NLB Group Presentation 1Q2020 Results

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This presentation has been prepared by Nova Ljubljanska banka d.d., Ljubljana (the "Company"). This presentation has been prepared solely for the purpose of informative presentation of the business conduct of the Company. This presentation has not been approved by any regulatory authority and does not constitute or form part of any offer to sell or issue or invitation to purchase, or any solicitation of any offer to purchase, any securities of the Company, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision.

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NLB is regulated by The Bank of Slovenia i.e. "Banka Slovenije, Slovenska 35, 1505 Ljubljana, Slovenia" and by The Securities Market Agency i.e. "Agencija za trg vrednostnih papirjev, Poljanski nasip 6, 1000 Ljubljana, Slovenia.

NLB Group Highlights

Key developments

• Covid-19 outbreak

➢ Government measures: immediate intervention measures & strategic measures.
➢ NLB Group measures: necessary measures to protect customers and employees by ensuring safety conditions and ensuring services are provided without disruption.
➢ Clients turned to digital channels and the Bank proved to be well prepared also for such circumstances

• Acquisition of Komercijalna banka a.d. Beograd

➢ On 26 February, NLB entered into a share purchase agreement with the Republic of Serbia for the acquisition of an 83.23% ordinary shareholding in Komercijalna Banka a.d. Beograd
➢ The closing of the transaction is expected in Q4 2020

• Capital measures

✓ Tier 2 issuances in total amount of EUR 285m
✓ Discussions with MIGA for guarantee agreements, which could reduce the risk weighted assets of NLB d.d. on consolidated level by around EUR 300 million
✓ Inclusion of minorities underway

• Regulatory changes

➢ New P2R composition (the P2 additional own funds requirement to be held in the form of CET1 capital, shall, instead, be held in the form of 56.25% of CET1 capital and 75% of Tier 1 capital, as a minimum)
➢ MREL requirement: 15.56% of Total Liabilities and Own Funds (TLOF) on sub-consolidated level of the NLB Resolution Group from 31 December 2021 onwards
➢ ECB/BoS ban for 2019 dividend payments

• Annual General Meeting

➢ 35th General Meeting of NLB d.d. will be held in Ljubljana, on 15 June 2020

COVID-19 Impact

Covid-19 measures by country

	Moratorium	Other CB / regulatory measures	Gov't aid
Slovenia	• Max 12 m • Opt-in mode	• 2019 dividend payout banned • Capital and operational relief by the ECB	• First stimulus package 3 bn EUR: to cushion the impact of coronavirus on Slovenia's economy and people: preserve jobs, improve liquidity, aid to agriculture; etc. • Second stimulus package 2 bn EUR: needed changes to the first package plus state guarantee for SMEs and corporates
North Macedonia	• Min 3 m • Opt-in mode (Retail, SME) • Opt-out mode (Corporates)	• Reintroduction of non-standard reserve requirement • 2019 dividend payout banned	• Financial support to companies for salaries payment • Subsidy for the amount of 50% of the social security contribution • WB loan facility announced: 100-140 m EUR • EU mechanism for help announced: 100-140 m EUR
R. Srpska	• Max 6m • Opt-in mode	• Dividends and variable payments banned • New structural liquidity requirement regulation in preparation	• Solidarity fund introduced to cover min salary and social contribution payments to closed businesses • 330m EUR IMF facility and 250m EUR EU financial assistance granted (to BIH) • Guarantee scheme anounced, no details so far
Federation BiH	• Max 6m • Opt-in mode	• Dividends and variable payments banned • New structural liquidity requirement regulation in preparation	• 1-1.5bn EUR Program: min salary and social security contribution paid to closed businesses, tax deferral, guarantee fund established • 330m EUR IMF facility and 250m EUR EU financial assistance granted (to BIH) • Guarantee scheme in the amount of 40m EUR
Kosovo	• Moratorium until 30th April • Opt-in mode	• Waiver of Central bank regulation on Credit risk area, few measures canceled on liquidity risk	• Postponement of tax payments for central and local government • Introduction of social package in the amount of 179 m EUR • Guarantee scheme –Micro and sole traders for liquidity needs up to EUR 10t loan with maturity of 24 months, the total Guarantee fund is EUR 15 mio -50% of the amount will be guaranteed by the Kosovo Credit Guarantee Fund, 30% by the KS Government, 50% of the interest will be subsidized by the KS Gov
Montenegro	• Min 3 m • Opt-in mode	• Prohibition to banks from paying dividends • Allowed breach of concentration limits	• Credit lines to improve liquidity of companies (max 3m EUR) • Tax deferrals
Serbia	• During state of emergency • Min 3 m • Opt-out mode	• 500 mEUR liquidity aid • Reference rate drop by 50bps to 1.5% • Agreement with banks to strengthen capital and not to pay dividends	• 5 bnEUR Program • Min. salary paid for SMEs • State loans, guarantees to SMEs • Tax deferrals • Guarantee scheme – 2bn EUR state guarantee program for SME corp. clients. State would guarantee 80% of exposure, however up to 24% gross exposure (or 480m EUR in absolute amount) in case if whole originated portfolio would default. The banks are able to participate in this scheme accord. to their current market shares, with certain adjustments based on success in campaigning.

