NLB — Annual Report 2025

Apr 9, 2026

NLB

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NLB Group Annual Report 2025

Inspiration

for Success

NLB Group

Annual Report 2025

NLB Group

Annual Report 2025

2

NLB Group

Overview

Business Report

Sustainability

Statement

Financial Report

398 Financial Report

401

Independent Auditor’s Report

405

Statement of Management’s Responsibility

583

NLB Group Directory

586

Definitions and Glossary of Selected Terms

33 Business Report

34

Strategy

37

Funding Strategy, MREL Compliance,

and Capital

42

Risk Factors and Outlook

47

Overview of Financial Performance

70

Segment Analysis

86

NLB Group Key Members

97

Risk Management

110

IT and Cyber Security

114

People and Culture

116

Corporate Governance

126

Compliance and Integrity

128

Internal Audit

129

Corporate Governance Statements

156

Disclosure on Shares and Shareholders

of NLB

159

Events after the End of the

2025 Financial Year

160

Reconciliation of Financial Statements

in Business and Financial Part of the Report

162

Alternative Performance Indicators

169

NLB Group Chart

170

Organisational Structure of NLB

171

Sustainability Statement

Forward-looking statements

The expectations, forecasts and statements regarding future developments that are

contained in this report are based on assumptions and are contingent on a number of

factors that will come into play in the future. Consequently, the actual situation may turn

out to be different.

Contents

4 Overview

5

NLB Group at a Glance

7

Statement by the Management Board of NLB

9

Statement by the Chairman

of the Supervisory Board of NLB

12

Inspired by Our Home Region

13

Key Highlights

17

Key Events

21

Shareholders Structure and Market

Performance of NLB’s Shares and GDRs

24

Macroeconomic Environment

30

Regulatory Environment

The NLB Group has long been a

generous patron of both Slovenian

and regional culture and the

arts in general. This commitment

reached a landmark milestone

in 2025 with the opening of the

MUZA, a new gallery operating

under the NLB’s auspices.

The MUZA’s mission is to

inspire and engage the public

by showcasing the NLB Art

Collection – a national treasure

of the Republic of Slovenia and

one of the country’s largest

private collections – together

with contemporary works by the

region’s most distinguished artists.

Yet the MUZA is more than just

a gallery: it is also a museum and

an academy. A dedicated banking

museum takes the visitors on

a journey through 200 years of

Slovenia’s financial history.

With its exhibits, the MUZA brings

to life the evolution of money,

banking practices, and the crucial

role of banks as both institutions

and supporters of the arts, making

this impact tangible and accessible

to all.

Both collections are carefully

managed by the NLB’s Cultural

Heritage Institute, which

continually expands them through

acquisitions and ensures they

remain a source of inspiration for

generations to come.

OVERVIEW

Explore NLB Group’s 2025 Overview:

key achievements and milestones, rooted

in Southeastern Europe – our home region

and our inspiration for success.

5

NLB Group

Overview

NLB Group at Glance

MB Statement

SB Statement

Regional Presence

Key Highlights

Business Report

Sustainability

Statement

Financial Report

NLB Group at a Glance

Note: Number of active clients in NLB Group banking members. Core financial members include seven banks with 381 branches, four leasing companies and three asset management companies. Ratings refer to long-term credit rating

and Outlook. On 3 March 2026, Moody’s upgraded NLB’s long-term issuer credit ratings by one notch to A2 from A3 with stable outlook. For more information on ratings, see the chapter

Events after the End of the 2025 Financial Year

.

Morningstar Sustainalytics rating was awarded in early 2025 for FY 2024; the 2025 result was not available at the reporting date.

7

banks

with

381

branches

4

leasing

companies

3

asset

management

companies

Vision:

The Group will look after the financial needs

of its clients and improve the quality of life in its home

region – Southeastern Europe.

NLB Group

Strategy

2030

Foresees a doubling

of

NLB Group’s balance sheet,

revenues, and profit

by 2030.

Designed to

support the long-

term development

of the

NLB Group and the broader

economic environment

in Southeastern Europe.

Sustainable

banking

• Sustainability is

embedded

in the Group Strategy

and

fully integrated into

business processes.

• The established NLB Group

Climate (Net-Zero) Strategy

steers decarbonization

in lending, investments,

and operations.

ESG Risk Ratings

Morningstar Sustainalytics 2024:

10.5 (low risk),

ranking the Group

in the t

op 5

th

percentile of global

banks

and earning

Top Regional

and Top Industry badges

.

S&P Global ESG Score 2025:

59 points

Strong credit fundamentals supported by solid liquidity and stable/positive outlooks.

Ratings

Number of active clients

more than

2.9

million

Total capital

EUR

3,926

million

Total operating income

EUR

1,303

million

Total assets

EUR

31,475

million

Employees

8,107

A3

Positive

2024

A3

Positive

2025

BBB

Stable

2024

BBB+

Stable

2025

Moody’s

S&P Global Ratings

7

Overview

NLB Group at Glance

MB Statement

SB Statement

Regional Presence

Statement

Statement by the Management Board of NLB

Esteemed Shareholders,

Great and compelling stories all share a few building

blocks: meaningful challenges, captivating characters,

significant transformation, and emotional resonance.

They give us something to believe in. And they inspire us

– to dream and to act. At the NLB Group,

we are writing

our own story – one of clear ambition, focus, and

growth

. As our reflections of the year 2025 clearly show,

also

one with plenty of inspiration

.

In 2025, the world witnessed no shortage of challenges,

leaving a global, regional and local footprint. The

global macroeconomic environment was marked by

a slowdown in economic activity, with key headwinds

including persistent geopolitical tensions in Ukraine

and the Middle East influencing supply chains, the

energy market, commodity prices, and defence

budgets, intensified trade and tariff wars, weak demand

in Europe and China, and a restrictive, albeit less

aggressive than before, monetary policy.

In

our home region of Southeast Europe

, inflation

declined but remained elevated, continuing to put

upward pressure on investments in talents. Nevertheless,

wage growth supported an improvement in purchasing

power and eligibility for lending, asset management and

insurance solutions. With above all, public infrastructural

investment remained supportive,

growth stayed solid

,

despite trade tensions and slower growth among key

European partners weighing on performance.

Banking operated in an environment of lower interest

rates and gradual disinflation, while the ECB’s key rate

cuts stimulated significant growth of credit activity.

Risks remained present but prudently managed,

ensuring operational stability and

strong asset quality

.

The demand for banking services remained robust,

positively impacting

NLB Group’s performance,

resulting in EUR 503.1 million in profit after tax

at

the end of 2025. ROTE remained solid (at 15.2%), and

normalised ROE is still attractive.

The result reflects the Group’s unwavering commitment

to justifying the trust of NLB’s shareholders, who in 2025

received

dividends in two tranches

, totalling

EUR 257.2

million

, or 50% of NLB Group’s net profit for the year

2024. In contrast, financial bottom-line outperformance,

strong strategic execution, and a focus on sustainable

operations resulted in recognition for the Bank and the

Group. In June, the

rating agency S&P raised NLB’s

long-term issuer credit rating

by one notch

to BBB+

from BBB with a stable outlook, while in early 2025 the

NLB Group received an improved

ESG Rating of 10.5

from

Morningstar Sustainalytics

and later in the year

also achieved an improved

S&P Global ESG Score of 59

.

On 3 March 2026, the

rating agency Moody’s upgraded

NLB’s long-term issuer credit rating

by one notch to

A2

from A3 with a stable outlook.

These, however, were not the only welcoming NLB-

related news connected to

international capital

markets

. In January, NLB issued new 4NC3 senior

preferred notes of EUR 500 million to meet its MREL

requirements. Later, in November, NLB successfully

concluded the bookbuilding process for its pioneer

perpetual NC5 Additional Tier 1 notes in the

benchmark amount of EUR 300 million with significant

oversubscription, resulting in a very reasonable yield

of 6.5% p.a. and signalling strong investor confidence.

The notes, which obtained a credit rating of BB- by S&P

Global Ratings, are strengthening and optimising NLB

Group’s capital position, ensuring that NLB is now

well

established for the next period of growth

, which will be

organic and potentially M&A driven as well.

With an eye on market trends, NLB Group continuously

explores opportunities for meaningful, value-accretive

acquisitions to strengthen its foothold in the markets

it serves, after having in 2025 strongly expanded

its services in the field of leasing. After obtaining all

regulatory approvals, the legal and technical merger of

NLB Lease&Go, leasing, Ljubljana, and Summit Leasing

Slovenija, Ljubljana were successfully concluded in

July. The merged entity operates under the name

NLB

Lease&Go, leasing, Ljubljana,

and has become the

leading provider of leasing services

on the Slovenian

market. It is now also a part of one of the largest leasing

ecosystems across the region, with operations in Serbia,

North Macedonia, and Croatia, as well as a recently

established NLB Car&Go company with an online

vehicle sales platform.

The strong capital position of the Bank also supports

the Group’s ambitious

business strategy

with the aim

of reaching more than EUR 50 billion in total assets,

more than EUR 2 billion of recurring revenues, and a

profit of more than EUR 1 billion by 2030. The strategy

commenced at the beginning of the year, further gaining

momentum after

Reinhard Höll joined the Management

Board

of NLB

as the seventh member and Chief

Transformation Officer (CTO) in June, who later also took

charge of IT and back office.

In addition to initiatives on retail, corporate, and

investment banking, and payments, one of the strategy’s

key pillars is the

transformation of the operating

model

from a product-oriented to a customer-centric

approach. This shift is seen by our efforts to expand

and invest in the ecosystem of adjacent banking

services, such as asset management, bancassurance,

trade finance, leasing, payment rails, among others.

Digital transformation advances brought our customer

experience closer to the best-in-class peers and

challengers, and the

digital core products sales share

in Slovenia to 36.0%

, while

Group digital penetration

exceeded 61.8%

, keeping us firmly on track to achieve

our 80% target by 2030.

8

Overview

Statement

Recognising AI as a key driver of productivity and cost

savings across the banking sector, the Group is also

investing in large-scale AI initiatives

, driving process

optimisation through advanced data and analytics,

comprehensive employee upskilling in AI, and the rollout

of a Group-wide generative AI platform to transform

operations and customer experience.

These deliberate strategic investments in technology, AI,

and people – the latter earned NLB the

Top Employer

certificate for the 10

th

consecutive year – are driving

NLB’s transformation into a faster and more efficient

organisation. They aim to

increase speed and reduce

the cost to serve

, while continuously

improving

customer satisfaction

, resulting in more extensive

cross-sell and market share growth. They are also the

foundation of our long-term competitiveness, enabling

faster, more efficient, and more personalised client

service. We believe the future of banking belongs to

those who

see beyond transactions

– to those who

build relevant relationships

Banks and other companies in the NLB Group are

deeply intertwined with the local environment,

supporting it not only through services and solutions,

but also through

sports

sponsorships

and a variety

of projects such as

NLB Youth Sports

. The Group’s

contribution also extends to

donations

for various

causes, which in 2025 focused on the health of children,

as well as the

promotion of culture

– a mission that

reached its culmination in the grand

opening of the

MUZA Gallery in Ljubljana

, operating under the

auspices of NLB.

With all this, our story writes itself in 2026 as well.

We will further accelerate our transformation and

strategy delivery, focusing on growth, innovation,

and sustainability, while maintaining prudent risk

management in an uncertain global environment. And

above all, we will continue finding inspiration all around

us: in a job well done, in growth, in services rendered,

in our strategy that is well on track, in stronger ties

among colleagues, in our communities supported, in

milestones celebrated, in our home region ... all leading

to

inspiration for success

Yours truly,

Management Board of the NLB d.d.

Hedvika Usenik

Member

Andrej Lasič

Member

Archibald Kremser

Member

Reinhard Höll

Member

Blaž Brodnjak

Chief Executive Officer

Peter Andreas Burkhardt

Member

Antonio Argir

9

Overview

Statement

Statement by the Chairman

of the Supervisory Board of NLB

1 Shane Parrish:

Brain Food,

December 2025.

To Our Shareholders,

“Short-term results come from intensity. Long-term

results come from consistency. Ninety percent of success

can be boiled down to consistently doing the obvious

thing for a longer period of time without thinking that

you’re smarter than you are.”

By borrowing the above quote

1

, I only tried to

describe the mental model your NLB Group should

be, and is, pursuing when trying to execute on its

strategic promises, embedded in our Strategy 2030,

communicated as our EUR 2 billion (topline) / EUR 1

billion (bottom line) / EUR 50 billion (asset size) 5-year

triangle targets.

Your Supervisory Board is of the opinion that the

“obvious” for NLB Group boils down to:

Focus on customer centricity and serving the client

with an increased speed-to-serve and decreasing

cost-to-serve.

Focus on continuously pushing for an increased

digitalisation of our services and products (client view),

and faster process re-engineering and automation

(organisation view), basically making our business

model completely future-proof ready.

Focus on hospitality and expanded ecosystem of

services, the banking model is developing into mid-to-

long term, moving beyond broad client segmentation

to individualisation, basically delivering data-driven

access to products and services that earn and cement

trust in an era of fading loyalty across our industry

segments.

Focus on credible double-digit growth targets across

all key loan categories and fee driven business (like

payments, bancassurance, trade finance, wealth

management…) and prioritising steady and profitable

growth rather than keeping Return on tangible equity

and/or payouts at peak levels, thus maintaining

10

flexibility between EPS growth and distributions.

Focus on capital efficiency and balance sheet

discipline – product by product, client by client if

needed, down to individual risk-weighted assets, all

based on our RORAC signalling system logic – to free

up trapped capital with precision and put it to work

where it earns more.

Focus on pursuing potential inorganic growth that adds

reach in specific segments and geographies, or that

bring distinct capabilities in a specialised area.

We also think that being humble (and “not thinking of

being smarter”) simply means that NLB should:

Continue to try to catch the pace of digitally native

banking role models when it comes to new digital

products development speed, technical delivery speed

and consequential product profitability uptake, all

applicable for retail and micro/SME clientele.

Continue to redefine the flow of our IT work to meet the

standards of higher efficiency and quality, measured

predominantly through the ratio of how much time we

spend on thinking vs building the new product features.

Continue to baseline our employees’ headcount

according to end-to-end client journey processes,

so that we can come to clear conclusions where the

additional efficiency gains are realistic, given the

expected impact of technology (including AI-driven

solutions) on internal processes and their much-needed

constant re-engineering.

Continue to try to understand and deploy an agile

way of working, institutionalising the so called “tribe

model”, with the goal to drastically shorten delivery

cycles and raise quality by fully integrating business, IT,

and control functions, and part ways with traditional

hierarchical organisation – all with the purpose to

unlock gains in efficiency and customer satisfaction.

We are basically talking about all the banking business

model elements which have to-date already proven

to be working well in the best-of-class digitally

transformed world’s leading banks and/or digitally

native banking sector leaders who show the way for the

“future of banking”.

But we are also aware that Europe remains fragmented

– strategically and structurally. Unlike the U.S., Europe

has no single dominant banking champion. Narrowing

down the picture to our core region – South-East

Europe – we sometimes mention that our fragmented

markets (classified as frontier markets, albeit arguably

they should bear the emerging markets classification)

are sort of a limiting factor for the quick valuation

upside re-rating of your NLB Group today. But you

should also know this fact preserves long-term

consolidation optionality. And we stand ready to play in

this field as well.

That said, we should maintain the intensity levels while

we work. And we should focus on consistency as our

key mid-to-long term promise. And we should continue

rigorously learning from the best-of-class. Maintaining

the growth mindset at the core of our thinking. For that

to happen, NLB Group will continue to heavily invest in

both technology and talent.

To continue enabling our clients to enjoy the benefits of

their purchasing and investment decisions today, while

spreading the sustainable cost of funding them over

the future. All while we will be expensing our decisions

now, so that our key constituencies (meaning you, our

shareholders, our employees and wider society) can

enjoy their outcomes and benefits long into the future.

Yours truly,

Supervisory Board of NLB d.d.

Primоž Karpe

Chairman

NINA IVANOVIĆ

Serbia

Forest, 2018

wire, metal rods, and spray paint

430 × 218 × 0.8 cm

New acquisition

A wire drawing in space transforms

a flat photograph of a forest

into a fragile three-dimensional

experience of nature.

INSPIRATION

FOR SUCCESS

(i) Number of active clients for banking entities.

(ii) In 2025, a change of methodology by the Central Bank of Serbia.

(iii) Market share of the leasing portfolio.

(iv) Merged entity: The legal merger between Summit Leasing Slovenija, Ljubljana and NLB Lease&Go, leasing, Ljubljana was completed on 4 July 2025, followed by the operational merger on 7 July 2025. The merged entity operates

under the name NLB Lease&Go, leasing, Ljubljana.

(v) Including intra-group exposure of EUR 138.8 million to Mobil Leasing, Zagreb.

(vi) Market share as at 30 September 2025.

(vii) Market share as at 30 November 2025.

For further information on NLB Group subsidiaries, please refer to the chapter

NLB Group Key Members

Result after tax

503.1

(in EUR millions)

Total assets

31,474.8

(in EUR millions)

Active clients

2,960,125

(i)

Inspired by Our Home Region

NLB Lease&Go, leasing, Ljubljana

(iv)

Result

after tax

21.9

1,369.8

(v)

Market share

by total assets

(iii)

37.5%

(iv), (vi)

Mobil Leasing, Zagreb

Result

after tax

1.4

168.8

Market share

by total assets

(iii)

3.8%

(vi)

NLB Lease&Go Leasing Beograd

Result

after tax

0.6

173.1

(iii)

8.5%

(vi)

NLB Skladi, Ljubljana

Assets under

management

3,616.2

(in EUR milliions)

of AUM

42.1%

in mutual funds

Result

after tax

14.5

NLB Fondovi, Beograd

Assets under

66.4

(in EUR milliions)

of AUM

3.0%

in mutual funds

Result

after tax

-0.6

NLB Fondovi, Skopje

104.6

of AUM

21.3%

0.1

NLB Lease&Go Skopje

-0.5

41.4

(iii)

n.a.

NLB, Ljubljana

33.1%

Active clients

737,216

426.9

19,061.0

NLB Banka, Banja Luka

21.5%

(vii)

216,982

29.5

1,333.7

NLB Komercijalna Banka, Beograd

10.2%

(ii)

1,043,052

153.8

6,062.4

NLB Banka, Prishtina

17.1%

(vi)

252,713

40.4

1,634.2

NLB Banka, Skopje

16.8%

475,435

61.5

2,551.3

NLB Banka, Sarajevo

6.3%

135,716

16.9

1,139.7

NLB Banka, Podgorica

14.6%

99,011

26.3

1,152.9

13

Strong performance and resilient growth,

supported by the leasing integration, confirm

the robustness of the business model despite

margin pressure

Profit a.t.

447

2022

503

2025

236

2021

551

2023

173

NGW

(i)

N Banka

515

2024

52

DT

(ii)

(i) NGW = negative goodwill = gains from bargain purchase

(ii) DT = deferred tax: increase of deferred tax assets and first recognition of deferred tax liability for withholding tax on dividends

Net interest income

Gross loans to customers

13,397

10,903

14,064

954

N

Banka

16,721

19,093

970

SLS

Group

31 Dec

2022

31 Dec

2021

31 Dec

2023

31 Dec

2024

31 Dec

2025

Non-performing loans (NPLs)

2021

367

2022

328

2023

301

2024

330

2025

470

2021

409

2022

505

2023

934

947

833

14

Capital

20.1%

TCR

vs. 15.75% requirement (incl. P2G)

Dividend payout in 2025

EUR

257.2

representing 50% of last year’s profit and

corresponding to a strong dividend yield of over 7%

Environmental

EUR

653

of new sustainable financing, supporting

the green transformation of our clients

MREL

43.8%

MREL ratio

vs. 34.71% requirement

MREL funding (stock)

2,410.0

New MREL funding in 2025:

EUR 800 million

Social

59%

increase of employee engagement

in 10 NLB Group members

Asset quality

29 bps

Cost of risk

NPE ratio

1.4%

(EBA definition)

Governance

ESG Risk Rating

10.5

low risk

by Morningstar Sustainalytics

in early 2025 for FY 2024;

the 2025 result was not available at the reporting date.

15

Key performance indicators

Table 1:

Key financial indicators for NLB Group and NLB

NLB

2023

Income statement data

Net interest income

947

934

833

419

432

373

Net non-interest income

(i)

356

308

260

393

378

266

Net non-interest income (BoS)

409

354

300

405

389

277

Net revenue (BoS)

1,735

1,671

1,432

1,040

1,062

828

Total costs

(i)

-617

-566

-502

-301

-279

-238

Tax on balance sheet

-34

-33

-

-34

-33

-

Operating costs (BoS)

-702

-642

-541

-346

-323

-249

Result before impairments and provisions

652

643

591

478

498

401

Impairments and provisions

-60

-37

-14

-15

14

78

Gains less losses from capital investments in subsidiaries, associates, and joint ventures

1

3

1

-

-

-

Result before tax

593

608

578

463

512

479

Result of non-controlling interests

16

16

13

Result after tax

503

515

551

427

478

514

Financial position statement data

31,475

28,035

25,942

19,061

16,975

16,015

Gross loans to customers

19,093

16,721

14,064

9,740

8,816

7,277

Impairments and valuations of loans to customers

-388

-358

-329

-186

-158

-121

Net loans to customers

18,705

16,364

13,735

9,555

8,657

7,156

Financial assets

7,088

6,324

4,804

5,266

4,548

3,016

Deposits from customers

24,510

22,206

20,733

13,450

12,294

11,882

Equity

3,782

3,226

2,883

3,003

2,526

2,249

Non-controlling interests

79

72

65

Total off-balance sheet items

8,642

7,336

6,301

7,132

6,108

5,291

Key financial indicators

a) Capital adequacy

Total capital ratio

20.1%

18.7%

20.3%

26.4%

24.4%

25.2%

Tier 1 ratio

17.4%

15.8%

16.9%

22.0%

19.6%

19.7%

CET1 ratio

15.4%

15.3%

16.4%

18.9%

18.8%

18.8%

Total RWA (in EUR millions)

19,510

18,216

15,337

11,962

11,153

9,207

RWA / Total assets

62.0%

65.0%

59.1%

62.8%

65.7%

57.5%

b) Asset quality

NPL coverage ratio 1 (coverage of gross non-performing loans with impairments for all loans)

82.7%

108.7%

110.0%

65.3%

107.2%

87.9%

NPL coverage ratio 2 (coverage of gross non-performing loans

with impairments for non-performing loans)

49.4%

62.7%

64.6%

45.5%

70.4%

61.2%

NPL coverage ratio (EBA definition)

(ii)

50.2%

63.5%

65.6%

45.7%

70.6%

61.4%

NPL coverage ratio (EBA definition) (BoS)

(iii)

50.2%

63.5%

65.6%

45.7%

70.6%

61.4%

NPL volume (in EUR millions)

470

330

301

285

148

138

NPL ratio (internal def.; NPL / Total loans)

2.0%

1.6%

1.5%

2.4%

1.4%

1.2%

Net NPL ratio (internal def.; net NPL / Total net loans)

1.0%

0.6%

0.5%

1.3%

0.4%

0.5%

NPL ratio (EBA definition)

(ii)

2.4%

2.0%

2.1%

2.8%

1.6%

1.9%

NPL ratio (EBA definition) (BoS)

2.0%

1.6%

1.5%

2.4%

1.4%

1.2%

NPE ratio (EBA definition)

1.4%

1.1%

1.1%

1.4%

0.8%

0.9%

NPE ratio (EBA definition) (BoS)

(iv)

1.1%

1.1%

0.8%

0.9%

Received collaterals / NPL

46.7%

55.9%

58.1%

38.4%

48.5%

58.7%

NPL collateral received / NPL (EBA definition)

64.8%

67.0%

45.6%

68.1%

61.3%

67.1%

Credit impairments and provisions / RWA

0.2%

0.1%

-0.1%

0.4%

0.3%

0.0%

c) Profitability

Net interest margin (BoS)

(v)

3.2%

3.5%

3.4%

2.3%

2.6%

2.5%

16

NLB

Financial intermediation margin (BoS)

4.6%

4.8%

4.6%

4.5%

5.0%

4.4%

Operational business margin

(vi)

4.6%

5.0%

4.8%

3.4%

3.8%

3.7%

ROE b.t.

16.8%

19.1%

21.6%

16.9%

21.2%

26.0%

ROA b.t.

2.0%

2.3%

2.3%

2.5%

3.1%

3.3%

ROE a.t.

14.5%

16.5%

21.0%

15.6%

19.8%

27.9%

ROA a.t.

1.7%

1.9%

2.2%

2.3%

2.9%

3.5%

d) Business costs

Operating costs / Average total assets (BoS)

2.4%

2.4%

2.2%

1.9%

2.0%

1.7%

CIR

(vii)

47.4%

45.6%

45.9%

37.0%

34.5%

37.3%

Total costs / RWA

3.2%

3.1%

3.3%

2.5%

2.5%

2.6%

Total costs / Total assets

1.9%

1.6%

1.6%

1.5%

e) Liquidity

Liquidity assets / Short-term financial liabilities to non-banking sector

42.2%

43.7%

51.9%

56.2%

54.7%

66.5%

Liquidity assets / Average total assets

33.7%

34.5%

41.0%

41.6%

40.0%

51.5%

Liquidity Coverage Ratio (LCR)

199.2%

197.2%

245.7%

243.1%

235.6%

299.7%

Net stable funding ratio (NSFR)

163.7%

167.6%

187.3%

156.2%

155.1%

175.0%

f) Leverage ratio

Leverage ratio

10.3%

9.9%

9.6%

13.1%

12.4%

10.9%

g) Other

Market share in terms of total assets

33.1%

31.3%

30.2%

LTD

76.3%

73.7%

66.2%

71.0%

70.4%

60.2%

Total revenues / RWA

6.7%

6.8%

7.1%

6.8%

7.3%

6.9%

Key indicators per share

Shareholders

(viii)

5,945

4,649

3,457

Shares

20,000,000

20,000,000

The corresponding value of one share (in EUR)

10

10

10

Book value (in EUR)

169.8

157.1

139.9

130.9

122.1

108.3

Branches

Number of branches

381

409

418

69

69

68

Employees

Number of employees

8,107

8,322

7,982

2,469

2,523

2,554

NLB Rating

NLB Outlook

International credit ratings

S&P

BBB+

BBB

BBB

Stable

Stable

Stable

Moody’s

A3

A3

A3

Positive

Positive

(i) Tax on balance sheet excluded from Total costs. Operating lease for NLB Group is presented on a net basis: non-interest income and related costs are netted by the amount of amortisation.

(ii) Loans and advances without loans and advances classified as held for sale, cash balances at central banks, and other demand deposits.

(iii) Loans and advances, including cash balances at CBs and other demand deposits.

(iv) The carrying amount of debt instruments measured at fair value through other comprehensive income (FVOCI) is increased by value adjustments due to impairments.

(v) Calculated on the basis of average total assets.

(vi) Calculated as Net income from operational business (Net interest income - Tier 2 expenses + Net fee and commission income + Recurring net income from financial operations)/Average total assets.

(vii) Tax on balance sheet is excluded from the calculation from 2024 on. CIR is adjusted to the new methodology ‒ operating lease is presented on a net basis: non-interest income and related costs are netted by the amount of amortisation.

(viii) As per the share register of Central Securities Clearing Corporation (KDD). The shares are listed on the Ljubljana Stock Exchange. The Bank of New York (the “GDR Depositary”) represented in the share register of KDD as a single

holder is not the beneficial owner of shares. It holds shares in its capacity as the depositary for the GDR holders. The GDRs representing shares are issued against the deposit of shares and are listed on the London Stock Exchange.

Therefore, the number in the share register of KDD does not represent all final beneficial owners of the Bank shares. The rights under the deposited shares can be exercised by the GDR holders only through the GDR Depositary, and

individual GDR holders do not have any direct right to either attend the general meeting of Bank’s shareholders or to exercise any voting rights under the deposited shares.

Further details on the definition of certain indicators in this table are available in the chapter

Alternative Performance Indicators

17

Key Events

11

12

2

4

1

6

10

8

3

5

7

9

New member

of NLB’s

Management

Board

appointed

Convocation of the

General Meeting

of NLB

Merger

of NLB Lease&Go,

leasing, Ljubljana

and Summit Leasing

Slovenija, Ljubljana

Apple Pay available

to all

NLB clients

across SEE

Issuance of

EUR 500 million

senior preferred notes

Top Employer

certificate

MUZA Gallery opening

First

dividend payment

128.6

Major upgrade of

NLB Klik

Standard and Poor’s

upgraded NLB’s

credit rating

Launch of

NLB Private app

Launch of

NLB Trading app

NLB won

Websi awards

Merger

of SLS HOLDCO,

Ljubljana and Summit

Leasing Slovenija,

Ljubljana

New

SREP

requirement

Issuance of

EUR 300 million

Additional Tier 1 notes

NLB won

two gold

the! Awards

Second

dividend payment

128.6

Charitable donations

across the Group

markets

Launch of

Digital first card

18

January

·

Issuance of senior preferred notes:

On 21 January

2025, NLB issued new 4NC3 senior preferred notes of

EUR 500 million to meet its MREL requirements

(ISIN: XS2972971399).

·

Top Employer certificate:

The Top Employers Institute

awarded the Bank the prestigious Top Employer

certificate for the 10

th

consecutive year.

February

·

Early redemption of notes:

On 5 February 2025, NLB

executed the early redemption of NLB Tier 2 notes in

the aggregate nominal amount of EUR 10.5 million

(ISIN: XS2113139195).

·

New member of NLB’s Management Board:

The Supervisory Board of NLB, upon the

recommendation from the Management Board,

appointed Reinhard Höll as the seventh member of the

Management Board.

·

Establishment of NLB Car&Go:

Following the successful

acquisition of the online vehicle sales platform

doberavto.si, the NLB Group established the NLB

Car&Go company as a wholly-owned subsidiary of

NLB Lease&Go, leasing, Ljubljana.

March

MREL requirement:

NLB received the decision of the

Bank of Slovenia relating to the MREL requirement,

which replaces the previous decision from the BoS.

NLB must comply with the MREL requirement on

a consolidated basis at the NLB Resolution Group,

consisting of NLB and other members of the NLB

Group, excluding banks, which amounts to 29.93% of

TREA (excluding CBR) and 11.24% of LRE. This decision

supersedes the previous BoS decision on the MREL

requirement from December 2023, which amounted to

30.66% of TREA (excluding CBR) and 10.69% of LRE.

MUZA Gallery:

The new gallery MUZA, operating

under the auspices of NLB, officially opened its doors.

The NLB Art Collection, considered Slovenia’s most

extensive private art collection, is now accessible to the

general public.

April

Convocation of the General Meeting of NLB:

NLB announced the convocation of the 44

th

General

Meeting of shareholders of NLB for 16 June 2025.

May

Merger of SLS HOLDCO, Ljubljana and Summit

Leasing Slovenija, Ljubljana:

On 9 May 2025, SLS

HOLDCO was officially merged with Summit Leasing

Slovenija, Ljubljana. As a result, SLS HOLDCO ceased to

exist as an independent legal company.

June

The General Meeting of NLB confirmed an increase

in dividend payout and reappointed a member of

the Supervisory Board:

At the 44

th

General Meeting

of NLB, shareholders adopted numerous resolutions

proposed by the Management or/and Supervisory

Board of NLB. Among these was the allocation of

distributable profit from the previous year, with part

of the profit paid out as dividends in the total amount

of EUR 128.6 million (representing EUR 6.43 gross per

share) on 24 June 2025. The General Meeting also

reappointed Islam Osama Bahgat Zekry for another

four-year term of office as a Supervisory Board

member of NLB. It took note of the new employee

representative Tatjana Jamnik Skubic being elected

by the NLB’s Works Council after the term of office of

Tadeja Žbontar Rems expired.

The ECB consents to Reinhard Höll as NLB’s CTO:

The ECB consented to the appointment of Reinhard

Höll as the seventh member of the Management Board

of NLB and Chief Transformation Officer (CTO) with a

five-year term of office.

Major upgrade of NLB Klik:

NLB has significantly

upgraded its online and mobile banking platform

NLB Klik, introducing a redesigned interface and

enhanced features. The changes assist users in

tracking payments, managing banking services, and

confirming transactions.

Standard and Poor’s upgraded NLB’s credit rating:

The rating agency S&P raised NLB’s long-term issuer

credit rating by one notch to BBB+ from BBB with a

stable outlook, based on financial outperformance and

strong strategic execution.

July

Merger of NLB Lease&Go, leasing, Ljubljana and

Summit Leasing Slovenija, Ljubljana, with operations

continuing under the name NLB Lease&Go, leasing,

Ljubljana, becoming the leading leasing provider in

Slovenia:

After obtaining all regulatory approvals and

registering the acquisition, NLB Lease&Go, leasing,

Ljubljana, was legally merged with Summit Leasing

Slovenija, Ljubljana on 4 July 2025, while technical

migration finished on 7 July 2025. The merged entity

operates under the name NLB Lease&Go, leasing,

Ljubljana and has become the leading provider of

leasing services on the Slovenian market.

Apple Pay available to all NLB clients across SEE:

With the introduction of Apple Pay in the remaining NLB

Group banks in North Macedonia, Kosovo, and Bosnia

and Herzegovina, all NLB clients across SEE now have

access to Apple Pay. NLB was the first bank in the

region to roll out Apple Pay across all of its markets.

The NLB Group published the second round of

net-zero disclosure report:

The report provides a

thorough summary of the NLB Group’s initiatives

and advancements in aligning the financing of GHG

emissions from the Group’s lending portfolios with

trajectories aimed at achieving Net-Zero emissions by

2050 or earlier.

August

NLB Private app:

NLB has launched a

non-transactional app for Private Banking clients – NLB

Private – offering a faster, more digital experience with

24/7 access to information on assets, products and

investment strategies.

September

· NLB Trading app:

NLB has launched a new mobile

app, NLB Trading, providing clients with a fast,

transparent, and straightforward way to manage their

trading.

Websi awards:

The NLB website received two Websi

awards – Best Website and Best UX – reflecting the

success of new digital platforms across the NLB Group.

19

October

New SREP requirement:

The ECB issued a new SREP

decision for NLB Group, under which the Pillar 2

Requirement was reduced from 2.12% to 2.10% and the

Pillar 2 Guidance from 1.00% to 0.75%. The new SREP

decision applies as of 1 January 2026.

November

Issuance of Additional Tier 1 notes:

On 26 November

2025, NLB issued new perpetual NC5 Additional Tier

1 notes of EUR 300 million for strengthening and

optimising capital position (ISIN: XS3227899989).

NLB won two gold PR awards:

NLB Group won

two gold the! Awards at the 2025 Croatian Public

Relations Association conference, recognising the

Welcoming ATM project in the Public Relations for

Large Companies category and NLB Investor Day in

the Events category.

December

Dividend payment:

At its 45

General Meeting in

2025, shareholders of NLB approved the payment

of the second dividend tranche in the amount of

EUR 128.6 million (EUR 6.43 gross per share), payable

on 23 December 2025. Together with the first tranche

paid in June, the total dividend payout for 2025

amounted to EUR 257.2 million, representing 50% of the

previous year’s profit and corresponding to a strong

dividend yield of more than 7%.

Charitable donations in 2025:

The Group made nine

charitable donations across all markets where it

operates, reflecting its commitment to children and

communities in Southeast Europe. NLB allocated

EUR 129,750 in holiday donations in Slovenia,

supporting the Pediatric Clinic in Ljubljana and the

Clinical Department of Reproduction at the University

Medical Centre in Ljubljana.

Digital first card:

NLB introduced an instant digital

debit card, enabling clients to receive it immediately in

digital form in the NLB Pay wallet upon ordering and

start using it right away for online payments, in-store

purchases, and cash withdrawals, following the rollout

of this functionality across other NLB Group banks.

ŠEJLA KAMERIĆ

Bosnia and Herzegovina

Base, 2022–2025

used scarves, printed textile

variable dimensions

Commission

A monumental tapestry made of

used scarves weaves the personal

stories of their previous owners

into an unbroken rope, symbolising

the power of women’s labour, the

cyclical nature of consumption,

and collective resilience.

INSPIRATION

FOR SUCCESS

21

Shareholders Structure and Market Performance

of NLB’s Shares and GDRs

Shareholder structure of NLB

The Bank’s shares are listed on the Prime Market

sub-segment of the Ljubljana Stock Exchange (ISIN

SI0021117344, Ljubljana Stock Exchange trading symbol:

NLBR), and the GDRs representing shares are listed on

the Main Market of the London Stock Exchange (ISIN:

US66980N2036 and US66980N1046, London Stock

Exchange GDR trading symbol: NLB and 55VX). Five

GDRs represent one NLB share.

Table 2:

NLB’s main shareholders as at 31 December 2025

(i)

Shareholder

Number of

shares

Percentage

of shares

Bank of New York on behalf

of the GDR holders

(ii), (iii)

9,152,391

45.76

of which EBRD

/

>5 and <10

of which Brandes

Investment Partners, L.P.

(iv)

/

>5 and <10

Republic of Slovenia (RoS)

5,000,001

25.00

Other shareholders

5,847,608

29.24

Total

100.00

(i) This information is sourced from the NLB’s shareholders’ book that

is accessible at the web services of CSD (Central Security Depository,

Slovenian: KDD - Centralna klirinško depotna družba) and available

to CSD members. The information on major holdings is based on

self-declarations by individual holders pursuant to the applicable

provisions of Slovenian legislation, which require that the holders of

shares in a listed company notify the company whenever their direct

and/or indirect holdings pass the set thresholds of 5%, 10%, 15%, 20%,

25%, 1/3, 50%, or 75%. The table lists all self-declared major holders

whose notifications have been received. In reliance on this obligation

vested with the holders of major holdings, the Bank postulates that no

other entities nor any natural person hold directly and/or indirectly ten or

more percent of the Bank’s shares.

(ii) The Bank of New York holds shares in its capacity as the depositary

(the GDR Depositary) for the GDR holders and is not the beneficial owner

of such shares. The GDR holders have the right to convert their GDRs

into shares. The rights under the deposited shares can be exercised by

the GDR holders only through the GDR Depositary, and individual GDR

holders do not have any direct right to either attend the shareholders’

meeting or exercise any voting rights under the deposited shares.

(iii) The information on GDR ownership is based on self-declarations by

individual GDR holders as required pursuant to the applicable provisions

of Slovenian law.

(iv) The information on GDR ownership is based on self-declarations

made by Brandes Investment Partners, L.P. on 5 December 2024.

29.24%

Other shareholders

25%

+ 1 share

Republic of Slovenia

45.76%

shares in GDR format

GDR holders with shares >5% and <10%:

• EBRD

• Brandes Investment Partners, L.P.

22

Market performance

of NLB’s shares and

GDRs

STOXX 600, the main European stocks index, began

2025 at approximately 510 points, reached its lowest

level of the year at 470 on 9 April, and closed the year

above 590 points, recording a 13.7% annual gain – its

strongest performance since 2021. The April low was

driven by concerns over U.S.–China tariffs, weaker

manufacturing data, and a cautious sentiment. The

subsequent recovery was propelled by a wave of

positive Q1 earnings across Europe. In June, the index

gained momentum, rising on renewed optimism around

U.S.–China trade talks, alongside signs of a stabilisation

in euro area manufacturing and service PMIs. Further

gains were observed in mid-to-late 2025, supported by

Germany’s EUR 50 billion infrastructure plan, which

fuelled the equipment manufacturing, transport, and

retail sectors and renewed confidence in cyclical

earnings. By late December, the STOXX 600 reached a

record high of 592 points, driven by continued strength

in mining and precious metals, as well as year-end

investor positioning.

The STOXX 600 Banks Subindex began 2025 at 212

points, weighed down by lingering tariff concerns, tight

deposit margins, and broad market risk aversion. A

strong recovery through H1 carried the index above 300

by mid-year, supported by tariff relief in Q2, including

the suspension of U.S. tariffs, which boosted the market

sentiment and highlighted strong earnings, enhanced

capital buffers, and potential loan growth. In July 2025,

the index stabilised because of resilient net interest

margins, rising loan demand, improved structural

hedges, stable policy, fiscal support, and strong return

projections. In September, a slight dip occurred amid

caution ahead of the U.S. FED meeting, as rate-sensitive

financials retreated while investors awaited clarity

on U.S. policy. By Q4, the index had climbed into the

350–360 range, driven by continued strong earnings

and loan growth amid a favourable rate environment,

with banks benefiting from improved trading income

and reduced funding costs. The weaker U.S. dollar and

risk-on sentiment environment supported cross-border

banking flows. Defensive positioning and improving

capital dynamics sustained momentum through

December. Overall, 2025 proved a standout year for

European banks, fuelled by cyclical tailwinds, tariff

relief, robust loan growth, and stronger-than-expected

earnings. Climactic gains around key macro updates

and Central Bank signals propelled the index towards

356 points by year-end.

The SBI TOP Index rose by approximately 33.1% in 2025,

trading within a range of 1,667 points to a multi-year

high of 2,536 points on 22 October 2025. The index

advanced steadily through mid-year, as Slovenian blue-

chip companies reported solid Q1 fundamentals and

broad-based revenue growth, reinforcing expectations

of sustained earnings momentum. The index closed the

year at 2,505 points, as NLB confirmed a second 2025

dividend in December, reinforcing the strong capital

return theme among heavyweights – a direct support for

index sentiment. Strong operating results and generous

payouts from Slovenia’s blue-chip companies added

fuel to the year’s robust performance.

Share price

growth

in 2025, more than

42%

and close to 55% total return

(including dividends)

Close to EUR

1.5 million

was the combined average

regular trading volume per day

(excluding block trades)

Figure 1:

NLB share price movements on the Ljubljana Stock Exchange and NLB GDR price movement

on the London Stock Exchange (in EUR)

Source: Ljubljana Stock Exchange, Bloomberg.

GDR

Shares (NLBR)

GDR (NLB)

Shares

40.00

39.00

38.00

37.00

36.00

35.00

34.00

33.00

32.00

31.00

30.00

29.00

28.00

27.00

26.00

25.00

24.00

23.00

22.00

21.00

20.00

200.00

195.00

190.00

185.00

180.00

175.00

170.00

165.00

160.00

155.00

150.00

145.00

140.00

135.00

130.00

125.00

120.00

Jan 2025

Feb 2025

Mar 2025

Apr 2025

May 2025

Jun 2025

Jul 2025

Aug 2025

Sep 2025

Oct 2025

Nov 2025

Dec 2025

23

NLB’s stock (NLBR) opened at EUR 127.50 in 2025. In

early April, it declined from EUR 139.50 to EUR 122.50,

before rebounding by 5.6% on 10 April, which reflecting

the impact of the U.S. tariff shock and its subsequent

partial suspension, and unsettled global markets

in early Q2. This was followed by de-escalation and

an improving sentiment later in the quarter. NLBR

pushed through EUR 169–171 in late August, supported

by strong H1 results. NLB reported a profit after tax

of EUR 274.4 million for H1 and highlighted strategy

execution, which resulted in the share price reaching

an all-time high in early August. On 6 November, NLB 

closed at EUR 180.50, up 2.6%, marking the start of a

strong Q4 trading range. The Q4 results reported a profit

of EUR 97.0 million for the quarter and EUR 503.1 million

YtD, driven by a 14% YtD loan growth, a resilient topline

performance, and improving fee income – while

management reiterated its 2030 strategic ambitions.

NLB successfully issued EUR 300 million AT1 (perpetual

NC5) notes at a 6.5% yield, tightening IPT by 50 bps on

strong demand. The transaction enhanced Tier 1 and

TCR, supporting the bank’s long-term growth plan. In

December, NLB confirmed a second 2025 dividend of

EUR 6.43 gross per share, bringing the total annual

payout to EUR 257.2 million or EUR 12.86 per share. The

stock closed the year at EUR 182.5, recording a 43.1%

growth in 2025.

NLB shares and GDRs

Table 3:

NLB shares information

Share information

31 Dec 2025

Total number of shares issued

Highest closing price (in 2025)

EUR 183.0

Lowest closing price (in 2025)

EUR 122.5

Closing price as at 30 December 2025

EUR 182.5

NLB Group book value per share

EUR 169.8

NLB Group earnings per share (EPS)

EUR 25.2

Price/NLB Group book value (P/B)

1.1

Dividend per share (for the

previous business year)

EUR 12.86

Market capitalisation

EUR 3,650,000,000

(i) No market on 31 December 2025.

Indices

The Bank’s shares are included in several indices: the

SBITOP index, SBITOP TR index, and ADRIA prime index

of the Ljubljana Stock Exchange, FTSE Frontier Index,

MSCI Frontier, and MSCI Slovenia, S&P Eastern Europe

BMI, S&P Emerging Frontier Super Composite BMI, S&P

Extended Frontier 150, S&P Frontier BMI, S&P Frontier

Ex-GCC BMI, S&P Slovenia BMI, as well as the STOXX

All Europe Total Market, STOXX Balkan Total Market,

STOXX Balkan Total Market ex-Greece & Turkey, STOXX

EU Enlarged Total Market, STOXX Eastern Europe 300,

STOXX Eastern Europe 300 Banks, STOXX Eastern

Europe Large 100, STOXX Eastern Europe Total Market,

STOXX Eastern Europe Total Market Small, STOXX

Global Total Market, and STOXX Slovenia Total Market,

New Europe Blue Chip Index, among others.

The Investor

Relations function

The Bank engaged actively with investors through a

wide range of interactions, including investor meetings,

conference calls, conferences, and roadshows.

Transparent communication with investors and

analysts enabled constructive dialogue on strategic

developments and the Group’s financial performance.

Throughout the year, the Bank continued to promote

broader awareness and understanding of its operating

businesses, developments, and events influencing the

Bank’s share price performance.

The Bank’s performance is monitored by analysts from

Deutsche Bank, Wood & Company, Citi, InterCapital,

Oddo BHF, Erste, Ipopema, Capital AM, PKO BP, and

Ilirika BPH.

Throughout 2025, the Bank participated in more than 21

conferences and roadshows, held both in person and

virtually. Representatives of the Bank met with over 220

investors in more than 700 interactions. These meetings

addressed a wide range of topics, including governance

(with remuneration), sustainability, digitalisation,

strategy, and finance.

»

Investor presentations, financial reports, and other key

information are available on the Bank’s website in line

with the Investor Relations Financial Calendar.

24

Macroeconomic Environment

The euro area ended 2025 with slow but steady growth, which was supported primarily by investment activity

and government spending. Inflation returned to 2%, which lifted real incomes. Industrial output and retail activity

stabilised, while confidence indicators improved modestly. Easing financial conditions further strengthened

domestic demand, and resulted in a year characterised by gradual growth.

Global and European

economy

In 2025, the U.S. economy recorded modest overall

growth of 2.2% YoY, with a notable surge in Q3, where

the 4.4% GDP expansion was driven largely by strong

AI-related investment. In Q4, the economy expanded

by 1.4% YoY. Unemployment drifted upward from

around 4.1% mid-year to 4.4% by year-end, as job

gains softened. Inflation remained above target, with

the Consumer Price Index (CPI) fluctuating between

2.3% and 3.0%, influenced by tariff measures and

sticky service prices. Overall, the year presented a

mixed picture. Solid GDP performance and resilient

consumer spending – sustained primarily by high-

income households and technology investment – stood

in contrast to cooling labour market dynamics and

persistent inflationary pressures. Significant capital

spending on artificial intelligence and automation

fuelled Q3 growth. Consumer spending remained

resilient as high-income households maintained strong

consumption despite rising borrowing costs. At the

same time, trade policy and supply chain adjustments

contributed to sticky goods prices. The labour market

cooled, as slower job creation and rising unemployment

tempered wage growth. In response to softening labour

indicators and gradually easing inflation, the Federal

Reserve shifted from maintaining rates through mid-

year to cutting them in Q4.

China’s economy in 2025 was primarily driven by strong

export activity, significant investments in high-tech

and green industry, and targeted domestic stimulus

supporting consumption. Retail sales rose while

industrial upgrading boosted productivity. Despite

these positive developments, the property sector

continued to experience a pronounced downturn,

and persistent deflationary pressures – a flat CPI

and prolonged Producer Price Index (PPI) declines –

remained key challenges. Overall, economic growth

relied on manufacturing strength and policy-driven

support amid structural real estate weakness and

subdued price dynamics.

The euro area closed 2025 with modest, yet increasingly

broad-based growth, as hard data solidified

incrementally while inflation returned to target. GDP

rose 1.3% YoY in Q4, 1.4% YoY in Q3, slightly below the

1.5% YoY reached in Q2 and 1.6% YoY in Q1, bringing the

average for 2025 to 1.5% YoY. Although performance

continued to vary by country, overall momentum edged

up toward year-end, supported by firmer investment

activity and higher government expenditure. On the

activity side, the composite PMI returned to expansion

in H2, reaching a 30-month high in November before

easing in December – still consistent with a soft growth

profile. Survey data indicated modest resilience in

services and a milder industrial drag. This was validated

by industrial production, which accelerated in October

to 2.0% YoY, with gains spanning energy, capital,

and consumer goods – evidence that the goods cycle

stabilised into Q4, as it rose by 2.2% YoY in November

and 1.2% YoY in December. Throughout the year,

industrial production was positive YoY, though growth

was rather subdued below the 2% mark, except in

March and May 2025. Retail trade volumes grew steadily

above 2% YoY in H1, but lost pace in H2 up to October

(1.9% YoY), November (2.4% YoY), and December

(1.3% YoY), suggesting real consumption is holding up

despite lingering caution.

Two demand-side drivers were particularly notable.

First, households rebuilt financial buffers as the

saving rate rose to 15.4% in both Q1 and Q2, reflecting

that disposable income outpaced consumption. This

combination of rising incomes and cautious spending

helped restrain price pressures while leaving room for

future consumption if confidence improves. Second,

sentiment indicators recovered from their 2024 lows, but

remained sub-trend. The Economic Sentiment Indicator

hovered in the region from mid-90s to 100 toward

the end of the year, while employment expectations

softened in December, signalling continued prudence

among firms and households. The price environment

was the decisive macro tailwind. Euro area inflation

opened the year at 2.5% YoY, spent the rest of the year

between 1.9% and 2.3% and fell to 2.0% in December,

supported by easing core inflation and YoY energy

deflation. Services remained the stickiest component;

however, the overall disinflation allowed real incomes

to improve and reduced policy-related uncertainty.

Against this backdrop, easing financial conditions that

followed earlier ECB rate cuts, gradually filtered through

credit channels and reinforced the stabilisation evident

in PMI new orders and the firming of output late in the

year. From a sectoral perspective, manufacturing’s

slow growth and services’ steady expansion were

complemented by incremental support from investment,

as the Q3 revisions attributed the GDP uptick partly to a

rebound in fixed investment, while government demand

also contributed. This growth composition, characterised

by reduced reliance on net exports and greater

reliance on domestic engines, helped mitigate external

headwinds from trade frictions. Overall, 2025 was

characterised as a year of slow, grinding expansion for

the euro area. The principal drivers included disinflation

that supported real income growth, stable consumption

1.1%

economic growth

in Slovenia in 2025

25

alongside elevated savings, stabilisation in industrial

and retail activity in Q4, and improving, though still

below-average, confidence.

In 2025, the ECB adopted a cautious, data-dependent

approach to interest rates, balancing disinflationary

progress with economic uncertainty. During the first

half of the year, the ECB cut its key interest rates on four

occasions. In June 2025, following three earlier cuts, the

Governing Council enacted a final 25-bps cut across all

three key policy rates, lowering the deposit rate to

2.00%, the refinancing rate to 2.15%, and the marginal

lending rate to 2.40%. This decision was driven by

inflation stabilising near the 2% target, revised

projections indicating lower energy-related price

pressures, a stronger euro, and slightly moderating

economic growth – estimated at approximately 0.9%

for the year. The Council assessed monetary policy

transmission as sufficiently effective and aimed to ease

financing conditions amid considerable global trade

and geopolitical uncertainty. Simultaneously, the ECB

completed an updated strategy assessment in late

June, reaffirming its symmetric 2% inflation target and

emphasising flexibility across its toolkit, particularly in

light of emerging risks from geopolitical fragmentation,

AI, demographic trends, and sustainability. For the

remainder of the year, monetary policy remained

broadly unchanged. In September, the Council left

interest rates on hold, citing inflation remaining close to

target and persisting global growth uncertainty,

notably linked to U.S. tariff developments, thereby

indicating no immediate need for further easing. The

December decision reaffirmed expectations of inflation

stabilising at 2.0%, alongside a moderate upward

revision in GDP growth.

With headline inflation nearing 2.0% and inflation

expectations remaining well anchored, the ECB

deemed that aggressive additional rate cuts were

unnecessary and instead focused on monitoring the

core and underlying inflation pressures. Persistent

trade tensions, geopolitical friction, and the strength of

the euro weighed on growth and inflation dynamics,

prompting a cautious easing in June followed by a

period of policy patience. Having cut rates substantially

since their 2024 peak of 4%, the ECB noted that credit

conditions had loosened and the stance of monetary

policy was approaching neutral territory. Overall,

the ECB’s rate strategy in 2025 reflected a deliberate,

calibrated approach, easing early in the year amid

cooling inflation and fragile growth, followed by a

pause in H2 as price pressures remained contained

and uncertainties persisted. The ECB’s December 2025

projections incorporated upward revisions to the growth

outlook alongside mixed adjustments to the inflation

profile, reflecting better-than-expected incoming data

and shifts in external conditions. Stronger Q3 activity,

reduced trade policy uncertainty, lower energy prices,

and improved foreign demand contributed to the

improved GDP outlook. Additional support stemmed

from fiscal stimulus, particularly higher defence and

infrastructure spending, especially in Germany, as well

as from easing financing conditions resulting from

earlier rate cuts. The upward revision to inflation in 2026

was driven by stronger-than-anticipated wage growth

and persistent services inflation, while the downward

revision for 2027 stems from the postponement of the

ETS2 carbon pricing mechanism to 2028, partly offset

by continued services inflation. These assessments

were further shaped by a significant upward revision to

compensation per employee, which supported domestic

demand, but was expected to moderate gradually

alongside lower projected oil and gas prices and the

appreciation of the euro, both of which helped reduce

inflation pressures.

In 2025, the FED transitioned from an early-year

wait-and-see approach to a cautious easing cycle by

year-end. The target federal funds rate was held at

4.25%–4.50% through June, citing solid employment

conditions and moderating inflation, opting for a

pause amid tariff-related uncertainty. In September,

a 25 bps cut lowered interest rates to 4.00%–4.25%,

making the first reduction since December 2024. This

decision reflected concerns over a weakening labour

market, characterised by slowing job growth and rising

unemployment, even as inflation remained elevated.

Subsequent cuts in October and in December – each by

25 bps – brought rates down to 3.50%–3.75%. Officials

cited increased downside risks to employment, softening

labour data, and persisting, but gradually cooling,

inflation. Overall, the FED’s actions were guided by

its dual mandate. With employment softening and

inflation retreating slowly, policymakers shifted from

holding rates to a gradual easing stance, maintaining

a data-dependent and risk-management approach

throughout the year.

The macroeconomic and monetary policy developments

in the euro area were also reflected in foreign exchange

markets, particularly in movements of the euro–U.S.

dollar exchange rate throughout 2025. Starting the

year at relatively weak levels, the euro gradually

strengthened as inflation converged toward the ECB’s

target, and the relative monetary policy outlook shifted

in favour of the euro area. At the beginning of the year,

the euro traded around 1.03 USD, reaching its lowest

point near 1.02 USD in January, reflecting ongoing ECB

easing while U.S. monetary policy remained restrictive.

During Q1, this policy configuration supported the U.S.

dollar and kept the euro under pressure. As the year

progressed, euro area inflation stabilised close to

the ECB’s 2% target, and economic activity, although

subdued, showed signs of gradual stabilisation. This

allowed the ECB to slow the pace of easing and maintain

a cautious, data-dependent stance. At the same time,

expectations for U.S. monetary policy began to adjust as

the U.S. labour market softened. Against this backdrop,

the euro strengthened during Q2, moving into the 1.12–1.13

USD range. Appreciation continued into Q3, supported

by a turning point in U.S. monetary policy, when the FED

initiated rate cuts in September. The euro reached its

annual high above 1.18 USD in mid-September. In Q4,

as the FED delivered further rate reductions and euro

area inflation remained close to target, the euro–U.S.

dollar exchange rate stabilised, trading broadly in the

1.15–1.18 USD range toward year-end. Overall, exchange

rate developments were consistent with converging

inflation dynamics, a stabilising euro area economy, and

a narrowing monetary policy differential between the

euro area and the United States, reinforcing the broader

macroeconomic trends described above.

Slovenia’s 2025 growth

was anchored by domestic

demand & investment amid

external headwinds

26

Economy in the

Group’s region

In 2025, the economies within the NLB Group’s

region demonstrated steady recovery and structural

adjustment, primarily driven by household consumption

and supported by targeted investment initiatives.

Domestic demand remained the cornerstone of growth,

benefiting from easing inflationary pressures that have

restored purchasing power, despite persistent cost

challenges in certain categories such as housing and

energy. Governments continued to play a stabilising

role through consistent public spending, while

private investment gained momentum, particularly in

infrastructure and construction, signalling confidence

in long-term prospects. External trade dynamics

improved gradually, with exports strengthening

across most countries, though imports remained

elevated due to strong domestic demand and capital

goods requirements. Industrial production showed

mixed performance, with notable weaknesses in EU-

linked manufacturing economies, reflecting structural

vulnerabilities and reliance on seasonal or energy-

intensive industries. Labour markets were broadly stable,

with improvements in several countries reinforcing

consumer confidence. Overall, 2025 positions the SEE

region as an area of cautious optimism, with moderate

yet resilient growth, inflation largely under control,

and investment-led strategies beginning to reshape

economic fundamentals. The interplay of resilient

consumption, gradually improving trade balances, and

strategic capital formation sets the stage for a more

balanced and sustainable trajectory in the years ahead.

FDI flows in the NLB Group’s region during 2025 show

divergent trends driven by structural and cyclical

factors. While Serbia still recorded the highest FDI

(inflows), the numbers faded compared to 2024, most

probably due to the massive government protest

and political uncertainty. Kosovo recorded steady

gains, supported by infrastructure development and

diaspora-linked investments, signalling growing trust

in institutional stability. Bosnia and Herzegovina

experienced a sharp surge later in the year, likely

tied to privatisation initiatives and greenfield projects

in energy and transport. Slovenia’s flows fluctuate,

influenced by portfolio adjustments and a shift toward

high-value sectors, while North Macedonia faces a

pronounced decline, underscoring investor caution

amid policy uncertainty and slower project execution.

Overall, the pattern highlights a preference for larger,

reform-oriented markets and sectors aligned with

regional integration, energy transition, and nearshoring

opportunities, while smaller economies remain sensitive

to governance and implementation risks.

Macroeconomic snapshot

of NLB Group’s region

The weighted-average regional growth rate declined

in 2025 compared to 2024 but stayed comfortably

above the euro area’s 1.5% YoY. The NLB Group’s region

experienced moderate, consumption-driven growth

with investment playing an increasingly important role,

while inflation trends broadly stabilised across countries,

despite sectoral pressures. External balances improved

across most economies, while industrial output remained

volatile, underscoring the importance of domestic

demand and capital formation as key anchors of

regional resilience. Apart from Slovenia, the growth in the

NLB Group’s region remains well above the euro area.

Economic growth in

Slovenia

expanded steadily through

2025, with GDP growth accelerating from -0.6% YoY

in Q1 to +1.9% in Q3 and 2.0% YoY in Q4, bringing the

average for 2025 to 1.1% YoY. The key growth driver

was domestic expenditure, which surged 3.8% YoY in

Q3 after a weak Q2 (-0.1% YoY) and further to 5.4%

YoY in Q4. This rebound reflects stronger gross capital

formation (+13.1% YoY in Q3 and +13.2% YoY in Q4),

signalling an investment-led recovery, likely supported

by easing financial conditions and EU funding flows.

Household consumption grew modestly (+1. 3% YoY) in

Q3 but sped up in Q4 to 3.0% YoY, while government

spending remained supportive (+1.2% YoY in Q3 and

3.8% YoY in Q4). Trade dynamics were mixed. Exports

contracted slightly (-0.4% YoY) in Q3 but rose by 0.5%

YoY in Q4, while imports rose (1.7% YoY in Q3 and by

4.8% YoY in Q4), resulting in a negative impact on the

external balance, which contracted by 1.3% YoY in 2025.

This pattern indicates that Slovenia’s growth leaned

heavily on domestic engines rather than net exports,

consistent with euro area trends amid global trade

frictions. Inflation moderated significantly, with the

Harmonised Index of Consumer Prices (HICP) averaging

2.5% YoY in 2025, down sharply from 2024, driven by

goods disinflation (+1.7%) and moderating services

(+3.8%). Food remained sticky (+5.5%), but transport

costs fell (-1.4%) as did housing electricity and utilities

(-0.1% YoY), which cushioned headline inflation. This

disinflation improved real incomes and supported

consumption resilience despite cautious sentiment. Retail

trade showed volatility: strong early-year gains (+3.0%

YoY in January) faded mid-year, even turning negative in

July (-0.5%), before stabilising in Q4 (+2.4% in October).

Industrial production remained weak, contracting most

months (e.g., -4.5% YoY in June), which reflects external

softness and manufacturing headwinds. The late-year

improvement (-0.9% in November) hints at stabilisation,

but not a full recovery. Unemployment remained low

but edged up to 4.2% in Q3 from 3.2% in Q2, signalling

cautious hiring amid uneven demand. In Q4, it decreased

marginally to 4.1%, bringing the average for 2025 to

3.9%. Still, Slovenia remained well below the euro area

average (6.4%), underscoring structural labour strength.

The economy in

Serbia

recorded steady but subdued

expansion in 2025, with real GDP rising approximately

2.0% YoY each quarter (Q1–Q3: 1.8–2.0% and by 2.2%

YoY in Q4), driven primarily by private consumption and

bringing the average for 2025 to 2.0% YoY. Household

spending accelerated from 1.9% in Q1 to 3.5% in Q3

and 3.7% YoY in Q4, mirrored in retail trade, where YoY

growth moved from 3.0–4.0% in spring to approximately

7.5% by October–November, bringing the growth for

2025 to 4.2% YoY in constant prices. This trend reflects

broad disinflation, as the headline CPI cooled from 4.6%

YoY in January and June to 2.7% by December, and

hence averaged 2.7% YoY in 2025. Food prices swung

from a modest increase to deflation by year’s-end (-0.9

YoY), easing pressure on real incomes, while housing

and energy costs rose late in the year (7.5% YoY), partly

offsetting the relief. Investment remained the weakest

component due to massive and enduring government

protests and political uncertainty. Gross fixed capital

formation contracted in the first three quarters (-0.7%

economic growth in the Group’s

region in 2025

27

YoY in Q1, -3.9% YoY in Q2, -2.2% YoY in Q3), and rose by

8.9% YoY in Q4, consistent with elevated financing costs

and a lack of foreign direct investments. Government

consumption was muted at 0.5% YoY in Q1, but rose

to 3.8% YoY in Q3 and Q2, while it sped up to 4.2% YoY

in Q4, providing some counter-cyclical lift. External

dynamics slowed throughout the year. Exports growth

decelerated from 8.2% YoY in Q1 to 4.2% in Q3 and 5.3%

YoY in Q4, while import growth decelerated from 10.9%

YoY in Q1 to 4.8% in Q3 and 7.6% YoY in Q4, leaving net

exports to decrease in each quarter. Industrial activity

remained volatile YoY, ranging from -1.8% in February to

+5.5% in July, then -3.4% in November and -5.7% YoY in

December, reflecting uneven manufacturing and energy

output, rising by 0.9% YoY in 2025. Labour market

quietly strengthened, as unemployment eased from

9.1% in Q1 to 8.2% in Q3, but rose again in Q4 to 8.9%,

bringing the average for 2025 to 8.7%.

Bosnia and Herzegovina

recorded a gradual

acceleration in 2025, with real GDP growth edging from

1.9% YoY in Q1 to 2.0% in Q2 and 2.1% in Q3. The growth

composition improved throughout the year. Private

consumption rose from 1.8% YoY in Q1 to 2.5% in Q3,

tracking a clear H2 retail rebound, as sales shifted from

negative in Q1 to 6.8% in November. This momentum

was driven by a disinflationary mix rather than outright

disinflation, as average prices were up 4.0% YoY in 2025,

with food remaining high (+8.3%), while clothing (-7.8%)

and transport (-2.4%) provided relief, supporting real

purchasing power and services demand (restaurants

and hotels +6.9%). Public consumption remained

steady, with a modest tailwind as growth went from 3.1%

YoY in Q1 to 2.7% YoY in Q3. The standout driver was

investment, with gross capital formation accelerating

sharply from 2.8% YoY in Q1 to 9.0% in Q3, suggesting

construction and equipment outlays offset tighter

financing conditions. On the external side, exports rose

by 5.6% YoY, while imports rose by 4.5% YoY, leaving net

exports negative as exports covered imports by 56.7%.

Industrial production remained mostly in contraction

YoY throughout the year, with only a brief intermission

of 2.5% YoY in June and 1.9% YoY in December, reflecting

softness in manufacturing supply chains and energy-

intensive branches. Hence, in 2025, the industrial

production contracted by 1.7% YoY. Nevertheless, labour

market conditions tightened, as the unemployment rate

declined from 13.4% in Q1 to 11.2% in Q3, and further to

11.1% in Q4, bringing the average for 2025 to 12.2%.

Economic expansion in

North Macedonia

was

moderated and investment-led. Real GDP rose from

2.9% YoY in Q1 to 3.8% in Q3. The growth composition

shifted notably, with gross capital formation standing

out and accelerating from 9.2% YoY in Q1 to 30.6% in Q3,

which signalled a strong construction and equipment

pipeline that was likely supported by EU-linked projects.

Government consumption provided a steady tailwind,

rising 5.7% YoY in Q1, easing to 3.5% in Q2, and returning

to 5.7% in Q3, cushioning volatility elsewhere. Private

consumption was more uneven, improving from 2.6%

YoY in Q1 to 3.1% in Q2, but cooling to 0.9% in Q3.

The pattern aligns with a stable disinflation trend, as

headline CPI hovered at 4.0-5.0% YoY in January, June,

and December, averaging 4.1% YoY in 2025. Food prices

remained elevated at 5.0–6.0%, while housing prices

were at 1.0–2.0%, and services prices were elevated

early in the year before normalising. Retail data echo

these trends, with a soft Q1, followed by a sales spike

in June (13.1% YoY), and then settling into modest gains

of 2.0–3.0% in October and November and 1.2% YoY

in December. The external balance was a drag. In

2025, exports rose by 2.9% YoY, while imports rose by

4.4% YoY. This left net exports negative, consistent with

capex-heavy demand for intermediates and machinery.

Industrial production was volatile, peaking at 9.4% YoY

in May and at -2.8% in November and 2.3% in December,

reflecting rotation across manufacturing niches. Labour

market conditions were steady, with unemployment

holding around 11.7% in Q1, 11.5% in Q2 and Q3, and 11.4%

in Q4, bringing the average for 2025 to 11.5%.

Montenegro

recorded solid growth in 2025, with real

GDP rising from 2.8% YoY in Q1 to 3.1% in Q3. The growth

composition became more balanced over the year. Final

consumption remained the key anchor, supported by

household spending across Q1–Q3, and was echoed

by solid retail trade growth of 3.0–7.0% YoY through

most months, aside from a brief dip in August. In Q4,

retail activity remained resilient, with turnover rising

by 7.2% YoY, though seasonality drove a pronounced

16.8% QoQ decline as the post-summer adjustment

set in. Government consumption was broadly stable,

adding a modest but reliable tailwind. The main pivot

during the year was investment and trade. Gross capital

formation climbed from EUR 435 million in Q1 to EUR

558 million in Q3, with gross fixed capital formation

advancing in parallel – consistent with construction and

equipment outlays linked to tourism infrastructure and

public projects. Externally, exports contracted by 7.0%

YoY in 2025, while imports increased by 9.3% YoY. The

coverage of import by export was 12.8% and it was lower

YoY by 2.3 pp. The trade gap widened compared to

2024 by roughly EUR 400 million, as the external sector

hence acted as a drag on the GDP. Price dynamics

were contained yet uneven. The headline CPI stood at

3.9% YoY in 2025, with food prices at 3.8%, housing and

energy at 6.4%, restaurants and hotels at 7.5%, and

clothing registering deflation. This mix supported real

incomes while keeping service prices firm. Industrial

production was volatile, with strong gains in May and

June, followed by sharp declines later in the year,

underscoring sectoral concentration, contracting by

9.2% YoY in 2025. Labour market conditions tightened,

as unemployment eased from 11.2% in Q1 to 10.1% in Q3.

Economic expansion in

Kosovo

was steady in 2025,

with GDP growth at 2.8% YoY in Q1, accelerating to

4.6% YoY in Q2 before easing to 3.1% in Q3. Household

consumption remained the primary growth driver,

expanding from EUR 2.0 billion in Q1 to EUR 2.27

billion in Q2 and EUR 2.08 billion in Q3, supported by

rising incomes despite inflation averaging between

4.0–5.0% YoY late in the year. Price pressures were most

pronounced in essentials, with food prices up 8.6%

and housing costs up 10.7% in December. Government

spending added a modest boost, while investment

accelerated, as gross capital formation jumped from

EUR 774 million in Q1 to EUR 1.08 billion in Q3, signalling

strong momentum in construction and infrastructure.

External trade improved markedly. Exports surged from

EUR 877 million to EUR 1.81 billion, outpacing the growth

of imports, although the trade gap remained wide.

Price pressures persisted in essentials, but deflation in

transport and communication offset some of the strain.

Labour market data are limited, but available indicators

suggest stability amid strong domestic demand.

28

Banking system in the Group’s region

The region continued to exhibit robust but uneven credit

growth, resilient household balance sheets, stabilising

profitability, and differing economic momentum across

countries. Deposit growth remained solid, but lagged

behind loan growth, leading to rising LTD ratios and a

gradual deterioration in regional liquidity. At the same

time, certain markets were experiencing rising funding

costs, adding pressure to overall financial conditions.

Table 4:

Movement of key banking systems indicators in the NLB Group region in 2025

Corporate loans

Household loans

Corporate deposits

Household deposits

Net interest margin

NPL

CAR

in EUR

millions

∆ % YoY

in EUR

millions

∆ % YoY

in EUR

millions

∆ % YoY

in EUR

millions

∆ % YoY

2024, in %

2025, in %

in %

∆ pp YoY

in %

∆ pp YoY

Slovenia

10,186

4.3

14,369

7.9

11,718

7.4

29,170

6.8

3.1

2.7

2.5

1.0

19.6

-0.2

Serbia

19,418

13.5

16,502

19.3

20,014

4.2

23,411

7.2

4.1

3.7

(ii)

2.1

-0.6

21.0

-0.9

N. Macedonia

4,528

15.3

4,487

10.9

3,044

6.5

7,209

12.1

3.6

3.2

2.3

-0.4

19.4

0.5

BiH

5,886

8.1

7,391

12.2

4,508

8.8

10,093

11.8

2.1

2.0

2.7

-0.8

19.9

0.4

Kosovo

3,794

11.2

2,795

19.7

1,717

15.5

5,046

12.0

4.1

4.1

2.1

0.1

17.2

1.4

Montenegro

1,995

18.9

2,428

19.8

2,074

-3.2

3,214

7.8

5.0

4.5

2.8

-1.2

19.4

-0.4

(i) Data as of Q3 2025.

(ii) Data as of 30 November 2025.

Note: Net interest margin calculated on interest-bearing assets. Household loans contain NPISH, corporate loans include only non

-financial corporates.

Source: Statistical offices, Central Banks, and NLB.

Corporate and household credit dynamics vary widely

across the region in 2025. Corporate loan growth was

strongest in Montenegro (18.9%) and North Macedonia

(15.3%), while Slovenia recorded modest expansion (4.3%).

Household lending was broad-based, led by Montenegro

(19.8%), Kosovo (19.7%) and Serbia (19.3%). Corporate

deposit trends were largely positive, with inflows ranging

from 4.2% to 15.5% YoY across most markets, except in

Montenegro, where deposits contracted by 3.2% YoY.

Household deposits remained resilient across all markets,

with North Macedonia (12.1%), Kosovo (12.2%) and Bosnia

and Herzegovina (11.8%) posting the fastest increases.

Overall, the data signals strengthening household

balance sheets and uneven corporate liquidity conditions,

shaped by country-specific economic momentum.

Across the region, interest rate movements in 2025

revealed a gradual normalisation phase, with most

countries showing mild easing from earlier peaks while

maintaining a cautious stance. In Slovenia, corporate loan

rates softened from 3.7% in January to 3.2% by October,

while consumer rates declined from 6.8% to 5.7%. Real

estate lending remained stable near 2.8–3.1%, indicating

a relatively anchored property-financing environment.

Serbia showed a similar, though more pronounced,

downward adjustment, as corporate loan rates fell from

5.8% in January to 5.1% in September, and consumer

loan rates decreased from 10.4% to 8.6%, signalling

easing household credit pressures. Real estate loans also

decreased from 5.7% to 4.7%. In Montenegro, corporate

lending rates trended downward from 4.8% to 4.2%, while

consumer rates eased from 6.3% to 6.1%. Real estate-

related rates fell moderately and stabilised around the

mid -4% range. Kosovo experienced moderate volatility,

but maintained a generally upward bias in corporate

rates from 6.3% to 6.9% by November that reflected

tighter credit conditions. Consumer lending fluctuated

but ultimately declined to 6.9%, while real estate rates

moved within a narrow band, closing at 5.7%. Bosnia and

Figure 2:

ROE ratio in the euro area and the NLB Group region

in 2025

(i) Return on average equity (ROAE) is used for Bosnia and Herzegovina. Data for the euro area and Montenegro are for Q4 2025, and data for Bosnia

and Herzegovina is for Q3 2025. November 2025 data for Serbia and December 2025 data for the rest.

Note: The dashed line represents the simple average of the NLB Group’s region in 2025.

Source: ECB, National Central Banks.

Slovenia

Euro area

Serbia

Kosovo

N. Macedonia

BiH

9.5%

9.5%

18.9%

14.4%

20.3%

19.8%

17.6%

17.0%

17.9%

19.9%

17.4%

19.3%

15.3%

15.9%

29

Herzegovina recorded the steepest regional adjustment,

with corporate lending rates dropping sharply from 8.0%

in January to 3.7% in November. Consumer and real-

estate rates declined gradually, reflecting easing financial

conditions. North Macedonia showed mild downward

trends across all segments, with corporate rates falling

from 4.8% to 4.4%, and consumer rates from 5.5% to

5.3%, which underscored steady monetary normalisation.

In 2025, ROE remained broadly stable or lower than

in 2024, reflecting a moderation in overall profitability.

The euro area decreased by the slightest of margins at

9.5%, as funding costs eased and credit risk stabilised.

North Macedonia and Serbia remained elevated

despite a slight moderation and were supported by solid

net-interest income. Slovenia, Bosnia and Herzegovina,

Kosovo, and Montenegro recorded a softening of

ROE, primarily due to slower credit volumes and the

normalisation of margins, following exceptionally strong

results in 2024. However, the average ROE of the NLB

Groups region, as depicted by the dashed line, remains

well above the euro area. Loan-to-GDP ratios in 2025

continued to signal that financial development across

the region was progressing. Corporate loan penetration

was the highest in Kosovo (0.341) and North Macedonia

(0.258), reflecting dynamic SME sectors and a strong

investment appetite. Household loans rose notably

in Montenegro (0.288) and North Macedonia (0.263),

and were driven by expanding mortgage markets and

household consumption. LTD ratios increased between

2024 and 2025 in all countries except Bosnia and

Herzegovina (and a slight decline in Slovenia), indicating

a general deterioration in liquidity conditions. In the

euro area, it rose by 0.9 pp, while Slovenia recorded a

decrease of 0.3 pp. Serbia experienced the sharpest

increase, at 9 pp, followed by Montenegro with 8.9 pp

and North Macedonia with 3.5 pp, with LTD ratios rising

due to faster deposit growth supported by remittances

and tourism-related inflows, while in Serbia, the increase

was largely attributed to lower inflows of FDIs. Overall,

the 2025 movements were driven by higher funding costs,

stronger YoY credit growth relative to deposit growth,

and the gradual normalisation of interest margins

after a prolonged period of high interest-rate volatility.

The average LTD of the NLB Group’s region, however,

remains well below the euro area, by a 15.7 pp margin.

Figure 3:

Loans to non-financial corporations and household loans

(% GDP) in the euro area and the NLB Group region in 2025

Slovenia

Euro area

Serbia

Kosovo

BiH

Loans to non-financial corporations, % GDP

Household loans, % GDP

(i) Data from Q3 2025 for Bosnia and Herzegovina, Kosovo and Montenegro, the rest is for Q4 2025. For Montenegro, the data is for residential loans.

Note: The dashed lines represent the simple average of the NLB Group’s region in 2025.

Source: National Central Banks, National Statistical Offices.

33.7%

45.2%

14.6%

20.3%

18.5%

18.4%

20.4%

34.1%

28.8%

22.5%

25.4%

24.7%

25.8%

26.3%

Figure 4:

LTD ratio in the euro area and the NLB Group region

Note: Data for December 2025 for Slovenia and Bosnia and Herzegovina, data for Q4 2025 for the euro area and Montenegro, data for Q3 2025 for North

Macedonia, data for October 2025 for Serbia and data for November 2025 for Kosovo. The dashed line represents the simple average of the NLB Group’s

region in 2025.

Source: ECB, National Central Banks, NLB.

Slovenia

Euro area

Kosovo

BiH

92.9%

92.8%

60.4%

60.1%

71.5%

80.5%

81.5%

85.0%

84.0%

85.2%

66.0%

74.9%

76.2%

76.9%

30

Regulatory Environment

The Group consistently monitors regulatory developments to ensure full compliance and timely adaptation to new

requirements. By leveraging technology, strengthening internal controls, and fostering a culture of responsibility,

the Group reinforces its position as a reliable and forward-looking financial institution. The most relevant legislative

and regulatory developments affecting the Group are outlined below.

Regulatory

environment in

In 2025, significant regulatory developments at both the

EU and Slovenian levels influenced the banking sector,

prompting the Bank to adapt its operations and further

strengthen its compliance framework. These changes

reflect the dynamic regulatory landscape and the Bank’s

commitment to maintaining the highest standards of

compliance, governance, and risk management.

Finalisation of Basel III (CRR III/CRD VI)

The revised Capital Requirements Regulation (CRR III)

became largely applicable as at 1 January 2025,

completing the final phase of Basel III implementation

in the EU. Certain elements, including market

risk standards under Fundamental Review of the

Trading Book (FRTB), were deferred to 2026. Capital

Requirements Directive VI (CRD VI) will apply following

its transposition into national legislation. The revised

framework strengthens the resilience of EU banks and

supports the transition to climate neutrality.

In March 2025, amendments to the Banking Act

(ZBan-3A) were adopted to align Slovenian legislation

with recent EU regulatory developments, including

CRR III, CRD V, and requirements arising from Regulation

(EU) 2023/1114 (MiCA) and the Digital Operational

Resilience Act (DORA). In addition, preparations for the

new Banking Act (ZBan-4), which will transpose CRD VI,

commenced through a public consultation process,

with adoption expected in early 2026. The Bank actively

monitors these developments and assesses their

potential impact on its operations.

Instant Payments Regulation

The Instant Payments Regulation entered its

implementation phase in 2025, introducing binding

requirements for payment service providers to

receive and send instant credit transfers in euros.

Additional obligations, including payee verification,

sanctions screening, and price parity aim to enhance

the security and efficiency of payment services. The

Bank implemented the necessary measures and

aligned its systems and processes with the applicable

implementation deadlines.

Payment Services Framework (PSD3 and PSR)

Legislative reforms to the EU payments framework

progressed through the adoption process of the revised

Payment Services Directive (PSD3) and the Payment

Services Regulation (PSR). These initiatives are designed

to further harmonise payment services regulation,

enhance consumer protection, and address operational

and fraud-related risks. The Bank continues to monitor

developments and prepare for implementation.

Digital resilience and information security

In 2025, Slovenia adopted the Information Security Act

(ZInfV-1), transposing the NIS2 Directive and establishing

the national cyber-security framework. For the Bank,

which is subject to DORA applicable from 17 January

2025, ZInfV-1 primarily affects coordination and incident-

handling arrangements at the national level.

Throughout the year, the Group further strengthened

its digital operational resilience by enhancing ICT risk

management, refining incident response and reporting

processes, and reinforcing oversight of third-party ICT

service providers. These measures ensured the Group’s

compliance with DORA and maintained a high level

of preparedness for ICT-related risks and operational

disruptions. The Group continues to prioritise digital

resilience and cyber-security as key elements of its risk

management framework.

ESG regulations

Regulatory expectations related to sustainability and

ESG risks continued to evolve. The EBA Guidelines on the

management of ESG risks, applicable from January 2026,

require the integration of ESG risks into governance,

strategy and risk management frameworks. In addition,

the EBA Guidelines on Environmental Scenario Analysis,

applicable from 1 January 2027 and forming part of

the EU sustainable finance roadmap under CRD VI,

introduce requirements for forward-looking assessment

of environmental risks. The Bank is preparing for their

implementation in line with supervisory expectations,

further aligning its risk management practices with

evolving ESG regulatory standards.

Anti-Money Laundering

Amendments to the Act on the Prevention of Money

Laundering and Terrorist Financing (ZPPDFT-2B and

ZPPDFT-2C) were adopted in 2025, further aligning the

national AML/CFT framework with EU legislation. The

changes include provisions related to crypto-assets,

cooperation with EU authorities, and revised access to

beneficial ownership information. The Bank continued

121

NLB

/

182

number of changes in the

regulatory environments

with material effects,

as published in 2025

31

to strengthen its AML/CFT framework by enhancing

controls and processes in line with updated regulatory

requirements and the EBA Guidelines on internal

policies, procedures and controls, which became

applicable on 30 December 2025.

Capital markets and investment products

Further regulatory changes introduced the adoption

of the Market in Financial Instruments Act (ZTFI-1),

applicable from October 2025, and the Act on Individual

Investment Accounts (ZINR), which introduces individual

investment accounts to promote long-term retail

investment and will apply from March 2026.

Central Credit Register Act (ZCKR-1)

Amendments to the Central Credit Register Act (ZCKR-1)

expanded mandatory reporting to additional lenders,

improving the completeness of data on borrower

indebtedness and supporting credit risk assessment.

The updated framework also enables automated access

to register data under defined technical and security

conditions and introduces the collection of ESG-related

information on corporate borrowers for integration into

credit risk evaluations.

Regulatory

environment in the

Group’s region

The regulatory environment in the Group’s regional

markets was characterised by developments focused on

strengthening financial stability, consumer protection,

ICT and cyber resilience, AML/CFT frameworks, and

alignment with EU legislation.

In

, extensive legislative and regulatory

changes were adopted in 2025, including 41 regulatory

acts requiring implementation activities monitored by

Compliance, of which five were laws. These changes

necessitated amendments to the bank’s General

Terms and Conditions, revisions of internal acts,

updates to operational procedures, and increased

reporting activities.

Following drafts issued at the end of 2024, final versions

of the Law on Banks and the Law on Protection of

Financial Service Consumers were published in 2025.

Changes to the Law on Banks strengthened the

prudential framework, capital requirements, corporate

governance, and banks’ resolution framework.

The National Bank of Serbia issued implementing

regulations to detail corporate governance

requirements, prudential rules and capital requirements,

and resolution procedures.

Amendments to the Law on the Protection of Financial

Service Consumers introduced caps on interest rates,

enhanced pre-contractual information requirements,

and strengthened rules on advertising, forbearance

measures, and unfair commercial practices. These

requirements were further specified through regulations

issued by the National Bank of Serbia, including decisions

on loan repayment relief and complaint handling.

The AML/CFT framework was further strengthened

through amendments to the Law on the Prevention of

Money Laundering and Financing of Terrorism and

the adoption of a new Law on the Central Records of

Beneficial Owners.

Additional changes were introduced to SEPA payment

schemes and electronic bills of exchange, alongside

amendments to the Law on Payment Services, including

drafting a Code of Conduct for Banks in cases of

fraudulent or abusive payment transactions.

In 2025,

North Macedonia

continued to harmonise

its legislation with the Law on Payment Services and

Payment Systems. Three amendments to the law were

adopted, and several new by-laws were introduced

or amended, which are either already implemented

by the bank or in the process of implementation.

Implementation of the Law on Prospectus and

Transparency Obligations of Issuers of Securities and

the Law on Financial Instruments, aligned with EU

directives, including MiFID II, continued during the year.

These laws will apply from October 2026. Additional

related by-laws were adopted.

The Law on Security of Network and Information

Systems was adopted for the first time and will apply

from 2026. Relevant amendments were also made

to the Law on Banks, the Law on Foreign Exchange

Operations, the Law on Electronic Documents, Electronic

Identification and Trust Services, the Law on Bank

Resolution, and the Law on Personal Data Protection.

The National Bank of the Republic of North Macedonia

adopted several acts covering ICT security, capital

adequacy, payment transactions, macroprudential

measures, and reserve requirements, alongside

consumer protection decisions applicable from

February 2026.

In 2025, the

Federation of Bosnia and Herzegovina

adopted a new Law on Personal Data Protection

aligned with the GDPR. The law imposes comprehensive

obligations for controllers and processors, strict consent

requirements, enhanced data protection, record-

keeping, breach notification requirements, designation

of a Data Protection Officer, and robust enforcement

powers for supervisory authorities.

Additionally, the Banking Agency of the Federation

of Bosnia and Herzegovina adopted the Decision on

ICT Systems and ICT Risk Management, introducing

comprehensive requirements for managing ICT and

cyber risks in banks, including integration of ICT risk

management into governance, incident handling,

operational continuity, and oversight of third-party

ICT service providers. The Decision aligns with the EU

DORA framework.

In 2025, the

Republic of Srpska

adopted a new Law

on Personal Data Protection aligned with GDPR. Key

changes include expanded data subject rights and

stricter penalties for non-compliance.

Amendments to the Law on Banks introduced changes

to capital requirements, definitions of related parties,

discontinuation of the reference interest rate, automated

decision-making in lending, prohibition of certain

fees, strengthened corporate governance, electronic

contracts, additional supervisory measures, and

enhanced resolution mechanisms.

The Banking Agency of the Republic of Srpska adopted

numerous decisions to harmonise internal acts and

processes, covering ICT risk management, licensing,

credit documentation standards, foreign exchange

risk, large exposures, capital instruments and eligible

liabilities, credit risk rules, and governance standards.

32

In late 2024, the Kosovo Assembly adopted a legislative

package, including the updated Law on Banking and

the Law on Payment Services, which are currently under

review by the Constitutional Court. Moreover, the Central

Bank adopted several regulations under the SEPA

programme, which shall enter into force immediately

after the laws become effective.

In 2025, the banking sector faced heightened regulatory

complexity, including new macroprudential capital

requirements, ICT and cyber risk regulations, updates

to banking account and credit register requirements,

and enhanced consumer protection oversight. Further

legislative changes are expected in 2026.

In 2025, regulatory developments were significantly

influenced by

’s accession process to the

EU. To comply with the Basel III standards, amendments

to the Law on Credit Institutions and related bylaws

addressed corporate governance, banking services

provisions, capital requirements, consumer protection,

and compliance obligations. Amendments to the

Resolution Act introduced requirements for MREL

implementation, including updates on criteria for

eligible liabilities, capital instruments, internal resolution

tools, and restrictions on profit distributions.

A new Law on Consumer Loans and related

bylaws introduced enhanced employee knowledge

requirements, creditworthiness assessments,

effective interest rate limitations, and rules for credit

intermediaries. The year was also marked by a significant

project of joining SEPA payment schemes. The integration

required significant technical and IT adjustments.

Amendments to the Law on Tax Administration

implemented the standard for the automatic exchange

of information on financial accounts, as partially

related to the Common Reporting Standard (CRS), and

FATCA obligations, with implementation dependent on

technical prerequisites from state authorities.

Other important legislative changes included the Law

on Accounting, the Law on Audit, the Law on Companies

and the Law on Registration of Companies. The bank

continued implementing EU restrictive measures in line

with EU foreign and security policy priorities.

BUSINESS

REPORT

We kindly invite you to delve deeper

into our Group's journey, strategic vision,

and regional impact with detailed financial

and operational performance.

34

Strategy

Risk Factors & Outlook

Performance Overview

Segment Analysis

NLB Group Key Members

Risk Management

Corporate Governance

Statements

Strategy

2

Introduced in 2024, NLB Group’s Strategy 2030 sets a clear vision for sustainable growth and operational excellence.

The strategy equally prioritises revenue generation through best-practice lines such as housing financing,

bancassurance, consumer finance, trade finance, transition finance, and payments, as well as the transformation of

NLB into the leading operating platform in the region. This transformation is driven by rigorous simplification and

digitalisation, while maintaining its prudent risk practices.

2 Incorporation by reference: The reference is made to this chapter from the Sustainability Statement chapter SBM-1 Strategy, business model, and value chain.

The introduced Group Strategy 2030 is accompanied

by key performance indicators, outlining the vision

and objectives for future development. The strategy

is designed to address the changing banking

environment, upcoming challenges, and emerging

opportunities, while reinforcing the Group’s ambition

to deliver sustainable growth that supports individuals,

businesses, and society. Overall, the strategy foresees

doubling the NLB Group’s balance sheet to more than

EUR 50 billion in assets, recurring revenues of more

than EUR 2 billion, and a profit of more than EUR 1 billion

by 2030. These objectives will be pursued through a

combination of organic growth, strategic plays, and

selected M&A across the SEE region.

The Group’s strategy focuses on the following four

areas: prioritising customers’ needs, delivering on its

shareholders’ expectations, ensuring stability, nurturing

talent, and fostering culture. Firstly, the Group is

committed to continuously enhancing the user experience

for both external and internal customers across all

channels by providing best-in-class support, products,

and solutions. This includes providing all mass banking

services and ensuring a seamless experience through

digital platforms, leveraging advanced technology to

deliver fast, secure, and convenient solutions. Secondly,

the Group is committed to delivering excellent returns

to its shareholders, targeting an increase in the payout

ratio to 50–60% of the previous year’s profit after tax

throughout the period. Thirdly, the Group focuses on

ensuring stability by being a trustworthy partner and a

systemic provider of client-relevant universal financial

services across all SEE target markets. This commitment

extends to supporting the economy, the community, and

sustainability initiatives, as well as promoting culture and

sports. Finally, the Group invests in developing employees

by enhancing and renewing their skills while fostering a

culture of growth and innovation.

Strategy 2030 foresees

doubling NLB Group’s

balance sheet, revenues,

and profit by 2030

Figure 5:

NLB Group’s Strategy 2030 key focus

Delivering

on shareholders expectations:

Increasing the dividend pay-out ratio

to 50-60% of the previous year‘s profit

after tax throughout the period.

Ensuring

stability:

Prudent risk management

and strategic investments for

safeguarding the financial welfare of

the Group and the broader economy,

support of Southeast Europe’s

development.

Nurturing

talent and fostering culture:

Uplifting,

enhancing, and renewing skills for

developing employees of the future,

ready to thrive in the face of tomorrow’s

challenges.

Prioritising

customer’s needs:

Enhancing customer

experience across all channels,

providing best-in-class support,

products and solutions in mortgages,

bancassurance, consumer finance and

sustainable financing, while increasing

digital penetration in home region.

Ambitious growth across the SEE region:

NLB Group aims to double its balance sheet, revenue, and profit by 2030.

> EUR

50

billion

in total assets

> EUR

2

billion

of recurring revenues

> EUR

1

billion

profit

35

Strategy

Risk Factors & Outlook

Performance Overview

Statements

Retail banking

segment

By 2030, the Group’s strategic ambition in the retail

banking segment is to become the leading bank in

SEE, increase its customer base to over 3 million, and

achieve more than 80% digital penetration. The strategy

is built on three core pillars: optimising monetisation of

the existing client base, doubling down on attractive

sub-segments, and scaling product verticals around

key customer needs. At the same time, the Group will

introduce additional success markers, accelerate the

digitisation of its franchise, and transition to a customer-

centric delivery model with mobile as the core channel.

Branches will evolve into advisory-driven hubs, offering

a market-leading customer experience aligned with

international best practices. Furthermore, the Group

aims to make a positive contribution to the societies

it serves, with a strong commitment to developing

the regional markets for investments and financial

protection, including insurance.

Corporate and

investment banking

segment

The Group aims to become the strategic banking

partner for corporations across the SEE region,

positioning itself as the leading local corporate and

investment banking institution, achieving profitable

growth across markets, and maintaining strict risk

controls with a cost of risk below 50 bps. The strategy is

based on three core pillars: consistently strengthening

performance in its existing core business; becoming

the regional leader in transition finance while driving

growth in SME and trade finance; and upholding its

role as a steward of prudent risk management. To

enable the strategy, the Group will innovate its end-

to-end operating model by digitising and streamlining

processes, particularly in onboarding and underwriting.

At the same time, the Group remains deeply committed

to the region and will position its Corporate and

Investment Banking segment as the leader in transition

finance in SEE by 2030 – leveraging NLB’s balance sheet

and creating attractive investment opportunities for

external investors.

Payments

The Group’s ambition in payments is to support NLB’s

growth path towards becoming the leading bank in

SEE by introducing best practices across customer and

operating models, deploying digital payment solutions,

and driving the cash transition in its markets. By 2030,

the Group’s strategic goal is to have the share of active

mobile users exceed 80%. The strategy is built on the

solid foundation of the existing payments framework

and is structured around three key pillars: accelerating

the regional cashless transition, expanding merchant

acquisition, and developing new propositions. Beyond

business objectives, the payments strategy aims to

contribute to the societies the Group serves by positively

promoting financial inclusion, supporting economic

prosperity, and combating the shadow economy by

actively facilitating cashless transactions.

»

Further information on the Group Strategy 2030 is

available on the NLB website.

Strategic initiatives

and milestones

In 2025, the NLB Group continued to make steady

progress toward its Strategy 2030 objectives, advancing

key initiatives across Retail Banking, Corporate and

Investment Banking, Payments, as well as operating

platform and digital banking.

In

Retail Banking

, new standardised principles for

the loan-origination process were rolled out across

the Group. Testing to enable direct access to clients’

bank statements (PSD2) progressed to a pilot phase.

Preparations for automated property valuations, digital

legal opinions, and optical character recognition (OCR)

model testing were also advanced.

Implementation of the Affluent and micro strategy

continued across all markets, supported by set

segment guidelines and completed client segmentation

across the Group. In Slovenia, the NLB Private app

was successfully launched, supported by set segment

guidelines and completed client segmentation across

the Group. In asset management, an infra-equity

alternative investment fund (AIF) was launched in

Slovenia, with continued development of the real estate

fund and the integration of brokerage services into

Klik

. Investment gold as a product for retail clients also

continued to evolve, gradually being expanded into

various product forms.

The merger of Summit Leasing Slovenija, Ljubljana

and NLB Lease&Go, leasing, Ljubljana was successfully

completed. The

doberavto.si

platform recorded growth

in listings and client visits, supported by a redesigned

website, including ongoing development of new digital

capabilities (introducing a new user application), and

enhanced customer journeys. Lead generation within

the housing ecosystem was strengthened through

the launch of the

NLB Dom

platform and a referral

programme with selected real-estate agencies. Strategic

evaluations for bancassurance are ongoing, with

selected products to be offered via

NLB Klik

, aligned

with broader digitisation priorities.

In

Corporate and Investment Banking (CIB)

, the SME

service model was revamped in Slovenia and Serbia,

complemented by enhancements to

Klikpro

in Slovenia

and its continued rollout across the Group, which

gained strong momentum in key markets. The large

ticket financing minimum viable product (MVP) further

matured within established risk appetite and approval

limits. In addition, the

NLB Trading

brokerage mobile

app was launched, alongside the introduction of simple

derivatives for SMEs.

Trade Finance offerings were further strengthened with

completed deliveries, including factoring application,

inter-factoring agreements, and the extension of

receivables financing to foreign buyers. Development

activities continued in factoring and reverse factoring

solutions, contributing to a more comprehensive and

competitive offering.

In

Payments

, the cash repricing concept was approved,

and the migration of VISA Business cards was

successfully completed. Tenders for ATM and Cash

Deposit Machines (CDS) were finalised. Regional SEPA

expansion to Montenegro and North Macedonia was

also successfully completed. The Group continued with

36

activities to define a target customer loyalty model,

including data collection and pilot-country scoping.

The redesigned merchant acquiring process pilot

concluded, while preparation of the target model and

partnerships progressed. Digital onboarding of existing

merchants was introduced in Slovenia.

Apple Pay

was launched across the Group, making NLB

the first bank to roll out the service across the entire

region. The mobile wallet strategy was approved, while

“digital card first” and instant card issuance capabilities

advanced further, supported by additional mobile wallet

upgrades that enhanced the overall user experience.

Regarding the

operating platform

, the implementation

of the new technology operating model continued

throughout 2025. Ten new websites were launched, and

an AI virtual assistant went live on

nlb.si

. Process

optimisation efforts progressed further, alongside

continued core banking migrations, CRM enhancements,

and the workspace renovation programme.

With the launch of the next-gen

NLB Klik

in Slovenia,

NLB set a new market benchmark for customer

experience and technical scalability. This achievement

was reinforced in 2025, when in digital banking it was

again ranked number one among Slovenian banks, with

Elaborat’s official report placing the

NLB Klik

app first

in the Slovenian market. Building on this momentum,

the

WEB

project was recognised in September 2025

at Slovenia’s largest competition for digital projects,

winning two Websi Awards for

Best Website

and

Best

UX

. As a result, by the end of 2025, digital penetration

reached 68.6%, keeping also the Group firmly on track

to achieve its 80% target by 2030.

Adoption of artificial intelligence accelerated

significantly during the year, with approximately 25% of

employees using AI tools, supported by access to Copilot

for Microsoft 365 and ChatGPT Enterprise. More than

60% of employees completed foundational AI literacy

training, strengthening adoption and safe, responsible

use of AI technologies across the organisation. This

marks a significant milestone in building productivity

and operational efficiency at scale.

Several dozen AI use cases are currently in the

pipeline, with a growing number already transitioned

into business-as-usual operations, reflecting deeper

integration of AI across business functions. The launch

of the conversational

NLB Virtual AI Assistant

on the NLB

website in mid-2025 marked NLB’s first generative AI

solution for customers in production. In December 2025,

an internal

Personal Loans AI Assistant

was deployed to

support branch and underwriting teams in responding

to customer requests and preparing loan offers more

efficiently, while remaining aligned with applicable

policies and guidelines. To accelerate the development of

both customer-facing and internal AI solutions, the Group

selected a dedicated platform for advanced generative

AI and analytics. This technology foundation enables the

next wave of innovation, including the development of

more complex AI use cases for core business functions,

alongside ongoing process optimisation and quick-win

solutions across multiple streams.

The Group continues to advance digitalisation by

leveraging cutting-edge technology to boost efficiency

and deliver more innovative, personalised, and timely

client services. With rising smartphone usage, the Group

is accelerating the shift to alternative channels and

promoting digital banking through a comprehensive

suite of 24/7 digital solutions.

Overall, NLB Group maintained focused execution in

2025, providing solid foundations for continued strategic

progress in 2026.

Figure 6:

Number of active digital users (in thousands) and penetration

in NLB Group banking members as at 31 December 2025

(i) Share of active digital users among clients with an active transactional account.

NLB,

Ljubljana

NLB KB,

Beograd

NLB Banka,

Skopje

NLB Banka,

Banja Luka

Sarajevo

Prishtina

Podgorica

492

47

246

47

102

383

101

Active digital users

Active users penetration

69.2%

51.1%

62.5%

57.0%

54.2%

42.7%

55.5%

37

Funding Strategy,

MREL Compliance, and Capital

Fostering strong client relationships remains essential to maintaining a stable and growing deposit base. At the

same time, wholesale funding activities are primarily focused on meeting MREL requirements and optimising the

Group’s capital structure, which results in higher average funding costs. Nonetheless, overall funding costs remain

low, supported by a reliable deposit base and the stability of sight deposit pricing, which continues to demonstrate

resilience to market fluctuations.

Deposit strategy

Deposits from customers remain the primary funding

source for the NLB Group, with each banking member

maintaining processes that support prudent strategic

deposit management aligned with business strategic

objectives and regulatory requirements. As deposits

remain the core funding element across NLB Group

markets, continuous monitoring of deposit dynamics,

market positioning, and structural trends enables timely

responses whenever business needs or regulatory

considerations require adjustments. In 2025, the

business environment was characterised by ongoing

disinflation and monetary easing in the euro area,

while funding conditions across the region became

increasingly differentiated. Within the euro area part of

the Group’s footprint, deposit rates generally trended

downward in line with monetary easing. Conversely,

in the non-euro area part of the Group’s footprint,

deposit rates increased, reflecting higher liquidity

needs, intensified competition for funding sources and

regulatory pressures to strengthen stable funding.

Against this backdrop, the NLB Group maintained a

robust structural liquidity position, with the LTD ratio

remaining within a healthy range of 75–80% in 2025,

supported by a stable deposit base, which remained the

dominant funding pillar.

A strong market position, proactive client relationships,

and a well-established franchise are essential for

maintaining a stable deposit base. The Group’s fund-

pricing is aligned with international standards, and

disciplined deposit pricing remains an important

element of prudent risk management and strategic

steering. Throughout 2025, agile deposit pricing

and active client engagement remained central, as

competitive pressures in the deposit market persisted

and the gap between lending and deposit rates

narrowed in several markets. Nevertheless, strong credit

growth continued to help sustain interest margins at

a satisfactory level. Within this environment, pricing

and product steering were increasingly focused on

balancing franchise stability with profitability, while

reinforcing the monitoring of concentration risk and

potential outflows and maintaining high readiness

under contingency funding plans.

NLB Group deposits continued to expand in 2025,

with non-banking sector deposits increasing from the

beginning of the year, driven by household deposits

rising 9% and corporate deposits rising 13%. Household

deposits remained the most stable component and

continued to account for most of the deposit base, while

corporate deposits provided additional volume growth,

including seasonal inflows linked to stronger business

activity and prudent cash management. The overall

deposit structure remained supportive of planned

business performance, providing a buffer for strategic

growth and resilience amid shifting deposit-market

conditions. At the same time, the composition and

maturity profile of retail and non-retail balances were

closely monitored to maintain an appropriate balance

between risk and profitability.

The overall cost of funding remains low, supported by

the reliability of the deposit base and the stability of

sight deposits.

Figure 7:

Average cost of funding (quarterly data)

(i) Excluding AT1 instruments.

Q1 2025

Q2 2025

Q3 2025

Q4 2025

5.27%

1.00%

0.53%

5.03%

1.00%

0.52%

5.01%

0.98%

0.52%

5.08%

0.99%

0.54%

Total average cost of funding

Average interest rate for deposits from customers 

Average cost of wholesale funding

38

Wholesale funding

and MREL

Wholesale funding activities within the Group aim

to achieve diversification, strengthen structural

liquidity and the capital position, and ensure

compliance with regulatory requirements, particularly

the MREL requirements.

The Bank was active in international capital markets in

2025, issuing 4NC3 senior preferred notes in January

for MREL purposes and perpetual NC5 Additional Tier

1 notes in November 2025 to further strengthen and

optimise its capital position.

The Preferred Resolution Strategy (PRS) for the NLB

Group is based on the Multiple Point of Entry (MPE)

strategy. A bail-in at the level of NLB represents the

primary resolution tool to be applied during the

stabilisation phase.

Within the NLB Group, seven resolution groups are

designated. The resolution group in the Banking Union is

headed by NLB, and the remaining six resolution groups

are headed by the banking subsidiaries located in non-

EU countries (Bosnia and Herzegovina, Montenegro,

and Serbia), while Kosovo and North Macedonia have

not yet implemented MREL legislation.

The NLB Resolution Group consists of NLB, the sole

banking member, complemented by several non-

banking members that together represent 13% of TREA.

The entities included in the NLB Resolution Group and

their respective contributions to TREA are presented in

the table below.

Table 5:

Contribution to the NLB Resolution Group’s TREA

in EUR millions

Entity

31 Dec 2025

NLB d.d.

9,277

NLB Lease&Go, leasing, Ljubljana

1,103

NLB Lease&Go Leasing Beograd

136

NLB Skladi, Ljubljana

124

NLB Lease&Go Leasing Skopje

33

Other

33

TREA total:

10,706

MREL requirement applicable as of 20 March 2025

amounts to:

•

29.93% of TREA + applicable CBR (4.78% on

31 December 2025),

•

11.24% of LRE.

On 31 December 2025, the MREL ratio amounted to

43.83% TREA and 23.34% LRE, which was well above the

required level.

SEE banking members in Bosnia and Herzegovina,

Serbia, and Montenegro are subject to local MREL

requirements.

Figure 8:

Resolution groups within NLB Group

NLB d.d.

&

NLB Lease&Go subsidiaries, NLB Skladi, Other

SLO

SRB

Komercijalna Banka,

Beograd

MNE

Podgorica

BIH

Banja Luka

BIH

Sarajevo

RKS

Prishtina

MKD

Skopje

Resolution group

MREL legislation not implemented yet

Figure 9:

Evolution of MREL eligible funding (in EUR millions),

MREL requirement and realised MREL ratio

31 Dec 2023

31 Dec 2024

3,187

1,505

Realised MREL ratio

CET1+T1+T2

MREL requirement (including CBR)

MREL deposits and senior funding

2,734

1,057

2,358

964

40.24%

37.48%

43.83%

31.91%

35.04%

34.71%

39

Capital and capital adequacy

Capital requirements

3 In 2025, the Bank of Slovenia increased the countercyclical capital buffer for exposures in Slovenia from 0.5% to 1%. The level of the countercyclical capital buffer applicable to the NLB Group is also affected by all other CCYBs of

countries to which the Group is exposed.

4 The Bank of Slovenia introduced a mandatory systemic risk buffer for sectoral exposures for banks. From January 2025, the required rate is 0.5% for all retail exposures to natural persons.

NLB ensures ongoing compliance with capital adequacy

requirements set out in the applicable regulatory

framework. These requirements are defined by the

Supervisory Review and Evaluation Process (SREP)

and are complemented by capital buffers designed to

mitigate risks and enhance financial stability.

As at 31 December 2025, the Group’s Overall Capital

Requirement (OCR) on a consolidated basis stood

at 14.75%, slightly higher (by 0.25%) than at the end

of 2024, due to an increase in the Combined Buffer

Requirement, driven by a higher Countercyclical Buffer

and lower Systemic Risk Buffer.

The OCR comprises the following components:

Total SREP Capital Requirement (TSCR): 10.12%

,

which includes:

•

8.00% Pillar 1 requirements and

•

2.12% Pillar 2 requirements (P2R).

Combined Buffer Requirement (CBR): 4.63%,

consisting of:

•

2.50% Capital Conservation Buffer,

1.25% O-SII Buffer,

0.80% Countercyclical Buffer (CCYB)

3

and

0.08% Systemic Risk Buffer

4

In addition to the mandatory capital requirements, the

regulator has recommended a Pillar 2 Guidance (P2G)

at 1.0% of Common Equity Tier 1 (CET1), which the Group

maintains as a safeguard against severe economic

stress scenarios.

Key developments during the year

In 2025, capital buffer rates across the Group’s region

developed as follows:

The countercyclical capital buffer rate increased in

Slovenia from 0.5% to 1.0%, and in North Macedonia

from 1.25% to 1.75%. Montenegro introduced a 0.5%

countercyclical buffer in April 2025, and Kosovo a 2%

buffer in July 2025. As of December 2025, the NLB

Group CCYB buffer was 0.80%, reflecting all CCYB rates

of countries to which the NLB Group is exposed.

In January 2025, the sectoral systemic risk buffer for

retail exposures, secured by residential real estate,

decreased from 1.0% to 0.5%. Consequently, the

Systemic Risk Buffer was 0.08% in December 2025, with

no changes in the third or fourth quarters.

Future changes in capital requirements

Effective 1 January 2026, NLB received a new SREP

decision on a consolidated basis for 2025. The Pillar

2 Requirement was reduced by 0.02 pp to 2.10%,

reflecting an improved SREP assessment. The P2G

was also lowered from 1.0% to 0.75%, thus reducing

OCR + P2G to 15.53% (down from the previous 15.75%).

The Group’s CCYB requirement is expected to increase

as a result of new CCYB requirements in North

Macedonia, Montenegro, Serbia and Croatia.

Pillar 1

Pillar 2

TSCR

Combined

Buffer

P2G

OCR+P2G 

2.00%

1.50%

4.63%

1.00%

4.50%

2.53%

1.90%

11.32%

2.71%

1.97%

15.44%

8.00%

0.53%

0.40%

1.19%

2.12%

2.53%

1.90%

5.69%

10.12%

Realisation

20.12%

OCR Requirement

14.75%

OCR Requirement+P2G

15.75%

T2

T2

CET1

CET1

AT1

AT1

Figure 10:

NLB Group capital requirements and realisation as at 31 December 2025

40

Capital adequacy

The Group has continued to strengthen and optimise

its capital position, maintaining capital ratios well

above regulatory and strategic requirements. In line

with the Group Strategy 2030 Impact Ambition, the

Group remains comfortably above its strategic capital

targets, with CET1 and TCR thresholds of 13% and 15%,

respectively, and maintains a substantial buffer above

the MDA trigger level.

As at 31 December 2025, the Group’s TCR stood at 20.1%

(1.4 pp increase YoY), while the CET1 ratio stood at 15.4%

(0.1 pp increase YoY). The higher total capital adequacy

primarily derives from an increase in capital (EUR 514.3

million YoY), which counterbalanced the RWA increase

of EUR 1,293.7 million YoY. The Group’s capital was

strengthened mainly through the inclusion of part of the

2025 profit (EUR 226.6 million) and the issuance of an AT1

instrument (EUR 300.0 million).

Table 7:

Buffers to maximum distributable amount (MDA)

CET1

Actual

15.44%

Requirement

10.32%

Buffer

5.12%

AT1

Actual

1.97%

Requirement

1.90%

Shortfall

0.00%

T2

Actual

2.71%

2.53%

Shortfall

0.00%

MDA buffer

5.12%

Dividend payout

The total cumulative payout for the year amounted

to EUR 257.2 million. The dividend payout was

structured into two tranches. The first instalment of

EUR 128.6 million was paid in June 2025, followed

by a second instalment of the same amount,

EUR 128.6 million, in December 2025.

31 Dec 2024

Retained earnings

AT1 + other

RWA impact

18.7%

3,411

215

300

n.a.

3,926

-1.2%

20.1%

1.5%

Figure 11:

Capital (in EUR millions) and capital ratios of NLB Group – evolution YoY

Table 6:

Capital realisation, YoY change and surplus over the regulatory requirement of the NLB Group as at 31 December 2025

in EUR millions

31 Dec 2023

Change YoY

Surplus over

OCR+P2G

Common Equity Tier 1 capital

3,011.6

2,785.8

2,510.0

225.8

803.1

Tier 1 capital

3,396.7

2,872.4

2,598.0

524.4

817.5

Total capital

3,925.6

3,411.3

3,109.0

514.3

852.8

Total risk exposure amount (RWA)

19,509.8

18,216.1

15,337.0

1,293.7

Common Equity Tier 1 Ratio

15.4%

15.3%

16.4%

0.1 pp

4.1 pp

Tier 1 Ratio

17.4%

15.8%

16.9%

1.6 pp

4.2 pp

Total Capital Ratio

20.1%

18.7%

20.3%

1.4 pp

4.4 pp

41

Total risk exposure

dynamic

In 2025, the Group’s RWA for credit risk increased

by EUR 1,653.4 million YoY, driven by changes to EU

regulatory rules that came into force on 1 January

2025 (approximately EUR 311.7 million) and portfolio

development (approximately EUR 1,341.6 million).

Portfolio growth in 2025 contributed to an RWA

increase, primarily within corporates and retail,

where a large part of the loans is at least partially

secured by real estate. RWA was also affected by

higher placements with central banks not included

on the EBA third-party equivalence list, as well as by

increased EUR-denominated assets held with central

banks outside the EU. Part of the liquidity surplus was

reallocated to commercial bank deposits and to newly

purchased bank-issued bonds, resulting in a slight

increase in RWA.

The increase in RWAs for market risks and Credit Value

Adjustments (CVA) by EUR 59.3 million YoY was primarily

driven by higher RWAs for FX risk of EUR 58.9 million.

This increase mainly reflects more open positions in the

domestic currencies of non-euro subsidiary banks.

The Group’s operational risk exposure decreased

by EUR 419.1 million YoY due to a new standardised

methodology under CRR 3 and a consequently

lower Business Indicator and Marginal Coefficient

(from 15% to 12% up to EUR 1 billion). The calculation

was predominantly influenced by the Asset and

Financial Components.

»

Further information on capital and capital adequacy

is available in the

of this Annual Report

and in

Pillar 3 Disclosures

Figure 12:

RWA structure (in EUR millions)

31 Dec 2022

61%

59%

65%

62%

RWA /

Total

Assets

14,653

15,337

18,216

1,410

1,445

1,707

1,462

2,186

1,522

11,798

12,168

14,508

19,510

1,767

1,581

16,162

Credit risk

Market risk incl. CVA

Operational risk

CAGR: 10.0%

YoY: 7.1%

42

Risk Factors and Outlook

Risk factors

Risk factors affecting the business outlook are

(among others):

economy’s sensitivity to a potential slowdown in the

euro area or globally,

potential liquidity outflows,

widening credit spreads,

worsened interest rate outlook/persistence of high

inflation,

energy and commodity price volatility,

increasing unemployment,

geopolitical uncertainties,

potential cyber-attacks,

litigation risks,

regulatory, other legislative, and tax measures

impacting the banks.

In 2025, economic growth in the euro area economy

remained modest, while the economies of other

countries in NLB Group’s region demonstrated a

steady recovery. Household consumption, supported

by targeted investments, was the main driver of

growth, benefiting from easing inflationary pressures.

Governments continued to play a stabilising role through

consistent public spending, while private investments

gained momentum in certain sectors. Lending growth,

which peaked in 2024, remained strong. Nevertheless,

persistent inflationary pressures, rising unemployment,

lower-than-expected GDP growth, and geopolitical and

other uncertainties could lead to a slowdown in private

consumption and investment growth.

Credit risk typically increases during periods of

economic slowdown. Throughout 2025, the Group’s

credit portfolio remained high-quality and well-

diversified despite ongoing geopolitical tensions

and more challenging macroeconomic conditions.

The resilience of the Group’s region helped maintain

non-performing ratios at a sustainable level, with

the coverage ratio above the EU average. However,

a slight increase in NPLs was identified. In 2025, the

Bank observed a deterioration in the creditworthiness

of a few larger companies operating in the steel and

automotive industries. Weakening financial indicators

and intensified sector-specific headwinds contributed

to the recognition of an “unlikely-to-pay” risk. As

a result, several exposures migrated to Stage 3 in

accordance with IFRS 9 impairment requirements. The

Group continues to closely monitor macroeconomic

and geopolitical developments, applying a prudent

approach to identifying increased credit risk at an early

stage in accordance with the Early Warning System, and

maintaining a proactive stance in NPL management.

The Group remained well capitalised throughout the

year and well above the risk appetite at both the Group

and banking member levels. Its liquidity position also

remained solid, with liquidity indicators well above the

regulatory requirements, indicating the Group’s low

tolerance for this risk. The Group’s investment strategy

for its bond portfolio held for liquidity purposes adapts

to expected market trends in line with the set risk

appetite. Investment activity continued with a balanced

approach to identifying attractive market opportunities

while managing credit spreads, interest rate risk,

and capital consumption. Geopolitical uncertainties

contributed to heightened volatility in financial

markets, particularly through shifts in credit spreads,

interest rates, and foreign exchange rates. The Group

closely monitors its prominent bond portfolio, mostly

sovereigns, and carefully manages it by incorporating

adequate early warning systems to limit potential

regulatory capital sensitivity.

So far, no material movements regarding the Group’s

significant FX positions have been observed. Current

developments, market observations, and potential

mitigations are closely monitored and discussed. While

the Group monitors its liquidity, interest rate, credit

spread, FX position, and corresponding market trends,

their impacts on the Group positions, and any significant

and unanticipated movements on the markets or

a variety of factors, such as competitive pressures,

consumer confidence, or other certain factors outside

the Group’s control, could adversely affect the Group’s

operations, capital position, and financial condition.

Special attention is paid to the continuous provision of

services to clients, their monitoring, simplification, and

digitalisation, while maintaining prudent risk practices

and corresponding prevention of cyber-attacks, other

ICT risks, and potential fraud events. The Group has

established internal controls and additional measures

to facilitate adequate risk management. However, these

measures may not always entirely prevent possible

adverse effects.

Cyber risk represents an increasingly important

operational risk for the Group, particularly in light of

the continued digitalisation of banking services, the

growing reliance on complex IT environments, and the

use of external technology and service providers. Cyber

threats may originate from both external actors and

internal sources. They may include ransomware attacks,

distributed denial-of-service (DDoS) attacks targeting

digital banking services, business email compromise,

data breaches involving customer information, payment

fraud attempts, and potential vulnerabilities associated

with legacy systems or digital channels. Such events could

lead to disruptions in business operations, temporary

unavailability of services to clients, loss or compromise

of sensitive data, financial losses, legal claims, regulatory

consequences, and reputational damage. The Group

therefore continuously strengthens its cyber risk

management framework and implements a range of

preventive, detective, and response measures, including

enhanced monitoring of IT systems and networks, regular

vulnerability assessments and testing, effective incident

response and recovery procedures, and employee

awareness activities. These measures aim to ensure the

protection of critical systems and data, maintain the

continuity of banking services, and support compliance

with applicable regulatory and supervisory requirements.

With regard to litigation risk, the Bank has observed

a shift in case law in recent years, particularly in the

more recent period, where outcomes are generally

more favourable to consumers. This trend is evident

in litigation concerning loan processing fees and loan

insurance premiums in Serbia, as well as CHF litigation-

related cases in Slovenia. In the latter, the number of

43

proceedings initiated against the Bank has risen, as

anticipated, as a consequence, the Bank continues to

closely monitor all developments.

The Group is subject to various regulations and laws

relating to banking, insurance, and financial services.

Respectively, it faces the risk of significant interventions

by several regulatory and enforcement authorities in

each jurisdiction in which it operates, including changes

in the tax treatment of banking business and changes in

the interpretation of legislation.

The SEE region represents the Group’s most significant

geographic area of operations outside Slovenia, and

its economic conditions are therefore crucial to the

Group’s operational performance and financial results.

Any regional instability or economic deterioration could

adversely affect the Group’s financial condition.

In this regard, the Group closely follows the

macroeconomic indicators relevant to its operations:

GDP trends and forecasts,

economic sentiment,

unemployment rate,

consumer confidence,

construction sentiment,

deposit stability and growth of loans in the banking

sector,

credit spreads and related future forecasts,

interest rate development and related future forecasts,

FX rates,

energy and commodity prices,

other relevant market indicators.

In H1 2025, the Group regularly reviewed IFRS 9

provisioning by testing relevant macroeconomic

scenarios to reflect current circumstances and their

future impacts. The Group established multiple scenarios

(i.e., baseline, optimistic, and severe) for the Expected

Credit Losses (ECL) calculation, aiming to create a

unified projection of macroeconomic and financial

variables aligned with the Bank’s consolidated outlook

for economic development in the SEE region. The

Group identified three possible scenarios, each with

an associated probability of occurrence, for forward-

looking risk provisioning under IFRS 9. These IFRS 9

macroeconomic scenarios incorporate the forward-

looking and probability-weighted aspects of the ECL

impairment calculation. Both features are subject to

change whenever material changes in the expected

future economic environment are identified and were

not embedded in previous forecasts.

The baseline macroeconomic scenario predicts sub-

trend growth for major economies, including the U.S.,

China, India, and the euro area, without a significant

recession in the mid-term. In the euro area, consumer

confidence and private consumption are expected to

support growth, while government spending remains

focused on recovery efforts and addressing structural

challenges. The ECB is expected to maintain a gradual

approach to interest rate cuts. Although trade tensions

and U.S. tariffs continue to pose risks, a recovery in risk

sentiment is expected, and global trade developments

are likely to benefit the euro area overall.

The alternative macroeconomic scenarios are based on

plausible mid-term drivers of economic development.

The optimistic alternative scenario reflects supply-driven

positive developments: alleviated geopolitical tensions,

technological advancements, and stable energy prices,

all of which strengthen supply conditions and support

robust economic growth. The global economy benefits

from the Ukraine-Russia ceasefire, while the euro area

is supported by a well-functioning labour market,

favourable global trade conditions, and coordinated

monetary policies among major central banks, with only

mild adverse effects from U.S. tariffs. The ECB’s expected

easing cycle stabilises rates and lending conditions.

Politics in Europe has reached a consensus, supported

by a coordinated but gradual green transition and

further boosting production potential.

The severe alternative scenario demonstrates supply-

driven bleak developments. It is characterised by the U.S.

pressure campaign against Iran, further complicating

relations with China over the Taiwan question, posing

a threat to the global economy and financial system,

and leading to a breakdown in confidence. The war

in Ukraine shows no signs of meaningful resolution.

Persistent supply chain problems and rising energy prices

pose challenges for the euro area, further hindering

economic growth amid supply shortages. Labour

shortages, trade barriers, and price competition induced

by U.S. tariff measures add to the pressure, prolonging

economic insecurity. In this environment, the ECB faces

difficulties managing high and persistent inflation and

weak supply-demand dynamics, exacerbated by the U.S.

monetary policy’s loss of credibility, increased financial

market uncertainty, and a slowdown in trade channels

due to heightened FX volatility.

The NLB Group formed three probable scenarios with

an associated probability of occurrence for forward-

looking assessment of risk provisioning under IFRS 9.

The IFRS 9 macroeconomic scenarios incorporate the

forward-looking and probability-weighted aspects

of the ECL impairment calculation. Both features

may change when material changes in the future

development of the economy are recognised and not

embedded in previous forecasts.

On this basis, for the year 2025, the NLB Group assigned

weights of 20%-60%-20% (with alternative scenarios

receiving 20% each and the baseline scenario receiving

60%) as a starting point. Based on the economic

situation, NLB and NLB Banka, Banja Luka adjusted the

weight for the severe scenario at 30% and reduced the

optimistic scenario weight to 10%, while the baseline

remained at the starting point. NLB Komercijalna Banka,

Beograd adjusted the weight for the severe scenario at

40% and reduced the optimistic scenario weight to 0%.

All other members have maintained assigned weights of

20%-60%-20%.

The Group has established a comprehensive internal

stress-testing framework and early warning systems

across various risk areas with built-in risk factors

relevant to the Group’s business model. The stress-

testing framework is fully integrated into key internal

processes, including the Risk Appetite, the Internal

Capital Adequacy Assessment Process (ICAAP), the

Internal Liquidity Adequacy Assessment Process (ILAAP),

and the Recovery Plan to determine how severe and

unexpected changes in the business, geopolitical, and

macro environments might affect the Group’s capital

adequacy or liquidity position. Together with recovery

plan indicators, the stress-testing framework supports

proactive management of the Group’s overall risk profile

in these circumstances, including capital and liquidity

positions from a forward-looking perspective.

Risk Management actions available to the Group are

determined by various internal policies and applied

44

as needed. The selection and application of mitigation

measures follow a structured three-layer approach,

considering the feasibility analysis of the measure, its

impact on the Group’s business model, and the strength

of the available measure.

Outlook

The indicated Outlook constitutes forward-looking

statements subject to several risk factors and does not

guarantee future financial performance. NLB Group

continues to pursue various strategic activities to

enhance its business performance. The interest rate

outlook remains uncertain, reflecting the adaptive

monetary policies of the ECB and local central banks in

response to the general economic sentiment.

According to NLB Group’s projections, euro area GDP

growth is expected to slow down in 2026 compared to

2025, as U.S. tariffs are likely to weigh on export activity.

Nonetheless, past ECB rate cuts and Germany’s fiscal

stimulus could provide tailwinds for domestic demand.

A slower-than-expected implementation of the German

fiscal stimulus remains a downside risk. The war in Iran is

sharply increasing Europe’s energy costs, as disruptions

around the Strait of Hormuz have pushed oil and gas

prices significantly higher, reviving inflation pressures

across the continent. This spike in energy prices risks

slowing economic growth, tightening already low gas

inventories, and could prompt the ECB to consider

precautionary rate hikes if the conflict drags on.

In Slovenia, GDP growth is expected to speed up in 2026,

positioning the country among the fastest-growing

economies in the euro area. Fixed investment growth

is also projected to gather momentum, bolstered by

previous ECB rate cuts and the inflow of EU funds.

Additionally, higher defence spending across the euro

area is set to boost Slovenia’s external sector. In NLB

Group’s region, economic growth reached 2.0% YoY in

2025, primarily due to weaker performance in Slovenia

and Serbia, the two largest contributors. The region

is expected to gain momentum in 2026. However,

the conflict in the Middle East has increased overall

uncertainty, adding upward pressure on inflation and

weighing on economic growth prospects. In the short

term, higher energy prices are expected to push inflation

noticeably higher. The longer-term impact will depend

on how long and how severe the conflict becomes, as

well as how rising energy costs ultimately filter through to

consumer prices and broader economic activity. Inflation

projections have been adjusted upward, particularly for

2026, largely due to the anticipated rise in energy prices

stemming from the conflict. Core inflation, excluding

energy and food, is also expected to be affected as

elevated energy costs feed into other price categories.

At the same time, economic growth forecasts have

been revised downward, again most significantly for

2026, reflecting the global repercussions of the conflict

on commodity markets, real purchasing power, and

overall confidence. Nevertheless, factors such as low

unemployment, strong private sector balance sheets,

and continued government spending on defence and

infrastructure are expected to provide some support to

growth. Overall, the NLB Group’s region is expected to

grow by 2.5% YoY in 2026 and 3.3% in 2027.

NLB Group delivered on all financial targets and

exceeded its 2025 outlook across several key indicators.

Strong, broad-based loan growth, profitable and efficient

operations, stable asset quality, and a consistent focus

on shareholder returns remain central to the Group’s

strategic ambition. The ongoing investment cycle – driven

by digital transformation and process streamlining – is

expected to enhance scalability, accelerate structural

cost reductions, and unlock significant revenue potential.

The Group’s strong capital position, further enhanced

by the EUR 300 million AT1 bond issuance in November,

enables the capacity to simultaneously pursue organic

loan growth and attractive shareholder returns. For

2026, the Bank expects to distribute 55% of last year’s

profit (subject to no material M&A), representing a 5 pp

increase in the payout ratio. This translates into high

single-digit dividend growth and an attractive dividend

yield, reinforcing NLB Group’s status as a compelling

investment opportunity characterised by high and

consistently growing dividends, while achieving strong

organic growth rates.

The strategic objective for capital adequacy is to

maintain Tier 1 capital at around 15% and CET1 ratio

above 13%. Given that the EU plans to neutralise the

effects of the Fundamental Review of the Trading Book

(FRTB) implementation for a period of up to three years,

no impact on NLB Group capital is expected in this

transition period.

Following the issuance of the AT1 bonds, the Group is

adjusting its profitability indicators to better reflect the

new capital structure. Sterilising for the impact of the

AT1 bonds from a return calculation has only a modest

impact on the calculated returns: ROTE for 2025 stood

at 15.2%, while ROE, as previously calculated, would

have been 14.5%. Furthermore, the methodology for

calculating ROE normalised was also slightly altered;

rather than normalising for the Tier 1 requirement, the

strategic CET1 target of 13% is applied and the result

is reduced for AT1 coupons, resulting in 15 bps lower

normalised ROE under the new approach.

Looking ahead to 2026, the Group expects solid revenue

growth, supported by the continuation of robust, high-

single-digit loan growth and a stable interest rate

environment. The former should build on the strong

momentum of the previous year, further supported

by rising household disposable income and expected

revival in regional economic activity. The lending

opportunity across the NLB Group should further

Table 8:

Movement of key macroeconomic indicators in the euro area and the NLB Group region

GDP

(real growth in %)

Average inflation

(in %)

Unemployment rate

(in %)

2026

2027

2028

2026

2027

2028

2026

2027

2028

Euro area

0.9

1.5

1.0

1.5

1.5

2.4

2.1

2.6

1.9

2.0

6.4

6.3

6.2

6.1

6.1

1.6

1.1

1.9

2.5

2.4

2.0

2.5

2.9

2.2

2.1

4.1

3.9

3.7

3.6

3.6

3.9

2.0

2.7

4.0

3.7

4.7

3.8

3.7

3.2

3.0

8.6

8.7

8.6

8.5

8.4

2.7

3.5

2.9

3.3

3.1

3.5

4.1

3.7

2.6

2.2

12.4

11.5

11.0

10.5

10.3

BiH

2.5

2.3

2.4

3.0

3.0

1.7

4.0

3.6

2.3

2.0

12.7

12.2

12.0

11.7

11.5

4.5

4.0

4.0

3.9

1.6

3.9

4.4

2.7

10.5

10.0

9.5

9.2

9.0

3.2

3.2

3.2

3.3

3.9

3.5

2.6

2.2

11.5

10.7

10.3

10.0

9.8

Note: NLB Forecasts are highlighted in grey.

Source: Statistical offices, Focus Economics.

45

improve as disinflation and moderating interest rates

lift real incomes and reduce debt-service burdens.

Recurring revenues are projected to be supported

by solid growth in fee-driven businesses, particularly

payments, bancassurance, and wealth management.

Operational efficiency is expected to improve, with the

cost-to-income ratio targeted below 48% in 2026 and

further declining to below 47% territory in 2027. Ongoing

IT investments remain central to the NLB Group’s

evolution into a digital-first, agile, and customer-centric

modern bank, and are expected to continue unlocking

significant efficiency gains. These investments are

executed in a controlled manner to support the Group’s

strategic priorities, while remaining fully aligned with

benchmarks and the long-term financial framework.

The cost of risk is expected to remain within the

30–50 bps range for 2026, consistent with the Group’s

disciplined risk appetite.

Table 9:

Actual 2025 vs Last Outlook for 2025 and Outlook for 2026 and 2027

Actual 2025

Last Outlook for 2025

Outlook for 2026

Outlook for 2027

Recurring income

EUR 1,282 million

~ EUR 1,200 million

> EUR 1,300 million

~ EUR 1,500 million

CIR

47.4%

~ 49%

Below 48%

Below 47%

Cost of risk

29 bps

30–50 bps

30–50 bps

30–50 bps

Loan growth

14%

Low double-digit

High single-digit

High single-digit

Dividends

EUR 257.2 million

(50% of 2024 profit)

50% of 2024 profit

55% of 2025 profit

50–60%

of 2026 profit

ROE a.t.

ROTE a.t.

ROE a.t. normalised

14.5%

15.2%

20.5%

~ 14.5%

~ 19.5%

~ 15%

~ 20%

~ 15%

~ 20%

M&A potential

M&A capacity of up to EUR 4 billion RWA

(i) ROTE a.t. = annualised result a.t., reduced for AT1 coupons, divided by the average equity, reduced for average intangible assets and average AT1 capital.

(ii) ROE a.t. normalised = annualised result a.t. reduced for AT1 coupons, divided by the average risk-adjusted capital. Average risk-adjusted capital is calculated

as the CET1 strategic target of average RWA reduced by the CET1 minority shareholder capital contribution. Following the AT1 bond issuance in November

2025, under the ROE normalised calculation, the result a.t. is reduced for AT1 coupons, and the average risk-adjusted capital is calculated according to the CET1

target of 13% instead of the regulatory Tier 1 requirement. ROE normalised for 2025 under the previous methodology would amount to 20.6%.

(iii) Assisted with the combination of capital from issuing AT1 notes and a temporary reduction of the dividend payments.

Table 10:

Actual 2025 and Impact Ambition 2030

Actual 2025

Impact Ambition 2030

Recurring income

EUR 1,282 million

> EUR 2,000 million

Recurring profit

~ EUR 530 million

> EUR 1,000 million

CIR

47.4%

< 45%

ROTE a.t.

15.2%

> 15% (1-2 pp upside from strategic plays)

ROE a.t. normalised

20.5%

> 20%

RTSR

55.1%

> Banking peer group

Payout ratio

50%

towards 50-60%

P/B

1.1

> 1

Tier 1 capital ratio

17.4%

~ 15%

CET1 ratio

15.4%

> 13%

29 bps

30–50 bps

(i) ROTE a.t. = annualised result a.t., reduced for AT1 coupons, divided by the average equity, reduced for average intangible assets and average AT1 capital.

(ii) ROE a.t. normalised = annualised result a.t. reduced for AT1 coupons, divided by the average risk-adjusted capital. Average risk-adjusted capital is calculated

as the CET1 strategic target of average RWA reduced by the CET1 minority shareholder capital contribution. Following the AT1 bond issuance in November

2025, under the ROE normalised calculation, the result a.t. is reduced for AT1 coupons, and the average risk-adjusted capital is calculated according to the CET1

target of 13% instead of the regulatory Tier 1 requirement. ROE normalised for 2025 under the previous methodology would amount to 20.6%.

(iii) Banking peer group: UniCredit, OTP, RBI (Raiffeisen Bank International), Erste Group, Intesa, Addiko. Performance measured for the full year 2025.

»

Further information on the Group Strategy 2030 is available on the NLB website.

Through layered applications of

acrylic and marble dust, the artist

creates a photorealistic yet tactile

mountain texture that functions

like a three-dimensional diorama.

JELENA BUJALIĆ

Untitled (Mountains), 2023

acrylic, chalk, marble dust, coloured

pencil, graphite on linen canvas

26 × 34.6 cm

New acquisition

47

Overview of

Financial Performance

The financial year concluded with a strong profit after tax of EUR 503.1 million. The Group delivered strong

performance and exceptional loan growth, supported by the leasing integration, confirming the robustness of its

business model despite margin pressure. Profit after tax was slightly lower than the previous year, with a robust

capital position and the cost of risk at 29 bps.

5 Cost of risk calculation excludes provisions from securities and other financial assets (in 202

5 net released in the amount of EUR 3.5 million).

6 Definitions of ROTE and ROE normalised are defined in the chapter

The following key drivers influenced the Group’s

performance in the year 2025:

The Group achieved exceptional YoY growth in gross

loans to customers of EUR 2,372.0 million, driven by

buoyant demand across segments.

The Group successfully funded its loan production

through growth in its deposit base, which rose by

EUR 2,303.6 million YoY, reflecting EUR 1,439.2 million

higher deposits from individuals and EUR 864.4 million

from corporates and state.

Higher volumes drove a 1% YoY increase in net interest

income. Net interest margin (NIM) showed signs of

bottoming out toward the end of the year, following

earlier declines in central bank policy rates. The annual

net interest margin amounted to 3.32%, down 32 bps YoY.

Net interest income sensitivity reduced as the Group

proactively managed interest rate exposures on both

the asset and liability sides.

Net fee and commission income grew by 9% YoY,

supported by higher client engagement in

investment funds and bancassurance, and higher

revenues from cards, also driven by improved terms

with service providers.

Total costs of the Group in 2025 amounted to EUR 616.8

million, 9% up YoY. This increase reflected continued

investment in employees, digital transformation,

and business expansion. On a like-for-like basis,

excluding the impact of the SLS Group, non-recurring

general and administrative expenses, and variable

compensation effects, cost growth remained contained

at approximately 4%.

In 2025, the Group established impairments and

provisions for credit risk in the amount of EUR 46.6

million. The established provisions were primarily

driven by portfolio developments (EUR 93.2 million),

largely due to credit migration among specific corporate

clients in the Slovenian automotive and steel sectors,

partially offset by recoveries from written-off receivables

(EUR 28.2 million) and model adjustments (EUR 18.4

million). The cost of risk in 2025 stood at 29 bps

5

Other impairments and provisions were net

established in the amount of EUR 13.7 million, with the

vast majority established in the last quarter due to

restructuring provisions.

The effective tax rate (calculated as income tax divided

by profit before tax) for 2025 was 13% for the NLB

Group and 8% for NLB. The effective tax rate of NLB

was significantly influenced by non-taxable income,

consisting mostly of received dividends and the release

of impairments of equity investments in subsidiary

banks. The overall contribution rate, including income

tax and the tax on balance sheet for the year 2025, was

18% for NLB Group and 15% for NLB.

Additional capital market issuance in 2025 further

strengthened the Group’s capital position. This included

the issuance of senior preferred notes in the nominal

amount of EUR 500 million in January for MREL

purposes and Additional Tier 1 notes in the amount of

EUR 300 million issued in November. Total Capital Ratio

(TCR) stood at 20.1%, well above the requirements.

ROTE and ROE normalised

6

amounted to 15.2% and

20.5%, respectively.

Amid volatile macroeconomic conditions throughout

the year, new NPL inflows surpassed repayments and

recoveries on the existing NPL portfolio, predominantly

within the corporate segment. As a result, the NPL

portfolio posted a net increase of EUR 139.1 million,

reaching EUR 469.5 million at the end of 2025. Modest

growth in the non-performing credit portfolio stock,

combined with high-quality credit portfolio growth, led

to an increase in the gross NPL ratio (EBA def.) from

2.0% to 2.4% YoY. The NPE ratio (EBA def.) remained at

merely 1.4%.

Unencumbered liquidity reserves portfolio amounted to

EUR 10,000.5 million, representing 31.8% of total assets.

EUR 503.1

of net profit

48

Figure 13:

Profit after tax of NLB Group – evolution YoY (in EUR millions)

Profit generation remained broad-based across the

Group, with the SEE banks together accounting for 62%

of the Group’s total profit, underscoring the strength and

diversification of the Group’s business model.

For more information on the banks operations, see the

chapter

Net interest

income

Net fee and

commission

income

Other net

non-interest

income

Total costs

Tax on

balance sheet

Impairments

and provisions

Share of profit

from investments

in associates and

joint ventures

Income tax

Result of

non-controlling

interests

12.5

29.7

18.3

-50.6

-22.8

503.1

514.6

-0.3

-1.5

0.0

EUR 1,302.5

of total net operating income

EUR 652.1

of profit before impairments

and provisions

49

Income statement

7

Table 11:

Income statement of NLB Group

in EUR millions

Change YoY

Q4 2025

Q3 2025

Q2 2025

Q1 2025

946.7

934.2

12.5

1%

243.8

236.5

232.5

233.9

Net fee and commission income

342.6

312.9

29.7

9%

92.5

87.1

82.7

80.4

Dividend income

0.2

0.1

0.1

65%

0.0

0.1

0.0

Net income from financial transactions

33.7

24.1

9.6

40%

5.2

7.6

13.4

7.5

Net other income

-20.7

-29.3

8.6

29%

-2.2

-3.1

-4.1

-11.4

Net non-interest income

355.8

307.8

48.0

16%

95.5

91.7

92.1

76.5

Total net operating income

1.302.5

1.242.0

60.5

5%

339.3

328.2

324.6

310.4

Employee costs

-352.3

-322.2

-30.2

-9%

-95.5

-85.4

-88.9

-82.6

Other general and administrative expenses

-203.7

-188.6

-15.1

-8%

-62.1

-47.7

-47.7

-46.2

Depreciation and amortisation

-60.8

-55.4

-5.4

-10%

-15.6

-14.2

-15.9

-15.1

-616.8

-566.2

-50.6

-9%

-173.2

-147.3

-152.5

-143.9

Tax on balance sheet

-33.5

-33.2

-0.3

-1%

-8.8

-8.5

-8.2

-8.1

Result before impairments and provisions

652.1

642.6

9.5

1%

157.4

172.3

164.0

158.5

Impairments and provisions for credit risk

-46.6

-20.6

-26.0

-126%

-36.4

-16.0

20.3

-14.5

Other impairments and provisions

-13.7

-16.9

19%

-10.4

0.0

-5.6

2.3

Impairments and provisions

-60.2

-37.4

-22.8

-61%

-46.7

-16.0

14.7

-12.2

Share of profit from investments in associates and joint ventures

1.5

3.0

-1.5

-51%

0.2

-0.2

0.9

0.6

Result before tax

593.4

608.1

-14.8

-2%

110.9

156.2

179.5

146.8

Income tax

-74.7

-77.9

4%

-10.3

-20.5

-26.2

-17.7

Result of non-controlling interests

15.6

15.7

0.0

0%

3.5

4.0

4.8

3.3

503.1

514.6

-11.5

-2%

97.0

131.6

148.5

125.8

7 From June 2025 onwards and for the previous periods, the income statement is presented according to the new methodology. An operating lease is presented on a net basis: non-interest income and related costs are netted by the

amount of amortisation (EUR 7.7 million in 2025 and EUR 2.8 million in 2024).

50

Net interest income increased modestly YoY to EUR 946.7

million, primarily driven by robust loan growth, including

the contribution from the acquired SLS leasing portfolio

in the second half of the last year, and accounted for

73% of total net operating income. At the same time,

against a backdrop of a lower interest-rate environment,

most Group banking members recorded a decline in net

interest income, while some entities achieved growth

supported by higher loan volumes.

At the Group level, interest income growth was driven by

higher loan volumes, with retail lending recording the

strongest increase of EUR 53.1 million, partly reflecting

the acquisition of the SLS Group in the previous year.

In addition, interest income from securities rose by

EUR 40.0 million, reflecting a deliberate increase in

securities holdings in anticipation of a declining interest-

rate environment, with the majority of the increase

attributable to higher volumes. This was partly offset by

a significant decline in income from balances with banks

and central banks of EUR 74.5 million, mostly reflecting

lower interest rates. Interest expenses increased YoY,

driven by higher funding volumes, particularly customer

deposits, as well as higher costs of MREL-eligible

wholesale funding, while the overall funding cost was

influenced by the declining interest-rate environment.

Profitability stabilisation is one of the NLB Group’s

priorities. To protect future interest income from

a declining interest rate environment, the Group

proactively responded to the market interest rate

dynamics by fixing interest rates primarily in the first half

of 2024, when rates were near their peak. This strategic

timing has secured stable interest income for the

medium term and significantly reduced NII sensitivity to

future rate fluctuations.

Figure 14:

Net interest income of NLB Group (in EUR millions)

1,184.0

2.2

4.5

3.3

4.2

233.9

232.5

236.5

243.8

Q1 2025

Q2 2025

Q3 2025

Q4 2025

1,163.0

292.1

291.2

295.5

305.1

-232.7

-60.3

-62.0

-63.5

-65.6

Interest income

Interest expenses

Derivatives & Other

934.2

946.7

+1%

-251.4

14.1

51

The net interest income sensitivity, simulated by a

100-bps immediate parallel downward shift in interest

rates, stood in December 2025 at EUR -67.6 million or

-1.99% of the T1 capital, driven mainly by cash balances

(EUR -20.7 million) and floating rate loan positions

(EUR -59.9 million), entering into new interest rate

hedges on issued liabilities (EUR 500 million), and

investing in additional high-quality debt securities

(EUR 1,018 million, partially hedged). In contrast, higher

central bank balances of EUR 425 million contributed

negatively to net interest income sensitivity. The issuance

of subordinated notes of EUR 300 million, eligible for

inclusion in AT1 capital, was the main driver of the

increase in central bank balances.

Due to uncertainty surrounding the future path of interest

rates in 2025, the Group consciously managed its IRRBB

position in a manner to enable the potential execution

of material IRRBB management actions in the event of a

stronger view on market interest rate dynamics.

Figure 15:

NII sensitivity to various rate shocks of NLB Group (in EUR millions)

-67.6

-33.4

25.3

50.1

Scenario

-100 bps

Scenario

-50 bps

Scenario

+50 bps

Scenario

+100 bps

Figure 16:

NLB Group’s NII sensitivity under a standard internal shock (in EUR millions)

101.4

94.3

76.0

73.9

70.7

67.2

67.6

65.4

67.6

31 Mar 2024

30 Jun 2024

30 Sep 2024

31 Mar 2025

30 Jun 2025

30 Sep 2025

NII NLB Group

NLB Group (% of Tier 1 Capital)

3.90%

3.62%

2.91%

2.82%

2.47%

2.34%

2.34%

2.27%

1.99%

52

The Group’s annual net interest margin decreased by

32 bps YoY to 3.32%, reflecting lower interest rates on

loans to customers and central bank balances. Margin

dynamics were also influenced by developments on the

funding side. In Slovenia, deposit interest rates declined

in line with monetary easing, contributing to a gradual

reduction in funding costs. In contrast, in certain SEE

markets, elevated funding needs amid strong loan

demand led to temporarily higher deposit interest rates

to secure sufficient liquidity. Towards the end of the

year, net interest margins showed signs of stabilisation

and bottoming out, with this trend first emerging in

Slovenia and is expected to gradually extend to the SEE

markets as pricing dynamics continue to normalise.

Similarly, the operational business margin decreased by

36 bps to 4.60%.

Figure 17:

Net interest margin (quarterly data, in %)

(i) Calculated based on average interest-bearing assets.

Figure 18:

Operational business margin (quarterly data, in %)

(i) Calculated based on average interest-bearing assets.

SEE banks

Q1 2025

Q2 2025

Q3 2025

Q4 2025

5.17%

4.72%

3.56%

5.14%

4.62%

3.41%

4.94%

4.53%

3.36%

4.96%

4.58%

3.44%

SEE banks

Q1 2025

Q2 2025

Q3 2025

Q4 2025

4.05%

3.46%

2.64%

2.51%

3.34%

3.94%

2.54%

3.25%

3.70%

2.47%

3.24%

3.77%

53

The Group’s net non-interest income recorded robust

YoY growth, driven by higher net fee and commission

income and sizeable non-recurring items. These

primarily reflected the revaluation and the sale of real

estate assets, as well as the resolution of a legal dispute.

Additionally, recurring other net non-interest income

in Q1 2025 was negatively affected by the accrual of

a one-time annual payment of regulatory costs in

NLB, amounting to EUR 11.4 million under the Deposit

Guarantee Scheme (DGS).

Net fee and commission income, a key component of

net non-interest income, recorded strong YoY growth,

primarily driven by higher revenues from cards,

investment funds, and bancassurance. The latter two

performed exceptionally well, achieving strong growth

in Slovenia and across the SEE markets, and making

a significant contribution to overall fee income. Over

the same period, NLB Skladi, Ljubljana, generated net

inflows of EUR 245 million in mutual funds, accounting

for 46.2% of total market net inflows.

The growth in the last quarter was mainly

attributable to higher net fees in the card business,

supported by seasonality effects and improved terms

with service providers.

Figure 19:

Net non-interest income of NLB Group (in EUR millions)

0.7

-11.6

8.8

20.5

-3.7

342.6

312.9

80.4

82.7

87.1

92.5

Net fee and commission income

Recurring other net non-interest income

Non-recurring other net non-interest income

7.7

76.5

92.1

91.7

1.3

3.3

95.5

355.8

307.8

+16%

-7.4

-1.4

0.8

2.3

Figure 20:

Net fee and commission income of NLB Group (in EUR millions)

6.2

6.9

7.5

6.1

21.9

26.7

43.8

45.1

45.4

47.7

Payment transaction & Basic accounts

Investment funds and Investment banking & Bancassurance

Cards and ATM operations

Guarantees & Other

11.0

12.5

13.6

17.6

80.4

82.7

87.1

92.5

342.6

312.9

+9%

65.8

79.3

48.2

54.6

19.5

18.2

20.6

21.1

176.9

181.9

54

8 Tax on balance sheet is excluded from the calculation. From June 2025 onwards and for the previous periods, CIR has been adjusted to the new methodology. The operating lease is presented on a net basis: non-interest income and

related costs are netted by the amount of amortisation.

Total costs increased YoY, reflecting ongoing

investments in employees, digital transformation,

and business expansion. On a like-for-like basis,

excluding the impact of the SLS Group, non-recurring

general and administrative expenses, and variable

compensation effects, cost growth remained contained

at approximately 4%.

Employee costs increased by EUR 30.2 million YoY.

Approximately one-third of the increase was attributable

to variable compensation linked to the rise in the NLB

share price, another one-third reflected a 4% increase in

employee-related costs across the banks, primarily due

to salary adjustments amid elevated wage inflation in the

region, while the remaining third was related to strategic

business expansion, particularly in the leasing segment.

Other general and administrative expenses increased

by EUR 15.1 million, with roughly half of the increase

attributable to the growing business, notably within

leasing and asset management companies. Within

the banks, the cost grew by 5%, mainly driven by

value-added investments, primarily related to IT, while

structural costs remained broadly stable or declined,

particularly in real estate.

Depreciation and amortisation increased by

EUR 5.4 million, primarily due to the consolidation of

the SLS Group and higher investments made in the

previous year.

Capital expenditure remained aligned with the Group’s

strategic priorities. Investments in IT increased by 16%

YoY to EUR 49.1 million, while real estate investments

amounted to EUR 38.2 million, reflecting a 33% growth

YoY. Real estate investments were primarily focused on

accelerating the refurbishment of the branch network

and the transformation of headquarters into modern,

employee-centric working environments, representing

a core delivery element of the Group’s Go-to-Market

(GTM) strategic initiative. These investments support

the ongoing transformation of the distribution network

through space and location optimisation, as well as a

strengthened omnichannel customer experience.

As in previous years, operating costs were higher in the

fourth quarter, reflecting the timing of certain IT and

marketing expenses, as well as employee-related costs.

The Cost-to-Income Ratio (CIR)

8

stood at 47.4%, up

1.8 pp YoY. The rise was driven by lower net operating

income growth, which was outpaced by the increase in

total costs.

Employee costs

Other general and administrative expenses

Depreciation and amortisation

46.2

47.7

47.7

62.1

82.6

88.9

85.4

95.5

143.9

152.5

147.3

173.2

15.1

15.9

14.2

15.6

188.6

203.7

322.2

352.3

566.2

616.8

~+4%

Like-for-like

55.4

60.8

+9%

Figure 21:

Total costs of NLB Group (in EUR millions)

Figure 22:

Number of employees

Figure 23:

Number of branches

SEE banks

Leasings & AuM

NLB DigIT & other

SEE banks

171

188

5,031

312

340

2,469

2,523

69

69

419

409

8,107

8,322

381

-215

-28

426

5,202

55

In 2025, the Group established impairments and

provisions for credit risk in the amount of EUR 46.6

million. The established provisions were primarily driven

by portfolio development (EUR 93.2 million), largely due

to credit migration among specific corporate clients

in the Slovenian automotive and steel sectors. These

establishments were partially offset by recoveries from

written-off receivables (EUR 28.2 million) and model

adjustments (EUR 18.4 million). Cost of risk calculation

excludes provisions from securities and other financial

assets (in 2025 net released in the amount of EUR 3.5

million). Consequently, the cost of risk for 2025 stood at

29 bps.

Other impairments and provisions were net established

in the amount of EUR 13.7 million. The vast majority

were established mainly in the last quarter, driven by

restructuring provisions (EUR 6.4 million in NLB and

EUR 3.4 million in NLB Komercijalna Banka, Beograd).

Figure 24:

Impairments and provisions of NLB Group (in EUR millions)

-20.6

-46.6

-14.5

20.3

-16.0

-36.4

-16.9

-13.7

-5.6

-10.4

-37.4

-60.2

-12.2

14.7

-16.0

-46.7

Impairments and provisions for credit risk

Other impairments and provisions

14

29

CoR

(bps)

56

In 2025, the effective tax rate (calculated as income

tax divided by profit before tax) for the NLB Group was

13%, and 8% for NLB. The effective tax rate of NLB was

significantly influenced by non-taxable income, primarily

received dividends and the reversal of impairments of

equity investments in subsidiary banks. In addition, tax

losses carry-forward decreased the taxable base by

50%. When excluding non-taxable dividends and the

non-taxable reversal of equity investments, the effective

tax rate is 18% for NLB and 14% at the Group level (the

latter also excludes non-taxable interest from state

securities, in accordance with some local tax legislation).

Taxes for the period 2024‒2028 are higher due to the

Reconstruction, Development, and Provision of the

Financial Resources Act, introduced following the major

floods in Slovenia in 2023. Under these measures,

the corporate income tax rate was increased from

19% to 22%, and the banks’ tax on balance sheet was

introduced. This tax on balance sheet is recognised

within other general and administrative expenses and

is included in the contribution rate. In 2025, the tax on

balance sheet amounted to EUR 33.5 million.

NLB Group is liable to pay the top-up tax for the Group

members in jurisdictions where the effective tax rate,

calculated by the rules related to the global minimum

top-up tax, is below 15%. For the year 2025, NLB

Group recognised EUR 6 million top-up-tax related to

subsidiaries in Bosnia and Herzegovina, Kosovo and

North Macedonia. North Macedonia is the only non-EU

country in the region in which the NLB Group operates

that has introduced the global minimum top-up tax

The overall contribution rate related to profit before tax,

including income tax and the tax on balance sheet, was

18% for the NLB Group and 15% for NLB in 2025. Until

2028, during the validity of the post-flood tax measures,

the overall contribution rate is expected to remain

slightly below or around 20% at the NLB Group level.

From 2029 onwards, the effective tax/contribution rate

related to profit before tax is expected to stabilise at

around 15% for NLB and 17% for the NLB Group.

Table 12:

Effective tax and contribution rates

in EUR millions

NLB 2025

NLB 2024

Profit before tax

463

512

593

608

Non-taxable income

-266

-266

-45

-44

Non-taxable dividends received

-219

-212

0

0

Non-taxable reversal of equity investments

-47

-54

0

0

Non-taxable interest from state debt securities

0

-45

-44

Taxable income

197

246

548

564

Adjustments

-110

-138

-235

-260

Utilisation of tax loss carry forward

-101

-123

-108

-126

Other adjustments

-9

-15

-127

-134

Tax base

87

108

313

304

Corporate income tax (at 22%)

19

24

69

67

Withholding tax (mainly dividends) & other

11

Global minimum top-up tax

4

6

6

Recognition of DTAs

-5

-6

-14

-7

Other

5

4

2

Total tax

36

34

75

78

Effective tax rate related to profit before tax

8%

7%

13%

13%

Effective tax rate related to taxable income

18%

14%

14%

14%

34

33

34

33

Contribution (total tax and balance sheet tax)

67

108

111

Overall contribution rate related to profit before tax

15%

13%

18%

18%

Overall contribution rate related to taxable income

35%

27%

20%

20%

(i) The data related to NLB’s corporate income tax is based on the tax return; the impact of temporary differences is not excluded.

(ii) The effect of different tax rates in other countries is included in other adjustments.

57

Statement of financial position

Table 13:

Statement of financial position of NLB Group

30 Sep 2025

30 Jun 2025

31 Mar 2025

Assets

Cash, cash balances at central banks,

and other demand deposits at banks

4,371.8

4,039.6

332.2

8%

4,371.8

3,873.6

4,215.2

3,838.1

Loans to banks

404.5

458.9

-54.4

-12%

404.5

600.3

351.3

504.8

Net loans to customers

18,705.5

16,363.6

2,341.8

14%

18,705.5

18,212.0

17,481.5

16,923.3

19,093.4

16,721.4

2,372.0

19,093.4

18,588.6

17,834.5

17,295.9

- Corporate

8,318.3

7,471.2

847.1

11%

8,318.3

8,229.1

7,914.7

7,719.5

- Individuals

9,992.4

8,735.0

1,257.5

9,992.4

9,667.8

9,347.6

9,023.4

- State

782.7

515.2

267.5

52%

782.7

691.8

572.2

553.0

Impairments and valuation of loans to customers

-388.0

-357.8

-30.2

-8%

-388.0

-376.6

-353.0

-372.6

Financial assets

7,087.8

6,324.5

763.3

12%

7,087.8

6,842.2

6,666.3

6,568.9

- Trading book

6.5

19.6

-13.1

-67%

6.5

8.3

8.3

8.3

- Non-trading book

7,081.3

6,304.9

776.4

12%

7,081.3

6,833.9

6,658.0

6,560.6

Investments in subsidiaries, associates, and joint ventures

14.1

14.7

-0.5

-4%

14.1

13.8

14.0

15.2

Property and equipment

331.3

310.0

21.2

7%

331.3

311.6

312.6

312.8

Investment property

24.4

26.1

-1.8

-7%

24.4

22.1

22.3

22.3

Intangible assets

115.9

100.5

15.4

15%

115.9

102.9

100.2

101.3

Other assets

419.6

397.4

22.2

6%

419.6

414.7

409.5

391.8

31,474.8

28,035.4

3,439.5

12%

31,474.8

30,393.3

29,573.0

28,678.5

Liabilities

Deposits from customers

24,509.9

22,206.3

2,303.6

10%

24,509.9

23,633.4

22,837.8

22,078.9

- Corporate

7,107.3

6,304.6

802.7

13%

7,107.3

6,733.3

6,292.3

6,043.1

- Individuals

16,951.2

15,512.0

1,439.2

9%

16,951.2

16,414.8

16,124.9

15,623.8

- State

451.4

389.7

61.7

16%

451.4

485.3

420.6

412.0

Deposits from banks and central banks

98.8

136.0

-37.2

-27%

98.8

135.4

178.8

172.1

Borrowings

280.0

225.1

54.9

24%

280.0

323.9

431.2

278.5

Subordinated debt securities

545.6

560.1

-14.6

-3%

545.6

560.1

551.2

538.3

Other debt securities in issue

1,553.6

1,048.8

504.8

48%

1,553.6

1,538.6

1,526.7

1,563.3

Other liabilities

626.6

560.9

65.7

12%

626.6

614.1

589.5

619.6

Equity

3,781.6

3,226.0

555.6

17%

3,781.6

3,512.5

3,386.2

3,356.2

Non-controlling interests

78.8

72.1

6.7

9%

78.8

75.3

71.6

71.6

Total liabilities and equity

31,474.8

28,035.4

3,439.5

12%

31,474.8

30,393.3

29,573.0

28,678.5

58

Figure 25:

Balance sheet structure of NLB Group on

31 December 2025 (in EUR millions)

The Group’s total assets increased 12% YoY to EUR 31,474.8

million, reflecting continued balance-sheet expansion

on the back of compounding of loan growth. The Group

maintained a healthy funding profile alongside impressive

loan growth, which was fully funded through customer

deposits. The Group recorded a solid net LTD ratio of

76.3% and preserved a strong liquidity position. The

issuance of two notes – EUR 500 million senior preferred

notes in January for MREL purposes and EUR 300

million Additional Tier 1 notes in November 2025 – further

diversified the Group’s funding structure, strengthening its

liquidity and capital position.

The Group’s leverage ratio, which takes into account

both on-balance sheet and off-balance sheet items,

increased by 0.4 pp YoY to 10.3%. The increase was

driven by higher on-balance exposures to individual

and corporate clients.

546

Subordinated debt securities

627

Other liabilities

1,554

Other debt securities in issue

379

Deposits from banks and

central banks & Borrowings

Liabilities

31,475

Assets

31,475

Net loans

to customers

18,705

Cash

equivalents

& placements

with banks

4,776

Financial

assets

7,088

Other assets 905

Deposits

from

customers

24,510

Total equity

3,860

Deposits

from state

1.8%

Deposits

from

individuals

69.2%

Deposits

from

corporate

29.0%

24,510

Loans to state

4.2%

Loans to

corporate

43.4%

Loans to

individuals

52.4%

18,705

Figure 26:

NLB Group’s LTD ratio movement

18,705

16,364

24,510

22,206

73.7%

76.3%

LTD

Net loans (in EUR millions)

Deposits (in EUR millions)

59

Assets

The distribution of total assets by country remained

broadly unchanged YoY, with asset growth in the

SEE members outpacing growth in Slovenia. Of the

Group’s total assets, 55.1% were located in Slovenia

and 19.6% in Serbia.

Figure 27:

Total assets of NLB Group – structure (in EUR millions)

905.2

848.7

4,776.3

4,498.5

18,705.5

16,363.6

7,087.8

6,324.5

Cash equivalents, placements with banks and loans to banks

Financial Assets

Other Assets

28,035.4

+12%

Figure 28:

Total assets of NLB Group by country (year-end, in %)

55.1%

55.5%

0.6%

0.5%

Other

Other

3.5%

3.4%

5.2%

5.1%

7.8%

7.7%

8.2%

7.7%

19.6%

20.1%

(i) The geographical analysis includes a breakdown of items with respect to the country in which individual NLB Group members are located.

60

Loan volume growth remained strong across

geographies and customer segments throughout the

year, resulting in an exceptional 14% loan growth at the

Group level. Favourable macroeconomic conditions,

combined with active commercial engagement across

the Group, supported loan demand. At the same

time, the pace and structure of growth varied among

individual Group members, reflecting local market

dynamics, liquidity positions, and funding considerations.

In NLB, business activity remained robust. Gross

loans to the corporate and state segment increased

by 11% YoY, driven primarily by higher investment

activity, increased working capital needs, and

improved business confidence amid easing financing

conditions. Loans to individuals recorded growth of

10%, with particularly strong momentum in housing

loans, supported by higher new loan production

during the year. New production of housing loans

in 2025 amounted to EUR 759.1 million (compared to

EUR 509.7 million in 2024). Consumer lending also

remained solid, reflecting sustained household demand,

with EUR 569.4 million in new consumer loan production

in 2025 (EUR 542.2 million in 2024).

In the SEE banks, loan growth outpaced the rate in

Slovenia, with exceptionally strong YoY increases in both

individual (19%) and corporate and state lending (17%).

Corporate and state lending expanded on the back

of increased investment activity and working-capital

financing needs, supported by improving economic

conditions across the region. Within retail lending, strong

new loan production was recorded across both consumer

and housing segments. Consumer loans accounted for

over 70% of new production and drove higher absolute

growth compared to the previous year (EUR 1,521.0 million

in 2025 compared to EUR 1,206.4 million in 2024), while

housing loans recorded stronger relative growth rates

(EUR 579.9 million in 2025 compared to EUR 418.7 million

in 2024). These trends were supported by declining

interest rates, improving economic conditions, and robust

wage growth, which enhanced household repayment

capacity and supported demand for retail lending.

Across the region, particularly in Slovenia, housing

loans represent a structurally important component of

lending to individuals, reflecting a significantly higher

share of owner-occupied housing compared to Western

European markets. In Slovenia, the more advanced

stage of the mortgage market and elevated property

prices mean that income growth primarily supports the

sustainability of housing lending amid elevated property

prices. In the SEE markets, lower mortgage penetration,

high levels of outright homeownership, and lower

property prices allow income growth to translate more

directly into housing loan demand, supporting gradual

market development.

Figure 29:

NLB Group gross loans to customers dynamics (in EUR millions)

SEE banks

8,735.0

3,965.2

4,056.9

9,992.4

4,375.8

4,819.2

+14%

+10%

+19%

Gross loans

to individuals

7,986.4

4,850.5

3,751.3

9,101.0

5,364.4

4,396.3

+11%

+17%

Gross loans

to corporate

& state

+14%

(i) On a stand-alone basis.

(ii) Sum of data on a stand-alone basis as included in the consolidated financial statements of the NLB Group.

61

During the year, lending rates declined in both Slovenia

and the SEE markets, reflecting monetary easing by

central banks. In Slovenia, lending rate developments

broadly followed the overall market trend, while loan

growth was supported by income growth and stable

economic activity.

In the SEE markets, declining lending rates were

accompanied by strong loan growth, supported by

robust wage growth and improving economic

conditions. Towards the end of the year, lending rates

showed signs of stabilisation across both Slovenia and

the SEE markets, in line with the gradual normalisation

of pricing conditions.

Figure 30:

Interest rates for loans to customers (quarterly, in %)

(i) On a stand-alone basis.

(ii) Sum of data on a stand-alone basis as included in the consolidated financial statements of the NLB Group.

5.48%

4.54%

6.01%

5.30%

4.34%

5.83%

5.08%

4.11%

5.66%

5.08%

4.11%

5.64%

62

The Group’s loan portfolio remained well diversified,

with no significant concentration in any specific

industry or client segment. In the retail segment,

growth was recorded across housing loans, consumer

loans, and leasing, with housing loans remaining the

predominant category.

Most of the loan portfolio is denominated in euros, with

the remainder in the local currencies of the Group’s

banking members. By interest rate type, 69% of the loan

portfolio was linked to a fixed interest rate, and the rest

predominantly to the Euribor reference rate.

Figure 31:

Loan portfolio

by segment, geography, currency, and interest rate type (in EUR millions)

EUR 23.3

billion

Institutions

467

2%

State

4,113

18%

Retail

consumer

4,759

20%

Retail

housing

5,233

22%

Corporates

3,415

15%

SME

5,301

23%

by segment

(iv)

Other

1,103

5%

1,996

9%

964

4%

1,401

6%

5,196

22%

1,874

8%

10,754

46%

EUR 23.3

billion

by geography

1%

BAM

5%

MKD

6%

RSD

10%

78%

EUR 23.3

by currency

Floating

31%

Fixed

69%

EUR 23.3

(i) The loan portfolio also includes account balances, required reserves at CBs, and demand deposits at banks.

(ii) State includes exposures to CBs.

(iii) The largest part represents EU members.

(iv) Segmentation following the company size defined in the Companies Act of an individual country in the region.

by interest rate

63

In 2025, the banking book debt securities portfolio

increased by EUR 770.8 million (book value) YoY,

constituting 22.1% of the Group’s total assets, consistent

with 2024. At the end of 2025, the portfolio’s average

duration was 4.1 years, up from 3.6 years in 2024, while

the average yield rose to 2.74%, up 0.25 pp from the

previous year. The ESG portfolio continued to expand

throughout the year, accounting for 13.0% of the entire

portfolio. Additional information is available in the

chapter

Banking book debt securities portfolio

in the

Sustainability Statement.

The portfolio is managed under two business models:

securities measured at fair value through other

comprehensive income (FVOCI) and securities measured

at amortised cost (AC). The FVOCI portfolio declined by

1.83 pp in 2025, accounting for 38.0% of the total Group

debt securities portfolio at year-end, with an average

duration of 2.7 years. The negative valuation of the

Group’s FVOCI debt securities portfolio during 2025

amounted to EUR 1 million, net of hedge accounting

effects and related deferred taxes.

The AC portfolio represented 62.0% of the Group’s

total debt securities portfolio at the end of 2025, with

an average duration of 4.9 years. Unrealised losses of

the Group’s AC debt securities portfolio during 2025

amounted to EUR 29 million.

Information on intangible assets and their contribution

to value creation within the Group is available in the

chapter

, with additional disclosures in the

of this Annual Report.

Figure 32:

Banking book debt securities portfolio by asset class, geography, currency, rating

9

, and maturity profile as at 31 December

2025 (in EUR millions)

9 The rating distribution is determined in accordance with the internal

policy on the use of international rating agencies. Under this approach,

exposure to Serbia is classified within the BB rating category, together

with other NLB Group’s markets, including exposures to Bosnia and

Herzegovina, North Macedonia and others. These exposures represent

97% of the Group’s total speculative-grade exposures.

EUR 6,964

Government

bonds

4,608

Corporate

bonds

25

Subordinated

debt

49

Covered

bonds

271

Bank senior

unsecured

bonds

1,004

Multilateral bank &

agency bonds

and GGB’s

1,006

by asset class

EUR 6,964

50

BAM

129

MKD

199

USD

259

RSD

506

5,821

by currency

EUR 6,964

BB

BBB

8%

B

3%

A

28%

AAA

25%

AA

22%

by rating

EUR 6,964

Finland

238

281

Luxembourg

283

Austria

284

the Netherlands

297

Germany

576

605

856

2,007

Belgium

769

by geography

France

767

114

145

SEE

International

2026

2027-2028

2029-2030

2031+

265

1,058

1,468

235

315

1,114

1,663

216

789

1,120

361

371

1,980

2,713

% of total portfolio

21%

24%

16%

39%

by maturity profile

64

Liquidity position

The Group’s liquidity position remains strong, supported

by a high level of unencumbered liquidity reserves,

which represented 31.8% of total assets and are

reflected in a LCR ratio of 199.2%, compared to 197.2%

at the end of 2024. The Group maintains a comfortable

liquidity position, with liquidity ratios well above the risk

appetite limit at both the Group and individual banking

member levels.

The Group’s unencumbered liquidity reserves comprise

cash, balances at central banks excluding the minimum

reserve requirement, the debt securities portfolio, and

credit claims eligible for CB-secured funding operations.

Among others, these liquidity reserves provide the basis

for future strategic growth.

In 2025, the Group’s unencumbered liquidity reserves

increased by 7.7% YoY, driven primarily by growth in

the banking book debt securities portfolio, while other

categories remained broadly stable.

Encumbered liquidity reserves, used for operational

and regulatory purposes, increased by 109.4% YoY to

EUR 87.3 million (excluding obligatory reserves) and

were excluded from the liquidity reserves portfolio.

Figure 33:

Evolution of NLB Group unencumbered liquidity reserves (in EUR millions)

0.0%

ECB eligible credit claims

Cash & CB reserves

Trading book debt securities (market value)

Banking book debt securities (market value)

0.1%

9,287.5

4.1%

29.8%

66.0%

0.0%

9,722.7

3.8%

29.9%

66.3%

0.0%

9,375.2

4.1%

28.0%

67.9%

0.0%

3.9%

28.4%

67.7%

9,768.4

3.6%

27.9%

68.5%

10,000.5

65

The Group’s total liabilities amounted to EUR 27,614.5

million, complemented by total equity of EUR 3,860.3

million. The funding structure remained dominated by

customer deposits, which accounted for 78% of total

liabilities and equity, with sight deposits prevailing.

Figure 34:

Total liabilities of NLB Group – structure (in EUR millions)

98.8

136.0

Deposit from customers

Deposit from banks and central banks

Borrowings

Subordinated liabilities

Total equity

24,509.9

280.0

545.6

1,553.6

3,860.3

626.6

22,206.3

225.1

560.1

1,048.8

3,298.0

560.9

28,035.4

+12%

66

Customer deposits at the Group level continued to

grow over the year, fully supporting loan growth and

maintaining a robust funding profile. Deposit growth

was underpinned by favourable macroeconomic

conditions, strengthened funding confidence and active

commercial engagement across the Group, while the

pace and structure of growth varied among individual

Group members, reflecting local market dynamics and

liquidity positions.

In Slovenia, customer deposits showed healthy growth,

driven by an 8% increase in deposits from individuals

and a further 12% increase in corporate and state

deposits. This reflected stable income growth, strong

business activity, and prudent liquidity management

by clients. The deposit base remained well diversified,

providing a stable source of funding for loan origination.

In the SEE markets, deposit growth generally exceeded

that observed in Slovenia, with deposits from individuals

and corporate and state increasing by 11% and 13%,

respectively. In addition to improving economic

conditions and robust wage growth, deposit growth was

supported by relatively more attractive deposit interest

rates, which were deliberately maintained to secure

sufficient funding amid elevated loan demand.

For more information on the average cost of funding,

please refer to the chapter

Funding Strategy, MREL

Compliance, and Capital

Deposits from individuals continued to exhibit a seasonal

pattern consistent with previous years, with inflows

typically increasing in the second and fourth quarters,

corresponding to vacation allowances in June and year-

end bonuses. The Q4 effect was particularly pronounced

in Slovenia, following the introduction of new legislation

mandating the payment of year-end bonuses.

Figure 35:

NLB Group deposits from customers’ dynamics (in EUR millions)

748.4

580.1

738.2

865.9

500.5

Sight deposits 

Term deposits 

7,558.7

6,694.3

+13%

3,741.5

3,328.3

Deposits from

corporate &

state

14,018.3

2,932.9

16,951.2

12,785.8

2,726.2

15,512.0

+9%

+8%

5,058.3

2,184.5

7,242.9

4,686.3

1,860.3

6,546.6

+11%

Deposits from

9,708.3

8,959.9

8,965.4

8,099.5

3,888.1

3,441.9

+13%

5,934.0

1,624.7

5,474.3

1,220.0

3,161.5

2,827.8

2,795.9

1,092.2

2,703.7

67

Deposit interest rates declined at the Group level over

the course of the year, broadly in line with central

bank policy rate cuts, with the final rate reduction

implemented in early June. Pricing developments,

however, differed across markets. In Slovenia, deposit

interest rates declined during the year and remained

broadly stable in the final quarter. By contrast, in the SEE

markets, several banks implemented selective increases

in deposit interest rates in the second half of the year,

leading to a slight increase in deposit rates at the Group

level in the final quarter. These measures were aimed

at securing sufficient funding to support strong loan

portfolio growth and reflect proactive liquidity and

funding management.

Figure 36:

Interest rates for deposits from customers (quarterly, in %)

0.53%

0.37%

0.72%

0.52%

0.35%

0.73%

0.52%

0.29%

0.79%

0.54%

0.29%

0.85%

68

Off-balance sheet items

The Group’s off-balance sheet items primarily comprise

guarantees, loan commitments, and derivatives.

Derivatives continued to represent the largest share of

the Group’s off-balance sheet exposures, accounting

for 43% at the end of 2025. Total off-balance sheet

increased notably YoY, largely driven by an increase

in derivatives, mainly related to the hedging of issued

NLB securities (EUR 500 million in 2025) aimed at

NII stabilisation and hedging of the FVOCI securities

portfolio to reduce valuation impact on regulatory

capital. Loan commitments and guarantees also

increased during the year, representing 35% and 22% of

total off-balance sheet items, respectively.

Figure 37:

Off-balance sheet items of NLB Group (in EUR millions)

48.4

34.6

1,805.6

+18%

3,733.9

2,985.8

1,873.6

2,832.3

2,663.2

Guarantees

Letters of credit

Loan commitments

Derivatives

7,335.7

8,641.7

DORUTINA KASTRATI

Spine, 2019

3D printed durable plastic material,

fiberglass, resin, epoxy pigments,

polyurethane paints

57 × 79 × 28 cm

A sculpture of an injured spine, with its cold and

impersonal appearance, serves as a reminder of the

dehumanisation and sacrifice of Kosovo’s working

class in the name of economic growth.

70

10 Incorporation by reference: The reference is made to this chapter from the Sustainability Statement chapter SBM-

1 Strategy, business model, and value chain, the Table 14 excluded.

11 Merged entity: The legal merger between Summit Leasing Slovenija, Ljubljana and NLB Lease&Go, leasing, Ljubljana was completed on 4 July 2025, followed by the operational merger on 7 July 2025. The merged entity operates

under the name NLB Lease&Go, leasing, Ljubljana.

12 On 9 May

2025, SLS HOLDCO, Ljubljana merged with Summit Leasing Slovenija, Ljubljana and ceased to exist as a separate legal entity.

Segment reporting is presented in accordance with the

strategy on the basis of the organisational structure

used in management reporting of the NLB Group’s

results. The NLB Group’s segments are business units

that focus on different clients and markets. They are

managed separately because each business unit

requires different strategies and service levels.

The segments of NLB Group are divided into Core and

Non-Core segments. The business activities of the parent

bank (NLB) and the company NLB Lease&Go, leasing,

Ljubljana

11

– the successor in legally merged companies

NLB Lease&Go, leasing, Ljubljana and Summit Leasing

Slovenija, Ljubljana ‒ are divided into several segments

(Retail Banking in Slovenia, Corporate and Investment

Banking in Slovenia, and Financial Markets in Slovenia).

Other core NLB Group members are, based on their

business activity, included in Strategic Foreign Markets

and Other.

In 2025, several changes were made to the

methodology, namely:

For NLB Lease&Go, leasing, Ljubljana, the reallocation

of the micro segment from Corporate and Investment

Banking in Slovenia to the segment Retail Banking

in Slovenia was conducted, and interest income was

reallocated based on fund transfer prices (FTP).

MREL and T2 funding costs were allocated from

Financial Markets in Slovenia to all other segments,

based on their corresponding capital and MREL

requirements.

Core Segments

Retail Banking in Slovenia

covers individuals and

micro companies, asset management (NLB Skladi,

Ljubljana), the part of NLB Lease&Go, leasing,

Ljubljana that operates with retail clients, as well as a

share of the result of the associated company Bankart.

Corporate and Investment Banking in Slovenia

covers

Key Corporate Clients, SMEs, Cross-Border Corporate

Financing, Investment Banking and Custody, Trade

Finance, Restructuring and Workout, and the part of

NLB Lease&Go, leasing, Ljubljana that operates with

corporate clients.

Financial Markets in Slovenia

include treasury

activities and trading with financial instruments,

while also presenting the results of asset and liability

management (ALM) in the parent bank and in NLB

Lease&Go, leasing, Ljubljana.

Strategic Foreign Markets

consist of strategic banks

in the Group operating in strategic markets (Serbia,

North Macedonia, Bosnia and Herzegovina, Kosovo,

and Montenegro), as well as the asset management

companies (NLB Fondovi, Skopje and NLB Fondovi,

Beograd), NLB DigIT, Beograd, and leasing companies

(NLB Lease&Go Skopje, NLB Lease&Go Leasing

Beograd, and Mobil Leasing, Zagreb).

activities include categories with operating

results that cannot be assigned to specific segments

(including tax on balance sheet), as well as the NLB

MUZA, Ljubljana, Real Estate entities from 2024

onward (except NLB Real Estate, Podgorica, which

was classified as a non-core member in 2025), and the

company NLB Car&Go, Ljubljana.

