NLB — Investor Presentation 2018

Apr 17, 2018

NLB Group Presentation

Audited results 2017

Disclaimer

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

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

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

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

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

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

NLB is regulated by The European Central Bank, Sonnemannstrasse 20, 60314 Frankfurt am Main, Germany, The Bank of Slovenia i.e. "Banka Slovenije, Slovenska 35, 1505 Ljubljana, Slovenia" and by The Securities Market Agency i.e. "Agencija za trg vrednostnih papirjev, Poljanski nasip 6, 1000 Ljubljana, Slovenia."

Team

Nova Ljubljanska Banka (NLB)

Blaž Brodnjak

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

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

Archibald Kremser

Chief Financial Officer (CFO)

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

Andreas Burkhardt Chief Risk Officer (CRO)

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

László Pelle

Chief Operating Officer (COO)

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

X Represents years of experience

Overview of NLB Group today

Investment highlights

• ✓ The largest banking and financial institution in Slovenia
  • ✓ 100% owned by the Republic of Slovenia
  • ✓ Leading bank for retail and corporate clients in Slovenia, with 693k active clients and 23.0% market share by total assets (as of Dec-17)
• ✓ Active in 6 attractive markets in South-Eastern Europe
  • ✓ Sizeable aggregate population of 15.4m as of Dec-16
  • ✓ 4 of the NLB Group banks are Top-3 banks in their respective markets (by total assets)
• ✓ Underwent substantial transformation since 2013, achieving turnaround in operational profitability and asset quality
  • ✓ Increasing profitability in all key business segments
  • ✓ ~21% reduction in operating costs (FY'13-FY'17), an equivalent of -2% CAGR, with 58% C/I as of FY'17
  • ✓ NPL ratio reduced from Dec-12 peak of 28.2% to 9.2% in Dec-17
• ✓ Extensive distribution network of 350 branches
  • ✓ 108 branches in Slovenia (Dec-17)
• ✓ Attractive dividend payout ratio
  • ✓ 58% of 2016 NLB Group net profit paid out in April 2017
  • ✓ 84% of 2017 NLB Group net profit to be paid out in 2018 (3)

Source: Company information, Bank of Slovenia

Key figures

Balance sheet (EURm)	Dec-15	Dec-16	Dec-17	Delta
Total assets	11,822	12,039	12,238	2%
Loans to customers (gross)	8,351	7,901	7,641	-3%
Loans to customers (net)	7,088	6,997	6,995	0%
Customer deposits	9,026	9,439	9,879	5%
Attributable equity	1,423	1,495	1,654(4)	11%
P&L (EURm)	FY'15	FY'16	FY'17	△
Net interest income	340	317	309	-3%
Pre provision income	186	186	204	9%
Profit after tax	92	110	225	105%
	Dec-15	Dec-16	Dec-17
Key ratios (%)	/ FY'15	/ FY'16	/ FY'17	△
CET1 ratio	16.2%	17.0%	15.9%(5)	-1.1pp
C/I ratio	61.6%	60.9%	58.3%	-3.1pp
NPL ratio	19.3%	13.8%	9.2%	4.6 pp
NPL coverage ratio	72.2%	76.1%	77.5%	-1.4 pp
NPE ratio (EBA)	14.3%	10.0%	6.7%	3.3 pp
NPE coverage ratio (EBA)	69.9%	72.4%	74.7%	-2.3 pp
RoE after tax	6.6%	7.4%	14.4%	7.7pp

Gross loans by customer (Dec-17)

Note: (1) Government departments, municipalities and agencies; (2) Geographical analysis based on location of assets of the NLB Group; (3) Represents proposed dividend of EUR189.1m, subject to approval by Supervisory Board and General Meeting of Shareholders; (4) Pre EUR189.1m Apr-17 proposed dividend payment distribution to existing shareholders; (5) Post EUR189.1m proposed dividend payment distribution;