NLB Group Assets by segment and geography

Credit portfolio(1) by segment (Group, 31 Mar 2020, EURm)

Well diversified credit portfolio, with substantial retail exposure

Credit portfolio(1) by geography (Group, 31 Mar 2020, EURm)

Source: Company information Note: (1) Credit portfolio also includes advances to banks and central banks; (2) State includes exposures to central banks; (3) The largest part represent EU members.

Segmentation by industry & sectors

Limited exposure to sectors considered as sensitive

Corporate sector, industry structure	Performing loans		Accomodation	Performing loans
Accommodation and food service activitie	95,663,755.47	2.58%	Hotels and similar	63,550,411.00	1.71%
Act. of extraterritorial org. and bodies	18,806.77	0.00%	Accomodation	14,960,718.00	0.40%
Administrative And support service activ	108,843,969.09	2.93%	Restaurants and mobile food	10,900,261.00	0.29%
Agriculture, forestry and fishing	136,668,579.93	3.68%	Others	6,252,365.00	0.17%
Arts, entertainment and recreation	13,955,117.96	0.38%		95,663,755.00	2.58%
Construction industry	243,838,919.13	6.57%	Manufacturing (main sub industries - related to car industry)	Performing loans
Education	13,974,177.92	0.38%	Manufacture of electric motors, generators and transformers	35,555,303.63	0.96%
Electricity, gas, steam and air conditio	155,269,815.04	4.18%	Manufacture of metal structures and parts of structures	23,025,523.43	0.62%
Finance	110,598,239.18	2.98%	Manufacture of other parts and accessories for motor vehicles	21,037,060.56	0.57%
Human health and social work activities	21,173,762.84	0.57%	Manufacture of batteries and accumulators	12,668,527.09	0.34%
Information and Communication	186,238,155.22	5.02%	Casting of light metals	16,512,615.17	0.44%
Manufacturing	864,266,702.81	23.29%	Manufacture of electricity distribution and control apparatus	9,578,870.98	0.26%
Mining and quarrying	17,495,131.31	0.47%	Manufacture of other pumps and compressors	4,749,304.37	0.13%
Professional, scientific and Techn. Acti	81,557,679.19	2.20%	Manufacture of fluid pow er equipment	3,634,623.13	0.10%
Public admin., defence, compulsory socia	116,601,862.42	3.14%		126,761,828.37	3.42%
Real estate activities	145,435,801.58	3.92%	Transport	Performing loans
Services	81,817,113.02	2.20%	Exposure to client w ith State Guarantee	393,194,298.63	10.59%
Transport and Storage	565,444,278.23	15.24%	Land transport (passenger)	22,089,862.81	0.60%
Water supply	25,987,000.39	0.70%	Land transport (freight and piplines)	79,126,658.84	2.13%
Wholesale And retail trade	726,343,117.78	19.57%	Postal services	17,966,436.18	0.48%
other	92,442.22	0.00%	Water transport (all)	1,511,283.14	0.04%
Total	3,711,284,427.49	100.00%	Air transport (all)	168,055.64	0.00%
				514,668,652.05	13.87%

• Accomodation, Manufacturing (related to Car industry only) and Transport represents 9.27% (0.34bn EUR) of corporate exposure (excl. exposure to corporate client with state guarantee)

Portfolio response

Moratorium structure of NLB Group, by non-financial corporation and households (as at 1 May 2020, EURm)

	Gross book value			Number of applications			% of relevant book
NLB-Group	Approved	Rejected	In process	Approved	Rejected	In process	Approved	Rejected	In process
Total requests	1,114	471	640	52,960	2,067	8,469	13.9%	5.9%	8.0%
o/w Non-financial corporation	627	96	165	4,103	68	542	7.8%	1.2%	2.1%
o/w Households	479	373	459	48,846	1,989	7,914	6.0%	4.7%	5.7%

Serbia and Macedonia implemented such schemes on an opt-out basis, which means that a relatively large share of exposures have been included.

