Cumulative	Quarterly
Deposits	443.174.324	148.451.801	432.328.435	144.834.128
Securities	1.168.756	305.541	(1.597.268)	(327.402)
TOTAL	94.822.201	30.971.166	70.295.775	21.637.147
	539.165.281	179.728.508	501.026.942	166.143.873

2) INTEREST EXPENSE

14,704,787	Jan 01 - Sep 30 2017 Cumulative	Quarterly

147.563.945	10.407.829	3.503.033
162.268.732		28.129.077 31.632.110
	44.821.803 49.716.943	91.291.777 101.699.606

3) FEE AND COMMISSION INCOME

	Jan 01 - Sep 30 2016		Jan 01 - Sep 30 2017
Cash payment operations - channels	Cumulative	Quarterly	Cumulative	Quarterly
Retail and card operations Corporate operations Other fee and commission income	215.613.934 110.588.003 41.541.276 5.408.308	73.314.011 47.057.564 14.749.499	209.680.811 141.544.818 42.789.117	70.711.662 70.777.642 15.066.923
TOTAL	373.151.521	1.928.330 137.049.404	6.169.341 400.184.087	2.051.495 158607722

4) FEE AND COMMISSION EXPENSE

				in HRK
		Jan 01 - Jun 30 2016		Jan 01 - Jun 30 2017
Payment operations	Cumulative	Quarterly	Cumulative	Quarterly
Other fee and commission expense	214.816.633 16.344.889	73.574.948 9.128.167	211.950.286	72.721.364
TOTAL	231.161.522	82.703.115	41.203.112	32.159.264
			253.153.398	104.880.629

5) GAINS LESS LOSSES FROM TRADING ACTIVITIES

	Jan 01 - Jun 30 2016		in HRK Jan 01 - Jun 30 2017
Securities and equity instruments	Cumulative	Quarterly	Cumulative	Quarterly
FX transactions HRK cash transactions Derivatives	20.988.266 33.561.065 367.955 (1.725.775)	19.289.313 12.831.643 178,850	10.244.476 28.464.166 486,695	8.095.967 10.811.781 277.150
TOTAL	53.191.512	(400.142) 31.899.665	(44.823) 39.150.514	(17.674) 19.167.224

6) OPERATING EXPENSES

	Jan 01 - Sep 30 2016		Jan 01 - Sep 30 2017
General and administrative expenses	Cumulative	Quarterly	Cumulative	Quarterly
Amortization and depreciation Savings deposit insurance costs Other costs	247.892.167 33.389.573 26.269.792 18.155.121	85.205.495 11.653.871 9.173.924	250.343.216 33.002.741 26.403.185	82.931.033 10.781.555 8.599.644
TOTAL	325.706.653	7.297.082 113.330.372	14.567.975 324.317.117	3.504.160 105816392

7) IMPAIRMENT LOSSES AND PROVISION EXPENSES

	Jan 01 - Sep 30 2016		in HRK Jan 01 - Sep 30 2017
Individually identified impairment losses	Cumulative	Quarterly	Cumulative	Quarterly
(risk group B i C) Portfolio based provisions for identified losses (risk group A) Other provisions	112.308.228 12.991.196	30.839.754 7.476.387	279.681.429 (208.549)	30.014.808 103.945
TOTAL	26.060.126	9.086.366	(3.076.884)	9.001.404
	151.359.550	47.402.507	276.395.996	39.120.157

$12 \pm$

B) BALANCE SHEET

8) CASH AND DEPOSITS WITH THE CNB

	Dec 31 2016	Sep 30 2017
CASH	421.479.852	544.564.885
DEPOSITS WITH THE CNB	1.841.823.262	2.555.628.028
Mandatory reserve	1.300.796.321	1.272.024.572
Account for transaction settlement	541.026.941	1.283.603.456
MANDATORY TREASURY BILLS
Portfolio based impairment allowance for identified losses
TOTAL	2.263.303.114	3.100.192.913

9) DEPOSITS WITH FINANCIAL INSTITUTIONS $in$ HRK Sep 30 2017 Dec 31 2016 753.064.739 413.872.903 Deposits with foreign banking institutions Deposits with domestic banking institutions 21.070.270 22.812.109 Portfolio based impairment allowance for identified losses 774.135.009 436.685.012 TOTAL

10) EQUITY INSTRUMENTS AND SECURITIES		in HRK
	Dec 31 2016	Sep 30 2017
Short term Treasury bills of the Croatian Ministry of Finance	415.536.615	414.640.114
Financial assets held for trading	551.322.886	457.274.094
Financial assets available for sale	2.630.574.528	2.388.859.389
Financial assets held to maturity	450.105.787	144.810.000
Portfolio based impairment allowance for identified losses	(6.771.524)	(775.376)
Deferred front-end fee	(499.204)	(18.523)
TOTAL	4.040.269.088	3.404.789.698

11) LOANS TO CUSTOMERS		in HRK
	Dec 31 2016	Sep 30 2017
Loans to financial instutitions	81.579.680	77.624.352
Gross Ioans	81.583.376	77.628.719
Impairment allowance	(3.696)	(4.367)
Loans to companies	2.783.381.353	3.150.300.030
Gross Ioans	3.880.932.056	4.255.871.354
Impairment allowance	(1.097.550.703)	(1.105.571.324)
Retail loans	4.577.784.714	4.787.642.034
Gross Ioans	4.799.866.200	5.065.586.001
Impairment allowance	(222.081.486)	(277.943.967)
therein: housing loans	1.423.592.367	1.623.317.963
Gross loans	1.441.669.433	1.641.427.487
Impairment allowance	(18.077.066)	(18.109.524)
Other loans	4.037.506.783	3.819.157.306
Gross loans	4.040.077.723	3.824.774.458
Impairment allowance	(2.570.940)	(5.617.152)
Portfolio based impairment allowance for identified losses	(103.076.997)	(111.466.193)
Deferred front-end fee	(45.255.706)	(43.513.574)
TOTAL	11.331.919.827	11.679.743.955