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

Slovenia: Fully integrated into European institutions

• ✓ Member of the EU and the Eurozone
• ✓ Export-driven economy with valueadded export goods
• ✓ Well educated labour force
• ✓ Solid Parliamentary support for coalition Government (next elections in 2018)

EUR 43.3 bn nominal GDP

5.0% real GDP growth

EUR 20.96k GDP/capita vs EUR 11k CEE average(1)

6.6%

survey unemployment rate

73.6% Govt debt/GDP

A+/A-/Baa1 Sovereign rating (S&P/Fitch/Moody's) 0.0 % of GDP Gov. deficit

Recent milestones

Source: Republic of Slovenia, IMF WEO, Statistical Office of the Republic of Slovenia Note: (1) 2016, CEE countries include Poland, Romania, Czech Republic, Slovakia, Hungary.

Slovenian economy growing at 5.0% compared to 2.3% Eurozone growth in 2017

Real GDP growth for Slovenia

Recovery driving lower unemployment and higher consumer confidence(1)

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

Macro update

• Slovenian economy grew by 5.0% in 2017 stronger than Eurozone average of 2.3%.
• Drivers included final consumption expenditure growth of 3.0% YoY and improved external trade balance of 12.9% YoY.
• Economic recovery drove unemployment rate down in Q4 2017 by 5.3 p.p. since Q1 2013.
• Consumer confidence increased by 42 points since its 2012(2) lows, driving household consumption growth. At the end of 2017 index reached a positive value for the first time in its history (since 1996).

GDP by source and activities (EURbn)

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

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

Interest rate evolution (%)

Resurgence of corporate loans and steady growth in retail loans

• Non-financial corporate loans stock increased by 7.9% in December 2017, from its September 2016 low
• Household loans stock increased by 11.7% in December 2017 vs December 2015, mostly due to improved consumer confidence
• Total loans to non-financial sector grew by 4.8% Y-o-Y (Dec-16 to Dec-17)

Stable interest rate environment

• Average interest rate for consumer and mortgage loans increased by 20 basis points in the past 12 months to December 2017, while interest rates for corporate loans in the same period decreased by 40 basis points.

NLB Group - Journey so far

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

Key initiatives implemented

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

6

14% cost base reduction from 2013 (EURm)

Staff Admin Other

Smaller and stronger balance sheet (EURm)

Return to profitability(2) (EURm)

2013 recapitalisation Journey so far

Note: NPL ratio and NPL stock based on credit portfolio, including balances and obligatory reserves with central banks and demand deposits at banks and different scope of consolidation; (1) CAGR 2013 to 2017; (2) Profit after tax attributable to the shareholders

Dominant player in the Slovenian banking sector

Market leader across products in Slovenia

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

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

Dominant player in the Slovenian banking sector Retail banking

Market evolution	✓ Retail lending has been steadily growing since 2014, primarily driven by mortgages. Household indebtedness in 2016 stood at 58.6% of GDP. ✓ Housing transactions and housing prices increasing ✓ Significant growth of retail deposits
NLB positioning	✓ Market shares resilient across market segments (As of Dec-17: Retail net loans: 23.4%, Retail deposits: 30.7%) ✓ Increasing share of new loan production in growing consumer segment, driven by wide distribution network, strong sales force and large customer base
Distribution network	✓ Network of 108 branches offers nationwide coverage, with presence in all key cities of Slovenia ✓ Key initiatives implemented in branches, including rollout of e-signature and branch refurbishment
Digital banking	✓ Ongoing enhancement of online and mobile banking platform with the introduction of new functionalities, including raising Express loan in mobile app (Klikin) 24/7 and full online availability of all transaction banking services. By upgrading the e-bank NLB Klik customers have the option of concluding certain NLB Vita insurance products. ✓ the 1st bank in Slovenia introducing contact-less ATMs for contactless cards ✓ First bank to introduce contactless debit and credit cards in Slovenia
Upside from fee generating products	Private banking: ✓ #1 market position, with growing customer base through conversion of existing NLB customers and limited competition ✓ Strong cross-selling capabilities with bancassurance and asset management Bancassurance: ✓ Profitable and growing business segment, with ca 13,5% market share in life by GWP(2) , with upside potential from underpenetrated customer base (14,3% penetration for life and non life) Asset management: ✓ # 1 player by AuM in Slovenian asset management exceeding EUR1.2bn in AuM(3)