	Gross book value		Number of applications			% of relevant book
NLB D.D.	Approved	Rejected	In process	Approved	Rejected	In process	Approved	Rejected	In process
Total requests	222	52	214	3,798	459	3,846	4.6%	1.1%	4.4%
o/w Non-financial corporation	129	39	105	323	27	297	2.7%	0.8%	2.2%
o/w Households	92	11	93	3,465	423	3,536	1.9%	0.2%	1.9%

	Gross book value			Number of applications			% of relevant book
Strategic foreign markets	Approved	Rejected	In process	Approved	Rejected	In process	Approved	Rejected	In process
Total requests	892	419	426	49,162	1,608	4,623	9.4%	4.8%	3.6%
o/w Non-financial corporation	497	56	60	3,780	41	245	5.2%	0.4%	0.0%
o/w Households	387	363	366	45,381	1,566	4,378	4.1%	4.5%	3.8%

• On NLB Group level EUR 1,114 million moratorium approved so far, 56% to Non-financial corporations and 44% to Households.

The amount represents 13.9% of total gross book in the two segments.
Rejection rate is approximately 7.5%.
Additional EUR 640 million are still to be processed.
Moratorium will mitigate asset quality deterioration (freezing of DPD counter and suspension of automated forbearance flag), but asset quality deterioration likely even during moratoria as rating process in the corporate segment is ongoing as well as monitoring of Retail.
Intra-moratorium IFRS9 stage migration: individual review of corporates as well as expert-opinion-based portfolio assessment for retail expected to lead to S1/S2 migration and contribute to provision increase in 2Q2020. In 1Q2020 weaker macroeconomic assumptions were incorporated into IFRS9 provision calculation, which contributed to one-off increase of pool provisions in this period.

Impairments and provisions & cost of risk

Cost of risk high

Impairments and provisions (Group, EUR m)

Cost of risk(1) (Group, bps)

In first three months of 2020, the Group established EUR 28.3 million of net impairments and provisions, while in the same period of previous year EUR 0.6 million.

Impairments and provisions for credit risk were net established in the amount of EUR 28.2 million and thus the cost of risk was high, 146 bps. Cost of risk in Q1 2020 without COVID-19 effect is 18 bps.

New credit impairments and provisions in total amount of EUR 24.5 million were established in Q1 2020 due to COVID-19 outbreak (recalculation of all parameters is performed annually, usually in the second quarter of the year, but since the macroeconomic environment has changed significantly since the year-end, additional ECL were recognised in all banks already in Q1, based on current assumptions).

Other impairments and provisions in Q1 2020 were net established in the amount of EUR 0.2 million, while in the same period of 2019 EUR 3.9 million.

*Other includes: NLB Srbija, NLB Crna gora, Leasing companies, LHB Frankfurt and NLB InterFinanz

75 38 -62 -43 -20 146 2015 2016 2017 2018 2019 1-3 2020 CoR 0 bps

Note: (1) Cost of risk = credit impairments and provisions (annualised level) / average net loans to customers;

Key Developments

Key performance indicators of NLB Group

	Medium-term targets set in 2018(1)
	YE 18	YE 19	Q1 20	Medium term(8)
Net interest margin(2)	2.56%	2.48%	2.29%	>2.7%
Loans to deposits ratio	68.3%	65.5%	66.6%	<95%
Total capital ratio	16.7%	16.3%	18.5%	15.75%(7)
Cost-income ratio	58.5%	58.7%	60.3%	~50%
Cost of risk(3)	-43 bps	-20 bps	146 bps	<90bps(5)
Return on equity (RoE)	11.8%	11.7%	4.3%	~12.0%
Dividend payout	70%			~70%(6)
NPE ratio(4)	4.7%	2.7%	2.7%	<4.0%

Source: Company information

Note: (1) Target set by NLB management as a part of their financial projections for 2019-2023; (2) Calculated on the basis of interest bearing assets; interest margin data for 2018 are adjusted to new methodology (calculation based on the number of days for the period). (3) Calculated as credit impairments and provisions over average net loans to customers; (4) Based on EBA definition. (5) CoR < 90bps should be read as NLB Group's limit that should not be exceeded even in deteriorated economic conditions. (6) The payment of dividends by NLB, will depend on NLB's capital structure, risk appetite, profits, financial condition, regulatory requirements, general economic and business conditions, and future prospects. (7) Revised in April 2020 (from 16.25%); target total capital ratio is regularly revised by the competent bodies to reflect each time the applicable capital requirements. (8) Mid-term target is subject to review as COVID-19 will likely have a negative impact on achievement of the target within the originally foreseen timeframe (2023).