Non-Core Segment

Non-Core Members

include the operations of non-core

NLB Group members, i.e. entities in liquidation, LHB;

NLB Srbija, NLB Crna Gora, SLS HOLDCO, Ljubljana

12

,

and NLB Real Estate, Podgorica (classified as a non-

core member in 2025).

Table 14:

Segments of NLB Group

Core Segments

Non-Core Segment

Retail Banking in

Corporate and

Investment Banking in

Financial Markets in

Strategic Foreign

Markets

Non-Core Members

Profit b.t. (in EUR millions)

593

246

55

22

330

-60

Contribution to Group’s profit b.t.

100%

41%

9%

4%

56%

-10%

0%

Total assets (in EUR millions)

31,475

5,375

4,137

7,347

14,109

488

18

% of total assets

100%

17%

13%

23%

45%

2%

0%

CIR

47.4%

44.3%

48.4%

/

47.3%

/

Cost of risk (bps)

29

43

79

(i) Tax on balance sheet is excluded from the calculation. From June 2025 onwards, the CIR for the NLB Group is adjusted to the new methodology. Operating lease is presented on a net basis: non-interest income and related costs are

netted by the amount of amortisation.

NLB Group’s main indicator of a segment’s efficiency is

net profit before tax. No revenues were generated from

transactions with a single external customer that would

amount to 10% or more of the Group’s revenues.

71

Retail Banking in Slovenia

The segment advanced its customer-focused strategy

through redesigned digital platforms, new mobile

solutions, and rising digital engagement, reinforcing

its position as the market’s leader in digital banking

services. Operational improvements across the branch

network and Contact Centre enhance accessibility

and service quality, while advancements in payments

and card business further accelerate the shift

toward cashless banking. Private banking, asset

management, and bancassurance maintain their

strong momentum and are supported by exclusive

partnerships and an expanding suite of investment

options. Together, these achievements underscore

the Bank’s commitment to innovation, customer

experience, and sustainable long-term growth.

Figure 38:

Contribution to NLB Group

Result b.t.

41

%

36

%

38

%

Financial and business performance

Table 15:

Performance of the Retail Banking in Slovenia segment

(iv)

in EUR millions consolidated

336.7

325.2

11.4

4%

Net interest income from Assets

131.5

109.8

21.7

20%

o/w allocation of regulatory costs

-9.3

Net interest income from Liabilities

205.2

215.4

-10.3

-5%

137.3

123.1

14.2

o/w net fee and commission income

151.6

130.1

21.5

17%

Total net operating income

474.0

448.3

25.7

6%

-210.0

-175.9

-34.2

-19%

264.0

272.5

-8.5

-3%

-19.9

-28.1

8.2

29%

Share of profit from investments in

associates and joint ventures

1.5

3.0

-1.5

-51%

245.5

247.3

-1.8

-1%

5,232.2

4,622.0

610.2

5,331.4

4,709.3

622.1

Housing loans

3,015.4

2,678.8

336.5

Interest rate on housing loans

2.84%

3.14%

-0.30 pp

Consumer loans

1,065.0

963.5

101.5

11%

Interest rate on consumer loans

8.17%

8.31%

-0.14 pp

848.9

681.7

167.2

25%

402.1

385.2

16.9

4%

10,710.1

9,849.6

860.5

Interest rate on deposits

0.33%

0.49%

-0.16 pp

Non-performing loans (gross)

105.9

95.7

10.2

11%

Cost of risk (in bps)

43

68

-25

CIR

44.3%

39.2%

5.1 pp

Net interest margin

4.15%

4.71%

-0.56 pp

(i) Net interest income from assets and liabilities using Fund Transfer Pricing (FTP).

(ii) Net interest margin and Interest rates only for NLB. Net interest margin and Interest rates only for NLB. The segment’s net interest margin is calculated as

the ratio between annualised net interest income (i) and the sum of average interest-bearing assets and liabilities divided by 2.

(iii) From the beginning of 2025 onwards, the corresponding allocation of MREL and Tier 2 from the segment Financial Markets in Slovenia is applied.

(iv) From the beginning of 2025 onwards, for NLB Lease&Go, leasing, Ljubljana, the reallocation of a micro segment was made from Corporate and

Investment Banking in Slovenia to the segment Retail Banking in Slovenia.

72

saw a 4% YoY increase, primarily

due to higher loan volumes, which positively impacted

the segment’s net interest income despite a decrease

in interest rates. The average interest rate on deposits

decreased by 16 bps YoY. Throughout 2025, the Bank

adjusted interest rates on term deposits and savings

accounts for individuals in line with prevailing market

conditions, supporting long-term financial stability and

sustainable growth.

recorded very strong

growth of 17% YoY, driven by the significant growth of

fees from investment funds, bancassurance, and card

operations, reflecting a higher volume and number of

transactions and improved terms with service providers.

The segment’s

total

costs

increased by 19% YoY,

primarily due to higher employee and value-added

costs and the inclusion of the retail part of Summit

Leasing Slovenija, Ljubljana, in the segment.

were net established for

credit risk related to the portfolio development.

The

segment’s loan portfolio

increased by EUR 622.1

million YoY, reflecting strong underlying business

activity. Growth was further supported by the

reallocation of the micro leasing portfolio from the

Corporate and Investment Banking segment in Slovenia

to the Retail Banking in Slovenia segment, following the

segment redefinition.

Housing and consumer lending

recorded strong YoY

growth of 13% and 11%, respectively. As a result, the

market share of housing loans increased to 32.4%

compared to 31.2% at the end of 2024, while the market

share of consumer loans remained stable at 30.0%

compared to 30.6% at the end of 2024. Sales

performance, particularly in green housing loans,

underscores the Bank’s ongoing commitment to

sustainability initiatives. In line with this strategy, the

Bank launched

NLB Dom

, an innovative platform

offering a comprehensive suite of tools to support clients

in planning the construction, purchasing, or renovating

their homes. The platform enables informed investment

decisions and enhances the overall user experience,

delivering meaningful added value in one of life’s most

important decisions ‒ creating a home.

New loan production

in 2025 was excellent, particularly

in housing loans, which surpassed EUR 750 million,

reflecting a 49% YoY increase. New production of

consumer loans also remained high, exceeding

EUR 569 million and reaching a 5% YoY increase.

Consequently, the market shares in new production of

housing and consumer loans remained strong in 2025,

at 37.0% and 30.9%, respectively.

The

segment’s market shares

further solidified in 2025,

reaching 31.0% in retail lending (from 30.4% at the end

of 2024) and 34.7% in deposit-taking (from 34.3% at the

end of 2024). The market share of short-term deposits

remained moderate, as clients continued to favour the

more popular savings account ‒ classified within sight

deposits ‒ over traditional short-term deposits.

Strong retail market position

and sustained growth

32.4% and

30.0%

market shares in housing loans

and consumer loans

Figure 39:

Market share of net loans to individuals and market share of deposits from individuals

29.8%

30.6%

30.0%

Housing loans

Consumer loans

30.2%

31.2%

32.4%

36.9%

36.8%

37.4%

Sight deposits

Short-term deposits

Long-term deposits

5.8%

6.0%

25.1%

27.6%

8.0%

23.2%

Excellent new

production

of housing loans and

consumer finance

73

Digital transformation and customer

experience – shaping a stronger,

smarter future

Figure 40:

Transactional Net Promoter Score

(i) Source: Enterprise Feedback Management tNPS (measuring satisfaction after completion of service or obtaining a new product).

The Bank’s

product and service development

is guided

first and foremost by client needs and expectations. Its

offerings are tailored to distinct customer segments,

supported by processes designed to address clients’

specific life situations. This segment-focused approach

underpins the Bank’s initiatives and business models.

To further enhance the user experience, the Bank

continued expanding its range of services for diverse

client groups.

The Bank tracks

customer satisfaction

using two key

indicators: the Customer Satisfaction Index (CX Index),

which measures overall satisfaction relative to other

banks in the market, and the transactional Net Promoter

Score (tNPS), which assesses satisfaction following

specific interactions with the Bank (after obtaining a

new product or service). The tNPS has shown consistent

and stable growth over time. Although a slight decline

was recorded at the end of 2025, the tNPS remains

above the satisfaction level for the finance industry

(SurveyMonkey global benchmark: 55). High satisfaction

is predominantly driven by the Bank’s proactive and

attentive service, and the readiness of its advisors to

support and guide clients.

The 2025 E-laborat study confirmed that the Bank

continues to achieve the highest satisfaction levels in

digital channels. In its independent market evaluation,

the Bank was recognised as the

best-ranking digital

bank

among comparable banks in Slovenia for the

second consecutive year.

The

rollout of the redesigned

NLB Klik

app

was highly

successful, marked by a seamless migration to the new

digital banking platform and exceptionally positive

client feedback. Users highlighted the modernised and

more intuitive interface, faster access to payments and

financial overviews, the introduction of push notifications

for payment confirmations (replacing one-time SMS

passwords), and significantly improved product

management features.

The Bank continues to advance digital orientation, with

a strategic focus on affluent clients and products such

as investment funds, trading accounts, and insurance

solutions. This progress is reflected in key digitalisation

indicators: the digital active user base increased by

5.7% YoY, while active digital penetration and digital

core products sales rose YoY by 3.3 pp and 8.8 pp,

respectively. Together, these results demonstrate the

Bank’s strong momentum in digital transformation

and its ability to drive customer engagement through

innovative, user-centric solutions.

Figure 41:

Digital sales

and digital penetration

(i) Share of the volume of digitally sold products in the total volume of

sales for comparable products.

(ii) Share of active digital users in # of clients with an active transactional

account.

The Bank’s digitalisation efforts have delivered several key

innovations to elevate the customer experience. Among

the most notable is the

NLB Trading

mobile app, which

offers fast, transparent, and user-friendly access to trading

accounts. The app enables clients to trade financial

instruments anytime and anywhere, ensuring seamless

connectivity with both the Ljubljana Stock Exchange and

the international markets supported by the Bank.

2020

2021

2022

11%

20%

69%

18%

69%

11%

17%

72%

15%

76%

75%

57

57

62

61

67

64

16%

73%

Ø 61

Promoters

Neutrals

Detractors

NPS

7.1%

14.8%

27.2%

36.0%

55.8%

61.3%

65.3%

68.6%

Sales

Penetration

Digital transformation

in the forefront focus

74

In addition, the new

NLB Private

non-transactional

mobile app empowers Private Banking clients with 24/7

access to comprehensive financial information, enabling

them to monitor and manage their assets and products

with ease. Designed to enhance the overall client

experience, the app fosters deeper engagement and

supports the development of long-term relationships.

Client support

across every touchpoint

As part of the

branch network

optimisation, the concept

of cash desk operating hours has been extended to

35 branch offices to support clients’ transition toward

cashless banking solutions. The Bank is also opening

new branch offices in more densely populated areas

or locations where it previously had no presence. At the

same time, existing branches are being renovated or

relocated, providing customers with several innovations

‒ the most notable being digitalised, fully automated

safe deposit boxes. Additionally, the Bank successfully

introduced its investment gold offering at its first branch

office, marking an important step toward scaling the

service across additional locations in Slovenia.

Employees across the branch network support

clients daily in adopting digital and cashless banking,

enabling faster, more independent, and more efficient

interactions. This shift allows employees to focus on

advisory roles and more complex financial products,

as branches continue to evolve into advisory hubs,

particularly for affluent clients.

The

micro segment

continued to demonstrate solid

performance throughout the year, supported by tailored

advisory services and simplified digital solutions that

meet the needs of the smallest business clients. The

Bank focused on strengthening long-term relationships,

improving accessibility through digital channels,

and enhancing product offerings to support both

day-to-day operations and future growth. Dedicated

advisory teams ensured swift support, while targeted

financing solutions and streamlined processes helped

micro entrepreneurs to manage their businesses with

greater confidence and efficiency.

The

Contact Centre

(CC) operates as the Bank’s

round-the-clock client support hub, demonstrating

its adaptability and commitment to meeting clients’

changing expectations. By consolidating branch phone

numbers across all search engines into a single general

number, all incoming calls are now routed efficiently

to the CC, establishing a unified telephone touchpoint.

AI-powered solutions have been implemented across

the Bank’s operations, improving efficiency and the

client experience. These include an AI-driven chatbot

on the Bank’s website that handles routine inquiries,

and a solution that converts written Slovenian text into

natural-sounding audio within seconds, allowing rapid

updates to recorded messages for technical issues,

service announcements, or promotional sales activities.

By automating routine tasks, these AI solutions allow

CC advisors to devote more time to tailored support

for complex client needs. Video calls further strengthen

digital engagement, in 2025 contributing 11% of sales

across key retail product categories.

With one of the largest

ATM

networks in the country,

the Bank introduced its first

Cash Deposit System

(CDS)

machine to enhance cash services for legal entities, with

additional units planned to be located across Slovenia.

Following the streamlining of the

Card

portfolio after

Q1 2025, which included the discontinuation of Maestro

debit cards and the smooth migration of existing

business debit cards into the Visa scheme in June –

which ensured uninterrupted service for clients – the

Bank intensified its efforts to expand card acceptance

and accelerate its digital transformation. To further

support this transition, digital-first debit cards were

launched towards the end of the year, enabling clients

to access their debit cards in digital form immediately

upon account opening.

The Group’s mobile wallet,

NLB Pay

, is instrumental in

advancing digitalisation and supporting clients’ shift

toward cashless transactions, driven by increasing

adoption and use of tokenised payments. The latest

release delivered upgraded app performance,

introduced new

Flik

features such as Split Bill and

Recurring Payments, and enhanced security features,

including a one-device usage restriction. In addition,

the implementation of an anti-fraud solution further

strengthened security and customer trust, ensuring a

smoother, more convenient, and secure user experience.

acquiring business

, the Bank continues to pursue

strategic cooperation with selected external partners,

and is actively exploring the introduction of additional

solutions, including fiscal cash register services, POS

vendors, and other business service providers, to

further strengthen its market position. The existing

product offering is being enhanced, and the merchant

onboarding process is being optimised to improve

speed and efficiency. The NLB Smart POS solution,

which is primarily targeted toward small merchants,

was upgraded with two new functionalities: instalment

payments and tip transactions. In addition, Android

POS terminals were incorporated into the Bank’s

standard offering. A simplified pricing and sales

approach tailored to the needs of small merchants was

successfully introduced during a pilot phase.

Figure 42:

Share of tokenised transactions in the total number

of card transactions

1.9%

2.9%

11.9%

22.2%

% tokenised transactions

75

Driving value for clients

private banking

segment remains a leading

banking provider in its segment and an integral

component of the Bank’s overall offering. The Bank

provides comprehensive wealth management services,

combining banking and investment products with a

full range of advisory solutions. In 2025, the segment

continued with its strong performance, achieving a

new milestone of 3,000 customers and approaching

EUR 3 billion in total financial assets. Emphasising new

investment opportunities, including the alternative fund

Zeleni prehod I

, played a significant role in this success.

Furthermore, the introduction of the

LoungeKey

benefit

on

Debit Mastercard World Elite

cards further enhanced

the value proposition for clients.

Figure 43:

Assets under management and the number of

private banking clients

The Bank has maintained its position as the largest

bancassurance

provider on the market for several

years. In addition to its long-term partners – Vita,

življenjska zavarovalnica, Generali Zavarovalnica, and

Zavarovalnica Triglav – Zavarovalnica Sava was added

as a provider of property insurance products. The

exclusive life insurance distribution model with Vita,

which is also in their product offer, follows the Bank’s

clients’ needs. As well, their combination contributed to

excellent overall insurance premium volumes.

, continues to lead Slovenia’s

asset management market, with the Bank serving as its

exclusive sales channel.

Figure 44:

Active clients’ penetration

of ancillary business

Through the

offering,

the Bank continues to enhance its portfolio of financial

services for private individuals and the micro segment.

Following the integration of NLB Lease&Go, leasing,

Ljubljana and Summit Leasing Slovenija, Ljubljana, the

financing platform has been rebranded as

NLB Buy&Go

and continues its successful trajectory by offering a

simple, accessible, and fast financing solution.

For more details on NLB Lease&Go, leasing, Ljubljana

and NLB Skladi, Ljubljana, please refer to the chapter

Leasing and asset management operations

1,377

2,224

2,923

1,711

2,000

2,347

2,756

3,306

AuM (in EUR millions)

# of Clients

Setting the pace

in Asset Management

and Bancassurance

2.6%

10.6%

17.4%

2.2%

10.9%

17.1%

2.2%

12.0%

17.1%

2.3%

12.8%

17.9%

Vita

NLB Skladi

Generali

76

Corporate and Investment Banking in Slovenia

The Bank reaffirmed its role as a leading and systemic

institution in its home region, providing corporate

clients with comprehensive support for all their

daily needs. Its offering includes tailored solutions

in trade finance, corporate finance, cross-border

financing, and investment banking. Across all areas

of operations, the Bank remains firmly committed to

embedding sustainability principles and promoting

responsible business practices.

Figure 45:

Contribution to NLB Group

Result b.t.

9

%

12

%

15

Financial and business performance

Table 16:

Performance of the Corporate and Investment Banking in Slovenia segment

in EUR millions consolidated

111.5

131.7

-20.2

-15%

Net interest income from Assets

60.5

81.6

-21.1

-26%

o/w allocation of regulatory costs

-11.7

Net interest income from Liabilities

51.0

50.1

0.9

2%

55.5

47.1

8.5

o/w net fee and commission income

41.5

41.1

0.4

1%

167.1

178.8

-11.8

-7%

-80.8

-76.0

-4.8

-6%

86.2

102.8

-16.5

-16%

-31.7

-7.6

-24.1

54.5

95.2

-40.7

-43%

4,081.1

3,871.8

209.3

5%

4,172.8

3,946.4

226.3

6%

Corporate

3,894.7

3,749.1

145.6

Key/SME/Cross Border Corporates

3,360.8

3,250.0

110.8

3%

Interest rate on Key/SME/Cross

Border Corporates loans

3.97%

5.07%

-1.10 pp

Investment banking

-0.1

Restructuring and Workout

250.7

108.2

142.5

132%

283.3

390.9

-107.6

-28 %

State

277.0

196.1

80.9

41%

Interest rate on State loans

3.68%

5.60%

-1.92 pp

2,665.6

2,392.0

273.6

Interest rate on deposits

0.29%

0.37%

-0.08 pp

Non-performing loans (gross)

215.3

79.9

135.5

170%

Cost of risk (in bps)

79

20

58

48.4%

42.5%

5.9 pp

3.66%

4.11%

-0.45 pp

(i) Net interest income from assets and liabilities using FTP.

(ii) Net interest margin and Interest rates only for NLB. The segment’s net interest margin is calculated as the ratio between annualised net interest income

(i) and the sum of average interest-bearing assets and liabilities divided by 2.

(iii) From the beginning of 2025 onwards, the corresponding allocation of MREL and Tier 2 from the segment Financial Markets in Slovenia is applied.

(iv) From the beginning of 2025 onwards, for NLB Lease&Go, leasing, Ljubljana, the reallocation of a micro segment was made from Corporate and

Investment Banking in Slovenia to the segment Retail Banking in Slovenia.

77

In the Corporate and Investment Banking segment,

the Bank maintains its long-standing tradition

of fostering sustainable and long-term business

relationships. Serving over 9,800 corporate clients, it

holds a market share of 32.4% in loans and 24.9% in

deposits. The segment’s operations are grounded in

customer centricity, focusing on understanding and

addressing clients’ specific needs. Through extensive

and customised financial solutions, the Bank actively

supports the broader economy.

At the beginning of 2025, the Bank implemented a

re-segmentation of its corporate client base, raising the

threshold for inclusion in the corporate segment to above

EUR 1 million. Clients below this threshold were transferred

to the Retail Banking – Micro segment, resulting in a net

reallocation of approximately 2,000 clients.

In early 2025, the Bank further strengthened its

commitment to the AGRI segment by establishing a

new dedicated organisational unit within the SME,

specialised exclusively in servicing clients operating in

the agricultural sector.

Figure 46:

Market share in Corporate Banking in Slovenia

Net

interest income

decreased by 15% YoY, reflecting

lower interest rates and the corresponding allocation

of regulatory costs of EUR 11.7 million from the segment

Financial Markets in Slovenia. An additional effect

arose from the re-segmentation of the leasing portfolio.

Partially offsetting these factors, deposit volume growth,

despite a lower key ECB interest rate, contributed to a

2% increase in interest income from liabilities.

recorded a modest

increase, with part of the income reallocated to the

segment Retail Banking in Slovenia in line with the re-

segmentation.

grew moderately YoY, mainly reflecting the

incorporation of the corporate part of Summit Leasing

Slovenija, Ljubljana into the segment, alongside higher

employee costs and IT expenditures.

were net established in the

amount of EUR 31.7 million, primarily driven by lending

growth and credit migration among specific corporate

clients in the automotive and steel sectors.

volume of gross loans

grew by EUR 226.3 million

or 6% YoY, with the strongest new production recorded

in Q3. The reallocation of the leasing portfolio of the

micro segment from Corporate and Investment Banking

in Slovenia to the segment Retail Banking in Slovenia

partially offset the segment’s loan portfolio growth.

Deposits

were higher by 11% YoY, with most of the

growth recorded in the second half of 2025.

Comprehensive solution offering

As a systemically important bank in SEE, the Bank

actively supports corporate clients in advancing their

ESG agendas and sustainable financing

objectives

by embedding environmental and governance criteria

into its lending and advisory services tailored to

business needs. Corporate solutions are designed

to help companies transition to more sustainable

operations, manage ESG-related risks, and unlock new

growth opportunities.

Cross-border activities

recorded substantial

development in 2025. At the end of year, the outstanding

loan portfolio of cross-border financing reached

EUR 688 million. A significant share of this portfolio

supported green and sustainable projects in the home

region, alongside financing key industries such as

telecommunications, energy, and real estate. Outside

the home region, the Bank remained focused on

Schuldschein loans granted to large international

investment-grade-rated companies, primarily from

Western Europe, and on supporting transition financing

through international syndicated loans.

trade finance

segment remained firmly a leader in

the region, both in supporting major local and

cross-border projects and business opportunities, and in

terms of market share and profitability. The Bank’s trade

finance offerings have experienced steady growth in

both volume and revenue across all core products,

including guarantees, factoring, and letters of credit.

Notably, factoring and supplier factoring experienced a

significant acceleration, with growth exceeding 70% YoY.

During this period, the Bank further enhanced the user

experience by introducing new digital functionalities,

including the

NLB Factoring

app. This application not

only provides all options for financing receivables, but

also includes payable financing, i.e., reverse factoring.

Additionally, the Bank expanded its offerings for

exporters within the EU and intergroup factoring, with

the first major transactions already realised in the last

quarter of the year.

The Bank remains among the top Slovenian players

in

custodian services

for Slovenian and international

clients. At the end of 2025, the total value of assets under

custody on domestic and foreign markets amounted

to EUR 15.7 billion, compared to EUR 13.1 billion as of 31

December 2024.

In 2025, the Bank executed client buy and sell orders

of EUR 2,357.7 million through its

brokerage services

In financial instrument dealings, foreign exchange spot

transactions reached EUR 1.5 billion, while derivative

trades reached EUR 221.7 million.

The Bank has been actively involved in the

financial

advisory business

, including M&A and bond issuance.

It acted as a sole or joint lead manager on several

25.7%

32.2%

32.4%

23.4%

23.7%

24.9%

Loans to customers

32.4%

market share in loans

to customers

NLB is the bank of choice

for most corporate clients

in Slovenia

78

corporate bonds, and government retail bonds were

issued for a total nominal amount of EUR 1,174.2 million.

In addition, the Bank continued to play a key role as

an arranger for syndicated facilities, arranging new

transactions in 2025 – including underwritings and club-

deals – amounting to EUR 364.2 million.

The intermediary business for

NLB Lease&Go, leasing,

Ljubljana

(following the merger with Summit Leasing

Slovenija, Ljubljana in July 2025), remained a key focus

of the Bank’s commercial activities, providing clients with

tailored financing solutions for vehicles and equipment.

The merged leasing portfolio in this segment further

strengthens the Bank’s focus on leasing activities.

As part of its strategy to expand card acceptance and

advance digitalisation, NLB has focused on

acquiring

merchants

in the small SME segments, where strong

potential for growth and digital transformation has been

identified. Strategic cooperation with external partners,

along with ongoing discussions with additional solution

providers – including fiscal cash register, POS vendors,

and other integrated business service providers – has

further strengthened its market positioning.

In parallel, efforts are underway to upgrade the

existing offer and to optimise the merchant onboarding

process, making it faster and more efficient. The

Smart POS

solution, primarily targeting small segment

merchants, has been upgraded with two new

functionalities: instalment and tip transactions. Digital

onboarding for NLB merchants with a business account

opened at the NLB was implemented at the end of

year. Pilot production is in progress. In addition,

Android POS terminals are becoming part of Bank’s

regular offer. NLB is also exploring new partnerships to

enhance its offering and strengthen the merchant

ecosystem. A simplified pricing and sales approach,

tailored to the needs of small segment merchants, was

successfully introduced in a pilot phase and is now

transitioning to regular operations. Larger companies

and key merchants continue to be approached

individually, with customised solutions aligned to their

specific business models and requirements.

Furthermore, marketing campaigns in cooperation with

selected merchants were launched to promote

instalment purchases at the point of sale.

24.9%

market share in deposits

from customers

Continued emphasis on

green

financing

79

Financial Markets in Slovenia

The segment is focused on the Group’s operations in

international financial markets, treasury functions

including ALM, financial institutions, and wholesale

funding. Throughout the period, there was a strong

focus on prudent liquidity management amid the

evolving interest rate environment, alongside

efforts to stabilise net interest income (NII). The Bank

remained active in international capital markets,

successfully issuing two notes in a total amount of

EUR 800 million in senior and subordinated formats.

Financial institutions continued to play a key role in

facilitating international transactions and supporting

the Group’s global operations.

Financial and business

13

performance

Table 17:

Performance of the Financial Markets in Slovenia segment

30.6

-4.1

34.6

Net interest income w/o ALM

34.4

29.8

4.6

16%

ALM

-3.9

-33.9

30.0

89%

40.9

3.1

-0.1

-4%

33.7

-0.8

34.5

-14.2

-12.9

-1.3

-10%

19.5

-13.7

33.2

-0.7

21.8

-14.4

36.2

Balances with Central banks

2,002.1

1,772.3

229.8

Banking book securities

5,227.2

4,499.0

728.2

Interest rate

2.43%

2.03%

0.40 pp

47.7

51.1

-3.4

-7%

Interest rate

1.38%

2.23%

-0.85 pp

Subordinated liabilities (Tier 2)

545.6

560.1

-14.6

-3%

8.49%

8.33%

0.16 pp

1,553.6

1,048.8

504.8

48%

5.14%

6.27%

-1.13 pp

(i) Net interest income from assets and liabilities using FTP.

(ii) Interest rates only for NLB.

(iii) From the beginning of 2025 onwards, the corresponding allocation of MREL and Tier 2 from the Financial Markets in Slovenia segment to all other

segments is applied based on their utilisation of capital and MREL funding.

13 This business overview includes the operations of the Group’s ALM, due to more comprehensive presentation of the operations on the Group level.

Net interest income (without ALM) reached

EUR 34.4 million, up by 16% YoY. The growth was driven

by a larger securities portfolio managed by Trading and

Treasury, more efficient reinvestment of maturing assets,

and a continued focus on optimising risk-return metrics.

The ALM result in 2025 increased by EUR 30.0 million

following the reallocation of funding costs related to

MREL and capital allocated to business segments.

Balances with the central bank and banking book

securities increased by EUR 229.8 million YoY and EUR

728.2 million YoY, respectively.

4.6 years

the average duration of

the banking book debt

securities portfolio

80

The Group’s ALM

The Group’s ALM process strategically manages

the Group’s balance sheet concerning the interest

rate, currency, and liquidity risk, considering the

macroeconomic environment and developments in

financial markets. Monitoring and managing the Group’s

exposure to market risk is decentralised, with uniform

guidelines and limits for each type of risk for individual

Group members.

From the interest rate risk perspective, the Group’s

surplus liquidity position was used to target actions to

stabilise net interest income, contribute to further grow

fixed interest rate loans, mostly housing loans, and to

invest in high-quality debt securities. On the funding

side, the non-banking sector deposits continued to

increase, mainly in the form of sight deposits. The

Group manages its positions and stabilises its interest

margin through pricing policy adjustments, whereas to

manage interest rate risk exposure, the Group actively

adjusts the average duration of liquidity reserves and

keeps outstanding “plain vanilla” derivatives. Active

profitability management has been supported by a

disciplined deposit pricing policy, enabling an effective

response to competitive loan markets across the Group’s

strategic markets.

Liquidity management

The Group’s liquidity management focuses on ensuring

a sufficient level of liquidity reserves to settle all due

liabilities, minimising the cost of maintaining liquidity,

and optimising the structure of liquidity reserves.

The Group has developed a comprehensive liquidity

contingency plan (LCP) to ensure an appropriate level of

liquidity for different situations, including emergencies

and crisis conditions.

To settle due liabilities, the Group relies on its liquid

assets, which comprise liquidity reserves (see the

subchapter

Liquidity position

in the chapter

of Financial Performance

) and other liquid assets. The

latter includes funds held on accounts with other banks

and money-market placements, which are treated as

inflows according to the LCR calculation. Each Group

member manages its liquid assets independently.

NLB’s banking book debt securities portfolio

Figure 47:

Banking book securities portfolio of NLB by asset class and geography as at 31 December 2025 (in EUR millions)

Banking book securities serve to provide liquidity,

manage interest rate risk, and optimise interest income.

Throughout 2025, the Bank continued to pursue the

strategic objective of further diversifying its banking

book securities portfolio, which at the end of 2025

amounted to EUR 5,175 million, constituting 27.2% of

the Bank’s total assets. At the year-end, debt securities

measured at FVOCI represented 39.0% of the Bank’s

debt securities portfolio, with a duration of 3.0 years,

while the duration of the portfolio measured at AC was

5.6 years. The positive valuation of the FVOCI portfolio

at year-end amounted to EUR 6 million (net of hedge

accounting effects and related deferred taxes), and

unrealised losses from securities measured at AC

amounted to EUR 53 million.

The average duration of the Bank’s banking book debt

securities was approximately 4.6 years at year-end,

and the average yield on the Bank’s banking book debt

securities portfolio increased by 0.39 pp YoY to 2.43%.

Approximately 17% or EUR 868 million of the banking

book securities portfolio consists of ESG-labelled

debt securities issued by governments, multilateral

organisations, or financial institutions, of which EUR 190

million were acquired in 2025.

Figure 48:

Maturity profile of NLB banking book securities as at

31 December 2025

56%

government securities

in the banking book debt

securities portfolio

Bank senior

unsecured

bonds

1,001

Government

2,910

Multilateral

bank bonds

and GGB’s

931

Covered bonds

271

Subordinated

debt

49

Corporate

12

EUR 5,175

1,334

825

France

629

the Netherlands

238

Luxembourg

283

Germany

523

Belgium

610

Austria

219

Finland

194

Spain

193

Slovakia

128

EUR 5,175

2026

2027-2028

2029-2030

2031+

24%

43%

SEE

International

649

125

819

728

114

847

2,243

45

% of total portfolio

23

1,267

1,018

226

1,870

361

81

Wholesale funding

The key objectives of the Group’s wholesale funding

strategy are to secure a well-diversified funding

structure, enhance structural liquidity and capital

position, and ensure full compliance with regulatory

requirements, particularly MREL.

The Bank maintains a regular presence on international

capital markets and a broad investor base, both of

which are essential for securing favourable funding

terms. In 2025, the Bank was active on international

capital markets, issuing 4NC3 senior preferred notes

in January for MREL purposes and perpetual NC5

Additional Tier 1 notes in November to optimise and

strengthen its capital position.

Additionally, NLB Group banking members in SEE

obtained new funding from international financial

institutions in the total amount of EUR 42.6 million

to support their clients, with a particular focus on

green financing.

notes issuances on international

capital markets (AT1 and SP notes)

Table 18:

Overview of outstanding NLB notes as at 31 December 2025

Type of bond

ISIN code

Issue Date

Maturity

First call date

Interest Rate

Nominal Value

Senior Preferred

XS2972971399

21 January 2025

21 January 2029

21 January 2028

3.500% p.a.

500

Senior Preferred

XS2825558328

29 May 2024

29 May 2030

29 May 2029

4.500% p.a.

500

XS2641055012

27 June 2023

27 June 2027

27 June 2026

7.125% p.a.

500

Total SP:

1,500

Tier 2

XS2750306511

24 January 2024

24 January 2034

24 January 2029

6.875% p.a.

300

Tier 2

XS2413677464

28 November

28 November

2032

2027

10.750% p.a.

225

Total Tier 2:

525

Additional

Tier 1

SI0022104275

23 September

Perpetual

between 23

September

2027 and 23

March 2028

9.721% p.a.

82

Additional

Tier 1

XS3227899989

26 November

Perpetual

26 November

2030

6.500% p.a

300

Total AT1:

382

Total outstanding:

2,407

(i) Further information is available in the chapter

Events After the End of the 2025 Financial Year

Figure 49:

Outstanding NLB notes by instrument type

(i) Maturity is presented based on the assumption that instruments are

redeemed at their respective call dates.

Figure 50:

NLB notes approaching call date (in EUR millions)

(i) Maturity is presented based on the assumption that instruments are

redeemed at their respective call dates.

31 Dec 2026

31 Dec 2027

31 Dec 2028

1,500.0

525.0

382.0

1,000.0

525.0

382.0

1,000.0

300.0

300.0

500.0

300.0

300.0

SP

Tier 2

AT1

2,407.0

1,600.0

1,100.0

1,907.0

31 Dec 2026

31 Dec 2027

31 Dec 2028

500.0

500.0

225.0

82.0

SP

Tier 2

AT1

82

Strategic Foreign Markets

14 More information on NLB DigIT is available in the chapter

IT and Cyber Security

The core financial part of the Group in the Strategic

Foreign Markets segment consists of six banks,

three leasing companies, two asset management

companies, and one IT services company

14

. The Group

banking subsidiaries are regional market leaders

across various business segments and provide a

comprehensive range of financial services to retail and

corporate clients. All Group subsidiary banks have a

stable market position, with total assets surpassing

10% in five of six markets.

Figure 51:

56

47

50

Table 19:

Performance of the Strategic Foreign Markets segment

468.6

483.1

-14.5

-3%

Interest income

579.9

566.7

13.2

2%

-19.0

Interest expense

-111.2

-83.6

-27.7

-33%

170.5

135.9

34.6

25%

147.9

142.1

5.8

639.1

619.0

20.1

3%

-302.6

-285.2

-17.4

-6%

336.5

333.9

2.6

1%

-6.9

-10.9

329.7

338.0

-8.3

-2%

o/w result of minority shareholders

15.6

15.7

0%

9,358.9

7,847.4

1,511.5

19%

9,540.9

8,027.5

1,513.5

19%

Individuals

4,875.5

4,087.0

788.4

19%

Interest rate on retail loans

6.21%

6.94%

-0.73 pp

Corporate

4,172.4

3,635.5

536.9

15%

Interest rate on corporate loans

5.17%

5.81%

-0.64 pp

State

493.1

304.9

188.2

62%

Interest rate on state loans

6.81%

7.58%

-0.77 pp

11,104.5

9,964.3

1,140.1

0.77%

0.65%

0.12 pp

126.5

130.6

-4.1

-3%

(in bps)

-17

22

47.3%

46.1%

1.3 pp

3.86%

4.35%

-0.50 pp

(i) From the beginning of 2025 onwards, the corresponding allocation of MREL and Tier 2 from the segment Financial Markets in Slovenia is applied.

In 2025, amid heightened geopolitical uncertainty and

global disruptions, FDI in the SEE region remained under

pressure, although long-term investors in sectors such

as green energy and technology remained resilient.

However, the NLB Group home region experienced stable

growth, underpinned by domestic demand and external

resilience, and a solid financial outlook, supported by

a well-capitalised and liquid banking sector, stable

deposit growth, contained credit risk, prudent fiscal

management, and declining inflationary pressures.

The steady easing of inflation enabled monetary policy

normalisation, with the ECB projecting inflation near

target by mid-2025. Inflation in the Group’s home region

was above EU levels, reflecting wage growth dynamics

and local demand pressures.

83

Throughout the year, the Group’s banks maintained

solid capital and liquidity positions, remaining well

above regulatory requirements.

In 2025, the Group’s banks further accelerated their

digital transformation by automating processes and

offering a range of digital solutions to clients, including

digital onboarding. In some markets, the Group banks

were the first to introduce digital onboarding and

solutions like Apple Pay, thereby improving the overall

client experience.

The Group banks’ ESG and CSR activities were further

enhanced by supporting clients’ financial literacy,

organising the #FrameOfHelp project for small

entrepreneurs, conducting tree-planting activities,

and hosting various other events, as detailed in the

Group Sustainability report. In recognition of their

efforts in digital solutions and green financing, several

Group banks received distinguished awards for their

contribution to the local countries of operation.

The banking members

are leading financial entities

in the SEE markets

The segment delivered strong results, recording a

remarkable double-digit YoY growth in gross loans to

customers of 19%. The banks alone reported 18% YoY

growth, exceeding local market averages, particularly

in the retail segment, thereby contributing to the overall

economic development of households in local countries

and supporting regional prosperity. The most significant

increases in gross loans to customers were achieved

by NLB Komercijalna Banka, Beograd (20% YoY), NLB

Banka, Skopje (19% YoY), and NLB Banka, Prishtina

(17% YoY).

High performance in new business production continued

across both the corporate and retail segments, as

several products and services were upgraded, including

streamlining and modernising their distribution network

and improving their digital offering by introducing end-

to-end mobile digital retail loans.

In line with the self-funding strategy, the Group’s

bank customer deposits increased by 11% YoY,

adapting to prevailing market conditions and

ensuring organic growth, while maintaining an

optimal balance sheet structure.

Leasing operations in the Group’s strategic foreign

markets continued to show solid growth and achieved

remarkable portfolio growth of 41% YoY by affirming

their local strong market positions, with a 7% market

share in Croatia, an 11% market share in new production

in Serbia, and a 26% market share in new production in

North Macedonia.

decreased by EUR 14.5 million

YoY despite the higher loan volumes, due to increased

interest expenses. In the second half of the year, several

banks implemented selective increases in deposit interest

rates to secure additional funding required to support

strong loan portfolio growth. These measures reflect the

banks’ proactive liquidity and funding management in

an environment of elevated loan demand.

Six

subsidiary banks,

three

leasing companies,

two

asset management companies

and

one

IT services company

Figure 52:

Result after tax of strategic NLB Group banks (in EUR millions)

NLB KB,

Beograd

Skopje

Sarajevo

Prishtina

Podgorica

140.5

67.8

29.5

14.4

37.0

27.7

153.8

61.5

29.5

16.9

40.4

26.3

+9%

-9%

0%

+17%

+9%

-5%

84

increased by EUR 5.8

million due to higher volumes of card business and

increased sales of bancassurance products. The

segment’s total net non-interest income increased by

EUR 34.5 million YoY, mainly driven by banking

members’ non-recurring income (e.g., sale of real estate

and the resolution of a legal dispute).

increased by 6% YoY, driven by inflationary

pressures, increased employee costs due to wage

growth across the region, and the continued

development and expansion of leasing and asset

management companies.

The higher volumes and still high interest rates on the

local markets supported SEE banking members’ results,

thus showing a net interest margin between 2.8% (NLB

Banka, Sarajevo) and 4.5% (NLB Banka, Podgorica).

Retail banking

The banking members realised a very strong new

retail loan production of 19% YoY. The loan portfolio to

individuals increased in all banking members. New loan

production was still high, significantly outperforming

the local markets, especially in consumer loans. The

highest increase in loans to individuals was achieved by

NLB Komercijalna Banka, Beograd (22% YoY), followed

by other banks with double-digit growth of the retail

loan portfolio, such as NLB Banka, Prishtina (20% YoY),

NLB Banka, Podgorica (20% YoY), NLB Banka, Banja

Luka (20% YoY), NLB Banka, Sarajevo (15% YoY), and

NLB Banka, Skopje (14%YoY).

Furthermore, most of the banks in the Group increased

their market share in retail lending, with growth achieved

by NLB Banka, Banja Luka (1.2 pp YoY), followed by

NLB Banka, Skopje (0.6 pp YoY), NLB Komercijalna

Banka, Beograd (0.3 pp YoY), NLB Banka, Podgorica

(0.2 pp YoY), and NLB Banka, Sarajevo (0.2 pp YoY).

The market shares of housing and consumer loans

grew significantly. The largest increase was recorded

by NLB Banka, Banja Luka, in the consumer segment,

which rose by 1.2 pp YoY, followed by NLB Banka, Skopje,

with a 0.8 pp increase YoY. In the housing segment, the

most significant market share increase was recorded

by NLB Banka, Podgorica (0.9 pp YoY), followed by both

Bosnian banks, NLB Banka, Banja Luka (0.6 pp YoY),

and NLB Banka, Sarajevo (0.6 pp YoY).

NLB Banka, Skopje (0.3 pp YoY), and NLB Komercijalna

Banka, Beograd (0.2 pp YoY) also recorded an increase

in market share.

In 2025, most of the Group’s banks positioned

themselves in local markets as the first “Mobile First”

and “Digital First” banks, offering a fully comprehensive

digital banking experience on mobile devices.

The Launch of Apple Pay in 2025 by NLB Banka, Skopje,

NLB Banka, Prishtina, and both Bosnian banks ensured

that clients had a modern, secure, and convenient way

to make contactless payments.

New production in green lending accelerated in 2025,

significantly exceeding the plan through the offering of

various NLB Green Loans via partners – eco-mortgage

loans, eco-home appliance loans, electric and hybrid

vehicles, and so on.

The SEE banks retained customer confidence as the

total segment deposits from individuals increased by

11% YoY.

Corporate banking

The banking members achieved double-digit growth

in financing and attracting new corporate clients. The

portfolio of corporate banking clients recorded 13%

YoY growth, with the highest growth levels achieved

by NLB Banka, Skopje (23% YoY), NLB Banka, Sarajevo

(13% YoY), and NLB Banka, Prishtina (13% YoY).

The banks continued supporting green investments,

particularly in solar power plants and energy efficiency.

The SEE banks attracted corporate deposits by boosting

the segment’s corporate balances by 13% YoY.

The market shares (by total

assets) of subsidiary banks

exceeded

10%

in five out of six markets

Profit before tax

EUR 329.7

85

The Non-Core Members segment includes the operations of non-core Group members. The primary objective within

this segment remains the systematic wind-down of all non-core portfolios and the associated cost reduction.

Table 20:

Performance of the Non-Core Members segment

0.7

0.9

-0.2

-27%

1.0

0.4

0.7

190%

1.7

1.3

0.4

34%

-6.9

-7.6

0.7

10%

-5.1

-6.3

1.2

19%

7.4

2.2

5.3

-4.1

6.4

Segment assets

18.4

28.6

-10.2

-36%

7.6

8.5

-0.9

-10%

21.8

24.3

-2.5

-10%

Investment property and property &

equipment received for repayment of loans

6.9

5.5

1.4

25%

Other assets

14.7

-10.7

-73%

21.8

24.3

-2.5

The non-core segment remains focused on a portfolio

wind-down that is aligned with the divestment strategy.

Total assets declined by EUR 10.2 million YoY, supported

by disciplined cost control and established collection

processes. New business activities have been suspended

for all non-core entities undergoing a wind-down,

while portfolio reduction continues through structured

collection measures and scheduled repayments.

EUR 2.5

reduction of gross loans

to customers in 2025

EUR 2.5

reduction of non-performing

loans (gross) portfolio in 2025

86

NLB Group Key Members

NLB Group banking members

NLB, Ljubljana

NLB, as Slovenia’s largest and systemically important

bank, demonstrated strong business resilience

throughout this year’s dynamic interest rate

environment, continuing to expand its footprint and

secure a substantial market share across both retail

and corporate lending.

In 2025, NLB reported a profit before impairments and

provisions of EUR 478.0 million, while profit after tax

amounted to EUR 426.9 million, with strong liquidity

and capital position.

The Bank remained active in international capital

markets. In 2025, it successfully issued two notes

in a total amount of EUR 800 million in senior and

subordinated formats.

It also maintained a strategic focus on sustainability ‒

including green financing ‒ and continued to advance

its digital transformation, enhancing client experience

through improved digital services and solutions.

Table 21:

Key performance indicators of NLB

in EUR thousands

Key performance indicators

419,233

431,880

392,897

378,182

-300,573

-279,254

-8%

-33,534

-33,204

-1%

-15,314

14,386

462,709

511,990

426,918

478,161

-11%

Financial position statement indicators

19,061,010

16,975,091

9,554,559

8,657,312

10%

9,740,213

8,815,651

13,449,865

12,293,708

Equity

3,003,117

2,525,609

Key financial indicators

Total capital ratio

26.4%

24.4%

2.1 pp

2.5%

2.9%

-0.3 pp

ROE a.t.

15.6%

19.8%

-4.1 pp

ROA a.t.

2.9%

-0.6 pp

37.0%

34.5%

2.5 pp

NPL volume

284,680

148,119

92%

NPL ratio (internal def.: NPL / Total loans)

1.0 pp

Market share by total assets

33.1%

31.3%

1.8 pp

LTD

71.0%

70.4%

0.6 pp

(i) Data on a stand-alone basis as included in the Group’s consolidated financial statements. Tax on balance sheet excluded from the calculation of CIR

from 2024 on.

EUR 426.9

result a.t.

30%

contribution to

NLB Group’s

result a.t.

No. 1

bank in the country

(by total assets)

33.1%

market share

87

NLB Komercijalna Banka,

Beograd

NLB Komercijalna Banka, Beograd is the second-

largest bank within the NLB Group. As at the end of

2025, it ranked as the fifth-largest bank in the Republic

of Serbia by market share.

In 2025, the bank once again outpaced the market in

terms of growth and further strengthened its position

as one of the leading banking institutions in Serbia.

A strong emphasis was placed on digitalisation,

supporting the strategic ambition to become the

first choice for both customers and employees, while

ensuring that the bank remains efficient and safe.

Throughout the year, significant attention was

devoted to financing green projects, underscoring the

bank’s commitment to supporting the transition to a

more sustainable economy.

The bank consistently allocates a meaningful share

of its resources to social responsibility initiatives. It

actively contributes to addressing the needs of the

most vulnerable groups in society and supports

talented and high-achieving individuals and teams in

sports and science. For the second consecutive year,

the bank earned the international

certification.

Table 22:

Key performance indicators of NLB Komercijalna Banka, Beograd

in EUR thousands

230,269

238,156

77,340

53,237

45%

-125,606

-125,759

-8,241

-5,694

-45%

173,762

159,940

153,811

140,482

Financial position statement indicators

6,062,430

5,553,552

3,948,165

3,290,707

3,998,642

3,333,958

4,964,092

4,510,793

Equity

878,039

865,365

19.7%

22.9%

-3.2 pp

4.2%

4.8%

-0.6 pp

ROE a.t.

18.0%

16.3%

1.7 pp

ROA a.t.

2.7%

2.7%

0.0 pp

40.8%

43.2%

-2.3 pp

NPL volume

38,363

24,020

60%

NPL ratio (internal def.: NPL / Total loans)

0.8%

0.5%

0.2 pp

Market share by total assets

10.2%

9.8%

0.4 pp

LTD

79.5%

73.0%

6.6 pp

(i) Data on a stand-alone basis as included in the Group’s consolidated financial statements.

Significant double-digit growth in consumer loans (22%

YoY) increased the market share to 12.5%. Despite a decline

in demand in the housing segment, loan growth outpaced

market peers and reached 13% YoY, boosting the market

share in the segment by approximately 20 bps to 13%.

The deposit base increased by 8% YoY. The interest

margin in the retail segment remained high, although

increasingly pressured by competition.

Corporate banking

The corporate segment recorded 12% growth in

gross loans in 2025. The bank aimed to strengthen its

value proposition across all products and services by

leveraging cross- and upselling programmes that also

added value to customers.

The bank participated in financing green projects,

underscoring its commitment to the green agenda

and ESG objectives by supporting the expansion of

renewable energy in Serbia. In addition, the bank

approved several project financings for major real

estate developments and sovereign funding for road

infrastructure projects.

The corporate deposit base increased by 14% YoY.

EUR 153.8

30%

contribution to

NLB Group’s

largest bank

in the country

10.2%

market share

88

NLB Banka, Skopje

The bank is a leading banking institution and a

systemically important bank in the local market. In

2025, its success was reaffirmed through prestigious

awards and recognition, while continuing to

demonstrate humanity and solidarity. For the twelfth

time, the Bank was awarded

the Bank of the Year

by

The Banker

The Bank remains committed to supporting

the country’s population and economy. Its strategic

priorities include digitalisation, enhancing digital

channels to increase customer penetration, improving

the overall customer experience, and broadening the

product and service offering, with particular emphasis

on “green” solutions and socially responsible projects.

In 2025, the bank continued its strong commitment to

digital transformation, customer-centric initiatives,

and sustainability objectives. NLB Banka, Skopje is now

officially positioned as the first

“Mobile First”

bank in the

market, offering a fully comprehensive digital banking

experience via mobile devices. Additionally, the Bank

introduced the

“Digital First”

functionality, enabling

clients the comprehensive ability to digitally receive and

manage banking products entirely digitally. The bank

launched

Apple Pay

for its clients in North Macedonia

and became the first bank in the country to implement

SEPA payments. Further enhancements included a new

solution for fully digital signing of credit documentation

and upgraded

mKlik

functionalities. NLB Banka, Skopje

also joined the EBRD’s

Green&Growth

programme,

expanding access to green financing and supporting

investments in digital and sustainable technologies.

Table 23:

Key performance indicators of NLB Banka, Skopje

81,554

76,487

7%

29,636

25,436

17%

-42,765

-39,305

-9%

1,705

15,110

-89%

70,130

77,728

61,513

67,838

-9%

2,551,329

2,158,767

1,672,233

1,394,123

1,713,601

1,439,456

1,973,905

1,733,845

Equity

362,971

322,944

19.5%

18.5%

0.9 pp

3.8%

4.0%

-0.3 pp

ROE a.t.

18.0%

22.9%

-4.9 pp

ROA a.t.

2.7%

3.5%

-0.7 pp

38.5%

38.6%

-0.1 pp

26,110

36,214

-28%

1.3%

2.1%

-0.8 pp

16.8%

15.9%

0.9 pp

LTD

84.7%

80.4%

4.3 pp

(i) Data on a stand-alone basis as included in the Group’s consolidated financial statements.

Gross loans grew 14% YoY, reaffirming NLB Banka,

Skopje’s position as the market leader in the

Macedonian banking system. This growth was driven

by 16% growth in housing loans and 14% in consumer

loans, surpassing market growth in 2025. Record

levels of disbursed loans in the retail segment led to a

23.4% increase in market share. The bank continues

to prioritise the customer journey and proactively

anticipates and addresses customer needs.

The deposit base increased by 13% YoY. The interest

margin in the retail segment remained relatively high,

although competitive pressures persisted. Key drivers

of income growth included portfolio expansion, foreign

payment operations, account management services,

and bancassurance.

At the end of 2025, the bank held a 13.7% market share,

driven by a 22% YoY increase in corporate gross loans.

Considering its strategic orientation, NLB Banka,

Skopje continued to support investments in renewable

energy sources and projects aimed at increasing the

corporate segment’s energy efficiency, modernisation,

and automation.

The bank expanded its portfolio in the segment of long-

term financing for highly creditworthy clients, securing

portfolio stability and consistent revenue generation. The

bank’s total outstanding balance in project financing

reached EUR 52 million, while nearly EUR 65 million in

outstanding loans were approved for investments in

renewable sources, energy-efficient technologies, and

green buildings (assessed in accordance with the EBRD

methodology for green buildings).

EUR 61.5

3

rd

largest bank

in the country

16.8%

89

NLB Banka, Skopje also provided strong support to

export-oriented companies by offering products and

services designed to help them adapt to emerging

market conditions. In response to macroeconomic

developments, corporate interest rates were aligned

with market conditions throughout the year.

The corporate deposit base increased by 16% YoY,

primarily driven by growth in short-term and sight

deposits, reflecting strong liquidity management and the

bank’s ability to deliver efficient transaction and cash

management solutions for corporate clients.

90

NLB Banka, Banja Luka

In 2025, the bank recorded strong business results and

further increased its market share in the Republic of

Srpska. Besides maintaining its position as the second-

largest bank in the market, it has become recognised

as a systemically important institution in the Republic

of Srpska. The bank reaffirmed its status as a leading

retail bank.

The predominant strength of the bank remains its

market position in the corporate and retail segments

and its solid deposit base. For the third consecutive

year, the bank received the

Golden BAM

award as

the most innovative bank in Bosnia and Herzegovina,

along with its sister bank, NLB Banka, Sarajevo.

Further strengthening its commitment to innovation,

the bank now offers clients all three major digital

wallets ‒

Google Pay, Apple Pay, and Garmin Pay

‒

further expanding its digital payment solutions. Its

dedication to employees was also recognised through

the bank’s first-ever

certification,

following the example set by its parent bank, NLB.

Table 24:

Key performance indicators of NLB Banka, Banja Luka

38,804

38,473

19,808

18,512

7%

-25,866

-23,228

-11%

-793

-1,351

41%

31,953

32,406

-1%

29,452

29,510

1,333,719

1,172,113

735,993

644,579

756,818

664,344

1,048,099

927,972

160,840

130,314

23%

17.7%

17.8%

-0.1 pp

3.3%

3.6%

-0.4 pp

20.2%

24.9%

-4.7 pp

ROA a.t.

2.7%

-0.3 pp

44.1%

40.8%

3.4 pp

5,644

7,445

-24%

0.5%

0.8%

-0.3 pp

21.5%

20.9%

0.6 pp

70.2%

69.5%

0.8 pp

Retail banking recorded strong double-digit YoY growth

in gross loans by 20%, while deposits grew by 12% YoY.

Consumer loans increased by 20%, and housing loans

increased by 15% YoY. The key drivers of income growth

were interest income and income from accounts and

payments processing.

The focus remained on retail portfolio growth,

particularly on introducing additional customer services,

including in digitalisation and bancassurance.

Corporate banking recorded 8% YoY growth in gross

loans by supporting local companies in short- and long-

term financing and investment projects.

Corporate deposits recorded 11%YoY growth, enabling a

solid foundation for the bank’s organic growth.

EUR 29.5

nd

largest bank in the

Republic of Srpska

21.5%

91

NLB Banka, Sarajevo

In 2025, the bank achieved 13% growth in total assets,

reaffirming its position among banks with net assets

exceeding EUR 1 billion. Profitability also increased,

resulting in a 17% increase in net profit and providing

a robust foundation for future development. The

bank’s predominant strength continues to be its

housing and consumer lending activities, which

contribute significantly to its high share of net non-

interest income (31% of net fee and commission income

in total net operating income).

The bank continued to invest in digital solutions and,

in 2025, introduced several market-first innovations to

enhance the customer experience. In addition, the

bank further strengthened its visibility and reputation

through various sponsorships, promotional activities

and initiatives supporting innovation and social

responsibility. During the year, the bank received the

Golden BAM award in the categories of innovation and

humanity, earned the Top Employer certification, and

ranked among the top three most desirable employers

in Bosnia and Herzegovina. These achievements

confirm the bank’s strong position as an innovative,

responsible, and people-centric organisation.

Table 25:

Key performance indicators of NLB Banka, Sarajevo

28,575

28,436

15,392

13,093

-24,313

-22,824

-7%

-1,599

-3,304

52%

18,055

15,401

16,872

14,384

1,139,714

1,005,053

734,243

633,666

755,009

655,136

927,026

831,022

128,582

107,662

18.2%

18.1%

0.1 pp

2.8%

3.1%

-0.4 pp

14.0%

14.1%

-0.1 pp

1.5%

0.1 pp

55.3%

55.0%

0.3 pp

12,859

14,854

-13%

1.3%

1.7%

-0.4 pp

6.3%

6.1%

0.2 pp

79.2%

76.3%

3.0 pp

(i) Data on a stand-alone basis as included in the consolidated financial statements of the Group.

Retail banking recorded 15% YoY growth in gross loans,

driven by the expansion of housing and consumer

loans, both of which continued to strengthen their

market position. Housing loans increased by 29% YoY,

while the consumer loans portfolio grew by 11% YoY,

driven by heightened demand, targeted campaigns,

and strong employee engagement. In 2025, the focus

remained on retail portfolio growth, client acquisition,

digital transformation, the transition toward cash-lite

services, and the introduction of new innovative services

for customers. Retail deposits grew 15% YoY, providing a

solid foundation for the bank’s organic growth.

The corporate banking segment achieved YoY growth

of 13% in gross loans, while corporate deposits grew

19%. The bank continued to focus on acquiring new,

creditworthy clients to drive loan portfolio expansion.

A positive trend was observed in the growth of newly

acquired clients and in the volume of the guarantee

portfolio. Additionally, green lending volume increased,

positioning the bank to expand its involvement in

renewable energy financing.

EUR 16.9

3%

6

largest bank in the

Federation of Bosnia

and Herzegovina

6.3%

92

NLB Banka, Prishtina

In 2025, the bank ranked first among local banks in

terms of profitability, with net profit increasing by 9%.

It also remained the second-largest bank in Kosovo,

with total assets rising by 15% YoY. The bank’s key

strength lies in offering a full spectrum of financial

services to both retail and corporate clients, while

maintaining a leading position in innovation within the

local banking sector. Net interest income grew by 5%

YoY, driven primarily by increased lending activities

and optimised investments in securities and balance

sheet management.

In 2025, the bank became the first in the market to

introduce an end-to-end mobile solution for retail

lending. Further strengthening its commitment to

digital innovation, it also introduced

Apple Pay

as the

first bank in the Kosovo market, complementing its

offering of

Google Pay

and

Garmin Pay

During 2025, the bank received several prestigious

awards. The Kosovo Chamber of Commerce

recognised it as the

Employer of the Year 2025

the

Taxpayer of the Year 2025.

From

Euromoney, it

received the Best Bank for Consumers award, and

from the EBRD, the Most Active Bank for Guarantee

Issuing for 2024 award

Table 26:

Key performance indicators of NLB Banka, Prishtina

54,006

51,444

5%

8,876

8,164

-19,406

-17,562

1,483

-1,094

44,959

40,952

40,399

37,028

1,634,228

1,426,862

1,168,391

996,781

1,199,154

1,028,521

1,318,917

1,138,254

198,267

173,827

17.8%

18.1%

-0.3 pp

3.6%

4.1%

-0.5 pp

22.5%

23.8%

-1.4 pp

2.7%

2.9%

30.9%

29.5%

1.4 pp

20,796

17,044

22%

0.1 pp

17.1%

17.0%

0.2 pp

88.6%

87.6%

1.0 pp

In 2025, the bank achieved 20% YoY growth in

gross loans and 16% in deposits. Retail growth was

predominantly driven by heightened loan demand

and a further rise in the general consumption

pattern, contributing to higher real estate prices amid

inflationary pressures. Housing loan growth reached

19%, while consumer loan growth showed a significant

23% YoY increase. Digital penetration, as a share of total

active users, increased from 30% to 40% YoY. In 2025,

the bank became the first in the market to introduce an

end-to-end mobile solution for retail lending.

In addition to accelerating its digitalisation efforts, the

bank also invested in renovating eight branches in

2025 to enhance customer experience. Furthermore,

the bank has signed several partnership agreements

with construction and trade companies to support

the financing of their products and strengthen the

performance of the sales department.

Corporate banking recorded 13% YoY growth in gross

loans, driven largely by disruptions to the normal supply

chain (external factors) and increased cross-selling to

existing corporate clients, many of which expanded

their businesses towards retail and SME customers.

Optimisation of the bank’s liquidity structure was

highlighted by an 18% YoY increase in deposits. Key

contributors to income growth included working capital

loans, credit lines, and overdrafts. Cooperation at the

Group level enabled the financing of a significant, locally

recognised project that made a notable contribution to

renewable energy production.

EUR 40.4

7%

nd

17.1%

93

NLB Banka, Podgorica

In 2025, the bank ranked third among 11 banks

operating in the market and was recognised as a

systemically important institution in Montenegro. Its

predominant strength lies in housing and consumer

lending, positioning it as an important player in the

local market.

During the year, the bank was awarded the title of

Best Bank in Montenegro for Customer Experience

, an

international recognition that highlights its strategic

commitment to digital transformation, innovation, and

client-centric services. Furthermore, for the second

consecutive year, it was honoured with Euromoney’s

Best Bank for Real Estate

award, reaffirming its

leadership in real estate financing.

In October 2025, the bank entered the Single Euro

Payments Area, becoming the first SEPA-enabled

bank in Montenegro. This milestone highlights its

commitment to providing modern payment solutions

and delivering fast, secure, and efficient transactions

for its customers.

The bank also joined the

Women on Boards Adria

initiative to promote gender diversity. Today, more than

60% of its management positions are held by women,

reinforcing its dedication to inclusion and sustainability.

Table 27:

Key performance indicators of NLB Banka, Podgorica

45,362

45,987

-1%

9,671

9,203

-25,517

-24,069

-6%

1,381

1,501

-8%

30,897

32,622

-5%

26,296

27,714

-5%

1,152,933

1,034,523

777,534

669,999

792,348

686,730

898,913

846,589

138,889

119,729

20.8%

20.2%

0.7 pp

4.5%

5.1%

-0.6 pp

20.3%

22.1%

-1.8 pp

2.8%

-0.4 pp

46.4%

43.6%

2.8 pp

12,756

17,897

-29%

1.3%

2.1%

-0.8 pp

14.6%

14.3%

0.3 pp

86.5%

79.1%

7.4 pp

(i) Data on a stand-alone basis as included in the consolidated financial statements of the Group.

The retail segment recorded 20% YoY growth in gross

loans and 9% growth in deposits. More than half of

the retail portfolio consists of consumer loans, with the

remainder allocated to housing loans. Gross loans growth

was driven by a 15% YoY increase in consumer loan

volumes and a 27% rise in housing loans. This expansion

was supported by timely, organised, and well-executed

consumer and housing loan campaigns, followed by tax

reforms, salary and pension increases, and a reduction

in interest rates. During Q4 2025, the focus remained on

expanding the retail consumer portfolio, with particular

emphasis on introducing additional services for

customers, especially in digitalisation.

The corporate banking segment recorded YoY growth of

9% in gross loans and 5% in deposits. The loan portfolio

predominantly consisted of large corporates, which

increased by 9% YoY. By improving portfolio quality, the

new production of EUR 72.2 million was recorded across

all large corporates and SME segments.

The bank also became the EBRD’s and the EU’s first

partner in Montenegro to launch the

“SME Go Green”

programme. The EUR 3 million credit line supports

investments in energy efficiency, renewable energy, and

sustainable agribusiness.

EUR 26.3

rd

14.6%

94

Leasing and asset

operations

Leasing operations

Leasing is one of the strategic pillars of the NLB

Group’s operations. As leasing services address

evolving customer needs, the NLB Group is gradually

expanding its leasing operations. These services

complement the banks’ lending and enable individuals

and corporate clients to select the solution that best

suits their circumstances.

Since the establishment of NLB Lease&Go, leasing,

Ljubljana in 2020, the NLB Group has been expanding

its presence in the leasing sector. In 2022, it created two

new leasing companies in North Macedonia and Serbia,

followed by the acquisition of Summit Leasing Slovenija,

Ljubljana and its Croatian subsidiary Mobil Leasing,

Zagreb in September 2024. Through Mobil Leasing,

Zagreb, NLB re-entered the Croatian market after a

30-year absence, further strengthening its regional

footprint. Further expansion included the establishment

of NLB Car&Go, and in 2025, the acquisition of the online

vehicle sales platform

doberavto.si

A major milestone was reached on 4 July 2025, when

Summit Leasing Slovenija, Ljubljana and NLB Lease&Go,

leasing, Ljubljana legally merged under the name

Lease&Go, leasing, Ljubljana

. The joint entity now

serves more than 100,000 clients through approximately

1,500 dealer network touchpoints, positioning the NLB

Group as the market leader in the Slovenian leasing

industry. In addition to leasing services, NLB Lease&Go,

leasing, Ljubljana, also plays a prominent role as a

provider of point-of-sale consumer lending in Slovenia.

Mobil Leasing, Zagreb

achieved remarkable growth

in new leasing investments in 2025, concluding 4,100

leasing contracts. It ranked first in the Croatian market

by annual growth rate and sixth by market share in new

leasing investments, with a 6.6% market share. A key

strategic objective remains the ongoing transformation

of its business model – shifting from predominantly

captive leasing to offering comprehensive multi-brand,

multi-vendor leasing services to strengthen its market

presence further.

, with a strong, stable

portfolio growth, has steadily strengthened its market

presence and secured an 10.8% market share in new

production, positioning itself among the leading leasing

industry players. With 6,000 active contracts and 2,500

clients, it continues to expand its presence and relevance

across key market segments.

NLB Lease&Go Skopje

has expanded its financing

across various market segments, building a leasing

portfolio of 1,706 active contracts and 637 clients,

securing third place in North Macedonia’s leasing

market. In line with ESG principles, the company

advanced sustainable financing in 2025, including the

funding of an electric taxi project.

NLB Car&Go

, fully owned by NLB Lease&Go, leasing,

Ljubljana, together with

doberavto.si,

is strengthening

its digital and market presence. The platform hosts over

17,000 ads, connects 176 dealers, and engages 500,000

users, creating a strong foundation for growth. In 2025,

a key strategic achievement was the integration of

financing into the marketplace through NLB Lease&Go,

leasing, Ljubljana, which generated nearly 1,000

leasing contracts.

An intensive integration process marked the year

2025; the net effect amounted to EUR 2.6 million. The

pro forma

consolidated profit after tax from leasing

activities would be EUR 23.4 million; however, when

including funding synergies, the contribution to the

NLB Group result would amount to EUR 36.0 million.

Table 29:

Pro forma look-through of key financial indicators on

leasing activities

PRO FORMA

Leasing Group

19.7%

Interest margin

4.05%

54.2%

Cost of risk net (bps)

17

(i) Operating lease is presented on a net basis: non-interest income and

related costs are netted by the amount of amortisation.

(ii) Pro forma consolidation reflects the aggregated performance of

leasing entities within the NLB Group, adjusted for intra-group exposures

and funding synergies.

Table 28:

Key financials of leasing activities

NLB Lease&Go,

leasing,

Ljubljana

Mobil Leasing,

Zagreb

NLB Lease&Go

Leasing

Beograd

NLB Lease&Go

Skopje

PRO FORMA

Leasing Group

on stand-alone basis

Income statement

Total net operating

income

45.1

5.5

4.9

0.8

68.9

-29.0

-3.7

-3.4

-1.2

-37.3

21.9

1.4

0.6

-0.5

36.0

Balance sheet

1,369.8

168.8

173.1

41.4

1,614.3

Gross loans to

customers

1,272.2

165.6

164.1

37.3

1,500.4

(i) Operating lease is presented on a net basis: non-interest income and related costs are netted by the amount of amortisation.

(ii) Pro forma consolidation reflects the aggregated performance of leasing entities within the NLB Group, adjusted for intra-group exposures and

funding synergies.

(iii) Merged entity: The legal merger between Summit Leasing Slovenija, Ljubljana and NLB Lease&Go, leasing, Ljubljana was completed on 4 July 2025,

followed by the operational merger on 7 July 2025. The merged entity operates under the name NLB Lease&Go, leasing, Ljubljana.

95

Asset management

operations

Asset management represents one of the key

strategic pillars of the NLB Group’s operations.

Through a comprehensive range of mutual funds and

discretionary portfolio management services, the NLB

Group delivers innovative and tailored investment

solutions aligned with clients’ financial objectives.

In 2025, asset management services were further

strengthened with the launch of

NLB Skladi – Zeleni

prehod I

, a special alternative investment fund focused

on supporting the green transition. This fund reinforces

the Group’s commitment to sustainable finance and

ESG principles, while expanding the product offering

into higher-value alternative investments.

, with over 20 years of experience,

remains Slovenia’s largest asset management company

by total assets under management and the leading

mutual fund manager, while maintaining a strong market

share of 42.1%. In 2025, the company recorded strong

performance, with net inflows of EUR 245 million into the

NLB Skladi Umbrella Fund

and capturing a solid market

share of 46.2% in net sales in the Slovenian market.

Total assets under management increased by 19% YoY

to EUR 3,616 million, comprising EUR 3,048 million in

mutual funds, EUR 564 million in discretionary portfolio

management, and EUR 4 million in an alternative

investment fund, representing invested capital only.

In 2025, the company launched its first alternative

investment fund and successfully completed its initial

fundraising, securing EUR 30 million in committed

capital. In 2025, net profit reached EUR 14.5 million,

representing a 20% YoY increase, reflecting continued

client confidence and efficient cost management.

Regionally, NLB Skladi, Ljubljana, continued its

expansion through the asset management company

in North Macedonia, acquired in May 2024, and

rebranded as NLB Fondovi, Skopje, and through the

asset management company in Serbia, acquired within

NLB Group in September 2024 and rebranded as NLB

Fondovi, Beograd. This regional presence strengthens

cross-selling opportunities between the NLB Group’s

banking and asset management services and supports

the evolving needs of local investors.

NLB Fondovi, Skopje

ranks as the third-largest asset

manager in the North Macedonian market, holding

a 21.3% market share. The company manages

EUR 104.6 million in assets across various investment

funds and portfolios. Net inflows in investment funds in

2025 amounted to EUR 32.2 million, while the company

generated a net profit of EUR 0.1 million, confirming

stable growth and a successful market position.

NLB Fondovi, Beograd

manages EUR 66.4 million

of assets across several investment funds and holds

a 3.0% market share. During 2025, it recorded net

inflows of EUR 6.5 million into investment funds,

reflecting promising investor confidence and market

expansion. In 2025, the company reported a net loss of

EUR 0.6 million.

Table 30:

Key financials of asset management activities

NLB Skladi,

NLB Fondovi,

Skopje

NLB Fondovi,

PRO-FORMA

Asset Managment

companies

on stand-alone basis

Total net operating

income

30.9

1.0

0.4

32.2

-12.2

-0.8

-1.0

-14.0

14.5

-0.6

14.1

Balance sheet

33.6

0.9

36.0

Total assets under

3,616.2

104.6

66.4

3,787.2

(i) Pro forma consolidation reflects the aggregated performance of asset

management companies within the NLB Group.

Table 31:

Pro forma look-through of key financial indicators on

asset management activities

PRO-FORMA

Asset Managment companies

59.0%

43.4%

(i) Pro forma consolidation reflects the aggregated performance of asset

management companies within the NLB Group.

A photographic portrait of a

Lipizzaner with a genetic defect

serves as a critical reflection on

political gifts and the complexity

of symbolic exchanges within

cultural diplomacy.

JASMINA CIBIC

Lipizzaner 508 Neopolitano Thais XL

(r.11.04.2005), 2020

ink-jet print

150 × 200 cm

97

The self-funded model, strong liquidity, and solid capital position continued in 2025, demonstrating the Group’s

financial resilience. Effective risk and capital management remains essential to supporting sustainable, long-term

profitability. A robust Risk Management framework is fully embedded in the Group’s decision-making, steering, and

mitigation processes, and aims to support its business operations proactively. In line with its strategic commitment

to sustainability, the Group contributes to sustainable finance by incorporating environmental, social, and

governance risks into its business strategies, risk management framework, and internal governance arrangements.

The Group operates a well-diversified business model

and, in line with its strategic orientations, aims to

maintain sustainable profitability. Its focus remains on

serving clients in its core markets, providing innovative

yet simple, customer-oriented solutions, and actively

contributing to a sustainable, balanced, and inclusive

economic and social system. Efficient risk and capital

management are essential for supporting the Group’s

long-term operations. Risk Management within the

Group is responsible for managing, assessing, and

monitoring risks across the Bank ‒ its main entity in

Slovenia ‒ and acts as the competence centre for

banking and leasing subsidiaries.

Based on the Group’s business strategy, credit risk

represents the dominant risk category, followed

by credit spread, interest rate risk in the banking

book, liquidity risk, and operational risk. Credit risk

management focuses on moderate risk-taking,

aiming to maintain a well-diversified credit portfolio,

ensure adequate credit portfolio quality, safeguard a

sustainable cost of risk, and achieve optimal returns

considering the risks assumed. The Group’s exposure

to the other aforementioned risks remains limited,

while market and other non-financial risks are of

lower materiality. The Group integrates and manages

ESG risks alongside existing risk types, such as credit,

liquidity, market, and operational risks, within its risk

management framework. These risks are estimated

as low, except for the transition risk within the area of

credit, which is evaluated as low to medium. Liquidity

risk tolerance remains low, and the Group must always

maintain an appropriate level of liquidity and pursue a

proper structure of financing sources.

Table 32:

NLB Group’s Key Risk Appetite Indicators (KRIs)

KRIs

15.4%

LCR

199.2%

NSFR

163.7%

29 bps

NPL ratio (EBA definition)

NPE (EBA definition)

Interest rate risk (EVE)

Strong lending growth continued in 2025. The Group’s

credit portfolio maintained high quality and remained

well diversified, despite ongoing geopolitical tensions and

more adverse-than-anticipated macroeconomic trends.

The resilience of the Group region’s markets contributed

to maintaining non-performing ratios at a sustainable

level, although a moderate increase in NPLs was

identified, predominantly in the corporate sector in

Slovenia. As an important strength, their coverage ratio

remained above the EU average. In 2025, the Bank

observed a deterioration in the creditworthiness of a few

larger companies operating in the steel, metal, and

automotive industries. The weakening of financial

indicators and intensified sector-specific headwinds

contributed to a recognised risk of default. As a result,

several exposures migrated to Stage 3 in accordance with

IFRS 9 impairment requirements. Nevertheless, the cost of

risk remained at 29 bps, staying within the 2025 expected

low level of NPE (EBA def.)

Figure 53:

Risk profile of NLB Group as at 31 December 2025

Credit risk

Concentration risk

Credit spread risk

Interest rate risk in banking book

Operational risk

Market risk

Business, Strategic and Other risks

4.9%

7.4%

5.2%

6.3%

3.6%

70.1%

98

range. The Group continues to closely monitor

macroeconomic and geopolitical developments,

remaining prudent in identifying any increase in credit risk

at an early stage in accordance with the Early Warning

System, and being proactive in NPL management.

The Group remained well-capitalised in 2025, with

capital significantly above the established risk

appetite at both the Group and banking member

levels. Its liquidity position also remained strong,

with liquidity indicators well above the regulatory

requirements, indicating a low tolerance for liquidity

risk. Considerable attention was devoted to the structure

and concentration of liquidity reserves, while accounting

for potential adverse negative market movements.

Investment activity continued with a balanced approach,

focusing on identifying attractive market opportunities

while effectively managing credit spreads, interest

rate risk, and capital consumption. In 2025, the Group

reduced net interest income sensitivity, and exposure to

interest rate risk remained moderate and well within its

risk appetite.

As a systemically important institution, the Group

participates in the EBA EU-wide and ECB SSM Stress Test

exercise. This EU-wide stress test evaluates the resilience

of the European banking sector in the current uncertain

and evolving macroeconomic environment, particularly

amid escalating geopolitical tensions that could lead

to a significant decline in GDP. The ECB published the

aggregate results at the beginning of August 2025. The

final results of the bottom-up stress test confirmed that,

even under the unfavourable market conditions defined

by the EBA and the ECB, the Group maintains sufficient

capital resilience. Under the adverse scenario, the CET1

ratio (fully loaded) would decline by less than 300 bps

after three years without mitigation measures. The

qualitative results of the exercise were incorporated into

the ECB’s determination of capital requirements, namely

the setting of the Pillar 2 Guidance (P2G) requirement,

which decreased from 100 bps to 75 bps.

Risk Management and control are carried out through

a clear organisational structure with defined roles

and responsibilities. The organisation and delineation

of competencies are designed to prevent conflicts of

interest and to ensure a transparent, documented

decision-making process subject to an appropriate

upward and downward flow of information.

The competence line Risk Management in NLB is, by

encompassing several professional areas, responsible for:

formulating and controlling the Group’s Risk

Management policies,

setting limits,

overseeing the harmonisation,

regular monitoring of risk exposures and limits based

on centralised reporting on a Group level.

The Group greatly emphasises the risk culture and

risk awareness across all its entities. The Group’s Risk

Management framework is forward-looking and

tailored to its business model and corresponding

risk profile. The main risk principles and limits are

defined by the Group’s Risk Appetite and Risk Strategy,

both of which are aligned with its business strategy.

The Group regularly conducts risk identification as

part of the ICAAP and ILAAP frameworks. All topical

risks identified in this process, including ESG-related

risks, are comprehensively assessed, monitored, and

mitigated where necessary. Particular attention is given

to integrating risk analysis into the decision-making

process at both the strategic and operating levels,

ensuring diversification to avoid large concentrations,

optimising capital usage and allocation, setting

appropriate risk-adjusted pricing, and ensuring overall

compliance with internal rules and regulations. To

adequately manage ICT risks and ensure compliance

with the DORA requirements, a dedicated second

line of defence has been established within the risk

management function and ICT risk management

framework. Special attention is placed on their regular

and comprehensive monitoring and mitigation.

Risk Management focuses on managing and mitigating

risks in line with the Group’s Risk Appetite and Risk

Strategy, which form the foundation of the Group’s Risk

Management framework. Within these frameworks,

the Group monitors a range of risk metrics to ensure

its risk profile remains consistent with its Risk Appetite.

In addition, the Group continuously enhances its Risk

Management system, where the consistent integration

of ICAAP, ILAAP, the Recovery plan, and other internal

stress-testing capabilities is essential. Moreover, the

Group emphasises their integration into the overall Risk

Management system to assure proactive support for

informed decision-making.

As a systemically important bank, the Bank is part

of the Single Supervisory Mechanism (SSM).

Supervision falls under the jurisdiction

of the Joint Supervisory Team (JST) of:

The Group adheres to ECB regulations, with its

subsidiaries operating outside Slovenia complying

with the rules set by the local regulators. Third-

party equivalents are approved in Serbia,

Bosnia and Herzegovina, and North Macedonia,

aligning local regulations with CRR rules.

ECB

BoS

Across the Group, risks are assessed, monitored,

managed, or mitigated in a uniform manner, as outlined

in the Group’s Risk Management Standards, while

also considering the specific characteristics of the

markets in which individual Group members operate.

29 bps

cost of risk at the Group level

Proactive Risk Management

continued in 2025

99

The uniform stress-testing programme ‒ including

internally developed models, stress scenarios,

and sensitivity analysis ‒ is regularly revised and

complemented. The Group has established an internal

ESG stress-testing framework to identify the most relevant

financial vulnerabilities stemming from climate risk. This

framework is continuously enhanced by incorporating

newly available ESG-related data. The comprehensive

stress-testing framework is subject to a regular internal

validation cycle and is supported by a robust validation

framework. The Group ensures strict controls over the risk

approaches and internal models applied.

The business and operating environment relevant to the

Group’s operations continues to evolve, driven by trends

such as sustainability, social responsibility, governance

developments, changing customer behaviour, emerging

technologies, and increasing competition. These

trends contribute to a more sustainable, balanced,

and inclusive economic and social system, while also

introducing additional regulatory requirements. Risk

Management continuously adapts to this evolving

environment, proactively identifying and addressing

new and emerging risks.

Figure 54:

NLB Group’s Risk Management Framework

Business strategy

ICAAP & ILAAP

inputs

Risk identification

Risk appetite / Risk strategy

(Limit system)

Capital and Financial planning

Results

Recovery plan

Assessment of liquidity and capital

(significant deterioration)

ILAAP

• Economic and normative assessment

of liquidity

• Stress tests

• Liquidity contingency plan (LCP)

ICAAP

• Economic and normative assessment

of capital

• Stress tests

100

Proactive Risk

Management in 2025

A prudent capital-level

position and attainment of

interim MREL targets

One of the key objectives of Risk Management is to

maintain a prudent capital position for the Group. As

such, the Group monitors its capital position at both the

consolidated and individual subsidiary bank levels in

line with its Risk Appetite. It also incorporates normative

and economic perspectives through the established

ICAAP process. As at 31 December 2025, the Group’s TCR

stood at 20.1%, representing a 1.4 pp YoY increase, while

the CET1 ratio stood at 15.4%, also up 0.1 pp YoY. Both

ratios remained well above regulatory requirements.

The higher total capital adequacy derives from higher

capital (EUR 514.3 million YoY), which counterbalanced

the RWA increase of EUR 1,293.7 million YoY. The Group

increased its capital by partially including 2025 profit

(EUR 226.6 million) and by issuing an AT1 instrument

(EUR 300.0 million).

In 2025, the Group’s credit risk RWAs increased due

to changes in EU regulatory rules effective from

1 January 2025 and continued portfolio growth. Portfolio

expansion, particularly in corporate and retail segments

‒ where a substantial portion of loans is at least

partially secured by real estate ‒ contributed to an RWA

increase. Higher RWAs for market risks and Credit Value

Adjustments primarily reflected the result of more open

positions in domestic currencies of non-euro subsidiary

banks. The decrease in RWA for operational risks

mainly stems from the new standardised approach to

operational risk capital requirements introduced in 2025.

As at 31 December 2025, the Group met all fully-loaded

regulatory requirements. The regular ECB SREP

assessment resulted in a slightly lower P2R of 2.10%,

while P2G decreased from 1% to 0.75%.

The MREL requirement forms part of the Group’s Risk

Appetite, whereby its fulfilment is regularly analysed and

monitored. NLB complies with all interim targets. Further

details on MREL are available in the chapter

Funding

Strategy, MREL Compliance, and Capital

Maintaining a solid

liquidity position and

structure

Maintaining a solid liquidity position and structure

is another key risk objective. The liquidity position

remained stable and strong at the Group and individual

subsidiary bank levels. The Group’s LCR increased by

2.0 pp YoY to 199.2%, remaining well above the risk

appetite limit. The level of the unencumbered eligible

liquid reserves remained high, representing 31.8%

of total assets. The Group holds sufficient liquidity

reserves in the form of placements with the ECB, prime

debt securities, and money market placements. The

Group’s core funding base predominantly consists of

retail customer deposits, which remain very stable and

continue to grow consistently. The LTD ratio increased

to 76.3% from 73.7% at the end of 2024, but it stands at a

comfortable level.

Figure 55:

NLB Group’s Pillar 2 Requirement evolution

2018

2019

2020

3.50%

3.25%

2.75%

2.75%

2.60%

2.40%

2.12%

2.12%

2.10%

101

Maintaining adequate

credit portfolio quality

Maintaining a high-quality credit portfolio remains a

key objective for the Group, with a focus on cautious

risk-taking, quality of new loans, and a diversified

customer portfolio. The Group constantly develops a

wide range of advanced approaches in the credit risk

assessment, aligned with best banking practices, to

further enhance existing risk management tools while

enabling faster customer responsiveness. The Group’s

restructuring approach focuses on the early detection

of clients facing potential financial difficulties and their

proactive treatment.

The Group is actively present in the SEE markets,

providing financing to both existing and new

creditworthy clients. Its lending strategy focuses on

its core markets, including retail, SMEs, and selected

corporate business activities across the region and

the EU. In Slovenia, the focus is on providing tailored

solutions for retail, medium-sized companies, and small

enterprises. Within the corporate segment, the Bank

has established collaborations with selected corporate

clients through various lending and investment

instruments. The Group’s banking members in the SEE

region operate as universal banks, primarily focused on

retail, medium-sized companies, and small enterprise

segments. Their primary objective is to provide

comprehensive services to clients by applying prudent

risk management principles. In addition, with the

acquisition of the SLS Group, the Group strengthened its

leasing position in the Slovenian market and entered the

Croatian market.

Figure 56:

NLB Group structure of the corporate and retail credit portfolio (gross loans) by segment and geography (in EUR millions)

(i) The largest part represents EU members.

28%

28%

Retail

consumer

4,759

SME

5,301

Retail

housing

5,233

Corporates

3,415

EUR 18.7

SME

Corporate

Retail/Housing

Retail/Consumer

3,764

2,865

4,105

3,131

4,368

3,101

4,522

3,642

4,633

3,138

4,522

4,213

5,301

3,415

5,233

4,759

31 Dec 2024 w/o SLS Group

48%

49%

47%

8%

21%

2%

3%

21%

1,727

847

1,235

3,960

8,766

1,534

640

EUR 18.7

102

The strong loan growth recorded in 2024 continued into

2025. In the retail segment, fixed-rate lending remained

predominant, encompassing both the housing loan

market and consumer credit. In the corporate segment,

the Group seized opportunities to finance several of the

region’s top corporate clients, while maintaining focus

on SMEs as its key segment. The current credit portfolio

(gross loans to corporate and retail customers) consists

of 53.4% retail clients, 18.3% large corporate clients,

and 28.3% SME clients, including micro companies.

The retail portfolio represents a significant share of the

total credit portfolio, with housing loans remaining the

dominant segment.

Increased lending activity supported further expansion

of the corporate loan portfolio in 2025. The growth was

primarily concentrated in the manufacturing, wholesale

and retail trade, construction, and real estate sectors.

The most significant new financing was directed toward

real estate and specialised lending projects, including

infrastructure projects and projects related to the green

transition. The European Classification of Economic

Activities was updated in 2025, which contributed to

changes in the portfolio’s industry breakdown. Some

of the changes in industry exposure in 2025 can be

attributed to this methodological change.

The corporate credit portfolio is well diversified, with no

large concentration existing in any specific industry. This

diversification is essential to maintain as geopolitical

tensions, the green transition, and other macro factors

could impact specific economic sectors.

Table 33:

Overview of NLB Group corporate loan portfolio by industry as at 31 December 2025

Credit portfolio

Corporate sector by industry

∆ Q4 2025

∆ 2025

Accommodation and food service activities

322.2

10.5

80.3

Activities of extraterritorial organisations and bodies

Administrative and support service activities

174.0

23.2

Agriculture, forestry and fishing

440.8

20.8

56.9

Arts, entertainment and recreation

21.6

1.6

0.7

Construction and real estate activities

1,366.0

40.0

149.8

Education

28.4

5.2

Electricity, gas, steam and air conditioning supply

622.9

16.3

6.4

Financial and insurance activities

295.2

36.0

66.1

Human health and social work activities

63.4

2.6

15.4

Telecommunication, computer programming, consulting,

computing infrastructure and other information service activities

211.6

-9.1

-4.7

Publishing, broadcasting, and content

production and distribution activities

17.1

0.2

-0.2

Manufacturing

2,049.0

24%

-0.6

284.5

Mining and quarrying

39.1

-0.3

-3.4

Professional, scientific and technical activities

418.9

-23.5

70.8

Public administration and defence, compulsory social security

268.0

32.4

54.1

Other service activities

63.1

-2.5

43.6

Transportation and storage

602.7

-17.0

-31.9

Water supply, sewerage, waste management

and remediation activities

71.6

-3.7

5.5

Wholesale and retail trade

1,640.8

14.0

123.5

-0.1

-0.1

Total Corporate sector

8,716.5

100%

125.7

945.8

103

Table 34:

Main manufacturing activities of NLB Group by stages as at 31 December 2025

Credit portfolio

Main manufacturing activities

Group

- o/w

Stage 1

- o/w

Stage 2

- o/w

Stage 3

∆ 2025

- o/w

Stage 1

- o/w

Stage 2

Stage 3

∆ Q4

Stage 1

Stage 2

Stage 3

Manufacture of food products

6.2%

539.1

522.9

11.7

4.5

235.7

251.3

-12.9

-2.7

5.3

15.7

-13.0

Manufacture of fabricated metal products,

except machinery and equipment

201.5

145.4

19.6

36.5

-1.8

-7.0

-22.3

27.5

5.0

7.6

-32.0

29.4

Manufacture of basic metals

2.8%

242.3

144.8

12.8

84.8

50.2

22.4

-55.9

83.7

14.9

13.3

-71.7

73.2

Manufacture of electrical equipment

1.3%

116.0

112.0

-67.3

-67.0

-0.3

-40.7

-40.3

-0.3

-0.1

Manufacture of basic pharmaceutical products

and pharmaceutical preparations

0.9%

76.2

76.2

1.8

1.7

-1.6

-1.6

Manufacture of chemicals and chemical products

1.0%

90.7

75.2

15.5

52.5

37.1

15.4

45.6

32.9

12.8

-0.2

Manufacture of machinery and equipment n.e.c.

1.0%

88.4

73.6

9.4

5.4

1.6

-5.5

2.9

4.2

-16.6

-24.5

5.3

Manufacture of rubber and plastic products

0.9%

74.8

71.1

0.8

-10.9

-11.2

0.6

-1.9

-2.2

0.2

Manufacture of other non-metallic mineral products

114.5

53.5

53.7

7.2

-4.2

-57.8

50.6

2.9

2.5

2.8

Manufacture of motor vehicles, trailers and semi-trailers

93.0

51.1

7.4

34.5

-5.5

-43.1

7.2

30.4

-7.5

-6.1

-0.7

-0.6

Manufacture of wood and of products of wood and cork, except

furniture, manufacture of articles of straw and plaiting materials

0.7%

59.6

43.2

10.1

6.2

5.6

2.8

1.2

1.6

Manufacture of furniture

0.6%

48.1

42.2

3.1

-0.8

0.2

-1.6

1.4

Manufacture of wearing apparel

0.4%

39.0

37.1

0.3

-4.8

-6.2

-13.0

-11.7

-1.2

Other manufacturing activities

3.0%

265.6

243.7

12.7

9.2

28.4

33.5

-9.8

4.8

4.8

Total manufacturing activities

23.5%

2,049.0

1,692.0

164.9

192.0

284.5

154.5

-23.7

153.6

-15.1

-94.6

109.1

During 2025, particularly in Q4 2025, the Bank observed

a deterioration in the creditworthiness among larger

companies operating in the steel and metal industry.

The weakening of financial indicators, combined with

intensified sector-specific headwinds, contributed

to a recognised risk of default. As a result, several

exposures migrated to Stage 3 in accordance with IFRS 9

impairment requirements.

The global automotive industry, which significantly

influences the European market, is facing unfavourable

trends. These challenges could affect Slovenia’s

economy, as its automotive industry is export-oriented

and integrated into the European supply chain. The

NLB Group identified companies involved in the

manufacturing of automotive components that could be

adversely affected by the current market circumstances,

leading to the re-staging of certain exposures during

2025. Clients in the automotive industry are subject

Figure 57:

NLB Group exposure to the automotive industry as at 31 December 2025

Car sales & maintence in NLB Group banks

Car sales & maintence in NLB Group leasing companies

Manufacturing of car components in NLB Group

44%

˜

EUR 116

72%

Croatia

23%

˜

EUR 100

73%

France

˜

EUR 144

104

to closer monitoring under the Early Warning System

(EWS) and may consequently be classified under Stage

2 or Stage 3. Financing for both automotive industry

segments – manufacturing of automotive components

and car sales and maintenance services – represents a

small part of the Bank’s portfolio, with manufacturing

accounting for 1.6% and sales activities for 2.5%.

The Bank’s corporate portfolio also includes financing

for real estate activities and specialised lending projects,

primarily in solar and wind energy production, both

of which represent a smaller segment of the overall

portfolio. The risks associated with real estate financing

depend on the specific phase of the construction

process ‒ whether the project is still in the development

stage or already operational ‒ as well as on the

source of repayment. Projects are carefully monitored

throughout each construction phase, and no material

disruptions have been identified.

Figure 58:

NLB Group Real estate financing and Specialised lending as at 31 December 2025

Real estate in construction

21%

31%

59%

Austria

32%

˜

EUR 495

Finished real estate for rent or sale

˜

EUR 460

Specialised lending

45%

EUR 314

105

In the current macroeconomic environment, the Group’s

asset quality remains robust. The majority of the loan

portfolio is classified as Stage 1 (93.0%), with a relatively

small share in Stage 2 (5.0%) and Stage 3 (2.0%). The

increase in Stage 2 allocation was primarily observed

in the retail segment, driven by improved statistical

models and the SICR identification system implemented

in subsidiaries in Q2 2025. Despite this shift, the overall

share of the Stage 2 portfolio remains moderate, and

77.8% of Stage 2 retail exposure shows no payment

delays. In the corporate segment, previously identified

risk triggers resulted in a transfer of certain exposures

from Stage 2 to Stage 3 in Q4 2025. Loans classified

under Stages 1 to 3 are measured at amortised cost (AC),

while no receivables are measured at fair value through

profit or loss (FVTPL).

Table 35:

NLB Group loan portfolio by stages as at 31 December 2025 (in EUR millions)

Provisions and FV changes for credit portfolio

Stage 1

Stage 2

Stage 3 & FVTPL

Stage 1

Stage 2

Stage 3 & FVTPL

Credit

portfolio

Share of

Total

YTD

change

Credit

portfolio

Share of

Total

YTD

change

Credit

portfolio

Share of

Total

YTD

change

Provision

Volume

Provision

Coverage

Provision

Volume

Provision

Coverage

Provisions

& FV

changes

Coverage

with

provisions

and FV

changes

Total NLB Group

21,658.9

93.0%

2,345.1

1,160.3

5.0%

123.5

469.6

139.1

88.0

0.4%

68.2

5.9%

231.9

49.4%

o/w Corporate

7,832.0

89.9%

871.4

573.7

6.6%

-52.7

310.8

3.6%

127.1

46.7

0.6%

21.7

3.8%

126.6

40.7%

o/w Retail

9,248.2

92.6%

1,070.2

585.4

5.9%

175.1

158.8

12.1

39.3

0.4%

46.5

7.9%

105.3

66.3%

o/w State

4,111.5

100.0%

344.8

1.2

1.2

1.9

5.0%

81.6%

o/w Institutions

467.2

100.0%

58.7

100.0%

Figure 59:

NLB Group corporate and retail loan portfolio by stages as at 31 December 2025 (in EUR millions)

The trend towards fixed interest rates continued in 2025.

A total of 64.8% of the Group’s corporate and retail

loan portfolio is linked to a fixed interest rate, while the

remainder is tied to a floating rate, predominantly the

Euribor reference rate. Floating interest rates continue to

dominate the corporate segment, although their share

in the portfolio has been gradually decreasing. In the

retail segment, 81.6% of the loan portfolio is linked to a

fixed interest rate, with an even higher percentage in the

housing loan segment (81.8%). This structure reduces the

sensitivity of the retail segment to potential changes in

reference rates.

159

Retail

+13%

YoY

+13%

YoY

+43%

YoY

+8%

YoY

Stage 1 by segment

Stage 2 by segment

Stage 3 by segment

6,006

454

169

6,855

250

131

6,961

626

184

8,178

410

147

7,832

574

311

9,248

585

-8%

YoY

+69%

Figure 60:

NLB Group corporate and retail loan portfolio (in %) by interest rates as at 31 December 2025

31 Dec 23

31 Dec 24

31 Dec 25

31 Dec 23

31 Dec 24

31 Dec 25

55%

63%

34%

59%

26%

45%

81%

37%

66%

41%

74%

Corporate (incl. SME)

Consumer

Fix

Float

31 Dec 23

31 Dec 24

31 Dec 25

30%

24%

82%

70%

76%

Housing

106

New NPLs formation and

NPL management

The global economy experienced a slowdown in 2025,

with GDP growth rates projected to remain below the

long-term average and downside risks intensifying.

Despite measures implemented to reduce the riskiness

of the NLB Group portfolio, the Bank experienced

increased NPL formation in 2025, particularly in

the corporate segment in Slovenia. NPL formation

amounted to EUR 341.2 million, representing 1.5% of

the total loan portfolio. Nevertheless, due to cautious

lending standards and effective early warning systems,

the Group’s credit portfolio remains of solid quality, with

a sustainable share of NPLs and above EU average

provision coverages to limit potential losses.

provisions for credit risk of EUR 46.6 million. These

established impairments derive from portfolio

development, reflecting portfolio growth on the one

hand, and portfolio deterioration shifts to Stage 3 on

the other. However, material repayments of written-off

receivables and changes in models contributed to the

mitigation of the overall impact. In 2025, the annual cost

of risk was 29 bps

15

, remaining within the expected range

for year-end 2025. Although macroeconomic conditions

in the region continue to be influenced by factors such

as relatively high inflation, lower-than-expected GDP

growth, and rising unemployment, these developments

are unlikely to have a significant impact on the Group’s

cost of risk.

15 Cost of risk calculation excludes provisions from securities and other financial assets (in 202

5 net released in the amount of EUR 3.5 million).

Figure 61:

NLB Group gross NPL formation (in EUR millions)

SME

Formation /

gross loans

(stock)

43

76

118

77

93

170

87

148

106

341

0.6%

0.8%

Figure 62:

Cumulative net new impairments and provisions for credit risk in NLB Group (in EUR millions)

-46.6

Changes in models/

risk parameters

Portfolio

development

Repayments of

written-off receivables

Net impairments and

provisions for credit risk

28.2

-93.2

18.4

Release

Establishment

107

Precisely defined targets and various proactive workout

approaches have supported the management of the

non-performing portfolio in 2025. The Group’s NPL

management framework places strong emphasis

on restructuring, complemented by other active NPL

management tools, such as collateral foreclosure,

sale of claims, and pledged assets. Amid the volatile

macroeconomic conditions in 2025, inflows of new NPLs

exceeded repayments and recoveries of existing NPLs;

this dynamic was especially evident in the corporate

segment. As a result, the NPL portfolio recorded a

net increase of EUR 139.1 million in 2025. The Group’s

non-performing credit portfolio stock increased to EUR

469.5 million by the end of 2025, compared with EUR

330.5 million at the end of 2024. Despite this increase

in the non-performing credit portfolio, combined with

credit growth in a higher-quality portfolio, the NPL

ratio remained at merely 2.0%. Based on the EBA

methodology, the internationally comparable NPE ratio

stood at 1.4%, and the Group’s gross NPL ratio was

2.4%. In addition, EUR 191.6 million of NPLs showed no

payment delays.

In 2025, the NPL coverage ratio 1 (coverage of gross

NPLs with impairments for all loans) decreased to 82.7%,

reflecting lower coverage of newly recognised corporate

NPLs, which on average carry a lower coverage ratio

than the legacy NPL portfolio. Furthermore, the Group’s

NPL coverage ratio 2 (coverage of gross NPLs with

impairments for NPL) stood at 49.4%, remaining well

above the EU average published by the EBA (41.9% for

Q3 2025). Additionally, NPLs are covered by collateral,

which serves as a secondary source of repayment. At the

end of Q4 2025, the collateral coverage ratio was 46.7%.

The Group strives to ensure the best possible collateral

for long-term loans, most commonly through mortgages.

Thus, the real estate mortgages are the most common

type of collateral for both corporate and retail loans. In

corporate loans, government and corporate guarantees

are also common types of collateral.

Through extensive experience gained over recent

years in managing clients facing financial difficulties

– primarily from legacy portfolios – the Group has

developed a comprehensive knowledge base. This

expertise encompasses both the prevention of financial

difficulties for clients, the restructuring of viable

Figure 63:

NLB Group NPL, NPL ratio, NPL collateral coverage and coverage ratio

(i) By internal definition.

1.8%

31 Dec 2021

31 Dec 2022

NPLs

NPL ratio

Coverage ratio 1

Coverage ratio 2

Collateral coverage

58.1%

57.1%

57.9%

367

328

301

330

470

55.9%

46.7%

61.7%

61.0%

62.7%

49.4%

64.6%

86.1%

98.9%

108.7%

82.7%

110.0%

Figure 64:

NLB Group NPL by geography as at 31 December 2025

(i) Considering materiality of delays, namely 2% or EUR 50 thousand.

8

67%

131

38

147

315

25

14

45

11

27

13

21

19

21

21

No delays

D rating

E rating

108

clients in case of need, and the efficient management

of exposures with no realistic recovery prospects.

This extensive knowledge base is shared across the

Group and readily accessible to relevant units. Risk

units, along with restructuring and workout teams,

are adequately staffed and equipped to handle

considerably increased volumes, if required, in a

professional and efficient manner.

Low market risk in the

trading book

Regarding market risks in the trading book, the Group

maintains a low-risk appetite. Exposure to trading (as

defined by the CRR) is permitted only at the parent bank

of the Group, and remains highly limited.

The Group conducts its main business activities in euros,

and the subsidiary banks, in addition to their domestic

currencies, also operate in euros, the Group’s reporting

currency. The Group’s net open FX position from

transactional risk is low, at 0.3% of capital. Regarding

structural FX positions on a consolidated level, assets

and liabilities held in foreign operations are converted

into euro currency at the closing FX rate on the balance

sheet date. FX differences in non-euro assets and

liabilities are recognised in the other comprehensive

income, impacting shareholders’ equity and CET1

capital.

Proactive management

of interest rate risk in the

banking book

The Group follows a strategy of maintaining a low

Economic Value of Equity (EVE) indicator while

simultaneously monitoring the effects on Earnings at

Risk (EaR). Bonds and loans with fixed interest rate

contribute the most to the interest rate risk exposure in

the Economic Value of Equity (EVE) indicator. In contrast,

exposure is predominantly managed through core

deposits, which present the most important and material

element of interest rate risk management. To a lesser

extent, the Group also employs plain-vanilla derivatives

to hedge risk.

The exposure to interest rate risk remains modest and

within the Group’s defined risk appetite limits. The

Group applies several scenarios when assessing the

EVE sensitivity. In 2025, the Group continued to enhance

its measurement of interest rate risk in accordance

with the new EBA Guidelines, which impacted the EVE

result. From an EVE perspective, the estimated capital

sensitivity under the most adverse regulatory scenario

(Parallel up) equals -2.69% of the Group’s T1 capital.

The Group’s EUR 6,019 million loan portfolio linked

to Euribor primarily comprises loans referencing 3M

Euribor (47%), followed by 6M Euribor (38%), 1M Euribor

(11%), and 12M Euribor (3%).

Robust operational risk

In operational risk management, the Group has

established a robust operational risk culture. The main

qualitative activities focus on reporting loss events and

identifying, assessing, and managing operational risks.

Based on this, continuous improvements are made

to control activities, processes, and the organisation.

Additionally, the Group also focuses on proactive

mitigation, prevention, and minimisation of potential

damage. Special attention is given to the stress-testing

system, based on a scenario analysis of potentially high-

severity, low-frequency events, and on modelling of loss

events. The Bank uses the gamma distribution technique

for modelling, which proved to be the most suitable.

From an economic perspective, the aim is to ensure the

necessary capital to cover materially important risks

that occur extremely rarely. Consequently, data on

realised loss events are used with a 99.9% confidence

interval. Moreover, some add-ons are added for specific

current and significant risks. In a normative view, a

90% confidence level is used for more plausible but still

severe events, which would be absorbed through P&L.

In 2025, the Group reported lower net operational losses

arising from loss events than in the previous year, and

stayed within established operational risk tolerance

limits. Certain litigation costs were mainly due to

systemic issues, such as litigation risk (e.g., cases related

to loan processing fees and loan insurance premiums in

Serbia). For other realised operational losses, banking

members of the Group conducted a comprehensive

analysis and defined adequate mitigation measures to

prevent or minimise such events in the future.

Beyond recorded loss events, the Bank may also face

one-off, unpredictable, extreme events. The list of

such potential events is updated annually to reflect

the current operating environment and relevant risks

observed in the banking industry. Scenario analyses are

prepared for each identified event. The cyber-attack

scenario, as an umbrella scenario, has been further

divided into five detailed sub-scenarios to address

different types of attacks. Results indicate that the most

significant potential loss could arise from disruptions

to electronic banking channels, anti-money laundering

breaches, cyber-attacks, and legal risks. For these

scenarios, existing controls were additionally revised

and mitigation measures were defined to address any

potential deficiencies.

Furthermore, key risk indicators serve as an early

warning system for the broader field of operational

risks ‒ including those related to human resources,

processes, systems, and external factors. They are

regularly monitored, analysed, and reported to improve

the existing internal controls system and enable timely

reactions.

The Group supports a proactive approach to

operational risk management at all organisational

levels. All employees are encouraged to report loss

events. The most significant operational risks are

promptly escalated and reviewed at the Operational

Risk Committee meeting, and the implementation of

mitigation measures is closely monitored.

In addition, the Group diligently manages other non-

financial risks related to its business model or arising

from other external circumstances within the framework

of the established ICAAP process.

Incorporating ESG risks

The Group contributes to sustainable finance by

incorporating ESG risks into its business strategies, risk

management framework, and internal governance

arrangements. ESG risks are incorporated into the

established risk management processes across credit,

liquidity, market, and operational risk domains. The

109

Group’s approach follows ECB and EBA guidelines,

reflecting comprehensive integration of ESG

considerations into all relevant processes.

The Group conducts a materiality assessment as part

of its overall risk identification process to determine

the level of transitional and physical risk to which

the Group is exposed. The Group’s exposure towards

these risks is relatively low. Transition risk is assessed

as more material than physical risk. Implementing

the Net Zero Strategy of the NLB Group is expected to

reduce the impact of transition risk over time gradually.

Furthermore, results from internal climate stress tests

showed no material impacts on the Group’s capital and

liquidity position.

»

Additional details on Risk Management can be found

in the

,

the Sustainability Statement of

this Annual Report

, and the Pillar 3 Disclosures.

110

The Group remained firmly committed to providing its clients with sustainable and efficient services supported by

highly reliable and secure technology platforms. The Bank continued to advance its technology transformation

initiative, supporting a digital-first approach and the consolidation of core banking systems, with significant

progress achieved at the Group level in 2025.

Additionally, the Group further rolled out group-wide business solutions, including the launch of a new digital

banking platform, the implementation of a loan origination platform, and the introduction of mobile applications

for selected business segments, such as private banking and asset management. Strengthening cyber security

resilience remained a key priority, with continued investment in enhancing existing security capabilities and

implementing new solutions, including anti-fraud and data leakage prevention platforms.

IT Strategy 2025–2030

The current IT Strategy for the period 2025–2030,

incorporating the Group dimension, is built around a

clearly defined vision and mission, and a set of

strategic principles:

IT Infrastructure: Ensuring

reliability and resilience

Confirmed high performance with numbers

IT performance is monitored through a set of relevant

indicators linked to the Balanced Scorecard (BSC)

system. These indicators reflect the high performance

of IT operations and effective risk management. With

99.91% IT system availability and negligible unplanned

interruptions at 0.09%, the Bank continues to prioritise

stability. In 2025, the percentage of days without system

or service interruptions further improved from 80%

in 2024 to a solid 84% in 2025. Harmonised Service

Level Agreements (SLAs) are in place with users of

the information system and have been fulfilled to a

considerable high degree. Across the Group, members

recorded high IT operational performance, ranging

between 99.91% and 99.97%.

Main IT initiatives

Transformation with expanding group-wide

capabilities

The primary focus continues to be the transformation

of IT, covering the organisation, group perspective,

processes, people, and technology. IT has adopted more

agile delivery practices, strengthening collaboration

with the business and improving efficiency. Changes in

processes ensured higher transparency, unification, and

simplification, from modernised demand and release

processes to IT service processes.

99.91%

availability of IT systems in NLB

Vision

Build the best digital banking IT team in the SEE region.

Mission

Enable the best client and employee experiences through reliable, effective, secure, accessible, and scalable

IT solutions.

Main principles

Transform IT to support the implementation of the Group’s business strategy.

Continue implementing agile development practices to improve delivery and support the business.

Enhance the IT architecture with a focus on cloud-native solutions.

Increase client satisfaction across all segments by implementing a new digital omnichannel platform, digitalising

client journeys and interactions (CRM) and pursuing operational excellence.

Introduce advanced agile practices and DevOps transformation, enabling shorter release cycles, automated testing,

and reduced manual tasks.

• Ensure sufficient development capacity.

Further develop and enhance information and cyber security capabilities.

• Introduce modern collaboration tools and digitise internal processes.

Foster a highly motivated, effective, and engaged IT team working closely and collaboratively with the business.

111

Group-wide capabilities are still expanding, supported

by the Group Competence Centre in Belgrade,- Serbia,

which was transferred from the Bank to the IT service

company

NLB DigIT

, providing crucial support for

development across the Group. NLB DigIT acts as an IT

hub, providing high-quality services in domains where

expertise is scarce. The company has recently expanded

its portfolio to include:

Strategic Enablers

:

Implementation of strategic

enablers in the IT Delivery area.

IT Operations

:

Establishment of operations in several

areas, currently in the scale-up phase.

Core Services

:

IT security setup and digital

transformation projects.

NLB DigIT remains dedicated to the digital enablement

and reliable IT operations of NLB Group.

Transformation delivery

In 2025, the IT team delivered significant progress across

key strategic priorities in solution delivery, including

digital penetration, payments, core consolidation, and

workflow automation. These initiatives accelerated

platform modernisation, enhanced digital customer

journeys, and improved operational efficiency across

the Group.

In Serbia, a new origination platform for retail and

corporate customers was implemented, strengthening

end-to-end onboarding and origination capabilities. In

parallel, digital-first enhancements for debit cards were

introduced, and digital merchant onboarding solutions

were rolled out in Serbia and Slovenia to streamline

onboarding and reduce manual effort.

In Slovenia, the successful launch of the new

NLB Private

application improved the digital experience for high-

value clients. The new

platform and new

mobile application for investment trading NLB Trading

reinforced the mobile-first roadmap. The cash loan

process was additionally improved, enabling higher

levels of straight-through processing (STP for retail

loans increased from 45% to approximately 77%)

and significantly reducing manual intervention and

cycle times (from 17 hours to 30 minutes on average).

In addition, trade finance application modernisation

progressed with a strong focus on process enhancement.

Across the wider Group, multiple improvements were

delivered to digitalise and automate back-office and

administrative processes, supporting faster execution,

improved control, and increased operational resilience.

Core systems consolidation

IT continued to execute the core banking strategy, with

the consolidation of core banking systems progressing

as planned. Currently, the Bank operates two core

systems: the Bancs legacy retail core system and the

Temenos Transact corporate core system. As part of

Strategy 2030, the product migration from the legacy

Bancs system to the target core system, Temenos

Transact, advanced throughout the year. Following

the successful migration of term deposits in 2024, the

Bank migrated gradual savings products and began

originating new gradual savings products directly in the

target core system in 2025.

Development activities required for the migration and

origination of the loan portfolio were also completed,

and the first test execution was successfully performed.

Beyond migration activities, at the beginning of 2025,

the Bank upgraded the Temenos Transact core system

to the latest available release on the existing technology

stack. In the second half of the year, the Bank initiated

a discovery phase to explore a potential shift to a new

architectural setup and technical stack for the Temenos

Transact product.

Enterprise and application architecture

Enterprise architecture is responsible for defining

and governing the Group’s target architecture. This

includes establishing core architectural building blocks

and ensuring that new solutions – particularly Group-

standard platforms – align with the target architecture

and associated Group roadmaps.

The rollout of standard components further

strengthened the API-first and event-driven integration

capabilities, improving interoperability and ensuring

that new platforms and solutions can be seamlessly

integrated across the Group.

To address key gaps in the target architecture, the Group

has selected new standard platforms for operational

and marketing CRM, document output management,

and loan origination.

The implementation of the standardised enterprise

architecture tool was completed and transitioned into

regular maintenance. Keeping the repository up to

date will simplify application portfolio management,

reduce the risk of software obsolescence, strengthen

IT risk management, and support compliance with

DORA requirements.

Data management

The Group manages data across its entire life cycle

through comprehensive data governance policies, robust

frameworks, and modern technological foundations. Key

platforms include the Group Enterprise Data Warehouse

(EDWH), advanced analytics and AI platforms, risk and

profitability analytics, and consolidated regulatory

reporting capabilities, ensuring consistency, scalability,

and regulatory compliance across the Group.

Data serves as a core enabler of the Group’s digital

transformation. Multiple initiatives are underway to

establish a single source of truth across all banks and

business segments, improve accessibility of high-quality

data and reporting, and embed advanced analytics into

both operational and strategic decision-making processes.

The Group’s data management approach is built on

three pillars:

Technology foundations

:

Development of analytical

and reporting platforms, reference data solutions,

standardised development frameworks and processes,

and a harmonised Group EDWH data model.

· Governance

:

Implementation of governance models

that ensure continuous alignment between business

units and data and technology owners, enabling

responsible data and analytics usage in line with

defined guardrails and target architecture.

Adoption

Design and rollout of programs to embed

data and analytics into everyday business processes,

supported by workforce up-skilling and the promotion

of a data-driven culture.

Strengthening the IT team,

optimising processes, and

accelerating transformation

112

Outlook

In the year ahead, the Group will continue to invest

strongly in newly adopted technologies that support

its business strategy and accelerate its digital-first

ambition. The Group will further consolidate its

infrastructure, embrace cloud technologies as a key

enabler of speed and scalability, and standardise key

platforms across the Group to unlock greater efficiency

and consistency.

Above all, the Group will continue to enhance the client

experience – raising the bar on quality, innovation,

reliability, and security – as it progresses decisively

toward becoming a truly digital-first banking group.

Cyber security

Strengthening digital cyber

resilience and fraud prevention

The Group focuses on cyber security, ensuring the

confidentiality, integrity, availability, and authenticity of

data, information, and IT systems that support clients’

banking services and products. Cyber security within the

Group is constantly tested and upgraded through security

assessments, independent reviews, and penetration

testing. The topic is regularly discussed at the Bank’s

Information Security Steering Committee, Operational

Risk Committee, and Management Board meetings.

In 2025, key activities focused on strengthening digital

cyber resilience and enhancing anti-fraud capabilities,

reflecting increasing regulatory expectations and the

growing sophistication of cyber financial crime. To

improve productivity, accountability, and delivery speed,

the IT Security function was organisationally restructured

to create a clear separation between IT Security

Engineering and IT Security Operations. The Group IT

Security function now comprises 29 FTEs, supported

by nine FTEs within IT Security Operations, while 27

FTEs operate within the Second Line of Defence (CISO

function), ensuring independent oversight and control.

Management continues to strongly support security

functions and investments in the cyber security domain.

Investments in security are expected to increase in the

coming years, driven by ongoing digitalisation, evolving

regulatory requirements, and the need to further

strengthen cyber resilience capabilities.

In 2025, significant efforts were dedicated to the

implementation of an advanced anti-fraud protection

solution, enhancing real-time fraud detection and

prevention across digital banking channels. In parallel,

brand-protection capabilities were strengthened to

mitigate phishing, impersonation, and external abuse

of the Group’s brand. Data Loss Prevention (DLP) and

Cloud Access Security Broker (CASB) capabilities were

technically implemented, with a strong emphasis

on cloud environments, improving visibility and

enforcement of data-protection controls. Strengthening

monitoring, detection, and response capabilities

remains a key priority, aligned with industry best

practices and digital operational resilience principles.

Continuous employee education

and information exchange

All employees across the Group are continuously trained

on the importance of information and cyber security,

including awareness of social engineering techniques.

The banks within the Group provide security notifications

to employees and customers, particularly regarding

threats in the global environment that may impact the

Group’s IT systems, services, products, and clients.

In 2025, awareness activities placed increased emphasis

on fraud-related social engineering and phishing

scenarios. The Bank regularly tests employee awareness

through simulated social-engineering attacks. Threat-

intelligence information is shared at the Group level, with

all members contributing insights on emerging threats

and recommended mitigation measures. The Group

continues to operate a proprietary phishing simulation

platform and to execute coordinated phishing

campaigns across all members.

For further information, see the chapter

Cybersecurity

in

the Sustainability Statement.

Through the raw depiction of an

empty washroom, the painter

symbolises inhumane working

conditions and the systemic

injustices of contemporary

capitalism.

BILJANA DJURDJEVIĆ

Case Study 1, Washroom, 2021/22

oil on canvas

130 × 210 cm

114

People and Culture

Following the implementation of the Group’s Human Resources Strategy and people management standards across

all core members of NLB Group, the focus in 2025 shifted towards leadership and talent development, succession

planning, and organisational design. To further support the business strategy, particular attention was given to

capability and capacity planning, with an emphasis on reducing complexity and introducing new, lean, and agile

ways of working.

Investment in employees, continuous development, and career growth, as well as the creation of a modern and

healthy workplace, remain central priorities. Past initiatives in talent development have resulted in more effective

deployment of skills and expertise, stronger engagement of talents in strategic initiatives, and solid succession for

leadership positions. The purpose remains unchanged: to deliver an excellent employee experience throughout the

entire employee lifecycle.

Employee headcount

The Group continues to optimise processes and to

accelerate the transition to digital banking through

transparent and sustainable workforce planning.

This includes an ongoing review of the skills and

competencies required to support current and future

business needs.

Table 36:

NLB Group headcount by countries

Country

2,776

2,856

-80

2,366

2,515

-149

1,013

1,025

-12

993

995

-2

502

478

24

406

410

-4

Croatia

49

41

8

Germany

Switzerland

NLB Group Total

8,107

8,322

-215

Employer of choice

Human Resource teams across the Group work closely

together, consistently sharing best practices and

introducing novelties to their workplaces by staying up-

to-date with evolving trends. These efforts contribute to

a stimulating work environment and support employee

well-being.

Recognition of the implementation of best practices

across the Group is reflected in the Top Employer

Certificate, now held in three countries. In 2025, NLB

received the ‘Slovenia Top Employer’ recognition for the

consecutive year, while NLB Komercijalna Banka,

Beograd received the recognition for the second time.

In addition, NLB Banka, Banja Luka and NLB Banka,

Sarajevo achieved the certification for the first time,

demonstrating excellence in HR practices. Awarded

by the Top Employers Institute, this recognition reflects

excellence in people strategy, leadership, digitalisation,

talent acquisition and development, performance

management, sustainability, and more.

The Group will continue to adopt new practices and

adapt to workplace trends, with the ambition to become

the leading employer in the banking and financial

services sector in the region.

Strengthening strategic

capabilities and future-

ready skills across the

In 2025, the Group continued to evolve its training

function into a more strategic enabler of long-term

objectives. A key strategic shift was the deliberate

rebalancing of learning portfolios toward future-

oriented capabilities. Nearly one-third of all learning

hours were dedicated to future skills, including

digital tools, data and analytics, artificial intelligence,

automation, ESG, and modern leadership competencies.

At the same time, mandatory and professional trainings

remained a strong pillar of the learning framework,

safeguarding regulatory compliance, risk awareness,

and operational resilience. This balanced approach

enabled the Group to simultaneously address current

regulatory requirements while systematically closing

long-term capability gaps.

Self-directed and digital learning further strengthened

the learning culture across the Group. More than 35%

of total learning hours were completed through digital

Retaining recognition as the

in Slovenia,

Serbia,

and BiH

8,107

employees in the Group family

115

channels, including 12% via the Udemy platform,

complementing internal and external instructor-led

trainings. This trend reflects the growing employee

ownership of personal development and proactive skill-

building aligned with both individual career paths and

organisational needs. Through sustained investment in

upskilling and reskilling, NLB Group continues to build

a resilient, adaptable workforce prepared for ongoing

transformation in the banking and financial environment.

Investing in people drives

all-time high engagement

Talent cultivation

Talent development remained a strategic priority in

2025, with a strong emphasis on deploying talents into

strategic initiatives and fostering on-the-job learning,

coaching, and mentoring. By strengthening programmes

for leadership growth, professional expertise, and the

advancement of young talent, the Group is ensuring the

future-ready experts and successors. One of the key

achievements in 2025 included strengthening the

succession pipeline, accelerating readiness for critical

roles, and improving the delivery of strategic projects

through talent deployment.

Developing our current

and future leaders

The development of leadership capabilities at all

levels remains one of the most important initiatives of

the Group’s HR strategy. In 2025, the Group launched

an extensive leadership academy, offering tailored

programmes for different leadership levels across

the organisation. As an integral component of people

management and culture transformation, these

programmes focus on future-oriented leadership skills

essential for driving long-term success.

Leaders across the Group also participated in

360-degree feedback assessments, providing valuable

insights into their managerial and leadership styles and

their impact on the organisational culture. This initiative

served as the foundation for individual development

plans and will guide future Group-wide leadership

development initiatives.

Well-being & health

Employee well-being remains a core pillar of the Group’s

people management approach. In 2025, the Bank

continued to invest in the physical and mental health

of its employees through enhanced benefits, including

the introduction of additional medical insurance

for employees and, partially, their family members.

Continued access to anonymous psychological support

services, and a broad portfolio of supplementary

benefits – including those under the Family Friendly

certification – further demonstrate the Group’s long-

term commitment to a supportive and health-oriented

working environment.

During the year, the Group further strengthened

awareness of employee well-being by addressing key

topics such as stress management, healthy lifestyle

habits, mental health, mindfulness, personal energy

management, and effective communication. A wide

range of initiatives and programmes were implemented

at both the local and regional levels within the Healthy

Bank programme and the Family Friendly certification

framework to ensure relevance to diverse employee

needs across markets.

Flexible working arrangements also reflect the Group’s

core value of Improving Lives. Where operationally

feasible, employees are offered the opportunity to work

remotely to support a better work-life balance. By the

end of 2025, this option was available in nearly all Group

countries, with 32% of employees using this option.

In Slovenia, 33% of employees have a remote work

arrangement by contract.

Employee engagement

The Group continues to place strong emphasis on

employee engagement and motivation. In 2025, the

employee engagement survey recorded an all-time

high participation rate of 84.7%, and as well the highest

employee engagement score to date, with 59% of

employees classified as engaged. The employer’s Net

Promoter Score of 29 further confirms that employees

act as strong ambassadors for the Group.

Looking ahead, the Group will continue to enhance

employee engagement through targeted follow-up

actions, constructive dialogue, and ongoing employee

listening initiatives.

Figure 65:

NLB Group Employee Engagement comparison

For further information, see the chapter

Own Workforce

in the Sustainability Statement.

Employer Net Promoter Score

29

On average, employees spent

7.8 days

on training activities

Engaged

Not engaged

Actively disengaged

59%

30%

54%

36%

116

The Bank’s corporate governance is grounded in the legislation of the RoS, particularly (but not exclusively) the

Companies Act (ZGD-1) and the Banking Act (ZBan-3)

16

, the Decision of the BoS on Internal Governance, Management

Body, Adequate Internal Capital Assessment Procedure for Banks and Savings Banks, as well as relevant the EBA

Guidelines on internal governance, the EBA Guidelines on the assessment of the suitability of members of the

management body and key function holders, the EBA Guidelines on prudent remuneration, relevant EU regulations

regarding sustainability issues, and other applicable RoS and EU regulations.

16 For the whole business year 2025 the Banking Act (ZBan-3) was valid, while on

12 March 2026 a new Banking Act (ZBan-4) came on force, therefore in this annual report we refer exclusively to provisions of ZBan-3.

Apart from a binding legal framework, the Bank

complies with the Slovenian Corporate Governance

Code for Listed Companies. This Code stipulates

governance, management, and supervision based

on the “comply or explain” approach applicable to

companies listed on the

Ljubljana Stock Exchange

Any deviations from the Code’s recommendations are

disclosed in the NLB Group Annual Report, within the

Corporate Governance Statement of NLB. This statement

is prepared in accordance with Article 70 (Paragraph 6)

of the Companies Act, and is also available on the

Bank’s website

Rules and procedures

The Bank’s Corporate Governance encompasses the

processes through which the Bank’s objectives are

set and pursued (directed and controlled). Lately,

it has also become an efficient way to channel

investor-driven sustainability initiatives. Corporate

governance principles define the distribution of

rights and responsibilities among the Bank’s different

stakeholders, including the Management Board of NLB

and Supervisory Board of NLB, shareholders, investors,

creditors, auditor, regulators, and other relevant

stakeholders, and set out the rules and procedures

for decision-making in corporate affairs. The most

important rules and procedures are:

Articles of Association of NLB d.d.

NLB operates under a two-tier governance system, as

defined by the ZBan-3 and ZGD-1. The Management

Board manages the Bank’s operations, and the

Supervisory Board oversees and supervises the

Management Board’s work. Shareholders exercise their

rights at General Meetings of Shareholders.

For more information, refer to the Bank’s website,

Corporate Governance.

Corporate Governance Policy

of the NLB and the NLB Group

Governance Policy

The Corporate Governance Policy of NLB, which

forms the Bank’s corporate governance framework, is

drawn up jointly by the Management and Supervisory

Boards of the Bank. In this Policy, the Management and

Supervisory Boards publicly disclose commitments to

shareholders, clients, creditors, employees, and other

stakeholders as a whole, and explain how the Bank is

managed and supervised, as well as adopt decisions

on which corporate governance code the Bank follows,

as outlined on the

Bank’s website

. The Corporate

Governance Policy of NLB should be read together

with the NLB Group Governance Policy which defines

and governs the corporate governance principles and

mechanisms of the Group members, excluding NLB.

NLB Group Code of Conduct

NLB Group Code of Conduct

defines the Group’s

values, mission, and core principles of conduct, together

with a set of guidelines to which the Group is committed.

The Code outlines the values and basic principles

of ethical business conduct that the Group respects,

promotes, and expects all Group members to follow.

Operating with integrity and responsibility is key to the

Group’s corporate culture. The Code demands that every

employee, regardless of their role or work location, and

every other stakeholder of the Group, comply with the

highest standards of integrity.

117

Bank’s governing

bodies

The Bank’s corporate governance is based on a two-tier

system, with the Management Board responsible for

day-to-day operations and the Supervisory Board

providing oversight of the Management Board’s activities.

General Meeting of

Shareholders

Shareholders exercise their rights related to the

Bank’s operations at the General Meetings of NLB.

Decisions adopted by the General Meeting include,

among others, adopting and amending the Articles

of Association of the NLB, determining the use of

distributable profit, granting of discharge of duties to

members of the Management and Supervisory Boards,

approving changes to the Bank’s share capital,

appointing and recalling the Supervisory Board

members representing shareholders’ interests, setting

remuneration and profit-sharing for Management

Board members and employees, and approving the

annual schedules and characteristics of issues of

securities convertible into shares and equity securities

of the Bank.

At the 44

General Meeting, held on 16 June 2025,

shareholders took note of the adopted NLB Group

Annual Report 2024 and adopted the Report of

the Supervisory Board of NLB on the results of the

examination of the NLB Group Annual Report 2024. They

also adopted the Report on Remuneration for members

of the Management Body of NLB for the business

year 2024 and with the Additional Information to the

Report on Remuneration for business year 2024 on the

basis of SSH’s Baselines. Furthermore, shareholders

acknowledged the adopted annual Internal Audit

Report for 2024, the positive opinion of the Supervisory

Board, and the adopted decision on the election of a

new Supervisory Board of NLB.

The General Meeting also adopted decisions on the

allocation of distributable profit for 2024 and the first

tranche of dividend payout in the total amount of EUR

128.6 million, or EUR 6.43 gross per share, and granted a

discharge from liability to members of the Management

and Supervisory Boards.

At the General Meeting, shareholders also re-appointed

Islam Osama Bahgat Zekry for another four-year term

as a member of the NLB Supervisory Board, effective

immediately upon appointment. Due to the fact that the

term of Tadeja Žbontar Rems expired at the conclusion

of the General Meeting, shareholders also took note

of the election of Tatjana Jamnik Skubic as the new

employee representative by the NLB Works Council.

Shareholders also confirmed the further improved

Remuneration Policy for the Members of the Supervisory

Board of NLB d.d. and the Members of the Management

Board of NLB d.d., the Policy on the provision of diversity

of the Management Body and senior management

in NLB d.d., the Policy on the selection of suitable

candidates for members of the Supervisory Board in

NLB d.d., and changes to the Determination of payment

to members of the Supervisory Board of NLB d.d. and its

committees.

At the 45

General Meeting, held on 15 December 2025,

shareholders confirmed the payment of the second

dividend tranche in the total amount of EUR 128.6

million, or EUR 6.43 gross per share. Combined with the

first tranche of EUR 128.6 million, paid in June, the total

dividend payout for 2025 amounted to EUR 257.2 million

(EUR 12.86 gross per share), cumulatively representing

50% of the previous year’s profit and corresponding to a

dividend yield of more than 7%.

Further details on the activities of the General Meeting

of the Shareholders are available in the chapter

Corporate Governance Statement of NLB

and on the

General Meeting of Shareholders

Supervisory Board

Management Board

118

Supervisory Board

17

According to the Articles of Association of the NLB d.d., the Supervisory Board of NLB may consist of up to 12

members, eight representing the interests of shareholders and four representing the interests of employees.

Members representing shareholders’ interests are elected and recalled by the General Meeting from candidates

proposed either by shareholders or by the Supervisory Board. Members representing employees’ interests are

appointed by the Works Council of NLB, in accordance with the conditions for Supervisory Board membership set

out in the applicable regulations and the Articles of Association of NLB d.d.

17 Incorporation by reference: The reference is made to this chapter from the Sustainability Statement chapter GOV-

1 The role of administrative, supervisory and management bodies.

At the beginning of 2025, the Supervisory Board

consisted of the following members: Primož Karpe

(Chairman), Shrenik Dhirajlal Davda (Deputy Chairman),

Islam Osama Bahgat Zekry, André-Marc Prudent-

Toccanier, Mark William Lane Richards, Cvetka Selšek,

Natalia Olegovna Ansell, Luka Vesnaver, and employee

representatives Tadeja Žbontar Rems and Sergeja

Kočar. The mandate of Islam Osama Bahgat Zekry

expired in 2025, while the mandates of Shrenik Dhirajlal

Davda, Mark William Lane Richards, Cvetka Selšek, and

André-Marc Prudent-Toccanier are due to expire in 2027.

Following the expiration of his mandate, Islam Osama

Bahgat Zekry was proposed for re-election and

was reappointed for another four-year term at the

General Meeting of Shareholders in June 2025, with

his mandate commencing on the date of appointment.

At the same General Meeting, shareholders took note

of the election of Tatjana Jamnik Skubic as a new

employee representative by the NLB Works Council.

Tatjana Jamnik Skubic commenced her mandate on 25

August 2025, following the ECB’s decision to issue a no-

objection to her appointment.

At the end of 2025, the Supervisory Board comprised

Primož Karpe (Chairman), Shrenik Dhirajlal Davda

(Deputy Chairman), Islam Osama Bahgat Zekry, Cvetka

Selšek, André-Marc Prudent-Toccanier, Mark William

Lane Richards, Luka Vesnaver, Natalia Olegovna Ansell,

and employee representatives Sergeja Kočar and

Tatjana Jamnik Skubic.

eight

shareholders’

representatives

and two

employees’

representatives

As at 31 December 2025:

Number of members:

Diversity:

out of ten

members were

female (40%),

in line with

NLB d.d.’s

Diversity Policy

119

The composition of the Supervisory Board as at 31 December 2025 is presented in the table below.

Representatives

of Capital

Primož Karpe, MSc

Chairman

Term of office: 2016–2020,

2020–2024, renewed term 2024–2028

Shrenik Dhirajlal Davda, MBA

Deputy Chairman

Term of office: 2019–2023,

renewed term 2023–2027

Luka Vesnaver, MSc

Term of office: 2024–2028

Islam Osama Bahgat Zekry, PhD

Term of office: 2021–2025,

renewed term 2025-2029

Link to CV

Link to CV

Membership in

NLB Supervisory Board committees:

• Nomination Committee (Chairman)

• Audit Committee (Member)

• Operations and IT

Committee (Member)

Membership in

NLB Supervisory Board committees:

• Remuneration Committee

(Chairman)

• Risk Committee (Member)

• Nomination Committee (Member)

• Audit Committee (Member)

• Risk Committee (Member)

Operations and IT Committee

(Deputy Chairman)

• Nomination Committee (Member)

• Remuneration Committee (Member)

Membership in management bodies

of related or unrelated companies:

Angler d.o.o., Zagreb – Director

Membership in management bodies

of related or unrelated companies:

Charity Commission of England

and Wales – Commissioner

and Board Member

IPSO, UK – Lay Member

of the Board

• British Slovenian Chamber

of Commerce – President of

the Management Board

• Managers’ Association of

Slovenia – Member

Alpine Ski Club Olimpija,

Ljubljana – Member of the Board

• Commercial International

Bank, Egypt – Group Chief

Finance & Operation Officer

and Board Member

CIB Housing Association –

Board Member

Telecom Egypt – Non-

Executive Board Member

André-Marc Prudent-Toccanier, MSc

Term of office: 2023–2027

Mark William Lane Richards, MSc

Term of office: 2019–2023,

renewed term 2023-2027

Cvetka Selšek

Term of office: 2023–2027

Natalia Olegovna Ansell, MA

Term of office: 2024-2028

• Risk Committee (Chairman)

Audit Committee (Deputy Chairman)

• Remuneration Committee (Member)

• Operations and IT

Committee (Chairman)

• Remuneration Committee

(Deputy Chairman)

• Nomination Committee

• Audit Committee (Chairwoman)

• Risk Committee

(Deputy Chairwoman)

Committee (Member)

• None

VenCap International plc, UK

– Chairman

Berry Palmer & Lyle Ltd. (BPL Global)

(Lloyds of London Insurance

Broker) – Non-Executive Director

Enza Group Global, Cairo

– Chairman

Managers’ Association of Slovenia –

Member of the Honourable Tribunal

• Slovenian Directors’

Association – Member

Equity Bank Kenya Limited,

Nairobi – Member of the Board

Further details on the activities and composition of the Supervisory Board are available in the chapter

Corporate Governance Statement of NLB

Representatives

of Employees

Tatjana Jamnik Skubic, MSc

Term of office: 2025–2029

• None

Sergeja Kočar, MSc

Term of office: 2020–2024,

renewed term 2024–2028

• None

120

Committees of the

The Supervisory Board appoints committees to

prepare proposals for resolutions passed by the

Supervisory Board, to monitor their implementation,

and to perform other expert tasks. The Bank’s

Supervisory Board has established five collective

decision-making and advisory committees.

Audit Committee

Risk Committee

Nomination

Committee

Remuneration

Committee

Operations and

Information

Technology (IT)

Committee

Cvetka Selšek,

Chairwoman

André-Marc

Prudent-Toccanier,

Chairman

Primož Karpe,

Chairman

Shrenik Dhirajlal

Davda,

Chairman

Mark William Lane

Richards,

André-Marc

Prudent-Toccanier,

Deputy Chairman

Cvetka Selšek,

Deputy Chairwoman

Mark William Lane

Richards,

Richards,

Islam Osama

Bahgat Zekry,

Primož Karpe,

Shrenik Dhirajlal

Davda,

Sergeja Kočar,

Islam Osama

Bahgat Zekry,

Tadeja Žbontar

Rems,

(until 16 June 2025)

Luka Vesnaver,

Sergeja Kočar,

Tadeja Žbontar

Rems,

(until 16 June 2025)

Tatjana Jamnik

Skubic,

(from 25 August

2025)

Natalia Olegovna

Ansell,

Davda,

Tatjana Jamnik

Skubic, Member

(from 25 August

2025)

Luka Vesnaver,

Natalia Olegovna

Ansell,

121

Management Board

18

18 Incorporation by reference: The reference is made to this chapter from the Sustainability Statement chapter GOV-

1 The role of administrative, supervisory and management bodies. The CVs of the Management Board members are not

subject to assurance.

In accordance with the Articles of Association of the NLB d.d., the Management Board consists of three to seven

members, including the President and up to six members. All members are appointed and dismissed by the

Supervisory Board. The President and members of the Management Board are appointed for a five-year term and

may be re-appointed or dismissed in accordance with applicable law and the Articles of Association of the NLB d.d.

In the year that marked the implementation of its

new business strategy, NLB further strengthened

its leadership team. On 20 February 2025, upon the

recommendation of the Management Board, the

Supervisory Board appointed Reinhard Höll as the

seventh member of the Management Board. Following

the required approval from the ECB in early June 2025,

he assumed the position of Chief Transformation Officer

(CTO), responsible for transformation, IT and back office.

On 7 August 2025, the Supervisory Board appointed

Blaž Brodnjak, Archibald Kremser, and Peter Andreas

Burkhardt for another term.

At the end of the year, the composition of the

Management Board was as follows: Blaž Brodnjak

as CEO; Archibald Kremser as Chief Financial Officer

(CFO); Peter Andreas Burkhardt as Chief Risk Officer

(CRO); Hedvika Usenik as Chief Marketing Officer (CMO),

responsible for Retail Banking and Private Banking;

Antonio Argir, responsible for Group governance,

payments, and innovations; Andrej Lasič as CMO,

responsible for Corporate and Investment Banking; and

Reinhard Höll as Chief Transformation Officer (CTO),

responsible for transformation, IT and back office. The

mandates of Hedvika Usenik, Antonio Argir, and Andrej

Lasič are set to expire in April 2027.

As at 31 December 2025:

Number of members:

-year term

of office

Mandate:

As at 31 December 2025, the composition of the Management Board was as follows:

Blaž Brodnjak

CEO (since 2016)

Term of office: 2012–2016, 2016–2021,

renewed term 2021–2026

Peter Andreas Burkhardt

CRO

Term of office:

2013–2016, 2016–2021,

renewed term 2021–2026

Archibald Kremser

CFO

Term of office:

2013–2016, 2016–2021,

Deputy CEO (since 2023)

Other important functions

and achievements:

Over 25 years of experience in

managerial positions across all levels

of international banking groups.

Chairman or member of the

supervisory boards of 13 commercial

banks in six countries, three insurance

companies in three countries,

a leading asset management

company in Slovenia, and a

multinational production group.

Other important functions

and achievements:

Over 24 years of experience

in banking, with a particular

focus in Central Europe.

Chairman or member of the

supervisory boards of several

banks within the Group from

2013 to the present.

Over 25 years of experience in the

financial services industry across

Austria, CEE, and SEE, focusing on

finance and asset management,

strategy and corporate development,

as well as performance

improvement assignments.

Direct responsibility:

Strategy and Business Development

• Legal and Secretariat

• Brand and Communication

• Human Resources and

Organisation Development

• Internal Audit

• Compliance and Integrity

Direct responsibility:

• Global Risk

Credit Risk – Corporate

Credit Risk – Retail

Workout and Legal Support

• Restructuring

• NPE Management and

Legal Proceedings

• Evaluation and Control

• Financial Accounting

and Administration

• Controlling

• Financial Markets

Group Real Estate Management

• Investor Relations

• Data and Artificial

Intelligence Governance

• Procurement

Membership in management or

supervisory bodies of related

or unrelated companies:

Chairman of the Supervisory Board

of NLB Lease&Go, leasing, Ljubljana

President of the Supervisory Board

of the Bank Association of Slovenia

Member of the Board of Directors of

Basketball Club Cedevita Olimpija

Member of the EBF Board of the

European Banking Federation

Member of the Management

Board of the Foundation for the

Pediatric Clinic in Ljubljana

Membership in management or

supervisory bodies of related

or unrelated companies:

Chairman of the Supervisory

Board of NLB Banka, Sarajevo

Chairman of the Board of Directors

of NLB Komercijalna Banka, Beograd

122

Antonio Argir

Responsible for Group governance,

payments, and innovations

Term of office: 2022–2027

Andrej Lasič

CMO (responsible for Corporate

and Investment Banking)

Term of office: 2022–2027

Hedvika Usenik

CMO (responsible for Retail

Banking and Private Banking)

Reinhard Höll

CTO (responsible for transformation,

IT and back office)

Term of office: 2025–2030

Under the management of Antonio

Argir, NLB Banka, Skopje marked

exceptional growth across all

segments of its operations and

perceived itself as the most

innovative bank in the market,

with a significant increase in

the bank’s profitability and a

fivefold rise in the share price.

Over 28 years of experience in

corporate and investment banking

within international banking groups.

Over 23 years of experience within

international banking groups,

including more than 19 years

of managerial experience.

• Chartered Financial Analyst

(CFA) – CFA Institute, USA

Chartered MCSI – Chartered Institute

for Securities & Investment, UK

• Chartered Wealth Manager

– Chartered Institute for

Securities & Investment, UK.

• Group Steering

• Cash Processing

• Payments Processing

Payments and Cards Services

and Business Development

CSA & Cross-border Financing

• Large Corporates

• Small and Mid-Corporates

• Trade Finance Services

Investment Banking and Custody

NLB Group Corporate and

Investment Banking Management

• Private Banking

• Contact Centre 24/7

• Distribution Network

• Customer, Product Management,

and Digital Services

• Development of Lending

Solutions for Retail

• Transformation

• IT Delivery

Business Intelligence and Analytics

IT Governance and Architecture

• IT Infrastructure

• Financial Instruments Processing

Corporate Clients Review and

Account Products Delivery

• Corporate Loans and

Trade Finance Delivery

• Retail Banking Processing

Chairman of the Supervisory

Board of NLB Banka, Podgorica

Chairman of the Board of Directors

of NLB Banka, Prishtina

President of the Board of

Directors of Macedonian-

Slovenian Business Club

Board of NLB Banka, Banja Luka

Member of the Board of Directors of

NLB Komercijalna Banka, Beograd

Deputy President of the

Supervisory Board of the Bank

Association of Slovenia

Chairwoman of the Supervisory

Board of NLB Skladi, Ljubljana

Chairwoman of the Supervisory

Board of NLB Banka, Skopje

Member of the Management

Board of the Institute for

Economic Research

Board of British – Slovenian

Chamber of Commerce

• None

Further information about the work and composition of the Management Board is available in the chapter

Corporate Governance Statement of NLB.

123

Collective decision-making bodies

The Management Board appoints different committees, commissions, boards, and working bodies to execute relevant tasks within the powers of the Management Board.

Corporate Credit Committee

Assets and Liabilities Management Committee

of the NLB Group

NLB Operational Risk Committee

Change the Bank Committee

Chairman: CRO

Chairman: CFO

Chairman: CRO

Chairman: CEO

Number of members: 7

Number of members: equal to the number of

appointed members of the Management Board

Number of members: 16

Number of members: equal to the number of

appointed members of the Management Board

The Committee is responsible for determining

credit ratings, deciding on the reclassification

of clients, and approving commercial banking

investment transactions and limits that

exceed the directors’ competences. It also

adopts decisions on investment transactions

in commercial banking within the Bank’s

statutory powers (companies, banks, and

financial institutions), on operations with

clients in intensive care, and NPL. The

committee also approves deviations from

interest rates and tariffs, changes of individual

impairments and provisions, and provides

non-binding opinions on credit decisions for

NLB Group’s materially important clients.

Committee meetings are generally

convened once a week.

The Committee monitors developments in the

macroeconomic environment and analyses

the balance sheet, including changes and

trends in the assets and liabilities of the Bank

and the Group. It adopts resolutions and

issues guidelines to ensure an appropriate

structure of the Bank’s and the Group’s

balance sheet. Committee meetings are

generally held on a monthly basis.

The Committee is responsible for monitoring,

guiding, and supervising operational

risk management in the Bank and

transferring methodology to the Group

members. The Committee meetings are

generally held once every two months.

The Committee is responsible for adopting

decisions related to the development

portfolio to transform the Bank and decisions

associated with adopting the development

guidelines. The Committee meetings are

generally convened once a month.

Data and Artificial Intelligence Steering

Committee

in NLB d.d.

Risk Committee

Group Real Estate Management Committee

Sales Committee

Chairman: CFO

Chairman: CMO (responsible for

Corporate and Investment Banking)

Number of members: 4

Number of members: 5

Number of members: 6

Number of members: 16

The Committee is responsible for defining the

directions and priorities for data governance,

advanced analytics, and artificial intelligence

in accordance with NLB‘s business goals. It

endorses and oversees the implementation

of the data, advanced analytics, and

(generative) artificial intelligence plan, and

establishes guidelines for these areas across

all NLB Group members. The Committee also

approves standards and methodologies for

the implementation of the data governance

and data quality policy, the policy of using

artificial intelligence, and the standardisation

of internal reporting. In addition, it resolves

escalations related to data, advanced analytics,

and artificial intelligence, and verifies data

ownership by data domain. Committee

meetings are generally convened quarterly.

The Risk Committee is a decision-making

and advisory body. It is responsible for

approving certain internal acts, preparing

proposals for topical or selected strategic

guidelines, monitoring credit portfolio

quality, topical or certain areas/segments

of credit, commercial and other related risks

within NLB and NLB Group. The Committee

reports to the Management Board on its

conclusions, recommendations, and other

relevant changes. Committee meetings

are generally convened quarterly.

The Committee provides opinions and

makes decisions for real estate in use (“in-

use” real estate), real estate intended for

divestment (“run-off” real estate), real estate

projects (“development”), and general

real estate matters. Committee meetings

are generally convened once a week.

The Sales Committee adopts decisions

on managing the range of products

and services, and client relationships in

sales. As a rule, Committee meetings are

generally convened once a week.

The Management Board also appointed working bodies that operate at a lower level:

Committee for New and Existing Products

Money Laundering Prevention Committee

Corporate Customer Acceptability Committee

Retail Credit Committee

124

Advisory bodies of the Bank’s Management Board

Watch List Committee

NLB Group Non-Performing Assets

Committee

NLB d.d. Sustainability Committee

Group Information Security Steering

Chairman: Director of NPE Management

and Legal Proceedings

Chairman: CEO

Number of members: 8

Number of members: 7

Number of members: 21

The Watch List Committee monitors the

progress of activities for clients on the

Watch List. Committee meetings are

generally convened on a quarterly basis.

The NLB Group Non-Performing Assets

Divestment Committee monitors the

operations of Non-Core Group Members

and issues opinions, recommendations,

and initiatives. Committee meetings are

generally convened on a quarterly basis.

The Committee oversees the integration

of the ESG factors into the business model

of NLB d.d. and the NLB Group members

in a focused and coordinated manner

across the company. It issues opinions,

recommendations, and initiatives, and

takes relevant decisions when needed.

The Committee discusses, develops,

and approves sustainability strategies,

policies, initiatives, methodologies, KPIs,

and other applicable procedures. It also

influences sustainability-related strategic

objectives and monitors their development

and realisation. Committee meetings are

The Committee focuses on operational

reporting that is not part of regular

reporting to the Management Board,

in relation to ensuring information and

cyber security, escalating open measures

and expired measures that require the

involvement of members of the NLB Group,

reporting on the status of implementation

of plans and projects, and the state of risk

management in the field of information and

cyber security. In addition, the Committee

preliminarily considers strategies and other

technical and organisational measures to

reduce the risks of information and cyber

security. Committee meeting are generally

convened once every two months.

NLB Group’s governance

As the parent bank, NLB implements the corporate and

business governance of Group members in accordance

with EU and BoS legislation, local legislation, and the

regulatory requirements applicable to respective Group

members, while also adhering to internal policies, ECB

guidelines, and other relevant regulations.

The NLB Group Governance Policy comprehensively

defines the Group’s operating model through corporate

and business governance rules, principles, criteria,

and mechanisms. These elements outline the roles,

authorisations, and responsibilities of relevant

stakeholders, ensuring coordinated action across

the Group and supporting the achievement of the set

business goals.

The NLB Group Governance Model is structured around

three key pillars:

1. Corporate Governance

, which is implemented in line

with fundamental corporate rules and governance

principles. It encompasses the exercise of shareholder

voting rights at the General Meeting of NLB Group

members, the proposal of candidates for the

supervisory bodies of NLB Group members, and the

provision of professional support to the supervisory

bodies of NLB Group members. It also participates in

the selection process for management positions within

NLB Group members, and proposes candidates for

various committees across the Group.

2. Business Governance

, which is carried out through

mechanisms that ensure efficient business guidance

and oversight. This includes the establishment of

a formal business governance framework through

Group Steering, as well as the standardisation and

harmonisation of operations across the NLB Group

through Competence Lines.

3. Internal Control Functions

serve as the second and

third lines of defence. In addition to standardisation

and harmonisation within their respective areas,

these functions oversee the implementation of

Group rules and requirements. They include

Internal Audit, Risk Management and Compliance,

including AML, Information Security, Prevention and

investigation of fraud to the detriment of the bank,

and Physical Security.

125

Figure 66:

NLB Group Governance Model

(i) Including also AML, CISO, Prevention and investigation of fraud to the detriment of the bank, and Physical Security.

The NLB Group consists of NLB and Group members,

classified as follows:

financial core members

banks, leasing companies,

and asset management companies;

non-financial core members

: real estate management

companies, a company providing IT operations, and

other non-financial companies;

non-core members

companies in the wind-down

process or entities considered non-strategic for the

NLB Group.

At the end of 2025, the Group comprised 29 members,

four fewer than in the previous year, reflecting the

following status changes:

the merger of SLS HOLDCO, Ljubljana with Summit

Leasing Slovenija, Ljubljana in May 2025;

the cessation of business operations of ARG –

Nepremičnine and its deletion from the court register in

May 2025;

the merger of NLB Lease&Go, leasing, Ljubljana, with

Summit Leasing Slovenija, Ljubljana, followed by its

renaming to NLB Lease&Go, leasing Ljubljana in July

2025; and

the completion of the liquidation of OL Nekretnine in

liquidation, Zagreb in December 2025, with its deletion

from the court register in early January 2026.

Competence Lines, as defined in the current NLB Group

Governance Policy, serve as the primary business

governance counterparts for the Group members. They

are responsible for harmonising and standardising

operations across the Group and represent the highest

level of the business governance hierarchy. Competence

Lines consist of professional, competent, and qualified

teams that are fully or predominantly dedicated to the

Group-level activities.

The governance of the two subgroups – leasing

and asset management – is clearly defined, with

NLB responsible for the business and corporate

management of its direct subsidiaries, which act as

parent companies of the respective subgroups. Each

parent company of the subgroup, in turn, is responsible

for the business and corporate governance of its

direct subsidiaries, in line with NLB Group rules and

requirements, where applicable. NLB has established

governance monitoring mechanisms over all subgroups.

The legal and organisational structure of the banking

group, including descriptions of the internal governance

arrangements, close links arrangements, and the

arrangements regarding the governance of subsidiaries,

is available on the Bank’s website.

Sustainability Management

General Assembly of NLB

Supervisory Board of NLB

Management Board of NLB

Supervisory Bodies

of NLB Group members

Management Boards

of NLB Group members

Business Governance

Competence Lines

Group functions

Competence Centres

Centres of Excellence

Group domains

Internal Control Functions

Internal Audit

Compliance

General Assembly

126

Compliance and Integrity

The Group systematically approaches compliance, addressing the complexities of evolving regulatory requirements

and ensuring that employees and decision-makers understand and prioritise regulatory objectives. In line with

commitment, the Group continues to strengthen its compliance function and enhance operational due diligence,

reinforcing a culture of integrity and accountability across all levels of the organisation.

19 Core financial members included, excluding NLB.

A strong culture of compliance is embedded into the

Group’s day-to-day operations to support its business,

contribute to its robust internal control environment, and

mitigate compliance risks.

The Compliance and Integrity function addresses the

following areas:

prevention and investigation of fraud detrimental to the

bank;

prevention of money laundering and terrorist financing

(MLTFP), and implementation of restrictive measures;

personal data protection (DPO);

information security (CISO);

regulatory compliance;

prevention of corruption and bribery (ABC) and

management of conflicts of interest;

prevention of abuse on the financial instruments

market;

cooperation in the assessment of the suitability of

members of the management body and key function

holders;

efficient, consistent, and proportionate actions in the

event of identified deviations from compliance and

integrity requirements;

cooperation within the system of internal controls;

promotion of general professional ethics;

physical/technical security.

Group-wide ethics and

integrity standards and

prevention

Through its business compliance programme, the

Group upholds the highest standards of ethics, integrity,

transparency, and sustainable conduct, thereby

fostering trust, accountability, and long-term value

creation for stakeholders and the broader community.

culture, ethical governance and integrity, and regulatory

compliance

in the Sustainability Statement.

Prevention of money

laundering and terrorism

financing, and financial

sanctions compliance

The Group fully complies with applicable regulatory

frameworks on Anti-Money Laundering and Countering

the Financing of Terrorism (AML/CFT), including

guidelines and standards issued by the EBA, BoS, and

other competent authorities. As an EU member state, the

Republic of Slovenia is subject to the European AML/CFT

Directives, which transpose the recommendations of the

Financial Action Task Force

into EU legislation.

Effective mitigation of risk related to money laundering,

terrorist financing, and breaches of financial sanctions

is of paramount importance for the Group. Accordingly,

the Group applies strict and unified policies, procedures,

and technological solutions in the AML/CFT area. The

same principles also apply to the Group’s framework on

financial sanctions compliance.

AML and

prevention of financing of terrorism

in the Sustainability

Statement.

Information security and

personal data protection

The Group operates a robust information security

and data protection framework that is aligned with

international standards, regulatory requirements

(including DORA), and the three lines of defence

model. This framework strengthens cyber resilience,

risk management, and GDPR compliance across

all operations. In 2025, the framework was further

enhanced through the harmonisation of policies,

regular cyber risk assessments, employee training, and

consolidated security reporting.

For further information, see the chapters

Cybersecurity

Cyber security and personal data protection

in the

Sustainability Statement.

2,283

4,729

19

the number of employees who

completed anti-corruption

training in 2025

1,001

3,442

19

the number of employees who

participated in the 2025 Ethics

and Compliance Survey

62

data subject requests under

GDPR submitted to NLB in 2025

127

Investigation and

whistleblower protection

The Group has implemented a unified system and

standards for preventing, detecting, and investigating

suspected misconduct that could adversely affect the

Group. This framework also ensures the protection of

whistleblowers in line with applicable legislation and

internal policies.

For further information, see the chapters

Managing

concerns about unlawful or harmful conducts

Whistleblower protection

128

Internal Audit reviews key risk areas in the Group’s operations, provides advisory support to management at

all levels, and deepens the Bank’s understanding of operations. Its primary purpose is to provide the Bank’s

Management and Supervisory Boards with objective and independent assurance and advisory services designed to

add value and improve the effectiveness of the Bank’s operations.

Internal Audit is an independent and objective assurance

and advisory function designed to add value and

enhance the Bank’s operations, and reports primarily to

the Supervisory Board of NLB and its Audit Committee,

and secondarily to the Management Board. It supports

the achievement of the Bank’s objectives through a

systematic and disciplined approach to evaluating

and improving the effectiveness of governance, risk

management, and internal control processes.

Through independent, risk-based assurance and

advisory activities, Internal Audit strengthens the Bank’s

ability to create, protect, and sustain value by providing

insight, advice, and foresight to the Management and

Supervisory Boards.

Performed audits

Internal Audit carried out its activities independently

and in accordance with the Internal Audit Plan, as

approved by the Management and with the consent of

Supervisory Boards. Based on its internal methodology

and a comprehensive risk assessment for 2025, the

Internal Audit planned 110 audits. By 31 December 2025,

100 audits have been completed, covering various

areas of operations within the Bank and the Group.

These included 24 branch inspections, six Group audits,

two joint audits conducted with a local auditor, three

quality reviews of Internal Audit functions in banking

subsidiaries, and eight newly initiated audits.

In addition, the Internal Audit participated as

an advisor on several strategic projects and

observed the integration process. Five planned

audits were postponed due to objective reasons.

Most recommendations issued in 2025 have been

implemented within the agreed deadlines.

Implementation of

uniform rules

Internal Audit continuously strives to enhance efficiency

across the Group. Its focus areas include monitoring the

implementation of audit recommendations, providing

training and education, advising management, and

ensuring a high standard of quality and professionalism

within the internal audit function across the Group.

In November 2025, the Internal Audit Manual was

revised to incorporate minor improvements to internal

audit processes. Internal Audit also establishes

uniform operating rules for the internal audit function,

and regularly monitors compliance with these rules

throughout the Group.

Following the highest

standards

In 2022, an external quality assessment of the internal

audit function was conducted. The review confirmed that

Internal Audit and other internal audit services across

the Group operate in compliance with the following:

40

Internal Audit experts

100

Internal Audit assignments

conducted

Code of

Internal

Auditing

Principles

Code of

Ethics of

an Internal

Auditor

Standards

for the

Professional

Practice

of Internal

Auditing

Banking Act

(ZBan-3) or other

relevant laws

regulating the

operations of a

Group member

129

Corporate Governance Statements

130

Statement of Management’s Responsibility

20 MFIA,

Official Gazette of the RoS, No. 77/18, 17/19 – corr., 66/19, 123/21, 45/24 and 77/25

In accordance with the provisions of Article 134

(Paragraph 2, Point 3, 2

nd

bullet) of the Market and

Financial Instruments Act

20

, the Management Board

hereby confirms the statements made in the business

report, which are in accordance with the attached

financial statements as of 31 December 2025, and

represent the actual and fair financial standing of the

Bank and the NLB Group as well as their operating

results in the year that ended 31 December 2025.

The Management Board confirms that the Business

Report gives a fair view of developments and operating

results of the Bank and the Group and their financial

standings, including a description of the material

types of risks the Bank and the NLB Group companies

included in the consolidation are exposed as a whole.

Ljubljana, 24 March 2026

Management Board of the NLB d.d.

Chief Executive Officer

131

Authorisation to Perform Banking Services

NLB has an authorisation to perform banking services

pursuant to Article 5 of the Banking Act (ZBan-3).

Banking services are the acceptance of deposits and

other repayable funds from the public and the granting

of credits for its own account.

The Bank may perform the following mutually

recognised financial services, pursuant to Article 5 of

the ZBan-3:

1. receiving deposits;

2. granting

of loans, including:

consumer loans,

mortgage loans,

purchase of receivables with or without recourse

(factoring),

financing of commercial transactions, including

export financing based on the purchase of non-

current non-past-due receivables at a discount

and without recourse, secured by financial

instruments (forfeiting);

4. payment services and electronic money issuing

services;

5. issuance and management of other payment

instruments (i.e. travellers’ cheques and banker’s

drafts) in the part in which this service is not

included in service of previous point of this Article;

6. issuing of guarantees and other commitments;

7. trading for own account or for the account of

clients:

in money-market instruments,

in foreign exchange, including currency

exchange transactions,

financial futures and options,

exchange and interest-rate instruments,

in transferable securities;

8. participation in securities issues and the provision

of associated services;

9. corporate consultancy with regard to capital

structure, operational strategy and related matters,

and consultancy and services in connection with

corporate mergers and acquisitions;

10. monetary intermediation on interbank markets;

11. advice on portfolio management

(investment consulting);

12. safekeeping of securities and other related

services;

13. credit rating services: collecting, analysing

and disseminating information regarding

creditworthiness;

14. leasing of safe deposit boxes;

15. investment services and transactions, and ancillary

investment services in accordance with the Market

in Financial Instruments Act.

The Bank may perform the following additional

financial services, pursuant to Article 6 of the ZBan-3:

1. insurance agency service pursuant to the law

governing the insurance industry

4. custodian and administrative services according

to the law governing investment funds and

management companies

5. credit brokerage for consumer and other types of

loans

6. other services or transactions that, taking into

account the manner in which they are provided

and the risks to which a bank is exposed in the

provision thereof, have similar attributes to

mutually recognised financial services or ancillary

financial services:

6.1. brokerage of intermediation in

financial leasing

6.2. sale and purchase of investments in gold

Authorisation to perform banking services is published

on the official website of BoS.

132

21 The Companies Act (ZGD-

1);

Official Gazette of the RoS, No. 65/09

and consecutive changes.

22 The Corporate Governance Policy of NLB was adopted in February

2023.

23 Slovenian Corporate Governance Code for Listed Companies, December

2024, took effect on 1 January 2025.

24 Published on the

25 ZGD-1M,

Official Gazette of the RoS, No. 102/24

, valid from 18 December 2024.

Pursuant to Article 70, paragraphs 6 and 7 of the

Companies Act (ZGD-1)

, NLB hereby gives the following

Corporate Governance Statement of NLB as part of

the Business Report of the NLB Group Annual Report

2025. The primary function of this statement is to inform

investors on the coherence of the Bank’s corporate

governance system.

1. COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

1.1. References to the Slovenian

Corporate Governance Code for

Listed Companies

The recommended best corporate governance practices

contribute to a transparent and understandable

corporate governance system that promotes the

confidence of domestic and foreign investors, as well

as the employees, other stakeholders (shareholders,

regulators, suppliers, etc.), and the public. A decision on

which code the Bank would follow was made jointly by

the Management and the Supervisory Boards of the Bank

by adopting the Corporate Governance Policy of NLB

22

Compliance with the Slovenian Corporate Governance

Code for Listed Companies

23

is explained in this

statement on a “comply or explain basis”, in which the

Bank provides an explanation regarding deviations,

the reasoning for non-compliance with a certain

recommendation, or alternative practices performed

mostly due to stricter banking regulation. The statement

refers to the Bank’s system of corporate governance

from the beginning to the end of the financial year,

which also corresponds to the beginning and the end of

the calendar year (from 1 January until 31 December).

The Corporate Governance Statement of NLB is also

published as a standalone document in the Corporate

Governance chapter on the Bank’s website.

NLB strives to increase the level of its business

transparency and informs shareholders and other

expert communities in line with the Guidelines on

Disclosure for Listed Companies (Ljubljana Stock

Exchange, 25 March 2024), and in line with the Rules and

Regulations of the Luxembourg Stock Exchange, as well

as in line with the Rules of the London Stock Exchange

through Regulatory News Services (RNS) of the London

Stock Exchange.

NLB also upholds its own code of conduct. The

Group Code of Conduct

, which was revised in February

2025, is a standardised document for all members of the

Group that defines values, lays down the standards of

ethical business conduct, and serves as the guideline for

all Bank’s relationships regardless of whether it involves

clients, competitors, business partners, state authorities,

regulators, shareholders, or internal relationships

between employees. At the same time, it serves as the

basis for the Group’s values and basic principles of

conduct, which provide specific conduct guidelines to its

employees. This approach aims to ensure compliance

with all applicable laws, regulations, and standards. It is

published on the

Regarding the representation of gender in the

Management and Supervisory Boards, the NLB

implements an internal Policy on the Provision of

Diversity of the Management Body and Senior

Management (June 2025), which defines the principles

and procedures that promote gender-balanced

planning for the Management and Supervisory Boards,

and for senior management.

24

The Corporate Governance system of the Bank and

all relevant information on the Bank’s management

that exceeds the requirements of Article 70 of the

Companies Act (ZGD-1) are published in the chapter

of this Annual Report. Additional

aspects of the functioning of the Bank’s managing

bodies are described in the chapter

Governance

of this Annual Report, as well as in the

Corporate Governance Policy of NLB published on the

NLB’s website

Information on ESG Risk Management

for the year 2025 is described in the

as part of this Annual Report. In accordance

with the amendments introduced by ZGD-1M

25

,

information on the Diversity Policy is presented in the

following chapter. The Diversity Policy, Remuneration

Policy, and ESG risks are also described in the

Pillar 3

Disclosures

, prepared in line with Basel standards.

133

2. COMPLIANCE WITH THE SLOVENIAN CORPORATE GOVERNANCE CODE

FOR LISTED COMPANIES

26 Recent changes are primarily the result of alignment with the amendment to the Companies Act (ZGD-1M) and the development of good corporate governance practices (diversity, remuneration and independence).

The Code provides recommendations on good

management, control, and management practices for

public joint-stock companies whose shares are listed on

the organised market in Slovenia. In 2024, the Code was

updated and entered into force on 1 January 2025. The

companies should apply the recommendations of this

Code for the first time when preparing the Corporate

Governance Statement for the 2025 financial year

26

The Bank does not follow, partially implements, or

adheres to different, in most cases stricter, banking

regulations with regard to the following recommendations:

Recommendation 7.4:

The Sustainability Policy of

NLB d.d. and NLB Group contains basic due diligence

guidelines and measures for identifying risks and

prevention of serious harm in relation to areas that

are defined in this recommendation. Additionally, due

diligence guidelines and measures for identifying risk

are further elaborated in the Policy on the Respect

for Human Rights in NLB and the NLB Group and are

implemented in other domain-specific policies covering

respective business areas in the NLB Group.

Recommendation 12.1:

In assessing a candidate’s

eligibility to be a Supervisory Board member, statutory

criteria are applied. However, according to the Policy

to Assess the Suitability of the Management and

Supervisory Board Members in NLB, it is not necessary

for candidates to have a certificate evidencing their

specialised professional competence for membership

on a Supervisory Board, such as the Certificate of the

Slovenian Directors’ Association, or any other relevant

certificate. However, all strict conditions must be fulfilled

according to banking legislation, including a wide range

of knowledge, skills, and experience.

Recommendation 14.2:

Currently, valid Rules of

Procedure of the Supervisory Board of NLB d.d.

(November 2024) are prepared according to strict rules

governing banks. They do not include provisions on the

Agreement on access to the archives after expiration

of the term of office of the members of the Supervisory

Board, as access to the archives after expiration of the

term of office is determined by the provisions of the

Rules of Procedure of the Supervisory Board of NLB and

not in a special agreement.

Recommendation 14.3:

The Rules of Procedure of

the Supervisory Board of NLB d.d. do not include the

scope of topics and timeframe to be respected by the

Management Board in its periodic reporting to the

Supervisory Board. However, the scope of topics and

time frames of periodic reporting to the Supervisory

Board are included in the annual Action Plan of the

Supervisory Board. Competent organisational units of

the Bank ensure that timely information is provided to

the Supervisory Board.

Recommendation 14.4:

In 2025, the NLB Works Council

did not report to the Supervisory Board. In 2023, the NLB

Works Council sent a letter stating that it would inform

the professional services of NLB if it intended to report to

the Supervisory Board in the future.

Recommendation 14.6:

Access to the archives after

the expiration of the term of office of the members

of the Supervisory Board is determined by the Rules

of Procedure of the Supervisory Board of NLB d.d.

Members of the Supervisory Board do not sign a special

Agreement regarding access to the archives upon taking

up the position. See also Recommendation 14.2 above.

Recommendation 17.6:

The President of the Supervisory

Board, together with the Secretary of the Supervisory

Board or an expert from the Bank designated by the

Secretary of the Supervisory Board, takes care of

the minutes of the Supervisory Board meetings. Only

exceptionally can a Supervisory Board member also

be the minute-taker. The President of the Supervisory

Board and the Director of Legal and Secretariat ensure

that the resolutions formulated at the meeting are

clearly formulated and comprehensible.

Recommendation 19.1:

In 2025, the Supervisory Board

members (representatives of capital and representatives

of workers) did not receive attendance fees, but received

payments for performing their function based on the

decisions of the General Meeting of Shareholders dated

21 October 2019, 15 June 2020, 19 June 2023, and 16 June

2025. Remuneration of the Members of the Supervisory

Board is regulated by the Articles of Association of

NLB d.d., the decisions of the General Meeting of

Shareholders from the previous sentence and the

Remuneration Policy for the Members of the Supervisory

Board of NLB d.d., and the Members of the Management

Board of NLB d.d. For 2025 version 4 is relevant; it was

adopted by the Supervisory Board on 22 April 2024 and

approved by the General Meeting of Shareholders on 17

June 2024.

Recommendation 20:

Minutes of the Supervisory Board

meetings are taken by the Secretary of the Supervisory

Board or an expert from the Bank designated by

the Head of Secretariat. Only exceptionally can a

Supervisory Board member also be the minute-taker.

Recommendation 23.4:

The Remuneration Policy for

the Members of the Supervisory Board of NLB d.d.

and the Members of the Management Board of NLB

d.d. envisages the use of relative total shareholder

return as part of the criteria for the determination of

the performance of each member of the Management

Board of NLB during the subsequent performance

period (i.e. for the determination of the fulfilment of

additional performance criteria for the payment of a

long-term incentive – LTI).

Recommendation 23.5:

When required by regulations

and the Remuneration Policy for the Members of the

Supervisory Board of NLB d.d. and the Members of

the Management Board of NLB d.d. to award a part

of a variable remuneration to the members of its

Management Board in instruments, NLB uses share-

linked instruments for such purposes whereby the

non-deferred instruments are handed over to the

134

members of the Management Board of NLB at the time

of awarding and the remaining instruments are deferred

for at least five years and are handed over to them

pro

rata

during the deferral period.

Recommendation 26.6:

The Bank maintains a list of

transactions with related persons according to the

Banking Act (ZBan-3). A list of transactions involving

related persons is submitted to the Supervisory Board

by special demand.

Recommendation 30.4:

NLB draws up its Financial

Calendar

published on the

Banks’ website

, and

includes the date of the Annual General Meeting of NLB.

However, it doesn’t provide information on the dividend

payment date. The date is announced in the publication

of the Agenda and Proposed Resolutions to be passed

at the Annual General Meeting. The dividend payment

date is determined based on KDD’s Operations Rules

(Central Securities Clearing Corporation).

Recommendation 32.7:

NLB does not publish the

rules of procedure of its bodies (Management

Board, Supervisory Board, and its committees) on its

website. However, each year, the Bank discloses the

competences, composition, and work of its managing

bodies in the Corporate Governance Statement of NLB,

published in this NLB Group Annual Report, as well as on

the

135

3. MAIN FEATURES OF INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMS IN

RELATION TO FINANCIAL REPORTING

27 Article

281a of the ZGD-1 and Article 164 of the ZBan-3.

NLB is governed by the provisions of the Capital

Requirements Regulation (CRR) with amendments,

together with all applicable delegated acts, the Banking

Act (ZBan-3), the Regulation on Internal Governance

Arrangements, the Management Body, the Internal

Capital Adequacy Assessment Process for Banks and

Savings Banks regulating, and relevant EBA Guidelines,

among others, the Bank’s obligation to set up, maintain

appropriate internal control, and risk management

systems. Due to the above, the NLB has developed

a steady and reliable internal governance system

encompassing the following:

3.1. Internal control mechanisms

The Suitability of the internal control mechanisms is

determined by the independence, quality, and validity of:

the rules for and controls of the implementation of the

Bank’s organisational, business, and work procedures

(internal controls) and,

the internal control functions and departments (internal

control functions).

3.1.1. Internal Controls

The policy entitled “Internal Control System” defines a

system of internal controls as a set of rules, procedures,

and organisational structures. The system of internal

controls in NLB is designed to ensure that for each

key risk, there is a process or other measure to reduce

or manage that risk, and that process or measure is

effective for that purpose.

The mentioned policy introduces a new description of

the three lines of defence, namely:

First-level (or line) controls are implemented in business

and non-business organisational units (OU).

Second-level controls are divided between Risk

Management and Compliance control functions

(including AML/CTF and Information security

management), which carry out independent controls

and supervision over the operation of the first line of

defence.

The third level of control is performed by the internal

audit function, which regularly assesses and checks

the completeness, functionality, and adequacy of the

internal control system. An internal audit is entirely

independent of both the first-line and the second-level

control functions.

In the event of deficiencies, irregularities, or breaches

identified in the process of implementation of internal

controls, the breaches are discussed at the Operational

Risk Committee (which is the collective decision-making

body appointed by the Management Board of the Bank

that is established for the execution of individual tasks

within the powers of the Management Board of the

Bank). The mentioned committee adopts decisions to

take appropriate actions and informs the Management

Board of the Bank about deficiencies and actions taken

on that behalf.

As NLB advances its commitment to sustainable and

responsible banking, updates to the Internal Control

System policy reflect the Bank’s dedication to ensuring a

comprehensive ESG governance approach, addressing

ESG risks, and promoting responsible business practices.

3.1.2. Internal Control Functions

Internal control functions are part of the system of

internal governance in the Bank. Internal control

functions include:

a) The Internal Audit Function

The internal audit function is organised in accordance

with the Charter of the Internal Audit of NLB d.d.

(adopted by Management Board on 22 October

2024, with the consent of the Supervisory Board on

7 November 2024). The Charter defines the position

of the Internal Audit within the organisation, including

the nature of the relationship between the functional

responsibility of the Chief Audit Executive to the

supervisory body, further the Charter grants internal

auditors the authority to have access to records,

employees, premises, and equipment relevant to

performing their tasks, and defines the scope and

activities of the Internal Audit. The Management

Board of the NLB has established and organised ‒ as

its constituent part ‒ an independent Internal Audit

function. The main purpose of the Internal Audit is

to provide the Bank’s Management and Supervisory

Boards with objective and independent assurance and

advisory services designed to add value and improve an

organisation’s operations.

Internal auditing is an independent, objective assurance

and advisory service designed to add value and

improve the Bank’s operations, which is primarily

responsible to the Supervisory Board of NLB and its

Audit Committee, and secondarily responsible to the

Management Board of the Bank. It helps to accomplish

Bank’s objectives by bringing a systematic, disciplined

approach to evaluate and improve the effectiveness of

governance, risk management, and control processes.

The Internal Audit carries out regular control of the quality

of operation of the other internal audit departments in the

NLB Group, and takes care of the constant development

of the internal auditing function.

The Supervisory Board of the NLB must issue its

agreement to the appointment, dismissal, and

remuneration of the Chief Audit Executive, which ensures

his independence and thus the independence of the

work of the Internal Audit.

In line with the ZGD-1 and the ZBan-3

27

, the Chief Audit

Executive annually prepares the Internal Audit Report on

the work performed in the reporting period (including

the content of the engagements) and reports to the

Management Board, Supervisory Board and its Audit

Committee, and to the auditor of financial statements. In

accordance with Article 164 of the Banking Act (ZBan-3),

the Bank’s Management Board is required to submit to

the Bank’s General Meeting the Internal Audit Annual

Report with the Supervisory Board’s opinion at the same

time as the Bank’s annual report and the Supervisory

Board’s report referred to in Article 282 of the Companies

Act. The report includes the following information:

the statement of objectivity and independence, the

implementation of the annual action plan, the major

audit findings for the reporting period, the assessment

of the compliance of remuneration practices with the

136

remuneration policy, and the implementation of the

Quality Assurance and Improvement Programme.

b) The Risk Management Function

The Risk Management Function is organised in accordance

with the Charter of the Risk Management Function of NLB

adopted by the Management Board (September 2025), in

agreement with the Supervisory Board.

The Charter on Functioning of the Risk Management

Function of NLB d.d. (hereinafter: the Charter) is

the framework document on understanding and

role of the risk management function; it defines the

purpose, validity, and method of operation, as well

as the authorisations and responsibilities of the risk

management function according to the requirements of

the Banking Act (ZBan-3) and the Regulation on Internal

Management Arrangements, Management Body, and

the Internal Capital Adequacy Assessment Process for

Banks and Savings Banks (hereinafter: Regulation on

Internal Management).

The risk management function in NLB is organised

within the Risk stream (CRO), and is covered by the

member of the Management Board responsible for risk.

The CRO stream covers the following:

strategic risk management guidelines,

risk management of credit, liquidity, market,

operational and other risks on portfolio level,

underwriting risk management principles for corporate

and retail,

collateral management,

risk management controls and financial instruments

valuation,

restructuring, work-out, collection, and legal support.

The risk management function is performed by the

Global Risk, whereas the manager or head in charge of

the risk management function is the Director of Global

Risk. The Global Risk is in functional and organisational

terms separated from other functions where business

decisions are adopted, and conflicts of interest may

arise with the risk management function. The head of

the risk management function has direct access to the

Management Board of the NLB and, at the same time,

unhindered and independent access to the Supervisory

Board of NLB and the Risk Committee of the Supervisory

Board of the NLB. In accordance with the competences,

authorisations, and responsibilities of the Global Risk, it

is represented by its Director (General Manager).

Within the members of the NLB Group, the risk

management function is organised in accordance

with local legislation, taking into account the bases

for its set-up, organisation, and activities in the area

of risk management in the members, as defined in

the document “Risk Management Standards in the

NLB Group”. The described guidelines or standards

on risk management provide the members of the NLB

Group with a basis for aligning their business and risk

management policies, organisation, work procedures,

and reporting system.

c) The Compliance Function, Information Security

Function, and AML/CTF Function

Compliance and Integrity in the Group, in its role as an

internal control function, performs control activities with

respect to the following main areas:

anti-money laundering and counter-terrorist financing

(separately for NLB and the Group);

information security and data protection;

personal data protection;

regulatory compliance management;

prevention and investigation of fraud to the detriment

of the bank;

security;

development of compliance risk methodologies, and

setting and monitoring ethics and integrity standards;

harmonisation of policies and practices within the

Group (Competence line Compliance and Integrity).

Compliance and Integrity is an organisational unit of

the Bank, placed directly under the Bank’s Management

Board in the organisational structure. The Bank adopted

the Integrity and Compliance Policy of NLB and the NLB

Group. This Policy regulates the methods and scope

of the activities of the compliance functions within the

Bank. Supervision over compliance of operations is

within the competence of Compliance and Integrity.

This enables Compliance and Integrity to operate

independently from other Bank departments.

The Director of Compliance and Integrity does not

perform any other function at the Bank that could

possibly lead to a conflict of interest. To ensure his

independence, the Director reports directly to the

Management and Supervisory Boards. Additionally,

the Director provides regular updates to a designated

member of the Bank’s Management Board responsible

for overseeing compliance areas (including information

security, personal data protection, and AML/CTF

functions). This arrangement provides additional

assurance for the independence of the Compliance and

Integrity operations.

As information security, AML/CTF, and Group AML

functions are organised within Compliance and Integrity,

CISO for NLB and NLB Group (Chief Information Security

Officer), DPO (Data Protection Officer), the head of

the AML/CTF area for NLB, and the head of Group

AML are ensured complete independence through

equal reporting lines as the Director of Compliance

and Integrity. Following NLB’s model, the compliance

function was established within the Group’s core

members and aligned with the Group’s standards for the

compliance and integrity area.