Branch network (#)

NLB Klik(1) users (000s)

Private banking GWP (EURm)

Source: Bank of Slovenia, Company information. Bank for International Settlements

Note: All figures refer to full year ending 31-Dec unless stated otherwise; (1) NLB Klik refers to NLB's online banking application; (2) Slovenian Insurance Association; (3) Including investments in mutual funds and discretionary portfolios. Source: Slovenian Fund Management Association (4) Significant drop in NLB Klik users due to termination of 30.000 inactive clients.

Dominant player in the Slovenian banking sector Corporate banking

Market evolution	✓ Corporate deleveraging post-crisis, volumes decreasing 8% on average during 2014-16 ✓ Corporate credit demand demonstrated pick-up in 2016 as economic growth continues to improve ✓ Substantial progress in corporate NPL resolution	Corporate net loans (Market, EURm) CAGR '14 - '17 -3.7%
NLB positioning	NLB is clear sector leader with 20.2% net loans market share(1); ✓ ✓ Loan balances in key business(2) grew by 7.5% despite the sector falling by 3.7% on average since 2014 ✓ Market leader across deposit product lines: 18.6% market share for sight deposits, 9.9% for term deposits	11.947 10.556 10.167 10.670 Dec-14 Dec-15 Dec-16 Dec-17
Competitive advantage	✓ Largest bank in the country with the highest capacity to lend and best capability to service large clients ✓ Strong pricing power, driven by largest customer base – NLB is positioned in upper third of market ✓ International desk to leverage on network of subsidiaries in the region	(EURm, Dec-17)
Strong fee business	✓ Leader in merchant acquiring with 12,5k POS terminals, 5.5k merchants and 34% market share as at Dec-17 ✓ Strong performance of Investment Banking in 2017, with income growing at 33.7% (compared to 2016) ✓ Assets under custody reached almost EUR14.7bn in Dec-17 (+20% vs Dec-16) ✓ Leading market position in Brokerage and Treasury Sales showing strong revenue growth of 45% YOY.	SME gross loans(4)
Opportunity in small and mid business	✓ Mid-corporate: with wide physical presence NLB has advantage in a strongly contested market ✓ Attractive fee business potential as relevant advisory and treasury services can be offered at smaller scale

NLB key business(2) gross loans (EURm)

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

	Clients	Gross loans (EURm)	Deposits (EURm)
Large	671	1,421	160
Mid	2,679	477	422
SE(3)	14,250	115	473

SME gross loans(4) (EURm)

Source: Bank of Slovenia, Company information

Note: (1) Market share of NLB d.d. excluding DARS bonds; (2) Key business excludes workout and restructuring; (3) Small enterprises, excluding Standard segment clients in Distribution Network; (4) Excluding restructuring and workout

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

• ✓ NLB's SEE footprint outside of Slovenia covers 5 countries with EUR 73.1 bn GDP and 15.0m population
• ✓ Attractive growth markets in Q3 2017, with 2.6% real GDP growth and 22.4% household indebtedness as of GDP(4)

	Slovenia	Macedonia	Bosnia(1)	Kosovo	Montenegro	Serbia
Population (Dec-16, m)	2.1	2.1	3.5	1.8	0.6	7.0
GDP(3) (2017, EURbn)	43.3	10.1	15.9(5)	6.2(5)	4.1(6)	36.8
GDP/Capita(3) (2016, EURk)	19.6	4.8	4.4	3.4	6.4	4.9
Real GDP growth (2017, YoY)	5.0%	0.0%	3.0%(4)	3.8%(4)	4.3%(4)	1.9%
Average Inflation (2017, YoY)	1.4%	1.4%	1.3%	1.5%	2.4%	3.1%
Government debt/GDP (Q3 2017)	78.4%	45.8%	36.7%(8)	15.5%	59.3%	61.5%
Household debt /GDP(7) (Q3 2017)	21.9%	22.7%	27.4%	14.4%	27.4%	20.3%
Currency	EUR	MKD	EUR(2)	EUR	EUR	RSD
Credit rating (Moody's, S&P)	Baa1 / A+	n/a / BB-	B3 / B	n/a / n/a	B1 / B+	Ba3 / BB