Revenues and Cost Dynamics

Net interest income (Group, EURm)

Net non-interest income (Group, EURm)

Cost of risk(1) (Group, bps)

Costs (Group, EURm)

Net impairments and provisions (Group, EUR m)

Note: (1) Cost of risk = credit impairments and provisions (annualised level) / average net loans to customers;

Release

146

Loan dynamics

Gross loans to individuals Gross loans to corporate

+4% YoY

-1% YtD

Gross loans to corporate (in EUR million)

Yields - loans to corporate

4.07% 31 Mar 2019 4.11% 31 Dec 2019 4.10% 31 Mar 2020 2,376.8 2,267.8 2,354.2 Yields - loans to individuals Gross loans to individuals (in EUR million)

1,000

1,500

500

1,000

1,500

2,000

Note: (1) Without funding of subsidiaries; (2) Only banks also before new segmentation from 2019 on; consolidated data for volumes.

0 500

2,500

0 500

0.0 0.5 1.0 1.5 2.0 2.5

Income Statement

Notes: (1) Gains less losses from capital investments in subsidiaries, associates, and joint ventures. (2) NLB Skladi, NLB Vita and Bankart.

In Q1 2020, NLB Group generated EUR 18.3 million of profit after tax:

Net interest income was lower by EUR 2.0 million (3%), mainly due to an increase in interest expenses in the Bank (new subordinated Tier 2 instruments issued in 2019 and Q1 2020), which was partially compensated with the loan volume growth.
Higher net fee and commission income by EUR 2.3 million YoY (6%), mainly from the retail segment in the banking subsidiaries in SEE. An increase was recorded from total fees from basic accounts, payment transactions, and cards and ATM operations (3% in total), and also in fees from investment funds and bancassurance business. Due to the COVID-19 outbreak a decrease of net fee and commission income in the second half of March 2020 was recorded (fewer withdrawals and payments made by customers).
Total costs higher by EUR 4.9 million or 7%, mostly due to higher employee costs, costs of services and IT.
Net established impairments and provisions were EUR 28.3 million, while in the same period of previous year EUR 0.6 million. New credit impairments and provisions in total net amount of EUR 24.5 million established in Q1 2020 due to COVID-19 outbreak.

Result before impairments and provisions (Group, EURm) Contribution to the NLB Group consolidated result a.t. (EURm)

Balance sheet structure – NLB Group

Simple client business driven balance sheet

Liabilities

NLB Group – performance indicators across SEE countries

	Slovenia	North Macedonia	Bosnia and	Herzegovina	Kosovo	Montenegro	Serbia	NLB Group

	NLB d.d., Ljubljana	NLB Banka Skopje	NLB Banka Banja Luka	NLB Banka Sarajevo	NLB Banka Prishtina	NLB Banka Podgorica	NLB Banka Beograd
				Data on stand-alone	basis			Consolidated data*
Result after tax (EURm)	7.5	4.9	1.4	0.9	2.6	0.1(6)	0.3	18.3
Total assets (EURm)	9,946	1,472	769	634	800	530	633	14,288
RoE a.t.	2.2%	9.1%	6.1%	4.2%	11.8%	0.7%	1.5%	4.3%
Net interest margin(1)	1.65%	3.43%	2.41%	2.95%	4.12%	4.16%	3.64%	2.29%
Cost/income	68.0%	41.5%	47.9%	56.2%	32.8%	55.0%	73.4%	60.3%
Loans/ Deposits % (net)	59.8%	77.7%	67.6%	79.6%	80.8%	87.0%	100.2%	66.6%
NPL ratio	3.0%	4.4%	1.3%	2.8%	1.6%	3.8%	1.5%	3.9%
NLB ownership (%)		87.0%	99.8%	97.3%	81.2%	99.8%	99.9%	/
No. of branches (#)	92	53	53	37	34	19	28	316
Market share by total assets (%)	23.6%	16.1% (4)	18.3% (2, 4)	5.3% (3, 4)	17.8%	11.8% (5)	1.7% (4)	/

Note: Financial data as of March 2020

*Consolidated data. Including non-core members and other activities and other core members.

(1)Calculated on the basis of interest bearing assets; (2) Market share in the Republic of Srpska; (3) Market share in the Federation of BiH; (4) Data for market share as of 31 Dec 2019; (5) Data for market share as of 29 Feb 2020. (6) Bank achieved profit before impairments and tax in the amount of EUR 2.8 million. Net profit in the amount of EUR 0.1 million exceeds YoY result but is impacted by additional provisions that were formed for one litigation case (EUR 2.2 million)

Business Performance

Net interest income & net interest margin

Interest income remains under pressure

Interest income Interest expenses

Interest income (Group, EURm) Net interest margin(1) (Group, %)

Net interest margin(1) in NLB Group banks (in %)

Source: Company information Note: (1) Calculated on the basis of interest bearing assets.

Net interest income drivers – NLB d.d.