3.2. Financial reporting

To ensure appropriate financial reporting procedures,

NLB pursues the adopted Policy on Accounting Controls.

The accounting controls are provided through the

operation of the complete accounting function with the

purpose of ensuring quality and reliable accounting

information and, thereby, accurate and timely financial

reporting. The principal identified risks in this area are

managed with an appropriate system of authorisations,

segregation of duties, compliance with accounting

rules, documenting of all business events, a custody

system, posting on the day of a business event, in-

built control mechanisms in source applications, and

archiving pursuant to the laws and internal regulations.

Furthermore, the policy precisely defines primary

accounting controls, performed in the scope of analytical

bookkeeping, and secondary accounting controls, i.e.,

checking the efficiency of implementation of primary

accounting controls. With an efficient mechanism of

controls in accounting reporting, NLB ensures:

a reliable decision-making and operation support

system;

accurate, complete, and timely accounting data, the

resulting accounting, and other reports of the Bank;

compliance with legal and other requirements.

137

a) Selection of an audit firm

28

Through a process, the Bank selects an auditing

company in which management bodies, the Audit

Committee, and the Supervisory Board actively

participate and appoint an auditing company that

will ensure an independent and impartial audit of the

financial statements in accordance with professional

and professional-ethical auditing principles and other

auditing rules.

Before the start of the selection process, a proposal for

the criteria for the appointment of the audit company

and the minimum conditions for cooperation are

prepared, which also include the mandatory disclosure

of all possible non-audit services that the audit company

has performed for the Bank or its affiliated companies

in the last year (namely a statement that an audit

firm or any member of the network to which the audit

firm belongs, did not directly or indirectly provide to

the audited entity, to its parent undertaking, or to its

controlled undertakings any prohibited non-audit

services in the financial year immediately preceding

the period being audited). The proposed criteria are

approved by the Audit Committee and the Supervisory

Board. After considering the report on the selection

process, the Audit Committee submits a recommendation

on the appointment of an audit company to the

Supervisory Board. Based on the recommendation of the

Audit Committee, the Supervisory Board proposes the

appointment of an audit company, which is approved by

the Shareholders’ Meeting.

The financial statements of NLB and the consolidated

financial statements of NLB Group are audited by the

auditing company KPMG Slovenia d.o.o., Ljubljana. This

auditing company was appointed as the auditor of NLB

by the 38

General Meeting of Shareholders of the Bank,

dated 20 June 2022, for the financial years 2023 to 2026.

The selected audit company audits all material

members of the NLB Group, except in cases of other

valid reasons (possible legal or other local restrictions).

b) Independence of the Statutory Auditor

The statutory auditor must assess and document

compliance with independence requirements before

accepting or continuing a statutory audit engagement.

28 According to Recommendations for the Audit Committees (SDA & KPMG

2022, point 10.1), the Bank provides an explanation of the selection of an audit firm and the independence of the statutory auditor.

The Audit Committee annually requires written

declarations of independence from the statutory auditors,

which must apply to the audit firm, the audit partners,

and senior personnel involved in the audit engagement.

When assessing the auditor’s independence, all areas of

potential conflict of interest are considered, such as:

direct or indirect financial investments in the company;

personal and business relationships (which also

include close family members, close relatives and

business partners);

the relationship between the key audit partner,

members of the board and key employees;

economic dependence;

type and scope of other services performed by the

auditor in addition to the audit.

Independence is ensured during the period covered by

the financial statements being audited and during the

period during which the statutory audit is carried out.

138

4. INFORMATION ON POINT 4, PARAGRAPH 6, OF ARTICLE 70 OF THE ZGD-1, regarding

points 3, 4, 6, 8, and 9 of paragraph 8 of the article 70

Explanation regarding significant direct and indirect

ownership of the company’s securities in the sense of

achieving a qualified stake, as determined by the act

regulating acquisitions

(Point 3 of the eighth paragraph of Article 70

of the ZGD-1)

Significant direct and indirect ownership of the

company’s securities in terms of achieving a qualifying

holding as defined in the Takeovers Act.

Table 37:

NLB’s main shareholders as at 31 December 2025

Shareholder

Number of shares

Percentage of shares

Bank of New York on behalf of the GDR holders

(ii), (iii)

9,152,391

45.76

• of which EBRD

• of which Brandes Investment Partners, L.P.

Republic of Slovenia (RoS)

5,000,001

25.00

5,847,608

29.24

100.00

(i) This information is sourced from the NLB’s shareholders’ book that is accessible at the web services of CSD (KDD – Central Securities Clearing

Corporation, Slovenian: KDD – Centralna klirinško depotna družba) and available to CSD members. The information on major holdings is based on

self-declarations by individual holders pursuant to the applicable provisions of Slovenian legislation, which require that the holders of shares in a listed

company notify the company whenever their direct and/or indirect holdings pass the set thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, or 75%. The table

lists all self-declared major holders whose notifications have been received. In reliance on this obligation vested with the holders of major holdings, the

Bank postulates that no other entities nor any natural person hold directly and/or indirectly ten or more percent of the Bank’s shares.

(ii) The Bank of New York holds shares in its capacity as the depositary (the GDR Depositary) for the GDR holders and is not the beneficial owner of such

shares. The GDR holders have the right to convert their GDRs into shares. The rights under the deposited shares can be exercised by the GDR holders only

through the GDR Depositary, and individual GDR holders do not have any direct right to either attend the shareholders’ meeting or exercise any voting

rights under the deposited shares.

(iii) The information on GDR ownership is based on self-declarations by individual GDR holders as required pursuant to the applicable provisions of

Slovenian law.

(iv) The information on GDR ownership is based on self-declarations made by Brandes Investment Partners, L.P. on 5 December 2024.

More information on the Bank’s Share Capital is available on the NLB website.

Explanation regarding the holders of securities that

carry special control rights

(Point 4 of the eighth paragraph of Article 70 of the

ZGD-1)

The Bank did not issue any securities carrying special

controlling rights.

Explanation regarding the restrictions related to voting

rights, in particular: (i) restrictions of voting rights to a

certain stake or a certain number of votes, (ii) deadlines

for executing voting rights, and (iii) agreements in

which, based on the company’s cooperation, the

financial rights arising from securities are separated

from the rights of ownership of such securities

(Point 6 of the eighth paragraph of Article 70 of the

ZGD-1)

The shares of the Bank are freely transferable, subject to

the provisions of the Articles of Association of the Bank,

which require the approval of the Supervisory Board,

namely for the transfer of shares of the Bank by which

the acquirer, together with the shares held by the holder

before such an acquisition and the shares held by third

parties for the account of the acquirer, exceeds the share

of 25% of the Bank’s voting shares. Approval for the

transfer of shares is issued by the Supervisory Board. The

Bank rejects the request for approval of the transfer of

shares if the acquirer, together with the shares held by

the acquirer before the acquisition and the shares held

by third parties for the account of the acquirer, exceeds

the 25% share of the Bank with voting rights, increased by

one share.

Notwithstanding the provision mentioned in the first

paragraph, approval for the transfer of shares is not

required if the acquirer of the shares has acquired them

for the account of third parties, so that it is not entitled

to exercise voting rights from these shares at its sole

discretion, while at the same time committing to the

Bank that it will not exercise voting rights on the basis

of the instructions of an individual third party for whose

account it has acquired the shares if, together with

the instructions for voting, it does not receive a written

guarantee from that person that this person has shares

for his own account, and that this person is not, directly

139

or indirectly, a holder of more than 25% of the Bank’s

voting rights.

The acquirer who exceeds the share of 25% of the

Bank’s shares with voting rights and does not require the

issuance of approval for the transfer of shares, or does

not receive the approval of the Bank, may exercise the

voting right from 25% of the shares with the voting rights.

There are no restrictions other than those mentioned

and those that are regulatory in nature.

Explanation on the (i) company’s rules on appointment

or replacement of members of the management or

supervisory bodies, and (ii) changes to the company’s

Articles of Association

(Point 8 of the eighth paragraph of Article 70 of the

ZGD-1)

The appointment or replacement of members of the

management or supervisory bodies

The Management Board

29

Articles of Association of NLB d.d. define that the

Management Board of the Bank is comprised of three

to seven members, one of whom is appointed President

of the Management Board of the Bank. The number

of Management Board members is determined by

a resolution of the Bank’s Supervisory Board. The

President and other members of the Management Board

are appointed and recalled by the Supervisory Board

of the Bank. The President of the Management Board

may propose to the Supervisory Board of the Bank to

appoint or recall an individual member or the remaining

members of the Management Board of the Bank.

The President and members of the Management

Board shall be appointed for a period of five years and

may be re-appointed for another term of office. The

President and members of the Management Board may

be recalled prior to the expiry of their term of office in

accordance with applicable laws and the Articles of

Association. Each member of the Management Board

of the Bank may prematurely resign from her/his term

of office with a period of three months’ notice. Written

notice shall be delivered to the Chair of the Supervisory

Board of the Bank. The notice term may be shorter than

three months if requested by the resigning member of

29 Incorporation by reference: The reference is made to these chapters from the Sustainability Statement chapter GOV-1 The role of administrative, supervisory and management bodies.

the Management Board of the Bank in his/her notice,

and is subject to the approval of the Supervisory Board

of the Bank.

A member of the Bank’s Management Board may only

be a person who fulfils the legally prescribed conditions

for a management board member under the law on

banking, and who obtained a licence from the BoS or

the ECB, if executing the competences and tasks from

Item (e) of paragraph 1 of Article 4 of Regulation (EU)

no. 1024/2013 for the performance of the function of

a bank’s management board member under the law

regulating banking. The Bank assesses every candidate

in accordance with the Bank’s Policy governing the Fit &

Proper assessment prior to the appointment.

The Supervisory Board

According to the Articles of Association of NLB d.d.,

the Supervisory Board may consist of 12 members, of

whom eight represent the interests of shareholders,

and four represent the interests of employees. Members

of the Supervisory Board representing the interests of

shareholders are elected and recalled at the General

Meeting from persons proposed by shareholders or the

Supervisory Board. Members of the Supervisory Board

representing the interests of employees are elected and

recalled by the Works Council, taking into account the

conditions for members of the Supervisory Board laid

down in the regulations and the Articles of Association

of NLB d.d.

At the end of 2025, the Supervisory Board of the

Bank consists of a total of 10 members, of which eight

members represent the interests of shareholders and

two members represent the interests of employees.

The term of office of the Supervisory Board members

commences on the day their appointment enters into

force (at the start of the term of office) and lasts up

until the end of the Bank’s Annual General Meeting of

Shareholders, which decides on the use of accumulated

profit for the fourth business year since the start of their

term of office unless otherwise stipulated at the time

of appointment of individual members. In this context,

the first year is deemed the business year in which the

members of the Supervisory Board of the Bank started

their term of office.

The General Meeting of the Bank may dismiss an

individual or all members of the Supervisory Board

(representatives of shareholders) even before the

expiration of their term of office. A resolution on

dismissal shall be valid if adopted with at least a three-

quarters majority of all votes cast.

The Supervisory Board of the Bank shall, at its first

meeting after an appointment, elect from among its

members a Chair and at least one Deputy Chair of the

Supervisory Board of the Bank. A member representing

the interests of employees cannot be elected Chair or

Deputy Chair of the Supervisory Board of the Bank. All

the Supervisory Board members shall be independent

professionals, as defined by the Articles of Association of

NLB d.d.

A member of the Bank’s Supervisory Board may only

be a person who fulfils the legally prescribed conditions

for a supervisory board member under the Banking

Act and who obtained a licence from the BoS or the

ECB, if executing the competences and tasks from

Item (e) of paragraph 1 of Article 4 of Regulation (EU)

no. 1024/2013 for the performance of the function of

a bank’s supervisory board member under the law

regulating banking. The Bank assesses every candidate

in accordance with the Bank’s Policy governing Fit &

Proper assessment prior to the appointment.

Amendments to Articles of Association of NLB d.d.

A qualified majority of at least 75% (seventy-five per cent)

of the votes cast by shareholders at the General Meeting

of the Bank’s Shareholders is required for the adoption

of any amendments to the Articles of Association of

NLB d.d.

Explanation regarding the authorisation of

the members of the management, particularly

authorisations to issue or purchase own shares

(Point 9 of the eighth paragraph of Article 70 of the

ZGD-1)

No authorisation exists which would authorise the

members of the management to issue or purchase own

shares of the Bank.

140

5. INFORMATION ON THE WORK AND KEY POWERS OF THE SHAREHOLDERS’ MEETING

AND OF ITS KEY POWERS, AND A DESCRIPTION OF SHAREHOLDERS’ RIGHTS AND THE

METHOD OF THEIR EXERCISING

The General Meeting is a body of the Bank through

which shareholders exercise their rights, which include,

among others: adopting and amending the Articles

of Association of NLB d.d., use of distributable profit,

granting a discharge from liability to the members of

the Management and Supervisory Boards, changes to

the Bank’s share capital, appointing and discharging

members of the Supervisory Board who represent

the shareholders’ interests, remuneration and profit-

sharing by the members of the Management Board and

employees, annual schedules, and characteristics of

issues of securities convertible into shares and equity

securities of the Bank.

The General Meeting is convened by the Management

Board. Also, the General Meeting may be convened by

the Supervisory Board in cases where the Management

Board fails to convene the General Meeting or where

a convocation is necessary to ensure unhindered

operations of the Bank. The Supervisory Board may

amend the agenda of the General Meeting convened in

line with the bylaws.

As a rule, the General Meeting shall be convened

at the registered office of the Bank, yet it may also

be convened at another venue specified by the

convenor. The Management Board may stipulate

that shareholders may attend or vote before or at the

General Meeting by electronic means without being

physically present. The General Meeting of Shareholders

shall adopt resolutions by a simple majority of the votes

cast unless the applicable laws or the Bank’s Articles

of Association stipulate a larger majority or other

conditions (adoption and amendments of the Articles of

Association, issue of convertible bonds or other equity

securities of the Bank, exclusion of a pre-emptive right

of existing shareholders, decrease in share capital, the

status restructuring of the Bank, liquidation of the Bank,

and discharge of Supervisory Board members).

The shareholders have the right to participate in the

General Meeting, the voting right, the pre-emptive right

to subscribe for new shares in case of a share capital

increase, the right to profit participation (dividends), the

right to a share in surplus in the event of liquidation or

bankruptcy of the Bank, and the right to be informed.

According to Article 296 of the Companies Act, NLB

informs shareholders of their rights as shareholders in

the Information on the Rights of Shareholders that is

published among the documents for the convocation

of each General Meeting (i.e., on the expansion of the

agenda, proposals by shareholders, voting proposals by

shareholders, and the shareholders’ right to be informed).

141

6. INFORMATION ABOUT THE COMPOSITION AND WORK OF THE MANAGEMENT AND

SUPERVISORY BOARDS AND THEIR COMMITTEES

30

30 Incorporation by reference: The reference is made to these chapters from the Sustainability Statement chapter GOV-1 The role of administrative, supervisory and management bodies. The reference includes subchapter 6.1 - only the

first paragraph, and subchapter 6.2, paragraph 1 and subchapter Statement of Independence of the Members of the Supervisory Board.

6.1. Composition of

the Management Board

30

Upon the recommendation of the Management Board,

the Supervisory Board appointed Reinhard Höll as

the seventh member of the Management Board on

20 February 2025. Following the necessary approval of

the ECB at the beginning of June 2025, he assumed the

role of Chief Transformation Officer (CTO), responsible for

transformation, IT and back office. On 7 August 2025, the

Supervisory Board appointed Blaž Brodnjak, Archibald

Kremser, and Peter Andreas Burkhardt for another term.

The composition of the Management Board at the end

of the year was as follows: Blaž Brodnjak as CEO; and

the following members: Archibald Kremser as Chief

Financial Officer (CFO); Peter Andreas Burkhardt as Chief

Risk Officer (CRO); Hedvika Usenik as Chief Marketing

Officer (CMO) responsible for Retail Banking and

Private Banking; Antonio Argir, responsible for Group

governance, payments, and innovations; Andrej Lasič as

CMO, responsible for Corporate and Investment Banking;

and Reinhard Höll as Chief Transformation Officer (CTO)

responsible for transformation, IT and back office. The

mandates of Hedvika Usenik, Antonio Argir, and Andrej

Lasič expire in April 2027.

Work of the Management Board

In 2025, the NLB Management Board continued to fulfil

the goals set with the NLB Group Strategy 2030. The

Management Board stayed focused on building lasting

relationships, recognising clients’ needs, anticipating

their evolving expectations, and designing a banking

ecosystem that embeds finance services that adapt

accordingly. The Management Board continued to focus

on activities that serve not only shareholders, but also

the communities NLB empowers every day.

Constant care for employees did not go unnoticed.

In January 2025, NLB received the

certificate, awarded by the international independent

organisation Top Employers Institute, for the 10

year in

a row. NLB has once again been ranked among the best

employers in the world, and as the only bank in Slovenia.

In addition, this year, a member of NLB Group, NLB

Komercijalna Banka, Beograd, also received the Top

Employer award for the second time, as the ambition

of the Management Board is to transfer excellent and

proven HR practices to other members of NLB Group.

The Management Board continued to be very successful

in creating a more substantial footprint and increasing

impact in its home region, Southeastern Europe,

particularly in sustainability. In January 2025, the

Bank received two more awards from Morningstar

Sustainalytics, the leading ESG research, assessment,

and data firm, namely the Top Regional and Top Industry

(among banks) awards, confirming NLB’s commitment

to sustainable operations and responsible business. In

January 2025, to strengthen its ability to meet the MREL

requirement, NLB completed the issuance of new senior

preferred bonds for EUR 500 million.

The NLB Group’s results for the first quarter of 2025

totalled EUR 125 million. NLB Group once again

demonstrated the strength and stability of its business

model and, despite the challenging economic

environment, achieved good business results. NLB’s

focus on disciplined, sustainable growth continues to

create added value for shareholders and strengthen

its financial position. In addition to achieving financial

results, NLB continued to implement strategic initiatives,

with accelerating digitalisation within the framework of

strategic projects (including the rollout of Google Pay

wallets, which are now present almost everywhere, and

the redesign of the NLB Klik online and mobile bank,

which was completed).

In June 2025, based on good financial results and

successful implementation of the strategy, the rating

agency Standard and Poor’s raised the long-term

issuer credit rating of NLB by one notch from BBB

to BBB+, with a stable outlook. Among the reasons

for the upgrade of NLB’s credit rating, Standard and

Poor’s cited NLB’s commitment to its Strategy 2030,

which envisages expansion in Southeastern Europe,

diversification of the business model, and upgrading

of the operating model, with the aim of doubling total

assets and profit after tax by 2030. The S&P upgrade

represents strong external confirmation of NLB’s

consistent execution and strategic orientation as a

regional and domestic banking leader over the past

few years, and brings it closer to the credit rating of its

home country, the Republic of Slovenia (AA rating).

The Management Board continued shaping the future

of leasing financial services in the region, ensuring

that leasing services and solutions are among the

key pillars of the NLB Group system, providing the

Group’s customers with flexibility and choice. NLB

Group currently offers leasing services in Slovenia,

Serbia, North Macedonia, and Croatia. Starting in

2020, with the launch of NLB Lease&Go, and in 2022,

it took a step forward by establishing two new leasing

companies in North Macedonia and Serbia. Later, this

growth momentum accelerated with the acquisition

of SLS HOLDCO, Ljubljana, the parent company of

Summit Leasing Slovenija, Ljubljana, and its Croatian

branch, Mobil Leasing, Zagreb, further solidifying NLB

Group’s presence in the region. In October 2024, the

new company, NLB Car&Go, was established to acquire

the online vehicle sales business. After obtaining all

regulatory approvals and entering the merger into

the court register, NLB Lease&Go, leasing, Ljubljana,

has merged with Summit Leasing Slovenija, Ljubljana,

on 4 July 2025. Following the successful operational

integration, the company was renamed to NLB

Lease&Go, leasing, Ljubljana, on 7 July 2025. With a

37.5% market share and more than 100,000 customers,

both consumers and businesses, NLB Lease&Go,

leasing, Ljubljana, has become the leading provider

of leasing services on the Slovenian market. Leasing

activities complement the Bank’s loan offering and allow

both private users and companies to choose the option

that best suits their needs, situation, and desires.

142

NLB Group’s first half of 2025 results showed solid

business performance, with profit after tax of EUR 274.4

million, and the share price of NLB reached an all-time

high, hovering around the book value per share. NLB

was particularly successful in identifying the need for

sustainable financing. With the issuance of the green

bond, the Bank was committed to channelling EUR 500

million into such investments in the medium term.

NLB Group showed robust performance in Q3 2025 with

a result after tax of EUR 131.6 million driven by strong

loan growth across all geographies and client segments.

With a YtD result after tax of EUR 406.0 million in the first

nine months, the Group continued to show consistent,

high-quality performance across all markets of its

operations in SEE. The Management Board maintained

a positive outlook on the Bank’s near-term financial

performance, while steadfastly focusing on mid- to long-

term growth opportunities, whether driven by external

market dynamics or by initiatives within operations.

Staying focused on the Group’s Strategy, the focus

remained on clients by investing in digital capabilities

and reimagining end-to-end processes, aiming to

deliver seamless, meaningful experiences at every

touchpoint. Embracing a digital-first business model is

not just about efficiency and productivity – it is about

creating lasting value for them and stakeholders, and

shaping the future of how to connect, serve, and grow

together.

In November 2025, NLB completed the issuance of its

AT1 bonds with no maturity and callable after five years

(NC5) in the amount of EUR 300 million, reinforcing its

reputation as an increasingly important and attractive

player in international capital markets. The transaction

was well received by investors, with the final order book

exceeding EUR 1 billion.

From December 2025 onwards, NLB customers have an

instant digital card available, i.e. a card in digital form,

which the customer immediately receives in their NLB

Pay digital wallet when ordering a new debit card – and

can start using it immediately for online payments, in-

store purchases, and cash withdrawals.

On 15 December 2025, the General Meeting of

Shareholders approved the payment of the second part

30 Incorporation by reference: The reference is made to this chapter from the Sustainability Statement chapter GOV-1 The role of administrative, supervisory and management bodies.

of the dividend, in the total amount of EUR 128.6 million,

which is EUR 6.43 gross per share. Together with the first

dividend tranche of EUR 128.6 million, which was paid

in June, the total dividend payment in 2025 amounts

to EUR 257.2 million (EUR 12.86 gross per share). This

represents 50% of last year’s profit and a high dividend

yield of over 7%.

Detailed information on the composition of the

Management Board is provided in Table 40 in the

Appendix to this Statement.

6.2. Composition of the

30

At the beginning of 2025, the composition of the

Supervisory Board was as follows: Primož Karpe –

Chairman, Shrenik Dhirajlal Davda – Deputy Chairman,

Islam Osama Bahgat Zekry, André-Marc Prudent-

Toccanier, Mark William Lane Richards, Cvetka Selšek,

Natalia Olegovna Ansell, Luka Vesnaver, and employee

representatives Tadeja Žbontar Rems and Sergeja

Kočar. The mandate of Islam Osama Bahgat Zekry

expired in 2025, while the mandates of Shrenik Dhirajlal

Davda, Mark William Lane Richards, Cvetka Selšek, and

André-Marc Prudent-Toccanier expire in 2027.

Following the expiration of his mandate, Islam Osama

Bahgat Zekry was proposed for re-election and was

re-appointed for another four-year term at the General

Meeting of Shareholders in June 2025, with his mandate

commencing on the date of appointment. At the

same General Meeting, shareholders took note of the

election of Tatjana Jamnik Skubic as a new employee

representative by the NLB Works Council, following the

expiration of Tadeja Žbontar Rems’ term. Tatjana Jamnik

Skubic commenced her mandate on 25 August 2025,

following the ECB’s decision to issue a no-objection to

her appointment.

At the end of 2025, the Supervisory Board comprised

Primož Karpe (Chairman), Shrenik Dhirajlal Davda

(Deputy Chairman), Islam Osama Bahgat Zekry, Cvetka

Selšek, André-Marc Prudent-Toccanier, Mark William

Lane Richards, Luka Vesnaver, Natalia Olegovna Ansell,

and employee representatives Sergeja Kočar and

Tatjana Jamnik Skubic.

Statement of Independence of the Members of the

In accordance with Article 16 of the Articles of

Association of NLB, all Supervisory Board members

must be independent experts. Persons representing the

interests of employees in the Supervisory Board of the

Bank are considered independent despite the existence

of an employment relationship with the Bank upon

fulfilling certain terms and conditions.

A Statement of Independence, in which they declare

themselves to meet the criteria of a conflict of interest, is

provided by a candidate for a function of a member of

the Supervisory Board, upon each change that would

mean a change of his/her independence status, and once

a year (with the new statements published as of January

2026). The statement is published on the

Work of the Supervisory Board

In 2025, the Supervisory Board held eight regular

and nine correspondence sessions. In its work, the

Supervisory Board of NLB received professional

assistance from five operational committees (as further

defined below). Based on their findings, the Supervisory

Board passed the appropriate resolutions.

In 2025, the primary focus of the Supervisory Board was

to implement The NLB Group Strategy 2030, to engage

in activities to enhance the corporate governance

system of the Bank, to carefully evaluate the work of

the Management Board, and to perform other tasks

pursuant to the law and regulations. NLB Group is well

on track to deliver on its strategic ambition by the year

2030 – exceeding EUR 50 billion in total assets, revenues

of more than EUR 2 billion, and profit of more than EUR 1

billion – while maintaining an attractive dividend payout

ratio in the range of 50‒60% of the previous year’s profit.

Throughout the year, the digital transformation

remained the main focus of the Supervisory Board,

because alongside the robust growth of volumes across

the existing product categories, the Supervisory Board

is aware that the only way to increase the speed-to-

serve and decrease the cost-to-serve of customers is

to smartly and relentlessly accelerate Bank’s digital

and organisational innovation. That requires investing

in a best-practice tech stack and talent, with an

143

uncompromising focus on customer centricity and new

client acquisition across geographies and expanding the

services ecosystem.

At the regular session of the Supervisory Board in

February 2025, the Supervisory Board of NLB considered

the draft of the NLB Group Annual Report 2024. It was

a year that, amongst others, marked the successful

acquisitions of SLS Group and Generali Investments,

Skopje, dynamic activity on regional financial and

international capital markets, several enhancements

in clients’ user experience, a substantial dividend

payout of EUR 220 million in two tranches, and kicked

off a new period in the Group’s transformation with the

introduction of its new business strategy. The financial

year concluded with a strong profit after tax result

at EUR 514.6 million, with pre-provision profit up a

respectable 9% YoY (EUR 51.2 million).

Upon the recommendation of the Management Board,

the Supervisory Board also appointed Reinhard Höll as

the seventh member of the Management Board, in the

role of Chief Transformation Officer (CTO), responsible

for transformation, IT and back office.

At the regular session in April 2025, the Supervisory

Board confirmed the NLB Group Annual Report 2024,

which also includes the inaugural Sustainability

Statement under the new Corporate Sustainability

Reporting Directive. It also considered documents

related to the adoption of the NLB Group Annual Report

2024 for the General Meeting of Shareholders (the

KPMG External Auditor’s report after the final audit of

financial statements 2024; the Internal Audit Overall

Opinion for 2024; the Internal Audit Annual Report for

2024; the Corporate Governance Statement of NLB;

the Statement on the Management of Risk; the Report

of the Supervisory Board of NLB on the results of the

examination of the NLB Group Annual Report 2024; and

the Report of the Audit Committee of NLB about the

statutory audit for financial year 2024).

On 25 April 2025, the Supervisory Board adopted

a decision to announce the convocation of the

44

General Meeting of Shareholders in order to

acknowledge the NLB Group Annual Report for 2024,

and related documents, they decided on the allocation

of distributable profit from the previous year, and re-

elected the existing members of the NLB Supervisory

Board and discussed a variety of reports and policies.

On 4 August 2025, the Supervisory Board confirmed

NLB Group’s solid half-year results, with profit after tax

of EUR 274.4 million, and the NLB share price reached

an all-time high, hovering around book value per share.

The Supervisory Board also extended the mandates of

three NLB Management Board members.

On 6 November 2025, Supervisory Board confirmed

the NLB Group Q3 2025 results. Results showed robust

performance, with a result after tax of EUR 131.6 million,

driven by robust loan growth across all geographies

and client segments. The Supervisory Board recognised

the Group’s solid foundation performance, which

demonstrated that even amidst an uncertain economic

landscape, the Group continued not only to navigate

challenges successfully, but also to address its digital

transformation and growth ambitions.

The Supervisory Board acted within its powers to

ensure that the Bank’s business goals, strategies, and

policies were coordinated correctly with the strategies

and policies for assuming and managing risks. The

Supervisory Board was regularly informed about the

Group’s risk profile and the corresponding types of

risk to steer the Group’s fulfilment of internal strategic

objectives and all external requirements. Tackling

a comprehensive assessment of the main risks and

vulnerabilities for NLB Group, the Supervisory Board

adopted the Charter on Functioning of the Risk

Management Function of NLB; the Internal liquidity

adequacy process (ILAAP) in the Group for 2024; the

Internal Capital Adequacy Assessment Process (ICAAP)

in the Group for 2024; the ALM update: the Report

on IRRBB management activities in 2024; the Digital

Operational Resilience Strategy and Third-Party ICT

Risk Strategy and acknowledged ICT Risk Management

Policy. The Supervisory Board adopted the Financial

Calendar and the Calendar of Supervisory Board of NLB

for 2026.

The functioning of NLB management bodies has always

been a priority of the Supervisory Board. To that extent,

the Supervisory Board adopted the NLB Group Internal

Audit Plan 2026 (for 2026 & the long-term plan); the

Internal Audit Strategy of NLB (2025–2030); the Annual

Report for the 2024 ECRA compliance risk assessment

at the NLB and NLB Group levels; the Action Plan of the

Compliance and Integrity for 2026; and regular interim

reports on the operations of the NLB Group; Periodic

Internal Audit Reports, Compliance, Prevention, Fraud

and DPO Reports; Periodic AML NLB; and the NLB Group

AML Reports.

In line with an increased focus on the risk culture,

and the impact on how incentives align risk-taking

behaviour with NLB’s risk profile and long-term

interests, the Supervisory Board adopted resolutions of

individual goals for Management Board members for

short-term incentives (STI) and long-term incentives (LTI)

including financial goals of NLB Group, the approval of

additional performance criteria for LTI, and approval

of financial goals of NLB. The Supervisory Board also

adopted information on payments to the members of

the Supervisory Board of NLB and its committees, and

changes to the Remuneration Policy of the members

of the Supervisory Board of NLB d.d. and members of

the Management Board of NLB d.d. (on 16 June 2025

mentioned policy was approved by the General Meeting

of Shareholders, whereby the vote on this resolution is of

a consultative nature in accordance with ZGD-1).

NLB Group strives to actively contribute to a more

balanced and inclusive economic and social system. The

Supervisory Board monitored the implementation and

effectiveness of NLB Group’s Strategy 2030 and followed

the NLB Group Sustainability implementation.

Each year, a self-assessment of the Supervisory

Board and the Audit Committee is prepared. Based on

findings of self-assessment the training programme for

Supervisory Board Members for 2025 and the annual

review of training completed by individual SB members

for 2024 were adopted.

During the year, the Supervisory Board issued prior

approvals for transactions with persons in a special

relationship with the Bank, and prior consents for NLB

Group banking members to conclude legal transactions

with a group of related clients with which the large

exposure of NLB Group banking members is towards

a certain client. The Supervisory Board adopted

information regarding the NLB Investment policy

144

governing strategic investments in Private Equity Funds

and the Investor Relations Status Report.

Throughout the year, the Supervisory Board has

maintained a well-balanced professional relationship

with the Management Board and enjoyed timely,

comprehensive, and data-supported inputs from the

latter, enabling the Supervisory Board to adopt all its

decisions in line with the professional interests of the

Bank, whilst always adhering to banking regulations

and its statutory powers.

To ensure transparent decision-making at the

Supervisory Board and in sessions of committees,

members of the Supervisory Board, in particular, take

into account all necessary precautionary measures to

avoid conflicts of interest.

Information on statements of independence of the NLB

Supervisory Board members is discussed in this context.

Pursuant to Article 282 of the Companies Act (ZGD-1)

and the above report, the Supervisory Board of NLB

established and ensured that it regularly and thoroughly

monitored the Bank’s and NLB Group’s operations in

2025 within its powers and efficiently supervised the

Bank’s and NLB Group’s management and operations.

The composition of the Supervisory Board members is

described in Table 41 in the Appendix of this statement.

6.3. The Supervisory Board

Committees

All five committees of the Supervisory Board function

as consulting bodies of the Supervisory Board of NLB

and discuss the material and proposals of Management

Board of NLB for the Supervisory Board meetings

related to a particular area. The Supervisory Board has

the following committees:

The Audit Committee

The Risk Committee

The Nomination Committee

The Remuneration Committee

The Operations and IT Committee.

Committees are composed of at least three members

of the Supervisory Board, although at the end of

2025, the actual number was five. The Works Council

can nominate one Supervisory Board member – a

representative of the workers to each Committee. The

member of the Committee may only be appointed from

among the members of the Supervisory Board.

6.3.1. The Audit Committee of the Supervisory Board

of NLB

The Audit Committee monitors and prepares draft

resolutions for the Supervisory Board in the following

areas: accounting and financial reporting, internal

control and risk management, internal audit, taking note

of results of the inspections carried out by regulators

and monitoring the implementation of their measures,

compliance of operations and external audit, ALM,

the annual assessment of the Compliance function,

and monitoring the implementation in the field of

sustainability and sustainability reporting.

At the end of 2025, the composition of the Committee

was as follows: Cvetka Selšek (Chairwoman), André-

Marc Prudent-Toccanier (Deputy Chairman), Primož

Karpe, Tatjana Jamnik Skubic, and Luka Vesnaver

(members). Changes in the Committee’s membership

that occurred during the year, as well as the academic

degrees of the Audit Committee members, are reflected

in the chart on the Supervisory Board Committees (Table

41 in the Appendix below).

There were six regular sessions of the Audit Committee

in 2025. The following is a summary of the key topics

considered by the Audit Committee:

NLB Group Annual Report 2024; KPMG External

Auditor’s report after the final audit of financial

statements 2024; Internal Audit Overall Opinion for

2024; Internal Audit Annual Report for 2024; Corporate

Governance Statement of NLB; Statement on the

Management of Risk, Report of the Supervisory

Board of NLB on the results of the examination of

the NLB Group Annual Report 2024; Report of the

Audit Committee of NLB about the statutory audit for

financial year 2024; Approval of external assurance of

NLB Group Sustainability Statements 2025 and 2026;

Assessment of the satisfaction rating at the NLB Group

level regarding the quality of audit services provided by

the external auditing firm KPMG for 2024; Presentation of

the Audit Plan for 2025 by the Auditor KPMG; NLB Group

Internal Audit Plan 2026 (2026 & long-term plan); Internal

Audit Manual ‒ amendments; Internal Audit Strategy

of NLB (2025–2030), Internal Audit Communication

Plan; Annual Report for the 2024 ECRA compliance risk

assessment at the NLB and NLB Group levels;

Action Plan of the Compliance and Integrity for 2026;

Report on Compliance and Ethics Survey Results for

NLB and NLB Group 2024;

Regular interim reports on the operations of the NLB

Group, Periodic Internal Audit Reports, Compliance,

Prevention, Fraud and DPO Reports; Periodic AML NLB

and the NLB Group AML Report;

Reports on the documents received from the BoS and

ECB, and on the implementation of the requirements of

the BoS and ECB (Progress Report);

Appointment/Prolongation of the mandate for the

Director of Internal Audit; a Salary increase for the

heads of control functions ‒ Director of Internal Audit

and Compliance; Confirmation of the goals for 2025

and assessment of the heads of Internal Audit and

Compliance for 2024; F&P assessment of the Director

of the Internal Audit, AML, and CISO Functions, and

Evaluation of the Audit Committee;

Approval of the Instructions for Reimbursing the Costs

to the Members of the Supervisory Board of NLB;

Information about the costs of the Management and

Supervisory Boards;

NLB Audit Committee Self-Assessment for 2024 (Status

Report) and approval of the Action Plan.

The Audit Committee performs its tasks both during

meetings and outside of them. In addition to considering

materials at the meetings themselves and preparing

proposals for the Supervisory Board, the Committee

also meets regularly with representatives of professional

services for individual areas covered by the Committee.

The President of the Committee also meets regularly with

representatives of the external auditor and regulators.

In 2024, the Audit Committee carried out a self-

assessment of its work (an evaluation of 2023) with

the help of an external independent evaluator, the

Slovenian Directors’ Association. Based on the findings,

an action plan was prepared, and all the deficiencies

were eliminated.

145

6.3.2. The Risk Committee of the Supervisory Board

of NLB

The Risk Committee monitors and drafts resolutions

for the Supervisory Board in all risk areas relevant to

the Bank’s operations. It is consulted on the Group’s

current and future risk appetite, the corresponding risk

profile and risk management strategy, and helps carry

out control over senior management concerning the

implementation of the risk management strategy, risks

monitoring (operational) in the area of operations; the

findings of audits in the area of operations, IT, and IT

security: monitoring the recommendations to ensure/

increase information/cyber security issued by the head

of the information security function at the level of NLB

(CISO NLB) and separately at the NLB Group level (Group

CISO); treating reports on any violations, events, and

incidents in the area of IT security.

At the end of 2025, the composition of the Committee

was as follows: André-Marc Prudent-Toccanier

(Chairman), Cvetka Selšek (Deputy Chairwoman),

Shrenik Dhirajlal Davda, Luka Vesnaver, and Natalia

Olegovna Ansell (members). Changes in the Committee’s

membership that occurred during the year are reflected

in the chart on Supervisory Board Committees (Table 41

in the Appendix below).

There were eight regular sessions of the Risk Committee

in 2025. The following is a summary of key topics

considered by the Risk Committee:

Risk Report of NLB and NLB Group as per 31 December

2024; Periodic Risk Reports, of NLB and NLB Group;

Pillar III Disclosures for 2024 and periodic disclosures

for 2025; Internal liquidity adequacy process (ILAAP)

in the Group for 2024; The Internal Capital Adequacy

Assessment Process (ICAAP) in the Group for 2024; ALM

update: Report on IRRBB management activities in

2024; SREP Action plan – Implementation of ECB IRRBB

recommendations; Charter on Functioning of the Risk

Management Function of NLB; Periodic NLB Group CISO

and NLB CISO Reports; Annual review of transactions –

prepared by Credit Risk Corporate (2024); Presentation

& Report on the Top 50 exposures of Corporate Clients

& Groups in the NLB Group; Report on passive court

proceedings in NLB and NLB Group of more than EUR

0.5 million as per end of 2024; Top restructuring cases;

Information about the final deletions of the receivables

from the off-balance for 2024;

Risk Assessment of the NLB Group and NLB financial

results and goals assessment of the members of the

Management Board of NLB for 2024; Confirmation of

goals of identified employees for 2025 – Head of Global

Risk; Consent of goals assessment of the heads of

control or supervisory functions for the year 2024; Salary

increase for the Head of control function – Global Risk;

Approval of Digital Operational Resilience Strategy

and Third-Party ICT Risk Strategy; Acknowledgement

of ICT Risk Management Policy; Budget 2026 –

Review of compliance of the labour cost plan from

the risk perspective

NLB Group Recovery Plan;

Annual Review of Prior Consent for Limit application

(that exceeds certain percentages of NLB Tier 1

capital); Prior consents for limit application that

exceeds NLB Tier 1 capital; Prior consent to conclude

legal transactions with Central Banks; Prior consent

for the conclusion of legal transactions with a client

in a special relationship with NLB; Prior consent for

prolongation of maximum exposure of the Bank

towards a company; Approval of the write-off to Off

balance sheet of receivables towards clients;

Status Report of Restructuring Case; Report on the Real

Estate Market and Collateral Portfolio Management;

Information on Strategy update regarding the evolution

of exposure to the Republic of Serbia;

Report on the documents received from the BoS and

the ECB, and the report on the implementation of

the requirements.

6.3.3. The Nomination Committee of the

Supervisory Board of NLB

The Nomination Committee drafts proposed resolutions

for the Supervisory Board concerning the appointment

and dismissal of the Management Board members;

recommends candidates for Supervisory Board

members; makes recommendations to the Supervisory

Board about the dismissal of members of the

Management and Supervisory Boards (representatives

of capital); prepares the content of executive

employment contracts for the President and members of

the Management Board; evaluates the performance of

the Management and Supervisory Boards; and assesses

the knowledge, skills, and experience of individual

members of the Management and Supervisory Boards

and the bodies as a whole.

was as follows: Primož Karpe (Chairman), Mark Richards

(Deputy Chairman), Sergeja Kočar, Islam Osama Bahgat

Zekry, and Shrenik Dhirajlal Davda (members). Changes

in the Committee’s membership that occurred during

the year are reflected in the chart on Supervisory Board

Committees (Table 41 in the Appendix below).

There were six regular sessions of the Nomination

Committee in 2025. The following is a summary of key

topics considered by the Nomination Committee:

Expansion of the Management Board of NLB; Selection

process for the independent member of the SB – Status

update; development plans for Management Board

Members and 360 results; Succession planning; F&P

assessment of Members of the Supervisory Board,

Islam Osama Bahgat Zekry; Appointment of members

of the Supervisory Board of NLB;

Regular yearly 2025 F&P assessment of the

Management Board; The assessment of collective

suitability of the Management Board of NLB; Regular

yearly 2025 assessment of collective suitability of the

Supervisory Board of NLB;

Confirmation of the proposed amendments to the

Policy on the provision of diversity of the management

body and senior management in NLB d.d.;

Confirmation of the proposed changes of the Policy on

the selection of suitable candidates for members of the

Management Board in NLB d.d.;

F&P assessment for candidates proposed by the Works

Council; F&P assessment for the president and two

members of the Management Board; Proposal for the

reappointment of the president and two members of

the NLB Management Board – nomination perspective;

Annual Review of the Diversity Policy of the Bank.

6.3.4. The Remuneration Committee of the

The Remuneration Committee carries out expert

and independent assessments of the remuneration

policies and practices and formulates initiatives for

measures related to improving the management

of the Bank’s risks, capital, and liquidity; prepares

proposals for remuneration-related decisions of the

Supervisory Board; including those that impact risks

and management of the Bank’s risks and supervises the

remuneration of senior management performing the

risk management and compliance functions.

146

was as follows: Shrenik Dhirajlal Davda (Chairman),

Mark William Lane Richards (Deputy Chairman), Islam

Osama Bahgat Zekry, Sergeja Kočar, and André-

Marc Prudent-Toccanier (members). Changes in the

Committee’s membership that occurred during the

year are reflected in the chart on Supervisory Board

Committees (Table 41 in the Appendix below).

There were seven regular and two correspondence

sessions of the Remuneration Committee in 2025. The

following is a summary of key topics considered by the

Remuneration Committee:

Budget 2026: Review of labour cost plan for 2026;

Confirmation of STI/LTI Goals for Management Board

with additional performance criteria and Financial

Goals of NLB and NLB Group; Confirmation of the

Assessment of the NLB Group and NLB financial

results, goals assessment of the members of the

Management Board of NLB and heads of control or

supervisory functions for the year 2024; Confirmation

of STI and LTI goals for three Management Board

members for 2025; Proposal for the reappointment of

the president and two members of NLB Management

Board – a remuneration perspective; Expansion of

the Management Board of NLB – a remuneration

perspective Annex to the employment contract for a

Management Board member;

Confirmation of the goals of identified employees

(heads of controlled and supervisory functions) for

2025; Confirmation of an annual self-assessment of the

identified employees (2024); Periodic Update of Self-

Assessment of the Identified Employees; Confirmation of

changes to the instrument on awarding of the variable

part of salary in instruments to the identified employees;

An overview of performance assessment and

remuneration for employees in NLB Group for business

year 2024; Awarding and payment of STI and LTI for

2024 for Members of the Management Board, and

payment of deferred part of variable part of salary

for previous year for Members of the Management

Board and identified employees – heads of control

or supervisory functions; the salary increase for the

heads of control functions – Internal Audit, Global Risk,

Compliance and Integrity;

Confirmation of the proposed changes to the

Remuneration Policy for the Members of the

Supervisory Board of NLB d.d. and the Members

of the Management Board of NLB d.d.; Proposal of

amendments to the Remuneration Policy for employees

in NLB d.d. and in the NLB Group.

6.3.5. The Operations and IT Committee of the

The Committee monitors and prepares draft resolutions

for the Supervisory Board, whereby the main tasks

that it performs are the following: monitoring KPIs in

operations and Information Technology and service

quality indicators; reporting about the implementation

of the company’s long-term IT Strategy, including

the infrastructure and use of AI, monitoring the

management of information technologies; monitoring

integration of AI into operations; monitoring

responsibility in the AI area; monitoring compliance

with the rules on AI; monitoring key projects and

initiatives related to operations, IT, and artificial

intelligence; monitoring major procedures of purchasing

IT equipment and services; being informed of security

incidents; discussing the Business Continuity Plan for

IT Systems; discussing the reports of the Internal Audit

about the review of risks related to the IT and AI systems;

monitoring the target model of operations in the

information technology, artificial intelligence, operation

security centre.

was as follows: Mark William Lane Richards (Chairman),

Islam Osama Bahgat Zekry (Deputy Chairman), Primož

Karpe, Tatjana Jamnik Skubic, and Natalia Olegovna

Ansell (members). Changes in the Committee’s

membership that occurred during the year are reflected

in the chart on Supervisory Board Committees (Table 41

in the Appendix below).

There were four sessions of the Operations and IT

Committee in 2025. The Operations and IT Committee

acknowledged itself with:

Periodic Review of IT KPIs;

Digitalise the Bank periodic reports;

Transformation and IT report for Q3 2025 (incl. change

portfolio prioritisation);

Initiative progress, status, lessons learned.

147

7. DESCRIPTION POLICY ON THE PROVISION OF DIVERSITY OF THE MANAGEMENT BODY

AND SENIOR MANAGEMENT

Pursuant to Article 70 (paragraph 6, Point 7) of the

ZGD-1, description of the diversity policy implemented in

relation to representation in the management or control

bodies of the company (from the point of view of gender

and other aspects, and a statement of the goals and

results of the policy) is as follows:

Policy on the Provision of Diversity of the Management

Body and Senior Management of NLB.

A general diversity framework aimed at management

bodies is stipulated in the Policy on the Provision

of Diversity of the Management Body and Senior

Management of NLB (hereinafter: Diversity Policy).

NLB amended the Diversity Policy in 2025, including

provisions from the new EU Directive on gender

balance, which was transposed into the Slovenian

Companies Act (ZGD-1) in December 2024. This policy

ensures that NLB’s leadership is composed in a way

that strengthens good governance, supports long-term

strategic goals, and reflects the Group’s commitment to

fairness, inclusion, and balanced representation.

The main changes of the Diversity Policy relate to

the Bank’s commitment that NLB will follow the

target of 40% of the underrepresented gender

in the Supervisory Board. According to these

changes and changes in the number of members

of the Management Board, the target for gender

representation was adjusted for 2025.

The Diversity Policy concurrently establishes a

framework to promote diversity across the

following dimensions:

- Gender diversity: ensuring a balanced pool of

candidates during recruitment, promoting adequate

gender representation in management. If two

candidates for the management body meet all

criteria and gender representation targets are unmet,

the underrepresented gender will be selected.

- Age Diversity / Generational Diversity: attracting

candidates across age groups to reflect its

demographics, balancing younger and older

members in management.

- Professional competencies, Skills and Experience:

ensuring diverse knowledge, skills, and experience

of the management body and senior management,

adhering to criteria like experience, reputation,

management of potential conflicts of interest,

available time, and independence.

- Continuity: maintaining a suitable ratio between existing

and new members by not changing all members

of the management body or senior management

simultaneously when their mandates expire.

- Representation of Foreign Nationals and International

Experience: ensuring that the management body and

senior management have international experience in

different areas.

- Personal integrity: the management body and senior

management must demonstrate high personal

integrity and follow the NLB Group Code of Conduct.

- Geographical provenance: seeking diverse

geographical backgrounds in the management

body and senior management to ensure a suitable

knowledge of the culture, market characteristics,

and legal framework in the areas where the NLB

Group operates.

Target representation of the management body is

achieved through a predetermined replacement plan

and by fulfilling the roles as defined by the Articles

of Association. In line with the Diversity Policy, the

conditions and required profiles for management roles

are established before appointments and various

recruitment pathways are used to attract a wide range

of candidates. NLB regularly monitors the achievement

of target representation.

While the Companies Act is binding only to NLB, its

principles are included in the Diversity Policies of NLB

Group’s banking members.

Following the provisions of the Diversity Policy, NLB

determined that the proportion of gender balance it

aims to achieve is at least 40% representation of the

underrepresented gender (i.e., women) among the

members of the supervisory body.

Table 38:

Share of women in governance bodies

at the end of 2025

Share of women in NLB

40% (4 of 10 members)

14% (1 of 7 members)

NLB plans to maintain high levels of professional

knowledge, international experience, continuity,

and personal integrity across its Supervisory and

Management Boards, with medium-high emphasis on

geographical provenance and balanced age structure

as shown in the table below:

Table 39:

Diversity of the NLB management bodies in 2025 (actual and planned) breakdown by diversity objectives

Management Board of NLB

Plan for 2025

Plan for 2025

Wide range of knowledge, skills and professional experience

High

High

High

High

International experience of the members in different areas

Medium High

Medium High

Continuity of composition of the management body

High

Personal integrity

Geographical provenance

Age structure

20-30 = 0

20-30 = 0

30-40 = 0

30-40 = 0

41-50 = 1

41-50 = 2

51-60 = 6

51-60 = 5

60+ = 3

60+ = 0

Share of women

40%

40%

148

7.1. Statement on changes that

occurred between the end of

the accounting period up to the

publication of this statement

In accordance with Guidelines on Disclosure for Listed

Companies, point 7.3.2 (Ljubljana Stock Exchange,

25 March 2024), NLB hereby states that there were no

changes relevant to corporate governance between the

end of the accounting period and the publication of this

statement or the NLB Group Annual Report 2025.

Ljubljana, 9 April 2026

Supervisory Board of NLB d.d.

Primož Karpe

149

Table 40:

Composition of Management in the financial year 2025

Name and

Surname

Position held

(President,

Member)

Area of work

covered within the

First appointment

to the position

Conclusion

of the position/

term of office

Citizenship

Year of birth

Qualification

Professional

profile

supervisory bodies in

companies not related to

the company

President

CEO

6 July 2016

6 July 2026

Slovenian

1974

MBA

Banking/Finance

Bank Association

of Slovenia,

Basketball Club

Cedevita Olimpija,

European Banking

Federation,

Foundation for the

Pediatric Clinic in Ljubljana

Deputy CEO/

CFO

31 July 2013

6 July 2026

Austrian

1971

MBA

Banking/Finance

Peter Andreas

Burkhardt

CRO

18 September

2013

German

1971

MBA

Rotary Club Ljubljana

Responsible for

Group governance,

payments and

innovations

28 April 2022

28 April 2027

Macedonian

1975

MBA

Macedonian–Slovenian

Business Club

CMO (responsible

for Corporate and

Investment Banking)

28 April 2022

28 April 2027

Slovenian

1970

Bachelor’s

degree

Bank Association

of Slovenia

CMO (responsible for

Retail Banking and

Private Banking)

Slovenian

1972

MBA

Institute for Economic

Research,

British–Slovenian

Chamber of Commerce

CTO (responsible for

for transformation,

IT and back office)

3 June 2025

3 June 2030

German

1983

(i) Member of the Management Board since 2012.

150

Table 41:

Composition of Supervisory Board and Committees in the financial year 2025

Name and

Surname

Position

held

(Chairman,

Deputy

Chairman,

Member)

First

appointment

to the

position

Conclusion

of the

position/

term of

office

Representative

of the company‘s

capital structure /

employees

Attendance

at SB session

in regard

to the total

number of SB

session (for

example 5/7)

applicable

on his/her

mandate

Gender

Citizenship

Year of

birth

Qualification

profile

Independence

under

Article 23

of the Code

(YES/NO)

Existence

of conflict

of

interest,

in the

business

year

(YES/NO)

supervisory bodies in

other companies or

institutions

Primož

Karpe

10 February

2016

2028

Representative

of the company‘s

capital structure

8/8

male

Slovenian

1970

MSc

Banking/

Finance

YES

YES

Angler d.o.o., Zagreb

Shrenik

Dhirajlal

Davda

Deputy

Chairman/

10 June

2019

2027

capital structure

8/8

male

British

1960

Finance

YES

NO

Charity Commission of

England and Wales

IPSO, UK

Islam

Osama

Bahgat

Zekry

14 June

2029

6/8

male

Egyptian

1977

PhD

IT

YES

NO

Commercial

Bank, Egypt

CIB Housing

Association, Egypt

Telecom Egypt

Mark

William

Lane

Richards

10 June

2019

8/8

male

British

1966

MSc

Banking/

Finance

YES

NO

Enza Group

Global, Cairo

BPL Global

(Lloyds of London

insurance Broker)

VenCap International

plc, UK

Cvetka

Selšek

19 June

8/8

female

Slovenian

1951

University

Degree

Banking/

Finance

NO

Honourable Tribunal

of Managers’

Association of Slovenia

Slovenian Directors’

Association

Prudent-

Toccanier

19 June

8/8

male

French

1955

MSc

Banking/

Finance

NO

Natalia

Olegovna

Ansell

17 June

2028

female

British

1972

MA

Luka

Vesnaver

17 June

1972

MSc

Banking/

British Slovenian

Alpine Ski Club

Olimpija, Ljubljana

Managers’ Association

of Slovenia

Sergeja

Kočar

17 June

2020

of the company’s

employees

female

1968

MSc

Management

Tatjana

Jamnik

Skubic

25 August

2029

of the company’s

employees

3/3

female

1971

151

Name and Surname

Membership in committees (audit, nominal,

income committee, etc.)

First appointment to the

position

Conclusion of the

position/term of office

Chairman/Deputy

Chairman/Member

Attendance at sessions of

SB’s Committees in regard

to the total number of SB’s

session (applicable on his/her

mandate)

Shrenik Dhirajlal Davda

Remuneration Committee

28 June 2019

7/7

Mark William Lane Richards

Remuneration Committee

26 June 2020

7/7

Islam Osama Bahgat Zekry

9 September 2024

2029

5/7

André-Marc Prudent-Toccanier

9 September 2024

7/7

Sergeja Kočar

26 June 2020

7/7

Primož Karpe

Nomination Committee

15 April 2016

6/6

Mark William Lane Richards

Nomination Committee

18 September 2023

6/6

Shrenik Dhirajlal Davda

6/6

Sergeja Kočar

6/6

Islam Osama Bahgat Zekry

18 September 2023

2029

4/6

Cvetka Selšek

Audit Committee

Chairwoman

6/6

André-Marc Prudent-Toccanier

15 April 2016

Tadeja Žbontar Rems

4/4

Tatjana Jamnik Skubic

25 August 2025

2029

1/1

Luka Vesnaver

30 September 2024

Deputy Chairwoman

8 July 2021

Luka Vesnaver

30 September 2024

Natalia Olegovna Ansell

8 November 2024

Operations and IT Committee

28 June 2019

4/4

8 July 2021

4/4

Natalia Olegovna Ansell

8 November 2024

4/4

4/4

Tadeja Žbontar Rems

8 April 2021

2/2

Tatjana Jamnik Skubic

25 August 2025

1/1

(i) There were also extraordinary sessions of the committees that are not reflected in this table.

152

Statement of Management of Risk

NLB d.d.’s Management Board and Supervisory Boards

provide herewith a concise statement of the risk

management according to Article 17 of the Decision on

Internal Governance Arrangements, the Management

body and the Internal Capital Adequacy Assessment

Process for Banks and Savings banks (

Official Gazette

of the RoS, no. 73/15

and 115/2021

), Regulation (EU)

575/2013, article 435 (Risk management objectives and

policies), point (e) and (f), as well as EBA Guidelines

on Internal Governance (EBA/GL/2021/05) and EBA

Guidelines on Disclosure requirements (EBA GL/2016/11).

Risk management in NLB Group, representing an

important element of the Group’s overall corporate

governance, is implemented in accordance with the set

strategic guidelines, established internal policies and

procedures which take into account European banking

regulations, the regulations adopted by the Bank of

Slovenia, the current EBA guidelines, and relevant good

banking practices. NLB Group follows EU regulations,

and its subsidiaries operating outside Slovenia are

also compliant with the rules set by local regulators.

NLB Group places great importance on risk culture and

awareness of all relevant risks across the entire Group.

Maintaining risk awareness is ingrained in the Group’s

business and risk strategy. The business and operating

environment relevant to the Group’s operations is

changing, with trends such as sustainability, social

responsibility, governance, changing customer

behaviour, emerging technologies, competitors, and

increasing regulatory requirements. Respectively,

risk management continuously adapts to detect and

manage emerging risks.

NLB Group uses the “three lines of defence framework”

as an important element of its internal governance,

in which the Risk management function acts as a

second line of defence. The Group has enhanced

overall corporate governance, as reflected in lower

SREP requirements in recent years. A robust and

comprehensive Risk Management framework is

defined and organised with regard to the Group’s

business and risk profile, based on a forward-looking

perspective to meet internally set strategic objectives

and all external requirements. The proactive risk

management and control system is primarily based on

Risk appetite and Risk strategy, which are consistent

with the Group’s business strategy, and focused on

early risk identification and efficient risk management.

Set governance and different risk management tools

enable adequate oversight of the Group’s risk profile,

proactively support its business operations and its

management by incorporating escalation procedures

and using appropriate mitigation measures when

necessary. In this respect, the Group is continually

enhancing and complementing the existing methods

and processes in all risk management segments.

NLB Group introduced its Group Strategy 2030, which

equally prioritises revenue generation through best

practices such as housing financing, bancassurance,

consumer finance, trade finance, transition finance,

and payments, as well as the transformation of the

Group into the leading operating platform in the region

through rigorous simplification and digitalisation, while

maintaining its prudent risk practices. In this respect,

particular emphasis is given to ongoing monitoring

of regulatory compliance, ICT (information and

communication technology) and operational risks,

and on their corresponding mitigation to maintain the

established Group’s reputation.

NLB Group is engaged in contributing to sustainable

finance by incorporating environmental, social and

governance (ESG) risks into its business strategies, risk

management framework and internal governance

arrangements. With the adoption of the NLB Group

Sustainability programme, the Group implemented

sustainability elements across three pillars: sustainable

finance, sustainable operations, and contribution to

society. The goal of this strategic, organisation-wide

initiative is to ensure sustainable financial performance

of the Group by considering ESG risks and opportunities

in its operations, and to actively contribute to a more

balanced and inclusive economic and social system.

Thus, sustainable finance integrates ESG criteria into

the Group’s business and investment decisions for

the lasting benefit of the Group’s clients and society.

Moreover, NLB, as a member of the former UN Net-

Zero Banking Alliance, publicly disclosed its Net-Zero

commitment and corresponding targets. With this, the

Bank continues to align its lending and investment

portfolio with Net-Zero emissions by 2050.

The NLB Group Sustainability Committee oversees the

integration of ESG factors into the NLB Group’s business

model. The management of ESG risks aligns with the

Group’s overall risk management framework, namely

the credit approval process, the collateral evaluation

process and related credit portfolio management.

It follows ECB and EBA guidelines, with a tendency

towards their comprehensive integration into all relevant

processes. Consequently, management of these risks is

also integrated into the BCP, operational, liquidity, and

market risk management framework. The availability of

ESG data in the region where the NLB Group operates

remains limited. Nevertheless, the Group established a

process for obtaining relevant ESG-related data from its

clients, which is a prerequisite for adequate decision-

making and the corresponding proactive management

of ESG risks.

NLB Group plans a prudent risk profile, optimal capital

utilisation, and profitable operations in the long run,

while considering the risks assumed. The Business

strategy, the Risk appetite, the Risk strategy and the

key internal risk policies of NLB Group, approved by

the Management and Supervisory Boards, specify the

strategic objectives and guidelines concerning risk

assumption, the approaches and methodologies of

monitoring, measuring, mitigating, and managing all

types of risk at different relevant levels. Moreover, the

main strategic risk guidelines are consistently integrated

into regular business strategy reviews, the budgeting

process and other strategic decisions, thereby ensuring

informed decision-making. NLB Group regularly monitors

its target risk appetite profile and internal capital

allocation, representing the key components of proactive

management. Risk limits usage and potential deviations

from limits or target values are regularly reported to the

respective committees and/or the Management Board of

the Bank, the Risk Committee of the Supervisory Board,

and the Supervisory Board of the Bank.

Additionally, NLB Group established a comprehensive

stress-testing framework and other early warning

systems across different risk areas, with the intention

153

of contributing to the setting and pursuing the Group’s

business strategy, supporting ongoing decision-making,

strengthening existing internal controls, and enabling

timely responses when necessary. The stress-testing

framework covers all material risk types, ESG-related

risks, and various relevant stress scenarios or sensitivity

analyses, according to the vulnerability of the Group’s

business model. Stress-testing plays an important

role in assessing the Group’s resilience to stressed

circumstances, namely from a profitability, capital

adequacy, and forward-looking liquidity perspective. As

such, it is embedded into the Group’s Risk management

system, namely Risk appetite, ICAAP, ILAAP, and

Recovery plan, as an important component of sound

risk management. In addition to internal stress-testing,

NLB Group, as a systemically important bank, also

participates in the ECB’s regulatory stress test exercises.

NLB Group is the largest Slovenian banking and

financial group with an important presence in the SEE

region. In accordance with its new Strategy 2030, NLB

intends to be the leading bank in SEE and aims to

provide international best practices across its customers

while building an operating platform based on digital

services, while maintaining its prudent risk practices.

The Group continues strengthening its market position

in its home region, actively participating in market

growth and consolidation, and promoting the ESG

agenda. NLB Group has a well-diversified business

model. Efficient risk and capital management is crucial

for the Group to sustain long-term profitable operations.

Based on the Group’s business strategy, credit risk is

the dominant risk category, followed by credit spread

risk in the banking book portfolio, interest rate risk in

the banking book, liquidity risk, operational and ICT

risks, market risk, and other non-financial risks. The

Group integrates and manages ESG risks within the

established risk management framework, where the

aforementioned risk is one of the risk drivers of the

existing type of risks, such as credit, liquidity, market,

and operational risk. Regular risk identification and

assessment are performed within the ICAAP and ILAAP

processes to ensure their overall control and effective

risk management on an ongoing basis.

Managing risks and capital efficiently at all levels is

crucial to NLB Group’s sustained long-term profitable

operations. Management of credit risk, representing

the Group’s most important risk, focuses on taking

moderate risks – a diversified credit portfolio, adequate

credit portfolio quality, a sustainable cost of risk,

and ensuring an optimal return considering the risks

assumed. The liquidity risk tolerance is low. The NLB

Group must maintain an appropriate level of liquidity

at all times to meet its short-term liabilities, even if a

specific stress scenario is realised. Further, to minimise

this risk, the Group pursues an appropriate structure

of sources of financing. The Group limited exposure

to credit spread risk arising from the valuation risk of

debt securities portfolio servicing as liquidity reserves,

to the medium level. The NLB Group’s basic orientation

to managing interest rate risk is to limit unexpected

negative effects on revenues and capital arising from

changes in market interest rates, and, therefore, a

medium tolerance for this risk is stated. Moreover, in

2025, the Group further enhanced the existing interest

rate risk management practices and IT platform. When

assuming operational risk, the NLB Group maintains the

orientation that such risk must not significantly impact

its operations. Risk appetite for operational risks is

low to medium, with a focus on mitigation actions for

important risks and on key risk indicators serving as an

early warning system. To adequately manage ICT risks

and ensure compliance with the requirements of the

Digital Operational Resilience Act (DORA), a dedicated

second line of defence within the risk management

function and ITC risk management framework has

been established. Special attention is given to their

regular and comprehensive monitoring and mitigation.

The conclusion of transactions in derivative financial

instruments at NLB d.d. is primarily limited to servicing

customers and hedging the Bank’s own positions. In

the area of currency risk, the NLB Group thus aims for

low to moderate exposure. Based on the environmental

and climate risk assessment, the impact of these risks

is estimated to be low, except for transition risk in the

credit risk area, which is assessed as low to medium. The

tolerance for all other risk types, including non-financial

risks, is set with a focus on minimising their possible

impacts on the Group’s operations.

The main NLB Group Risk Appetite Statement objectives

are as follows:

preservation of regulatory and internal capital

adequacy,

fulfilment of MREL requirement,

maintenance of low leverage,

maintenance of a solid liquidity position and stable

customers’ deposits as the main funding base,

improvement in the quality of the credit portfolio,

sufficient NPL coverage, sustainable credit risk

volatility, sustainable cost of risk across the economic

cycle, limited Stage 2 exposures, sustainable industry

and individual concentration, sustainable exposure to

cross-border, leverage transactions, M&A, real estate

financing and specialised lending,

diversification of risk in exposures to banks and

sovereigns,

limited exposure to interest rate and credit spread risk,

limited exposure to foreign exchange risk,

limited tolerance to net losses from operational and ICT

risk,

sustainable exposure to ESG risks, including a portfolio

decarbonisation strategy based on NZBA-aligned

targets.

Values of the most important risk appetite indicators

of NLB Group as at the end of year 2025, reflecting

the interconnection between strategic business

orientations, risk strategy and targeted risk appetite

profile, were as follows:

Total capital ratio 20.1%,

Tier 1 capital ratio 17.4%,

Common Equity Tier 1 ratio (CET1) 15.4%,

MREL ratio 43.8%,

Leverage ratio 10.3%,

Cost-of-risk 29 bps,

The share of non-performing exposure (NPE %) by

EBA 1.4%,

Non-performing loans coverage ratio (NPL CR) 49.4%,

Loan-to-deposit ratio (LTD) 76.3%,

LCR 199.2%,

NSFR 163.7%,

EVE sensitivity (worst scenario) -2.7% of capital,

Transactional FX risk 0.3% of capital,

No new financing of coal mining and coal-fired

electricity generation (0 EUR),

Net losses from operational risk 5.4% of the capital

requirement for operational risk.

Sustainable ESG financing in accordance with the

Environmental and Social Management System (ESMS)

is integrated into the Group’s risk appetite and overall

risk management framework. Following the transition

154

of the former Net Zero Banking Alliance to the guidance

framework, the NLB Group’s climate strategy remains

unchanged and is addressed in the Group’s Risk

Appetite. Emission-based targets have been set for

Power Generation, Iron & Steel, Road Freight Corporates,

and Leasing. These were complemented by financing

targets for Residential and Commercial Real Estate,

Leasing (Passenger Cars), and client engagement

targets for Agriculture and Road Freight Transport,

while, for the Oil & Gas, Cement, and Aluminium sectors,

origination guidelines were set.

The Group’s credit portfolio continued to exhibit high

quality and remained well diversified, despite ongoing

geopolitical tensions and more adverse than anticipated

macroeconomic trends. The resilience of the Group

region contributed to maintaining non-performing ratios

at a sustainable level, although some increase in NPLs

was identified, predominantly in the corporate sector

in Slovenia. As an important strength, their coverage

ratio remained above the EU average. In 2025, the

Bank observed a deterioration in the creditworthiness

of a few larger companies operating in the steel, metal,

and automotive industries. The weakening of financial

indicators and intensified sector-specific headwinds

contributed to a recognised risk of default. As a result,

several exposures migrated to Stage 3 in accordance

with IFRS 9 impairment requirements. Nevertheless,

the cost of risk stood at 29 bps, staying within the

2025 expected range. The Group continues to monitor

macroeconomic and geopolitical factors closely,

remains very prudent in identifying any increase in

credit risk at an early stage in accordance with the Early

Warning System, and is proactive in NPL management.

The Group stayed well capitalised and well above the

risk appetite at both the Group and banking member

levels. The Group’s liquidity position also remained

solid, with liquidity indicators high above the regulatory

requirements, indicating its low tolerance for this

risk. Significant attention was paid to the structure

and concentration of liquidity reserves, while also

considering the potential adverse market movements.

Investment activity continued with a balanced approach

to identifying attractive market opportunities while

pursuing well-managed credit spread and interest

rate risk, as well as capital consumption. In addition,

the Group reduced the net interest income sensitivity in

2025. Interest rate risk exposure remained moderate

and stayed well within the risk appetite tolerance.

Consequently, NLB Group concluded 2025 as self-

funded, with strong liquidity and a very solid capital

position, demonstrating the Group’s financial resilience.

In May 2025, the merger of NLB Lease&Go, leasing,

Ljubljana and Summit Leasing Slovenija, Ljubljana

occurred. The merged entity operates under the name

NLB Lease&Go, leasing, Ljubljana and has become the

leading provider of leasing services on the Slovenian

market. Otherwise, during 2025, there were no other

transactions of sufficiently material nature to impact on

NLB Group’s risk profile or distribution of the risks on the

Group level.

A Condensed Statement of the management of risk

is also published on the NLB intranet with the aim of

strict adherence of the banks’ employees to the daily

operations of the Bank, as regards the definition and

importance of a consistent tendency of the adopted

risks, and ways to take into account when adopting its

daily business decisions.

Ljubljana, 9 April 2026

Primоž Karpe

VLADKA HROVAT

Croatia, United Kingdom

Balance Beam #0724, 2024

wooden chair, wooden beam,

various round and tubular objects

120 × 400 × 50 cm

A striking installation of fragile

balance acts as a powerful

metaphor for the uncertain fate

of the world and the vulnerability

of our foundations.

156

Disclosure on Shares and Shareholders of NLB

1. Information pursuant to

the Companies Act,

Article 70, paragraph 8

1.1. Structure of the Bank’s

share capital

The Bank has issued only ordinary registered no-par

value shares, the holders of which have a voting right

and the right to participate in the General Meeting of the

Bank’s shareholders, the pre-emptive right to subscribe

for new shares in case of a share capital increase, the

right to profit participation (dividends), the right to a share

in the surplus in the event of liquidation or bankruptcy of

the Bank, and the right to be informed. All shares belong

to a single class and are issued in book-entry form.

Information regarding the shareholder structure

of NLB (as at 31 December 2025) is available in the

subchapter

Shareholder structure of NLB

in the chapter

Shareholder Structure and Market Performance of

NLB’s Shares and GDRs

1.2. All restrictions relating to the

transfer of shares and the

restrictions on voting rights

The shares of the Bank are freely transferable, subject to

the provisions of the Articles of Association of the Bank,

which require the approval of the Supervisory Board,

namely for the transfer of shares of the Bank by which

the acquirer, together with the shares held by the holder

before such an acquisition and the shares held by third

parties for the account of the acquirer, exceeds the

share of 25% of the Bank’s voting shares. Approval for

the transfer of shares is issued by the Supervisory Board.

The Bank rejects the request for approval of transfer

shares if the acquirer, together with the shares held by

the acquirer before the acquisition and the shares held

by third parties for the account of the acquirer, exceed

the 25% share of the Bank with voting rights, increased

by one share.

Notwithstanding the provision mentioned in the first

paragraph, approval for the transfer of shares is not

required if the acquirer of the shares has acquired them

on account of third parties so that (s)he is not entitled

to exercise voting rights from these shares at his/her

sole discretion, while at the same time committing to the

Bank, (s)he will not exercise voting rights on the basis of

the instructions of an individual third party for whose

account (s)he has acquired the shares if, together with

the instructions for voting, (s)he does not receive a written

guarantee from the person that this person has shares on

his/her own account and that this person is not, directly or

indirectly, a holder of more than 25% of the Bank’s voting

rights. The acquirer who exceeds the share of 25% of the

Bank’s shares with voting rights and does not require the

issuance of approval for the transfer of shares or does not

receive the approval of the Bank may exercise the voting

right from 25% of the shares with the voting rights.

There are no restrictions other than those mentioned

and those that are regulatory.

1.3. Qualifying holdings

This information is included in the chapter

Governance Statement of NLB

1.4. Securities carrying special

controlling rights

This information is included in the chapter

Governance Statement of NLB

1.5. The employee share scheme, if

used by the company, for shares

to which the scheme relates and

about the method of exercising

control over this scheme, if

the controlling rights are not

exercised directly by employees

The Bank does not have an employee share scheme.

In accordance with the relevant remuneration

policies (when required by ZBan-3), a part of variable

remuneration of NLB’s Identified Staff shall consist

of NLB shares or NLB share-linked instruments or

equivalent non-cash instruments (the instrument used is

determined by the Supervisory Board). So far, the Bank

has not used its own shares for this purpose. It currently

uses NLB share-linked instruments.

More information will be available in the Report on

Remuneration for the members of the Management Body

of NLB d.d. in the 2025 Business Year.

1.6. Explanation regarding

restrictions related to

voting rights

1.7. All agreements among

shareholders which are known

to the company and could result

in restrictions relating to the

transfer of securities or voting

rights

The Bank is not aware of such agreements.

157

1.8. The company’s rules on the

appointment or replacement of

management and supervisory

boards members and changes

of the articles of association

1.9. Authorisations given to

management, particularly

authorisations to issue or

purchase own shares

1.10. All major agreements to

which the company is a party,

and which take effect, are

changed or cancelled following

a change in control over the

company resulting from a

bid, as laid down by the Act

governing M&A, and the effects

of such agreements

There are no major agreements to which the Bank is

a party, and which would take effect, be changed, or

cancelled following a change in control over the Bank

resulting from a bid.

1.11. All agreements between the

Bank and the members of its

management or supervision

bodies or its employees which

envisage compensation if, due

to a bid as laid down by the Act

governing M&A, these persons

resign, are dismissed without a

well-founded reason, or their

employment is terminated

In line with the employment contracts of the members of

the Management Board, if the Supervisory Board recalls a

member of the Management Board for other business and

economic reasons, such a member of the Management

Board is entitled to compensation for early discontinuation

of his term of office. The Supervisory Board may reduce

the compensation for early discontinuation of the term of

office before its payment (it may even reduce it to zero)

in accordance with the Remuneration Policy in the Bank

that regulates the remuneration of the members of the

Management Board. The member of the Management

Board shall not be entitled to compensation for early

discontinuation of the term of office if he/she continues

to be employed in the Bank or the NLB Group after the

discontinuation of the term of office or in case of regular

termination of the term of office. In the event of resignation,

the member of the Management Board shall not be

entitled to any compensation for early discontinuation of

the term of office.

2. Number of shares held

by members of the

Supervisory Board and

Table 42:

Number of shares held by members of the

Supervisory Board and Management Board

Shares held as at

Name of member of

Number

1,386

0.007%

—

—

—

—

—

190

0.001%

Name of member of

Number

1,850

0.009%

991

0.005%

1,000

0.005%

1,180

0.006%

650

0.003%

560

0.003%

333

0.002%

158

3. Stock option agreements

The Bank has no stock option agreements in relation to

its listed shares.

4. Dividend taxation

Withholding tax

In 2025, a Slovenian payer was required to deduct and

withhold the amount of Slovenian corporate or personal

income tax from dividend payments made to the certain

categories of payees:

Individuals: 25%

Intermediaries: 25%

Legal entities (other than Intermediaries): 15%.

There are some exemptions if dividends are paid to

intermediaries and legal entities

For the purposes of Slovenian tax legislation, the GDR

depositary will qualify as an intermediary. Therefore, the

dividends paid by the custodian to the GDR depositary

will be subject to the deduction and withholding of

Slovenian tax at the rate of 25%. A holder, an owner of

a GDR or a beneficial owner will be entitled, if and to the

extent applicable, to claim a refund of the withholding tax.

In the case of legal entities, the exemptions are related

to the characteristics of the legal entities.

Application of double tax treaties

If the payee is not an intermediary, Financial

Administration of the RoS (FURS) may approve the

application of a lower tax rate specified in the double

tax treaty between the RoS and the country of residence

of the payee if the Slovenian payer provides certain

information on the payee and a confirmation that the

payee is a resident for taxation purposes in such a

country, issued by the tax authorities of such a country.

Refund of withholding tax

If the Slovenian tax was deducted and withheld at a

higher tax rate than it would be paid if a Slovenian

payer would make the dividend payment directly to

such person as a payee or a higher tax rate than the

one specified in the double tax treaty, the payee of the

dividend is entitled to the refund of the overpaid tax. The

tax refund is enforced by filing a claim to the Financial

Administration of the RoS (FURS).

Legal persons

Dividends with respect to the shares received by a legal

person who is a Slovenian resident are exempt from

Slovenian corporate income tax (

davek od dohodkov

pravnih oseb

).

Individuals

The amount of tax withheld from a dividend payment

received by an individual constitutes the final amount

of Slovenian Personal Income Tax (

dohodnina

) with

respect to such a dividend payment.

159

Events after the End of the 2025 Financial Year

On 9 January 2026, NLB obtained ECB permission

to include its subordinated Additional Tier 1 notes of

EUR 300 million, issued on 26 November 2025 (ISIN

XS3227899989), into calculation of its Additional Tier 1

capital as of 31 December 2025.

On 24 February 2026, the formal procedure for

squeezing out the remaining shareholders of NLB

Banka, Banja Luka was completed. As of that date, NLB

became the owner of the remaining 91 shares of NLB

Banka, Banja Luka and thereby increased its capital

participation in the bank from 99.85% to 100%.

On 3 March 2026, Rating agency Moody’s raised

NLB’s long-term issuer credit ratings by one notch to

A2/P-1 from A3/P-2 and its long-term senior unsecured

rating to A3 from Baa1. The upgrade reflects the

Bank’s consistently strong financial performance,

robust profitability, and resilient asset risk metrics,

supported by diversified revenues and proficient

risk management across Slovenia and Southeastern

Europe. The outlook is stable.

On 16 March 2026, NLB received the decision of the BoS

regarding the MREL requirement, which replaces the

previous BoS decision. NLB must comply with the MREL

requirement on a consolidated basis at the resolution

group level, amounting to 30.15% of TREA (excluding

CBR) and 11.71% of the LRE. The requirement shall be met

at all times from and including the notification date. This

decision supersedes previous BoS decision on MREL

requirement dated 18 March 2025, which amounted to

29.93% of TREA (excluding CBR) and 11.24% of the LRE.

On 24 March 2026, NLB received permission of the Single

Resolution Board for the early redemption of its notes

in the aggregate nominal amount of EUR 500 million,

issued on 27 June 2023 and with maturity on 27 June

2027 (ISIN: XS2641055012).

160

Reconciliation of Financial Statements

in Business and Financial Part of the Report

Table 43:

Income Statement of NLB Group for the annual period ended 31 December 2025

Business report

Financial report

Notes

946.7

Interest and similar income

1,237,019

4.1.

Interest and similar expenses

(290,324)

4.1.

342.6

Fee and commission income

469,467

4.3.

Fee and commission expenses

(126,824)

4.3.

Dividend income

191

4.2.

Net income from financial transactions

33.7

Gains less losses from financial assets and liabilities

not measured at fair value through profit or loss

2,109

4.4.

Gains less losses from financial assets and liabilities held for trading

26,264

4.5.

Gains less losses from non-trading financial assets

mandatorily at fair value through profit or loss

788

4.6.

Gains less losses from financial liabilities measured

at fair value through profit or loss

(4,574)

Fair value adjustments in hedge accounting

(1,963)

5.5.a)

Foreign exchange translation gains less losses

11,256

4.7.

Gains less losses from modification of financial assets

(198)

4.13.

Net other income

(20.7)

Gains less losses on derecognition of non-financial assets

6,703

Other operating income

28,427

4.8.

Other operating expenses

(7,347)

4.9.

Cash contributions to resolution funds and

deposit guarantee schemes

(44,134)

4.11.

Gains less losses from non-current assets held for sale

2,579

Net gains or losses on derecognition of investments

in subsidiaries, associates and joint ventures

719

355.8

363,463

1,302.5

1,310,158

(352.3)

Administrative expenses

(589,563)

4.10.

(203.7)

(60.8)

(68,449)

4.12.

(616.8)

(658,012)

(33.5)

4.10.

(650.4)

(658,012)

652.1

652,146

(46.6)

Provisions for credit losses

1,616

4.14.

Impairment of financial assets

(48,191)

4.15.

(13.7)

Provisions for other liabilities and charges

(14,041)

4.14.

Impairment of non-financial assets

381

4.15.

(60.2)

(60,235)

Gains less losses from capital investment in

subsidiaries, associates, and joint ventures

Share of profit from investments in associates and joint

ventures (accounted for using the equity method)

1,455

5.12.e)

593.4

Profit before income tax

593,366

(74.7)

(74,675)

4.16.

15.6

Attributable to non-controlling interests

15,636

503.1

Attributable to owners of the parent

503,055

(i) Operating lease for the NLB Group in the Business Report is presented on a net basis: non-interest income and related costs are netted by the amount of amortisation.

161

Table 44:

Statement of Financial Position of NLB Group as at 31 December 2025

Notes

Assets

Cash, cash balances at central banks, and

other demand deposits at banks

4,371.8

Cash, cash balances at central banks and

other demand deposits at banks

4,371,798

5.1.

Loans to banks

404.5

Financial assets measured at amortised cost -

loans and advances to banks

404,532

5.6.b)

18,705.5

Financial assets measured at amortised cost -

loans and advances to customers

18,705,474

5.6.c)

7,087.8

7,087,796

- Trading book

6.5

Financial assets held for trading

4,552

5.2.a)

- Non-trading book

7,081.3

Non-trading financial assets mandatorily at fair value

through profit or loss - part (without loans)

21,706

5.3.a)

Financial assets measured at fair value

through other comprehensive income

2,744,384

5.4.

Financial assets measured at amortised cost - debt securities

4,317,154

5.6.a)

Investments in subsidiaries, associates, and joint ventures

14.1

Investments in associates and joint ventures

14,137

5.12.d)

Property and equipment

331.3

331,255

5.8.

Investment property

24.4

24,370

5.9.

Intangible assets

115.9

115,871

5.10.

419.6

other financial assets

170,741

5.6.d)

Derivatives - hedge accounting

85,114

5.5.b)

Fair value changes of the hedged items in

portfolio hedge of interest rate risk

(13,768)

5.5.c)

Current income tax assets

27

Deferred income tax assets

108,251

5.17.

63,856

5.13.

Non-current assets held for sale

5,378

5.7.

Total Assets

31,474,832

24,509.9

Financial liabilities measured at amortised cost - due to customers

24,509,880

5.15.a)

Deposits from banks and central banks

98.8

Financial liabilities measured at amortised cost -

deposits from banks and central banks

98,758

5.15.a)

280.0

Financial liabilities measured at amortised cost -

borrowings from banks and central banks

166,775

5.15.b)

borrowings from other customers

113,216

5.15.b)

545.6

debt securities issued

2,099,220

5.15.c)

1,553.6

626.6

Financial liabilities held for trading

4,555

5.2.b)

Financial liabilities measured at fair value

through profit or loss

13,648

5.3.b)

other financial liabilities

362,649

5.15.d)

Derivatives - hedge accounting

2,898

5.5.b)

Provisions

100,236

5.16.

Current income tax liabilities

20,969

Deferred income tax liabilities

425

5.17.

121,269

5.19.

3,781.6

Equity and reserves attributable to owners of the parent

3,781,576

78.8

78,758

Total Liabilities and Equity

Total liabilities and equity

31,474,832

162

The Bank has chosen to present these APIs, either because they are in common use within the industry or because

they are commonly used by investors and as such are useful for disclosure. The APIs are used internally to monitor

and manage operations of the Bank and the Group, and are not considered to be directly comparable with similar

KPIs presented by other companies. The Bank’s APIs are described below together with definition.

Table 45:

Description

Calculation

Notes

Cost of risk (CoR)

Calculated as the ratio between credit

impairments and provisions annualised

from the income statement and

average net loans to customers.

Numerator:

Credit impairments

NLB internal information. Credit impairments and provisions are annualised,

calculated as all established and released impairments on loans and provisions

for off-balance (from the income statement) in the period divided by the number

of months for the reporting period and multiplied by 12. The net established Credit

impairments and provisions are shown with a positive sign, and the net released

Credit impairments and provisions are shown with a negative sign.

Denominator:

Average net loans

NLB internal information. Average net loans to customers are calculated as the

sum of the balance of the previous year end (31 December) and monthly balances

of the last day of each month from January to month t divided by (t+1).

Cost to income ratio (CIR)

Indicator of cost efficiency, calculated

as the ratio between the total costs

and total net operating income.

Numerator:

Denominator:

Total average cost of funding

(quarterly)

Calculated as the ratio between

interest expenses annualised and

average interest-bearing liabilities.

Interest expenses

Interest expenses (quarterly) are annualised, calculated as the sum of interest

expenses in the period divided by the number of days in the quarter and

multiplied by the number of days in the year. Interest expenses on interest-

bearing liabilities also include interest income from negative interest rate on

financial liabilities.

Average interest-

bearing liabilities

NLB internal information. Average interest-bearing liabilities (quarterly) for the

NLB Group are calculated as the sum of monthly balances (t) for the

corresponding quarter and monthly balance at the end of the previous quarter

divided by (t+1).

Average cost of wholesale funding

(quarterly)

Calculated as the ratio between interest

expenses on deposits from customers

annualised and average wholesale funding.

Wholesale funding includes deposits from

banks and central banks, borrowings, debt

instruments, and subordinated liabilities.

Interest expenses from

wholesale funding

Interest expenses from wholesale funding (quarterly) are annualised, calculated as

the sum of interest expenses from wholesale funding in the period divided by the

number of days in the quarter and multiplied by the number of days in the year.

Average wholesale

funding

NLB internal information. Average wholesale funding (quarterly) for the NLB

Group, calculated as the sum of monthly balances (t) for the corresponding

quarters and monthly balance at the end of the previous quarter divided by (t+1).

Average interest rate for deposits from

customers (quarterly)

Calculated as the ratio between

interest expenses on deposits from

customers annualised and average

deposits from customers.

Interest expenses on

deposits from customers

Interest expenses on deposits from customers (quarterly) are annualised,

calculated as the sum of interest expenses on deposits from customers in the

period divided by the number of days in the quarter and multiplied by the

number of days in the year.

Average deposits

from customers

NLB internal information. Average deposits from customers (quarterly) for the

NLB Group, calculated as the sum of monthly balances (t) for the corresponding

quarters and monthly balance at the end of the previous quarter divided by (t+1).

Deposit beta

Calculated as the ratio between the

change of interest rate on deposits from

customers and change of ECB deposit facility

interest rate over the selected period.

NLB internal information. Interest rate on deposits from customers

(quarterly average).

ECB deposit facility

interest rate

Data from the ECB. Deposit facility interest rate (quarterly average).

163

Description

Calculation

Notes

Credit portfolio under IFRS 9

IFRS 9 requires an expected loss model,

where an allowance for the expected credit

losses (ECL) is formed. Loans measured at

amortised costs (AC) are classified into the

following stages (before deduction of loan

loss allowances):

Stage 1 – A performing portfolio: no

significant increase of credit risk since

initial recognition, NLB Group recognises an

allowance based on a 12-month period.

Stage 2 – An underperforming portfolio:

a significant increase in credit risk since

initial recognition, NLB Group recognises an

allowance for a lifetime period.

Stage 3 – An impaired portfolio: NLB Group

recognises lifetime allowances for these

financial assets. The definition of default is

harmonised with the EBA guidelines.

A significant increase in credit risk

is assumed: i) when a credit rating

significantly deteriorates at the reporting

date in comparison to the credit rating

at initial recognition; ii) when a financial

asset has material delays over 30 days

(days past due are also included in the

credit rating assessment); iii) if NLB Group

expects to grant the client forbearance or

if the client is placed on the watch list.

Financial assets measured

mandatorily at fair value through

profit or loss (FVTPL)

Financial assets measured mandatorily at

fair value through profit or loss represent

the minor part (no FVTPL portfolio in

December 2025 and December 2024; 0.002%

December 2023) of the loan portfolio (before

the deduction of fair value for credit risk;

loans with contractual cash flows that are

not solely payments of principal and interest

on the principal amount outstanding).

Classification into stages is calculated in

the internal data source, by which the NLB

Group measures the loan portfolio quality,

and which is also published in the Business

Report of Annual and Interim Reports.

AC - IFRS 9 classification into Stage 1

Total (AC) loans in Stage 1

Total gross loans

and advances

AC - IFRS 9 classification into Stage 2

Total (AC) loans in Stage 2

Total gross loans

and advances

AC + FVTPL - IFRS 9 classification into

Stage 3

Total (AC) loans in Stage

3 + Total (FVTPL) non-

performing loans

AC - Corporates - IFRS 9 classification

into Stage 1

Total (AC) loans in

Stage 1 to Corporates

to Corporates

164

Notes

AC - Corporates - IFRS 9 classification

into Stage 2

Total (AC) loans in

Stage 2 to Corporates

to Corporates

AC + FVTPL - Corporates - IFRS 9

classification into Stage 3

Stage 3 to Corporates

+ Total (FVTPL) non-

performing loans

AC - Retail - IFRS 9 classification into

Stage 1 to Retail

Total gross loans to Retail

AC - Retail - IFRS 9 classification into

Stage 2 to Retail

Total gross loans to Retail

Stage 3

Stage 3 to Retail

Leverage ratio

Its calculation uses Tier 1 as the numerator,

and the denominator is the total exposure

of all active balance sheet and off-

balance-sheet items after the adjustments

are made in the context of which the

exposures from individual derivatives,

exposures from transactions of security

funding, and other off-balance sheet

items are especially pointed out.

Tier 1

The leverage ratio is a non-risk based supplementary measure to the risk-based

capital requirements. A minimum leverage ratio requirement is 3%. The purpose

of the leverage ratio is to limit the size of the Bank balance sheets, and with a

special emphasis on exposures which are not weighted within the framework of

the existing capital requirement calculations.

Total Leverage Ratio

exposure measure

Liquidity coverage ratio (LCR)

LCR refers to high liquid assets held

by the financial institution to cover

its net liquidity outflows over a

30-calendar day stress period.

Stock of HQLA

The LCR requires financial institutions to maintain a sufficient reserve of high-

quality liquid assets (HQLA) to withstand a crisis that pressure their cash flows.

The assets to hold must equal to or greater than their net cash outflow over a

30-calendar-day stress period (having at least 100% coverage). The parameters

of the stress scenario are defined under Basel III guidelines. The calculations

presented are based on internal data sources.

Its calculation is based on the European Commission’s Delegated Act on LCR.

Net liquidity outflow

Net loan to deposit ratio (LTD)

Calculated as the ratio between net loans to

customers and deposits from customers.

There is no regulatory defined limitation on the LTD; however, this measure aims

to restrict the extensive growth of the loan portfolio.

Net interest margin on the basis of

interest-bearing assets

net interest income annualised and

average interest-bearing assets.

Net interest income is annualised, and calculated as the sum of interest income

and interest expenses in the period divided by the number of days in the period

and multiplied by the number of days in the year.

Average interest-

bearing assets

NLB internal information. Average interest-bearing assets for NLB are calculated

as the sum of total assets of the previous year end (31 December) and daily

balances in the period (from 1 January to day d – the last day in the reporting

month) divided by (d+1). Average interest-bearing assets for NLB Group and for

individual bank members are calculated as the sum of balance of the previous

year end (31 December) and monthly balances of the last day of each month from

January to the reporting month t divided by (t+1).

165

Net interest margin on the basis of

interest-bearing assets (quarterly)

Calculated as the ratio between the

net interest income annualised and

average interest-bearing assets.

Net interest income (quarterly) is annualised, calculated as the sum of interest

income and interest expenses in the period divided by the number of days in the

quarter and multiplied by the number of days in the year.

bearing assets

NLB internal information. Average interest-bearing assets (quarterly) for the NLB

Group are calculated as the sum of monthly balances (t) for the corresponding

quarter and monthly balance at the end of the previous quarter divided by (t+1).

Net interest margin on total assets

Calculated as the ratio between net interest

income annualised, and average total assets.

Net interest income is annualised, and calculated as the sum of interest income

and interest expenses in the period divided by the number of days in the period

and multiplied by the number of days in the year.

Average total assets

NLB internal information. Average total assets for the NLB Group are calculated

as the sum of balance of the previous year end (31 December) and monthly

balances of the last day of each month from January to month t divided by (t+1).

Average total assets for NLB are calculated as the sum of total assets of the

previous year end (31 December) and daily balances in the period (from 1 January

to day d – the last day in the reporting month) divided by (t+1).

NPE per cent. (EBA def.)

In accordance with EBA methodology, NPE as

a percentage of all exposures to clients in the

Finrep18 before the deduction of allowances

for the ECL; the ratio is in gross terms.

Total Non-Performing on-

balance and off-balance

Exposure in Finrep18

NPE includes risk exposure to D- and E-rated clients (includes loans and

advances, debt securities, and off-balance exposures, which are included in the

report Finrep18; before the deduction of allowances for the ECL). Non-performing

exposures measured by fair value loans through P&L (FVTPL) are considered at

fair value increased by the amount of negative fair changes for credit risk.

The share of NPEs is calculated based on an internal data source, with which the

NLB Group monitors the portfolio quality.

Total on-balance

and off-balance

exposures in Finrep18

NPE per cent. (EBA def.) (BoS)

The NPE indicator, according to the

BoS calculation, differs from the EBA

methodology in the treatment of debt

instruments measured at FVOCI. Due

to impairments, value adjustments

increase the carrying amount of debt

instruments measured at FVOCI.

Total Non-Performing on-

balance and off-balance

Exposure in Finrep18

Total on-balance and

off-balance exposures

in Finrep18, where

carrying amount of

FVOCI is increased

by value adjustments

due to impairments

NPL per cent.

Non-performing loans as a percentage of

total loans to clients before deduction of

loan loss allowances; ratio in gross terms.

Total Non-

Performing Loans

Non-performing loans include loans to D- and E-rated clients, namely loans at

least 90 days past due or loans unlikely to be repaid without recourse to

collateral (before deduction of loan loss allowances).

The share of non-performing loans is calculated based on an internal data

source, with which the NLB Group monitors the loan portfolio quality.

NPL coverage ratio 1 (NPL CR 1)

The coverage of the gross non-performing

loans portfolio with loan loss allowances on

the entire loan portfolio - loan impairment

in respect of non-performing loans.

It shows the level of credit provisions

that the entity has already absorbed

into its profit and loss accounts with

respect to the total of impaired loans.

Loan loss allowances

for entire loan portfolio

The NPL coverage ratio 1 is calculated based on an internal data source, with

which the NLB Group monitors the quality of the loan portfolio.

Total Non-

Performing Loans

NPL coverage ratio 2 (NPL CR 2)

The coverage of the gross non-performing

loans portfolio with loan loss allowances

on the non-performing loans portfolio.

Loan loss allowances

for non-performing

loan portfolio

The NPL coverage ratio 2 is calculated based on an internal data source, with

which the NLB Group monitors the loan portfolio quality.

Net NPL ratio

The share of net non-performing loans in

total net loans: non-performing loans after

deduction of loss allowances on the non-

performing loans portfolio as a percentage

of total loans to clients after the deduction of

loan loss allowances; the ratio is in net terms.

Net volume of non-

The calculations are based on internal data sources.

Total Net Loans

166

Received collaterals for NPLs/NPL

The coverage of the gross non-

performing loans portfolio with

collateral for non-performing loans.

Gross volume of Non-

covered by collaterals

The collateral market value is used for calculation. The calculations are based on

internal data sources.

Gross NPL ratio (EBA def.)

The ratio of the gross carrying amount of

non-performing loans and advances to

the total gross carrying amount of loans

and advances, in accordance with the

EBA methodology (report Finrep18).

Gross volume of Non-

Performing Loans and

advances without loans

held for sale, cash

balances at CBs and

other demand deposits

Non-performing loans include loans and advances in accordance with EBA

Methodology that are classified as D and E, namely loans at least 90 days past

due or loans unlikely to be repaid without recourse to collateral (before deduction

of loan loss allowances).

For calculation, loans and advances classified as held for sale, cash balances at

CBs, and other demand deposits are excluded from the denominator and the

numerator. The calculations are based on internal data sources.

Gross volume of Loans

and advances in Finrep18

without loans held for

sale, cash balances

at CBs and other

demand deposits

Gross NPL ratio (EBA def.) (BoS)

The ratio of the gross carrying amount of

non-performing loans and advances to

the total gross carrying amount of loans

and advances, in accordance with the

EBA methodology (report Finrep18).

Cash balances at CBs and other demand deposits are included in the calculation.

The EU banking sector indicator is published quarterly by the EBA in the Risk

dashboard. The calculations are based on internal data sources.

Gross volume of Loans

and advances in Finrep18

NPL coverage ratio (EBA def.)

The ratio of the amount of accumulated

impairment, negative changes in fair value

due to credit risk to the non-performing

loans and advances, in accordance with

the EBA methodology (report Finrep18).

Volume of allowances

and value adjustments

for credit losses on

Non-Performing loans

Loans and advances classified as held for sale, cash balances at CBs and other

demand deposits are excluded from the denominator and the numerator.

Performing loans

NPL coverage ratio (EBA def.) (BoS)

The NPL coverage ratio is the ratio of

the amount of accumulated impairment,

negative changes in fair value due to

credit risk to the non-performing loans

Volume of allowances

and value adjustments

for credit losses on

Non-Performing loans

Cash balances at CBs and other demand deposits are included in the calculation.

Performing loans

NPL collateral coverage ratio (EBA def.)

The NPL collateral ratio is the ratio of the

collateral received for non-performing

loans and advances to the gross carrying

amount of collateralised non-performing

loans and advances, in accordance with

the EBA methodology (report Finrep18).

Volume of collateral

received up to the

carrying amount of

each loan or advance

The calculation is provided on a single loan basis. The NPLs where the amount of

collateral received exceeds the net non-performing of each loan exposure are the

subject of calculation.

Gross volume of

collateralized Non-

167

Net stable funding ratio (NSFR)

The net stable funding ratio is a liquidity

risk standard requiring financial institutions

to hold enough stable funding to cover

the duration of their long-term assets

Amount of available

stable funding

NSFR is defined as the amount of available stable funding relative to the amount

of required stable funding and is based on the current Basel Committee

guidelines. This ratio should be equal to at least 100% on an ongoing basis.

“Available stable funding” is defined as the portion of capital and liabilities

expected to be reliable over the time horizon considered by the NSFR, which

extends to one year. The amount of such stable funding required of a specific

institution is a function of the liquidity characteristics and residual maturities of

the various assets held by that institution and those of its off-balance-sheet (OBS)

exposures. The calculations presented are based on internal data sources.

Amount of required

stable funding

EVE as % of Equity

The EVE (Economic Value of Equity) method

measures the sensitivity of changes in

market interest rates on the economic

value of financial instruments. EVE

represents the present value of net future

cash flows and provides a comprehensive

view of the possible long-term effects of

changing interest rates under at least six

prescribed standardised interest rate shock

scenarios or more if necessary, according

to the situation on financial markets.

Interest risk in banking

book – EVE

Calculations take into account behavioural and automatic options, as well as the

allocation of non-maturing deposits.

The assessment of the impact of a change in interest rates of 200 bps on the

economic value of the banking book position.

Equity (Tier I)

Operational business margin (OBM)

operational business net income

annualised and average assets.

Operational business

net income

Operational business net income is annualised, and calculated as operational

business income in the period divided by the number of days in the period and

multiplied by the number of days in the year. Operational business income

consists of net interest income (excluding interest expenses from subordinated

securities), net fees and commissions and net gains and losses from financial

assets and liabilities held for trading that derive from foreign exchange trading.

Average total assets

NLB internal information. Average total assets are calculated as a sum of balance

as at the end of the previous year end (31 December) and monthly balances of the

last day of each month from January to month t divided by (t+1).

Operational business margin (OBM)

operational business net income

annualised and average assets.

Operational business

net income

Operational business net income (quarterly) is annualised, and calculated as

operational business income in the period divided by the number of days in the

quarter and multiplied by the number of days in the year. Operational business

income consists of net interest income (excluding interest expenses from

subordinated securities), net fees and commissions and net gains and losses

from financial assets and liabilities held for trading that derive from foreign

exchange trading.

NLB internal information. Average total assets (quarterly) for the NLB Group are

calculated as the sum of monthly balances (t) for the corresponding quarter and

monthly balance at the end of the previous quarter divided by (t+1).

Return on equity before tax (ROE b.t.)

Calculated as the ratio between result

before tax annualised and average total

equity (including non-controlling interests).

The result before tax is annualised and calculated as the result before tax in

the period divided by the number of months for the reporting period and

multiplied by 12.

Average total equity

NLB internal information. Average total equity (including non-controlling

interests) is calculated as the sum of the balance as at the end of the previous

year end (31 December) and monthly balances of the last day of each month from

January to month t divided by (t+1).

Return on equity after tax (ROE a.t.)

Calculated as the ratio between result

after tax annualised and average equity.

The result after tax is annualised and calculated as the result after tax in the

period divided by the number of months for the reporting period and

multiplied by 12.

Average equity

NLB internal information. Average equity is calculated as the sum of the balance

as at the end of the previous year end (31 December) and monthly balances of the

last day of each month from January to month t divided by (t+1).

Return on Tangible Equity after tax

(ROTE a.t.)

Calculated as the ratio between the result

after tax reduced by AT1 coupons annualised

and the average equity reduced by intangible

assets and Additional Tier 1 instrument (AT1).

Result after tax reduced

by AT1 coupons

The result after tax reduced by AT1 coupons is annualised and calculated as the

result after tax less interest expenses from AT1 coupons in the period divided by

the number of months for the reporting period and multiplied by 12.

Average equity

reduced by intangible

assets and AT1

NLB internal information. Average equity reduced by intangible assets and AT1

equity instruments is calculated as the sum of the balance at the end of the

previous year (31 December) and monthly balances of the last day of each month

from January to the month t divided by (t+1).

168

Return on equity after tax (ROE a.t.)

normalised

Calculated as the ratio between result after

tax reduced by AT1 coupons annualised

and average risk adjusted capital. Average

risk adjusted capital is calculated as a CET1

strategic target requirement of average

Risk Weighted Assets (RWA) and reduced

by CET1 minority shareholder capital.

Result after tax reduced

by AT1 coupons

Result after tax reduced by AT1 coupons is annualised, calculated as a result after

tax less interest expenses from AT1 coupons in the period divided by the number

of months for the reporting period and multiplied by 12.

Average risk

adjusted capital

NLB internal information. Average risk adjusted capital is calculated as a sum of

Risk Weighted Assets (RWA) balance as at the end of the previous year end

(31 December) and monthly Risk Weighted Assets (RWA) balances of the last day

of each month from January to month t divided by (t+1), multiplied by CET1

strategic target capital requirement (13.0%) and reduced by CET1 minority

shareholder capital.

Return on assets before tax (ROA b.t.)

Calculated as the ratio between result before

tax annualised and average total assets.

The result before tax is annualised and calculated as the result before tax in

the period divided by the number of months for the reporting period and

NLB internal information. Average total assets are calculated as the sum of the

balance as at the end of the previous year end (31 December) and the monthly

balances of the last day of each month from January to month t divided by (t+1).

Return on assets after tax (ROA a.t.)

Calculated as the ratio between result after

tax annualised and average total assets.

The result after tax is annualised and calculated as the result after tax in the

period divided by the number of months for the reporting period and

NLB internal information. Average total assets are calculated as the sum of

balance as at the end of the previous year end (31 December) and monthly

Total capital ratio (TCR)

TCR is the own funds of the institution

expressed as a percentage of the

total risk exposure amount.

Total capital (Own funds)

Total risk exposure

Amount (Total RWA)

(i) All alternative performance indicators are expressed in %, except the cost of risk (CoR) is expressed in bps.

169

NLB Group Chart

32

32 The reference is made to this chapter from the

Sustainability Statement chapter SBM-1 Strategy, business

model, and value chain.

Nova Ljubljanska banka d.d., Ljubljana

Core

Non-Core

Financial organisations

Companies

Banks

Financial organisations

Companies

Bankart,

46.03%

46.03%

NLB Skladi,

100%

100%

Prvi faktor, v likvidaciji,

50%

50%

PRO-REM, Ljubljana -

v likvidaciji

(v)

NLB Lease&Go, leasing,

NLB MUZA,

NLB Real Estate,

NLB Car&Go,

(vii)

Foreign markets

Foreign markets

(viii)

Sarajevo

97.35%

97.35%

Podgorica

99.87%

99.87%

Prishtina

82.38%

82.38%

99.85%

99.85%

86.97%

86.97%

NLB Komercijalna Banka,

(vi)

51%

NLB Lease&Go Leasing

50.89%

99.80%

Mobil Leasing,

Zagreb

(vii)

NLB DigIT,

NLB Real Estate,

NLB InterFinanz in

Liquidation, Zürich

NLB InterFinanz,

Beograd – u likvidaciji

LHB AG,

Frankfurt am Main

NLB Crna Gora,

Podgorica

NLB Srbija,

Prvi faktor u likvidaciji,

Zagreb

(i.a)

Prvi faktor-faktoring,

Beograd – u likvidaciji

(i.b)

90%

95%

Legend:

The chart shows voting rights shares. The Group includes entities according to the definition in the Financial Conglomerates Act (Article 2).

(i.a) 100% direct ownership Prvi Faktor d.o.o., v likvidaciji, Ljubljana.

(i.b) 90% direct ownership Prvi Faktor d.o.o., v likvidaciji, Ljubljana, 5% NLB d.d., 5% SID banka d.d.

- 46.03% direct ownership NLB d.d.

- Abanka merged into Nova KB and, in addition, in September 2024 Nova KBM and SKB merged into OTP banka d.d., therefore the share in Bankart increased from

29.22% to 43.06%. This is over the 25% threshhold set in the Founding agreement - no shareholder other than NLB can have more than 25% capital share in Bankart.

51% direct ownership NLB Lease&Go, leasing, d.o.o. Ljubljana, and 49% NLB Banka AD Skopje.

50.89% direct ownership NLB Lease&Go, leasing, d.o.o. Ljubljana, 48.91% NLB Komercijalna banka AD Beograd.

(v)

100% direct ownership NLB Real Estate d.o.o. Ljubljana.

100% direct ownership NLB Skladi d.o.o., Ljubljana.

(vii) 100% direct ownership NLB Lease&Go, leasing, d.o.o. Ljubljana.

(viii) OL Nekretnine u likvidaciji, Zagreb: The liquidation of OL Nekretnine d.o.o. u likvidaciji has been completed, all remaining assets have been distributed to its sole

owner in December 2025. The company was deleted from the court register on 7 January 2026.

Subsidiary

% direct share

% indirect share at the group level

Associate

% direct share

% indirect share at the group level

Joint Venture

170

Works Council

Group Steering

Strategy and Business

Development

Legal and Secretariat

Brand and Communication

Human Resources and

Organisation Development

Global Risk

Credit Risk - Corporate

Credit Risk - Retail

Evaluation and Control

Restructuring

NPE Management and

Legal Proceedings

CRO

CFO

CMO

Transformation

IT Delivery

Business Intelligence and

Analytics

IT Governance and Architecture

COO

Group Real Estate Management

Controlling

Financial Accounting and

Administration

Financial Markets

Investor Relations

Distribution Network

Area Branch Ljubljana

Area Branch Northwest and

Central Slovenia

Area Branch Northeast Slovenia

Area Branch East Slovenia

Area Branch Southeast Slovenia

Area Branch Southwest Slovenia

Micro Enterprises

Mobile Banking

Distribution Network Coordination

CSA & Cross-Border Financing

Large Corporates

Small and Mid Corporates

Trade Finance Services

Investment Banking and

Custody

NLB Group Corporate and

Investment Banking Management

Customer, Product Management

and Digital Services

Private Banking

KC 24/7

Development of Lending

Solutions for Retail

CEO

Anti-Money Laundering and

Counter-Terrorism Financing

IT Infrastructure

Data and Artificial Intelligence

Procurement

Payments and Cards Services

and Business Development

Payments Processing

Cash Processing

Financial Instruments Processing

Corporate Clients Review and

Account Products Delivery

Retail Banking Processing

Corporate Loans and Trade

Finance Delivery

Organisational Structure of NLB

(i) Works Council is an independent organisational unit with no subordinate or superior organisational units, and it operates in accordance with ZSDU.

Note: The tasks and responsibilities of Global Risk, Compliance and Integrity, and Internal Audit are taken into account in accordance with the definitions of the (currently valid) Banking Act (ZBan-3).

Uncover the NLB Group’s sustainability

performance and take a closer look at how

it impacts the people, environment, and

our home region’s future.

SUSTAINABILITY

STATEMENT

172

NLB Group Sustainability

Journey

General Disclosures

Climate Change (Mitigation

and Adaptation)

Own Workforce

Affected Communities

Consumers and End Users

Business Conduct

Appendices

Contents

33 The chapters NLB Group Sustainability Journey and Complementary Information: Sustainability Supply Chain, as well as Appendix 5 and the Appendix, are not subject to assurance.

176

General information

177

NLB Group Sustainability Journey

33

182

General Disclosures

185

202

212

Impacts, Risks, and Opportunity Management

215

Environmental information

216

Climate Change (Mitigation and Adaptation)

268

Social information

269

290

Affected Communities

300

Consumers and End Users

315

Governance information

316

Business Conduct

332

Complementary Information

Sustainable Supply

335

Appendices

ESRS Appendices

336

Appendix 1:

EU Taxonomy Regulation Disclosures

(Environmental Information)

383

Appendix 2:

Methodological Outline for operational

GHG emissions calculation

388

Appendix 3:

IRO-2 Disclosure Requirements in ESRS

covered in the Sustainability Statement

390

Appendix 4:

List of Datapoints That Derive from

Other EU legislation (ESRS 2 Appendix B)

Complementary Appendices

394

Appendix 5

Responsible Banking Progress Statement

for PRB Signatories

396

Appendix 6

TCFD Index Table

173

NLB Group Sustainability

Journey

Climate Change (Mitigation

and Adaptation)

Independant Auditor’s Report

© 2026 KPMG SLOVENIJA, podjetje za revidiranje, d.o.o., slovenska

družba z omejeno odgovornostjo in članica globalne organizacije

neodvisnih članic, ki so povezane s KPMG International Limited,

zasebno angleško družbo z omejeno odgovornostjo. Vse pravice

pridržane.

vpis v sodni register: Okrožno sodišče v Ljubljani

št. reg. vl.: 061/12062100

osnovni kapital: 54.892,00 EUR

ID za DDV: SI20437145

matična št.: 5648556000

Independent Auditor’s Limited

Assurance Report on the

Consolidated Sustainability

To the shareholders of Nova Ljubljanska banka d.d., Ljubljana

Limited Assurance Conclusion

We have performed a limited assurance engagement on whether the

Consolidated

of

Nova Ljubljanska banka d.d.

(“the Bank”)

and its subsidiaries (collectively

, “the

Group”)

as of and for the year ended 31 December 2025, included in

the

Sustainability Statement

section of

the Group’s Business

Report, including the

information incorporated by reference, as

laid out

in

Table 46: Incorporation by reference,

within the

BP-2 Disclosures in relation to specific circumstances

section

(“

the Sustainability Statement

”)

, has been prepared in accordance with article

s

70(c) and 70(č)

of the Companies Act dated 4 May 2006 (Official Gazette of the Republic of Slovenia no. 42/2006 with

amendments

)

, including the requirements of the Commission Delegated Regulation (EU) 2019/815 of

17

December 2018 supplementing Directive 2004/109/EC of the European Parliament and

of the

Council with regard to regulatory technical standards on the specification of

a single electronic reporting

format (

“

Delegated Regulation

”)

(collectively,

“

the applicable legal requirements

”).

Based on the procedures performed and evidence obtained, nothing has come to our attention to cause

us to believe that the Group’s Sustainability Statement as of and for the year ended 31 December 2025

is

not prepared, in all material respects, in accordance with the applicable legal requirements,

including:

C

ompliance with the European Sustainability Reporting Standards (

“

ESRS

”

), including that the

process carried out by the Group to identify the information reported in the Sustainability Statement

(“

the Process

”

) is in accordance with the description set out in

the

Impacts, Risks, and Opportunity

section thereof

;

C

ompliance of the disclosures in

Appendix 1: EU Taxonomy Regulation Disclosures

(Environmental information)

section of the Sustainability Statement

with the reporting requirements

of Article 8 of Regulation (EU) 2020/852 (

“

the Taxonomy Regulation

”); and

C

ompliance of the Sustainability Statement with the XHTML format referred to in the Delegated

Regulation.

Our conclusion on the Sustainability Statement

does not extend to any other information that

accompanies or contains the Sustainability Statement

and our limited assurance report thereon, nor to

any

information within the Sustainability Statement

not in scope of our assurance engagement

(

Complementary information and other information marked as information not subject to external

174

Journey

assurance or assurance

).

We have not performed any assurance procedures as part of this engagement

with respect to such

other

information.

However, w

e audited the

Group’s consolidated

and the Bank’s separate

financial statements as of and

for the year ended 31 December 2025

prepared in accordance with International Financial Reporting

Standards as adopted by

European Union, forming part of the other information

, and our auditor’s

reports thereon are

also included with

the other information

Basis for Conclusion

We conducted our limited assurance engagement in accordance with International Standard on

Assurance Engagements (ISAE) 3000 (Revised),

Assurance Engagements Other Than Audits or

Reviews of Historical Financial Information

, issued by the International Auditing and Assurance

Standards Board (IAASB).

Our responsibilities under this standard are further described in the

‘Our

responsibilities’ section of our report.

We have complied with the independence and other ethical requirements of the International Code of

Ethics for Professional Accountants (including International Independence Standards) issued by the

International Ethics Standards Board of Accountants (IESBA

Code

), together with the ethical

requirements that are relevant to our assurance engagements on the Sustainability Statement

in

Slovenia.

Our firm applies International Standard on Quality Management (ISQM) 1,

Quality Management for

Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services

Engagements

, issued by the IAASB. This standard requires the firm to design, implement and operate

a system of quality management, including policies or procedures regarding compliance with ethical

requirements, professional standards and applicable legal and regulatory requirements.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our

conclusion.

Other Matter – Comparative information

The comparative information for periods prior to the year ended 31 December 2024 was not subject to

assurance. Our conclusion is not modified in respect of this matter.

Responsibility for the Sustainability Statement

T

he Management of the

Bank

is responsible for

designing, implementing and maintaining a process

to

identify the information reported in the Sustainability Statement

in accordance with the ESRS and for

disclosing this process in

Impacts, risks, and opportunity management

section

of the Sustainability

Statement. This responsibility includes:

Understanding the context in which the Group’s activities and business relationships take place

and developing an understanding of its affected stakeholders;

I

dentifying the actual and potential impacts (both negative and positive) related to sustainability

matters, as well as risks and opportunities that affect, or could reasonably be expected to affect,

the Group’s financial position, financial performance, cash flows, access to finance or cost of capital

over the short–

, medium

–

, or long

–

term;

A

ssessing the materiality of the identified impacts, risks and opportunities related to sustainability

matters by selecting and applying appropriate thresholds; and

D

eveloping methodologies and making assumptions that are reasonable in the circumstances.

The Management of the

Bank

is further responsible for the preparation of the Sustainability Statement

in accordance with the applicable legal requirements, including:

C

ompliance with the ESRS;

P

reparing the disclosures in

Appendix 1: EU Taxonomy Regulation Disclosures (Environmental

information)

section of the Sustainability Statement, in compliance with Article 8 of the Taxonomy

Regulation;

D

esigning, implementing and maintaining such internal controls that the Management

determines

are necessary to enable the preparation of the Sustainability Statement

such that it is free from

material misstatement, whether due to fraud or error; and

S

electing and applying

appropriate sustainability reporting methods and making assumptions and

estimates about individual sustainability disclosures that are reasonable in the circumstances.

Those charged with governance are responsible for overseeing the reporting process for the Group’s

Inherent Limitations in Preparing the Sustainability Statement

There are inherent limitations regarding the measurement or evaluation of the sustainability matters

presented in the Sustainability Report subject to limited assurance, which have been set out below:

As described in the

BP-2 Disclosures in relation to specific circumstances

section within

Sustainability Statement, greenhouse gas emissions quantification is associated with

measurement uncertainty as a result of both scientific and estimation uncertainty

;

reporting forward

–

looking information in accordance with

ESRS,

M

anagement

of the Bank

is

required to prepare the forward

–

looking information on the basis of disclosed assumptions

about events

that may occur in the future and possible future actions by the Group. The actual

outcome is likely to be different since anticipated events frequently do not occur as expected.

In determining the disclosures in the Sustainability Statement

, M

anagement of

the Bank interprets

undefined legal and other terms. Undefined legal and other terms may be interpreted differently,

including the legal conformity of their interpretation and, accordingly, are subject to uncertainties.

Our Responsibilities

Our

responsibilities are to plan and perform the assurance engagement to obtain limited assurance

about whether the Sustainability Statement

is free from material misstatement, whether due to fraud or

error, and reporting our limited assurance conclusion to the

Bank’s

shareholders. Misstatements can

arise from fraud or error and are considered material if, individually or in the aggregate, they could

reasonably be expected to influence decisions of users taken on the basis of the Sustainability

as a whole.

Our responsibilities in relation to the Process for reporting the Sustain

a

bility Statement, include:

O

btaining an understanding of the Process but not for the purpose of providing a conclusion on

the effectiveness of the Process, including the outcome of the Process; and

D

esigning and performing procedures to evaluate whether the Process is consistent with the

Group’s description of its Process, as disclosed in

Impacts, risks, and opportunity

section

Our other responsibilities in respect of the Sustainability Statement

include:

O

btaining an understanding of the Group’s control environment, processes and information

systems relevant to the preparation of the Sustainability Statement

but not evaluating the design

of particular control activities, obtaining evidence about their implementation or testing their

operating effectiveness;

I

dentifying disclosures where material misstatements are likely to arise, whether due to fraud or

error; and

175

Journey

D

esigning and performing procedures focused on disclosures in the Sustainability Statement

where material misstatements are likely to arise. The risk of not detecting a material

misstatement resulting from fraud is higher than for one resulting from error, as fraud may

involve collusion, forgery, intentional omissions, misrepresentations, or the

override of internal

control.

Summary of the Work we Performed as the Basis for Our Conclusion

A limited assurance engagement involves performing procedures to obtain evidence about the

Sustainability Statement. We designed and performed our procedures to obtain evidence about the

that is sufficient and appropriate to provide a basis for our conclusion. The

nature, timing and extent of our procedures depended on our understanding of the Sustainability

and other engagement circumstances, including the identification of disclosures where

material misstatements are likely to arise, whether due to fraud or error, in the Sustainability Statement

We exercised professional judgment and maintained professional scepticism

throughout the

engagement.

In conducting our limited assurance engagement, with respect to the Process, the procedures we

performed included:

O

btaining an understanding of the Process by:

pe

rforming inquiries to understand the sources of the information

used by management

(

including stakeholder engagement, business plans and strategy documents); and

i

nspecting the

Group

’s internal documentation of its Process; and

E

valuating whether the evidence obtained from our procedures about the Process was consistent

with the description of the Process set out in

Impacts, risks, and opportunity management

section

In conducting our limited assurance engagement with respect to the Sustainability Statement

, the

procedures we performed included:

O

btaining an understanding of the Group’s reporting processes relevant to the preparation of its

by

performing inquiries of the relevant personnel

and inspecting

Group’s internal documentary evidence

;

E

valuating whether material information

identified by the Process is included in the Sustainability

;

E

valuating whether the structure and the presentation of the Sustainability Statement

is in

accordance with the ESRS;

P

erforming inquiries of relevant personnel and analytical procedures on selected disclosures in the

;

P

erforming substantive assurance procedures on a sample basis on selected disclosures in the

Sustainability Statement, including selected taxonomy disclosures

O

btaining evidence on the methods, assumptions and data for developing material estimates and

forward

–

looking information and on how these methods were applied;

btaining an understanding of the process of calculating by the Group of the Green Assets Ratio

and preparing related disclosures;

E

valuating whether the standardi

z

ed reporting templates required by the Taxonomy Regulation

were appropriately used to present the key performance indicators;

A

ssessing whether the taxonomy disclosures reconcile

d,

where relevant, with the Group’s

consolidated financial data;

A

ssessing whether the Sustainability Statement

has been properly prepared in the XHTML format

referred to in Delegated Regulation

The procedures performed in a limited assurance engagement vary in nature and timing from, and are

less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance

obtained in a limited assurance engagement is substantially lower than the assurance that would have

been obtained had a reasonable assurance engagement been performed.

On behalf of audit firm

KPMG SLOVENIJA,

podjetje za revidiranje, d.o.o.

Domagoj Vuković, FCCA

Certified Auditor

Partner

Ljubljana, 8

April 2026

GENERAL

INFORMATION

This chapter presents the NLB Group’s

sustainability strategy, key milestones

and recognitions, as well as our approach

to managing impacts, risks, and opportunities.

177

Journey

At NLB Group, we recognise the significant global challenges of climate change, social equity, and ethical

governance. This is why the Group has responsibly committed to “sustainable development that meets the needs

of the present without compromising the ability of future generations to meet their own needs”.

35

As a systemically

important financial institution in the region, the NLB Group has set the goal to actively contribute to the sustainable

transformation of the economy and society to a greener, more just, and inclusive future.

34 NLB Group Sustainability Journey, including subchapters Key milestones, Improved ESG Rating, Key Sustainability Performance Indicators are not subject to external assurance.

35 Definition by United Nations General Assembly, 1987

To achieve this, the Group has integrated sustainability

and ESG (environmental, social and human rights, and

governance) factors into its business model, strategy

and daily operations. Sustainability is also firmly

embedded in the NLB Group’s vision “to take care of

the financial needs of its clients and at the same time

improve the quality of life of the home region where we

operate”, and its core values which are growing people,

encouraging entrepreneurship, and improving lives.

NLB Group’s commitment to sustainability is

concentrated on the markets within the Southeast

Europe (SEE) region, where the Group operates. The

commitment extends beyond the Group’s companies in

Slovenia and Croatia, both EU members, by harmonising

a sustainable approach in financing, investing, and own

operations across companies in all other countries of

operation on the path to EU membership: Serbia, Bosnia

and Herzegovina, North Macedonia, Montenegro, and

Kosovo. Hence, the harmonisation process groupwide

considers EU legislation as well as national strategies

and laws in each market.

Since its establishment, the NLB Group has upheld a

tradition of responsible, stakeholder-centric operations.

This tradition has evolved over time, and has been

enhanced in recent years.

NLB Group has integrated

sustainability and ESG

factors into its business

model, strategy and

daily operations

178

Key milestones

· NLB joined the UNEP FI Net-Zero Banking Alliance

(NZBA).

Guided by the NZBA principles, the Group aims

to reduce emissions in credit and investment portfolios

and its own operations by reaching Net-Zero emissions

by 2050 or sooner.

· NLB Group upgraded the third Sustainability Report

by incorporating disclosures in line with EU Taxonomy

regulations, and recommendations of the Task Force

on Climate-Related Financial Disclosures (TCFD) in

reference with the requirements and recommendations

of the Financial Conduct Authority (FCA).

· Sustainability was integrated in the new Group

Strategy 2030 – New Horizons,

in which commitment

to environmental risk management and sustainable

banking is reflected in several strategic projects.

· The Climate Change Committee was established.

NLB Group adopted the Operational Emissions Net-

Zero Strategy aiming to reduce emissions from the

Group’s own operations.

· NLB Group prepared its first externally assured

prepared in accordance with

the CSRD and ESRS and incorporated in the Annual

Report. The report also integrated previously adopted

frameworks, including the UNEP FI Principles for

Responsible Banking, the Net-Zero Banking Alliance,

and the TCFD recommendation.

· NLB Group’s sustainability journey was formally

established

with an organisation-wide initiative and

the adoption of the Sustainability Programme.

· NLB signed the Principles for Responsible Banking –

United Nations Environment – Finance Initiative,

thus

committing to the UN Sustainable Development Goals

and the Paris Climate Agreement. NLB Group integrates

these commitments into its operations, financing,

investments, and societal contributions across its

regions.

· NLB Group prepared its first stand-alone

Sustainability Report in

line with national and EU

legislation, as well as regulatory requirements and

recommendations. The report was prepared in

accordance with the Global Reporting Initiative (GRI)

standards, marking the start of data-driven disclosures

on the NLB Group’s sustainability reporting.

· The Sustainability Programme was replaced by the

NLB Group Sustainability Framework

which became

the mandatory framework for all the NLB Group core

members in the region.

· The Sustainability Committee was established

as

the central sustainability-related advisory body to the

Management Board of NLB.

· The Environmental and Social Management System

(ESMS) was established

as a part of a comprehensive

risk management system within the NLB Group, aiming

to improve ESG risk management capacity in the

financing process, and to reduce credit and liability

risks arising from ESG considerations.

· For the first time, NLB Group prepared the UN PRB

Self-Assessment Report,

which was incorporated into

the second Sustainability Report.

· The comprehensive NLB Group Sustainability

Policy was established,

enhancing the existing

internal framework and reaffirming the foundation

for integrating ESG factors into the Group’s business

model, strategy, and daily operations.

· The first NLB Group Net-Zero Disclosure Report was

published,

aligned with the NZBA methodology and

reaffirming our commitment to achieving net zero by

setting the targets for reducing its financed emissions

and maintaining a coal exclusion policy.

· In the fourth Sustainability Report,

continued established disclosure practices while

adjusting its reporting processes to align with the

upcoming EU Corporate Sustainability Reporting

Directive (CSRD) and the European Sustainability

Reporting Standards (ESRS).

· Following the transition of the former Net Zero

Banking Alliance (NZBA) to the guidance framework,

the NLB Group’s climate strategy remained unchanged,

which reaffirms the Group’s commitment to achieve

Net-Zero by 2050.

· The second NLB Group Net-Zero Disclosure Report

was published,

which covered additional sectors and

expanded the coverage of the portfolio under the

Net-Zero Portfolio Strategy to 51% of the in-scope

portfolio exposure.

· NLB Group prepared the second consolidated

Sustainability Statement,

compliant with CSRD and

ESRS, which provides consolidated information on

the sustainability performance across the Group.

2020

179

Improved ESG risk

rating

The NLB Group’s efforts and progress on its

sustainability journey have been recognised by

Morningstar Sustainalytics, and S&P Global, two of

the world’s leading independent providers of ESG

research, ratings and data.

Morningstar Sustainalytics provides

an ESG Risk Rating

that measures the degree of a company’s unmanaged

ESG risk. The rating focuses on how much ESG risk could

still materially impact enterprise value after considering

how effectively the company manages those risks.

Sustainalytics uses a

0–50 ESG Risk Rating scale,

where

lower scores indicate less unmanaged ESG risk.

Ratings

are categorised as Negligible (0–9.99), Low (10–19.99),

Medium (20–29.99), High (30–39.99), and Severe (40+).

· In 2022,

the NLB Group received its first ESG Risk Rating

of

17.7 points,

becoming at the same time

the first bank

headquartered in and exclusively strategically focused

on South-Eastern Europe (SEE) to obtain this rating,

as well as the first among companies listed on the

Ljubljana Stock Exchange.

· In 2023,

the ESG Risk Rating improved by 1.7 points to

16.0 points, ranking the NLB Group in the

top 13 per

cent of all banks assessed.

· In 2024,

the NLB Group recorded a significant 5.4-point

improvement, achieving an overall ESG Risk Rating of

10.5 points. The NLB Group ranked

42

nd

among 1,027

rated banks,

positioning it in the top

percentile

among the 432 highest-rated companies in Europe.

This achievement placed the NLB Group among the

Top-rated companies in Europe

and the

Top-rated

banks globally.

At the time of preparation of this report, the latest results

were not yet available.

S&P Global

evaluates ESG risks and opportunities within

its broader Corporate Sustainability Assessment (CSA)

and uses the

S&P Global ESG Score, which ranges

from 0 to 100,

where 100 represents the best possible

performance.

Overall, the 2023–2025 period shows a total

improvement of 13 points, confirming the NLB Group’s

accelerating progress and reinforcing its ambition to

maintain strong ESG performance in the banking sector.

· In 2022,

the NLB Group scored

45 points

· In 2023,

46 points,

establishing a solid foundation

for further improvement.

· By 2024,

the score had risen to

52 points,

marking

a 6-point year-on-year increase. This improvement

aligned with strengthened ESG structures, enhanced

disclosures, and broader integration of sustainability

into core business processes.

· In 2025,

the NLB Group achieved a score of

59 points,

a further 7-point increase and its strongest result to

date, with highlighted

improvements in several key

areas

reviewed by S&P, including information security,

human capital management, and human rights

processes, signalling significant advancement across

multiple ESG dimensions.

Morningstar Sustainalytics 2024

10.5

low risk

S&P Global ESG Score 2025

59

points

180

Key sustainability performance indicators

Social

Environmental

653

New sustainable financing

retail and corporate green financing

Net asset value EUR

153

Asset management

in two sub-funds that promote environmental

and social characteristics

615

Green Bond allocation

as at 31 March 2025

tCO

eq

8.748

GHG emissions

financed and operational emissions

(market-based)

Employee engagement

in 10 NLB Group members

Net Promoter Score

28

points

Client satisfaction

in the NLB Group banking members

days/employee

7.8

Completed training

1.585

Donations in SEE region

Gender diversity

women in the NLB Management Board

40%

Gender diversity

women in the NLB Supervisory Board

employees

6,874

Completed anti-corruption training

cases

Fines for corruption and bribery

181

Awards and recognitions

In 2025, several NLB Group banking members received notable awards for their sustainability-related contributions:

for the 11

consecutive year (Dutch Top Employer Institute)

The Best Mobile and Online Bank in Slovenia award

(independent study by E-laborat)

Sports-Friendly Company

certificate (Olympic Committee of Slovenia)

Recognition for

the most sustainable campaign

for sponsorship partnership at the

Volleyball Nations League tournament in Ljubljana (SPORTO Conference)

for the second consecutive year

ESG Leaders

award for employer care (PwC)

Socially Responsible Company of the Year

(Serbian Association of Managers), awarded for the bank’s

for long-term investment in the community through the national initiative NLB Organic

Green Breakthrough of the Year

award for the NLB Organic campaign received (CSR & ESG Forum)

The Campaign with Purpose

award for three CSR initiatives: Frame of Support, A World Full of Heart Is a World

Full of Opportunities, and NLB Organic (two awards in total, including the prestigious Grand Prix for 2025)

NLB Banka, Banja Luka and NLB Banka, Sarajevo

Both banks received the

Golden BAM

award for:

• innovation in the banking sector

• introducing Smart POS services to the market

• Humanity in Action campaign

Both banks received the

Top Employer of the Year

certificate

Employer of the Year

(Kosova Chamber of Commerce)

Taxpayer of the Year

(Kosova Chamber of Commerce)

The Friend of Children

award in recognition of the bank’s significant contributions to child protection efforts in Kosovo

Kosovo’s Best Bank for Consumers

(Excellence Awards 2025, the financial magazine Euromoney)

Plaque for special contribution and

support to the Special Olympics North Macedonia

Bank of the Year

(the financial magazine The Banker)

National awards for

the best banking commercialists

(the Macedonian Banking

Association in cooperation with the Deposit Insurance Fund)

Recognition on the occasion of the 80

anniversary of the national

Red Cross

organization,

awarded to the bank for its

dedicated partnership, support, and donations

Special recognition from the

Macedonian Stock Exchange for good ESG practices

Best Bank for Customer Experience

(the financial magazine Euromoney Awards for excellence)

182

ESRS 2

BP-1

Basis for

preparation of

the Sustainability

The NLB Group consolidated Sustainability Statement

is prepared in compliance with the EU Corporate

Sustainability Reporting Directive (CSRD) and

European Sustainability Reporting Standards (ESRS)

as transposed to the Slovenian Companies Act (ZGD-1)

in December 2024, and the disclosure requirements

related to Article 8 of the EU Taxonomy and

corresponding delegated acts.

The statement aims to provide stakeholders with

information on the NLB Group’s material impacts

on people and the environment, and the effect of

sustainability matters on the Group’s development,

performance, and position. The statement describes the

material sustainability topics and their related impacts,

risks, and opportunities (IRO) identified by the NLB Group

based on the DMA conducted in 2024 and additional

IROs identified in 2025 DMA annual update. The report

also includes certain information that, according to the

DMA methodology, was not assessed as material but

provides additional insights for stakeholders.

The Sustainability Statement has been prepared on

a consolidated basis following the same principles as

those applied in financial reporting. This means that

the statement includes the parent bank NLB and all

its subsidiaries which NLB had control over as at 31

December 2025 from the date on which NLB obtained

direct or indirect control over the financial and operational

management and received a variable return.

The Sustainability Statement covers the financial

reporting period from 1 January to 31 December 2025,

except for the NLB Green Bond use of proceeds,

which includes data as of 31 March 2025 in line with

the annual issuance calendar of the Green Bond

Allocation and Impact report.

Although disclosure of comparative information in

respect of the previous period was not required for

the period before 2024, which was the first year of the

ESRS application, the NLB Group opted to present such

comparisons for the Operational carbon footprint of

the NLB Group (table 73 in the chapter

Gross Scopes

1, 2, 3 and Total GHG Emissions

), which includes

disclosures for the fiscal years 2019 to 2025.The Group

also described the capacity-building and training

information for the governance bodies, covering the

three-year period from 2023 to 2025. Only disclosures

for the fiscal years 2024 and 2025 were subject to

external assurance.

The NLB Group’s Sustainability Statement and

DMA were prepared based on the available data.

Data collection and assessment in the downstream

value chain and certain non-EU and non-strategic

NLB Group members are still developing. Therefore,

some data were unavailable or inapplicable, leading

to the use of management judgments, estimates,

and third-party data, with explanations provided

for any gaps.

NLB Group will continue its efforts to enhance data

governance, upgrade IT solutions, and will continue to

engage in industry-wide initiatives to standardise and

improve sustainability data quality.

NLB Group’s DMA and the Sustainability Statement

consider its entire value chain: upstream, its own

operations, and downstream.

For details, please refer to chapters

NLB Group’s Value

Chain

; and

Impact, risk and opportunity management –

Double Materiality Assessment

No classified or sensitive information corres-

ponding to intellectual property, know-how,

or innovation results has been omitted from

the Sustainability Statement.

The Group partially used an exemption from disclosure

of impending developments related to the sustainability

information about the Group’s value chain for the

first three years after the CSRD came into effect. The

partial exemption refers to cases were all the necessary

information regarding the Group’s value chain was

not available or could not be obtained. In such cases,

explanations and, wherever applicable, estimates are

provided alongside respective disclosures. In addition,

consistent with the ESRS Delegated Act Quick Fix, the

Group adopted applicable phase-ins, including the

ESRS E1-9 anticipated financial effects (qualitative-only/

omission during the permitted period) and, where

threshold conditions are met, selected ESRS S1 datapoints.

183

BP-2

Disclosures in

relation to specific

circumstances

Time horizon

Impacts, risks, and opportunities were assessed over

time horizons as defined in ESRS, namely short (1 year),

medium (1–5 years) and long-term (more than 5

years), with the exception of physical risks. These were

assessed for the following time horizons:

· short-term:

until 2030;

· mid-term:

2030–2050;

· and long-term:

2050–2100, as internal methodology

relies on studies and scenarios mainly project

temperature and climate change until 2100.

Value chain estimation, sources of estimation and

outcome uncertainty

When disclosing metrics for downstream value chain

data, the information includes data from clients and

estimates from third-party providers or sector averages.

These estimates may significantly impact the reported

information, and the Group cannot influence these

estimates. Hence, reported GHG emissions data reflect

measurement uncertainty due to methodological and

data limitations, including reliance on third-party data.

Our analysis and climate targets use estimates based

on recognised frameworks available at the time. As

methods and data evolve, our sources and figures may

become outdated. GHG emission factors quality are

expected to increase as more data becomes available

and associated companies are included. In cases where

the disclosed quantitative metrics and monetary amounts

were subject to a high level of measurement uncertainty,

this is stated and explained along the metrics.

Expectations, forecasts and statements

Sustainability targets and initiatives, particularly

climate-related ones, require long-term horizons and

forward-looking parameters. Future developments

described in this Sustainability Statement are based

on current expectations, projections, and estimates,

which involve several factors that will come into play

in the future. These factors include evolving science,

methodologies, standards, market conditions,

technological developments, data maturity and

availability, data accuracy, and regulatory changes.

Changes in preparation or presentation

of sustainability information and reporting

errors in prior periods

Based on a deeper understanding of the continuously

evolving sustainability data frameworks, as well

as improvements in data collection, calculation

methodologies, and internal controls, certain changes

were made to the presentation of sustainability

information compared to the previous reporting period,

as outlined below:

In the chapter E1 Climate Change: Additional financed

emissions targets were disclosed, and certain

non-material discrepancies related to the 2024

operational emissions calculations were identified.

In the chapter S1 Own Workforce: The reporting scope

was expanded to include all NLB Group members,

methodologies for selected disclosures were improved,

and a new employee engagement target was

introduced.

These changes are explained in detail in the Accounting

policy and reconciliation sections alongside the

presentation of metrics and in the notes to the tables.

Disclosures stemming from other legislation

or generally accepted sustainability reporting

pronouncements

NLB Group’s Transition plan, disclosed in the chapter

Environmental Information, applies also Net-Zero

Banking Resources developed by UNEP FI (former

NZBA guidelines which phased out in October 2025).

Use of phase-in provisions

In preparing this Sustainability Statement, the NLB

Group applied certain phase-in provisions under the

ESRS framework. While the Quick Fix Delegated Act

(July 2025) permits to delay disclosures of selected

datapoints for fiscal years 2025 and 2026, the Group

has chosen to retain most disclosures from the 2024

Sustainability Statement to ensure comprehensive and

comparable information. Thus, this report also includes

certain detailed disclosures, which could be phased-in,

specifiically under the standards S3 – Customers and

End-Users and S4 – Affected Communities, as well as

selected S1 – Own Workforce datapoints (S1-13 Training

and Skills Development, S1-14 Health and Safety, S1-15

Work-Life Balance) ahead of their mandatory timeline.

In line with Quick Fix Delegated Act, datapoint SBM-3

Anticipated Financial Effects (para. 48(e)) is reported

qualitatively only, without monetary figures.

Defined financial metrics and

targets support the strategic

ambition of the NLB Group

184

Incorporation by reference

Parts of ESRS disclosures in this Sustainability Statement

are incorporated by reference to other sections of the

Annual Report as indicated in the table below. The

references are detailed on the stated pages of the

Table 46:

Incorporation by reference

Disclosure requirement

Chapter in the Annual Report

Page

GOV-1 The role of administrative, supervisory,

and management bodies,

page 185

The Supervisory Board

118

The Management Board

121

The appointment or replacement of members of the management or supervisory bodies, subchapters:

• The Supervisory Board

• The Management Board

139

Information about the composition and work of the Management and Supervisory boards and their committees

141, 142

SBM-1 Strategy, business model, and value chain,

page 202

70

169

Other references in this Sustainability Statement to

other information, outside the Business Report or

the Financial Report, which are not included in the

table above (such as links to summarised policies or

additional information available on the websites of the

NLB Group members), are for informational purposes

only and are not subject to external assurance. The

contents of such other documents or websites as well as

divider pages throughout the Sustainability Statement

are not incorporated by reference into this Sustainability

Statement, nor should they be considered part of it for

any purpose.

185

GOV-1

The role of

administrative,

supervisory and

management bodies

Composition

NLB Group consists of NLB as a parent bank and

members of the NLB Group. These are independent

legal entities, each with its own management bodies

and statutory duties and responsibilities in line with the

legislation of its operating market. Detailed organisation

is presented in the

Business part of this report, NLB Group

Chart, page 169

The NLB’s corporate governance is based on a two-tier

system in which the Management Board manages the

daily operations, and the Supervisory Board controls and

supervises the Management Board’s work.

The composition of the NLB Management Board and

Supervisory Board, including the number, representation

of employees and other workers, the information on the

Supervisory Board Independancy are presented in the

following chapters of the Business Report:

and in the

Corporate Governance statement

The appointment or replacement of members of the

management or supervisory bodies

Information about the composition and work of the

management and supervisory boards and their

committees

The relevant experience of the Management Board

and Supervisory Board is described in chapter

Governance of sustainability-related impacts, risks, and

opportunities

. Detailed information on their CVs and

expertise are publicly available on the NLB website

(The Management Board, The Supervisory Board).

Diversity

The general diversity framework aimed at management

bodies is stipulated in the Policy on the Provision

of Diversity of the Management Body and Senior

Management of NLB (hereinafter: Diversity Policy). As

part of its ongoing efforts, NLB is progressively adapting

these diversity principles across its banking members,

prioritizing compliance in regions where local regulations

mandate such policies. Currently, NLB actively monitors

gender diversity ratios and raises awareness of the

importance of gender balance in management bodies.

The main goal of the Diversity Policy is ensuring that

the composition of the management body and senior

management encompasses a collective proficiency

in knowledge, skills, and experience, while taking into

consideration business and strategic goals and principles

of meritocracy. This comprehensive approach aims

to foster a deep understanding of the NLB Group’s

strategy, challenges, and the associated risks. The

diversity principles are considered when appointing

or re-appointing members of the management body

and senior management (in line with internal policies

for selecting suitable candidates) and also in the

annual assessment of the collective suitability of the

management bodies.

The Diversity Policy also establishes a diversity

framework across the following dimensions:

Gender diversity:

ensuring a balanced pool of

candidates during recruitment, promoting adequate

gender representation in the management. If two

candidates for the management body meet all criteria

and gender representation targets are unmet, the

underrepresented gender will be selected.

Age diversity / generational diversity:

attracting

candidates across age groups to reflect their

demographics and ensuring a balanced representation

of younger and older members in management.

Professional competencies, skills and experience:

ensuring diverse knowledge, skills, and experience of the

management body and senior management, adhering

to criteria like experience, reputation, management

of potential conflicts of interest, available time and

independence.

Continuity:

maintaining a suitable ratio between the

existing and new members by not changing all members

of the management body or senior management

simultaneously when their mandates expire.

Representation of foreign nationals and international

experience:

ensuring that the management body and

senior management have international experience

across a range of areas.

Personal integrity:

the management body and

senior management must demonstrate high personal

integrity, following the NLB Group Code of Conduct.

Geographical provenance:

seeking diverse

geographical backgrounds in the management body

and senior management to ensure a suitable knowledge

of the culture, market characteristics, and legal

framework in the areas where the NLB Group operates.

Target representation of the management body is

achieved through a predefined succession and role-

filling plan as set out in the Articles of Association.

In line with the Diversity Policy, the conditions

and required profiles for management roles are

established before appointments and various

recruitment pathways are used to attract a wide

range of candidates. NLB regularly monitors if target

representation has been achieved.

NLB amended the Diversity Policy in 2025 with inclusion

of provisions from the new EU Directive regarding gender

balance, which was transposed to Slovenian Companies

Act (ZGD-1) in December 2024.

Pursuant to these

provisions, NLB has defined the gender balance targets

it aims to achieve. The Bank targets at least 40%

representation of the underrepresented gender (i.e.

women) among members of the Supervisory Board, in

line with regulatory requirements. For the Management

Board, NLB has set a target of 14% representation

of the underrepresented gender (i.e. women).

While

the Companies Act is binding only for NLB, we aim to

include its principles in Diversity Policies in the NLB Group

banking members and other NLB Group members as

best practice and where relevant.

186

Table 47:

Share of women in governance bodies at the end of 2025

Female

(number)

Female

(%)

Female

(number)

Female

(%)

40%

Financial core members

85

35

41%

49

NLB Group members

97

41

42%

65

Notes: NLB: parent bank

Financial core members:

• All banks: NLB and six subsidiary banks - NLB Banka, Sarajevo, NLB Banka, Banja Luka,

NLB Komercijalna Banka, Beograd, NLB Banka, Prishtina,

NLB Banka, Skopje, NLB Banka, Podgorica

• Leasing companies: NLB Lease&Go, Leasing Ljubljana and subsidiaries - NLB Lease&Go, Beograd, NLB Lease&Go, Skopje, Mobil Leasing, Zagreb

• Asset management companies: NLB Skladi, Ljubljana and subsidiaries – NLB Fondovi, Beograd, NLB Fondovi, Skopje

Table 48:

Diversity of the NLB management bodies and senior management (actual and plan) breakdown by diversity objectives

NLB Supervisory Board

NLB Management Board

NLB Senior Management

NLB Supervisory Board

NLB Management Board

NLB Senior Management

Status

Plan

Status

Plan

Status

Plan

Status

Plan

Status

Plan

Wide range

of knowledge,

skills and

professional

experience

experience of

the members in

different areas

Medium

Medium

Medium

Medium

Medium

Continuity of

composition

of the

body

Personal

integrity

Geographical

provenance

Low

Low

Low

Low

Age structure

20-30 = 0

20-30 = 0

20-30 = 0

30-40 = 0

30-40 = 0

31-40 = 2%

to 10%

41-50 = 1

41-50 = 2

40-50 = 44%

to 40%

18

51-60 = 6

51-60 = 5

50-60 = 52%

to 40%

18

16

60+ = 3

60+ = 0

60+ = 2%

to 10%

Share of women

44%

45%

42%

30%

42%

(i) The plan was restated in 2025, from 30% to 14%, due to the changed composition of the Management Board (from five men and one woman to six men and one woman); accordingly, the Diversity Policy was also updated.

187

Governance of

sustainability-related

impacts, risks, and

opportunities

NLB Group has established a comprehensive

framework for sustainability-related governance.

The framework encompasses monitoring of

sustainability-related IROs, setting of targets, 

and monitoring progress towards achieving them.

The framework also sets out the roles, responsibilities

and procedures, as well as reporting lines for:

the Supervisory Board of NLB and the supervisory

bodies of the NLB Group members, and their

committees,

the Management Board of NLB and the management

boards of the NLB Group members, and their

committees,

the NLB Sustainability Unit,

competence lines and organisational units in NLB and

the NLB Group members,

internal control functions.

The framework, as well as

sustainability-related roles

and responsibilities

for all the above-mentioned bodies

and functions are outlined in two internal documents:

the Sustainability Policy, and Standard and Rulebook for

Sustainability Management. As their sustainability roles

are intertwined with their scope of work, they are also

described in domain-specific internal rules of procedures.

NLB Group acknowledges the complexity and

interconnectivity of sustainability matters therefore

all business areas are involved in sustainability

governance to some extent.

The highest responsibility

for managing and overseeing sustainability and

related impacts, risks, and opportunities lies with

the management boards and supervisory boards

of each NLB Group member. In accordance with the

Group governance, collective decision-making and

consultative bodies are appointed by the management

and supervisory bodies to execute tasks within their

respective powers. Operational responsibility is

assigned to competence lines, organisational units,

and sustainability experts, which manage and monitor

impacts, risks, and opportunities within their specific

36 The assessment scale: A=absent, L=low, ML=medium-low, MH=medium-high and H=high

areas of work, expertise and authority. The progress

is monitored through daily operations and is reported

regularly to the management boards or its respective

bodies and quarterly to the Sustainability Committee.

In accordance with the Banking Act and the EBA

guidelines on assessing the suitability of members of

the management body (i.e. the Management Board and

the Supervisory Board) and holders of key functions,

NLB carries out self-assessments of the collective

suitability of its management body, including its

collective knowledge.

By doing so, NLB detects potential

deficiencies in the collective suitability and ensures that

the management body always has a wide range of

knowledge, skills and experience to be able to understand

the NLB Group’s activities and its main risks. In this context,

climate-related and other ESG risks and opportunities,

as well as broader sustainability considerations,

have become increasingly important topics for the

Management Board and the Supervisory Board alike.

Once a year, the Supervisory Board assesses the

composition of the Management Board,

performance,

potential conflicts of interest of individual members,

and performance of individual members and the

Management Board as a whole, as well as its efficiency.

If it establishes that the number of the members of

the Management Board is inadequate or that the

number of members of the Management Board needs

to be increased, or that certain knowledge, skills and

experience are lacking, or that the members of the

Management Board are no longer qualified to perform

this function because they do not meet the required

conditions, or because one or several members are

unsuitable and thus the Management Board as a whole

no longer meets the required collective suitability, the

process of finding a suitable candidate (or candidates) is

started. In 2025, the Management Board was expanded

by one member, who joined the Bank in the beginning of

June as Chief Transformation Officer.

The collective suitability of the members of its

management bodies covers six major pillars:

business

model requirements, governance, risk management,

compliance and audit, management and decision-

making, climate and environment risk and experience

overview of its members. Each of these pillars relates to

several sustainability topics, such as (and not limited to):

discovering and exploiting opportunities with regard to

business sustainability, i.e. actions of the company that

influence the reduction of adverse environmental and

social impact, social, ethical, and professional standards,

risk strategy, risk culture and risk appetite, internal

culture, understanding of climate and environmental

risks, remuneration, compliance, whistleblowing, group

governance, and internal controls. The Supervisory

Board conducted a collective assessment of

sustainability topics in November 2025, concluding that

their knowledge, skills, and experience are generally

high. Similarly, the Management Board’s assessment in

November 2025, which included the assessment of the

same pillars, also received a high score.

36

The management and supervisory bodies of the NLB

Group core financial members are expected to have in

particular adequate competences regarding the climate

and other environmental risk,

which is stipulated in

the internal policies for suitability assessments and Fit

and Proper procedures (the Policy on the Selection of

Suitable Candidates for Members of the Supervisory

Board of NLB and the Policy on the Selection of Suitable

Candidates for Members of the Management Board of

NLB). As stipulated in both policies, the selection process

for the management bodies’ members encompasses

seven steps: identification of the need to search for

and nominate a candidate for the member, definition

of the profile, search for candidates, selection of the

candidates, “Fit & Proper” assessment of the candidates,

proposal for appointment of a candidate, appointment

of a candidate as a member of the management

body. In NLB, candidates provide a self-assessment

of their competencies in the questionnaire, which are

further assessed by the HR department and then at the

Nomination Committee, which submits an opinion to the

Supervisory Board. In the second step, their competencies

are also assessed by the Bank of Slovenia and the ECB

as part of the licensing procedure. The assessment of

climate-related competencies is indirectly included

also in the Fit and Proper procedures of management

and supervisory bodies in other NLB Group financial

members, as part of the overall risk assessment.

Throughout 2025 and in previous years, the NLB Group

implemented a structured set of sustainability-focused

trainings tailored to different governance levels

and stakeholder needs. A key component was

188

the capacity building of Management Boards

across all banking members through programmes

addressing strategically relevant environmental,

social, and governance topics. In addition, several

Management and Supervisory Board members

contributed as speakers and expert participants at

sustainability-focused conferences and professional

events. These combined activities supported

continuous capability development and enhanced the

Group’s readiness to lead sustainability integration

across all markets of operation.

Management Boards capacity building

37

Training for the

members

in 2025 focused on responsible banking, digital

transformation, and artificial intelligence, reflecting

the Group’s strategic shift toward technology-enabled

and sustainable operations. In previous years,

2023 and 2024, programmes centred on human

rights, cybersecurity risk, and compliance, ensuring

a strong foundation in ethical conduct and

regulatory governance.

The Management Board in

completed training sessions on AML/

CTF, customer and data protection, anti-corruption,

insider-information management, sanctions compliance,

operational risk, and business continuity, further

strengthening governance, regulatory alignment, and

digital transformation capabilities. In 2023 and 2024,

training focused on fraud prevention, cybersecurity,

information security, business continuity, as well as the

AI’s strategic impact, digital strategy, and sector-specific

cybersecurity through executive programmes and

industry forums.

During 2025, the Management Board members in

completed training on AI

in banking, GDPR, banking law, and governance

onboarding, strengthening alignment with Group and

local standards. In earlier two year they also completed

programmes in cybersecurity, AML/CTF, responsible

banking, and business coaching, supported by

mandatory ESG, AI, and compliance courses.

In recent years, the development of the Management

Board in

centred on ESG

37 In the Capacity building and training section, the scope of the external review covered only information for 2024 and 2025.

38 In the Management Boards capacity building section, the scope of the external review covered only information for 2024 and 2025.

integration, cybersecurity, AI tools, and leadership,

complemented by workshops on payments, risk,

and employee well-being. In 2025, advanced

modules on regulatory compliance, ICT risk, and

sustainability-focused leadership enhanced oversight

of transformation and ESG priorities.

In 2025, the Management Board members in

Banka, Skopje

strengthened their capabilities through

training programmes and conferences focused on

leadership, innovation, digital transformation, and

AI adoption, complemented by targeted trainings in

ESG compliance, cybersecurity, and climate-related

governance (the conference for Climate Risks,

Climate Governance Structure Enhancement and

financial stability). In 2024, development was focused

on operational and climate risk, payments and

financial services innovation, and participation in

conferences and panels supporting broader digital and

sustainability themes, such as youth integration and

inclusion, cybersecurity and digital transformation.

During 2023 – 2025, the Management Board members

in

enhanced their competencies

through core governance and sustainability trainings,

mostly by attending key national and regional

sustainability and finance events, focused on

sustainable finance and ESG trends.

In 2025,

members completed programmes focused on data

and AI literacy, digital transformation, ESG and

sustainable finance, leadership development, and

change management. Training in 2024 was focused on

AI applications, cybersecurity, risk management, and

environmental and social management, while in 2023

was centred on strategic planning competencies.

Supervisory Boards capacity building

38

Over the past three years, NLB Supervisory Board

members have continued to strengthen their

sustainability and governance capabilities through a

diverse set of targeted programmes. In 2025, training

advanced further with a session on the implications

of new sustainability-related legislation (ZGD1M),

requirements stemming from ECB and EBA ESG risk

management, and webinars on Sustainability Reporting,

including the evolving role of boards and the impacts

of the Omnibus legislative package. In 2024, their

development expanded with INSEAD’s

of ESG and Sustainability,

complemented by training

on the Corporate Sustainability Due Diligence

Directive, Executive and Non-Executive Remuneration,

Cybersecurity, and Governance and Risk Culture.

In 2023, they engaged in the

Sustainability Leadership

Programme,

explored Diverse and Effective Boards and

Committees in a Changing and Competitive Landscape,

and participated in an internal session on ESG –

Regulatory Requirements and Commitments.

Across the region, Supervisory Board training activities

continued to strengthen competencies in sustainability,

governance, and risk management. In NLB Komercijalna

Banka, Beograd, development focused on deepening

understanding of ESG principles and broader

sustainability priorities, including evolving leadership

expectations. In NLB Banka Banja Luka, Board members

enhanced their capabilities through programmes

on cybersecurity, ESG awareness, and regulatory

compliance related to financial crime prevention. In NLB

Banka Skopje, discussions and trainings emphasised

modern banking trends, the evolving role of Board

members, and the strategic importance of digital

transformation and cyber resilience. In NLB Banka

Sarajevo, annual training cycles reinforced knowledge in

ESG topics, cybersecurity preparedness, and compliance

with emerging banking and data-protection regulations.

In 2025, NLB also continued to participate in the

Chapter Zero Slovenia

initiative, which was launched

in April 2023 under the patronage of the Slovenian

Directors’ Association (SDA) and British-Slovenian

Chamber of Commerce (BSCC). Taking part in this

initiative enables the Supervisory Board members

to build their capacity in regard to principles and

frameworks for climate change strategy and action.

An initiative is underway to extend collaboration into

Chapter Zero Adriatic, enabling the inclusion of all NLB

Group members across the region. This expansion will

further strengthen climate-governance competencies,

deepen cross-market alignment, and support the

Group’s long-term strategic commitment to board-level

sustainability leadership.

189

Figure 67:

Organisation of sustainability management in the NLB Group

Internal Controls

All bodies,

competence lines,

and organisational

units manage

sustainability-

related IROs within

their respective

work areas and

responsibilities,

reporting to their

respective superiors,

or boards.

Appointed sustainability profiles Sustainability Managers/Coordinators, Sustainability Representatives, ESG Risk Stream Coordinator, ESMS Officers, ESM Teams, etc. who are responsible for active

collaboration with Sustainability Unit, for managing and executing the sustainability initiatives in their business lines and locally and to respond to their Management Boards.

The Audit Committee

The Risk Committee

The Nomination Committee

The Remuneration Committee

The Operations and IT Committee

Overseeing the management of sustainability-related IROs

Managing sustainability-related IROs and reporting to the Supervisory Board

Several Working and Advisory

Bodies appointed by

Advisory Body

Sustainability Committee

Discussing key topics and

monitoring progress in the

management of sustainability-

related IROs across NLB Group

Collective Decision-Making Body

Corporate Credit Committee

Assets and Liabilities Committee

of NLB d.d. and NLB Group

NLB Operational

Group Real Estate Asset

Management Committee

Sales Committee

Risk Committe

Change the Bank Committee

Climate Change Committee

Strategy and Business

Development Division -

Sustainability Unit

Sustainability Unit makes

proposals related to Sustainability

Policy, drives and oversees the

implementation of sustainability-

related roadmap, measuring

results and reporting on the status

Sustainability management in NLB Group members

Data and Artificial Intelligence

Steering Committee

Sustainability-related risks are included in the NLB Group's internal control system. This system is designed to ensure that a process

and measures are in place for each key risk to actively reduce and manage that risk, and that the process or measures are

effective for this purpose.

190

Figure 68:

Organisation of sustainability management in the NLB Group

NLB Group Steering co-operates in the process of sustainability/ESG harmonization

and management in NLB Group banking members

(parent bank)

Supervisory Board,

Management Board,

Committees

Sustainability Unit

Head of Sustainability

Sustainability Coordinators

ESG Coordinator

Risk Stream + ESMS Team

(Specialists and Officers)

representatives in key

OUs that constitute CL

Banking members

Supervisory Board,

Management Board,

Sustainability-related

body (committee,

workgroup…)

Sustainability Manager

and a substitute/deputy

OR Sustainability Unit

OR Sustainability Advisor

to the MB

ESMS

Officer(s)

Representatives in key

OUs that constitute CL

Internal controls in each NLB Group member through the first (organizational units), the second (risk management, compliance), and the third level of control (internal audit)

Mutual collaboration among all bodies, competencel lines, organizational units, sustainabilty profiles,

capacity and culture-building

Leasing and asset

companies

Sustainability-related

body (committee,

workgroup…)

Sustainability Manager/

Coordinator and

a substitute/deputy

Representatives in key

Non-financial core

members

Coordinator and

a substitute/deputy

Coordinating, delivering and overseeing

an overarching NLB Group sustainability

policies, strategies, guidelines,

expert advisory

Delivering and overseeing ESG Risk

management framework, including credit

process, stress testing, business continuity

Delivering and overseeing busines lines

specific policies, strategies, guidelines,

expert advisory

Sustainability matters

are integrated in NLB

Group’s established

governance rules.

Specific committees

on sustainability matters

are established.

Central sustainability / ESG

steering at NLB and NLB

Group level is ensured

is implemented in other

business areas through other

key Competence Lines /

Organizational Units

ESG Risk Management is

implemented throughout the

Risk Competence Line

Mandatory body/role/profile

Optional body/role/profile

Non-core

members

Coordinator

and a deputy

Climate Change

ESMS

Officer(s)

– only for leasing

companies

191

Governance bodies

The Supervisory Board of NLB and supervisory bodies

of the NLB Group member companies perform their

function by monitoring operations of an individual

NLB Group members (including sustainability), within

their competencies in line with the local legislation, and

in accordance with the established internal policies:

Corporate Governance Policy in NLB, the NLB Group

Governance Policy and the Guidelines. Moreover, the

Supervisory Board of NLB monitors the operations of the

entire NLB Group within their competences by obtaining

information on operations of the NLB Group members

and performing site visits.

The Management Board of NLB or the Board of

Directors in the NLB Group member represent the entity

and manage its daily operations, independently and at

its discretion, as provided by the applicable laws and

the articles of associations. The Management Board of

NLB represents and acts on behalf of NLB, including the

governance of the entire NLB Group.

The Governance bodies of NLB and other NLB Group

members are expected to follow regulators’

39

guidelines

(expectations and principles) regarding sustainability

and ESG matters in the NLB Group. Their key

responsibilities include:

integrating sustainability and ESG (environmental,

social, governance) into business strategy and risk

management,

allocating roles for sustainability matters, appointing a

board member responsible for ESG,

assessing board members’ knowledge of sustainability

and climate risks,

overseeing sustainability and ESG risks,

aligning remuneration policies with sustainability and

ESG goals,

ensuring adequate resources for managing

sustainability, including training and appointing

experts.

To assist and advise in sustainability implementation

processes, as well as to execute individual tasks within

the powers of the Management Board, different collective

decision-making bodies and consultative bodies that are

39 Expectations for significant institutions stipulated in the Guide on climate-related and environmental risks, Supervisory expectations relating to risk management and disclosure, ECB, November 2020, taking into account the materiality

of their exposure to climate-related and environmental risks and in connection with Basel Committee Principles for the effective management and supervision of climate-related financial risks, Basel Committee on Banking Supervision

(BCBS), June 2022.

appointed by the Management Board for execution of

individual tasks within the powers of the Management

Board all play a significant role in implementing

sustainable finance and sustainable operations, namely:

the Corporate Credit Committee, Assets and Liabilities

Management Committee of the NLB Group, NLB

Operational Risk Committee, Change the Bank Committee,

Risk Committee, Group Real Estate Management

Committee, Sales Committee, Retail Credit Committee, etc.

Committees identify and address IROs related to

environmental, social, and governance issues within

their area of work. Committees operate in line with

their rules and procedures and regularly report to

the NLB Management Board. Meetings are convened

regularly and frequently, in accordance with the meeting

schedule. Ad-hoc meetings are convened if certain

issues require immediate attention. In 2025, the majority

of meetings were held once a week, some of them

monthly or every two or three months.

The expert support for the NLB Supervisory Board’s

work is provided by its five committees, namely:

the Audit Committee, Risk Committee, Nomination

Committee, Remuneration Committee, and the

Operations and IT Committee. They all participate in

sustainability-related matters and discuss the proposed

materials and proposed resolutions of the Management

Board in individual areas intended for discussion or

adoption at meetings of the NLB Supervisory Board. In

line with the internal rules and procedures committee

meetings are convened according to the financial

calendar prior to each Supervisory Board session. In

2025, there were 17 meetings of the NLB Supervisory

Board’s committees altogether.

The Supervisory Board’s committees are mainly

established in the NLB Group banking members but

may also exist in other members if required by specific

regulations. In line with the specific needs of a member

company, the Supervisory Board may also establish

other committees and bodies.

In addition, the NLB Group has established

committees

that are dedicated exclusively to sustainability

matters,

i.e. the Sustainability Committee in NLB and

similar bodies in the NLB Group members,

and the NLB Climate Change Committee.

The NLB Sustainability Committee is the central

sustainability-related advisory body

to the

Management Board of NLB. The Committee oversees

the integration of the ESG factors into NLB and the

NLB Group members’ business model in a focused and

coordinated way across the Group and issues opinions,

recommendations, initiatives, and takes relevant

decisions when needed. The Committee provides the

overall vision and sustainability strategy, discusses,

develops, and validates sustainability strategies, policies,

initiatives, methodologies, KPIs and other relevant

documents and procedures, and submits them to the

NLB Management Board for approval. The committee

also decides on specific external partnerships and

agreements and ensures cohesion of the overall

sustainability activities with the Group’s mission. The

Sustainability Committee influences sustainability-related

strategic objectives and monitors their development

and implementation. It is convened quarterly, and is

composed of the senior officials across all areas of the

Bank, and chaired by the CEO of NLB. The Rules of

Procedure of the Sustainability Committee determine

the composition and powers of the Committee, its

membership and other details regarding its purpose.

NLB Group members can establish local sustainability-

related bodies.

To this end they consider the nature

of work, scale and complexity of the activities and

organisational structure of the member company, and

adopt the basic rules of procedure of such a body.

Sustainability-related bodies can be established in

various forms, such as sustainability teams, project

groups, working groups, committees, etc., and may

include internal and external members. Members of the

local sustainability-related body are appointed by the

Management Board of the NLB Group member.

The Climate Change Committee

has full authority

and responsibility over the development and

implementation of the NLB Group Net-Zero Strategy,

to streamline decision-making and enhance

accountability related to the set decarbonization

targets. The Climate Committee is composed of key

192

individuals who cover both strategic and operational

aspects of the decarbonization efforts. The Committee

comprises all seven members of the Management

Board, as well as at least six core team members. The

core team members include the project-lead from the

Sustainability Unit and representatives of Global Risk,

Retail Banking, Corporate Banking, Data/IT and Group

Steering divisions/departments. The composition

of the committee ensures a holistic approach to

the decarbonization process. It brings together

executives and experts from various fields, providing

comprehensive guidance and insight. This collaborative

effort aligns different areas of the organisation,

enhancing interdepartmental coordination and

facilitating effective decision-making.

The Sustainability Unit

The Sustainability Unit is set up within the Strategy and

Business Development Division (which is part of the

CEO stream) in the parent bank NLB. In this manner,

sustainability in the NLB Group is coordinated through

the central coordination team. The team consists of

sustainability coordinators and is led by the head of the

Sustainability Unit, who reports to the director of the

Strategy and Business Development Division, reporting

directly to the CEO of NLB. The latter also reports to

the Management Board and Supervisory Board of

NLB. The Sustainability Unit is the overall coordinator

of sustainability management and closely cooperates

with individual competence lines which are responsible

owners of the entire process in their field of work,

without unduly infringing upon the established internal

governance system and control functions.

Competence Lines

Sustainability and ESG are important topics that

need to be strongly embedded in all key business

areas of the NLB Group. Each key competence line is

therefore responsible for alignment and oversight of the

implementation of sustainability and ESG matters in its

field of work. Relevant sustainability and ESG matters

are communicated to the relevant key competence line

in advance by the Sustainability Unit. The established

governance mechanism of the competence lines in

general is stipulated in the NLB Group Governance

Policy and Minimum Standards for Competence

Lines. Consequently, in the context of harmonisation

and standardisation of the NLB Group operations in

terms of sustainability and ESG, the main roles of key

competence lines are to:

monitor that all NLB Group members nominate

sustainability representatives in the competence line’s

field of work,

ensure that the relevant rules and principles

(Group-wide) pertaining to sustainability and

ESG are incorporated into the competence line’s

documentation framework,

monitor that members of the NLB Group operate in

accordance with the Group-wide rules and principles of

sustainability and ESG relating to the competence line’s

field of work.

NLB Group members are responsible for complying

with the local or sector-specific regulatory requirements

applicable in the country of each NLB Group member.

Sustainability expert profiles

In the NLB Group member sustainability expert profiles

(roles) are appointed and they are responsible for

implementation of sustainability matters within their

scope of work. An NLB Group member may appoint

one or several sustainability profiles (roles), subject

to its size, scope and field of work, such as: head of

sustainability, sustainability coordinator/manager,

sustainability coordinator/manager deputies, ESG risk

stream coordinator, ESMS officer, ESMS Team, ESMS

Team Coordinator, and sustainability representatives in

organisational units or competence lines.

Internal controls

To ensure efficient and consistent implementation

of strategies and operations of the NLB Group, its

processes and procedures, protection of the value of

bank assets, and reliability and integrity of accounting

and management data and information, an efficient

system of internal controls has been set up in the NLB

Group members. The adequacy of internal control

mechanisms is defined based on the independence,

quality and applicability of the rules and controls of

performance of organisational, business and work

processes of the internal controls in the NLB Group,

and the internal control functions. The foundation is

defined by the internal document NLB Internal Control

System, which outlines the internal control system and

the responsibilities for its establishment, continuous

operation and improvement. In accordance with internal

procedures, the internal document is also implemented in

the NLB Group members. 

Sustainability impacts, risks, and opportunities are

integrated into the NLB Group’s internal control system

through three levels of defence. Each level has clearly

defined sustainability-related responsibilities, ensuring

effective management and oversight.

First line of defence 

First-level controls ensure proper implementation of

business activities in each organizational unit. The

competent unit supervises and implements procedures

according to the Rules on Authorisations and Signing.

All units are the first line of defence, responsible for daily

risk management in climate and sustainability matters,

especially frontline employees in corporate, retail, and

financial markets. Their main responsibilities include:

conducting client activities within the ESMS framework

and managing climate and ESG risks,

gathering sustainability profiles of clients and

identifying new commercial opportunities,

informing clients about new sustainable banking

products while avoiding greenwashing,

providing clear directions on new products

and processes,

managing ESG risks related to their work,

ensuring data for reporting and disclosures meet

industry standards,

participating in awareness activities and training on

sustainability topics.

Back-office employees also identify and manage

sustainability impacts, risks, and opportunities in their

work, following internal principles and procedures,

reporting to superiors, and engaging in training.

Second line of defence 

Second-level controls are divided between internal

control functions, risk management and business

compliance; the latter carries out independent controls

and supervision over the operations of the first line

of defence. 

The risk management function defines the rules for

risk appetite, strategy, policies, and ESG and climate-

related risks. It focuses on holistic risk management

and cross-risk oversight to enhance risk steering and

193

mitigation within the NLB Group. Additionally, it ensures

data for reporting and disclosures meet the industry

standards and provides training on efficient ESG risk

management, especially for climate-related risks.

The business compliance function supervises and

ensures compliance with the regulatory framework in

the NLB Group. It identifies, assesses, prevents, and

monitors risks to compliance and integrity, including

those related to ESG and climate. Responsibilities

include overseeing the implementation of laws,

directives, standards, and regulations, and providing

guidance to ensure compliance.

In line with the internal document Rules on Management

of Changes in Legal Environment, managing changes

in legal environment includes climate-related and

ESG risks. Compliance function monitors regulatory

developments, communicates updates to relevant

units through internal channels, such as newsletters

on regulatory changes, and participates in the general

sustainability activities to ensure adequate oversight of

their implementation.

The status of legal changes or adjustments to the

Group’s operations is reported by Compliance at least

quarterly to the Management and Supervisory Boards,

and as needed to Risk Management and other units.

Compliance also participates in sustainability working

groups, the Sustainability Committee, and cooperates

with the Sustainability Unit.

Third line of defence 

The third level of control is performed by the

independent internal audit function, which assesses

the completeness, functionality, and adequacy of the

internal control system. Sustainability and ESG matters

are included in the Audit Universe and integrated into

the annual planning process of NLB and other

NLB Group members.

GOV-2

Information

provided to and

sustainability

matters addressed

by the administrative,

supervisory and

bodies

In 2025, information on the NLB Group’s sustainability

performance related to IROs was provided to the top

governance bodies:

at NLB Management Board and

NLB Supervisory Board meetings,

at meetings of the Management Board

and Supervisory Board committees,

quarterly at Sustainability

Committee meetings,

twice a year at the Climate

Change Committee.

Additionally, ad-hoc in-depth insights into

sustainability-related topics were provided to the

Management Board or Supervisory Board, when

needed or required.

The Management and Supervisory Boards’ review

and approval process related to business topics,

including the strategy, decision on major transactions,

and risk management process, is supported by their

advisory and collective decision-making bodies and

other organizational units who are responsible for a

particular business topic. They prepare and coordinate

the statements and reports and submit them for

discussion and approval to the Management Board,

which then reports to the Supervisory Board.

In 2025 the NLB Management Board reviewed and

approved the updated DMA, Sustainability Statement

and report of internal audit on sustainability assessment.

GOV-3

Integration of

sustainability-related

performance

in incentive schemes

Overview of the

remuneration policies

NLB Group remuneration policies are designed to

support the achievement of strategic and business

targets, as well as the recruitment, motivation, and

retention of members of management bodies, senior

executives, and other employees.

The target-setting, performance evaluation, and

remuneration framework for identified employees,

i.e. the governance bodies, and other identified

employees (those who can significantly impact the

risk profile of NLB and/or the NLB Group in the

scope of their tasks and activities), is set out in the

Remuneration Policy for Members of the Supervisory

Board and Management Board of NLB (hereinafter:

Remuneration Policy for Management Bodies) and

in the Remuneration Policy for Employees in NLB

and in NLB Group (hereinafter: Remuneration Policy

for Employees), which principles are valid for other

employees. Based on the Group guidelines these

principles are also implemented in the NLB

Group members. 

Both policies were updated in the reporting period:

· The 2025 Remuneration Policy for Management

Bodies

was amended to implement Step-in Criteria

to ensure that variable remuneration is granted only

when predefined conditions are met, to clarify the

process for setting the Bonus Poll and define the roles

of individual stakeholders in each relevant process. This

Policy was adopted by the Supervisory Board on 10

April 2025, approved at the General Meeting on 16 June

2025, and became effective on 1 January 2026.

· The 2025 Remuneration Policy for Employees

was

amended to clearly define the roles of individual

stakeholders in remuneration-related processes,

the identification process for identified employees, fixed

and variable part of remuneration, Step-in Criteria,

194

performance criteria and to establish a clearer process

for setting the bonus pool. Adopted by the Supervisory

Board on 19 June 2025, it is effective from 1 January 2026.

The amendments of the Remuneration Policy were

implemented in core NLB Group members while observing

the local regulations in their countries of operations.

Supervisory Board remuneration

In relation to their function, a member of the Supervisory

Board may only receive remuneration that is

compliant with the relevant resolutions of the General

Meeting. Supervisory Board members are entitled to

remuneration for performing their function and/or

attendance fees for their membership in the Stravel

expenses, meal allowance and accommodation costs

up to the amount provided by the regulations governing

the tax treatment of reimbursements of expenses

and other income from the employment relationship.

Remuneration for members of the Supervisory Board

is related only to performing their function and is not

related to achieving business goals.

Management Board remuneration

The remuneration of a Management Board

member consists of a fixed part of the salary and

a performance-related variable part of the salary,

which is divided into short-term incentive (STI)

and long-term incentive (LTI), and reflects sustainable

and risk-adjusted performance. The amount of the

variable part of salary of a Management Board member

depends on performance criteria which comprise:

the achievement of the financial goals of the

NLB Group,

the achievement of the financial and/or strategic

business goals specifically set for each Management

Board member with respect to individual functional

responsibilities,

the personal goals of the Management

Board member,

upon separate assessment at the end of the

subsequent performance period the LTI is

adjusted based on performance achieved in

the same period.

Table 49:

Overview of the remuneration policy for identified employees

Remuneration policy

How it applies to identified employees

Fixed

remuneration

Is set based on the relevant professional

experience, responsibilities, powers and

duties of a Management Board member.

Considering the regional benchmark of comparable

banks with regard to the position/segment covered by

an individual member of the Management Board.

Performance

assessment

A system of setting smart goals

is in use following a top-down

approach. Performance is assessed

against the agreed goals of the

Management Board Member.

Qualitative and quantitative performance measures and

objectives are set at the beginning of each year with focus

on supporting the NLB Strategy 2030 and core values –

entrepreneurship, people’s growth and improving lives.

Short-term

incentive (STI)

The Short-Term Performance

Criteria and methodology for

evaluating the performance of the

Management Board members is

set by the Supervisory Board.

Short-term performance criteria consist of financial goals of

the NLB Group, financial or development goals in the areas

covered by the member of the Management Board and

personal goals of the member of the Management Board.

Long-term

incentive (LTI)

The Long-Term Performance Criteria

and related methodology for

evaluating the performance of the

Management Board members during

the Subsequent Performance Period

is set by the Supervisory Board.

LTI consists of relative total shareholder return (RTSR) and goals

that derive from the Bank’s long-term strategy and are related to

the sustainability and development of the Bank and are linked to

the promotion of organizational culture, employee development

and customer relations (cost of risk applies to the CRO only).

Note: identified employees are the governance bodies, and other identified employees (those who can significantly impact the risk profile of NLB and/or

the NLB Group in the scope of their tasks and activities).

195

targets in the Management

Board remuneration

incentive schemes

40

Members of the NLB Management Board and other

identified employees are committed to achieving

sustainability-related targets set out in their respective

areas. Where applicable, targets are delegated to the

organizational units and then further to employees under

the responsibility of each management board member.

The annual performance evaluation process for the

members of the NLB Management Board is based on

financial and non-financial goals, i.e. other measurable

targets, including those which are related to the

implementation of sustainability strategy in NLB Group

40 In line with the NLB financial calendar and corporate governance, the 2

025 remuneration report will be published after the approval at the Shareholders’ Meeting in June 2026.

and material sustainability matters: ESG risk management,

climate change, sustainable finance, corporate culture,

employee development and engagement, gender

pay gap, service quality and customer satisfaction,

digitalization, contribution to society.

In 2025, the weighting for sustainability-related

targets was as follows:

· CEO of NLB: 30% weighting

· Other members of the NLB Management Board:

25–35% weighting

ESRS 2, GOV-3 E1

Targets related to climate change refer to the

development and implementation of the climate

(net-zero) strategy, including green loans and risk

management, and are allocated to the following

members of the NLB Management Board: the CEO with

a 4% weight, the CRO with a 10% weight, the CGPO

with a 5% weight, and the CMO Corporate and CMO

Retail with a 10% weight. The performance of the NLB

Management Board is therefore assessed against these

emission targets.

In addition, the

Long Term Incentive (LTI) plan for

2026-2028

for the NLB Management Board was

approved by the Supervisory Board in January 2025.