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

in $H$ R $K$

B) BALANCE SHEET (continued)

12) DEPOSITS

		IN FIRK
	Dec 31 2016	Sep 30 2017
Financial institutions	1.180.254.901	1.009.839.486
Corporations	3.010.655.654	3.208.853.171
Retail Other	8.886.016.253	8.930.240.802
	1.453.063.764	1.407.060.644
TOTAL	14.529.990.572	14.555.994.103

13) BORROWINGS

		in HRK
	Dec 31 2016	Sep 30 2017
Borrowings from HBOR	624.696.401	656.194.033
Borrowings from domestic banking institutions	۰
Borrowings from domestic non-banking institutions
Borrowings from foreign banking institutions Deferred front-end fee	88.426.109	5.247.981
TOTAL	(3.700.954)	(4.131.447)
	709.421.556	657.310.567

14) OTHER LIABILITIES

	in HRK
	Dec 31 2016	Sep 30 2017
Restricted deposits	1.715.292.949	1.836.660.314
Interest and fees payable	58.731.565	53.846.505
Provisions for off-balance sheet exposure	22.269.210
Other	379.030.399	40.932.340
TOTAL		345.505.076
	2.175.324.123	2.276.944.235

C) CHANGES IN ACCOUNTING POLICIES

There were no changes in accounting policies of the Bank during the reporting period which might have had an impact on financial position or results of the Bank.

D) CHANGES IN PRESENTATION OF FINANCIAL REPORTS

Bank has carried out a correcton of prior period error with regard to certain items in financial statements. In line with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, prior period financial reports have been restated.

Correction is related to a deduction from retained earnings for erroneously booked income from FX translation differences arising from foreign payment operations for a foreign partner, over the course of the period from Jan 01 2011 to Dec 31 2015, as well as correction of 2016 net profit for erroneously booked FX translation differences arising from aforementioned operations.

Corrections with regard to prior periods have been carried out during the current reporting period, error in booking has been eliminated, and P&L presented in these reports reflects correct effects of these transactions.

Effects arising from correction are presented below:

Effects on statement on financial position as per Dec 31 2016 (in HRK)

	as per 31.12.2016.	Restatement effects	as per 31.12.2016.
Item	- before restatement		- after restatement
ASSETS
Other assets (AOP 016)	744.801.351	(51.892.088)	692.909.263
EQUITY
Profit/(loss) for the period (AOP 037)	188.277.328	(7.016.311)	181.261.017
Retained earnings (AOP 038)	82.293.647	(44.875.777)	37.417.870

Effects on P&L statement for the period from Jan 01. - Sep 30 2016:
(in HRK)
Item	01.01. - 30.09.2016.	Učinci prepravljanja	01.01. - 30.09.2016.
	- before restatement		- after restatement
Gains less losses from exhange rate

differences		(6.385.123)	(1.125.462)
(AOP 063)	5.259.661

Profit/loss for the period 141.137.086 $(6.385.123)$ 147.522.209 (AOP 071)

$\overline{15}$

$E)$ POST BALANCE SHEET EVENTS

In October 2017, by the date these reports have been published, events occured and indications occured that have an adverse effects on creditworthiness of one debtor to settle his obligations towards the Bank. Exposure towards this debtor as per Sep 30 2017 is classified as non-performing (NPL), and equals HRK 14.490 thousand, with recognized impairment equalling 10 percent. New assessment of recovery rate is being made presently, and Bank estimates that it should result in additional impairments during Q4 2017 in amount of approximately HRK 9 million.

$F)$ BANK'S OWNERSHIP STRUCTURE

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

Shareholder	Ownership stake
Republic of Croatia (Ministry of State Assets)	42,43%
HP Hrvatska pošta Plc	11,93%
State Agency for Deposit Insurance and Bank Resolution	8,98%
Croatian Pension Insurance Insitute (Ministry of State Assets)	8,76%
Prosperus Invest d.o.o., for Prosperus FGS	4,94%
PBZ CROATIA OSIGURANJE OMF (B category)	4,12%
ERSTE d.o.o. for ERSTE PLAVI OMF (B category)	3,90%
Allianz ZB d.o.o., for AZ OMF (B category)	2,88%
CROATIA osiguranje Plc	2,47%
Fund for Financing the Decommissioning of the Krško Nuclear Power Plant and the Disposal of NEK Radioactive Waste and Spent Nuclear Fuel	2,36%
RAIFFEISEN D.D., for Raiffeisen OMF (B category)	2,20%
Minorities	4,99%
Own shares	0,04%

$G)$ HPB STOCK

HPB's share is listed on the Official Market of ZSE. The last price per share at the end of the reporting period was HRK 515,00 (Sep 27 2017) representing a decrease of 31,4% when compared to the last traded price in 2016 (HRK 751,00 on Dec 30 2016).

Trading during the reporting period was as follows:

	$\sim$

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2090_10-q_2017-10-24_0148e8e5-d06b-44cd-b609-256f63f7f541.pdf