Net interest income drivers – Strategic foreign markets(1)

Net non-interest income – NLB Group Good performance in Fees and Commissions

Net non-interest income (Group, EURm) (1)

Non-recurring other net non-interest income

in EUR million	1-3 2020	1-3 2019	Change YoY
Recurring other net non-interest income Net income from financial transactions	2.3	2.6	-0.3	-12%
(Fees from Exchange differences)	2.8	2.4	0.4	17%
Net other income	-0.5	0.2	-0.7	-
- external realization NLB (IT, cash logistics)	1.0	0.9	0.1	6%
- rents	0.9	1.5	-0.6	-41%
- regulatory charges (SRF, DGS)	-2.4	-2.2	-0.2	-8%

Dividend income

Net fee and commission income growing YoY (Group, EURm)

Net non-interest income reached EUR 46.4 million and decreased by EUR 8.7 million or 16% YoY. The YoY dynamic was influenced by the following factors:

• Net fee and commission income higher by EUR 2.3 million or 6% YoY, mainly from the retail segment in the banking subsidiaries in SEE. An increase was recorded in basic accounts fees, payment transactions, and cards and ATM operations (3% in total), and also in fees from investment funds and bancassurance business. Due to the COVID-19 outbreak a decrease of net fee and commission income in the second half of March 2020 was recorded (mainly on card operations, fewer withdrawals and payments from customers were made).

• Important material non-recurring other net non-interest income in Q1 2019 with a positive impact on the Group's result were a partial repayment of a large exposure measured at fair value through profit and loss in the amount of EUR 5.1 million, and the sale of debt securities held by the Bank with a positive effect in the amount of EUR 2.6 million. The Bank realized profit from the sale of the securities portfolio also in Q1 2020 in the amount of EUR 2.3 million.

Note: (1) From June 2019 on different presentation of non-recurring items is in use. (2) Includes investment funds, guarantees, investment banking, insurance products and other services.

Costs – NLB Group

Costs increased YoY

Total costs amounted to EUR 74.6 million, and are thus by EUR 4.9 million or 7% higher YoY, mostly due to higher employee costs, costs of services and IT (mostly licences).
The QoQ decrease due to performance rewards paid in December and higher other general and administrative costs in Q4 2019 (mostly costs of services and marketing).
CIR stood at 60.3%.
Headcount dropped by 19% over 2012-March 2020 driven primarily by Slovenia core & non-core members.
Ongoing closures of unprofitable branches.

Operating expenses (Group, EURm) Employees and branches evolution – stronger rationalisation in tougher Slovenia market (#)

of branches

Impairments and provisions & cost of risk

Cost of risk high

Impairments and provisions (Group, EUR m)

In first three months of 2020, the Group established EUR 28.3 million of net impairments and provisions, while in the same period of previous year EUR 0.6 million.

Other impairments and provisions in Q1 2020 were net established in the amount of EUR 0.2 million, while in the same period of 2019 EUR 3.9 million.

Cost of risk(1) (Group, bps)

Note: (1) Cost of risk = credit impairments and provisions (annualised level) / average net loans to customers;

*Other includes: NLB Srbija, NLB Crna gora, Leasing companies, LHB Frankfurt and NLB InterFinanz

Assets and Liabilities

NLB Group Assets

Well diversified loan book, strong liquidity position

Total assets of NLB Group – structure (EURm)

Credit portfolio by segment (Group, 31 Mar 2020)

Banking book portfolio by asset class (Group, 31 Mar 2020)

NLB Group Assets – Loan portfolio

Balanced loan portfolio with loan growth in most of banks

Gross loans to customers by strategic member – contribution (EURm)

Gross loans stable or growing in all subsidiaries banks, especially in NLB Banka, Beograd and NLB Banka, Podgorica.

Gross loans to individuals in subsidiary banks grew by 1.8% and to corporate by 1.5% YtD.

NLB Group Liabilities and Equity

Funding structure driven by stable and price insensitive deposit base

NLB Group Liabilities

Stable deposit base with decreasing interest rate

Deposits from customers by strategic member – contribution (EURm)

Deposit stays on the same level across all markets, despite low interest rate environment.

NLB d.d. charges minimum 0.03% monthly fee on deposits volume (threshold from January 2019 at EUR 100k) to corporate deposits and account balances.

Capital - NLB Group

• At the end of March 2020, the Total capital ratio for NLB Group stood at 18.5% (or 2.2 p.p. higher YtD), and for NLB at 26.1% (3.4 p.p. higher YtD). • The higher total capital adequacy derives from higher capital (EUR 212.0 million for NLB Group) mainly due to inclusion of all T2 instruments in capital (EUR 240.0 million), while

other comprehensive income decreased for EUR -25.3 million.