Note: (1) Bosnia and Herzegovina is comprised of 2 entities, The Federation of Bosnia and Herzegovina and Republika Srpska; (2) Official currency is BAM – Bosnia-Herzegovina Convertible Mark, pegged to EUR;

(3) Converted at average FX rate for 2017; (4) As of Q3 2017; (5) As of Q3 2017 – Trailing 12 months; (6) As of Q4 2017 preliminary – Trailing 12 months; (7) Own calculation; (8) As of Q2 2017

Top position across target SEE countries

Unified brand across 6 markets

• ✓ Leading franchise in the region based on total assets, compared to other banks present in the same countries, with network of 242 branches and 1.1m active clients(1) in SEE
• ✓ The only international banking group with exclusive focus on the region
• ✓ Independent, well capitalised, self-funded and profitable subsidiaries

		NLB Group
--	--	-----------	--

	Macedonia	Bosnia		Kosovo	Montenegro	Serbia
	NLB Banka Skopje	NLB Banka Banja Luka	NLB Banka Sarajevo	NLB Banka Prishtina	NLB Banka Podgorica	NLB Banka Beograd
NLB ownership (%)	87%	100%	97%	81%	99%	100%
No. of branches (#)	52	58	39	44	18	31
Market(2) share %	16.2%	18.9%(3)	5.3%(4)	15.7%(5)	11.0%(5)	1.2%
Profit after tax (EURm)	40.0	23.7	8.3	14.2	5.4	3.7
Net interest margin %	4.9%	2.8%	3.5%	4.9%	4.1%	6.1%
Cost/ income %	37.4%	46.1%	54.8%	38.7%	57.7%	77.8%
Loans/ Deposits % (net)	79.2%	65.6%	77.7%	76.3%	73.7%	91.8%
NPL ratio %	5.2%	3.7%	6.9%	2.9%	8.0%	5.1%
RoE a.t.	27.8%	29.3%	12.8%	22.2%	7.0%	6.7%
Total assets (EURm)	1,236	670	531	584	457	371

Source: Company disclosure

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

Strong revenue performance driven by stable NIM and resilient fee income

Very challenging interest rate environment resulting in Stable NIM in 2017 (Group, %) decreasing net interest income with positive trend in the last two quarters (Group, EURm)

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

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

Source: Company information

Note: (1) NIM of 2.63% in 2016 if normalised for NPL sale impact; (2) The sum of net revenues and costs of the segments is greater than items from the consolidated income statement of the NLB Group, difference results from the activities between the segments which are netted on the Group level. Consolidation adjustment amounts to EUR2.5m in 2017; EUR4.0m in 2016 and EUR3.9m in 2015.

Successful business transformation results in sustainable profitability

Evolution of group profitability since 2015 (EURm)

All Core foreign banks profitable(1) (EURm)

Positive performance continued in 2017

• In 2017, NLB Group generated EUR 225.1m of profit after tax (105% increase YoY), a great result in the history of the Group
• Strong result reflects business growth at resilient margins and negative cost of risk
• Subsidiary banks contributed an important part of the Group's result, almost 40% of the net profit
• Non-core markets recorded growing profits as well and contributed to the Group's result

Profitability improvement in all key business segments during 2017

Profitable, client-oriented group, focused on core markets Key business activities consistently profitable, retail and

international increasingly profitable (PBT, EURm)

• Profit before tax of key business activities increased by EUR 55.3m.
• Both the Retail and Corporate segments in Slovenia showed solid performance, with the Retail segment revealing healthy growth.
• Strong development was recorded on Strategic foreign markets with record results in Macedonia and the strong performance in Kosovo and in Bosnia and Herzegovina. An improvement was recorded on the Serbian market and favourable results were also achieved in Montenegro.
• The Financial markets segment reflects decline due to reinvestment of investments in securities.
• Non-core result achieved an improvement based on collection of NPLs and improved cost of risk, a one-off gain from divesting an equity exposure, divestment of non-core subsidiaries and contribution to non-interest income from real estate management.