The plan defines the following non-financial targets with

50% weighting in the overall LTI plan:

linked to organisational culture, employee

development: decrease in gender pay gap, decrease in

actual and desired organisational culture,

linked to customer relations: reaching the sustainable

loan portfolio target by 2028.

Detailed breakdown of targets per each member of the

NLB Management Board for the financial year 2025 is

presented in the following tables.

Table 50:

Breakdown of sustainability-related targets in the remuneration of the CEO

Target

Mapping to the material

sustainability topic

Weight

per target

Weight

(total)

Targets for areas under

the responsibility of CEO

NPS enhancement at the NLB Group level

Service quality and

Initiation of all new strategy projects of the NLB Group Strategy 2030

ESG ratings improvement

Sustainability strategy

and governance

Implementation of PRB and NZBA initiatives as identified by the UNEP FI Annual Progress Report

Climate change,

Sustainable finance,

Contribution to society

Enhanced youth engagement in sports activities, sponsored by NLB; and enhanced

engagement in financial and/or digital literacy training or program organized by NLB

Contribution to society

Personal targets of CEO

Acting in accordance with the NLB Group values

Corporate culture

Employee engagement enhancement - NLB Group

Employee attraction

and development

Employee development / Succession planning

Employee attraction

and development

Realisation of the individual development plan

Sustainability-related weights (Total)

196

Table 51:

Breakdown of sustainability-related targets in the remuneration of the CFO

Target

Mapping to the material

sustainability topic

Weight

per target

Weight

(total)

Targets for areas under

the responsibility of CFO

NPS enhancement at the NLB Group level

Service quality and

Developing solutions as stated in the “fully bankable plan” of the Strategy 2030

Delivery of operating platform initiatives’ scope

Align all CFO streams to Value management principles: focus on rating

enhancement strategy (path to A-rating), execution on fixed income funding

plan, consistent execution of Treasury strategy groupwide

Implementation of the NLB Group Net-Zero Operational Strategy

Climate change,

Sustainable finance

Personal targets of CFO

Acting in accordance with the NLB Group values

Corporate culture

Employee engagement enhancement in NLB - CFO stream

Employee development / Succession planning in NLB - CFO stream

Realisation of the individual development plan

Sustainability-related weights (Total):

(i), (ii) Until the CTO assumed the role of the new NLB Management Board member in June 2025, the CFO’s targets also encompassed employee-engagement enhancement and employee development / succession planning

for the NLB Group IT. These responsibilities were subsequently transferred to the CTO.

(iii) Until the CTO assumed the function as the new NLB Management Board member in June 2025, the weights of the CFO’s targets were adjusted. Specifically, the weight assigned to Developing solutions as stated in the “fully bankable

plan” of the Strategy 2030 and to Delivery of operating platform initiatives’ scope was reduced from 7.5% to 5%, while the weight of the target Aligning the streams to value management principles was increased from 5% to 10%.

Table 52:

Breakdown of sustainability-related targets in the remuneration of the CTO

Target

Weight

(total)

the responsibility of CTO

Initiation of all new strategy projects – launch strategic initiatives

planned for 2025 and KPI’s set on Project Portfolio level

Assume the oversight responsibility for IT for the Group

ESG IT & Data Management Framework Implementation

Sustainability strategy

and governance

Personal targets of CTO

Employee engagement enhancement in NLB Group Transformation

Office and enhance response rate for IT stream in NLB

Completion of Transformation Set Up as specified in the Strategy

Roadmap - Governance, Staffing and Steering

Sustainability-related weights (Total)

197

Table 53:

Breakdown of sustainability-related targets in the remuneration of the CRO

Target

(total)

the responsibility of CRO

60%

Implementation of Risk strategy of the NLB Group

Launch activities of initiative “Risk and Underwriting” planned for 2025 

Support activities of initiative “E2E process optimisation” (loans) planned for 2025

Support activities of initiatives “Consumer Finance” and “Mortgages” planned for 2025

NLB Group Climate Strategy – Cooperation in Implementation and monitoring of

Net Zero strategy targets related to risk management (Net Zero Portfolio)

Sustainable finance,

ESG risk management

Implementation and upgrades to risk management framework and process according to

action plans (in line with ECB Guide on climate-related and environmental risks) Supervisory

(ECB, BS, EBA, etc.) risk management requirements and expectations related to ESG

ESG risk management,

Climate change

NLB Group ESG and Climate Strategy – ESG Due Diligence: Execution of ESG due diligence

ESG risk management,

Climate change

Personal targets of CRO

Employee development / Succession planning

Employee engagement enhancement in CRO stream (NLB)

Table 54:

Breakdown of sustainability-related targets in the remuneration of the CGPO

Target

(total)

the responsibility of CGPO

Launch strategic initiatives under payments ownership planned for

2025 and KPI’s set on Payments Project Portfolio level

Increase active digital penetration

Digitalisation and

innovation

Sustainability and ESG governance: Ensuring consistent compliance with internal Sustainability

Policy and Rulebook, timely reporting on sustainability, timely implementation of Net Zero

operational strategy and Net Zero Portfolio Strategy in all relevant Group members

Harmonizing sustainability and ESG governance, the Net Zero Climate

Strategy (Operational Strategy and Portfolio Strategy) in subsidiaries

and governance,

Sustainable finance

Personal targets of CGPO

Employee engagement enhancement in NLB (in CGPO STREAM)

198

Table 55:

Breakdown of sustainability-related targets in the remuneration of the CMO CORPORATE

the responsibility of

CMO CORPORATE

Initiation of all new strategy business initiatives under CIB ownership (SME, IB, TF)

7.5%

Implementation of critical IT projects: CRM, OMNI for

corporate, credit granting process tool for SME

7.5%

Corporate green lending portfolio (Group level 50% stock and 50% of green loans)

NLB Group Climate Strategy – cooperation in implementation

and execution of Net Zero Portfolio Strategy

Personal targets of

CMO CORPORATE

Employee engagement enhancement in NLB Corporate stream

Table 56:

Breakdown of sustainability-related targets in the remuneration of the CMO RETAIL

the responsibility of

CMO RETAIL

Initiation of all new strategy projects under Retail ownership and

achieve overall KPI’s set on Retail Project Portfolio level

NPS enhancement at the NLB Group level (General NLB Group

total NPS 50% and 50% NPS SLO retail segment).

Retail green lending portfolio: annual growth of Groupwide retail green

lending portfolio (volume of new production or exposure planned)

Climate Change,

NLB Group Climate Strategy – cooperation in implementation

and execution of the Net Zero Portfolio Strategy

Climate Change,

Digital penetration: achieve annual growth

Digitalisation and

innovation

Personal goals of

CMO RETAIL

Employee engagement enhancement in NLB retail stream

35%

199

GOV-4

on due diligence

NLB Group performs various due diligence activities that

are guided by the UN Guiding Principles on Business

and Human Rights and the OECD Guidelines for

Multinational Enterprises. The Group’s due diligence

process is strongly integrated within its strategic and

business model framework, which ensures that due

diligence is part of the Group’s ongoing operations,

specifically in identifying and managing negative

impacts. The table below provides a description of the

Group’s due diligence approach and activities in 2025

referenced in this Sustainability Statement.

Table 57:

The NLB Group’s due dilligence approach

Core elements of due diligence

Paragraphs in the sustainability statement

Embedding due diligence in

governance, strategy and

the business model

ESG risk management (section due diligence)

Human rights commitments related to clients

Human rights commitments related to employees

Human rights commitments related to suppliers

Engaging with affected stakeholders

in all key steps of the due diligence

ESRS 2 General information: Stakeholder engagement

Processes for engaging about impacts

• S1-2 Processes for engaging with employees and workers’ representatives about IROs

• S3-2 Processes for engaging with affected communities about impacts

• S4-2 Processes for engaging with clients and End Users about impacts

Identifying and assessing

adverse impacts

SBM-3: Material IROs and their interaction with strategy and business model

· E1 Climate change

· S1 Own workforce

· S3 Affected Communities

· S4 Consumers and End Users

G1 Business Conduct IRO -1 Description of processes to identify and assess material IROs

G1-3 Prevention of corruption and bribery

Taking actions to address

those adverse impacts

E1-1 Transition plan for climate change mitigation

E1-3 Actions and resources related to climate change mitigation and adaptation

Taking action on material IROs:

· S4-1, S4-4, S4-5 Consumers and End Users

· S1 Own workforce

S3-3 Processes to remediate negative impacts and channels

for affected communities to raise concerns

S4-3 Processes to remediate negative impacts – complaint management

G1 Business Conduct

· Managing concerns about unlawful or harmful conducts

· Whistleblower protection

Tracking the effectiveness of these

efforts and communicating

E1-4 Targets related to climate change mitigation and adaptation

S1 Own workforce

· S1-5 Targets and metrics related to managing material IROs

· Human rights commitments: Key actions and progress

S3 Affected Communities

· S3-4 Key actions, Metrics and progress

S4 Consumers and End Users

· S4-5 Targets related to managing material IROs

200

GOV-5

Risk

management and

internal controls over

sustainability

reporting

Sustainability Unit in NLB is responsible for coordinating

the Sustainability Statement and the underlying

Double Materiality Assessment. Competence lines and

organizational units across the NLB Group are data

owners responsible for data accuracy, collection and

providing the data to the Sustainability Unit. In recent

years, NLB Group has been actively developing IT system

support for reporting on green financing, GHG emissions,

EU taxonomy and other sustainability-related topics. To

mitigate operational risks in sustainability reporting which

may result in incompleteness, inaccuracy, and errors, the

development of a comprehensive sustainability-related

data governance framework is underway, which includes

risk management and an internal control framework

supported by adequate IT solutions. The NLB Group’s

goal is to integrate this framework into data governance,

controls, and risk management across all competence

lines, similar to the process applied in financial reporting.

The risk assessment approach and control framework for

this Sustainability Statement were based on detailed data

points and their underlying definitions, and calculation

methodologies, which are aligned with the ESRS. Two

operational risks were addressed in the consolidated

sustainability statement: the risk of overlooking material

topics, and the risk of inaccurate data.

The following risk management and internal control

procedures were applied:

As the unit responsible for preparing the Sustainability

Statement, the experts of Sustainability Unit conducted

several workshops and individual meetings with

subject-matter experts from competence lines who had

been identified as data point owners and were thus

responsible for collecting, preparing, and verifying data

for the disclosure requirements. In the meetings, they

aligned their understanding of disclosure requirements

and methodologies, as well as other activities

necessary for preparation of the Report.

The reporting on each disclosure requirement was

compiled by one or more employees in the responsible

competence lines, checked for accuracy and

completeness, and reviewed by the immediate superior.

Disclosure drafts were then reviewed by one or more

members of the Sustainability Unit team.

During the preparation of the Sustainability

Statement, the Sustainability Unit reported at least

quarterly to the NLB Management Board, or Audit

Committee or NLB Supervisory Board about the

sustainability reporting process.

The final version of the Sustainability Statement was

reviewed and signed off by the contributors and their

superiors and approved by the NLB Management

Board and Supervisory Board.

During the process, the contributors followed

the principles of the Standard on Prevention of

Greenwashing at NLB and NLB Group (adopted in 2024),

in line with the EBA guidelines and the Group’s effort for

transparency in sustainability-related communication

and reporting. This policy outlines the key processes that

require caution to prevent any form of greenwashing in

the process or reporting in general.

To mitigate operational risks

in sustainability reporting,

risk management procedures

and internal controls have

been established

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202

SBM-1

Strategy,

business model

and value chain

NLB Group’s strategy

and business model

NLB Group is the leading banking and financial group

with headquarters and an exclusive strategic interest

in our home region – Southeast Europe. The NLB

Group is comprised of NLB and six subsidiary banks,

several companies providing ancillary services (asset

management, real estate management, leasing services

etc.), and a limited number of non-core subsidiaries in

a controlled wind-down, operating in the markets of

Slovenia, Bosnia and Herzegovina, Montenegro, Kosovo,

North Macedonia, Serbia, and Croatia. The Group

deploys a universal banking model and operates in

core and non-core segments.

For details, please refer to the chapters NLB Group Key

members and Segment Analysis (sections

) in the Business Report.

is integrated

in the new Group

Strategy 2030

In May 2024, the NLB Group launched its new Group

Strategy 2030, which incorporates sustainability,

while ESG impacts, risks, and opportunities have

been gradually embedded into the Group’s business

processes over last few years. For details, please refer to

the chapter

Strategy in the Business Report

At the end of 2025, NLB Group had 8,107 employees.

For overview of employee headcount per

countries please refer to the chapter

Employees

characteristic metrics

NLB Group will report revenues by ESRS sectors once

they are adopted by European Financial Reporting

Advisory Group (EFRAG).

The Group’s own operations do not include the fossil

fuel, chemical production, controversial weapons, or

tobacco cultivation and production sectors. Therefore,

it generates no revenue from these industries.

NLB Group’s value chain

The value chain of the NLB Group integrates its internal

operations with the upstream and downstream activities

of NLB as the parent company and its subsidiaries. This

holistic approach includes activities, resources, and

relationships that drive value creation within the Group’s

business model.

Own operations

NLB Group impacts the environment and society

through its own operations and internal processes. Own

operations encompass the use of resources across all

business units, including in financial core members (see

details below), human resources and organisational

development, governance, compliance, legal, tax,

financial markets and treasury, and IT services (including

NLB Digit, a core non-financial member with a supportive

expert function, established as a separate legal entity

providing services to the NLB Group). Own operations

also include Group members engaged in real estate

management and the preservation of cultural heritage.

Key entities in own operations are NLB as a parent

bank and other financial core members: banks, leasing

companies and asset management companies.

At the end of 2025, NLB and six subsidiary banks

(NLB Komercijalna Banka, NLB Banka, Banja Luka,

NLB Banka, Sarajevo, NLB Banka, Skopje, NLB Banka,

Prishtina, NLB Banka, Podgorica), accounted for as much

as 93% according to the number of employees in NLB

Group, more than 99% according to its client base, 92% of

total equity and 91% net revenue, and 92% of profit after

tax. Derived from its core business, i.e. financing, they

generate the greatest impact, risks, and opportunities

related to the environment and society. Other non-

financial core members (NLB Digit, own real estate

management companies, NLB Cultural Heritage Institute

MUZA), and non-core members (companies in the wind-

down process or companies which are considered

non-strategic for the NLB Group) have significantly lower

sustainability impact and financial materiality.

Upstream value chain

The key upstream value chain actors are suppliers of

products or services to the NLB Group through direct

and indirect business relationships. Key suppliers include

providers of utilities, goods, and services. The NLB Group

has a direct impact on the environment and society

through its procurement decisions, while the Group’s

impact on the suppliers’ management procedures,

including employee working conditions and human rights

is indirect and limited. DMA assessed suppliers and their

workforce as not-material to the NLB Group. In recent

years, the Group has begun integrating sustainability

into procurement, recognising its growing relevance

and potential future impact. To meet the expectations

of rating agencies, analysts, and other stakeholders,

and to maintain consistency with previous reporting, the

Group included general supply-chain information in the

Sustainability Statement. This disclosure is guided by ESRS

requirements but does not fully comply with them and is

presented in the

Complementary Information

section.

Downstream value chain

The key downstream value chain actors are clients

receiving products or services from the NLB Group,

such as loans, funding through debt or equity issuance,

interest on deposits, investments in companies, and

leased assets. The NLB Group has a direct impact on

the environment and society through financing and

investment policies aimed at clients. On the other hand,

the Group has very limited and indirect impact through

provision of funds to clients and may not directly impact

clients’ management procedures in this respect or clients’

relations with their workforce. Investors provide capital

to the NLB Group, and regulatory authorities provide the

regulatory context for their operations. By collaborating

with regulators and investors the NLB Group has an

indirect impact on the environment and society.

203

Figure 69:

NLB Group’s value chain

Upstream

Stakeholder

Suppliers

Investors

Regulatory authorities

Impact on environment

and society

Direct

Indirect

Suppliers of utilities provide electricity, heating, water, waste collection

Suppliers of goods provide office supplies, IT equipment, etc.

Suppliers of services provide various services, such as: security, logistics,

communications, cleaning, data, consulting etc.

Providing capital for NLB Group

to grow, innovate, and expand.

Providing regulatory context for

operations and strategy, future

sustainable development.

Key dependencies/resources

NLB Group depends on provided utilities to perform basic business operation,

provision of IT equipment and other goods necessary to perform basic

business operations, provision of key services, such as cleaning and logistics,

as well as provision of data and other types of services necessary to perform

basic business operations. NLB Group is not dependant on supply of specific

resources or materials.

NLB's shareholders provide capital

and express expectations regarding

business dvelopment and performance.

NLB Group operates in a highly

regulated sector and thereby

the role of regulators is critical.

NLB Group collaborates with

them in line with legislation and

engages in policy discussions.

Own Operations

Stakeholder

banking

banking

Investment

banking

Asset

and wealth

Real estate

asset

Leasing

Cultural

Heritage

Organisational

Impact on environment

and society

Direct

Providing loans

and other types

of banking

products and

services to

individuals and

microcompanies.

Providing loans

and other types

of banking

products and

services to

corporate clients

(large, SMEs).

Providing

investment

banking services

to retail and

corporate clients.

Providing asset

products

and services

to private

individuals and

business clients.

of owned

real estate.

Providing leasing

to private and

business clients.

Preserving

and promoting

cultural

heritage and

providing culture

experience to

general public.

Carrying out all basic

business functions

necessary to perform

business operations (e.g.

HR and organization

development,

governance,

compliance, legal, tax,

financial markets and

treasury, IT etc.).

Key dependencies/resources

NLB Group depends on human capital, i.e., own employees to create value, ensure day-to-day running of operations, manage business, develop strategy, etc.

Downstream

Retail clients

Corporate clients

Retail and corporate clients

Direct

Indirect

Using provided products and services

to fund various goods and activities.

Using provided products and services

to fund business operations.

Products, services and projects carried out

as a result of funding provided by NLB Group.

NLB depends on client relationships as clients provide funds, repay loans, carry out projects that

the bank funds.

Clients operating in resource and/or energy intensive sectors depend on various natural resources

and energy to produce goods.

Note: The figure presents key actors in the value chain through which the NLB Group has either direct or indirect impact on the environment and society, and constitutes dependencies with them. As per segment analysis investment

banking, leasing, and asset management are allocated both in retail banking and corporate banking.

204

NLB Group’s approach

to sustainability

Sustainability Policy

NLB Group’s approach to sustainability is laid down in

the Sustainability Policy in NLB and NLB Group, which

was adopted at the beginning of 2024 and updated at

the end of 2025. The overall objectives of the Policy are:

to implement sustainability-related legislative

requirements, recommendations, and guidelines of

the supervisory bodies, professional institutions, and

initiatives in the financial industry, in NLB and other

NLB Group members’ business models and processes,

to describe mechanisms for ensuring that the

requirements, recommendations, and guidelines

related to sustainability are recognized and respected

in NLB and the NLB Group members,

to comprehensively provide the three pillars of the

NLB Group sustainability: sustainable operations,

sustainable finance, and contribution to society,

to establish overarching and forward-looking

sustainability-related principles and objectives, as well

as governance and management rules and procedures

to integrate sustainability and ESG factors in the NLB

Group’s business model and processes.

The Policy is complemented by the internal document

Standard – Rulebook for Sustainability Management

in NLB Group.

Together, they define a top-down and

bottom-up process for sustainability governance that

extends from individual business units and countries

to the management bodies. The Policy is intertwined

with domain-specific policies and instructions related

to risk management, environmental management,

HR, diversity and inclusion, human rights, compliance,

anti-corruption, tax, procurement, and other specific

internal documents, developed in the Sustainability Unit

and respective business areas (competence lines), in

accordance with the NLB Group Governance Policy.

The Policy and the Standards are in the custody of the

Sustainability Unit in NLB and were adopted by the

management boards of NLB and other core financial

members. Both documents are mandatory for all core

financial members: banks, leasing companies,

and asset management companies across all markets

where the NLB Group operates. In line with the NLB

Group’s comprehensive approach to sustainability, the

scope of both documents will be expanded in 2026.

Mandatory minimum standards will be implemented

for non-financial core members, such as real estate

management companies and other non-financial

entities. Non-core members – companies in the process

of dissolution or those not considered strategic for

the NLB Group – will acknowledge the Policy and the

Standard, which will serve as a voluntary best-practice

guideline for them.

The Policy and the Standard are available to employees

on the intranet in the Register of Internal Documents.

The summary of the Sustainability Policy is also

communicated to external stakeholders and is available

on the NLB website.

Sustainability mission

By implementing sustainability into its business model, the

NLB Group aims to achieve three overarching objectives:

ensure the sustainable financial performance of the

NLB Group, and at the same time

achieve added value for its key stakeholders (clients,

employees, suppliers, shareholders, etc.) by considering

ESG factors, and

successfully manage ESG impacts, risks and

opportunities arising from these factors.

The three-pillar approach ensures that sustainability is

integral to all NLB Group’s financial activities - lending,

leasing, asset management, treasury, and trading with

financial instruments.

Current significant products, markets, and customer

groups in relation to sustainability are presented in the

chapter

Moreover, sustainability is also integrated in functions

in the NLB Group’s own operations, and in our

relations with communities in the broader society.

Current activities in these areas are presented

in respective chapters of this Sustainability

Statement.

The main mission

of sustainability in the

NLB Group is to improve

the quality of life and

contribute to a sustainable

economy and society,

while leading these

processes by example

205

Figure 70:

NLB Group’s approach to sustainability

Mission

Objectives

Pillars

The way we

deliver

Sustainable financial performance

+

adding value for stakeholders

+

successfully manage ESG impacts, risks, and opportunities

Sustainable

Contribution

to Society

Operations

Leading by example

Improving quality of life

Contributing to ª sustainable economy and society

Commitments to global sustainability initiatives and goals

Comprehensive and efficient ESG stewardship, based on double materiality

Stakeholder engagement and inclusion, developing partnerships

High corporate governance standards, compliance, integrity and respecting human rights

Strong sustainability governance and culture

206

NLB Group Sustainability Pillars

Principle 1:

Alignment

Principle 2:

Impact &

Target Setting

Principle 3:

Clients &

Customers

Principle 4:

Stakeholders

Principle 5:

Governance &

Culture

Principle 6:

Transparency &

Accountability

UN Principles for Responsible Banking

SDG 3:

Ensure healthy

lives and

promote

well-being for

all at all ages

SDG 4:

Ensure inclusive

and equitable

quality

education

and promote

lifelong learning

for all

SDG 5:

Achieve gender

equality and

empower all

women and girls

SDG 6:

Ensure

availability and

sustainable

of water and

sanitation for all

SDG 7:

Ensure access

to affordable,

reliable,

sustainable,

and modern

energy for all

SDG 8:

Promote

inclusive and

sustainable

economic

growth,

employment,

and decent

work for all

SDG 9:

Build resilient

infrastructure,

promote

inclusive and

industrialization,

and foster

SDG 11:

Make cities

and human

settlements

inclusive, safe,

resilient, and

SDG 12:

Ensure a

consumption

and production

pattern

SDG 13:

Take urgent

action to combat

climate change

and its impacts

GENDER

EQUALITY

DECENT WORK AND

ECONOMIC GROWTH

QUALITY

EDUCATION

AFFORDABLE AND

CLEAN ENERGY

GOOD HEALTH

AND WELL-BEING

CLEAN WATER

AND SANITATION

INDUSTRY, INNOVATION

AND INFRASTRUCTURE

11

SUSTAINABLE CITIES

AND COMMUNITIES

RESPONSIBLE

CONSUMPTION

AND PRODUCTION

CLIMATE

ACTION

UN Sustainable Development Goals

Operations

Contribution

to Society

Sustainable operations

decarbonise NLB Group’s own operations by achieving

Net-Zero operational emissions by 2050 or sooner

ensure positive impacts and minimise adverse impacts

of the NLB Group’s own financial operations on key

stakeholders

identify and mitigate risks, and pursue opportunities

stemming from business relations with key stakeholders

that might affect financial operations of the NLB Group

or our stakeholders

These goals and related activities apply for all NLB

Group members in all countries of operations.

align the lending and investment portfolio with

achieving Net-Zero emissions by 2050 or sooner

ensure a positive impact by financing a sustainable

transition (green and social)

identify and mitigate climate-related and other ESG risks

in relation to the NLB Group’s lending or investments

ensure responsible asset management

These goals and related activities apply for NLB

Group banking members and leasing companies in all

countries of operations, and are detailed in the chapter

align each CSR activity with at least one

UN Sustainable Development Goal

create added value by addressing genuine

societal needs through focused initiatives and

partnerships in key areas: employee wellbeing,

financial literacy and mentoring, environmental

responsibility, sustainable entrepreneurship,

support for sports, culture and cultural heritage,

and philanthropy. Employee care and environmental

responsibility apply to all NLB Group members,

while the other areas are primarily relevant for

the banking members.

207

To deliver on the Bank’s mission and objectives across

all three sustainability pillars, the NLB Group embraces

and invests in overarching sustainability drivers:

responsible engagement with key stakeholders and their

inclusion in business models and business decisions

high standards of corporate governance, responsibility,

compliance, ethics, and integrity in everything we do

comprehensive and efficient sustainability stewardship

through all three ESG pillars (environmental, social and

governance factors, and human rights)

building strong corporate governance and a culture

that support sustainability-related issues

commitment to global sustainability initiatives and

goals, such as the UN Sustainable Development Goals,

UNEP FI – Principles for Responsible Banking, and the

Net-Zero Banking Alliance

NLB Group follows the

Paris Climate Agreement,

and its commitments to the

UN global sustainability

initiatives and goals

Commitments to UN SDGs

NLB Group officially endorsed the UN SDGs by becoming

a signatory to the UNEP FI Principles for Responsible

Banking in 2020. In 2021 the NLB Group defined five initial

priority SDGs which reflected its greatest and direct impact

on the environment and society: 3 – good health and well-

being, 7 – affordable and clean energy, 8 – decent work

and economic growth, 12 – responsible production and

consumption, 13 – climate action. Since then, the Group has

gradually implemented several additional sustainability-

related commitments and initiatives, which address

additional SDGs: 4 – quality and education, 5 – gender

equality, 6 – clean water and sanitation, 9 – industry,

innovation and infrastructure, 11 – sustainable cities and

communities. Therefore, in 2023, the Group expanded

the list to 10 priority SGDs. At the same time, the Group

estimates that it indirectly contributes to all 17 SDGs to

varying degrees, as all of them are interconnected.

Commitment to UN PRBs

Following the commitment to the UNEP FI Principles for

Responsible Banking, NLB aligns its business with the

six principles for responsible banking and transparently

reviews and publicly discloses the progress annually in a

self-assessment report. The six underlying principles are:

· Principle 1: Alignment.

The NLB Group aligns its

business strategy to be consistent with and contribute to

individuals’ needs and society’s goals, as expressed in

the UN SDGs, Paris Climate Agreement, United Nations

Guiding Principles on Business and Human Rights and

relevant national and regional frameworks such as the

Sofia Declaration on the Green Agenda for the Western

Balkans, and national energy and climate plans.

· Principle 2: Impact and target setting.

The NLB Group

continuously increases its positive impacts while

reducing the negative impacts on, and managing the

risks to, people and the environment resulting from our

activities, products and services. To this end, the Group

sets and publishes targets where it can have the most

significant impacts.

· Principle 3: Clients.

The NLB Group works responsibly

with its clients to encourage sustainable practices

and enable economic activities that create shared

prosperity for current and future generations.

· Principle 4: Stakeholders.

The NLB Group proactively

and responsibly consults, engages and partners with

relevant stakeholders to achieve the goals pursued by

the society.

· Principle 5: Governance and culture.

The NLB Group

fulfils its commitment to the UNEP FI Principles for

Responsible Banking through effective governance

and a culture of responsible banking.

· Principle 6: Transparency and accountability.

The NLB

Group periodically reviews its individual and collective

implementation of these Principles and is transparent

about and accountable for its positive and negative

impacts and contribution to society’s goals.

In 2025, the NLB Group received the 4

UNEP FI

Principles for Responsible Banking Feedback Report,

which highlighted the positive progress and effective

practices in all six principles: alignment, impact and

target setting, clients, stakeholders, governance and

culture, transparency, and accountability.

For the UNEP FI PRB self-assessment report please refer

to the

Appendix 5

A comprehensive overview of UNEP FI Principles

for Responsible Banking is available at the website.

Commitment to the Net-Zero guidance

In line with the NLB Group’s commitment to a climate-

positive future (i.e. fostering a mindset of proactive

positive impact, rather than merely reducing harm)

and its Net-Zero ambition, the Group officially joined

the UNEP FI Net-Zero Banking Alliance (NZBA) in

May 2022. NZBA, which was the membership-based

alliance, ceased operations and was restructured into

a guidance framework in October 2025. However, the

NLB Group’s climate strategy remains unchanged, along

with its commitment to align the financing activities with

decarbonization and to achieve climate resilience.

For a comprehensive overview of the NLB Group

decarbonization activities and Net-Zero commitment

please refer to the chapter

Environmental information

208

SBM-2

Interests and

views of stakeholders

Stakeholder engagement

NLB Group continually engages with a wide range of

stakeholders to provide them with relevant information

on various topics, to consider their views, concerns, and

aspirations in business decisions, and to enhance trust

and partnerships. A materiality analysis, conducted

in 2021, identified the

six key stakeholder groups,

which were

reconfirmed in the 2024 Double Materiality

Assessment (DMA):

employees, investors/shareholders,

private individual clients, corporate clients (large

and SMEs), regulatory authorities, suppliers and

contractual partners.

In addition, the NLB Group

maintains constructive dialogue with other stakeholders,

such as local communities, professional and business

associations, and the media.

Stakeholders are regularly informed about general as

well as sustainability-related issues through various

communications channels, such as the NLB Group

members’ internet sites, public reports, marketing

communications, social media channels, etc. In

addition, the NLB Group pursues regular personal

communication, meetings in person or on-line,

consultations, and conferences and special events.

The engagement activities also include gathering

information and feedback, as well as various forms

of dialogue such as surveys and research.

Sustainability-related topics are included in stakeholder

engagement in several ways. The Sustainability

Unit primarily, and also other NLB Group expert

representatives (in connection with their field of work)

participate in the dialogue with internal and external

stakeholders. To enhance communication with the

stakeholders about sustainability, the NLB Group core

financial members have adopted the Instructions for

management of external sustainability communication

channel on environmental and social issues and related

grievance mechanism, and established the sustainability

e-mail inbox (for example in NLB:

[email protected]

),

which is accessible on their internet sites. This channel

also provides a mechanism for submitting complaints by

affected stakeholders and communities.

In addition, the importance of stakeholder engagement

was re-confirmed in the conducted DMA in 2024

that included views of the key stakeholders through

their assessment of sustainability-related impacts.

Employees, clients, investors, and suppliers participated

directly by completing a questionnaire, while regulatory

authorities were involved indirectly through the context

analysis.

The Group’s objective is to comprehensively understand

stakeholder perspectives and interests, ensuring

alignment with our business strategy. For this reason,

stakeholder engagement is deeply integrated into our

business model, continuously shaping and directing our

strategic activities now and in the future.

Namely, stakeholders’ views are important and are

considered when designing and implementing the

NLB Group policies and activities in different business

areas. The highest governance bodies are informed of

key findings, views and interests through established

communication and reporting channels. Important

topics are regularly discussed in board sessions and

committees and are included in policies and decisions

affecting the stakeholders.

NLB Group’s objective is to

comprehensively understand

stakeholder perspectives

and interests

209

Table 58:

Key areas of stakeholder engagement

Key Stakeholders

Purpose and content of the engagement (on-going)

Employees

Transparent and open communication through all internal channels (intranet, internal newsletters, personal meetings, performance reviews, etc.)

Active cooperation with workers’ representatives

Improving employee engagement, growth and personal development

Ensuring equal opportunities, respecting diversity, equity and inclusion

Enabling safe and healthy work environment

Providing various training and coaching possibilities to enhance knowledge and skills

Ensuring work-life balance

Ensuring teamwork and well-being activities

Measuring employee engagement, providing feedback opportunities and a grievance mechanism

Please refer to

S1 – Own workforce

for more information on activities and engagement process with employees.

Investors –

Professional and proactive communication with investors and analysts on topics and initiatives relevant for their decisions

Regular discussion on strategies to follow global trends

Integration of investors’ requirements into the Group’s operations

Presenting business performance and strategy of the NLB Group with reports, presentations, website publications, with publications

in the electronic information system of the Ljubljana Stock Exchange (SEOnet) and the London Stock Exchange (RNS)

Organising special investor days (once a year), webcasts, roadshows, bilateral talks, conferences, etc.

Clients:

Retail (Private

Individuals, micro

companies)

Corporates (large

companies, SME)

Ensuring responsible, professional and friendly relationships and communication with clients and understanding their expectations

Improving service quality

Supporting corporates and private individuals in sustainable transition with quality financial products, professional services, as well as timely and accurate information

Offering new green and social products, at a lower interest rate, and new digital solutions, adhering to principles of responsible marketing and communication

Protecting clients’ privacy, ensuring data and cybersecurity, and trustworthy use of AI

Promoting the sustainability topics at various client events

Measuring client satisfaction, needs, and preferences

Providing feedback opportunities and a grievance mechanism

Please refer to

S4 – Consumers and End Users

for more information on activities and engagement process with clients.

Regulatory Authorities

Regular cooperation with the ECB, EBA, Bank of Slovenia and local supervisory and regulatory authorities in markets where the NLB Group operates

Personal meetings and proactive dialogue on relevant topics to better understand supervisory expectations

Prompt regulatory compliance and transparency

Suppliers and

Contractual Partners

Implementation of sustainability requirements and due diligence in the procurement process

Personal meetings, dialogue on cooperation, challenges and issues related to sustainability matters

G1 – Complementary information (Sustainable supply chain)

for more information on activities and engagement process with suppliers.

Other Stakeholders

Local Communities

Maintaining strong relationships with key stakeholders to support local communities in achieving their objectives

Supporting local communities through financing, building partnerships, sponsorships and donations

S3 – Affected Communities

for more information on activities and engagement process with communities.

Associations

Active membership in banking, leasing, asset management associations and participation in policy and regulation discussions

Active memberships in key international initiatives, principles, recommendations and associations in sustainability-related areas

Media

Professional communication with the media through relevant channels (press releases, statements, press conferences, information briefings and other media events)

210

SBM-3

Material IROs

and their interaction

with strategy and

business model

Impacts of material IROs

Based on the DMA update, conducted in 2025, the

NLB Group recognises 45 material impacts (negative

or positive, actual or potential), as well as 4 material

risks and 19 opportunities, which are associated with

20 material sustainability topics.

Material impacts, risks, and opportunities (IROs) are

connected with the Group’s business model and value

chain. They derive from its own operations and the

downstream (clients), while in upstream (suppliers,

regulators, investors) no material IROs were identified.

In line with the Group’s risk management and the

business model, the IROs and their current and

anticipated effects are managed through the

NLB Group’s competence lines, responsible for

particular IROs. This will remain the Group’s

approach also in the future.

The financial effects of material risk and opportunities

are integrated into the NLB Group’s existing business

practices, and such effects are taken into consideration

when the Group sets capital targets and establishes

tolerance limits to manage potential profit and loss

effects. No significant changes to this approach

are expected over the course of the next annual

reporting period.

A detailed overview of IROs is presented in chapters

on particular sustainability topic (

E1-Climate Change

S1-Own Workforce

S3-Affected Communities

S4 – End

Users and Consumers

G1-Business Conduct

) in tables

including the description and connection with the

NLB Group’s business model, location in the value

chain and expected time horizon of each IRO.

NLB Group demonstrates a solid performance,

maintains a robust financial position, and has effective

risk management processes. This enables the Group

to implement its strategy and manage material IROs

effectively. A climate resilience analysis of the Group’s

lending and investment activities is conducted across

short-, medium- and long-term horizons. The uniform

stress-testing programme includes internally developed

models, stress scenarios, and a sensitivity analysis, which

are regularly revised and updated. For details see the

chapter

Resilience Analysis in Environmental information

In 2025, the NLB Group made a few adjustments

related to the DMA. When conducting an initial DMA

in 2024, the NLB Group identified 50 material impacts

(negative or positive, actual or potential), 7 risks and

20 opportunities, which were mapped to 21 material

sustainability sub-topics.

Following the 2025 DMA update, one of the topics -

Financial Performance was removed as a standalone

material sustainability topic. The financial performance

remains critical to the NLB Group as it supports its long-

term growth, stability, and shareholder value, and is

achieved through responsible resource management,

ethical practices, and a commitment to long-term value

creation. However, in DMA, financial performance is

not treated as a separate sustainability topic. Instead,

it serves mainly as a disclosure and assessment lens,

explaining how sustainability topics and IROs impact

financial position, performance, and cash flows.

In addition, new impacts, risks, and opportunities

(IROs) related to the Artificial Intelligence (AI) were

added to sustainability topics Sustainable Finance,

Energy, and Digitalisation and Innovation. All impacts

were assessed as material (above 12.5 threshold) by

internal experts. Also, impact Financed Emissions of

Leasing Operations under the topic Climate Change

was reassessed by internal experts to material (in

2024 DMA it was assessed below the 12.5 threshold).

Additional impacts and their reassessment have no

impact on the overall scoring and position of

sustainability topics the Materiality Matrix.

The Double Materiality

Assessment was

updated, resulting in the

reconfirmation of most

material impacts, risks,

and opportunities

20

material sustainability

topics were identified

211

Overview of ESRS topics

and the NLB Group–

specific topics

Among identified subtopics, 7 derived from ESRS 1

(Appendix A, AR 16), while additional 13 entity-specific

subtopics

41

were identified as crucial to the NLB Group

operations and the local context through document

analysis and stakeholder engagement.

41 Cybersecurity is considered a single sub-topic that refers to two standards (S

1 and S4).

Table 59:

Material sustainability topics

Material Topical Standard

Material ESRS sub-topic

Material entity-specific sub-topic

E1 Climate

· Climate Change

· Energy

· Sustainable finance

S1 Own Workforce

· Working conditions

and human rights

Employee attraction and development

Diversity, equity and inclusion

· Cybersecurity

S3 Affected Communities

Financing community and regional development

· Sponsorships and donations

S4 Consumers

and End Users

· Responsible marketing

and communication

Financial health and Inclusion

Service quality and customer satisfaction

· Cybersecurity

· Digitalization and innovation

G1 Business Conduct

· Corporate culture, regulatory

compliance and governance,

Prevention of corruption and bribery

· Whistleblower protection

· ESG risk management

· Prevention of money-laundering

and financing terrorism

· Tax transparency

Participation in associations and policy discussion

Not material standards/topics;

E2 - Pollution, E3 - Water, E4 - Biodiversity, E5 - Resource and Waste

S2 – Workers in the value chain: working conditions and human rights of employees in the supply chain and of corporate clients’ employees

212

Impacts, Risks, and Opportunity Management

IRO-1

Double

materiality matrix

and material

sustainability topics

Material environmental topics (E1)

are mainly

connected to impacts of the NLB Group’s financing

activities, climate-related risks and sustainable

finance offering to reduce our negative impacts

and capitalise on the opportunities of the

green transition.

Material social topics relate to our workforce

(S1)

included care for Working conditions and

human rights of employees, Diversity, equality

and inclusion as well as Talent attraction and

development

NLB Group affects communities (S3)

in the region through our financing operations,

within the Financing community and regional

development topic, and through our contribution

to society through Sponsorships and donations.

Impacts, risks and opportunities linked to our

clients (S4),

correspond to the topics of Financial

health and Inclusion, Responsible marketing and

communication, Service quality and customer

satisfaction and Cybersecurity. Digitalization and

Innovation, including Artificial Intelligence use,

are seen as key tools to improve our services and

continue to foster meaningful relationships with

our clients.

Several

business conduct and governance-related

topics (G1)

were identified as material, reflecting the

critical importance of governance, compliance, and

integrity in the banking sector. These include Corporate

culture and regulatory compliance and governance,

Whistleblower protection, ESG risk management, Tax

transparency, Participation in associations and policy

discussion. Prevention of corruption and bribery, and

Prevention of money-laundering and financing of

terrorism were recognised as foundational efforts

to preserve our integrity.

Note: IROs under topics "Climate change, Energy, Water, Resource use and waste, Pollution and Biodiversity, include both own operations and value

chain considerations.

25

23

22

20

15

15

20

23

finance

Climate

change

Energy

Pollution

Water

Biodiversity

Resource use

and waste

Working conditions and

human rights of employees

Diversity,

equity and

inclusion

Employee attraction and development

Working conditions

and human rights

of employees of

the supply chain

Working conditions

of employees of

corporate clients

Financing

community

and economic

Sponsorships

and donations

Responsible marketing

and communication

Financial health

and inclusion

Service quality

and customer

satisfaction

Digitalization

and innovation

Corporate culture,

regulatory

compliance and

governance

Whistleblower

protection

Participation in

associations and

policy discussions

supply chain

Prevention

of corruption

and bribery

Tax

transparency

ESG risk

Prevention

of money

laundering and

financing of

terrorism

Material topics

Envronmental topic

Social topic

Governance topic

Non-material topics

Impact materiality

Financial

materiality

Figure 71:

Double materiality matrix

213

DMA methodology and

assumptions

This Sustainability Statement was prepared based on

the conducted DMA, which defined the matters that are

material from at least one of the following perspectives:

· impact materiality:

the NLB Group’s operations may

have positive or negative impacts on people and the

environment,

· financial materiality:

sustainability topics may involve

risks and opportunities for the Bank’s financial position

and performance.

The DMA followed the methodology outlined in

ESRS 1 and ESRS 2, guidelines from the European

Financial Reporting Advisory Group (EFRAG), and

included specifics of the banking sector by using best

available tools and data, such as the UNEP FI Impact

Materiality Tool. The Sustainability Unit together with the

established internal expert group for each functional

area in NLB adopted a top-down approach considering

the entire NLB Group. This group comprised of

sustainability representatives from the key competence

lines in NLB as a parent bank for the banking stream,

and sustainability representatives from the leasing and

asset management streams.

In the initial stage of the DMA, all NLB Group members

were preliminarily assessed for their impact on

sustainability and financial performance in line with the

NLB Group’s business model, governance principles,

and value chain. As the NLB Group’s most relevant

activities are performed by core financial members

(NLB and its subsidiaries: banks, asset management,

leasing companies) these were deemed to have the

highest impacts, risks, and opportunities. The internal

expert group identified and assessed IROs taking

into consideration the operations of all core financial

members, and their stakeholders were engaged

via pool to assess impacts. Non-financial members

were considered to have minor impacts, risks, and

opportunities, and their operations were assessed

indirectly by the internal expert group. Non-core

members (e.g., companies in liquidation and those

with a small number of employees) were deemed to

have negligible or no impact, risk, or opportunity,

and were not subject to further DMA stages. Finally,

IROs at the NLB Group level were assessed by the NLB

Management Board, a member of the NLB Supervisory

Board, and investors.

DMA process

In 2024, the NLB Group carried out a comprehensive

Double Materiality Assessment (DMA) in accordance

with the CSRD requirements. The process and

methodology are described later in this chapter.

ESRS 1 and EFRAG guidance stipulate that

undertakings must review and, where necessary,

update the materiality assessment at least annually

to ensure the relevance and timeliness of disclosures.

Since the last reporting period, there have been no

significant changes (e.g. new legislation or stakeholder

expectations, changes in the value chain, business

strategy or model, new data or circumstances that

could affect the significance or severity of impacts,

opportunities or risks) that would require a new

full assessment.

In 2025, the NLB Group performed the annual DMA

review and update using the same assessment

framework as in 2024. The process did not involve

stakeholder consultation; it was conducted by an

internal expert team that confirmed existing impacts,

opportunities and risks, added new impacts related to

the use of artificial intelligence, reassessed the impact

of financed emissions from leasing activities, and

reviewed the adequacy of the understanding of the

topic “Financial Performance”. The results of the annual

review were approved by the NLB Management Board

and noted by the NLB Supervisory Board. Detailed

outcomes are presented in the chapter

Effects of

Material Impacts, Risks and Opportunities on Strategy

and Business Model

Defining the sustainability context

We first scanned various information sources to identify

relevant ESG topics for the wider financial sector and

specifically for the NLB Group. This “sustainability

context analysis” included a review of internal

documents, specific regulatory requirements, sector

specific standards and materiality assessments, the

annual reports of peers, and an analysis of our value

chain and portfolios.

Preparation of the list of sustainability topics

Upon analysing the sustainability context, we prepared

a longlist of topics, which was based on the list of topics

and subtopics from ESRS 1, Appendix A, paragraph 16,

and additional, sector and NLB Group specific topics.

We then excluded all topics deemed irrelevant, i.e.

those not identified in the reviewed documentation,

and prepared a shortlist of 28 topics by grouping

related sub-topics.

Key steps in the DMA process

Defining the

context

Preparation

of the list of

topics

Identification

of IROs

Impact

materiality

assessment

Financial

engagement

Analysis and

selection of

IROs and

material topics

214

Identification of IROs

Based on the shortlist, we performed further analytical

work, and organised workshops and stakeholder

consultations to identify positive and negative, actual

and potential impacts, risks and opportunities (IROs).

We identified the source of each IRO, namely own

operations, portfolio, upstream value chain (namely,

supply chain) or downstream value chain (excluding

portfolio-related impacts). Each impact was assessed to

be either short-term, medium-term or long-term, based

on the expectation of when it would materialise. We

also identified short-, medium- and long-term risks and

opportunities. Risks and opportunities either originated

from our existing risk management registries, derived

from specific impacts we identified, or were identified

based on additional research and internal expert input.

Altogether, 141 unique impacts, 84 unique risks and 46

unique opportunities were identified.

Impact materiality assessment

Internal NLB experts assessed each impact

considering the severity and likelihood on a 1–5 scale

(with an individual assessment scale, scope and

irremediability within the severity parameter).

Impact identification and assessment were further

supported by the results of the UNEP FI Impact

Assessment, which was used as an input for assessing

positive and negative impacts related to our portfolios.

The UNEP FI has created an ESRS interoperability

package to improve compliance using the analysis

tool. This package includes mapping UNEP FI’s impact

topics to ESRS sustainability topics in Appendix A of

ESRS 1, mapping tool outputs to the ‘Scale’, ‘Scope’,

‘Severity’, and ‘Irremediable character’ parameters

required by ESRS 1, and describing how to calibrate and

translate these parameters into thresholds to identify

the most significant impacts.

Following the UNEP FI

Impact Assessment Toolkit, we identified impacts of our

consumer, corporate and investment portfolios for our

banking units in Slovenia, Bosnia and Herzegovina,

Serbia, North Macedonia, Montenegro and Kosovo.

Consolidated assessments by internal experts, were

corroborated through the impact assessment within

an extensive stakeholder engagement. The final score

reflects the assessment of all stakeholders.

Financial materiality assessment

Internal NLB experts assessed each financial risk and

opportunity considering the magnitude of financial

effects, defined as positive or negative impact on our

profit or reputation and likelihood. A 1–5 scale was

used, estimating the approximate financial effect

of each risk and opportunity in monetary terms.

Throughout the process, we worked to align and

integrate our methodology and procedures with

already existing risk procedures of the NLB Group.

Climate-related and environmental risks were already

assessed by the NLB Group risk materiality following

the ECB guidelines as outlined in chapter

SBM-3

Material Climate-Related Impacts

and were not subject

to additional assessment. In the coming years, we plan

to enhance the integration of the risk identification

and assessment procedures utilised in the Double

Materiality Assessment into our overarching risk

management framework and overall management

in the competence lines.

Stakeholder engagement

We carried out stakeholder consultations in 2024 using

a survey to gather the views of internal and external

stakeholders on the impacts, risks and opportunities

that are most material from their point of view.

Stakeholder engagement was focused on affected

stakeholders, namely employees, clients and suppliers

(and vendors in the case of our Leasing activities),

who were given the opportunity to assess different

ESG topics (based on identified impacts) and also

provide their own input on potentially missing impacts.

Investors as key users of financial statements were

also included in the consultations, and they were asked

to assess and validate different ESG topics both from

the impact, risk and opportunity perspective. The

Management Board and Supervisory Board were also

included, assessing impacts, risks and opportunities

through a survey.

The survey was conducted in Slovenia, Croatia,

Bosnia and Herzegovina, Serbia, North Macedonia,

Montenegro and Kosovo. In total, we gathered 2,179

responses from our stakeholders. The results of

stakeholder engagement were integrated into the

final DMA.

Analysis and selection of material IROs and topics

Finally, the materiality for each topic was determined,

with the highest assessment of any impact, risk

or opportunity, identified under a specific topic. A

materiality threshold for impact materiality and

financial materiality was set at 50% of the average

assessed value, resulting in 21 topics being identified

as material.

The list of material topics is presented in chapter

Overview of ESRS and Entity-Specific Topics.

Decision-making process

The process, methodology and key decisions relate to

initial DMA and annual update were documented

ensuring the replication and upgrade of the process. The

Group will also monitor the development of DMA for

financial institutions and adjust the process as needed

to improve assessment quality.

Double Materiality Assessment (DMA) was conducted

by internal subject matter experts from all relevant

NLB competence lines and in cooperation with the

Management Board. This ensured the assessment was

informed and objective. The Sustainability Unit led the

entire process, coordinating with various competence

lines and NLB Group members to maintain a clear

decision-making line. Together with representatives

from the Competence Lines, the Sustainability Unit

made key decisions on the methodology and process.

Internal control was done by the Sustainability Unit, who

oversaw the entire DMA process. The final results of the

DMA were confirmed by the NLB Management Board

and presented to the Supervisory Board.

Materiality threshold:

50%

of the average assessed value

ENVIRONMENTAL

INFORMATION

In this chapter we are presenting the NLB Group’s

Climate Strategy, the transition plan, as well as

the policies, targets, and metrics related to

emissions reduction and green financing.

216

E1

Climate Change

42 GFANZ defines net zero as the state when anthropogenic emissions of greenhouse gases to the atmosphere are balanced by anthropogenic removals. Organisations are considered to have reached a state of net zero when they

reduce their GHG emissions following scienced-based pathways, with any remaining GHG emissions attributable to that organisation being fully neutralised, either within the value chain or through purchase of valid offset credits.

43 The Net-Zero portfolio strategy is set out in the publicly disclosed Net-Zero Commitment. The overall Net-Zero climate strategy, covering both operational and portfolio emissions reduction, is outlined in the Transition Plan and

disclosed as part of this Sustainability Statement. The operational strategy is detailed in the internal Net-Zero Operational Strategy.

44 The document Our Net-Zero Commitment is not subject to assurance.

45 The document Advancing Out Net-Zero Commitment is not subject to assurance.

E1-1

Transition plan

for climate change

mitigation

NLB Group acknowledges the pivotal role it plays in

supporting the transition to a Net-Zero

42

emissions

economy by 2050 target year. Thus, it has committed

to managing the impacts, risks, and opportunities

stemming from climate change and has developed

a comprehensive NLB Group Net-Zero Climate

Strategy.

43

The strategy systematically addresses two

core decarbonization levers: reducing emissions from

financing and investment activities (Net-Zero Portfolio

Strategy), and reducing emissions from the NLB Group’s

operational activities (Net-Zero Operational Strategy).

In line with the NLB Group’s commitment to a climate-

positive future (i.e. fostering a mindset of proactive positive

impact, rather than merely reducing harm) and its Net-

Zero ambition, the NLB Group officially joined the UNEP FI

Net-Zero Banking Alliance (NZBA) in May 2022. In 2023 the

Group disclosed the first round of targets aligned with

NZBA guidelines in the

Our Net-Zero Commitment

44

report,

while in 2025 the targets were expanded and disclosed in

Advancing Our Net-Zero Commitment

45

report. The key

steps in setting the targets and developing the NLB Group

Net-Zero Portfolio Strategy are shown in Figure 72.

NZBA ceased operations and its commitments were

transformed into a guidance framework in October

2025. However, the NLB Group’s climate strategy

remains unchanged, along with its commitment to

align the financing activities with decarbonization

and to achieve climate resilience. This commitment

is being delivered through exclusion of coal financing

as outlined in the ESG Exclusion List, along with

proactive support for renewable energy and energy

efficiency projects.

General scope

Baselining

Net-Zero Strategy

Transition Plan

Steering and

Implementation

Reporting and

Assurance

The targets cover the

corporate loan portfolio,

residential mortgages,

and leasing exposures.

The baseline emissions

value, defined in 2023,

includes client emissions

from Scopes 1 and 2 of

the loan portfolio as

well as emissions from

the investment portfolio,

which covers both debt

and equity instruments.

In the second phase of

target setting in 2025,

the NLB Group focused

on expanding the scope

of the covered portfolio

based on exposure.

In the first round of

target setting in 2023, the

NLB Group established

decarbonization targets

for 2030 and 2050.

The Group set further

sectoral targets in 2025.

The targets are based on

widely accepted, science-

based decarbonization

scenarios.

The targets for 2030

focus on priority

sectors where the

NLB Group has the

most significant impact

(most GHG-intensive).

Targets are approved by

the NLB Management

Board – the highest

executive level within

the NLB-.

As part of its annual report,

the NLB Group publicly

discloses its decarbonization

targets and reports annually

on progress according to the

transition plan.

The Group reviews and revises

the targets every five years.

Figure 72:

Key steps of the NLB Group Net-Zero Portfolio Strategy

The content and steps of the strategy are detailed in the chapter

Portfolio Net-Zero Strategy

217

Transitioning to a Net-Zero emissions economy implies that

all economic actors need to work towards this objective.

For financing institutions, including the NLB Group, this

requires changes in their capital allocation or granting

criteria, engagement with clients to navigate their Net-

Zero journeys, managed phaseouts of carbon-intensive

economic activities, and a massive re-orientation of capital

flows towards transition activities and solutions. By acting

in a coordinated manner, financial institutions can support

best practices and drive further efficiency across the whole

economy towards a Net-Zero emissions pathway.

Financed emissions (Scope 3, Category 15 under

the GHG Protocol) make up more than 99% of the

NLB Group’s carbon footprint, making them the core

focus of the overall NLB Group Net-Zero Climate

Strategy. Reducing these emissions is essential

to achieving Net-Zero commitments and sectoral

decarbonization and the NLB Group delivers this

through targeted measures, client engagement,

and climate-positive financing.

NLB Group is included in the EU benchmarks aligned with

the Paris Agreement in accordance with the exclusion

criteria of the Commission Delegated Regulation (EU)

2020/1818 (the Climate Benchmark Standards Regulation).

Alignment with Paris

Agreement

Net-Zero Portfolio targets

NLB Group has adopted a phased, sector-informed

approach to implementing its Net-Zero portfolio targets.

The included scope for target-setting and reporting

encompasses the corporate credit portfolio, the leasing

portfolio exposure in Slovenia, and the retail mortgage

portfolio, ensuring that the target-setting exercise

captures the most material segments of the NLB Group’s

lending activities in line with its transition objectives.

Targets are developed with reference to sector-specific

decarbonization pathways and relevant national climate

plans, ensuring alignment with a 1.5°C trajectory in

accordance with the NZBA guidance. The NLB Group’s

approach to implementation of targets remains iterative,

reflecting the evolving nature of sectoral decarbonization,

data availability, and market developments.

To achieve its 2030 sectoral targets, the NLB Group

does not rely on offsets but instead directly focuses on

sector-specific decarbonization levers, including client

engagement, portfolio alignment with credible Net-Zero

pathways, and financing solutions that drive low-

carbon transitions.

Net-Zero Portfolio target development follows a

structured governance framework with executive

oversight and cross-functional collaboration. Targets

are reviewed at least every five years to ensure ongoing

alignment with evolving climate science, regulatory

developments, and international commitments. The

Group will continue to track the progress and disclose

the results annually, while continuous enhancements

in data quality, internal monitoring systems, and client

engagement strategies will further support the Group’s

climate transition efforts.

Based on the Group’s portfolio structure as at year-

end 2023 the first round of target setting covered

approximately 25% of cumulative in-scope portfolio

exposure, focusing on carbon-intensive sectors

with robust data availability and clearly defined

decarbonization pathways. The second round extended

coverage to 51% of the in-scope portfolio, reflecting

the remodelling of Commercial and Residential Real

Estate (CRE and RRE) baselines and pathways, and the

inclusion of additional sectors such as Agriculture, Road

Freight Transport, and Passenger Vehicle Leasing—

areas of growing relevance in the transition context.

Further disclosures on activities, sectoral targets, sector-

specific scenario selection, decarbonisation levers, and

risk factors are detailed in the chapters:

Key Levers and Actions Related to the Portfolio Strategy

Targets Related to Climate Change Mitigation

and Adaptation

GHG Emission Reduction Targets

Operational Net-Zero Targets

NLB Group’s Net-Zero Operational Strategy is fully

aligned with the Paris Agreement and anchored in

science-based targets (SBTs), reflecting our commitment

to a robust and science-aligned decarbonisation

pathway and review mechanisms. While the Paris

Agreement does not set specific corporate SBTs, it

defines global temperature limit goals, including the 1.5°C

pathway from which such targets are derived.

The strategy’s ambition, structure, and monitoring

are all designed to ensure that the NLB’s operational

emissions pathway is consistent with the global goal

of limiting warming to 1.5°C. The strategy covers all

relevant emission scopes (Scope 1, 2, and selected

Scope 3 categories) using the Greenhouse Gas Protocol,

which is the global standard for emissions accounting

and is recommended by the Paris Agreement framework.

For further information on key activities and targets

please refer to the chapters:

Actions Related to Operational Emissions

Portfolio Strategy

Targets Related to Climate Change Mitigation

and Adaptation

Net-Zero Portfolio

targets cover

51%

of the in-scope portfolio

218

Decarbonization levers

and key activities

NLB Group is committed to accelerating the transition to

a low-GHG emissions, climate-resilient economy through

a comprehensive strategy that focuses on leveraging its

capabilities to support high-emitting sectors in the real

economy. To drive this transition, the Group is prioritising

key actions such as financing low-carbon technologies,

mobilising transition finance, fostering partnerships,

developing innovative financial products, and integrating

climate risks into decision-making frameworks. As

targets evolve, the NLB Group will continually refine its

approach to incorporate emerging climate risks and

opportunities, ensuring steady progress toward its Net-

Zero and climate resilience objectives.

This strategic decarbonization approach outlined in the

NLB Group (Net-Zero) Climate Strategy

focuses on two

core levers:

· Net-Zero Portfolio Strategy (Portfolio Strategy)

– Aligning the Group’s financing activities with Net-

Zero objectives by setting science-based targets for

priority sectors, steering capital towards sustainable

activities, and engaging with clients on their climate

transition pathways.

· Operational Emissions Net-Zero Strategy (Operational

Strategy)

– Reducing the Group’s direct and indirect

emissions caused by its operational activities.

Emission scope

Timeline

Iterative process

Climate

(Net Zero)

Operational

strategy

Operational strategy was approved in 2024

and action plan was adopted in 2025

Scope 1

(vehicle fleet, gas combustion

for office heating)

Scope 2

(vehicle fleet, gas combustion

for emissions from purchased

electricity and heat)

Scope 3

(indirect emissions from the

value chain e.g. business travel,

waste management, employee

commuting)

Portfolio strategy

Scope 3

(financed emissions -

category 15 of GHG Protocol)

UNEP FI’s NZBA Commitment

NLB Group signed the commitment

in May 2022

First Net Zero target setting

(18 months after NZBA

commitment Q4 2023)

Second Net Zero target setting

(36 months after NZBA

commitment Q2 2025)

Figure 73:

Overview of the NLB Group (Net-Zero) Climate Strategy

219

Decarbonization levers related to

the Portfolio Strategy

For the initial Net-Zero targets, the NLB Group focused

on four priority sectors—Iron & Steel, Power Generation,

Residential Real Estate, and Commercial Real Estate—

which together accounted for approximately 50% of

financed emissions based on the baseline exercise.

In the second round of target setting, coverage was

expanded to include Agriculture, Road Freight

Transport, and Leasing of Passenger Vehicles, reflecting

their increasing transition relevance and improved

data availability. For sectors with limited exposures,

such as Cement, Aluminium, and Oil & Gas, the Group

has developed loan origination guidelines based on

credible Net-Zero transition pathways to guide future

lending and ensure alignment with decarbonization

objectives. Net-Zero targets are further elaborated in

NLB Group supports the clients’ development and

implementation of decarbonisation plans through

initiatives such as expanding renewable energy

capacity, adopting low-emission technologies,

and financing energy-efficient real estate projects.

Concurrently, the NLB Group recognises that effective

client engagement is critical for improving data quality,

supporting client transition readiness, and advancing

portfolio decarbonisation. Therefore, the second phase

of setting Net-Zero targets also incorporates metrics

related to client engagement. Further details on this are

provided in the chapter

Client Engagement Targets

The key levers and actions related to the Portfolio

strategy are further elaborated in the chapter

Actions

and Resources Related to Climate Change Mitigation

Decarbonization levers related to

the Operational Strategy

In year 2025 the NLB Group continued to work on

improving its environmental impact, whereas the focus

was on preparation of the NLB Group Operational

Emissions Net Zero Strategy’s Action Plan. Action Plan

was confirmed at the NLB’s Management Board.

It provides operational steps and financial outline

for meeting the Operational Strategy’s 2030 targets,

since the regulatory and infrastructural outlook

by 2050 is not sufficiently tangible yet. Scope 1 and

Scope 2 emissions account for 66% of total operational

GHG emissions, namely electricity generation from

fossil fuels (such as heating oil, natural gas etc), use

of fossil fuels for heating and use of refrigerant gases

and fossil fuels for transportation (internal fleet). Action

plan foresees measures according to the specifics

of each Group entity and it is founded on strategic

initiatives, individual entity’s operational plans as well

as budget projections.

Key levers aimed at reduction of GHG emissions

· Procurement/investment in renewable sources for

electricity production:

Procuring and installing/investing

in renewable energy sources is vital for reducing GHG

emission of the NLB Group’s operational activities. The

main activities supporting the transition to a low-carbon

economy are installing photovoltaic panels and entering

into power purchase agreements with renewable energy

providers where such options are available.

· Energy efficiency and reduced energy consumption

in business premises:

Emission reduction is closely

linked to energy consumption reduction through

improvements in energy efficiency. The main

anticipated activities are introducing energy-efficient

technologies and practices, building renovations,

implementing energy management systems,

conducting energy audits and educating employees

on energy-saving practices.

· Transition from fossil fuel driven vehicles to low/zero

emission vehicles:

steadily transform the NLB Group’s

fleet to be electrified, by installing adequate charging

infrastructure, supply the vehicles with zero emission

electricity and explore possibilities of fuel change for

special vehicles.

· Use of refrigerants:

Cooling systems use refrigerants

with high GWP value resulting in difficulties to reduce

GHG emissions. As the EU adopted legislation to reduce

emissions from refrigerants, which the NLB Group will

follow as well as closely monitor technical quality of

cooling systems to prevent any leakage.

· Employee engagement for work from home and

low-emission commuting:

During COVID-19 years

positive experiences with work from home stimulated

the NLB Group to introduce possibility for employees to

work from home after the pandemic was over and to

establish the legal basis for this arrangement. The NLB

is promoting work from home, with expected results

relating to lower operational emissions by reducing

the need for workspaces in office buildings and lower

energy consumption.

· Reduced use of paper, water consumption and waste

production.

For a detailed list of activities in the NLB Group in

2025, please refer to chapter

Actions and Resources

Related to Climate Change Mitigation and Adaptation -

Operational Emissions Net-Zero Strategy

220

Resources for transition

plan implementation

For timely and effective implementation of the transition

plan, the NLB Group utilises human and financial

resources on various areas. The key ones are:

· Employee training:

Improved skills and knowledge

help ensure that employees stay up to date with the

current regulations, technologies, and best practices.

Well-trained staff perform their duties more efficiently

and effectively, which leads to higher employee

retention and, as a result, positively impacts the

NLB Group’s reputation.

· IT infrastructure:

crucial for delivering complete,

reliable, relevant, and timely sustainability and ESG

information and data to both internal and external

stakeholders of the NLB Group.

· External consulting services:

external experts

provide an impartial, third-party viewpoint on specific

issues. This helps internal teams identify gaps and

opportunities for improvement.

· Real estate and fleet:

the investing in energy

efficiency reduces operating expenses and

increases the value of assets, while also minimising

the environmental impact. These improvements

also support the Group’s compliance with the

EU regulations.

· Advertising and communication:

plays the key

role in promoting clients and other stakeholders’

awareness of the Group’s sustainability products

and commitments, which not only strengthens

stakeholders’ trust but also attracts sustainable

investments and grows business, giving the Group

a competitive edge.

Locked-in

GHG Emissions

The progress towards the NLB Group’s Net-Zero

Portfolio targets is significantly influenced by

external factors, particularly the decarbonization

of industry and infrastructure. Locked-in emissions,

stemming from long-term assets and investments like

infrastructure, present a considerable challenge for

the NLB Group, as these emissions, embedded in past

financing activities, limit the flexibility in meeting near-

term reduction goals.

Each target has been set with an understanding of

the sector specific dependencies on external parties,

including the pace of decarbonization in high-emitting

sectors. Achieving the Net-Zero Targets requires

collaboration between the NLB Group, industry

stakeholders, and governments. The NLB Group will

continue to support public policy developments in

Slovenia and the region, as these measures are vital to

decarbonization of economy and society. Due to the

need for collective action, the NLB Group’s role is limited.

Clients must take steps towards decarbonization, and

governments need to establish frameworks and policies

to guide the transition.

Decarbonizing the industrial energy mix is crucial, with

carbon capture and storage infrastructure playing a

key role in sectors like steel production. In Residential

and Commercial Real Estate, national energy mixes

influence efficiency milestones, especially in the

regions where fossil fuels still dominate the electricity

production. For instance, Slovenia’s coal-fired TEŠ

power plant is scheduled for decommissioning by 2033.

The homeowners’ engagement in energy efficiency

measures, such as retrofitting and energy-

saving investments, is critical. This progress relies on

consumers’ willingness and financial capacity, as well

as external factors like energy price volatility, which can

affect consumption patterns.

Decarbonizing Agriculture presents particular

challenges, while policy measures and efficiency

gains have reduced emission intensities for some

products, these improvements have been largely

offset by increased production volumes. Further

emission reductions will require a stronger policy

implementation, wider adoption of climate-smart

practices, and greater awareness among farmers

of their role and available technical solutions. Joint

efforts from all stakeholders are needed to make a

meaningful progress.

When it comes to reducing operational greenhouse

gas emissions, some residual emissions will always

remain outside the NLB Group’s control. This is

mainly because:

The NLB Group depends on the pace of technological

development and innovation by (national) utility

providers. For instance, the NLB Group cannot

influence the energy mix of (state) utility companies

supplying district heating, upgrade electricity

infrastructure, expand charging networks for electric

vehicles, or open energy markets to new supply

products. These factors limit the NLB Group’s ability

to further reduce emissions.

The nature of banking operations and employee

commuting also generates transport-related emissions.

While a qualitative assessment suggests that these

residual emissions could be addressed through carbon

removal credits, the NLB Group has not yet determined

its strategic approach and will continue to monitor

developments in the carbon credit markets.

221

Alignment with business

strategy and financial

planning

With its first Net-Zero Target Disclosure Report, the NLB

Group set its first round of climate targets in December

2023, thereby defining its strategic ambitions. These

targets were further complemented by a second round

of disclosures in July 2025, reflecting the expanded

portfolio coverage and enhanced alignment with the

NZBA guidance.

The transition plan, which is

connected with the

NLB Group Net-Zero Strategy

and annual disclosures

of Net-Zero targets and commitment, is

aligned with

the NLB Group’s 2030 Strategy: New Horizons

all the before-mentioned documents, the NLB Group

has established clear financial metrics and targets to

support its broader strategic ambition of contributing

to the real-economy transition, through both financing

activities and its internal operational goals. These

metrics are aligned with the Group’s overarching

sustainability objectives, including the reduction of

emissions in its financing activities and the mobilisation

of capital for sustainable finance. The financing targets

set by the Group reflect its commitment to advancing

its transition plan’s strategic ambition, with a focus on

key sectors such as renewable energy, green buildings,

energy efficiency, sustainable transportation and

agriculture.

Financing and Net-Zero targets are detailed in the

Alignment with the EU

Taxonomy Regulation

NLB Group has developed a structured approach

to monitor and progressively increase its share of

taxonomy-aligned revenues in line with its sustainability

commitments and regulatory disclosure requirements.

The EU Taxonomy is a classification system designed to

determine the environmental sustainability of economic

activities within the European Union. For banks, it serves

as a crucial framework for evaluating and disclosing the

environmental impact of their investments and lending

practices. By adhering to the EU Taxonomy, banks

can identify and prioritise investments that contribute

to environmental objectives, such as climate change

mitigation and adaptation. This taxonomy provides clear

criteria and standards, enabling banks to assess the

alignment of their portfolios with sustainable goals, mitigate

risks associated with environmentally harmful activities,

and support the transition to a more sustainable economy.

Compliance with the EU Taxonomy is mandated under

Articles 8 and 10 of Regulation (EU) 2020/852 of the

European Parliament and of the Council of 18 June

2020 on the establishment of a framework to facilitate

sustainable investment, amending Regulation (EU)

2019/2088.

The EU Taxonomy reporting has been

prepared in accordance with Delegated Regulations

(EU) 2021/2178, (EU) 2021/2139 and (EU) 2023/2486 as

applicable on 31 December 2025.

This legislation establishes the criteria for determining

whether an economic activity is environmentally

sustainable and provides the basis for implementation

of the EU Taxonomy across various sectors, including

banking and finance.

In line with the regulation, the NLB Group discloses

in this Sustainability Statement information about

Taxonomy alignment for all six environmental objectives

as at year-end 2025:

1. Climate change mitigation

2. Climate change adaptation

3. Sustainable use and protection of water

and marine resources

4. Transition to a circular economy

5. Pollution prevention and control

6. Protection and restoration of biodiversity

and ecosystems

Green Asset Ratio (GAR)

The Green Asset Ratio (GAR) within the framework

of the EU Taxonomy measures the proportion of a

Group’s assets that meet the criteria for environmentally

sustainable economic activities. This ratio serves as a

key metric for stakeholders to assess how much of a

Group’s portfolio supports environmental sustainability

objectives. Banks are required to report their GAR

as part of their sustainability reporting obligations,

ensuring transparency and accountability in their

sustainability efforts.

However, while the Green Asset Ratio enhances

transparency, it does not fully capture the transition

efforts of banks. A substantial portion of the NLB

Group’s portfolio is excluded from the calculation —for

example, loans to smaller companies and international

non-EU business—meaning the actual number of

aligned activities is higher. Furthermore, banks rely on

counterparties for data, and since many of these entities

are at the early stages of their green transformation,

they may struggle to evaluate their own sustainability.

Therefore, GAR should be analysed alongside additional

disclosed metrics and other relevant information on the

NLB Group’s efforts to finance the transition.

The KPI covers banking-book assets in the scope of

EU Taxonomy Article 8 (mainly loans to NFRD/CSRD

reporters).

The financing targets reflect

the NLB Group’s commitment

to advancing the transition

plan’s strategic ambition

222

It excludes exposures out of scope (e.g., central banks,

sovereigns, trading book, derivatives). The Group uses

Article 8 statements from counterparties as the primary

data source. “Taxonomy-aligned” means a substantial

contribution, no significant harm, and minimum

safeguards compliance. The scope expanded over time

from climate to the other environmental objectives.

The Group embeds Taxonomy rules in strategy, product

design, and origination, and develops labelled green

products with use-of-proceeds linked to Taxonomy

activities.

Furthermore, the Group supports clients on

eligibility/alignment and data collection through the

credit process. Governance and risk integration follow

the Group sustainability policy and Pillar III approach.

The Group also monitors complementary alignment

metrics to show the weight of Taxonomy-aligned

financing in overall activity. These indicators will evolve

as client reporting and our green product suite scale.

NLB Group is not required to disclose quantitative

Taxonomy KPIs for trading exposures and therefore

provides a qualitative overview instead. Trading

portfolios serve liquidity and risk management needs.

Taxonomy-relevant content is limited and controlled

through internal limits and product governance. The

Group aims to tighten policy links to the Taxonomy over

time and track composition and trends.

The NLB Group’s disclosure practice is to maintain

a consistent and unified approach throughout its

reporting. As banking regulation and sustainability

reporting are not aligned yet, banking regulation

compliance is in our focus. In Pillar III report, the

Group discloses the GAR only for the first two climate

objectives, based on Pillar 3 methodology. This creates

a methodological difference between the climate-GAR

and any “total” GAR. For 2025, the difference is not

material because alignment under the other four

objectives based on counterparty Article 8 disclosures

is very low.

GAR flow

The Draft Commission notice issued on 21 December

2023, aims to provide clarity and improve disclosure

requirements. In line with the notice the Green Asset

Ratio (GAR) flow disclosure includes all newly acquired

exposures over the reporting period, rather than only

reflecting net changes.

GAR value and progress

As of 31 December 2025, the NLB Group’s GAR stands at

1.59% of total covered assets, reflecting an increase of

0.25 percentage points compared to 31 December 2024.

The reporting templates prepared in accordance with

the EU Taxonomy disclosure requirements are included

in the

Appendix 1 - EU Taxonomy Regulatory Disclosures.

These templates are part of the Sustainability Statement

and are subject to assurance.

GAR as of 31 December 2025

1.59%

of total covered assets

223

Transition plan governance

To ensure effective governance, strategic oversight, and

regular monitoring of the transition, the NLB Group has

set a robust sustainability governance structure, which

includes the Climate Change Committee. This structure

ensures that the transition plan is guided by top-level

executives from the Sustainability Unit, Global Risk,

Retail Banking, Corporate Banking, Data/IT and Group

Steering, and implemented effectively across all relevant

sectors in the Group. Please refer to the

chapter for a detailed description of this committee.

The effectiveness of the transition plan is

regularly reported and discussed at meetings

of the Sustainability Committee, Climate Change

Committee, NLB Management Board, and NLB

Supervisory Board.

These sessions monitor the

progress in reducing portfolio emissions and, as

needed, guide strategic adjustments.

In line with the NZBA guidelines and NLB Group’s

internal corporate governance framework, the transition

plan is formally approved each year by the Climate

Change Committee and NLB Management Board. The

initial transition plan was approved in March 2025,

while the updated plan—incorporating year-end 2025

progress data—was approved in February 2026.

The Operational Emission Net-Zero Strategy, which

focuses on reducing the emissions from the NLB Group’s

own operations, was adopted in 2024 and confirmed

by the NLB Management Board, with regular updates

presented at the Supervisory Board’s Audit Committee

meetings. The operational carbon footprint emissions are

reported regularly, with interim quarterly reports shared

at regular sessions of the Sustainability Committee. Yearly

results and corresponding action plans are reviewed and

approved by the NLB Management Board.

Transition plan

implementation

progress

Since 2023, when the NLB Group introduced its

transition plan, by the end of 2025, the Group has

achieved a meaningful progress in implementing its

climate strategy:

Reducing financing emissions

Building on the first sector targets published

in December 2023, the NLB Group has further

operationalized its Net-Zero Portfolio Strategy through

the second round of target setting, published in July

2025 and extended the coverage of in-scope NLB

Group’s portfolio exposure from 25% to 51%.

Key policies to operationalise the Net-Zero Portfolio

Strategy were adopted, incorporating targets for

emissions-intensive sectors. These policies guide

lending, investment, and risk management decisions,

aligning operations with decarbonization goals.

The NLB Group developed a green financing offer with

clear criteria defining green transactions to support

climate change mitigation.

At the end of 2025, the financed emissions in category

15 (investments) were 8,686,682 tCO

eq representing

a 22.2% decrease compared to the end of 2024.

The Group’s climate-related topics continued to be

actively governed and regularly reported through three

Climate Change Committee sessions held in 2025,

which monitor the portfolio progress and guide

strategy adjustments as needed.

Reducing operational emissions

While in 2024 the NLB Group developed and approved

its Operational Emissions Net Zero Strategy, making

a significant step towards reducing its operational

emissions, 2025 was dedicated to the preparation of

Action Plan and development of two applications where

data can be input in order to calculate operational

emissions. One of these two applications focuses solely

on the real estate segment and thereto connected

categories, whereas the second application is dedicated

mainly to data reporting for Scope 3 categories. This

important developmental step reduces the possibility

for errors and enables progressive reporting options.

At the end of 2025, operational emissions accounted

for 17,395 tCO

eq which is -13% compared to the end

of 2024.

In recent years, the NLB Group has established

several important policies and internal documents

focused on reducing operational emissions. The most

significant is the NLB Group Policy on Measuring

and Reporting Carbon Footprint, which provides the

processes for measuring, managing, and reporting

the Group’s performance in terms of operational

emissions. Additionally, the Group has implemented

internal regulations covering real estate management,

sustainable fleet and company vehicle management,

as well as guidelines for remote work arrangements.

For details on the above-stated progress areas please

see the following chapters:

Policies Related to Climate Change Mitigation

Gross Scopes 1, 2, 3 and Total GHG Emissions

Alignment of Transition Plan with Business Strategy

and Financial Planning

Financed emissions:

8,687 ktCO₂eq

as of 31 December 2025

Operational emissions:

17,395 tCO₂eq

as of 31 December 2025

224

SBM-3

Material climate-related impacts, risks and opportunities,

and their interaction with the strategy and business model

Climate-related risk

The NLB Group has developed an internal Methodology

for the Assessment of Environmental Risks, which

classifies climate and environmental risks into three

categories: transition risk, physical risk, and other

environmental risk.

Each category is further divided

into several sub-categories. Although the NLB Group

has identified a broad range of risk drivers across

all categories, the materiality assessment focused

exclusively on those risk drivers most relevant to the

regions in which the Group operates. The climate and

environmental risks, together with risk drivers, are

presented in the table below.

As of 31 December 2025, the NLB Group updated the

materiality assessment using the same methodology

applied in the previous year. The updated analysis

did not identify any significant changes; therefore,

the conclusions of the materiality assessment remain

consistent with those presented previously. In 2026, the

NLB Group plans to further enhance the materiality

assessment methodology, with a particular emphasis on

integrating more advanced approaches for evaluating

physical risks.

Resilience analysis

The uniform stress-testing programme, which

includes internally developed models, stress scenarios,

and sensitivity analysis, is regularly revised and

further refined. The Group has established an internal

ESG stress-testing concept to identify the most relevant

financial vulnerabilities stemming from climate risk.

This framework is continuously enhanced by

integrating newly available ESG-related data.

The stress testing considers three NGFS II long-term

scenarios (orderly, disorderly, hot house world),

encompassing transition risk, physical risk, and

other climate & environmental risks associated with

each scenario. 

The combined stress test incorporates both transition

and physical risks until 2050. This entails a permanent

impact arising from transition risk and projected one-

time physical risk events (floods and drought), while

effects of the combined stress materialise after 2030.

The results of the climate stress tests showed

no material impacts on the Group’s capital and

liquidity position. 

In addition, as a systemically important institution, the

NLB Group participated in the 2022 ECB Climate Stress

Test exercise, consisting of three modules. The exercise

was conducted in the first half of 2022 and aggregated

results were published in July 2022. By performing this

exercise, the ECB assessed how banks were prepared

for dealing with financial and economic shocks

stemming from climate risk. The Group’s overall results

were within the range of average peer results. 

Table 60:

Classification and materiality of environmental risk 

Climate risk

Risk drivers

Materiality 

Transition risk 

· Climate policy changes 

· Technological changes 

· Behavioural changes (investor

and consumer sentiment) 

All categories of transition risk are assessed as material over the

short- and medium-term horizons whereas the climate policy

changes are the most significant risk driver within transition risk. 

Physical risk 

Acute physical risk: 

· Floods 

· Drought 

· Heat waves 

· Windstorms 

· Wildfires 

· Hailstorms 

· Freezing rain 

· Landslides 

Floods and drought are assessed as material over the short- and

medium-term horizons, other hazards are assessed as immaterial. 

Chronic physical risk: 

· Temperature changes 

· Reduced water availability 

· Biodiversity loss 

Chronic risk is assessed as immaterial over the

short- and medium-term horizons. 

environmental

risk

Risk drivers

Materiality

Ecosystem dependency risk: 

· Depletion of resources 

· Ecosystem service disruption 

· Biodiversity loss 

· Climate change impact 

Ecosystem impact risk: 

· Pollution 

· Land use 

· Habitat degradation 

Other environmental risk is assessed as immaterial risk

over the short-term horizon. Over the medium-term

horizon the ecosystem impact risk is assessed as material

and ecosystem dependency risk as immaterial. 

Scenarios

(orderly, disorderly, hot house)

C&E Risk

Transition Risk

Physical Risk

Other C&E Risk

Figure 74:

NLB Group’s internal ESG stress-testing concept

225

IRO-1

Processes to identify

and assess material

climate-related impacts,

risks and opportunities

The NLB Group has established processes for identifying

and assessing material climate-related impacts, risks,

and opportunities. Several material IROs were identified

in the initial DMA conducted in 2024, following the

process presented in the chapter

DMA process

In the 2025 DMA update,

the impacts Financed Emissions of Leasing Operations

under the topic Climate Change was reassessed

as material

(in 2024, it was below the 12.5 threshold).

In addition, three new AI-related IROs were identified as

material, namely the NLB Group’s AI use for optimizing

its own environmental footprint, and the environmental

impact of NLB Group’s AI use, and the NLB Group’s

client investment to AI use for optimizing their

environmental footprint.

The identified material IROs (including those related

to GHG emissions) and their connection to the NLB

Group’s business activities, location in the value chain,

and the time horizons of assessment are detailed

in the tables below.

Table 61:

Climate-related impacts, risks, and opportunities (climate change adaptation and mitigation)

Material

Name of IRO

Description of IRO

Type of IRO

Location in the

value chain

Time horizon

Climate

change

Climate-related risk

Climate-related physical risks, such as extreme weather events, can lead to loan defaults,

asset devaluation, and increased insurance claims, thereby undermining the bank’s

financial stability and risk exposure.

Risk

Downstream

Short, medium,

long-term

Climate-related transition risks, driven by shifts to a low-carbon economy through policy

changes, technological advancements, or evolving market preferences, can result in

stranded assets, increased operational costs, and credit risk for a bank’s borrowers,

potentially affecting the bank’s financial performance.

Risk

Short, medium,

long-term

Reducing financed

emissions (towards

Net-Zero) as part of

the Climate (Net-

Zero) Strategy

Reducing financed emissions as part of the Climate (Net-Zero) Strategy enhances asset

value, mitigates risks, opens new revenue streams, and improves regulatory compliance

despite potential initial costs. This approach aligns investment with long-term

sustainability goals, positively impacting ROI and shareholder value while building a

strong reputation and competitive edge.

Opportunity

long-term

Operational scope 1

emissions

The NLB Group’s own GHG emissions from electricity use, heating of own real estate and

use of own vehicles contribute to a rise in the GHG concentration in the atmosphere. This

leads to changing climate patterns, including droughts, flooding and heatwaves, increase

in average temperature, and sea level rise.

Impact - actual

negative impact

Own operations

Short-term

Operational scope 2

emissions from

purchased electricity

and heat and fuel for

own vehicles

The NLB Group’s downstream GHG emissions due to production of electricity and heating

contribute to a rise in the GHG concentration in the atmosphere. This leads to changing

climate patterns, including droughts, flooding and heatwaves, increase in average

temperature, and sea level rise.

Impact - actual

negative impact

Operational scope 3

emissions (limited

categories)

The NLB Group’s indirect emissions related to employee travel to and from work and to

business travels contribute to a rise in the GHG concentration in the atmosphere. This

leads to changing climate patterns, including droughts, flooding and heatwaves, increase

in average temperature, and sea level rise.

Operational scope 3

emissions from

bought goods and

services (supply

chain)

The NLB Group’s indirect emissions related to the carbon footprint of purchased goods

and services from the supply chain contribute to a rise in the GHG concentration in the

atmosphere. This leads to changing climate patterns, including droughts, flooding and

heatwaves, increase in average temperature, and sea level rise.

Financed emissions

from loan activity

Financed emissions related to lending to retail clients, governments and corporates

contribute to a rise in the GHG concentration in the atmosphere and form the largest share

of the NLB Group’s total GHG emissions. This leads to changing climate patterns, including

droughts, flooding and heatwaves, increase in average temperature, and sea level rise.

Financed emissions

of asset and wealth

Financed emissions related to asset and wealth management and related investments

contribute to a rise in the GHG concentration in the atmosphere. This leads to changing

climate patterns, including droughts, flooding and heatwaves, increase in average

temperature, and sea level rise.

of leasing operations

Financing lease of vehicles indirectly contributes to a rise in the GHG concentration

in the atmosphere. This leads to changing climate patterns, including droughts,

flooding and heatwaves, increase in average temperature, and sea level rise.

226

Table 62:

Climate-related impacts, risks, and opportunities (energy)

Material

Name of IRO

Description of IRO

Type of IRO

Location in the

value chain

Energy

Operational use of

energy from zero-

carbon sources

Using energy from zero-carbon sources in operations reduces direct environmental impact

and aligns with sustainability goals, while also mitigating risks like future carbon taxes and

energy cost fluctuations. This transition enhances green credentials, lowers long-term

operational costs, and appeals to stakeholders prioritizing environmental responsibility.

Opportunity

long-term

Need for green

investments in

renewables

Green investments in renewables drive decarbonization, reduce reliance on fossil fuels,

and support long-term climate goals. They offer growth potential through clean energy

innovations, meet regulatory demands, and align with increasing investor preferences for

sustainable, environmentally conscious projects.

long-term

Need for investments

in house renovation

and energy

efficient buildings

Investments in house renovations and energy-efficient buildings lower energy

consumption, reduce emissions, and increase property value. They support climate

targets, meet evolving regulations, and attract demand from environmentally conscious

buyers, while offering long-term savings and enhancing energy resilience.

Operational use

of zero-carbon

own vehicles

Utilizing zero-carbon vehicles for operations reduces emissions, lowers operational costs,

and enhances corporate sustainability efforts. This transition improves brand reputation,

meets regulatory standards, and aligns with the growing consumer preference for

environmentally friendly practices, ultimately contributing to a more resilient and

responsible business model.

Operational energy

use for heating

and electricity in

own real estate

By using energy from non-renewable sources the company is contributing to

environmental degradation (air pollution due to emission of air pollutants from fossil fuel

combustion used for energy production).

Operational use of

energy from zero-

carbon sources

The NLB Group is already purchasing over half of its energy from zero-carbon sources,

thus reducing the negative environmental impacts related to combustion of fossil fuels,

such as GHG emissions and air pollutant emissions.

Impact - potential

positive impact

Medium-term

Financing

and leasing of

conventional vehicles

By financing loans and lease of personal vehicles with internal combustion

engines NLB Group is indirectly contributing to environmental degradation (air

pollution due to emission of air pollutants from fossil fuel combustion).

NLB Group’s AI use

for optimizing its

own environmental

footprint

The Group’s use of AI for better managing its critical infrastructure (IT, water, energy,

transport, etc.) can optimise its environmental footprint and have positive effects

on the environment.

Impact – potential

positive impact

Medium-term

impact of NLB

Group’s AI use

The Group’s own use of AI have some negative effects on environment

(use of energy, water)

As part of the DMA, the financial materiality assessment

integrated the existing risk management procedures

and the results of a comprehensive climate-related

materiality analysis, which the NLB Group performs

annually within its broader risk management process

and is presented in the following chapters.

The Group’s comprehensive approach includes a risk

assessment framework integrating climate-related risks:

into the overall risk management processes

(identification and materiality assessment of physical

and transition risk at the portfolio level, transaction and

client due diligence, credit approval process, alignment

with climate targets, green finance),

stakeholder engagement to understand concerns and

expectations,

and scenario analysis to assess the potential impacts

of different climate-related scenarios on the Group’s

operations and financial performance.

Managing climate-related IROs forms part of the

broader framework for managing environmental, social,

and governance (ESG) risks, identified in the DMA as a

material sustainability topic under Business Conduct.

This topic is further elaborated in the subchapter

ESG risk management

227

Table 63:

Climate-related impacts, risks, and opportunities (sustainable finance)

Material

finance

lending products

for retail banking

Sustainable lending products for retail banking promote eco-friendly practices by offering

favourable terms for environmentally responsible projects, such as energy-efficient home

renovations or electric vehicle purchases. These products enhance customer loyalty, attract

a growing segment of environmentally conscious consumers, and align with regulatory

expectations, while supporting broader sustainability goals and fostering a positive

brand image.

Green lending

to corporates

Green lending to corporates supports environmentally sustainable projects, such as

renewable energy initiatives and energy-efficient upgrades. This approach mitigates

climate risk, aligns with regulatory demands, and enhances corporate reputation while

attracting socially responsible investors and fostering long-term partnerships for

sustainable growth.

The NLB Group is providing green lending to corporates and is aiming to significantly

increase its volume. Green lending is a means to reduce the volume of financed emissions

through financing of sustainable activities of corporate clients.

Green leasing

Green leasing structures lease agreements to promote sustainable practices and reduce

environmental impacts, enabling the bank to support eco-friendly initiatives and attract

conscious tenants. This approach enhances asset value, improves tenant satisfaction, and

demonstrates a commitment to sustainability, ultimately contributing to long-term financial

performance and a positive market reputation.

Sub-funds in

investment

banking and asset

Sub-funds which promote environmental and social characteristics, targeting companies

and projects that prioritise sustainability and ESG criteria. These funds attract a growing

base of socially conscious investors, enhance portfolio resilience against climate risks, and

align with regulatory demands, ultimately supporting a shift toward sustainable finance

and long-term value creation.

The NLB Group is offering investment opportunities in sub-funds in its asset management

portfolios. This increases financing sustainable goals. Once implemented, financed activities

will have a positive impact on the environment.

lending products

for retail banking

The NLB Group is providing green lending to private individuals and micro companies.

Green lending is a means to reduce the volume of financed emissions through financing of

sustainable activities and purchases of private clients.

Issuing of green

NLB has issued a green bond, raising several hundred million euros for financing

sustainable projects. Sustainable projects, once implemented, will have a positive impact on

the environment. The issuing of the green bond will have a positive signalling effect on other

banks and companies in the region.

Issuing of green bonds provides the capital for environmentally sustainable projects, such

as renewable energy, energy efficiency, and pollution reduction initiatives. This financing

option enhances market reputation, attracts socially responsible investors, and

demonstrates a commitment to sustainability, while also meeting growing regulatory

expectations and supporting broader climate goals.

Financing of energy

efficient buildings

The NLB Group is providing finance for energy efficient buildings and has committed to

significantly increase its share of financing of most energy efficient buildings by 2030.

Energy efficient buildings require less energy, thus contributing to lower need for energy

and to lower GHG emissions.

NLB Group’s client

investment to AI

use for optimizing

their environmental

footprint

The Group’s financing of AI investments of its clients for better managing critical

infrastructure (IT, water, energy, transport, etc.) and for optimizing their environmental

footprint (energy, water) can have positive effects on environment.

Impact - potential

228

Identification and

assessment of climate-

related physical and

transition risks

Identification of climate-related risk

The NLB Group conducts the materiality assessment as

part of its overall risk-identification process to determine

the level of exposure to transition and physical risk.

In addition, the NLB Group uses all available climate

and environmental data and studies relevant to its

region (namely those provided by various relevant

state institutions) to determine the level of its exposure

to environmental risks

In this process, identification

of environmental risk factors, relevant transmission

channels and their materiality and impact on the

Group’s financial performance in the short-, medium-

and long-term period are assessed.

The NLB Group performs the materiality assessment

through the following steps: 

· In the first step,

the climate and other environmental

risk drivers relevant for Slovenia and other countries

where the NLB Group is present are identified. In

addition to physical and transition risk, the NLB Group

also considers exposure to other environmental risks,

such as ecosystem dependency and impact (including

biodiversity risk). 

· In the next step,

the NLB Group defines the

transmission channels to better understand how the

climate and environmental risk drivers translate into

traditional financial risk categories. 

· In the third step,

the NLB Group assesses the

probability and impact of each identified risk driver

using internal and external sources and methodologies.

This assessment takes into account the geographic

location and industry (segment) of the counterparty. 

· Furthermore,

the NLB Group evaluates how other

factors (sources of variability), which determine

the probability or the size of the impact (so-called

amplifiers, mitigants and geographical heterogeneity),

impact its operations. 

· In the final step,

the materiality of the impact is

assessed. Considering probability and impact score,

the final vulnerability score is determined and assigned

to each exposure. A heatmap tool is used to illustrate

vulnerability across climate and environmental risk

drivers. 

Climate and environmental risk drivers identified as

material are quantified separately through a dedicated

stress-testing process.

In line with the internal risk management rules and

procedures, the NLB Group uses a 5-level scale to assess

climate-related physical and transition risk drivers and

other environmental risk drivers: 

A detailed assessment of each category is performed

separately and is further elaborated in the following

chapters. The first extensive materiality assessment

of climate and environmental risks was conducted in

2023 and upgraded in 2024. In 2025, the methodology

remained unchanged; however, the materiality

assessment was updated as of 31 December 2025. In

2025, there were no material changes with regard to

climate and environmental risks. The Group intends to

further improve the methodology for assessing C&E risk

drivers in 2026.

Real estate plays an important role in the transition

to a carbon-neutral economy. Within the collateral

evaluation process, the NLB Group’s ESG risk

management focuses on real estate climate transition

and physical risks. The identification and materiality

of specific ESG risks for real estate in collateral are

assessed through the NLB Group methodology for

environmental risks. Climate transition and physical risks

are measured through energy performance data of real

estate and collateral location data.

Physical risk

Each identified physical risk driver (as presented in the

previous chapter) is assessed from both a probability

(likelihood) and impact perspective. The assessment

is performed in line with internally developed

methodology, which relies on available climate and

environmental data (including insurance companies’

loss statistics), vulnerability and climate studies available

for the region (provided by different relevant state

institutions) and expert judgement. While the probability

of a severe physical risk event is evaluated based on

the location (NUTS-3 level mapping) of the exposure,

the impact of such an event relies more on the industry

(segment) of the counterparty. Probability and impact

scores are then combined into a single vulnerability

score. For residential mortgages, the Group assesses

flood risk by using flood maps, which means that the

exact flood risk level is determined based on the micro

location (exact geospatial coordinates) of the real estate. 

Time horizons and climate scenarios

Assessment was performed for short-term, medium-

term and long-term period. While studies and scenarios

mainly project temperature and climate change by 2100

and climate change is a slow and gradual process, the

Group has defined the time horizons for assessment of

physical risks as follows:

Short-term: by 2030;

Mid-term: 2030-2050;

Long-term: 2050-2100.

Such assessment is used in the budget, forecast or stress

test process based on the defined time perimeter and

maturity of the exposure.

In relation to physical risk, the Group considers two

different climate scenarios in the long-term period

(after the year 2050), namely pessimistic RCP 8.5

and optimistic RCP 2.6 scenarios. Based on these two

scenarios different physical risk assessments were

performed and were used in materiality assessment. 

A Representative Concentration Pathway (RCP) is

a greenhouse gas concentration (not emissions)

trajectory adopted by the IPCC. Four pathways were

used for climate modelling and research for the IPCC

Fifth Assessment Report (AR5) in 2014. The pathways

Low

Moderately

Moderate

Moderately

229

describe different climate change scenarios, all of which

are considered possible depending on the amount of

greenhouse gases (GHG) emitted in the years to come.

The RCPs – originally RCP 2.6, RCP 4.5, RCP 6, and

RCP 8.5 – are labelled after a possible range of radiative

forcing values in the year 2100 (2.6, 4.5, 6, and 8.5 W/m

respectively). The Group decided to use RCP 2.6 scenario,

which is a “very stringent” pathway scenario, and RCP

8.5 scenario which assumes emissions will continue to

rise throughout the 21

st

century. 

In the short-term period, the use of different climate

scenarios for assessment of physical risk was assessed

as not material and therefore not considered. Long-

term assessment of physical risk, considering both

scenarios described, relies on findings of climate

studies performed for our region and different studies

performed by the EU Joint Research Centre (JRC) where

different climate scenarios were considered. 

Findings of the materiality assessment

of physical risk

Key findings on the assessment as of 31 December 2025:

· Short-term

exposure to physical risk is not material;

however, frequency and severity of events is expected

to increase gradually due to climate change.

Over the

medium-term

horizon, the level of physical

risk is assessed as moderately low.

Over the

horizon, considering the RCP 2.6

scenario, the level of physical risk is higher, although

still at a moderately low level. Considering the RCP 8.5

scenario, the level of physical risk over the long-term is

increased and assessed as moderate.

From the materiality perspective we can conclude that

floods and drought are currently the only material risk

driver in certain industries and regions. Other events

are not material from financial perspective, though

they cannot be completely neglected. Chronic risk is

also not determined as a material risk in the short-

and medium-term. From the perspective of direct

corporate exposure, mostly the agriculture sector in

some countries is materially exposed to physical risk

(high and moderately high level of drought risk) in

the mid-term horizon. Vulnerability to physical risk in

other industries is less material. Within the short- and

medium-term horizon, no exposure is allocated to the

high-risk bucket. Considering the long-term horizon,

7% of the corporate portfolio is allocated to the high-

risk bucket under the RCP 2.6 scenario and 18%

under the RCP 8.5 scenario, which is slightly higher

than in 2024.

The impacts of climate change on physical risk

exposure of NLB Group’s credit portfolio and business

model (sensitivity)

The most relevant natural disasters in terms of

frequency and severity are drought and floods, while

hail and windstorms are also frequent but less material.

Floods and drought do cause material losses to our

clients, but they do not have a material effect on the

Group’s portfolio. However, we can expect that financial

impact of such events will increase in the long run if no

adequate policy changes are implemented in a timely

manner. Other events, including chronic risk, are not

material for the region and the Group’s business model.

Chronic physical risks in Slovenia are assessed as

immaterial to the Group’s collateral exposure.

Historical losses in the region, primarily affecting public

infrastructure and the agricultural sector, were largely

compensated through government support, thereby

limiting their financial impact on the Group. In addition,

insurance data indicate that a substantial share of

losses arising from physical climate-related events

is covered by insurance mechanisms, which further

mitigates the potential impact of such risks on the

Group’s financial performance.

The Group’s credit portfolio is well diversified (from the

industry and location perspectives) which reduces the

financial impact of such events. Stress tests performed

on the portfolio level reveal that some losses could occur

due to physical risk, though with no significant impact on

the Group’s performance.

The impacts of climate change on physical risk

exposure of collateral and real estate

These impacts could arise from both an increase of

extreme weather events (acute impacts) as well as from

gradual global warming (chronic impacts). A model for

assessing acute flood risk based on national (Slovenian)

flood risk zones and EU flood risk zones (NLB Group

members) was developed – determining flood risk

on the actual location of the real estate in collateral.

For all collaterals in the Slovenian portfolio, flood risk

(high, moderately high, moderate, moderately low, low)

was determined; flood risk assessment on the micro

location of real estate for the NLB Group members is still

in development as countries have different available

data. Currently other physical climate risks are assessed

through the NLB Group methodology for environmental

risks as not material to the Bank’s collateral exposure.

NLB is in the process of obtaining flood end other

physical risk exposure for all collateral portfolio in NLB

and the NLB Group. Measures for reducing climate

physical risk of collateral are part of credit approval

process. Exposure to assets located in high flood-risk

areas within the collateral portfolio is assessed as low.

Transition risk

The assessment of transition risk (which is identified as

described in the previous chapter) is focused on the

mid-term horizon. It is based on the assumption that the

transition to low-carbon economy will materialise by

2050, and that transition risk will peak in the mid-term

horizon (2030-2050) as defined by the Group. Afterwards

the level of transition risk is expected to decrease.

The assessment of transition risk factors is based on the

UNEP FI methodology, which was elaborated by the

NLB Group to a more granular level. The methodology is

combined with actual emission data of a counterparty

or proxy emissions data. For residential mortgages

the Group assesses transition risk by using energy

performance certificate (EPC) labels, primary energy

consumption and CO

emissions, and other information

derived from the EPC. 

The methodology assumes full implementation of the

Net-Zero 2050 scenario. Other less optimistic scenarios

(slower transition) are not considered in the materiality

assessment of transition risk while the level of transition

risk is lower in such cases. However, the Group uses

different scenarios in the climate stress test, which is

described in the chapter

Resilience analysis

Findings of the materiality assessment

of transition risk

Key findings on the assessment as of 31 December 2025:

Transition risk is already recognised as a material risk

driver and is expected to reach its peak over the mid-

term horizon. 

230

Over the short-term horizon, the level of transition risk

is assessed as moderately low. 

Over the mid-term horizon, the level of transition risk

will increase to moderate level. 

Over the long-term horizon, the level of transition risk is

expected to start decreasing.

As such, exposure to transition risk over the long-

term horizon is less material therefore the focus of the

materiality assessment is the mid-term horizon. Using

UNEP-FI methodology for classification of transition

risk, only 5% of the corporate portfolio is allocated to

the high-risk bucket and 10% to the moderately high-

risk bucket. 39% of the portfolio is allocated to the low

or moderately low risk bucket and the remaining part is

allocated to the moderate-risk bucket. 

From a sectoral perspective, exposures assessed

as above-moderate are concentrated in the

manufacturing sector, wholesale and retail trade,

construction, and electricity generation activities in

Slovenia and Serbia. In Kosovo and other jurisdictions

of the NLB Group, these exposures are assessed as less

material. For the identified sectors, direct and indirect

emission-related cost drivers significantly contribute

to elevated transition-risk scores, while needed capital

expenditure further increases the overall vulnerability

to transition risk.

At the country level, the lowest transition-risk exposure

is observed in Slovenia, whereas the highest exposure

is identified in Serbia, notwithstanding that the applied

UNEP-FI methodology is not country-specific. In

other NLB Group markets outside Slovenia, a delayed

transition trajectory is anticipated, resulting in lower

risk in the short term but a higher materiality of

transition risk in the medium term due to accelerated

alignment requirements.

The impacts of climate change on transition risk

exposure of NLB Group’s credit portfolio and business

model (sensitivity)

Transition risks already arise in the short term due

to the EU’s determination to reduce carbon emissions in

accordance with its ambitious Net-Zero by 2050 strategy. 

With the implementation of the NLB Group’s Net-Zero

Strategy in 2023 it is expected that the impacts of

transition risks will gradually diminish in the long run.

Nevertheless, the Group assessed transition risk as

more of a material than a physical risk. This can already

be observed through higher energy and emission

costs. There are certain industries which are directly or

indirectly related to fossil fuels and such industries are

considered riskier. 

The level of transition risk does not depend only on

the industry itself but also on the companies (ESG

awareness, strategy, efficiency, etc.) and their location

(outside the EU there is less regulation). 

On the portfolio level, the Group does not face any

large concentration of specific NACE industrial sectors

exposed to climate risk, whereby the role of transitional

risk is more prevalent. Based on industry segmentation

of the portfolio and corresponding emissions, the Group

has relatively low exposure to emission-intensive sectors

in its corporate clients’ business. There is some exposure

in more emissions-intensive industries, such as energy,

transportation, industry and agriculture; however,

exposure to clients with high emissions is rather limited.

As part of its strategy, the NLB Group does not finance

companies that extract fossil fuels or operate coal-fired

power plants.

In its initial set of Net-Zero portfolio targets, the NLB

Group prioritised sectors with material exposure

to transition risk, specifically fossil fuel-based and

highly energy-intensive industries such as power

generation and iron and steel, as well as other sectors

with significant financed emissions and/or data

availability. The Group’s Net-Zero targets are subject to

regular monitoring in line with ESRS requirements on

target-setting and progress tracking.

In 2025, the NLB Group introduced additional

quantitative and qualitative decarbonization targets.

Quantitative targets were established for the transport

sector, while for the remaining priority sectors

qualitative targets and decision-tree-based approaches

were applied due to low exposure or insufficient data

availability (e.g., in agriculture), consistent with the ESRS

guidance on data limitations and proportionality.

The impacts of climate change on transition risk

exposure of collateral and real estate

The remaining chapter outlines the Group’s

commitments regarding real estate, specifically

Residential Real Estate (RRE) and Commercial Real

Estate (CRE) as they represent an important part of

exposure and financed emissions.

The Group is dedicated to reducing financed emissions

in these sectors as part of its broader goal to achieve

Net-Zero emissions and through that reduce exposure

to climate transition risk. Therefore, specific targets

are set for reducing emissions from our real estate

portfolio, which includes both RRE and CRE. The Group

is committed to integrating sustainability criteria into

our lending and investment decisions. This approach

ensures that the Group’s real estate financing supports

the transition to a low-carbon economy and aligns with

overall sustainability goals.

Energy performance certificates provide relevant

information to banks on energy efficiency of buildings

in collateral and exposure to climate transition risk,

so constant EPC data collection initiative is in action.

The NLB Group uses different sources and methods to

obtain data on EPC of the real estate in collateral as

the Group is present on EU and non-EU markets. On

the Slovenian market there is the publicly available

EPC database from the Ministry of the Environment

and Spatial Planning, and the full national base is

periodically matched with NLB’s real estate in collateral;

proxy EPCs were also developed for collateral stock

based on the national database. For new production

information on EPCs is also collected from the

borrower at loan origination and included in the NLB

database, and official EPC has been mandatory for

new residential mortgage loans for private individuals

since the end of 2023 (before that only in cases when

EPC was mandatory according to Slovenian law) which

will, in time, increase the share of official EPC data.

In other non-EU countries multiple difficulties were

discovered during the EPC data collection initiative. In

some countries EPCs are not established in the local

legislation (e.g., Kosovo), while in others EPCs do exist

but are not enforced by local law. NLB proactively acts

on those markets that official and proxy calculations

of EPC and other energy performance documents are

obtained where possible. All missing EPCs in the NLB

Group portfolio are periodically modelled based on

available characteristics of real estate in collateral

(specifically for each country). Additional measures are

in development to increase the share of official EPC data

on all markets.

231

Overview of vulnerability

to physical and transition risk

by country and by industry

The outcomes of the materiality assessment for transition

and physical climate-related risks over the medium-term

horizon, consistent with the methodology described in

preceding sections, are presented in the two charts below.

The figure 75 provides an overview of the corporate

portfolio’s exposure to physical and transition risks by

country, while the figure 76 presents the exposure by

economic activity (industry), in line with ESRS requirements

for disaggregation by geographical area and sector.

The updated materiality assessment did not identify

any material changes in the Group’s exposure to

climate-related physical or transition risk drivers compared

with previous reporting periods. Although the volume of

exposure subject to the assessment increased, particularly

in the manufacturing, construction, and wholesale and

retail trade sectors, the overall risk profile with respect to

physical and transition risks remained unchanged.

2.8

2.4

2.4

3.5

Bosnia and

Herzegovina

Physical Risk

BIH

Figure 75:

NLB Group physical and transition risk by country (as of 31 December 2025) 

Transition

Risk

1.0

0.5

A

C

G

L

I

B

F

K

H

M-S

E

D

Transition

Risk

Agriculture, Forestry and Fishing

B

Mining and Quarrying

Manufacturing

Electricity, gas, steam and air conditioning supply

Watter supply, sewerage, waste managment

and remediation activities

F

Construction

G

Wholesale and retail trade, repair of motor

vehicles and motorcycles

H

Transportation and storage

I

Accomodation and food service activities

K

Financial and insurance activities

L

Real estate activities

Other: J, M-S

Figure 76:

NLB Group physical and transition risk by industry (as of 31 December 2025) 

232

Other environmental risk

In addition to the assessment of climate-related physical

and transition risks, the NLB Group also conducted an

evaluation of other environmental risks at the Group

level. In line with ESRS requirements, this assessment

incorporates both dependency-related factors (such

as resource depletion, ecosystem service disruption,

biodiversity loss and climate-related environmental

change) and impact-related factors (including pollution,

land-use pressures and habitat degradation). The

analysis is informed by the EBRD methodology and the

ENCORE knowledge base, which provide structured

frameworks for identifying and assessing environmental

risk drivers across the value chain.

The ENCORE knowledge base provides a structured

mapping of economic activities to their dependencies

on natural capital and their environmental impacts and

includes a risk matrix that classifies environmental risks

by risk driver, severity and likelihood. Using ENCORE, the

Group assessed environmental risk drivers relevant to its

credit portfolio to determine exposure and vulnerability

in line with ESRS requirements. For economic activities

where ENCORE does not provide sectoral coverage, such

as wholesale and retail trade, the EBRD environmental

risk assessment methodology is applied to ensure

methodological completeness and consistency.

Because the ENCORE framework does not provide

an assessment across different time horizons nor

incorporate alternative climate scenarios, the evaluation

of other environmental risks based on the ENCORE

and EBRD methodologies is treated as a mid-term

horizon assessment. To address this limitation and

ensure methodological completeness in line with ESRS

requirements, additional data sources such as the

Aqueduct Water Risk Atlas were applied. By combining

ENCORE with Aqueduct indicators, the Group performed

an assessment of water-stress-related risks across

multiple time horizons and climate scenarios.

Dependency

Figure 77:

NLB Group dependency and impact risk by country (as of 31 December 2025) 

Impact

BIH

5.0

0.5

4.5

Agriculture, Forestry and Fishing

I

Real estate activities

B

Mining and Quarrying

Construction

H

Financial

and insurance

activities

F

J, M-S

Dependency

Electricity, gas, steam

and air conditioning supply

G

Accomodation and

food service activities

Figure 78:

NLB Group dependency and impact risk by industry (as of 31 December 2025) 

Impact

B

F

G

Accomodation and food service activities

H

Other: J, M-S

233

Findings of the materiality assessment of other

environmental risk

The NLB Group updated the materiality assessment of

other environmental risk as of 31 December 2025. The key

outcomes remain consistent with the previous assessment

and are summarised as follows:

Short-term exposure to other environmental risks is

assessed as not material, although the level of risk is

expected to gradually increase and reach its peak in the

medium-term horizon.

Over the medium-term horizon, other environmental risk

is assessed as moderately low. 

In contrast to transition risk, other environmental risk is

not expected to decline in the long-term horizon. 

17% of the portfolio is classified within the high or

moderately high environmental-risk categories, of which

8% is assigned to the high-risk category. A further 27%

of the exposure is assessed as moderate risk, while the

remaining 56% is allocated to the low or moderately

low risk categories. The distribution of exposures across

risk categories remains consistent with the previous

assessment, indicating no material change in the Group’s

other environmental risk profile.

The impacts of climate change on other environmental

risk exposure of portfolio

Exposure to other environmental risks—including

dependencies on ecosystem services (such as

biodiversity-related functions) and impacts on natural

ecosystems—is assessed as not material in the short term,

although their potential long-term effects are taken into

account in line with the ESRS requirements.

In the short- and medium-term horizons, impact-driven

environmental risks prevail, particularly for economic

activities that exert significant pressure on natural capital

and are therefore expected to face increasing regulatory

scrutiny. Over the long-term horizon, the dependency

perspective also becomes relevant due to the potential

degradation of ecosystems, further exacerbated by

climate change.

From a combined impact, dependency, and materiality

assessment, the Agriculture sector is identified as highly

vulnerable to other environmental risks. Other industries

exhibit lower vulnerability, although certain sectors

show elevated exposure due to either high dependence

on specific natural assets or significant negative

environmental impacts, both of which are associated

with heightened regulatory expectations. The Group’s

largest exposure within the Agriculture sector is located

in Serbia, resulting in comparatively higher vulnerability

to other environmental risks in this market than in

other jurisdictions of the Group. This is illustrated in the

figures 77 and 78, which present the materiality of other

environmental risks from both the impact and dependency

perspectives, based solely on exposures for which

ENCORE-based assessments are available.

The updated materiality assessment did not identify

any material changes in the Group’s exposure to other

environmental risk compared with previous reporting

periods. Although the volume of exposure subject to the

assessment increased, particularly in the construction

sector, the overall risk profile with respect to other

environmental risks remains on the similar level as in the

previous assessment (small increase of dependency risk

from 2.7 to 2.8 and impact risk from 2.4 to 2.5).

The updated materiality

assessment identified

no material changes

in the Group’s exposure

to climate-related physical

or transition risks

ARIANA KADIĆ

From present to memories and back, 2023

installation of carpet,

small drawings

in a suitcase

video 4'29"

Winner of the International Open Call

for Artists At the Intersection

The winner of the international

open call At the Intersection.

The carpet, conceived as a mystical

portal, bridges the gap between the

ancestors and eternity, and through

flowing colours reveals a deeply

personal connection to the heritage.

235

E1-2

Policies related

to climate change

mitigation and

adaptation

The NLB Group’s transition plan to achieve Net-Zero

emissions by 2050 is underpinned by a comprehensive

set of policies that manage emissions-intensive and

climate-vulnerable activities. Through the adopted

internal acts, the NLB Group incorporates climate

change mitigation and adaptation into its core

financing processes (loan originiation, underwriting,

risk management), as well as into its own operations.

These policies ensure that climate-related risks and

opportunities are embedded in decision-making

processes, guiding the approval of loans and

investments in alignment with the Group’s Net-Zero

targets. They focus on the:

Phase-Out of GHG-Intensive Assets by reducing

exposure to high-emission sectors in line with defined

reduction targets;

Climate-Related Lending and Investment by integrating

climate-related criteria to ensure that financed projects

contribute to emissions reduction;

Portfolio Engagement by supporting clients’ transition

to a low-carbon economy with climate transition plans

and aligned projects;

and Safeguards Against Adverse Impacts by

ensuring all transactions and investments adhere to

environmental and social governance standards to

minimise negative effects on the environment.

The NLB Group has also established a range of policies

focusing on reducing emissions from its own operations

and enhancing overall energy efficiency.

management policies

The risk management function defines the rules about

risk appetite, risk strategy, credit risk, and other risk-

related topics, which are embedded in policies and

other internal documents. Unless stated otherwise,

all policies presented in this chapter apply to the NLB

Group banking members and leasing companies,

and their management boards are the most senior

bodies responsible for their implementation. At the

operational level, employees across corporate banking,

risk management, restructuring, and other relevant

departments must adhere to the defined rules and

procedures. The policies are available to employees in

the Register of Internal Documents, while affected clients

are informed of their content through communication in

sales procedures, due diligence, and agreements.

NLB Group Risk Appetite Statement

Content and purpose:

The statement integrates

sustainable finance and ESG risks into the business

strategy, with a particular focus on phasing out

financing of the coal industry and setting Net-Zero

targets for high-emission sectors.

Excluded and Restricted ESG Activities

in NLB and the NLB Group

Content and purpose:

Identifies sectors and high-

risk activities, such as coal-related activities, that

are either excluded from the NLB Group’s financing

portfolio or subject to strict limitations. Among

other, it defines the scope of high-emitting, hard-to-

abate sectors that fall under the Net-Zero alignment

requirements, specifies relevant activities and their

corresponding NACE classifications, outlines structural

emissions intensity and transition constraints, and

establishes the related decision-making framework

for transaction approval.

Criteria and Procedures for Granting Transactions to

Legal and Private Entities in NLB and the NLB Group

The policy defines transaction-

approval criteria, with a strong emphasis on risk

assessment, client cooperation, and operational

standardisation. It applies to legal and private entities,

excluding private individuals and treasury transactions.

The policy is aligned with the NLB Group Code

of Conduct, the Anti-Corruption and Anti-Money

Laundering (AML) frameworks, as well as with ESG

due-diligence requirements. It is also aligned with

EBRD and MIGA standards. Collaboration with clients,

regulators, and internal teams ensures compliance.

Environmental and Social Transaction Policy

Framework in NLB and the NLB Group

The policy establishes a

Group-wide framework for assessing and managing

environmental, social, and governance (ESG) risks in

all corporate and non-retail transactions. It defines the

purpose of ensuring responsible financing by integrating

ESG considerations into decision-making processes,

aligning with UN SDGs, the Paris Agreement, the EU

Taxonomy, and EBRD and MIGA standards. The policy

sets minimum standards, procedures, and governance

for ESG screening, due diligence, and monitoring

across the NLB Group. It requires the application of the

Environmental & Social Risk Management System (ESMS),

which includes exclusion lists, regulatory compliance

checks, categorisation, and ESG risk assessments. In

cases of non-compliance, the policy defines corrective

measures, risk-based controls, and exit strategies,

including rating adjustments or relationship termination.

Environmental and Social Transaction Categorisation

Methodology Framework in NLB and the NLB Group

The methodology consolidates

the Group’s commitments, international agreements, and

regulatory requirements that guide the evaluation and

categorisation of clients from an ESG risk perspective.

The monitoring includes exclusion-list screening,

compliance checks, project categorisation, ESG risk

assessment, and continuous oversight of transactions.

Lending Policy for Non-Financial Companies

in NLB and the NLB Group

The policy defines the transaction

approval principles based on client creditworthiness,

industry concentration, ESG factors, and financing

purpose, reflecting the NLB Group’s risk appetite. It

aims to generate value while avoiding speculative

transactions. Monitoring includes creditworthiness

assessment, ESG compliance, collateral requirements,

and ongoing oversight. The policy guides employees on

responsible lending practices and governance.

236

Lending Policy for Specific Client Segments

The policy defines the reference

frameworks and principles for approving transactions

for specific client segments, including Municipalities,

State-Owned Enterprises, International Corporates,

Project Finance, and Farmers. It complements the

Lending Policy for Non-Financial Companies by

specifying rules for these segments. It addresses risks

related to creditworthiness, industry concentration,

ESG factors, and financing purposes, ensuring value

generation while avoiding speculation. Monitoring

includes credit assessments, ESG compliance,

collateral requirements, and ongoing oversight.

The policy guides employees on governance,

sustainability, and compliance.

General Methodology for Credit Rating Classification

The methodology defines credit

rating classification of legal entities and entrepreneurs,

excluding clients subject to specialised methodologies.

It is based on financial and qualitative indicators,

risk assessment, and creditworthiness evaluation,

integrating ESG factors. Monitoring includes regular

rating updates, qualitative assessments, and ESG risk

adjustments. The methodology guides employees on

credit assessment and risk governance.

Policies related to

operational emissions

and energy use

NLB Group Carbon Footprint Measurement

and Reporting Policy

The operational NLB Group

Carbon Footprint Measurement and Reporting Policy

updated In 2025 establishes a unified, transparent, and

methodologically robust framework for measuring,

managing, and reporting the operational carbon

footprint of the NLB Group in Scopes 1-3. It ensures that

all Group members consistently collect, calculate, verify,

and disclose greenhouse gas (GHG) emissions in line

with the GHG Protocol and the European Sustainability

Reporting Standards (ESRS), particularly ESRS E1 under

the CSRD. The policy supports the NLB Group’s strategic

goal of reducing operational emissions, identifying

emission hotspots, enabling informed decisionmaking,

complying with regulatory obligations, and contributing

to the Group’s Operational Emissions NetZero Strategy

and longterm climate neutrality target by 2050.

The policy provides a comprehensive structure for

operational GHG accounting across the NLB Group. In

its content, it focuses on the following key areas:

Regulatory and Methodological Basis

Organisational and Operational Boundaries

Data Collection and Data Governance

Data Modelling and Calculation

Results, KPIs, and Scenario Building

Verification, Disclosure, and Reporting

Exclusion List

NLB Group Real Estate Strategy

The strategy covers the entire

portfolio of the NLB Group real estate (RE) and is

structured around three main pillars: in-use RE, run-off

RE, and development RE. The policy focuses on the use

of electricity from renewable sources, investments in

energy-efficient devices, energy renovation of buildings,

rationalisation of space usage, environmentally friendly

refrigerants, and reducing the amount of waste and

water, all with the aim of lowering the operational

carbon footprint. In addition, the strategy emphasises

upgrading RE databases with environmental KPIs. In

2025, the strategy was supplemented with an Action

Plan, which outlines measures to support the goal of

achieving Net-Zero targets by 2050, including more

detailed activities planned through 2030. Furthermore,

space optimisation measures (including digitalisation

and work-from-home options) and space-demand

assessments are incorporated, with any excess space

in business or non-business premises to be either

monetised or used for local social responsibility projects.

NLB Group Estate Management is the owner of the

policy, while each NLB Group member is responsible for

implementing the strategy within its own entity.

Sustainable Car Fleet Management and

Company Car Policy

The policy responds to the

NLB Operational Emissions Net-Zero Strategy and

supplements the policy on measuring and reporting

operational carbon footprint. It defines the assumptions

and emission model for achieving the NLB Group’s

operational Net-Zero emissions by 2050. The policy’s

main goals are oriented in using cleaner fuels and

technologies, electrifying the internal NLB Group fleet

and taking into consideration limitations of the electric

car park (efficient charging infrastructure and range). It

further sets the foundation for cooperation with external

and contracted suppliers. The policy is adopted at the

NLB Group level, where NLB is the policy owner and

NLB Lease&Go is in the role of a steering function. Each

NLB Group member is responsible for the adoption and

implementation of the policy in its local entity.

Policy on work from home

The policy outlines prerequisite

conditions and regulation for work from home. It

specifically addresses the relevance, procedures to gain

this right and detailed health and safety regulation, data

protection and information infrastructure specification

and follows all national health and safety regulation. It

concerns all employees in NLB whose nature of work

allows for work from home. For further details please

refer to the chapter

Work-Life Balance

237

E1-3

Levers, actions

and resources related

to climate change

mitigation and

adaptation

NLB Group continued to implement its comprehensive

Climate Strategy through several key levers and actions

detailed in this chapter.

While the baseline itself does not constitute

a climate change mitigation or adaptation action,

its establishment is the initial key step related to the

Net-Zero Portfolio Strategy to support target setting

and identification of levers for transition. Baseline

assessments were conducted in 2023 and 2025, with

results broken down by asset class, exposure, and

financed emissions. The baseline and strategy apply

across all regions in which the NLB Group operates and

cover all NLB banking members and NLB Lease&Go

Ljubljana. The strategy is designed for full execution

by 2050, when the Group aims to achieve a net-zero

financed emissions portfolio. Detailed information on

the actions is provided in the sub-chapter

Key Levers

and Actions Related to the Portfolio Strategy

NLB Group drives its Climate

Strategy through strategic

levers, targeted actions,

and dedicated resources

46 Transparency and Pillar 3 | European Banking Authority

The Operational Emissions Net-Zero Strategy was

adopted in 2024 and the established emissions baseline

and calculation methodology (model) for reduction of

GHG emissions of the NLB Group’s own operations were

its key prerequisites. In November 2025, the Action Plan

for implementation of the Operational Emissions Net-

Zero Strategy was adopted. It establishes targets and

key measures with the outlook until 2030. The

NLB Group will review the action plan on a yearly

basis and will gradually upgrade it until the target year

2050. While the Strategy encompasses all NLB Group

members, the Action plan focuses on the NLB Group

members which materially contribute to GHG emissions.

Detailed information on actions is provided in the

sub-chapter

Actions Related to Operational Strategy

The financial resources and human capital

requirements for implementing the Climate Strategy

are established within the regular financial planning

processes of the NLB Group members. This approach

ensures that each member effectively manages the

related measures within the overall budget that is

reviewed, approved, and overseen by the respective

governance body of the NLB Group member.

Key levers and actions

related to the portfolio

strategy

Establishing emission

baseline for target setting

and identification of key levers

The NLB Group’s Net-Zero journey is aligned with the

NZBA guidance for

Climate Target Setting for Banks,

focusing on defining key sectors, levers, and establishing

a comprehensive emissions baseline. In establishing

the baseline for defining key sectors and levers for the

management of portfolio financed emissions, the NLB

Group aligns its reporting and target-setting processes

with distinct regulatory frameworks. The total financed

emissions disclosed publicly follow the

Pillar III Basel

framework

46

, as defined by the European Banking

Authority (EBA), focusing primarily on non-financial

corporations and exposures in the banking book, which

provides transparency on risk and corporate exposure.

For the target setting and establishment of an emissions

baseline, the NLB Group refers to the broader perimeter

of the Net-Zero Banking Alliance (NZBA) guidance, which

extends to a wider range of counterparties, including

general governments, credit institutions, other financial

corporations, non-financial corporations, and households.

The NLB Group has adopted a phased, sector-informed

approach, focusing on the most material segments

of its corporate, leasing, and mortgage portfolios.

For the 2021 baseline established in 2023 at the first

target setting exercise, the NLB Group’s total financed

emissions, under the NZBA guidance, amount to 2,516

kilotons of CO

eq. This includes Scope 1 and Scope 2

client emissions from the Group’s lending portfolio, as

well as financed emissions from the Group’s investment

portfolio, encompassing both debt and equity

investments. In the second phase of target setting in

2025, the NLB Group focused on expanding the in-scope

portfolio coverage. Based on the EoY 2023 exposure,

the second round expanded the coverage of in-scope

portfolio exposure to 51% through the inclusion of

additional sectors.

The implementation of the CSRD initially required a

significant number of entities to report on their emissions.

However, the “Stop-the-Clock” directive, which has

reduced the number of entities required to report,

will affect the Group’s ability to fully incorporate

client Scope 3 emissions data into its financed

emissions baseline.

The NLB Group remains committed to evolving its

methodologies and refining its commitments in dynamic

process requiring continuous resource allocation

and adaptation.

238

Baseline breakdown

by asset class

Nearly 50% of baseline emissions are linked to

the sovereign bond exposure. However, they are

not included in the targets due to double-counting

of financed emissions, as emissions from clients,

previously accounted for in corporate and retail loans,

are redundantly included when aggregating at a

national level within sovereign bond emissions. For the

sovereign bond portfolio, GHG emissions for 2020 were

applied, with Scope 1 emissions attributed using GDP

adjusted by PPP.

Figure 79:

NLB Group baseline 2021 split by asset class

(total = 2,516 ktCO

eq)

The lack of consensus on metrics and methods

used to calculate country-level emissions presents

challenges, particularly in deciding whether to include

governmental, territorial, production, or consumption

emissions, and whether to account for land use, land

use change and forestry (LULUCF). The time lag in

verifying data further complicates the process. The

decarbonization process is expected to unfold indirectly,

with limited practical approaches currently available.

Emissions are concentrated in Slovenia and Serbia,

accounting for nearly 80% of total financed emissions,

primarily due to the financial exposure rather than

carbon intensity.

Figure 80:

NLB Group baseline 2021 split by entity

(total = 2,516 ktCO

eq)

49%

Sovereign

46%

Corporate loans

Mortgages

Car loans

NLB d.d

39%

38%

239

Baseline breakdown by exposure

In the second round of target setting, the NLB Group

established the baseline based on exposure coverage

of its

in-scope portfolio, comprising the corporate

credit, retail mortgage, and leasing exposures in

Slovenia.

This approach ensures that the target setting

exercise captures the most material segments of the

Group’s lending activities in alignment with its transition

objectives, sector-specific dynamics and regulatory

expectations.

Figure 81:

In-scope portfolio and exposure coverage

Based on the Group’s portfolio structure as at year-end

2023, the first round of sectoral target setting covered

25% of cumulative portfolio exposure, focusing on

carbon-intensive sectors with robust data availability

and clear decarbonization pathways. The second round

covers 48% of the portfolio, driven by the remodelling

of Commercial and Residential Real Estate (CRE &

RRE) baseline and decarbonisation pathway and the

inclusion of additional sectors such as Agriculture, Road

Freight Transport, and Leasing of Passenger Vehicles,

reflecting a growing transition relevance. Under the

second round of target development, an additional 8%

of the portfolio was

analysed to assess its potential for alignment with the

NZBA guidance. A further 20% of the portfolio is

considered addressable within a broader strategic

context, covering less emission intensive or less data

mature sectors such as logistics and services. The

remaining 22% of the portfolio is classified as hard to

address at this stage due to structural constraints or

data limitations, with ongoing efforts to evaluate

opportunities for future alignment where feasible.

Together,

the first and second rounds have extended

the coverage to 51% of the NLB Group’s portfolio

exposure,

ensuring a structured and phased alignment

with the NZBA guidance.

1. Power generation

2.

Iron & Steel

3.

Total 1 st Round

4.

CRE - NLB d. d. recalculated

5.

RRE - NLB d. d. recalculated

6.

CRE - NLB Group extension

7.

RRE - NLB Group extension

8. Agriculture

9. Road Freight

10.

Leasing - Passenger cars

11. Aluminium

12. Cement

13.

Oil & Gas

14.

Total NZBA Coverage

15. Coal

16. Agriculture excluded

17. Leasing

18.

Transport and storage

19.

Electricity, Gas, Steal and Air, etc.

20. Manufacturing

21.

22.

Water Supply, Sewerage, Waste, etc.

23. Construction

24.

Accommodation and Food Service, etc.

25.

Wholesale and retail trade, repair, etc.

26.

Financial and Insurance Activities

27.

Exposures to other sectors

28. Total

26

27

28

120%

80%

60%

The first round

covered 25% of

the portfolio

The second round covers

48% of the portfolio

(including the remodelling

of CRE & RRE - NLB d.d.)

Sectors studied

(8%)

Sectors in a more broader

transition planning strategy

(20%)

Hard to address

sectors (22%)

51%

240

Baseline breakdown by emissions

Among the 10 carbon intensive priority sectors eligible

under the NZBA guidance, approximately 95% of

financed emissions are concentrated within six specific

sectors: Agriculture, Residential Real Estate, Commercial

Real Estate, Road Freight Transport, Iron & Steel, and

Power Generation.

NLB Group has applied a broader lens to target-setting

metrics, exploring a range of target types beyond

emissions-based targets alone. For certain sectors, data

limitations, heterogeneity of activities, or methodological

inconsistencies make emissions metrics insufficient, and

their non-use has been duly justified.

Instead, the NLB Group has developed targets that

are tailored to the maturity of each segment and the

profile of its exposure, in line with the NZBA guidance.

These targets are:

· Emission intensity based targets

aligned with

sectoral decarbonization pathways,

· Quantitative financing targets

to support credible

transition plans and low-carbon activities, and

· Client engagement targets

supported by structured

data collection and assessments.

This approach lays the groundwork for transition

planning, going beyond the NZBA guidance. The

NLB Group has structured its transition planning to

proactively address the regulatory expectations,

embedding transition considerations at the core of its

banking activities. Through integrated exposure

mapping, sector-specific decarbonization pathways,

and client-level strategies, this work strengthens both

regulatory alignment and the Group’s internal steering

capacity. To ensure that ambition is aligned with

business reality, the NLB Group has also established a

set of origination guidelines as a pragmatic

counterpart to its quantitative targets. Grounded in

the leading market practices and tailored to sector-

specific dynamics, these guidelines are designed with

operational feasibility in mind. They provide a

structured framework for engaging clients in transition

topics while identifying financing opportunities

aligned with the Group’s strategic objectives.

Figure 82:

Split of NLB Group financed emissions by 10 NZBA priority sectors (ktCO

eq)

564 ktCO

eq

251 ktCO

eq

Power

Commercial Real Estate

Iron & Steel

Residential Real Estate

Agriculture

Road Freight Transport

Aluminium

Oil & Gas

0% Cement

0% Coal

31%

42%

Note:

The figure presents the distribution of

NLB Group’s financed emissions across

the 10 NZBA guidance framework

priority sectors, amounting to a total of

564 ktCO₂eq. The largest contributions

originate from agriculture, residential

real estate, road freight transport, and

iron & steel.

The first round of target setting, covering

power generation, commercial real

estate, iron and steel, and residential

real estate, accounted for 45% of

total financed emissions, equivalent

to 251 ktCO₂eq. Within this share, 83%

relate to iron & steel and residential

mortgages, which together represent

the predominant portion of the targeted

emissions.

241

For the initial set of Net-Zero targets, the NLB Group set

objectives for four sectors considered most significant

in terms of emissions and financial exposure -

Power

Generation, Iron & Steel, Commercial Real Estate,

Residential Real Estate. These four sectors collectively

accounted for approximately 50% of financed

emissions within the prioritised sectors identified

under the NZBA guidance. In the second round of

target setting, additional targets were established for

other key sectors, namely

Road Freight Transport,

Passenger Car Leasing,

Agriculture.

Addressing

the identified sectors by steering financing activities

through the set targets and origination guidelines

represents the key lever to achieve emission reductions.

In the agricultural sector, there is currently no well-

established Net-Zero pathway. Moreover, the sector

exhibits significant heterogeneity, encompassing a

diverse range of activities such as crops, livestock,

fishing, and forestry. Obtaining client-level data

remains challenging due to their limited availability,

primarily because a substantial portion of the portfolio

is concentrated among smaller companies. As a result,

the targets developed for agriculture focus on client

engagement and financing commitments, covering the

sector with feasible, non-emission-based objectives

that enable better data collection in the future and

strengthen the engagement with clients to understand

climate relevance and transition opportunities.

In the Road Freight Transport, data-related

challenges are similar to those encountered in the

Agriculture. Emission intensity targets have been

established based on Slovenia’s National Energy and

Climate Plan, complemented by client engagement

targets to support data collection and enhance the

understanding of climate relevance and transition

opportunities across the portfolio.

Together, the first and second rounds now cover

approximately 95% of the Group’s financed emissions,

ensuring comprehensive alignment with the NZBA

guidance. The remaining 5% of financed emissions,

associated with sectors with limited exposure such

as Aluminium, Cement, and Oil & Gas, are addressed

through origination guidelines based on credible

Net-Zero transition pathways, reinforcing responsible

lending and portfolio alignment principles.

Key actions

Building on the established baselines, the

NLB Group’s decarbonization strategy targets

the most carbon-intensive sectors identified in the

target setting, namely Power Generation, Iron &

Steel, and Commercial & Residential Real Estate,

Agriculture, Road Freight Transport and Passenger

Car Leasing. These sectors represent a significant

share of the Group’s financed emissions.

Key actions undertaken in 2025, as well as those

planned for the coming years, are outlined below. Their

expected impact is to contribute to the reduction of

emissions across the Group’s financed portfolio. These

activities are being implemented on an ongoing basis

in all markets where the NLB Group operates and cover

both the downstream value chain—namely clients

operating in the most carbon-intensive sectors—as well

as the Group’s own internal processes.

· Data Collection

– enhancement of data collection

processes to obtain reliable emission data from clients,

with a focus on key emission sources (Scope 1, Scope 2,

and Scope 3). A robust data collection is essential for

tracking progress across the portfolio and enabling

effective actions where reliable data are available

to drive a measurable impact. Specific actions are

tailored to each sector, addressing their unique

decarbonization challenges.

· Methodology Improvements

– continuous refinement

of calculation and monitoring processes to ensure

alignment with evolving regulatory frameworks and

industry best practices.

· Portfolio Monitoring

– the establishment of portfolio

monitoring for emission intensity to track progress and

ensure effective steering of commitments in carbon-

intensive sectors.

· Client Engagement

– cooperation with clients

across relevant sectors to implement decarbonization

plans, ensuring alignment with the NLB Group’s

targets and facilitating the transition to low-carbon

alternative solutions.

- In Power Generation, the focus is on supporting

clients’ transition through renewable energy projects

and plant upgrades.

- In Iron & Steel, the NLB Group will facilitate the

adoption of low-emission technologies by financing

with credible transition plans.

- For Commercial Real Estate, NLB prioritises financing

energy-efficient new builds and promoting retrofitting

of the existing properties.

- In Residential Real Estate, NLB aims to support

energy-efficient homes and retrofitting efforts

through green financing solutions. In the Road Freight

Transport, the focus is on advancing decarbonization

through client engagement, portfolio coverage, and

financing fleet improvements and efficient transport

solutions.

- In Leasing, NLB Lease&Go in Slovenia is targeting

lower-emission vehicles and an increased share

of battery electric and plug-in hybrid vehicles in its

passenger car portfolio.

- In Agriculture, the Group prioritises sustainable

agriculture financing and client engagement

for upstream corporates and individual farmers

while supporting data coverage improvements for

downstream processing, given current limitations in

emissions reporting.

· Portfolio Steering and Capital Allocation

– focused

financing activities in the key sectors based on the

targets, with a commitment to mobilise EUR 1.9 billion in

sustainable and transition financing by 2030.

Sector-specific key actions related to the targets,

progress of these actions, and achieved GHG

emissions reduction are further elaborated under

the chapter

Targets Related to Climate Change

Mitigation and Adaptation

Target coverage

at year-end 2025:

95%

of the NLB Group’s financed

emissions within priority

sectors, as defined by

the NZBA guidelines

242

Actions related

to the Operational

The Operational Emissions Net-Zero Strategy is fully

in line with the Paris Agreement (1,5°C limit) trajectory.

Methodologically, the Operational Emissions Strategy is

built on Green-House Gas Protocol and it incorporates

the NLB Group’s commitment to become Net-Zero by

2050, while fulfilling SBTi requirements. Also, relevant EU

legislation aimed to reduce the potential impact of GHG

emissions has been transferred into the principles and

assumptions of the NLB Group’s operational emission

model and reduction target setting.

Establishing operational

emission baseline

Even though the NLB Group started to report its

operational carbon footprint already in 2021 for the

period of 2019-2021, the Operational Emissions Net-

Zero Strategy has been harmonised with the Portfolio

Net-Zero Strategy and the baseline year is 2021. The

Strategy was prepared according to the internationally

recognized carbon footprint corporate reporting

standard, the Greenhouse Gas Protocol. The Corporate

standard (Corporate Accounting and Reporting

Standard) and Corporate Value Chain (Scope 3)

Accounting and Reporting Standard were used to

calculate the NLB Group’s carbon footprint. In creating

the approach for consolidating GHG emissions,

the NLB Group followed the accounting principles

and hence used the financial control approach in

terms of setting organisational boundaries.

The calculation of the operational emissions baseline

as a key step for developing and implementing the

Operational Net-Zero strategy was made using the

key principles, as introduced by the GHG Protocol:

relevance, completeness, consistency, transparency

and accuracy. To provide for the highest level of

adopting the key principles, a centralised approach

was used for data gathering and calculation, i.e. data

were gathered and calculated on the individual Group

47 Energy Performance in the Buildings Directive, Energy Efficiency Directive, National Energy and Climate Plan.

48 NLB Group’s operational emission measurements for 2021 do not yet include Scope 3 categories of water, waste and business travel, since at the time the data were insufficient, however it provides the trajectories until 2050.

Table presents NLB Group green financing commitments and achieved progress in 2025. The NLB Group classifies activities as green using the EU Taxonomy, NLB Green Bond Framework, MIGA performance standards and EBRD

performance requirements, where a transaction is considered green if it meets at least one of the criteria under these frameworks.

member level and reported to the corporate level,

where the total NLB Group GHG emissions

were calculated.

The Operational Emissions Net-Zero Strategy considers

full Scope 1 and Scope 2, and limited Scope 3, including:

48

· Category 1

(Purchased Goods and Services): use of

paper and water supply

· Category 5

(Waste Generated in Operations)

· Category 6

(Business Travel)

· Category 7

(Employee Commuting).

For details on the exclusion list with detailed

explanations of each Scope and Category please refer

to chapter

Gross Scopes 1, 2, 3 and Total GHG Emissions

Operational Emission Model

A fundamental prerequisite for developing and

implementing the Operational Net-Zero Strategy was

the establishment of the Operational Emission Model,

considering Paris Agreement 1,5°C trajectory, EU’s

climate change mitigation obligations, input data from

carbon footprint calculations, assumptions on the level

of each emission source and various already planned

emission reduction activities. The model provides a

tool to explore potential changes in the Net-Zero and

intermediate targets using potentially stricter emission

targets or requirements.

Figure 83:

Structure of the NLB Group Net-Zero Operational Emissions Model

Scope 3.6

Scope 3.7

Transport model

Electricity model

Refrigerants model

Vehicles model

Building model

Emissions model

Scope 1.1

Fuels

Scope 1.2

Pasenger vehicles - fuels

Special vehicles - fuels

Scope 1.3

Refrigerants

Scope 2.1

Electricity - El. vehicles

Electricity offices

Pasenger km

Pasenger km

Scope 2.2

Disctrict heating

Scope 3.1

Paper/Water

Scope 3.5

Waste

243

Key actions

Key actions that NLB Group undertook in 2025 in

different countries of operation to support objectives

stated in the Operational Emissions Net-Zero Strategy

are outlined in the table. Their goal is to contribute

to the reduction of operational emissions across the

Group’s own activities, as such they have the impact

mostly on employees and clients who use NLB Group

business premises. Below listed activities are ongoing

among NLB Group members as they contribute to our

goal of reducing GHG emissions from own operations.

Table 64:

Key energy efficiency and emission reduction measures 

Field of operation

Measure category

Activities in 2025 in the NLB Group

Electricity supply

Zero-emission electricity

procurement

In accordance with the accepted Net-Zero Operational Emission Strategy, the prepared Action plan stipulates zero-emissions electricity

supply as one of key enablers to become Net-Zero by 2050 or sooner. The consumption of electricity represents over 30% of the

contribution to the operational carbon footprint, when heating and cooling are added, this accounts for roughly 50% of all NLB Group GHG

operational emissions. For this reason, the NLB Group places a considerable focus on reducing the electricity consumption and ensuring

that production sources of purchased electricity are zero-emission where this is possible. In 2025, the NLB Group continued with the zero-

emission supply in Slovenia and Serbia and implemented such supply also in North Macedonia. Other countries will follow based on

market availability.

Renewable electricity

self-sufficient supply

NLB Group members continued monitoring market trends on electricity supply options (PPAs) to implement these options when

appropriate. They also installed solar power plants where possible according to technical capabilities of the facilities and the possibility

of obtaining the relevant approvals. In 2025, solar power plants continued with the production in Slovenia, whereas new installation was

done on the premises of NLB Banka, Banja Luka.

Space optimisation

Internal premises optimisation targets which were established within 2030 NLB Group Strategy, were continually monitored in order

in order to take decisions regarding different use, lending or selling the excessive premises.

Energy consumption

Energy efficiency

NLB Group continued to focus on the increase of energy efficiency to achieve targeted average annual consumption as defined

in the NLB Group Operational Emissions Net-Zero Strategy by activities such as:

· replacing facade windows/openings with more energy efficient solutions (NLB, NLB Komercijalna Banka, Beograd,

NLB Banka, Banja Luka, NLB Banka, Podgorica, NLB Banka, Skopje)

· where feasible, increasing the insulation on outside surfaces (NLB Banka, Podgorica)

· installing LED light fixtures and motion sensors (NLB, NLB Komercijalna Banka, Beograd, NLB Banka, Podgorica, NLB Banka, Skopje).

In 2025, a comprehensive review of real estate portfolio was conducted together with the optimisation of potential targets defined

through different strategic initiatives. In addition, a detailed digital real estate database (iNep) was updated with all NLB Group

properties, where various indicators of energy consumption, including calculation of CO

eq are visible. Such approach enables NLB to

conduct additional analysis and obtain information about facilities that need greater attention from the aspect of energy efficiency.

As a continuous multi-year activity, the Group has maintained its established protocols for the full

or partial shutdown of night-time lighting and illuminated signage on its premises. 

Where possible and economically justifiable, the NLB Group members install Building Management Systems

and Centralised control and Monitoring Systems; in 2025 these were implemented in NLB.

Heating & cooling

During 2025 fossil fuel heating was replaced with heat pumps heating on locations where possible.

The Group maintained and monitored the established protocols on recommended heating and cooling temperatures. Also, the Group

reduced the use of ventilation/heating in facilities and, where it is technically possible, increased the percentage of waste air recovery,

and continued to install external blinds.

Resources use

Water

When renovating buildings, we look into the possibility to install faucets with water flow sensors, as well as toilet kettles with the option

of flushing different amounts of water. In 2025, the Group members regularly monitored the water infrastructure and fixed promptly any

identified malfunctions.

Paper

The Paperless Project continued throughout 2025. For further information refer to the section

Paper use reduction

Waste

The Group continued to strive to separate all waste according to various materials, mainly paper, plastic, organic substances and glass,

which are removed by local utility companies. Hazardous waste, construction waste and waste electronics were also sorted and disposed

of in appropriate containers or delivered to an authorised disposal site. At some locations we also compress certain types of waste

ourselves, which reduces the need for transportation to disposal sites.

Sustainable Mobility

Fleet

The Group continued to replace the fossil-fueled fleet with hybrid, plug-in hybrid and electric vehicles, and installed several charging

stations for electric vehicles. For further information please refer to the section

Sustainable mobility

Behavioural changes

Waste & Water

Some NLB Group members conducted awareness activities among employees on waste separation and on how to reduce the use of

resources.

Employee’s commute

Several NLB Group members have provided employees with option to work from home and continued with this practice in 2025. For further

information please refer to the chapter

Work - life balance

Sustainable lifestyle

Some NLB Group members utilised special days such as the international Earth Day, and the Sustainability Day, and organised special

activities, workshops, online sessions to raise awareness of employees on various sustainability topics.

244

Sustainable mobility

NLB Group adopted the umbrella NLB Group

Sustainable Car Fleet Management and Company

Car Policy already in 2022. The policy is followed by the

NLB Group members in all countries of operation with

the aim to replace the fossil-powered fleet vehicles with

alternative-powered vehicles according to the plan and

in alignment with the possibilities and planned costs of

the vehicle replacement.

NLB Group’s Operational Emissions Net-Zero Strategy

assumes that the replacement of fossil-powered fleet

vehicles with alternative-powered vehicles will take

place in all NLB Group members in the four-year cycles.

The first replacement cycle took place in 2023/2024;

the second cycle started in 2025 and will last until

2029. The first important milestone for the NLB Group’s

fleet has been met as planned, with the exception of

NLB Banka, Prishtina and the newly affiliated Summit

Leasing Slovenija, Ljubljana (merged to NLB Lease&Go,

Ljubljana in 2025) and Mobil Leasing, Zagreb, as these

companies were not included in the initial plan for 2025.

In the period 2026–2030, the transition to alternative-

powered vehicles is planned for the fleet of the newly

affiliated members. The remaining ICE vehicles are

expected to be replaced in 2026/2027. The main GHG

emission reduction measure remains to be vehicle

fleet modernisation with an increased share of battery

electric vehicles (BEV).

Key actions in electrification of the fleet in the period

2023-2026:

· Efficient vehicle use:

- raising environmental awareness of drivers and ECO

driving mode,

- respecting speed limits,

- careful selection of company car fleet between BEV,

PHEV, and HEV based on Total Rental Costs (TRC), 

- supporting the change in the mindset of company car

users, 

- FMO (Fleet Management Office) will follow new

technologies to ensure a smooth transition, 

· Use of electric energy obtained from RES (Renewable

Energy Sources)

to support own company car

charging network. 

· Limitation of the electric car range risk

(selection of

cars based on demand and real range). 

· Efficient Charging Infrastructure

(higher capacity

batteries and efficient and faster charging will

contribute to better BEV range and usability). 

Paper use reduction

NLB Group is encouraging the reduction of paper use

while enhancing the digitalisation of its operations,

including digital banking digitising services and client

documents, as well as automating and streamlining

internal processes across the NLB Group. The Paperless

Collaboration Project was initiated in 2020 and ended

in 2024. But the mission of printing less continues within

everyday business in all NLB banking members. The

objective was to achieve a 50% reduction in paper

prints by the end of 2025 (compared to 2019) through

the elimination of paper use wherever possible,

supported by optimised digital processes and tools.

The NLB Group achieved a 53.8% reduction, thereby

exceeding the set target.  

In 2025, the largest decline was achieved in

NLB Banka, Banja Luka, lowering prints by 24%.

Among all banks in the Group, NLB Komercijalna Banka,

Beograd, has the largest share in paper usage (46%)

and the biggest environmental impact, as it reduced

printing by over 4 million pages (14% prints

less than in 2024). However, not all NLB Group

banking members recorded a negative trend in

paper consumption in 2025 due to strong sales

growth and limited or unavailable options for using

electronic signature. All in all, the NLB Group achieved

a 12% decline in prints in 2025 compared with the

previous year.  

Figure 84:

Paper consumption (prints) in NLB Group banking members (in thousand) 

Table 65:

NLB Group’s fleet breakdown by share of vehicle type

Realisation

Vehicle type

Plug-in Hybrid (PHEV)

Hybrid (HEV)

58%

50%

37%

Battery electric vehicle (BEV)

28%

23%

Internal combustion engine vehicle (ICE)

64%

(i) Summit Leasing Slovenia and Mobil Leasing, Zagreb were not included in the 2025 plan but are part of Realisation Status. The plan is adjusted in line

with implementation progress, fleet size, and market conditions. As a result, the 2025 report reflects updated planned figures that were published in the

2024 report (16% for PHEV and 26% for BEV). Transition to alternative-powered vehicles in these new members will start in 2026.

53.8%

-17%

-18%

-7%

-12%

130,685

119,272

108,450

89,841

73,433

68,448

60,388

2019

2020

245

E1-4

Targets related to climate change mitigation and adaptation

Financed emissions, falling under GHG Protocol Scope 3

Category 15, account for 99.3% of total emissions within

the NLB Group, making them the primary focus of our

emissions reduction targets. This approach highlights

the pivotal role of portfolio emissions in achieving the

NLB Group’s long-term climate goals.

The NLB Group uses science-based scenario pathways

to limit global warming to 1.5°C, and does not rely on

offsets when meeting its 2030 sector targets.

Instead,

the Group focuses on monitoring industry standards

for offsets as they evolve. Targets, developed under

internal risk supervision and executive approval, are

aligned with NZBA guidance and will be reviewed

every five years to remain consistent with international

agreements and national goals.

The NLB Group’s Net-Zero Portfolio Strategy, which

covers financed emissions (Scope 3, Category 15),

addresses lending activities that include clients’ Scope 1

and Scope 2 emissions. Initial emission reduction targets

were set in 2023, focusing on the identified priority

sectors under the established baseline, including high-

emission industries and key areas of financial exposure,

as detailed in the chapter

Levers, Actions and Resources

Related to Climate Change Mitigation and Adaptation

where prioritisation is explained.

With the second round of

target-setting,

the NLB

Group has applied a broader lens to target-setting

metrics, exploring a range of target types beyond

emission-based targets alone. For certain sectors, data

limitations, heterogeneity of activities, or methodological

inconsistencies make emissions metrics insufficient,

and their non-use has been duly justified. Instead, a

combination of target types tailored to each segment’s

maturity and exposure profile has been developed,

in line with the NZBA guidance. The second round

targets include emission-based targets aligned with

sectoral decarbonisation trajectories, quantitative

financing targets to support credible transition plans

and low-carbon activities, and client engagement targets

supported by structured assessments and data collection.

Sector 

Round

Metrics / KPIs

Coverage

Power

Generation

Emission-based target

Round 1

Emission Intensity

in tCO

eq/MWh

Emission-based target

Round 1

Emission Intensity

in tCO

eq/t steel

Commercial

Real Estate

Financing target

Round 1

Share of new production

in most energy efficient

commercial buildings

(<50 kgCO

/m²)

Emission-based

monitoring

Round 1 and 2

EPC based Emission

Intensity in kgCO

/m²

Residential

Real Estate

Financing targets

Round 1 and 2

Share of new production

in top-rated mortgages

(A&B EPC class)

Emission-based

monitoring

EPC based Emission

Intensity in kgCO

/m²

Road Freight

Round 2

Physical intensity

gCO

eq/tkm

Client engagement

target

Round 2

Share of clients engaged

Leasing

(Passenger Cars)

Round 2

Physical Intensity

gCO

eq/km

NLB Lease&Go,

Financing target

Round 2

Share of BEV/

PHEV financing

Agriculture

Client engagement

target

Round 2

Share of clients engaged

NLB, Ljubljana &

NLB KB, Beograd

Mio EUR of new

production

NLB, Ljubljana &

NLB KB, Beograd

(i) Note to emission-based monitoring: NLB actively monitors portfolio performance in Slovenia instead of setting formal emission targets, due to

dependence on regulatory, infrastructure, and stakeholder factors beyond NLB’s control.

(ii) The targets pertain either to an individual NLB Group member or to multiple members. Where the term ‘NLB Group’ is used, the scope explicitly

encompasses all banking members.

(iii) The metrics for the share of new mortgages in the highest energy-efficiency class are defined for all banks in the NLB Group, except forNLB Banka,

Prishtina, and NLB Banka, Podgorica, and are detailed in the the chapter

Financial targets

Table 66:

Overview of targets and monitoring activities related to climate change mitigation and adaptation

246

For residential and commercial real estate NLB actively

monitors portfolio performance in Slovenia instead of

setting formal emission targets, due to dependence

on regulatory, infrastructure, and stakeholder factors

beyond NLB’s control.

The effectiveness of the transition plan is regularly

monitored and reported through the Group’s

governance bodies, with further details provided

Transition Plan Governance

This approach lays the groundwork for transition

planning, going beyond NZBA Guidance. The

NLB Group has structured its transition planning

to proactively address the regulatory expectations,

embedding transition considerations at the core of

its banking activities. Through integrated exposure

mapping, sector-specific decarbonisation pathways,

and client-level strategies, this work strengthens

both regulatory alignment and the Group’s internal

steering capacity.

However, significant gaps remain in Scope 3 data quality,

particularly for small and medium-sized enterprises in

the SEE region. The NLB Group is committed to:

· Encouraging client participation

in GHG accounting

and reporting

· Enhancing proxy calculation

methodologies through

collaboration with leading data providers

· Continuously refining target-setting

approaches to align with international

best practices

For carbon-intensive sectors with limited exposure,

where targets could not be set, the NLB Group has

established a set of

origination guidelines

presented in

table 67, to ensure that ambition is aligned with business

reality. Grounded in leading market practices and

tailored to sector-specific dynamics, these guidelines are

designed with operational feasibility in mind. They

provide a structured framework for engaging clients on

transition topics while identifying financing opportunities

aligned with the Group’s strategic objectives.

Table 67:

Overview of origination guidelines

Sector

Round

Metrics / KPIs

Coverage

Oil & Gas

Origination

Guidelines

Based on client reduction of absolute GHG emissions

Cement

Based on client emission intensity

(kgCO

eq/ton Cement)

Aluminium

Based on emission intensity (tCO

eq/ton Aluminium)

247

GHG emissions reduction targets

Table 68:

Emission-Based Targets of Net-Zero Portfolio Strategy

Sector

Details

GHG Baseline

Performance

GHG 2030 Targets

Scope(s)

included

Scenario

used

Unit of

measurement

Baseline

Year

Baseline

FY 2024

FY 2025

YoY Change

2030 Target

Relative to

baseline

Power Generation

1 and 2

IEA NZE

tCO

eq/Mwh

0.232

0.188

0.169

0.165

-29%

1 and 2

IEA NZE

tCO

eq/t

0.600

0.827

0.880

1.07

Road Freight Corporates

NECP OU

gCO

eq/tkm

54.5

Set in Round 2, subject

to future monitoring

49.5

Leasing Passenger Cars

NECP DU

gCO

eq/km

150.8

130

-14%

Lease&Go,

Commercial Real Estate

1 and 2

IEA NZE,

SBTi

kgCO

/m²

77.6

69.7

69.7

NLB,

Residential Real Estate

1 and 2

IEA NZE,

SBTi

kgCO

/m²

37.1

37.8

36.8

NLB,

(i) NLB is actively reporting on its efforts within its Commercial and Residential Real Estate portfolio in Slovenia, supporting clients in improving the energy performance of their properties through targeted financing solutions. Clear metrics

are integrated into the Group’s reporting to demonstrate its commitment to decarbonising the real estate sector while transparently tracking progress toward the Net-Zero objectives. Emission intensity reductions of 14% in Residential Real

Estate and 53% in Commercial Real Estate were achieved under the balance sheet approach, but in Round 2, the baselines were remodelled using a portfolio-weighted methodology.

Notes:

a) NLB continues its commitment to coal exclusion introduced in 2021, with the existing exposure to be phased out.

b) Majority of exposure is covered by clients’ decarbonization plans. The increase in intensity stems from missing clients’ Scope 2 data in the baseline but remains below the pathway scenario and 2030 target, ensuring alignment with

decarbonization goals.

c) National Energy and Climate Plans do not exist outside the EU, and there are inconsistencies in Energy Performance Certificate (EPC) methodologies within the region. Despite these challenges, NLB is committed to financing at least

30% of new production in the most energy-efficient commercial buildings (<50 kgCO₂/m²) and at least 15% of new production in top-rated mortgages (A & B EPC class) in Slovenia by 2030.

d) Emission intensity targets are set as gross targets, A location-based approach is used for portfolio monitoring, ensuring transparency and consistency in tracking progress. Compared to the market-based method, which reflects

emissions from electricity that companies have purposefully chosen, the location-based approach accounts for the average emissions intensity of the grid where consumption occurs.

e) NLB intends to forgo the utilisation of offsets to achieve its 2030 sectoral targets. Instead, NLB will monitor and contribute to the development of industry standards for offsets as they emerge. NLB will also engage with its clients to

encourage them to formulate their own Net-Zero strategies, which may involve utilising carbon credits to offset residual emissions in accordance with scientific guidance.

Target science-

based alignment

and methodology

For the second consecutive year since the disclosure

of our first-round targets, the NLB Group is reporting

on its progress for for 2024 and 2025. The progress

against the second-round targets, established in 2025,

will be reported for the first time in the 2026 year-end

report. Due to the reliance on publicly reported emission

data from clients, required for the calculation of sector

emission intensity, reporting on emission profiles is

based on a one-year lag, in comparison to the financial

reporting timeline.

Effective data collection and stakeholder engagement

are essential for setting emission intensity targets and

monitoring progress. Data gathering plays a crucial

role in ensuring the accuracy and relevance of targets,

requiring direct engagement with stakeholders. Scope

1 and 2 emissions data were collected from various

sources, including annual disclosures, publicly available

information, direct communication with relevant

stakeholders, and collections of Energy Performance

Certificates (EPC) for individual properties in the

Residential Real Estate (RRE) and Commercial Real

Estate (CRE) sectors. This comprehensive data collection

process ensures that the targets reflect an accurate and

thorough understanding of emissions across key sectors.

Annual progress reports will track performance, and the

NLB Group is enhancing the internal systems for target

monitoring and tracking. Individual sectoral specifics,

such as scenario selection and specific decarbonisation

levers, are further detailed in the sectoral breakdown,

providing a comprehensive explanation of the

approaches to emission reductions within each sector.

Power generation target

The NLB Group has set the target for its Power

Generation portfolio on the Group level, guided by the

IEA NZE WEO 22 pathway. In the NZE 2050 scenario,

global power generation reaches Net-Zero emissions

by 2040, enabling the global economy to meet its 2050

target. The scenario envisions an average energy

efficiency of 0.005 tCO

eq/MWh across our power

generation portfolio by 2050 and interim target of 0.165

tCO

eq/MWh by 2030. This target builds on the Group’s

2021 commitment to exclude coal financing and phase

out existing coal exposures.

In FY2025, NLB Group reduced the emission intensity

of its power generation portfolio to 0.169 tCO₂eq/MWh,

down from 0.188 tCO₂eq/MWh in FY2024, representing

a 10% reduction. In the Power segment, carbon

intensity slightly decreased year-on-year, mainly due

to reduced exposure to higher-emitting counterparties.

Some exposure remains with a mixed-activity utility,

of which only electricity generation is included in Net-

Zero alignment. Additionally, certain counterparties

lack sufficient emissions data. While largely linked to

renewable projects, these cannot be fully reflected in the

intensity calculation.

248

Figure 85:

Power Generation Emission Intensity in tCO

eq/MWh

The NLB Group will achieve its Net-Zero target

through ongoing client engagement, incentivising the

development and implementation of decarbonization

plans, including expanding renewable energy capacity,

decommissioning fossil-based power production, and

upgrading renewable energy plants for improved

efficiency. With significant exposure to renewable

energy, the Group has committed to further boosting this

carbon-neutral sector through targeted financing.

Achieving this target will require support from EU

and national-level incentives to develop renewable

energy production facilities, including funding for such

projects. Despite the NLB Group’s significant exposure to

renewable energy, progress will be contingent on these

external incentives.

Iron & steel target

The NLB Group’s target scenario for its Iron & Steel

portfolio follows the IEA NZE 1.5°C pathway, aligned with

global Net-Zero data from IEA scenarios. This scenario

aims for an average energy efficiency of 0.108 tCO

eq/t

steel by 2050, with an interim target of 1.070 tCO

eq/t

steel by 2030, set at the Group level. NLB Group’s

2021 baseline stands at 0.600 tCO

eq/t steel, already

significantly below the 2030 target.

The steel industry can achieve Net-Zero targets by

adopting low-emission technologies, using low-carbon

feedstock, and advancing existing decarbonization

plans. The key actions include supporting clients using

low-emission technologies (e.g., Electric Arc Furnaces)

49 JRC Publications Repository - Greenhouse gas intensities of the EU steel industry and its trading partners

and ensuring clients with decarbonization commitments

to implement their plans. Additionally, decarbonizing the

regional industrial energy mix and establishing carbon

capture and storage networks will be essential for

enabling steel producers to meet Net-Zero targets.

Figure 86:

Iron & steel Emission Intensity in tCO

eq/t steel

In FY2025, the Iron & Steel portfolio recorded an

emission intensity of 0.880 tCO₂eq/t, compared to

0.827 tCO₂eq/t in FY2024, representing a 6% increase

YoY. Overall exposure remained largely unchanged,

with small variations across individual facilities. Updated

ESG data were incorporated for most clients, resulting

in some reductions in intensity while others increased.

These results highlight the sensitivity of the portfolio

to individual high-intensity clients and the importance

of ongoing monitoring and data collection.

The NLB Group’s exposure is largely to the clients

already progressing in their decarbonization efforts.

Most of our existing clients produce steel with the

Electric Arc Furnace (EAF) route using scrap steel,

resulting in a current sector portfolio intensity well

below the European average of 1.81 tCO

eq/t for

integrated steel production, as reported in the JRC

Technical Report on Greenhouse Gas Intensities of the

EU Steel Industry

For less advanced clients, the NLB Group aims to

understand their current carbon intensity and strategic

targets for 2030 and beyond, acting as a strategic

partner. Moving forward, the NLB Group aims to

facilitate the transition of integrated steel producers

to the scrap route based on credible client transition

plans. While this may lead to a temporary increase in

portfolio emissions, it will have a significant medium-

to long-term environmental impact, contributing to the

decarbonization of production processes.

Road freight corporate target

The NLB Group is advancing the decarbonisation of

its Road Freight Transport portfolio through a focused

approach centred on client engagement and portfolio

coverage. The Group has established both a physical

intensity target and a portfolio coverage target for the

road freight corporate segment, which was prioritised

within corporate exposures due to its climate materiality

and relative homogeneity.

These targets cover clients accounting for 63% of the

segment’s total exposure, providing a solid foundation

for monitoring the progress and supporting the sector’s

transition toward lower emissions. The scope of

coverage includes all NLB Group banking members, as

well as NLB Lease&Go.

For clients with exposures above EUR 1 million, an

emission-based target has been set, covering 47% of the

segment. This target is expressed in physical intensity,

measured in grams of CO₂ equivalent per ton-kilometre

(gCO₂eq/tkm), aligning with the standard activity metric

in freight transport to capture the emission efficiency of

transported goods.

The target trajectory is anchored with the existing

measures (OU) according to the scenario set forth in the

Slovenian National Energy and Climate Plan, reflecting

the current technological availability and the pace of

decarbonisation within the sector while recognising the

operational realities of clients across the NLB Group’s

geographies.

From a 2023 baseline of 54.5 gCO₂eq/tkm, calculated

using a combination of direct client data and

estimations, the target is set at 49.5 gCO₂eq/tkm by

2030, representing a reduction of 9.2% acrsoss the

covered portfolio. The sector’s emission intensity will

be disclosed annually against the preset pathway with

the 2030 target serving as an intermediate milestone

towards the wider 2050 Net-Zero ambition.

Decarbonization Pathway IEA NZE WEO 22

2025 Status

2030 Target

0.495

0.395

0.295

0.195

0.095

-0.005

2030

2035

2040

2045

2050

0.232

0.188

0.169

0.165

2024-2025

Decarbonization Pathway IEA NZE 1,5

2025 Status

1.2

0.8

0.6

2030

2035

2040

2045

2050

0.827

0.880

1,070

+6%

2024-2025

249

The implementation of this target relies on structured

client engagement to gather high-quality operational

data and to facilitate discussions on financing the

investments necessary for transitioning to lower

emission intensity fleets.

This approach is further supported by the origination

guidelines that foster engagement and financing

opportunities while maintaining a “no data, no deal”

principle and ensuring alignment with decarbonisation

objectives consistent with the regional Network for

Greening the Financial System (NGFS) aligned pathways.

Figure 87:

Road Freight physical intensity (gCO

eq/tkm)

Passenger vehicle leasing target

NLB Lease&Go Ljubljana has set emission-based and

financing targets for its Passenger Car Leasing portfolio,

covering 76% of the leasing segment’s exposure in

Slovenia. This high level portfolio coverage reflects NLB’s

commitment to supporting the climate transition while

responsibly managing transition risks and capturing

financing opportunities within its leasing operations.

The emission physical intensity target is set at 130

gCO₂eq/km under the WLTP (regulatory norm) by 2030,

representing a 13.5% reduction from the 2023 baseline

of 150.8 gCO₂eq/km. The sector emission intensity will

disclosed annually against the preset pathway with

the 2030 target serving as an intermediate milestone

toward the wider 2050 Net-Zero ambition.

The target trajectory is anchored in the “with additional

measures” (DU) scenario from the Slovenia’s National

Energy and Climate Plan, reflecting the advanced state

of decarbonisation technologies within the passenger

vehicle sector, the high concentration of the leasing

portfolio in Slovenia, and the NLB’s ability to influence

the decarbonisation pathway within this segment.

The WLTP metric (Worldwide Harmonized Light

Vehicles Test Procedure), while slightly underestimating

real-world emissions, offers the advantage of being

a regulatory standard available for all new vehicles,

ensuring consistency in measurement and disclosure

while aligning with portfolio alignment best practices.

The emission physical intensity target is supplemented

by the financing target set to increase the share of

exposure of low-carbon vehicles (battery electric

vehicles or plug-in hybrid electric vehicles) within the

leasing portfolio of passenger cars as further explained

in chapter Financing targets.

This reflects the growing role of hybrid and electric

vehicle technologies in the transition towards lower

emission mobility, with mild hybrids (MHEVs), full

hybrids (HEVs), PHEVs, and BEVs each contributing

to reductions in emission intensity, supporting

a structured progression towards the 2030

decarbonisation objectives. Implementation of these

targets will be underpinned by the development of

targeted financing solutions, and the integration of

climate considerations into product development and

commercial strategies.

Through this focused and pragmatic approach,

NLB Lease&Go, Ljubljana aims to drive meaningful

emission reductions within its passenger car leasing

portfolio while maintaining alignment with Net-Zero

commitments, NZBA guidance and supporting the

broader decarbonisation of mobility within the region.

Figure 88:

Passenger cars physical intensity (gCO

eq/km)

Commercial Real Estate emission

intensity monitoring

NLB has remodelled its Commercial Real Estate

Portfolio Monitoring Framework to align with Net-Zero

commitments and integrate climate considerations. NLB

also replaced the previous Balance Sheet Approach

with the Portfolio Weight Approach for baseline and

benchmark calculations, ensuring accurate accounting of

emissions and surface areas across ownership structures,

and applied this methodology to the Commercial Real

Estate perimeter, defined as classical CRE activities

covered under NACE 68.1 (buying and selling of own real

estate) and NACE 68.2 (renting and operating of own

or leased real estate). Emission intensity is calculated

using a weighted average of CO₂ emissions from multiple

collaterals, prioritising the official EPC data. The portfolio

baseline reflects each exposure’s relative share, and

decarbonisation trajectories follow the 1.5°C SBTi Retail

Shopping Mall pathway, ensuring consistency with

available data and portfolio characteristics.

This scenario envisions an average energy efficiency

of 0.4 kgCO

/m² across our CRE portfolio by 2050

with an interim benchmark of 35.6 kgCO

/m² by 2030.

This science-based pathway is established for NLB in

Slovenia, where sufficient official EPC data allows for a

robust baseline and target setting. The national green

transition targets in Slovenia, supported by legislation,

further reinforce this objective.

To meet the benchmark, NLB will focus on financing

the construction of commercial buildings with the

NECP - Scenario OU (with existing measures)

60

50

40

2030

2040

2050

54.5

49.5

53.4

NECP - DU Scenario

WLTP adjusted NECP DU Scenario

250

200

150

100

2040

2050

130

163

195

155

151

Figure 89:

Commercial Real Estate Emission Intensity in kgCO

/m²

Portfolio carbon intensity on a 1.5

C SBTi trayectory

Reference - Retail - Shoping Center carbon intensity local scenario

C CRREM

Reference - Sector carbon intensity local scenario 1.50C SBTi

150

125

100

75

2035

2040

2045

2050

69.7

77.6

2024-2025

69.7

250

best energy performance certificates and promote

green loans for retrofitting and renovating the existing

commercial properties to enhance energy efficiency,

including the installation of heat pumps.

In FY2025, the Commercial Real Estate sector recorded

an emission intensity of 69.7 kgCO₂/m², unchanged from

FY2024, representing a 10.2% reduction compared to

the 2023 baseline of 77.6 kgCO₂/m². The year-on-year

stability reflects the overall composition of the portfolio

and the continued integration of updated ESG data,

alongside ongoing monitoring of portfolio intensity and

further refinement of data quality and coverage. The

result was also influenced by a single higher-intensity

exposure; the respective counterparty has established a

transition plan aimed at reducing carbon intensity to the

targeted level by 2030.

The relatively small size of the Commercial Real Estate

portfolio means that individual transactions can have

a significant effect on the overall portfolio intensity. In

addition, the 10-year validity of EPCs in Slovenia does

not capture passive decarbonization or efficiency

improvements implemented by property owners. The

transition from calculated to metered EPCs for commercial

premises may also pose challenges, as metered EPCs

reflect total energy consumption at metering points, while

calculated EPCs only cover key building systems defined

by the EPC methodology. Market demand for highly

energy-efficient buildings remains moderate, due to

higher construction costs that are not always recoverable

from tenants. Nevertheless, NLB is committed to

decarbonising the Commercial Real Estate sector, with a

target of directing at least 30% of new production volume

in Slovenia toward highly energy-efficient buildings (<50

kgCO₂/m²) by 2030. Progress against this target is further

detailed in the chapter

Financing Targets

Residential Real Estate emission

intensity monitoring

For Residential Real Estate, NLB replaced the former

balance sheet approach with the Portfolio Weight

Approach to calculate baselines and targets, accurately

capturing emissions and surface areas across the

portfolio. CO₂ emissions are weighted across multiple

collaterals, prioritising EPC data where available.

Benchmark trajectories follow the 1.5°C SBTi Residential

Multi-family pathway, ensuring alignment with portfolio

characteristics and supporting the NLB’s Net-Zero

commitments. This scenario envisions an average

energy efficiency of 0.4 kgCO₂/m² across the mortgage

portfolio by 2050, with an interim benchmark of 17.2

kgCO₂/m² by 2030. While no formal emissions-based

target has been set, NLB continues to monitor the

emissions performance of its RRE portfolio. In FY2025,

the mortgage portfolio recorded an emission intensity of

36.8 kgCO₂/m², representing a 3% decrease compared

with the FY2024 result of 37.8 kgCO₂/m², reflecting strong

performance in the financing of new production within

top-rated mortgages (EPC classes A and B).

As with Commercial Real Estate, the interim science-

based benchmark is set only for NLB, as Slovenia is

the only market with sufficient official EPC data to

establish a robust baseline. Additionally, as part of

the EU, Slovenia has national green transition targets

supported by the legislation.

Figure 90:

Residential Real Estate Emission Intensity in kgCO

The NLB Group is strengthening its contribution to the

decarbonization of the residential housing sector by

increasing its focus on energy-efficient housing finance

and enhancing data transparency across its Residential

Real Estate portfolio.

To build a robust foundation for transition planning, the

NLB Group is implementing a structured EPC collection

process across its subsidiaries where permitted by local

regulations. This approach strengthens the NLB’s insight

into the energy performance of its housing portfolio,

while maintaining flexibility in markets where the EPC

issuance timelines may vary. The regulatory context for

EPCs continues to evolve, and practices will be gradually

adapted in markets outside the European Union to

reflect differing stages of market maturity.

Given the diversity of EPC regulatory frameworks and

portfolio baselines across its markets, the NLB Group

is prioritising financing targets over physical emission

intensity targets for residential real estate at this stage.

In Slovenia, NLB has increased its financing target for

top-rated mortgages (EPC class A & B), advancing its

commitment to supporting the transition of the housing

stock while aligning with national climate goals. Beyond

Slovenia, financing targets have been established in four

additional markets, reflecting each subsidiary’s capacity

to promote energy-efficient housing and leveraging

verified EPC data to ensure a balanced yet ambitious

approach. The targets and progress are further explained

Financing Targets

Portfolio assessment continues to face challenges

due to differing EPC methodologies across the region

and factors such as the 10-year EPC validity period in

Slovenia, which does not reflect passive decarbonization

or homeowner-led improvements. For properties

without EPCs, emission intensity is modelled using

collateral data, while the availability of official EPC data

varies significantly across the Group’s subsidiaries.

NLB promotes an inclusive approach to energy

efficiency, ensuring financing is accessible to all

homeowners while offering more favorable conditions

for properties with EPC class A or B, or primary energy

consumption below 67.5 kWh/m². NLB continues to

develop innovative products, services, and partnerships

to support energy-efficient housing, recognising

that systemic progress also depends on regulatory

frameworks, subsidies, grid decarbonization, and

homeowner engagement.

However, systemic change is essential, including

stronger government policies, enhanced subsidies,

and a faster transition to renewable energy. While NLB

continues to develop innovative financial solutions

to support modernisation, achieving climate goals

ultimately depends on grid decarbonization, regulatory

action, and active homeowner participation.

Portfolio carbon intensity on a 1.5

C SBTi trajectory

Reference - Sector carbon intensity local scenario 1.5

C SBT

Reference - Residental Multi Family carbon

intensity local scenario 2

C CRREM

40

2035

2045

37.1

37.8

2024-2025

251

Financing targets

The NLB Group has committed a total of EUR 1.9

billion to transition financing by 2030,

with the pledge

divided between Retail Banking and Corporate and

Investment Banking Green Transition Financing, focusing

on renewable energy, sustainable infrastructure, and

energy efficiency projects. In addition, the

NLB has

committed to financing at least 30% of new loan

production in the most energy-efficient commercial

buildings

(<50 kgCO₂/m²).

At the same time, the Group is supporting new loan

production in top-rated residential mortgages (EPC

class A & B) across the key markets, where allowed

by the regulatory context and market maturity, with

the targets set at 12% for NLB Komercijalna Banka,

Beograd, 10% for NLB Banka, Banja Luka, 5% for NLB

Banka, Sarajevo, 6% for NLB Banka, Skopje and 20% for

NLB, where the ambition was raised from the initial 15%

based on the solid interim progress.

As part of the 2

nd

of the Net-Zero Portfolio strategy, NLB

Lease&Go has set a new target to reach a 12% share of

exposure to battery electric and plug-in hybrid vehicles

(BEV/PHEV) in its leasing passenger vehicle portfolio by

2030, supporting clean transportation. The Group has

also committed EUR 75 million to financing farmers and

upstream agricultural corporates in Slovenia and Serbia,

under a Sustainable Agriculture Framework that is

currently being developed, further supporting sustainable

agriculture and low-carbon transition in the region based

on to-be-developed sustainable agriculture framework.

The Group monitors the progress against the financial

targets quarterly, with planned annual public disclosures

against the set of commitments, presented in Table 69.

Table 69 presents NLB Group green financing commitments and

achieved progress in 2025. The NLB Group classifies activities as

green using the EU Taxonomy, NLB Green Bond Framework, MIGA

performance standards and EBRD performance requirements, where

a transaction is considered green if it meets at least one of the criteria

under these frameworks.

Table 69:

Green Financing Commitments and Progress (outstanding stock volume), in EUR thousands

Segment

Relative

to Target

and Investment

Banking

Green Transition

Financing

Renewable

Energy Projects

Solar, wind, hydro, geothermal,

bioenergy, and related infrastructure

1,370,000

953,815

70%

Green Building

Financing

EPC A, NZEB, LEED Gold,

BREEAM Excellent

Energy Efficiency

Projects

Manufacturing of batteries,

electric heat pumps, and other

energy-efficient technologies

Clean

Transportation

Projects

Rail and low-carbon transport

infrastructure

Pollution

Prevention and

Water Treatment

Pollution prevention and water

treatment projects

Sustainable Water

and Wastewater

Projects focused on sustainable water

and wastewater management

Retail Banking

Green Transition

Financing

Renewable

Energy Financing

Solar power plants

528,000

591,587

112%

Green Building

Financing of energy-efficient buildings

(EPC A & B, where available). Target:

15% of new production in A & B EPC

class by 2030

Energy Efficiency

Energy renovations and installation

of energy-efficient equipment

(e.g., heat pumps, lights)

Clean

Transportation

Zero-emission vehicles powered

by electricity (cars and light

commercial vehicles)

Total Green

1,900,000

1,545,402

81%

Commitment

to Finance

Energy-Efficient

buildings

Share of financing of new production

in most energy efficient commercial

buildings (<50 kgCO

/m²)

82%

Commitment

to Finance

Energy-Efficient

Mortgages

Share of financing of new

production in top-rated

mortgages (A & B EPC class)

210%

NLB KB,

Targets set in FY

2025, subject to

future monitoring

Sarajevo

Target Share

of Low-Carbon

Vehicles in

Leasing Portfolio

Share of BEV/PHEV vehicles in Leasing

passenger vehicle fleet by 2030

Lease&Go,

Financing for farmers and upstream agricultural

corporates in Slovenia and Serbia, aligned with

the NLB Sustainable Agriculture Framework

75,000

(i) The total financing target of the green transition is the same as disclosed in the Sustainable Financing section. This table presents it in more detail,

specifically by activities.