Strong capital position

NLB Group capital ratios (%) Capital structure and ratios

RWA structure (EURm)

(in EUR million)	31.3.2020	31.12.2019	Change YtD
Common Equity Tier 1 capital	1,423.2	1,451.2	-28.0	-1.9%
Additional Tier 1 capital	0.0	0.0	0.0
Tier 1 capital	1,423.2	1,451.2	-28.0	-1.9%
Tier 2 capital	284.6	44.6	240.0
Total capital	1,707.8	1,495.8	212.0	14.2%
Total risk exposure amount (RWA)	9,226.7	9,185.5	41.2	0.4%
RWA for credit risk	7,725.0	7,720.2	4.8
RWA for market risks + CVA	547.6	523.7	23.8
RWA for operational risk	954.1	941.6	12.6
Common Equity Tier 1 Ratio	15.4%	15.8%	-0.4 p.p.
Tier 1 Ratio	15.4%	15.8%	-0.4 p.p.
Total Capital Ratio	18.5%	16.3%	2.2 p.p.

NLB Group capital ratios and local requirements (31 Mar 2020, %)

Note: *As of 1 January 2020 new SREP capital requirement applicable for NLB Group leading to overall capital requirement of 14.25% (lower by 0.5 p. p.).

Capital evolution and requirements

Strong capital position

Structure of the Overall Capital Requirement (OCR)

Total capital ratio reaching 18.5% on Group level in March 2020.
As from 1 January 2020, Pillar 2 Requirement (P2R) is lowered by 0.5 p.p. (to 2.75%) as a result of better overall SREP assessment. Comfortable buffers against 2020 regulatory requirements of 14.25% OCR.
NLB medium term target set at 15.75%(2) total capital ratio; to be regularly revised by competent bodies to reflect each time applicable capital requirements. Medium term target incl. P2G and management buffer.
NLB issued Tier 2 instruments in total amount of EUR 285 million. The bonds issued on 19 November 2019 and on 5 February 2020, each in the amount of EUR 120 million, are included in the capital as per 31 March 2020. The Bank obtained ECB permission for inclusion of both instruments in the calculation of its Tier 2 capital in March 2020.
The Bank of Slovenia adopted a macroprudential measure in April 2020 placing temporary restrictions on banks and savings banks in their profit distribution for the profits generated in 2019 and 2020, and to undistributed profits and reserves from previous years. The measure is expected to be in place for one year, although the Bank of Slovenia will closely monitor the situation, and will modify the measure as appropriate should the risks increase or decrease significantly. The first assessment of the measure is planned for the end of this year.
NLB accounts EUR 35mln from 2019 profits in its regulatory capital (CET1). The remaining of the 2019 result in amount of 157mln is not yet accounted for in the capital. In the upcoming AGM it is suggested to resolve on a proposal to keep retaining all profits also in respect of the decision of BoS.

On 12 March the ECB announced the amended composition of the P2 additional own funds requirement. On 8 April NLB d.d. received the decision by ECB amending the composition of the P2 additional own funds requirement. This Decision shall apply retroactively from 12 March 2020. With this specific measure (P2R being covered with CET1 with at least 56.25%, and being covered with T1 with 75%), capital req. for NLB Group stand at:

OCR	CET1	T1	TCR
Adjusted	9.55%	11.56%	14.25%

The TSCR and OCR for total capital remained unchanged.

Note: (1) OCI – Other Comprehensive Income, Intangible assets are deduction item; (2) Revised in April 2020 (from 16.25%)

Asset Quality

Diversified credit portfolio, focused on core markets and cautious risk taking

Credit portfolio(1) by currency and rate type (Group, 31 Mar 2020)

Source: Company information

No large concentration in any specific industry or client segment
Lending strategy focuses primarily on its core markets of retail, SME and selected corporate business activities
Great emphasis is also placed on further improvement of credit portfolio
- Intensive and proactive handling of problematic customers
- Cautious lending policy
- Early warning system for detecting increased credit risk
The Group is actively present on the market, financing existing and new creditworthy clients.

Note: (1) Credit portfolio also includes advances to banks and central banks; (2) Rating A, B and C are performing exposures. Rating A: investment grade clients with high financial stability; Rating B: clients with high ability to repay their obligations, a significant aggravation of the economic environment would cause problems to them; Rating C: performing clients with increased level of risk who may encounter problems with settlement of liabilities in the future; Ration D and E are NPLs: Default clients (article 178 of CRR), including clients in delay >90days and other clients considered 'unlikely to pay' with delays below 90 days. Numbers may not add up to 100% due to rounding.

Diversified credit portfolio, focused on core markets and cautious risk taking

Credit portfolio(1) by segment (Group, 31 Mar 2020, EURm)

Credit portfolio(1) by geography (Group, 31 Mar 2020, EURm)

Note: (1) Credit portfolio also includes advances to banks and central banks; (2) State includes exposures to central banks; (3) The largest part represent EU members.