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

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

International contributes 45% of Group's profit in 2017

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

Strong profitability of core foreign banks (RoE a.t.) Capital adequacy comfortably above local requirements

Source: Company information

Note: Geographical analysis based on location of assets of the NLB Group; (1) Calculation based on net loans; (2) Regulatory minimum CAR will be increased to 15% as of 31.3.2018 (3) including various buffers

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

Deposits accounting for 94% of funding (EURm)

Source: Company information decreased to EUR 0 effective 3 Jul 2017 when the Eurobond matured.

Deposits from non-banking sector (EURm) - strong retail franchise provides stable and price insensitive deposits base Dec-17

Decreasing deposit yields (%)

Well capitalised franchise with solid capital position…

• ✓ Highest quality capital (CET1) at Group and NLB d.d.(1), reaching 15.9% in Dec-17
• ✓ Increase in credit RWAs in 2017 is mainly a result of increased retail exposures due to housing and consumer loans growth. Increase in market RWAs is particularly a result of requested correction of treatment of FX position on consolidated level and treatment of equity investments in non-euro subsidiary banks.

In 2017 RWA increased by EUR 684 m, of which EUR 232m

Dividend potential from retained earnings (NLB d.d., EURm)

Upside from DTAs(2) (Group, EURm)

Source: Company information Note: (1) NLB d.d. CET1 ratio amounted to 21.8% as of Dec-17; (2) NLB d.d. recognised DTAs accrued on the basis of temporary differences in an amount that is expected to be reversed in the foreseeable future (i.e. within five years based on future profit projections); Out of EUR306m Dec-17 gross deferred tax assets of NLB, EUR205m are generated from tax losses which can be used to reduce annual tax base of NLB by 50%

Diversified loan portfolio

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

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

Source: Company information

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

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

NLB has driven a turnaround in asset quality

Further improvements driven by active NPL management and economic recovery

Active workout drove gross NPL ratio down despite falling loan volumes (Group, EURm) 3.684 2.798 2.623 1.896 1.299 844 28,2% 25,6% 25,1% 19,3% 13,8% 9,2% NPL ratio

Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17

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

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

Reduction of NPLs remains a key focus

• Gross NPLs at Group level reduced by EUR 455m in FY'17
• Positive momentum expected through active portfolio management and macro recovery

High coverage of NPLs

• Coverage ratio remained high in Dec-17 (78%) despite release of provisions in FY'17

Active approach to NPL management

• Strong emphasis on restructuring (over 63% of NPLs in restructuring process)
• Other NPL management tools include: debt collection, foreclosure of collateral, sale of claims, active marketing and sale of pledged assets

Source: Company information

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

(1) Refers to corporate loans issued since 2014 and retail loans issued since 2015; EUR25m refers to cumulative NPLs 2014-30.9.2017; (2) Represents credit impairments and provisions; (3) Group NPLs cash coverage calculated including both individual and pool provisions

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

✓ Total coverage exceeds 100% across segments

Source: Company information

✓ Limited non-performing exposures from off-balance sheet items (~EUR84m)

Group NPL structure (Dec-17, EURm)

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

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

Medium-term objectives

Delivering growth, sustainable returns and attractive payout to shareholders

Source: Company information Note: (1) Target set by NLB management as a part of their 5-year plan for 2017-2021; (2) Calculated as credit impairments and provisions over average net loans to NBS; (3) % of consolidated group profit; (4) Based on EBA definition