252

By the end of 2025, the NLB Group achieved EUR 1,545

million, or 81%, of its total EUR 1.9 billion commitment

in green financing by 2030. This includes EUR

954 million (70%) of the EUR 1.37 billion target for

Corporate and Investment Banking. Retail Banking

has achieved its target of EUR 528 million by reaching

EUR 592 million (112%), exceeding expectations.

In 2025, NLB continued to promote energy-efficient

buildings through its lending activities. In the commercial

real estate segment, 24% of newly approved loans

were allocated to the most energy-efficient commercial

buildings (<50 kgCO₂/m²), below the annual target. The

result was largely impacted by a single higher-intensity

transaction, which has a defined transition plan to

reduce carbon intensity to the targeted level by 2030.

In the retail real estate (RRE) segment, 42% of new

mortgage loans in Slovenia were classified in the

highest energy performance classes (A and B energy

performance certificates), exceeding the annual

ambition of 20% reflecting strong momentum in energy-

efficient lending.

Client engagement targets

The NLB Group recognises that robust client

engagement is essential for improving data quality,

supporting client transition readiness, and advancing

portfolio decarbonisation within its Net-Zero

commitments. While acknowledging that achieving

meaningful progress depends not only on its own

commitments but also on the climate maturity and

readiness of its clients.

Across many sectors, particularly in agriculture, road

freight transport, and downstream processing, client

maturity on climate topics remains limited, with low

awareness of decarbonisation pathways, scarce

emissions reporting, and minimal target-setting to

date. Initial pilot engagements, such as the climate

questionnaire submitted to selected clients in 2025,

confirmed these limitations, revealing a low disclosure

of operational and emission data, and a limited

integration of climate-related considerations into

business strategies. These maturity gaps present

challenges for setting meaningful, steerable

emissions targets across parts of the portfolio,

as the current baselines often rely on proxies

and incomplete data.

Table 70:

Overview of client engagement targets

Sector / Segment

Target description

Share of clients, exposure and timeframe for NLB Group to increase its engagement

with clients (by using questionnaire and structured dialogue)

Road Freight

100% of clients with > 1 EUR million exposure by 2027

100% of new clients with > 500 thousand EUR exposure from 2026

50% of clients with > 500 thousand EUR exposure by 2030

Individual

Farmers

100% of clients with > 100 thousand EUR exposure by 2028

100% of new clients with > 100 thousand EUR exposure from 2026

100% of clients with > 1 EUR million exposure by 2028

100% of new clients with > 1 EUR million exposure from 2026

Despite these constraints, the NLB Group remains

committed to supporting its clients in building

climate maturity through structured engagement, a

transparent dialogue, and gradual integration of climate

considerations into client discussions and financing

decisions. By focusing on portfolio coverage targets and

capacity-building initiatives, the Group aims to enable

its clients to better understand their climate risks and

opportunities, laying the groundwork for future alignment

with Net-Zero objectives while ensuring a responsible

and practical approach to transition financing.

The NLB Group developed dedicated climate

questionnaires in 2025, which will be used as the basis

for a structured client dialogue and financing decisions,

and has set specific client engagement targets.

These targets reinforce the NLB Group’s commitment

to supporting the transition across key sectors with

low maturity.

Since such a structured client engagement is a new

target-setting area, the base year for the targets set is

2025, with zero baseline values. Progress monitoring will

commence in 2026, and the NLB Group will report on the

achieved progress in the next Sustainability Statement.

253

Operational

emissions targets

The NLB Group Operational Emission Strategy

trajectories are in line with Paris Agreement pathways

and follow the EU target proposals to reduce emissions

by 55% by 2030 and to be climate-neutral by 2050.

The projected possible reductions have been

determined to guide the implementation and

operational strategy. Using the NLB Group emission

model (presented in the chapter

Operational Emissions

Model

) and relevant assumptions, along with the

planned activities and legislative measures, significant

reductions in emissions are anticipated already by

2030 and even more so by 2050 compared to the

baseline year 2021.

The NLB Group baseline GHG emissions amounted to

35,804 tCO

eq in 2021 for all reported scopes (Scope 1,

Scope 2-market based, limited Scope 3), considering the

number of the NLB Group members at the time.

The Group set a target to achieve a 75% decrease in

operational CO

emissions by 2030 compared to the

baseline year 2021, and including all NLB Group

members. This target of a 75% reduction hence exceeds

the EU’s proposed 55% reduction pathway for the same

period, whreas the highest emission reduction is to be

achieved in electricity usage.

The target was approved by the NLB Management

Board, with progress monitored and reported quarterly

to the Sustainability Committee, and annually in

the Sustainability Statement. The development of

the strategy and targets involved all relevant NLB

departments with a significant role in reducing

operational emissions, including sustainability

coordinators in core financial subsidiaries, Group Real

Estate Management, Procurement, Human Resources

and Organisational Development, and NLB Lease&GO

team leading the sustainable mobility initiative.

Building on its long-term commitment to reducing

operational emissions, the NLB Group is implementing

and further enhancing a range of initiatives that directly

support the achievement of its strategy and targets.

A comprehensive overview is provided in the chapter

Actions Related to the Operational Strategy

Target:

75%

reduction of operational

emissions by 2030 compared

to 2021 baseline year

254

E1-5

Energy consumption and mix

As presented in the table 71, the NLB Group reduced

its consumption of energy from fossil sources by 2.5%

in 2025 compared with 2024. Due to a change in the

production source of the electricity used, the Group

significantly reduced its consumption of energy from

nuclear sources—by 99.3%. The share of renewable

sources in the NLB Group’s total energy consumption

increased substantially, by 111%, driven primarily by

increased production from the Group’s own solar

power plants.

This gradual and consistent increase in renewable

energy consumption and production is a direct result

of the implementation of the NLB Group’s Operational

Emissions Strategy and Action Plan.

The NLB Group remains committed to continuing these

measures to achieve its Net-Zero target by 2050 at the

latest. For a detailed list of measures aimed at reducing

operational emissions, please refer to the chapter

Actions related to the Operational strategy

Table 71:

Energy consumption and energy source mix of the NLB Group

Total fossil energy consumption

[MWh]

31,935

31,137

Share of fossil sources in total energy consumption

[%]

64%

64%

Consumption from nuclear sources

[MWh]

9,917

72

Share of consumption from nuclear sources in total energy consumption

[%]

Fuel consumption for renewable sources, including biomass (also comprising industrial

and municipal waste of biologic origin, biogas, renewable hydrogen, etc.)

[MWh]

26

Consumption of purchased or acquired electricity, heat, steam, and cooling from

renewable sources

[MWh]

8,236

17,216

The consumption of self-generated non-fuel renewable energy

[MWh]

264

Total renewable energy consumption (calculated as the sum of lines 5, 6 and 7)

8,292

17,506

Share of renewable sources in total energy consumption (%)

[%]

36%

Total energy consumption (calculated as the sum of lines 1, 3 and 8)

50,144

48,715

(i) For 2024, minor corrections were made to total energy consumption figures due to improvements in data quality. These adjustments amount to less than

a 1% change. In line with the GHG Protocol principles, the corrections are incorporated into the relevant table; however, they do not constitute a material

change.

(ii) As NLB Group does not have material operations and activities in high climate sectors further aggregation is not needed.

Note: The data has not been validated by any external source other than the limited assurance provider.

255

E1-6

Gross Scopes

1, 2, 3 and Total

GHG Emissions

The table 72 presents the NLB Group’s gross emissions,

encompassing both operational emissions and those

arising from financing and investment

activities. GHG emissions decreased by 21.8%,

both on a location-based and market-based basis.

This reflects a drop from roughly 11.19 to 8.75 million

tCO₂eq and 11.18 to 8.75 million tCO₂eq, respectively.

The methodologies applied for calculating and

disclosing these emissions are described in the

following sections, ensuring transparency and

consistency in the NLB Group’s emissions

reporting approach.

Table 72:

Breakdown of GHG emissions (in tCO

eq)

Base year

Comparative

N

% N/N-1

Scope 1 GHG emissions

Gross Scope 1 GHG emissions

3,703

3,070

2,642

-13.9%

Percentage of Scope 1 GHG emissions from regulated emission

trading schemes (%)

Scope 2 GHG emissions

Gross location-based Scope 2 GHG emissions

32,952

17,203

15,604

-9.3%

Gross market-based Scope 2 GHG emissions

28,570

10,778

8,865

-17.7%

Significant Scope 3 GHG emissions

Total gross indirect (Scope 3) GHG emissions

3,531

11,169,096

8,736,340

-21.8%

Purchased goods and services

466

465

439

-5.7%

Capital goods

Fuel and energy-related activities (not included in Scope 1 or Scope 2)

1,588

1,482

-6.6%

Upstream transportation and distribution

Waste generated in operations

11.1%

Business traveling

430

479

11.4%

Employee commuting

3,065

3,608

3,478

-3.6%

Upstream leased assets

Downstream transportation

Processing of sold products

Use of sold products

End-of-life treatment of sold products

Downstream leased assets

43,770

Franchises

Investments

11,162,996

8,686,682

-22.2%

Total GHG emissions

Total GHG emissions (location-based) (tCO

eq)

40,186

11,189,368

8,754,5

86

-21.8%

Total GHG emissions (market-based) (tCO

35,804

11,182,944

8,747,

847

-21.8%

(i) For 2024, minor corrections were made to Scope 1–3 due to improvements in data quality. These adjustments amount to less than a 0.5% change. In line

with the GHG Protocol principles, the corrections were incorporated into the table; however, they do not constitute a material change.

Note: The metrics have not been validated by any external body other than the assurance provider.

As presented in the table 72, the NLB Group continues to reduce its operational GHG footprint across all Scopes (1–3). The reduction is a direct

consequence of measures taken to improve energy efficiency and transition, where possible, to energy sources with zero emissions. Within the Scope 3

categories, a slight increase was recorded in emissions from waste and business travel, highlighting the continued need to strengthen data collection

process and measurement quality. In all other categories, emissions decreased.

256

Table 73:

Operational carbon footprint of the NLB Group (excluding financed emissions from Categories 3.13 – Downstream leased assets and 3.15 - Investments)

Year

2019

Name

Unit

Scope 1-3

All emissions from all Scopes

[tCO

eq]

36,935

37,789

35,804

20,627

19,313

19,948

17,395

Scope 1-2

Emissions from Scopes 1 and 2

[tCO

eq]

31,922

33,948

32,273

16,793

15,240

13,848

11,507

Scope 1

Total Scope 1 emissions

[tCO

eq]

3,680

3,350

3,703

3,648

3,418

3,070

2,642

Scope 1.1

Fuel combustion

[tCO

eq]

1,472

1,569

960

887

818

720

738

Scope 1.2

Vehicle fleet

[tCO

eq]

1,882

1,447

1,720

1,756

1,684

1,813

1,728

Scope 1.3

Refrigerant

326

333

1,023

1,004

916

537

176

Scope 2

Total Scope 2 emissions

28,242

30,598

28,570

13,145

11,822

10,778

8,865

Scope 2.1

Electricity

21,992

24,410

21,904

7,542

7,243

6,094

5,189

Scope 2.2

District heating and cooling

6,250

6,188

6,666

5,603

4,579

4,683

3,676

Scope 3

Total Scope 3 emissions

5,013

3,842

3,531

3,834

4,072

6,100

5,888

Scope 3.1

Paper and water

466

418

338

465

439

Scope 3.3

Fuel- and energy-related activities not included

in Scope 1 or Scope 2

1,588

1,482

Scope 3.5

Waste

Scope 3.6

Business travel

185

326

430

479

Scope 3.7

Employee (work) commute

5,013

3,842

3,065

3,210

3,389

3,608

3,478

(i) For 2023 and 2024, minor corrections were made to Scope 1–3 due to improvements in data quality. These adjustments amount to less than a 0.5% change. In line with the GHG Protocol principles, the corrections were incorporated

into the table; however, they do not constitute a material change.

Note: The metrics have not been validated by any external body other tshan the assurance provider (from 2024 onwards). Only disclosures for the fiscal years 2024 and 2025 were subject to external assurance.

As presented in the table 73, the NLB Group continues to

reduce its operational GHG footprint across all Scopes (1–3).

The reduction is a direct consequence of measures taken

to improve energy efficiency and transition, where possible,

to energy sources with zero emissions. Within the Scope 3

categories, a slight increase was recorded in emissions from

waste and business travel, highlighting the continued need

to strengthen data collection process and measurement

quality. In all other categories, emissions decreased.

For a detailed list of measures aimed at reducing

operational emissions, please refer to the chapter

Actions related to the Operational strategy

GHG intensity based

on net revenue

Table 74:

GHG Intensity based on net revenue

Total GHG emissions

(market-based)

(tCO

11,182,944

8,747,847

(location-based)

(tCO

11,189,368

8,754,586

Net revenue (in EUR

thousands)

1,695,679

1,780,242

GHG Intensity-based per

net revenue (market-based)

(tCO

eq /EUR thousands)

6.59

4.91

GHG Intensity-based per net

revenue (location-based)

(tCO

eq /EUR thousands)

6.60

4.92

Note: The metrics have not been validated by any external body other

than the assurance provider.

Accounting policy and reconciliation:

Net revenue (EUR 1, 780, 242 thousands) is reconciliated

with the financial statements note 7. Analysis by Segment

for NLB Group; b) Geographical information. For 2024,

the net revenue was restated due to the change in the

calculation methodology that Bank of Slovenia issued

in 2025.

257

Significant changes

affecting year-to-year

comparability

In the 2025 GHG emissions report, the NLB Group reports

aggregated emissions for the third consecutive year,

covering Scope 1 and Scope 2 emissions as well as Scope 3

financed emissions generated by its clients in accordance

with the Pillar III framework. Since the introduction of this

disclosure, the reporting scope has evolved.

In 2022, Scope 3 – Category 15 financed emissions

were reported without the inclusion of client Scope

3 emissions. In 2023, client Scope 3 emissions were

incorporated, resulting in a significant increase in

reported values, as these emissions represent the

majority of total financed emissions. The 2024 report

established year-to-year comparability through a

consistent reporting scope and updated figures.

The 2025 reporting reflects additional methodological

and process improvements implemented during the

reporting period. Scope 1 and Scope 2 emissions

data prepared by IJS, together with Scope 3 emission

proxies provided by ICE, were updated from emission

year 2021 to emission year 2022. Furthermore, the

calculation process was migrated to the Data Warehouse

environment, enabling full automation, introducing

methodological improvements, and ensuring the use

of the most recently available balance sheet data.

The Group also expanded the scope of actual client

data collected, thereby strengthening data quality

and improving the accuracy and reliability of financed

emissions estimates.

Changes in reported emissions may also arise from shifts

in exposures to individual sectors, defined by NACE codes,

from the perspective of lending activity and new business.

This approach ensures alignment with regulatory

requirements, enhances transparency, and supports risk

management under the Pillar III disclosure framework.

Methodologies,

assumptions and

emissions factors

Aiming to report GHG emissions in line with

internationally recognised and independent standards,

the NLB Group’s calculations follow the GHG Protocol

guidelines. The NLB Group’s carbon footprint is

determined using the:

· Corporate standard (Corporate Accounting and

Reporting Standard) and the

· Corporate Value Chain (Scope 3) Accounting and

Reporting Standard.

A centralised approach to data collection is used

across the Group:

each NLB Group member gathers

data at the individual entity level, then it is reported to

the corporate level for the calculation of GHG emissions.

For the purpose of defining organisational boundaries,

NLB uses the financial control approach on a

consolidated basis, consistent with financial reporting

principles.

This means that the statement includes

the parent bank NLB and all subsidiaries over which

NLB exercises direct or indirect control of financial and

operational management and from which it receives

variable returns.

The Sustainability Statement covers the financial

reporting period from 1 January to 31 December 2025.

However, several entity-specific circumstances apply:

SLS Holdco Ljubljana was merged into Summit Leasing

Slovenija in May 2025. As a result, SLS Holdco ceased

to exist as an independent legal company and no

individual reporting was carried out.

NLB Lease&Go, Ljubljana (old) was merged with Summit

Leasing Slovenija, Ljubljana on 4 July 2025, after which

Summit Leasing Slovenija, Ljubljana was renamed to

NLB Lease&Go, Ljubljana (new). In terms of reporting,

NLB Lease&Go, Ljubljana (old) reported separately until

the end of June 2025, while from July to December 2025

the merged and newly named company NLB Lease&Go,

Ljubljana (new) reported GHG emissions.

OL Nekretnine was liquidated in November 2025 and

therefore reported data only for the period January–

November 2025.

Key subsidiaries in own operations are NLB as the

parent bank and other financial core members,

namely: i) banks, ii) leasing companies, and iii) asset

management companies. GHG emissions are calculated

for operational offices with significant material impact,

as well as for individuals, across the following Scopes

(operational boundaries):

Scope 1 – direct emissions

Combustion of fuels

Company-owned vehicle fleet (internal combustion

engine)

Company-controlled fleet (internal combustion engine)

Refrigerants (for HVAC systems)

Scope 2 – indirect emissions from purchased energy

Electricity consumption (both location-based and

market-based)

Owned vehicle fleet – electric vehicles and PHEV/

hybrid (included in electricity consumption)

District heating

Scope 3 – indirect emissions (selected emission

categories; see the chapter Exclusions for details)

Purchased goods and services: use of paper

and water supply

Fuel- and energy-related activities not included

in Scope 1 (well to tank) or Scope 2 (transmission

and distribution losses)

Waste generated in operations

Business travel

Employee commuting

Because several NLB Group entities operate on the

premises of another Group member, reporting is done

by the member owning the premises and holding the

most accurate data (i.e. locally consolidated approach).

For more details on operational boundaries please refer

to the chapter

Exclusions

Although the NLB Group first began reporting its

operational carbon footprint in 2021 (covering reporting

years 2019–2021), the GHG Emission Report has since

been harmonised with the Portfolio Net-Zero Strategy

and ESRS requirements. Accordingly, 2021 has been re-

established as the baseline year.

258

Scope 3, Category 13 – Downstream Leased Assets

For Scope 3, Category 13 (Downstream Leased Assets),

GHG emissions are calculated in accordance with the

PCAF Standard for Motor Vehicle Loans, applying the

methodology corresponding to Data Quality Score 2a

under estimated vehicle-specific emissions.

An attribution factor is determined as the ratio between

the outstanding exposure and the retail price of the

vehicle. Annual mileage is estimated using passenger-

vehicle data published by the Statistical Office of the

Republic of Slovenia (SURS) and proportionally adjusted

to reflect the share of the year 2025 during which the

contract was active. Financed emissions per vehicle

are calculated using the vehicle’s WLTP CO₂ emission

value. Where WLTP data are unavailable, the CO₂

value is obtained from the Slovenian OPSI database

of the Ministry of Infrastructure (Registry of Registered

Vehicles). If neither source provides a value, the average

WLTP value of the entire fleet is applied.

Total financed emissions are calculated as the

aggregate sum of financed emissions for all vehicles

within the portfolio.

Scope 3, Category 15 – Investments

The NLB Group calculates its portfolio (financed)

emissions in accordance with the Partnership for Carbon

Accounting Financials (PCAF) Standard. Disclosures of

financed emissions are, however, aligned with the

Pillar

III disclosure framework,

ensuring comparability across

the banking sector, regulatory compliance, and year-to-

year consistency in reported data.

This approach enables

a transparent and consistent assessment of financed

emissions across sectors, supporting risk management

and alignment with industry benchmarks.

Maintaining

methodological consistency further enhances the reliability

of the Group’s disclosures, ensuring comparability over

time while adhering to regulatory requirements.

The application of the Partnership for Carbon

Accounting Financials (PCAF) Standard also ensures

consistency with industry best practices and regulatory

expectations. The PCAF methodology was selected due

to its broad recognition among financial institutions, its

transparency, and its compatibility with internationally

established reporting frameworks, including the

Greenhouse Gas Protocol (GHG Protocol) and the

Task Force on Climate-Related Financial Disclosures

(TCFD) recommendations. The approach enables a

standardised and comparable assessment of financed

emissions across asset classes.

The Group has recognised greenhouse gas (GHG)

emissions data as the primary and crucial factor when

assessing the level of transition risk. Therefore, obtaining

good-quality emission data is highly important. The

priority is the data obtained directly from the clients.

While operating in a region where such information is

not commonly available, the Group supports the clients

with the know-how and motivates them to calculate the

GHG emissions.

Primary emission data obtained from clients account

for 13.9% of total financed emissions, with the majority

of emissions data based on proxy estimates.

Due

to data limitations, particularly in sectors with scarce

primary disclosures, the Group applies proxy data and

sectoral benchmarks where necessary. The calculation

is based on the following assumptions:

· The calculation and disclosure of financed emissions

is based on the perimeter defined under Pillar III

rules, encompassing exposures in the banking book.

This includes the Gross Carrying Amount of loans and

advances, debt securities, and equity instruments to

non-financial corporations, excluding instruments held

for trading. The assessment specifically focuses on non-

financial corporations and captures both direct and

indirect emissions associated with lending, investing,

and financing activities. Sovereign, sub-sovereign,

institutional and supranational exposures are excluded

from the calculation, as they do not materially

contribute to direct emissions. Emissions related to the

retail portfolio (e.g., mortgages and vehicle loans) are

not subject to Pillar III disclosures.

· Where available, actual client data for Scope 1, 2, and

3 emissions is used

to calculate financed emissions.

The data is obtained through client questionnaires,

published annual reports, or sustainability reports.

· When client-reported Scope 1 and Scope 2 emission

data is not available, the Group uses proxies

provided

by the

Jožef Stefan Institute (IJS), Energy Efficiency

Centre

, a leading institute in this area with a proven

background. These proxies are calculated at the lowest

possible granularity level, considering the available

data for each country where the NLB Group operates.

However, granularity varies across the industries and

countries depending on data availability. The proxies

delivered by IJS express the average economic intensity

by industry and are primarily used for portfolio

emissions calculations, as well as for target setting and

decision-making. Based on the client’s industry code

and revenues, the Group calculates Scope 1 and Scope

2 emissions of each client by multiplying the applicable

proxy value by the client’s revenues.

· When client-reported Scope 3 emission data

is unavailable, NLB uses proxies

from the

Intercontinental Exchange (ICE)

, selected for their

transparency and because they were also used in the

ECB’s economy-wide climate stress test. ICE collects

data from public sources and applies statistical

treatment and rigorous checks with verification by

ICE’s Quality Assurance team. The data is classified

as reported, inferred, or statistically treated, with

transparency of the source. Based on the client’s

industry code and revenues, the Group calculates

Scope 3 emissions of each client by multiplying the

relevant Scope 3 proxy value by the client’s revenues,

consistent with the approach used for Scope 1 and

Scope 2 calculation.

· Attribution methodology follows the PCAF’s

financial-exposure-based attribution model,

allocating emissions according to the proportional

contribution of a loan or investment to a client’s total

balance sheet. The attribution factor is calculated

using on-balance-sheet data as Gross Carrying

Amount / (Short-Term Financial Debt + Long-Term

Financial Debt + Equity).

· Finally, financed emissions are calculated by

multiplying the attribution factor

by the client’s

Scope1, Scope 2, and Scope 3 emissions – using either

client-reported data or proxy-based estimates.

The scopes, metrics, definitions of emissions, as well

as emission and conversion factors for operational

emissions, are described in detail in the

Appendix 2

259

Exclusions

Table 75:

List of exclusions in GHG emissions

Scope 1

Exclusion

Fuel combustion

Vehicle fleet (ICE)

Refrigerant

Included in the calculations in limited scope due to lack of data.

Scope 2

Electricity (market-based)

District heating and cooling

Vehicle fleet (Electric, PHEV, Hybrid)

Scope 3

Purchased goods and services

Limited reporting – only use of paper and water included. Emissions of Scope 3 categories “3.1 – Purchased goods and services” and “3.2 – Capital

goods (assets)”, represented by paper and water emissions only, do not reflect actual emissions of these two categories. The cost for these two

reported categories was estimated for 2023 and reached 115 EUR millions. Paper and water represent a smaller share of this, therefore additional

emission categories will have to be introduced in carbon footprint reporting in the future to be able to cover a substantial part of Scope 3 operational

emissions. Based on 2023 figures, Scope 3 categories 1 and 2 emissions that were not included account for 14,300 tCO

eq (using US EPA Supply Chain

GHG Emission Factors, Offices of Bank Holding Companies – 130 tCO

eq/MUSD). The reason for non-inclusion of these Scope 3 categories is also

reflected in the lack of reliable emission factors for emission sources (goods, services and assets). Also, the NLB Group has not yet used a supplier-

engagement approach to stimulate its suppliers to report their product emissions, mainly due to the significant challenge posed by the of lack of data.

Capital goods

Not included. Emissions of Scope 3 categories “3.1 – Purchased goods and services” and “3.2 – Capital goods (assets)”, represented by paper and

water emissions only, do not reflect actual emissions of these two categories. The cost for these two reported categories was estimated for 2023

and reached 115 EUR millions in 2023. Paper and water represent a smaller share of this, therefore additional emission categories will have to

be introduced in carbon footprint reporting in the future to be able to cover a substantial part of Scope 3 operational emissions. Based on 2023

figures, Scope 3 category 1 and 2 emissions that were not included account for 14,300 tCO

eq (using US EPA Supply Chain GHG Emission Factors,

Offices of Bank Holding Companies – 130 tCO

eq/MUSD). The reason for non-inclusion of these Scope 3 categories is also reflected in the lack

of reliable emission factors for emission sources (goods, services and assets). Also, the NLB Group has not yet used a supplier-engagement

approach to stimulate its suppliers to report their product emissions, mainly due to the significant challenge posed by the of lack of data.

Fuel- and energy- related activities

Upstream transport and distribution

Not included.

Upstream leased assets

Included in Scope 1 and 2 report.

Downstream transport and distribution

Not relevant.

Processing of sold products

Use of sold products

End-of-life treatment of sold products

Downstream leased assets

Limited reporting. Financed emissions are calculated exclusively for exposures in Slovenia relating to private individuals. Corporate

clients, exposures outside Slovenia, and other asset classes are excluded from the calculation. The calculation applies solely

to the active passenger vehicle leased fleet and excludes test vehicles and any non-passenger vehicle categories.

Franchises

Not relevant.

Investments

Reported separately. Portfolio (financed) emissions are calculated by using the Partnership for Carbon Accounting Financials (PCAF) Standard;

however, disclosures of financed emissions are aligned with requirements of the Pillar III disclosure framework, ensuring banking-sector

comparability, regulatory compliance, and year-to-year consistency in reported data. This approach enables transparent and consistent assessment

of financed emissions across sectors, supporting risk management and alignment with industry benchmarks. By maintaining methodological

consistency, the Group enhances the reliability of its disclosures, ensuring comparability over time while adhering to regulatory requirements.

260

Sustainable finance, including transition finance,

has a high impact on environment and society and

is recognised as a strategic opportunity for the NLB

Group. It is firmly embedded in the 2030 Strategy New

Horizon as well as the NLB Group (Net-Zero) Climate

Strategy. Risks related to sustainable finance are

managed through ESG risk management in lending

and investing.

NLB Group offers its clients a diverse range of financing

products and solutions to support climate change

mitigation and climate adaptation. These include

green lending and leasing, mutual and alternative

investment funds aligned with EU regulations promoting

environmental and social characteristics, issuing green

bond, and investing in ESG-labelled bonds in line with

the NLB Group internal policies.

Accountancy policy and reconciliation:

Unless stated otherwise, reported financial data in

the Sustainable Finance section refers to the financial

statements note 5.6. Financial assets measured at

amortised cost.

Green financing

for corporate and

retail clients

Policies

NLB Group has embedded sustainability eligibility

principles and criteria into several policies and other

internal acts as well as implemented new ones, which

address the IROs related to sustainable lending

products for retail banking and green lending to

corporates, as detailed in table 61 in the chapter

IRO-1 Processes to Identify and Assess Material

Climate-Related Impacts, Risks and Opportunities.

These internal acts include the Risk Appetite and

Lending Policy, ESG Exclusion List, Criteria and

Procedures for Granting Transaction to Legal

and Private Entities, Environmental and Social

Categorisation Methodology Framework, NLB and NLB

Group Lending Policy for Non-Financial Companies,

and the Lending Policy for Specific Client Segments,

GHG Emissions Data Collection and Assessment. All

these policies are presented in the Environmental

Information chapter, subchapter Policies.

To fulfil the objectives of climate-related policies, the

NLB Group provides corporate and retail clients (i.e.

stakeholders in the downstream value chain) in all

markets of operations, financing or refinancing to various

sustainable economic activities that meet financial and

sustainability eligibility criteria of relevant frameworks,

such as EU taxonomy, MIGA, EBRD, NLB Group Green

Bond Framework (following ICMA Green Bond Standards)

and NZBA guidelines in the case of green retail financing.

Across all countries of the NLB Group operations,

retail sustainability products primarily focus on

environmental objectives

through green financing

solutions. These include Green Mortgage/Housing

Loans for purchasing, constructing, or renovating

energy-efficient properties that meet local energy

certification standards (A/B or NZEB criteria), and Green

Consumer Loans for acquiring solar panels, and electric

or hybrid vehicles. Several banks in the NLB Group

also offer specialised products such as ECO Loans for

comprehensive home energy efficiency improvements,

and GEFF loans under EBRD credit lines, which provide

incentives like cash-back for verified green investments.

In some markets, additional purposes include financing

electric bicycles, scooters, and other mobility devices

to reduce CO₂ emissions. Green eligibility is determined

based on EU taxonomy, Net-Zero guidelines, EBRD,

GEFF, Green Bond principles, and NZBA guidelines in the

case of green retail financing ensuring alignment with

established sustainability frameworks.

Socially responsible retail products aim to promote

financial inclusion and support education.

is in the early stages of developing its formal social

financing categorisation and framework. Nevertheless,

the Group already provides a range of financing

products with social purposes, applying its established

credit and risk methodologies while tailoring specific

criteria to the intended social use. These include student

loans, Work & Travel financing, MBA study loans, and

tailored packages for youth and seniors, such as e-Junior

accounts and Silver Loans with insurance benefits. All

the Group members offer tailored packages for youth or

seniors. NLB Banka, Prishtina and NLB Banka, Sarajevo

introduced packages for financial inclusion and family-

oriented package to strengthen social impact.

During the period 2024–2025, the NLB Group gradually

expanded its portfolio of sustainable offering. Changes

include expanding green loan purposes (e.g., ventilation

systems, biomass heating), introducing new ESG credit

lines (GEFF III), and improving conditions for green

consumer loans by removing dependency on vendor

partnerships. Overall, the NLB Group continues to integrate

environmental and social considerations into its retail

offering, reinforcing its commitment to sustainable finance.

For the Micro segment, the NLB Group offers green

financing solutions for legal entities and entrepreneurs,

focusing on

EU taxonomy-aligned investments.

Products include loans for purchasing energy-efficient

equipment, solar panels, biomass heating systems,

insulation, and electric or hybrid vehicles, as well as

financing for renewable energy projects and sustainable

water and waste management. Several banks provide

ESG investment loans for agro clients, dedicated credit

lines such as EBRD Go Green, Go Digital, and Green

Growth, and partnerships for verified green projects.

Socially responsible products include The Women in

Business programme loans and support packages for

women-owned or women-led companies and is based

on dedicated EBRD credit lines and accompanying

initiatives that promote female entrepreneurship. In

addition, the Group’s own initiatives offer Young Business

and Financial Inclusion programmes, developed to

support young enterprises and to enhance financial

inclusion for underserved client groups. Across the

Group, no major changes were reported in 2024–2025,

except for the introduction of new EBRD credit lines

Go Green and Go Digital in NLB Komercijalna Banka,

Beograd and NLB Banka, Skopje.

261

The table presents non-exhaustive list of overarching

areas that serve as a guide for the NLB Group

sustainable financing or refinancing, while eligible

projects are defined in detail in the aforementioned

frameworks and specified in the NLB Group internal

documents. These sustainable financing areas cover

corporate and retail clients in all countries of the NLB

Group operations, and are regular key actions of the

core decarbonization lever, i.e. reducing

emissions from financing and investment activities. Their

expected output is to achieve both emission reduction

and the financing targets, detailed in the chapter

Targets

Related to Climate Change Mitigation and Adaptation

The list of sustainable financing and refinancing areas

will continue to evolve over time, reflecting changes in

classifications of sustainability criteria, stakeholders’

needs and expectations, and regulatory requirements.

NLB Group integrates

environmental and

social considerations

into its retail offering,

reinforcing its commitment

to sustainable finance

Table 76:

NLB Group sustainable financing and refinancing areas (non-exhaustive list)

Renewable Energy

Clean Transportation

Pollution

Prevention & Control

Sustainable Water and

Wastewater Management

Electricity generation

using solar photovoltaic

technology

Construction of

new buildings

Manufacture of batteries

Passenger interurban

rail transport

Construction, extension and

operation of water collec-

tion, treatment and supply

systems

Production of

heat/cool using

waste heat

Electricity generation using

concentrated solar power

(CSP) technology

Renovation of

existing buildings

Storage of electricity

Freight rail transport

Renewal of water

collection, treatment

and supply systems

Collection and transport

of non-hazardous waste in

source segregated fractions

Electricity generation from

wind power

Acquisition and

ownership

of buildings

Installation and operation of

electric heat pumps

Urban and suburban

transport, road passenger

transport

Construction, extension and

operation of wastewater

collection and treatment

Material recovery from

non-hazardous waste

Electricity generation from

hydropower

Installation, maintenance

and repair of energy

efficiency equipment

Transport by motorbikes,

passenger cars and light

commercial vehicles

Renewal of wastewater

collection and treatment

geothermal energy

Infrastructure for personal

mobility, cycle logistics

Electricity generation

from bioenergy

Infrastructure for

rail transport

Transmission and

distribution of electricity

Infrastructure enabling

low-carbon road

transport and public

transport

Cogeneration of heat/

cool and power from solar

energy

Installation, maintenance

and repair of renewable

energy technologies

262

Targets and progress

In 2025, green financing for corporate and retail

strengthened significantly. Compared to 2024, new

production portfolio increased by 49% and total

portfolio volume increased by 50%. The green loan

portfolio reached 81% of the 2030 target in 2025.

The data in the table covers NLB and six regional

subsidiary banks and are based on actual exposures

as of 31 December 2025. The classification of

green financing follows the NLB Group’s internal

methodology, which is aligned with the EBRD, MIGA,

Green Bond Framework, and the EU Taxonomy. A loan

is currently classified as green if it is aligned with any

of these frameworks and NZBA in the case of green

retail financing.

Monitoring of the targets is carried out at multiple

levels. Progress is reviewed during weekly meetings,

and monthly reports are prepared and submitted to

the directors responsible for the corporate and retail

business segments. On a quarterly basis, results and

progress are examined in more detail in meetings

with the responsible Management Board member

and reported to the Sustainability Committee, which

includes all Management Board members and other

committee representatives.

Leasing

Policies

Leasing activities represent an integral component

of the NLB Group’s sustainable financing framework.

Accordingly, all leasing companies within the Group

incorporate sustainability considerations and IRO

management into their operations and internal policies.

The relevant policies which address IROs related

to green leasing (as detailed in the table 61 in the

IRO-1 Processes to Identify and Assess Material

Climate-Related Impacts, Risks and Opportunities

)

are presented below.

Sustainability Policy and Standard of NLB Lease&Go

Both internal documents set

out a general framework for sustainability- related

activities. They are harmonised with the NLB Group

Sustainability Policy and Standard and adapted

to leasing activities. Thus, they follow the same

sustainability pillars, overarching goals and principles

as the parent bank.

Scope:

All leasing companies in the NLB Group.

Most senior level accountable:

Management Board /

Board of Directors and Risk Department. Operational

responsibility rests with the Sustainability Coordinator

at NLB Lease&Go Ljubljana and the sustainability

representatives within other leasing companies.

Availability:

Register of Internal Documents.

Domain-specific policies related to sustainability

The implementation of the

internal acts related to ESG risks in the process of

financing is covered by Risk department. Several

internal acts in NLB Lease&Go frame the process

of financing ESG items for legal entities, such as:

Lending Policy for Non-Financial Companies,

Policy Environmental and Social transaction

Policy Framework in NLB and NLB Group,

Methodological framework for environmental

and social categorisation of investments in NLB

and NLB Group, Framework of the EU Taxonomy

and Evaluation of Sustainability-Related Activities

in NLB and NLB Group. Within an internal act

Lending Policy for Non-Financial Companies in

NLB and NLB Group the full list of cross-sectoral

and sector-specific prohibited (exclusion list),

restricted, and normal activities from the ESG

Table 77:

NLB Group corporate and retail green financing

Baseline year and

volume

Target 2030

New production volume

333,146

308,582

198,203

Outstanding stock volume

953,815

700,999

330,837

1,370,000

New production volume

319,568

130,064

89,293

Outstanding stock volume

591,587

327,143

229,421

528,000

Total (corporate and retail)

652,714

438,646

287,496

1,545,402

1,028,142

560,358

1,900,000

(i) Total target 2030 is set at EUR 1,900,000 thousands. Discrepancy in total sum reflects rounding in budgeting of sub-categories.

(ii) Targets were set only for outstanding stock volume.

263

perspective is set, including EBRD requirements,

that NLB Lease&Go adheres to in the financing

decisions and processes.

Scope:

All leasing companies in the NLB Group.

Most senior level accountable:

Senior managers

(directors) responsible for a specific policy area.

Availability:

Register of Internal Documents.

The year 2025 marks an important milestone in the

leasing segment as Summit Leasing Slovenija, Ljubljana

and NLB Lease&Go, Ljubljana merged in July. The NLB

Lease&Go group now consists of four leasing companies

in the region (beside NLB Lease&Go, Ljubljana also NLB

Lease&Go, Beograd, NLB Lease&Go Skopje, and Mobil

Leasing, Zagreb) and a subsidiary NLB Car&Go, which

operates the platform doberavto.si and enhance the

group’s ability to support circular principles through the

resale of pre-owned vehicles.

Sustainability is a core priority for the leasing

companies, with NLB Lease&Go, Ljubljana acting

as the central coordinator for sustainability topics,

green financing and compliance with regulatory

Leasing companies on a regular basis provide

corporate and retail clients (i.e. stakeholders in the

downstream value chain) financing green investments

for the purpose of clean transportation and

renewable energy. As a parent entity for the leasing

subsidiaries, NLB Lease&Go, Ljubljana has introduced

a comprehensive framework for monitoring green

investments and aligning internal acts with the NLB

Group policies. The framework is implemented in all

other leasing companies as well.

In future years, leasing companies will continue

to pursue its Net-Zero strategy and sustainability

commitments and to advance their green financing

agenda and develop additional green product

(supported by AI, advanced digital platforms, and

enhanced customer experience). They also plan to

gradually expand their offer to include social financing.

Targets and progress

To advance the objectives of the NLB Group Climate

Strategy and to further support the green transition

of the economy, NLB Lease&Go has established a

green financing target of EUR 61.8 million to be

achieved by 2030.

In 2025, green financing activities within the leasing

companies expanded substantially. Relative to 2024,

new green financing production increased by 152%,

accompanied by a 64% growth in the green portfolio.

As a result, new green financing already accounts for

56% of the total target set for 2030.

Reported data refers to all leasing companies

(NLB Lease&Go, Ljubljana and subsidiaries

NLB Lease&Go, Skopje, NLB Lease&Go, Beograd

and Mobil Leasing, Zagreb).

Green lending or financing classification refers to the

internal methodology of the NLB Group, which refers to

Green Bond and EU taxonomy frameworks. If a loan or

financing is mapped to either of these frameworks, it is

currently considered a green loan or financing.

The Management Board of NLB Lease&Go, Ljubljana

is regularly informed about the progress and reviews

the materials prepared on a quarterly basis (as part

of the risk management report), which is subsequently

presented to the Supervisory Board. The report

includes ESG-related content, with a particular focus

on Green Bond-eligible investments, as well as the

monitoring of progress toward the net-zero strategic

targets. Progress on key ESG indicators is assessed at

weekly meetings, while monthly reports are prepared

and submitted to the Management Board member

responsible for the sustainability area. In addition,

the progress in reported quarterly at the

Sustainability Committee.

Table 78:

Leasing companies in NLB Group - green financing

Baseline year and

value

Target 2030

New production

34,557

13,712

9,763

61,866

Outstanding

47,911

29,216

11,343

(i) Targets were set only for the new production.

The green financing new

production in leasing

companies reached

56%

of the 2030 target

264

Asset Management

Policies

NLB Skladi, upravljanje premoženja, d.o.o. (hereinafter:

NLB Skladi) offers three asset management services:

1. discretionary portfolio management,

2. mutual investment fund management, and

3. alternative investment fund management.

For each of these services NLB Skladi has adopted

service specific internal documents that determine

how each service will be performed and how funds

will be managed. Furthermore, the documents address

the identified material impacts and opportunities

related to sub-funds in investment banking and

asset management activities, as set out in Table 61

in chapter IRO-1 – Processes for the identification

and assessment of material climate-related impacts,

risks and opportunities. While discretionary portfolio

management services are performed in accordance

with the Discretionary Portfolio Management General

Terms and Conditions and do not take sustainability

into account, NLB Skladi also established an

alternative investment fund and two mutual sub-funds

of its umbrella fund which promote environmental and

social characteristics.

Offering Document Including the Fund Management

Rules of NLB Skladi - Green Transition I, Specialised

Investment Fund

This act determines that

the fund promotes environmental characteristics

(for details see the section Key activities). NLB Skladi

manages sustainability risks that are required

by national and EU law in relation to alternative

investment funds. How this is performed is determined

by Alternative Investment Fund Due Diligence

Policy and Alternative Investment Funds Risk

Management Plan.

Scope:

NLB Skladi.

The head of

the Risk Management department and the

Sustainability coordinator.

Prospectus of the NLB Skladi Umbrella Fund Including

the Management Rules

This act determines that the

sub-fund of NLB Skladi – Equity Socially Responsible

Global Advanced Markets promotes environmental

and social characteristics and the sub-fund of NLB

Skladi – Equity Environmental promotes environmental

characteristics. How the mentioned two sub-funds

achieve environmental and social characteristics and

which activities are excluded for these 2 sub-funds is

explained below in section Key Activities. This act also

determines that the company NLB Skladi manages

sustainability risks that are required by national and EU

law in relation to mutual investment funds. To manage

these risks NLB Skladi adopted the Rulebook on Due

Diligence of Investments and Record Keeping and the

Mutual Funds Risk Management Plan which determines

how sustainability risks are identified and mitigated.

Scope:

NLB Skladi

The head of the Risk

Management department.

Sustainability Policy of NLB Skladi

The Sustainability Policy does

not apply to assets managed by NLB Skladi (assets

managed in mutual funds, alternative investment funds

and portfolios) and determines that NLB Skladi does

not currently consider adverse impacts of investment

decisions on sustainability factors. NLB Skladi plans

to review this provision in the Sustainability Policy in

the future as the environmental regulation evolves.

The Sustainability Policy also determines how NLB

Skladi will conduct its business operations sustainably.

It determines that NLB Skladi will take into account

impacts, risks or opportunities created by its business

operations and that NLB Skladi will adhere to the NLB

Group exclusion list published on the NLB website.

Scope:

NLB Skladi; NLB Fondovi, Beograd; and

NLB Fondovi, Skopje.

The supervisory board

to which the NLB Skladi Sustainability coordinator

regularly reports (semi-annually).

Publicly available at the

website.

NLB Skladi offers two mutual sub-funds of its umbrella

fund which promote environmental and social

characteristics and adhere to Article 8 of Regulation

SFDR (EU) 2019/2088, whereas NLB Fondovi Beograd

and NLB Fondovi Skopje currently do not have any such

funds in their offer.

Sub-fund NLB Skladi – Equity Socially Responsible

Global Advanced Markets

(established in 2018)

promotes a combination of environmental and social

characteristics but does not invest in sustainable

investments. Therefore, this sub-fund invests in

issuers with above-average environmental and social

awareness in their operations, provided that they

respect good governance practices.

The reference value for the achievement of the

environmental and social characteristics promoted

by this sub-fund has been determined as the required

minimum allowable weighted average score of the

environmental, social and governance characteristics

of all investments of the sub-fund.

This sub-fund also promotes environmental and social

characteristics by not investing in individual activities or

sub-activities that it considers to be controversial. Such

controversial activities or sub-activities in which the sub-

fund will not invest are aviation and defence, gambling,

tobacco, breweries, spirit drinks and wine producers,

energy, metals and mining, paper and forest-based

industry, and road transport.

In accordance with the ESMA Guidelines on fund

names using ESG or sustainability-related terms this

sub-fun will also not invest in companies that are

in violation of the United Nations Global Compact

(UNGC) principles or the Organisation for Economic

Cooperation and Development (OECD) Guidelines for

Multinational Enterprises (prohibition of investing in

tobacco and controversial weapons is included in the

Individual Fund Management Rules of the Umbrella

Fund Prospectus).

265

Sub-fund NLB Skladi – Equity Environmental

(established in 2018) promotes a combination

of environmental characteristics provided that

companies adhere to good governance practices but

does not invest in

sustainable investments. Therefore,

this sub-fund invests in issuers with above-average

environmental awareness in their operations, provided

that they respect good governance practices.

The reference value for the achievement of the

environmental characteristics promoted by this

sub-fund has been determined as the required

minimum allowable weighted average score of the

environmental and governance characteristics of all

investments of the sub-fund.

In accordance with the ESMA Guidelines on fund names

using ESG or sustainability-related terms

this sub-fund

is prohibited from investing in:

companies involved in any activities related to

controversial weapons;

companies involved in the cultivation and production of

tobacco;

companies that are in violation of the United Nations

Global Compact (UNGC) principles or the Organisation

for Economic Cooperation and Development (OECD)

Guidelines for Multinational Enterprises;

companies that derive 1% or more of their revenues

from exploration, mining, extraction, distribution or

refining of hard coal and lignite;

companies that derive 10% or more of their revenues

from the exploration, extraction, distribution or refining

of oil fuels;

companies that derive 50% or more of their revenues

from the exploration, extraction, manufacturing or

distribution of gaseous fuels;

companies that derive 50% or more of their revenues

from electricity generation with a GHG intensity of more

than 100 gCO

e/kWh.

Alternative investment fund Green Transition I,

Specialised investment fund

(established in 2024,

became operational in 2025)

promotes environmental

characteristics by investing in projects that enhance

energy efficiency and generate electricity from

renewable energy sources and any other projects

related to the energy transition, provided that good

governance practices are observed. In 2025 the fund

signed its first Share Purchase Agreement and sent

our numerous non-binding offers for the purchase of

potential investments, signalling a strong pipeline of new

projects. Since this fund has the word “transition” in its

name it also respects the same prohibitions of the ESMA

Guidelines on fund names using ESG or sustainability-

related terms that apply to the sub-fund NLB Skladi –

Equity Environmental

In 2025, NLB Skladi implemented the ESMA Guidelines

on fund names using ESG or sustainability-related

terms in relation to the two mutual sub-funds that have

such terms in their names and the alternative

investment fund. To ensure compliance NLB Skladi use

Morningstar/Sustainalytics Global access web

application to screen the portfolios of both mutual

sub-funds monthly and any new securities before they

are added and conduct a proprietary check of any

investment of the alternative investment fund before

such investment is acquired and a yearly check to

ensure that the investment still meets all requirements.

NLB Skladi also completed an evaluation of feasibility

of joining the United Nations’ Principles for

Responsible Investment (UN PRI) initiative but

concluded that joining this initiative would currently

result in suboptimal placement of fund assets and lead

to underperformance in relation to the chosen

benchmark indexes.

Metrics and progress

NLB Skladi has not defined quantitative target amounts

for its sub-funds that promote environmental and social

characteristics and a special investment fund. Instead,

it pursues the strategic objective of maximising their

long-term asset value and monitors the inflows and

outflows of assets of mutual funds on a daily basis.

In addition, NLB Skladi quarterly reports to the

Sustainability Committee the percentage of assets

under management in the above mentioned sub-

funds in relation to all assets under management.

In 2025, the total net asset value of these sub-funds

decreased by 1.5% compared with 2024.

Table 79:

Net asset value of funds that promote environmental

and social characteristics

in EUR

thousands

Sub-fund NLB Skladi –

Equity Socially Responsible

Global Advanced Markets

127,177

128,539

Sub-fund NLB Skladi –

Equity Environmental

22,000

22,519

NLB Skladi – Green

Transition I, Special

Investment Fund

4,167

153, 344

151,058

(i) NAV as of 30 September 2025

Accountancy policy and reconciliation:

The value is a proportion of total net asset value reported

in the business report, page 95 (Asset management)

NLB Skladi offers two

mutual sub-funds which

promote environmental

and a specialised investment

fund Green Transition

266

Green Bond

Policy

NLB Green Bond Framework

The NLB Green Bond

Framework

(GBF) defines commitments related to

green bond issuance(s) and key activities to meet the

commitments. Most relevant are criteria for selection

of the eligible portfolio (use of proceeds), how the

portfolio is managed, and respective allocation and

impact reporting content and dynamic. GBF follows

the International Capital Market Association (ICMA)

Green Bond Principles (not subject to assurance of

this Sustainability Statement) with the following focus

areas: renewable energy, energy efficiency, green

buildings, clean transportation, sustainable water

and wastewater management, and pollution

prevention and control.

Under the GBF only NLB can issue any debt

security to finance or refinance loans, assets and

projects with positive environmental benefits. The

eligible loans, assets and projects which satisfy the

commitments can be contributed by NLB, its subsidiary

banks and several companies providing ancillary

services (including asset management, real estate

management, leasing, etc.).

While for the

governance of the GBF a Green Bond Working Group

was established, the main responsibility for the

implementation is with the NLB Management Board

that confirms the GBF as well as the eligible portfolio

and reports.

The GBF is publicly available on

the NLB website:

NLB Green Bond Framework

Key activities

Based on the NLB Green Bond Framework (GBF), NLB

issued its inaugural green bond in a benchmark size

of EUR 500 million in June 2023. Key actions in 2025

focused on building up the green bond eligible assets

portfolio. This focus continues to be a priority in 2026.

Target and progress

With the issuance of the green bond in June 2023

in line with the GBF, NLB committed to strive to allocate

the full amount of the green bond (EUR 500 million)

within 36 months after issuance (target amount), i.e.

by 26 June 2026.

The eligibility criteria, as outlined in the Use of

Proceeds section of the GBF, take into account the EU

Taxonomy Regulation and the EU Taxonomy Climate

Delegated Act, with the intention to apply them on a

best-efforts basis. In that respect, the Group will focus

on compliance with technical screening criteria for

determining substantial contribution to climate change

mitigation and, as they enter into force, to sustainable

use and protection of water and marine resources,

as well as pollution prevention and control.

The target amount was set based on the outcome

of the analysis made by Corporate and Investment

Banking Management (for the CIB stream) and

Customer, Product Management and Digital Services

(for the retail stream) before the green bond issuance.

Based on the projections, it was concluded that

the target is within reach. The target amount was

confirmed by the Management Board.

Financial Markets department monitors progress on

meeting the allocation targets monthly and quarterly,

while progress is reported quarterly also on the

Sustainability Committee.

Externally, the progress is reported with the publication

of the NLB Green Bond Allocation and Impact Report

(Allocation and Impact Report), which is available on

the NLB website. The NLB Green Bond Allocation and

Impact Report was not subject to an external audit

of this Sustainability Report. The assurance review

was performed by Sustainalytics (Morningstar), which

subsequently issued a limited assurance report.

Based on the NLB Green Bond Framework such a report

has to be prepared annually at least until full allocation.

The second Allocation and Impact Report was published

in June 2025 on data as at 31 March 2025. The report

reveals that the

portfolio of eligible assets amounted

to EUR 615 million (thus exceeding the target), with

2,909 financings granted.

With respect to green bonds

and relating commitment to allocate EUR 500 million

of eligible projects, full allocation was achieved and

reported with the second Allocation and Impact Report

published in June 2025.

Table 80:

Eligible portfolio - allocation by categories

Allocated proceeds as at 31 March 2025

ICMA Green

Projects Categories

Total amount of

proceeds allocated

Number of financings

New financing

Refinancing

Unallocated proceeds

Renewable Energy

340,766

1,822

139,552

201,214

139,907

386

9,191

130,716

Clean Transportation

119,825

700

14,282

105,543

14,230

14,230

614,729

2,909

163,025

451,703

500,000

267

Banking book debt

Policy

NLB Group Investment Strategy

When managing banking

book debt securities, the portfolio reflects different

characteristics in order to diminish the risk derived

from within. This is described in the NLB Group

Investment Strategy: Investment Portfolio Plan –

Definition and Monitoring and in Trading and Treasury

Framework for Managing Debt Securities. While the

former document only sets the ESG as a component

in the portfolio overview, the latter document includes

a definition of ESG component, which constitutes a

social, green or sustainability tag based on the 2021

Social Bond Principles (SBP), the 2021 Green Bond

Principles (GBP) and the 2021 Sustainability Bond

Guidelines (SBG) published by the International Capital

Market Association (ICMA).

The NLB Group Investment Strategy is the

highest-level document for managing banking book

debt securities and all banking members are obliged

to comply with it.

Each banking

member has its own debt securities portfolio under

its supervision and as such is reported to local Assets

and Liabilities Committee (ALCO). Every quarter an

overview of portfolios is reported to the Group ALCO.

Register of internal Documents

In 2025, the NLB Group was actively present on the

market of ESG-labelled debt securities issuances,

whether primary or secondary, following the policy and

the target related to the banking book debt securities

portfolio. This will continue in 2026. With this approach

constant growth of the Group’s ESG awareness in the

debt securities portfolio is ensured.

Target and progress

The Group’s target is defined as a share representing

ESG-labelled banking bonds in all banking bonds

issued in the observed period for which the Group has

a risk appetite. The target is calculated twice per year

with a half-yearly observed period. In 2025 this target

was set at 15% and its achievement was reported on

Sustainability Committee quarterly. At the end of 2025

ESG-labelled banking bonds represented 32.5% of all

banking bonds issued.

At the end of 2025, the NLB Group had EUR 902.6

million invested in ESG-labelled bonds which

represents 13% of the Group’s banking book debt

securities portfolio and marked a 34.7% growth

compared to 2024 (10.8% share). More than half of

the ESG portfolio was invested into government,

government guaranteed and multilateral bank

bonds. In 2025, EUR 203.4 million of ESG-labelled

bonds were added into the debt securities portfolio

which is 12.9% of all new investments in 2025 on the

Group level.

Reported values for ESG Bonds in the Group’s banking

book debt securities portfolio refer to the financial

statements notes 5.3. Non-trading financial instruments

measured at fair value through profit or loss, 5.4.

measured at fair value through

other comprehensive income, and 5.6. Financial

assets measured at amortised cost.

Table 81:

ESG Debt Securities in NLB Group portfolio

Banks &

corporate

Government and

multilat. banks

Purchased

in 2025

324,580

201,560

526,140

391,657

127,006

Social

65,927

163,405

229,331

183,984

34,753

506

146,651

147,157

94,532

41,676

Total ESG

391,012

511,616

902,628

670,174

203,435

Total portfolio

1,349,689

5,614,211

6,963,901

6,193,120

1,573,617

% of ESG

29.0%

9.1%

13.0%

10.8%

12.9%

Table 82:

Distribution of ESG debt securities by asset class

Asset 

Share

Share

Government bonds

230,673

25.6%

171,461

25.6%

Bank senior unsecured bonds

319,880

35.4%

213,652

31.9%

Multilateral bank & agency

bonds and GGB’s

280,943

31.1%

237,068

35.4%

Covered bond

60,608

6.71%

34,592

5.2%

Subordinated debt

5,780

0.64%

8,654

1.29%

Corporate bonds

4,744

0.53%

4,746

0.7%

902,628

670,174

SOCIAL

This section outlines the NLB Group’s approach to

building relationships with employees, clients and

communities, embedding respect for human rights

across all interactions.

269

S1

SBM-3

Material

impacts, risks

and opportunities

and their interaction

with the strategy

and business model

At the NLB Group, sustainable practices and human

resource management are deeply interconnected.

Sustainability is firmly embedded in the Group’s

values which are the key drivers of the organisational

culture (growing people, encourage entrepreneurship,

and improving lives). It is also one of the foundations

of the NLB Group Human Resource Strategy

(hereinafter: HR Strategy).

The strategic importance of our own workforce

(hereinafter employees) for the Group’s own

operations and business model is evident in the fact

that the HR Strategy incorporates and supports the

NLB Group Strategy 2030 (People and Culture pillar).

The Strategy is designed to enable and support

organisational growth and development while

embedding sustainability and resilience into the

workforce management. It is built on two

foundational pillars:

Values, culture, and leadership for the future

Sustainable growth and development

To achieve its purpose,

the HR Strategy focuses

on six key directions:

· Talent Retention and Acquisition:

Attracting and

retaining top talents through competitive offerings

and career development opportunities.

· Management of Skills and Competencies:

Ensuring

employees have the right capabilities to meet

evolving business needs.

· Healthy and Inclusive Work Environment:

Promoting

well-being, diversity, and inclusion across all levels of

the organisation.

· Leadership and Culture Transformation:

Developing future-ready leaders and fostering

a culture of collaboration and innovation.

· Effectiveness and Added Value:

Driving efficiency

and measurable impact in the HR processes

and initiatives.

· Digitalisation and Data-Driven HR:

Leveraging

technology and analytics to enhance decision-

making and employee experience.

By integrating these foundations and directions, the

NLB Group aims to create a resilient, inclusive, and

high-performing workforce that supports long-term

organisational success.

The NLB Group has also defined Standards for Human

Resource Management and Organisation Development,

highlighting the fact that the NLB Group wants to be

one of the most desired employers in all the markets

operated by the Group.

In order to achieve that, the NLB Group members

establish a long-term relationship with their employees

based on mutual interests, resulting in employee loyalty,

high motivation, and dedication.

The employees have the possibility of systematic career

development, employment abroad, gaining experience

and advancing personal development.

Figure 91:

NLB Group Values

Growing

People

Encourage

Entrepreneurship

Improving

Lives

We are ambitious, curious

people who want to learn

continuously. We are skilled

professionals and effective

communicators.

• We are honest speakers

and active listeners

• We acquire and share

knowledge

• We are persistent in striving

for continuous improvement

• We support each other

to learn and improve

• We act together towards

common purpose

We understand our clients and

colleagues, and continuously

innovate to enhance their

experience. We drive and

embrace the changes.

• We are looking everything

through digital eyes

• We are always going

one step further

• We are respecting our

agreements and promises

• We are proposing innovative

and simplified improvements.

• We ask for empowerment

and take responsibility

We are changing ourselves

to improve the quality of life

in our home region.

• We are advocating

and applying

sustainable practices

• We show interest

and understanding

for one another

• We personally lead

the change

• We take care of our personal

impact on environment

• We look for opportunity

in every challenge

270

The NLB Group continuously embeds sustainable

principles into the human resource management and

organisation.

In this respect, the NLB Group members

implement respective HR internal documents, rules

and procedures, initiatives, and practices which:

respect the human rights and labour rights enshrined

in both local and international law,

include diversity and inclusion, equal opportunities,

and non-discrimination for reasons of gender, ethnicity,

age, or any other circumstance,

ensure efficient addressing of diversity, in particular

gender equality in the highest governance bodies and

senior positions,

ensure fair pay and remuneration, an equal pay for

an equal job, reduce and monitor the gender pay gap,

promote and ensure the safety, health, work-life

balance, and well-being of employees,

attract and manage talents to drive the local and

international career development of employees,

promote the internal dialogue and communication and

measure employee satisfaction through regular

organisational culture and employee engagement surveys,

maintain high standards of labour management

relations and social dialogue,

promote and implement training and other measures

to ensure that the employees build their sustainability

capacities, awareness, and engagement,

build and promote a sustainability culture which

is an important driver for successfully steering the

sustainability and ESG agenda in the NLB Group.

The DMA conducted in 2024 identified 4 material

sustainability topics, which are directly or indirectly

connected with the HR strategy and Standards: Working

conditions and human rights of employees; Employee

attraction and development; Diversity, equity and

inclusion, and Cybersecurity. These topics and related

IROs were reconfirmed by 2025 DMA update review.

The following tables 83 and 84 present material IROs

and their connection to the overall business model

of the NLB Group.

Employee classification in the NLB Group

The conducted DMA and disclosures in this Social

Information chapter relate to all those employees who

are or could be materially impacted by the Group. In

accordance with the ESRS, the NLB Group classifies its

workforce into two categories:

· Employees:

Individuals engaged by a contract with

any NLB Group member, either full-time or part-time,

identified by an ID number.

· Non-Employees:

Individual contractors supplying

labour to NLB Group members, including self-

employed individuals under signed contracts,

and workers provided by third-party providers

(NACE Code N78), such as HR agencies, institutions,

and students.

As stipulated in the ESRS requirements and Quick Fix

regulation, information on non-employees may be

excluded in the first three years of reporting (for 2024,

2025, 2026 financial years). The NLB Group opted to apply

this exclusion and plans to report on this employee type in

the future, in line with the regulations in force at the time.

The identified IROs, presented in the tables, are related

to all NLB Group’s employees and do not make a

difference among relevant types of employees.

For example, while the impact of office work

on employees’ health is widespread in all the

countries where the NLB Group operates, the Group

acknowledges that at the same time, some employee

Table 83:

Own workforce-related impacts, risks, and opportunities (Working Conditions)

Material

Name

of IRO

Type

of IRO

Time

horizon

of employees

Work-related

health impacts

For some employees, office work results in long-term health impacts, such as back pain,

damaged eyesight, and related issues, thus reducing their quality of life.

Enabling a healthy

work-life balance

The NLB Group consistently prioritises imparting knowledge about healthy habits, mental

health, employee assistance support programmes, and advocates activities that

contribute to employees’ well-being and satisfaction. It fosters a healthy work environment

conducive to meaningful interpersonal connections and a work-life dynamic.

Enabling a healthy

and safe working

environment

The NLB Group has implemented numerous health-related initiatives aimed at reducing

the negative impacts of work and promoting a healthy lifestyle, which may result in a

positive impact on the employees’ health. Health and safety measures are implemented to

prevent accidents.

Enabling low

turnover rate and

long-term contracts

The NLB Group implements policies to ensure fair remuneration, adequate working

conditions, and social dialogue to promote employees’ satisfaction and retention. This

includes transparent and fair remuneration standards, monitoring working hours to

prevent burnout, and maintaining an open communication with the employees.

Fair remuneration

of employees

Through remuneration policies, the NLB Group is ensuring transparent and fair

remuneration standards for its employees, fostering fairness and equity.

Enabling social

dialogue

The NLB Group members are committed to establishing constructive relations between

employees and management, maintaining high standards of social dialogue and ensuring

timely communication. This also includes open communication on relevant topics and

informing employees and their representatives prior to the implementation of significant

operational changes that could substantially affect them.

Enabling collective

agreements with

employees

Employees are covered by a collective agreement, which allows for stronger

representation and a better bargaining position.

271

groups may be more exposed to work-related illnesses,

security, and injuries (such as customer-facing

employees and security drivers).

Material negative impacts

The actual identified material negative impact of office

work on the employees’ health is widespread in all

the countries operated by the NLB Group, however

some employee groups may be more affected than

others. For example, employees with disabilities and

older employees may be more exposed to work-

related illnesses, and specific groups of employees

(branch staff, employees working in the vault, money

transporters, etc.) may be more exposed to security

issues such as violence or robberies.

Material positive impacts

The NLB Group’s material positive impacts on the

employees span across material sustainability topics,

which are described in the table of material IROs

above. As a parent bank, the NLB strives to harmonise

related policies, practices, and measures that enhance

positive impacts and minimise negative impacts in all

the NLB Group members so that all the employees

across the group are or could be equally positively

affected. These efforts have some limitations due to

different legislations and socio-economic environments

in non-EU countries as well as the size of the entities.

Material risks and opportunities arising from impacts

and dependencies 

The NLB Group relies on a skilled workforce to achieve

its strategic objectives and deliver complex financial

services. Talent development and succession planning

are crucial for realising the opportunities and business

goals set forth in the Group’s Strategy. The DMA reveals

several material opportunities arising from impacts

and dependencies as presented in the tables. Although

only the identified material risk above the threshold is

related to cybersecurity, the Group recognises other

non-material (below the threshold) potential negative

impacts and risks, and embeds their mitigation in its

policies and procedures.

The impact on employees that may arise from the

transition plan

The implementation of the NLB Group’s transition plan

may have some negative and some positive impacts

on employees, however none of them are deemed

material. If not appropriately addressed, negative

impacts may include increased workload derived from

fulfilling new requirements and establishing new work

processes. On the other hand, the implementation of the

transition plan may have a positive impact and provide

opportunities for new job creation, reskilling, and

upskilling. These impacts will be adequately addressed

in the further development and implementation of the

transition plan.

Risks regarding forced labour or child labour

The NLB Group has established a strong policy on

human rights, which prohibits any kind of forced,

compulsory, or child labour and no minors under

18 years of age are employed in any of the NLB Group

members. As a result, none of the NLB Group members

or activities in their own operations are at risk

regarding these issues. The Group has also

implemented due diligence mechanisms to monitor,

identify, and act upon any deviations and incidents

which might occur.

Table 84:

Own workforce-related impacts, risks, and opportunities (Employee Attraction and Development, DEI, Cybersecurity)

Type

of IRO

Time

horizon

Employee

attraction and

Enabling trainings

and skills

The NLB Group is continuously committed to leverage trainings throughout the

region and make development of its employees its core value. Investing in training

raises career prospects for employees and improves workplace satisfaction.

Trainings and skills

Training and skills development are crucial for enhancing employee capabilities

and fostering innovation within the Group. By investing in continuous learning

opportunities, the Group can improve employee performance, adapt to industry

changes, and strengthen workforce engagement, ultimately leading to better

service delivery and long-term competitiveness in the financial sector.

Enabling talent

management and

retention of talents

Enabling talent management and retention of talents ensures that the organisation

can maintain a skilled and motivated workforce with improved career prospects.

Key talent

retention of talents

Effective talent management and retention strategies are essential for banks to

maintain a competitive edge and drive organisational success. By focusing on

career development, employee engagement, and a positive workplace culture,

the Group can attract top talent, reduce turnover, and ensure a skilled workforce

that is committed to achieving long-term goals and enhancing service quality.

Diversity, equity

and inclusion

Gender pay gap

and remuneration

The NLB Group has committed to reducing and monitoring the

gender pay gap, which may negatively impact the work satisfaction

of female employees and damage the company’s reputation.

Protection of

employees’

personal data

Protection of employees’ personal data ensures privacy and fosters trust among

employees, contributing positively to their sense of security and overall morale.

Cyber crime

Cybersecurity risks, particularly regarding the protection of employee and

customer data, can significantly impact the Group’s financial performance through

potential data breaches that lead to costly remediation efforts, regulatory fines,

and litigations, as well as reputational damage that erodes customer trust and

confidence, ultimately resulting in a loss of business and diminished market value.

272

S1-1

Policies related

to own workforce

The NLB Group manages identified material IROs, which

are related to ensuring secure employment and fair

remuneration, enabling development of employees, safe

and healthy working environment, work-life balance,

enabling social dialogue, equal opportunities for all

employees, and ensuring cybersecurity (data and

privacy) through several policies and procedures.

On a high level, the general internal regulation

framework related to the Group’s own employees is set

out in the Code of Conduct (described in the chapter

Governance Information

). Another important document

is the Policy on Respecting Human Rights (detailed in

Human Rights

). In 2025, new Human Resource

Management and Organisational Development

Standards were introduced. All Group members are

required to operate in full alignment with these HR

Standards and ensure compliance with applicable local

regulations and legislation when implementing related

principles and policies. The document sets out key

requirements and establishes the minimum standards

that all NLB Group members must integrate into

their operations.

In addition to these three key internal documents,

specific IROs are addressed in domain specific policies,

and other internal acts, rules, and procedures which are

harmonised in line with the Guidelines for the adoption

of NLB Group documents.

In the following chapters, specific policies are presented

for each material sustainability topic. The purpose and

content are described for each Policy, while the scope,

accountability, and availability are common to all

policies as detailed below (unless stated otherwise in the

description of a relevant policy).

NLB Group has established mechanisms

for document and processes harmonisation in all

the NLB Group members. In line with the

Guidelines

for the adoption of NLB Group documents

(policies,

strategies, methodologies, criteria, procedures…)

internal documents related to employees are first

prepared by the human resource competence line

and adopted by the competent body in the NLB as

the parent bank. As a rule, sustainability-related

policies and other internal documents are adopted

first in the NLB as the parent bank, whereas the

Group members are responsible for adapting them

and implementing them in their operations according

to the parent bank’s guidelines and local legislation.

Accordingly, the competence line defines the level

of obligation: whether the NLB Group document is

mandatory, partially mandatory (mandatory and

best practice) or just best practice recommendation

for other NLB Group members.

Most senior function accountable:

The policies

related to employees are in the custody of different

departments, mainly human resource departments.

The Policy on Respecting Human Rights is in the

custody of the Sustainability Unit, and policies on

protecting personal data are in the custody of legal,

general affairs, compliance or IT departments.

They are responsible for the preparation of policies,

their updates and first-level implementation, as

well as raising the awareness and delivering the

training related to the policies. The Management

Board or director of each NLB Group member is

accountable for the oversight of the policies,

while directors of designated departments are

responsible for their operational implementation.

After a NLB Group member adapts and

adopts its internal acts, they are published on their

intranet site, making them accessible to all their

employees.

S1-2

Processes

for engaging

with employees

and workers’

about IROs

The NLB Group has established a structured process for

engaging with the employees and fostering constructive

relations between the employees and management.

The Group maintains high standards of social dialogue

and ensures timely, transparent communication on

impacts, risks, and opportunities. The employees

and their representatives are informed in advance of

significant operational changes that may affect them,

supporting openness and collaboration across all the

entities. Following the DMA conducted in 2024, the NLB

Group enhanced the inclusion of material IROs in the

discussions with the employees and their representatives.

In all the countries of operations and entities, the

NLB Group strives for a high level of consistency by

using the NLB practice as a guideline and adhering

to the local legislation. The NLB Group members

strictly respect and follow their national labour laws

which stipulate the right for workers to form trade

(or labour) unions and to freely associate through

them. The engagement between the employer and

employees occurs directly and also indirectly through

the workers’ representative bodies and their authorised

representatives.

The NLB has two workers’ representative bodies: a

representative trade union and workers’ council. In

other banking members a trade (labour) union is also

in place, except in NLB Banka, Prishtina. In the leasing,

asset management companies and other NLB Group

members, trade unions have not been established.

Therefore, the management boards of companies

conduct the social dialogue directly with their

employees by regular communication channels, such as

personal meetings, management sessions, meetings of

organisational units, etc.

273

The processes for presenting information, carrying

out communication, negotiations and submitting

complaints to or with representatives are defined in

a detailed agreement between the employer and

workers’ representative bodies (where they are

established) and in their local labour law legislation. For

example, in NLB, the cooperation with the labour unions

and Workers’ Council is stipulated in the collective

agreements, the Act on workers and management and

the Agreement on Cooperation between the Workers’

Council and Employer.

In other NLB Group members, the employees’ initiatives

and requests on the aforementioned topics are gathered

via local human resource departments, internal

communication channels, or in person.

Representatives on the Workers’ Council in the NLB

review employees’ initiatives, opinions, and proposals

related to the Bank’s organisation, working conditions,

occupational health and safety, and other work-related

matters, and forward them to the employer. They

ensure compliance with labour legislation, collective

agreements, and the employer’s internal regulations,

support the achievement of jointly agreed objectives of

the Bank, and propose measures that the employees

benefit from.

The engagement with workers’ representatives

takes place frequently, regularly, in relation to all

relevant business decisions, and with the established

monitoring and oversight. For example, in the NLB, the

organisational setting includes:

· The NLB representative trade union.

Monthly

meetings are held with the trade union on open topics.

If negotiations are required, then meetings are in line

with the negotiation process. The main topics of interest

are related to social status improvements.

· The Workers’ Council.

Regular monthly meetings are

organised to address current topics in the bank and

questions raised by employees.

· Two representatives of the Workers’ Council

are

appointed to the NLB Supervisory Board, contributing to

discussions and the oversight of employee-related IROs.

· An authorized representative

assigned to cooperation

in labour relations who coordinates and monitors the

effectiveness of engagement with the trade unions and

the Workers’ Council.

In the case of business decisions and circumstances that

could have a material impact on employees, workers’

representative bodies are promptly informed or their

opinion is sought. Such decisions are, among other

things, as follows:

dismissals of employees due to redundancies

(economic, technical, organisational reasons)

significant operational or organisational changes

adoption of relevant work regulations (internal acts)

dismissals of employees who have committed a serious

breach of work obligations

The deadlines for informing the employees and their

representatives prior to the implementation of significant

operational changes that could substantially affect them

range from 8 to 30 days, subject to the nature of the

operational change.

The operational responsibility for ensuring that the

social dialogue takes place lies with senior managers

or directors who are in charge of human resource

departments in each NLB Group member or authorised

for cooperation in labour relations. They are in an

ongoing communication with the management boards,

thus ensuring that the engagement results and other

topics are promptly addressed and that decisions are

incorporated in the operations of a relevant NLB Group

member.

In line with the established Policy on respecting

human rights, as well as diversity, equity and inclusion

principles, the NLB Group members engage all their

employees in their consultation processes, ensuring

equal inclusion irrespective of their gender, religion,

seniority, disability, or any other personal characteristics

or circumstances.

S1-3

Processes to

remediate negative

impacts and channels

for own workforce

to raise concerns

The NLB Group is committed to conducting their

business operations ethically and responsibly, with the

aim of preventing any potential negative impacts on

their employees and fostering a workplace grounded

in respect, equal opportunities and dignity of every

individual. In order to identify and assess such impacts,

the Group has established several mechanisms for the

employees to raise concerns and submit complaints.

On the general level, the Group identifies and assesses

the impacts through employee engagement surveys,

feedback mechanisms between managers and

employees, and through dedicated grievance or

reporting channels, which also serve to raise concerns,

make comments, ask questions or submit complaints.

Through these channels employees can report any non-

compliance, such as non-ethical, inappropriate business

practices or any potential or actual negative impacts on

employees or the company, including any employee-

related matters, data breaches, harassment or other

inappropriate events, or human rights violations. These

channels are established by the NLB Group and do not

involve any third-party mechanisms.

The employees may report:

by addressing their immediate superiors, HR department,

authorised representatives in trade unions, etc.

electronically and anonymously via the Whistler web

application

by e-mail to a dedicated e-mail address

in person or by telephone to persons authorised for

reporting and confidants under the local whistleblower

protection acts (in the NLB Group members where this

is applicable)

All reports are reviewed in accordance with the internal

procedures that are applied consistently and uniformly

across all the NLB Group members. The procedures

The Group maintains high

standards of social dialogue

and ensures timely, transparent

communication on impacts,

risks, and opportunities

274

described in the chapter

, subchapter

Managing Concerns About Unlawful or Harmful

Conduct

, also apply to reports related to negative

impacts on employees.

When a negative impact is identified, the Group takes

appropriate steps to provide remedies. The type of

remedy depends on the nature of the impact and may

include providing access to counselling or other support

services, implementing corrective measures such as policy

updates or additional training, displacement-related

measures, or other appropriate actions. These and similar

measures are undertaken to ensure a fair, adequate and

effective response to the identified negative impact.

The NLB Group members support the availability,

accessibility and trustworthiness of their channels for

raising concerns in several ways, adapted to the size

of each entity and the communication tools available.

The core financial members promote the use of these

mechanisms by:

regularly and transparently communicating them on

their intranet sites,

providing clear instructions on how to raise a concern

in all relevant internal policies, and

delivering training that strengthens the awareness of

the speak-up culture and builds trust in these channels.

The smaller NLB Group members that do not have

intranet platforms or standalone internal policies

raise the awareness of these channels through direct

communication with their employees.

The NLB Group assesses the effectiveness of its channels

indirectly, based on the availability of established access

points, the level of system usage, and any complaints

submitted. The system is considered effective, as

pathways and mechanisms remain continuously

accessible. Each year, a small number of anonymous

cases are reported, and are processed in line with the

internal rules and valid national regulation.

The NLB Group members also monitor the number of

reported and resolved cases, as well as the outcomes

of grievance processes and implemented remedies.

Effectiveness is measured directly through feedback

from the affected employees and indirectly through

employee engagement surveys.

S1-4

Taking action

on material IROs,

and effectiveness

of those actions

Under the HR Strategy, the NLB Group has established

a structured framework of initiatives, KPIs, and activity

plans for each strategic direction, implemented through

procedures across the Group members. All work-related

activities are aligned through ongoing dialogue with

workers’ representatives, trade unions, and employees’

immediate supervisors.

Tracking progress on these activities includes employee

surveys and regular feedback, as well as benchmarking

against industry standards.

Human resource activities and related investments

are integrated into the NLB Group’s regular financial

planning processes, which enables that initiatives

are managed effectively within the overall budget

framework, which is approved by respective

management boards.

The key actions associated with each material

sustainability topic are disclosed in the respective

chapters that follow, namely

Human Rights, Working

Conditions, Employee Attraction and Development,

Diversity, Equity and Inclusion, and Cyber Security.

S1-5

Targets and

metrics related

to managing

material IROs

The strategic, measurable and timebound targets

have been established in relation to human resource

management to be met by 2030 in the NLB Group

banking members. They include:

· increasing the employee engagement to over 56%

and achieving the employee Net Promoter Score of

more than 50 points.

· achieving an average of 33 training hours per

employee

, equivalent to an average of 5.5 training

days per employee.

For further details on these targets and how they are

connected to the policies and actions see the chapter

Employee Attraction and Development

The NLB Group also monitors additional metrics for

each material sustainability topic, focusing on its

employees and corresponding actions. These metrics

are disclosed in the subsequent chapters dedicated

to each sustainability topic:

Human Rights

Working

Conditions

Diversity, Equity and Inclusion, and

Cyber Security

The targets are set and discussed in the yearly planning

process in the NLB Group members, and are usually

set as a year-end benchmark. Employees or their

representatives are included in target setting where

applicable, and subject to the type of the target. The

progress and effectiveness of the targets and metrics are

monitored and measured within the departments, which

are responsible for their implementation, and reported

to the management boards of the NLB Group members.

275

S1-6

Employee

characteristic metrics

Accounting methodology and reconciliation:

Employee characteristics presented in this chapter are

based on actual headcount data reported by NLB Group

members as at the last day of the reporting period.

Headcount reflects the number of individuals holding

an employment contract, regardless of the contracted

working hours. To ensure accuracy and avoid double

counting, employees with employment contracts in

more than one Group entity are counted only once. A

breakdown for the categories “other” or “not reported”

gender is not applicable, as none of the NLB Group

members report employees under these classifications.

The reported number of employees is reconciled

with the Business Report (page 5) and the financial

statements notes 4.10 Administrative expenses.

At the end of 2025, the NLB Group employed 8,107

people, reflecting a year-on-year decrease of 215

employees.

In 2025, a total of 990 employees left the NLB Group,

matching the turnover recorded in 2024. The number of

employees who left includes all departures - voluntary,

dismissals, retirements, and all other forms of exit. While

the overall number of departures remained stable

year-over-year, the gender composition of employee

departures shifted moderately: female departures

increased by 4.6% while male departures decreased by

9.1%. The NLB Group recorded a total employee turnover

rate of 12% in 2025, consistent with the level reported

in 2024. The employee turnover rate is calculated as a

percentage by dividing the total number of employees

who left during the reporting period (numerator) by the

total number of employees at the end of the reporting

period (denominator). The decline in employee numbers

and the corresponding turnover rate is predominantly

attributable to the merger of the leasing companies,

alongside ongoing digitalisation initiatives and process

optimisation efforts across the broader banking entities.

Table 85:

The number of NLB Group employees by gender

(headcount)

Gender

Male

2,547

2,597

Female

5,560

5,725

Not reported

NLB Group Total

8,322

Note: The measurement of metrics was not validated by an external

body other than the assurance provider.

Table 86:

The number of employees in the countries with at

least 50 employees and 10% of the total NLB Group number of

employees (headcount)

Country

2,776

2,856

2,366

2,515

1,013

1,025

993

995

502

478

406

410

Note: The measurement of metrics was not validated by an external

body other than the assurance provider.

Table 87:

The number of NLB Group employees by gender and countries (headcount)

Country

Male

Male

2,776

67%

33%

2,856

68%

32%

2,366

71%

29%

2,515

71%

29%

1,013

75%

1,025

74%

26%

993

66%

34%

995

65%

35%

502

61%

39%

478

406

68%

32%

410

67%

33%

Croatia

63%

37%

Switzerland

69%

31%

8,322

69%

31%

Note: The measurement of metrics was not validated by an external body other than the assurance provider.

Table 88:

The number of NLB Group’s permanent, temporary and non-guaranteed hours employees, by gender (headcount)

Male

Not reported

Male

Permanent

5,227

2,407

5,324

2,456

Temporary

333

140

401

141

Non-guaranteed hours

5,560

2,547

5,725

2,597

Note: The measurement of metrics was not validated by an external body other than the assurance provider.

276

Table 89:

The number of NLB Group’s permanent, temporary and non-guaranteed hours employees, by countries (headcount)

Human rights

Policies

The NLB Group members ensure a fair treatment

and protect the rights of workers while providing a

structured framework for employers to manage their

workforce effectively in accordance with the local labour

laws. To this end, the principles and provisions related

to the human rights are included primarily in the Policy

on Respect for Human Rights in the NLB and NLB Group,

and consequently in the employment contracts, which

are signed by each employee, and are also integrated

into the domain-specific internal acts.

Policy on Respect for Human Rights

The purpose of the Policy,

adopted in 2023, is to set out the NLB Group’s

commitments to respecting human rights in

accordance with the international standards.

These include (but are not limited to) the Universal

Declaration of Human Rights, the International

Covenant on Civil and Political Rights, the

International Covenant on Economic, Social and

Cultural Rights, the ILO Declaration on Fundamental

Principles and Rights at Work, the UN Guidelines,

Performance Standards 2, 4, 9 as per EBRD

Environmental and Social Policy, and the OECD

Guidelines. In addition to these, the NLB follows

the National Action Plan on Business and Human

Rights of the Republic of Slovenia and meaningfully

transposes its directions and recommendations

to other regions. The Policy lays down principles

and commitments, related to the NLB Group’s own

operations, financing and investing or relationships

with other stakeholders.

It also outlines diligence mechanisms for identifying

and preventing any risks or incidents stemming from

the NLB Group’s value chain.

NLB Group employees.

Most senior function accountable:

The Policy

is in the custody of the Sustainability Unit (or

sustainability coordinators or legal and general

affairs departments in smaller companies without

sustainability-related functions in place), while the

highest responsibility lies with the Management

Boards of each NLB Group member. In addition, to

steer the human right policy the NLB has appointed

a Human Right Custodian to monitor and oversee

human right compliance on the Group level, organise

training, and coordinate the development of due

diligence mechanisms.

The Policy is available to all employees

in the Register of Internal Documents, and publicly on

the NLB website

The Policy includes the following principles and

commitments, which address several material and other

IROs (the latter are detailed in the tables 83 and 84):

The employees have the right to a suitable and safe

working environment.

The employees are encouraged to pursue personal

and professional growth and development.

Striving to improve the representation of the under-

represented gender in the management positions.

Zero tolerance and prohibition of any form of

harassment to ensure the dignity of employees and

a work environment free from ill-treatment and

harassment (the specific Rules on the Prevention of

Harassment and Mobbing at Work were established,

please see details below).

The employees are guaranteed the right to an effective

complaint mechanism to express their opinions,

complaints, and observations in confidence.

Ensuring equal opportunities for women and men, i.e.

an equal treatment irrespective of gender.

Country

Permanent

Temporary

Non-

guaranteed

hours

Permanent

Temporary

Non-

guaranteed

hours

2,776

2,752

2,856

2,830

26

North

Macedonia

993

930

63

995

890

105

406

376

410

366

44

Bosnia and

Herzegovina

1,013

962

51

1,025

936

89

502

304

198

322

156

2,366

2,260

106

2,515

2,393

122

Croatia

7,634

473

7,780

542

Table 90:

The total number of employees who have left the NLB Group by gender (headcount)

990

689

301

990

659

331

(i) The figure for 2024 was restated to the actual value for the whole NLB Group as for that reporting period only NLB Group banking members were

included due to the unavailability of data from other NLB Group members at the time: from 925 to 990, from 632 to 659, and from 293 to 331.

Table 91:

The employee turnover rate in the NLB Group by gender

of which female

70%

67%

of which male

33%

277

Ensuring the inclusion of persons with disabilities by

making appropriate adjustments to workplaces and work

environments, in accordance with the local regulations.

Recognizing the fundamental rights of employees

to form and join trade unions or other forms of

association, to bargain collectively, and to have the

protection of workers’ representatives recognized in

accordance with the labour law.

Considering the safety and health of employees to be

of fundamental importance and giving priority to the

continuous improvement of working conditions.

The NLB Group supports the elimination of all forms

of forced and child and adolescent labour, human

trafficking and does not employ persons under

18 years of age.

Rules on the Prevention of Harassment

and Mobbing at Work

The NLB Group members have

adopted the Rules on the Prevention of Harassment

and Mobbing at Work or included these principles in

the corresponding instructions, trainings and other

measures. The aim of this Policy is to protect the

employees in the event of mistreatment and harassment.

As the employers, the NLB Group members are obliged

to maintain the dignity of employees and create a

working environment in which no employee is exposed

to mistreatment or sexual or other means of harassment

by their subordinates or superiors, colleagues, or anyone

else who performs work for any NLB Group member

With this Policy, all employees uniformly understand

the importance of the prohibition of ill-treatment and

harassment, which they must all consistently respect in

their relations with all the Group’s stakeholders.

NLB Group employees.

The Management

Boards and directors of HR departments or similar

functions in the NLB Group members.

The Rules are available to all employees in

the Register of Internal Documents.

Key actions and progress

In 2025, the NLB Group continued to implement the

findings from several analyses conducted over the

previous two years, including:

A review of policies, processes, and mechanisms for

respecting human rights;

A human right risk assessment across the NLB Group

banking members;

An employee survey at the NLB evaluating the

likelihood and severity of specific human right issues.

The employee survey identified three key human

right priorities:

An equal pay for equal work

Good and safe working conditions

The right to rest and leisure

These rights were incorporated into the initial DMA

conducted in 2024 and are reflected in the material

ROs

and sustainability topics: Working conditions and human

rights of employees, and Diversity, equity, and inclusion.

Other human right issues (such as child labour, slavery,

and forced labour) were not considered significant due

to strong awareness and robust legislation in all the

countries where the NLB Group operates. These findings

were indirectly reconfirmed in 2025 DMA update review.

Building on these findings, the NLB Group undertook

several key activities in 2025:

· Human Right Training:

Human right topics were

integrated into mandatory annual sustainability

training, completed by employees in the banking

members. This significantly enhanced the employees’

awareness of human rights.

· Grievance Mechanisms:

Potential human right

violations were monitored through established

grievance channels available to all internal and

external stakeholders. For a detailed process, see

S1-3

: Processes to Remediate Negative Impacts

and Channels for Own Workforce to Raise Concerns.

· Ongoing Initiatives:

Additional activities supporting the

human rights of employees are described in relevant

subchapters of the

section: Working

Conditions, Employee Attraction and Talent Development,

Diversity, Equity, and Inclusion, Cybersecurity.

S1-17

Incidents, complaints

and severe human rights

impacts

Accounting policy:

The reported figures are based on

actual data provided by the NLB Group members.

Table 92:

The number of human right incidents, complaints,

and severe human right impacts related to the employees

The total number of confirmed

incidents of discrimination,

including harassment

The number of complaints filed

through various channels, including

grievance mechanisms

The total amount of fines, penalties,

and compensation for damages as a

result of the incidents and complaints

The total number of severe

incidents (forced labour, human

trafficking or child labour)

The total amount of fines, penalties,

and compensation for damages

as a result of severe incidents

(i) Of the two cases reported, one was closed following a preliminary

review, as no indications of harmful behaviour were identified and

therefore no further investigation was required. In the second case the

investigation was performed, and procedure was conducted resulting in

disciplinary action, which lead to employment termination.

Note: The measurement of metrics was not validated by any external

278

As identified through the initial DMA and reconfirmed

in the 2025 DMA update review, seven material impacts

relate to the working conditions and human rights,

grouped into three key aspects:

· Secure Employment:

Ensuring low employee turnover,

promoting long-term contracts, and providing fair

remuneration.

· Health and Well-Being:

Maintaining a healthy and

safe work environment, preventing work-related health

risks, supporting work-life balance, and raising the

awareness of health topics.

· Labour-Management Relations:

Fostering a social

dialogue and ensuring collective agreements with the

Secure employment

and fair remuneration

Policy

The overarching framework for ensuring secure and

stable employment across the NLB Group is defined by

collective agreements or corresponding internal acts,

adopted in accordance with the labour legislation in

each country where the Group operates. Further details

on collective agreements are provided in the chapter

Enabling Social Dialogue and Collective Bargaining.

The Group’s approach to fair and responsible

remuneration - recognised as a material positive impact

on employees - is governed by the Remuneration Policy,

which sets out the principles for equitable, transparent

and sustainable compensation practices across all

NLB Group members.

Remuneration Policy of employees in the NLB

and the NLB Group

This Policy provides guidelines

for the prudent remuneration of all employees,

excluding Management Board members (their

remuneration is regulated by the Remuneration Policy

for Members of the Supervisory Board and Members

of the Management Board in NLB), and aligns the

performance management system and remuneration

across the NLB Group. For core financial members, the

Policy aligns with the principles used by the NLB and

incorporates the local regulations that are binding

and applicable at the time for a respective member.

In other non-core members, the principles of the

remuneration policies are implemented through the

employment contract. The Policy defines relevant

stakeholders involved in the relevant processes, fixed

and variable remuneration, goal-setting process,

performance criteria (KPIs), and outlines the conditions

for awarding and paying out the variable part of the

salary. The Policy adheres to the EBA guidelines and

Banking Law, considering proportionality, NLB Group’s

assets, and relevant local regulations. It ensures an

equal pay for equal work, regardless of gender,

making it gender-neutral.

Boards and Supervisory Boards of NLB Group

members.

In 2025, the NLB Group continued to execute the

following ongoing activities:

Secure employment

All NLB Group members provided their employees with

long-term employment security by offering indefinite

contracts. However, due to specific circumstances such

as project-based work or temporary substitutions,

fixed-term contracts may be issued. In Kosovo, labour

law stipulates that an indefinite contract is automatically

granted after 10 years of continuous employment with

the bank.

Adequate wage

All NLB Group members were ensuring equal pay for

equal work and setting salaries above the market

minimum, so no employee received less than an

adequate (minimal) wage. For example, the NLB

conducts annual salary adjustments in accordance

with the minimum wage set by the government and the

collective agreement.

To ensure proper execution of the remuneration

policy, the NLB Group members make adjustments

based on monitoring the market conditions (market

salary benchmarks), local legislation, and dialogue

with employees and/or trade unions and workers

representatives.

Employee performance assessment

In 2025, the NLB Group continued to apply its

performance management framework to ensure

fairness and alignment with the strategic objectives.

The foundation of this process was goal-setting, which

cascades from the Group-level business priorities

to organisational units and individual employees.

The annual and semi-annual planning cycles were

implemented across all NLB Group members, forming

the basis for performance appraisals and variable

component of remuneration. Throughout the year, the

managers and employees engaged in the structured

performance review meetings to define and monitor:

Business goals aligned with the organisational and

Group objectives,

Personal development goals focused on enhancing

competencies and skills.

Performance monitoring and evaluation were

conducted at regular intervals, tailored to the nature

of tasks within each unit. To support the employee

performance assessment, the implementation of

a unified performance management system and

employee reward module is underway, integrated within

the Cornerstone application. This IT solution was first

introduced by the NLB as the parent bank. In 2025 it

was implemented in 3 more NLB Group members (NLB

Banka, Skopje, NLB Banka, Podgorica and NLB Digit)

and it will be implemented in all the banks and NLB

Lease&Go by 2028, which will ensure a coverage above

95% of all employees.

Other activities

Other ongoing activities related to collective

agreements include following the legislation,

maintaining a dialogue with employees, trade unions

and workers representatives, ensuring employees

receive written contracts at the beginning of the

working relationships, and enabling social protections

coverage in case of major life events related to

the employment (such as sickness, parental leave,

retirement, unemployment).

Activities related to engaging employees and

social dialogue in setting collective agreements

279

are described in detail in the chapter

Processes

for engaging with employees and workers’

representatives about IROs

S1-13

Performance review metrics

Accounting policy and reconciliation:

The reported

figures and gender breakdown for 2025 are actual data

provided by the NLB Group members. For the calculation,

employee headcount from S1–6 by gender was used as

the denominator, while the number of eligible employees

of each gender who received a regular review served as

the numerator. For 2024, the figures were estimated using

the overall gender structure of the NLB Group (the number

of employees of a particular gender divided by the

total number of employees), due to the unavailability of

complete data for that year. Because the methodologies

differ, the results are not directly comparable.

Eligible employees are those who, as at the last day of

the reporting period, hold an employment contract with

the company and are neither on long-term absence

nor in a probation period. Long-term absence refers

to full-day absence for at least half of the assessment

period, including absences due to sick leave, maternity

leave, parental leave, and comparable reasons.

The table 94 shows the share of eligible NLB Group

employees who participated in performance or

career development reviews. Participation in 2025 was

consistently high across genders, with nearly all eligible

female and male employees included.

S1-10

Adequate wages metrics

The general objective related to secure employment

and fair remuneration is to increase the number of

employees with long-term or permanent contracts

(where applicable and based on employment needs)

and to secure adequate and appropriate wages

considering job context, market conditions, local

legislation, and employee satisfaction.

In both reporting years 2025 and 2024, all NLB Group

members employees received an adequate wage

according to applicable benchmarks in their countries.

The reported

figure reflects actual data provided by NLB Group

members and is calculated as the number of NLB Group

employees receiving an adequate wage divided by the

total number of all NLB Group employees.

Table 93:

Adequate wages

Percentage of employees

paid an adequate wage

Note: The measurement of metrics was not validated by any external

Health and safe working

environment

Policy

The NLB Group has established an Occupational

Health and Safety (OHS) management system that is

fully aligned with the legal requirements set out in the

national laws and regulations on workplace health

and safety in every country where the Group members

operate. Building on this regulatory foundation,

the NLB Group members have created the internal

governance documents, such as the Statement on

Safety and Risk Assessment and other health and

safety-related rulebooks, which define responsibilities

and required practices. Together, these documents form

a comprehensive OHS framework that directly

addresses the Group’s material IROs, specifically

enabling a healthy and safe working environment

and work-related health impacts.

Statement on Safety and Risk Assessment

This internal act regulates the

rights, obligations, and responsibilities of employers

and employees in connection with the implementation

and improvement of safety and health protection of

employees at work, as well as general principles of

prevention, and a system of rules of safety and health

protection at work, the application of which achieves

the prevention of injuries at work, occupational

diseases, and other diseases related to work, as

well as protection of the working environment, and

other issues related to safety and health protection

at work. Among other topics, special protection

is prescribed in order to preserve the mental and

physical development of young people, to protect

women from risks that could endanger the realization

of motherhood, to protect persons with disabilities

and occupationally ill persons from further damage to

their health and lowering their working capacity, and

to preserve the working capacity of older employees

within the limits appropriate to their age. The

statement also includes a risk and health assessment

for specific job categories.

All NLB Group employees are covered by the

undertaking’s health and safety management system

based on the legal requirements.

The Management

Table 94:

Performance and career development reviews (headcount), explanatory breakdown on eligible employees

(i), (ii)

All employees

Number

of eligible

Percentage

of eligible

Number of eligible

employees that

participated

in regular

performance/

career

Percentage of

eligible employees

that participated

in regular

performance or

career development

reviews

5,560

5,139

92%

5,086

99%

2,547

2,425

95%

2,382

98%

Gender not reported

7,564

93%

7468

99%

(i) Actual data reported by the NLB Group members for 2025.

(ii) A direct comparison with 2024 is not feasible, as the 2024 shares were estimated using a different methodology—based on the overall gender

composition of the NLB Group, due to incomplete 2024 data. Therefore, the following estimated shares were reported: 99% - 100% on the NLB Group level,

of which 69% female, 31% male, and 0% for other or not-reported categories.

Note: The measurement of metrics was not validated by any external body other than the assurance provider.

280

Board of each NLB Group member. In addition, all

NLB Group members (except those with fewer than

three employees) employ professional workers for

health and safety at work, who, together with the

help of managers, take care of the implementation

of measures to ensure safety and health at work

or they hire a licensed company to implement the

occupational health and safety law and to inspect

the applicable measures.

Key activities

Ensuring a healthy and safe work environment remains

one of the key priorities for the NLB Group. In 2025,

the Group continued implementing comprehensive

measures to protect employees’ well-being, prevent

occupational risks, and promote physical and mental

health across the region.

Occupational health risk assessments (technical and

health risks)

were conducted according to specific

methodologies , following the health and safety

legislation. The measures to reduce occupational

emissions, regular safety training, and provision of

personal protective equipment are implemented.

Injuries are recorded, investigated, and measures are

adopted to prevent recurrence. The risk assessment

is a foundation for the Statement on Safety and Risk

Assessment. The Employees must report workplace

risks or incidents to their supervisor, stop work if a

danger arises, follow internal protocol, and resume

only once the danger is resolved.

The employees took part in the

regular mandatory

training

covering topics such as workplace health

and safety, fire protection, first aid, and evacuation,

with the type and scope of training determined by

each NLB Group member respectively

The employees

who work in a higher risk position are provided with

a special or additional training for their specific jobs

or tasks (e.g., handling cash and securities, cash

transport, debt collection). Training sessions are

provided by OSH certified legal entities and other

professional companies.

General

periodical medical examinations were offered

to all NLB Group employees.

In the countries where this

is not obliged by the law, the entities have arranged

for medical insurance and additional possibilities

of preventive medical exams. Moreover, the entities

also offered other types of medical exams, such as

ophthalmology, breast scans, etc.

NLB and several other Group members also offered

ergonomic workplace adaptations

(such as ergonomic

chairs) to maintain the employees’ health.

A special health awareness programme, Healthy

Bank, was established in the NLB,

providing webinars

on various topics. This programme started in the NLB in

2015 and similar programmes are being gradually rolled

over to other NLB Group members.

Recognising the need to

raise the awareness of sound

mental health and appropriate stress management,

an employee assistance programme (EAP) started in the

NLB (Slovenia) and NLB Komercijalna Banka, Beograd

(Serbia) in 2024 and is now an ongoing initiative. EAP

offers the employees anonymised psychological and

other support. In 2025, more than 60% of employees

used EAP services or attended webinars on this topic.

Some other entities, which have not yet implemented

a dedicated EAP, performed ongoing activities, such

as organising ad-hoc online sessions on employees’

well-being, including stress management, emotional

intelligence, time management, marked the World

Mental Health Day by organising an online webinar

focused on health and mental well-being in the

workplace and everyday life (NLB Banka, Prishtina.) or

enabled the employees to submit to the HR departments

any concerns they may have.

The employees took part in

several sport events

and activities,

provided by the NLB and some other

Group members (such as memberships in internal

or external sports associations, sport events and

gatherings, etc.). In June 2025, the NLB was awarded

the ‘Športu prijazno podjetje’ (Sports-Friendly

Company) certificate by the Slovenian Olympic

Committee, recognising its commitment to promoting

sports and healthy lifestyles among the employees

and in wider community.

The channels were available to the employees to

suggest improvements or express concerns about

occupational health and safety.

The Group has various methods for worker

participation, consultation, and communication. In

some countries, safety committees or trade union

representatives help prepare safety declarations

and collect employee feedback. Where there are no

committees, the employees follow the guidelines and

can send their suggestions by e-mail.

S1-14

Health and safety metrics

The general objective related to health and safety is to

ensure working conditions for preventing work related

illness, injuries, excessive stress and deterioration of

mental health.

Accounting policy:

The reported figures are actual data

provided by NLB Group members.

Table 95:

Health and safety metrics

Percentage of employees who are

covered by the health and safety

NLB Group management system

Number of recordable work-

related accidents

Rate of recordable work-

related accidents

1.89

2.26

Number of recordable

work-related ill health

Number of days lost to work-

related injuries from work-related

accidents or work-related ill health

1266

769

Number of work-related fatalities

(i) The rate of recordable work-related accidents of 1.89 for 2025

indicates the number of work-related injuries per one million hours

worked. It is calculated as the number of injuries in the year out of

the total hours worked (for number of employees disclosed in S1-6),

multiplied by a coefficient equal to 1,000,000. For 2024, only working

hours for banking members were available (which represents 93% of

employees), so the estimation of data for the entire Group was made by

proportional extrapolation.

281

Work-life balance

Policy

The overarching framework for addressing the identified

positive actual impact, namely enabling a healthy work–

life balance, is defined in the NLB Group’s Code of

Conduct, the Policy on Respecting Human Rights, and the

Sustainability Policy. Efforts raise awareness and

implement concrete measures that support work–life

balance are further strengthened through family-friendly

initiatives, as well as company-specific policies on remote

work and the right to disconnect.

Family-friendly framework, regulations on remote

work and the right to disconnect

Some NLB Group members have

adopted special regulations and instructions related to

work from home (hybrid, remote work), flexible working

hours, and working time or have these principles

implemented in other acts defining employment

relationship. Also, some Group members have internal

acts defining measures and processes on creating

a family-friendly company, while all members strive

to follow these principles. Since 2024, all NLB Group

members operating in Slovenia adopted the Policy of the

Right to Disconnect, adhere to the EU directive, which

ensures that employees have the right to disengage

from work-related electronic communications during

non-work hours, promoting a better work-life balance

and protecting their health and well-being.

Directors of

HR departments or similar functions in each

NLB Group member.

The family-friendly measures at the NLB Group

address various aspects of the working environment

to promote work-life balance. These measures are

continuously implemented and developed across all

In 2025, the NLB advanced its commitment to work-

life balance by implementing the measures under its

national Family-Friendly Company certificate awarded

by the Ekvilib Institute (basic certificate in 2011, full

certificate in 2014). As in the previous year, 27 measures

were in place, 11 of which are related to family benefits.

In 2025, NLB Komercijalna Banka, Beograd reaffirmed

national Work-Life Balance Company CEE

certificate,

originally awarded in 2023, confirming the

Bank’s continuous commitment to creating a supportive

and sustainable working environment. Within the

Work-Life Balance framework, the Bank continued

to implement over 20 structured measures, including

process innovations, panel discussions on work-life

balance, and the organisation of a Family Day.

NLB Banka, Banja Luka is a signatory to the

Memorandum of Understanding with the UNFPA

and a member of the

Expanding Choices programme

(signed in October 2024), and they actively supported

family-friendly workplace practices throughout 2025.

In the countries without a family-friendly certificate,

the NLB Group members adopt individual measures to

support working parents,

such as hybrid work, well-

being webinars, days off for significant life events, and

limited overtime.

All NLB Group employees (women in men) are entitled

to parental and family-related leave under social policy

and/or collective bargaining agreements. They also

provide additional family-related leave, for example in

cases of marriage, childbirth, relocation, the death of

a family member, or a child starting the first grade of

primary school.

S1-15

Work- life balance metrics

The reported figures are actual data

provided by NLB Group members, and include maternity

leave, paternity leave, parental leave, and child care

leave that is available under national law or collective

agreements. The work-life balance metrics were

introduced in the 2025 reporting year; therefore,

no data are available for 2024.

Table 96:

Employees who are entitled to take and who took

family-related leave (distribution by gender), NLB Group

Employees entitled to take

family-related leave

Employees who took family-related leave

- of which female

73%

- of which male

27%

Complementary information: absenteeism

Absenteeism is included as an additional information

to provide users of the Sustainability Statement with a

clearer understanding of employee presence, well-being,

and health-care measures within the NLB Group. The

information is provided voluntarily, is not required by the

ESRS, and was not identified as material during the DMA.

However, it complements the information disclosed

under

S1-14 Health and safety metrics

, and

S1-15 Work-

life balance metrics

. The information was not subject to

assurance review of this Sustainability Statement.

The absenteeism rate is calculated

as the total number of hours of absence due to family or

healthcare reasons divided by the total number of hours

(including both presence and absence). Health-related

absenteeism encompasses absences of the NLB Group

employees due to illness covered either by the NLB

Group members or the state, work-related injuries and

occupational diseases covered by the entity or the

relevant institute, as well as absences taken for medical

appointments, obtaining medical assistance, or activities

such as blood donation that require reimbursement.

Family-related absenteeism includes absences for caring

for a family member, maternity and parental leave, and

all other family-related leave entitlements provided

under Family-Friendly measures.

Table 97:

The absenteeism rate in the NLB Group members

Family-related absenteeism

3.1%

Health-care related absenteeism

3.5%

6.6%

Note: The measurement of the metrics was not subject to assurance

review of this Sustainability Statement and was not validated by the

assurance provider.

282

Enabling social dialogue

and collective bargaining

In addition to the domain-specific policies, the identified

material IROs related to the employees under the topic

of working conditions and respecting human rights

are also defined by the Collective Agreement, which

represents one of the key internal acts in this area.

Collective Agreement

The Collective Agreement (CA

or CBA – Collective Bargain Agreement), being an

outcome of social dialogue among the management

board and the employees’ representatives, is

a general framework stipulating the rights and

obligations of the employer and employees in

relation to the legal employment relationship.

It regulates all matters of importance for the

employment relationship, their rights, obligations and

responsibilities, especially the establishment of the

employment relationship, its duration, working hours,

health and safety at work, professional training,

protection against discrimination and abuse at work,

and the right to freedom of association. In the NLB

Group members with established CA employees

are covered by their own CA or

a sectoral CA. In

jurisdictions where sectoral or national CA are not

in force, the NLB Group members have adopted

internal labour rulebooks, as a result of a social

dialogue,

that follow the parent bank CA principles,

and HR competence line governance rules,

as

the best practice. In addition,

several NLB Group

members have established rulebooks regulating the

cooperation between the workers’ representatives

and respective management boards, such as the

Workers and Management Act and the Agreement

on Cooperation between the Workers’ Council and

Employer, which is in force in the NLB and servers as

a harmonisation guidance across the Group.

The NLB Group members.

Most senior functions accountable:

Management Board and in some entities also the

Supervisory Board.

S1-8

Collective agreements coverage

and social dialogue

The NLB Group maintains high standards of social

dialogue and collective bargaining across its operations.

Accordingly, the report on employees covered by

CBAs includes all entities with collective bargaining

arrangements – those with their own, sectoral or

national CBAs and those with internal acts that follow

the principles of the NLB Collective Agreement.

figures are actual data provided by the NLB Group

members. For the calculation, employee headcount from

S1–6 was used as the denominator, while the number

of employees covered by collective agreements and

equivalent arrangements, served as the numerator.

As of the reporting year, and in previous year 99% of

the NLB Group employees are covered by collective

bargaining agreements and equivalent arrangements.

Across regions, Slovenia, Croatia and non-EEA countries

(Serbia, North Macedonia, Bosnia and Herzegovina,

Kosovo and Montenegro) fall within the 80–100%

coverage range, while workplace representation in EEA

countries is established only in Slovenia.

For an additional description of the key processes,

engagement and related activities please refer to the

Processes for engaging with employees and

workers’ representatives about IROs

Table 98:

Collective agreements coverage, NLB Group

Employees covered

by collective agreements

99%

99%

(i) The figure has been revised from 94% to 99%, as the 2024 value

reflected only NLB Group banking members, whereas the current

reporting includes all NLB Group members.

Table 99:

Collective bargaining and social dialogue coverage

in 2025, NLB Group

Collective Bargaining Coverage

Social

Dialogue

rate

Employees

EEA

non-EEA

Workplace

representation

(EEA only)

0-19%

Croatia

20-39%

40-59%

60-79%

80-100%

Slovenia,

Serbia, North

Macedonia,

Herzegovina,

Montenegro,

283

and talent

Policies

The identified material impacts and opportunities,

namely training and skills development (as detailed

SBM-3 Material impacts, risks and

opportunities and their interaction with strategy and

business model, table 84

), are addressed through several

policies.

Development Strategy of Human Resources and

Organisation for the NLB Group

A general framework for

employee development is set out in the HR Strategy

and the Development Strategy of Human Resources

and Organisation for the NLB Group, which

defines the basic areas (HR strategy, organisation,

education) and work activities in the NLB Group,

which contributes to the performance of individuals,

teams and the entire Group as well as ensure

sustainable development and long-term business

success. In 2025, the Human Resource Management

and Organisational Development Standards in the

NLB Group, which complement the Strategy, were

updated and they now provide high-level directions,

ensuring consistency, compliance, and clarity across

operations and harmonisation among the NLB

Key Employee Management Policy in NLB

The key employees are those

whose departure from the NLB Group would entail

a significant loss, for example due to the rare know-

how or experience of such employees. The Policy

aims to define all significant factors and measures

that contribute to a higher and more successful

commitment by the key employees, with the aim

of improving their loyalty, efficiency, motivation,

responsibility, and creativity, and to retain their

employment in the Group. The investing in the

key employees is a long-term process aimed at

retaining the best employees, since this contributes

to maintaining their high performance, engagement

and efficiency in the long run. At the same time, this

Policy has a positive impact on attracting talents

from the labour market and will thus be profitable in

the long run.

The key NLB employees.

Policy on mobility within the NLB Group

Content and purpose: The Policy defines the

frameworks and orientations that make it possible to

set uniform starting points for implementing the mobility

within the NLB Group and ensure the compliance

with the targets, values, culture and strategy of the

NLB Group. Its purpose is to enhance the agility and

development of all employees within the NLB Group

on the horizontal as well as the vertical levels, with

a high potential for assuming complex assignments

or positions (in particular managers, talents, key

employees, successors) or for reassignment within the

NLB Group. As the Group is present in different countries

in SEE, the Policy reflects the modern approach to

employee management, and acknowledges different

forms of employment and cooperation as the basic

source of competitive advantage and business results

of the NLB Group.

Talent retention and acquisition

is one of the six key

directions of the NLB Group’s HR Strategy, supporting

the People and Culture pillar of the NLB Group Strategy

2030. The updated HR Strategy, introduced in 2025,

positions recruitment as an essential lever for securing

the capabilities needed to meet future business demands.

It includes concrete initiatives that enable the NLB Group

to attract the right talent and build the internal capacity

required for the execution of Strategy 2030. The most

notable initiatives related to employee attraction and

talent development undertaken in 2025 are as follows:

· Unified talent management programmes.

members implement talent management programmes

using a unified methodology and approach. These

include development plans for identified talents,

coaching and training programmes, talent-rotation

initiatives (one or more working days spent in different

business areas), continuous monitoring of talent

satisfaction, and preparation of corrective action plans

where needed. In recent years, several generations of

talents have participated in programmes for young

talents, expert talents, and talents with leadership

potential. The latter are also considered for nomination

as successors for leadership positions and are included

in successor-development programmes. Talent

programmes operate in NLB Lease&Go and NLB Skladi

as well, with the intention of gradually expanding these

initiatives to subsidiaries across the region.

· Capacity building through upskilling, reskilling,

and capability development.

This is ensured through

systematic capability assessments, defining future

skills, and implementing upskilling and reskilling

programmes to close identified gaps. Managers and

HR share clearly defined responsibilities in capability

mapping, training delivery, and post-training

application to ensure that new skills translate into

organisational performance.

· Talent recruitment initiatives.

These include

continuous engagement on the labour market and the

promotion of occupations and career opportunities

to various talent segments. NLB maintains career

partnerships with all major universities and cooperates

with various student groups. It also leads an active

dialogue with the unemployment office to provide

opportunities for job seekers. In addition, NLB

organises challenges for young professionals in

partnership with AmCham, the School of Economics

and Business of the University of Ljubljana, and IEDC –

Bled School of Management, one of Europe’s leading

management development institutions. Throughout

the year, NLB also offers students part-time job

opportunities and practical placements.

The Group is continuously committed to leveraging

training throughout the region and to making the

development of its employees its core value. By

establishing a broad-based approach to training,

NLB Group ensures that the team remains agile and

well-versed in both traditional and emerging industry

domains. Furthermore, the Group is dedicated to

fostering an inclusive environment where every

employee has equal access to learning opportunities.

By removing barriers to education and development,

mostly with the help of digital channels, the Group

ensures that all team members can grow, contribute,

and thrive within our organisation.

284

In 2025, activities in the following areas were conducted

in NLB Group members:

In Slovenia,

NLB Education Centre

continues to

follow trends in the market to predict vital skills and

competencies that will have an impact on the Group’s

future, and provides learning opportunities to all Group

employees. Throughout 2025, the Group continued to

invest systematically in employee development, with

a strong focus on building core banking, leadership,

digital and regulatory capabilities. In total, employees

completed 383,482 training hours.

· More than 98% of the NLB Group employees (except

for a few Group members with very small teams and

technical obstacles or members undergoing a winding

down process) have access to the Udemy platform,

which offers over 10,000 training courses, available

to all employees as self-paced learning. In 2025,

there were 3,408 individual users learning in Udemy,

who together completed 58,322 training hours

inside Udemy.

NLB and larger banking members have established

a network of internal trainers

who are recognized

professionals in their respective fields. These trainers

deliver targeted sessions on a range of topics

aligned with operational needs.

In NLB Group, we also foster

coaching

as a powerful

tool for building capability, driving results, and

supporting both individual and organisational success.

Coaching is enabled in NLB and some NLB Group

members through the pool of certified internal coaches

or external coaching providers. In total,

X

internal

coaches were active across the Group in 2025.

The NLB Group strengthened employee skills through

mandatory and targeted training programmes.

All NLB Group core financial members conducted

mandatory e-training sessions based on legislation

and financial industry specifics (in particular code

of conduct, compliance, AML, anti-bribery and

corruption, IT security, etc.) Several NLB Group

members executed training sessions for specific

employee groups and topics, such as leadership,

coaching, and an executive monitoring programme,

innovation, sustainability and ESG, and diversity

and inclusion.

The impact of these and other key initiatives

is reflected in the Group’s continued recognition

as the employer of choice.

NLB has earned the

Top Employer certification for the 11

consecutive year,

while NLB Komercijalna Banka, Beograd has been

certified for the second time. In 2025, NLB Banka,

Banja Luka and NLB Banka, Sarajevo were also

awarded the Top Employer certificate for the first time.

Targets and metrics

figures for the employee engagement score are

based on a regular annual survey which includes

10 NLB Group members (NLB and 6 subsidiary banks,

NLB Digit, NLB Lease&Go, NLB Skladi).

In 2025, the annual Employee Engagement survey

confirmed a high employee engagement score

(improved by 5 p.p. compared to 2024) and a high

employee net promoter score (improved by 3 points

compared to 2024).

Table 100:

Employee attraction and talent development metrics

54%

>56%

Employee net

promoter score

>50

(i) Employee engagement target is reviewed annually, which resulted in

increasing the initial target 2030 from more than 50% (this target was

surpassed in 2024 for 4 p.p.) to new one - more than 56%.

S1-13

Training and skills

development metrics

The training

metrics is based on actual data provided by the NLB

Group members. For the calculation, average number of

employees in 2025 was used as the denominator, while

the number of training hours served as the numerator.

In line with the NLB Group internal methodology 6 hours

equal 1 training day. The 2024 figure included only the

NLB Group banking members, due to the unavailability

of complete data from other entities for that year.

Because the methodologies differ, the results are not

directly comparable.

members invested 46.6 hours or 7.8

training days/employee (of which 7.6 days/woman and

8.2 days/man), showing YoY improvement by 0.1 days,

and exceeding the 2030 target by 40%. The average

sustainability-related training days per employee stood

at 0.7 days, showing improvement by 0.4 days.

Table 101:

Average training hour per employee

Average training

hours per employee

46.6

46.2

Average training

days per employee

7.8

7.7

5.5

(i) Actual data for NLB Group members.

(ii) Actual data for NLB Group banking members.

383,482

training hours across NLB Group

285

Diversity, equity

Among the various impacts, risks and opportunities

(IROs) related to diversity, equity and inclusion

assessed, the gender pay gap was identified within the

DMA as a material actual negative impact (described in

more detail in chapter

SBM 3 Material impacts, risks and

opportunities and their connection with the strategy

and business model, table 84

). The management of this

impact (and other IROs) is embedded in the HR Strategy

and the Sustainability Policy.

HR Strategy

The general framework for

diversity, equity and inclusion in the workplace is

set out in the Sustainability Policy, which set out a

commitment to include diversity and inclusion, equal

opportunities, and non-discrimination for reasons of

gender, ethnicity, age, or any other circumstance, and

to ensure efficient addressing of diversity, in particular

gender equality, in the highest governance bodies

and senior positions. In addition, an inclusive work

environment is one of the main strategic directions

of the NLB Group HR Strategy. The Strategy outlines

the principles of embedding diversity, equity, and

inclusion (DEI) in all elements of key HR processes. It

also outlines strategic initiatives to be followed by all

NLB Group members, taking into account their local

specific and legislation.

Board and HR directors or similar functions in the

Register of Internal Documents

Key actions in 2025 were as follows:

The HR department and Sustainability Team

raised

awareness on DEI

group-wide with online sessions on

topics related to DEI, reporting on the Sustainability

Committee and through online webinars.

Diversity Policy for the Management Board and

was revised.

To underscore the importance of diverse recruitment,

this

commitment was communicated transparently, both

internally and externally,

as the proactive approach

not only attracts diverse candidates but also signals to

current employees that their unique contributions are

valued and integral to the Group’s success.

In 2025, all core members began implementing

a target organisational structure

to unify organisational

structures and job requirements, enabling proper address,

monitoring, and management of the gender pay gap.

mandatory e-training

on diversity was completed

by employees in NLB and covered the topics of diversity,

equity and inclusive culture. From 2026 onwards, these

training modules will be systematically rolled out to

other NLB Group members across the region.

NLB introduced

the Next Generation Platform

(NGP)

- a pilot programme to strengthen its internal

talent pipeline and increase participation of younger

employees. The programme is structured around four

pillar (Transformative Projects, Mentoring, Education,

and Social & Networking) which provide younger

employees with practical project assignments,

access to senior leadership, skill-building sessions,

and cross-divisional interaction. Through voluntary

participation, NGP improves visibility of early-career

employees, supports succession planning, and

increases the bank’s ability to integrate next-generation

perspectives into business and customer-focused

development, contributing directly to NLB’s

sustainability and HR development strategy.

S1-9

Diversity metrics

figures represent the actual headcount data provided by

all NLB Group members. In accordance with the Group’s

harmonised internal methodology, top management

refers to B-1 level directors, i.e. managers who report

directly to the Management Board of the respective

NLB Group member.

In 2025, NLB Group had 215 B-1 level managers, with

53% women and 47% men, the same gender split as in

2024, when there were 226 managers. This reflects stable

gender balance at top management levels.

Table 102:

Gender distribution at top management, i.e. B-1 level (headcount)

NLB Group (all members) - number

215

114

101

226

120

106

NLB Group (all members) - percentage

53%

47%

53%

47%

Note: The measurement of the metric was not validated by any external body other than the assurance provider.

figures represent the actual headcount data provided

by all NLB Group members.

In 2025, the age distribution percentages were closely

aligned with those in 2024, despite the change in the

total number of employees.

Table 103:

Age distribution (headcount)

Under 30

years old

30 - 50

years old

Over 50

years old

Under 30

years old

30 - 50

years old

Over 50

- Number

854

5,217

2,036

828

5,378

2,116

- Percentage

64%

65%

(i) The figures for 2024 were restated from initial values to the actual values (from 822 to 828, from 5,350 to 5,378, and from 2,150 to 2,116) as an estimate had

been used for that reporting period due to the unavailability of data from some NLB Group members.

Note: The measurement of the metric was not validated by any external body other than the assurance provider

286

S1-16

Pay gap and total

remuneration metrics

At the NLB Group, we recognise the importance

of systematically monitoring gender pay differences

and addressing the associated challenges, as this

is essential for ensuring a fair and inclusive

In 2025, the NLB banking members and leasing companies

made significant progress in their efforts to establish

a unified organisational structure model, harmonise

processes, and consequently implement a standardised

job evaluation model and job profile structure. After full

implementation, this will ensure that all job positions are

assessed using the same criteria promoting fairness

and transparency across all members of the Group. The

consistent approach fosters role comparability, supports

talent mobility, and lays a foundation for equitable

remuneration and improved employee trust - key factors

for long-term success of the NLB Group.

Total annual remuneration was calculated as the ratio

between the total annual remuneration of the highest-

paid individual in the NLB Group and the median total

annual remuneration of employees (excluding the

highest-paid individual). Reported figures for 2025 are

actual data reported by all the NLB Group members.

In 2024, the reported figures included only the NLB

Group banking members (due to unavailability of other

NLB Group members’ data). The calculation of the total

remuneration ratio for 2025 is based on data on the

actual remuneration of all employees employed in the

NLB Group entities as of the end of the reporting year,

taking into account the purchasing power parity of

each country for that year. In calculation of the total

remuneration ratio in 2024 employees in the banking

members who were employed in each individual bank

from 1 January 2024 until 31 December 2024 were

included, also taking into account the purchasing power

parity of each country for that year.

The average unadjusted gender pay gap is calculated

as the difference in average pay levels between female

and male employees, expressed as a percentage of the

average pay level of male employees. Compared to 2024,

the methodology and scope of data used for calculating

the average unadjusted pay gap have been modified.

In the calculation for the 2025 financial year, all

employees across all NLB Group members as of year-end

were included. The calculation used the gross hourly

rate for regular work, including the variable component,

adjusted for the purchasing power parity of each

country for 2025. In contrast, the 2024 calculation of the

gender pay gap included only the NLB Group’s banking

members and was based on contractual basic salary

and seniority bonus (excluding the variable component).

The average unadjusted gender pay gap for the

NLB Group employees in 2025 was 29.4%, while the

total remuneration was 1:42. Comparison of the value of

the total remuneration ratio for banking members shows

an increase in the ratio due to the rise in the

remuneration of the highest-paid individual by 76%

while the median of all other employees in banking

members (excluding the highest-paid individual)

increased by 9%. The remuneration figure of the

highest-paid individual is reconciled with the business

part of report,

page 576

Table 104:

Pay gap and total remuneration metrics

The average unadjusted gender pay gap of all employees in the NLB Group

29.4%

n.a.

The average unadjusted gender pay gap of all employees in the

NLB Group banking members

28.3%

28.4%

The total remuneration ratio in the NLB Group

1:42

n.a

The total remuneration ratio in the NLB Group banking members

1:42

1:26

Note: The measurement of the metrics was not validated by any external body other than the assurance provider.

(i) To ensure relevant comparison, the 2024 data for the NLB Group banking members were recalculated for the total remuneration ratio and for the

average unadjusted gender pay gap (reflecting the modified methodology). Taking into account the revised scope and methodology has partly affected

the previously reported values; the average unadjusted gender pay gap increased from the original 27% to 28.4%, while the total remuneration ratio

indicator remained unchanged at 1:26. The NLB Group banking members account for 93% of the employee headcount.

(ii) The calculation, reflecting the modified scope and methodology, was performed only for 2025, as data for the non-banking members were not

available for 2024.

Complementary information: The median unadjusted

gender pay gap

The calculation of the median unadjusted gender pay

gap is presented as additional, voluntary information

to enhance users’ understanding of remuneration

differences between female and male employees.

This metric has been calculated for the first time for

the year 2025. Although not required under the ESRS,

it complements the disclosures on employee-related

metrics. The information was not included in

the scope of the assurance review of this

Table 105:

Median unadjusted gender pay gap

The median unadjusted gender pay gap

of all employees in the NLB Group

22.8%

Note: The measurement of the metrics was not subject to assurance

review of this Sustainability Statement and was not validated by the

assurance provider.

The figure represents actual data of

all employees as of 31 December 2025 in all NLB Group

members. The calculation presents the gross hourly rate

for regular work including variable part, adjusted for

purchasing power parity in each country for 2025.

287

NLB Group continues to prioritise the confidentiality,

integrity, and availability of data, information, and IT

systems supporting both internal processes and client-

facing services. The highest-level strategic framework

is the IT Security Strategy (2025–2027), which aims to

position the Group as the most trusted digital bank

by emphasising centralisation, modernisation, cloud

adoption, regulatory compliance, and enhanced

security and disaster recovery capabilities.

Identified material IROs, pertaining to cybersecurity

(namely cyber crime and protection of employee

personal data), are governed by a range of policies,

guidelines, and instructions, with the principal policies

outlined in detail below. These internal regulations

apply uniformly to all NLB Group financial core

members, subject to local legislation concerning the

protection of information, individuals, and property. The

responsibility for policy implementation rests primarily

with the management boards of respective subsidiaries.

Employees can access these policies through the Register

of Internal Documents, and the essential elements are

covered in the compulsory annual information security

training. The policies are reviewed annually and updated

as needed to reflect regulatory changes.

NLB Group Information Security Policy

The Policy outlines a

comprehensive cyber and information security

governance framework, adhering to the three lines

of defence model. The aim of this is to ensure robust

management and oversight of information security risks

across various levels of the organisation, encompassing

business management, IT Security function, CISO, and

Internal Audit. The Policy emphasises the importance

of integrating information security into everyday

operations, in line with organisational requirements and

international standards. Furthermore, it details specific

roles, responsibilities, and procedures to safeguard the

confidentiality, integrity, availability, and authenticity of

data, information assets and ICT assets, thus enhancing

the overall digital operational resilience. The Group

provides information protection in accordance with

the laws (the Banking Act, the Personal Data Protection

Act, the Companies Act, the Business Secrets Act),

other regulations and the principles of good

practice defined in the ISO/IEC 27001:2022 in

ISO/IEC 27002:2022.

NLB Group IT Security Governance Policy

The purpose of the Policy is

to ensure the continuity of critical business processes

and to minimise IT security related risks and damages

by preventing and/or minimising potential malicious

events – IT security incidents. To this end, the Policy

defines the concepts of IT Security organisation within

the NLB Group and the allocation of responsibilities. It

places IT security as a skilled specialised organisational

unit within the Group. The Group IT Security Function

is established by and responds to the Group CIO (in

alignment with IT CL). The local IT Security function is

located in the local IT department but has a high level of

independence within the local subsidiary.

NLB Group IT Security End-User/Employee Protection

The protection of end users,

including employees and their devices, is crucial

for maintaining the overall security of information

systems. The objective of this guideline is to establish

comprehensive security practices applicable to all

users in the organisation, regardless of their specific

work settings. This guideline aims to enhance security

awareness and provide strategic measures to mitigate

risks associated with the use of organisational IT assets.

Throughout 2025, the NLB Group focused on several

core activities to enhance its cybersecurity governance,

cyber resilience and digital capabilities. The Group

advanced its information security objectives through

measurable and governance-driven actions aligned

with the Information Security Strategy 2025–2027.

The unified cybersecurity governance framework has

been implemented across all NLB Group financial core

members, ensuring harmonisation of internal acts and

compliance with DORA regulation requirements. The

Group updated its Information Security Framework and

aligned local policies with Group standards, ensuring

regular and timely implementation of all mandatory

documents.

Security reviews were conducted across subsidiaries,

with a total of twelve reviews performed by the Group

CISO office, and additional local reviews following

the CIS v8.1 methodology framework. These reviews

included, but were not limited to, assessments of

network infrastructure, data protection, malware

defences, penetration testing, and audit log

management.

Risk management was strengthened in core financial

members through the adoption of a new Cyber Risk

methodology and the ongoing implementation of a

GRC (Governance, Risk, and Compliance) tool. Security

controls were verified regularly, including monitoring

of privileged activities, adequacy of SIEM alarms,

and execution of mandatory controls defined in

policies. All core financial members of the group also

maintained a program to monitor the implementation

of recommendations issued by regulators, external and

internal audit findings, and pentest findings.

Risk management was also strengthened through the

development of a comprehensive framework aligned

with ISO 27001 and NIST standards. Regular cyber risk

assessments were conducted, and mitigation strategies

updated to address emerging threats. Third-party risk

management progressed with the implementation

of stringent cybersecurity standards and periodic

assessments for critical vendors. These measures were

integrated into the Group’s governance processes

288

to reduce supply chain vulnerabilities and ensure

compliance with regulatory expectations.

Security awareness remained a priority in all NLB

financial core members, with the execution of quarterly

social engineering exercises (phishing simulations)

and targeted e-education programmes on corporate

security, artificial intelligence, and social engineering.

New employees in NLB underwent in-person awareness

trainings, and special training sessions were organised

for Management Board and Supervisory Board members.

The Group continued to inform employees and customers

about current threats and vulnerabilities through regular

notifications and alerts, with NLB introducing a weekly

newsletter and common threat notification service.

Incident response capabilities of all core financial

members were tested through tabletop exercises,

including participation in the FS-ISAC CAPS scenario.

Third-party risk management was addressed through

regular reviews and risk assessments of outsourcing

providers in line with EBA guidelines, as well as

cooperation in external agency reviews.

Digital transformation initiatives were secured by

integrating proper security controls into all projects,

ensuring data protection regardless of location (on-

premises, cloud, or in transit), and enhancing the

security of digital payment systems. Fraud management

processes were optimised, and regular reviews were

conducted on electronic channels.

Sustainable cybersecurity practices were promoted

across the Group by integrating ESG considerations

into procurement and operational processes, utilising

technologies that minimise resource consumption

and environmental impact, and fostering a culture of

continuous improvement and collaboration within the

organisation and with external partners.

Metrics and progress

The implementation of a unified KPI reporting

dashboard has strengthened visibility into

cybersecurity, with monthly consolidated reporting

from all core financial members. A consolidated KPI

dashboard reports monthly on indicators such as

fraud prevention, vulnerability management, patch

compliance, access control, and security awareness

across all core financial members. These measures

apply to all core financial members of the NLB Group

and encompass employees, clients, and relevant third-

party stakeholders. At the time of preparing this report,

the dashboard is in the optimisation phase; however,

even at this stage, it already provides improved insight

into the cybersecurity performance of each member

and of the NLB Group as a whole. These KPIs are

uniformly monitored and reported at the Group

level, enabling consistent oversight and timely

remediation actions.

Security awareness and training programs in

NLB recorded high participation rates, exceeding a

97% completion rate across all employees. Training

content was reviewed, updated, and reinforced

through continuous awareness campaigns and

phishing simulations (where the number of employees

falling victim to simulated social engineering attacks

remained under 2% in NLB), embedding security-first

behaviour into organisational culture, the effectiveness

of which is tracked through incident reporting

and engagement.

Digital transformation initiatives were secure by design,

with all major projects undergoing security reviews

before deployment. This approach ensured that

modernisation efforts, including cloud adoption and

digital banking services, adhered to cybersecurity best

practices and regulatory requirements.

Security awareness and

sustainable practices in

procurement and

operational processes

are important focus areas

DARDEN ZHEGROVA

Hybrid Puppet #5, 2023

soft sculpture, canvas, polyester, plywood,

print paint

250 × 80 × 20 cm

A monumental textile sculpture,

born from the memories of

childhood and theatre, transcends

temporal frameworks and, through

the symbolism of puppets, explores

the freedom of identity beyond

social roles.

290

S3

Affected

Communities

SBM-3

Material IROs

with the strategy

NLB Group serves four key roles as a financial

institution:

an employer, a provider of financial

and investment products and services, purchaser

of goods and services, and contributor to

society

through financial support and mentorship

programmes. Through these roles, the Group directly

and indirectly affects the lives of many individuals,

specific groups, and diverse communities in the region,

impacting their economic, social and cultural life,

including human rights.

As the Group’s operations focus on financial transactions

and services, it does not have physical operations or

supply chains that would affect communities through

production, logistics, or distribution. Although our

supply chain does not present material risks, impacts,

or opportunities, we still place strong emphasis on

ensuring that sustainability principles (covering both

environmental standards and human rights) are upheld

by our suppliers throughout the procurement process.

For details see the chapter

Sustainable Complementary

information - Sustainable supply chain

The NLB Group addresses its indirect impacts on

communities and related risks through its environmental

and social risk management system (ESMS) applied in

lending and investment decisions. Through this process,

the Group identifies and assesses potential or actual

impacts and risks of clients’ operations on affected

communities and supports clients in accessing green

and transition financing.

The DMA (conducted for the first time in 2024 and

updated in 2025) identified two material positive

impacts and one material opportunity arising from

the NLB Group’s financing community and economic

development activities, as well as two material

opportunities arising from sponsorships and donations.

An overview is provided in the table 106.

The DMA confirmed that the Group’s largest, though

indirect, impact on affected communities is through

its financing activities which are at the core of NLB

Group’s business model. These impacts include also

green lending and investment, detailed in the chapter

as well as broader financing

that enables community and economic development

presented in this chapter.

Accordingly, the Group contributes to addressing key

societal needs in various ways. By financing private or

corporate real estate projects, the NLB Group contributes

to new housing developments, helping to meet an

essential social need in the region. Furthermore, as a

key player in the regional monetary system, the Group

contributes to macroeconomic stability through prudent

risk management and strong financial performance.

The Group also facilitates regional economic development

by supporting in infrastructure projects, small businesses,

and sustainable initiatives, thereby strengthening local

economies, creating jobs, fostering community resilience,

and contributing to long-term regional growth.

Table 106:

NLB Group’s material actual and potential impacts on its communities

community

and economic

Supporting housing

in the region

By financing private or corporate real estate projects, the NLB Group is contributing to new

housing developments, a key social need.

Supporting systemic

financial stability

The NLB Group is a key player in the regional monetary system; with prudent risk

management and financial stability it is contributing to macroeconomic stability in the

region.

Supporting

regional economic

Supporting regional economic development allows banks to strengthen local economies,

create jobs, and foster community resilience. By financing infrastructure projects, small

businesses, and sustainable initiatives, banks can enhance their reputation as community

partners while driving long-term growth and stability, ultimately benefiting both the region

and the NLB Group.

Sponsorships

and donations

The NLB Group is supporting environmental and social initiatives through sponsorship and

donations programmes.

Supporting

humanitarian

organisations

Supporting humanitarian organisations through enabling financing and donations.

291

These community-related impacts are closely

connected to the Group’s strategy and business

model. They demonstrate how financing activities

(core to the Group’s value creation) originate material

societal outcomes and inform ongoing strategic

development. The growing importance of green and

socially beneficial financing, identified through the

DMA and ESMS processes, strengthens the Group’s

focus on sustainable finance, risk-aware lending,

and products that deliver long-term positive

community outcomes.

The Group also has an important social impact that

goes beyond lending and investing. We actively support

communities through sponsorships and donations

which are at the heart of Contribution to Society, the

third pillar of the NLB Group Sustainability Policy. In

this way the NLB Group enables a positive impact

across culture, education, sports, environment and

social inclusion. As a result, various segments of local

communities are positively affected, either directly or

indirectly. In addition, the Group supports humanitarian

organisations through both financing and donations,

responding to crises and helping address pressing

long-term societal challenges.

Together, these financing and community-support

actions illustrate the relationship between the Group’s

material risks and opportunities and its strategy

and business model. Opportunities arise through

enhanced community trust, regional development,

green financing growth, and strengthened

stakeholder relationships. Risks—including those

linked to social and environmental impacts of

clients—are mitigated through the ESMS integration,

responsible business conduct, sustainability-oriented

procurement practices, and active oversight of

community engagement programmes. Such alignment

ensures that the Group’s strategic direction remains

responsive to its impacts and dependencies on

affected communities.

S3-1

related to affected

communities

Managing the NLB Group’s identified material IROs

related to communities is covered by the Group’s policies

on financing community and economic development,

sponsorships and donations, which are presented in

detail in this chapter.

Human rights commitments relevant for communities

that are affected by the NLB Group’s financing,

sponsorships, and donations programmes are

stipulated in the Policy on Respect for Human Rights

in NLB and the NLB Group (presented generally in the

chapter Own Workforce, the subchapter

Human rights

),

while principles related to affected communities are

explained below in the chapter

Key policies

The NLB Group is committed to respecting and

preventing violations of human rights in its own

operations and its value chain as well as acting on any

detected violations. This chapter focuses specifically

on the approach to respecting human rights that the

NLB Group has established as a financing provider and

contributor to society.

Given that indigenous peoples are not identified or

formally recognised in the markets where the Group

operates, the human rights commitments and policies

do not include specific provisions related to such

groups. The NLB Group is committed to ensuring

equal consideration of all ethnic groups and acting in

accordance with the internal acts.

For additional information on respecting human rights

in employee relations and procurement, please see

the subchapters

Human rights in Own Workforce

Sustainable supply chain

chapters.

Policies related financing community and economic

The key internal documents

related to communities affected by the Group’s

financing are the NLB Group Lending Policies as

described in detail in the chapters Policies related to

climate change mitigation and adaptation and ESG

risk management where the ESMS (Environmental

and Social Factors/Risk Management System) is

presented, which stipulates the process of assessing

and managing ESG risks and impacts associated

with transactions, i.e. financing the NLB Group clients.

In this way, the NLB Group identifies and assesses

environmental, social, including human rights, matters

connected with its clients.

The policies are binding for all the NLB Group

banking members.

Directors of risk and

sales departments in each NLB Group member.

For employees in the Internal Acts

Register, while some financing principles are included

in the Sustainability Policy publicly available on the

NLB website.

NLB Group’s approach to respecting human rights as a

financing provider

As stipulated in the Policy on Respect for Human

Rights and followed in daily operations, the NLB Group

indirectly contributes to respecting human rights related

to communities by not directly financing activities

that are known to contain elements of human rights

abuses and/or where such abuses exist. However, if

human rights abuses are identified in existing clients’

operations, the NLB Group members cooperate with

clients to adopt appropriate measures to end such

practices and prevent such abuses in the future.

NLB Group expects its clients to comply with all

applicable human rights laws and standards and strive

to uphold them as set out in the Universal Declaration

of Human Rights and, where local legislation does not

meet these standards, at minimum:

identify and manage human rights risks,

review potential impacts on human rights,

avoid causing or contributing to human rights

violations,

292

assess potential human rights risks in their supply

chains and use their influence to address human rights

violations by their suppliers and clients,

engage with their stakeholders and provide access to

remedy where necessary.

Respect for human rights is part of the due diligence

process before signing a contract with a client. Human

rights considerations are included in the NLB Group’s

ESMS system and ESG questionnaires that serve as a

data-gathering and assessment tool for clients with

high environmental or social risk. Beside environmental

and governance data clients must provide social

and human rights data: an explanation of whether a

client has put in place policies and measures relating

to the social aspects of operations in the areas of

human rights, equal opportunities/non-discriminatory

practice, encouragement of staff diversity, health and

safety at work, child labour illegal work, and modern

slavery prevention, ethical business conduct, employee

relations/labour standards, whistleblowing mechanisms,

the company’s impact on the community/society,

programmes to support local communities, information

on social aspects in the client’s supply chain, mitigation

of social and human rights risks, etc.

In addition, the NLB Group has established an internal

document Environmental and Social Categorisation

Methodology Framework in NLB and NLB Group by

NACE and SKD Codes which describes risk assessment

and was prepared to better understand clients’

environmental and social risks. Assessment is divided

in four categories, including Health and Safety, Labour

and Community, which also cover human rights risks.

NLB Group considers consumer rights as one

of important components of human rights, which

is intertwined with responsible client relations.

For further details please refer to the chapter

Sponsorships and Donations Policy in NLB

and the NLB Group

This Policy defines the framework for sponsorships

and donations in the NLB Group members. Its purpose

is to ensure that all activities in this area are aligned

with the Group’s business objectives, values, and

socially responsible approach. The aim of this Policy is

to promote positive changes in the community and to

strengthen the Group’s reputation. It defines rules and

procedures for managing sponsorships, donations,

and relations with the NLB Group’s stakeholders

across 6 pillars:

1. Environmental responsibility

2. Culture and protection of cultural heritage

3. Increasing financial literacy and mentorship

4. Sustainable entrepreneurship

5. Supporting professional, youth and para sports

6. Humanitarian activities

The NLB Group banking members.

Directors of marketing,

brand, and communication departments in each

For employees in the Internal Acts

Register, while financing principles are included

in the Sustainability Policy publicly available on

the NLB website.

NLB Group’s approach to respecting human rights

as a sponsorship and donation provider

NLB Group actively monitors the operations of the

organisations it supports by tracking their activities,

maintaining an open dialogue, and observing their

media presence. The Group’s sponsorship beneficiaries

are contractually obligated to align their activities with

the Sustainability Pillars (ESG) and the UN Sustainable

Development Goals (UNSDG). The Corporate Social

Responsibility and Corporate Communication

department manages sponsorship applications, and

after an initial review, promising proposals are forwarded

to the Sponsorship Committee for final decision.

In contract negotiations, the Group strives to adapt to

the needs of its stakeholders, actively listens to them and

collaborates with them to achieve mutual goals, thereby

ensuring the fulfilment of both its own goals and those of

its partners. In 2025, the NLB Group enhanced its formal

due diligence process. In line with the NLB Group’s Policy

on Respect for Human Rights as well as Sustainability

Policy, the NLB Group does not support projects where

there is a suspected violation of human rights. Before

sending the funding proposal to the Sponsorship

Committee and before signing the contract with a

candidate for sponsorship or for donation, the Brand

and Communications department conducts a thorough

review of publicly available information (including

websites, social media posts, and media publications)

to identify any potential violations. This due diligence

process is repeated throughout the contractual period,

and sponsored entities are continuously monitored to

ensure compliance.

In general, the NLB Group members engage in several

ways with communities affected by its financing and

sponsorships from a human rights perspective. The

Group provides the open door and speak-up policy

through various communication channels and grievance

mechanisms in place that enable affected communities

to express their opinions, ideas, or raise concerns, as

described in detail in the chapter

Business Conduct.

The Group also strives to increase understanding of

human rights topics in employee training and promote

them in relationships with clients and applicants

for sponsorships and donations. In addition to due

diligence mechanisms, the Group monitors human

rights-related impacts, risks, and opportunities that

could stem from financing, sponsorships, and donations

in public debates and in the media. Where deviations or

opportunities are identified, we engage with clients and

relevant community institutions and organisations to

address them appropriately.

The NLB Group identifies human rights incidents through

due diligence conducted on corporate clients during

procurement and, to some extent, among recipients of

sponsorships and donations. Additionally, in line with its

Environmental and Social Management System (ESMS),

the NLB Group has implemented an Early Warning

System (EWS).

293

The ESMS (described in detail in the chapter

ESG risk

, subchapter Credit Risk Management)

is managed by the Credit Risk departments, to detect

environmental or social incidents, including human

rights violations such as modern slavery, child labour,

work-related fatal injuries, and labour inspections.

The severity level of human rights breaches has been

determined in accordance with international guidance

and based on the internal self-assessment carried out

by NLB in 2024. The assessment is strictly internal in

nature. The severity ratings are based exclusively on the

internal NLB scales and do not reflect any external

validation or legally confirmed findings.

As presented in table 107, in 2025 the NLB Group

identified two potential human rights violations related

to working conditions among its clients. No concerns or

incidents were detected or reported that could impact

communities through sponsorships and donations. The

NLB Group engages with stakeholders and offers access

to remedies for potential negative human rights impacts.

The Group did not detect any severe human rights issues

or incidents involving affected communities, employees,

or procurement activities. Furthermore, among the

identified incidents, there were no cases in which a court

or any other competent authority confirmed a breach of

human rights.

Table 107:

Human rights incidents related to financing,

sponsorships and donations in NLB Group banking members

Human rights incidents

detected - clients

Human rights incidents

detected – applicants/

sponsorships and donations

Human rights violations

confirmed

S3-2

Processes for

engaging with

affected communities

about impacts

NLB Group engages with affected communities on

multiple levels. For financing, especially projects that

have potential significant impact on community and

are classified as Type A or D (based on environmental

and social impact according to the EBRD classification),

additional due diligence and special criteria are

applied as described in Environmental and Social

Transaction Policy Framework in NLB and NLB

Group. Financing of projects implemented across

the entire NLB Group, where a greater impact has

been identified, involves communication with the

potential client through their representatives, while

on the NLB Group side the collaboration is managed

by contract managers. Collaboration takes place

on a regular basis; meetings, written and oral

communication — before the contract is signed and

later throughout the project financing period. The most

senior role responsible for ensuring this collaboration

is the Director of the Business Centre within each

individual banking member. Contractual activities

affecting communities — such as project financing

documentation requiring specific characteristics for a

project to be classified as green financing (criteria for

green financing are defined in the chapter

) – are gathered before and, if necessary, after

the investment.

To this end, the Group’s representatives in all markets

monitor the economic and social situation and conduct

occasional meetings with clients, local governments and

municipalities, as well as organisations and institutions

in local communities to discuss the needs, impacts,

risks, and opportunities. The Group will proceed with

the activities that are already in place, continue and

improve the dialogue and collaboration practices, and

consider upgrading and formalising the engagement

processes in the future. In 2025 NLB organised 11 events

across different regions, which represent a key platform

for connecting with the local economy.

The central theme of this year’s events was geopolitical

and economic changes and their impact on the

Slovenian economy

with a focus on sharing and

exchanging knowledge. Similar events aimed at

strengthening connections with the local economy are

held across the entire NLB Group.

In sponsorships and donations, cooperation is

maintained through legitimate representatives

of the partners, i.e. the beneficiaries of such financing.

This cooperation takes places on a regular basis,

with daily or at least monthly interactions. The most

senior role responsible for ensuring this engagement

is the Head of Brand and Communication

in an

individual banking member. Sponsorships are

evaluated, and further actions are determined

based on the results. The Group engages in dialogue

with all partners and, where possible, supports the

implementation of their activities.

The most notable examples of engagement:

· Integrating sponsorships to amplify their collective

impact

on society. This approach allows even less

prominent sponsorships to reach a broader target

audience and consequently broaden their impact.

For example, cultural performers (Ljubljana Festival,

Arsana Festival, Jazz Festival) participate at the

NLB Ljubljana Marathon.

· Organising expert lectures

at the NLB Sports Academy

for clubs participating in the NLB Sport for Youth

programme in the region and for all clubs in Slovenia in

disciplines supported by NLB at the national level.

· Providing the NLB Group’s premises free of charge

for

press conferences or internal use.

· Providing support in organisation

of the NLB Wheel

League, including its development in regions where

NLB operates.

NLB Group is committed to respecting human rights

and treating all its clients and communities equally,

in accordance with its internal policies and generally

accepted principles. It pays particular attention to

ensuring that the needs of the most vulnerable members

of the community are not overlooked. For example, the

NLB Group supports the Special Olympics, NLB Wheel,

and sitting volleyball for persons with disabilities.

294

S3-3

Processes to

remediate negative

impacts and

channels for affected

communities to raise

concerns

The DMA found no material negative impacts or risks

to communities resulting from financing. However, the

NLB Group acknowledges that some financed activities

may pose environmental, social, and governance risks.

Similarly, no material negative impacts were identified

in connection with sponsorships and donations,

however, stakeholders or the wider community may

nonetheless have concerns. To ensure transparency and

accountability, the NLB Group remains open to receiving

and addressing any complaints or reports of suspected

issues through accessible and confidential grievance

channels and complaint-handling procedures in line

with internal policies and regulations.

To this end, the NLB Group banking members have

established several channels for all stakeholders,

including affected communities to raise concerns.

The overall approach, including availability of these

channels, and mechanisms for identification and

investigation, is described in the following chapters:

Business Conduct, subchapter

Whistleblower Protection

Processes to Remediate Negative Impacts

General Information, subchapter

Interests and Views

of Stakeholders

In 2025, the Group did not record any complaints

regarding negative impacts on communities arising

from its financing, sponsorship and donation activities,

or other sustainability matters, through its established

grievance mechanism or any other channels.

S3-4

The DMA did not identify any material negative impacts

stemming from the NLB Group’s financing, sponsorships

and donations. The general description of the Group’s

due diligence approach and mechanisms to address

potential and actual risks and negative impacts, and

provision of remedies are described in previous sections

of this chapter.

On the other hand, the NLB Group’s financing,

sponsorships and donations have several material

positive impacts for affected communities. Actions,

initiatives and related targets that the NLB Group has

developed and implemented to provide and enhance its

positive impacts are summarised below.

The effectiveness of measures related to the

financing of communities and economic activities

is regularly monitored and reported monthly to the

NLB Management Board and quarterly to the

Sponsorship and donation activities are regularly

monitored and reports and project evaluations are

prepared by the marketing or communication departments

for all key sponsorships and donations implemented. The

overall breakdown by UN SDGs is reported annually on the

Sustainability Committee sessions.

The NLB Group members do not have special measures

in place to engage directly with affected communities

in setting targets, tracking performance, or identifying

lessons or improvements as result of the Group’s

financing, sponsorships and donations. This cooperation

is performed indirectly through relationship with clients,

institutions and organisations with which the NLB Group

collaborates directly.

NLB Group’s financing,

sponsorships and

donations have several

material positive impacts

for affected communities

295

Financing community

and economic development

Through its banking portfolio, the NLB Group

finances projects that support the development

of local communities, the modernisation of key

infrastructure, and the transition to low-carbon

energy systems. Financing is directed toward sectors

with high development potential and demonstrable

environmental and social impacts. The key areas are

presented below.

Renewable energy generation

Financing the reconstruction of existing hydropower

plants, the construction of new solar power plants

across multiple locations, and investments in wind

parks in Serbia, Montenegro, and Kosovo. These

projects increase the share of electricity generated

from renewable sources and reduce dependence on

fossil fuels.

Electricity distribution infrastructure

Loans for the construction and modernisation of

electricity distribution networks, enabling the integration

of a higher share of renewable energy, improving grid

reliability, and reducing transmission losses.

Transport infrastructure

Financing the development of the second railway track

in Slovenia, which will represent an important logistic

connection and will reduce traffic congestion and

emissions compared to road transport.

Digital infrastructure

Support for the modernisation of telecommunications

networks and the rollout of 5G networks, which enhance

digital connectivity, strengthen business processes, and

provide broader access to digital services.

Such financing directly impacts energy efficiency,

regional connectivity, and the development of local

economies. It also strengthens the resilience of critical

infrastructure and enables communities to transition

more easily to sustainable and technologically

advanced systems.

Financing the investments in the aforementioned

areas forms part of the sustainable financing targets in

markets of the NLB Group, which are in detail explained

in the chapter Sustainable finance, and contributes to

the implementation of the Policies related to climate

change mitigation and adaptation.

Sponsorships and donations

Donations

Donations are generally directed to communities

facing crises (for example donations to support post-

fire recovery efforts in North Macedonia in 2025)

or to institutions addressing long-standing social

exclusion issues or health-related challenges (such

as: support to the Association of Slovenian Sign

Language Interpreters, the Slovenian Red Cross, a

donation to the Department of Reproductive Medicine

and Gynaecological Endocrinology at UKC Maribor in

2025) as well as cultural heritage (Institute for Cultural

Heritage – MUZA). Donations also include the purchase

of sports wheelchairs for NLB Wheel, which we have

supported for many years.

The NLB Group strategically focuses its sponsorships on

communities where its support can advance growth and

development in key fields, most notably in:

Sports

– the Sports for Youth project, which enables

young people to actively participate in sports activities

or project Move with Us.

Culture

– we support top cultural events such as the

Ljubljana Festival, Ljubljana Jazz Festival, and the

Arsana Festival in Ptuj.

Health

– through the Support for Healthy Recreation

project, we promote an active lifestyle and well-being.

For additional information on the most significant

projects see the chapter

Overview of significant

sponsorships and donations by type

The NLB Group’s goal is to enable community

and economic development by offering financing

aligned with annual plans and market opportunities.

Consequently, the Group has set a clear target to

contribute to achieving the United Nations Sustainable

Development Goals (UN SDGs). In addition to this

overarching commitment, the Group follows general

annual objectives related to financing, sponsorships,

and donations. These objectives are shaped by

emerging opportunities and the needs of the

communities in which the Group operates according to

the rules set in the Sponsorship and Donations Policy.

The Group’s approach is grounded in responsible

practices and focuses on supporting projects that

create a positive impact on the environment, society,

and the economy. This approach prioritises initiatives

that are aligned with the Group’s values, including those

that foster sustainable development.

In 2025, the NLB Group banking members financed

community and economic development through

various projects. Significant projects exceeding

EUR 5 million amounted to EUR 87 million, including

green financing.

Table 108:

Progress related to financing community and

economic development

Financing community and

economic development

87,013

138,350

296

In relation to sponsorships and donations the

NLB Group has set the following general objectives:

To provide financial contributions in line with annual

plans, needs, and opportunities, and in compliance

with the Sponsorships and Donations Policy.

To ensure that annually each CSR activity contributes to

at least one UN Sustainable Development Goal.

To leverage the indirect positive impact by including

a special sustainability clause in each sponsorship

contract by the end of 2025. The clause requires specific

and mutually agreed actions of applicants to enhance

their positive impact on society and the environment.

The classification

of projects in line with the UN SDGs is based on the

applicant’s self-declaration for a donation or

sponsorship. The number of supported projects and the

amount of funds allocated for donations vary from year

to year and are determined by the number of

applications received and the quality of each project, as

assessed by the sponsorship committee. A decrease in

the number of projects or in the amount of allocated

funds therefore primarily reflects a lower number of

submitted applications or fewer expressed needs within

the community in which the Group operates.

Donations data refers to all NLB Group members.

The reported values are reconciled with the financial

statements notes 4.9 Other Operating Expenses

Donations. The data on the number of projects includes

actual figures from the banks and asset management

companies, as other Group members do not have

significant sponsorship projects or dedicated budgets

for such activities.

Table 110:

Donations, projects, and contribution to the UN SDGs

NLB Group donations

(in EUR thousands)

1,585

2,187

Number of projects in

NLB Group banking

members and asset

management companies

389

436

Share of projects contributing

to at least one UN SDG

99.92%

99.68%

Table 109:

Sponsorship and donations in the NLB Group banking members – share of projects contributing to the UN SDG targets, N= 389

UN SDG

GOOD HEALTH

AND WELL-BEING

Good health and well-being

64.27 %

63.68%

SUSTAINABLE CITIES

AND COMMUNITIES

Sustainable cities and communities

14.37%

11.49%

CLIMATE

ACTION

Climate action

0.09%

6.52%

PARTNERSHIP

FOR THE GOALS

Partnerships for the goals

7.28%

5.73%

QUALITY

EDUCATION

Quality education

3.26%

4.27%

LIFE

ON LAND

Life on land

4.54%

2.47%

REDUCED

INEQUALITIES

Reduced inequalities

4.31%

1.46%

DECENT WORK AND

ECONOMIC GROWTH

Decent work and economic growth

0.07%

1.36%

GENDER

EQUALITY

Gender equality

0.71%

0.92%

ZERO

HUNGER

Zero hunger

0.48%

0.68%

PEACE, JUSTICE

AND STRONG

INSTITUTIONS

Peace, justice, and strong institutions

0.06%

0.31%

POVERTY

No poverty

0.01%

0.25%

CLEAN WATER

AND SANITATION

Clean water and sanitation

0.24%

AFFORDABLE AND

CLEAN ENERGY

Affordable and clean energy

0.15%

0.17%

LIFE

BELOW WATER

Life below water

0.12%

INDUSTRY, INNOVATION

AND INFRASTRUCTURE

Industry, innovation and infrastructure

0.30%

RESPONSIBLE

CONSUMPTION

AND PRODUCTION

Responsible consumption and production

0.02%

Not supporting any UN SDG

0.08%

0.32%

297

Overview of significant sponsorships and donations by type

Increasing financial literacy and mentoring 

At NLB Group, we are dedicated to counselling in the field of financial literacy for various stakeholders, reducing inequalities and improving education.

Goal 4 – Quality education 

Goal 10 – Reducing inequalities 

NLB Muza, the banking museum of Slovenia, which is also a financial literacy centre, welcomed 16,328 visitors in 2025. The museum guides its visitors through six stages of

personal finance management, they can play digital games, take quizzes and learn or check their financial literacy in a fun way. The centre is widely accepted and enjoyed

by school groups (3,330 pupils visited it).

The Bank continued the Minicity initiative, which made significant strides in promoting financial literacy in 2025. In addition to its playful financial- education activities, which

engaged 68,393 children (105,969 participants including accompanying adults), the Bank also empowered prenatal families with essential financial knowledge at three

dedicated educational events.

Partnering with Simbioza, NLB delivered four digital financial-literacy workshops specifically designed for retirees,helping them navigate the financial landscape with

confidence.

NLB supports the Škrateljc project, which combines natural and cultural heritage with an experiential learning approach and includes the innovative financial-literacy game

ZAKLADNICA (Treasury). NLB serves as a key partner and co-creator of the programme’s content, helping children learn responsible money management, saving, and how

to distinguish between needs and wants. The Zakladnica programme achieved considerable reach between April and June 2025, delivering activities for 31 primary schools

and engaging 97 groups, 1,900 students, and 194 accompanying teachers. In addition, we organised seven public family events attended by 150 children and 170 parents.

The bank educated 30 children from clubs that are supported through the NLB Sports for Youth project about communication and teamwork skills.

The bank also held financial-literacy workshops attended by approximately 70 children.

NLB Komercijalna

Banka, Beograd

As the general sponsor of the forum, the bank strengthened its role as a driver of digital transformation in the region in 2025. Under the umbrella of the forum, sessions

focused on digital learning were organised, highlighting the role of the financial sector in the development of modern technologies, data platforms, and new digital services.

Participants were introduced to best practices in digital transformation implemented by the NLB Group – from the development of innovative digital banking solutions to the

expansion of knowledge and competencies in artificial intelligence and advanced analytics. Approximately 550 people attended the lectures provided by NLB

NLB Skladi participated as a sponsor of the Financial School for Teenagers, where they helped young people develop essential financial literacy. The programme covers key

personal finance topics in an interactive and practical way — from saving and investing to career development, online safety, and entrepreneurship. With their expertise, NLB

Skladi made an important contribution to raising awareness among young people and strengthening their responsible financial behaviour. Approximately 50 youngsters

aged 11 to 19 attended the lectures.

The bank once again supported the important educational initiative of the Albiz Foundation, enabling 175 secondary-school and university students gain easier access to

learning. On 19 February 2025, the scholarship award ceremony for the 14

generation of recipients was held. To date, more than 3,000 young people have benefited from the

foundation’s scholarship programme, allowing them to pursue their education further. This project is made possible through the joint support of the Albiz Foundation’s

member companies, including NLB Banka, Skopje, which co-finance the scholarships and contribute to the development of future generations.

As part of its commitment to sustainable development and regional empowerment, the bank organised a series of educational events “Master Your Business” across multiple

regions, reaching over 120 participants. The programme was designed to support micro, small, and medium-sized enterprises by highlighting the long-term benefits of digital

business transformation. Through practical workshops and expert guidance, entrepreneurs gained insights into how digital tools can enhance efficiency, reduce

environmental impact, and strengthen competitiveness. By investing in knowledge and capacity-building, we helped foster a more resilient and future-ready business

community.

Environmental responsibility

We continue to create and support a variety of initiatives that aim to reduce carbon footprint, combat climate change, and increase positive impacts on the environment. We

also empower our stakeholders to increase their awareness and actively engage in such initiatives. 

Goal 13 – Climate action 

Goal 15 – Life on land 

NLB continued with the renovation of the Kredarica hut on Triglav, the highest mountain in Slovenia. The complete renovation of the solar power plant in 2023 was followed

by the energy renovation of the roof in 2024. In 2025, we initiated the construction of a wastewater treatment plant, which is scheduled for completion in 2026.

The Bank continued the long-lasting partnership, encouraging sustainable mobility in the second largest Slovenian city, where the network expanded to 230 city bikes. 

The Bank supports the Beekeeping Association with general sponsorship and with a significant donation for the revival of the Anton Janša Beekeeping School.

The bank supported several initiatives that promote environmental awareness, sustainable development, and community resilience. In Bijeljina it has contributed to the 9

International Congress on Engineering and Environment, organised by the Faculty of Technology, and to the conference “Clean Air: Dream or Attainable Goal?”, hosted by the

Association Stav - both of which foster dialogue on ecological innovation and air quality. The bank also supported the Balkan Solar Summit, a regional platform for

advancing solar energy and low-carbon solutions. Through these engagements, NLB Banka, Banja Luka strengthened its commitment to sustainability, knowledge exchange,

and the transition to a greener future in Southeast Europe. 

The bank supported the project Eko Zeleni Tuzla and thus enabled the organisation and implementation of several ecological programmes, focusing on education in schools

for youngsters (6–19 years), research programmes, and tree planting. More than 30 schools participated in the programme. 

The bank supported the Festival of Ecology and Peace in Zenica. Over 300 people (children and their parents) were present at the Festival. 

NLB Komercijalna

Banka, Beograd

Forests of Food – The bank financed the planting of three permaculture orchards in agriculture schools in Serbia where current and future generations of students can learn

about sustainable agriculture. Approximately 700 students will benefit from this activity.

The bank’s support made it possible to carry out a multiday cultural, recreational, and sustainability focused programme, which was successfully executed and attracted

more than 1,000 visitors to Kruševo from all parts of the country. The event combined local heritage, sports, and naturebased experiences, further strengthening Kruševo’s

position as a yearround destination. It significantly boosted local tourism and community engagement, increased foot traffic to local businesses, and generated positive

media coverage. A strong emphasis was placed on sustainability: the festival promoted a deeper appreciation for nature, advanced sustainable sports, and highlighted the

importance of responsible waste management and proper waste sorting.

QUALITY

EDUCATION

REDUCED

INEQUALITIES

CLIMATE

ACTION

LIFE

ON LAND

298

Sustainable entrepreneurship

We create and support several initiatives that promote entrepreneurship, innovative thinking, economic growth, and inclusiveness 

Goal 10 – Reduced inequalities 

Goal 2 – Zero hunger 

In cooperation with the National Theatre of the Republic of Srpska, the bank enabled the purchase of equipment that will enable blind, visually impaired, and hearing-

impaired citizens to watch selected performances in the theatre’s repertoire. 

The competition, which has been held in Serbia for fourteen years, aims to promote the development of organic farming and innovation in the production and processing of

food. This year, awards were presented in four categories, with a total value of approximately EUR 30,000, recognising the best ideas for improving the production,

processing, and sale of organic food and other sustainable products. With its long-standing tradition, the initiative makes an important contribution to the development of

sustainable agriculture, as the competition attracts numerous individuals and organisations every year – this year, as many as 105 competitors took part, strengthening the

role of organic farming in the region with their innovative approaches. By supporting the project, the bank continues its mission of encouraging sustainable food production,

rural development, and raising awareness of the importance of organic farming in Serbia and beyond.

The bank supported establishment of a café (Zvuci srca café) in Pančevo, a place where people with developmental disabilities work and can be more included in society.

The café created jobs for 12 people with mental challenges. In addition, an estimated 100,000 citizens can visit the café, interact with its employees, and learn more about the

everyday challenges faced by people with developmental disabilities. 

The bank supported the Sarajevo Energy Forum 2025 with approximately 200 participants, where the bank participated in a panel discussion. The panel focused on

financing renewable energy projects and building partnerships aimed at reducing CO₂ emissions. Through its contribution, the bank helped highlight concrete plans and

best practices that can accelerate the transition to cleaner energy. This engagement further reinforced commitment to sustainable development and regional cooperation

in the energy sector.

Supporting professional, youth, and para sports

We promote the positive values of sport by supporting various sports associations, clubs, and young athletes, whose talent and sportsmanship inspire society and contribute

to improved health and well-being. 

Goal 3 – Good health and well-being 

Goal 5 – Gender equality 

Goal 10 – Reduced inequalities 

In the 2025/2026 season, the Bank is supporting 79 sports clubs within the NLB Sport for Youth programme. More than 11,500 children aged from 6 to 14 years have

participated.

Within the traditional NLB Sports Academy project, the Bank carried out 3 academies with more than 60 participants from Sport for Youth club representatives.

As part of the NLB Wheel project, the Bank donated two sports wheelchairs for disabled athletes – basketball players.

NLB helped the organisation Special Olympics – a worldwide programme defined as a special sports and cultural programme for people with intellectual disabilities. The

result is the preservation of psychophysical abilities and general socialisation of persons with intellectual disabilities.

We are especially proud of the socially beneficial project Move with Us, through which we will provide 100 classes, or 2,500 children, with a free sports day. With this initiative,

we aim to show them that physical activity is fun while also encouraging a healthy and active lifestyle.

The bank supported various sports activities via sports clubs. In addition, the bank sponsored a basketball camp, which promoted healthy living, transferring the knowledge

of professionals to young generations (over 130 children). 

Donation to Special Olympics of Macedonia enabled more than 80 athletes with intellectual disabilities across North Macedonia to participate in regular training sessions

and local competitions. The support improved access to sports activities in underserved areas, empowering participants to build confidence, strengthen social skills, and

experience genuine inclusion through sport. The programme contributed to measurable progress in the athletes’ physical and emotional well-being. It also fostered stronger

community engagement and increased public awareness of the importance of inclusive sports opportunities.

Through various sponsorships the bank actively encouraged sports activities, social engagement, and the strengthening of relationships with local communities and key

stakeholders. Support for Tennis Club “Pointer” reinforced cooperation between the banking sector and diplomatic missions, while the sponsorship of KK Gostivar enhanced

NLB’s brand visibility in the local community and media. Collaboration with RK Vardar 1916 enabled quality training, league participation, and international appearances,

contributing to higher fan engagement and improved competitive results. The programme of the Basketball Federation of RNM strengthened children’s motor skills,

discipline, and social interaction, promoting early involvement in sports. Sponsorship of ultramarathon runner Radmila Jovanova further strengthened NLB’s image as a

responsible organisation that supports perseverance, healthy living, and the ambitions of its employees.

The bank supported 3 sports clubs (over 180 young people) in the region.

The bank’s investments in grassroots sports development actively contribute to creating an inclusive and encouraging environment for young people in Kosovo. By

supporting programmes that provide girls and boys with access to organised, safe, and developmentoriented sports activities, the bank strengthens opportunities for their

holistic growth and promotes healthy lifestyle habits. The bank places particular emphasis on locally anchored initiatives and therefore supports the work of five sports clubs

whitin the initiative Sport for Youth, which play an important role in encouraging sports participation among children and adolescents as well as strengthen community

connections. Through these efforts, NLB continues to uphold its commitment to youth development and the promotion of positive social change.

The bank supported the campaign “Prava priča” and celebrated Pink October – 100 female colleagues underwent a preventive breast examination.

The bank supported a variety of sports initiatives with a focus on youth development, inclusion, and community engagement. Our contributions included support for junior

girls’ tournaments, the “Basket za sve” event, and traditional street races, as well as donations to the Handball Association of the Republic of Srpska and the 56

Handball

TV Tournament of Champions in Doboj. The bank sponsored clubs such as Swimming Club Borac and Wheelchair Basketball Club “Vrbas,” promoting both competitive

excellence and inclusive participation. Through these efforts, the bank helped strengthen local sports infrastructure and encouraged active lifestyles across diverse age

groups and abilities.

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299

Humanitarian activities

We contribute to society through philanthropy, charity, and volunteerism. These initiatives are particularly aimed at socially disadvantaged groups of individuals or people

in need due to various reasons and circumstances. 

Goal 3 – Good health and well-being 

Goal 5 – Gender equality 

Goal 13 – Climate action 

Following the devastating fire in Kočani, in which 62 people lost their lives and more than 150 individuals were injured, the NLB Group came together to provide funds for

longterm support to the affected families. All member banks of the Group contributed to the donation, bringing the total amount to EUR 350,000, which will be allocated

through a newly established foundation dedicated to alleviating the consequences of the tragedy. NLB is one of the founders of this initiative, whose primary goal is to

support the rehabilitation and medical treatment of the injured, provide mentalhealth assistance to the victims and their families, and help individuals and families facing

loss to continue their education and reintegrate professionally. With this initiative, the NLB Group once again reaffirmed its role as a responsible regional institution standing

by its communities in their most difficult moments.

A donation to the Red Cross with the aim of supporting the implementation of a camp for young leaders and assisting in training young promoters of blood donation. 

The bank supported the Brave Hearts with Love organisation, which helps children and young people suffering from various rare diseases and disabilities. It is a solidarity

fund, which further rationalised financial support for children who need medical treatment abroad.

As part of its mission to promote equal opportunities and foster an inclusive environment, the bank supported the Vule Antić Special Education School in Vranje in 2025.

The bank provided a donation of EUR 12,000, which was used to purchase didactic toys designed to encourage various learning styles and meet the developmental

needs of children.

With this contribution, the bank helped improve the learning environment and developmental opportunities for 90 children with special needs, while also strengthening its

commitment to supporting education, social inclusion, and the well-being of the communities in which it operates.

The bank supported Down Syndrome Kosova with a donation aimed at strengthening their therapeutic and vocational programmes for individuals with Down syndrome. The

funds help enhance their daily life, promote independence, and support the development of essential skills. Through this contribution, the bank fosters greater social inclusion

and creats more equal opportunities within the community. The donation thus brings longterm improvements to the quality of life of the individuals and their families.

The bank continued to cover the costs of education and summer camp for vulnerable children, including children without parental care or at risk of abandonment, in the

Prishtina region.

The bank once again supported the organisation Action for Mothers and Children, which works to improve maternal and child health in Kosovo and implements key

preventive and therapeutic support programmes.The bank’s contribution was dedicated to covering the costs of therapeutic treatments for children who require additional

professional care. With this support, the bank improved access to therapy and contributed to the long-term well-being of the most vulnerable families.The bank is particularly

proud that, together with its partners, they were able to help more than 130 mothers and their children. The donation thus significantly strengthens the quality of healthcare

and reduces inequalities within the community.

As part of the bank's commitment to a rapid response in times of crisis, immediately after the tragic fire in Kočani, in which 62 people lost their lives and many families were

affected, the bank made a donation to the Red Cross. The funds, in the amount of EUR 20,000, were allocated as an emergency intervention fund to support the families of

the victims and the injured, helping to ease their most difficult moments and provide essential assistance in the first days following the disaster.

In 2025, NLB Podgorica became an important example of best practice in connecting employees, the local community, and the bank’s socially responsible efforts. As part of

the preparations for the NLB Millennium Run, NLB Banka, Podgorica organised guided running and hiking training sessions for its employees, encouraging them to adopt a

more active lifestyle. The project gained particular value through the involvement of members of the Association of Disabled Youth, who joined the walking and running

challenges, further strengthening the inclusive nature of the initiative.

During the marathon itself, participants and visitors were able to make donations to support the work of the association, and the NLB team thanked all donors with symbolic

souvenirs. The initiative successfully combined sports, solidarity, and employee engagement, contributing to greater visibility of the bank’s socially responsible activities

within the local community. In total, EUR 15,000 was raised.

As part of our corporate social responsibility activities, employees collected funds in August through the Preskoči initiative to purchase school supplies and donated

approximately 100 supply packages to children from socially disadvantaged families; at the New Year’s party, they collected voluntary contributions and donated around

500 books to the school library.

The bank supported a range of community-focused initiatives across Bosnia and Herzegovina, with special attention to early childhood education, humanitarian aid, and

youth engagement. Donations were directed toward the reconstruction and reopening of kindergartens in Kladanj, Čelić, and Gračanica, helping improve access to safe and

nurturing learning environments.

The bank supported the SENSUS Center, which provides psychological support and counseling for individuals and couples undergoing in-vitro fertilization (IVF) and related

assisted reproduction processes. The programme offers a safe space to navigate emotional challenges, reduce stress, and strengthen resilience throughout treatment. By

supporting this initiative, the bank helped improve access to specialised mental-health services for those facing complex fertility journeys. The bank’s contribution reflects a

broader commitment to promoting well-being and ensuring compassionate care for vulnerable groups.

In partnership with Pomozi.ba, the bank contributed to the “Meal for Everyone” programme, which provides warm meals to individuals and families in need. The support

helped expand the reach of the initiative, ensuring greater food security and dignity for vulnerable communities. The programme reflects our commitment to social

responsibility and regional solidarity. By supporting this effort, the bank helped promote compassion, inclusion, and tangible impact where it matters most.

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50 The NLB Group defines the ESRS term consumers and end users as clients or customers.

with the strategy and

The relationship with consumers and end users

and maintaining their trust is central to the NLB

Group’s business model. With more than 2.9 million

active clients at the end of 2025, the NLB Group ranks

among the leading financial groups in the SEE region.

It prioritises a client-centric approach, focusing on

providing high-quality financial products and services,

enhancing customer experience, efficient delivery, and

regulatory compliance. This approach fosters trust,

safeguards the financial system, and reinforces the

NLB Group’s reputation.

As stipulated in the Sustainability Policy, the

NLB Group’s approach to client relations includes

the following activities:

offering products tailored to clients’ needs, with

marketing policies reviewed by dedicated committees,

i.e. the Committee for New and Existing Products

in NLB and equivalent committees in other

NLB Group members,

ensuring that the marketing and sale of products and

related communications are performed regularly, in

compliance with all applicable regulations, standards,

and best practice in the financial industry,

delivering quality and value to clients, consistently and

reliably, to promote excellence in service quality, and

optimising the client experience, measured by NPS

(Net Promotor Score),

improving client experience and business

performance through comprehensive implementation

of complaint management into the overall client

experience process,

protecting the confidentiality and privacy of client data

and using them in a responsible manner,

providing clients with information that complies with

regulations so that it is considered impartial, clear,

and never misleading, using appropriate

communication channels,

implementing digital products and channels that

enable better access to banking services and promote

financial inclusion,

improving the physical and technological accessibility

of services across all NLB Group members for all

people, with a particular focus on people with

disabilities,

upholding the highest standards of cyber and physical

security and therefore promoting practices that

maximise the security of its products and services,

providing clients with channels that enable them to

raise questions and concerns and receive timely and

high-quality responses,

providing client education on sustainability-related

matters.

The conducted DMA identified five material

sustainability topics: Digitalisation and innovation,

Cybersecurity, Financial health and inclusion, Service

quality and customer satisfaction, Responsible

marketing and communication.

Several material

positive impacts (actual and

potential)

affecting all types of clients were identified

across the downstream value chain. Material actual

positive impacts include protection of client data,

contributing to financial health of customers, enabling

digital solutions that improve access to banking

services, maintaining a network of physical branch

offices, ensuring service quality and client satisfaction,

promoting financial literacy, ensuring responsible

marketing practices. The introduction of new products

and services that enable clients to monitor financial

data, access sustainable finance options, track their

personal carbon footprint, and receive energy-

saving advice is deemed to have a material potential

positive impact. The only material potential negative

impact arises from situations in which inadequate or

inaccurate information may be provided to clients.

This impact is considered incident-based, as it typically

results from isolated errors in specific interactions

rather than from systemic issues, specific products/

services, regions, or business relationships.

Digital solutions that improve access to banking services

were identified as a

material opportunity.

Actual and potential cyberattacks represent a

material

risk

for the financial industry as a whole, including the

NLB Group.

Unless otherwise specified, these impacts, risks and

opportunities relate to all consumers (clients) and end

users, including private individuals, micro-enterprises,

SMEs, and large corporate clients using the NLB Group’s

financing and investments products.

In the 2025 DMA update, the NLB Group reconfirmed

all previously identified IROs and assessed three

additional IROs relating to clients under the

Digitalisation and Innovation sustainability topic.

The effects of trustworthy AI on business and social

aspects were recognised as a material potential

positive impact. The improper or non-trustworthy use

of AI and the positioning of the NLB Group as a trusted

AI partner were not identified as a material risk

and opportunity, respectively. Nevertheless, the

NLB Group recognises several AI-related impacts,

risks and opportunities (material and non-material)

and has established a governance framework to

manage them effectively.

AI can create great opportunities, while also

introducing risks related to inaccurate, incorrect, and

incomplete execution of AI systems, as well as the

potential for improper use beyond the specific intended

purpose. Such risks may result in adverse impacts on

the Group’s business, employees, affected persons, and

customers. The positive and negative impacts remain

dependent on how effectively the Group governs AI

(model risk management, data quality, explainability,

transparency, robustness, incident management, etc.),

aligned with the principles of safe, responsible and

compliant AI development and use, with particular

301

regard to applicable EU requirements under the

EU AI Act (e.g., high-risk use cases such as credit

underwriting).