Dec-15

NPLs fully covered by provisions and collateral

Top 20 NPLs (Group, 31 Mar 2020)

NPL by geography (Group, 31 Mar 2020) NPL cash coverage(1) (Group, %)

An important Group strength is the NPL cash coverage (CR1), which remains high at 93%. Further, the Group's NPL coverage ratio 2 stands at 64 %, which is well above the EU average as published by the EBA.

As such, it enables a further reduction in NPLs without any material losses.

Source: Company information Note: (1) Cash coverage calculated including both individual and pool provisions.

New NPL formation very low, successfull legacy resolution

Low NPL in Retail segment throughout the economic cycle.

In Corporate segment a considerable reduction of NPL is observed in industries with the highest NPL %.

Top 10 NPL represent 32% of the entire NPL volume; the coverage with provisions remains high, limiting the potential losses.

NPL ratio increased from 3.8% to 3.9 YtD, while NPE ratio remained at the end year level at 2.7%.

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 nonperforming 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.

High % of Stage 1 Loan portfolio (Valued at amortized cost & FVTPL)

Stage 1 loans represent 91% of loan portfolio valued at amortized cost and fair value through P&L.

Due to NPL reduction Strategy the share of Stage 3 loans is decreasing.

Limited volume of Stage 2 loans.

Strategy & IT

NLB went through difficult times – A new period is about to start

2016

2013

Strong incumbent heritage
Lagging behind international trends
Limited business/ customer focus

Restructuring

3 years of progressive implementation of the Restructuring Program

PAT back to positive
OPEX reduction by 20%
Rundown of NPL portfolio

Strategy 2020

4 years strategy defining initiatives to improve profitability

13 strategic initiatives successfully closed; 4 major programs started
Targets have been reached: NLB became the most profitable Slovenian group
IPO/ privatization

Strategy update 2025

NOW we are updating the strategy since…

2019

…key restrictions were finally eliminated (state aid process concluded)
… market environment has been changing
… new opportunities emerged
… we would like to identify, detail and operationalize future path for the entire NLB GROUP

We are a successful, geographical niche player with strong foundations to build on

Foundations to benefit from

Strong market positions

Above 10% market share in 5/6 countries with high entry barriers. Wide coverage and accessibility

Regional roots

The only cross-regional player with local HQ: market knowledge and image

Positive brand perception at subsidiaries

High brand equity (except for Slovenia, due to the turbulences in the past years)

Recent successes, local innovation Good recent performance, acknowledged innovations (digital) in Slovenia

Untapped opportunities

Plentiful untapped potential to be exploited in various market segments and in operations

Track record of innovation

The pioneer of banking innovation in Slovenia

First Slovenian bank to launch contactless ATMs

First Slovenian bank to launch chat and video call functionalities and the only bank with multichannel 24/7 support

Only bank with fully mobile express loan capabilities (Consumer & SME)

First Slovenian bank to offer card management functionalities in mobile wallet

Top-ranked financial apps on App Store and Google Play

Demonstrated success in moving to digital

% Penetration of client base

Use of video call functionality (# of contacts)

E- and M-bank transactions (in EURm)

E-bank M-bank

Mobile bank users(1) ('000s) Online bank users(1) ('000s)

Note: All figures are for Slovenia (1) Individual users (Klikin and NLB Klik); (2) In 2017 ~30,000 inactive NLB Klik users systematically removed.

Medium-term objectives in IT and Digital

Leverage digital and data to enhance our business model

Enhance customer experience ✓ Increase customer satisfaction ✓ Create new business opportunities Optimise operations ✓ Full (paperless) digitalization of processes ✓ Increased process automation ✓ Reduction in cost-to-serve ✓ Concentration on value adding activities (advisory, sales) Data insights ✓ Risk scoring models ✓ Behavioral models to inform individualized customer offers ✓ Support of automated decisions ✓ Upgrading digital channels to support full customer journeys ✓ Migration of customers to new digital channels ✓ Idea management implementation ✓ Deploying partnerships to explore new concepts ✓ Open eco-system to become solution Omni-channel Strategic initiatives 1 2 Innovative solutions 3 Increase innovation capacity ✓ Agile development ✓ Pull ideas driven by customer demands ✓ Empowering employees Simplification ✓ Process and product simplification to support digital delivery ✓ Simplified IT enabling digitalization 4 Strategic objectives Improve customer insight ✓ Data collection ✓ Data extrapolation ✓ Advanced analytics

NLB Group synergy opportunities

Group synergies are being addressed in all functional areas

Established predominantly for subsidiary banks, but will increasingly service also the parent company
Core banking maintenance and development operating since the beginning of 2018
Expansion in 2019 provided additional support:
- API roll-out
- ETL's and data modelling in EDWH