Appendix

Financial statements

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

	FY'14	FY'15	FY'16	FY'17
Net interest income	330	340	317	309
Net fee and commission income	148	147	146	155
Income from financial operations	38	4	20	27
Other Income	(5)	(8)	(7)	(3)
Operating Income	511	483	476	489
Staff costs	(163)	(163)	(165)	(164)
General expenses	(105)	(103)	(96)	(92)
Depreciation and amortization expenses	(36)	(32)	(28)	(28)
Operating expenses	(304)	(298)	(290)	(285)
Pre Provision Income	208	185	186	204
Extraordinary measures	0	0	0	0
Impairment losses on credit risk	(120)	(51)	(26)	43
Other(1)	(22)	(32)	(35)	(14)
Investments in associates and JVs	3	4	5	4
Profit before income tax	69	107	131	237
Income Tax	(4)	(11)	(15)	(4)
Profit after income tax	65	95	116	233
Profit attributable to shareholders	62	92	110	225

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

	Dec-14	Dec-15	Dec-16	Dec-17
ASSETS
Cash and balances with Central Banks	1,128	1,162	1,299	1,256
Financial instruments(1)	2,529	2,578	2,778	2,963
Loans and advances to banks (net)	271	432	436	510
Loans and advances to customers	7,415	7,088	6,997	6,994
Investments in associates and JV	38	40	43	44
Intangible assets	43	39	34	35
PP&E	215	208	197	188
Other assets	270	275	255	248
Total Assets	11,909	11,822	12,039	12,238
LIABILITIES & EQUITY
Deposits from banks	62	58		41
Deposits from customers	8,949	9,026	9,439	9,879
Borrowings	731	551	455	354
ECB funding	120	120	0	0
Securities and other liabilities	678	616	576	276
Total Liabilities	10,540	10,371	10,513	10,550
Shareholders' funds	1,343	1,423	1,495	1,654
Non Controlling Interests	26	28	30	35
Total Equity	1,369	1,450	1,526	1,688
Total Liabilities & Equity	11,909	11,822	12,039	12,238

Source: Company information Note: (1) Includes trading assets, financial assets designated at FV through profit or loss, AFS FS and HTM FS

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

	FY'14	FY'15	FY'16	FY'17
Net interest income	227	208	175	159
Net fee and commission income	101	98	95	99
Income from financial operations	34	9	13	17
Other Income	3	(2)	0	(2)
Operating Income	364	313	284	272
Staff costs	(102)	(102)	(103)	(104)
General expenses	(67)	(64)	(59)	(54)
Depreciation and amortization expenses	(24)	(21)	(19)	(18)
Operating expenses	(193)	(187)	(181)	(176)
Pre Provision Income	171	126	103	96
Extraordinary measures	0	0	0	0
Impairment losses on credit risk	(84)	(28)	(15)	41
Other(1)	(9)	(60)	(49)	(11)
Investments in subsidiaries, associates and JVs	5	14	29	58
Profit before income tax	83	52	68	185
Income Tax	(1)	(8)	(4)	4
Profit after income tax	82	44	64	189
Profit attributable to shareholders	82	44	64	189

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

	dec.14	dec.15	dec.16	dec.17
ASSETS
Cash and balances with Central Banks	434	497	617	570
Financial instruments(1)	2,038	2,087	2,295	2,460
Loans and advances to banks (net)	159	345	408	462
Loans and advances to customers	5,7	5,221	4,929	4,670
Investments in subsidiaries, associates and JV	353	353	347	357
Intangible assets	34	30	23	24
PP&E	97	95	90	87
Other assets	70	80	68	82
Total Assets	8,886	8,707	8,778	8,713
LIABILITIES & EQUITY
Deposits from banks	91	97	75	72
Deposits from customers	6,300	6,298	6,617	6,812
Borrowings	557	416	343	266
ECB funding	120	120	0	0
Securities and other liabilities	613	534	478	181
Total Liabilities	7,681	7,465	7,513	7,332
Shareholders' funds	1,205	1,242	1,265	1,381
Non Controlling Interests	0	0	0	0
Total Equity	1,205	1,242	1,265	1,381
Total Liabilities & Equity	8,886	8,707	8,778	8,713