NLB has thus prioritised AI as one of the main drivers of

digital transformation in its 2030 strategy. Accordingly,

the Data and AI Governance (DAIG) sector was been

established in 2024, facilitating actions across three key

areas: (1) fostering innovation through experimentation

with the latest AI technologies; (2) enabling the broad

deployment of gen AI tools, supported by re-skilling

initiatives and AI community-building activities that

empower employees; and (3) strengthening data and

AI governance to ensure the safe, responsible, and

compliant use of AI in line with human-centric and

trustworthy AI principles and regulations. NLB has

formally joined the EU AI Pact to share its approach

and commitment to mastering AI for business and

social benefit.

A detailed overview of the identified client-related IROs

and their link to the Group’s business model is presented

in the table below. The NLB Group’s policies, processes,

and progress in managing these IROs are described

further in this chapter.

Table 111:

The NLB Group’s material impacts, risks and opportunities related to clients

Digitalisation

and innovation

Innovative tools

and solutions

enabling sustainable

consumer behaviour

The introduction of new products and services that enable clients to monitor financial

data, access sustainable finance options, track their personal carbon footprint, receive

energy-saving tips, etc.

Digital solutions that

improve access to

banking services

Digital solutions that improve access to banking services enhance customer convenience

and streamline transactions. By implementing online platforms and mobile applications,

banks can improve user experience, reduce operational costs, and reach a broader

audience, ultimately driving customer engagement and satisfaction while adapting to

evolving consumer preferences.

Short-, medium-,

The effects of

trustworthy AI

on business and

social aspects

By using AI in a trustworthy way, the Group can improve its work efficiency, business

competitiveness in an ethical, socially and environmentally positive and responsible way.

Impact-

potential positive

impact

Cybersecurity risks

Cybersecurity risks, particularly regarding the protection of employee and customer data,

can significantly impact a bank’s financial performance through potential data breaches

that lead to costly remediation efforts, regulatory fines, and litigation, as well as

reputational damage that erodes customer trust and confidence, ultimately resulting in

loss of business and diminished market value.

Short-, medium-,

Protection of

client data

Protection of client data is essential for maintaining the privacy and trust of customers and

clients. Ensuring that client data is secure helps to prevent unauthorised access and

potential misuse, which could lead to financial loss.

Financial health

Contributing to the

financial health

of customers

Through various banking services and information, the NLB Group is contributing to the

financial health of customers, which positively impacts their stability and well-being by

providing them with the necessary tools and support to manage their finances effectively.

Enabling digital

solutions that

improve access to

Enabling digital solutions that improve access to banking services improves convenience

and accessibility for all customers, fostering greater financial inclusion and user

satisfaction.

Maintaining a

network of physical

branch offices

Maintaining a network of physical branch offices ensures that customers, especially those

who may not be comfortable with or have access to digital banking, can still access

banking services, improving overall service accessibility.

Service quality

and customer

satisfaction

Ensuring service

quality and client

Ensuring service quality and client satisfaction leads to positive outcomes by enhancing

customer loyalty, trust, and overall satisfaction with the Group’s offerings.

Responsible

marketing and

communication

Promoting

financial literacy

Promoting financial literacy enhances customers’ financial understanding and decision-

making, empowering them to manage their finances better.

Providing quality

information to clients

Providing quality information to clients ensures that they have access to accurate, timely,

and useful information, leading to better financial decisions and enhanced trust in the

Group.

Providing inadequate

or inaccurate

information to clients

Providing inadequate or inaccurate information to clients can lead to misunderstandings

and poor financial decisions, damaging the trust between the bank and its customers.

Ensuring responsible

marketing practices

Ensuring responsible marketing practices has a positive impact by promoting truthful and

ethical communication with consumers, building trust and safeguarding their interests.

302

S4-1

related to clients

The overarching internal documents that define the

general framework and key principles for managing

IROs related to the Group’s clients are the Code of

Conduct (as detailed in the chapter

)

and the Sustainability Policy (as detailed in the chapter

General Information

). In addition, the Group has

established specific policies and procedures addressing

material IROs and related sustainability topics, which

are presented in the chapters dedicated to individual

client-related sustainability topics.

The Group measures the effectiveness and progress of

its material sustainability-related policies, processes,

and actions within the departments responsible for each

sustainability topic or IRO. These departments report

to the management boards of the NLB Group members

at least once a year or whenever a significant topic

requires attention or a decision. Moreover, these topics

are presented at least quarterly at meetings of the

Human rights commitments related to clients

The overarching NLB Group Policy on Respect

for Human Rights

51

, which follows the Universal

Declaration of Human Rights and other internationally

recognised frameworks, such as the ILO Declaration

on Fundamental Principles and Rights at Work and

the OECD Guidelines for Multinational Enterprises,

also includes provisions on respecting these rights in

relationships with clients.

As stipulated in this Policy, the NLB Group members

do not offer products or services that could negatively

affect human rights. This is ensured through due-

diligence assessments and monitoring processes

embedded in the Group’s lending policy and applied

throughout the entire product lifecycle or the duration

of a contractual relationship.

51 The Policy is detailed in S

1 and also refers to clients.

Furthermore, other NLB Group’s internal documents

and conduct related to client relations are closely

aligned with human-rights commitments. For example,

the client’s right for inclusion and access to financial

services, non-discrimination, accurate and timely

information, financial health and literacy, and personal

safety and privacy are considered strongly connected

with the client’s human rights.

As disclosed under the chapter

Affected Communities,

the NLB Group identified two potential human-rights

incidents through client due diligence in 2025; however,

subsequent internal procedures confirmed that neither

constituted an actual incident.

In 2025, the NLB Group’s policies were aligned

with the

UN Guiding Principles on Business and Human Rights,

the ILO Declaration on Fundamental Principles and

Rights at Work, or the OECD Guidelines for Multinational

Enterprises or human rights incidents related to clients

were reported.

S4-2

Processes for

engaging with clients

about impacts

The NLB Group places strong emphasis on active

engagement with its clients to maintain their trust

and ensure transparency in relationships with them.

The Group therefore engages with clients regularly

through day-to-day business processes, using both

physical and digital channels.

Physical channels include regular personal

communication with customer relationship officers or

branch employees, as well as support provided through

contact centres, the website, telephone and video calls

(depending on the entity).

For example, the NLB Contact Centre (KC 24/7) provides

customers with continuous, multi-channel support to

ensure accessible, reliable, and high-quality service.

Customers can reach the bank through a broad range

of channels, including telephone support, video calls,

email, online forms, the Klik/Klikpro digital-banking

environment, live chat and chatbot services, and

selected social-media messaging platforms. Together,

these channels ensure that customers (both digital and

non-digital) can receive assistance in the way that best

suits their needs.

Each channel supports different types of inquiries,

ranging from simple information requests to more

complex banking procedures and complaints. The

telephone channel remains the primary point of

contact, providing 24/7 availability for all customers.

Video calls enable a more personalised and visually

guided service experience, while email and online

forms support written communication, document

submission, and case resolution. Digital-banking

messages, chat services, and chatbots provide quick,

intuitive support within online and mobile environments,

and social-media messaging offers an additional

touchpoint for basic guidance and redirection.

Daily engagement involves communicating the

characteristics and impacts of the Group’s financial

products and services,

ensuring that clients remain

well informed and confident in their financial decisions

and maintain a professional relationship with the Group.

Client feedback is collected through daily interactions,

the complaint-management system, and satisfaction

surveys. In leasing companies, for instance, customer

satisfaction is also measured through InstantFeedback

digital tools during the sales phase, providing real-time

insights into customer experience that enable immediate

corrective actions and foster a culture of continuous

improvement.

The NLB Group financial members also conduct

periodic

desktop and direct client research

. The main

goal of such research is to identify client needs and

preferences, which are then incorporated into decision-

making processes and inform the Group’s product

development, communication strategies, and the wider

business strategy.

303

Operational responsibility for client engagement rests

with sales, marketing, or communication directors in

each NLB Group member. Employees in direct client-

facing roles, as well as those in support functions,

participate actively in the engagement processes.

The effectiveness of different engagement methods

and communication channels is monitored and

measured through established internal processes,

including quality assessments, customer-experience

feedback, process-efficiency indicators, and continuous

improvements to ensure accessibility, responsiveness,

and clarity. Client-related matters are reported

regularly to the relevant department director, while

strategic issues and overall client-satisfaction metrics

are also reported to the Management Board of each

For additional information please see the

chapters

Responsible Communication

Client Service

quality and client satisfaction

S4-3

impacts – complaint

The NLB Group members are committed to maintaining

open and constructive communication with clients

and to resolving any issues, misunderstandings, or

errors that may arise in day-to-day interactions. When

clients are dissatisfied with products or services, the

Group provides multiple channels through which they

can raise questions, submit complaints, or express

concerns, ensuring that responses are timely and

appropriate. These channels, which support the

structured handling of customer grievances, are

described in the preceding chapter.

Clients are informed about available communication

and grievance-handling channels through the

websites, digital banking platforms, branch materials,

and other client-facing information. All channels

are established and managed internally by the

Group, without involvement of third-party grievance

mechanisms.

In addition to standard complaint channels, clients

may use dedicated procedures to report concerns

relating to unlawful or harmful conduct. These

include a designated email address, the option to

submit concerns anonymously via the Whistler web

application, and the possibility to report issues in

person or by telephone to authorised representatives.

In line with internal whistleblower-protection rules,

clients benefit from the same safeguards against

retaliation as all other stakeholder groups. Additional

information is provided in the chapters

Managing

Concerns about Unlawful or Harmful Conduct

Whistleblower Protection

When a justified negative impact on a client is confirmed

through the complaint process, the Group assumes

responsibility for providing or contributing to a

remedy. Remedies may include correcting or reversing

earlier decisions, offering financial or non-financial

compensation, providing clarifications, adjusting services,

or implementing corrective measures within relevant

business processes. To ensure remediation is effective,

the NLB Group systematically monitors the recurrence

of similar issues, the timeliness and quality of case

resolution, and client feedback following closure. These

insights inform proposals for process improvements and

the prevention of future negative impacts.

The Group regularly monitors client experience across

communication channels. Contact centres, for example,

assess communication quality, post-interaction

satisfaction, response times, resolution efficiency,

adviser performance, and overall user experience

through surveys, quality checks, and operational

analyses. Customer experience is also tracked through

structured post-interaction surveys, targeted follow-ups

with dissatisfied clients, cross-channel user-experience

analysis, and ongoing monitoring of complaints and

feedback. These findings are integrated into continuous

improvements of processes and service quality.

Client feedback, including complaints, is an

important input for

improving services, internal

processes, and customer relationships.

Complaint

management is therefore embedded within the broader

client-experience framework of the NLB Group, and

employees receive regular training to support service

quality improvements.

As the parent bank, NLB ensures consistent minimum

standards for channel accessibility and the handling of

client concerns by systematically harmonising policies

and complaint-management practices across all Group

banking members. Similar frameworks are applied in

leasing and asset-management companies.

NLB Group places

strong emphasis on active

client engagement

304

The complaint-management policies outlined below

address client-related impacts (as detailed in Table 111

under the chapter

Material IROs and their interaction

with the strategy and business model

), including three

material impacts identified by the DMA: two positive

impacts (ensuring service quality and client satisfaction,

and providing high-quality information to clients) and

one potential negative impact (providing inadequate or

inaccurate information).

Instructions for handling complaints

Content and purpose

: The Instruction establishes

the general framework for complaint management,

defines the types of complaints, and sets out the two-

level internal complaint-handling process. It describes

the two-tier customer-complaint resolution system and

the competent institutions for out-of-court settlement

of customer claims (IRPS and ECDR) and provides

clarifications about complaint-solving methods and

procedures. The Instruction also defines minimum

standards and general objectives that are aligned

across the Group, including:

fast, efficient, and professional complaint resolution

at all levels of the process and consistent handling of

justified reimbursement requests;

registration of complaints to enable content analysis

aimed at improving products, processes and the

overall customer experience (transparency, quality,

customer relationships, etc.); and

preparation of improvement proposals with the

purpose of preventing a larger number of similar

mistakes and negative customer experience.

Scope

: All employees involved in complaint

management and resolution.

Directors of sales

departments and heads of branches with direct

business relationships with clients.

Availability

: Accessible to employees in the Register

of Internal Documents, while the complaint-handling

rules and procedures are available to clients in

branches and on the websites of NLB and subsidiary

banks, in accordance with local legislation.

Rulebook for handling complaints in

the NLB Skladi sub-group

Content and purpose

: The policy sets out the rules

on how the NLB Skladi sub-group handles client

complaints relating to its services, ensuring that each

complaint is addressed with the aim of increasing

client satisfaction, reducing court disputes and

associated costs, and strengthening trust in the

company. It defines what constitutes a complaint

(a statement of dissatisfaction regarding services)

and distinguishes it from a query/enquiry (a request

for information that is not treated as a complaint).

A designated responsible person/department is

appointed to manage the complaint process. All

complaints are logged and analysed (e.g. by type,

outcome, possible compensation). Regular reports

are submitted to management and the regulator

and are used to monitor reputational risk and improve

services. After the internal process is concluded (or 30

days after submitting a complaint), clients may turn

to a specialised arbitration body for out-of-court

dispute resolution under its applicable rules.

Scope

: All employees involved in complaint-

management and resolution.

Director of the

sales department.

Availability

: Accessible to employees in the Register

of Internal Documents, while the complaint-handling

rules and procedures are available to investors

in branches and on the NLB Skladi websites, in

accordance with local legislation.

Leasing companies in all markets of operation

follow complaint-management procedures in

line with their local regulatory requirements

(consumer-protection legislation). In recent years, they

have adopted internal policies for handling customer

complaints received through various channels,

both in written and verbal form. Current methods

of recording complaints vary among the companies.

Plans are in place to upgrade the complaint-tracking

and management system so that it is aligned

with the rulebook and standards applied by

banking members.

The material impacts outlined above in the chapter

are also addressed through the ongoing actions

of the NLB Group members.

In 2025, the Group continued its efforts to harmonise the

complaint-management process across all members.

Regular monthly meetings were held to align the

mechanisms and methodology, monitor and coordinate

actions in the Group, and to share our practices. Various

training sessions were delivered to employees involved

in complaint handling in several Group members,

complemented by mandatory e-learning in NLB. KPIs for

NLB were assessed regularly and reported quarterly to

the Operational Risk Committee, while the annual report

for the NLB group banking members was presented to

the Management Board.

Following the merger of NLB Lease&Go and Summit

Leasing Slovenija, Ljubljana in 2025, the re-registration

of financed vehicles resulted in a significant increase

in customer interactions. Despite these operational

challenges, customer-service teams maintained

responsiveness and ensured continuity of service,

demonstrating a strong commitment to customer

satisfaction throughout a complex transition period.

305

KPIs set to monitor the efficiency and risks related

to complaint management include the number and

share of complaints, average resolution time, and

other indicators. The average share of all banking

customers who submitted a complaint during the year

was 1.5%, which is 0.5 percentage point lower than

in 2024. Similarly to the banking system in the region,

card services account for the largest share of total

complaints. However, the share of complaints relative to

the total number of card transactions in the NLB Group

banking members was low, ranging from 0.01% to 5.13%.

To mitigate the risk of card abuse, which represents

a large share of credit-card-related complaints, the

Group has a system in place to detect and prevent

card abuse and raises client awareness about the risks

associated with online commerce and shopping, thereby

strengthening risk management in this area.

In 2025, the NLB Group banking members recorded

a notable improvement in customer experience. The

average complaint resolution time (excluding card cases)

was 6.6 days, and 80% of complaints were resolved in the

customer’s favour, although this figure remained below the

Group thresholds. Both the share of customers submitting

complaints and the overall volume of complaints

decreased year-over-year, by 25% and 23%, respectively.

Table 112:

Complaints in the NLB Group banking members

Share of customers

who have complained

annually

Number of complaints

64,261

83,259

The percentage

(share) is calculated as a number of complaints divided

by a total number of all clients (active + other) in the

NLB Group banking members: 4,319,616 as at

31 December 2025.

At the asset management company level (NLB Skladi),

investor complaints remain extremely low, with only

0.00014% of investors submitting a complaint in 2025.

The company addresses potential gaps in customers’

financial-product knowledge with a professional

approach, always striving to uphold the highest

standards of customer interest and satisfaction. The

same approach applies in NLB Fondovi, Beograd and

NLB Fondovi, Skopje where no investor complaints

were recorded in 2025.

In the leasing companies, the share of customer

complaints has also remained relatively low, ranging

between 0.1% and 0.2% of all clients

The highest

number of complaints was recorded in the largest

leasing member, NLB Lease&Go Ljubljana, where a

process-optimisation initiative is currently underway

regarding customer care, which will be followed by an

upgrade of the complaint-recording and management

system. These improvements aim to ensure greater

consistency of complaint management and enable

more advanced reporting.

S4-4

Taking action

on material IROs

In general, the NLB Group members have established

several actions to support the implementation of

policies and achieve both general and topic-specific

targets. Once implemented, these actions (unless stated

otherwise) are ongoing, and their progress is monitored

through established processes within the organisational

units or competence lines responsible for their delivery.

Investments related to key actions are incorporated

into the annual business plans of NLB or individual

NLB Group members and have been approved by the

respective management boards.

Key actions relating to clients and general progress

of these actions are detailed in the following sections

under the relevant material sustainability topics:

Digitalisation and innovation, Cybersecurity, Financial

health and inclusion, Service quality and customer

satisfaction, and Responsible marketing

and communication.

S4-5

Targets related

to managing

material IROs

The NLB Group has set several general objectives

within each material sustainability topic related to

its customers, linked to the actions presented in the

respective chapters presenting each sustainability

topic. These objectives, both qualitative and

quantitative, serve as a baseline for steering how

material negative impacts are to be managed,

positive impacts strengthened, and significant risks

and opportunities managed. In addition, the following

strategic, measurable and time-bound targets have

been set to achieve by 2030:

increase NPS to >50 points in the NLB Group banking

members,

increase digital penetration to 80%, digital core-

product sales penetration to >50%, and digital

acquisition to >30% in the NLB Group banking

members,

increase by 15% the percentage of young NLB clients

(aged 18–27, and 27+ up to retirement) with products

related to long-term savings and/or investment plans.

For further details on these targets and their links to

policies and actions, see the chapters

Digitalisation

and Innovation

, and

Financial Health and Inclusion

The objectives and targets are set and discussed as

part of the yearly planning process in each NLB Group

member and are generally determined as year-end

benchmarks. Clients contribute indirectly to target

setting through surveys and feedback is delivered in

interactions, as described in the chapter

Engaging with Clients

Progress and effectiveness of these objectives and targets

are monitored and measured within the departments

responsible for their implementation and reported to the

management boards of the NLB Group members.

306

The Group continues to prioritise digital innovation, by

enhancing its technological infrastructure to deliver

excellent client experience and maintain a competitive

edge. In recent years, the NLB Group has undertaken

strategic investments in technology, AI, and talent to

future-proof the business and strengthen its position

for sustainable growth. These initiatives are designed

to accelerate speed-to-serve and reduce cost-to

-serve, while enhancing digital engagement and

service orientation.

Digitalisation is a key strategic priority for the

NLB Group, driving growth by streamlining processes,

enhancing scalability, and boosting efficiency. By

rapidly expanding digital channels across the region

the Group reduces branch actions for routine tasks,

enhances client satisfaction, streamlines internal

processes, and supports paper usage reduction.

Therefore, the NLB Group is committed to growth by

leveraging digital marketing channels and enhancing

connectivity, and developing innovative tools,

while maintaining adequate personal interaction

with clients.

During the DMA update review, conducted in 2025,

the NLB Group reconfirmed initially identified IROs,

and identified a set of new material IROs related to

artificial intelligence. NLB as a parent bank in the

Group, recognises the potential of AI as the main

innovation driving force to disrupt the banking and

financial sector in the near future. The Group can

leverage its extensive transactional, behavioural, risk

and IT data to enable real-time decision-making that

grows revenue, cuts costs, and streamlines controls.

This is why NLB has prioritised the adoption of AI in all

areas and throughout the whole Group, recognising its

potential internally, to streamline its business processes,

enhance employees’ capabilities and skills, optimise

performance and quality, and externally, to enhance

the Bank’s capacities and abilities to react on market

changes and serve clients and their financial needs

in a timely and agile manner.

The digital and AI-related policies outlined below

address IROs (as detailed in the table 111 in the chapter

Material IROs and their interaction with strategy and

the business model

), including two material impacts

identified by the DMA:

The effects of trustworthy AI on business and social

aspects, Innovative tools and solutions enabling

sustainable consumer behaviour, and the material

opportunity: Digital solutions for easier access to

banking services.

Digital transition – strategy and related policies

Digital transition is firmly embedded in the new NLB

Group Horizon 2030 Strategy. The strategy focuses

on growth across three pillars: Retail, Corporate

and Investment Banking, and Payments, supported

by operating platform enhancement initiatives.

Transitioning to a fully digital business model is a key

focus, which includes providing users with advanced

digital solutions (NLB Klik, NLB Pay), modernising

digital processes in the Bank, and setting up a central

IT hub.

The policies related to digital solutions for clients are

included in overarching product development and

cybersecurity policies, which are described in detail

in respective chapters: Cybersecurity and personal

data protection and Responsible marketing and

Communication. In addition, specific instructions and

guidelines have been established for each digital

channel providing regulatory compliance, efficient

internal processes and delivery to the clients.

Artificial Intelligence Use Policy of NLB and NLB Group

The Policy regulates the use

of AI to ensure a safe, compliant and responsible

use of AI in NLB and the NLB Group. The Policy

covers provisions related to trustworthy AI as

regulated by the EU AI Regulation (AI Act) that have

already started to apply, e.g. general principles

of trustworthy AI, prohibited use, transparency

obligations and incident reporting. It also covers

safe and responsible use of generative AI including

proper handling of personal, confidential, internal

data and trade secrets based on related Slovenian

and EU regulation that includes GDPR, Banking Act,

Insurance Act, Financial Instruments Market Act,

Market Abuse Regulation and Trade Secret Act. The

Policy also includes provisions that cover employee

AI enablement and skills development ensuring

proper understanding of benefits and risks of using

AI in workplace environment.

The Policy covers NLB and other NLB Group

members being subject to either EU AI Act regulation

and/or Council of Europe Convention on Human

Rights, Democracy and Rule of Law.

Most senior function accountable

: The Management

Board is according to the EU AI Act and Slovenian

law on implementation of the AI Act (Act on

implementation of the EU regulation on setting

harmonised rules for AI) responsible for compliance

with the provisions of the act. All employees are

accountable for their proper and compliant use of AI

based on this Policy.

Employees can access the policy

in the Register of Internal Documents and on the

internal websites.

During the DMA update

review, a set of new material

IROs related to artificial

intelligence was identified

307

Key actions and progress

Key actions in banks, leasing and

asset management companies

In recent years, NLB has been a pioneer of banking

innovation in Slovenia as it has introduced various

advanced digital services and channels, including

24/7 opening of personal accounts and the full digital

signing of documents in the digital bank, videocall

functionalities with multichannel 24/7 support, fully E2E

digital loan capabilities for consumers & SMEs, sending

PINs for cards via SMS, implementing Flik P2M (Person

to Merchant) at all POS (Point of Sale), the NLB Smart

POS solution on mobile phone for merchants, card

management functionalities and biometric recognition,

and issuing digital-only debit cards. Other NLB Group

banking members are also among the most innovative

banks in the region, introducing new digital services,

products and channels to the market, such as new

digital bank launch in NLB Banka, Sarajevo, NLB Banka,

Banja Luka, NLB Banka, Podgorica and launch of digital

sales processes in NLB (savings accounts, deposits,

account overdraft, credit card limit, ordering a new

credit card), NLB Banka, Prishtina, (consumer loan), and

NLB Banka, Skopje (consumer loan).

In 2025, the NLB Group banking members

undertook several initiatives that contributed

to the implementation of the digital strategy:

NLB has significantly upgraded its online and mobile

banking platform NLB Klik, introducing a redesigned

interface and enhanced features. The changes assist

users in tracking payments, managing banking

services, and confirming transactions.

As the first banks in their respective countries,

NLB Banka, Skopje, NLB Banka, Prishtina, NLB Banka,

Sarajevo, and NLB Banka, Banja Luka introduced

Apple Pay.

New non-transactional app for Private Banking

clients - NLB Private - offering a faster, more digital

experience with 24/7 access to information on assets,

products and investment strategies was introduced.

The NLB Group continued to consolidate its digital

channels across banking members.

New mobile app, NLB Trading, providing clients with a

fast, transparent, and straightforward way to manage

their trading, was launched.

Despite challenges related to different technological

background, harmonisation of products and services

available on digital platform is ongoing and will

continue in the following years in order to achieve a

common goal: one platform for all NLB Group banking

members.

The Group maintained a strong focus on digitalising

clients across all markets and ongoing best-practice

sharing among the NLB Group members to enhance

digital penetration and channel utilisation. Regular

meetings were organised throughout the year. In

addition, the NLB Group organised the 4

edition of

NLB Payments Days which gathered experts from

across the NLB Group and external partners to discuss

progress, challenges and opportunities related to

digital payments strategy.

Several awareness-raising activities were carried out

for under-digitalised clients, with a particular focus

on the elderly. For details see the

Overview of

significant sponsorships and donations by type, section

Increasing financial literacy and mentoring

In addition to banks, digital channels are being

integrated into the operations of asset management

companies and leasing companies in the NLB Group,

creating the basis for shifting the business model towards

a more customer-centric and service-driven focus.

Key actions in 2025 in asset management

companies (NLB Skladi, Ljubljana, NLB Fondovi,

Skopje, NLB Fondovi, Beograd):

NLB Skladi introduced a new webpage that is more

user-friendly for persons with disabilities while

NLB Fondovi AD Beograd and NLB Fondovi AD Skopje

began updating their webpages so that all asset

management companies will have a uniform

webpage format.

NLB Skladi digitised and automated tracking

investment limitations by incorporating an advanced

investment and order management application called

Limina into its business operations.

NLB Fondovi AD Beograd and NLB Fondovi AD Skopje

also started the process to switch to the same business

solutions for investor tracking as NLB Skladi.

With NLB Skladi already integrated to NLB Klik in 2024,

development of this mobile application started also for

NLB Fondovi AD Skopje and NLB Fondovi AD Beograd.

Key actions in 2025 in leasing companies

(NLB Lease&Go, NLB Leasing Belgrade,

NLB Leasing Skopje, NLB Car&Go):

Continuous use of digitalisation benefits helped simplify

and streamline the processes, particularly through

the electronic confirmation of invoices, which was

introduced in 2024 across all leasing companies.

Video identification of new customers was introduced

in Mobil Leasing Zagreb.

Further development of the platform doberavto.si

(the platform of NLB Car&Go, which was acquired

in October 2024 by NLB Lease&Go) to safeguard its

leading market position in an increasingly digital car

market. The platform integrates value-added services

such as financing options, vehicle insurance and

inspection services, offering users a one-stop platform

for all their automotive needs.

In future, the NLB Group will prioritise completing

platform harmonisation across all banking members

and scaling advanced digital services to deepen

client engagement. Asset management and leasing

companies will accelerate integration of unified

digital solutions and mobility platforms to strengthen

customercentric models. Continuous innovation,

accessibility, and sustainability will remain core

priorities to support digital growth and operational

excellence.

AI-related actions

In 2025, NLB started several activities to support the

smooth adoption of AI in NLB and the NLB Group. These

activities have been led by the newly established Data

and AI Governance Group that reports directly to the

NLB Management Board, and include:

Innovation and experimentation activities

NLB started to develop and experiment with different

genAI systems and promoted the use of genAI at

all levels and throughout the NLB Group, focusing

on strategic member companies. Large scale

experimentation has been enabled by providing

access (licences) to the newest genAI platforms such as

Microsoft Copilot and OpenAI ChatGPT (more than 2100

licences have been granted) and coordinating their use

within various use cases across the NLB Group (more

than 400 use cases currently in the pipeline). Business

308

value evaluation is currently ongoing in NLB d.d. in

order to assess benefits of genAI use and identify the

future needs.

Employee enablement

In line with large scale experimentation, NLB has

implemented a broad literacy initiative for its employees

with over 75% of employees engaged. Mandatory

training for all employees in the NLB Group on AI use

policy was prepared and carried out with currently

more than 6,500 employees having successfully

completed it (approximately 90% of all employees in

the NLB Group). In addition, comprehensive training has

been prepared and carried out for genAI licence holders

covering both technical aspects of genAI use (e.g.,

proper prompting techniques, chatbot use, etc.) and

safe, responsible and compliant use of genAI according

to the internal AI use policy and AI regulation with all

strategic NLB Group members and with more than 2000

employees participating.

Data & AI Governance

In order to properly and effectively manage AI

systems used in the NLB Group in compliance with

the EU AI Act, NLB has continued to build its data

governance framework and started actions to establish

a comprehensive AI governance framework (AIGF).

Specific working groups at the B-1 level and expert level

have been established to prepare the framework and

integrate its requirements to the existing processes,

systems and controls. The AIGF actions are driven by

experimentation and adoption efforts on the one hand

and phased application of the EU AI Act on the other.

NLB has formally acceded to the EU AI Pact in order to

join the frontrunner organisations in the EU in adopting

AI in a responsible way.

Community building

NLB has initiated several activities for sharing

information, best practices and initiatives with its

employees. NLB established Data & AI community

covering all NLB Group members and including around

1000 employees and organised special community

days to inform and update community about current

and planned actions related to data & AI. In addition,

an AI ambassadors network has been organised and

nominated to lead the uptake of AI in their own business

units and provide the necessary support following the

concept of train-the-trainer.

Going forward, the Group will intensify its focus on

digitalising banking processes and clients in all markets

of operations, and further enhance digital accessibility

solutions. Additionally, the Group will prioritise digital

security and fraud prevention by implementing

advanced security measures to ensure the highest levels

of protection and client satisfaction. The Group will also

continue advancing trustworthy AI implementation

and governance, strengthening employees’ AI skills

and literacy, and building a community to support

AI adoption.

Targets and metrics

In alignment with its digital transition strategic

objectives and the UNEP FI Principles for Responsible

Banking, the NLB Group set a digital penetration

target in 2021 to achieve a 55% active digital banking

adoption (web or mobile) among private individuals

by 2025, and 80% by 2030. The 2025 target was

surpassed in 2024

by 1.4 percentage points. Therefore, in 2024, the Group

increased the previously set digital penetration target

from 70% to 80% and additional goals concerning

digital penetration and acquisition were set as detailed

in the table below. The target setting relied on market

and client research and was embedded in the process of

the development of the NLB Group New Horizons 2030

Strategy. The progress and effectiveness of the targets is

monitored and measured within the digital departments

in individual NLB Group members and reported to

their management boards. Additionally, the progress is

reported monthly to the NLB Management Board within

the Strategy 2030 project.

At the end of 2025, the NLB Group banking members

had more than 2 million digital users, of which almost

95% are active users. Digital penetration is growing in all

banking members and is progressing towards the goal

of 80% in 2030.

The digital

penetration rate is calculated as the number of active

digital banking users - private individuals divided by the

total number of private individuals.

Table 113:

Digital banking usage in the NLB Group banking members

Baseline

Digital penetration

61.8%

56.6%

29.5%

55%

80%

Digital core product sales penetration

15.77%

4.80%

>50%

Digital acquisition

0.42%

<1%

>30%

(i) The 2025 and 2030 baselines and targets for digital core product sales penetration and digital acquisition have not been defined and the progress

continues to be monitored regularly.

NLB Group will intensify its

focus on digitalising banking

processes and clients in

all markets of operations,

and further enhance digital

accessibility solutions

309

and personal data

protection

As identified in the DMA, the NLB Group has a positive

impact on client data protection through established

policies and mechanisms that safeguard client data by

preventing unauthorised access and potential misuse,

including risks that could result in financial loss.

On the other hand, the DMA identified cybersecurity

risks as material. As in any financial institution,

cybersecurity risks, if not mitigated well, particularly

regarding the protection of customer personal data, can

significantly impact the Group’s financial performance

through potential data breaches that may lead to costly

remediation efforts, regulatory fines, and litigation, as

well as reputational damage that erodes customer trust

and confidence, ultimately resulting in loss of business

and diminished market value. Protection of client data is

therefore essential for maintaining the privacy and trust

of clients.

Ongoing privacy awareness is an essential part of our

organisational culture. In the NLB Group, we ensure

that our employees stay up to date with the latest

personal data protection requirements, best practices

and responsibilities through ongoing communication,

training, targeted e-learning and awareness campaigns.

The NLB Group adheres to GDPR requirements in

its daily operations. A clear organisational structure

and division of tasks in the field of personal data

protection has been established. A Data Protection

Officer (DPO) and deputies have been appointed to

advise management and employees on compliance

with legislation, monitor the implementation of

rules, cooperate with supervisory authorities, and

monitor internal compliance with legislation and

internal documents.

Transparency is essential. The NLB Group members

communicate openly about the data they collect, how

they use it, and with whom they may share it, always

on a lawful basis. Individuals have easy access to their

data and the right to rectification, erasure, restriction

of processing, portability, objection, and withdrawal of

consent. The data protection officers are available to

answer questions, and the complaint mechanisms are

designed to be simple and accessible.

The NLB Group members store and protect personal

data in a way that prevents any undue disclosure of

data to unauthorised persons. They undertake not

to transfer, lend, or sell personal data to third parties

without prior notice and the client’s consent. In all cases,

the Group members ensure adequate safety measures

and process personal data only within the framework of

lawful legal bases and for the specified purposes.

The NLB Group continuously develops and improves

its services to meet the clients’ needs. Accordingly,

collecting and processing some personal data on a

lawful basis, allows the Group to adapt to clients’

needs and preferences faster and better, resulting in

more effective communication and an improved

user experience.

Both, identified material risk and a positive impact as

well as other IROs in the area of cybersecurity and

personal data protection are covered in the established

policies, including the Rules on the Protection of

Personal Data, and cybersecurity policies, the most

relevant are the NLB Group Information Security Policy,

NLB Group IT Security End-User/Employee Protection.

For more information on cybersecurity policies, actions

and metrics please refer to the chapter

under

S1-Own workforce

as the presented

cybersecurity governance and disclosures cover both

employees and clients related matters.

Details on the personal data protection policy, actions

and metrics are presented in the following subchapters.

Rules on the Protection of Personal Data

The Rules set out principles for

processing personal data in compliance with GDPR

and national law, ensuring lawfulness, fairness, and

transparency. They emphasise data minimisation,

purpose limitation, and integrity, while safeguarding

the rights of data subjects. Roles and responsibilities,

including the Data Protection Officer, are defined

to ensure accountability and proper handling of

personal data throughout its lifecycle. The Rules also

regulate processing by controllers and processors,

procedures for managing personal data breaches and

other relevant topics, required by the data protection

legislation. In line with the Rules, the provisions are

integrated into the NLB’s processes and systems.

The Rules are fully applicable for NLB, while

other NLB Group members use the rules as best

practice and have implemented their provisions

in their internal documents and business practice

in accordance with their local legislation and

organisational structure.

Most senior function accountable

: The Management

Board and appointed Data Protection Officer

who professionally and independently assists the

management in ensuring that the processing of

personal data complies with the rules.

Employees can access the Rules in the

Register of Internal Documents, while the summary

of the Rules and general information on data

processing is available to stakeholders on the

NLB Group’s website.

Through its policies, the NLB Group sets standards for

transparency, security, and respect for individual rights

in all its processes. Within the NLB Group, transparency

is regarded as the foundation of compliance with

legislation and the Bank’s internal rules. For this reason,

the Group maintains comprehensive records of personal

data processing activities, clearly defining the purposes

of processing, types of data, legal bases, retention

periods, and other mandatory information.

The NLB Group processes all collected personal data

– whether identification, contact, or service usage data –

exclusively for legitimate and clearly defined purposes.

When providing banking services, complying with

regulatory requirements, or performing any other type

of processing, the Group ensures that data is processed

strictly in accordance with its intended purpose.

Data storage within the NLB Group is strictly limited

and carried out only for the minimum time necessary,

following the precisely defined timelines and legal

obligations. The Group employs advanced technical

and organisational measures, such as encryption,

310

pseudonymisation, regular testing of security solutions,

and robust incident recovery plans. It requires the same

high standards from all contracted processors, ensuring

that data remains protected throughout its entire lifecycle.

The NLB Group has established a comprehensive

and clearly defined protocol for reporting personal

data breaches. These procedures are designed to

minimise risks, limit breaches, and ensure transparent

communication throughout the process.

The Group discloses personal data to third parties only

on a lawful basis, for example, to regulatory authorities

or to contractual processors that must provide the same

level of data protection as the NLB Group.

The NLB Group adheres to personal data protection

requirements in its daily operations. Several ongoing

actions were undertaken in 2025 in NLB and other core

financial members that include the entire value chain

(downstream, upstream, and own operations):

The DPO function advises the business function on

day-to-day issues and questions regarding personal

data protection.

The DPO function advises the business function on

data protection impact assessments (DPIA) and

legitimate interest assessments (LIA) and monitors their

implementation and outcomes.

The DPO function acts as the contact point for

data-subject requests and for the data-protection

supervisory authority.

Policies, rules, standards, and procedures for

personal data protection are used in the Group’s

everyday operations.

A Privacy notice for customers is available on the

websites of the NLB Group core financial members. The

notice includes all information required by law.

Continuous awareness-raising activities and focused

training on personal data protection are conducted

annually (mandatory for all employees).

A data protection compliance check is part of the

mandatory review of each outsourcing provider.

Activities regarding cybersecurity are presented in

under S1-Own workforce,

and they also refer to the clients.

The NLB Group has established several internal

objectives and KPIs regarding data protection,

processes and tasks through the policies presented in

the previous chapter. The overarching goal is to ensure

compliance with the legislation governing personal

data protection. The DPO oversees compliance and

the effective implementation of data-protection rules,

providing independent supervision and reporting

regularly to the Operational Risk Committee, the

Management Board and the Supervisory Board through

quarterly compliance reports.

Metrics and progress regarding cybersecurity are

presented in the chapter

under S1-Own

workforce

and they also refer to the clients.

For the NLB Group, financial inclusion is about ensuring

access to financial products and services and “leaving

no-one behind”. Although there is no specific policy

in place addressing financial health and inclusion

exclusively, these categories are embedded in the

Group’s business model and process by following

the Group’s core value of improving lives and the

central principles of the 2030 Agenda for Sustainable

Development, in particular two SDGs:

· 8 – Decent work and economic growth

(Strengthen the

capacity of domestic financial institutions to encourage

and expand access to banking, insurance, and

financial services for all), and

· 10 – Reduce inequality

(By 2030, empower and

promote the social, economic, and political inclusion

of all, irrespective of age, sex, disability, race, ethnicity,

origin, religion or economic or other status).

In addition, guided by the UNEP FI Principles for

Responsible Banking, the NLB Group promotes

universal financial inclusion and in particular supports

the financial health and inclusion of its private individual

clients. These considerations are firmly embedded in the

NLB Group Policy on Respect for Human Rights, as well

as in policies and manuals and procedures governing

the sales process.

The Group balances the optimisation of its branch network

with ensuring access to banking services. Although branch

roles are shifting due to market changes and digitalisation,

direct in-branch contact remains essential, especially for

comprehensive services and vulnerable clients. To reduce

negative impacts, the Group strengthens physical and

digital accessibility through its branch and ATM network,

digital channels, contact centres, email, website, and social

media, while also supporting people with disabilities and

promoting financial inclusion and literacy.

The Group also places great importance on managing

potential negative impacts, for example due to strategic

optimisation of physical banking network in some

areas (not deemed as material in the conducted DMA).

The approach includes maintaining an adequate

physical network and appropriate communication

about branch closures with affected local communities

and directly with concerned clients via the established

communication channels.

NLB Group actively promotes

universal financial inclusion

and supports the clients’

financial wellbeing

311

At a high level, the principles of financial health and

inclusion are embedded in the Sustainability Policy, and

indirectly in all policies and other internal documents on

client-related products, services, and relationships. The

White Book for Branches is the key policy addressing

the material positive impact of maintaining a network

of physical banking offices.

White Paper for Branches

: The internal document

describes the critical role of branches in providing

adequate levels of physical accessibility and client

experience. It defines the standards and roles of

branch offices to ensure a modern, professional,

and friendly client experience. The aim is to increase

sales and strengthen the Bank’s advisory role,

improve the client experience, and support clients

in transitioning to digital channels and greater

efficiency.

Distribution network, product & segment

managers, real estate managers in the NLB Group.

The most senior function accountable

: Director of

customer, product management and digital services

or a similar function in the NLB Group members. In

addition, the Group has established policies and

procedures to ensure employees, clients and other

visitors in branches a high level of security and

measures to mitigate any security risks.

The Register of Internal Documents.

To contribute to the achievements of the policies

which are related to the financial health and

inclusion, the NLB Group continued to strengthen

accessibility for clients and inclusion across its network

throughout 2025.

In Slovenia, at the end of the year 2025 hearing loop

devices were installed in all NLB branches, and 58 ATMs

currently support blind and partially sighted customers

with voice-guided transactions, with 26 more to be

upgraded by Q1 2026. The mobile branch NLB Bank&Go

served 10 locations in smaller towns, with two new

destinations planned.

In North Macedonia, NLB Banka, Skopje enhanced

its mClick mobile app with a built-in voice reader for

visually impaired clients, while NLB Banka, Prishtina

confirmed plans to implement new accessibility

standards for digital services.

Group-wide efforts also include compliance with the EU

directive on digital accessibility which has been effective

since June 2025, branch adjustments for people with

motor disabilities, and a commitment to equip all ATMs

with accessibility features by 2030.

Various sponsorship and donation programmes to

increase clients’ financial literacy were held in NLB

(financial literacy centre in the banking museum MUZA,

financial literacy initiative for families and children in

Minicity, financial literacy workshops for the elderly),

and NLB Banka, Skopje (financial literacy workshops

for children).

NLB also started

Fino! project

in Slovenia. This is a

multi-phase project that combines digital campaigns,

AI technology, and media outreach to make financial

literacy accessible and engaging. The project’s core

objective is to increase the share of clients who feel

empowered in their financial decision-making from 25%

(Spring 2025) to 27% (Fall 2026). The project includes

online quizzes (more than 15,000 were taken by the end

of 2025), AI financial assistant who educates users on

personal budgeting, financial goals, and digital banking,

offering advice for both short- and long-term goals.

In addition, in 15 weeks TV shows on national television

and podcasts were launched, addressing topics such

as setting financial goals, managing cash flow, saving,

investing, insurance, and starting a business.

With the aim of promoting financial literacy, especially

among young people, NLB Skladi in Slovenia

organised several motivational and educational

events, published expert publications, leveraged

social media, particularly Instagram, and took part in

financial education events for young people, organised

by the national newspaper Finance. For additional

information see the subchapter

Overview of significant

sponsorships and donations by type

The NLB Group continued its commitment to financial

literacy and inclusion by enhancing target setting and

further developing relevant initiatives.

In 2025, NLB recorded steady progress in promoting

long-term financial planning and inclusion. The share

of young clients (18–27 years) using long-term savings

or investment products stood at 28%, while the share of

clients aged 27+ increased to 42%, up from 39% in 2024.

Both client groups remain on track toward the NLB’s

2030 target of a 15% increase in uptake of long-term

savings and investment solutions. - corresponding to

33.4% for young clients (18–27 years) and 44.8% for

clients aged 27+.

The percentage

(share) is calculated as a number of clients with at

least 1 product related to long-term savings and/or

investment plan, in relevant age group divided by the

total number of clients. The number of such clients

represents a portion of 737,216, which is the total number

of NLB clients and represents a segment of total client

base of the NLB Group of 2.9 million, as detailed in the

In line with UNEP – FI methodology NLB as the parent

bank in 2024 defined the baseline and set two concrete

Table 114:

Financial healt and inclusion metrics, NLB

Baseline

year and value

Number of young clients (18-27 years) with products related to

long-term savings and/or investment plans

28%

29%

+15%

Number of clients aged 27+ age up to retired clients with products

related to long-term savings and/or investment plans

39%

+15%

Note: The measurement of the metrics was not validated by any external body other than the assurance provider.

312

goals to be achieved by 2030 for the impact area

Financial Health & Inclusion, which focuses on savings

and investment plans as a key priority area:

By 2030 NLB will increase by 15% the percentage

of young clients (18–27 years) with products related

to long-term savings and/or investment plans.

By 2030 NLB will increase by 15% the percentage

of clients aged 27+ up to retirement with

products related to long-term savings and/or

investment plans.

Personal savings are crucial for long-term income

stability, especially for the young clients. The

foundations for developing the targets were mostly

the Slovenian government 2017 Strategy for a Long-

Lived Society and data from the Pension and Disability

Insurance Institute of Slovenia (ZPIZ). The Strategy

underscores the importance of early pension savings

to ensure financial security in the old age. Slovenia is

experiencing significant demographic changes, with

the elderly population expected to nearly double by

2060, from 17.3% in 2013 to 29.4%. This shift, coupled

with a shrinking working-age population, will strain

the national pension system, with expenditures

projected to rise from 11.8% to 15.3% of GDP by 2060.

The ratio of contributors to pensioners will worsen,

threatening the system’s financial sustainability.

Currently, many pensioners receive between

EUR 700 and 800, below the poverty risk threshold

of EUR 827, indicating financial instability for nearly

half of retirees. Therefore, young Slovenians must

prioritise personal savings for retirement, as the

national pension scheme alone may not provide

sufficient income.

Targets for other banks in the region will be developed

in the future. In addition, the NLB Group will gradually

develop additional specific and meaningful targets for

key financial health and inclusion initiatives.

client satisfaction

The NLB Group, through the policies, procedures and

activities described in this chapter and by establishing

responsible market practices, manages the key positive

and negative impacts related to providing clients with

high-quality information.

Responsible product

The NLB Group members execute product development,

marketing actions and provide information to clients in

compliance with regulations and local legislation related

to customer rights, guidelines and codes of professional

associations. The general framework related to products

and services for clients is set at the high level in the Code

of Conduct and the Sustainability Policy which is applied

in all core financial members (banks, asset management

and leasing companies) and will be harmonised across

the NLB Group in 2026. In addition, various specific

policies and guidelines have been established, the

most significant relating to product development, data

protection (see details in the chapter Cybersecurity and

personal data protection), and marketing communication

actions. Other internal documents govern specific areas,

such as client segmentation and appropriate treatment,

the format and frequency of client contact, or receiving

and processing interactions in the contact centre.

Together, these policies address the identified actual

material positive impact (ensuring quality of services and

client satisfaction), which is detailed in the table 111 in the

SBM-3 Material IROs and their interaction with

strategy and business model

The NLB Group is committed to offering only products

and services that create value for our clients and

shareholders, meet the clients’ needs, and ensure full

confidence in the products provided. The processes for

approving new products comprise a preliminary review

required for achieving these goals. The procedures

for approving products and services apply to all

new product offerings, as well as a variety of existing

products. The Committee for Existing and New Products

is responsible for approving and monitoring products

while also focusing on risks associated with each

product and the method to manage those risks. The

key control functions must be involved in the process

of product development and monitoring, including

the compliance function, since it is essential that

every product complies with regulatory requirements,

particularly in the areas of consumer protection,

personal data protection, and prevention of money

laundering and financing terrorism. The most relevant

policy related to the responsible product development is

presented below.

Policy for the Introduction of New Products and

Substantial Changes to Existing Products

The Policy describes the NLB

Group’s general approach to responsible product

development and defines the Bank’s framework for

introducing new and significant changes to existing

products for private individuals and legal entities and

products of financial markets.

It is based on Slovenian and European legislation,

including the Banking Act, and EBA and ESMA

guidelines on product governance requirements. The

Policy also follows the applicable national regulations

related to client loans, client protection, electronic

business and communication, and protection of

personal data. The purpose of the policy is to define:

1. the principles of introducing new products and

substantial changes to existing products,

2. assessment factors for the introduction of new

products and substantial changes to existing products

(before launching new or modified products, the NLB

Group members analyse financial, non-financial,

compliance, legal, and capital/liquidity impacts. Non-

financial risk assessments include evaluating ESG

risks, defining mitigations, and specifying ESG-related

product features),

3. minimum standards of the organisation when

introducing new products and significant changes

to the existing products,

4. product discontinuation process and

5. regulation of the area at the level of the NLB Group

banks, with the aim of taking into account the interests,

goals and characteristics of consumers in order to

prevent damage in advance for the bank and any

damage that could occur to the consumer and other

customers of the Group as a result of the behaviour

313

and the conduct of the bank’s employees, due to the

composition of the product, its marketing or other

procedures related to the product offer, and to prevent

a negative impact on the Group’s reputation.

The NLB Group banking members, mandatory

for all employees involved in product development.

Board of each banking member oversees decisions

on new and existing products, delegating this to

the New and Existing Products Committee which is

established in each bank. This committee reviews new

products and marketing policies before launching

them to ensure that clients can have full confidence

in them. The highest level of accountability for policy

implementation are directors of customer, product

management, and digital services in each NLB Group

banking member.

In 2025, the NLB Group supported relevant policies

and identified impacts related to sustainable finance

and responsible product development with several

activities. In particular, the Group made significant

progress in green financing and integration of ESG

principles into product development. The Group banking

members in different markets introduced or updated

multiple products, including 12 new product solutions.

For additional information on new products see the

Green financing

for corporate and retail

clients in the chapter

Within product governance 10 committee sessions

were organised in NLB and several targeted meetings

in other banks to approve new credit lines and adjust

green loan conditions.

Responsible marketing

The NLB Group manages material positive impacts

related to provision of quality information to clients

and ensuring responsible marketing practices as well

as potential negative impact, i.e. provision of quality

information to clients (for details see the table 111 in

Material IROs and their interaction

with strategy and business model

)

by its policies,

procedures and actions as described in this chapter.

The overarching objective of these policies is to follow

the applicable legislation, and to provide clients with

impartial, transparent clear and accurate information,

including clear and ethical advertising.

Instruction for Implementing Marketing

Communication Actions of the NLB Group

: The instruction outlines all

stages of the internal marketing and communication

process, aiming to standardise procedures and

eliminate inconsistencies or legal issues within

the NLB Group’s marketing and communication

actions. It is grounded in national legal, ethical,

and communication guidelines, as well as best

practices in marketing communication and public

relations. The instruction emphasises compliance

with legislation, particularly the Consumer Protection

Act, Code of Advertising Practice, Advertising Law

and Media Law, and the Ethical Code of Designers

to ensure that the actions in marketing plans fully

account for their impact on consumer protection.

The policy also stipulates transparent, fair and

comprehensive communication with the client. By

adhering to this instruction, the NLB Group aims to

prevent and mitigate the risk of unfair commercial

practices in product marketing. As a parent bank

NLB is a signatory to the commitment to implement

sustainability standards in advertising (Slovenian

Advertising Chamber) by 2030 or sooner. These

standards are gradually being implemented in policies

and procedures in all NLB Group banking members.

The NLB Group banking members.

Directors

of communication or similar functions in each

NLB Group banking member, while provisions

apply to all employees who are responsible for

marketing communication and external partners in

these processes.

Throughout 2025, the NLB Group banking members

carried out the following key ongoing actions in their

daily operations to mitigate potential negative impacts

and to manage actual positive impacts in client

communication:

The Group offered clients financial products in

accordance with their needs and income profile and

educated them about different aspects of a product,

including potential negative consequences and risks.

The Group continued to use a variety of communication

channels (personal, physical and digital) for client

communication. In line with its digital strategy and

access to information, the implementation of the

new technology operating model continued. Six new

websites were launched, and an AI virtual assistant

went live on nlb.si. The NLB Group web project was

recognised at Slovenia’s largest competition for digital

projects, winning two Websi Awards: Best Website

and Best UX.

There were no identified cases of incompliance with

regulations related to consumer rights, consumer

protection in the marketing and contracting of financial

services and consumer protection against unfair

commercial practices, guidelines and codes in the

communication and advertising industry.

The Group’s direct communication enhanced financial

literacy of clients. For example, before approving a

loan, in communication with clients the NLB Group

emphasises responsible lending practices, such as

keeping monthly obligations manageable and being

aware of risk of variable interest rates. In addition,

several NLB Group members provide clients and

the general public with professional advice on their

websites (e.g., in NLB, such as how to manage personal

finances in various life events, how to improve saving

habits, establish a contingency fund, and other aspects

of financial literacy. For additional information on

how the NLB Group promotes financial literacy

see the subchapter

sponsorships

and donations by type in the chapter

Affected Communities.

314

To gain a deeper insight into client satisfaction the

NLB Group conducts bi-annual Net Promoter Score

(NPS) survey, which measures brand NPS, a widely

used metric for assessing customer experience and

satisfaction.

It reflects the general recommendation of NLB, using

a representative sample from each market where the

NLB Group operates for both retail and corporate

segment. The NPS has been constantly increasing

throughout the years as a result of continuous service

development, enhancement of the existing and

development of the new products and digital solutions.

In 2025, the NPS experienced a slight decline due to

various market conditions. As a key performance

indicator and integral part of the NLB’s strategy, the

NPS results were thoroughly analysed, and an action

plan was developed to enhance customer satisfaction

moving forward.

NPS is measured in accordance with the standard

methodology, which gauges customer sentiment and

identifies areas for improvement. It is calculated based

on responses to a single question: “How likely are you to

recommend NLB to a friend or colleague?”. Respondents

rate their likelihood on a scale from 0 to 10. Based

on their scores, customers are categorised into three

groups: Promoters (9-10), Passives (7-8), and Detractors

(0-6). The NPS is then calculated by subtracting the

percentage of Detractors from the percentage of

Promoters. The resulting score ranges from -100 to

+100, with higher scores indicating greater customer

advocacy and satisfaction.

The target, applicable to all NLB Group banking

members and their respective countries of operation,

was established through a combination of industry

benchmarking, regional scoring behaviours, and

historical performance trend. The progress and

effectiveness of the target is monitored and measured

twice a year and is reported to the NLB Management

Board, management boards of respective NLB Group

members, and additionally within the Strategy

2030 project.

Table 115:

Client satisfaction NPS - NLB Group banking members

2024 Baseline

Average NPS

28

32

11-35

>50

(i) The figure represents the baseline target as defined in the Strategy 2030 as a consistent starting point for long-term performance tracking. However,

the NLB Group had measured the NPS in previous years, historical values that precede the strategic baseline were reported in previous annual and

sustainability reports.

The reported NPS value is calculated as a difference

between satisfied (promoters) and dissatisfied

(detractors) customers. The result for the NLB Group

banking members is calculated as a simple mean of

individual banking members. The result for a single

year is calculated as a moving average, meaning

that the result for a year includes the average of two

measurements conducted in that year and is calculated

as a mean of these two measurements. This represents

a change in the calculation and reporting before

2024, where only the last measurement in a year was

considered, and the NPS values were as follows:

28 in 2022 and 36 in 2023.

GOVERNANCE

This chapter discloses information

on business conduct, compliance, integrity,

tax transparency, and ESG risk management

across all our processes.

316

G1-

GOV-1

Role of

administrative,

management bodies

related to business

conduct

All NLB Group employees, including members of the

management bodies (members of management

boards and supervisory boards, executive directors)

are expected to act in a fair, responsible, and ethical

manner, in adherence with the Group’s compliance

standards. The overarching framework defining the

NLB Group’s policy on responsible business conduct

and the framework for organisational culture, respecting

values, and ensuring integrity is the NLB Group Code

of Conduct. The rules and procedures for specific areas

of business conduct are detailed in other internal acts,

as presented in the chapter

In line with corporate governance principles, the

management body discusses and adopts decisions, rules,

and procedures regarding business conduct in managing

impacts, risks, and opportunities (IROs) in this area.

Managers at various levels of the NLB Group set

tone from the top

as to what good and responsible

business conduct should be. They have specific roles

and responsibilities in promoting responsible

business conduct:

Discussing the Code with team members to ensure

everyone understands it, thus promoting the ethical

culture in the NLB Group

Ensuring the fundamental principles and rules of

conduct are implemented and complied with

Striving to achieve the values of the Group in

accordance with the set principles and rules of conduct

Encouraging open, fair, and honest relationships

among employees, free from fear and vindictiveness

Promoting open discussions about all questions

addressed by the

Code

Setting an example through conduct and behaviour

that embody the NLB Group’s values and adhere

to its fundamental principles

Reacting swiftly to any perceived ethical concerns

in the environment

Not requiring employees to engage in conduct

contrary to legislation, prescribed rules, or the

Code

The management body and senior management

members must demonstrate a

high level of personal

integrity

and act in accordance with the NLB Group

Code of Conduct. Integrity represents the expected

actions and responsibilities of individuals and

organisations in preventing and eliminating risks

associated with the misuse of authority, functions,

or other decision-making powers contrary to the law,

legally permissible goals, and the guidelines defined

in the NLB Group Code of Conduct.

knowledge and expertise

of management bodies

regarding organisational culture and business conduct

are the key components of corporate governance.

Accordingly, board members of financial core members

regularly discuss internal culture and compliance,

and complete annual training. Non-financial core and

non-core managerial body members are informed

of the relevant policies and standards via electronic

communication and become familiar with them as part

of the fit and proper assessment process.

Furthermore, adherence to the NLB Group values,

which supports corporate culture and responsible

business conduct, is a

specific target included in the

remuneration criteria for NLB Management Board

members.

In alignment with the NLB Group Governance

Policy, board members across other NLB Group entities

have instituted similar procedures, training programmes,

and targets.

The knowledge and expertise

of management bodies

regarding organisational

culture and business conduct

are the key components of

corporate governance

317

IRO-1

of processes to

identify and assess

At NLB Group, we consider business conduct and

organisational culture to be inherently complex and

multi-dimensional. Beside areas which are defined

as mandatory by ESRS - prevention of corruption

and bribery, and other harmful incidents, as well

as whistleblowing mechanisms - they encompass

various other aspects, which are critical for responsible

business conduct in financial institutions, such as ethical

governance, integrity, regulatory compliance, anti-

money laundering system, tax management, ESG risk

management, etc.

Consequently, the identified material IROs extend beyond

mandatory data points and include some entity-specific

topics. The full list of material IROs which were identified

in the initial DMA in 2024 and reconfirmed in the DMA

update in 2025 is presented in

tables 116 and 117.

Although the DMA did not identify any material risks

related to business conduct (i.e. above the set threshold),

NLB Group acknowledges the inherent risks and

potential negative impacts associated with its operations.

Therefore, the mechanisms and policies outlined in the

following chapters also address these risks.

Following the 2025 DMA refresh, Financial Performance

was removed as a standalone material sustainability

topic. The financial performance remains critical to the

NLB Group as it supports its long-term growth, stability,

and shareholder value, and is achieved through

responsible resource management, ethical practices,

and a commitment to long-term value creation.

However, in DMA, financial performance is not treated

as a separate sustainability topic. Instead, it serves

mainly as a disclosure and assessment lens, explaining

how sustainability topics and impacts on risks and

opportunities (IROs) impact the financial position,

performance, and cash flows.

Table 116:

Impacts, risks, and opportunities related to Business Conduct (Corporate Culture)

Location in

the value chain

Time

horizon

Corporate culture,

regulatory

compliance

Ethical and

transparent

corporate culture

An ethical and transparent corporate culture fosters trust, accountability, and integrity

within the Group. By promoting open communication, adhering to ethical practices, and

encouraging employee feedback, the Group can enhance employee morale, strengthen

stakeholder relationships, and build a positive reputation, ultimately contributing to

long-term success and sustainability.

High standards

of corporate

governance,

integrity, and

transparency

High standards of corporate governance, integrity, and transparency are essential for the

Group to build trust with stakeholders and ensure accountability in its operations. By

adhering to these principles, the Group can enhance its reputation, mitigate risks, and

foster a culture of ethical behaviour, ultimately supporting long-term success and stability

in the financial sector.

Enabling an ethical

and transparent

corporate culture

Enabling an ethical and transparent corporate culture promotes trust and integrity within

the organisation, enhances employee morale, and ensures compliance with regulations,

ultimately leading to sustainable business success.

Ensuring high

standards

of corporate

integrity, and

Ensuring high standards of corporate governance, integrity and transparency enhances

corporate reputation, ensures compliance with laws, and builds stakeholder trust.

Integrating principles

of ethical banking

Integrating the UNEP FI principles for responsible banking promotes fairness and

responsibility, improves customer trust, and supports long-term financial stability.

Ensuring regulatory

Ensuring regulatory compliance helps maintain corporate integrity, avoid legal penalties,

and build stakeholder trust.

318

Table 117:

Impacts, risks, and opportunities related to Business Conduct (entity-specific topics)

Prevention of

corruption and

bribery

Preventing

corruption

and bribery

Preventing corruption and bribery is essential for maintaining the integrity and reputation

of the Group. By implementing robust compliance programmes, conducting regular

training, and promoting a culture of transparency, the Group can safeguard its operations,

build trust with stakeholders, and ensure adherence to ethical standards, ultimately

contributing to long-term sustainability and success.

Preventing corruption and bribery fosters an ethical business environment, enhances

corporate reputation, and ensures compliance with laws.

Prevention of

money laundering

and financing of

terrorism

Preventing

money laundering

and financing

of terrorism

Preventing money laundering is essential for maintaining the integrity and reputation of the

Group. By implementing robust compliance programmes, conducting regular training, and

promoting a culture of transparency, the Group can safeguard its operations, build trust

with stakeholders, and ensure adherence to ethical standards, ultimately contributing to

long-term sustainability and success.

Prevention money laundering and financing of terrorism ensures compliance

with legal regulations and fosters trust and integrity within the financial system.

Whistleblower

Enabling the

protection of

whistleblowers

Enabling the protection of whistleblowers fosters an organisational culture of

transparency and accountability, encouraging employees to report unethical practices

without fear of retaliation.

ESG risk

of ESG risks

Effective management of ESG risks is crucial for the Group to identify, assess,

and mitigate potential environmental, social, and governance challenges that could

impact its operations and reputation. By proactively addressing these risks, the Group can

enhance resilience, improve decision-making, and attract socially responsible investors,

ultimately contributing to long-term sustainability and financial performance.

Adequate

of ESG risks

Adequate management of ESG risks ensures a strategic approach to environmental,

social, and governance issues, reducing potential risks and enhancing long-term

sustainability.

Tax transparency

Ensuring regular

tax payments

Ensuring regular tax payments demonstrates corporate responsibility, supports public

services, and enhances the company’s reputation with stakeholders.

Participation in

associations and

policy discussions

Advocating for

through professional

associations

Advocating for sustainable development through professional associations demonstrates

the company’s commitment to sustainability, enhances its reputation, and contributes to

broader industry and societal change.

319

G1-1

culture, ethical

governance

and integrity,

and regulatory

NLB Group is committed to ensuring an ethical

organisational culture, compliance, and integrity

across all its members in all markets of operation.

The foundation for managing material IROs related to

business conduct and to establish, develop, promote,

and evaluate the corporate culture, is laid down in the

NLB Group Code of Conduct (hereinafter: the Code).

The Code is binding for all the Group’s employees

and stipulates the

fundamental principles and rules

of conduct on which the operations and actions of

the NLB Group are based. These include:

acting ethically and responsibly and complying with the

rules of the Code,

respecting colleagues and maintaining a pleasant

working environment,

respecting customers,

avoiding conflicts of interest,

preventing unacceptable practices,

adhering to the rules and complying with regulation,

prudent and ethical handling of assets and property,

being socially responsible.

For each principle, the Code provides employees

with

practical guidelines

for daily conduct, helping

them understand what is expected from each

employee and other stakeholders within the

NLB Group. Ethical governance, integrity, and

compliance are closely intertwined with the rules

of conduct and are detailed in the Integrity and

Compliance Policy.

NLB Group operates in sectors that are highly

regulated because of the urgency to ensure

financial stability and prevent system risks. Hence,

the Group’s employees are aware that compliance

is the foundation of its business. They understand

that responsible business conduct extends beyond

merely adhering to applicable laws, regulations, and

standards. It also encompasses a robust compliance

programme. Compliance is therefore integrated

into the Group’s daily operations, contributing to

a strong internal control environment and effective

management of compliance risks.

The NLB Group members are obliged to

regularly (at least once a year) provide

training

to all employees

on the contents of the Code. They

also actively and continuously promote the Code,

raise awareness, train, and inform employees about

its provisions, and provide guidance on their

application in specific situations employees may

encounter. In addition, the NLB Group members

deliver specialised training on anti-corruption,

anti-money laundering, and other topics related

to responsible business conduct.

Compliance is integrated

into the NLB Group’s

daily operations,

contributing to a strong

internal control environment

and effective management

of compliance risks

320

Key internal documents are the Code of Conduct and

the Integrity and Compliance Policy, which are detailed

below. In addition, the Group has established policies

addressing specific topics related to fundamental

principles of responsible business conduct.

All these policies are adopted by each financial core

member, i.e. banks, asset management and leasing

companies. If certain policies require alignment with

local laws, they are updated at the local level to ensure

full compliance. Responsibility for implementing the

policies rests with the designated compliance officers

in each subsidiary. They assess, monitor, and evaluate

corporate culture through specific indicators and

surveys on ethics and integrity. Consistency across

all financial core members is maintained by applying

standardised evaluation methods and conducting

regular reviews.

In non-financial core members and non-core members

of the NLB Group implementation of the policies is

subject to the principle of proportionality, based on

the size and the core business of the specific member.

Nevertheless, all members are required to adjust

their work procedures, organisation, monitoring,

and reporting. The competence line responsible for

compliance provides ongoing oversight of compliance

with requirements by clearly communicating

expectations, ensuring regular training (or providing

training materials), conducting periodic reviews, and

monitoring the activities in specific areas to address any

compliance issues. Oversight is performed by the person

in charge of Compliance and Integrity and focuses on

areas based on the principle of risk.

The Code describes the

values, basic principles, and rules of ethical business

conduct that the Group respects and promotes.

Operating with integrity and responsibility is key to

the Group’s corporate culture. The Code demands

that every employee, regardless of their job or

location of work, and every other stakeholder of

the Group comply with the highest standards of

integrity. It also reflects the standards that we expect

in our relationship with the rest of our stakeholders.

The NLB Group expects that all business partners

and other stakeholders apply the standards at least

equal to those written in the Code, including their

attitude towards the employees. The summary is

publicly available on the NLB website.

Integrity and Compliance Policy of

NLB and the NLB Group

The Policy sets a strategic

framework of the Group’s comprehensive programme

of compliance operations to meet the following

goals: (1) Ensure compliance and integrity by meeting

requirements, preventing violations,

and fostering a compliance culture, (2) Limit losses

from violations, including business losses, sanctions,

and reputational damage, (3) Enhance legal protection

for the Group and its responsible persons against

liability for violations, (4) Strengthen the Group’s brand

reputation and meet stakeholder expectations through

integrity and compliance, (5) Boost the Group’s

competitive position by adhering to high compliance

and ethical standards, enhancing corporate culture

and employee commitment.

Both internal documents are binding for all

employees in the NLB Group across all markets,

including the management and supervisory bodies

of each NLB Group member. In addition, the internal

documents apply indirectly to suppliers and clients

in the parts which are related to their required

behaviour. Exclusions include activities that are not

directly related to the NLB Group’s operations or

where the Group has limited influence.

The management

board of each NLB Group member.

The Code of Conduct and the Policy

are published in the Register of Internal Documents.

Internal meetings and workshops are held annually to

explain the internal documents and their implications.

A summary of the Code with contents that are relevant

for external stakeholders is publicly available on the

NLB Group website,

while the Policy is communicated

through relationships with stakeholders.

Respecting the Code of Conduct and the Integrity

and Compliance Policy

is an on-going activity in daily

operations of every NLB Group employee.

As part of its commitment to ethics and integrity, the

NLB Group has implemented various prevention

activities to protect the Group and its stakeholders

from the reputational risk, and risk of money laundering,

terrorist financing, fraud, corruption, and other forms

of financial crime.

To manage compliance risks effectively, the Group

conducts regular

Enterprise Compliance Risk

Assessments (ECRA).

These assessments enable

the Group to identify, evaluate, and mitigate compliance

and integrity risks effectively. The compliance

programme also involves risk assessments for new

and modified products, outsourcing arrangements, fit

and proper assessments, and other material changes

impacting the Group’s operations.

The Group actively promotes a culture of compliance

through awareness-raising initiatives. Annual employee

e-training covers critical topics such as ethics, anti-

corruption, conflict of interest mitigation, and personal

data protection. Regular newsletters provide updates on

regulatory changes and practical case studies, ensuring

employees are well equipped to address compliance

challenges effectively. In 2025, these initiatives were

complemented by targeted, interactive workshops for

sales managers and employees, reinforcing the practical

application of the Code of Conduct, anti-corruption

standards, conflict of interest management, and data

protection requirements.

321

Managing concerns about

unlawful or harmful

conducts

NLB Group has established procedures to promptly,

independently and objectively investigate suspicions

of harmful behaviour to the detriment of an individual

member. These procedures include a strong

mechanism for identifying, reporting, and investigating

suspicions of harmful behaviour, including bribery

and corruption. The mechanism allows the Group

to identify potential compliance risks and take

appropriate action in a timely manner.

A key component of the Group’s compliance

programme is the emphasis on establishing a

speak-up culture.

The Group’s banking members

have established rules on the investigation of suspected

harmful conduct to the detriment of the member

and on the protection of whistleblowers. In line with

internal rules, prevention of harmful behaviour is the

responsibility of all employees. Every suspected harmful

behaviour to the detriment of the member (such as

abuse, fraud, including suspected bribery or any form

of corruption) must be reported and dealt with.

The Group fosters an environment that encourages

employees to ask questions and discuss them with their

managers or other employees in the Group, including the

experts in compliance, money-laundering prevention,

or the fight against bribery and corruption, lawyers, or

HR managers. The Group’s

commitment to the highest

standards of corporate culture

and its procedure

for reporting suspected harmful activities are also

communicated transparently to all employees through

newsletters, other notifications, and mandatory training.

Employees have the option to submit a report directly

to their supervisor, who then files the report with the

Compliance department using the prescribed form

or, alternatively, employees can also submit a report

themselves through various channels. The Group’s

banking members have established several channels

(including anonymous ones) for reporting suspicions

of harmful behaviour to the detriment of a member,

such as electronically via the Whistler web application,

e-mail to a dedicated address, in-person reporting,

regular mail sent to a designated postal address,

and telephone reporting. For external stakeholders,

reporting channels are available as published by the

members on their websites. In addition, all NLB Group

members can also use the external reporting channels

NLB website,

making them available

to all external stakeholders – customers as well as

employees of other Group members.

Upon receipt of a report, a preliminary verification of

the report is carried out. If the circumstances of the

case are sufficiently clarified at this stage, no further

investigation is conducted and the case is closed

with a preliminary report. If not, a full investigation is

initiated and concluded with an investigation report.

With the established process the NLB Group provides

a framework for

efficient, impartial, professional,

prudent and conscientious conduct of investigation

and the collected data and information ensured at

every stage of the process. The investigation must run

continuously and without unnecessary delays.

The objectives of the investigation are as follows:

confirm or dismiss the suspicion of harmful actions

and protect the evidence

establish any potential damage to the Group or the

client and determine the amount of damage caused

identify the suspected perpetrators (Group employees

or other individuals allegedly involved in the harmful

practices)

identify potential risks and weaknesses in individual

processes and provide proposals/recommendations

for their elimination

conduct a compliance risk assessment

Depending on the results of the investigation,

subsequent actions - which differ from case to case

- may include notifying the whistleblower about the

findings and closing of the case, informing the HR

department and the supervising director, filing a

criminal complaint, and other relevant steps.

In addition, at NLB Group members, the internal audit

and the compliance functions (where established

separately) check and control the respect of the basic

principles in regular internal audit procedures and

compliance review procedures according to the risk-

based approach as well as randomly. In the scope

of its regular tasks, the compliance function of each

NLB Group member performs activities to investigate

suspected corrupt practices and bribery. Each NLB

Group member ensures that responsibilities and

internal controls are established as part of the internal

control mechanisms, by means of which corrupt

practices are prevented (e.g. no black funds for bribery

or facilitation payments, etc.). The Group also regularly

assesses conflict of interest and corruption risks in

accordance with the applicable methodology for

the general assessment of the integrity and

compliance risks.

Complementary information:

Number of cases investigated

This information is included to provide users of the

Sustainability Statement with additional data on

investigated cases. The information is provided

voluntarily and is not required by the ESRS; however

it complements the disclosures related to managing

concerns about unlawful or harmful conducts.

In 2025 the NLB Group financial core members

collectively investigated 121 cases related to reported

suspicions of misconduct detrimental to a member.

The investigations most frequently concerned the loan

process, submission of false or forged documents,

violations of internal procedures, and similar issues.

Table 118:

Cases of investigated reported suspicions

Number of cases in NLB

31

38

Number of cases in other

financial core members

90

61

121

99

322

G1-3

of corruption

In the banking industry, employees may find themselves

in situations that constitute or could constitute a conflict

of interest. NLB Group

strongly condemns bribery and

corruption and pursues a strict zero-tolerance policy

for such practices,

deeming them unfair, illegal, and

harmful to societies and countries with corrupt practices.

We expect the same commitment from our customers,

business partners, and third parties.

To ensure integrity, all NLB Group employees are

subject to restrictions on accepting and giving gifts,

hospitality, and other influences on their conduct, with

concrete measures in place to manage associated

risks. Rules, guidelines and procedures are set out in a

comprehensive anti-corruption and bribery policy.

The Policy on the Prevention of Corruption and

Bribery and on the Management of Conflicts of

Interest

The Policy establishes a baseline

for behaviour in situations with identified corruption

risks. It outlines specific measures to manage these

risks, aligned with international standards in the fight

against corruption. The Policy is aligned with the Code

of Corporate Governance for listed companies, the

Slovenian Banking Act, EBA Guidelines on Internal

Governance and the Regulation on Internal Governance

Arrangements, the Management Body and the Internal

Capital Adequacy Assessment Process for Banks and

Savings Banks. The Policy adheres to the principles

of the United Nations Convention against Corruption

(UNCAC) in terms of its core points and substance,

although it does not directly reference the convention.

These standards cover various aspects, including

engagement with agents and intermediaries, hiring

services of (former) civil servants, interactions with high

(state) representatives, preventing nepotism, averting

accelerated payments, and ensuring transparency in

the NLB Group operations.

The NLB Group members, whereby the

level of implementation is subject to the principle

of proportionality, based on the size and the core

business of a specific member.

The management

board of each NLB Group member.

Employees may access the Policy in the

Register of Internal Documents. The summary of the

Policy is publicly available at the

NLB website.

System and activities

to prevent and detect,

investigate, and respond

to allegations or incidents

relating to corruption and

bribery

As part of the fight against corruption and bribery, and

in line with internal policies, the NLB Group carries out

several ongoing activities to manage related risks:

Ensuring specific terms in written agreements and/or

general terms and conditions with third parties that

define anticorruption and anti-bribery standards as a

minimum requirement for investment and purchasing. 

Internal control mechanisms, including accounting

controls, are in place in the anti-bribery and

anticorruption area.

Regular, at minimum annual review, identification,

and assessment of risks of conflicts of interest and

corruption among external contractors, suppliers and

other contractual partners of NLB and NLB Group

through due diligence processes. 

The compliance functions have strengthened their

approach to managing these risks in day-to-day

operations, through obligatory e-training for all

employees in financial core members, awareness-

raising activities in the field of prevention of corruption

and bribery, by assessing conflict of interest and

corruption risk in relations with suppliers, including

this topic in the monthly newsletter, and classroom

and online presentations and discussions.

All employees are included in yearly training

and awareness-raising activities. In the NLB Group

various (whistleblowing) channels are established

for reporting suspicions of harmful conduct (internally

and publicly available), including suspicion of

corrupt conduct.

All employees are responsible for rejecting any form

of corruption and bribery with zero tolerance,

promptly reporting any identified suspected

misconduct through the established reporting

channels, proactively disclosing any conflicts of

interests, and adopting appropriate measures to

manage such conflicts.

The executives (members of senior management)

shall ensure that employees comply with the anti-

corruption and anti-bribery policies, are familiar with

their provisions and implement these rules within the

scope of their duties and powers.

The response to alleged violations and incidents

relating to corruption and bribery is defined

within the procedures that are detailed in the

Managing concerns about unlawful or

harmful conducts

The investigation teams in the NLB Group

banking members operate independently from the

management chain involved in the reported matter.

In line with the harmonisation principles, investigating

function in the NLB Group banking members operates

within the Compliance department. The organisation

of this function differs across other strategic

members, with some positioning it within a dedicated

unit, depending on the size, structure and internal

organisation of the member company.

In the NLB Group banking members investigators

are responsible for examining suspicions of harmful

behaviour to the detriment of the member company,

including corruption or bribery. They conduct an

independent investigation and provide objective

findings, supported by collected evidence, which

serves as the basis for follow-up measures. In some

banking members, including NLB, investigators also

file criminal charges and represent the bank in court

in criminal proceedings.

NLB provides coordination and support to the Group

and takes over the investigation of cases in those

members that do not have the resources to conduct

investigations on their own.

323

In NLB, the Director of Compliance and Integrity

reports at their discretion (based on the risk

assessment) on received reporting of suspicion

of harmful behaviour to the detriment of the bank,

measures imposed on perpetrators and other activities

directly to the Management Board. The Management

Board is informed of all received reports of suspected

harmful conduct through regular quarterly reports.

If an investigation involves members of the

Management Board, the Director of Compliance

and Integrity directly informs the Chairman of the

Audit Committee that operates within the NLB

Supervisory Board. Other NLB Group banking

members inform their management in line with

their assessment of the risk associated with each

specific case. Other member companies act

in accordance with the adopted standards.

Training

The compliance function in each NLB Group member

regularly carries out awareness-raising activities and

organises, at least one annual anti-corruption and

anti-bribery training session, which is mandatory for

all employees (including members of the management

body). All employees are considered a “function at risk”

with different levels of exposure to such risks.

In 2025, the members of Supervisory Board and

Management Board in the majority of financial core

members also participated in classroom training;

in others such training will be performed in 2026

and onwards.

A total of 6,874 employees across NLB and other financial

core members completed anti-corruption training

representing 87.7% of the entire NLB Group workforce.

Table 119:

Preventing corruption and bribery training

in NLB Group financial core members

Number of NLB Group

employees who completed

the training

6,874

7,056

Share of NLB Group employees

who completed the training

87.7%

84.8%

The measurement of the metrics was not validated by any external body

other than the assurance provider.

G1-4

Incidents of corruption

or bribery

In relation to harmful behaviour to the detriment

of the member company, the NLB Group has

established

a standard of zero tolerance for illegal and unethical

actions and disrespect for the Group’s values.

Across the Group, this standard is highlighted as

one of the fundamental principles that it pursues

when conducting business.

Zero tolerance refers to all intentional actions of

employees that represent harmful conduct for the

NLB Group member and are as such defined by

legal or implementing acts, internal legal acts, good

business practice and other generally known good

business practice. Zero tolerance also applies to

actions of employees committed with gross negligence

– circumstances when employees should be aware of

the possibility that their actions might cause damage

to the NLB or the NLB Group member but failed to

prevent them.

In 2025, there were no convictions for violation of

anti-corruption and anti-bribery laws and no fines

were issued for these matters in entire NLB Group.

Table 120:

NLB Group incidents of corruption or bribery

Number of convictions for

violation of anticorruption

and anti-bribery laws

Fines issued for convictions for

violations of anticorruption

and anti-bribery laws

(EUR thousands)

The measurement of the metrics was not validated by any external body

other than the assurance provider.

NADA PRLJA

While Waiting for Better Times, 2015–2018

a series of 20 colour ink paintings on paper

21 × 30 cm

A visual diary by Nada Prlja responding to the political scandal in

Macedonia in 2015, the protests, and their aftermath. The images

reinterpret media representations of social upheaval.

325

AML and prevention

of financing of

terrorism

Anti-Money-Laundering and Countering the

Financing of Terrorism Policy

Through this Policy, the NLB

Group manages impacts and risks related to AML

and CFT. The Policy lays down the key elements of the

AML/CFT system, and the content and scope of the

tasks to be established and performed by the NLB

Group, its member companies and their employees.

The main objectives of the Policy are: implementation

of the legislative requirements of the ZPPDFT-2 and

guidelines of the supervisory bodies in the procedures

and framework of banking operations and operations

of other member companies, definition of elements

in the control environment of the members and the

NLB Group, efficient implementation of the AML/CFT

system, establishing an efficient system of policies,

procedures, and internal controls at the level of

individual members and the level of the NLB Group in

order to effectively combat all identified MLTF risks.

By implementing the requirements from the Policy

and therefore establishing the control environment

in member companies, the entire NLB Group reduces

risks to an acceptable level.

The NLB Group members.

board in each NLB Group member.

The Policy is available to employees in

the Register of Internal Documents. A summary of the

Policy is publicly accessible in the Code of Conduct,

NLB as the parent bank in the NLB Group regularly

updates and enhances its governance in line with

directions set by the ECB, BoS and other relevant

regulators. Through the system of performing

financial crime risk assessment, regular reporting, and

constant on-site and off-site control, NLB monitors the

implementation and execution of standards throughout

the Group.

NLB also regularly performs customer due diligence

following the risk-based approach, applying additional

measures in cases of increased risk within the “Know

your customer” segment and in the ongoing monitoring

of transactional activities. In cases of detected

deviations and considering the AML/CFT indicators,

NLB’s AML function ensures a review and, if required

by AML/CFT legislation, reports customers and

transactions to the competent Financial Intelligence

Unit. In its Acceptance Policy, NLB has also adopted

additional measures to prevent onboarding customers

who do not correspond to its risk appetite. NLB also

ensures a high awareness of the AML/CFT and financial

sanctions by regular training of all its employees.

The same principles as described above for NLB also

apply to other banking members of NLB Group, where

all NLB Group AML/CFT standards apply in their

entirety. In other non-banking members the NLB Group

AML/CFT standards apply to the extent applicable to

them according to their size, nature of business, their

regulators’ guidelines, and other factors.

For years, the NLB Group has been aware of the

importance of whistleblower protection, which was

identified in the DMA as a material sustainability

topic. In the Republic of Slovenia, the Whistleblower

Protection Act (ZZPri) came into force in 2023,

transposing EU Directive 2019/1937 of the European

Parliament and the Council. All NLB Group members

based in the Republic of Slovenia that are subject

to the Whistleblower Protection Act are responsible

for ensuring compliance with its requirements.

Other member companies follow their local legal

requirements regarding whistleblower protection.

Years ago, the Group established a whistleblowing

system for internal and external stakeholders with a

strict procedure for whistle-blower protection against

retaliation measures and assurance of anonymity,

if the whistle-blower chooses not to reveal their

identity. An integral part of the system, or one of the

reporting channels, is also

Whistler – an application

for reporting (suspected) violations

, accessible also

on the public websites of the NLB Group banking

members. It enables whistleblowers to submit named

or anonymous reports and facilitates communication

between the whistleblower and the investigator, even

in the case of anonymity. When receiving, processing,

investigating and archiving individual reports, the

investigators make sure that the information in the

report and thus the whistleblower’s personal data are

strictly protected. All NLB Group banking members use

Whistler in their local languages. Both, the Whistler

application and other reporting channels are available

24/7 and allow reports to be submitted from outside the

Group’s IT systems or premises.

326

The Management Board of NLB adopted its

Commitment to Protect Whistleblowers of Harmful

Conduct as early as 2014. Since then, the principles

and regulation on whistleblower protection have

been systematically embedded in other NLB Group

The NLB Group’s banking members have established

multiple reporting channels and, in addition to the

legally required mechanisms, also provide additional

protective measures. Other member companies

are responsible for ensuring compliance with the

requirements of the applicable local legislation.

Rules on the Investigation of Suspected Harmful

Conduct to the Detriment of NLB and the

NLB Group, and on the Protection of

Whistleblowers

Content, purpose, and regulatory framework:

These Rules establish the standards for

investigations of harmful conduct committed by

both employees and external perpetrators, where

in either case NLB or other members of the NLB

Group have suffered or could suffer material or

non-material damage. The Rules define the tasks

of the compliance unit in the investigation process,

the duties and powers of the lead investigator,

their deputies and other persons performing

investigations, the methods for reporting suspicions

of harmful behaviour to the detriment of the

member company, the procedure for investigating

harmful conduct, the action plan, measures for

encouraging reporting, mechanisms for protecting

internal whistleblowers, measures for remedying

damage, and reporting to the compliance unit and

informing the public.

The NLB Group members (adopted in

NLB, and transposed to the NLB Group members

through standards)

board in each NLB Group member.

The Rules are available for employees

in the Register of Internal Documents, and for all

stakeholders they are summarised at

Measures to protect

against retaliation

In addition to the requirements local legislation, the NLB

Group banking members perform the following activities

and measures to protect whistleblowers against retaliation:

A one-time password is assigned to the whistleblower,

and the password is then used in place of the

whistleblower’s name in any further investigation.

The whistleblower is referred to in all documents by

a unique identification number (the identity is sealed

in a separate envelope and stored in a metal cabinet,

accessible only to authorised investigators).

The identity, if disclosed in the Whistler application,

is strictly protected (external server) and access is

restricted to authorised investigators only.

If the Bank initiates further proceedings (legal

or criminal), it always adheres to the principle of

never disclosing that such action is the result of an

individual’s report.

Employees are informed (through newsletters, the

website, and training lessons) about the possibility to

submit reports and the protection options available

under local legislation.

Other measures may also be implemented in

cooperation with the whistleblower (such as providing

professional psychological counselling and support,

granting paid special leave to the whistleblower, or

relocating the employee to another location).

All above-listed activities and measures were in place

in the NLB Group banking members also in 2025 and

their execution was monitored by the responsible

persons in compliance departments in the NLB Group

banking members and reported to their respective

management boards. Other members of the NLB

Group are responsible for ensuring compliance with the

requirements of the applicable local legislation.

The NLB Group banking members also organise

training on fraud prevention, and the reporting of

harmful behaviour where employees are introduced

to practical examples and channels for submitting

reports. These training sessions are tailored to different

target groups of employees and there are obligatory

e-learning programmes for all employees. Some Group

members prepare newsletters, competitions, and other

awareness-raising activities.

Specialised training for internal fraud investigators

is not required, however investigators participate in

training programmes offered by external institutions

(Transparency International, ACFE, the Commission for

the Prevention of Corruption, universities, etc.).

Additionally, NLB as the parent bank, on average

once per quarter organises workshops or meetings

for investigators in the NLB Group banking members

to address current topics in the field of investigation of

suspicions of harmful behaviour. In-person training for

investigators in the NLB Group is also provided upon

request. In 2025, two workshops and three in-person

trainings for employees in the NLB Group banking

members were organised. For the other members,

it is planned to consider the potential for future

training in this area.

Integration of ESG risk

management in the

business model, strategy,

and processes

Having in mind overall operations, the NLB Group

defines ESG risks as any actual or potential negative

impact arising from environmental, social (including

human rights) and governance factors related to the

NLB Group or its key stakeholders. In the realm of

financing activities (lending and investments), ESG

risks are defined as the risks of any negative financial

impact on the NLB Group stemming from the current

or prospective impacts of ESG factors on the NLB

Group’s counterparties or invested assets. Given

the global importance of climate change mitigation

and adaptation, the NLB Group primarily focuses on

developing and implementing a strong climate-related

and environmental risk management framework for its

portfolio and investments, including the internal policies

and other documents, which are detailed in the chapter

Climate-related risk management policies

. Moreover,

in recent years, the Group has systematically upgraded

its social and governance risk management, which will

remain the strategic direction going forward.

327

The aforementioned policies also address IROs identified

by the conducted DMA. As detailed in the chapter

Description of processes to identify and assess material

IROs

, table 61, the management of ESG risks is identified as

an opportunity and a positive impact. As an opportunity,

it represents a crucial internal mechanism for the Group

to identify, assess, and mitigate potential environmental,

social, and governance risks across the entire value chain.

By proactively addressing these risks, the Group can

enhance resilience, strengthen decision-making, attract

socially responsible investors, and ultimately support

long-term sustainability and financial performance. As

an impact, effective management of ESG risks ensures

a strategic and structured approach to environmental,

social, and governance issues, reducing potential risks

and reinforcing the Group’s long-term sustainable

development.

At NLB Group, ESG risks do not constitute a new risk

category, but rather are among the risk drivers of existing

risk types, such as credit, liquidity, market, operational,

and reputation risks. Therefore, the Group integrates

and manages ESG risks within the established risk

management framework for the aforementioned type

of risks, business strategy, and internal governance

arrangements. The risk management function defines

the rules about risk appetite, risk strategy, and other

risk policies and guidelines. They are established within

the risk management framework for the existing types

of risk, such as credit, liquidity, market, operational, and

reputation risk. Besides that, risk monitoring and proactive

ESG management are established. The mandate of the risk

management function is to increase its focus on holistic risk

management and cross-risk oversight to further enhance

risk steering and mitigation across the whole Group.

In this respect, the Group is focused on establishing

efficient processes to manage ESG risks across

all business areas comprehensively and the

three

sustainability pillars

: sustainable operations,

sustainable finance, and contribution to society.

ESG risk management follows the ECB and EBA guidelines,

with a tendency to integrate them comprehensively into

all relevant processes across the NLB Group. In addition,

the NLB Group adheres to the national and EU regulatory

framework, recommendations and guidelines, as well

as voluntary commitments and initiatives that the Group

has joined in recent years, such as the UNEP FI PRB, and

the Net-Zero Banking Guidance. The Group is also a

signatory of the Framework Agreements with the EBRD,

and the Contract of Guarantees with MIGA. All the above-

mentioned regulations, recommendations and guidelines

are integrated in the internal regulatory framework of the

NLB Group.

In terms of social risk management, the NLB Group also

follows international frameworks in the area of respect

for human rights, including the Universal Declaration

of Human Rights, the International Covenant on Civil

and Political Rights, the International Covenant on

Economic, Social and Cultural Rights, the International

Labour Organization (ILO) Declaration on Fundamental

Principles and Rights at Work, and the OECD Guidelines.

The NLB Group is committed to further developing

processes and policies to enhance the mitigation of

social and governance risks in its internal operations

and relations with counterparties.

ESG risks in credit risk

The NLB Group has implemented tools to identify,

measure, and manage ESG risks within its overall credit

risk management framework. This includes the credit

approval process, credit portfolio management, and

collateral evaluation process. A comprehensive risk

assessment and monitoring mechanism in the NLB Group

is the Environmental and Social Risk Management System

(ESMS), whose main objectives are to identify and manage

the NLB Group’s exposure to the ESG risks of its clients

and to promote their good environmental and social

business practices. The system is fully embedded in the

NLB Group’s loan origination and monitoring processes

and is regularly updated to reflect any material factors or

procedures aligned with the ESG-related developments

and requirements. The ESMS system is mandated by the

Environmental and Social Transaction Policy Framework

in NLB and NLB Group, which is detailed in the chapter

Climate-related risk management policies

ESMS system

is embedded in

loan origination

and monitoring

Exclusion List

Engagement

of RMs in collecting

ESG data

Regulatory Compliance Check

ESG Industry

Categorisation by NACE

LOW

MEDIUM

HIGH

ESG Enhanced Risk Assessment

Transaction Characteristics

Decision

(approving / declining transaction)

ESG Risk monitoring

Exiting the Investment

F

Category A Projects

Conduct a Site Visit

Figure 92:

Key steps of the transaction approval process:

328

The credit ratings of clients that are materially

important to the NLB Group, and the issuance of

credit risk opinions, are centralised through the NLB

Credit Committee. The process follows the co-decision

principle, in which the credit committee of the respective

Group member first approves its decision, followed by

the NLB Credit Committee giving its opinion.

Key steps of the transaction approval process:

ESG data collection is integrated into the NLB Group’s

KYC (know your client) procedures. The Group

collects ESG data through questionnaires and direct

communication with clients, based on the transaction’s

initial ESG risk, transaction type, and transaction

value. ESG data collection is also an integral part of

monitoring procedures for transactions and clients, and

it helps raise awareness of ESG risks among our clients.

Once it is confirmed that the transaction is not on

the exclusion list, a Regulatory Compliance Check is

conducted. This check ensures that the client complies

with relevant laws, regulations, and standards,

including environmental, health and safety, planning,

and operating licenses and permits.

For transactions identified as having high environmental

or social risk, an enhanced risk assessment is carried out:

During the annual review of the client, provided the

exposure and ESG risk level thresholds are met, and

when a new transaction proposal is made, under the

following conditions:

new loans are related to project finance with a total

project value exceeding EUR 10 million,

financing applications pertain to secondary market

transactions or syndicated loans where the Group’s

participation is below 25% of the total loan value,

a new loan exceeds EUR 3 million, has a maturity

of at least 36 months, and the client meets the ESG

review threshold at the annual review.

Throughout the project’s duration, ESG risk

monitoring is established to evaluate the impact of

each risk and develop mitigation strategies. This

ensures that risks are adequately managed and

that any changes or new risks are identified and

addressed promptly.

If a client fails to comply with the ESG requirements

of the investment, the Group assess the situation

to determine the best course of action. This may

involve exiting the investment or implementing

measures to mitigate the risk of non-compliance.

The Group considers potential financial losses, legal

consequences, and reputational damage, as well as

its overall ESG strategy and how exiting the investment

might affect its ESG goals.

Similar ESG risk screening is implemented also in the

supply chain management and is part of the Group’s

supplier selection and regular assessment process.

For more information, please refer to the chapter

Complementary information: Sustainable supply chain

ESG risks in the NLB

Group’s own operations

In addition to ESG risk management in the

aforementioned processes, the NLB Group has

established an Operational Risk Management Policy

and framework for comprehensive mitigation of

environmental, social, and governance risks related

to the NLB Group’s operations. Namely, ESG risks may

occur across all key business areas and operations;

therefore, identifying risks in key competence lines’

areas of work and implementing an early warning

system are essential steps in the planning phase of

the sustainability management process. Moreover,

competence lines define Key Risk Indicators (KRIs),

monitoring procedures, and indicative scenarios for

action if such situations materialise, in accordance with

the rules and procedures stipulated in internal risk

operational documents. All loss events and identified

risks are recorded in designated applications, allowing

the department Non-Financial Risk to prepare

consolidated reports, highlight trends, and escalate

major events directly to the Management Board

member responsible for risks. In addition to regular

monthly reporting, detailed descriptions of major loss

events, sector-level insights, Operational Risk Indicators,

stress test results, and project-related risks are reported

to the Operational Risk Committee.

Operational Risk Management Policy

The objective of operational

risk management pursued by the NLB and the

NLB Group is to limit the scope of potential losses

and the probability of their occurrence to a level

acceptable for the Bank or the Group from the aspect

of defining the risk appetite and indirectly from the

aspect of maintaining reputation. The Policy defines

the processes for the identification, measurement,

assessment, control, and monitoring of risks, including

reporting on operational risks to which the Group

is or could be exposed. Among several types of risks,

the Policy also address ESG risk, including the risk

of greenwashing.

The Policy applies to NLB and other NLB Group

members that have implemented the operational risk

management methodology.

The Policy and related documents

are available in the Register of Internal Documents.

Physical risks, in particular, as part of ESG risks in the

operational risk area, are addressed in the Group’s

business continuity management (BCM) and business

continuity plans. These plans are prepared for use

in the event of natural disasters, IT disasters, and

environmental impacts to mitigate their consequences.

Business Continuity Management Policy

The Policy establishes the

framework for Business Continuity Management (BCM)

to ensure operational resilience in crisis situations. The

purpose is to ensure uninterrupted critical operations

during disruptions caused by natural disasters,

ICT failures, pandemics, cyber incidents, and other

crisis scenarios, as well as to limit losses due to crisis

situations.

The Policy applies to NLB as the parent bank,

banking subsidiaries, asset management and leasing

companies, which implement the Policyin accordance

with the nature of their operations, considering also

local legislation.

The Policy and related documents are

available in the Register of Internal Documents and on

the intranets of individual NLB Group members.

329

Tax transparency

The DMA carried out in 2024 showed that ensuring

regular tax payments within the NLB Group delivers a

significant positive impact. Through this approach, the

Group demonstrates social responsibility, contributes

to public services, and strengthens its reputation. The

annual review of the assessment in 2025 confirmed

that the identified impact remains unchanged and is

managed through policies and activities as presented in

this chapter.

Tax Policy of NLB Group

Content, purpose, and regulatory framework:

Policy stipulates the general principles of conduct

in the tax field to which all units handling taxes

adhere and are detailed below. The NLB Group

conducts its tax operations in line with the purpose

and requirements of the relevant legislation and

in accordance with the international standards,

regulations and initiatives (where applicable by law

or business driven), Guidelines and international

standards used (depending on local laws and

practices), such as: Foreign Account Tax Compliance

Act (FATCA), OECD Common Reporting Standard (CRS),

US Qualified Intermediary (QI), OECD Transfer Pricing

Guidelines, CBCR reporting, Directive of Administrative

Cooperation – DAC 6 and Pillar 2.

As the parent bank, the NLB defines the Tax Policy

for the NLB Group and controls the implementation

of the tax function in the Group, while the NLB Group

members inform the NLB about their tax position. Each

member is responsible for fulfilling its tax obligations

in accordance with their respective legislation. The

members are independent and entirely responsible for

their own tax compliance.

Applicable and mandatory for all NLB Group

members. Banks have included the provisions of the

Tax Policy in their internal acts. Other core members

declared their compliance with the Tax Policy.

Financial Accounting

and Administration director in NLB and managers in

similar positions in the NLB Group banking members.

In the NLB, the tax expert unit Financial Accounting and

Administration reports to the Chief Financial Officer,

with important tax issues discussed and decided by the

Management Board, which also confirms the Tax Policy.

Tax functions in the NLB Group members are similarly

managed under the local CFOs and the Tax Policy is also

confirmed by the local Management Board.

General principles of the Tax Policy:

The attitude of the Group members towards the

Financial Administration is respectful, transparent and

professional.

When determining tax obligations, members comply

with the legally permitted reliefs and exemptions from

the tax base.

Members cooperate with the Financial Administration

to obtain the relevant explanations and information for

the provision of tax bases on a regular basis.

When establishing tax positions, members strive to

achieve certainty and implement a conservative policy

of assuming tax risks. Tax optimization is carried out

strictly in compliance with the applicable tax laws and

regulations.

The Group members do not use the structures for the

purpose of tax avoidance or aggressive tax planning.

They do not use structures that are not in line with the

purpose of the legislation or the use of which would

subordinate its business motives to tax motives.

The reasons for a Group member’s presence in a

certain country are purely business and not tax-

motivated. The Group members do not do business in

tax havens or use them for tax avoidance and do not

divert profits to tax havens and jurisdictions with low

taxation.

The Group members do not enable or support tax-

motivated arrangements of their clients and act

preventively.

The Group members strive to ensure that the

appropriate part of its taxable profit is considered in

those members where the value is generated. As a rule,

our operations with related persons are carried out

at comparable market prices and in the case of any

deviations, such a fact is considered in the tax reports.

A number of processes and ongoing activities were in

place in 2025 to assure an effective management of the

tax risks, the control framework and awareness of the

importance of the tax function, such as:

· Ensuring that tax risks throughout the NLB

Group are identified, evaluated, managed, and

communicated.

Tax risks are defined, evaluated and

reported within the framework of operational risk

management. They are managed yearly with tax

questionnaires and detailed lists of controls for different

types of taxes. 

· Maintaining a strong control environment and tax

risk framework

to ensure compliance with the tax

laws. Detailed written instructions are prepared for

different taxes, together with the first and second

line of controls which have to be carried out. The first

line of control is typically performed by back-office

departments that prepare the basic input data for

tax calculations, while the second line is carried out

by the tax department. Depending on the type of

tax, this may include, for example, preparing control

checklists, verifying the consistency of reported data

with general ledger records, and performing logical

controls, among other activities. The Internal Audit

and Compliance, as the second and the third line of

defence, respectively, control taxes in line with the

yearly plan and risk assessment.

Regular tax payments, strong

control environment and tax

risk framework demonstrate

the NLB Group’s social

responsibility

330

· Reviewing the tax treatment

of every new product or

business decision before its implementation. 

Handling tax-related topics by in-house qualified tax

experts who are provided with ongoing training. 

· In-house tax experts of NLB regularly attend yearly

tax conferences

and education on actual tax topics

(for instance at the Slovenian Audit Institute and

Slovenian Bank Association). The employees involved

in the performing of the tax function attend continuous

training to enhance tax risk understanding provided

by internal tax experts (FATCA/CRS, DA6, Tax - dealing

with securities). For the tax topics important to a wide

range of employees, e-learning is also prepared. There

was a total of 569 participants from the NLB in the

internal tax training (a majority of employees in the

branches, new employees).

Monitoring of updates to changes in the tax laws and

their impacts on the NLB and industry. 

· Discussing important tax issues

related to the banking

industry within the Bank Association, preparing

comments on tax legislation proposals, initiatives

for changes of tax legislation, and questions for

tax opinions whenever possible or relevant at the

local level. Comments, initiatives, and questions are

professionally reasoned, coordinated with members of

the Bank Association, and, where appropriate, take into

account the impact on the local community.

· Maintaining a good relationship with tax authorities.

For example, the NLB is a holder of a special tax status,

which is granted by the Financial Administration

of the Republic of Slovenia after the existence of

adequate and effective internal tax controls has been

demonstrated. The special tax status which is awarded

for a period of three years was granted to the NLB for

the first time in 2018. Since then, the status has been

regularly renewed. Other jurisdictions where the NLB

Group banking members operate so far do not have

any legislation in place that would allow them to obtain

a special tax status.

The execution of the activities stipulated in the Tax

Policy in banks and other core members is monitored

yearly with the tax questionnaires by tax experts/

Financial Accounting and Administration in the NLB and

occasional site visits to individual NLB Group members.

In 2025, 4 such visits were made.

Specific quantitative targets have not been established

for the tax management, however the NLB Group is

actively pursuing the following overarching goals:

to ensure responsible and transparent taxation and to

prevent important tax risks through internal controls in

all the countries where the Group operates. In 2025, the

implementation of the tax legislation was found to be

consistent and adequate, and no important tax risks

were identified;

to maintain a special tax status for the NLB,

thus demonstrating cooperation, transparency,

understanding, voluntary payment of taxes and

mutual trust. In 2025, the NLB maintained its special

tax status, which is valid until March 11, 2027.

Each NLB Group member is taxed according to

local legislation, with income tax rates ranging

from 9% to 32%. Details by country are disclosed

in the table below.

Table 121:

Country by Country Reporting (CBCR) for 2025

Number of

employee

(31 Dec 2025)

Revenues

from

third-party

sales

Revenues from

intra-group

transactions

with other tax

jurisdictions

Profit/loss

before tax

Tangible

assets other

than cash

and cash

equivalents

income tax

paid on a

cash basis

income tax

accrued on

profit/loss

(iii), (iv)

2,776

634,977

28,971

265,848

157,491

28,182

24,790

993

116,326

-3,040

69,814

38,563

6,855

8,984

2,366

318,283

3,104

174,275

123,571

22,205

20,516

406

58,077

-2,422

31,285

25,679

5,164

4,821

10,311

-4,112

1,592

1,542

163

380

1,013

106,356

-3,777

50,008

41,707

4,459

4,255

502

65,872

-2,990

44,959

12,781

4,442

4,592

Germany

-104

65

-72

-41

4,997

719

57

640

Notes:

The table is prepared in accordance with the OECD Guidelines for Country-by-Country Reporting (CbCR). The table includes data for all members of the

NLB Group (banking and non-banking members, with only non-banking members operating in Croatia, Germany, and Switzerland).

No external body other than the assurance provider validated the measurement of metrics.

(i) The data in the columns Revenues from third-party sales and Revenues from intra-group transactions with other tax jurisdictions include net interest

income, dividend income from entities that are not members of the NLB Group, net fee and commission income, the net effect of financial instruments,

foreign exchange translation, the effect on the derecognition of assets, net operating income, and gain less losses from non-current assets held for sale.

(ii) Dividends from the NLB Group members are not included in the data in the Profit/loss before tax column.

(iii) Income tax paid or accrued in relation to dividends from the NLB Group members is not included in the data in the columns Corporate income tax paid

on a cash basis and Corporate income tax accrued on profit/loss. Income tax paid in relation to dividends from the NLB Group members amounts to EUR

9,899 thousand.

(iv) The data in the Corporate income tax accrued on profit/loss column include only current tax, and do not include deferred tax, withholding tax on

dividends from the NLB Group members, or global minimum tax.

331

policy discussion

The conducted DMA identified advocating for

sustainable development through professional

associations as the actual positive impact of the

NLB Group. Such participations and policy discussions

demonstrate the Group’s commitment to sustainability,

enhance its reputation, and contribute to broader

industry and societal change.

To reinforce its commitment to a sustainable, green,

and just transition, as well as broader sustainability

priorities, the NLB Group has voluntarily joined and

aligned with key international initiatives, principles,

and associations over the years.

Members of the Management Board and other

professionals actively and regularly collaborate on market-

relevant topics (such as environmental sustainability, social

inclusion and quality of corporate governance) through

professional and sectoral associations, primarily within

the local associations of banks where they represent

their interests in regulatory, policy, and industry-wide

discussions. They collaborate through specialised

committees to shape standards, improve sector practices,

and coordinate responses to shared challenges.

As the largest bank in Slovenia and a designated

Significant Institution under the European

Banking Supervision framework, NLB participates

in cooperation structures and sector-relevant

discussions at both the Slovenian and EU level. Its key

engagements include the Bank Association of Slovenia,

the European Banking Federation, and international

sustainability platforms such as UNEP FI Principles for

Responsible Banking.

NLB Komercijalna Banka, Beograd maintains regular

cooperation within the Association of Serbian Banks

and holds a strategic partnership with the Serbian

Association of Economists (SES) through its active

role at the Kopaonik Business Forum, the leading

economic event in Serbia and the wider region.

As an institutional partner, the bank consistently

contributes expert insights to high-level economic

discussions and participates in panels on financial

stability, sustainable growth, ESG integration, and

digital transformation. Through this engagement,

the bank supports the development of public

policies related to the green transition, financial

inclusion, and the sustainable evolution of

capital markets.

NLB Banka, Prishtina maintains active collaboration

with the Kosovo Banking Association, the American

Chamber of Commerce, the Kosovo Chamber of

Commerce, and the European Investors Council.

Similarly, NLB Banka, Skopje participates in several

committees within the Macedonian Banking Association

and is actively present in discussions on topics such as

ESG risk management, as well as economic and social

development opportunities.

NLB Banka, Banja Luka and NLB Banka, Sarajevo

engage regularly in professional and sectoral

cooperation on market-relevant topics, primarily through

the Association of Banks of Bosnia and Herzegovina.

NLB Banka, Podgorica actively participates in the

Banking Association of Montenegro and also in the

working group of the Women Entrepreneurs Finance

Code Montenegro (WE Finance Code) - an initiative

established in 2025 and coordinated by the Central

Bank of Montenegro, aimed at promoting women’s

entrepreneurship and improving access to finance for

women-owned businesses.

Through these and several other engagements, the

Group takes part in strategic dialogues on the role and

importance of sustainability in the economic and social

environment. These collaborations further strengthen

the capacities of the NLB Group professionals,

enhancing knowledge exchange and experience

sharing that is embedded into daily operations. In

doing so, the Group helps co-create future activities

and contributes to achieving local, regional, and global

sustainability goals.

Figure 93:

Key cooperations and participations of the NLB Group banking members

UN Sustainable Development Goals

UNEP FI Principles for Responsible

Banking

European Banking Federation –

Sustainable Finance Expert Group

Chapter Zero Slovenia

Slovenian Banking Association –

Sustainable Finance Working Group

AmCham Slovenia – Commission for

Sustainable Growth

EBRD Women in Business Programme

Greenhouse Gas Protocol

Multilateral Investment Guarantee

Agency

Sustainable Business Network

Bled School of Management

332

G1-5

Political influence

and lobbying activities

The NLB Group is politically neutral, and giving financial

contributions to political parties, political representatives

or political campaigns, is strictly prohibited in the

NLB Group as the Sponsorships and Donations Policy

(presented in the chapter

)

stipulates that members shall not pay any political

contributions – neither direct nor indirect. NLB and

other members of the NLB Group are committed to

maintaining an apolitical reputation in their business

dealings, avoiding any perception that their decisions

are influenced by politics.

In 2025, no political contributions of any kind (either

financial or in-kind) were made in NLB or any of the

Table 122:

NLB Group political contributions (in EUR thousands)

Political contributions (financial)

Political contributions (in-kind)

Note: The measurement of the metrics was not validated by any external

52 This chapter is not subject to assurance.

Complementary

information

- sustainable

supply chain

52

In the 2024 DMA and its update in 2025, the management

of supplier relationships was not identified as a material

topic. Nevertheless, the NLB Group decided to disclose

this information on an informative basis and to a

comparable extent as in previous reporting cycles in

order to provide stakeholders with a consistent and

comprehensive overview over time. The information

was not in the scope of external assurance review

of this Sustainability Statement.

Procurement portfolio

overview

As part of its efforts to enhance Group-wide

procurement governance, the NLB Group expanded

its supplier monitoring in 2025 to include banks (as

in previous year) and additionally asset management,

real estate, and leasing companies. As a result,

the procurement portfolio overview now covers all

NLB Group core members.

In 2025, they cooperated with a total of 9,407 suppliers

from 40 different countries, of which 8,449 (90%) were

local suppliers, covering 96% of the procurement spend.

Since the procurement process is not applicable to

various spend categories (e.g. taxes payable to

municipalities, ministries, central bank, donations,

sponsorships, re-invoicing, leasing transactions,

cooperation within the NLB Group, etc.), cooperation

based on the procurement process covered 3,829

suppliers, of which 3,581 were local suppliers with 95%

of the procurement spend.

Table 123:

NLB Group core members - number of suppliers,

by markets (based on procurement process)

Location

of suppliers

Number of

suppliers

Share

in total

supplier

Local markets (7 countries)

3,581

94.67%

European Union (23 countries)

2,047

52.37%

Europe (32 countries)

3,789

99.66%

Non-European (5 countries)

0.34%

Table 124:

NLB Group core members - number of suppliers,

by activity (based on procurement process)

Activity

Number of

suppliers

Share

in total

supplier

spend

Information and

Communication

444

35.29%

Professional, Scientific

and Technical

553

13.44%

Wholesale and Retail Trade,

and Repair of Motor Vehicles

705

10.37%

Administrative and

Support Services

260

9.02%

Financial and Insurance

85

7.03%

167

4.09%

Other activities

1,366

16.73%

Data not available

249

4.02%

3,829

9,407

suppliers from

different countries

333

Procurement management

The overarching principles related to suppliers and

the procurement management guidelines applied

across the NLB Group members are defined in the

Code of Conduct. Specifically, the procurement

management in the banking members is governed by

the Standard – Procurement in the NLB Group Members

and other procurement-related internal documents.

For the other core members, the Standard serves as

a recommendation, guiding them to incorporate its

provisions into their business processes where relevant.

The purpose of the Standard is to ensure a uniform

and transparent procurement procedure of goods

and services needed to perform the business activities

in the NLB Group. To manage sustainability-related

impacts, risks, and opportunities efficiently and in a

harmonised way, the NLB Group established a synergy

approach whereby, in most cases, NLB as the parent

bank assesses and integrates the needs of several

NLB Group members – primarily banks – and issues

RFPs and conducts purchases at the NLB Group level.

The rules and procedures defined in the Standard

are fully implemented in the banking members of the

NLB Group, while in other members its harmonisation

is underway. The most senior function responsible

for implementing the Standard is performed by the

directors of procurement departments, or an equivalent

function, in each NLB Group member.

The Standard sets out key principles and guidelines,

including fair dealing and good governance.

Accordingly, as a rule, the NLB Group members must

ensure that the procurement process is fair, non-

discriminatory, and provides opportunities and equal

treatment for all suppliers in the procedures. It defines

clear terms of cooperation between the NLB Group,

bidders, suppliers, and external contractors, which all

parties are required to follow.

NLB Group members engage regularly with suppliers’

legal representatives to maintain appropriate business

relationships and to ensure that suppliers understand and

comply with sustainability-related requirements.

The Group is committed to supporting local economies

and the well-being of local communities. Therefore, it

aims to cooperate with local suppliers whenever this is

consistent with its targets and policies. Local suppliers

are defined as entities registered in countries where the

NLB Group operates (Slovenia, Croatia, Serbia, Bosnia

and Herzegovina, Montenegro, North Macedonia, and

Kosovo). Partnering with local suppliers also reduces

transport costs and contributes to reducing emissions.

The Standard requires the procurement process to follow

good governance principles, including compliance with

contractual payment dates and avoiding payments

to sanctioned individuals. For banking members, the

standard payment term is 60 days from the invoice date,

with shorter terms (45, 30, 15 days) possible if agreed.

These terms apply to all suppliers, including SMEs, across

all countries. The company has a system in place for

reviewing and verifying invoices to ensure payments are

made on time. In 2025, there were no legal proceedings

related to payment delays.

Sustainability due diligence

In line with the Standard, all procurement procedures

require suppliers to operate ethically and responsibly.

Suppliers and their subcontractors must prevent

harmful practices, including corruption, bribery, and

discrimination, and comply with all sustainability-related

requirements set by the NLB Group.

Sustainability and related due diligence are integrated

in the procurement procedures as follows:

The supplier selection process starts with a request for

proposal specification of services/goods that will be

subject of purchase, which also include sustainability-

related requirements, such as green electricity, office

paper with an FSC certificate, electric cars, etc.

All bidders are required to complete a questionnaire that

serves as a formal tool for gathering information on their

environmental and social practices, ethical and business

conduct, anti-terrorism measures, and compliance with

human rights requirements. These requirements include

preventing human trafficking, forced labour, slavery-like

working or living conditions, and the exploitation of child

labour under the age of 15; ensuring safe and healthy

working conditions; respecting freedom of association

and collective bargaining; providing a living wage and

fair remuneration; and guaranteeing equal treatment

without discrimination. The questionnaire also covers

relevant internal training and governance practices of

bidders and suppliers.

In addition, suppliers are asked about their potential

to further develop their business activities – such as

creating additional employment opportunities arising

from cooperation or contractual relationships with

the Group – thereby supporting broader efforts to

reduce unemployment.

To qualify as suppliers, bidders must meet a set of

legal, financial and non-financial criteria, including

sustainability-related requirements, and demonstrate

compliance with predefined standards. In addition to

evaluating questionnaires, procurement officers carry

out further monitoring activities, such as reviewing

media coverage related to bidders and suppliers. If

these criteria and standards are not met, the bidder is

not selected.

Sustainability matters are also included in the General

Provisions of the Agreement (GPA), which most

suppliers sign together with the purchase contract.

By doing so, suppliers commit to fulfilling their

contractual obligations in line with a comprehensive

set of required environmental, social and governance

practices, including the protection of human rights

within their operations and throughout their supply

chains. The GPA further stipulates that suppliers’

employees or subcontractors may report any cases

of non-compliance with these commitments through

NLB’s grievance mechanism, with NLB ensuring full

confidentiality and the protection of whistle-blowers’

identities in accordance with its internal policy.

Suppliers with significant levels of engagement and

procurement value undergo an annual extended

assessment of their relationship with the respective

NLB Group member, including an evaluation of their

sustainability practices. In 2025, the assessment

threshold was set at EUR 100,000. Suppliers

achieving low scores are required to prepare

improvement measures, and the implementation

of these measures is monitored by relevant

procurement officers.

In addition, a comprehensive due diligence review

is performed every 3 years. This assessment covers

most suppliers whose annual spend exceeds the

predetermined threshold (ranging from EUR 10,000

to 35,000 in 2024, and adjusted to EUR 10,000 to

100,000 in mid-2025, depending on the size of the

NLB Group banking member).

334

Based on the completed questionnaire reviews and due

diligence findings, the NLB Group banking members

identify any potential or actual regulatory breaches,

violations, or risks in suppliers’ operations. Where such

issues are identified, corrective measures are agreed

upon, and suppliers must address them within the

agreed timeline. If a supplier – potential or existing

– fails to ensure compliance with sustainability

requirements, including human rights, or does not

implement the agreed corrective measures, the

NLB Group banking member will either refrain

from entering into cooperation or terminate the

contract, respectively.

The procurement procedures also apply to human-

rights-related matters, including workers’ rights. The

NLB Group banking members assess whether potential

or existing suppliers respect and uphold human rights,

including workers’ rights, and evaluate any risks

associated with these areas.

The general approach is stipulated in the Group’s

human rights policy and the procurement Standard.

Since their adoption NLB, these documents have

already been implemented and harmonised across all

banking members, while harmonisation in other Group

members is still underway.

The NLB Group members expect their suppliers to

comply not only with financial requirements, but also

with non-financial and ESG obligations, including:

acting in compliance with regulations on environment

and energy saving, health, security, safety at work,

social security, and respecting labour law (including

collective agreements);

ensuring compliance with at least the following in

its operations (and throughout their supply chains):

the right to freely choose employment, prohibition of

child labour, prohibition of discrimination, prohibition

of illegal work, the right to fair payment, the right to

appropriate working hours, the right to organise and

join trade unions and engage in collective bargaining,

the right to respect one’s personality and dignity, the

right to health and safety, and the right to diversity;

when performing their business activities or business

activities of their subcontractors on any market, the

suppliers must operate in an ethical and socially

responsible manner and provide measures not to

use child labour, forced labour or slavery-like working

conditions, and not to violate any human rights in

any way.

These requirements are embedded in the due diligence

questionnaires that each bidder must complete at

the start of the procurement process, confirming that,

alongside other ESG requirements, human-rights-related

requirements are also met. In addition, suppliers must

confirm that they act in accordance with the general

terms and conditions of the contract, the NLB Group Code

of Conduct, and other internal regulations governing

responsible business practices. If these requirements are

not met, the bidder is not selected.

Due diligence reviews are carried out before a contract

is signed and whenever non-compliance with legal and

sustainability-related requirements is identified during the

contractual period. If suppliers fail to respect human rights

or cannot guarantee compliance for any reason, they

cannot collaborate with the NLB Group banking members.

Furthermore, the NLB Group banking members conduct

supplier reviews at least every three years. As part of

this process, suppliers must provide information on their

compliance with human-rights-related expectations,

including the prohibition of child labour, forced or

compulsory labour, and other social impacts. In 2025,

the scope of monitoring was expanded to include

potential indicators of human trafficking.

Grievance mechanism

As part of the due diligence process, the NLB Group

assesses whether suppliers have established effective

mechanisms for anonymously reporting and addressing

labour law violations, significant negative impacts

on workers in the value chain, other irregularities,

and breaches of regulations, and whether corrective

measures are ensured.

Before signing a contract, each potential supplier must

provide information on their established mechanisms

for anonymously reporting and addressing these

issues. If a supplier cannot provide this assurance, they

must submit additional clarification. If, after reviewing

the additional clarification, it is determined that the

supplier lacks an adequate reporting channel, a

reporting channel managed by an NLB Group member

is included in the supplier contract. The supplier

must then demonstrate that all employees have

been duly informed of this reporting channel. If this

requirement cannot be fulfilled, the potential supplier

is disqualified.

Suppliers’ employees may also report violations online

via NLB Whistler, a reporting channel that ensures

complete anonymity and broad accessibility. If the

company employs only one person, this requirement

does not apply.

Additionally, certain NLB Group banking members

provide dedicated e-mail addresses for reporting

irregularities. These are regularly monitored and reports

– submitted either anonymously or with personal data –

are reviewed and addressed accordingly.

For a detailed description of the whistleblowing

mechanism, please refer to the chapter

Progress

NLB Group has adopted a zero-tolerance approach to

harmful supplier practices, including corruption, bribery,

and discrimination, and non-compliance with the

sustainability-related requirements set out by the NLB

Group and described in previous chapters.

The annual due diligence conducted in 2025 included

most suppliers of the Group whose annual spend

exceeded the predetermined threshold (ranging from

EUR 10,000 to EUR 35,000, depending on the size of

the NLB Group banking member) and all new suppliers

with contracts signed in last three years (2024). In total,

the NLB Group carried out 758 due diligence reviews

(393 in 2024), representing 63.12% of spend based on the

procurement process (compared to 56.80% in 2024).

In 2025, regular reviews and due diligence activities

found no harmful practices, environmental or social

impacts, human rights violations, or cases of child or

forced labour in supplier operations. Consequently,

no supplier relationships within the NLB Group

were terminated.

APPENDICES

336

Appendix 1: EU Taxonomy Regulation Disclosures

(Environmental Information)

Regulatory disclosure requirement in accordance with article 8

of the EU taxonomy regulation

The EU Taxonomy is a classification system designed to

determine the environmental sustainability of economic

activities within the European Union. For banks, it serves

as a crucial framework for evaluating and disclosing the

environmental impact of their investments and lending

practices. By adhering to the EU Taxonomy, banks

can identify and prioritize investments that contribute

to environmental objectives, such as climate change

mitigation and adaptation. This taxonomy provides

clear criteria and standards, enabling banks to assess

the alignment of their portfolios with sustainable

goals, mitigate risks associated with environmentally

harmful activities, and support the transition to a more

sustainable economy.

Compliance with the EU Taxonomy is mandated under

Article 8 and Article 10 of Regulation (EU) 2020/852

of the European Parliament and of the Council of 18

June 2020 on the establishment of a framework to

facilitate sustainable investment, amending Regulation

(EU) 2019/2088. EU Taxonomy reporting has been

prepared in accordance with Delegated Regulations

(EU) 2021/2178, (EU) 2021/2139 and (EU) 2023/2486 as

applicable on 31 December 2025.

Green Asset Ratio (GAR)

The Green Asset Ratio (GAR) within the framework

of the EU Taxonomy measures the proportion of a

bank’s assets that meet the criteria for environmentally

sustainable economic activities. This ratio serves as a

key metric for stakeholders to assess how much of a

bank’s portfolio supports environmental sustainability

objectives. Banks are required to report their GAR

as part of their sustainability reporting obligations,

ensuring transparency and accountability in their

sustainability efforts.

However, while the Green Asset Ratio enhances

transparency, it does not fully capture the transition

efforts of banks. A substantial portion of the Group’s

portfolio is excluded—for example, loans to smaller

companies and international non-EU business—

meaning the actual number of aligned activities is

higher. Furthermore, banks rely on counterparties for

data, and since many of these entities are at the early

stages of their green transformation, they may struggle

to evaluate their own sustainability. Therefore, GAR

should be analysed alongside additional disclosed

metrics and other relevant information on NLB Group’s

efforts to finance the transition.

The KPI covers banking-book assets in scope

of EU Taxonomy Article 8 (mainly loans to NFRD/CSRD

reporters). It excludes exposures out of scope (e.g.,

central banks, sovereigns, trading book, derivatives).

We use Article 8 statements from counterparties as

the primary data source. “Taxonomy-aligned” means

a substantial contribution, no significant harm, and

minimum safeguards compliance. The scope

expanded over time from climate to the other

environmental objectives.

We are not required to disclose quantitative Taxonomy

KPIs for trading exposures. We give a qualitative

view instead. Trading portfolios serve liquidity and

risk management needs. Taxonomy-relevant content

is limited and controlled through internal limits and

product governance. We aim to tighten policy links

to the Taxonomy over time and track composition

and trends.

NLB approach to disclosures is to maintain unified

approach to disclosures. As banking regulation and

sustainability reporting are not aligned yet, banking

regulation compliance is in our focus. In Pillar III report,

we disclose the GAR only for the first two climate

objectives, based on Pillar 3 methodology. This creates

a methodological difference between the climate-GAR

and any “total” GAR. For 2025, the difference is not

material because alignment under the other four

objectives based on counterparty Article 8 is very low.

Our Calculation Approach

The Green Asset Ratio (GAR) is calculated as identified

taxonomy-aligned assets (numerator) divided by

total assets covered by the KPI (denominator).

Data

as of the cut-off date 31.12.2025 was used. Exposures

towards central banks, central governments,

supranational entities, and the bank’s trading

portfolio are excluded from both the numerator and

denominator, as they are not covered by the KPI.

Exposures to regional and local public authorities and

state-controlled entities, where the use of proceeds is

unknown, are also excluded from both the numerator

and denominator.

We have disclosed information related to all six

environmental objectives where actual data directly

published by counterparties is available.

To assess Taxonomy-related KPIs for non-financial

undertakings (CSRD corporates, i.e., corporates subject

to non-financial reporting requirements, including

337

taxonomy reporting), we use publicly available

information on the percentage of eligibility and

alignment of counterparties’ turnover-based (turnover)

and capital expenditure-based (CAPEX) metrics. the

Green Asset Ratio (GAR) flow disclosure includes all

newly acquired exposures throughout the year.

Explanations of the nature and objectives of

Taxonomy-aligned economic activities and the

evolution of the Taxonomy-aligned economic

activities over time, starting from the second year of

implementation, distinguishing between business-

related and methodological and data-related

elements

To determine household eligibility for KPIs, we consider

the entire portfolio of mortgage loans, with assets

subject to energy efficiency rules. For alignment KPIs

on the household portfolio, we focus on the “Purchase

and Ownership of Buildings” category under Delegated

Regulation 2021/2139, excluding the “Renovation”

category due to the lack of specific information to

identify green loans. We also include the financing of

the purchases of electric vehicles for households as

taxonomy -aligned asset.

Description of the compliance with Regulation (EU)

2020/852 in the financial undertaking’s business

strategy, product design processes and engagement

with clients and counterparties

NLB Group as financial institution, includes Regulation

(EU) 2020/852

in Business strategy, service providing

and engagement with clients through different

approaches, for example through due diligence of

clients as well issuing for example Green Bond. More

detailed description can be found in Sustainability

Statement (Chapters Sustainable Finance, Transition

Plan and S3 - Affected Communities.

Criteria for Buildings:

For buildings built before December 31, 2020:

building must have at least an energy performance

class A. Alternatively, it must be within the upper 15%

of the national or regional building stock in terms of

operational primary energy demand, demonstrated

by appropriate evidence comparing the asset’s

performance to national or regional benchmarks for

buildings constructed before December 31, 2020. This

distinction applies separately to residential and non-

residential buildings.

For buildings constructed after December 31, 2020:

building must meet the criteria set out in Section 7.1 of

this Annex, applicable at the time of purchase.

For large non-residential buildings

(with a rated

thermal input for heating systems, combined space

heating and ventilation systems, air-conditioning

systems, or combined air-conditioning and ventilation

systems above 290 kW), the building must be subject to

energy performance monitoring and assessment.

For credit institutions that are not required to disclose

quantitative information for trading exposures,

qualitative information on the alignment of trading

portfolios with Regulation (EU) 2020/852, including

overall composition, trends observed, objectives and

policy.

NLB Group is not required to disclose

quantitative information on trading exposures,

qualitative information that demonstrates how our

trading portfolios align with Regulation (EU) 2020/852

are disclosed in Sustainability Statement chapter

ESG Bonds in the Group’s banking book debt

securities portfolio.

Additional or complementary information in support

of the financial undertaking’s strategies and the

weight of the financing of Taxonomy-aligned

economic activities in their overall activity

approach toward financing of Taxonomy aligned

economic activities are described in the chapter

E1 - Climate Change.

Table 125:

Summary of KPIs to be disclosed by credit institutions under Article 8 Taxonomy Regulation

Total environmentally

sustainable assets (Turnover)

(in 000 EUR)

KPI (Turnover

- based)

KPI (Capex - based)

% coverage

(over total assets)

% of assets excluded from

the numerator of the GAR

(Article 7(2) and (3) and

Section 1.1.2. of Annex V)

% of assets excluded from

the denominator of the GAR

(Article 7(1) and Section 1.2.4

of Annex V)

Main KPI

Green asset ratio (GAR) stock

346,317

1.59%

1.58%

69.84%

41.58%

30.16%

Total environmentally

sustainable activities

(Turnover)(in 000 EUR)

KPI (Turnover

- based)

KPI (Capex - based)

% coverage

(over total assets)

% of assets excluded from the

numerator of the GAR (Article

7(2) and (3) and Section 1.1.2.

of Annex V)

the denominator of the GAR

(Article 7(1) and Section 1.2.4

Additional KPIs

GAR (flow)

78,719

1.02%

1.10%

67.41%

43.96%

32.59%

Trading book

Financial guarantees

4,799

8.97%

13.88%

Assets under management

Fees and commissions income

(i) Share (%) of assets covered by the KPI over total assets.

(ii) Based on the Turnover KPI of the counterparty.

(iii) Based on the CapEx KPI of the counterparty.

(iv) The KPIs related to the Trading Book and Fees and Commissions Income are due for reporting from year 2026.

338

Table 126:

Assets for the calculation of GAR (TURNOVER)_1/8

31 December 2025

(in 000 EUR)

Total [gross]

carrying amount

Climate Change Mitigation (CCM)

Climate Change Adaptation (CCA)

Sustainable Use and Protection of Water and

Marine Resources (SST)

Of which towards taxonomy relevant sectors

(Taxonomy-eligible)

Of which towards taxonomy relevant

sectors (Taxonomy-eligible)

Of which towards taxonomy relevant

sectors (Taxonomy-eligible)

Of which environmentally sustainable

(Taxonomy-aligned)

Of which environmentally

sustainable (Taxonomy-aligned)

Of which environmentally

sustainable (Taxonomy-aligned)

Of which

Use of

Proceeds

Of which

transitional

Of which

enabling

Of which

Use of

Proceeds

Of which

enabling

Use of

Proceeds

enabling

GAR - Covered assets in both

numerator and denominator

8,834,851

4,918,008

346,221

203,521

766

100,258

Loans and advances, debt securities

and equity instruments not HfT

eligible for GAR calculation

8,799,300

4,918,008

346,221

203,521

766

100,258

Financial undertakings

2,687,642

326,582

37,090

Credit institutions

2,213,733

326,582

37,090

Loans and advances

508,442

Debt securities, including UoP

1,705,291

326,582

37,090

Equity instruments

Other financial corporations

473,909

of which investment firms

Loans and advances

Debt securities, including UoP

Equity instruments

of which

11,684

299

11,385

of which insurance undertakings

12,315

4,220

7,693

402

Non-financial undertakings

688,610

172,667

105,610

766

100,258

683,848

172,557

105,610

766

100,258

4,762

110

Households

5,155,752

4,418,759

203,521

203,521

of which loans collateralised by

residential immovable property

4,370,983

4,370,983

155,745

155,745

of which building renovation loans

of which motor vehicle loans

784,769

47,776

47,776

47,776

Local governments financing

267,296

Housing financing

Other local government financing

267,296

31

Collateral obtained by taking

possession: residential and

commercial immovable properties

35,551

32

Assets excluded from the

numerator for GAR calculation

(covered in the denominator)

13,003,372

339

Table 127:

Assets for the calculation of GAR (TURNOVER)_2/8

Total [gross]

carrying amount

Climate Change Mitigation (CCM)

Climate Change Adaptation (CCA)

Sustainable Use and Protection of

Water and Marine Resources (SST)

Of which towards taxonomy relevant sectors

(Taxonomy-eligible)

Of which environmentally sustainable

(Taxonomy-aligned)

Use of

Proceeds

transitional

enabling

Use of

Proceeds

enabling

Financial and Non-

financial undertakings

6,904,288

SMEs and NFCs (other than

SMEs) not subject to NFRD

disclosure

obligations

2,924,413

35

2,917,004

36

of which loans collateralised by

commercial immovable property

37

of which building renovation loans

Debt securities

6,342

39

1,067

Non-EU country counterparties

not subject to NFRD

disclosure obligations

3,979,875

3,971,093

42

Debt securities

6,375

2,407

44

Derivatives

71,346

45

On demand interbank loans

46

Cash and cash-related assets

582,015

Other categories of assets (e.g.

Goodwill, commodities etc.)

5,445,723

48

Total GAR assets

21,838,223

4,918,008

346,221

203,521

766

100,258

Assets not covered for

GAR calculation

9,432,489

Central governments and

Supranational issuers

5,687,703

51

Central banks exposure

3,738,260

52

Trading book

6,526

53

31,270,712

4,918,008

346,221

Off-balance sheet exposures - Undertakings subject to NFRD disclosure obligations

54

Financial guarantees

53,499

6,633

4,799

371

55

Assets under management

56

Of which debt securities

57

Of which equity instruments

340

Table 128:

Assets for the calculation of GAR (TURNOVER)_3/8

Transition to a Circular

Economy (CE)

Pollution Prevention

and Control (PC)

Protection and Restoration of Biodiversity

and Ecosystems (Ecos)

GAR - Covered assets in both

numerator and denominator

41,649

96

3,872

4,963,534

346,317

Loans and advances, debt

securities and equity instruments

not HfT eligible for GAR calculation

41,649

96

3,872

4,963,534

346,317

Financial undertakings

326,582

37,090

Credit institutions

326,582

37,090

Other financial corporations

of which investment firms

of which

of which insurance undertakings

Non-financial undertakings

41,649

96

3,872

218,193

105,706

41,649

96

3,872

218,083

105,706

110

Households

4,418,759

residential immovable property

4,370,983

155,745

155,745

of which motor vehicle loans

47,776

47,776

Local governments financing

Housing financing

Other local government financing

31

Collateral obtained by taking

possession: residential and

commercial immovable properties

32

Assets excluded from the

numerator for GAR calculation

(covered in the denominator)

341

Table 129:

Assets for the calculation of GAR (TURNOVER)_4/8

Transition to a Circular

Economy (CE)

Pollution Prevention

and Control (PC)

Protection and Restoration of Biodiversity

and Ecosystems (Ecos)

Of which environmentally sustainable (Taxonomy-

aligned)

Financial and Non-

financial undertakings

SMEs and NFCs (other than

SMEs) not subject to NFRD

disclosure

obligations

35

commercial immovable property

37

39

Non-EU country counterparties

not subject to NFRD

disclosure obligations

On demand interbank loans

46

Cash and cash-related assets

Other categories of assets (e.g.

Goodwill, commodities etc.)

48

Total GAR assets

41,649

96

3,872

4,963,534

346,317

Assets not covered for

GAR calculation

Central governments and

Supranational issuers

51

Central banks exposure

52

53

4,963,534

346,317

Off-balance sheet exposures - Undertakings subject to NFRD disclosure obligations

54

68

6,703

4,799

371

55

56

Of which debt securities

Of which equity instruments

342

Table 130:

Assets for the calculation of GAR (TURNOVER)_5/8

31 December 2024

Mitigation (CCM)

Adaptation (CCA)

Sustainable Use and Protection of

Water and Marine Resources (SST)

7,158,131

4,163,554

252,932

100,151

640

14,495

5,967

5,967

437

Loans and advances, debt securities

and equity instruments not HfT

eligible for GAR calculation

7,112,482

4,163,554

252,932

100,151

640

14,495

5,967

5,967

437

2,208,690

250,162

20,702

1,805,874

250,162

20,702

450,707

1,355,167

250,162

20,702

402,816

of which

10,954

4,433

6,521

11,492

3,490

7,694

308

841,530

194,094

132,079

640

14,495

5,967

437

772,855

193,978

132,079

14,495

437

68,675

116

3,850,031

3,719,298

100,151

100,151

3,717,814

3,717,814

98,667

98,667

132,217

1,484

1,484

1,484

212,231

212,231

31

45,649

12,110,723

343

Table 131:

Assets for the calculation of GAR (TURNOVER)_6/8

31 December 2024

Mitigation (CCM)

Adaptation (CCA)

6,076,799

2,597,922

2,597,905

39

3,478,877

3,467,330

9,135

2,412

71,418

46

540,282

5,422,224

48

19,268,854

4,163,554

252,932

100,151

14,495

437

8,596,041

4,999,206

3,577,239

19,596

53

27,864,895

4,163,554

252,932

54

77,904

669

3,191

3,191

234

55

56

344

Table 132:

Assets for the calculation of GAR (TURNOVER)_7/8

Transition to a Circular Economy (CE)

Pollution Prevention and Control (PC)

302

75

4,169,834

258,974

14,932

302

75

4,169,834

258,974

14,932

250,162

20,702

250,162

20,702

of which

302

200,374

138,121

14,932

302

200,258

138,121

14,932

116

3,719,298

3,717,814

98,667

98,667

1,484

1,484

345

Table 133:

Assets for the calculation of GAR (TURNOVER)_8/8

Of which environmentally sustainable (Taxonomy-

aligned)

46

Other categories of assets (e,g,

Goodwill, commodities etc,)

4,169,834

258,974

14,932

53

4,169,834

258,974

54

70

3,930

3,233

234

346

Table 134:

GAR sector information (TURNOVER) _1/2

Sustainable Use and Protection of Water

and Marine Resources (SST)

Non-Financial

corporates

(Subject to NFRD)

SMEs and other NFC

Non-Financial

corporates

(Subject to NFRD)

SMEs and other NFC

Non-Financial corporates

[Gross] carrying amount

[Gross] carrying amount

environmentally

(CCM)

environmentally

(CCM)

(CCA)

(CCA)

(SST)

(SST)

Breakdown by sector - NACE 4-digit level (code and label)

02.10

Silviculture and other

forestry activities

20.16

Manufacture of plastics

in primary forms

13,368

21.20

Manufacture of pharmaceutical

preparations

24.42

Aluminium production

18,469

4,584

25.50

Forging and shaping metal

and powder metallurgy

28,905

33.17

Maintenance and repair of

other transport equipment

35.12

Transmission of electricity

55,775

35.13

Distribution of electricity

134,745

35.14

Trade of electricity

35.30

Steam and air conditioning supply

49,839

36.00

Water collection,

treatment, and supply

7,495

42.12

Construction of railways and

underground railways

5,038

43.99

180

47.30

Retail sale of automotive

fuel in specialized stores

62,895

49.20

Freight rail transport

23,898

49.31

Urban and suburban

passenger land transport

15,578

49.50

Pipeline transport

19,139

52.10

Cargo handling

52.21

Supporting service activities

in land transport

129,547

53.10

Universal postal service activities

55.10

Hotels and similar

accommodation activities

7,181

61.10

Wired telecommunications

activities

70,235

64.20

Activities of holding companies

68.20

70.10

Activities of head offices

9,204

71.12

Other engineering activities and

related technical consultancy

347

Table 135:

GAR sector information (TURNOVER) _2/2

corporates (Subject

to NFRD)

SMEs and other

NFC not subject

to NFRD

SMEs and other

NFC not subject

to NFRD

to NFRD

corporates (Subject

to NFRD)

to NFRD

[Gross] carrying

amount

[Gross] carrying

amount

amount

amount

amount

sustainable (CE)

sustainable (CE)

sustainable (PC)

sustainable (PC)

(Ecos)

(Ecos)

Breakdown by sector - NACE 4 digits level (code and label)

02.10

Silviculture and other

forestry activities

20.16

Manufacture of plastics

in primary forms

13,368

21.20

Manufacture of

pharmaceutical

preparations

24.42

Aluminium production

18,469

4,584

25.50

Forging and shaping

metal and powder

metallurgy

28,905

33.17

Maintenance and

repair of other

transport equipment

35.12

Transmission of

electricity

55,775

35.13

Distribution of electricity

134,745

35.14

Trade of electricity

35.30

Steam and air

conditioning supply

49,839

36.00

Water collection,

treatment, and supply

7,495

42.12

Construction of

railways and

underground railways

5,038

43.99

180

47.30

Retail sale of automotive

fuel in specialized stores

62,895

49.20

23,898

49.31

passenger land

transport

15,578

49.50

Pipeline transport

19,139

52.10

Cargo handling

32,302

32,302

52.21

Supporting service

activities in land

transport

129,547

53.10

Universal postal

service activities

55.10

Hotels and similar

accommodation

7,181

61.10

Wired

telecommunications

70,235

64.20

Activities of holding

68.20

70.10

Activities of head offices

9,204

71.12

Other engineering

activities and related

technical consultancy

348

Table 136:

GAR KPI stock (TURNOVER) _1/6

% (compared to total covered

assets in the denominator)

Sustainable Use and Protection of Water

and Marine Resources (SST)

Proportion of total covered assets funding taxonomy

relevant sectors (Taxonomy-eligible)

Proportion of total covered assets funding taxonomy

relevant sectors (Taxonomy-eligible)

Proportion of total covered assets

funding taxonomy relevant sectors

Proportion of total covered

assets funding taxonomy relevant

sectors (Taxonomy-aligned)

Proportion of total covered assets

funding taxonomy relevant

sectors (Taxonomy-aligned)

Of which Use

of Proceeds

Of which Use

of Proceeds

22.52%

1.59%

0.93%

0.00%

0.46%

0.00%

0.00%

1.50%

0.17%

1.50%

0.17%

1.50%

0.17%

of which

0.79%

0.48%

0.46%

0.79%

0.48%

0.46%

20.23%

0.93%

0.93%

20.02%

0.71%

0.71%

0.22%

0.22%

0.22%

22.52%

1.59%

0.93%

0.46%

349

Table 137:

GAR KPI stock (TURNOVER) _2/6

% (compared to total covered

assets in the denominator)

funding taxonomy relevant sectors

0.19%

0.19%

0.19%

0.19%

350

Table 138:

GAR KPI stock (TURNOVER) _3/6

Proportion of total

assets covered

Proportion of total covered assets funding

taxonomy relevant sectors

Proportion of total covered assets funding

taxonomy relevant sectors

Loans and advances. debt securities

0.02%

22.73%

1.59%

0.93%

0.46%

28.14%

1.50%

0.17%

8.59%

7.08%

1.63%

Debt securities. including UoP

5.45%

1.52%

Debt securities. including UoP

0.04%

0.04%

0.04%

0.01%

0.02%

0.02%

1.00%

0.48%

2.20%

0.02%

1.00%

0.48%

2.19%

20.23%

16.49%

20.02%

0.71%

0.71%

13.98%

0.22%

0.22%

2.51%

0.85%

0.85%

0.11%

22.73%

69.84%

351

Table 139:

GAR KPI stock (TURNOVER) _4/6

funding taxonomy relevant

Loans and advances. debt securities

21.61%

1.31%

0.52%

0.08%

0.03%

0.03%

1.30%

0.11%

1.30%

0.11%

1.30%

0.11%

1.01%

0.69%

0.08%

0.03%

0.03%

1.01%

0.69%

0.08%

0.03%

19.30%

19.29%

0.51%

0.51%

0.01%

0.01%

0.01%

21.61%

1.31%

0.08%

352

Table 140:

GAR KPI stock (TURNOVER) _5/6

353

Table 141:

GAR KPI stock (TURNOVER) _6/6

Proportion of total

assets covered

Use of P

roceeds

21.64%

1.34%

25.52%

1.30%

0.11%

7.93%

1.30%

6.48%

1.62%

4.86%

1.45%

0.04%

0.04%

1.04%

0.72%

3.02%

1.04%

0.72%

2.77%

0.25%

19.30%

13.82%

19.29%

0.51%

0.51%

13.34%

0.47%

0.76%

0.76%

0.16%

21.64%

1.34%

69.15%

354

Table 142:

GAR KPIs FlowT _1/3

% (compared to flow of

total eligible assets)

relevant sectors (Tax onomy-eligible)

Proportion of total covered

assets funding taxonomy relevant

45.74%

2.93%

2.17%

0.15%

10.69%

1.27%

11.65%

1.38%

18.01%

2.14%

30.22%

9.76%

4.83%

30.22%

9.76%

4.83%

71.99%

3.82%

3.82%

100.00%

3.56%

3.56%

4.45%

4.45%

4.45%

15.91%

1.02%

0.76%

0.05%

355

Table 143:

GAR KPIs FlowT _2/3

% (compared to flow of

total eligible assets)

relevant sectors (Taxonomy-aligned)

relevant sectors (Taxonomy-aligned)

356

Table 144:

GAR KPIs FlowT _3/3

taxonomy relevant sectors (Taxonomy-eligible)

taxonomy relevant sectors (Taxonomy-eligible)

Of which enabling

45.74%

2.93%

2.17%

0.15%

23.45%

10.69%

1.27%

8.62%

11.65%

1.38%

7.91%

2.80%

18.01%

2.14%

5.11%

30.22%

9.76%

4.83%

30.22%

9.76%

4.83%

71.99%

3.82%

3.82%

13.32%

100.00%

3.56%

3.56%

9.42%

4.45%

4.45%

3.90%

0.80%

0.80%

15.91%

1.02%

0.76%

0.05%

67.41%

357

Table 145:

KPI off-balance sheet exposures (CAPEX) _1/3

% (compared to total eligible

off-balance sheet assets)

Financial guarantees (FinGuar KPI)

12.398%

8.970%

0.000%

0.007%

0.693%

0.002%

0.000%

0.000%

0.000%

0.000%

Assets under management (AuM KPI)

Table 146:

KPI off-balance sheet exposures (CAPEX) _2/3

% (compared to total eligible

off-balance sheet assets)

Financial guarantees (FinGuar KPI)

0.127%

0.002%

Assets under management (AuM KPI)

Table 147:

KPI off-balance sheet exposures (CAPEX) _3/3

12.529%

8.970%

0.007%

0.693%

358

Table 148:

Assets for the calculation of GAR (CAPEX)_1/8

8,834,851

4,938,135

345,919

49,556

8,799,300

4,938,135

345,919

49,556

2,687,642

321,788

33,720

2,213,733

321,788

33,720

508,442

1,705,291

321,788

33,720

473,909

11,684

299

11,385

12,315

4,220

7,693

402

688,610

197,588

108,678

49,556

683,848

195,436

108,678

49,556

4,762

2,152

5,155,752

4,418,759

4,370,983

4,370,983

155,745

784,769

267,296

267,296

35,551

13,003,372

359

Table 149:

Assets for the calculation of GAR (CAPEX)_2/8

6,904,288

2,924,413

2,917,004

6,342

1,067

3,979,875

3,971,093

6,375

2,407

71,346

582,015

Other categories of assets (e,g,

Goodwill, commodities etc,)

5,445,723

21,838,223

4,938,135

345,919

49,556

9,432,489

5,687,703

3,738,260

6,526

31,270,712

4,938,135

345,919

53,499

20,664

7,426

360

Table 150:

Assets for the calculation of GAR (CAPEX)_3/8

Protection and Restoratibon of Biodiversity

Of which towards taxonomy

Of which towards taxonomy

44,064

1,623

4,983,822

345,919

Loans and advances, debt

securities and equity instruments

not HfT eligible for GAR calculation

44,064

1,623

4,983,822

321,788

33,720

321,788

33,720

44,064

1,623

243,275

108,678

44,064

1,623

241,123

108,678

2,152

4,418,759

361

Table 151:

Assets for the calculation of GAR (CAPEX)_4/8

44,064

1,623

4,983,822

4,983,822

20,695

7,426

362

Table 152:

Assets for the calculation of GAR (CAPEX)_5/8

7,158,131

4,103,099

218,652

2,610

3,682

21,015

21,015

7,112,482

4,103,099

218,652

2,610

3,682

21,015

21,015

2,208,690

228,905

19,501

1,805,874

228,905

19,501

450,707

1,355,167

228,905

19,501

402,816

10,954

4,433

6,521

11,492

3,490

7,694

308

841,530

154,896

99,000

2,610

3,682

21,015

772,855

154,098

99,000

2,610

3,682

20,504

20,504

68,675

798

511

511

3,850,031

3,719,298

3,717,814

3,717,814

98,667

132,217

212,231

212,231

45,649

12,110,723

363

Table 153:

Assets for the calculation of GAR (CAPEX)_6/8

6,076,799

2,597,922

2,597,905

3,478,877

3,467,330

9,135

2,412

71,418

540,282

5,422,224

19,268,854

4,103,099

218,652

2,610

3,682

8,596,041

4,999,206

3,577,239

19,596

27,864,895

4,103,099

218,652

77,904

4,183

10,247

10,247

364

Table 154:

Assets for the calculation of GAR (CAPEX)_7/8

943

905

4,125,064

240,572

3,696

943

905

4,125,064

240,572

3,696

228,905

19,501

228,905

19,501

943

905

176,861

120,920

3,696

943

905

175,552

120,409

3,696

1,309

511

3,719,298

365

Table 155:

Assets for the calculation of GAR (CAPEX)_8/8

943

905

4,125,064

240,572

3,696

4,125,064

240,572

14,476

10,291

366

Table 156:

GAR sector information (CAPEX) _1/2

to NFRD

(CCM)

(CCM)

(CCA)

(CCA)

(SST)

(SST)

Breakdown by sector - NACE 4 digits level (code and label)

02.10

20.16

Manufacture

of plastics in

primary forms

13,368

21.20

Manufacture of

pharmaceutical

24.42

Aluminium

18,469

11,916

25.50

Forging and shaping

metal and powder

metallurgy

28,905

33.17

Maintenance and

repair of other

transport equipment

35.12

Transmission

of electricity

55,775

35.13

Distribution of

electricity

134,745

93,271

35.14

35.30

Steam and air

conditioning supply

49,839

36.00

treatment,

and supply

7,495

42.12

railways and

underground

railways

5,038

43.99

180

47.30

Retail sale of

automotive fuel in

specialized stores

62,895

49.20

23,898

49.31

passenger land

transport

15,578

49.50

19,139

52.10

32,302

1,444

52.21

Supporting service

activities in land

129,547

53.10

Universal postal

service activities

55.10

accommodation

7,181

61.10

Wired

telecommunications

70,235

64.20

Activities of holding

68.20

70.10

Activities of

head offices

9,204

71.12

Other engineering

activities and

related technical

consultancy

367

Table 157:

GAR sector information (CAPEX) _2/2

Protection and Restoration of

Biodiversity and Ecosystems (Ecos)

to NFRD)

SMEs and

other NFC not

subject to NFRD

SMEs and

other NFC not

subject to NFRD

SMEs and

SMEs and

(CE)

(CE)

(PC)

(PC)

(Ecos)

(Ecos)

02.10

20.16

Manufacture

of plastics in

primary forms

13,368

21.20

24.42

Aluminium

18,469

11,916

25.50

28,905

33.17

35.12

Transmission

of electricity

55,775

35.13

Distribution of

134,745

93,271

35.14

35.30

49,839

36.00

treatment,

and supply

7,495

42.12

underground

railways

5,038

43.99

180

47.30

Retail sale of

automotive fuel in

specialized stores

62,895

49.20

23,898

49.31

15,578

49.50

19,139

52.10

32,302

1,444

52.21

129,547

53.10

55.10

7,181

61.10

Wired

70,235

64.20

68.20

70.10

Activities of

head offices

9,204

71.12

activities and

related technical

consultancy

368

Table 158:

GAR KPI stock (CAPEX) _1/6

22.61%

1.58%

0.23%

1.47%

0.15%

1.47%

0.15%

1.47%

0.90%

0.50%

0.23%

0.89%

0.50%

0.23%

20.23%

20.02%

22.61%

1.58%

0.23%

369

Table 159:

GAR KPI stock (CAPEX) _2/6

0.20%

0.20%

0.20%

0.20%

370

Table 160:

GAR KPI stock (CAPEX) _3/6

Total (CCM)

taxonomy relevant sectors (Taxonomy-aligned)

taxonomy relevant sectors (Taxonomy-aligned)

22.82%

1.58%

0.23%

28.14%

1.47%

8.59%

1.47%

7.08%

1.63%

5.45%

1.52%

1.11%

0.50%

2.20%

1.10%

0.50%

2.19%

20.23%

16.49%

20.02%

13.98%

2.51%

0.85%

0.85%

22.82%

1.58%

69.84%

371

Table 161:

GAR KPI stock (CAPEX) _4/6

21.29%

1.13%

1.19%

0.10%

1.19%

0.10%

1.19%

0.10%

0.80%

0.51%

0.80%

19.30%

19.29%

21.29%

1.13%

372

Table 162:

GAR KPI stock (CAPEX) _5/6

373

Table 163:

GAR KPI stock (CAPEX) _6/6

Total (CCM)

Of which enabling

21.41%

1.25%

25.52%

1.19%

0.10%

7.93%

0.10%

6.48%

1.62%

4.86%

1.45%

0.92%

0.63%

3.02%

0.91%

0.62%

2.77%

0.25%

19.30%

13.82%

19.29%

13.34%

0.47%

0.76%

0.16%

21.41%

1.25%

69.15%

374

Table 164:

GAR KPIs FlowC _1/3

46.20%

3.16%

2.17%

10.82%

1.26%

11.79%

1.37%

18.23%

2.12%

43.78%

17.28%

43.78%

17.28%

71.99%

3.82%

100.00%

16.07%

1.10%

375

Table 165:

GAR KPIs FlowC _2/3

376

Table 166:

GAR KPIs FlowC _3/3

46.20%

3.16%

2.17%

23.45%

10.82%

1.26%

8.62%

11.79%

1.37%

7.91%

2.80%

18.23%

2.12%

5.11%

43.78%

17.28%

43.78%

17.28%

71.99%

13.32%

100.00%

9.42%

3.90%

0.80%

16.07%

1.10%

67.41%

377

Table 167:

KPI off-balance sheet exposures (CAPEX)_1/3

38.625%

13.881%

0.065%

Table 168:

KPI off-balance sheet exposures (CAPEX) _2/3

0.058%

Table 169:

KPI off-balance sheet exposures (CAPEX) _3/3

38.683%

13.881%

0.065%

378

Nuclear and fossil gas reporting

In accordance with Article 8(6), (7) and (8) of the amended Disclosures Delegated Act NLB prepared the exposure to nuclear energy and fossil gas energy sectors i. The

latter act outlines technical screening criteria and conditions under which activities in energy sector are qualified as sustainable under the EU Taxonomy.

To calculate KPI’s, data available for this year's disclosure from NFRD undertakings has been used. Limited data availability for this year resulted from providing

complete and accurate representation of exposures to these activities.

With ongoing advancements in regulatory reporting practices and continual efforts to improve data collection, we anticipate a progressive enhancement in the quality of

available data. This improvement trajectory will facilitate more precise and thorough analyses of exposures related to nuclear energy and fossil gas activities.

Table 170:

Template 1 Nuclear and fossil gas related activities, turnover- and CapEx-based

Nuclear energy related activities

1.

The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity

generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle.

2.

The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce

electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as

their safety upgrades, using best available technologies.

3.

The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or

process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy,

as well as their safety upgrades.

Fossil gas related activities

4.

The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce

electricity using fossil gaseous fuels.

5.

The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power

generation facilities using fossil gaseous fuels.

6.

The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that

produce heat/cool using fossil gaseous fuels.

379

Table 171:

Template 2 Taxonomy-aligned economic activities (denominator)

Turnover

Amount and proportion (the information is to be presented in monetary amounts and as percentages)

Climate change mitigation (CCM)

Climate change adaptation (CCA)

Economic activities

Amount

Amount

Amount

1.

Amount and proportion of taxonomyaligned economic activity referred to in Section 4.26 of Annexes I and II

to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

0.00

2.

Amount and proportion of taxonomyaligned economic activity referred to in Section 4.27 of Annexes I and II

to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

0.00

3.

Amount and proportion of taxonomyaligned economic activity referred to in Section 4.28 of Annexes I and II

0.00

4.

Amount and proportion of taxonomyaligned economic activity referred to in Section 4.29 of Annexes I and II

0.00

5.

Amount and proportion of taxonomyaligned economic activity referred to in Section 4.30 of Annexes I and II

0.00

6.

Amount and proportion of taxonomyaligned economic activity referred to in Section 4.31 of Annexes I and II

7.

Amount and proportion of other taxonomy-aligned economic activities not referred

to in rows 1 to 6 above in the denominator of the applicable KPI

100.00%

346,221

8.

Total applicable KP

CAPEX

Amount and proportion (the information is to be presented in monetary amounts and as percentages)

Climate change mitigation (CCM)

Climate change adaptation (CCA)

Economic activities

Amount

Amount

1.

Amount and proportion of taxonomyaligned economic activity referred to in Section 4.26 of Annexes I and II

2.

Amount and proportion of taxonomyaligned economic activity referred to in Section 4.27 of Annexes I and II

3.

Amount and proportion of taxonomyaligned economic activity referred to in Section 4.28 of Annexes I and II

4.

Amount and proportion of taxonomyaligned economic activity referred to in Section 4.29 of Annexes I and II

5.

Amount and proportion of taxonomyaligned economic activity referred to in Section 4.30 of Annexes I and II

6.

Amount and proportion of taxonomyaligned economic activity referred to in Section 4.31 of Annexes I and II

7.

Amount and proportion of other taxonomy-aligned economic activities not referred

to in rows 1 to 6 above in the denominator of the applicable KPI

8.

Total applicable KP

380

Table 172:

Template 3 Taxonomy-aligned economic activities (numerator)

Turnover

1.

to Delegated Regulation 2021/2139 in the nominator of the applicable KPI

2.

to Delegated Regulation 2021/2139 in the nominator of the applicable KPI

3.

4.

5.

6.

7.

Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above

in the nominator of the applicable KPI

8.

Total amount and proportion of taxonomy-aligned economic activities in the numerator of the applicable KPI

CAPEX

1.

7.

Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above

in the nominator of the applicable KPI

8.

Total amount and proportion of taxonomy-aligned economic activities in the numerator of the applicable KPI

381

Table 173:

Template 4 Taxonomy-eligible but not taxonomy-aligned economic activities

Turnover

Amount and proportion of taxonomyaxonomyeligible but not taxonomy-aligned

economic activity referred to

in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Amount and proportion of taxonomyeligible but not taxonomy-aligned economic activity referred to in

Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Amount and proportion of taxonomyeligible but not taxonomy-aligned economic activity referred to in

Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Amount and proportion of other taxonomy eligible but not taxonomy-aligned economic activities not

referred to in rows 1 to 6 above in the denominator of the applicable KPI

4,617,217

4,571,787

8.

Total amount and proportion of taxonomy eligible but not taxonomyaligned economic activities in the

denominator of the applicable KPI

4,617,217

4,571,787

CAPEX

Amount and proportion of taxonomyaxonomyeligible but not taxonomy-aligned

economic activity referred to

in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Amount and proportion of other taxonomy eligible but not taxonomy-aligned economic activities not

referred to in rows 1 to 6 above in the denominator of the applicable KPI

4,637,903

4,592,216

Total amount and proportion of taxonomy eligible but not taxonomyaligned economic activities in the

denominator of the applicable KPI

4,637,903

4,592,216

382

Table 174:

Template 5 Taxonomy non-eligible economic activities

Turnover

CAPEX

Amount and proportion of economic activity referred to in row 1 of Template 1 that is taxonomy-non-eligible in accordance

with Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Amount and proportion of economic activity referred to in row 2 of Template 1 that is taxonomy-non-eligible in accordance

with Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Amount and proportion of economic activity referred to in row 3 of Template 1 that is taxonomy-non-eligible in accordance

with Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Amount and proportion of economic activity referred to in row 4 of Template 1 that is taxonomy-non-eligible in accordance

with Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Amount and proportion of economic activity referred to in row 5 of Template 1 that is taxonomy-non-eligible in accordance

with Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Amount and proportion of economic activity referred to in row 6 of Template 1 that is taxonomy-non-eligible in accordance

with Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

Amount and proportion of other taxonomy-non-eligible economic activities not referred to in rows 1 to 6 above

in the denominator of the applicable KPI

16,874,689

16,854,401

Total amount and proportion of taxonomy-non-eligible economic activities in the denominator of the applicable KPI

16,874,689

16,854,401

383

Appendix 2: Methodological Outline for

Operational GHG Emissions Calculation

Scope

Reported metrics

Definition

Measurement

units

Reporting units

Methodology and emission factors

Scope 1 - 1.1.1

[natural gas]

Carbon emissions related to

natural gas consumption

m

, kWh-GCV,

MWh-GCV,

conversion

factor from

GCV to NCV is

0.9, conversion

factor from

m

to kWh is

9.47 kWh/m

tCO

eq

Consumption data is obtained in the following accuracy and priority manner:

1. Consumption data as provided on invoices issued by the relevant utility company.

2. In cases where the NLB Group member does not occupy the entire floor, consumption data is provided

either i) by the building manager based on a meter reading, or ii) by the rental provider based on a meter

reading and proportional sharing principle.

3. In cases where data is unavailable or costs are charged on a fixed €/m

basis, a location benchmark is

created [m

/m

] by dividing the location’s consumption [m

] in the same period but a different year by the

occupied floor area [m

].

Each entity’s calculation spreadsheet includes information on how energy-consumption data has been

attributed for each branch.

Emission factors for this category are presented below (Scope 1).

Scope 1 - 1.1.2

[heating oil]

Carbon emissions related to

heating oil consumption

l

eq

Consumption data is obtained from invoices issued by the relevant provider of heating oil.

Each entity’s calculation spreadsheet includes information on how energy-consumption data has been

attributed for each branch.

Emission factors for this category are presented below (Scope 1).

Scope 1 - 1.1.3

[liquid petroleum

gas]

Carbon emissions related

to liquid petroleum

gas consumption

Sm

Consumption data is obtained from invoices issued by the relevant utility company. If another unit used, the

calculation is made in m

(=Sm

).

Scope 1 - 1.1.4

[pellets, biomass]

Zero-emission source

kg

Consumption data is obtained from invoices issued by the relevant pellet provider.

Scope 1 - 1.2

Vehicle fleet

(mobile

combustion)

[gasoline, diesel]

Carbon emissions related to the

NLB Group’s own fleet travel

l, km

Data is obtained in the following accuracy and priority manner:

1. Information on the distance travelled [km], as provided by fleet managers.

2. Consumption data [l] based on invoices from fuel suppliers for each relevant vehicle (reg. plate).

3. Consumption data [l/km], as provided by fleet managers.

Scope 1 - 1.3

Refrigerants

GHG emissions related to

the consumption of gases

intended for cooling purposes

kg

Consumption data is obtained in the following accuracy and priority manner:

1. Consumption data is obtained from invoices for maintenance related to added refrigerant.

2. Refrigerant-quantity data from HVAC system, 10% of annual leakage.

Emission factors based on the IPCC Assessment report AR5.

Scope 2- 2.1

Electricity

Carbon emissions

related to purchased electricity

consumed by the NLB Group

kWh

1. Consumption data is obtained from invoices issued by the relevant utility company.

2. In cases where the NLB Group member does not occupy the entire floor, consumption data is provided

either i) by the building manager based on a meter reading, or ii) the rental provider based on a meter

reading and proportional sharing principle.

3. In cases where data is unavailable or costs are charged on a fixed €/m

basis, a location benchmark is

created [kWh/m

] by dividing the location’s consumption [kWh] in the same period but a different year by the

occupied floor area [m

].

Energy-mix data with regard to electric-energy production sources is obtained in the following accuracy and

priority manner:

1. Data as provided by electricity suppliers.

2. Where electricity suppliers do not provide this data, national electricity energy-mix data is used.

For electric vehicles, a location-based emissions factor is used as there is no data on electricity source for EV

charging.

Emission factors for market-based emissions are used based on Guarantees of Origin or RES and nuclear

electricity, otherwise residual mix obtained from national or international databases (Energy Agency of the

Republic of Slovenia, AIB for other countries, and Electricity Map for Kosovo and North Macedonia).

Emission factors for this category are presented below (Scope 2).

Scope 2- 2.1

(location-based)

Carbon emissions

related to purchased electricity

consumed by the NLB Group

kWh

ceq

As for electricity (market-based), emission factors for location-based emissions are used from national or

international databases – production mix (for Slovenia –Energy Agency of the Republic of Slovenia, AIB for

other countries, and Electricity Map for Kosovo and North Macedonia).

Emission factors for this category are presented below (Scope 2).

384

Scope

Reported metrics

Definition

Measurement

units

Reporting units

Methodology and emission factors

Scope 2- 2.2

District heating

Carbon emissions related

to the consumption of heat

from district heating

kWh

1. Consumption data is obtained from invoices issued by the relevant utility company.

either i) by the building manager based on a meter reading, or ii) the rental provider based on a meter

created [kWh/m

] by dividing the location’s consumption [kWh] in the same period but a different year by the

].

Each entity’s calculation spreadsheet includes information on how energy consumption data has been

Market-based emission factors are used from DH producers where data is known, otherwise the location-

based emission factor is used. The location-based emission factor for Slovenia is used for all countries due to

regional similarities, as acknowledged by the GHG Protocol (in the absence of market-based emission factors,

location-based factors can be used for market-based calculations).

Scope 3 – Cat. 1

Purchase of

goods and

services

to the production/supply

of paper and water

kg

Water-consumption data is used either from invoices or estimated. No estimation method is prescribed by the

methodology. Paper data is supplied by each entity using the data on paper monitoring in the Paperless

Office project. Data from the UK Government

Department for Energy Security & Net Zero (former DEFRA) is

used for all countries.

Emission factors for this category are presented below (Scope 3).

Scope 3 – Cat. 3

Fuel- and

energy-related

activities not

included in Scope

1 or Scope 2

Carbon emissions related to the

(upstream) indirect production

and transport of fuels/energy

purchased but not reported in

Scope 1 or 2. This includes fuel

extraction/refining, transmission

and distribution losses, and the

generation of sold electricity.

kWh

For downstream emissions from purchased fuels, data on fuel consumption was used from invoices or it was

estimated. The same as for Scope 1 and WTT, emission factors from DEFRA

were used.

For emissions from losses in grids, data for electricity and district heating, the same data was used as in the

Scope 2 emission calculation. Losses in grids was assumed to be 5.97% for both electricity and district heating,

and for emission factors location-based factors were used.

Scope 3 – Cat. 5

Waste in

to office-generated waste

kg

Data from the UK Government

Department for Energy Security & Net Zero (former DEFRA)

is used for all

countries. Emission factors for this category are presented below (Scope 3).

Scope 3 – Cat. 6

Carbon emissions caused

by business travel

km

Data from the company’s IT database on business travel in km and type of transport is used. In the case of

public transport, data from the UK Government

Department for Energy Security & Net Zero (former DEFRA)

is used for all countries.

In the case of airplane emissions, data from airline tickets or the

International Civil Aviation Organisation

(ICAO) calculator

is used. If the data on a business trip is not in a format appropriate for calculation with the

ICAO method, data from the UK Government

is used. Emission factors for this category are presented below (Scope 3).

Scope 3 – Cat. 7

commuting to

and from work

Carbon emissions caused

by employees’ commute

to and from work

km, type of

Anonymised data is obtained from internal HR databases. Selected based on data estimation of driving type.

The emission-factor source for Slovenia is the Jozef Stefan Institute, Energy Efficiency Centre; for other

countries, data from the UK Government

is the

source. Emission factors for this category are presented below (Scope 3).

385

Table 175:

GHG Emission Factors

Scope 1

Emission source

Country

Emission factor source

Unit

Energy source

Heating oil

All countries

IJS-CEU based on the National Inventory Report, ARSO, Conversion to GHG with GWP AR5

0.268

[kgCO

eq/kWh]

LPG

All countries

IJS-CEU based on the National Inventory Report, ARSO, Conversion to GHG with GWP AR5

0.228

[kgCO

eq/kWh]

Natural gas

0.200

[kgCO

eq/kWh]

Gasoline

0.251

[kgCO

eq/kWh]

Diesel

0.269

[kgCO

eq/kWh]

Biomass

0.034

R410A

UK Defra

1,924

eq/kg] (AR5)

R417A

UK Defra

2,127

eq/kg] (AR5)

R422D

UK Defra

2,473

R134A

UK Defra

1,300

R1234f

UK Defra

R407C

1,624

R22

1,760

R32

677

R422A

2,847

386

Scope 2

Emission source

Country/Location/Fuel

Emission factor source

Unit

Market- based

Energy Agency

0.479

/kWh]

Contract for RES electricity

Contract

/kWh]

BIH Banja Luka

AIB, Residual mix

0.777

/kWh]

BIH Sarajevo

AIB, Residual mix

0.777

/kWh]

Montenegro Podgorica

0.623

/kWh]

Serbia Belgrade

0.896

Serbia Belgrade KB (Contract for

zero-emission electricity)

North Macedonia Skopje

Electricity Map, Production mix

0.451

Kosovo Prishtina

Electricity Map, Production mix

0.605

0.573

Slovenia - Petrol d.d.

Petrol

0.382

Slovenia - Energija Plus

Energija Plus

0.436

Slovenia - E3

E3

0,441

North Macedonia Skopje 2024

RES electricity

Market-based

Slovenia - Energetika LJ

Energetika Ljubljana

0.3264

Slovenia - KP Velenje

Komunalno podjetje Velenje

0.29

Location-based

IJS-CEU

0.2442

BIH

AIB, Production mix

0.7766

AIB, Production mix

0.4822

0.8017

0.451

0.605

0.2244

Location-based

IJS-CEU

0.2498

BIH-BA

IJS-CEU

0.2498

Biomass

IJS-CEU based on ARSO data

0.0338

Other countries

IJS-CEU

0.2498

Slovenia NLB Lease&Go

IJS-CEU based on ARSO data

0.2004

Biomass

See Scope 1 above

0.0341

Natural gas

See Scope 1 above

0.2004

Heating oil

0.2683

eq/kW]h

Heat pump

Estimate IJS-CEU

Vehicles

Electricity_EV

Location-based EF

0.2442

Electricity_EV

Location-based EF

0.7766

0.4822

0.8017

0.451

0.605

0.2244

387

Scope 3

Emissions source

Unit

3.1 Purchased goods

Water

UK Defra (water supply)

0.1913

eq/m

]

Paper

UK Defra (material use; paper)

1.3450779

eq/kg]

3.3 WTT

WTT – Heating oil

UK Defra, WTT fuels, gas oil, Net NCV

0.06291

WTT – LPG

UK Defra, WTT fuels, NET NCV

0.02736

WTT – Natural gas

UK Defra, WTT fuels, NET NCV

0.03347

WTT – Gasoline

UK Defra, WTT fuels, average biofuel blend, NET NCV

0.0648

WTT – Diesel

UK Defra, WTT fuels, average biofuel blend, NET NCV

0.06181

WTT – Other heating

UK Defra, WTT bioenergy, wood pellets

0.03744

3.5 Waste

Waste

UK Defra (plastics: average plastics)

0.00898311

eq/kg]

3.6 Work commute and

3.7 Business travel

Public transport

IJS

0.079

eq/pkm]

On foot

eq/pkm]

Personal car

IJS

0.138

eq/pkm]

Company car

Included in Scope 1

eq/pkm]

Electric car

0.04047

eq/pkm]

Bicycle

IJS

Electric scooter

IJS

0.03

Motorcycle / moped

0.11367

Bus

IJS

0.079

Train

0.048

Electric bike

0.014

Taxi

0.089

Airplane

UK Defra, international, average passenger, without RF

0.0842

3.6 Work commute and

3.7 Business travel

Public transport

Other countries

0.10385

On foot

Personal car

0.16725

Company car

Included in Scope 1

Electric car

0.04047

Bicycle

Electric scooter

0.03

Motorcycle / moped

0.11367

Bus

0.10385

Train

0.03546

Electric bike

0.014

Taxi

0.14861

Airplane

UK Defra, international, average passenger, without RF

0.0842

388

Appendix 3:

IRO-2

Disclosure Requirements in

ESRS covered in the Sustainability Statement

List of material disclosure requirements

Page number

ESRS 2

BP-1

Basis for preparation of the Sustainability Statement

182

BP-2

Disclosures in relation to specific circumstances

183

GOV-1

The role of administrative, supervisory and management bodies

185

GOV-2

Information provided to and sustainability matters addressed by the administrative, supervisory and management bodies

193

GOV-3

Integration of sustainability-related performance in incentive schemes

193

GOV-4

Statement on due diligence

199

GOV-5

Risk management and internal controls over sustainability reporting

200

SBM-1

Strategy, business model and value chain

202

SBM-2

Interests and views of stakeholders

208

Material IROs and their interaction with strategy and business model

210

IRO-1

Impacts, risks, and opportunity management / Double materiality matrix and material

sustainability topics

212

E1

ESRS 2 GOV-3

E1

Integration of climate-related performance in incentive schemes

195

E1-1

Transition plan for climate change mitigation

216

ESRS 2 SBM-3 E1

Material climate-related impacts, risks and opportunities and their interaction with the strategy and business model

224

ESRS 2 IRO-1 E1

Processes to identify and assess material climate-related impacts, risks and opportunities

225

E1-2

Policies related to climate change mitigation and adaptation

235

E1-3

Levers, actions and resources related to climate change mitigation and adaptation

237

E1-4

Targets related to climate change mitigation and adaptation

245

E1-5

Energy consumption and mix

254

E1-6

Gross Scopes 1, 2, 3 and Total GHG emissions

255

S1

ESRS 2 SBM-2 S1

Interests and views of stakeholders

208

ESRS 2 SBM-3 S1

Material impacts, risks and opportunities and their interaction with the strategy and business model

269

S1-1

Policies related to own workforce

272

S1-2

Processes for engaging with own workers and workers’ representatives about impacts

272

S1-3

Processes to remediate negative impacts and channels for own workforce to raise concerns

273

S1-4

Taking action on material IROs, and effectiveness of those actions

274

S1-5

Targets and metrics related to managing material IROs

274

S1-6

Employees characteristic metrics

275

389

S1-8

Collective bargaining and social dialogue metrics

282

S1-9

Diversity metrics

285

S1-10

Adequate wages metrics

279

S1-13

Performance review metrics

279, 284

S1-14

280

S1-15

Work - life balance metrics

281

S1-16

Pay gap and total remuneration metrics

286

S1-17

Incidents, complaints and severe human rights impacts

277

S3

ESRS 2 SBM-2 S3

208

ESRS 2 SBM-3 S3

Material IROs and their interaction with the strategy and business model

290

S3-1

Policies related to affected communities

291

S3-2

Processes for engaging with affected communities about impacts

293

S3-3

Processes to remediate negative impacts and channels for affected communities to raise concerns

294

S3-4

294

S4

ESRS 2 SBM-2 S4

208

ESRS 2 SBM-3 S4

Material IROs and their interaction with the strategy and business model

S4-1

Policies related to consumers and end-users

S4-2

Processes for engaging with clients and end-users about impacts

S4-3

Processes to remediate negative impacts – complaint management

303

S4-4

Taking action on material IROs

305

S4-5

Targets related to managing material IROs

305

G1

ESRS 2 GOV-1 G1

Role of administrative, supervisory and management bodies related to business conduct

316

ESRS 2 IRO-1 G1

Description of processes to identify and assess material IROs

317

G1-1

Corporate culture, ethical governance and integrity, and regulatory compliance

319

G1-3

Prevention of corruption and bribery

322

G1-4

Incidents of corruption or bribery

323

G1-5

Political influence and lobbying activities

332

390

Appendix 4: List of Datapoints That Derive from

Other EU legislation (ESRS 2 Appendix B)

List of datapoints in cross-cutting and topical standards that derive from other EU legislation

Disclosure Requirement and related

datapoint

SFDR reference

Pillar 3 reference

Benchmark Regulation

reference

EU Climate Law

reference

Material / Not

material

Page number

ESRS 2 GOV-1

Board’s gender diversity paragraph 21 (d)

Indicator number 13 of

Table #1 of Annex 1

Commission Delegated

Regulation (EU)

2020/1816(5), Annex II

186

ESRS 2 GOV-1

Percentage of board members who

are independent paragraph 21 (e)

Delegated Regulation

(EU) 2020/1816, Annex II

186

ESRS 2 GOV-4

Statement on due diligence paragraph 30

Indicator number 10

Table #3 of Annex 1

199

ESRS 2 SBM-1

Involvement in activities related to fossil

fuel activities paragraph 40 (d) i

Indicators number 4

Table #1 of Annex 1

Article 449a Regulation (EU) No

575/2013;

Commission Implementing

Regulation (EU) 2022/2453(6)

Table 1: Qualitative information on

Environmental risk and Table 2:

Qualitative information on Social risk

(EU) 2020/1816, Annex II

202

ESRS 2 SBM-1

Involvement in activities related to

chemical production paragraph 40 (d) ii

Indicator number 9

Table #2 of Annex 1

202

Involvement in activities related to

controversial weapons paragraph 40 (d) iii

Indicator number 14

(EU) 2020/1818(7), Article

12(1) Delegated Regulation

Involvement in activities related

to cultivation and production of

tobacco paragraph 40 (d) iv

(EU) 2020/1818, Article 12(1)

ESRS E1-1

Transition plan to reach climate

neutrality by 2050 paragraph 14

Regulation (EU)

2021/1119, Article 2(1)

216

ESRS E1-1

Undertakings excluded from Paris-

aligned Benchmarks paragraph 16 (g)

Article 449a

Regulation (EU) No 575/2013;

Commission Implementing Regulation

(EU) 2022/2453 Template 1: Banking

book-Climate Change transition risk:

Credit quality of exposures by sector,

emissions and residual maturity

(EU) 2020/1818, Article12.1

(d) to (g), and Article 12.2

217

ESRS E1-4

GHG emission reduction

targets paragraph 34

Indicator number 4

Table #2 of Annex 1

Article 449a

Regulation (EU) No 575/2013;

Commission Implementing

Regulation (EU) 2022/2453 Template

3: Banking book – Climate change

transition risk: alignment metrics

(EU) 2020/1818, Article 6

247

ESRS E1-5

Energy consumption from fossil sources

disaggregated by sources (only high

climate impact sectors) paragraph 38

Indicator number 5 Table #1 and

Indicator n. 5 Table #2 of Annex 1

Not material

ESRS E1-5

Energy consumption and mix paragraph 37

Indicator number 5

254

ESRS E1-5

Energy intensity associated with

activities in high climate impact

sectors paragraphs 40 to 43

Indicator number 6

Not material

391

ESRS E1-6

Gross Scope 1, 2, 3 and Total GHG

emissions paragraph 44

Indicators number 1 and

2 Table #1 of Annex 1

Article 449a; Regulation (EU) No

575/2013; Commission Implementing

Regulation (EU) 2022/2453

Template 1: Banking book – Climate

change transition risk: Credit

quality of exposures by sector,

emissions and residual maturity

(EU) 2020/1818, Article

5(1), 6 and 8(1)

255

ESRS E1-6

Gross GHG emissions intensity

paragraphs 53 to 55

Indicators number 3

Article 449a Regulation (EU) No

575/2013; Commission Implementing

Regulation (EU) 2022/2453 Template

3: Banking book – Climate change

transition risk: alignment metrics

Delegated Regulation (EU)

2020/1818, Article 8(1)

256

ESRS E1-7

GHG removals and carbon

credits paragraph 56

2021/1119, Article 2(1)

ESRS E1-9

Exposure of the benchmark portfolio to

climate-related physical risks paragraph 66

(EU) 2020/1818, Annex II

Material, subject

to phase in

ESRS E1-9

Disaggregation of monetary

amounts by acute and chronic

physical risk paragraph 66 (a)

Article 449a Regulation (EU)

No 575/2013; Commission

Implementing Regulation (EU)

2022/2453 paragraphs 46 and

47; Template 5: Banking book

- Climate change physical risk:

Exposures subject to physical risk.

Material, subject

to phase in

ESRS E1-9

Location of significant assets at material

physical risk paragraph 66 (c).

ESRS E1-9 Breakdown of the carrying

value of its real estate assets by energy-

efficiency classes paragraph 67 (c).

Regulation (EU) 2022/2453 paragraph

34; Template 2:Banking book -Climate

change transition risk: Loans

collateralised by immovable property

- Energy efficiency of the collateral

ESRS E1-9

Degree of exposure of the portfolio to

climate- related opportunities paragraph 69

(EU) 2020/1818, Annex II

ESRS E2-4

Amount of each pollutant listed in Annex

II of the E-PRTR Regulation (European

Pollutant Release and Transfer Register)

emitted to air, water and soil, paragraph 28

Indicator number 8 Table #1 of

Annex 1 Indicator number 2 Table

2 of Annex 1 Indicator number

1 Table #2 of Annex 1 Indicator

number 3 Table #2 of Annex 1

ESRS E3-1

Water and marine resources paragraph 9

Indicator number 7

ESRS E3-1

Dedicated policy paragraph 13

Indicator number 8

Table 2 of Annex 1

ESRS E3-1

Sustainable oceans and seas paragraph 14

Indicator number 12

ESRS E3-4

Total water recycled and

reused paragraph 28 (c)

Indicator number 6.2

ESRS E3-4

Total water consumption in m3 per net

revenue on own operations paragraph 29

Indicator number 6.1

ESRS 2- IRO 1 - E4 paragraph 16 (a) i

Indicator number 7

ESRS 2- IRO 1 - E4 paragraph 16 (b)

Indicator number 10

ESRS 2- IRO 1 - E4 paragraph 16 (c)

Indicator number 14

ESRS E4-2

Sustainable land / agriculture practices

or policies paragraph 24 (b)

Indicator number 11

392

ESRS E4-2

Sustainable oceans / seas practices

or policies paragraph 24 (c)

Indicator number 12

ESRS E4-2

Policies to address deforestation

paragraph 24 (d)

Indicator number 15

ESRS E5-5

Non-recycled waste paragraph 37 (d)

Indicator number 13

ESRS E5-5

Hazardous waste and radioactive

waste paragraph 39

Indicator number 9

ESRS 2- SBM3 - S1

Risk of incidents of forced

labour paragraph 14 (f)

Indicator number 13

Table #3 of Annex I

Not material,

but disclosed

271

ESRS 2- SBM3 - S1

Risk of incidents of child

labour paragraph 14 (g)

Table #3 of Annex I

Not material,

but disclosed

271

ESRS S1-1

Human rights policy commitments

paragraph 20

Indicator number 9 Table

3 and Indicator number

11 Table #1 of Annex I

276

ESRS S1-1

Due diligence policies on issues

addressed by the fundamental

International Labor Organisation

Conventions 1 to 8, paragraph 21

276

ESRS S1-1

processes and measures for preventing

trafficking in human beings paragraph 22

Indicator number 11

277

ESRS S1-1

workplace accident prevention policy or

management system paragraph 23

Indicator number 1

279

ESRS S1-3

grievance/complaints handling

mechanisms paragraph 32 (c)

Indicator number 5

273

ESRS S1-14

Number of fatalities and number

and rate of work- related accidents

paragraph 88 (b) and (c)

Indicator number 2

280

ESRS S1-14

Number of days lost to injuries, accidents,

fatalities or illness paragraph 88 (e)

Indicator number 3

280

ESRS S1-16

Unadjusted gender pay gap

paragraph 97 (a)

Table #1 of Annex I

286

ESRS S1-16

Excessive CEO pay ratio paragraph 97 (b)

Indicator number 8

286

ESRS S1-17

Incidents of discrimination paragraph 103 (a)

277

ESRS S1-17

Non-respect of UNGPs on Business and

Human Rights and OECD paragraph 104 (a)

Indicator number 10 Table #1 and

Indicator n. 14 Table #3 of Annex I

(EU) 2020/1818 Art 12 (1)

ESRS 2- SBM3 – S2

Significant risk of child labour or forced

labour in the value chain paragraph 11 (b)

Indicators number 12 and

n. 13 Table #3 of Annex I

ESRS S2-1

Human rights policy

commitments paragraph 17

Indicator number 9 Table #3 and

Indicator n. 11 Table #1 of Annex 1

ESRS S2-1

Policies related to value chain

workers paragraph 18

Indicator number 11 and n.

4 Table #3 of Annex 1

ESRS S2-1

Non-respect of UNGPs on Business

and Human Rights principles and

OECD guidelines paragraph 19

(EU) 2020/1818, Art 12 (1)

393

ESRS S2-1

Due diligence policies on issues

addressed by the fundamental

International Labor Organisation

Conventions 1 to 8, paragraph 19

ESRS S2-4

Human rights issues and incidents

connected to its upstream and

downstream value chain paragraph 36

Table #3 of Annex 1

ESRS S3-1

Human rights policy commitments

paragraph 16

Indicator number 9 Table

3 of Annex 1 and Indicator

number 11 Table #1 of Annex 1

276

ESRS S3-1

non-respect of UNGPs on Business

and Human Rights, ILO principles or

and OECD guidelines paragraph 17

Table #1 Annex 1

(EU) 2020/1818, Art 12 (1)

ESRS S3-4

Human rights issues and

incidents paragraph 36

293

ESRS S4-1

Policies related to consumers and

end-users paragraph 16

3 and Indicator number

11 Table #1 of Annex 1

ESRS S4-1

Non-respect of UNGPs on Business

and Human Rights and OECD

guidelines paragraph 17

ESRS S4-4

Human rights issues and

incidents paragraph 35

302, 293

ESRS G1-1

United Nations Convention against

Corruption paragraph 10 (b)

Indicator number 15

322

ESRS G1-1

Protection of whistle- blowers

paragraph 10 (d)

Indicator number 6

325

ESRS G1-4

Fines for violation of anti- corruption and

anti-bribery laws paragraph 24 (a)

Indicator number 17

(EU) 2020/1816, Annex II)

323

ESRS G1-4

Standards of anti- corruption and

anti- bribery paragraph 24 (b)

Indicator number 16

323

394

Appendix 5: Responsible Banking Progress

Statement for PRB Signatories

53 The Appendix

5 is not subject to assurance.

Summary

NLB Group 2025

Principle 1:

Alignment

The NLB Group aligns its business strategy to be

consistent with and contribute to individuals’ needs

and society’s goals, as expressed in the UN SDGs, Paris

Climate Agreement, United Nations Guiding Principles

on Business and Human Rights, and relevant national

and regional frameworks such as the national energy

and climate plans. The alignment is reflected in the

business model including customer segments served,

type of products and services and other sustainability

related issues across all the operating geographies.

Principle 2:

Impact & Target Setting

The NLB Group is amplifying its positive impacts while

minimising negative impacts in key areas: climate,

healthy and inclusive economies, and human rights

within its own workforce. In 2025, the NLB Group

upgraded targets on climate change mitigation

and adaptation and continued with the implementation

of the activities under the targets of financial health and

inclusion as well as recourse efficiency.

Principle 3:

Clients & Customers

The relationship with consumers and end users lies

at the heart of the NLB Group’s business model.

With more than 2.9 million clients, the NLB Group

is one of the leading financial groups in the SEE region.

Links & references

For detailed information please refer to:

(in the Business part of the report)

Incorporating ESG risks

Links & references

For detailed information please refer to:

SBM-3 Material IROs and their interaction

with the strategy and business model

Targets related to climate change mitigation

and adaptation

Financial health and inclusion targets

S4 Consumers and End Users

E1 Climate Change

E1 Climate Change, Client engagement targets

Appendix 1: EU Taxonomy

395

Principle 4:

Stakeholders

The NLB Group continually engages with a wide

range of stakeholders to provide them with relevant

information on various topics, to consider their views,

concerns and aspirations in business decisions,

and to enhance trust and partnerships.

Principle 5:

Governance & Culture

The NLB Group constantly strives to improve its

governance structures in the area of sustainability.

In 2025, the Sustainability Policy was upgraded. Following

core sustainability governance, all the activities are

regularly monitored through the Sustainability and

Climate Change Committees. Furthermore, the NLB Group

employees are obliged to take sustainability training at

least once a year. With this, we are strengthening our

commitment to the set goals and responding to the needs

arising from the daily operations of various stakeholders.

Principle 6:

Transparency & Accountability

The NLB Group reports on sustainability in line with

the EU Corporate Sustainability Reporting Directive

(CSRD) and the European Sustainability Reporting

Standards (ESRS).

Third-party limited assurance has been obtained

by KPMG.

PRB Targets overview

Target value

Target year

Paper consumption (number in thousand)

60,388

65,343

Share of electricity from zero-carbon sources

75%

Digital penetration (% of active digital users in total number of clients)

61.6

80

Green lending to corporates (large, SME) - outstanding stock in EUR million

954

1,370

Green lending to micro and private individuals - outstanding stock in EUR million

592

528

Net zero portfolio targets

Please see the targets and

its current values under

E1-4 Targets

related to climate change

mitigation and adaptation

Net-Zero

Number of young clients (18-27 years) with products related to long-term savings and/or investment plans

+15%

Number of age 27+ up to retired clients with products related to long-term savings and/or investment plans

+15%

Governance information

Independent Auditor’s report

396

Appendix 6: TCFD Index Table

The Appendix 6 is not subject to assurance.

As an issuer on the London Stock Exchange, NLB

discloses climate-related financial information related

to the NLB Group for the fourth time in reference to the

Task Force on Climate-Related Financial Disclosures

(TCFD) recommendations regarding (1) governance, (2)

business strategy, (3) risk management, (4) metrics and

targets. NLB acknowledges that this framework is fully

incorporated in the IFRS S1 (General Requirements for

Disclosure of Sustainability-Related Financial

Information) and IFRS S2 (Climate-Related Disclosures)

as of year-end 2023. For fiscal year 2025, NLB prepared

the Sustainability Statement in accordance with the

Corporate Social Responsibility Directive (CSRD) and the

ESRS (European Sustainability Reporting Standards),

which also incorporates elements of the TCFD

framework. In addition, the NLB Group has published

the Pillar III Disclosures, which is available on the NLB

Group website.

This content index provides to stakeholders the relevant

information on the TCFD disclosure location in the NLB

Group Sustainability Statement 2025 and the NLB Group

Pillar III Disclosures for the 2025.

RECOMMENDATIONS

Disclosure location in the NLB Group Sustainability Statement or Pillar III Disclosures for 2025

I.GOVERNANCE

a) The Board’s oversight of climate-related risks and opportunities

b) The Management’s role in assessing and managing climate-

related risks and opportunities

Sustainability Statement:

Governance, pages 185-193

Information provided to and sustainability matters addressed by the administrative, supervisory, and management bodies, page 193

Integration of sustainability-related performance in incentive schemes, pages 193- 198

II. STRATEGY

a) Describe the climate-related risks and opportunities the

organisation has identified over the short, medium, and long

term.

b) Describe the impact of climate-related risks and opportunities on

the organisation’s businesses, strategy, and financial planning.

c) Describe the resilience of the organisation’s strategy, taking into

consideration different climate-related scenarios, including a 2°C

or lower scenario.

Sustainability Statement:

Transition plan for climate change mitigation, pages 216-223

Material climate-related impacts, risks and opportunities and their interaction with strategy and business model, pages 224-233

Resilience analysis, page 224

Sustainable finance, pages 260–267

d) Banks should describe significant concentrations of credit

exposure to carbon-related assets.

Pillar III Disclosures:

Exposures to top 20 carbon-intensive firms

e) Additionally, banks should consider disclosing their climate-

related risks (transition and physical) in their lending and other

financial intermediary business activities.

Material climate-related impacts, risks and opportunities and their interaction with strategy and business model, pages 224-233

Pillar III Disclosures:

Exposures subject to physical risk

397

III. RISK MANAGEMENT

a) The organisation’s processes for identifying and assessing

climate-related risks

Material climate-related IROs and their interaction with strategy and business model, pages 224-233

Identification and assessment of material climate-related risks, pages 228–233

ESG risk management, pages 326–328

b) The organisation’s processes for managing climate-related risks

c) How processes for identifying, assessing, and managing climate-

related risks are integrated into the organisation’s overall risk

d) Banks should consider characterising their climate-related risks

in the context of traditional banking industry risk categories such

as credit risk, market risk, liquidity risk, and operational risk.

Banks should also consider describing any risk classification

frameworks used (e.g., the Enhanced Disclosure Task Force’s

framework for defining “Top and Emerging Risks”)

IV. METRICS

a) Disclose the metrics used by the organisation to assess climate-

related risks and opportunities in line with its strategy and risk

management process

Identification and assessment of material climate-related risks, pages 228-233

Alignment with the EU Taxonomy Regulation, pages 221-222

Appendix 1: EU Taxonomy - Regulatory disclosure requirement in accordance with article 8 of the EU Taxonomy Regulation, pages 336-382

b) Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse

gas (GHG) emissions and the related risks

Gross Scopes 1, 2, 3 and total GHG emissions, pages 255-259

c) Describe the targets used by the organisation to manage

climate-related risks and opportunities and performances

against targets.

Targets related to climate change mitigation and adaptation, pages 245-253

d) Banks should disclose GHG emissions for their lending

and other financial intermediary business activities where

data and methodologies allow. These emissions should

be calculated in line with the Global GHG Accounting and

Reporting Standard for the Financial Industry developed

by the Partnership for Carbon Accounting Financials

(PCAF Standard) or a comparable methodology.

· Credit quality of exposures

Discover how transparency and accuracy

guide the NLB Group, with detailed

financial insights, notes, and disclosures

on performance and operations.

FINANCIAL

FINANCIAL

REPORT

399

Independent Auditor’s Report

Statement of Management’s

Responsibility

Income Statement for the

Annual Period

Statement of Other

Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial

Contents

....................

401

.......

405

Income Statement for the

Annual Period Ended 31 December

...............

Statement of Other Comprehensive Income for the

Annual Period Ended 31 December

...............

407

Statement of Financial Position

as at 31 December

...............................

408

Statement of Changes in Equity for the

Statement of Cash Flows for the

412

Notes to the Financial Statements

................

414

1. General Information on Reporting Entity

.......

414

2. Summary of Material Accounting

Policy Information

.............................

414

2.1. Statement of compliance

.......................

414

2.2. Basis for preparation the financial statements. .

414

2.3. Functional and presentation currency

..........

2.4. Comparative amounts

.........................

2.5. Consolidation

..................................

2.6. Business combinations, goodwill,

and bargain purchases

. . . . . . . . . . . . . . . . . . . . . . . .

415

2.7. Investments in subsidiaries, associates,

and joint ventures

..............................

415

2.8. A combination of entities or businesses

under common control

.........................

416

2.9. Foreign currency translation

...................

416

2.10. Interest income and expenses

................

416

2.11. Fee and commission income and expenses . . . 417

2.12. Dividend income

.............................

417

2.13. Financial instruments

........................

417

2.14. Allowances for financial assets

420

2.15. Forborne loans

...............................

425

2.16. Repossessed assets

..........................

425

2.17. Offsetting

....................................

426

2.18. Sale and repurchase agreements

.............

426

2.19. Property and equipment

......................

426

2.20. Intangible assets

426

2.21. Investment properties

........................

2.22. Non-current assets and disposal groups

classified as held for sale

.....................

2.23. Accounting for leases

427

2.24. Cash and cash equivalents

...................

427

2.25. Borrowings, deposits, and issued debt securities

with characteristics of debt

. . . . . . . . . . . . . . . . . . .

427

2.26. Other issued financial instruments with

characteristics of equity

......................

428

2.27. Provisions

....................................

428

2.28. Contingent liabilities and commitments

.......

428

2.29. Taxes

.........................................

428

2.30. Fiduciary activities

...........................

429

2.31. Employee benefits

............................

429

2.32. Share-based payment transactions

..........

430

2.33. Share capital

.................................

430

2.34. Segment reporting

...........................

430

2.35. Critical accounting estimates and judgments

in applying accounting policies

..............

2.36. Implementation of the new and revised

International Financial Reporting Standards. . 433

3. Changes in the Composition of the NLB Group

. . 434

4. Notes to the Income Statement

. . . . . . . . . . . . . . .

436

4.1. Interest income and expenses

..................

436

4.2. Dividend income

4.3. Fee and commission income and expenses

....

4.4. Gains less losses from derecognition of financial

assets and liabilities not measured at fair value

through profit or loss

440

4.5. Gains less losses from financial assets and

liabilities held for trading

.......................

440

4.6. Gains less losses from non-trading

financial assets mandatorily at fair value

441

4.7. Foreign exchange translation gains less losses

441

4.8. Other operating income

442

4.9. Other operating expenses

.....................

442

4.10. Administrative expenses

443

4.11. Cash contributions to resolution funds

and deposit guarantee schemes

..............

444

4.12. Depreciation and amortisation

445

4.13. Gains less losses from modification of

financial assets

445

4.14. Provisions

445

4.15. Impairment charge

446

4.16. Income tax

...................................

447

4.17. Earnings per share

449

5. Notes to the Statement of Financial Position . . .

449

5.1. Cash, cash balances at central banks,

and other deposits on demand at banks

.......

449

5.2. Financial instruments held for trading

.........

450

5.3. Non-trading financial instruments

measured at fair value through profit or loss . . . 451

5.4. Financial assets measured at fair value

through other comprehensive income

452

5.5. Derivatives for hedging purposes

454

5.6. Financial assets measured at amortised cost. . . 458

5.7. Non-current assets held for sale

460

5.8. Property and equipment

461

5.9. Investment property

463

5.10. Intangible assets

464

5.11. Leases

.......................................

466

5.12. Investments in subsidiaries, associates,

and joint ventures

............................

469

5.13. Other assets

..................................

476

5.14. Movements in allowance for the impairment

of financial assets

477

400

Statement of Management’s

Responsibility

Annual Period

Statement of Other

Comprehensive Income

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial

5.15. Financial liabilities, measured at

amortised cost

488

5.16. Provisions

491

5.17. Deferred income tax

..........................

497

5.18. Income tax relating to components of

other comprehensive income

.................

500

5.19. Other liabilities

500

5.20. Share capital

.................................

5.21. Other equity instruments issued

501

5.22. Accumulated other comprehensive income

and reserves

5.23. Capital adequacy ratios

503

5.24. Off-balance sheet liabilities

..................

505

5.25. Funds managed on behalf of third parties

....

507

6. Risk Management

508

6.1.

Credit risk management

511

6.2. Market risk

534

6.3. Liquidity risk

541

6.4. Management of non-financial risks

............

555

6.5. Fair value hierarchy of financial and

non-financial assets and liabilities

.............

556

6.6. Environmental and climate-related risks

.......

567

6.7. Offsetting financial assets

and financial liabilities

567

7. Analysis by Segment for NLB Group

........... .

569

8. Related-Party Transactions

.................. .

573

9. Events after the Reporting Date

............... .

582

401

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pridržane.

vpis v sodni register: Okrožno sodišče v Ljubljani

št. reg. vl.: 061/12062100

osnovni kapital: 54.892,00 EUR

ID za DDV: SI20437145

matična št.: 5648556000

Independent Auditor's Report

To the shareholders of NOVA LJUBLJANSKA BANKA D.D., Ljubljana

Report on the Audit of the Separate and Consolidated Financial Statements

Opinion

We have audited the separate financial statements of NOVA LJUBLJANSKA BANKA D.D., Ljubljana

(the “

Bank”) and the consolidated financial statements of the Bank

and its subsidiaries (collectively, the

“Group”), which comprise:

the separate and consolidated statements of financial position as at 31 December 2025

and, for the year

from 1 January to 31 December 2025:

the separate and consolidated statements of profit or loss

the separate and consolidated statements of

other

comprehensive income

the separate and consolidated statements of changes in equity;

the separate and consolidated statements of cash flows;

notes,

comprising material accounting policies and other explanatory information

("the separate and consolidated financial statements”)

In our opinion, the accompanying separate and consolidated financial statements give a

true and fair

view of the unconsolidated and consolidated financial position, respectively, of the Bank

and the Group

as at 31 December 2025, and of their respective unconsolidated and consolidated financial

performance and unconsolidated and consolidated cash flows for the year then ended in accordance

with International Financial Reporting Standards as adopted by the European Union (“IFRS EU

”).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (

“ISAs”) and

Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on

specific requirements regarding statutory audit of public

interest entities (OJ L 158, 27 May 2014, p.

77

112

– “

Regulation (EU) No 537/2014

”

). Our responsibilities under those standards are further

described in the Auditor’s Responsibilities for the Audit of the Separate and Consolidated Financial

Statements section of our report.

We are independent of the Bank

and the Group in accordance with International Ethics Standards

Board for Accountants’

International Code of Ethics for Professional Accountants (including

International Independence Standards) (

“

IESBA Code

”),

as applicable to audits of the separate and

consolidated financial statements of public interest entities

together with the ethical requirements that

are relevant to our audit of the separate and consolidated financial statements in the Republic of

and we have fulfilled our other ethical responsibilities in accordance with these requirements

and the IESBA Code. We believe that

the audit evidence we have obtained is sufficient and

appropriate to provide a

basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in

our audit of the separate and consolidated financial statements of the current period. These matters

were addressed in the context of our audit of the separate and consolidated financial statements as

a

whole, and in forming our opinion thereon, and we do not provide a

separate opinion on these

matters.

Impairment of loans and receivables from customers

As at 31 December 2025, the gross carrying amount of loans and advances to customers of the

Bank and the Group, respectively: EUR 9,736,014

thousand and EUR 19,093,449

thousand; related

impairment allowance of the Bank and the Group, respectively: EUR 185,521

thousand and EUR

387,975

thousand and related impairment loss recognised in the income statement in the year then

ended, for the Bank and the Group, respectively: EUR 50,539 thousand and EUR 51,869

thousand

(31 December 2024: the gross carrying amount of loans and advances to customers of the Bank and

the Group, respectively: EUR 8,811,061 thousand and EUR 16,721,410 thousand; related

impairment allowance of the Bank and the Group, respectively: EUR 157,713 thousand and EUR

357,761 thousand and related impairment loss recognised in the income statement

for the Bank and

the Group, respectively: EUR 41,348 thousand and EUR 31,431 thousand).

Refer to the Note 2.14. Allowances for financial assets, Note 2.35. Critical accounting estimates and

judgments in applying accounting policies, Note 4.15. Impairment charge, Note 5.6. Financial assets

measured at amortised cost, Note 5.14. Movements in allowance for the impairment of financial

assets and Note 6.1. Credit risk management

The key audit matter

How the matter was addressed in our audit

Allowances for impairment represent the

Management Board’s best estimate of the

expected credit losses (“ECLs”) within loans and

advances to customers (“loans”, “exposures”)

measured at amortized cost at the reporting date.

We focused on this area as the measurement of

allowances for impairment requires the

Management Board to make complex and

subjective assumptions and judgements.

The Bank and the Group calculate allowances for

credit losses in accordance with IFRS 9 Financial

Instruments, based on the ECL model under the

general approach, based on which the

impairment allowance is measured as either 12

month expected credit losses or lifetime

expected credit losses, depending on whether or

not there has been a significant increase in credit

risk since initial recognition.

ECLs for performing exposures (Stage 1 and

Stage 2 in the IFRS 9 Financial instruments

hierarchy) and for non

performing

(Stage 3)

exposures not exceeding EUR 0.5 million for

corporate exposures and EUR 0.1 million for

retail exposures, are determined by modelling

techniques

relying on key parameters such as

the probability of default (PD), exposure at

default (EAD), credit conversion factor (CCF) and

loss given default (LGD), taking into account

historical experience, identification of exposures

Our audit procedures in this area, performed,

where applicable, with the assistance of our own

financial risk management (FRM) and

information technology (IT) audit specialists,

included, among others:



Inspecting the Bank’s and the Group’s ECL

impairment

provisioning

methods

models, and assessing their compliance with

the requirements of the relevant regulatory

and financial reporting frameworks;



Making relevant inquiries of the Bank’s and

the Group’s risk management and

information technology (IT) personnel to gain

an understanding of the loan impairment

process, IT applications used therein, as well

as key data sources and assumptions in the

ECL model. Also, testing of IT control

environment for data security and access,

assisted by our own IT specialists;



Testing the design, implementation and

operating effectiveness of selected controls in

the process of approval, recording and

monitoring of loans, including, but not limited

to,

those

relating

to

credit

rating

classification, calculation of days past d

ue,

collateral valuations and estimation of ECLs;



Challenging the appropriateness of the Bank’s

and the Group’s application of the significant

increase in credit risk assumption and

402

with a significant increase in credit risk (SICR),

forward

looking information and management

judgment (together “collective impairment

allowance”).

ECLs for Stage 3 loans whose amounts exceed

EUR 0.5 million for corporate exposures and

EUR 0.1 million for retail exposures, are

determined on an individual basis by means of a

discounted cash flows analysis. The process

involves subjectivity and reliance

on a number of

significant assumptions, including those in

respect of the expected proceeds from the sale

of the related collaterals and minimum period for

collateral disposal.

Due to the above factors, including the

significantly higher estimation uncertainty

stemming from the current volatile economic

outlook, slowing economic growth and rising

interest rates we considered allowance for

impairment of loans and advances to customers

to be associated with a significant risk of material

misstatement in the consolidated and separate

financial statements. Therefore, the area

required our increased attention in the audit and

as such was determined to be a key audit matter.

definition of default; and classification of

exposures

into

performing

non

For collective impairment allowance:



Obtaining an understanding of the key internal

rating models for loans, and assessing the

relevance and reliability of the key data used

therein;

Obtaining the forward

looking information and

key macroeconomic forecasted variables

used in the ECL assessment.

Independently

assessing the information by reference to

publicly available data and corroborating

inquiries of the Management Board;

Assisted

by

our

own

financial

risk

management specialist, challenging selected

key parameters within the collective ECL

model, such as PD and LGD by reference to,

among other things, our own analysis of the

Bank’s

and the Group’s data on past default

occurrence and realised losses on those

defaults;

Evaluating key overlays applied to the ECL

model, by reference to our knowledge of the

industry and our understanding of the current

macro

economic situation;

For a risk

based sample of exposures

critically assessing the existence of any

triggers for classification to Stage 2 or Stage

3, by reference to the underlying evidence

(loan files), through inquiries of the loan

officers

credit

risk

person

nel and by considering business

operations of the respective customers as well

as market conditions and historical debt

service.

For impairment allowances calculated

individually, for a risk

based sample of Stage 3

loans:

challenging the Bank’s and the Group’s cash

flow projections and key assumptions used,

by reference to our knowledge of the relevant

industry and of the borrower.

challenging

collateral

valuations

by

inspecting the underlying valuation reports

obtained by the Bank and the Group, and also

by reference to publicly available data;

For all impairment allowances:

Critically

assessing

overall

reasonableness

of

allowances

for

impairment, including the loans provision

coverage, by benchmarking them against

publicly available industry data;

Examining whether the Bank’s and Group’s

loan

impairment

credit

risk

-related

disclosures in the separate and consolidated

financial statements appropriately address

the relevant quantitative and qualitative

requirements of the applicable financial

repo

rting framework

Other Information

Management is responsible for the other information. The other information comprises the “Overview”

“Business Report”,

“NLB Group Directory” and

“Definitions and Glossary of Selected

Terms” included in the Annual Report but does not include the separate and consolidated financial

statements and our auditor’s report thereon.

Other information was obtained prior to the date of this

auditor's report, except for the Report of the Supervisory Board, which will be available after that date.

Our opinion on the separate and consolidated financial statements does not cover the other

information and, except to the extent otherwise explicitly stated in our report, we do not express any

form of assurance conclusion thereon

as part of our engagement to audit the separate and

consolidated financial statements

We have performed a limited assurance engagement on the Sustainability Statement that forms part

of the other information and provided a separate unmodified assurance practitioner’s conclusion

thereon that is included within the other information.

In connection with our audit of the separate and consolidated financial statements, our responsibility is

to read the

other information and, in doing so, consider whether the other information is materially

inconsistent with the separate and consolidated financial statements or our knowledge obtained in the

audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of

this auditor's report,

we conclude that there is a

material misstatement of this other information, we are

required to report that fact. We have nothing to report in this regard.

Other Reporting Responsibilities Related to Other Information – Business Report

In addition, with respect to the Business Report, we are required to report on its consistency with the

separate and consolidated financial statements and on whether the Business Report includes the

disclosures required by the Companies Act dated 4 May 2006 (Official Gazette of the Republic of

Slovenia no. 42/2006 with amendments

hereafter referred to as

the applicable legal requirements

”)

excluding the requirements relevant for Sustainability Statement. Based solely on the work required to

be undertaken

in the course of the audit of the separate and consolidated financial statements and the

procedures above, in our opinion:

the information given in the Business Report for the financial year for which the separate and

consolidated financial statements are prepared is consistent, in all material respects, with the

separate and consolidated financial statements; and

the Business Report has been prepared in accordance with the applicable legal requirements

excluding the requirements relevant for the

s

ustainability reporting

In addition, in light of the knowledge and understanding of the Bank

and the Group and its

environment obtained in the course of our audit, we are required to report if we have identified material

misstatements in other information that we obtained prior to the date of this auditor's report. We have

nothing to report in this regard

403

Responsibilities of Management and Those Charged with Governance for the Separate and

Consolidated Financial Statements

Management is responsible for the preparation of the separate and consolidated financial statements

that give a

true and fair view in accordance with IFRS EU, and for such internal control as

management determines is necessary to enable the preparation of separate and consolidated

financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the separate and consolidated financial statements, management is responsible for

assessing the Bank’s and the Group's ability to continue as a

going concern, disclosing, as applicable,

matters related to going concern and using the going concern basis of accounting unless management

either intends to liquidate the Bank

or the Group or to cease operations, or has no realistic alternative

but to do so.

Those charged with governance are responsible for overseeing the Bank’s and the Group’s financial

reporting process.

Auditor's Responsibilities for the Audit of the Separate and Consolidated Financial

Our objectives are to obtain reasonable assurance about whether the separate and consolidated

financial statements as a

whole are free from material misstatement, whether due to fraud or error,

and to issue an auditor

’s report that includes our opinion. Reasonable assurance is a

high level of

assurance, but

is not a

guarantee that an audit conducted in accordance with ISAs and EU Regulation

(EU) No 537/2014 will always detect a

material misstatement when it exists. Misstatements can arise

from fraud or error and are considered material if, individually or in

the aggregate, they could

reasonably be expected to influence the economic decisions of users taken on the basis of these

separate and consolidated financial statements.

As part of an audit in accordance with ISAs and EU Regulation (EU) No 537/2014, we exercise

professional judgment and maintain professional s

k

epticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the separate and consolidated financial

statements, whether due to fraud or error, design and perform audit procedures responsive to

those risks, and obtain audit evidence that is sufficient and app

ropriate to provide a

basis for our

opinion. The risk of not detecting a

material misstatement resulting from fraud is higher than for

one resulting from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control;

Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the Bank’s and the Group's internal control;

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management;

Conclude on the appropriateness of management’s use of the going concern basis of accounting

and, based on the audit evidence obtained, whether a

material uncertainty exists related to events

or conditions that may cast significant doubt on the Bank’s and the Group’s ability to continue as

a

going concern. If we conclude that a

material uncertainty exists, we are required to draw

attention in our auditor

’s report to the related disclosures in the separate and consolidated

financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions

are based on the audit evidence obtained up to the date of our auditor’s report. However, future

events or conditions may cause the Bank

or the Group to cease to continue as a

going concern;

Evaluate the overall presentation, structure and content of the separate and consolidated financial

statements, including the disclosures, and whether the separate and consolidated financial

statements represent the underlying transactions and events in a

manner that achieves fair

presentation;

P

lan and perform the group audit to obtain sufficient appropriate audit evidence regarding the

financial information of the entities or business units within the Group as a

basis for forming an

opinion on the group financial statements. We are responsible for the direction, supervision and

review of the audit work performed for purposes of the group audit. We remain solely responsible

for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned

scope and timing of the audit and significant audit findings, including any significant deficiencies in

internal control that we identify during our audit.

We also provide those charged with governance with a

statement that we have complied with relevant

ethical requirements regarding independence, and communicate with them all relationships and other

matters that may reasonably be thought to bear on our independence, and where applicable, actions

taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters

that were of most significance in the audit of the separate and consolidated financial statements of the

current period and are therefore the key audit matters. We

describe these matters in our auditor’

s

report unless law or regulation precludes public disclosure about the matter or when, in extremely rare

circumstances, we determine that a

matter should not be communicated in our report because the

adverse consequences of doing so would reasonably be expected to outweigh the public interest

benefits of such communication.

Report on Other Legal and Regulatory Requirements

Information Required by Regulation (EU) No. 537/2014 of the European Parliament and the

Council

Appointment of Auditor and Period of Engagement

We have been appointed to audit the annual separate and consolidated financial statements of the

Bank

and the Group

by the shareholders of the Bank on the shareholders meeting dated 20 June

. Our period of total uninterrupted engagement is 3

years, covering the periods ended

December 2023 to 31

December 2025.

Consistency with Additional Report to Audit Committee

We confirm that our audit opinion is consistent with the additional report to the Audit Committee.

Non-audit Services

We declare that no prohibited non

audit services referred to in Article 5 (1) of Regulation (EU) No.

537/2014 of the European Parliament and of the Council were provided and that we remained

independent in conducting the audit.

Independent Auditor's Report on the Compliance of the Electronic Separate and

Consolidated Financial Statements with the Delegated Regulation 2019/815 on a Single

Electronic Reporting Format (“ESEF”)

We have conducted an engagement to provide reasonable assurance as to whether the audited

separate and consolidated financial statements of the Bank

and the Group for the financial year ended

(respectively, “Audited Separate Financial Statements” and “Audited Consolidated

Financial Statements” and, collectively, “Audited Separate and Consolidated Financial Statements”)

have been prepared in accordance with requirements of the Commission Delegated Regulation (EU)

2019/815 of 17 December 2018

on supplementing the Directive 2004/109/EC of the European

Parliament and the Council with regard to regulatory technical standards for establishing a

single

electronic reporting format applicable for

financial

year

ended 31 December

(“

Delegated

Regulation

”).

404

Responsibilities of Management and Those Charged with Governance

Management is responsible for the preparation and presentation of the Audited Separate and

Consolidated Financial Statements in accordance with the Delegated Regulation, and for such internal

control as management determines is necessary to enable the preparation of the Audited Separate

and Consolidated Financial Statements that are free from material misstatement, whether due to fraud

or error.

Those charged with governance are responsible for overseeing the preparation of the Audited

Separate and Consolidated Financial Statements in compliance with requirements of the Delegated

Regulation.

Auditor’s Responsibilities

Our

responsibility

is to express an opinion on whether the Audited Separate and Consolidated

Financial Statements are prepared in accordance with requirements of the Delegated Regulation. We

conducted our assurance engagement in accordance with the International Standard on

Assurance

Engagements (ISAE) 3000 Revised,

Assurance Engagements Other than Audits or Reviews of

Historical Financial Information

issued by the International Auditing and Assurance Standards Board.

That standard requires that we plan and perform our procedures to obtain reasonable assurance

about whether the separate and consolidated financial statements in the ESEF format are properly

prepared and presented in accordance with the requirements of the

Delegated Regulation, in all

material respects.

We have acted in accordance with the independence and ethical requirements of the EU Regulation

537/2014 and the International Code of Ethics for Professional Accountants (including International

Independence Standards) issued by the International Ethics Standards Board of Accountants (

IESBA

Code

”

), together with the ethical requirements that are relevant to our assurance engagements in

Slovenia. The Code is based on the fundamental principles of integrity, objectivity, professional

competence and due care, confidentiality and professional conduct

Our

firm applies International Standard on Quality Management (ISQM) 1,

Quality Management for

Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related

Services Engagements

issued by the IAASB. This standard

requires the firm to design, implement

and operate a

system of quality management including policies or procedures regarding compliance

with ethical requirements, professional standards and applicable legal and regulatory requirements.

Summary of the Work Performed

Within the scope of our work, we performed the following

procedures:

identified and assessed the risks of material non

compliance of the Audited Separate and

Consolidated Financial Statements with the requirements of the Delegated Regulation, whether

due to error or fraud;

obtained an understanding of internal control relevant to the engagement in order to provide

reasonable assurance for designing procedures that are appropriate in the circumstances, but not

for the purpose of expressing an opinion on the effectiveness of internal control;

assessed whether the Audited Separate Financial Statements are prepared in a

n appropriate

XHTML format

assessed whether the Audited Consolidated Financial Statements comply with the requirements of

the Delegated Regulation applicable as of the reporting date;

obtained reasonable assurance that the Audited Consolidated Financial Statements of the issuer

are presented in a appropriate

XHTML electronic format;

obtained reasonable assurance that the values and disclosures in the Audited Consolidated

Financial Statements in XHTML format are correctly marked and in Inline XBRL (iXBRL)

technology and that their machine reading provides complete and accurate information contained

in the Audited Consolidated Financial Statements; and

obtained reasonable assurance that notes to the consolidated financial statements are

appropriately

block

tagged.

We believe that the evidence obtained provides a

sufficient and appropriate basis for our opinion.

Opinion

Based on the procedures performed and the evidence obtained, the Audited Separate and

Consolidated Financial Statements of the Bank

and the Group for the financial year ended 31

December 2025

are in our opinion prepared, in all material respects, in accordance with the

requirements of the Delegated Regulation.

On behalf of audit firm

KPMG SLOVENIJA,

podjetje za revidiranje, d.o.o.

Domagoj Vuković, FCCA

Certified Auditor

Partner

Ljubljana, 8

April 2026

405

The Management Board hereby confirms its

responsibility for preparing the consolidated financial

statements of the NLB Group and the financial

statements of NLB for the year ending on 31 December

2025, and for the accompanying accounting policies and

notes to the financial statements.

The Management Board is responsible for the

preparation and fair presentation of these financial

statements in accordance with the International

Financial Reporting Standards as adopted by the

European Union, and with the requirements of the

Slovenian Companies Act and the Banking Act so as to

give a true and fair view of the financial position of the

NLB Group and NLB as at 31 December 2025, and their

financial results and cash flows for the year then ended.

The Management Board also confirms that the

appropriate accounting policies were consistently

applied, and that the accounting estimates were

prepared according to the principles of prudence and

good management. The Management Board further

confirms that the financial statements of the NLB Group

and NLB, together with the accompanying notes, have

been prepared on a going-concern basis for the NLB

Group and NLB, and in line with valid legislation and the

International Financial Reporting Standards as adopted

by the European Union.

The Management Board is also responsible for

appropriate accounting practices, the adoption of

appropriate measures for safeguarding assets, and

the prevention and identification of fraud and other

irregularities or illegal acts.

Income Statement for the Annual Period Ended 31 December

in EUR thousands

Interest income calculated using the effective interest method

1,097,292

1,112,288

575,389

602,004

Other interest and similar income

139,727

95,350

53,164

44,926

Interest and similar income

4.1.

1,237,019

1,207,638

628,553

646,930

Interest expenses calculated using the effective interest method

(251,707)

(232,863)

(171,131)

(174,429)

Other interest and similar expenses

(38,617)

(40,614)

(38,189)

(40,621)

Interest and similar expenses

4.1.

(290,324)

(273,477)

(209,320)

(215,050)

946,695

934,161

419,233

431,880

4.2.

191

116

232,187

223,579

Fee and commission income

4.3.

469,467

435,284

207,114

191,911

Fee and commission expenses

4.3.

(126,824)

(122,360)

(48,282)

(47,222)

342,643

312,924

158,832

144,689

Gains less losses from derecognition of financial assets and liabilities

not measured at fair value through profit or loss

4.4.

2,109

(160)

(484)

2,503

Gains less losses from financial assets and liabilities held for trading

4.5.

26,264

33,229

786

9,979

Gains less losses from non-trading financial assets mandatorily at fair value through profit or loss

4.6.

788

3,263

1,364

3,848

Gains less losses from financial liabilities measured at fair value through profit or loss

(4,574)

(2,903)

(2,962)

(1,572)

Gains less losses from hedge accounting

5.5.a)

(1,963)

(1,411)

(1,823)

(1,403)

Foreign exchange translation gains less losses

4.7.

11,256

(3,644)

5,684

(3,547)

Net gains or losses on derecognition of investments in subsidiaries, associates and joint ventures

719

189

Gains less losses on derecognition of non-financial assets

6,703

3,032

526

(213)

Other operating income

4.8.

28,427

21,849

13,834

14,574

Other operating expenses

4.9.

(7,347)

(11,829)

(3,417)

(3,908)

Administrative expenses

4.10.

(589,563)

(543,995)

(308,998)

(288,442)

Cash contributions to resolution funds and deposit guarantee schemes

4.11.

(44,134)

(40,213)

(12,013)

(10,793)

4.12.

(68,449)

(58,217)

(25,109)

(24,016)

Gains less losses from modification of financial assets

4.13.

(198)

(4,280)

Provisions for credit losses

4.14.

1,616

10,728

(1,221)

8,701

Provisions for other liabilities and charges

4.14.

(14,041)

(12,847)

(11,481)

(7,149)

Impairment of financial assets

4.15.

(48,191)

(31,306)

(48,110)

(40,690)

Impairment of non-financial assets

4.15.

(4,014)

45,498

53,524

Share of profit from investments in associates and joint ventures

(accounted for using the equity method)

5.12.e)

1,455

2,990

Gains less losses from non-current assets held for sale

2,579

676

194

446

Profit before income tax

593,366

608,149

462,709

511,990

4.16.

(74,675)

(77,916)

(35,791)

(33,829)

Profit for the year

518,691

530,233

426,918

478,161

Attributable to owners of the parent

503,055

514,552

426,918

478,161

Attributable to non-controlling interests

15,636

15,681

Earnings per share (in EUR per share)

4.17.

25.2

25.7

21.3

23.9

Diluted earnings per share (in EUR per share)

4.17.

25.2

25.7

21.3

23.9

The notes are an integral part of these financial statements.

407

Statement of Other Comprehensive Income for the Annual Period Ended 31 December

in EUR thousands

Net profit for the year after tax

518,691

530,233

426,918

478,161

Other comprehensive income after tax

19,372

56,704

17,699

25,968

Items that will not be reclassified to income statement

Actuarial gains/(losses) on defined benefit pensions plans

5.16.c)

(1,307)

356

(860)

Fair value changes of equity instruments measured at fair

value through other comprehensive income

5.4.c)

1,168

9,423

1,590

2,162

Share of other comprehensive income/(losses) of entities accounted for using the equity method

66

Income tax relating to components of other comprehensive income

5.18.

(309)

(1,433)

(389)

(476)

Items that have been or may be reclassified subsequently to income statement

Foreign currency translation

(3,232)

3,178

Translation gains/(losses) taken to equity

(3,232)

3,178

Debt instruments measured at fair value through other comprehensive income

27,066

57,414

32,233

Valuation gains/(losses) taken to equity

5.4.c)

28,784

55,781

20,739

31,825

Transferred to income statement

4.4., 4.15.

(1,718)

1,633

(37)

408

Income tax relating to components of other comprehensive income

5.18.

(5,396)

(10,589)

(4,560)

(7,091)

Total comprehensive income for the year after tax

538,063

586,937

444,617

504,129

522,383

571,081

444,617

504,129

15,680

15,856

The notes are an integral part of these financial statements.

408

Statement of Financial Position as at 31 December

Cash, cash balances at central banks, and other deposits on demand at banks

5.1.

4,371,798

4,039,581

2,220,649

1,973,113

Financial assets held for trading

5.2.a)

4,552

18,338

6,302

21,073

Non-trading financial assets mandatorily at fair value through profit or loss

5.3.a)

21,706

17,429

23,543

19,135

Financial assets measured at fair value through other comprehensive income

5.4.

2,744,384

2,563,516

2,093,239

1,665,019

Financial assets measured at amortised cost

- debt securities

5.6.a)

4,317,154

3,725,195

3,146,795

2,846,779

- loans and advances to banks

5.6.b)

404,532

458,921

322,150

193,172

- loans and advances to customers

5.6.c)

18,705,474

16,363,649

9,550,493

8,653,348

- other financial assets

5.6.d)

170,741

136,854

81,530

81,518

5.5.b)

85,114

77,771

85,114

77,771

Fair value changes of the hedged items in portfolio hedge of interest rate risk

5.5.c)

(13,768)

(6,353)

(15,113)

(8,761)

Investments in subsidiaries

5.12.a)

1,262,826

1,179,757

Investments in associates and joint ventures

5.12.d)

14,137

14,661

4,293

4,823

Tangible assets

5.8.

331,255

310,017

103,541

91,320

5.9.

24,370

26,132

5,331

5,599

5.10.

115,871

100,496

46,645

44,424

Current income tax assets

604

Deferred income tax assets

5.17.

108,251

120,701

101,365

106,327

5.13.

63,856

56,819

20,255

17,825

Non-current assets held for sale

5.7.

5,378

11,036

2,052

2,849

28,035,367

19,061,010

16,975,091

Financial liabilities held for trading

5.2.b)

4,555

6,995

6,204

9,977

Financial liabilities measured at fair value through profit or loss

5.3.b)

13,648

9,633

8,587

5,597

Financial liabilities measured at amortised cost

- deposits from banks and central banks

5.15.a)

98,758

136,000

151,736

220,120

- borrowings from banks and central banks

5.15.b)

166,775

120,612

47,711

51,106

- due to customers

5.15.a)

24,509,880

22,206,310

13,449,865

12,293,708

- borrowings from other customers

5.15.b)

113,216

104,519

293

- debt securities issued

5.15.c)

2,099,220

1,608,939

2,099,220

1,608,939

- other financial liabilities

5.15.d)

362,649

296,725

162,813

145,802

5.5.b)

2,898

3,592

1,461

1,261

5.16.

100,236

104,388

44,274

41,646

Current income tax liabilities

20,969

18,026

6,440

4,328

Deferred income tax liabilities

5.17.

425

17,694

5.19.

121,269

103,889

79,289

66,998

Total liabilities

27,614,498

24,737,322

16,057,893

14,449,482

Equity and reserves attributable to owners of the parent

Share capital

5.20.

200,000

200,000

200,000

200,000

Share premium

5.22.a)

871,378

871,378

871,378

871,378

Other equity instruments

5.21.

386,107

84,184

386,107

84,184

Accumulated other comprehensive income

5.22.b)

(314)

(19,642)

7,351

(10,348)

Profit reserves

5.22.a)

186,332

186,332

186,332

186,332

Retained earnings

2,138,073

1,903,708

1,351,949

1,194,063

3,781,576

3,225,960

3,003,117

2,525,609

78,758

72,085

3,860,334

3,298,045

3,003,117

2,525,609

28,035,367

409

The Management Board of NLB has authorised

the issue of the financial statements and the

accompanying notes.

Statement of Changes in Equity for the Annual Period Ended 31 December

Accumulated other

comprehensive income

Share

capital

premium

Other equity

instruments

Fair value

reserve of

financial

assets

measured at

FVOCI

Foreign

currency

translation

reserve

Profit

reserves

Retained

earnings

attributable

to owners of

the parent

attributable

to non-

controlling

interests

equity

5.20.

5.22.a)

5.21.

5.22.b)

5.22.b)

5.22.b)

5.22.a)

Balance as at

1 January 2025

200,000

871,378

84,184

(5,536)

(11,366)

(2,740)

186,332

1,903,708

3,225,960

72,085

3,298,045

- Net profit for the year

503,055

503,055

15,636

518,691

- Other comprehensive

22,498

(3,234)

64

19,328

19,372

Total comprehensive

income after tax

22,498

(3,234)

64

503,055

522,383

15,680

538,063

Dividends

(257,200)

(257,200)

(8,665)

(265,865)

Other equity

instruments issued

300,000

300,000

300,000

1,923

(11,490)

(9,567)

(342)

(9,909)

Balance as at

386,107

16,962

(14,600)

(2,676)

2,138,073

3,781,576

78,758

3,860,334

Accumulated other

capital

premium

instruments

Fair value

reserve of

financial

assets

measured at

FVOCI

Foreign

currency

translation

reserve

Profit

reserves

Retained

earnings

to owners of

the parent

to non-

controlling

interests

equity

5.20.

5.22.a)

5.21.

5.22.b)

1 January 2024

84,178

(60,019)

(14,588)

(1,511)

13,522

1,789,890

2,882,850

65,140

2,947,990

- Net profit for the year

514,552

514,552

15,681

530,233

- Other comprehensive

54,541

3,222

(1,234)

56,529

175

56,704

Total comprehensive

income after tax

54,541

3,222

(1,234)

514,552

571,081

15,856

586,937

Dividends

(220,000)

(220,000)

(8,911)

(228,911)

Transfer to profit

reserves

172,810

(172,810)

Transfer of fair

values reserve

(58)

(7,977)

(7,971)

(7,971)

84,184

(5,536)

(11,366)

(2,740)

1,903,708

3,225,960

72,085

3,298,045

411

capital

premium

financial assets

FVOCI

Profit

reserves

Retained

earnings

equity

5.20.

5.21.

5.20.

Balance as at 1 January 2025

84,184

(8,283)

(2,065)

1,194,063

2,525,609

426,918

- Other comprehensive income

17,382

317

17,699

Total comprehensive income after tax

17,382

317

444,617

Dividends

(257,200)

(257,200)

Other equity instruments issued

300,000

300,000

1,923

(11,832)

(9,909)

Balance as at 31 December 2025

386,107

9,099

(1,748)

1,351,949

3,003,117

capital

premium

FVOCI

Profit

reserves

Retained

earnings

equity

5.21.

Balance as at 1 January 2024

84,178

(35,111)

(1,205)

13,522

1,116,689

2,249,451

478,161

- Other comprehensive income

26,828

(860)

25,968

Total comprehensive income after tax

26,828

(860)

504,129

Dividends

(220,000)

(220,000)

Merger of subsidiary

172,810

(172,810)

(7,977)

(7,971)

Balance as at 31 December 2024

(8,283)

(2,065)

1,194,063

2,525,609

412

Statement of Cash Flows for the Annual Period Ended 31 December

					in EUR thousands
		NLB Group		NLB
	Notes	2025	2024	2025	2024
Cash flows from operating activities
Interest received		1,205,860	1,176,909	599,420	625,877
Interest paid		(270,443)	(237,651)	(199,261)	(197,468)
Dividends received		2,213	963	222,130	213,425
Fee and commission receipts		469,708	434,272	203,289	186,775
Fee and commission payments		(124,921)	(123,432)	(47,781)	(47,382)
Realised gains from financial assets and financial liabilities not at fair value through profit or loss		2,647	455	53	-
Net gains/(losses) from financial assets and liabilities held for trading		28,694	33,491	2,376	8,783
Payments to employees and suppliers		(609,419)	(502,249)	(316,315)	(243,299)
Other receipts		29,902	17,878	14,656	12,295
Other payments		(62,528)	(63,387)	(23,300)	(15,448)
Income tax (paid)/received		(69,662)	(88,128)	(22,002)	(36,790)
Cash flows from operating activities before changes in operating assets and liabilities		602,051	649,121	433,265	506,768
(Increases)/decreases in operating assets		(2,609,162)	(2,824,264)	(1,476,966)	(2,148,023)
Net (increase)/decrease in trading assets		9,338	(9,138)	9,338	(9,138)
Net (increase)/decrease in non-trading financial assets mandatorily at fair value through profit or loss		(4,055)	1,191	(3,646)	998
Net (increase)/decrease in financial assets measured at fair value through other comprehensive income		(180,174)	(240,602)	(405,666)	(595,088)
Net (increase)/decrease in loans and receivables measured at amortised cost		(2,388,001)	(2,562,328)	(1,074,026)	(1,542,445)
Net (increase)/decrease in other assets		(46,270)	(13,387)	(2,966)	(2,350)
Increases/(decreases) in operating liabilities		2,455,296	1,380,011	1,146,745	373,482
Net increase/(decrease) in financial liabilities measured at fair value through profit or loss		(2,891)	-	(1,679)	-
Net increase/(decrease) in deposits and borrowings measured at amortised cost		2,437,569	1,378,653	1,130,052	371,637
Net increase/(decrease) in other liabilities		20,618	1,358	18,372	1,845
Net cash flows from operating activities		448,185	(795,132)	103,044	(1,267,773)
Cash flows from investing activities
Receipts from investing activities		1,241,489	739,185	302,568	159,890
Proceeds from sale of property, equipment, and investment property		46,262	16,310	2,899	2,510
Proceeds from sale of subsidiaries, net of cash equivalents and decrease in subsidiaries’ equity	3.	-	-	8,577	-
Proceeds from sale of associates and joint ventures		720	-	720	-
Proceeds from non-current assets held for sale		10,455	2,045	991	1,893
Proceeds from maturity/disposals of debt securities measured at amortised cost		1,184,052	720,830	289,381	155,487
Payments from investing activities		(1,866,139)	(2,077,402)	(633,361)	(1,184,301)
Purchase of property, equipment, and investment property		(51,793)	(43,452)	(23,578)	(14,920)
Purchase of intangible assets		(34,989)	(29,122)	(14,657)	(19,620)
Purchase of subsidiaries, net of cash acquired and increase in subsidiaries’ equity	3., 5.12.b, c)	-	(103,926)	(2,296)	(130,545)
Purchase of debt securities measured at amortised cost		(1,779,357)	(1,900,902)	(592,830)	(1,019,216)
Net cash flows from investing activities		(624,650)	(1,338,217)	(330,793)	(1,024,411)
Cash flows from financing activities
Proceeds from financing activities		797,052	795,958	797,052	795,958
Issuance of subordinated bonds	5.15.c)	-	298,611	-	298,611
Issuance of senior preferred notes	5.15.c)	497,052	497,347	497,052	497,347
Issuance of ordinary shares and other equity instruments	5.21.	300,000	-	300,000	-
Payments from financing activities		(287,412)	(807,886)	(315,247)	(812,061)
Dividends paid		(265,847)	(228,679)	(257,200)	(220,000)
Repayments of subordinated debt	5.15.c)	(10,500)	(270,659)	(10,500)	(270,659)
Repayment of senior preferred notes	5.15.c)	-	(300,000)	-	(300,000)
Payments related to purchase of other equity instruments of subsidiaries		-	-	(43,846)	(19,930)
Other payments related to financing activities		(1,937)	-	(1,937)	-
Lease payments		(9,128)	(8,548)	(1,764)	(1,472)
Net cash flows from financing activities		509,640	(11,928)	481,805	(16,103)
Effects of exchange rate changes on cash and cash equivalents		(7,902)	6,788	577	(1,904)
Net increase/(decrease) in cash and cash equivalents		333,175	(2,145,277)	254,056	(2,308,287)
Cash and cash equivalents at beginning of year		4,498,650	6,637,139	2,013,308	4,323,499
Cash and cash equivalents at end of year		4,823,923	4,498,650	2,267,941	2,013,308

413

					in EUR thousands
		NLB Group		NLB
	Notes	31 Dec 2025	31 Dec 2024	31 Dec 2025	31 Dec 2024
Cash and cash equivalents comprise:
Cash, cash balances at central banks, and other demand deposits at banks	5.1.	4,372,729	4,040,816	2,220,761	1,973,308
Loans and advances to banks with original maturity up to three months		441,447	431,997	47,180	40,000
Debt securities measured at fair value through other comprehensive income with original maturity up to three months		9,747	25,837	-	-
Total		4,823,923	4,498,650	2,267,941	2,013,308

1. General Information on

Reporting Entity

Nova Ljubljanska banka d.d. Ljubljana (hereinafter:

‘NLB’ or ‘the Bank’) is a Slovenian joint-stock entity

providing universal banking services. The NLB Group

consists of NLB and its subsidiaries located in nine

countries, mainly in Slovenia and the SEE market.

Information on the NLB Group’s structure is disclosed

in note 5.12. Information on other related party

relationships of the NLB Group is provided in note 8.

NLB is incorporated and domiciled in Slovenia. The

address of its registered office is Trg republike 2, 1000

Ljubljana. NLB’s shares are listed on the Ljubljana

Stock Exchange, and the global depositary receipts

(‘GDR’) representing ordinary shares of NLB, are listed

on the London Stock Exchange. Five GDRs represent

one share of NLB.

As at 31 December 2025 and as at 31 December 2024, the

largest shareholder of NLB with significant influence is

the Republic of Slovenia, owning 25.00% plus one share.

2. Summary of Material

Accounting Policy

The material accounting policy information adopted

for the preparation of the separate and consolidated

financial statements are set out below. The policies

have been consistently applied to all the years

presented, except for changes in accounting policies

resulting from the application of new standards or

changes to standards.

2.1. Statement of compliance

The principal accounting policies applied in the

preparation of the separate and consolidated

financial statements were prepared in accordance

with the International Financial Accounting Standards

(hereinafter: ‘the IFRS’) as adopted by the European

Union (hereinafter: ‘EU’). Additional requirements under

the national legislation are included where appropriate.

The separate and consolidated financial statements

are comprised of the income statement and statement

of other comprehensive income, the statement of

financial position, the statement of changes in equity,

the statement of cash flows, material accounting policy

information, and the notes.

2.2. Basis for preparation the

financial statements

The financial statements have been prepared on

a going-concern basis, under the historical cost

convention, except for the following items, which are

measured at fair value: financial assets measured at fair

value through other comprehensive income, financial

assets, and financial liabilities at fair value through profit

or loss, including all derivative contracts, hedged items

in fair value hedge accounting relationships, non-current

assets held for sale, liabilities for cash-settled share-

based payment arrangements, and investment property.

The preparation of financial statements in accordance

with the IFRS requires the use of estimates and

assumptions that affect the reported amounts of assets

and liabilities, the disclosure of contingent assets and

liabilities on the date of the financial statements, and

the reported amounts of revenue and expenses during

the reporting period. Although these estimates are

based on management’s best knowledge of current

events and activities, actual results may ultimately

differ from those estimates. Accounting estimates and

underlying assumptions are reviewed on an ongoing

basis. Revisions of accounting estimates are recognised

in the period in which the estimate is revised. Critical

accounting estimates and judgements in applying

accounting policies are disclosed in

note 2.35.

This document contains both the separate financial

statements of NLB, and the consolidated financial

statements of the NLB Group. The presented accounting

policies apply to both sets of financial statements, with

the exception of policies described in

notes 2.5.

2.6.

, which only apply to the consolidated financial

statements and policies described in

note 2.7.

, where

differences in the accounting treatment for investments in

subsidiaries, and associates, and joint ventures between

separate and consolidated financial statements are

described. Data relating to separate financial statements

is marked ‘NLB’, while data relating to consolidated

financial statements is marked ‘NLB Group’.

2.3. Functional and

presentation currency

These consolidated financial statements are presented

in euro, which is the Bank’s functional currency. All

amounts have been rounded to the nearest thousand,

except when otherwise indicated.

2.4. Comparative amounts

Except when a standard or an interpretation permits or

requires otherwise, all amounts are reported or disclosed

with comparative amounts. Where IAS 8 applies,

comparative figures have been adjusted to conform to

the changes in presentation in the current year.

2.5. Consolidation

In the consolidated financial statements (the NLB Group),

subsidiaries which are directly or indirectly controlled

by NLB have been fully consolidated. Subsidiaries are

consolidated from the date on which effective control is

transferred to the NLB Group.

NLB controls an entity when all three elements of control

are met:

it has power over the entity;

it is exposed or has rights to variable returns from its

involvement with the entity; and

it has the ability to use its power over the entity to affect

the amount of the entity’s returns.

NLB reassesses whether it controls an entity if facts

and circumstances indicate there are changes to one

or more of the three elements of control. If the loss of

control of a subsidiary occurs, the subsidiary is no longer

consolidated from the date that the control ceases.

Where necessary, the accounting policies of subsidiaries

have been amended to ensure consistency with the

policies adopted by NLB. The financial statements of

415

consolidated subsidiaries are prepared as at the parent

entity’s reporting date. Non-controlling interests are

disclosed in the consolidated statement of changes in

equity. Non-controlling interest is that part of the net

results, and of the equity of a subsidiary, attributable

to interests which NLB does not own, either directly or

indirectly. The NLB Group measures non-controlling

interest on a transaction-by-transaction basis, either

at fair value, or by the non-controlling interest’s

proportionate share of net assets of the acquiree.

Inter-company transactions, balances, and unrealised

gains on transactions between the NLB Group entities

are eliminated. Unrealised losses are also eliminated

unless the transaction provides evidence of impairment

of the asset transferred.

The NLB Group treats transactions with non-controlling

interests as transactions with equity owners of the

NLB Group. For purchases of subsidiaries from non-

controlling interests, the difference between any

consideration paid and the relevant share acquired

of the carrying value of net assets of the subsidiary is

deducted from the equity. For sales to non-controlling

interests, the differences between any proceeds

received and the relevant share of non-controlling

interests are also recorded in the equity. All effects are

presented in the line item ‘Equity Attributable to Non-

Controlling Interest’.

2.6. Business combinations, goodwill,

and bargain purchases

The NLB Group accounts for business combinations

using the acquisition method when the acquired set of

activities and assets meets the definition of a business,

and control is transferred to the Group. In determining

whether a particular set of activities and assets is a

business, the Group assesses whether the set of assets

and activities acquired includes, at a minimum, an input

and substantive process, and whether the acquired set

has the ability to produce outputs. The acquired process

is considered substantive if it is critical to the ability to

continue producing outputs; and the inputs acquired

include an organised workforce with the necessary

skills, knowledge, or experience to perform that process

or it significantly contributes to the ability to continue

producing outputs and is considered unique or scarce

or cannot be replaced without significant cost, effort, or

delay in the ability to continue producing outputs.

The consideration transferred is measured at the

fair value of the assets transferred, equity interest

issued, liabilities incurred or assumed, including

the fair value of assets or liabilities from contingent

consideration arrangements and fair value of any

pre-existing equity interest in the subsidiary. However,

this excludes amounts related to the settlement of pre-

existing relationships which are recognised in profit

or loss. Acquisition-related costs such as advisory,

legal, valuation, and similar professional services are

recognised in profit or loss as well. Transaction costs

incurred for issuing equity instruments are deducted

from the equity, and all other transaction costs

associated with the acquisition are expensed.

Identifiable assets acquired and liabilities assumed in

a business combination are, with limited exceptions,

measured initially at their fair values at the

acquisition date.

A contingent consideration classified as equity is not re-

measured and its subsequent settlement is accounted

for within equity. A contingent consideration classified

as an asset or liability that is a financial instrument

and within the scope of IFRS 9 Financial Instruments

is measured at fair value at each reporting date, and

changes in fair value are recognised in the statement of

profit or loss in accordance with IFRS 9. Other contingent

considerations that are not within the scope of IFRS 9

are measured at fair value at each reporting date, and

changes in fair value are recognised in profit or loss.

For each business combination, the NLB Group elects

whether to measure the non-controlling interests in

the acquiree at fair value or at the present ownership

instruments’ proportionate share in the recognised

amounts of the acquiree’s identifiable net assets

at the date of acquisition. All other components

of non-controlling interests are measured at

their acquisition-date fair values, unless another

measurement basis is required by IFRSs.

Goodwill is measured as the excess of the aggregate

of the consideration transferred measured at fair

value, the amount of any non-controlling interest in

the acquiree, and the fair value of an interest in the

acquiree held immediately before the acquisition date

over the net amounts of the identifiable assets acquired,

as well as the liabilities assumed less any accumulated

impairment losses. Any negative amount, a gain on a

bargain purchase, is recognised in profit or loss after

management reassesses whether it has identified all

the assets acquired and all the liabilities and contingent

liabilities assumed have been correctly identified, and

after it reviews the appropriateness of their measurement.

Goodwill is tested annually for impairment. For the

purpose of impairment testing, goodwill arising from

a business combination is, from the acquisition date,

allocated to the Group’s cash-generating units (CGUs)

or groups of CGUs that are expected to benefit from the

synergies of the combination. Where goodwill has been

allocated to a cash-generating unit (CGU) and part of

the operation within that unit is disposed of, the goodwill

associated with the disposed operation is included in

the carrying amount of the operation when determining

the gain or loss on disposal. Goodwill disposed in these

circumstances is measured based on the relative values

of the disposed operation and the portion of the cash-

generating unit retained.

The goodwill of associates and joint ventures is included

in the carrying value of investments.

In a business combination achieved in stages, the NLB

Group remeasures its previously held equity interest in the

acquiree at its acquisition-date fair value, and recognises

the resulting gain or loss, if any, in profit or loss.

2.7. Investments in subsidiaries,

associates, and joint ventures

In the separate financial statements (NLB), investments

in subsidiaries, associates, and joint ventures are

accounted for with the cost method. Dividends from

subsidiaries, joint ventures, or associates are recognised

in the income statement when NLB’s right to receive the

dividend has been established.

In the consolidated financial statements, investments in

associates are accounted for using the equity method of

accounting. These are generally undertakings in which

the NLB Group holds between 20% and 50% of the

416

voting rights, and over which the NLB Group exercises

significant influence, but does not have control.

Joint ventures are entities over whose activities the

NLB Group has joint control, established by contractual

agreement. In the consolidated financial statements,

investments in joint ventures are accounted for using the

equity method of accounting.

The NLB Group’s share of its associates’ and joint

ventures post-acquisition profits or losses is recognised

in the consolidated income statement, and its share

of other comprehensive income is recognised in other

comprehensive income. The cumulative post-acquisition

movements are adjusted against the carrying amount

of the investment. When the NLB Group’s share of

losses in an associate and joint venture equals or

exceeds its interest in the associate and joint venture,

including any other unsecured receivables, the NLB

Group does not recognise further losses unless it has

incurred obligations or made payments on behalf of

the associate and joint venture. The NLB Group resumes

recognising its share of those profits only after its share

of the profits equals the share of losses not recognised

(note 5.12.d).

The NLB Group’s subsidiaries, associates, and joint

ventures are presented in note 5.12.

2.8. A combination of entities

or businesses under

common control

A merger of entities within the NLB Group is a business

combination involving entities under common control.

For such mergers, members of the NLB Group apply

merger accounting principles, and use the book value

accounting at the date of merger of merged entities as

reported in the consolidated financial statements.

Mergers of entities within the NLB Group do not affect

the consolidated financial statements.

When accounting for a merger in separate financial

statements (the merger of a parent company and its

subsidiary) if a surviving entity is the parent company,

NLB applies an accounting policy to recognise the

difference between: (1) the amounts assigned to the

assets and liabilities in the parent’s separate financial

statements after the merger; and (2) the carrying

amounts of the investments in the merged subsidiary

before the merger, directly in equity. In such a case, the

acquired assets and assumed liabilities are recognised

at the carrying amounts from the consolidated financial

statements of merged subsidiary as at the date of the

merger, including any recognised goodwill and fair

value adjustments related to merged subsidiary’s assets

and liabilities. The comparative amounts in separate

financial statements are not restated.

2.9. Foreign currency translation

Functional and presentation currency

The items included in the financial statements of each

of the NLB Group’s entities are measured using the

currency of the primary economic environment in which

the entity operates (i.e., the functional currency). The

financial statements are presented in euros, which is the

NLB Group’s presentation currency.

Transactions and balances

Foreign currency transactions are translated into the

functional currency at the exchange rates prevailing

on the dates of the transactions. Foreign exchange

gains and losses resulting from the settlement of such

transactions and from the translation of monetary

assets and liabilities denominated in foreign currencies

are recognised in the income statement, except when

deferred in other comprehensive income as qualifying

cash flow hedges.

Translation differences resulting from changes in the

amortised cost of monetary items denominated in

a foreign currency and classified as financial assets

measured at fair value through other comprehensive

income are recognised in the income statement.

Translation differences on non-monetary items, such as

equity instruments at fair value through profit or loss, are

reported as part of the fair value gain or loss in the income

statement. Translation differences on non-monetary items,

such as equity instruments classified as financial assets

measured at fair value through other comprehensive

income, are included together with valuation reserves in

the valuation (losses)/gains taken to other comprehensive

income and accumulated in the equity.

Gains and losses resulting from foreign currency

purchases and sales for trading purposes are included

in the income statement as gains less losses from

financial assets and liabilities held for trading.

NLB Group entities

The financial statements of all NLB Group entities

whose functional currency differs from the presentation

currency are translated into the presentation currency

as follows:

assets and liabilities for each statement of financial

position presented are translated at the closing rate at

the date of statement of financial position;

income and expenses for each income statement are

translated at average annual exchange rates; and

components of equity are translated at the

historical rate.

Goodwill and fair value adjustments arising from the

acquisition of a foreign entity are treated as assets

and liabilities of the foreign entity and translated at the

closing rate.

In the consolidated financial statements, exchange

differences arising from the translation of the net

investment in foreign operations are recognised in other

comprehensive income. When control over a foreign

operation is lost, the previously recognised exchange

differences on translations to a different presentation

currency are reclassified from other comprehensive

income to profit and loss for the year. On the partial

disposal of a subsidiary without loss of control, the

related portion of accumulated currency translation

differences is reclassified as a non-controlling interest

within the equity.

2.10. Interest income and expenses

Interest income and expenses for all financial instruments

measured at amortised cost, and financial assets

income are recognised in the income statement for

all interest-bearing instruments on an accrual basis

using the effective interest method. Interest income

on all trading assets and financial assets mandatorily

required to be measured at fair value through profit

or loss is recognised using the contractual interest

rate. The effective interest method is used to calculate

417

the amortised cost of a financial asset or financial

liability, and to allocate the interest income or interest

expenses over the relevant period. The effective interest

rate is the rate that exactly discounts estimated future

cash payments or receipts over the expected life of

the financial instrument, or a shorter period (when

appropriate) to the gross carrying amount of the financial

asset, or to the amortised cost of a financial liability.

Interest income includes coupons earned on fixed-

yield investments and trading securities, and accrued

discounts and premiums on securities. The calculation of

the effective interest rate includes all fees and points paid

or received by parties to the contract and all transaction

costs, but excludes future credit risk losses.

Interest income is calculated by applying the effective

interest rate to the gross carrying amount of financial

assets other than credit-impaired assets.

When a financial asset becomes credit-impaired and

is, therefore, classified in Stage 3, interest income is

calculated by applying the effective interest rate to the

net amortised cost of the financial asset. If the financial

asset cures and is no longer credit-impaired, interest

income is again calculated on a gross basis.

In the case of purchased or originated credit-impaired

financial assets (POCI), the credit-adjusted effective

interest rate is applied to the amortised cost of the

financial asset from initial recognition. The credit-

adjusted effective interest rate is the interest rate that, at

initial recognition, discounts the estimated future cash

flows (including credit losses) to the amortised cost of

the purchased or originated credit-impaired financial

asset. At the NLB Group level, most POCI exposures

relate to the initial recognition of non-performing

exposures in the case of a business combination.

2.11. Fee and commission income

and expenses

Fee and commission income and expenses mainly

include those related to credit cards and ATMs, customer

transaction accounts, payment services, investment

funds, and commissions from guarantees. Fee and

commission income is recognised at an amount that

reflects the consideration to which the NLB Group expects

to be entitled, in exchange for providing the services.

The performance obligations, as well as the timing of

their satisfaction, are identified and determined at the

inception of the contract. The Group’s revenue contracts

do not include multiple performance obligations.

When the NLB Group provides a service to its customers,

the consideration is invoiced and generally due

immediately upon satisfaction of a service provided

at a point in time. When the service is provided over

time, the consideration is invoiced and due in line

with the contractual provisions. The NLB Group has

generally concluded that it is the principal in its revenue

arrangements because it typically controls the services

before transferring them to the customer.

Fees and commissions that are integral to the effective

interest rate of financial assets and liabilities are

presented within interest income or expenses.

2.12. Dividend income

Dividends are recognised in the income statement within

the line item ‘Dividend income’ when the NLB Group’s

right to receive payment has been established and

an inflow of economic benefits is probable. Dividend

income includes dividends from equity instruments

as well as distributions from other equity-classified

financial instruments, including coupon payments on

Additional Tier 1 instruments, which are accounted for as

dividends in accordance with IFRS. In the consolidated

financial statements, dividends received from

associates, and joint ventures reduce the carrying value

of the investment.

2.13. Financial instruments

a) Classification and measurement

Financial instruments are initially measured at fair value

plus or minus, in the case of a financial instrument not

measured at fair value through profit or loss, transaction

costs that are directly attributable to the acquisition or

issue of the financial instrument. Subsequent measurement

depends on the classification of the instrument.

All debt financial assets need to be assessed based

on a combination of the Group’s business model for

managing the assets and the instruments’ contractual

cash flow characteristics. The measurement categories

of financial assets are as follows:

financial assets, measured at amortised cost (AC),

financial assets at fair value through other

comprehensive income (FVOCI),

financial assets held for trading (FVTPL), and

non-trading financial assets, mandatorily at fair value

through profit or loss (FVTPL).

Financial assets are measured at AC if they are held

within a business model for the purpose of collecting

contractual cash flows (‘held to collect’), and if cash

flows are solely payments of principal and interest

on the principal amount outstanding. After initial

recognition, they are measured at the amortised cost

using the effective interest method and are subject

to impairment. Interest income calculated using the

effective interest method, foreign exchange gains and

losses, and impairment are recognised in profit or loss.

Each of them is presented as a separate line item in the

income statement. Any gain or loss on derecognition is

recognised in profit or loss in line item ‘Gains less losses

from financial assets and liabilities not measured at fair

value through profit or loss’.

Debt financial instruments are measured at FVOCI if

they are held within a business model for the purpose of

both collecting contractual cash flows and selling (‘held

to collect and sell’), and if cash flows are solely payments

of principal and interest on the principal amount

outstanding. FVOCI results in the debt instruments

being recognised at fair value in the statement of

financial position and at the AC in the income statement.

Interest income is calculated using the effective interest

method, foreign exchange gains and losses, and

impairments are recognised separately in the income

statement. Other net gains and losses are recognised

in other comprehensive income, until the instrument is

derecognised. At derecognition of the debt financial

instrument, the cumulative gains and losses previously

recognised in other comprehensive income are

reclassified to the income statement under the line item

‘Gains less losses from financial assets and liabilities not

classified at fair value through profit or loss’.

Equity instruments that are not held for trading may be

irrevocably designated as FVOCI, with no subsequent

reclassification of gains or losses to the income

418

statement. Dividends are recognised as income in

profit or loss unless the dividend clearly represents a

recovery of part of the cost of the investment, in which

case, such gains are recorded in other comprehensive

income. Other net gains and losses are recognised in

other comprehensive income and are never reclassified

to profit or loss. In the NLB Group, the most material

equity instrument irrevocably designated as FVOCI is

the investment in the National Resolution Fund (note

5.4.a). The NLB Group decided to use this presentation

alternative because the fund was established based

on the law, and it has a highly regulated investment

strategy in order to ensure safety, low risk, and the high

liquidity of the fund.

All other financial assets are mandatorily measured at

FVTPL, including financial assets within other business

models such as financial assets managed at fair value

or those held for trading and financial assets with

contractual cash flows that are not solely payments

of principal and interest on the principal amount

outstanding. Net gains and losses, including any interest

or dividend income, are recognised in profit or loss.

Financial liabilities

Financial liabilities are subsequently measured at the

amortised cost or at fair value through profit or loss,

when they are held for trading, derivative instruments,

or the fair value designation is applied.

Upon initial recognition, financial liability may be

irrevocably designated as measured at fair value

through profit or loss if that eliminates or significantly

reduces a measurement or recognition inconsistency

that would otherwise arise from measuring assets or

liabilities or recognising the gains or losses on them on

different bases, or if the liabilities are part of a group

of financial instruments which are managed and

their performance evaluated on a fair value basis in

accordance with a documented risk management or

investment strategy.

Changes in the fair value of financial liabilities

designated as measured at fair value through profit or

loss are recognised in profit or loss, with the exception

of movement in the fair value due to changes of the NLB

Group’s own credit risk. Such changes are presented

in other comprehensive income with no subsequent

reclassification to the income statement.

Other financial liabilities are subsequently measured

at amortised cost using the effective interest method.

Interest expenses and foreign exchange gains and

losses are recognised in profit or loss. Any gain or loss

on the derecognition of a financial liability is recognised

in profit or loss. In the event of derecognition of a

financial liability measured at amortised cost, the gains

and losses are recognised in the line item ‘Gains less

losses from financial assets and liabilities not measured

at fair value through profit or loss’. Gains and losses on

disposals of financial liabilities designated as measured

at fair value through profit or loss are also presented

separately from those held for trading.

Assessment of the NLB Group’s business model

The NLB Group has determined its business model

separately for each reporting unit within the NLB

Group, and is based on observable factors for different

portfolios that best reflect how the Group manages

groups of financial assets to achieve its business

objective, such as:

how the performance of the business model and the

financial assets held within that business model are

evaluated and reported to key management personnel;

the risks that affect the performance of the business model

and, in particular, the way those risks are managed;

how the managers of the business are compensated

(e.g., whether the compensation is based on the fair

value of the assets or on collection of contractual cash

flows); and

the expected frequency, value, and timing of sales.

The business model assessment is based on reasonably

expected scenarios without taking worst-case and

stress case scenarios into consideration. In general,

the business model assessment of the Group can be

summarised as follows:

Loans and deposits given are included in the ‘held to

collect’ business model, as the primary objective of

the NLB Group for the loan portfolio is to collect the

contractual cash flows;

Debt securities are divided into three business models:

The first group of debt securities presents the ‘held

for trading’ category;

Debt securities in the second group are held under

the ‘held to collect and sell’ business model with the

intention of collecting the contractual cash flows

and selling the financial assets, and forms part of

the Group’s liquidity reserves;

The third part of debt securities is held within the

business model for holding them with the objective

to collect contractual cash flows.

With regard to debt securities within the ‘held to collect’

business model, sales related to an increase of the

issuers’ credit risk, sales made close to the final maturity,

or sales conducted to meet liquidity needs in a stress-

case scenario are permitted. Other sales that are not

driven by an increase in credit risk may still be consistent

with a held to collect business model if such sales are

incidental to the overall business model, and:

are insignificant in value, both individually and in

aggregate, even when such sales occur frequently; or

are infrequent, even if they are significant in value.

A review of instruments’ contractual cash flow

characteristics (the SPPI test – solely payment of

principal and interest on the principal amount

outstanding)

The second step in the classification of the financial

assets in portfolios being ‘held to collect’ and ‘held to

collect and sell’ relates to the assessment of whether

the contractual cash flows are consistent with the SPPI

test. The principal amount reflects the fair value at

initial recognition less any subsequent changes, e.g.

due to repayment. The interest must represent only the

consideration for the time value of money, credit risk,

other basic lending risks, and a profit margin consistent

with basic lending features. If the cash flows introduce

more than

de minimis

exposure to risk or volatility that is

not consistent with basic lending features, the financial

asset is mandatorily measured at fair value through

profit or loss.

The NLB Group reviews the portfolio within ‘held to

collect’ and ‘held to collect and sell’ for standardised

products on a level of a product and for non-

standardised products on a single exposure level.

The Group has established a procedure for SPPI

identification as part of regular investment process

with defined responsibilities for primary and secondary

419

controls. Special emphasis is put on new and non-

standardised characteristics of loan agreements.

Accounting policy for modified financial assets

When contractual cash flows of a financial asset are

modified, the NLB Group assesses whether the cash

flows of modified asset are substantially different to

the extent that it becomes a new financial asset. The

following factors are, amongst others, considered when

making such assessment:

reason for modification of cash flows,

change in currency of the loan,

introduction of an equity feature,

replacement of initially agreed debtor with a new

debtor that is not related party to initial debtor, and

if the modification changes the result of the SPPI test.

If the modification results in derecognition of a

financial asset, the new financial asset is initially

recognised at fair value, with the difference recognised

as a derecognition gain or loss, to the extent that an

impairment loss has not already been recorded. If

the modification does not result in cash flows that

are substantially different, the modification does not

result in derecognition. In such cases, the NLB Group

recalculates the gross carrying amount of the financial

asset and recognises modification gain or loss in

the income statement. The gross carrying amount is

recalculated as the present value of the renegotiated

or modified contractual cash flows that are discounted

at the financial asset’s original effective interest rate (or

credit-adjusted effective interest rate for purchased or

originated credit-impaired financial assets).

b) Reclassification

Financial assets can be reclassified when and only when

the NLB Group’s business model for managing those

assets changes. The reclassification takes place from

the start of the reporting period following the change.

Such changes are expected to be very infrequent, and

none occurred during the presented periods. Financial

liabilities shall not be reclassified.

c) Day one gains or losses

The best evidence of fair value at initial recognition

is the transaction price (i.e., the fair value of the

consideration given or received), unless the fair value of

that instrument is evidenced by a comparison with other

observable current market transactions in the same

instrument (i.e., without modification or repackaging), or

based on a valuation technique whose variables only

include data from observable markets.

If the transaction price on a non-active market is

different than the fair value from other observable

current market transactions in the same instrument,

or is based on a valuation technique whose variables

only include data from observable markets, the

difference between the transaction price and fair value

is recognised immediately in the income statement (‘day

one gains or losses’).

In cases where the data used for valuation are not fully

observable in financial markets, day one gains or losses

are not recognised immediately in the income statement.

The timing of recognition of deferred day one gains or

losses is determined individually. It is either amortised

over the life of the transaction, deferred until the

instrument’s fair value can be determined using market

observable inputs, or realised through settlement.

d) Derecognition

A financial asset is derecognised when the contractual

rights to the cash flows from the financial asset expire,

or when the financial asset is transferred, and the

transfer qualifies for derecognition. A financial liability

is derecognised only when it is extinguished, i.e., when

the obligation specified in the contract is discharged,

cancelled, or expires.

e) Write-offs

The NLB Group writes off financial assets in their

entirety or a portion thereof when it has no reasonable

expectations of recovery. Criteria indicating that there

is no reasonable expectation of recovery include

default period, quality of collateral, and different

stages of enforcement procedures. The NLB Group

may write off financial assets that are still subject to

enforcement activities, but this does not affect its rights

in the enforcement procedures. The NLB Group still

seeks to recover all amounts it is legally entitled to in

full. A write-off reduces the gross carrying amount of

a financial asset and allowance for the impairment.

Any subsequent recoveries are credited to credit loss

expenses. Write-offs and recoveries are disclosed in

note 5.14.a and b.

f) Fair value measurement principles

The fair value of financial instruments traded on active

markets is based on the price that would be received to

sell the assets or transfer liability (the exit price) being

measured at the reporting date, excluding transaction

costs. If there is no active market, the fair value of the

instruments is estimated using discounted cash flow

techniques or pricing models.

If discounted cash flow techniques are used, estimated

future cash flows are based on management’s best

estimates; and the discount rate is a market-based

rate at the reporting date for an instrument with similar

terms and conditions. If pricing models are used, inputs

are based on market-based measurements at the

reporting date.

g) Derivative financial instruments

and hedge accounting

Derivative financial instruments – including forward

and futures contracts, swaps, and options – are initially

recognised in the statement of financial position at fair

value. Derivative financial instruments are subsequently

re-measured at their fair value. Fair values are

obtained from quoted market prices, discounted cash

flow models, or pricing models, as appropriate. All

derivatives are carried at their fair value within assets

when the derivative position is favourable to the NLB

Group, and within liabilities when the derivative position

is unfavourable to the NLB Group.

The method of recognising the resulting fair value gain

or loss depends on whether the derivative is designated

as a hedging instrument and, if so, the nature of the

item being hedged. The NLB Group designates certain

derivatives as either:

hedges of the fair value of recognised assets or

liabilities or firm commitments (fair value hedge),

hedges of highly probable future cash flows

attributable to a recognised asset or liability, or a

highly probable forecasted transaction (cash flow

hedge), or

hedges of a net investment in a foreign operation (net

investment hedge).

Hedge accounting is used when certain criteria are met.

The NLB Group and NLB have exercised the option to

continue applying the existing IAS 39 hedge accounting

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requirements in accordance with the policy choice

permitted under IFRS 9. However, disclosures that are

required by the IFRS 9-related amendments to IFRS 7

‘Financial Instruments: Disclosures’ are implemented.

At the inception of the transaction, the NLB Group

documents the relationship between hedged items and

hedging instruments, as well as its risk management

objective, valuation methodology, and strategy for

undertaking various hedge transactions. The NLB

Group also documents its assessment, both at the

hedge inception and on an ongoing basis, of whether

the derivatives used in hedging transactions are highly

effective in offsetting changes in fair values or cash flows

of hedged items. The actual results of a hedge must

always fall within a range of 80%–125%.

Fair value hedge

Changes in the fair value of derivatives that are

designated and qualify as fair value hedges are

recognised in the income statement together with any

changes in the fair value of the hedged asset or liability

that are attributable to the hedged risk. Effective changes

in the fair value of hedging instruments and related

hedged items are reflected in ‘Fair Value Adjustments

in Hedge Accounting’ in the income statement.

Any ineffectiveness from derivatives is recognised

immediately in the income statement, recorded in the

same line as change in fair value of hedging instruments

and hedged item if they are different.

If a hedge no longer meets the hedge accounting

criteria, the adjustment to the carrying amount of the

hedged item for which the effective interest method is

used is amortised to profit or loss over the remaining

period to maturity. The adjustment to the carrying

amount of a hedged equity security is included in the

income statement upon disposal of the equity security.

Cash flow hedge

The effective portion of changes in the fair value of

derivatives that are designated and qualify as cash flow

hedges is recognised in other comprehensive income.

The gain or loss relating to the ineffective portion is

immediately recognised in the income statement.

Amounts accumulated in equity are recycled as a

reclassification from other comprehensive income to the

income statement in the periods when the hedged item

affects the profit or loss. When a hedging instrument

expires or is sold, or when a hedge no longer meets

hedge accounting criteria, any cumulative gain or loss

existing in other comprehensive income and previously

accumulated in equity at that time remains in other

comprehensive income and in equity, and is recognised

in profit or loss only when the forecasted transaction is

ultimately recognised in the income statement. When a

forecasted transaction is no longer expected to occur,

the cumulative gain or loss that was reported in other

comprehensive income is immediately transferred to the

income statement.

Hedge of a net investment in a foreign operation

Hedges of net investments in foreign operations are

accounted for in consolidated financial statements

similar to cash flow hedges. Any gain or loss on the

hedging instrument relating to the effective portion

of the hedge is recognised directly in equity. The gain

or loss relating to the ineffective portion is recognised

immediately in the consolidated income statement in

‘Gains Less Losses on Financial Assets and Liabilities

Held for Trading’. Gains and losses accumulated in other

comprehensive income are included in the consolidated

income statement when the foreign operation is

disposed of as part of the gain or loss on the disposal.

2.14. Allowances for financial assets

a) Expected credit losses for collective allowances

IFRS 9 applies an expected loss model that provides an

unbiased and probability-weighted estimate of credit

losses by evaluating a range of possible outcomes that

incorporates forecasts of future economic conditions.

The expected loss model requires the NLB Group to

recognise not only credit losses that have already

occurred, but also losses that are expected to occur

in the future. An allowance for expected credit losses

(ECL) is required for all loans and other debt financial

assets not measured at FVTPL, together with loan

commitments and financial guarantee contracts.

In the general model, the allowance is based on the

expected credit losses associated with the probability

of default in the next 12 months unless there has been a

significant increase in credit risk since initial recognition,

in which case, the allowance is based on the probability

of default over the life of the financial asset (LECL). When

determining whether the risk of default has increased

significantly since initial recognition, the Group considers

reasonable and supportable information that is

relevant and available without undue cost or effort. This

includes both quantitative and qualitative information

and analysis, based on the Group’s historical data,

experience, expert credit assessment, and incorporation

of forward-looking information.

Classification into stages

The NLB Group prepared a methodology for ECL defining

the criteria for classification into stages, transition criteria

between stages, models for risk indicators calculation,

forward-looking scenarios, and the validation of

models. The Group classifies financial instruments into

Stage 1, Stage 2, and Stage 3, based on the applied ECL

allowance methodology as described below:

Stage 1 – A performing portfolio: no significant increase

of credit risk since initial recognition, the NLB Group

recognises an allowance based on a 12-month period;

Stage 2 – An underperforming portfolio: significant

increase in credit risk (SICR) since initial recognition,

the NLB Group recognises an allowance for a lifetime

period;

Stage 3 – An impaired portfolio: the NLB Group

recognises lifetime allowances for these defaulted

financial assets.

The Bank has aligned its definition of credit impaired

assets under IFRS 9 to the European Banking Authority

(EBA) definition of non-performing loans (NPLs). The

Bank uses a unified definition of past due and default

exposures; defaulted clients are rated D, DF, or E based

on the internal rating system and contain the clients

with material delays over 90 days, as well as the clients

that were assessed as unlikely to pay. All financial

instruments of corporate and retail clients obtain a

unified credit rating.

A significant increase in credit risk is assumed:

when a threefold increase of LPD since initial

recognition is detected (comparing the LPD assessed

using the PD curve calculated at instrument origination

and the last available PD curve);

when an absolute increase of PD since initial

recognition exceeds the materiality threshold (150 bps

in retail and 200 bps for legal entities);

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when a financial asset has material delays over 30

days with a healing period of three months and the

materiality limit aligned with the one used as a default

trigger;

if the NLB Group grants a forbearance to the borrower

where the rules of forbearance expiry are aligned with

the ECB Guidelines;

if the legal entity is placed on the watch list or intensive

care list;

if a retail client is placed on the watch list based on

features which lead to increased credit risk (such as

spending habits, decreased employment security,

political risk, etc.).

The methodology of credit rating for banks and

sovereign classification depends on the existence or

non-existence of a rating from international credit rating

agencies – Fitch, Moody’s, or the S&P. Ratings are set

on the basis of the average international credit rating.

If there are no international credit ratings available,

the credit rating classification is based on the internal

Methodology Rating Classification for Financial Markets

client segments in NLB d.d. and the NLB Group. For

banks without an international credit rating, we obtain

information from Bureau van Dijk, a Moody’s Analytics

Company, using the modules BankScore and BankFocus

modules. Additionally, information is obtained by an

analyst from the annual reports with the assistance of

the central relationship manager.

The classification into stages is based on the facility

level. Nevertheless, occurring delays on one facility may

trigger the stage deterioration of other facilities of the

same client. When the SICR criteria no longer exist, the

facility may be transferred to a more favourable stage

subject to the prescribed cure period of three months.

The ECL for Stage 1 financial assets is calculated based

on 12-month PDs or shorter period PDs, if the remaining

maturity of the financial asset is shorter than one year.

The 12-month PD already includes the macroeconomic

impact effect. Allowances in Stage 1 are designed to

reflect expected credit losses that had been incurred in

the performing portfolio but have not been identified.

The ECL for Stage 2 financial assets is calculated based

on lifetime PDs (LPD) because their credit risk has

increased significantly since their initial recognition.

This calculation is also based on a forward-looking

assessment that considers several economic scenarios

in order to recognise the probability of losses associated

with the predicted macro-economic forecasts.

For financial instruments in Stage 3, the same treatment

is applied as for those considered to be credit impaired.

Exposures below the materiality threshold obtain

collective allowances using a PD of 100%. Financial

instruments will be transferred out of Stage 3 if they

no longer meet the criteria of being credit-impaired

after a probation period. Special treatment applies

for purchased or originated credit-impaired financial

instruments (POCI), where only the cumulative changes

in lifetime expected losses since the initial recognition

are recognised as a loss allowance.

The calculation of collective allowances is performed

by multiplying the EAD (exposure at default) at the

end of each month with an appropriate PD and LGD

(loss-given default). The obtained result for each

month is discounted to the present time using the

original effective interest rate of the facility. For Stage

1 exposures, the ECL only takes a 12-month period into

account, while for Stage 2 or 3 all potential losses until

the maturity date are included. Risk parameters are

calculated separately for each of the three possible

scenarios. The final ECL for each facility is calculated as

a weighted average ECL for each scenario.

The EAD represents the anticipated outstanding amount

owed by the obligor, which is determined as the sum of

on-balance exposure and expected future drawings of

the off-balance exposure. The drawings are assessed by

applying the CCF (credit conversion factor) based on the

Bank’s historic experience with similar types of facilities.

The PD is the estimation of the likelihood of default

over a given time horizon. The estimation is performed

separately for each unique segment (corporate

clients by size, institutions, or central government), or

by product group (mortgage, consumer loans, and

other retail products). Through the cycle, the PD is

supplemented with the forward-looking aspect using

three possible scenarios.

LGD reflects the expected loss that will occur in the

event of default. The indicator is estimated based

on historical recovery data from different types of

collateral (the decrease in collateral value is calculated

for homogeneous collateral groups) and from other

sources, such as regular/partial repayments, recoveries

in legal proceedings, sale of receivables, and similar

items. The average LGD over the entire economic cycle

is enhanced to reflect expected changes in the future

period by applying three possible scenarios.

Risk parameter calculations are based on the data from

each subsidiary, while the calculations and modelling

are performed centrally. In the case where the data

samples are not sufficiently large, hurdle rates are

applied based on the regulatory or other benchmarks.

Expected life

When measuring the ECL, the NLB Group must consider

the maximum contractual period over which the Group

is exposed to credit risk. For certain revolving credit

facilities that do not have a fixed maturity, the expected

life is estimated based on the period over which the

NLB Group is exposed to credit risk and where the credit

losses would not be mitigated by management actions.

Forward-looking information

During 2025, the NLB Group reviewed the IFRS 9

provisioning by testing the relevant macroeconomic

scenarios to accurately reflect the current circumstances

and their future impacts.

The NLB Group established multiple scenarios (i.e.,

baseline, optimistic, and severe) for the ECL calculation,

aiming to create a unified projection of macroeconomic

and financial variables for the Group, aligned with the

Bank’s consolidated view of the future of economic

development in the SEE. The Group formed three probable

scenarios with an associated probability of occurrence

for forward-looking assessment of risk provisioning in

the context of the IFRS 9. These IFRS 9 macroeconomic

scenarios incorporate the forward-looking and

probability-weighted aspects of the ECL impairment

calculation. Both features may change when material

changes in the future development of the economy are

recognised and not embedded in previous forecasts.

The baseline scenario presents an expected forecast

macroeconomic view for all the countries of the Group.

This scenario is based on recent official and professional

422

forecasts, with specific adjustments for individual

countries of the Group. The baseline macroeconomic

scenario predicts sub-trend growth for major economies

like the U.S., China, India, and the euro area, with no

significant recession in the mid-term. The euro area

consumer confidence and private consumption will

drive the growth, while government spending focuses on

recovery and structural challenges. The ECB is expected

to maintain a gradual approach to interest rate cuts,

achieving its 2% inflation target by late 2025. While

trade tensions and U.S. tariffs continue to pose risks, a

recovery in risk is expected, but global trade is expected

to benefit the euro area in general.

The alternative macroeconomic scenarios are based on

plausible drivers of economic development in the mid-

term. The optimistic alternative scenario demonstrates

supply-driven positive developments; it alleviates

geopolitical tensions, technological advancements, and

stable energy prices, which improve supply and foster

robust economic growth. The global economy benefits

from the Ukraine-Russia ceasefire and the euro area

from a well-functioning labour market, favourable

global trade conditions with mild adverse effects from

U.S. tariffs, and coordinated monetary policies of major

central banks, leading to a sustainable, resilient, and

confident economic environment. The ECB’s expected

easing cycle stabilises rates and lending conditions.

Politics in Europe has come to a consensus, supporting

a coordinated but gradual green transition and

contributing further to production potential.

The severe alternative scenario demonstrates supply-

driven bleak developments; it is characterised by

the U.S. pressure escalation on Iran and further

complicating relations with China related to the Taiwan

question, posing a threat to the global economy and

financial system, and leading to a breakdown of

confidence. The war in Ukraine does not show signs of

meaningful resolution. Persistent supply chain problems

and rising energy prices create challenges for the

euro area, further hindering economic growth due to

supply shortages. Labour shortages, trade barriers,

and price wars induced by the imposed U.S. tariffs add

pressure, leading to prolonged economic insecurity. The

ECB faces difficulties in managing high and persistent

inflation and sluggish supply-demand, exacerbated by

the U.S. monetary policy loss of credibility, increased

financial markets uncertainty, and a slowdown of

trading channels due to increased FX volatility.

All of the above scenarios are included in the calculation

of expected credit losses in accordance with IFRS 9.

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Macroeconomic scenarios for explanatory variables,

developed for each country in the NLB Group used in

2025 (in %):

	Optimistic scenario			Baseline scenario			Severe scenario
	2025	2026	2027	2025	2026	2027	2025	2026	2027
Slovenia
Real GDP	3.6	4.4	3.8	2.3	2.6	2.6	(0.7)	(0.3)	0.3
Unemployment rate	3.7	3.7	3.6	4.0	4.0	3.9	4.3	4.8	4.7
EURIBOR (6 months)	1.7	1.9	1.9	2.1	2.1	2.1	2.5	2.5	2.5
Bosnia and Herzegovina
Real GDP	3.7	4.3	4.0	2.7	3.0	3.1	0.5	0.8	1.3
Unemployment rate	11.3	10.8	10.7	12.3	11.8	11.7	13.3	14.3	14.2
EURIBOR (6 months)	1.7	1.9	1.9	2.1	2.1	2.1	2.5	2.5	2.5
Montenegro
Real GDP	6.1	7.0	6.0	3.4	3.3	3.4	(3.1)	(2.9)	(1.6)
Unemployment rate	9.7	9.3	9.0	10.7	10.3	10.0	11.7	12.8	12.5
EURIBOR (6 months)	1.7	1.9	1.9	2.1	2.1	2.1	2.5	2.5	2.5
North Macedonia
Real GDP	4.8	5.5	4.8	3.1	3.2	3.2	(0.8)	(0.5)	0.3
Unemployment rate	10.5	9.9	9.4	12.1	11.5	11.0	13.4	14.3	13.8
EURIBOR (6 months)	1.7	1.9	1.9	2.1	2.1	2.1	2.5	2.5	2.5
Serbia
Real GDP	5.4	5.8	5.1	4.2	4.2	4.0	1.6	1.7	2.0
Unemployment rate	7.7	7.5	7.3	8.3	8.1	7.9	9.0	9.8	9.6
EURIBOR (6 months)	1.7	1.9	1.9	2.1	2.1	2.1	2.5	2.5	2.5
Kosovo
Real GDP	5.2	5.7	5.1	4.0	4.0	3.9	1.2	1.3	1.8
Unemployment rate	9.0	8.5	8.2	10.0	9.5	9.2	11.0	12.0	11.7
EURIBOR (6 months)	1.7	1.9	1.9	2.1	2.1	2.1	2.5	2.5	2.5
Croatia
Real GDP	4.2	4.4	3.9	3.0	2.8	2.7	0.2	0.1	0.6
Unemployment rate	4.0	3.8	3.6	4.7	4.5	4.3	5.6	6.6	6.4
EURIBOR (6 months)	1.7	1.9	1.9	2.1	2.1	2.1	2.5	2.5	2.5

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Macroeconomic scenarios for explanatory variables,

developed for each country in the NLB Group used in

2024 (in %):

	Optimistic scenario			Baseline scenario			Severe scenario
	2024	2025	2026	2024	2025	2026	2024	2025	2026
Slovenia
Real GDP	2.9	3.3	3.8	1.9	2.5	3.0	0.8	0.4	2.4
Unemployment rate	4.0	3.8	3.6	4.2	4.2	4.0	4.7	6.2	6.6
EURIBOR (6 months)	1.7	1.5	1.8	2.9	2.6	2.6	3.9	3.6	3.7
Bosnia and Herzegovina
Real GDP	3.1	3.5	3.5	2.5	3.0	3.0	1.8	1.6	2.6
Unemployment rate	12.0	10.6	10.1	12.5	12.0	11.5	13.2	14.5	14.6
EURIBOR (6 months)	1.7	1.5	1.8	2.9	2.6	2.6	3.9	3.6	3.7
Montenegro
Real GDP	5.4	4.9	5.0	3.3	3.2	3.3	1.5	(0.7)	2.5
Unemployment rate	12.5	11.3	11.1	13.0	12.7	12.5	13.7	15.2	15.6
EURIBOR (6 months)	1.7	1.5	1.8	2.9	2.6	2.6	3.9	3.6	3.7
North Macedonia
Real GDP	3.8	4.2	4.2	2.6	3.2	3.2	1.4	0.7	2.6
Unemployment rate	12.2	10.9	10.7	12.7	12.4	12.2	14.4	18.2	19.2
EURIBOR (6 months)	1.7	1.5	1.8	2.9	2.6	2.6	3.9	3.6	3.7
Serbia
Real GDP	3.8	4.1	4.1	2.9	3.4	3.4	2.1	1.7	3.0
Unemployment rate	8.7	7.9	7.7	9.0	8.8	8.6	9.7	12.2	13.0
EURIBOR (6 months)	1.7	1.5	1.8	2.9	2.6	2.6	3.9	3.6	3.7
Kosovo
Real GDP	4.6	4.7	4.7	3.7	4.0	4.0	2.8	2.1	3.5
Unemployment rate	10.0	8.6	8.1	10.5	10.0	9.5	11.2	12.5	12.6
EURIBOR (6 months)	1.7	1.5	1.8	2.9	2.6	2.6	3.9	3.6	3.7

The NLB Group formed three probable scenarios with

an associated probability of occurrence for forward-

looking assessment of risk provisioning in the context

of IFRS 9. The IFRS 9 macroeconomic scenarios

incorporate the forward-looking and probability-

weighted aspects of the ECL impairment calculation.

Both features may change when material changes in the

future development of the economy are recognised and

not embedded in previous forecasts. On this basis, for

the year 2025, the NLB Group assigned weights of 20%-

60%-20% (alternative scenarios receiving 20% each,

and the baseline scenario 60%) as a starting point(2024:

20%-60%-20%). Based on the economic situation,

NLB d.d. and NLB Banka a.d., Banja Luka adjusted the

weight for the severe scenario at 30% and reduced the

optimistic scenario weight to 10%, while the baseline

remained at the starting point. NLB Komercijalna

banka a.d. Beograd adjusted the weight for the severe

scenario at 40% and reduced the optimistic scenario

weight to 0%. All other members have maintained

assigned weights of 20%-60%-20%.

Effects of changed risk parameters

The effects of the changed risk parameters on the

amount of expected credit losses are disclosed in notes

5.14. and 5.16.b.

b) Individual assessment of allowances for impaired

The NLB Group assesses impairments of financial

assets separately for all individually significant assets

classified in Stage 3. The materiality threshold is set

at a EUR 0.5 million exposure for legal entities, and

EUR 0.15 million for private persons on the level of

NLB, while the Group members apply lower thresholds

applicable to their portfolio size. All other financial

assets obtain collective allowances.

The amount of loss is measured as the difference

between the asset’s carrying amount and the

present value of estimated future cash flows, which

are discounted to the estimation date. In general, it

corresponds to the amount calculated on the base of

assessment of three scenarios, weighted with outcome

probabilities of the “going concern” and the “gone

concern” principles. The expected cash flows based on

the ‘going concern’ assumption consider cash flows from

operations and the sale of collateral that is not crucial

for future business. In the case of the ‘gone concern’

principle, the repayments are based on expected cash

flows from the sale of collateral. The expected payment

425

from the collateral is calculated from the appraised

market value of the collateral, the haircut is used as

defined in the Haircut Methodology, and discounted.

Off-balance sheet liabilities are also assessed

individually and, where necessary, related allowances

are recognised as liabilities.

The carrying amount of financial assets measured at

amortised cost is reduced through an allowance account

and the loss is recognised in the income statement line

item ‘Impairment of financial assets’. If the number of

allowances for ECL decreases subsequently due to an

event occurring after the impairment was recognised

(e.g., repayment in the collection process exceeds the

assessed expected payment from collateral), the reversal

of the loss is recognised as a reduction in the allowance

account, and the gain is recognised in the same income

statement item. For off-balance exposures, the amount

of ECL is recognised in the statement of financial position

in the line item ‘Provisions’ and in the income statement

in the line item ‘Provisions for credit losses’.

The ECLs for debt instruments measured at fair value

through other comprehensive income do not reduce

the carrying amount of these financial assets in the

statement of financial position, which remains at fair

value. Instead, an amount equal to the allowance that

would arise if the assets were measured at amortised

cost is recognised in other comprehensive income as an

accumulated impairment amount, with a corresponding

charge to profit or loss. The accumulated loss recognised

in other comprehensive income is recycled to the profit

or loss upon derecognition of the assets, or when the

amount of allowances for ECL decreases due to an event

occurring after the impairment was recognised.

2.15. Forborne loans

A forborne loan (or restructured financial asset) arises

as a result of a debtor’s inability to repay a debt under

the originally agreed terms, either by modifying the

terms of the original contract (via an annex) or by

signing a new contract under which the contracting

parties agree the partial or total repayment of the

original debt. When receivables from the client receive

restructuring status, the debtor must be classified in the

rating grade C or lower.

The definitions of forborne loans closely follow

definitions that were developed by the European

Banking Authority (EBA). These definitions aim to

achieve comprehensive coverage of exposures to which

forbearance measures have been extended.

The accounting treatment of forborne loans depends

on the type of restructuring. When the NLB Group

embarks on a forborne loan via the modified terms of

repayment proceeding from extending the deadline for

the repayment of the principal and/or interest, and/or

a forbearance of the repayment of the principal, and/

or interest or a reduction in the interest rate, and/or

other expenses, it adjusts the carrying amount of the

forborne loan on the basis of the discounted value of the

estimated future cash flows under the modified terms,

and recognises the resulting effect in profit or loss. In

the event of the reduction of a claim against the debtor

via the reduction in the amount of the claims as a result

of a contractually agreed debt waiver and ownership

restructuring or debt to equity swap, the NLB Group

derecognises the claim in the part relating to the write-

down or the contractually agreed upon debt waiver. The

new estimate of the future cash flows for the residual

claim, not yet written down, is based on an updated

estimate of the probability of loss. The NLB Group

considers the debtor’s modified position, the economic

expectations, and the collateral of the forborne loan.

When the NLB Group is embarking on the forborne loan

by taking possession of other assets (i.e., property, plant,

and equipment; securities; and other financial assets),

including investments in the equity of debtors obtained

via debt-to-equity swaps, it recognises the acquired

assets in the statement of financial position at fair value,

recognising the difference between the fair value of the

asset and the carrying amount of the eliminated claim in

profit or loss.

Forborne exposures may be identified in both the

performing and non-performing parts of the portfolio.

Where the forborne loan is classified in the non-

performing part of the portfolio, it can be reclassified

to the performing part when exposure is no longer

considered as impaired or defaulted, when determined

amounts were repaid, when one year has passed

from the latest of the events defined (introduction of

forbearance, classification in the non-performing part,

repayment of the last overdue amount, end of the grace

period), and after the introduction of forbearance there

have been no overdue amounts or doubts concerning

the repayment of the entire exposure, under the terms

and conditions after the forbearance. The absence of

doubt is confirmed by analysis of the financial situation

of the debtor. The forborne status is withdrawn when:

at least a 2-year probation period has passed since

(whichever is latest):

the moment of extending the restructuring

measures; or

the forborne exposure was deemed performing;

regular payments of the principal or interest were

made, in a substantial total amount, during at least half

the probation period;

no exposure, in the probation period, is more than 30

days in default of more than EUR 100;

the client fulfils determined financial indicators.

2.16. Repossessed assets

In certain circumstances, assets are repossessed

following the foreclosure on loans that are in default.

Repossessed assets are initially recognised in the

financial statements at their fair value and classified in

the appropriate category according to their purpose

and are sold as soon as it is feasible in order to reduce

exposure (note 6.1.l). After initial recognition, the

repossessed assets are measured and accounted for in

accordance with the policies applicable to the relevant

asset categories. Non-financial repossessed assets

mainly represent items of real estate that the NLB Group

classifies within investment properties measured in

accordance with an IAS 40 Investment property (note

2.21.), and other assets measured in accordance with

IAS 2 Inventories.

Real estate obtained as collateral from the foreclosure

of loans and receivables, classified as other assets

are initially recognised at fair value less costs to sell

(realisable value), wherein only the direct costs of

sales can be considered, but up to the amount of gross

carrying amount of foreclosed loan. At subsequent

measurement, the realisable value is verified at least

annually. Valuations of the fair value of real estate are

performed by certified real estate appraisers. The real

estate is impaired when the carrying value exceeds the

realisable value. The effect of impairment is recognised

as the impairment of other assets, and the reversal

of impairment as income from the reversal of the

impairment of other assets.

2.17. Offsetting

Financial assets and liabilities are offset, and the net

amount is reported in the statement of financial position

when there is a legally enforceable right to offset the

recognised amounts, and when there is an intention to

settle on a net basis, or to realise the asset and settle the

liability simultaneously.

2.18. Sale and repurchase agreements

Securities sold under sale and repurchase agreements

(repos) are retained in the financial statements, and the

counterparty liability is recognised in financial liabilities

measured at an amortised cost. Securities sold subject

to sale and repurchase agreements are reclassified in

the financial statements as pledged assets when the

transferee has the right by contract or custom to sell or

re-pledge the collateral. Securities purchased under

agreements to resell (reverse repos) are presented as

loans to other banks or customers, as appropriate.

In financial statements, the difference between the sale

and repurchase price is treated as interest and accrued

over the life of the repo agreements using the effective

interest method.

2.19. Property and equipment

All items of property and equipment are initially

recognised at cost. They are subsequently measured

at cost less any accumulated depreciation and any

accumulated impairment loss.

Each year, the NLB Group assesses whether there

are indications that property and equipment may be

impaired. If any such indication exists, the recoverable

amounts are estimated. The recoverable amount is the

higher of the fair value less costs to sell or value in use. If

the recoverable amount exceeds the carrying value, the

assets are not impaired. If the carrying amount exceeds

the recoverable amount, the difference is recognised as

an impairment loss in the income statement.

Items of a largely independent property and equipment

that do not generate cash flows are included in the cash-

generating unit and later tested for possible impairment.

Depreciation is calculated on a straight-line basis over

the assets’ estimated useful lives. The following annual

depreciation rates were applied:

NLB Group and NLB	in %
Buildings	2 – 3
Leasehold improvements	5 – 25
Computers	12.5 – 50
Furniture and equipment	10 – 25
Motor vehicles	12.5 – 25

Depreciation does not begin until the assets are

available for use.

The assets’ residual values and useful lives are reviewed

and adjusted if appropriate on each reporting date. The

Group reviewed the useful lives of its tangible assets at

the end of the reporting period, and no changes were

identified. Gains and losses on the disposal of items

of property and equipment are determined as the

difference between the sale proceeds and their carrying

amount, and are recognised in the income statement.

Maintenance and repairs are charged to the income

statement during the financial period in which they are

incurred. Subsequent costs that increase future economic

benefits are recognised in the carrying amount of an

asset, and the replaced part, if any, is derecognised.

2.20. Intangible assets

Intangible assets include software licences, goodwill

(note 2.6.), and identifiable intangible assets acquired

in a business combination. Intangible assets other

than goodwill have a finite useful life and are stated in

the statement of financial position stated at cost, less

accumulated amortisation and impairment losses.

Amortisation is calculated on a straight-line basis at

rates designed to write-down the cost of an intangible

asset over its estimated useful life. The core banking

system is amortised over a period of 10 years, and

other software over a period of three to five years.

Amortisation does not begin until the assets are

available for use.

The identifiable intangible assets acquired in a

business combination and recognised separately from

goodwill, are recorded at fair value on the acquisition

date if the intangible asset is separable or arises from

contractual or other legal rights. After initial recognition,

intangible assets acquired in a business combination

are measured in accordance with IAS 38 Intangible

Assets. Other intangible assets acquired in a business

combination (note 5.10.) relate to core deposits and

trade name. Their useful life is assessed to be five

years. Amortisation of a trade name is calculated on a

straight-line basis, while for core deposits accelerated

amortisation is applied, since it better reflects the

pattern of the asset’s consumption.

2.21. Investment properties

Investment properties include properties held to earn

rentals, or to increase the value of a long-term investment,

rather than to be used by the NLB Group. Investment

properties are carried at fair value determined by a

certified appraiser. Fair value is based on current market

prices. Any gain or loss arising from a change in the fair

value is recognised in the income statement.

2.22. Non-current assets and

disposal groups classified

as held for sale

Non-current assets and disposal groups are classified

as held for sale if their carrying amount will be

recovered through a sale transaction rather than

through continuing use. This condition is deemed to

be met only when the sale is highly probable, and the

asset is available for immediate sale in its present

condition. Management must be committed to the sale,

which should be expected to qualify for recognition

as a completed sale within one year from the date of

classification. Non-current assets and disposal groups

classified as held for sale are measured at the lower of

the assets’ previous carrying amount and fair value less

costs to sell.

In the case of business combinations, the NLB Group

measures an acquired non-current asset (or disposal

group) that is classified as held for sale at the acquisition

date in accordance with IFRS 5 Noncurrent Assets Held

427

for Sale and Discontinued Operations at fair value less

costs to sell.

During subsequent measurement, certain assets and

liabilities of a disposal group that are outside the scope

of IFRS 5 measurement requirements are measured

in accordance with the applicable standards (e.g.,

deferred tax assets, assets arising from employee

benefits, financial instruments, investment property

measured at fair value, and contractual rights under

insurance contracts). Tangible and intangible assets are

not depreciated. The effects of sale and valuation are

included in the income statement as a gain or loss from

non-current assets held for sale.

Liabilities directly associated with disposal groups are

reclassified and presented separately in the statement

of financial position.

2.23. Accounting for leases

A lease is a contract or part of a contract that creates

enforceable rights and obligations and conveys the

right to control the use of an identified asset for a period

of time in exchange for consideration. Thus, IFRS 16

requires a determination of whether a contract is or

contains a lease.

NLB Group as a lessee

The NLB Group recognises a liability to make lease

payments and an asset representing the right to use the

underlying asset (i.e., the right-of-use asset) during the

lease term for all leases, except for short-term leases and

leases of low-value. Short-term leases are defined as

those that have a lease term of 12 months or less without

the option to purchase the underlying asset at the

commencement date. Leases of underlying assets with a

value, when new, lower, or equal to EUR 5 thousand are

defined as low value leases and are thus recognised as

expenses on a straight-line basis over the lease term.

Right-of-use assets

At the commencement date, the NLB Group measures

the right-of-use asset at cost. The cost of the right-of-

use assets consists of the amount of lease liabilities

recognised, the initial direct costs incurred, an estimate

of costs to be incurred by the lessee in dismantling

and removing the underlying asset to the condition

required by the terms and conditions of the lease and

lease payments made at or before the commencement

date less any lease incentives received. After the

commencement date, the NLB Group measures the

right-of-use asset using a cost model (the asset is

measured at cost, reduced by any accumulated

depreciation and impairment losses, and adjusted for

any remeasurement of lease liabilities) and recognises

depreciation of the right-of-use assets on a straight-line

basis over the lease term, and (separately) interest on

the lease liabilities. In the statement of financial position,

right-of-use assets are presented in the line item

‘Property and equipment’.

Lease liabilities

At the commencement date, the NLB Group measures

the lease liability at the present value of the lease

payments that are not paid at that date. The lease

payments consist of fixed payments, variable lease

payments that depend on an index or a rate, amounts

expected to be paid under residual value guarantees,

the exercise price of a purchase option if there exists

a reasonable certainty for it to be exercised, and

payments of penalties for terminating the lease if the

lease term suggests reflects exercising the option to

terminate. Subsequently (after the commencement

date), the NLB Group measures the lease liability by:

increasing the carrying amount to reflect interest on the

lease liability;

reducing the carrying amount to reflect the lease

payments made;

remeasuring the carrying amount to reflect any

reassessment or lease modifications.

In the statement of financial position, lease liabilities are

presented in the line item ‘Other financial liabilities’.

NLB Group as a lessor

Payments under operating leases are recognised

as income on a straight-line basis over the period of

the lease. Assets leased under operating leases are

presented in the statement of financial position as

investment property or as property and equipment.

The NLB Group classifies a lease as a finance lease

when the risks and rewards incidental to ownership of a

leased asset lie with the lessee. When assets are leased

under a finance lease, the present value of the lease

payments is recognised as a receivable. Income from

finance lease transactions is amortised over the lifetime

of the lease using the interest rate implicit in the lease.

Finance lease receivables are recognised at an amount

equal to the net investment in the lease, /including the

unguaranteed residual value and any initial direct costs

of the lessor.

Sale-and-leaseback transactions

The NLB Group also enters into sale-and-leaseback

transactions (in which the NLB Group is primarily a

lessor) under which the leased assets are purchased

from, and then leased back to the lessee. These

contracts are classified as finance leases or operating

leases, depending on the contractual terms of the

leaseback agreement.

Leases recognised in a business combination

In most leases acquired in business combinations, the

acquiree is the lessee. For such leases, the NLB Group

applies the IFRS 16 initial measurement provisions

(with exceptions for leases with remaining term of 12

months or less and low value leases), and recognises the

acquired lease liability as if the lease contract was a new

lease at the acquisition date. The right-of-use asset is

measured at an amount equal to the recognised liability.

There are no favourable or unfavourable terms of the

leases relative to market terms, which would require the

adjustment of the right-of-use assets.

2.24. Cash and cash equivalents

For the purpose of the statement of cash flows, cash

and cash equivalents comprise cash and balances

with central banks, and other demand deposits at

banks, loans to banks, and debt securities not held for

trading with an original maturity of up to three months.

Cash and cash equivalents are disclosed under the

cash flow statement.

2.25. Borrowings, deposits, and

issued debt securities with

characteristics of debt

Loans and deposits received and issued debt securities

are initially recognised at fair value. Borrowings

are subsequently measured at amortised cost. The

difference between the value at initial recognition and

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the final value is recognised in the income statement as

interest expenses, applying the effective interest rate.

Repurchased own debt is disclosed as a reduction of

liabilities in the statement of financial position.

The difference between the book value and the price

at which own debt was repurchased is disclosed in the

income statement.

2.26. Other issued financial

instruments with

characteristics of equity

Upon initial recognition, other issued financial instruments

are classified in part or in full as equity instruments

if the contractual characteristics of the instruments

are such that the NLB Group must classify them as

equity instruments in accordance with IAS 32 Financial

Instruments: Presentation. An issued financial instrument

is only considered an equity instrument if that instrument

does not represent a contractual obligation for payment.

Issued financial instruments with characteristics of

equity are recognised in equity in the statement of

financial position. Transaction costs incurred for issuing

such instruments are deducted from retained earnings.

The corresponding interest is recognised directly in

retained earnings.

The carrying value of an issued financial instrument

with characteristics of equity is presented in the

statement of changes in equity in the line item ‘Other

Equity Instruments’.

2.27. Provisions

Provisions are recognised when the NLB Group has

a present legal or constructive obligation as a result

of past events, and it is probable that an outflow of

resources embodying economic benefits will be required

to settle the obligation, and a reliable estimate of

the amount of the obligation can be made. They are

recognised in the amount that is the best estimate of

the expenditure required to settle the present obligation

at the end of the reporting period. The provision

assessment considers:

the likelihood of demonstrating compliance with

information duties;

the potential outcomes of ongoing court cases;

the uncertainty surrounding the final resolution and

timing of disputes;

the estimation of legal costs; and

the statute of limitations on claims.

When the effect of the time value of money is material,

the NLB Group determines the level of provisions by

discounting the expected cash flows at a pre-tax rate

reflecting the current rates specific to the liability.

2.28. Contingent liabilities

and commitments

Financial and non-financial guarantees

Financial guarantees are contracts that require the

issuer to make specific payments to reimburse the

holder for a loss it incurs because a specific debtor fails

to make payments when due, in accordance with the

terms of debt instruments. Such financial guarantees are

given to banks, financial institutions, and other bodies

on behalf of the customer to secure loans, overdrafts,

and other banking facilities.

The issued guarantees covering non-financial

obligations of the clients represent the obligation of

the Bank (guarantor) to pay if the client fails to perform

certain works in accordance with the terms of the

commercial contract. Financial and non-financial

guarantees are initially recognised at fair value, which

is usually evidenced by the fees received. The fees are

amortised to the income statement over the contract

term using the straight-line method. The NLB Group’s

liabilities under guarantees are subsequently measured

at the greater of:

the initial measurement, less amortisation calculated to

recognise fee income over the period of guarantee; or

ECL provisions as set out in note 2.14.

Documentary letters of credit

Documentary (and standby) letters of credit constitute

a written and irrevocable commitment of the issuing

(opening) bank on behalf of the issuer (importer) to

pay the beneficiary (exporter) the value set out in the

documents by a defined deadline:

if the letter of credit is payable on sight; and

if the letter of credit is payable for deferred payment, the

bank will pay according to the contractual agreement

when and if the beneficiary (exporter) presents the bank

with documents that are in line with the conditions and

deadlines set out in the letter of credit.

A commitment may also take the form of a letter

of credit confirmation, which is usually done at the

request or authorisation of the issuing (opening)

bank and constitutes a firm commitment by the

confirming bank, in addition to that of the issuing bank,

which independently assumes a commitment to the

beneficiary under certain conditions.

Other contingent liabilities and commitments

Other contingent liabilities and commitments represent

undrawn loan commitments to extend credit, uncovered

letters of credit, and other commitments.

The nominal contractual values of guarantees, letters

of credit, and undrawn loan commitments where the

loan agreed to be provided is on market terms, are not

recognised in the statement of financial position.

Contingent liabilities recognised

in a business combination

A contingent liability recognised in a business

combination is initially measured at its fair value and

is recognised in the statement of financial position in

the line item ‘Provisions’. After initial recognition, it is

measured at the higher of:

the amount that would be recognised in accordance

with IAS 37 Provisions, Contingent Liabilities, and

Contingent Assets; or

the amount initially recognised less, if appropriate,

the cumulative amount of income recognised in

accordance with the principles of IFRS 15 Revenue

from Contracts with Customers. This requirement does

not apply to contracts accounted for in accordance

with IFRS 9.

2.29. Taxes

Income tax expenses are comprised of current, deferred

income tax and global minimum top-up tax.

Current corporate income tax in the NLB Group is

calculated on taxable profits at the applicable tax rate

in the respective jurisdiction. Income tax rates within

the NLB Group ranges from 9% to 32%. The corporate

429

income tax rate for 2025 in Slovenia was 22% (2024:

22%). According to the Reconstruction, Development and

Provision of the Financial Resources Act, the corporate

income tax rate is increased from 19% to 22% from 2024

to 2028.

Current and deferred taxes are recognised in profit or

loss, except to the extent that they relate to a business

combination or taxes related to effects recognised

directly in equity (deferred tax related to the fair value

re-measurement of financial assets measured at fair

value through other comprehensive income, cash flow

hedges, and actuarial gains and losses on defined

benefit pension plans is charged or credited directly to

other comprehensive income).

Deferred income tax is calculated using the balance

sheet liability method for temporary differences arising

between the tax bases of assets and liabilities, and their

carrying amounts for financial reporting purposes.

Deferred tax assets are recognised if it is probable

that future taxable profit will be available in the

foreseeable future against which the temporary

differences can be utilised.

Deferred tax assets and liabilities are measured at

tax rates enacted or substantively enacted at the end

of the reporting period that are expected to apply to

the period when the asset is realised, or the liability is

settled. At each reporting date, the NLB Group reviews

the carrying amount of deferred tax assets and assesses

future taxable profits against which temporary taxable

differences can be utilised.

Deferred tax assets for temporary differences arising

from impairments of investments in subsidiaries,

associates and joint ventures are recognised only to the

extent that it is probable that:

the temporary differences will be reversed in the

foreseeable future; and

taxable profit will be available.

The NLB Group recognises a deferred tax liability for

all taxable temporary differences associated with

investments in subsidiaries to the extent that NLB is

able to control the timing of reversal of the temporary

differences, and that it is probable that the temporary

differences will reverse in the foreseeable future. As NLB

controls the dividend policy of its subsidiaries, the NLB

Group recognised the deferred tax liability on withholding

tax payable on future planned dividend pay-out.

In the case of business combination, deferred tax

balances are recognised if related to temporary

differences and carry-forwards of an acquiree that exist

at the acquisition date, or if they arise as a result of the

acquisition. Income taxes are measured in accordance

with IAS 12 Income Taxes.

In accordance with the amendment to Slovenian

corporate income tax law effective from 1 January 2025,

tax losses can be carried forward to subsequent periods

for a maximum of five years after the period in which

they occurred. Based on the transitional provision,

accumulated unused old tax losses, incurred before the

entry into force, expire in the in five years (until 2029).

Prior to 2025, Slovenian legislation did not set deadlines

by which uncovered tax losses expire.

Global minimum tax is recognized if effective tax rate

calculated by the rules related to the global minimum

top-up tax, is below 15%. The NLB Group applied a

mandatory temporary exception from the requirements

of IAS 12, according to which information on deferred tax

assets and liabilities related to global minimum tax are

not recognised or disclosed.

A tax on financial services is a tax on fees, paid for

prescribed financial services rendered (financial services,

exempt from value-added tax (with the exception of

securities transactions) and the services of insurance

brokers and agents), paid in Slovenia. The tax rate is

8.5% (2024: 8.5%) and the tax is paid monthly. Given that

the tax on financial services is classified as a sales tax, it

reduces accrued revenues in the financial statements.

For the years 2024-2028 tax on banks’ balance sheets

was introduced in Slovenia. The tax is recognised in

other general and administrative expenses.

2.30. Fiduciary activities

The NLB Group provides asset management services

to its clients. Assets held in a fiduciary capacity are not

reported in the NLB Group’s financial statements as

they do not represent assets of the NLB Group. Fee and

commission income and expenses relating to fiduciary

activities are generally recognised in the income

statement when the service has been provided (see also

note 2.11.). Fee and commission income charged for this

type of service is broken down by items in note 4.3.b.

Further details on transactions managed on behalf of

third parties are disclosed in note 5.25.

Based on the requirements of Slovenian legislation,

the NLB Group has, in note 5.25., additionally disclosed

the assets and liabilities on accounts used to manage

financial assets from fiduciary activities, i.e., information

related to the receipt, processing, and execution of

orders and related custody activities.

2.31. Employee benefits

Employee benefits include:

short-term employee benefits (such as salary,

compensations, annual holiday allowance, separation

allowance, and non-monetary benefits);

reimbursement of commuting costs, meal allowance,

compensation for use of own resources;

retirement indemnity bonuses (post-employment

benefits);

other employment benefits (jubilee long-service

benefits, voluntary supplementary pension insurance);

variable remuneration.

Short-term employee benefits are recognised in the

period to which they relate and included in the income

statement line item ‘Administrative expenses’. Among

others, they include the payment of contributions for

pension and disability insurance, which according to

Slovenian local legislation (for employer) amount to

8.85% of the gross salaries.

According to legislation, employees retire after they

fulfil certain conditions and are entitled to a lump-sum

severance payment. Employees are also entitled to a

long-service bonus for every 10 years of continuous

service in NLB and its predecessor companies.

These obligations are measured at the present value of

future cash outflows considering future salary increases

and other conditions and then apportioned to past and

future employee service based on the benefit plan’s

terms and conditions.

Service costs are included in the income statement in

the line item ‘Administrative expenses’ as defined benefit

costs, while interest expenses on the defined benefit

liability are recognised in the line item ‘Interest and

similar expenses’. These interest expenses represent

the change during the period in the defined benefit

liability that arises from the passage of time. For post-

employment benefits, actuarial gains and losses

from the effect of changes in actuarial assumptions

and experience adjustments (differences between

the realised and expected payments) are recognised

in other comprehensive income under the line item

‘Actuarial Gains/(Losses) on Defined Benefit Pensions

Plans’, and will not be recycled to the income statement.

Actuarial gains and losses that relate to other

employment benefits are recognised in the income

statement as defined benefit costs. In the statement of

financial position, liabilities for short-term employee

benefits are included in the line item ‘Other liabilities’,

while liabilities for post-employment benefits and other

employment benefits (jubilee long-service benefits) are

included in the line item ‘Provisions’.

In the case of a business combination, employee

benefits are recognised and measured in accordance

with IAS 19 Employee Benefits, i.e., not at fair value.

2.32. Share-based

payment transactions

Cash-settled share-based payment transactions

If certain conditions are met, members of the

Management Board and identified employees (i.e., those

who can significantly impact the risk profile of the Group

in the scope of their tasks and activities) receive part

of their variable remuneration in the form of financial

instruments, whose value is linked to the value of an NLB

share. Upon expiration of the legally prescribed period

(up to eight years), beneficiaries receive cash payments

depending on the value of an NLB share. The first

contracts, including share-based payment transactions,

were concluded in the second quarter of 2022.

In the statement of financial position, a liability is

recognised in the line item ‘Financial liabilities measured

at fair value through profit or loss’. Its fair value is

measured initially and at each reporting date up to and

including the settlement date, with changes in fair value

recognised in the income statement line item ‘Gains less

losses from financial liabilities measured at fair value

through profit or loss’.

Equity-settled share-based payment transactions

The NLB Group does not have any equity-settled share-

based payment transactions.

2.33. Share capital

Dividends on ordinary shares

Dividends on ordinary shares are recognised in

equity in the period in which they are approved by

NLB’s shareholders.

Treasury shares

If NLB or another member of the NLB Group purchases

NLB shares, the consideration paid is deducted from

the total shareholders’ equity as treasury shares. If

such shares are subsequently sold, any consideration

received is included in equity. If NLB shares are

purchased by NLB itself or other NLB Group entities, NLB

creates reserves for treasury shares in equity.

Share issue costs

Costs directly attributable to the issue of new shares

are recognised in equity as a reduction in the share

premium account.

2.34. Segment reporting

Operating segments are reported in a manner

consistent with internal reporting to the Management

Board of the Bank, which is the executive body that

makes decisions regarding the allocation of resources

and assesses the performance of a specific segment.

Transactions between organisational units (OUs) are

managed under normal operating conditions. Interest

income among individual OUs in the parent bank

(NLB) and the company NLB Lease&Go, leasing d.o.o.,

Ljubljana is allocated using a fund transfer pricing

method and shown within the net interest income of

each OU. In the segment analysis for the current period,

the funding costs to meet MREL requirements and to

strengthen capital position of Tier 2 are additionally

allocated between segments and shown within the net

interest income. Net non-interest income is allocated

to the OU that actually provides the service that

generates income. Direct costs are attributed to the

segment that is directly related to the provided service,

and indirect costs (costs which service centres provide

for profit centres) are attributed to the segment for

which the service is provided, whereas overhead costs

are allocated according to general keys. External net

income is the net income of the NLB Group from the

consolidated income statement. Income tax is not

allocated between segments. Analysis by segment for

the NLB Group is presented in note 7.

In accordance with IFRS 8, the NLB Group has the

following reportable segments: Retail Banking in

Slovenia, Corporate and Investment Banking in Slovenia,

Strategic Foreign Markets, Financial Markets in Slovenia,

Non-Core Members, and Other Activities.

2.35. Critical accounting estimates

and judgments in applying

accounting policies

The NLB Group’s financial statements are influenced

by accounting policies, assumptions, estimates, and

management’s judgment. The NLB Group makes

estimates and assumptions that affect the reported

amounts of assets and liabilities within the next financial

year. All estimates and assumptions required in

conformity with the IFRS are best estimates undertaken

in accordance with the applicable standard. Estimates

and judgments are evaluated on a continuing basis,

and are based on past experience and other factors,

including expectations with regard to future events.

a) Allowances for expected credit losses

on loans and advances

The NLB Group monitors the quality of the loan portfolio

at the individual and portfolio levels to continuously

estimate the necessary allowances for ECL. The NLB

Group creates individual allowances for individually

significant financial assets attributed to Stage 3. Such

an assignment is based on information regarding the

fulfilment of contractual obligations or other financial

difficulties of the debtor, and other important facts.

Individual assessments are based on the expected

431

discounted cash flows from operations and/or the

assessed expected payment from collateral.

Allowances are assessed collectively for financial

assets assigned to Stage 1 or 2, or for financial assets in

Stage 3 with exposure below the materiality threshold.

Allowances by stages are disclosed in notes (5.14., 5.16.

and 6.1.j). The ECL in this group of assets are estimated

based on expected value of risk parameters combining

the historic movements with the future macroeconomic

predictions for three separate scenarios. The models

used to estimate future risk parameters are validated

and backtested regularly to make the loss estimations

as realistic as possible.

The NLB Group applies three different macroeconomic

scenarios to collectively assess the allowances for

credit risk: optimistic, baseline, and severe scenario.

The key features of each scenario are described in

note 2.14.a – Forward-looking information. Recognised

allowances represent a weighted average of the results

of the three scenarios.

In terms of credit risk parameters, the scenarios differ

in the level of default rates (transfer of assets from

performing to non-performing status) and loss rates

(the % of exposure that will not be repaid in case of

default occurrence). Applying a 100% probability on

each of the scenario provides an overview of severity or

optimism reflected in the two remaining scenarios.

The results for the NLB Group show the following

deviations of the severe and optimistic scenario from the

baseline as at 31 December 2025 and 31 December 2024:

														in EUR thousands
	31 Dec 2025							31 Dec 2024
		Of which	Collective allowances						Of which	Collective allowances
		Gross							Gross
	Gross	Loans with	Optimistic	Baseline	Severe	Weighted	Individual	Gross	Loans with	Optimistic	Baseline	Severe	Weighted	Individual
NLB Group	Loans	collective	scenario	scenario	scenario	average	allowances	Loans	collective	scenario	scenario	scenario	average	allowances
		allowances							allowances
Companies	8,126,619	7,859,065	(71,154)	(78,394)	(95,403)	(83,306)	(108,468)	7,320,791	7,183,783	(70,386)	(79,386)	(103,604)	(82,439)	(92,667)
Individuals	9,992,446	9,978,897	(172,240)	(179,095)	(194,943)	(183,197)	(7,936)	8,734,989	8,713,898	(154,935)	(164,266)	(185,229)	(166,654)	(10,630)

The result shows that for collective allowances, the

optimistic scenario would result in 95% of the baseline

provisions (92% as at 31 December 2024), while the

severe scenario and its conservative assumptions lead

to an increase of 113% compared to the baseline (119% as

at 31 December 2024).

b) Fair value of financial instruments

The fair values of financial investments traded on the

active market are based on current bid prices (financial

assets) or offer prices (financial liabilities).

The fair values of financial instruments that are not

traded on the active market are determined by using

valuation models. These include a comparison with

recent transaction prices, the use of a discounted cash

flow model, valuation based on comparable entities,

and other frequently used valuation models. These

valuation models at their best estimate reflect current

market conditions at the measurement date, which

may not be representative of market conditions either

before or after the measurement date. Management

reviewed all applied models as at the reporting date

to ensure they appropriately reflect current market

conditions, including the relative liquidity of the market

and the applied credit spread. Changes in assumptions

regarding these factors could affect the reported fair

values of financial instruments held for trading, and

financial assets measured at fair value through other

comprehensive income.

The fair values of derivative financial instruments

are determined on the basis of market data (mark-

to-market), in accordance with the NLB Group’s

methodology for the valuation of financial instruments.

The market exchange rates, interest rates, yield, and

volatility curves used in valuations are based on the

market snapshot principle. Market data are saved daily

at 4 p.m. and later used for the calculation of the fair

values (market value, NPV) of financial instruments. The

NLB Group applies market yield curves for valuation,

and fair values are additionally adjusted for credit risk

of the counterparty.

The fair value hierarchy of financial instruments is

disclosed in note 6.5.

c) Impairment of investments in subsidiaries,

associates, and joint ventures

The process of identifying and assessing the impairment

of investments in subsidiaries, associates, and joint

ventures is inherently uncertain, as the forecasting of

cash flows requires the significant use of estimates,

which themselves are sensitive to the assumptions used.

The review of impairment represents management’s

best estimate of the facts and assumptions such as:

Future cash flows from individual investments present

the estimated cash flow for periods for which adopted

business plans are available. For core members,

estimated cash flows are based on a five-year business

plan. For non-core members, estimated cash flows

are based on a period in line with the strategy of

divestment. The business plans of individual entities are

based on an assessment of future economic conditions

that will impact an individual member’s business and

the quality of the credit portfolio.

The growth rate for cash flows in perpetuity, following

the period of the adopted business plan, ranges

between 2.3% and 3.7%.

The target capital adequacy ratio of an individual bank

is between 15% and 18%.

The discount rate derived from the capital asset

pricing model that is used to discount future cash

flows is based on the cost of equity allocated to an

individual investment. The discount rate reflects the

impact of a range of financial and economic variables,

including the risk-free rate and risk premium. The value

of variables used is subject to fluctuations outside

management’s control. The pre-tax discount rate is

between 9.4% and 17.76% (31 December 2024: between

10.6% and 18.35%).

432

d) Employee benefits

Liabilities for certain employee benefits are calculated

by an independent actuary. The main assumptions

included in the actuarial calculation are as follows:

	NLB Group		NLB
	2025	2024	2025	2024
Actuarial assumptions
Discount factor	3.3% - 5.6%	3.0% - 6.4%	3.3%	3.0%
Wage growth based on inflation, promotions, and wage growth based on past years of service	2.4% - 6.1%	2.4% - 5.7%	2.5% - 2.9%	2.5% - 3.7%
Other assumptions
Number of employees eligible for benefits	7,417	7,306	2,467	2,475

A sensitivity analysis of significant actuarial assumptions for post-employment benefit:

31 Dec 2025	NLB Group				NLB
	Discount rate		Future salary increases		Discount rate		Future salary increases
	+0.5 pp	-0.5 pp	+0.5 pp	-0.5 pp	+0.5 pp	-0.5 pp	+0.5 pp	-0.5 pp
Impact on provisions for employee benefits - post-employment benefits (in %)	(4.7)	5.0	5.1	(4.7)	(4.2)	4.5	4.5	(4.2)

31 Dec 2024	NLB Group				NLB
	Discount rate		Future salary increases		Discount rate		Future salary increases
	+0.5 pp	-0.5 pp	+0.5 pp	-0.5 pp	+0.5 pp	-0.5 pp	+0.5 pp	-0.5 pp
Impact on provisions for employee benefits - post-employment benefits (in %)	(4.6)	4.9	5.0	(4.6)	(4.2)	4.5	4.5	(4.2)

Individual analysis is done by changing one assumption

for +/- 0.5 percentage points, while all other

assumptions stay the same.

The breakdown of actuarial gains and losses for post-employment benefit by causes:

				in EUR thousands
	NLB Group		NLB
	2025	2024	2025	2024
Actuarial gains and losses due to changed financial assumptions	(276)	(1,765)	240	(973)
Actuarial gains and losses due to changes in demographic assumptions	35	834	-	832
Actuarial gains and losses due to experience	250	(376)	116	(719)
Total actuarial gains and losses for the year	9	(1,307)	356	(860)

The weighted average duration of liabilities in years:

	NLB Group		NLB
	2025	2024	2025	2024
Post-employment benefit	9.8 - 19.8	9.4 - 20.5	10.3	10.2

433

e) Taxes

The NLB Group operates in countries governed by

different laws. The deferred tax assets recognised as

at 31 December 2025 are based on profit forecasts and

take the expected manner of recovery of the assets

into account. Changes in assumptions regarding the

likely manner of recovering assets or changes in profit

forecasts can lead to the recognition of currently

unrecognised deferred tax assets or derecognition

of previously created deferred tax assets. If profit

projections used for estimation of the amount of

deferred tax assets which are expected to be reversed

in the foreseeable future (i.e., within five years) change

by 10%, the estimated amount of deferred tax assets

would change by approximately EUR 11 million (notes

4.16. and 5.17.).

2.36. Implementation of the new and

revised International Financial

Reporting Standards

During the previous year, the NLB Group adopted all

new and revised standards and interpretations issued

by the International Accounting Standards Board

(hereinafter: ‘the IASB’) and the International Financial

Reporting Interpretations Committee (hereinafter: ‘the

IFRIC’) that are endorsed by the EU that are effective for

annual accounting periods beginning on 1 January 2025.

Accounting standards and amendments to existing

standards effective for annual periods beginning on

1 January 2025 that were endorsed by the EU and

adopted by the NLB Group

IAS 21 (amendment) –

The Effects of Changes in Foreign

Exchange Rates:

Lack of Exchangeability is effective for

annual periods beginning on or after 1 January 2025.

The amendments clarify how an entity should assess

whether a currency is exchangeable, and how it should

determine a spot exchange rate when exchangeability

is lacking. A currency is exchangeable when an entity

is able to exchange that currency for another currency

through market or exchange mechanisms that create

enforceable rights and obligations without undue

delay at the measurement date and for a specified

purpose. If a currency is not exchangeable at the

measurement date, the entity is required to estimate

the spot exchange rate as the rate that would have

applied to an orderly exchange transaction between

market participants at the measurement date under

prevailing economic conditions and disclose expected

effects to the entity’s financial statements. The NLB

Group does not expect there to be an impact on the

financial statements.

Accounting standards and amendments to existing

standards that were endorsed by the EU but not

adopted early by the NLB Group

New and revised accounting standards and

interpretations endorsed by the EU that are not

mandatory for annual accounting periods beginning

on 1 January 2025 were not adopted early by the NLB

Group. These standards and amendments are not

expected to have a material impact on the consolidated

financial statements of the NLB Group in the future

reporting periods and on foreseeable future transactions.

The NLB Group plans to adopt the accounting standards

and amendments listed below for reporting periods

commencing on or after the effective date.

IFRS 9 and IFRS 7 (amendment) –

Amendments to

the Classification and Measurement of Financial

Instruments

is effective for annual periods beginning

on or after 1 January 2026. The Amendments mainly

respond to a request from stakeholders to clarify some

aspects of the application guidance for assessing

the contractual cash flow characteristics of financial

assets and accounting for the settlement of financial

liabilities through electronic payment systems. The

NLB Group does not expect there to be an impact on

the financial statements.

Annual Improvements Volume 11 (amendment) –

amendments are effective for annual periods

beginning on or after 1 January 2026. The amendments

bring small improvements to existing standards. The

NLB Group does not expect there to be an impact on

the financial statements.

IFRS 9 and IFRS 7 (amendment) -

Contracts

Referencing Nature-dependent Electricity

Amendments are effective for annual periods

beginning on or after 1 January 2026. Amendments

help companies to better report the financial effects of

nature-dependent electricity contracts, which are often

structured as power purchase agreements (PPAs). The

amount of electricity generated under these contracts

can vary based on uncontrollable factors such as

weather conditions. To allow companies to better

reflect these contracts in the financial statements, the

amendments include:

clarifying the application of the ‘own-use’

requirements,

permitting hedge accounting if these contracts are

used as hedging instruments, and

adding new disclosure requirements to enable

investors to understand the effect of these

contracts on a company’s financial performance

and cash flows.

The NLB Group does not expect there to be an impact

on the financial statements.

standards, but not endorsed by the EU

IFRS 18 (new standard) –

Presentation and Disclosure

in Financial Statements

is effective for annual periods

beginning on or after 1 January 2027. IFRS 18 replaces

IAS 1, carrying forward many of the requirements in

IAS 1 unchanged and complementing them with new

IFRS 18 introduces new requirements to:

present specified categories and defined subtotals

in the statement of profit or loss;

provide disclosures on management-defined

performance measures (MPMs) in the notes to the

financial statements;

improve aggregation and disaggregation.

The NLB Group expects an impact only on the

presentation of financial statements.

IFRS 19 (new standard and amendment) –

Subsidiaries

without Public Accountability:

Disclosures is effective

for annual periods beginning on or after 1 January

2027. IFRS 19 permits an eligible subsidiary to provide

reduced disclosures when applying IFRS Accounting

Standards in its financial statements. A subsidiary

is eligible for the reduced disclosures if it does not

have public accountability, and its ultimate or any

intermediate parent produces consolidated financial

statements available for public use that comply with

IFRS Accounting Standards. IFRS 19 is optional for

subsidiaries that are eligible and sets out the disclosure

requirements for subsidiaries that elect to apply it. The

434

IAS 21 (amendment) –

The Effects of Changes in Foreign

Exchange Rates: Translation to a Hyperinflationary

Presentation Currency

is effective for annual periods

beginning on or after 1 January 2027. Before the

onset of hyperinflation, IAS 21 requires that exchange

differences arising from translation be recognised in

other comprehensive income (OCI) and accumulated

in a separate component of equity. The amendment

to the standard specifies that cumulative exchange

differences are not reclassified within equity when

a foreign operation becomes hyperinflationary. The

cumulative exchange differences remain in a separate

component of equity. They are reclassified to profit or

loss only upon the disposal or partial disposal of the

foreign operation in accordance with IAS 21. The NLB

Group does not expect there to be an impact on the

financial statements.

3. Changes in the

Composition of the

Changes in 2025

Capital changes:

In February 2025, NLB d.d. Ljubljana increased the

share capital in the form of a cash contribution in the

amount of EUR 1,050 thousand in the company NLB

Lease&Go, leasing, d.o.o., Ljubljana.

In February 2025, NLB Lease&Go, leasing, d.o.o.,

Ljubljana increased the share capital in the form of a

cash contribution in the amount of EUR 1,050 thousand

in the company NLB Car&Go, upravljanje spletnih

platform, d.o.o.

In March 2025, NLB d.d., Ljubljana obtained other

equity instruments issued by NLB Banka sh.a., Prishtina

in the amount of EUR 7,000 thousand and other equity

instruments issued by NLB Banka d.d., Sarajevo in the

amount of EUR 10,000 thousand.

In May 2025, NLB Skladi d.o.o., Ljubljana increased

the share capital in the form of a cash contribution in

the amount of EUR 600 thousand in the company NLB

Fondovi a.d., Beograd.

In May 2025, NLB d.d. Ljubljana increased the share

capital in the form of a cash contribution in the amount

of EUR 600 thousand in the company LHB AG, Frankfurt.

In May 2025, NLB d.d., Ljubljana obtained other equity

instruments issued by NLB Banka a.d., Skopje in the

amount of EUR 15,000 thousand.

In July 2025, NLB d.d. Ljubljana increased the share

capital in the form of a cash contribution in the amount

of EUR 646 thousand in the company NLB Lease&Go,

leasing, d.o.o., Ljubljana.

In September 2025, NLB Lease&Go, leasing, d.o.o.,

Ljubljana and NLB Banka a.d., Skopje increased the

share capital in the form of a cash contribution in the

total amount of EUR 1,266 thousand in the company

NLB Lease&Go, d.o.o. Skopje.

In September and November 2025, a total decrease

of the share capital in the amount of EUR 8,577

thousand was registered in NLB InterFinanz AG,

Zürich in Liquidation.

In December 2025, NLB Lease&Go, leasing, d.o.o.,

Ljubljana and NLB Banka a.d., Skopje increased the

total amount of EUR 500 thousand in the company

NLB Lease&Go, d.o.o. Skopje.

In December 2025, NLB d.d., Ljubljana obtained

other equity instruments issued by NLB Banka a.d.,

Podgorica in the amount of EUR 12,000 thousand.

Other changes:

In May 2025, after merging with Summit Leasing

Slovenija d.o.o., Ljubljana, the subsidiary SLS HOLDCO

d.o.o. ceased to exist. All its assets and liabilities

were transferred to Summit Leasing Slovenija d.o.o.,

Ljubljana, which became its universal legal successor

after the merger.

In May 2025, ARG – Nepremičnine d.o.o., Horjul, was

liquidated. In accordance with the court order, the

company was removed from the court register.

In July 2025, after merging with Summit Leasing

Slovenija d.o.o., Ljubljana, the subsidiary NLB Lease&Go,

leasing, d.o.o., Ljubljana ceased to exist. All its assets

and liabilities were transferred to Summit Leasing

Slovenija d.o.o., Ljubljana, which became its universal

legal successor after the merger. The company was

renamed NLB Lease&Go, leasing, d.o.o., Ljubljana.

In November 2025, OL Nekretnine d.o.o., Zagreb – u

likvidaciji was liquidated. In accordance with the court

order, the company was removed from the court register.

Changes in 2024

Capital changes:

In May 2024, NLB Skladi d.o.o., Ljubljana became the

owner of 100% of the financial company Generali

Investments a.d. Skopje. The purchase price for the

company was EUR 2,515 thousand and was fully paid

in cash (note 5.12.b). In August 2024, the company was

renamed ‘NLB Fondovi a.d. Skopje’.

In July 2024, NLB d.d., Ljubljana obtained other equity

instruments issued by NLB Banka sh.a., Prishtina in the

amount of EUR 10,000 thousand.

In August 2024, NLB d.d., Ljubljana obtained other

equity instruments issued by NLB Banka a.d., Skopje in

the amount of EUR 10,000 thousand.

In September 2024, NLB d.d., Ljubljana completed

the acquisition of a 100% stake in the company

SLS HOLDCO d.o.o., the parent company of Summit

Leasing Slovenija d.o.o., Ljubljana and its subsidiary

Mobil Leasing d.o.o., Zagreb. The purchase price

was EUR 127,216 thousand and was fully paid in cash

(note 5.12.c).

In October 2024, NLB d.d. Ljubljana increased the

amount of EUR 3,329 thousand in the company NLB

Lease&Go, leasing, d.o.o., Ljubljana.

In October 2024, NLB Komercijalna banka a.d. Beograd

and NLB Lease&Go, leasing, d.o.o., Ljubljana increased

company NLB Lease&Go, Leasing d.o.o., Beograd in

the total amount of EUR 5,831 thousand. After that, the

NLB Lease&Go, leasing, d.o.o., Ljubljana’s ownership

of NLB Lease&Go, Leasing d.o.o., Beograd increased

to 50.89%, and the NLB Komercijalna banka a.d.

Beograd‘s ownership to 48.91%.

In December 2024, NLB Lease&Go, leasing, d.o.o.,

total amount of EUR 684 thousand in the company NLB

Lease&Go, d.o.o., Skopje.

Other changes:

In January 2024, according to the new

Governance Policy

, three real estate companies

S-REAM d.o.o., Ljubljana, REAM d.o.o., Beograd and

REAM d.o.o., Podgorica were transferred from non-core

members to core members.

435

In May 2024, the company S-REAM d.o.o., Ljubljana

was renamed ‘NLB Real Estate d.o.o., Ljubljana’,

the company REAM d.o.o., Podgorica was renamed

‘NLB Real Estate d.o.o., Podgorica’, and the company

REAM d.o.o., Beograd was renamed ‘NLB Real

Estate d.o.o., Beograd’.

On 1 July 2024, after merging with NLB Lease&Go,

leasing, d.o.o., Ljubljana, the subsidiary NLB

Leasing d.o.o., Ljubljana – v likvidaciji ceased to exist.

All its assets and liabilities were transferred to NLB

Lease&Go, leasing, d.o.o., Ljubljana, which became its

universal legal successor after the merger.

On 1 July 2024, after merging with NLB

Real Estate d.o.o., Ljubljana, the subsidiary

Privatinvest d.o.o., Ljubljana ceased to exist. All its

assets and liabilities were transferred to NLB Real

Estate d.o.o., Ljubljana, which became its universal

legal successor after the merger.

In September 2024, NLB Komercijalna banka a.d.

Beograd completed the sale of its subsidiary KomBank

Invest a.d., Beograd to NLB Skladi, upravljanje

premoženja, d.o.o. Ljubljana. In October 2024, the

company KomBank Invest a.d., Beograd was renamed

‘NLB Fondovi a.d., Beograd’.

In October 2024, NLB Lease&Go, leasing, d.o.o.,

Ljubljana established a new non-financial company

for digital business NLB Car&Go, upravljanje spletnih

platform, d.o.o.

In November 2024, NLB Zavod za upravljanje kulturne

dediščine was renamed ‘NLB MUZA, Zavod za

upravljanje kulturne dediščine, Ljubljana’.

436

4. Notes to the Income Statement

4.1. Interest income and expenses

Analysis by type of assets and liabilities

				in EUR thousands
	NLB Group		NLB
	2025	2024	2025	2024
Interest and similar income
Interest income calculated using the effective interest method	1,097,292	1,112,288	575,389	602,004
Financial assets measured at fair value through other comprehensive income	65,447	54,463	43,769	25,289
Securities measured at amortised cost	114,406	85,320	73,812	54,016
Deposits with banks and central banks	47,274	121,456	43,600	115,927
Loans and advances to banks measured at amortised cost	20,082	17,271	14,198	11,142
Loans and advances to customers measured at amortised cost	850,083	833,778	400,010	395,630
Other interest and similar income	139,727	95,350	53,164	44,926
Financial assets held for trading	2,575	5,939	3,091	6,444
Non-trading financial assets mandatorily at fair value through profit or loss	7	19	130	412
Derivatives - hedge accounting	49,944	38,474	49,943	38,070
Finance leases	87,189	50,913	-	-
Other	12	5	-	-
Total	1,237,019	1,207,638	628,553	646,930
Interest and similar expenses
Interest expenses calculated using the effective interest method	251,707	232,863	171,131	174,429
Deposits from banks and central banks	2,176	3,543	6,369	9,068
Borrowings from banks and central banks	3,233	3,871	871	2,220
Due to customers	120,765	115,578	41,327	56,353
Borrowings from other customers	2,653	2,187	641	-
Subordinated liabilities	45,484	46,302	45,484	46,302
Debt securities issued	76,241	60,306	76,241	60,306
Lease liabilities (note 5.11.a)	1,155	1,076	198	180
Other interest and similar expenses	38,617	40,614	38,189	40,621
Derivatives - hedge accounting	35,522	34,164	35,039	34,164
Financial liabilities held for trading	2,220	5,546	2,709	6,020
Interest expenses on defined employee benefits (note 2.31., 5.16.c)	702	768	359	409
Other	173	136	82	28
Total	290,324	273,477	209,320	215,050
Net interest income	946,695	934,161	419,233	431,880

4.2. Dividend income

4.3. Fee and commission income and expenses

a) Fee and commission income and expenses relating to activities of the NLB Group and NLB

438

b) Fee and commission income and expenses relating to fiduciary activities

439

c) Analysis of the fee and commission income and expenses by type and by segments

								in EUR thousands
	NLB Group
		Corporate and
	Retail	Investment	Strategic	Financial
	Banking in	Banking in	Foreign	Markets in	Non-Core	Other	Intercompany
2025	Slovenia	Slovenia	Markets	Slovenia	Members	activities	relations	Total
Fee and commission income
Fee and commission income relating to financial	95,233	24,833	130,101	134	-	2	(76)	250,227
instruments not at fair value through profit or loss
Credit cards and ATMs	37,835	22,653	85,221	13	-	2	(4)	145,720
Customer transaction accounts	57,398	2,180	44,880	121	-	-	(72)	104,507
Other fee and commission	106,092	25,557	83,087	3,428	37	517	(20,308)	198,410
Payments	13,896	12,992	64,420	2,953	-	466	(3,030)	91,697
Investment funds	67,247	44	2,209	-	-	-	(16,386)	53,114
Agency of insurance products	14,610	2	8,706	-	-	-	-	23,318
Other services	10,339	12,519	7,752	475	37	51	(892)	30,281
Total fee and commission income from contracts with customers
Guarantees	181	11,833	7,393	1,797	-	-	(374)	20,830
Total	201,506	62,223	220,581	5,359	37	519	(20,758)	469,467
Fee and commission expenses	(49,939)	(20,704)	(72,730)	(2,937)	(96)	(1,176)	20,758	(126,824)
Total	(49,939)	(20,704)	(72,730)	(2,937)	(96)	(1,176)	20,758	(126,824)
Net fee and commission income	151,567	41,519	147,851	2,422	(59)	(657)	-	342,643

								in EUR thousands
	NLB Group
		Corporate and
	Retail	Investment	Strategic	Financial
	Banking in	Banking in	Foreign	Markets in	Non-Core	Other	Intercompany
2024	Slovenia	Slovenia	Markets	Slovenia	Members	activities	relations	Total
Fee and commission income
Fee and commission income relating to financial	89,681	23,602	125,601	63	-	2	(65)	238,884
instruments not at fair value through profit or loss
Credit cards and ATMs	35,051	21,104	82,521	8	-	1	(5)	138,680
Customer transaction accounts	54,630	2,498	43,080	55	-	1	(60)	100,204
Other fee and commission	87,587	25,011	78,701	514	39	2,980	(17,573)	177,259
Payments	13,919	11,711	64,326	76	-	2,957	(2,590)	90,399
Investment funds	55,994	44	993	-	-	-	(14,219)	42,812
Agency of insurance products	11,877	2	6,741	-	-	1	-	18,621
Other services	5,797	13,254	6,641	438	39	22	(764)	25,427
Total fee and commission income from contracts with customers
Guarantees	110	10,893	8,423	45	-	-	(330)	19,141
Total	177,378	59,506	212,725	622	39	2,982	(17,968)	435,284
Fee and commission expenses	(47,296)	(18,421)	(70,670)	(2,666)	(41)	(1,234)	17,968	(122,360)
Total	(47,296)	(18,421)	(70,670)	(2,666)	(41)	(1,234)	17,968	(122,360)
Net fee and commission income	130,082	41,085	142,055	(2,044)	(2)	1,748	-	312,924

440

4.4. Gains less losses from derecognition of financial assets and liabilities

4.5. Gains less losses from financial assets and liabilities held for trading

Interest income from financial assets held for trading is

included in the income statement line item ‘Interest and

similar income’ and interest expenses from financial

liabilities held for trading in line item ‘Interest and similar

expenses’ (note 4.1.).

441

4.6. Gains less losses from non-trading financial assets mandatorily at fair value through profit or loss

| | | | | |
| --- | --- | --- | --- | --- |
| | |
| | | | | in EUR thousands |
| | NLB Group | | NLB | |
| | 2025 | 2024 | 2025 | 2024 |
| Equity securities | | | | |
| - gains | 2,959 | 4,076 | 2,861 | 4,045 |
| - losses | (2,183) | (863) | (2,173) | (855) |
| Debt securities | | | | |
| - gains | 13 | 54 | - | - |
| - losses | (1) | (4) | - | - |
| Loans and advances to customers | | | | |
| - gains | - | - | 676 | 658 |
| Total | 788 | 3,263 | 1,364 | 3,848 |

Interest income from non-trading financial assets

mandatorily at fair value through profit or loss is

included in the income statement line item ‘Interest and

similar income’ (note 4.1.).

4.7. Foreign exchange translation gains less losses

| | | | | |
| --- | --- | --- | --- | --- |
| | |
| | | | | in EUR thousands |
| | NLB Group | | NLB | |
| | 2025 | 2024 | 2025 | 2024 |
| Financial assets and liabilities not measured | 11,192 | (3,867) | 5,620 | (3,770) |
| at fair value through profit or loss | | | | |
| Financial assets measured at fair value through profit or loss | 80 | 167 | 80 | 167 |
| Other | (16) | 56 | (16) | 56 |
| Total | 11,256 | (3,644) | 5,684 | (3,547) |

442

4.8. Other operating income

Other operating income mainly include reimbursement

of costs and taxes.

4.9. Other operating expenses

Other operating expenses mainly include expenses

associated with penalties, and damages.

443

4.10. Administrative expenses

Costs of other services include insurance costs, costs for

cash transport, archiving costs, costs for certification

agency and e-business, meeting fees of members of the

444

The table below presents the expenses related to the

services of the statutory auditor:

The contractual amount of the auditor’s remuneration

for auditing the annual report (excluding VAT,

predefined costs and inflation, if it exceeds 3% in an

individual member state of the NLB Group) amounted

to EUR 942 thousand in 2025 in the NLB Group

(2024: EUR 915 thousand), and EUR 302 thousand in NLB

(2024: EUR 302 thousand).

For other audit assurance services, the contractual

values (excluding VAT and additional costs) for the NLB

Group amount to EUR 273 thousand (2024: EUR 180

thousand), and EUR 259 thousand for NLB (2024: EUR 163

thousand), and relate to the sustainability report and

other audit services. For other audit services, excluding

assurance, the contractual values for the NLB Group

amount to EUR 20 thousand (2024: EUR 24 thousand),

and for NLB EUR 2 thousand (2024: EUR 7 thousand).

In addition to the services included in the paragraph

above, the statutory auditor also performed

certain non-audit services in 2025 in the amount of

EUR 122 thousand (2024: EUR 159 thousand). Amounts

are presented without VAT. The payment was included

in the calculation of the effective interest rate on the

instrument issued.

4.11. Cash contributions to resolution funds and deposit guarantee schemes

In February 2024, the Bank of Slovenia announced

the Single Resolution Board’s decision that no regular

annual contributions to the Single Resolution Fund will

be collected in 2024 since the target level of at least

1% of covered deposits held in the member states

participating in the Single Resolution Mechanism

was reached. Accordingly, NLB was not obligated to

contribute its regular contribution to resolution funds for

2025 and 2024.

445

4.12. Depreciation and amortisation

4.13. Gains less losses from modification of financial assets

| | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | |
| | | | | | | | in EUR thousands |
| | 2025 | | | 2024 | | | |
| | 12-month | Lifetime ECL | | 12-month | Lifetime ECL | | |
| NLB Group | expected credit | not credit - | Total | expected credit | not credit - | Lifetime ECL | Total |
| | losses | impaired | | losses | impaired | credit-impaired | |
| Financial assets modified during the period | | | | | | | |
| Amortised cost before modification | 8,331 | 543 | 8,874 | 515,034 | 16,401 | 2,083 | 533,518 |
| Net modification gains/(losses) | (176) | (22) | (198) | (4,113) | (143) | (24) | (4,280) |

The majority of modification loss of financial assets in

2024 refers to the

Decision on temporary measures for

banks in relation to housing loans to natural persons

which limited the interest rates of housing loans in

Serbia. The loss represents the difference between

the balance of the loan on the modification date and

the discounted value of the cash flows of the modified

repayment plans using the original effective interest rate.

4.14. Provisions

446

4.15. Impairment charge

In 2025, NLB released impairments related to equity

investments in subsidiaries in the total amount of

EUR 46,977 thousand (2024: EUR 53,705 thousand).

The release of impartments in subsidiaries was due to

an increase in their estimated recoverable amounts

and due to a decrease of the share capital in a non-

core subsidiary. The recoverable amounts have been

calculated based on the value in use, determined

by discounting the future cash flows expected to

be generated from holding the investments. The

values assigned to the key assumptions represent

management’s assessment of future trends in the

relevant sectors and have been based on historical

data from both internal and external sources (discount

rate from 9.4% to 17.76%; growth rate from 2.3% to 3.7%;

target capital adequacy ratio between 15% and 18%).

Details of the assumptions used in the estimates are

presented in note 2.35.c.

In 2025, NLB impaired equity investment in non-core

subsidiary in the amount of EUR 1,472 thousand (2024:

EUR 180 thousand), which is included in the amount in

the line item ‘Investments in subsidiaries’.

In 2024, impairment of financial assets includes

EUR 1,661 thousand of 12-month expected credit losses

for Stage 1 financial assets measured at amortised cost,

acquired through a business combination (note 5.12.c).

447

4.16. Income tax

Reconciliations of differences from the amount of tax

determined by applying the Slovenian statutory tax rate

and reconciliation of effects:

Each member of the NLB Group (disclosed in note 5.12.a)

is taxable as required by local tax legislation. Income tax

rates within the NLB Group ranges from 9% to 32%.

A tax rate of 22% was applied in Slovenia in 2025

(2024: 22%).

The effect of income not subject to tax of NLB in 2025,

mostly related to the:

· dividends in 2025 that amounted to

EUR 48,281 thousand (2024: EUR 46,728 thousand);

they are based on non-taxable dividend income in

2025, which amounts to EUR 219,461 thousand (2024:

EUR 212,400 thousand); 

· release of impairments of equity investments

in 2025 that amounted to EUR 8,448 thousand

(2024: EUR 11,815 thousand). They are based on non-

taxable income from the release of impairments

of equity investments in 2025 in the amount of

EUR 38,400 thousand (2024: EUR 53,705 thousand).

NLB Group recognised deferred tax assets accrued

on the basis of temporary differences in an amount

that, given future profit estimates, is expected to be

reversed in the foreseeable future (i.e., within five years).

Due to some uncertainties regarding external factors

(regulatory environment, market situation, etc.), a lower

range of expected outcomes was considered for the

purposes of deferred tax assets calculation.

NLB recognised deferred tax assets on all temporary

differences. The deferred tax assets for tax losses are

recognised in the amount that takes into account other

deferred tax assets, reaches the total amount of deferred

tax assets, for which a reversal is expected within five

years. The deferred tax assets with respect to which

448

simultaneously deferred tax liabilities are recognised are

excluded from this calculation (e.g., deferred tax assets

for temporary non-deductible expenses for impairment

of debt securities measured at fair value through other

comprehensive income and deferred tax assets related

to fair value hedge accounting).

The NLB Group members did not recognise deferred

tax assets for tax losses if there was uncertainty about

whether the tax losses could be utilised, because it is

not probable that future taxable profits will be available

against which the deferred tax assets can be utilised.

Deferred tax liability related to undistributed profits

includes withholding tax which shall be paid in 2026 on

projected dividends.

The tax authorities may audit operations of the NLB

Group entities. In general, tax inspection, which may

result in the emergence of additional tax liability, default

interest, and penalties, may be initiated at any time

within four to six years from the date of tax statement or

from the year in which tax should have been assessed.

NLB is not aware of any circumstances that could give

rise to a potential material tax liability in this respect.

NLB has a special tax status at the Financial

Administration of the Republic of Slovenia (FURS).

The purpose of the status is to establish cooperation

between FURS and the taxpayers, with the aim of

encouraging voluntary compliance and reduce

administrative burdens on financial supervision. FURS

cooperates with NLB and responds quickly to resolve

NLB’s tax compliance issues, which reduces NLB’s tax

risks and uncertain tax positions.

Global minimum tax

NLB Group is liable to pay the top-up tax for the group

members in jurisdictions where the effective tax rate,

top-up tax, is below 15%. For the year 2025, NLB Group

recognised EUR 6 million of top-up-tax related to

subsidiaries in Bosnia and Herzegovina, Kosovo and

North Macedonia. North Macedonia is the only non-

EU country in which NLB Group operates that has

introduced the global minimum top-up tax.

449

4.17. Earnings per share

Earnings per share are calculated by dividing the net

profit by the weighted average number of ordinary

shares in issue, less treasury shares.

Diluted earnings per share are the same as basic

earnings per share for the NLB Group and NLB since

subordinated bonds and other issued debt securities

have no future conversion options, and consequently

there are no dilutive potential ordinary shares.

	NLB Group		NLB
	2025	2024	2025	2024
Net profit attributable to the owners of the parent (in EUR thousands)	503,055	514,552	426,918	478,161
Weighted average number of ordinary shares (in thousands)	20,000	20,000	20,000	20,000
Basic earnings per share (in EUR per share)	25.2	25.7	21.3	23.9
Diluted earnings per share (in EUR per share)	25.2	25.7	21.3	23.9

5. Notes to the Statement of Financial Position

5.1. Cash, cash balances at central banks, and other deposits on demand at banks

Slovenian banks are required to maintain a

compulsory reserve with the Bank of Slovenia relative

to the volume and structure of their customer deposits.

Other banks in the NLB Group maintain a compulsory

reserve in accordance with local legislation. NLB and

other banks in the NLB Group fulfil their compulsory

reserve deposit requirements.

450

5.2. Financial instruments held for trading

a) Financial assets held for trading

The notional amounts of derivative financial instruments

are disclosed in note 5.24.b.

b) Financial liabilities held for trading

The notional amounts of derivative financial instruments

are disclosed in note 5.24.b.

451

5.3. Non-trading financial instruments measured at fair value through profit or loss

a) Financial assets mandatorily at fair value through profit or loss

As at 31 December 2025 and as at 31 December 2024, the

NLB Group and NLB did not have any assets received by

taking possession of collateral and included in financial

assets mandatorily at fair value through profit or loss.

b) Financial liabilities measured at fair value through profit or loss

452

5.4. Financial assets measured at fair value through other comprehensive income

a) Analysis by type of financial assets measured at fair value through other comprehensive income

The credit quality analysis for financial assets and

contingent liabilities is disclosed in note 6.1.j and

movements in allowance for the impairment of debt

securities in note 5.14.b.

453

b) Movements of financial assets measured at fair value through other comprehensive income

NLB Group and NLB do not have any equity instruments

income obtained by taking possession of collateral in

the statement of financial position (note 6.1.l).

c) Accumulated other comprehensive income related to financial assets measured at fair value through other comprehensive income

454

5.5. Derivatives for hedging purposes

The NLB Group entities measure their exposure to

interest rate risk using repricing gap analysis and by

calculating the sensitivity of both the statement of

financial position and off-balance-sheet items in terms

of the economic value of equity. Portfolio duration is

used as a risk measure in the management of securities

in the banking book.

NLB Group entities use interest rate swaps (IRS) to

close open positions in an individual maturity bucket.

Micro and macro fair value hedges are used for that

purpose, i.e., the swapping of a fixed interest rate on a

hedged item for a variable interest rate. Micro cash flow

hedges are also occasionally used, i.e. the swapping

of a variable interest rate on a hedged item for a fixed

interest rate. All fair value hedges are made on assets

and liability items.

Hedge accounting principles (i.e., fair value and cash

flow hedging) were applied in the hedging of interest rate

risk using interest rate swaps. These hedge relationships

are designated in such a way that the characteristics

of the hedging instrument and those of the hedged

item match (i.e., the principal terms match), while the

dollar-offset method is used to regularly measure hedge

effectiveness retrospectively. Efficiency is considered

when total difference is within range 80%–125% or within

materiality threshold defined at origination of hedge.

Prospective testing of hedge effectiveness is carried out

regularly for macro hedges where the characteristics of

both items in the hedge relationship do not fully match

by comparing the change in the fair value of both items

to the shift in the yield curve.

Sources of hedge ineffectiveness may arise from the

difference of discount rates used for valuation of

hedged and hedging instruments, notional and timing

differences, as well differences in the amortisation plan

between hedged items and the hedging instrument.

Hedge effectiveness is assessed monthly, by comparing

changes in the fair value of the hedged item that are

attributable to a hedged risk with changes in the fair

value of the hedging instrument.

a) Gains less losses from hedge accounting

In both years presented, all fair value hedges were

effective, with actual results of the hedge ratio within a

range of 80–125% (or within the materiality of change),

therefore, no discontinuation of the hedge accounting

was required.

NLB Group and NLB had no relationships designated

for cash flow hedge accounting or for hedge of a net

investment in a foreign operation. The NLB Group applied

a hedge of a net investment in a foreign operation

in years 2011 and 2012, and at that time recognised a

EUR 754 thousand gain on the hedging instrument in

other comprehensive income (note 5.22.b). This gain will

be included in the consolidated income statement when

the foreign operation is disposed of as a part of the gain

or loss on the disposal.

455

b) Notional amounts of interest rate swaps

The hedging instrument is included in the statement of

financial position in the line item

‘

Derivatives – hedge

accounting’

456

c) Accumulated fair value adjustments arising from the

corresponding continuing hedge relationships

The table below presents accumulated fair value

adjustments arising from the corresponding continuing

hedge relationships, irrespective of whether there

has been a change in the hedge designation during

the year. The accumulated fair value adjustment is

presented in the same line of statement of financial

position as a hedged item, except for macro fair

value hedges. In such relationships, hedged items are

presented in the line item ‘Financial assets measured

at amortised cost’, while the accumulated fair value

adjustment is presented in a separate line item ‘Fair

value changes of the hedged items in portfolio hedge of

interest rate risk’.

The change in fair value of the hedge item used as the

basis for recognising hedge ineffectiveness:

d) IBOR reform

NLB Group continuously monitors the development of

the Benchmark Interest Rate Reform and is actively

preparing for the changes imposed by the regulation.

In 2018, NLB formed a special working group that deals

with the preparation for the discontinuation of some

important reference interest rates and reports on this to

the NLB Group ALCO.

The NLB Group no longer offers new products that

would be tied to reference rates in termination. With

regard to the reference rates, the NLB Group only offers

products related to EURIBOR, which is not scheduled for

discontinuation. Therefore, the NLB Group’s attention in

the past few years has been focused on the modification

of new contractual relationships with customers in which

EURIBOR occurs.

EURIBOR’s possible discontinuation

Due to the timely transition to the new hybrid EURIBOR

methodology which meet the BMR requirements,

EURIBOR can continue to be used in new and legacy

contracts for the foreseeable future.

EU-supervised entities are bound to include robust

fallback clauses into contractual documentation with

clients. In November 2019, the euro risk-free rates (RFR)

working group published high-level recommendations

for fallback provisions for products referencing

EURIBOR. The inclusion of robust fallback language is a

requirement in contracts subject to the EU Benchmark

Regulation. The Bank already incorporated the generic

fallback clause into all new EURIBOR (both retail and

corporate) contracts.

In May 2021, the Euro RFR working group produced its

recommendations on EURIBOR fallback trigger events

and €STR-based EURIBOR fallback rates. Based on

these recommendations, NLB’s mid-term activities are

expected to focus on ensuring more precise fallback

457

provisioning, based on these recommendations. NLB

identified potential €STR-based fallbacks for EURIBOR,

in line with the current market consensus on those

fallbacks and intends to proceed with the activities for

inclusion on EURIBOR fallbacks into all new EURIBOR-

based contracts. In the next step, the Bank is also

expected to include fallback provisions in legacy

contracts. The exact timing depends on the regulatory/

market development and best practice.

NLB as a supervised entity, is required to comply

with the benchmark regulation and, as a user of

benchmarks, must produce and maintain a robust

written plan setting out the actions NLB would take

in the event that a benchmark materially changes or

ceases to be provided. NLB has prepared a plan, which

sets out an inexhaustive/summary action list, and will

continue to closely follow market standards to identify

alternative benchmarks that could be referenced in

substitute of existing benchmarks.

LIBOR discontinuation

Since many LIBOR settings ceased to exist at the

beginning of 2022, the Bank finished the process

of winding-down the exposures in a most efficient

way. Incremental LIBOR transactions were not

allowed unconditionally.

The NLB Group activities for the implementation of

LIBOR transition were as follows:

review of outstanding LIBOR referencing loans,

identification of alternative reference rate to be used

for loan portfolio;

analysis of how the alternative reference rate will

be calculated and how to calculate any economic

difference between LIBORs and the selected alternative

reference rates;

consideration of IT-system accommodation with

alternative reference rates;

documentation of the transition of the loans.

The tables indicate the notional amount and weighted

average maturity of derivatives at the NLB Group level

and separately for NLB d.d. in hedging relationships that

will be affected by the IBOR reform, analysed by interest-

rate type. The derivative hedging instruments provide a

close approximation to the extent of the risk exposure

the NLB Group manages through hedging relationships.

The majority of long-term derivatives in hedging

relationships are exposed to EURIBOR; therefore, the

uncertainty arising from the interest rate benchmark

reform derives mainly from derivatives with longer

maturities, when a change of EURIBOR could be expected.

As at 31 December 2025, derivatives with remaining

maturity of five or more years amount to EUR 639,748

thousand (31 December 2024: EUR 242,830 thousand).

				in EUR thousands
	2025		2024
	Notional	Weighted	Notional	Weighted
NLB Group	amount	average	amount	average
	(in EUR	maturity	(in EUR	maturity
	thousands)	(years)	thousands)	(years)
Interest rate swaps (assets)
EURIBOR (3 months)	704,950	8.16	310,250	8.05
EURIBOR (6 months)	278,730	5.55	272,189	5.47
USD LIBOR (6 months)	45,420	6.05	6,702	8.93
Interest rate swaps (liabilities)
EURIBOR (3 months)	1,100,000	1.68	800,000	2.53
EURIBOR (6 months)	920,000	2.69	720,000	3.87

				in EUR thousands
	2025		2024
	Notional	Weighted	Notional	Weighted
NLB	amount	average	amount	average
	(in EUR	maturity	(in EUR	maturity
	thousands)	(years)	thousands)	(years)
Interest rate swaps (assets)
EURIBOR (3 months)	644,950	8.59	250,250	8.88
EURIBOR (6 months)	278,730	5.55	272,189	5.47
USD LIBOR (6 months)	45,420	6.05	6,702	8.93
Interest rate swaps (liabilities)
EURIBOR (3 months)	1,100,000	1.68	800,000	2.53
EURIBOR (6 months)	920,000	2.69	720,000	3.87

458

5.6. Financial assets measured at amortised cost

Analysis by type of financial assets

The credit quality analysis for financial assets and

contingent liabilities is disclosed in note 6.1.j.

a) Debt securities

b) Loans and advances to banks

c) Loans and advances to customers

459

Analysis of loans and advances to customers by sector

d) Other financial assets

Analysis by type of other financial assets

Receivables in the course of settlement are temporary

balances which will be transferred to the appropriate

item in the days following their occurrence.