Structure of NLB Group

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

Key segment financials – 1-12 17

EURm	Retail banking in Slovenia	Corporate banking in Slovenia	Financial markets in Slovenia	Foreign Strategic markets	Total	Non-Core	Other(3)	Group
P&L (1-12 2017)
Net interest income	72.8	42.9	32.5	144.6	292.7	16.8	(0.2)	309.3
Net non-interest income	68.0	31.0	7.2	47.1	153.2	24.1	4.5	181.8
Net operating income	140.7	73.9	39.6	191.7	445.9	40.9	4.3	(1) 491.1
Total costs	(100.8)	(43.6)	(12.4)	(97.2)	(254.0)	(21.7)	(11.5)	(1) (287.2)
Result before impairments and provisions	40.0	30.3	27.2	94.5	192.0	19.2	(7.2)	(1) 203.9
Impairments and provisions	(2.9)	22.5	(0.1)	7.6	27.0	12.9	(10.4)	29.5
Other(2)	4.6	-	0.2	-	4.6	(0.9)	-	3.7
Result before tax	41.7	52.8	27.3	102.0	223.8	31.2	(17.7)	237.3
Balance sheet (Dec-17)
Gross loans	2,122	2,189	221	2,661	7,193	448	-0	7,641
Assets	2,248	2,056	3,508	3,851	11,663	391	183	12,238
Deposits	5,537	1,081	172	3,078	9,869	10	0	9,879

Liabilities 5,543 1,123 502 3,265 10,432 19 98 10,550

Note: (1) Incl. EUR2.5m intersegment consolidation adjustment. The sum of net revenues and costs of the segments is greater than items from the consolidated income statement of the NLB Group, difference results from the activities between the segments which are netted on the Group level; (2) Includes contribution to the NLB Group profit from joint venture NLB Vita and associates Skupna pokojninska družba and Bankart; (3) Other activities includes the categories in Bank whose operating results cannot be allocated to individual segments

Key segment financials – 1-12 16

EURm	Retail banking in Slovenia	Corporate banking in Slovenia	Financial markets in Slovenia	Foreign Strategic markets	Total	Non-Core	Other(3)	Group
P&L (1-12 2016)
Net interest income	71.2	45.9	48.5	136.9	302.6	15.4	(0.7)	317.3
Net non-interest income	62.4	29.2	(0.8)	42.5	133.1	10.8	18.5	162.5
Net operating income	133.6	75.0	47.7	179.4	435.7	26.2	17.8	(1) 479.8
Total costs	(101.1)	(44.6)	(12.2)	(95.5)	(253.3)	(24.2)	(16.0)	(1) (293.5)
Result before impairments and provisions	32.4	30.5	35.5	83.9	182.4	2.1	1.8	(1) 186.2
Impairments and provisions	(10.2)	(2.7)	0.1	(16.3)	(29.2)	(20.9)	(10.6)	(60.6)
Other(2)	5.2	-	-	(0.0)	5.2	(0.2)	0.0	5.0
Result before tax	27.4	27.8	35.6	67.6	158.4	(18.9)	(8.8)	130.6

Balance sheet (Dec-16)

Gross loans	1,992	2,511	255	2,457	7,215	676	10	7,901
Assets	2,118	2,339	3,376	3,540	11,373	503	164	12,039
Deposits	5,224	1,152	212	2,824	9,412	26	0	9,439
Liabilities	5,230	1,198	907	3,039	10,374	58	82	10,513

Note: (1) Incl. EUR4.0m intersegment consolidation adjustment. The sum of net revenues and costs of the segments is greater than items from the consolidated income statement of the NLB Group, difference results from the activities between the segments which are netted on the Group level; (2) Includes contribution to the NLB Group profit from joint venture NLB Vita and associates Skupna pokojninska družba, Bankart and Kreditni biro Sisbon (in liquidation); (3) Other activities includes the categories in Bank whose operating results cannot be allocated to individual segments