Other financial assets in the amount of EUR 21,470

thousand (31 December 2024: EUR 23,975 thousand)

relate to a receivable recognised in accordance with the

‘Act for Value Protection of Republic of Slovenia’s Capital

Investment in Nova Ljubljanska banka d.d., Ljubljana’

(note 5.16.a). The remaining balance includes claims

from refunds.

460

Analysis of other financial assets by sector

e) Movement of called non-financial guarantees

5.7. Non-current assets held for sale

The line item ‘Non-current assets held for sale’ includes

business premises and assets received as collateral

that are in the process of being sold. As at 31 December

2025, the value of assets received by taking possession

of collateral and included in non-current assets held

for sale by the NLB Group amounted to EUR 1,297

thousand (31 December 2024: EUR 7,191 thousand). As

at 31 December 2025, and as at 31 December 2024, NLB

did not have any non-current assets obtained by taking

possession of collateral and included in non-current

assets held for sale (note 6.1.l).

Analysis of movements of non-current assets held for sale

461

5.8. Property and equipment

a) Analysis by type

b) Movement of own property and equipment

										in EUR thousands
	NLB Group					NLB
			Other equipment					Other equipment
	Land &			in		Land &			in
	Buildings	Computers	for own use	operating	Total	Buildings	Computers	for own use	operating	Total
				lease					lease
Cost
Balance as at 1 January 2025	361,441	96,045	112,278	38,346	608,110	208,074	50,202	43,913	4,596	306,785
Effects of translation of foreign operations	(175)	(55)	(75)	(20)	(325)	-	-	-	-	-
to presentation currency
Additions	18,468	15,059	17,800	45,993	97,320	12,654	6,207	4,506	48	23,415
Disposals	(13,998)	(5,676)	(4,764)	(40,804)	(65,242)	(10,402)	(1,782)	(1,635)	-	(13,819)
Impairment (note 4.15.)	(26)	-	-	-	(26)	-	-	-	-	-
Transfer to/from investment property (note 5.9.)	633	-	-	-	633	-	-	-	-	-
Transfer to/from non-current assets held for sale (note 5.7.)	(10,436)	-	-	-	(10,436)	-	-	-	-	-
Balance as at 31 December 2025	355,907	105,373	125,239	43,515	630,034	210,326	54,627	46,784	4,644	316,381
Depreciation and impairment
Balance as at 1 January 2025	193,320	59,383	73,963	6,761	333,427	143,824	35,822	37,648	3,814	221,108
Effects of translation of foreign operations	(40)	(11)	(24)	(2)	(77)	-	-	-	-	-
to presentation currency
Disposals	(10,350)	(5,590)	(3,658)	(4,504)	(24,102)	(9,006)	(1,769)	(1,635)	-	(12,410)
Depreciation (note 4.12.)	7,384	12,404	9,317	7,623	36,728	4,138	4,922	1,896	298	11,254
Impairment (note 4.15.)	(149)	-	-	-	(149)	-	-	-	-	-
Transfer to/from investment property (note 5.9.)	(441)	-	-	-	(441)	-	-	-	-	-
Transfer to/from non-current assets held for sale (note 5.7.)	(7,789)	-	-	-	(7,789)	-	-	-	-	-
Balance as at 31 December 2025	181,935	66,186	79,598	9,878	337,597	138,956	38,975	37,909	4,112	219,952
Net carrying value
Balance as at 31 December 2025	173,972	39,187	45,641	33,637	292,437	71,370	15,652	8,875	532	96,429
Balance as at 1 January 2025	168,121	36,662	38,315	31,585	274,683	64,250	14,380	6,265	782	85,677

As at 31 December 2025, the value of assets received

by taking possession of collateral and included in

property and equipment by the NLB Group amounted

to EUR 1,015 thousand (31 December 2024:

EUR 1,644 thousand). As at 31 December 2025 and as at

31 December 2024, NLB did not have any assets received

by taking possession of collateral and included in

property and equipment (note 6.1.l).

462

| | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | in EUR thousands |
| | NLB Group | | | | | NLB | | | | |
| | | | Other equipment | | | | | Other equipment | | |
| | Land & | | | in | | Land & | | | in | |
| | Buildings | Computers | for own use | operating | Total | Buildings | Computers | for own use | operating | Total |
| | | | | lease | | | | | lease | |
| Cost | | | | | | | | | | |
| Balance as at 1 January 2024 | 357,527 | 93,968 | 104,612 | 15,004 | 571,111 | 202,080 | 46,552 | 44,866 | 4,202 | 297,700 |
| Effects of translation of foreign operations | 233 | 66 | 61 | 1 | 361 | - | - | - | - | - |
| to presentation currency | | | | | | | | | | |
| Acquisition of subsidiaries (note 5.12.b) c) | - | 302 | 627 | 20,777 | 21,706 | - | - | - | - | - |
| Additions | 14,155 | 11,067 | 16,355 | 20,791 | 62,368 | 7,825 | 5,962 | 2,439 | 395 | 16,621 |
| Disposals | (1,529) | (9,358) | (8,830) | (10,596) | (30,313) | (93) | (2,312) | (3,007) | (1) | (5,413) |
| Transfer from/to property and equipment | 385 | - | (547) | 162 | - | 385 | - | (385) | - | - |
| Transfer to/from investment property (note 5.9.) | 1,106 | - | - | - | 1,106 | - | - | - | - | - |
| Transfer to/from non-current assets held for sale (note 5.7.) | (10,436) | - | - | - | (10,436) | (2,123) | - | - | - | (2,123) |
| Other | - | - | - | (7,793) | (7,793) | - | - | - | - | - |
| Balance as at 31 December 2024 | 361,441 | 96,045 | 112,278 | 38,346 | 608,110 | 208,074 | 50,202 | 43,913 | 4,596 | 306,785 |
| Depreciation and impairment | | | | | | | | | | |
| Balance as at 1 January 2024 | 183,334 | 58,823 | 73,838 | 5,196 | 321,191 | 141,780 | 33,419 | 38,690 | 3,571 | 217,460 |
| Effects of translation of foreign operations | 34 | 20 | 16 | 1 | 71 | - | - | - | - | - |
| to presentation currency | | | | | | | | | | |
| Disposals | (664) | (8,808) | (7,513) | (123) | (17,108) | - | (2,307) | (2,999) | (1) | (5,307) |
| Depreciation (note 4.12.) | 9,665 | 9,348 | 7,710 | 2,838 | 29,561 | 3,880 | 4,710 | 2,004 | 244 | 10,838 |
| Impairment (note 4.15.) | 3,667 | - | - | - | 3,667 | - | - | - | - | - |
| Transfer from/to property and equipment (note 5.9.) | 47 | - | (88) | 41 | - | 47 | - | (47) | - | - |
| Transfer to/from investment property (note 5.9.) | (8) | - | - | - | (8) | - | - | - | - | - |
| Transfer to/from non-current assets held for sale (note 5.7.) | (2,755) | - | - | - | (2,755) | (1,883) | - | - | - | (1,883) |
| Other | - | - | - | (1,192) | (1,192) | - | - | - | - | - |
| Balance as at 31 December 2024 | 193,320 | 59,383 | 73,963 | 6,761 | 333,427 | 143,824 | 35,822 | 37,648 | 3,814 | 221,108 |
| Net carrying value | | | | | | | | | | |
| Balance as at 31 December 2024 | 168,121 | 36,662 | 38,315 | 31,585 | 274,683 | 64,250 | 14,380 | 6,265 | 782 | 85,677 |
| Balance as at 1 January 2024 | 174,193 | 35,145 | 30,774 | 9,808 | 249,920 | 60,300 | 13,133 | 6,176 | 631 | 80,240 |

463

5.9. Investment property

As at 31 December 2025, the value of assets received

investment property by the NLB Group amounted to

EUR 16,499 thousand (31 December 2024: EUR 17,844

thousand) and in NLB it amounted to EUR 293 thousand

(31 December 2024: EUR 619 thousand) (note 6.1.l).

Operating expenses arising from investment properties:

464

5.10. Intangible assets

| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | in EUR thousands |
| | NLB Group | | | | NLB |
| | | Other | | | |
| | Software licenses | intangible assets | Goodwill | Total | Software licenses |
| Cost | | | | | |
| Balance as at 1 January 2025 | 301,180 | 35,224 | 36,876 | 373,280 | 233,599 |
| Effects of translation of foreign operations | (104) | (27) | - | (131) | - |
| to presentation currency | | | | | |
| Additions | 39,326 | - | - | 39,326 | 14,801 |
| Write-offs | (5,704) | (13,238) | - | (18,942) | (4,626) |
| Balance as at 31 December 2025 | 334,698 | 21,959 | 36,876 | 393,533 | 243,774 |
| Amortisation and impairment | | | | | |
| Balance as at 1 January 2025 | 231,575 | 12,402 | 28,807 | 272,784 | 189,175 |
| Effects of translation of foreign operations | (42) | (25) | - | (67) | - |
| to presentation currency | | | | | |
| Amortisation (note 4.12.) | 19,311 | 3,789 | - | 23,100 | 12,013 |
| Write-offs | (4,917) | (13,238) | - | (18,155) | (4,059) |
| Balance as at 31 December 2025 | 245,927 | 2,928 | 28,807 | 277,662 | 197,129 |
| Net carrying value | | | | | |
| Balance as at 31 December 2025 | 88,771 | 19,031 | 8,069 | 115,871 | 46,645 |
| Balance as at 1 January 2025 | 69,605 | 22,822 | 8,069 | 100,496 | 44,424 |

465

| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | in EUR thousands |
| | NLB Group | | | | NLB |
| | | Other | | | |
| | Software licenses | intangible assets | Goodwill | Total | Software licenses |
| Cost | | | | | |
| Balance as at 1 January 2024 | 272,445 | 13,214 | 32,336 | 317,995 | 218,179 |
| Effects of translation of foreign operations | 68 | 51 | (1) | 118 | - |
| to presentation currency | | | | | |
| Acquisition of subsidiaries (note 5.12.b), c) | 1,590 | 21,959 | 4,541 | 28,090 | - |
| Additions | 31,023 | - | - | 31,023 | 18,670 |
| Write-offs | (3,946) | - | - | (3,946) | (3,250) |
| Balance as at 31 December 2024 | 301,180 | 35,224 | 36,876 | 373,280 | 233,599 |
| Amortisation and impairment | | | | | |
| Balance as at 1 January 2024 | 217,335 | 9,736 | 28,807 | 255,878 | 180,800 |
| Effects of translation of foreign operations | 39 | 38 | - | 77 | - |
| to presentation currency | | | | | |
| Amortisation (note 4.12.) | 18,147 | 2,628 | - | 20,775 | 11,625 |
| Write-offs | (3,946) | - | - | (3,946) | (3,250) |
| Balance as at 31 December 2024 | 231,575 | 12,402 | 28,807 | 272,784 | 189,175 |
| Net carrying value | | | | | |
| Balance as at 31 December 2024 | 69,605 | 22,822 | 8,069 | 100,496 | 44,424 |
| Balance as at 1 January 2024 | 55,110 | 3,478 | 3,529 | 62,117 | 37,379 |

Other intangible assets represent additionally identified

intangible assets in a business combination, namely

core deposits, trade name and intangible assets

related to the distribution agreements. In 2024, the

Group identified new intangible assets related to the

distribution agreements, which were recognised at

the acquisition date at fair value, which amounted to

EUR 21,959 thousand. Useful life is assessed to be 10

years. This fair value was estimated by applying an

income approach.

466

5.11. Leases

a) NLB Group as a lessee

In the statement of financial position, right-of-use assets

are included in the line item ‘Property and equipment’

and lease liabilities are included in the line item ‘Other

financial liabilities’.

Additions to the right-of-use assets during 2025 in the

NLB Group amounted to EUR 15,942 thousand (2024:

EUR 17,305 thousand) and in NLB to EUR 3,293 thousand

(2024: EUR 2,675 thousand). Due to the acquisition of

subsidiaries in 2024, the right-of-use assets in the NLB

Group increased by EUR 1,894 thousand (note 5.12.c).

The income statement shows the following amounts relating to leases:

467

The total cash outflow for leases in 2025 in the NLB

Group was EUR 10,297 thousand (2024: EUR 9,433

thousand), and in NLB EUR 1,958 thousand (2024:

EUR 1,646 thousand).

The NLB Group leases various offices, branches,

vehicles, and other equipment used in its business.

Rental contracts for offices and branches generally

have lease terms between 5 to 20 years, while some

contracts are made for indefinite periods. Contracts

for indefinite periods are included in the measurement

of liability in accordance with planning projections.

Normally, a lease term of five years is assumed, with

the exemption of business premises on strategic

locations where management assesses a different

(longer) lease term. Vehicles and other equipment

generally have lease terms between 1 and 5 years.

There are several lease contracts that include extension

and termination options. These options are negotiated

by management to align with the Group’s business

needs. Lease payments to be made under reasonably

certain extension options are included in measurement

of the liability.

Lease terms are negotiated on an individual basis and

contain a range of different terms and conditions. Lease

agreements do not impose any covenants other than the

security interests in the leased assets that are held by

the lessor. Leased assets may not be used as security for

borrowing purposes.

The NLB Group also has certain leases of other

equipment with a lease term of 12 months or less, and

equipment with low value. For these leases, the NLB

Group applies the short-term lease and the lease of low-

value assets recognition exemptions. Lease payments

on short-term leases and leases of low-value assets are

recognised as expenses on a straight-line basis over the

lease term.

For calculation of the net present value of the future

lease payments, the NLB Group uses the internal

transfer price as the discount rate.

The NLB Group and NLB do not have expenses relating

to variable payments and gains or losses arising from

sale and leaseback transactions.

The following table sets out a maturity analysis of undiscounted lease liabilities.

468

b) NLB Group as a lessor

Finance and operating leases of motor vehicles

and operating leases of business premises and POS

terminals represent the majority of agreements in which

the NLB Group acts as a lessor.

Most of the lease agreements entered into by the NLB

Group as lessor contracts are finance lease agreements.

Most of the finance lease agreements are concluded for

a non-cancellable period of between 48 and 60 months.

By paying the last instalment at the end of the contract,

the leasing object becomes the lessee’s property. The

financial leasing receivables are secured by the object

of financing. The NLB Group does not have finance

lease contracts with variable payments not included in

the measurement of the net investment in the lease.

The investment properties are leased to the lessee

under operating leases with rentals payable monthly.

There are no variable lease payments that depend on

an index or a rate. The investment properties generally

have lease terms between 2 and 10 years. Some

contracts are made for an indefinite period.

Finance leases

Loans and advances to customers in the NLB Group

include finance lease receivables.

The following table sets out a maturity analysis of lease

receivables, showing the undiscounted lease payments

to be received after the reporting date.

		in EUR thousands
NLB Group	2025	2024
Less than 1 year	187,986	242,013
1 to 2 years	172,565	191,168
2 to 3 years	206,953	204,981
3 to 4 years	236,933	198,055
4 to 5 years	264,259	184,840
More than 5 years	519,641	397,203
Total undiscounted lease	1,588,337	1,418,260
receivable
Unearned finance income	(199,995)	(190,412)
Net investment in the lease (note	1,388,342	1,227,848
5.6.b, c)

During 2025, the NLB Group recognised interest income

on lease receivables in the amount of EUR 87,189

thousand (2024: EUR 50,913 thousand).

Operating lease

A maturity analysis of lease payments, showing the

undiscounted lease payments to be received after the

reporting date.

The NLB Group realised rental income arising from:

investment properties in the amount of EUR 982

thousand (2024: EUR 1,348 thousand), and movable

property in the amount of EUR 5,839 thousand (2024:

EUR 2,491 thousand). NLB realised rental income arising

from: investment properties in the amount of EUR 255

thousand (2024: EUR 293 thousand) and movable

property in the amount of EUR 559 thousand (2024:

EUR 527 thousand) (note 4.8.).

469

5.12. Investments in subsidiaries, associates, and joint ventures

a) Analysis by type of investment in subsidiaries

| | | |
| --- | --- | --- |
| | | in EUR thousands |
| NLB | 31 Dec 2025 | 31 Dec 2024 |
| Banks | 1,057,645 | 975,400 |
| Other financial organisations | 162,648 | 160,952 |
| Enterprises | 42,533 | 43,405 |
| Total | 1,262,826 | 1,179,757 |

Data of subsidiaries as included in the consolidated financial statements of the NLB Group as at 31 December 2025:

(i) 51% ownership of NLB Lease&Go, leasing, d.o.o., Ljubljana and 49% ownership of NLB Banka a.d., Skopje.

(ii) 50.89% ownership of NLB Lease&Go, leasing, d.o.o., Ljubljana and 48.91% NLB Komercijalna banka a.d. Beograd.

(iii) 100% ownership of NLB Real Estate d.o.o., Ljubljana.

470

Data of subsidiaries as included in the consolidated financial statements of the NLB Group as at 31 December 2024:

(i) 51% ownership of NLB Lease&Go, leasing, d.o.o., Ljubljana and 49% ownership of NLB Banka a.d., Skopje.

(ii) 50.89% ownership of NLB Lease&Go, leasing, d.o.o., Ljubljana and 48.91% NLB Komercijalna banka a.d. Beograd.

(iii) 100% ownership of SLS HOLDCO, holdinška družba, d.o.o. Ljubljana.

(iv) 100% ownership of NLB Real Estate d.o.o., Ljubljana.

Changes in ownership interest in the subsidiaries of the NLB Group in 2025 and 2024 are presented in

note 3

471

Data of subsidiaries with significant non-controlling interests, before intercompany eliminations:

472

b) Acquisition of Generali Investments, Skopje

In May 2024, NLB Skladi d.o.o., Ljubljana become the

owner of 100% of the financial company Generali

Investments a.d. Skopje. Generali Investments a.d.,

Skopje is the third largest asset manager on the

Macedonian market with an 18% market share. As at

30 June 2024, the company managed approximately

EUR 53 million of client assets in different investment

funds and portfolios.

In August 2024, Generali Investments a.d., Skopje was

renamed to NLB Fondovi a.d. Skopje.

The purchase price for the company was EUR 2,515

thousand and was fully paid in cash. There are

no contingent consideration arrangements. At the

acquisition date, cash in acquired entities amounted to

EUR 173 thousand. The net outflow of cash amounted to

EUR 2,342 thousand (included in the statement of cash

flows within payments from investing activities).

The assets and liabilities recognised in the NLB Group

financial statements as a result of the acquisition are

as follows:

	in EUR thousands
Cash, cash balances at central banks and other demand deposits at banks	173
Non-trading financial assets mandatorily at fair value through profit or loss	857
Financial assets measured at amortised cost
- other financial assets	2
Tangible assets
Property and equipment	4
Intangible assets	34
Current income tax assets	15
Other assets	83
Total assets	1,168
Financial liabilities measured at amortised cost
- other financial liabilities	39
Other liabilities	17
Total liabilities	56
Net identifiable assets acquired	1,112
Consideration given	2,515
Goodwill	1,403

The acquisition of NLB Fondovi a.d., Skopje resulted in

goodwill in the amount of EUR 1,403 thousand, which is

recognised in the statement of financial position under

the line, ‘Intangible assets’. The main factors that make

up the goodwill are the synergies within the NLB Group,

the existing distribution channels and the presence on

the strategically important market of the NLB Group.

Acquisition-related costs were immaterial.

473

c) Acquisition of SLS HOLDCO d.o.o., Ljubljana

On 11 September 2024, NLB completed the acquisition

of a 100% stake in the company SLS HOLDCO d.o.o.,

Ljubljana, the parent company of Summit Leasing

Slovenija d.o.o., Ljubljana, and its subsidiary Mobil

Leasing d.o.o., Zagreb.

The purchase price for the company was EUR 127,216

thousand and was fully paid in cash. There are

no contingent consideration arrangements. At the

acquisition date, cash in acquired entities amounted to

EUR 25,632 thousand. The net outflow of cash amounted

to EUR 101,584 thousand (included in the statement of

cash flows within payments from investing activities).

The assets and liabilities recognised in the NLB Group

financial statements as a result of the acquisition are

	in EUR thousands
Cash, cash balances at central banks and other demand deposits at banks	25,632
Financial assets measured at amortised cost
- loans and advances to banks	69
- loans and advances to customers	874,816
- other financial assets	3,877
Tangible assets
Property and equipment	23,596
Intangible assets	23,515
Current income tax assets	522
Deferred income tax assets	3,726
Other assets	8,406
Total assets	964,159
Financial liabilities measured at amortised cost
- borrowings from banks and central banks	809,939
- other financial liabilities	16,036
Provisions	2,002
Deferred income tax liabilities	3,155
Other liabilities	8,949
Total liabilities	840,081
Net identifiable assets acquired	124,078
Consideration given	127,216
Goodwill	3,138

The acquisition of SLS HOLDCO d.o.o., Ljubljana resulted

in goodwill in the amount of EUR 3,138 thousand, which

is recognised in the statement of financial position under

the line, ‘Intangible assets’. The goodwill consists of

the fair value of expected synergies and other benefits

from combining the acquirer and acquiree’s net assets

and businesses. The goodwill will not be deductible for

income tax purposes. In 2024, acquisition-related costs

amounted to EUR 1,900 thousand and are included

within administrative expenses.

As a result of the acquisition, the NLB Group’s

off-balance sheet liabilities increased by

EUR 1,868 thousand.

474

The valuation techniques used for measuring the fair

value of material assets and liabilities acquired were

Assets acquired	Valuation technique
	For the performing loans portfolio, fair value was determined by using the discounted cash
	flow method, whereby future cash flows were discounted to their present value at current
Performing loans	market interest rates. Contractual cash flows were adjusted for historical prepayment
	rate. In the absence of publicly available market interest rate for financial leases, market
	interest rates were estimated based on the weighted average interest rate of the financial
	leases issued in the last three months by Summit Leasing Slovenija and Mobil Leasing.
	The market value of non-performing loans was determined on the market value of the
Non-performing loans	underlying collateral. Financial leases are secured by the assets under lease. The market value
	is recovered as profit for sale as underlying assets on average reduced for the appropriate
	haircut. Consumer loans are secured by insurance, and 100% of the exposure can be recovered.
	For valuation of distribution agreements multi-period excess earnings method (MEEM) under the
Distribution agreements	income approach was applied. This method is based on the principle that the value of intangible
	assets is equal to the present value of the excess earnings attributable only to the subject intangible
	asset after deducting contributory assets charges like fixed assets and assembled workforce.

The fair value of acquired loans and advances

to customers is EUR 874,816 thousand, of which

EUR 848,638 thousand relates to the performing

portfolio and EUR 26,178 thousand to the non-

performing portfolio. The latter was recognised as

purchased or originated credit impaired financial assets

(POCI). The gross contractual amount for performing

loans and advances to customers is EUR 857,488

thousand, and for this exposure, 12-month expected

credit losses in the amount of EUR 1,596 thousand were

recognised through the income statement. The gross

contractual amount for non-performing loans and

advances to customers is EUR 38,952 thousand, and

it is expected that approximately EUR 6 million of the

contractual cash flows will not be collected.

Since the transaction was completed on 11 September

2024, a loss of EUR 1,821 thousand was included in

the income statement for 2024, 12-month expected

credit losses for financial assets in Group 1 of EUR 1,661

thousand and related deferred taxes of EUR 358

thousand were recognised. If the acquisition had

occurred on 1 January 2024, management estimates that

consolidated revenues would have been approximately

EUR 53 million higher. Consolidated profit for the period

would not have changed materially.

NLB obtained all the necessary information for

measuring fair values, therefore no amounts were

measured and recognised on a provisional basis.

475

d) Analysis by type of investment in associates, and joint ventures

NLB Group’s associates

						in %
			2025		2024
	Nature of	Country of
	Business	Incorporation	Shareholding	Voting rights	Shareholding	Voting rights
Bankart d.o.o., Ljubljana	Card processing	Slovenia	46.03	46.03	46.03	46.03
ARG - Nepremičnine d.o.o., Horjul	Real estate	Slovenia	-	-	75.00	75.00

By contractual agreement between the shareholders,

NLB did not control ARG-Nepremičnine, Horjul, but did

have a significant influence. Therefore, the entity was

accounted for as an associate.

The carrying amount of interests in associates included in

the consolidated financial statements of the NLB Group:

		in EUR thousands
	2025	2024
Carrying amount of the NLB Group’s interest	14,137	14,661
NLB Group’s share of:
- Profit for the year	1,455	2,990
- Other comprehensive income	66	18
- Total comprehensive income	1,521	3,008

In previous years, the NLB Group’s interest in an

associate was reduced to zero. Consequently, the

NLB Group did not recognise a share of profit in the

amount of EUR 37 thousand in 2024. The cumulative

unrecognised share of losses of an associate as at 31

December 2024 amounted to EUR 1,705 thousand. In

May 2025 the associate was liquidated.

NLB Group’s joint ventures

				in %
			2025	2024
	Nature of	Country of
	Business	Incorporation	Voting rights	Voting rights
Prvi Faktor Group, Ljubljana	Finance	Slovenia	50	50

In previous years, the NLB Group’s interest in a joint

venture was reduced to zero. Consequently, the NLB

Group did not recognise a share of loss in the amount

of EUR 519 thousand in 2025 (2024: unrecognised gain

EUR 485 thousand). The cumulative unrecognised share

of losses of a joint venture as at 31 December 2025

amounted to EUR 13,679 thousand (31 December 2024:

EUR 13,160 thousand).

476

e) Movements of investments in associates

		in EUR thousands
NLB Group	2025	2024
Balance as at 1 January	14,661	12,519
Share of result before tax	1,680	3,408
Share of tax	(225)	(418)
Net gains/(losses) recognised in other comprehensive income	66	18
Dividends received	(2,045)	(866)
Balance as at 31 December	14,137	14,661

5.13. Other assets

Assets, received as collateral on the NLB Group in the

amount of EUR 16,740 thousand (31 December 2024:

EUR 18,976 thousand) and on NLB in the amount of

EUR 1,467 thousand (31 December 2024: EUR 1,468

thousand) consist of real estate (note 6.1.l).

477

5.14. Movements in allowance for the impairment of financial assets

a) Movements in allowance for the impairment of loans and receivables measured at amortised cost

Column Increases/(Decreases) for 2024 also includes

12-month expected credit losses recognised at the

acquisition of SLS HOLDCO in the amount of EUR 472

thousand for Loans and advances to individuals, in the

amount of EUR 1,124 thousand for Loans and advances

to other customers, and in the amount of EUR 65

thousand for Other financial assets (notes 4.14. and

5.12.c).

479

480

Other movements relate mainly to expenses due to initial

recognition of non-performing exposure at fair value.

The contractual amount outstanding on financial

assets that were written off during the year ending 31

December 2025 and that are still subject to enforcement

activity for the NLB Group amounted to EUR 54,432

thousand (31 December 2024: EUR 39,408 thousand),

and for NLB it amounted to EUR 28,772 thousand

(31 December 2024: EUR 11,576 thousand), of which

EUR 5,672 thousand in the NLB Group (31 December

2024: EUR 2,590 thousand) and EUR 3,778 thousand in

NLB (31 December 2024: EUR 1,122 thousand) represent

interest receivables that have not been recognised in the

income statement prior to the write-off.

481

b) Movements in allowance for the impairment of debt securities

							in EUR thousands
NLB Group	Balance as at 1 Jan 2025	Effects of translation of foreign operations to presentation currency	Transfers	Increases/ (Decreases)	Changes in models/ risk parameters	Foreign exchange differences and other movements	Balance as at 31 Dec 2025
Notes				4.15.	4.15.		5.4.a), 5.6.a)
12-month expected credit losses
Debt securities measured at amortised cost	6,913	(1)	12	(744)	(373)	(8)	5,799
Debt securities measured at fair value through other comprehensive income	4,959	(4)	69	(2,040)	(139)	8	2,853
Lifetime ECL not credit-impaired
Debt securities measured at amortised cost	554	(2)	(12)	(538)	14	(1)	15
Debt securities measured at fair value through other comprehensive income	36	-	(69)	58	(5)	-	20
Lifetime ECL credit-impaired
Debt securities measured at fair value through other comprehensive income	798	-	-	-	-	-	798

							in EUR thousands
NLB Group	Balance as at 1 Jan 2024	Effects of translation of foreign operations to presentation currency	Transfers	Increases/ (Decreases)	Changes in models/ risk parameters	Foreign exchange differences and other movements	Balance as at 31 Dec 2024
Notes				4.15.	4.15.		5.4.a), 5.6.a)
12-month expected credit losses
Debt securities measured at amortised cost	4,946	2	(4)	2,047	(92)	14	6,913
Debt securities measured at fair value through other comprehensive income	6,475	-	-	(1,273)	(243)	-	4,959
Lifetime ECL not credit-impaired
Debt securities measured at amortised cost	576	2	4	153	(185)	4	554
Debt securities measured at fair value through other comprehensive income	56	-	-	(11)	(8)	(1)	36
Lifetime ECL credit-impaired
Debt securities measured at fair value through other comprehensive income	798	-	-	-	-	-	798

482

						in EUR thousands
NLB	Balance as at 1 Jan 2025	Transfers	Increases/ (Decreases)	Changes in models/ risk parameters	Foreign exchange differences and other movements	Balance as at 31 Dec 2025
Notes			4.15.	4.15.		5.4.a), 5.6.a)
12-month expected credit losses
Debt securities measured at amortised cost	3,450	12	(1,275)	(354)	(9)	1,824
Debt securities measured at fair value through other comprehensive income	1,849	69	(437)	(131)	(7)	1,343
Lifetime ECL not credit-impaired
Debt securities measured at amortised cost	80	(12)	(63)	12	(2)	15
Debt securities measured at fair value through other comprehensive income	-	(69)	69	-	-	-
Lifetime ECL credit-impaired
Debt securities measured at fair value through other comprehensive income	798	-	-	-	-	798

						in EUR thousands
NLB	Balance as at 1 Jan 2024	Transfers	Increases/ (Decreases)	Changes in models/ risk parameters	Foreign exchange differences and other movements	Balance as at 31 Dec 2024
Notes			4.15.		4.15.	5.4.a), 5.6.a)
12-month expected credit losses
Debt securities measured at amortised cost	2,624	(4)	858	(34)	6	3,450
Debt securities measured at fair value through other comprehensive income	1,650	-	206	(8)	1	1,849
Lifetime ECL not credit-impaired
Debt securities measured at amortised cost	173	4	(101)	-	4	80
Lifetime ECL credit-impaired
Debt securities measured at fair value through other comprehensive income	798	-	-	-	-	798

483

c) Explanation of how significant changes in the gross carrying amount of financial instruments contributed to changes in the loss allowance

Movement of gross carrying amount of loans to banks

484

Movement of gross carrying amount of loans and advances to individuals

In 2025, the loss allowance for loans and advances to

individuals increased by EUR 13,849 thousand at the

NLB Group level, while at the NLB level it increased by

EUR 7,607 thousand. At the NLB Group level, the gross

carrying amount increased by EUR 1,257,457 thousand,

mainly due to increased exposure, while at the NLB level

it increased by EUR 410,581 thousand.

In 2024, the loss allowance for loans and advances to

individuals increased by EUR 28,785 thousand at the

NLB Group level, while at the NLB level it increased by

EUR 17,754 thousand. At the NLB Group level, the gross

carrying amount increased by EUR 1,499,675 thousand,

mainly due to increased exposure and the acquisition

of subsidiaries, while at the NLB level it increased by

EUR 356,361 thousand.

485

Movement of gross carrying amount of loans and advances to other customers

In 2025, the gross carrying amount of loans and

advances to other customers increased by EUR 1,114,582

thousand at the NLB Group level and EUR 514,372

thousand at the NLB level, mostly in Stage 1 due to

the increased exposure. The loss allowance increased

by EUR 16,365 thousand at the NLB Group level

and EUR 20,201 thousand at the NLB level, largely

attributable to the deterioration in the credit ratings of

certain clients.

In 2024, the gross carrying amount of loans and

advances to other customers increased by EUR 1,158,507

thousand at the NLB Group level and EUR 1,186,849

thousand at the NLB level, mostly in Stage 1 due to the

acquisition of subsidiaries and the increased exposure.

The loss allowance increased by EUR 349 thousand at

the NLB Group level and EUR 20,391 thousand at the NLB

level. The main reason for the small increase in allowance

compared to the increased exposure were write-offs in

the amount of EUR 21,236 thousand at the NLB Group

level and EUR 4,073 thousand at the NLB level.

486

Movement of gross carrying amount of other

The gross carrying amount of other financial assets

in 2025 increased by EUR 34,235 thousand at the NLB

Group level due to an increase in claims from refunds.

The gross carrying amount of other financial assets

decreased by EUR 47 thousand at the NLB level. The

loss allowance for other financial assets in year 2025

at the NLB Group level increased by EUR 348 thousand,

while at the NLB level it decreased by EUR 59 thousand.

The main reason for the increase at the NLB Group level

was the increased exposure, while the decrease at the

NLB level was driven by reduced exposure.

in 2024 decreased (by EUR 30,920 thousand at the

NLB Group level and EUR 20,479 thousand at the NLB

level), with the majority of these decreases relating

to receivables for credit cards. As these receivables

are by their nature short-term, they did not contribute

significantly to the decrease of the loss allowance. The

loss allowance for other financial assets in year 2024 at

the NLB Group level decreased by EUR 1,812 thousand,

while at the NLB level it decreased by EUR 401 thousand.

The main reason for these decreases are write-offs

(EUR 5,599 thousand at the NLB Group level and EUR 341

thousand at the NLB level).

Movement of gross carrying amount of debt securities measured at amortised cost

487

Movement of gross carrying amount of debt securities measured at fair value through other comprehensive income

488

5.15. Financial liabilities, measured at amortised cost

Analysis by type of financial liabilities, measured at the amortised cost

a) Deposits from banks and central banks and amounts due to customer

b) Borrowings from banks and central banks and other customers

As at 31 December 2025, the NLB Group and NLB

had EUR 92,528 thousand in undrawn borrowings (31

December 2024: EUR 97,874 thousand).

489

c) Debt securities issued

| | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | |
| | | | | | | | in EUR thousands |
| NLB Group and NLB | | | | 31 Dec 2025 | | 31 Dec 2024 | |
| | | | | Carrying | Nominal | Carrying | Nominal |
| | Currency | Due date | Interest rate | | | | |
| | | | | amount | value | amount | value |
| Subordinated bonds | | | | | | | |
| | EUR | 05. 02. 2030

(i) | 3.40% to 05.02.2025, thereafter 5Y MS + 3.658% p.a. | - | - | 10,785 | 10,500 |
| | EUR | 28. 11.

203

2 | 10.75% to 28.11.2027, thereafter 5Y MS + 8.298% p.a. | 224,010 | 225,000 | 224,960 | 225,000 |
| | EUR | 24. 01.

2034 | 6.875% to 24.01.2029, thereafter 5Y MS + 4.230% p.a. | 321,572 | 300,000 | 324,398 | 300,000 |
| Total Subordinated bonds | | | | 545,582 | 525,000 | 560,143 | 535,500 |
| Senior Preferred notes | | | | | | | |
| | EUR | 27. 06.

20

27 | 7.125% to 27.07.2026, thereafter 1Y MS + 3.606% p.a. | 519,383 | 500,000 | 524,638 | 500,000 |
| | EUR | 21. 01. 2029

(ii) | 3.50% to 21.01.2028, thereafter 1Y MS + 1.150% p.a. | 515,594 | 500,000 | - | - |
| | EUR | 29. 05.

203

0 | 4.50% to 29.05.2029, thereafter 1Y MS + 1.650% p.a. | 518,661 | 500,000 | 524,158 | 500,000 |
| Total Senior Preferred notes | | | | 1,553,638 | 1,500,000 | 1,048,796 | 1,000,000 |
| Total Debt securities issued | | | | 2,099,220 | 2,025,000 | 1,608,939 | 1,535,500 |

(i) On 5 February 2025, NLB executed an early redemption of

NLB Tier 2 notes in the aggregate nominal amount of EUR 10,500 thousand (ISIN: XS2113139195).

(ii) On 21 January 2025, NLB issued senior preferred bonds in the total nominal value of EUR 500 million, 4NC3 tenor (ISIN: XS2972971399).

All of the above-mentioned subordinated bonds

represent non-convertible Tier 2 instruments (note 5.23.).

In the event of bankruptcy or liquidation of the issuer,

claims arising from Tier 2 instruments shall be repaid:

after the repayment of all unsubordinated claims of

the issuer, as well as all other subordinated claims (if

any), except claims arising from Tier 2 instruments and

Additional Tier 1 instruments;

with the same priority (

pari passu

) as, and

proportionally with the claims arising from other

instruments which qualify as Tier 2 instruments;

in priority to the claims arising from shares or other

instruments that qualify as Additional Tier 1 instruments

and claims arising from Common Equity Tier 1 capital

instruments.

490

Movement of debt securities issued

d) Other financial liabilities

Other financial liabilities in the amount of EUR 22,750

thousand (31 December 2024: EUR 25,255 thousand)

relate to a liability recognised in accordance with the

‘Act for Value Protection of Republic of Slovenia’s Capital

Investment in Nova Ljubljanska banka d.d., Ljubljana’

(note 5.16.a). The remaining balance also includes

liabilities to insurance companies, liabilities for received

EIB financial initiatives that can be used for specified

purposes, and received warranties.

491

5.16. Provisions

a) Analysis by type of provisions

Provisions for guarantees and commitments represent

expected credit losses in accordance with IFRS 9,

employee benefits are recognised in accordance

with IAS 19, while all other provisions are recognised

according to IAS 37.

Legal risks

Provisions for legal risks are formed based on

expectations regarding the probable outcome of legal

disputes. As at 31 December 2025, the NLB Group was

involved in 35 (31 December 2024: 40) legal disputes

with material claims against Group members in the total

amount of EUR 343,776 thousand excluding accrued

interest (31 December 2024: EUR 463,087 thousand).

As at 31 December 2025, NLB was involved in 20

(31 December 2024: 23) legal disputes with material

monetary claims against NLB. The total amount of these

claims, excluding accrued interest, was EUR 243,370

thousand (31 December 2024: EUR 243,599 thousand).

In connection with legal risks, the largest amount of

material monetary claims relates to civil claims filed

by Privredna banka Zagreb (the PBZ) and Zagrebačka

banka (the ZaBa) against NLB, referring to the old

savings of LB Branch Zagreb savers, which were

transferred to these two banks in a principal amount of

approximately EUR 172.91 million (as per 31 December

2025). Due to the fact the proceedings had been pending

for such a long time, the penalty interest already

exceeds the principal amount. As NLB is not liable for

the old foreign currency savings, based on numerous

process and content-related reasons, NLB has all along

objected to these claims. Two key reasons NLB is not

liable for the old foreign currency savings are that it was

only founded on the basis of the Constitutional Act on 27

July 1994 (at the time the savings were deposited with LB

Branch Zagreb, NLB did not yet exist), and NLB did not

assume any such obligations. Moreover, this is a former

Yugoslavia succession matter, as the governments of the

Republic of Slovenia and the Republic of Croatia agreed

in a Memorandum of Understanding signed in 2013

whose intent was to find a solution to the transferred

foreign currency savings of Ljubljanska banka in Croatia

(LB) on the basis of the Agreement on Succession

Issues. The Memorandum also said that the Republic

of Croatia would ensure the stay of all the proceedings

commenced by the PBZ and the ZaBa in relation to the

transferred foreign currency savings until the issue was

finally resolved.

Despite the agreement in the Memorandum of

Understanding to stay all of the proceedings

commenced, the Court of Appeal, the County Court of

Zagreb, ruled in six claims (as explained below in detail)

in favour of the plaintiff. In six of those cases, NLB filed a

constitutional suit after an extraordinary legal measure

of NLB with the Supreme Court of the Republic of Croatia

was not successful. In two of the six cases mentioned,

the plaintiff was fully repaid and therefore there are no

further liabilities for NLB in this regard.

Contrary to the decisions of the court described above

in another case, a claim filed by the PBZ was refused

and the judgment became final in favour of NLB. The

extraordinary legal measure with the Supreme Court

of the Republic of Croatia, filed by the plaintiff, was

dismissed by the Supreme Court on 16 June 2015.

In the other cases, with respect to which court

procedures described above are pending, final court

decisions have not yet been issued.

492

The table below summarises the amounts according to final court decisions (not including penalty interest) and which have not yet been recovered from NLB:

Date of the ruling	Plaintiff	Principal amount in thousands of currency	Costs of the proceedings in thousands of currency	Measures taken by NLB
				Constitutional suit against the court decisions (including the decision of the Supreme Court of
				the Republic of Croatia in the revision proceeding), as NLB found the court decision contrary to
April 2018	PBZ	EUR 222	EUR 34	the legislation in force and constitutional principles, and as well contrary to the Memorandum
				concluded between the Republic of Slovenia and the Republic of Croatia. Constitutional Court
				of the Republic of Croatia rejected the constitutional appeal of NLB d.d. on 5 October 2021.
				NLB challenged the judgments with the extraordinary legal measure (revision) on the Supreme
November 2017	PBZ	EUR 220	EUR 91	Count of the Republic of Croatia, which rejected NLB’s revision on 22 November 2023 (judgment
				received on 5 January 2024). NLB challenged the judgment in question with a constitutional
				lawsuit before the Constitutional Court of the Republic of Croatia on 2 February 2024.
				Constitutional suit against the court decisions (including the decision of the Supreme Court of
				the Republic of Croatia in the revision proceeding), as NLB found the court decision contrary to
December 2018	PBZ	SEK 3,855	EUR 90	the legislation in force and constitutional principles and as well contrary to the Memorandum
				concluded between the Republic of Slovenia and the Republic of Croatia. Constitutional Court
				of the Republic of Croatia rejected the constitutional appeal of NLB d.d. on 3 October 2023.
				NLB challenged the judgment with the extraordinary legal measure (revision) on the Supreme
March 2019	PBZ	USD 9,185	EUR 425	Count of the Republic of Croatia which rejected NLB’s revision. NLB challenged the judgment in
				question with a constitutional lawsuit before the Constitutional Court of the Republic of Croatia

The General Meeting of Shareholders of NLB provided

the Management Board of NLB with instructions on

how to act in the event of existing or potential new

final decisions by Croatian courts against LB and NLB

regarding the transferred foreign currency deposits,

especially not to voluntarily settle the adjudicated

amounts, and also gave some additional instructions

on the usage of legal remedies and regarding the

management of the property from that perspective.

On 19 July 2018, the National Assembly of the Republic

of Slovenia passed the ‘Act for Value Protection of

Republic of Slovenia’s Capital Investment in Nova

Ljubljanska banka d.d., Ljubljana’ (Zakon za zaščito

vrednosti kapitalske naložbe Republike Slovenije v

Novi Ljubljanski banki d.d., Ljubljana, hereinafter: ‘the

ZVKNNLB’) which entered into force on 14 August 2018.

In accordance with the ZVKNNLB, the Succession Fund

of the Republic of Slovenia (Sklad Republike Slovenije

za nasledstvo, javni sklad, hereinafter: ‘the Fund’),

shall compensate NLB for the sums recovered from

NLB by enforcement of final judgements delivered by

Croatian courts with regard to the transferred foreign

currency deposits, that is the principle amount, accrued

interest, expenses of court, attorney’s expenses, and

other expenses of the plaintiff, and expenses related

to enforcement with the accrued interest, and shall

not compensate NLB for its own costs or for the

difference between the book value of its assets sold

in enforcement proceedings and the price obtained

for such assets in enforcement proceedings. There

shall be no compensation for any voluntarily made

payments by NLB. In accordance with the ZVKNNLB

and pursuant to the agreement between NLB and

the Fund, as envisaged by the ZVKNNLB (which was

concluded on 14 August 2018), NLB has to contest the

claims made against it in court proceedings in relation

to transferred foreign currency deposits, and use

against court decisions that are disadvantageous for

NLB, all reasonable legal remedies and to continue to

actively challenge the judicial decisions of the courts of

the Republic of Croatia in relation to transferred foreign

currency deposits on the basis of which enforcement

took place, leading, on the basis of ZVKNNLB, to the

compensation of the sums recovered from NLB by

enforcement. In the aforementioned case from May

2015, the Succession Fund of the Republic of Slovenia

has already compensated the sums recovered from NLB

by enforcement.

Provisions for legal risks for existing claims filed by PBZ

and ZaBa are not formed, since NLB believes that based

on the factual and legal evaluation there are greater

prospects for the court proceedings to end in favour of

NLB than the opposite.

Regardless of the negative outcomes for claims for

which the final ruling was issued, in the financial

statements the NLB Group did not recognise the

negative impact on profit and loss due to the protection

provided by the ZVKNNLB. For final judgements, the

NLB Group recognised the liabilities and related assets,

which are included within other financial assets (note

5.6.d) and other financial liabilities (note 5.15.d).

493

b) Provisions for guarantees and commitments

Movements in provisions for guarantees and commitments

494

Movement of contractual amounts of guarantees and commitments in off-balance sheet

495

c) Movements in employee benefit provisions

Post-employment benefits

Other employee benefits

Other employee benefits include NLB Group’s

obligations for jubilee long-service benefits.

d) Movements in restructuring provisions

Additional restructuring provisions recognised during

2025 and 2024 relate mainly to NLB for the purpose

of continuing the reorganisation, optimisation of work

processes/business in individual segments, and HR

restructuring (restructuring of workforce in accordance

with business demands) and the related reduction in the

number of employees.

496

e) Movements in provisions for legal risks

f) Movements in other provisions

Other provisions in the NLB Group relate mainly to

liability in relation to reimbursement of fees in case of

early loan repayment.

497

5.17. Deferred income tax

a) Analysis by type of deferred income taxes

As at 31 December 2025, the tax loss on which NLB

did not recognise deferred tax assets, amounts to

EUR 305,136 thousand (31 December 2024: EUR 430,086

thousand). In accordance with the amendment to

Slovenian corporate income tax law effective from

1 January 2025, tax losses can be carried forward

to subsequent periods for a maximum of five years

after the period in which they occurred. Based on the

transitional provision, accumulated unused old tax

losses, incurred before the entry into force, can be

claimed in the five years (until 2029). By Slovenian tax

law, use of tax loss is limited to 50% of the actual tax

base. Other banking members have no tax losses.

NLB did not recognise deferred tax assets on temporary

differences arising from the impairments of investments

in subsidiaries and associates where it is not probable

that the temporary difference will reverse in the

foreseeable future. These temporary differences amount

to EUR 99,018 thousand as at 31 December 2025 (31

December 2024: EUR 137,277 thousand).

498

b) Movements in deferred income taxes

499

				in EUR thousands
NLB	Impairment of financial assets	Valuation of financial instruments and capital investments	Depreciation and valuation of non-financial assets	Total
Balance as at 1 January 2024	538	3,556	168	4,262
Charged/(credited) to profit and loss	-	-	(29)	(29)
Charged/(credited) to other comprehensive income	44	1,663	-	1,707
Balance as at 31 December 2024	582	5,219	139	5,940
Charged/(credited) to profit and loss	-	-	(98)	(98)
Charged/(credited) to other comprehensive income	(111)	2,708	-	2,597
Balance as at 31 December 2025	471	7,927	41	8,439

5.18. Income tax relating to components of other comprehensive income

| | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| | |
| | | | | | | in EUR thousands |
| 2025 | NLB Group | | | NLB | | |
| | Before tax | Tax expense | Net of tax | Before tax | Tax expense | Net of tax |
| Actuarial gains and losses | 9 | (23) | (14) | 356 | (39) | 317 |
| Financial assets measured at fair value through other comprehensive income | 28,234 | (5,682) | 22,552 | 22,292 | (4,910) | 17,382 |
| Share of associates and joint ventures | 66 | - | 66 | - | - | - |
| Total | 28,309 | (5,705) | 22,604 | 22,648 | (4,949) | 17,699 |

5.19. Other liabilities

5.20. Share capital

The share capital of NLB amounts to EUR 200,000

thousand and did not change in 2025. It is comprised

of 20,000,000 no-par-value ordinary registered

shares, with the corresponding value of EUR 10.0 for

one share. All issued shares are fully paid and there

are no un-issued authorised shares. As at 31 December

2025, the major shareholder of NLB with significant

influence is the Republic of Slovenia, who owns 25.00%

plus one share.

The book value of an NLB share on a consolidated level

as at 31 December 2025 was EUR 169.8 (31 December

2024: EUR 157.1), and on a solo level it was EUR 130.9

(31 December 2024: EUR 122.1). It is calculated as the

ratio of net assets’ book value excluding other equity

instruments issued and the number of shares.

Distributable profit as at 31 December 2025 amounts

to EUR 1,351,949 thousand (31 December 2024:

EUR 1,194,063 thousand) and consists of the NLB net

profit for 2025 in the amount of EUR 426,918 thousand

(2024: EUR 478,161 thousand), and retained earnings

from previous years in the amount of EUR 1,194,063

thousand, reduced for the payment of dividends in

the amount of EUR 257,200 thousand and for the

interests of subordinated bonds, which are considered

instruments of additional basic capital in the amount

of EUR 11,832 thousand (31 December 2024: EUR 7,977).

Its allocation will be subject to a decision by the Bank’s

General Meeting. A proposal for the General Meeting will

be prepared by the Management and the Supervisory

Boards, considering restrictions imposed by the

regulators, the Group’s risk appetite, the target capital

adequacy at the Group’s level, and actual prevailing

capital position at the time of the proposal.

The shares give to their holders the right to vote at the

NLB’s meeting of shareholders where, as a rule, each

share entitles its holder to one vote. Nevertheless, a

shareholder who acquires shares which, together with

the shares already held by such shareholder or by a

third person on behalf of such shareholder, represent

more than 25% of the NLB’s share capital, may only

exercise its voting rights under such shares if NLB’s

501

Supervisory Board approves such an acquisition.

The Supervisory Board’s approval may only be rejected

if, following such an acquisition, such a person would

hold shares representing more than 25% of NLB’s issued

share capital plus one share. The approval shall be

considered given if not expressly rejected in 20 days.

No such approval is required for shares acquired by

a person on behalf of third persons provided that

this person is not entitled to exercise the voting rights

arising from such shares at their own discretion, and

undertakes to NLB not to exercise the voting rights

based on voting instructions unless those instructions

are accompanied by a confirmation that the instructing

person is the beneficial owner of the shares with respect

to which votes are to be exercised and does not hold in

the aggregate, directly or indirectly, 25% or more of NLB

shares with voting rights.

The shares also give their holders the right to be

informed, as well as the pre-emptive right to subscribe

for new shares on a pro rata basis in the case of a

share capital increase, the right to a pro-rata share

of remaining assets in the case of bankruptcy or

liquidation or NLB, and the right to receive a dividend.

In 2025, NLB paid dividends for the previous year in

the amount of EUR 

12.86

per share (2024: EUR 

11.00

per share), which decreased retained earnings by

EUR 257,200 thousand (2024: EUR 220,000 thousand).

As at 31 December 2025 and 31 December 2024,

NLB holds no own shares. In June 2019, the General

Meeting of NLB authorised the Management Board

that in the period of 36 months from the adoption of

the shareholders’ resolution, it can buy own shares of

the Bank for the payment of variable remuneration to

certain employees as required by the Banking Act and

other relevant regulations. NLB did not buy any own

shares based on this authorisation.

5.21. Other equity instruments issued

On 23 September 2022, NLB issued subordinated notes

intended to qualify as Additional Tier 1 Instruments in the

aggregate nominal amount of EUR 82 million, and on

26 November 2025 in the aggregate nominal amount of

EUR 300 million. The notes have no scheduled maturity

date. The issuer has the option for early redemption of

the notes in the defined period. The coupon payments

are discretionary and non-cumulative. The notes terms

provide for a temporary write-down in the event that

the Common Equity Tier 1 ratio of the NLB Group and/or

NLB drop(s) below 5.125%. The issue price was equal to

100% of the nominal amount of the notes.

5.22. Accumulated other comprehensive income and reserves

a) Reserves

The share premium account as at 31 December 2025 and

as at 31 December 2024 comprises paid-up premiums in

the amount of EUR 822,173 thousand and the revaluation

of the share capital from previous years in the amount of

EUR 49,205 thousand.

Profit reserves as of 31 December 2025 and as of

31 December 2024 amount to EUR 186,332 thousand

and consist of EUR 13,522 thousand of legal reserves

and EUR 172,810 thousand of other reserves, which

were formed based on the Resolution of the Bank’s

General Meeting.

In 2025, NLB recorded a net profit in the amount of

EUR 426,918 thousand (2024: net profit EUR 478,161

thousand), which is included in the retained earnings as

at 31 December 2025.

b) Accumulated other comprehensive income

503

5.23. Capital adequacy ratios

504

Overall capital requirements of the NLB Group at the consolidated level:

SREP requirement		2025	2024	2023
	CET1	4.5%	4.5%	4.5%
Pillar 1 (P1R)	AT1	1.5%	1.5%	1.5%
	T2	2.0%	2.0%	2.0%
	CET1	1.19%	1.19%	1.35%
Pillar 2 (P2R)	Tier 1	1.59%	1.59%	1.80%
	Total Capital	2.12%	2.12%	2.40%
	CET1	5.69%	5.69%	5.85%
Total SREP Capital Requirement (TSCR)	Tier 1	7.59%	7.59%	7.80%
	Total Capital	10.12%	10.12%	10.40%
Capital Conservation buffer	CET1	2.50%	2.50%	2.50%
O-SII buffer	CET1	1.25%	1.25%	1.25%
Systemic risk buffer	CET1	0.08%	0.11%	0.10%
Countercyclical buffer	CET1	0.80%	0.52%	0.26%
Combined buffer requirement (CBR)	CET1	4.63%	4.38%	4.11%
	CET1	10.32%	10.07%	9.96%
Overall capital requirement (OCR) = MDA threshold	Tier 1	12.22%	11.97%	11.91%
	Total Capital	14.75%	14.50%	14.51%
Pillar 2 Guidance (P2G)	CET1	1.0%	1.0%	1.0%
	CET1	11.32%	11.07%	10.96%
OCR + P2G	Tier 1	13.22%	12.97%	12.91%
	Total Capital	15.75%	15.50%	15.51%

As at 31 December 2025, the Group’s Overall Capital

Requirement (OCR) on a consolidated basis was 14.75%,

which is slightly higher (by 0.25 percentage point,

hereinafter: pp) than at the end of 2024, due to an

increase in the Combined Buffer requirement (higher

Countercyclical Buffer and lower Systemic Risk Buffer).

The OCR comprises:

The Total SREP Capital Requirement (TSCR) is 10.12%,

including 8.00% Pillar 1 and 2.12% Pillar 2 Requirements.

The Combined Buffer Requirement (CBR), which is

4.63%, and includes a 2.50% Capital Conservation

Buffer, a 1.25% O-SII Buffer, a 0.80% Countercyclical

Buffer, and a 0.08% Systemic risk buffer.

In addition to the above requirements, the Pillar 2

Guidance (P2G) is 1.0% of Common Equity Tier 1 (CET1).

Effective 1 January 2026, NLB received a new SREP

decision on a consolidated basis for 2025. The Pillar 2

Requirement was reduced by 0.02 pp to 2.10%, reflecting

an improved SREP assessment. The Pillar 2 Guidance

(P2G) was also lowered from 1.0% to 0.75%, thus

reducing OCR + P2G to 15.53% (from previous 15.75%).

The Group CCYB is expected to increase due to new

CCYB requirements in North Macedonia, Montenegro,

Serbia and Croatia.

The Bank and the NLB Group’s capital covers all the

current and announced regulatory capital requirements,

including capital buffers and other currently known

requirements, as well as the P2G.

As at 31 December 2025, the NLB Group capital ratios on

a consolidated basis stand at:

15.44% CET1 ratio,

17.41% Tier 1 ratio,

20.12% Total Capital ratio.

As at 31 December 2025, the Group’s TCR stood at

20.1% (or 1.4 pp increase YoY), and the CET1 ratio stood

at 15.4% (or 0.1 pp increase YoY), which is well above

requirements. The higher total capital adequacy derives

from higher capital (EUR 514.3 million YoY), which

counterbalanced RWA increase of EUR 1,293.7 million

YoY. The Group increased its capital mainly by including

part of 2025 profit (EUR 226.6 million) and by issuing an

AT1 instrument (EUR 300.0 million).

In 2025 (YoY), the RWA of the Group for credit risk

increased by EUR 1,653.4 million due to changed EU

regulation rules that came into force on 1 January 2025

(approx. EUR 311.7 million) and portfolio development

(approx. EUR 1,341.6 million).

Portfolio growth in 2025 contributed to an RWA increase,

primarily within corporates and retail, where a large

part of the loans is at least partially secured by real

estate. A minor rise in RWA also resulted from newly

recognised defaults. RWA was also affected by higher

placements with central banks not included on the

EBA third-party equivalence list as well as increased

EUR denominated assets held with the central bank

outside EU. Part of the liquidity surplus was reallocated

to commercial bank deposits and to newly purchased

bank-issued bonds, resulting in a slight RWA increase.

The increase in RWAs for market risks and Credit Value

Adjustments (CVA) by EUR 59.3 million YoY was mainly

driven by a higher RWA for FX risk of EUR 58.9 million

(mainly the result of more open positions in domestic

currencies of non-euro subsidiary banks).

505

The Group’s operational risk exposure decreased

by EUR 419.1 million YoY due to a new standardised

methodology under CRR 3 and a consequently lower

Business Indicator and Marginal Coefficient (from 15% to

12% up to EUR 1 billion). The calculation was predominantly

influenced by the Asset and Financial Components.

The most important goal of internal capital adequacy

assessment process (ICAAP) in the NLB Group, set up

in accordance with the ECB Guidelines, is ensuring

adequate capital and sustainability on an ongoing

basis. The purpose of this process is to have in place

sound, effective, and comprehensive strategies and

processes to assess and maintain capital on an ongoing

basis, as well as the adequate distribution of internal

capital for covering the nature and level of the risks to

which the NLB Group is or might be exposed. In addition,

the NLB Group places strong emphasis on its integration

into the overall risk management system in order to

ensure proactive support for informed decision-making.

From an economic perspective, the NLB Group manages

its capital adequacy by ensuring that all its risks are

adequately covered by internal capital. A normative

perspective is a multiyear forward-looking assessment

of the NLB Group which shows its ability to fulfil all of its

capital-related regulatory and supervisory requirements

and risk appetite of the NLB Group. Within these capital

constraints, the NLB Group defines its management

buffers in the risk appetite above the regulatory and

supervisory requirements, and the internal capital needs

that allow it to sustainably follow its business strategy. A

normative perspective includes several stress scenarios

which are integrated into the NLB Group’s annual

business plan review and budgeting process.

5.24. Off-balance sheet liabilities

a) Contractual amounts of off-balance sheet financial instruments

Fee income from issued non-financial guarantees

amounted to EUR 11,156 thousand (2024: EUR 10,239

thousand) in the NLB Group, and to EUR 7,623 thousand

(2024: EUR 6,743 thousand) in NLB.

In addition to the instruments presented in the table

above, the NLB Group and NLB have also some low-

risk off-balance sheet items, for which a 0% credit

conversion factor is applied in accordance with

the Capital Requirements Regulation (credit and

other lines which can be irrevocably cancelled by

a bank). As at 31 December 2025, these items at the

NLB Group level amount to EUR 1,308,542 thousand

(31 December 2024: EUR 1,097,316 thousand), and at the

NLB level EUR 480,359 thousand (31 December 2024:

EUR 433,363 thousand).

506

b) Analysis of derivative financial instruments by notional amounts

As at 31 December 2025, the NLB Group held interest

rate swaps intended as fair value hedges of assets with

a total nominal value of EUR 1,029,100 thousand (31

December 2024: EUR 589,141 thousand) and intended to

hedge the fair value of bonds issued in 2025 with a total

nominal value of EUR 2,020,000 thousand (31 December

2024: EUR 1,520,000 thousand) (note 5.5.b).

As at 31 December 2025, NLB held interest rate swaps

intended as fair value hedges of assets with a total

nominal value of EUR 969,100 thousand (31 December

2024: EUR 529,141 thousand) and intended to hedge

the fair value of bonds issued in 2025 with a total

contractual value of EUR 2,020,000 thousand (31

December 2024: EUR 1,520,000 thousand) (note 5.5.b).

Derivatives that qualify for hedge accounting are used

to hedge interest rate risk.

The fair values of derivative financial instruments are

disclosed in notes 5.2. and 5.5.

c) Capital commitments

507

5.25. Funds managed on behalf of third parties

Funds managed on behalf of third parties are accounted

separately from the NLB Group’s funds. Income and

expenses arising from these funds are charged to the

respective fund, and no liability falls on the NLB Group

in connection with these transactions. The NLB Group

charges fees for its services.

Funds managed on behalf of third parties

Fiduciary activities

Fee income for funds managed on behalf of third parties

508

6. Risk Management

Risk management in the NLB Group is implemented

in accordance with the set strategic guidelines,

established internal policies, and procedures which

take into account European banking regulations, the

regulations adopted by the Bank of Slovenia, current

EBA guidelines, and relevant good banking practices.

In addition, the Group is constantly enhancing and

complementing the existing approaches, methodologies,

and processes in all risk management segments with the

aim to proactively support decision-making.

Effective risk and capital management is crucial for

the NLB Group in sustaining long-term profitable

operations. A robust Risk Management framework

is comprehensively integrated into decision-making,

steering, and mitigation processes within the Group. The

NLB Group gives high importance to the risk culture and

awareness of all relevant risks within the entire Group.

The NLB Group’s Risk Management Framework

supports business decision-making on strategic and

operating levels, comprehensive steering, proactive risk

management, and mitigation by incorporating:

Risk Appetite statement and Risk Strategy orientations;

yearly review of strategic business goals, budgeting,

and the capital planning process;

internal capital adequacy assessment process (ICAAP)

and internal liquidity adequacy assessment process

(ILAAP);

recovery plan and resolution activities;

other internal stress-testing capabilities, early warning

systems, and regular risk analysis;

regulatory and internal management reporting.

The NLB Group uses the ‘three lines of defence

framework’ as an important element of its internal

governance, whereby the Risk management function

acts as a second line of defence. Set governance and

different risk management tools enable adequate

oversight of the Group’s risk profile. Moreover, they

support business operations and enable efficient risk

management by incorporating escalation procedures

and different mitigation measures when necessary.

a) Risk management strategies and processes

The key goal of the NLB Group’s Risk Management is to

proactively manage, assess, and monitor risks within

the Group. Sound and holistic understanding of risk

management is embedded into the entire organisation,

focusing on risk identification at a very early stage,

efficient risk management and mitigation with the aim

of ensuring the prudent use of its capital and adequate

liquidity structure to support the financial resilience of

Key strategic risk management principles of the NLB

Group are defined by its Risk Appetite and Risk Strategy,

designed in accordance with the Group’s business model,

integrating a forward-looking perspective. The

of NLB Group, Risk Appetite, Risk Strategy

, and the

key internal risk policies of the NLB Group – which are

approved by the Management and Supervisory Boards

– specify the strategic goals, risk appetite guidelines,

approaches, and methodologies for monitoring,

measuring, and managing all types of risk in order to

meet internal strategic objectives and fulfil all external

requirements. The main strategic risk guidelines are

comprehensively integrated into decision-making,

including the business plan review and budgeting process.

The NLB Group plans a prudent risk profile and optimal

capital usage, representing an important element of its

business strategy and related mid-term financial targets.

The management of credit risk, which is the most

important risk category in the NLB Group, concentrates

on taking moderate risks – a diversified credit portfolio,

adequate credit portfolio quality, sustainable costs of

risk, and ensuring an optimal return considering the

risks assumed. As regards liquidity risk, the tolerance

is low, while the activities are geared towards ensuring

an adequate liquidity position and funding structure

on an ongoing basis. The Group limited exposure to

credit spread risk, arising from the valuation risk of

debt securities portfolio serving as liquidity reserves,

to a medium level. The fundamental orientation in the

management of interest rate risk is to limit unexpected

negative effects on revenues and capital, therefore, a

medium tolerance for this risk is stated. When assuming

operational risk, the Group pursues the orientation that

such a risk must not significantly impact its operations.

On this basis, changes of control activities, processes,

and/or organisation are performed when necessary.

In addition, the Group also focuses on proactive

mitigation, prevention, and minimisation of potential

damage. To adequately manage ICT risks and ensure

compliance with the requirements of the Digital

Operational Resilience Act (DORA), a dedicated second

line of defence within risk management function and

ITC risk management framework is established. Special

attention is given to their regular and comprehensive

monitoring and mitigation. The conclusion of

transactions with derivative financial instruments at NLB

is primarily limited to servicing customers and hedging

the Bank’s own positions. In the area of currency risk,

the NLB Group pursues the goals of low to moderate

exposure. Based on environmental and climate risk

assessment the impact of these risks is estimated as low,

except for transition risk in the area of credit risk which

is assessed as low to medium. The tolerance for other

risk types is low and focuses on minimising their possible

impacts on the NLB Group’s entire operations.

For the purpose of an efficient risk mitigation process.

NLB Group applies a single set of standards to retail

and corporate loan collateral. representing a secondary

source of repayment with the aim of efficient credit

risk management and optimal capital consumption.

The Group has a system for monitoring and reporting

collateral at fair (market) value in accordance with the

International Valuation Standards (IVS). The eligibility

of collateral. by types and ratios referring to prudent

lending criteria. is set within internal lending guidelines.

Credit risk mitigation principles and rules in NLB Group

are described in more relevant details in the section

‘Credit risk management’. When hedging market risks.

namely interest rate risk and foreign exchange risk. in

line with the set risk appetite. NLB Group follows the

principle of natural hedge or using derivatives in line

with hedge accounting principles.

Risk management focuses on managing and mitigating

risks in line with the Group’s Risk Appetite and Risk

Strategy. Within these frameworks, the Group monitors

a range of risk metrics, including internal capital

allocation in order to assure the Group’s risk profile is

in line with its risk appetite. The usage of risk limits and

potential deviations from limits and target values are

regularly reported to the respective committees and/or

the Management Board of the Bank and the Supervisory

Board. The banking subsidiaries within NLB Group

509

adapted a corresponding approach to monitor and

manage their target risk profiles.

The NLB Group established a comprehensive stress-

testing framework and other early warning systems in

different risk areas with the intention to strengthen the

existing internal controls and ensure timely response

when necessary. A robust and uniform stress-testing

programme includes all material types of risk and

relevant stress scenario analysis, according to the

vulnerability of the Group’s business model. The Group

established an internal ESG stress-testing concept

to identify the most relevant financial vulnerabilities

stemming from climate risk, which is constantly further

enhanced by considering disposable ESG-related

data. Stress testing is integrated into the Risk Appetite,

ICAAP, ILAAP, Recovery Plan, and budgeting process

to support proactive management of the Group’s

risk profile, namely the capital and liquidity positions

in a forward-looking perspective. In addition, the

Group also performs reverse stress tests with the aim

to test its maximum recovery capacity. Other partial

risk assessments are covered by risk analysis, based

on relevant risk parameters, and integrated into the

process of setting a risk management limit system.

b) Risk management structure and organisation

The NLB Group’s corporate governance framework

is based on the principles of sound and responsible

governance, in accordance with the applicable

legislation of the Republic of Slovenia, particularly

the provisions of the Companies Act (ZGD-1M) and

the Banking Act (ZBan-4), the Regulation on Internal

Governance Arrangements, the Management Body,

and the Internal Capital Adequacy Assessment Process

for Banks and Savings Banks, the EBA Guidelines

on internal governance, the EBA Guidelines on the

assessment of the suitability of members of the

management body, and key function holders, as well

as the EBA Guidelines on remuneration practices.

Several layers of management provide cohesive risk

management governance in the NLB Group.

The NLB Group established a three lines of a defence

framework with the aim of managing risks effectively.

The three lines of defence concept provides a

clear division of activities and defines roles and

responsibilities for risk management at different levels

within the Group. Risk management in the Group acts as

a second line of defence, accountable for appropriate

managing, assessing, monitoring, and reporting of

risks in the Bank as the main entity in Slovenia, and

as the competence centre in charge of Group banking

and leasing members, and other non-core subsidiaries

which are in a controlled wind-out.

Overall, the organisation and delineation of

competencies in the NLB Group’s risk management

structure is designed to prevent conflicts of interest

and ensure a transparent and documented decision-

making process, subject to an appropriate upward and

downward flow of information. Risk management in the

NLB Group is managed within the Risk Management

competence line, which is a specialised competence

line encompassing several professional areas for which

the Global Risk Department, the Credit Risk – Corporate

Department, the Credit Risk – Retail Department and

the Evaluation and Control Department are responsible

in NLB. Risk profile or other risk exposures of the

Group are reported to different decision-making

bodies, such as the Management Board, Assets and

Liabilities Committee (ALCO), Risk Committee (RICO)

and Credit Committee of the Management Board

and the Risk Committee of the Supervisory Board.

The risk management competence line is in charge

of formulating and controlling the risk management

policies of the NLB Group, setting limits, establishing

methodologies, overseeing the harmonisation of risk

management policies within the NLB Group, monitoring

the NLB Group’s risk exposures, and preparing external

and internal reports.

All members of the NLB Group that are included in

the financial statements of the NLB Group report their

exposure to risks to the competent organisational

units within the Risk Management competence line.

These organisational units then report all relevant

risk information to the Management Board and its

respective Committees and the Supervisory Board

and its respective Committees, where the appropriate

measures are adopted.

The credit ratings of clients that are materially important

to the NLB Group and the issuing of credit risk opinions

are centralised via the Credit Committee of NLB. The

process follows the co-decision principle, whereby the

credit committee of the respective Group member first

adopts a decision, after which the Credit Committee of

NLB issues their opinion. The resolution of the Credit

Committee of NLB is made on the basis of all available

documentation, including a non-binding rating opinion

prepared by the Credit Risk department of NLB.

Risk monitoring in the NLB Group members takes place

in an independent and/or separate organisational unit.

This enables uniform risk monitoring on standardised

risk management approaches. Such monitoring

provides a comprehensive overview of the Group’s risk

profile and that of each Group member. In compliance

with the risk appetite, risk management strategy, and

policies of the NLB Group, risk monitoring in each NLB

Group member is separated from its management and/

or business function to maintain the objectivity required

when assessing business decisions (the concept of three

lines of defence concept). The organisational unit for

managing risks directly reports to the Management

Board and its committees (Credit Committee, ALCO,

RICO and the Operational Risk Committee) and to the

c) Risk measurement and reporting systems

As a systemic banking group, the NLB Group is subject

to the Single Supervisory Mechanism (SSM), which

is supervised by the Joint Supervisory Team (JST) of

the ECB and the Bank of Slovenia. The NLB Group

complies with the ECB regulation, while the NLB Group

subsidiaries operating outside Slovenia are also

compliant with the rules set by the local regulators. A

third-party equivalent was approved in Serbia, Bosnia

and Herzegovina, and North Macedonia, resulting in

alignment of local regulation with the CRR rules. With

regard to capital adequacy, and in accordance with

the provisions of the Directive (CRD) and the Regulation

(CRR), the NLB Group applies a standardised approach

for credit, market and operational risk. As of 1 January

2025 the calculation of Risk Weighted Assets for credit

risk is based on the CRR3 regulation.

Across the Group, risks are assessed, monitored,

managed, or mitigated in a uniform manner, as

defined in the Group’s Risk Management standards,

and taking into account the specifics of the markets in

which individual NLB Group members operate. For the

purposes of measuring exposure to credit risk, liquidity

510

risk, interest rate, and credit spread risk in the banking

book, operational risk, market risk, ESG, and non-

financial risks, in addition to the prescribed regulations,

the NLB Group uses internal methodologies and

approaches that enable more detailed monitoring and

management of risks. These internal methodologies are

aligned with the ECB, EBA, and Basel guidelines, as well

as best practices in banking methodologies.

As for risk reporting, the NLB Group’s internal guidelines

reflect, in addition to internal requirements, the

substance and frequency of reporting required by the

Bank of Slovenia and the ECB. In addition, each member

of the NLB Group also complies with the requirements

of its local regulations. Risk reporting is carried out

in the form of standardised reports, pursuant to risk

management policies based on common methodologies

for measuring exposure to risks, a uniform database

structure within Data Warehouse (DWH), comprehensive

data quality assurance, and automated report

preparation, which ensures the quality of reports and

reduces the possibility of errors.

d) Data and IT system

Risk data are calculated and stored in the NLB Group

DWH and collected from DWH of NLB and other

Group members. The established process provides an

integrated information in common reference structure

where business users can access in a consistent and

subject-oriented format. Data are regularly checked

and validated. Data used for internal risk assessment,

management, and reporting are the same as data the

NLB Group uses for regulatory reporting.

The Group has established a strong and robust data

governance program that aligns with the goals and

objectives of the Group’s risk management function. The

NLB Group data governance and data quality framework

consists of identifying risks, developing policies and

controls regarding the confidentiality, integrity, accuracy,

and availability of data, and carrying out second-line-

of-defence controls by an independent validation unit

under the responsibility of the Group Data Governance

Officer. This framework covers the agreed upon service

level standards for both in-house and outsourced data-

related processes. In doing so, the Group complies with

the BCBS 239 principles and the ECB Guide on effective

risk data aggregation and risk reporting.

e) Risk management highlights in 2025

Efficient managing of risks and capital remains crucial

for the NLB Group to sustain long-term profitable

operations. The Group further enhanced the robustness

of its risk management system in all respective risk

categories in order to manage them proactively,

comprehensively, and prudently. Risk identification

in a very early stage, its efficient managing, and the

corresponding mitigation processes represent essential

steps in such a system. The business and operating

environment relevant for the NLB Group operations

is changing with trends, such as sustainability, social

responsibility, governance, changing customer

behaviours, emerging new technologies and competitors,

as well as increasing new regulatory requirements.

Accordingly, the risk management framework is regularly

adapted and upgraded with the aim of detecting and

managing new potential emerging risks.

The NLB Group places particular emphasis on

integrating risk analysis into the decision-making

process at strategic and operational levels, ensuring

diversification to avoid excessive concentration,

optimising the use of internal capital, applying

appropriate risk-adjusted pricing, providing regular

training at all levels of management, and ensuring

overall compliance with internal policies/rules and

relevant regulations.

The Group’s credit portfolio continued to exhibit high

quality and remained well diversified, despite the

ongoing geopolitical tensions and more adverse than

anticipated macroeconomic trends. The resilience of

the Group in the region contributed to maintaining

non-performing ratios at sustainable level, although

some increase in NPLs was identified predominately

in corporate sector in Slovenia. As an important

strength their coverage ratio remained above EU

average. In 2025, the Bank observed a deterioration in

creditworthiness in a few larger companies operating

within the steel, metal and automotive industry. The

weakening of financial indicators and intensified

sector-specific headwinds contributed to a recognised

risk of default. As a result, several exposures migrated

to Stage 3 in accordance with the IFRS 9 impairment

requirements. Nevertheless, the cost of risk remained

within the 2025 expected range.

The Group is well capitalised and above the risk appetite

at both the Group and banking member levels. The

liquidity position of the Group also remained solid,

with liquidity indicators high above the regulatory

requirements, indicating its low tolerance for this

risk. Even if a highly unfavourable liquidity scenario

would materialise, the Group holds a sufficient level

of high-quality liquidity reserves. Significant attention

was devoted to the structure and concentration of

liquidity reserves, while at the same time the potential

adverse negative market movements were considered.

Investment activity continued with a balanced approach

to finding attractive market opportunities while pursuing

well-managed credit spread and interest rate risk, as

well as capital consumption. In addition, the Group

reduced the net interest income sensitivity in 2025.

Interest rate risk exposure remained moderate and

stayed well within the risk appetite tolerance.

The management of ESG risks follows the ECB and

EBA guidelines, focusing on their comprehensive

integration into all relevant processes. The management

of these risks is embedded in the Group’s overall

credit approval process, collateral management and

related credit portfolio management. Sustainable ESG

financing in accordance with Environmental and Social

Management System is integrated into the Group’s Risk

Appetite Statement. Additionally, its publicly disclosed

Net-Zero commitments are addressed in the Group’s

Risk Appetite.

As a systemically important institution, the Group is

included in the EBA EU-wide and ECB SSM Stress Test

exercise. This EU-wide stress test evaluates the resilience

of the European banking sector in the current uncertain

and evolving macroeconomic environment, particularly

amid escalating geopolitical tensions that could lead

to a significant decline in GDP. The ECB published the

aggregate results at the beginning of August 2025.

511

6.1. Credit risk management

a) Introduction

In its operations, the NLB Group is exposed to credit

risk, or the risk of losses due to the failure of a debtor to

settle their liabilities to the NLB Group. For that reason, it

proactively and comprehensively monitors and assesses

the aforementioned risk. In that process, the NLB Group

follows the International Financial Reporting Standards,

regulations issued by the European Central Bank or

Bank of Slovenia, and the EBA guidelines. This area is

governed in greater detail by the internal methodologies

and procedures set out in internal documents.

Through regular reviews of the business practices and

the credit portfolios of the NLB Group members, NLB

ensures that they manage credit risk in accordance with

the NLB Group’s risk management standards, thereby

securing appropriately harmonised procedures at the

consolidated level.

The NLB Group manages credit risk using various

approaches:

Risk Assessment and Monitoring

At the level of the individual customer/group of

customers, appropriate procedures are followed in

various phases of the relationship with a customer prior

to, during, and after the conclusion of an agreement.

Prior to concluding an agreement, a customer’s

performance, financial position, and past cooperation

with NLB are assessed. To objectively assess a client’s

operation, internal scoring models for particular client

segments or product types have been developed. It is

also important to secure high-quality collateral even

though it does not affect a customer’s credit rating. This

is followed by various forms of customer monitoring,

in particular an assessment of their ability to generate

sufficient cash flows to ensure the regular settlement of

their liabilities and fulfilment of contractual obligations.

In this part of the credit process, regular monitoring

of clients within the Early Warning System (EWS) is

important. In the case of client default, restructuring or

work-out procedures are initiated depending on the

severity of the client’s situation.

Performance Measurement and Reporting

The quality and trends in the credit portfolio, including

on-balance and off-balance sheet exposures, are

actively monitored and analysed at the level of the

overall portfolio of the NLB Group and individual

banks. Comprehensive analyses are regularly

performed to assure monitoring of the portfolio quality

through time and to identify any breach of limits or

targets. Great emphasis is placed on the evolution

of portfolio structure in terms of client segmentation,

credit rating structure, structure by stages (based on

IFRS 9), and NPL ratios. Furthermore, the coverage of

NPL is an important indicator of potential future losses

that is closely monitored.

Apart from analysing the portfolio as a whole, the

quality of new loans production is monitored to test

the conservativity of the lending standards, which

should ensure the portfolio quality is maintained within

the Group risk appetite. Regular reporting to senior

management and the Management Board ensures

transparency and informed decision-making.

Stress-testing and Scenario Analysis

Regular stress-testing and scenario analyses are

conducted to assess the resilience of credit portfolio

under different economic conditions. These exercises

help detect vulnerabilities and formulate contingency

plans to address unforeseen events.

Beside default risk, portfolio management is also

focused on monitoring single name and industry

concentration, migration, FX lending, and the

environmental and climate risks of the credit portfolio.

Capital requirements for credit risk at the NLB Group

level within the first pillar are calculated according to

the Standardised approach, while within the second

pillar an internal IRB approach is used to estimate

the RWA for default, migration, and FX lending risk. In

addition, a single name concentration add-on is based

on the Granularity Adjustment Methodology, and an

industry concentration add-on is estimated based on

the HHI concentration indices. NLB and other NLB Group

members assess the level of credit risk losses on an

individual basis for material claims, and at the collective

level for the rest of the portfolio.

An individual review is performed for material Stage

3 financial assets which have been rated as non-

performing based on the information regarding

significant financial problems encountered by a

customer, actual breaches of contractual obligations

such as arrears in the settlement of liabilities, whether

financial assets will be restructured for economic or

legal reasons, and the likelihood that a customer will

enter bankruptcy or a financial reorganisation. Expected

future cash flows (from ordinary operations and possible

redemption of collateral) are assessed following an

individual review. If their scenario weighted discounted

value differs from the book value of the financial asset in

question, impairment must be recognised.

Collective ECL allowances are made for the remainder

of the portfolio, that is not assessed on an individual

basis. Based on IFRS 9 requirements, financial assets

measured at amortised cost or at fair value through

other comprehensive income are attributed to the

appropriate stage based on the estimated increase of

credit risk of a single exposure since initial recognition.

The stage of financial assets determines whether a

12-month or lifetime ECL must be considered. The ECL

calculation is based on the forward-looking probability

of default (PD) and loss given default (LGD), which are

calculated using historic data and statistical modelling,

as well as predicted macroeconomic parameters for

different scenarios. For off-balance financial assets,

the probability of the redemption of guarantees is

considered when creating collective provisions. The

models used to estimate future risk parameters are

validated and backtested on a regular basis to make

loss estimations as realistic as possible.

512

The management of ESG risks is incorporated in the

Group’s overall credit approval process and related

credit portfolio management. Sustainable financing is

addressed in the basic documentary framework:

Lending Policy for Non-Financial Companies in NLB

d.d. and NLB Group

where in the special sub-chapter

Environmental, Social and Governance Framework

three categories are defined (prohibited, restricted,

normal activities);

The Environmental and Social Transaction Policy

Framework in NLB d.d. and NLB Group

applies to

certain transactions with the greatest potential

for significant E&S impact (exclusion list, regulatory and

performance standards compliance check,

project categorisation);

The Environmental and Social Categorisation

Methodology Framework in NLB d.d. and NLB Group

provides a guide to the typical level of inherent

environmental and social risk according to NACE codes.

Beside addressing ESG risks in all relevant stages of

the credit-granting process, relevant ESG criteria were

also considered in the collateral evaluation process. On

the portfolio level, the Group does not face any large

concentration towards specific NACE industrial sectors

exposed to climate risk, whereby the role of transitional

risk is more prevailing. The availability of ESG data in the

region where the NLB Group operates remains limited,

nevertheless the Group has made a material progress in

the last period.

b) Key highlights in 2025

In the process of constantly complementing and

enhancing credit risk management, the NLB Group

focuses on taking moderate risks, and at the same

time ensuring an optimal return considering the risks

assumed. Preserving high credit portfolio quality

represents the most important goal, with particular

focus on the quality of new placements leading to a

diversified portfolio of customers. The Group is actively

present on the market in the region, financing existing

and new creditworthy clients. To further enhance

existing risk management tools, the Group is constantly

developing a wide range of advanced approaches

supported by mathematical and statistical models

in credit risk assessment in line with best banking

practises, while at the same time enabling faster

responsiveness towards its clients.

Lending growth in 2025 was substantial both in retail

and corporate segment. In the retail segment, the

lending in fixed interest rates was prevailing, especially

in the housing loan market. In the corporate segment,

the Bank seized opportunities to finance some of the top

corporate clients in the region while keeping the focus

on SME as its key segment. The credit portfolio remains

well-diversified, and there is no large concentration in

any specific industry or client segment. The share of retail

portfolio in the whole credit portfolio is quite substantial,

with still prevailing segment of mortgage loans.

In 2025, the Group’s credit portfolio quality remained

solid with a stable rating structure and diversified

portfolio. Great emphasis was placed on intensive

and proactive handling of problematic customers and

customers active in the industries that are less stable

under the current economic circumstances. The Bank

established an early warning system for detecting

increased credit risk at a very early stage. The stock

of NPE volume increased, primarily in the corporate

segment, driven by default of few individual clients from

iron and steel, and automotive industries in Slovenia.

As at 31 December 2025, the share of non-performing

exposure by EBA methodology in the NLB Group was

1.36% (a moderate increase from 1.08% at the end of

2024). Moreover, the coverage ratio remains high at

49.4%, which is above the EU average published by the

EBA (41.9% in 3Q 2025).

513

c) Maximum exposure to credit risk

Maximum exposure to credit risk is a presentation of NLB

Group’s exposure to credit risk separately by individual

types of financial assets and contingent liabilities.

Exposures stated in the above table are shown for the

balance sheet items in their net book value as reported

in the statement of financial position, and for off-balance

sheet items in the amount of their nominal value.

514

d) Collateral from financial assets measured at amortised cost

Collateral from credit impaired financial assets measured at amortised cost

515

516

Collaterals from financial assets measured at amortised cost classified into Stage 1 and 2

517

e) Collateral from loans mandatorily at fair value through profit or loss

518

f) Credit protection policy

The NLB Group applies a single set of standards to

retail and corporate loan collateral, as developed by

the NLB Group members in accordance with regulatory

requirements. The master document regulating loan

collateral in the NLB Group is the Loan Collateral

Policy in NLB d.d. and NLB Group. The Policy has been

adopted by the Management Board of the NLB Group.

The Policy represents the basic principles that the NLB

Group’s employees must take into account when signing,

evaluating, monitoring, and reporting collateral, with the

aim of reducing credit risk.

In line with the policy, the primary source of loan

repayment is the debtor’s solvency, and the accepted

collateral is a secondary source of repayment in case

the debtor ceases to repay the contractual obligations.

The NLB Group gives priority to collateral complying

with the Basel III requirements with the aim of improving

credit risk management and optimising the use of

capital. In accordance with Basel II, collateral may

consist of pledged deposits, government guarantees,

bank guarantees, debt securities issued by central

governments and central banks, bank debt securities,

and real-estate mortgages (the real estate must be,

beside other criteria, located in the European Economic

Area or in a country on the EBA’s third party equivalent

list for the effect on capital to be recognised).

Loans made to companies and sole proprietors may

be secured by other forms of collateral, as well (e.g., a

lien on movable property, a pledge of an equity stake,

investment coupons, collateral by pledged/assigned

receivables, etc.) if it is assessed that the collateral could

generate a cash flow if it were needed as a secondary

source of payment. If there is a lower probability that this

type of collateral would generate a cash flow, the NLB

Group takes a conservative approach and accepts the

collateral while reporting its value as zero.

From spring 2024 onwards, the NLB Group has been

intensively preparing for the introduction of the

amended Basel III standards. The amended regulation

came into force on 1 January 2025 and brings changes

in particular in the area of mortgaged real estate. The

aim of the NLB Group’s adjustment is to establish such

collateral and monitoring in the application support in

order to be able to fully utilise the regulatory possibilities

for achieving capital savings.

g) Processes for valuation of asset-based collateral

In compliance with relevant regulations, the NLB Group

monitors and reports collateral at market value. In

addition, in accordance with the amended legislation

(CRR3 or Basel III legislation), it established a system for

determining the prudent value (prudent valuation) of

real estate collateral in 2025.

Prudent value is a conservative estimation of value

determined by the Basel standards (Basel III) and

represents a value equal to or lower than the current

market value, as it takes into account a safety margin

for periods of possible market fluctuations. The basis

for determining the prudent value of real estate is

the market value, based on an assessment of the risk

that the current market price of the real estate may

be significantly higher than the value that would be

sustainable over the term of the loan. This assessment

is based on the cyclical nature of the real estate

market and takes into account factors such as the

macroeconomic cycle and where the real estate market

is in that cycle, the extent of excess supply of a particular

type of real estate, population trends, changes in the

micro environment, the duration of the loan, and the

location (area) of the property.

The market value of real estate used as collateral is

obtained from valuation reports of licensed appraisers.

The market value of movable property is obtained

from valuation reports of licensed appraisers or from

sales agreements. Both, valuation reports and sales

agreements must not be older than one year. In NLB

and members of the NLB Group, most reports of external

real estate appraisers are subject to review and control

procedures. The controls are performed by internal

appraisers. The subject of control is the content, value,

scope, and format of the report, its compliance with

international valuation standards, and the estimated

value. If they notice deviations, they estimate the needed

correction of the value of the external valuation (in %)

and correct the value of the external valuation. The

value adjustment can only be negative and can be

applied only in a limited range. For the purposes of

business decisions and the calculation of the necessary

impairments and provisions, additional deductions

(haircuts) are applied to the eventual adjusted market

value, depending on the type of collateral. For real-

estate collateral liquidation-value haircuts range

between 30% and 70%, depending on the type and

location of the real estate, and for movable assets they

range between 50% and 100%, depending on the type

of movable asset.

The market value of financial instruments held by the

NLB Group is obtained from the organised market – such

as the stock exchange for listed financial instruments

or determined in accordance with the internal

methodology for unlisted financial instruments (such

collateral is used exceptionally and on a small scale in

loans granted to companies and sole proprietors).

NLB has compiled a reference list of licensed real estate

appraisers for real estate. All appraisals must be made

for the purpose of secured lending and in accordance

with the international valuation standards (IVS, EVS, and

RICS). Appraisals related to retail loans are generally

ordered only from appraisers with whom the NLB has

a contract for real-estate valuations. For corporate

loans, appraisals are usually submitted by clients. If

a client submits an appraisal that is not made by an

appraiser included on the NLB’s reference list, NLB’s

expert department which employs certified real estate

appraisers in construction with licences granted by the

Slovenian Ministry of Justice, and certified real-estate

value appraisers with licences granted by the Slovenian

Institute of Auditors, will verify the appraisal. The expert

department is also responsible for reviewing valuations

of real estate serving as collateral for large loans.

Other NLB Group members obtain valuations from

in-house appraisers and outsourced appraisers, all

possessing the necessary licences. The NLB Group has

compiled a reference list of appraisers for valuations

of real estate located outside the Republic of Slovenia.

Appraisals must be made in accordance with the

international valuation standards, and for larger

exposures, real-estate evaluations must also be reviewed

by an internal licensed appraiser with knowledge of the

local real-estate market. If the appraisal does not comply

with to the international valuation standards or if the

value adjustment exceeds the prescribed treshold, the

appraisal is rejected as inadequate.

519

When taking collateral, the NLB Group follows the

internal regulations which define the minimum security

or pledge ratios. The NLB Group strives to obtain

collateral with a higher value than the underlying

exposure (depending on the borrower’s rating, loan

maturity, etc.) with the aim of reducing negative

consequences resulting from any major swings in

market prices of the assets used as collateral. If real

estate, movable property, and financial instruments

serve as collateral, the NLB Group’s lien on such assets

should be top ranking. Exceptionally, where the value of

the mortgaged real estate is large enough, the lien can

have a different priority order.

The NLB Group monitors the value of collateral during

the loan repayment period in accordance with the

mandatory periods and internal instructions. For

example, the value of real estate collateral is monitored

annually. It is monitored either by preparing individual

assessments or by using models for monitoring the

estimated value of real estate (based on actual data

on real estate transactions on the market). The value

of pledged movable property is monitored once a

year (in NLB the procedure is automated, with a linear

depreciation over the remaining useful life).

h) The main types of collateral taken by the NLB Group

The NLB Group accepts various forms of material and

personal security as loan collateral.

Material loan collateral grants the right, in the event

that a debtor (borrower) defaults on their contractual

obligations, to sell a specific property to recover the

Bank’s claims, to retain designated non-cash property

or cash, or to reduce or offset the amount of exposure

against the counterparty’s debt to the Bank.

The NLB Group accepts the following material types of

loan collateral:

Collateral in the form of business and residential

real estate: land, buildings, and individual parts of

buildings in a storeyed property intended for living in

or performing a business activity, such as land in the

area foreseen for construction, apartments, residential

buildings, garages and holiday homes, business

premises, industrial buildings, offices, shops, hotels,

branches and warehouses, forests, parking spaces, etc.

The objects can be completed or under construction.

Priority is given to property where the pledge right of

the Bank is entered in the first place and real estate

is already owned by the debtor and/or the pledger.

For real estate, there must be a market, and it must be

redeemable within a reasonable time;

Collateral in the form of movable property: priority

is given to the types of movable property, that are

highly likely to be sold in the event of execution, and

the funds received are used to repay the collateralised

claims (their market value must be estimated with

considerable reliability). Among the appropriate types

of movable property, the Bank includes motor vehicles,

agricultural machinery, construction machinery,

production lines, and series-produced machines, and

some custom-made production machines;

Collateral by a pledge of financial assets (bank

deposits or cash-like instruments, debt securities

of different issuers, investment fund units, equity

securities, or convertible bonds):

Cash receivable collateral: bank deposits and

savings held with the Bank are considered eligible

both in domestic and foreign currencies;

Debt and equity securities: bonds and shares that

the Bank deems eligible collateral for investments

and are traded on a regulated market (marketable

securities of higher-quality Slovenian and foreign

issuers);

Pledge of investment coupons of mutual funds

managed by management companies (a priority

company NLB Skladi) and are, according to the

Bank’s assessment, suitable for insurance

of investments;

Pledge of an equity stake: non-marketable capital

shares with a credit rating of at least B are eligible;

Pledge or assignment of receivables as collateral:

cash receivables must have longer maturities than the

maturity of the investment and they must not be due

and not be paid;

Other material forms of loan collateral (e.g., life

insurance policies pledged to NLB): the Bank accepts

products of Vita, življenjska zavarovalnica d.d.

Ljubljana – a pledge of an investment life insurance

policy and a life insurance policy with a guaranteed

return that includes saving, in addition to insurance.

Personal loan collateral is a method for reducing credit

risk whereby a third party undertakes to pay the debt in

case of the primary debtor (borrower) defaulting.

The NLB Group accepts the following types of personal

loan collateral:

Joint and several guarantees by retail and corporate

clients: for the collateralisation of private individuals’

loans, employees, or pensioners are adequate

guarantors. They must not be in the process of personal

bankruptcy. They are responsible for fulfilling the

debtor’s obligations for loans with a repayment period

not exceeding 60 months. For the collateralisation of

legal entities investments, legal entities, individuals, or

private individuals are adequate guarantors;

Bank guarantees;

Government guarantees (e.g., of the Republic

of Slovenia);

Guarantees by national and regional development

agencies with which the Bank has a contract on

the acceptance of guarantees (e.g., the Slovene

Enterprise Fund);

Other types of personal loan collateral.

Loans are very often secured by a combination of

collateral types. The general recommendations on loan

collateral are specified in the internal instructions and

include the elements specified below. The decision

on the type of collateral and the coverage of loan by

collateral depends on the client’s creditworthiness (credit

rating), loan maturity, and varies depending on whether

the loan is granted to a retail or a corporate client.

NLB has also established, in the area of real-estate loan

collateral, an online connection with the Surveying and

Mapping Authority in the Republic of Slovenia, which

allows direct and immediate verification of the existence

of property.

The NLB Group strives to obtain the best possible

collateral for long-term loans, in particular mortgages

whenever possible. As a result, the mortgaging of real

estate is the most frequent form of loan collateral of

corporate and retail clients. In corporate exposures, the

next most common forms of collateral are government

and corporate guarantees, while in retail loans, it is

personal guarantors.

i) Risks, deriving from valuation of received collateral

Client/counterparty credit risk is the key decision

parameter when approving exposures. Collateral is a

secondary source of repayment, and therefore decisions

520

on the approvals of exposures should not primarily be

based on the provided collateral. However, collateral

is an important comfort element in the approval

process and, depending on the credit rating of the

client, a prerequisite. The NLB Group has prescribed the

minimum ratios between the value of collateral and the

loan amount, depending on the type of collateral, loan

maturity, and the client rating. The ratios are based on

experience and regulatory guidelines.

The NLB Group pays particular attention to monitoring

of market and prudent value of collateral, and to

receiving regular and independent revaluations by

applying the International Valuation Standards. Through

a detailed examination of all collateral received, NLB

has ensured that only collateral from which payment can

realistically be expected if it is liquidated is recognised.

The NLB Group has the largest concentration of

collateral relating to mortgages on pledged real-estate,

which is a relatively reliable and high-quality form of

collateral. Due to the possible decrease of real-estate

market prices, the Group closely monitors the real-

estate collateral values and, where required, establishes

higher amounts of impairments and provisions for

non-performing loans secured by real-estate, based on

estimated discounts of the real-estate value, which are

expected to be achieved in a sale (expected payment

from collateral). Priority is given to property where the

pledge right of the Group is entered in the first place and

the real-estate is already owned by the debtor and/or

the pledger. For real-estate, there must be a market, and

it must be redeemable within a reasonable time.

Collateral consisting of securities entails market risk,

specifically the risk of changes in the prices of securities

on capital markets. To limit such risks and restrict

the possibility of the value of instruments received as

collateral falling below approved limits, the

Rules on

Determining Collateral Valuation Ratios for Securing

Exposures with Pledged Securities in NLB

clearly

determine the minimum pledge ratios. Deviations

from the Rules are subject to the prior approval of

the respective decision bodies of the Bank. The ratio

between the loan amount and the value of the securities

is determined on the basis of the issuer’s credit rating,

the securities’ liquidity, maturity, and correlation with

changes in market indices, i.e., by considering the key

features reflecting the level of volatility of market prices,

and the ability to sell the securities at the market price.

Collateral consisting of the sureties of corporate clients,

sureties of private individuals, and bank guarantees

entail the credit risk of the provider of the collateral.

The NLB Group includes the amount of the guarantees

received in the exposure of the guarantor, and

guarantees are only taken into account as collateral if

the guarantor has sufficient overall creditworthiness.

Loan Collateral Policy in NLB d.d. and NLB Group

regulates which forms of collateral are acceptable, and

which conditions each type of collateral must meet in

order to constitute an adequate and eligible form of

received collateral.

521

j) Credit quality analysis for financial assets and contingent liabilities

522

523

The NLB Group’s client credit rating classification is

based on internally developed methodologies, drawing

from internal statistical analyses, good banking

practices, as well as the Bank of Slovenia regulations,

and ECB and EBA guidelines and requirements. The

rating methodologies are used across the entire NLB

Group. They include a uniform credit grade scale of 12

rating classes, out of which nine represent performing

clients and three non-performing clients.

Rating Group A (AAA to A rating classes) includes the

best clients with a low degree of default probability,

characterised by high coverage of financial liabilities

with free cash flow. The Rating Group A is considered as

investment grade classification.

Rating Group B (BBB to B rating classes) includes

clients with a low credit risk, starting one notch higher

than at ‘A’ rating group clients. These clients show

stable performance, acceptable financial ratios, and

qualitative elements, and have sufficient cash flow to

settle their obligations, but may be more sensitive to

changes in the industry or the economy. The Rating

Group B classification is an investment grade for BBB,

and an ‘invest with care’ for BB and B rating classes.

Rating Group C (CCC to C rating classes) includes clients

who are exposed to a higher and above-average level

of credit risk. CCC-rated clients are financed by the Bank

only in the case when such support brings more positive

effects for the Bank; however, Rating Group C is overall

considered as a substantial risk. The Bank reasonably

restricts cooperation with such clients and decreases its

exposure to them.

Rating Groups D (D and DF rating classes) and E

represent non-performing clients that are treated

as defaulted. D, DF, and E rating classified clients

are ordinarily transferred to the specialised units for

restructuring (which perform business and financial

restructuring with a goal of minimising losses and

restoring the client to a performing status) or workout

and legal support (with the goal of minimising losses

due to default).

The NLB Group ratings in the master scale are mapped

to the following PD structure:

Rating class	Average PD in %
AAA	0.05
AA	0.15
A	0.30
BBB	0.60
BB	1.20
B	2.40
CCC	4.80
CC	9.60
C	19.20
D	100
DF	100
E	100

The NLB Group applies the default definition based

on the EBA guidelines, where the materiality threshold

for delays is determined in absolute and relative terms

(EUR 100 for retail and EUR 500 for the non-retail

segment and 1% of the total on-balance exposure on

the client level). In 2023, a scoring model for private

individual clients came into effect in NLB d.d., while the

models in banking subsidiaries were deployed in 2024,

which enables higher degree of differentiation among

the clients as it introduces nine performing rating classes

(instead of the previous three).

A general corporate rating methodology, with

the prescribed set of parameters (qualitative and

quantitative) applies to all NLB Group entities. Groups

of connected clients are treated as materially important

for the NLB Group whenever exposure exceeds

EUR 10 million for the NLB Group members with total

assets lower than EUR 1.5 billion, EUR 15 million for the

NLB Group members with total assets between EUR 1.5

billion and EUR 4.0 billion, or EUR 20 million for the NLB

Group members with total assets above EUR 4.0 billion.

Materially important clients are generally within the

decision-making authority of the NLB Credit Committee.

NLB regularly reviews the business practices and credit

portfolios of the NLB Group members to make sure they

are operating in accordance with the minimum risk

management standards of the NLB Group. This ensures

appropriately harmonised processes for managing and

reporting credit risks at the consolidated level.

524

k) Forborne loans and advances

525

526

Forborne exposures of loans and advances by periods of forbearance

The main forbearance measurements used by the NLB

Group and NLB are: deferral of payment, reduction

of interest rates, acquisition of collateral for partial

repayment of claims, and others, applied either

individually or in combination.

l) Repossessed assets

The NLB Group and NLB received the following assets

by taking possession of collateral held as security and

held them at the reporting date:

527

m) Analysis of loans and advances by industry sectors

528

n) Analysis of net loans and advances by geographical sectors

529

o) Analysis of debt securities and derivative financial instruments by geographical sectors

Other members of the European Union included in the line item ‘Other’ are Greece and Croatia.

Other members of the ‘Other countries’ in the line item ‘Other’ are Chile, South Korea, Egypt, and Brazil.

530

Other members of the European Union included in the line item ‘Other’ is Greece.

Other members of the ‘Other countries’ in the line item ‘Other’ are Chile, South Korea, Egypt, Brazil, and Oman.

531

p) Internal rating of derivatives counterparties

				in %
	NLB Group		NLB
	31 Dec 2025	31 Dec 2024	31 Dec 2025	31 Dec 2024
A	95.84	94.33	96.02	94.72
B	3.70	5.58	3.54	5.20
C	0.45	0.04	0.43	0.04
D and E	0.02	0.04	0.02	0.04
Total	100.00	100.00	100.00	100.00

All derivatives in the banking book are entered into with

counterparties with an external investment-grade rating.

When derivatives are entered into on behalf of the NLB

Group’s customers, such customers usually do not have

an external rating, but all such transactions are covered

through back-to-back transactions involving third

parties with an external investment-grade rating.

r) Debt financial instruments in the portfolio of the NLB Group and NLB that represent subordinated liabilities for the issuer

532

s) Presentation of net financial instruments by measurement category

533

As at 31 December 2025 and 31 December 2024, all of the

NLB Group’s financial liabilities, except for derivatives

designated as hedging instruments, trading liabilities,

and financial liabilities measured at fair value through

profit or loss, were carried at amortised cost.

534

6.2. Market risk

The NLB Group defines market risk as the risk of

potential financial losses due to changes in rates and/

or market prices (exchange rates, credit spreads,

and equity prices), or in parameters that affect prices

(volatilities and correlations). Losses may impact profit

or loss directly, for example in the case of trading book

positions. However, for the banking book positions they

are reflected in the revaluation reserve. The exposure

to market risk is to a certain degree integrated into the

banking industry and offers an opportunity to create

financial results and value.

The Global Risk Department of NLB is independent

from the trading activities and reports to the Bank’s

Assets and Liabilities Committee (ALCO). Global Risk

also monitors and manages exposure to market

risks separately for the banking and trading books.

Exposures and limits are monitored daily and reported

to the ALCO committee on a regular basis.

The Bank uses a wide selection of quantitative and

qualitative tools for measuring, managing, and reporting

market risks such as value-at-risk (VaR), sensitivity

analysis, stress-testing, backtesting, scenarios, other

market risk mitigants (concentration of exposures, gap

limits, stop-loss limits, etc.), net interest income sensitivity,

economic value of equity, and economic capital. Stress-

testing provides an indication of the potential losses that

could occur in severe market conditions.

In the area of currency risk, the NLB Group pursues

the goal of low to medium exposure. NLB monitors the

open position of the NLB Group on an ongoing basis.

The orientation of the NLB Group in interest rate risk

management is to prevent negative effects on the net

interest income and economic value of equity arising

from changed market interest rates. The conclusion of

transactions involving derivatives at NLB is limited to

servicing the clients and hedging of the Group’s own

open positions. In accordance with the provisions of

Strategy on Trading with Financial Instruments in

, the trading activities in other NLB Group

members are highly restricted.

For monitoring and managing the NLB Group’s exposure

to market risks, uniform guidelines and exposure limits

for each type of risk are set for individual NLB Group

entities. The methodologies are in line with regulatory

requirements on individual and consolidated levels,

while reporting to the regulator on the consolidated

basis fillows the standardised approach. Pursuant to

the relevant policies, the NLB Group companies must

monitor and manage exposure to market risks and

report to NLB accordingly. The exposure of an individual

NLB Group member is regularly monitored and reported

to the Assets and Liabilities Committee of the NLB Group

(NLB Group ALCO).

6.2.1. Currency risk (FX)

Foreign currency risk (FX) is a risk of potential losses

from the open FX positions due to the changes in

the foreign currency rates. The exposures of NLB to

the movement of the FX rates have an impact on the

financial position and cash flows of the Bank. The

Bank measures and manages the FX risk by using a

combination of sensitivity analysis, VaR, scenarios, and

stress-testing.

In the trading book, currency risk is managed, along

with other market risks, on the basis of VaR limits

that are approved by the Management Board of the

Bank and in accordance with the adopted

Policy for

Managing Market Risk in the Trading Book of NLB

. The

trading FX positions in the trading book are managed

on an integrated basis at the level of portfolio.

NLB monitors and manages FX risk in the banking book

according to the

Policy for Managing FX Risk in NLB

The policy is primarily composed to protect Common

Equity Tier 1 against the negative effects of the volatility

of the FX rates, whilst limiting the volatility in the income

statement. FX exposures in the banking book result from

core banking business activities.

Each member company is responsible for its own

currency risk policy, which also includes a limit system

and is in line with the parent Bank’s guidelines and

standards, as well as local regulatory requirements.

Policies are confirmed by either the local Management

Board or Supervisory Board. NLB monitors and manages

the NLB Group currency risk exposure on a monthly basis

for each member and on the consolidated level.

The NLB Group banks follow the

Guidelines for

Managing FX Lending in NLB Group

. The goals of the

guidelines are to address the risks stemming from the

potential excessive growth of FX lending, to identify

hidden risks, and tail-event risks related to FX lending, to

mitigate the respective risk, to internalise the respective

costs, and to maintain adequate capital reserves to

cover potential risks.

The positions of all currencies in the statement of

financial position of NLB, for which a daily limit is set,

are monitored daily. FX positions are managed at the

currency level so that they are always within the limits.

Regarding structural FX positions on a consolidated

basis, assets, and liabilities held in foreign operations

are translated into euro at the closing FX rate on

the reporting date. Foreign exchange differences of

non-euro assets and liabilities against the euro are

recognised in OCI and therefore affect shareholder’s

equity and CET1 capital. The NLB Group ALM employs

strategies to manage this foreign currency exposure,

including matched funding of assets and liabilities.

Exposure to currency risks is discussed at daily

liquidity meetings and monthly meetings of the ALCO

committee of the NLB Group, and quarterly at the

consolidated level.

535

a) Analysis of financial instruments by currency exposure

‘Other’ mostly relates to exposures in currencies MKD and BAM.

536

‘Other’ mostly relates to exposures in currencies GBP, CAD, and JPY.

537

b) FX sensitivity analysis

in %

NLB Group and NLB

Scenarios

USD

+/-7.96

+/-6.49

CHF

+/-4.91

+/-8.93

CZK

+/-2.49

+/-6.14

RSD

+/-0.45

+/-0.43

MKD

+/-2.34

+/-2.50

JPY

+/-8.09

+/-23.19

AUD

+/-7.93

+/-10.02

HUF

+/-4.67

+/-7.48

BAM

+/-0.07

+/-0.07

The effect on the other comprehensive income

statement of the NLB Group has decreased due to the

lower volatility growths’ scenario for MKD currency.

538

6.2.2. Managing market risks in the trading book

Market risk exposure in the trading book arises mostly

from the changes in interest rates, credit spreads, FX

rates, and equity prices.

The Management Board determines low total risk

appetite and limits by the risk type. The limits are

monitored daily by the Global Risk Department.

NLB uses an internal VaR model based on the variance-

covariance method for other market risks. The daily

calculation of the VAR value is adjusted to Basel

standards (99% confidence interval, a monitored period

of 250 business days, a 10-day holding position period).

6.2.3. Interest rate risk

Interest rate risk is the risk to the NLB Group’s capital

and profit or loss arising from changes in market interest

rates. Interest rate risk management of the NLB Group

includes all interest rate-sensitive on- and off-balance

sheet assets and liabilities that are divided into the

trading and banking book according to regulatory

standards. It takes into account the positions in each

currency. Interest rate risk management in the NLB

Group is adopted in accordance with the risk appetite

and risk strategy, based on general Basel standards on

interest rate management in the banking book (IRRBB;

hereinafter: the ‘Standards’) and European Banking

Authority guidelines.

In the trading book, interest rate risk is measured

on the basis of the VaR method and BPV method, in

accordance with the adopted

Policy for Managing

Market Risk in the Trading Book of NLB

The interest rate risk in the banking book is measured

and monitored in line with the

Interest Rate Risk

Management Policy

that establishes consistent

methodologies, models, and limit systems. The NLB

Group manages interest rate risk exposure through

application of two main measures:

economic value sensitivity – using the BPV method

(Basis Point Value), which measures the extent to which

the economic value of the banking book would change

if interest rates change according to the scenario;

sensitivity of net interest income – which measures the

impact of the interest rate change on future net interest

income over a one-year period, assuming constant

balance sheet volume and structure.

The NLB Group regularly measures interest rate risk

exposure in the banking book under various standardised

and additional scenarios of changes in the level and

shape of interest rate yield curve, including all significant

sources of risk, taking into account behavioural and

modelling assumptions. Part of non-maturing deposits,

which is considered as a core part is allocated long-term

by using a replicating portfolio approach. Optionality

risk is mainly derived from behavioural options, and

is reflected in prepayments and withdrawals, and

embedded options such as caps and floors. Moreover,

considering expected cash flows, non-performing

exposures, as well as off-balance sheet items are

considered when measuring interest rate risk exposure.

The interest rate risk is closely measured, monitored,

and managed within approved risk limits and controls.

The Group manages interest rate positions and

stabilises its interest rate margin primarily with the

pricing policy and a fund transfer pricing policy. An

important part of the interest rate risk management

is presented by the banking book securities portfolio,

whose primary purpose is to maintain adequate

liquidity reserves, while it also contributes to the stability

of the interest rate margin.

NLB Group also manages interest rates risk by using

plain vanilla derivative financial instruments (interest

rate swaps, overnight index swaps, cross currency

swaps, and forward rate agreements), most of which are

treated according to hedge accounting rules.

Each member of the NLB Group is responsible for its

own interest rate risk policy, which includes the limit

system and is in line with the parent Bank’s guidelines

and standards, as well as with the local regulatory

requirements. NLB regularly monitors the interest

rate risk exposure of each individual member of the

NLB Group in accordance with the

Standards for Risk

Management in NLB Group

. The document comprises

guidelines for uniform and effective interest rate risk

management within individual the NLB Group members.

Interest rate risk in the banking book is measured,

monitored, and reported by the Global Risk Department

(monthly at the Group level and more frequently if

necessary, in case of NLB), while positions are managed

by Financial Markets. Exposure to interest rate risk is

discussed on ALCO at the level of NLB monthly and

quarterly on the consolidated basis.

539

a) Analysis of financial instruments according to the

exposure to interest rate risk

The following table presents open net interest rate

risk positions by the most important currencies of the

NLB Group.

Financial instruments without maturity such as sight

deposits are presented in the first gap irrespective

of their behavioural characteristics and the NLB

Group’s expectations.

				in EUR thousands
31 Dec 2025	NLB Group
Currency	1–3 years	3–5 years	5–10 years	Over 10 Years
EUR	(5,693,049)	2,858,506	4,347,148	2,079,458
RSD	(153,063)	481,226	607,912	(2,816)
MKD	(72,725)	217,929	258,831	(652)
Other	(408,163)	358,800	379,386	45,137

				in EUR thousands
31 Dec 2024	NLB Group
Currency	1–3 years	3–5 years	5–10 years	Over 10 Years
EUR	(3,828,183)	2,408,757	2,706,607	1,548,118
RSD	285,895	280,810	275,857	(33)
MKD	198,485	110,367	16,844	(20,024)
Other	(316,582)	195,638	140,147	14,937

540

b) Net interest income sensitivity analysis and

an economic view of interest rate risk

in the banking book

The analysis of interest income sensitivity for the horizon

of the next 12 months assumes a sudden parallel interest

rate shock down by 50 basis points for EUR or 100 basis

points for other currencies. The analysis assumes that

the positions used remain unchanged.

The assessment of the impact of a change in interest

rates of 50/100 basis points on the amount of net

interest income of the banking book position:

The EVE (Economic Value of Equity) method is a

measure of the sensitivity of changes in market interest

rates on the economic value of financial instruments.

The EVE represents the present value of net future

cash flows and provides a comprehensive view of the

possible long-term effects of changing interest rates at

least under the six prescribed standardised interest rate

shock scenarios or more if necessary, according to the

situation on financial markets. Calculations take into

account behavioural and automatic options, as well as

the allocation of non-maturing deposits.

The assessment of the impact of a change in interest

rates of 200 basis points on the economic value of the

banking book position:

			in EUR thousands
	NLB Group		NLB
	31 Dec 2025	31 Dec 2024	31 Dec 2025	31 Dec 2024
Interest risk in banking book - EVE	91,291	144,400	80,672	97,643
Interest risk in banking book - EVE as % of Equity	2.69%	5.04%	3.06%	4.47%

The applied sudden parallel interest rate shock up is

by 200 basis points, which represents a “worst case”

scenario for the NLB Group. The calculation takes into

the account allocation of the core part of non-maturing

deposits and other behavioural assumptions.

541

6.3. Liquidity risk

Liquidity risk is the risk of the NLB Group being unable

to fulfil current or future expected and unexpected

cash requirements, across all time horizons. The risk

may stem from the reduction in funding sources or a

reduction in the liquidity of certain assets.

Liquidity risk is related to funding liquidity risk (the

NLB Group’s liquidity on the liabilities-side) and market

liquidity risk (counterbalancing capacity on the assets-

side). From a liabilities perspective, liquidity risk can

result in a loss if the Bank is unable to settle all its

liabilities or when the Bank, because of its incapacity

to provide sufficient funds to settle its obligations, is

forced to raise the necessary funds at a cost which

significantly exceeds the normal cost. From an assets

perspective, the liquidity risk is related to the market

value of counterbalancing capacity and arises in case

of significant reduction of market value of an individual

financial instrument and may result in insufficient value

of counterbalancing capacity to cover the NLB Group’s

liquidity needs.

Intraday liquidity risk is the capacity required during

the business day to enable financial institutions to make

payments and settle obligations.

In the risk identification process, first the reasons for the

realisation of each identified material risk are analysed

and grouped into short risk descriptions. Material risks

are then classified into three groups based on what part

of liquidity is affected by the realisation of the material

risks: liabilities, assets, and intraday liquidity risk. The

origin of each risk is determined as being internal,

external, or a combination of internal and external

(internal shock, meaning it originates within the Bank,

or external shock, meaning it comes from outside the

Bank – e.g., a major macroeconomic event, physical

or transition event, ESG rating downgrade). Based on

the identified material risks, key liquidity risk drivers

are defined. Key risk drivers of the liquidity position

are factors that are expected to trigger a substantial

deterioration of the Group’s liquidity position. This

deterioration may take place in the form of an increase

in outflows, a decrease in inflows, or a decrease in the

liquidity value of the counterbalancing capacity.

Liquidity risk is defined as an important risk type for the

NLB Group, and one which must be managed carefully.

The NLB Group has a liquidity risk management

framework in place that enables maintaining a low risk

tolerance for liquidity risk. The NLB Group formulated a

set of liquidity risk metrics and limits to manage liquidity

position within the requirements set by the regulator.

By maintaining a smooth long-term maturity profile,

limiting dependence on wholesale funding, and holding

a solid liquidity reserve, the NLB Group maintains a

sound and robust liquidity position, even under severely

adverse conditions.

The Management Board approves the Liquidity Risk

Management Policy, which outlines the key principles

for the Bank’s liquidity management. ALCO receives

a regular report on the liquidity position and the

performance against approved limits and targets. ALCO

oversees the development of the Bank’s funding and

liquidity position and decides on liquidity risk-related

issues in the NLB Group.

Risk tolerance for liquidity risk is low, therefore the

NLB Group must be able to provide sufficient funds for

settling its liabilities at all times, even if a specific stress

scenario materialises. The NLB Group measures and

manages its liquidity in two stages:

static view (current exposure);

forward-looking and stress-testing.

The objectives of monitoring and managing liquidity risk

in the NLB Group are as follows:

ensure a sufficient amount of liquidity for the settlement

of all NLB Group’s liabilities;

minimise the costs of maintaining liquidity;

determine an adequate amount of counterbalancing

capacity and optimal liquidity management;

ensure an adequate control environment;

ensure an appropriate level of liquidity for various

situations and stress scenarios;

anticipate emergencies or crisis conditions, and

implementing contingency plans in the event of

extraordinary circumstances;

ensure regular projections of future cash flows and

stress-testing of liquidity risk;

prepare proposals for establishing additional financial

assets as collateral for sources of funding;

ensure that climate-related and environmental risks

that could have a material impact on net cash outflows

or liquidity reserves are incorporate into liquidity risk

management and liquidity reserves calibration.

Overall assessment of the liquidity position of the

NLB Group is assessed in the Internal Liquidity

Adequacy Assessment Process (ILAAP) at least once

per year for the NLB Group, and it includes a clear

formal statement on liquidity adequacy, supported

by an analysis of ILAAP outcomes. The ILAAP process

is integral to risk management frameworks and is

aligned with the NLB Group’s risk appetite which is

consistent with the business model and approved by the

Management Board. Based on the risk appetite, the NLB

Group prepares a business plan and financial forecasts

which are crucial for defining internal capital needs (the

ICAAP process) and an internal liquidity assessment

(ILAAP process). Both processes are conducted

from the normative and economic perspectives and

supplemented by the stress-testing programme.

The NLB Group performs stress tests on a regular basis

for a variety of bank-specific and market-wide stress

scenarios (individually and in combination) to identify

sources of potential liquidity strain and to ensure

that current exposures remain in accordance with

the NLB Group’s established liquidity risk tolerance.

Stress test outcomes are used to adjust its liquidity risk

management strategies, policies, and positions, define

minimum amount of counterbalancing capacity, and to

develop effective contingency plans.

The NLB Group has a formal liquidity contingency plan

(LCP) that clearly sets out the procedures for addressing

liquidity shortfalls in stressed situations. The plan

outlines procedures for managing a range of stress

environments, establishes clear lines of responsibility,

includes clear invocation and escalation procedures,

and is regularly tested and updated to ensure

operational robustness.

The NLB Group maintains a sufficient amount of liquidity

reserves in the form of high credit quality debt securities

that are eligible for refinancing via the ECB/central bank

or on the market. In the current situation, the NLB Group

also strives to follow as closely as possible the long-term

trend of diversification on both the liability and asset

sides of the balance sheet. The NLB Group regularly

542

performs stress tests with the aim of testing the liquidity

stability and the availability of liquidity reserves in

various stress situations. In addition, special attention

is given to the fulfilment of the liquidity regulation (CRR/

CRD), with monitoring and reporting of the liquidity

coverage ratio (LCR) according to the Delegated Act

and net stable funding ratio (NSFR). This also includes

monitoring and reporting of Additional Liquidity

Monitoring Metrics (ALMM) on solo and consolidated

levels. In accordance with the Commission Implementing

Regulation (EU), the NLB Group regularly monitors and

issues quarterly reports on asset encumbrance.

The Group manages its liquidity position (liquidity within

one day) daily, for a period of several days or weeks in

advance, based on the planning and monitoring of cash

flows. Each NLB Group member is responsible for its own

liquidity position and carries out the following activities:

manage intraday liquidity,

plan and monitoring cash flows,

monitor and complying with the liquidity regulations of

the central bank,

adopt business decisions,

form and manage liquidity reserves, and

perform a liquidity stress test to define the liquidity

reserves for smooth functioning of the payment system

in stressed circumstances.

The NLB Group members actively manage liquidity over

the course of a day, taking into account the characteristics

of payment settlements to ensure the timely settlement of

liabilities in normal and stressed circumstances.

Liquidity risk management in the NLB Group is under

strict monitoring by NLB as a parent bank. All Group

members report to NLB on a daily basis. Global Risk

gives guidelines and defines minimal standards for the

Group members regarding liquidity risk management

in the NLB Group Risk Management Standards. Each

Group member is responsible for ensuring adequate

liquidity via the necessary sources of funding and

their appropriate diversification and maturity, and

by managing liquidity reserves and fulfilling the

requirements of regulations governing liquidity. The

exposure of an individual NLB Group member towards

liquidity risk is regularly monitored and reported to

ALCO, and to local Assets and Liabilities Committees.

a) Managing the NLB Group’s liquidity reserves

The NLB Group has liquidity reserves available to cover

liabilities that fall or may become due. Liquidity reserves

must be available on short notice. Liquidity reserves

comprise cash, the settlement account at the central

bank above reserve requirement, debt securities valued

at market value, and loans eligible as collateral for the

Eurosystem’s liquidity providing operations on the basis

of which the Bank may generate the requisite liquidity

at any time. The available liquidity reserves are liquidity

reserves decreased by the required balances for the

continuous performance of payment transactions,

encumbered securities, and/or credit claims for different

purposes (secured funding).

The structure of liquidity reserves is shown in the

following table.

(i) Above reserve requirement.

(ii) Market value.

As at 31 December 2025, 68.6% (31 December 2024: 72.0%)

of debt securities in the banking book of the NLB Group

were government securities (including government

guaranteed bonds – GGB), and 14.4% (31 December 2024:

11.3%) were bank senior unsecured bonds.

The purpose of banking book securities is to provide

liquidity, along with stabilisation of the interest margin

and the interest rate risk management, simultaneously.

When managing the portfolio, the NLB Group uses

conservative principles, particularly with respect to the

portfolio’s structure in terms of issuers’ ratings and asset

class. The general rules and principles for managing

the banking book securities are laid in the NLB Group

Investment Strategy: Investment Portfolio Plan –

definition and monitoring and Trading and Treasury

Framework for Managing Debt Securities.

The ECB-eligible credit claims comprise loans which

fulfil the high eligibility criteria set by the ECB itself and

for domestic loans are specified in the General Terms

about Execution of Monetary Policy Framework (Part

4) adopted by the Bank of Slovenia. NLB is the only

member of the NLB Group that classifies as an eligible

counterparty to the Eurosystem. As such, these ECB

credit claims are included among liquidity reserves.

Members of the NLB Group manage their liquid assets

on a decentralised basis in compliance with the local

liquidity regulation and valid policies and standards of

the NLB Group.

543

b) Encumbered/unencumbered assets

c) Collateral received – unencumbered

The table below shows the nominal value of collateral

received.

544

d) Sources of encumbrance

As at 31 December 2025, the NLB Group and NLB had a

large share of unencumbered assets. Other sources of

encumbrance mostly relate to the obligatory reserve.

At the NLB Group level, the amount of encumbered

assets equalled EUR 1,640 million (31 December 2024:

EUR 1,383 million).

545

e) Non-derivative cash flows

The tables below illustrate the cash flows from non-

derivative financial instruments by residual maturities at

the end of the year. The amounts disclosed in the table are

the undiscounted contractual cash flows determined on

the basis of spot rates at the end of the reporting period.

546

547

548

When determining the gap between the financial

liabilities and financial assets in the maturity bucket of

up to one month, it is necessary to be aware of the fact

that financial liabilities include total demand deposits,

although from an economic perspective, they are stable

and present long term funding source.

549

f) An analysis of the statement of financial position by residual contractual maturity

550

551

552

553

g) Derivative cash flows

The table below illustrates cash flows from derivatives,

broken down into the relevant maturity buckets based on

residual maturities. The amounts disclosed in the table

are the contractual undiscounted cash flows prepared

on the basis of spot rates on the reporting date.

554

555

6.4. Management of

non-financial risks

a) Operational risk

When assuming operational risks, the NLB Group

follows the guideline that such risks may not materially

impact its operations and, therefore, the risk appetite

for operational risks is low to moderate. The risk is also

gradually decreasing due to the reduced complexity

of operations in the NLB Group, with the disinvestment

process of non-core activities and optimisation of

internal processes. The NLB Group has set up a system

of collecting loss events, identification, assessment, and

management of operational risks, all with the aim of

ensuring quality management of operational risks. This

applies particularly to strategic banking members.

All NLB Group banking members monitor risk appetite

limits for operational risk. The upper tolerance limit is

defined as the limit amount of net loss that an individual

member company still allows in its operations. If the

total net loss exceeds the tolerance limit, a special

review of major loss events is required, and, if necessary,

additional measures for the prevention or mitigation

of the same or similar loss events are taken. The

warning and critical limit of loss events are also defined,

when exceeded, they trigger escalation procedures

and adoption of any additional risk management

measures. In addition, the Bank does not allow certain

risks in its operations – for such risks it has defined

the so-called ‘zero tolerance’. To monitor some major

risk indicators that could indicate a possible rise in

operational risk, the Bank has developed a specialised

methodology as an early warning system. Such risks

are periodically monitored in different business areas,

and the results are discussed at the Operational Risk

Committee. This Committee was designated as the

highest decision-making authority for operational risk

management. Relevant operational risk committees

were also appointed in other NLB Group banks and

in other member companies this role is performed

by the management board. The main task of the

aforementioned bodies is to discuss the most significant

operational risks and loss events, and to monitor and

support the effective management of operational risks

including their mitigation in an individual entity. All NLB

Group entities, which are included in the consolidation,

have adopted relevant documents that are in line

with the NLB Group standards. In banking members,

these documents are regularly updated in line with the

development of operational risk management. A unified

software support is used across the entire NLB Group

and it is regularly upgraded.

In 2025, the Group reported lower net operational

losses arising from loss events than in the previous

year and remained within the established operational

risk tolerance limits. Certain litigation costs arose from

systemic issues, such as litigation risk (e.g., cases related

to loan processing fees and loan insurance premiums in

Serbia). For other realised operational losses, banking

members of the Group performed a comprehensive

analysis and defined adequate mitigation measures to

prevent or minimise such events in the future.

In general, considerable attention is paid to reporting

loss events, their mitigation measures, and identification

of operational risks in all segments. In order to ensure

the appropriate and timely handling of the most

significant and largest loss events, the Bank has

introduced an escalation scale for reporting major or

material loss events to the top decision-making levels

in NLB and the Supervisory Board of NLB. Additional

attention is paid to the reporting of potential loss events

in order to improve the internal controls and thus

minimise the probability of such and similar events.

Furthermore, the methodology to monitor, analyse,

and report key risk indicators has been established,

functioning as an early warning system. The aim is

to improve business and support processes, thereby

enabling an immediate response.

Through comprehensive identification of operational

risks, possible future losses are identified, estimated,

and properly managed. Each year, special emphasis

is placed on current risks as a result of the risk

identification process, including ESG risks. Key risk

indicators (KRIs) have also been established for ESG

risks, serving as an early warning system. The most

important operational risks are actively managed

through mitigation measures. An operational risk

profile is prepared once a year based on the Bank’s

operational risk identification. Special emphasis is put

on the most topical risks, among which those with a

low probability of occurrence and a very high potential

financial influence are in the foreground. For this

purpose, the Bank has developed the methodology of

stress-testing for operational risk. The methodology

is a combination of modelling loss event data and

scenario analysis for exceptional, but plausible events.

Scenario analyses are made based on experience and

knowledge of experts from various critical areas. The

biggest loss could arise from the following potential

events: possible difficulties in the functioning of

electronic banking channels, anti-money laundering,

cyber-attacks, and legal risk. For these scenarios,

existent controls were additionally revised, while for

identifying potential deficiencies, mitigation measures

were defined.

The capital requirement for operational risk is calculated

using the basic indicator approach at the NLB Group

level and the standardised approach at the NLB level.

b) Business Continuity Management (BCM)

In the NLB Group, business continuity management

is carried out to protect lives, goods, and reputation.

Business continuity plans are prepared to be used in

the event of natural disasters, IT disasters, epidemic/

pandemic, and the undesired effects of the environment

to mitigate their consequences.

The concept of the action plan that is prepared

each year is such that the activities contribute to the

upgrading or improvement of the Business Continuity

Management System. Business Continuity Management

was upgraded and optimised in accordance with DORA

(Digital Operational Resilience Act) requirements in the

Business Impact Analysis (hereinafter: ‘BIA’).

The basis for modernising the business continuity plans is

the regular annual Business Impact Analysis (BIA). On its

basis, the adequacy of the plans for Organisational Unit

Plans (merged office buildings and HR plans) and ICT

plans are checked. The best indicator of the adequacy of

the business continuity plans and ICT Disaster Recovery

plans is testing. In 2025, NLB tested Manual Procedures,

backup locations, and the IT Disaster Recovery Plan. No

major deviations were identified.

In the NLB Group, know-how and methodologies are

transferred to its member companies. The member

companies have adopted appropriate documents which

are in line with the standards of NLB and revised in

556

accordance with the development of business continuity

management. The activities of the member companies

are monitored throughout the year, and expert

assistance is provided if necessary.

For more efficient functioning of the business continuity

management system in the NLB Group, training

courses and visits to individual banking members are

also organised. All preventive and response measures

concerning business continuity are regularly sent

to the member companies to help ensure a uniform

course of action.

In the case of natural disasters (floods) and IT failures,

the Bank effectively implemented its IT and business

continuity plans and instructions for manual procedures,

thus ensuring the continuation of operations in

emergency situations.

c)

Management of other types of non-financial risks –

strategic risk, reputation risk, profitability and

other risks

Risks that are not included in the regulatory capital

requirements (standardised approach) but have or

might have an important influence on the risk profile

of the NLB Group, are regularly assessed, monitored,

and managed. In addition, they are integrated into the

internal capital adequacy assessment process (ICAAP).

The NLB Group established internal methodologies for

identifying and assessing specific types of risk, referring

to the Group’s business model or arising from other

external circumstances. If a certain risk is assessed

as a materially important risk, relevant disposable

preventive and mitigation measures are applied,

including regular monitoring of their effectiveness.

On this basis, internal capital is considered, and its

consumption regularly monitored.

6.5. Fair value hierarchy of financial

and non-financial assets and

liabilities

Fair value is the price that would be received when

selling an asset or paid to transfer a liability in an

orderly transaction between market participants at

the measurement date. The NLB Group uses various

valuation techniques to determine fair value. IFRS

13 specifies a fair value hierarchy with respect to the

inputs and assumptions used to measure financial

and non-financial assets and liabilities at fair value.

Observable inputs reflect market data obtained

from independent sources, while unobservable

inputs reflect the assumptions of the NLB Group. This

hierarchy gives the highest priority to observable

market data when available, and the lowest priority

to unobservable market data. NLB Group considers

relevant and observable market prices in its valuations,

where possible. The fair value hierarchy comprises the

following levels:

Level 1 – Quoted prices (unadjusted) on active markets.

This level includes listed equities, debt instruments,

gold, derivatives, units of investment funds, and other

unadjusted market prices of assets and liabilities.

When an asset or liability may be exchanged in

multiple active markets, the principal market for the

asset or liability must be determined. In the absence of

a principal market, the most advantageous market for

the asset or liability must be determined.

Level 2 – A valuation technique where inputs are

observable, either directly (i.e., prices) or indirectly (i.e.,

derived from prices). Level 2 includes prices quoted for

similar assets or liabilities in active markets and prices

quoted for identical or similar assets, and liabilities

in markets that are not active. The source of input

parameters for financial instruments, such as yield

curves, credit spreads, foreign exchange rates, and the

volatility of interest rates and foreign exchange rates,

is Bloomberg.

Level 3 – A valuation technique where inputs are not

based on observable market data. Unobservable

inputs are used to the extent that relevant observable

inputs are not available. Unobservable inputs must

reflect the assumptions that market participants

would use when pricing an asset or liability. This

level includes non-tradable shares and bonds, and

derivatives associated with these investments and

other assets and liabilities for which fair value cannot

be determined with observable market inputs.

Wherever possible, fair value is determined as an

observable market price in an active market for an

identical asset or liability. An active market is a market in

which transactions for an asset or liability are executed

with sufficient frequency and volume to provide

pricing information on an ongoing basis. Assets and

liabilities measured at fair value in active markets are

determined as the market price of a unit (e.g., a share)

at the measurement date, multiplied by the quantity of

units owned by the NLB Group. The fair value of assets

and liabilities whose market is not active is determined

using valuation techniques. These techniques bear a

different intensity level of estimates and assumptions,

depending on the availability of observable market

inputs associated with the asset or liability that is the

subject of the valuation. Unobservable inputs shall

reflect the estimates and assumptions that other market

participants would use when pricing the asset or liability.

For non-financial assets measured at fair value and

not classified at Level 1, fair value is determined based

on valuation reports provided by certified valuators.

Valuations are prepared in accordance with the

International Valuation Standards (IVS).

557

a) Financial and non-financial assets and liabilities measured at fair value in the financial statements

558

559

b) Significant transfers of financial instruments

between levels of valuation

The NLB Group’s policy of transfers of financial

instruments between levels of valuation is illustrated in

the table below.

560

Transfers between levels of valuation of financial

instruments measured at fair value in financial

statements:

c) Financial and non-financial assets and liabilities at

Level 2 regarding of the fair value hierarchy

Financial instruments on at Level 2 of the fair value

hierarchy in the NLB Group and NLB include:

debt securities: mostly bonds not quoted on active

markets and valuated by a valuation model,

derivatives: derivatives except forward derivatives and

options on equity instruments that are not quoted on

active markets, and

the National Resolution Fund.

Non-financial assets at Level 2 of the fair value hierarchy

in the NLB Group and NLB include investment properties

and non-current assets held for sale.

When valuing bonds classified at Level 2, the NLB

Group primarily uses the income approach based on

an estimation of future cash flows discounted to the

present value. The input parameters used in the income

approach are the risk-free yield curve and the spread

over the yield curve (i.e., credit, liquidity, country).

Fair values for derivatives are determined using a

discounted cash flow model based on the risk-free

yield curve. Fair values for options are determined

using valuation models for options (the Garman and

Kohlhagen model, the binomial model, and the Black-

Scholes model).

At least one of the three valuation methods is used

for the valuation of investment property. The majority

of investment property is valued using the income

approach where the present value of future expected

returns is assessed.

When valuing an investment property, average rents

at similar locations and capitalisation ratios such as:

the risk-free yield, risk premium, and the risk premium

to account for capital preservation are used. Rents at

similar locations are generated from various sources, like

data from lessors and lessees, web databases, and own

databases. The NLB Group has observable data for all

investment property at its disposal. If observable data for

similar locations are not available, the NLB Group uses

data from wider locations and adjusts it accordingly.

d)

Financial and non-financial assets and liabilities at

Level 3 of the fair value hierarchy

Financial instruments on Level 3 of the fair value

hierarchy in NLB Group and NLB include:

equities: mainly financial equities that are not quoted

on active markets;

debt instruments: bonds not quoted on active markets

and valuated by valuation model with inputs which are

not based on observable market data;

derivative financial instruments: forward derivatives

and options on equity instruments that are not quoted

on an active organised market. Fair values for forward

derivatives are determined using the discounted

cash flow model. Fair values for equity options are

determined using valuation models for options (the

Garman and Kohlhagen model, the binomial model,

and Black-Scholes model). Unobservable inputs include

the fair values of underlying instruments determined

using valuation models. The source of observable

market inputs is the Bloomberg information system;

loans measured at fair value, which according to IFRS 9

do not pass the SPPI test. Fair value is calculated on the

basis of the discounted expected future cash flows with

the required rate of return. In defining the expected

cash flows for loans, the value of collateral and other

pay off estimates can be used.

Non-financial assets on Level 3 of the fair value

hierarchy at the NLB Group include investment

properties and non-current assets held for sale.

The NLB Group uses three valuation methods for the

valuation of equity financial assets mentioned in the first

bullet: income, market, and cost approaches.

The NLB Group selects valuation model and values of

unobservable input data within a reasonable possible

range but uses model and input data that other market

participants would use.

At least one of the three valuation methods is used

for the valuation of investment property. The majority

of investment property is valued using the income

approach where the present value of future expected

returns is assessed.

561

When valuing an investment property, average rents

at similar locations and capitalisation ratios such as

the risk-free yield, risk premium, and the risk premium

to account for capital preservation are used. Rents at

similar locations are generated from various sources,

like data from lessors and lessees, web databases,

and own databases. The NLB Group has observable

data for all investment property at its disposal. If

observable data for similar locations are not available,

the NLB Group uses data from wider locations and

adjusts it accordingly.

562

Movements of financial assets and liabilities at Level 3

The NLB Group and NLB recognise the effects from

valuation of trading instruments in income statement

line item ‘Gains less losses from financial assets

and liabilities held for trading’, the effects from

valuation of non-trading equity instruments and loans

mandatorily measured at fair value through profit

or loss in the income statement line item ‘Gains less

losses from non-trading financial assets mandatorily

at fair value through profit or loss’, and the effects

from valuation of financial assets measured at fair

value through other comprehensive income in the

accumulated other comprehensive income line item

‘Financial assets measured at fair value through other

comprehensive income’.

563

In 2025 and in 2024, the NLB Group and NLB recognised

the following unrealised gains or losses for financial

instruments that were at Level 3 as at 31 December:

			in EUR thousands
		Financial assets measured at fair	Non-trading financial assets
NLB Group	Financial assets held for trading	value through OCI	mandatorily at fair value through
			profit or loss
2025	Derivatives	Equity instruments	Equity instruments
Items of Income statement
Gains less losses from financial assets and liabilities held for trading	3	-	-
Gains less losses from non-trading assets mandatorily at fair value through profit or loss	-	-	1,691
Foreign exchange translation gains less losses	-	-	(1,087)
Item of Other comprehensive income
Financial assets measured at fair value through other comprehensive income	-	108	-

			in EUR thousands
	Financial assets held for trading	Financial assets measured at fair	Non-trading financial assets
NLB Group		value through OCI	mandatorily at fair value through
			profit or loss
2024	Derivatives	Equity instruments	Equity instruments
Items of Income statement
Gains less losses from financial assets and liabilities held for trading	3	-	-
Gains less losses from non-trading assets mandatorily at fair value through profit or loss	-	-	3,043
Item of Other comprehensive income
Financial assets measured at fair value through other comprehensive income	-	21	-

564

				in EUR thousands
		Financial assets	Non-trading financial assets mandatorily at fair	Financial liabilities
NLB	Financial assets held for	measured at fair value	value through profit or loss	measured at fair value
	trading	through OCI		through profit or loss
			Loans and other	Loans and other
2024	Derivatives	Equity instruments	Equity instruments	financial liabilities
			financial assets
Items of Income statement
Gains less losses from financial assets
and liabilities held for trading	3	-	-	- -
Gains less losses from non-trading assets
mandatorily at fair value through profit or loss	-	-	3,043	60 597
Item of Other comprehensive income
Financial assets measured at fair value
through other comprehensive income	-	13	-	- -

Movements of non-financial assets at Level 3

				in EUR thousands
	Investment property		Non-current assets
			held for sale
NLB Group	2025	2024	2025	2024
Balance as at 1 January	19,214	20,189	8,187	801
Effects of translation of foreign operations to presentation currency	(56)	65	(21)	6
Additions	242	-	2,647	-
Disposals	(3,755)	(1,329)	(7,721)	(150)
Transfer from/(to) property and equipment	320	70	-	7,441
Transfer from/(to) non-current assets held for sale	-	(81)	-	-
Transfer from/(to) other assets	59	-	-	-
Transfer from/(to) investment property	-	-	-	81
Net valuation to fair value	2,671	300	234	8
Balance as at 31 December	18,695	19,214	3,326	8,187

565

e) Fair value of financial instruments not measured at

fair value in financial statements

Financial instruments not measured at fair value in

financial statements are not managed on a fair value

basis. For respective instruments, fair values are

calculated for disclosure purposes only and do not

impact the NLB Group statement of financial position or

The table below shows estimated fair values of financial

instruments not measured at fair value in the statement

of financial position.

Loans and advances to banks

The estimated fair value of deposits is based on

discounted cash flows using prevailing market interest

rates for instruments with similar credit risk and residual

maturities. The fair value of overnight deposits equals

their carrying value.

Loans and advances to customers

The estimated fair value of loans and advances

represents the discounted amount of estimated future

cash flows expected to be received. Expected cash flows

are discounted at current market rates for debts with

similar credit risk and residual maturities to determine

their fair value.

Deposits and borrowings

The fair value of sight deposits and overnight deposits

equals their carrying value. However, their actual value

for the NLB Group depends on the timing and amounts

of cash flows, current market rates, and the credit risk

of the depository institution itself. A portion of sight

deposits is stable, similar to term deposits. Therefore,

their economic value for the NLB Group differs from the

carrying amount.

The estimated fair value of other deposits and

borrowings from customers is based on discounted cash

flows using interest rates for new deposits with similar

residual maturities.

Debt securities measured at amortised cost and debt

securities issued

The fair value of debt securities measured at amortised

cost and debt securities issued is based on their quoted

market price or value calculated by using a discounted

cash flow method and the prevailing money market

interest rates.

Loan commitments

For credit facilities that are drawn soon after the NLB

Group grants loans (drawn at market rates) and loan

commitments to those clients that are not impaired,

the fair value is close to zero. For loan commitments

to clients that are impaired, fair value represents the

amount of the recognised provisions.

Other financial assets and liabilities

The carrying amount of other financial assets and

liabilities is a reasonable approximation of their fair

value as they mainly relate to short-term receivables

and payables.

566

Fair value hierarchy of financial instruments not measured at fair value in financial statements

567

6.6. Environmental and

climate-related risks

The NLB Group is engaged in contributing to sustainable

finance by incorporating environmental, social, and

governance (ESG) risks into its business strategies, risk

management framework, and internal governance

arrangements. With the adoption of the

Sustainability Policy

, the NLB Group implemented

sustainability elements into its business model. Thus,

sustainable finance integrates ESG criteria into the

Group’s business and investment decisions for the

lasting benefit of the Group’s clients and society. The

NLB Group Sustainability Committee oversees the

integration of the ESG factors into the NLB Group

business model.

ESG risks represent one of the risk drivers of the existing

type of risks. The Group integrates and manages them

within the established risk management framework in

the areas of credit, liquidity, market, and operational

risk. The management of ESG risks follows the

ECB and EBA guidelines, with the tendency of their

comprehensive integration into all relevant processes.

The management of ESG risks is incorporated into

the Group’s overall credit approval process, collateral

management and the related credit portfolio

management. Sustainable financing is implemented in

accordance with the Group’s Environmental and Social

Management System (ESMS). In addition to addressing

ESG risks in all relevant stages of the credit-granting

process, relevant ESG criteria were also considered in

the collateral evaluation process.

The NLB Group conducts a materiality assessment as

part of its overall risk identification process to determine

the level of transitional and physical risk to which the

Group is exposed. In this process, the identification

of environmental risk factors, relevant transmission

channels, and their materiality and impact on the

Group’s financial performance in short-, mid- and

long-term periods are assessed. The Group’s exposure

towards these risks is relatively low. Transition risk is

assessed as more material than physical risk. From the

perspective of physical risk, the most relevant natural

disasters are floods, landslides, and drought, while hail

and windstorms are also frequent, but less material.

Despite this, the Group can expect its impact to increase

in the long run if no adequate policy changes are

implemented in a timely manner. Chronic risk is not

determined as a material risk.

On the portfolio level, the Group does not face any large

concentration towards specific NACE industrial sectors

exposed to climate risk, with the role of transitional

risk being more prevalent. Based on the industry

segmentation of the portfolio and corresponding

emissions, the Group has a relatively low exposure

to emission-intensive sectors in its corporate clients’

businesses. The Group does not finance companies that

extract fossil fuels or operate coal-fired power plants as

part of its strategy. Following the transition of the former

Net Zero Banking Alliance to the guidance framework,

the NLB Group’s climate strategy remains unchanged.

Emission-based targets have been set for Power

Generation, Iron & Steel, Road Freight Corporates, and

Leasing. These were complemented by financing targets

for Residential and Commercial Real Estate, Leasing

(Passenger Cars), and client engagement targets for

Agriculture and Road Freight Transport, while, for the

Oil & Gas, Cement, and Aluminium sectors, origination

guidelines were set.

An internal ESG stress-testing concept to identify the

most relevant financial vulnerabilities stemming from

transitional and physical climate risks is established. It is

further revised and enhanced by considering disposable

ESG-related data. The results of the climate stress tests

showed no material impacts on the Group’s capital and

liquidity positions.

6.7. Offsetting financial assets and

financial liabilities

The NLB Group has entered into bilateral foreign

exchange netting arrangements with certain banks and

corporates. Cash flows from such transactions that are

due on the same day in the same currency are settled on

a net basis, i.e., a single cash flow for each currency. The

settlement of all interest rates derivatives is also carried

out by netting of both legs of transaction. Assets and

liabilities related to these netting arrangements are not

presented in a net amount in the statement of financial

position because netting rules apply to cash flows and

not to the entire financial instrument.

The NLB Group also holds certain standardised

derivatives (some interest rate swaps) with a clearing

house or central counterparty. A system of daily

margins assures the mitigation and collateralisation of

exposures, as well as the daily settlement of cash flows

for each currency.

All derivatives are conducted under the conditions of

signed Master Agreements (MA), with international

banks. An ISDA MA is in place along with a CSA annex

and for corporates a domestic MA is in place, which

enable daily evaluation and exchange of margining.

568

The NLB Group and NLB have no financial assets/

liabilities set off in the statement of financial position.

569

7. Analysis by Segment for NLB Group

a) Segments

(i) ‘Total net income’ includes net interest income,

dividend income, net fee and commission income, the net effect of financial instruments, foreign exchange translation, the effect on the derecognition of assets, other operating income,

other operating expenses, cash contribution to resolution funds and deposit guarantee schemes, gains less losses from modification of financial assets, and gain less losses from non-current assets held for sale.

570

(i) ‘Total net income’ includes net interest income, dividend income, net fee and commission income, the net effect of financial instruments, foreign exchange translation, the effect on the derecognition of assets, other operating income,

other operating expenses, cash contribution to resolution funds and deposit guarantee schemes, gains less losses from modification of financial assets, and gain less losses from non-current assets held for sale.

Segment reporting is presented in accordance with the

strategy on the basis of the organisational structure

used in management reporting of the NLB Group’s

results. The NLB Group’s segments are business units

that focus on different customers and markets. They

are managed separately because each business unit

requires different strategies and service levels.

The business activities of the parent bank (NLB) and

company NLB Lease&Go, leasing, d.o.o., Ljubljana – a

successor in legally merged companies NLB Lease&Go,

leasing, Ljubljana and Summit Leasing Slovenija – are

divided into several segments. Interest income and

expenses are reallocated between segments on the

basis of fund transfer prices (FTP), at Summit Leasing

Slovenija from Q1 2025 onwards. Other NLB Group

members are, based on their business activity, included

in only one segment.

In the segment analysis for the current period, the

funding costs to meet MREL requirements and to

strengthen the capital position of Tier 2 are additionally

allocated between segments and shown within the net

interest income.

The segments of the NLB Group are divided into core

and non-core segments.

The core segments are the following:

• Retail Banking in Slovenia covers individuals and micro

companies, asset management (NLB Skladi, Ljubljana),

and the part of NLB Lease&Go, Leasing, d.o.o.,

Ljubljana operating with retail clients, as well as the

part of the result of the associated company Bankart.

• Corporate and Investment Banking in Slovenia covers

Key Corporate Clients, SMEs, Cross-Border Corporate

Financing, Investment Banking and Custody, Trade

Finance, Restructuring and Workout, and the part of

NLB Lease&Go, Leasing, d.o.o., Ljubljana operating

with corporate clients.

• Strategic Foreign Markets consist of strategic banks in

the Group operating in the strategic markets (Serbia,

North Macedonia, Bosnia and Herzegovina, Kosovo,

and Montenegro), as well as the investment companies

NLB Fondovi, Skopje and NLB Fondovi, Beograd, NLB

DigIT, Beograd, and leasing companies NLB Lease&Go

Skopje, NLB Lease&Go leasing Beograd, and Mobil

Leasing, Zagreb.

• Financial Markets in Slovenia include treasury

activities and trading with financial instruments,

while also presenting the results of asset and liability

management (ALM) in the parent bank and company

NLB Lease&Go, Leasing, Ljubljana.

• Other activities include categories whose operating

results cannot be allocated to specific segments, as

well as NLB Cultural Heritage Management Institute,

company Car&Go, Ljubljana and Real Estate entities

with the exception of NLB Real Estate d.o.o., Podgorica

which was classified as a non-core member in 2025.

Non-Core Members include the operations of non-core

NLB Group members, i.e. entities in liquidation, LHB, NLB

Srbija, NLB Crna Gora, and SLS HOLDCO, Ljubljana and

571

in 2025 also NLB Real Estate, d.o.o., Podgorica. On 9

May 2025, SLS HOLDCO, Ljubljana merged with Summit

Leasing Slovenija, Ljubljana and ceased to exist as a

separate legal entity.

The NLB Group is primarily a financial group, and net

interest income represents the majority of its net revenues.

The NLB Group’s main indicator of a segment’s efficiency

is net profit before tax. No revenues were generated from

transactions with a single external customer that would

amount to 10% or more of the NLB Group’s revenues.

b) Geographical information

Geographical analysis includes a breakdown of items by the country in which individual NLB Group entities are located.

The column ‘Revenues’ includes interest and similar

income, dividend income, and fee and commission income.

The column ‘Net Revenue’ includes interest and similar

income, dividend income, fee and commission income,

the net effect of financial instruments, other operating

income, gains less losses from subsidiaries, associates

and joint-ventures, foreign exchange translation, the

effect on the derecognition of assets, gains less losses

from modification of financial assets, and gain less losses

from non-current assets held for sale. The items net effect

of financial instruments, foreign exchange translation,

the effect on the derecognition of assets, gains less losses

from modification of financial assets, are included only

if their combined value is positive. The items gains less

losses from subsidiaries, associates and joint-ventures,

and gain less losses from non-current assets held for sale

are included only if their value is positive.

572

The table below presents data on the NLB Group

members before intercompany eliminations and

consolidation journals:

573

8. Related-Party Transactions

A related party is a person or entity that is related to the

NLB Group in such a manner that it has control or joint

control, has a significant influence, or is a member of

the key management personnel of the reporting entity.

Related parties of the NLB Group and NLB include: key

management personnel (Management Board, other key

management personnel and their family members); the

Supervisory Board; companies in which members of the

Management Board, key management personnel, or their

family members have control, joint control, or a significant

influence; or a major shareholder of NLB with significant

influence, subsidiaries, associates, and joint ventures.

Related-party transactions with Management Board

and other key management personnel, their family

members and companies where these related parties

have control, joint control, or significant influence

A number of banking transactions are entered into

with related parties in the regular course of business.

The volume of related-party transactions and the

outstanding balances are as follows:

574

Key management compensation

The remuneration for the 2025 for the members of the

Supervisory Board of NLB d.d. and the Management

Board of NLB d.d. is regulated in the

Remuneration

Policy for the Members of the Supervisory Board of NLB

d.d. and the Members of the Management Board of NLB

d.d

. The remuneration for the identified employees and

other employees is regulated in the

Remuneration Policy

for employees of NLB d.d. and NLB Group.

In the

Remuneration Policy

and based thereon and in

accordance with Commission Delegated regulation (EU)

2021/923, the Bank designates identified employees.

In designating identified employees, the internal

organisation and the nature, scope, and complexity

of the Bank’s activities are taken into account. The

criteria fully take into account the risks that the Bank or

the NLB Group is or could be exposed to given its risk

profile and risk appetite. As identified employees under

are identified members of

the Bank’s Supervisory Board, members of the Bank’s

Management Board, senior management, and other

identified employees identified as identified employees

on the basis of the Bank’s annual self-assessment.

Members of the Supervisory Board may, in relation to

their function of a member of the Supervisory Board,

receive only remuneration that is compliant with the

relevant resolutions of the Bank’s General Meeting.

The Supervisory Board members are entitled to a

remuneration for performing their function for their

membership in the Supervisory Board of the Bank and

the committees of the Supervisory Board of the Bank,

which are determined in accordance with respective

applicable resolution by the General Meeting of the

Bank, and to reimbursement of travel expenses and

accommodation costs up to the amount provided by the

regulations governing reimbursement of costs related to

work and other income not included in the tax base.

The Bank’s General Meeting may determine and change

the remuneration of the members of the Supervisory

Board independently from the

, and

may change, repeal, or replace any of its resolutions in

relation to the remuneration of the Supervisory Board

members at any time, or adopt a new resolution in

relation to the remuneration of the Supervisory Board

members. The last changes of the remuneration of

members of the Supervisory Board were adopted at the

General Meeting of NLB d.d. 19 June 2023.

The performance of Management Board Members is

defined by financial and non-financial criteria. In

addition to the salary determined in their employment

contract, other income and reimbursement of costs and

other benefits, they are also entitled to a Performance

Bonus which is divided into a short-term incentive

(hereinafter: ‘STI’) and a long-term incentive (hereinafter:

‘LTI’). The Short-term Performance Criteria for STI and

LTI consists of the financial goals of the NLB Group, the

575

goals in the areas covered by the individual

Management Board Member, and the personal goals.

To determine the performance of an individual member

of the Management Board during the Subsequent

Performance Period (LTI), the following targets are used:

a) relative total shareholder return (RTSR); and b) goals

that derive from the Bank’s long term strategy and that

are related to the sustainability and development of the

Bank and are linked to the promotion of organisational

culture, employee development and customer relations

(only for the Chief Risk Officer the cost of risk is included

in the targets).

The objectives and performance assessment criteria

for STI and LTI of each member of the Management

Board shall be determined each year by the Supervisory

Board of NLB d.d. at the time of adoption of the Bank’s

annual business plan. Also, the Supervisory Board of

NLB d.d. confirms the objectives of the heads of control

or supervisory functions and financial targets of NLB

d.d. The objectives and performance assessment criteria

for the identified employees are determined by the

Management Board.

Management Board members are entitled to a STI in the

amount of a maximum of nine average gross monthly

salaries of each member of the Management Board,

and LTI for a single accrual period, which can amount to

a maximum of three average gross monthly salaries of

each member of the Management Board.

Other identified employees are entitled to a variable

part of remuneration according to the category of

employee in the maximum amount of three to six

salaries. Key management shall be entitled to a variable

part of the performance benefit only in proportional

part to the actual period of employment (duration of the

term of office) of the Bank during the period to which the

variable part of the performance benefit relates.

The non-deferred part of variable remuneration is

paid no later than three months after the adoption of

the Annual Report of the NLB Group for the business

year to which the variable remuneration relates.

Variable remuneration part of payment of an identified

employee is awarded and paid in cash without deferral,

provided that the amount does not exceed EUR 50

thousand or/and is higher than one-third of his/her

The table below shows payments in presented periods:

total remuneration for each financial year, and if this is

remuneration is paid, and it is paid in proportional

permissible in accordance with the relevant regulation.

shares (in fifths), according to the relevant legislation.

If the variable remuneration part of payment of an

Short-term benefits include:

identified employee exceeds EUR 50 thousand or/and

monetary benefits (gross salaries, supplementary

is higher than one-third of his/her total remuneration

insurance, holiday allowances, and other bonuses),

for each financial year and if this is permissible in

non-monetary benefits (company cars, health care,

accordance with the relevant regulation, then at least

residential facilities, etc.).

50% of the variable remuneration must consist of

instruments. The part of the variable remuneration of

The reimbursement of costs comprises food allowances,

an identified employee consisting of instruments shall

travel expenses, and use of own resources.

be awarded and paid under the terms and conditions

in the valid

in instruments whose

value is based on the value of the share of NLB d.d. The

instrument gives its holder yields equal to the dividends

the NLB d.d.’s share gives its holder.

The deferred part of the variable part of the salary must

be deferred for a period of at least five years of the

day on which the non-deferred part of such variable

576

Payments to individual members of the Management Board

			in EUR
Member/Mandate		2025	2024
Blaž Brodnjak	Short-term benefits:
01.12.2012	- gross salary and holiday allowance	762,443	753,098
	- benefits and other short-term bonuses	14,387	14,405
	Costs refunds	1,581	1,452
	Long-term bonuses:
	- other benefits	3,055	2,904
	- variable part of payments	1,016,421	241,055
	Total	1,797,887	1,012,914
Peter Andreas Burkhardt	Short-term benefits:
18.09.2013	- gross salary and holiday allowance	690,959	678,405
	- benefits and other short-term bonuses	32,583	48,283
	Costs refunds	1,542	1,504
	Long-term bonuses:
	- other benefits	17,874	2,904
	- variable part of payments	919,145	210,292
	Total	1,662,104	941,387
Archibald Kremser	Short-term benefits:
31.07.2013	- gross salary and holiday allowance	727,943	718,973
	- benefits and other short-term bonuses	48,732	35,699
	Costs refunds	2,323	1,434
	Long-term bonuses:
	- other benefits	34,396	2,904
	- variable part of payments	957,546	229,865
	Total	1,770,940	988,875
Antonio Argir	Short-term benefits:
28.04.2022	- gross salary and holiday allowance	504,870	453,128
	- benefits and other short-term bonuses	56,483	56,206
	Costs refunds	1,480	1,431
	Long-term bonuses:
	- other benefits	38,121	2,904
	- variable part of payments	120,195	73,114
	Total	721,148	586,783

The increase in remuneration paid to members of

the Management Board in 2025 was primarily driven

by the payment of deferred variable remuneration

relating to prior periods. In 2025, financial instruments

became payable for the first time after a deferral

period of three years and one month, covering the

financial years 2019, 2020 and 2021 (note 2.32.).

			in EUR
Member/Mandate		2025	2024
Andrej Lasič	Short-term benefits:
28.04.2022	- gross salary and holiday allowance	504,870	453,128
	- benefits and other short-term bonuses	1,042	1,364
	Costs refunds	1,683	1,387
	Long-term bonuses:
	- other benefits	3,055	2,904
	- variable part of payments	115,281	73,114
	Total	625,930	531,897
Hedvika Usenik	Short-term benefits:
28.04.2022	- gross salary and holiday allowance	504,870	453,128
	- benefits and other short-term bonuses	10,037	12,336
	Costs refunds	1,443	1,325
	Long-term bonuses:
	- other benefits	3,055	2,904
	- variable part of payments	121,831	73,114
	Total	641,236	542,807
Reinhard Höll	Short-term benefits:
03.06.2025	- gross salary and holiday allowance	297,229	-
	- benefits and other short-term bonuses	29,004	-
	Costs refunds	807	-
	Long-term bonuses:
	- other benefits	12,540	-
	Total	339,581	-

577

Payments to individual members of the Supervisory Board

578

Related-party transactions with subsidiaries, associates, and joint ventures

				in EUR thousands
NLB Group	Associates		Joint ventures
	2025	2024	2025	2024
Loans issued
Balance at 1 January	12	10	-	-
Increase	101	119	-	-
Decrease	(105)	(117)	-	-
Balance at 31 December	8	12	-	-
Deposits received
Balance at 1 January	10,333	6,168	1,596	1,451
Effects of translation of foreign operations to presentation currency	-	-	(4)	4
Increase	8,854	6,753	11,409	3,338
Decrease	(10,167)	(2,588)	(8,677)	(3,197)
Balance at 31 December	9,020	10,333	4,324	1,596
Interest expenses	-	-	(155)	(48)
Other financial assets	6	7	-	-
Other financial liabilities	1,821	1,642	-	-
Guarantees issued and loan commitments	32	28	-	-
Fee income	9	8	-	-
Fee expenses	(17,199)	(18,891)	-	-
Other income	42	42	5	5
Other expenses	(1,788)	(827)	-	-
Gains less losses on derecognition of financial assets/liabilities held for trading	-	-	4	-

579

580

Related-party transactions with major shareholder

with significant influence

The volumes of related-party transactions with major

shareholder are as follows:

581

The NLB Group and NLB disclose all transactions with

the major shareholder with significant influence. For

transactions with other government-related entities, the

NLB Group discloses individually significant transactions

with exposure above EUR 40 million and their business

accounts balances. No significant transactions were

recorded during the year 2025 and 2024.

		in EUR thousands
	Effects in income statement
NLB Group and NLB	during the year
	2025	2024
Interest income from loans	12,807	16,364
Fees and commissions income	49	55
Interest income from debt securities measured at amortised cost and
net valuation effects from hedge accounting	621	2,151

582

9. Events after the Reporting Date

No events took place after 31 December 2025 that

would have had a materially significant influence on the

presented financial statements.

583

NLB Group Directory

Nova Ljubljanska banka d.d., Ljubljana

Trg republike 2

1000 Ljubljana, Slovenia

Tel: +386 1 476 39 00, +386 1 477 20 00

E-mail: [email protected]

www.nlb.si

Slovenian network

Area Branch Ljubljana

Trg republike 2

1000 Ljubljana, Slovenia

Area Branch Northwest and Central Slovenia

Mestni trg 1

1230 Domžale, Slovenia

Area Branch East Slovenia

Titova cesta 2

2000 Maribor, Slovenia

Area Branch Northeast Slovenia

Rudarska cesta 3

3320 Velenje, Slovenia

Area Branch Southeast Slovenia

Seidlova cesta 3

8000 Novo mesto, Slovenia

Area Branch Southwest Slovenia

Cesta Zore Perello - Godina 7

6000 Koper, Slovenia

Private Banking

Micro Enterprises

Mobile Banking

Small and Mid-Corporates

Central Slovenia

Northwest region

Ljubljanska cesta 62

1230 Domžale, Slovenia

Primorsko-Goriška region

Cesta Zore Perello - Godina 7

6000 Koper, Slovenia

Podravsko-Pomurska region

Titova cesta 2

2000 Maribor, Slovenia

Savinjsko-Koroška region

Kocenova 1

3000 Celje, Slovenia

Dolenjsko-Posavska region

Seidlova cesta 3

8000 Novo mesto, Slovenia

AGRO Segment

CSA & Cross-Border

Large Corporates

Institutional Investors

Investment Banking

and Custody

Trade Finance Services

584

Members of NLB Group

NLB Komercijalna Banka AD Beograd

Bulevar Mihajla Pupina 165v

11070 New Belgrade, Serbia

E-mail: [email protected]

www. nlbkb.rs

NLB Banka AD Skopje

Vodnjanska 1

1000 Skopje, North Macedonia

www.nlb.mk

NLB Banka a.d. Banja Luka

Milana Tepića 4

78000 Banja Luka, Republic of Srpska,

E-mail: [email protected] www.nlb-rs.ba

NLB Banka d.d. Sarajevo

Ul. Koševo br. 3

71000 Sarajevo, Bosnia and Herzegovina

www.nlb.ba

NLB Banka sh.a. Prishtina

Rr. Ukshin Hoti nr. 124

10000 Prishtina, Kosovo

www.nlb-kos.com

NLB Banka a.d. Podgorica

Bulevar Ivana Crnojevića 171

81000 Podgorica, Montenegro

www.nlb.me

NLB DigIT d.o.o. Beograd

Omladinskih brigada 90b

11070 New Belgrade, Serbia

www.nlbdigit.rs

NLB Lease&Go, leasing, d.o.o., Ljubljana

Flajšmanova ulica 3

www.nlbleasego.si

NLB Lease&Go d.o.o. Skopje

Vodnjanska 1

1000 Skopje, North Macedonia

www.nlbleasego.mk

NLB Lease&Go Leasing d.o.o. Beograd

Bulevar Mihajla Pupina 165v (prvi sprat)

www.nlbleasego.rs

NLB Car&Go d.o.o. Ljubljana

Šlandrova ulica 2

1231 Ljubljana - Črnuče, Slovenia

Mobil Leasing d.o.o.

Kovinska ulica 5

10000 Zagreb, Croatia

www.mobil-leasing.hr

NLB MUZA Cultural Heritage Management Institute,

Čopova ulica 3

www.nlb-muza.si

Prvi faktor d.o.o. v likvidaciji, Ljubljana

Slovenska cesta 17

Prvi faktor – faktoring d.o.o. Beograd – u likvidaciji

Bulevar Mihajla Pupina 165v

Prvi faktor d.o.o. u likvidaciji, Zagreb

Miramarska cesta 24

10000 Zagreb, Croatia

NLB InterFinanz AG in Liquidation, Zürich

Beethovenstrasse 48

8002 Zürich, Switzerland

NLB InterFinanz d.o.o. Beograd – u likvidaciji

NLB Skladi, upravljanje premoženja, d.o.o. Ljubljana

Tivolska cesta 48

www.nlbskladi.si

NLB Fondovi a.d. Beograd

Vladimira Popovića 6, A301

www.nlbfondovi.rs

NLB Fondovi AD Skopje

Blvd. Partizanski odredi 14A-1/2

www.nlbfondovi.mk

Bankart d.o.o. Ljubljana

Celovška cesta 150

www.bankart.si

LHB Aktiengesellschaft, Frankfurt am Main

Silberbornstrasse 14

D-60320 Frankfurt, Germany

PRO-REM d.o.o. – v likvidaciji

Čopova 3

www.nlbrealestate.com

585

NLB REAL ESTATE d.o.o. Podgorica

Bul. Džordža Vašingtona 102,

I. sprat/20

81000 Podgorica, Montenegro

www.nlbrealestate.com

NLB REAL ESTATE d.o.o. Beograd

NLB Srbija d.o.o. Beograd

www.nlbsrbija.co.rs

NLB Crna Gora d.o.o. Podgorica

Bulevar Džordža Vašingtona 102,

II sprat/38

NLB REAL ESTATE d.o.o. Ljubljana

Čopova 3

586

Definitions and Glossary of Selected Terms

AC

Amortised Cost

ACFE

Association of Certified Fraud Examiners

AI

Artificial Intelligence

ALCO

Asset and Liability Committee

ALM

Asset and Liability Management

ALMM

Additional Liquidity Monitoring Metrics

AML/CTF

Anti-Money Laundering and Counter-Terrorism

Articles of Association

Articles of Association of the NLB d.d.

Additional Tier 1 capital

AuM

Assets under Management

BAM

Bosnian Convertible Mark

BCM

Business Continuity Management

BCP

Business Continuity Plans

BEV

Battery electric vehicles

BIA

Business Impact Analysis

BoS

Bank of Slovenia

bps

Basis Points

BPV

Basis Point Value

BSCC

British-Slovenian Chamber of Commerce

CB

Central Bank

CBA or CA

Collective bargaining agreements

CBCR

Country-by-Country Reporting

CBR

Combined Buffer Requirement

CCF

Credit Conversion Factor

CCYB

Countercyclical Capital Buffer

CEE

Central Eastern Europe

CEO

CER

Sustainable Business Network of Slovenia

CET1

Common Equity Tier 1 capital

CEU

Energy Efficiency Centre

CFO

Chief Financial Officer

CGPO

Chief Group Governance, Payments and Innovations

Officer

Cost-to-Income Ratio

CISO

Chief Information Security Officer

CMO

Chief Marketing Officer

CoR

Cost of Risk

CRD

Capital Requirements Directive

CRE

CRM

Customer Relationship Management

CRO

Chief Risk Officer

CRR

Capital Requirements Regulation

CSA

Credit Support Annex

587

CSD

Central Security Depository

CSR

Corporate Social Responsibility

CSRD

Corporate Sustainability Reporting Directive

CTO

Chief Transformation Officer

CVA

Credit Value Adjustments

DAC 6

Council Directive 2011/16/EU

DAIG

Data and AI Governance Sector

DEI

Diversity, equity and inclusion

DGS

Deposit Guarantee Scheme

DMA

Double Materiality Assessment

DORA

Digital Operational Resilience Act

DPO

Data Protection Officer

DT

Deferred Tax

DTA

Deferred Tax Asset

DWH

Data Warehouse

EAD

Exposure at Default

EAP

Employee Assistance Programme

EBA

European Banking Authority

EBRD

European Bank for Reconstruction and Development

ECB

European Central Bank

ECL

Expected Credit Losses

ECRA

Enterprise Compliance Risk Assessment

EDWH

Enterprise Data Warehouse

EEA

European Economic Area

EF

Emission Factor

EFRAG

European Financial Reporting Advisory Group

EIB

European Investment Bank

EPC

Energy Performance Certificate

EPS

Earnings Per Share

ESEF

European Single Electronic Format

E&S

Environmental and Social

ESG

Environmental, Social and Governance

ESMS

Environmental and Social Management System

ESRS

European Sustainability Reporting Standards

EU

European Union

EURIBOR

Euro Interbank Offered Rate

EU Taxonomy

Regulation (EU) 2020/852

EV

Electric vehicle

EVE

Economic Value of Equity

EWS

Early Warning System

FATCA

Foreign Account Tax Compliance Act

FCA

Financial Conduct Authority 

FDI

Foreign Direct Investment

FED

Federal Reserve

FTP

Fund Transfer Pricing

FURS

Financial Administration of the Republic of Slovenia

FVOCI

Fair Value Through Other Comprehensive Income

FVTPL

Fair Value Through Profit or Loss

588

FX

Foreign Exchange

GAR

Green Asset Ratio

GBF

Green Bond Framework

GDP

Gross Domestic Product

GDPR

General Data Protection Regulation

GDR

Global Depositary Receipts

GEFF

Green Economy Financing Facility

General Meeting of Shareholders of NLB d.d.

GFANZ

Glasgow Financial Alliance for Net Zero

GGB

Government Guaranteed Bonds

GHG

Greenhouse gases

GPA

General Provisions of the Agreement

GRI

Global Reporting Initiative – Sustainability Reporting

Standards

GWP AR5

Global warming potential – Fifth Assessment Report

HEV

Hybrid electric vehicles

HHI

Herfindahl-Hirschman Index

HR

Human Resources

HQ

Headquarters

HQLA

High-quality liquid assets

HVAC

Heating, Ventilation and Air Conditioning

IBOR

Interbank Offered Rate

ICAAP

Internal Capital Adequacy Assessment Process

ICE

Internal Combustion Engine Vehicle

ICMA

International Capital Market Association

ICT

Information and Communication Technology

IEA

International Energy Agency

IFRS

International Financial Reporting Standards

Institute Jožef Stefan

ILAAP

Internal Liquidity Adequacy Assessment Process

ILO

International Labour Organization

IPCC

Intergovernmental Panel on Climate Change

IRB

Internal ratings-based

IRO

Impacts, risks and opportunities

IRRBB

Interest Rate Risk in the Banking Book

IRS

Interest Rate Swaps

ISDA

International Swaps and Derivatives Association

ISIN

International Securities Identification Number

IT

Information Technology

JRC

Joint Research Centre

JST

Joint Supervisory Team

KB

Komercijalna Banka

KDD

Central Securities Clearing Corporation

KPI

Key Performance Indicator

KYC

Know Your Client

LCP

Liquidity Contingency Plan

LCR

Liquidity Coverage Ratio

LECL

Lifetime Expected Credit Losses

LGD

Loss Given Default

589

LIA

Legitimate interest assessments

LIBOR

London Interbank Offered Rate

LJSE

Ljubljana Stock Exchange

LPD

Lifetime Probability of Default

LRE

Leverage Ratio Exposure

LSE

London Stock Exchange

Loan-to-Deposit Ratio

LTI

Long-Term Incentive

LULUCF

The Regulation on land, land use change and forestry

(EU) 2018/841

M&A

Mergers and Acquisitions

Management Board or MB

Management Body of NLB d.d.

MDA

Maximum Distributable Amount

MHEV

Mild hybrid

MIGA

Multilateral Investment Guarantee Agency

MREL

Minimum Requirement of Own Funds and Eligible

NACE

Statistical Classification of Economic Activities in the

European Community

NECP

National Energy and Climate Plan

NFRD

Non-Financial Reporting Directive (2014/95/EU) 

NGFS

Network for Greening the Financial System

NGP

Next Generation Platform

NGW

Negative Goodwill, i.e. Gains from Bargain Purchase

NII

Net Interest Income

NLB or the Bank

NLB d.d.

NPE

Non-Performing Exposures

NPL

Non-Performing Loans

NPS

Net Promoter Score

NPV

Net Present Value

NSFR

Net Stable Funding Ratio

NZBA

Net-Zero Banking Alliance

NZE

Net zero emissions

OBM

Operating Business Margin

OCI

Other Comprehensive Income

OCR

Overall Capital Requirement

OECD

Organisation for Economic Co-operation and

Development

OHS

Occupational health and safety management system

O-SII

Other Systemically Important Institutions

OU

Organisational Units

PCAF

Partnership for Carbon Accounting Financials

PHEV

Plug-in hybrid electric vehicle

pp

Percentage Point(s)

P2G

Pillar 2 Guidance

P2R

Pillar 2 Requirements

PPA

Power Purchase Agreement

PMI

Purchasing Managers’ Index

POCI

Purchased or Originated Credit-Impaired

POS

Point of Sale

PSD2

Payment Services Directive

590

RCP

Representative Concentration Pathway

RE

REAM

Real Estate Asset Management

RES

Renewable Energy Sources

RICO

RICS

Royal Institution of Chartered Surveyors

ROA

Return on Assets

ROE

Return on Equity

RORAC

Return on Risk-Adjusted Capital

RoS

Republic of Slovenia

ROTE

Return on Tangible Equity

RRE

RSD

Serbian dinar

RTSR

Relative Total Shareholder Return

RWA

Risk-Weighted Assets

SBITOP

Slovenian Blue-chip Index

SBTi

Science-based targets

SDA

Slovenian Directors’ Association

SEE

South-Eastern Europe

SEPA

Single Euro Payment Area

SES

Serbian Association of Economists

SICR

Significant Increase of Credit Risk

SME

Small and Medium-sized Enterprises

SPPI

Solely Payment of Principal and Interest

SREP

Supervisory Review and Evaluation Process

SSH

Slovenian Sovereign Holding

SSM

Single Supervisory Mechanism

STI

Short-Term Incentive

STR

Suspicious Transaction Report

Supervisory Board or SB

T1

Tier 1

tonnes of CO

equivalent

TCR

Total Capital Ratio

TCFD

The Group

tNPS

Transactional Net Promoter Score

TRC

Total Rental Costs

TREA

Total Risk Exposure Amount

TSCR

Total SREP Capital Requirement

UN

United Nations

UNCAC

United Nations Convention against Corruption

UNEP FI

United Nations Environment Programme Finance

Initiative

UN FPA

United Nations Population Fund

UNGC

United Nations Global Compact

UN PRB

United Nations Principles for Responsible Banking 

UN PRI

United Nations Principles for Responsible Investment

UN SDG

United Nations Sustainable Development Goals

VAT

Value Added Tax

591

WLTP

Worldwide Harmonized Light Vehicles Test Procedure

Works Council

Works Council of NLB d.d.

ZBan-3

Slovenian Banking Act

ZEO

Zero-energy building

ZGD-1

Companies Act (Zakon o gospodarskih družbah)

ZGD-1M

Companies Act (Zakon o gospodarskih družbah) -

Amendment M

ZPIZ

Pension and Disability Insurance Institute of Slovenia

ZTFI-1

Market in Financial Instruments Act

ZVKNNLB

Slovenian Act for Value Protection of Republic of

Slovenia’s Capital Investment in Nova Ljubljanska banka

d.d., Ljubljana

ZZPri

Whistleblower Protection Act

EDUARD ČEHOVIN

Seeing the Unseen, 2026

Digital design. An AI tool was not

used to create this design.

Cover artwork

The cover artwork was created for

the Annual Report, reflecting the

inspiration for success that represents

the fundamental moment of any

strategic or creative endeavour

– when clear objectives take

precedence over uncertainty. It drives

decisive action, reinforces discipline,

and converts sustained efforts into

tangible outcomes.

The artwork reflects the concept of

the unseen: a dynamic environment

of emerging potential in which the

form and meaning develop over time.

Through the evolution, a structured

and forward-looking vision takes

shape, conveying clarity, stability,

and future readiness.

593

NLB d.d., Ljubljana

nlb.si

NLB d.d.

Production:

Saatchi & Saatchi Ljubljana

Photographs:

Primož Lukežič, Matko Mioč

All rights reserved: NLB d. d., Ljubljana

Ljubljana, April 2026

NLB Group is committed to safeguarding the environment and to reducing printing and paper usage in our every process. Leading by example, this report is prepared in digital form

only. We invite our stakeholders to join us in our safeguarding efforts and not print any copy of this report.