IT competence center Process (System) competences

Standardization of the loan origination and approval process and unification of the platform for all 6 subsidiary banks. An RFP to purchase a platform was launched in Q4 2019. POCs of shortlisted bidders is expected to start in Q2
Introduction of RPA in 2 banks in the Group

IT regionalisation activities Procurement

Regional SIEM(1) and SOC(2) successfully set up by the parent bank in Ljubljana covering all banks in the Group
Regional synergies in all major areas of IT infrastructure have been addressed
Unification / Standardization activities in infrastructure and application have been launched
Central sourcing in strategic sourcing categories is in place
Regional synergy potential explored in categories with highest spend

By actively working on Group synergies, NLB Group leverages on costs (scale), speed of implementation and knowledge sharing

Outlook

Covid-19: Macro & business outlook

Macro outlook & risk factors affecting the business outlook similar contraction (-6.0%). The economic growth in the Group's region could drop to around -4.5% this year. • Economic momentum in the region has worsened due to COVID-19 pandemic (since end of Q1 2020). Countries in the region implemented different mitigation measures, with the aim of mitigating adverse negative impacts of the pandemic. Substantial drop in the economic activity, lower industrial production and consumer spending is expected to cause an economic slowdown and increased unemployment in the region. • Based on the measures taken by the governments in Slovenia and other countries, the Group is granting an option of moratoriums on payment of obligations to all eligible borrowers due to COVID-19, which will not be treated as a trigger for significant increase of the credit risk. Nevertheless, all clients requiring the moratorium will be closely monitored as their financial situation and identification of credit deterioration will lead to downgrade and impact the IFRS 9 staging. • Risk factors affecting the business outlook are (among others): the economies' sensitivity to a potential slowdown in the Euro area or globally, credit spreads widening, potential liquidity outflows, worsened interest rate outlook, regulatory and tax measures impacting the banks, and other geopolitical uncertainties. • The overall slow-down of the economy is expected to have a negative impact on new loan generation and consequently lower net interest income than previously expected. Margins are expected to be under further pressure. The additional pressure on interest income in retail market in Slovenia is expected due to regulatory restrictions for consumer lending put in place by the end of 2019. A negative effect is expected also on fees and commissions as a result of lower transaction volumes (card business and payments). • Due to slower business operations linked to moratoriums and the crisis, some of the activities of the Group are expected to be cancelled or postponed; which will reflect in lower costs. On the other hand, costs related to protection of health - hygiene, safety products and transportation, resulting from the current situation will increase. • Due to the impact of worsened macroeconomic environment at the end of Q1 2020 the Group made one-off adjustment of expected credit losses in accordance with new macro forecasts, consequently resulting in an increase of cost of risk. The cost of risk for 2020 is under current knowledge and anticipated consequences expected to be in a range of 150 bps, although this will depend on the length and severity of disruption in corporate operations and consumer incomes. • Due to recent ECB measures taken, NLB Group is expecting to benefit from the lower capital requirements, while due to ECB recommendation on dividend distributions during the COVID-19 pandemic towards European banks, the dividend distributions by the Bank are not envisaged in 2020. Business outlook

• We expect that the global economy will experience a recession in 2020 of around -3%. The Euro area, with an already weak economic growth in 2019, could contract by around 6.5% this year, while Slovenia can experience a

Appendixes

Appendix 1: Segment Analysis	46
Appendix 2: Macro Overview	65
Appendix 3: Financial statements	78

Appendix 1 Segment Analysis

NLB Group business segments

	Retail banking in Slovenia(1)	Corporate and investment banking in Slovenia	Strategic foreign markets	Financial markets in Slovenia	Non-core members
	Retail Micro NLB Skladi Bankart(2)	Key corporates SME corporates Investment banking and custody Restructuring and workout	NLB Banka, Skopje NLB Banka, Banja Luka NLB Banka, Sarajevo NLB Banka, Prishtina NLB Banka, Podgorica NLB Banka, Beograd	Treasury activities Trading in financial instruments Asset and liabilities management (ALM)	Non-core members according to EC commitments REAM entities NLB Srbija NLB Crna Gora
(Mar 2020, in EUR million)	• Largest retail banking group in Slovenia by loans, deposits and number of branches • #1 in private banking and asset management • Focused on upgrading customer digital experience and satisfaction	• Market leader in corporate banking with focus on advisory and long-term strategic partnerships • Market leader in Investment Banking and Custody services • Regional know-how and experience in Corporate Finance and #1 lead organiser for syndicated loans in Slovenia • Strong trade finance operations and other fee based business • Market leader at FX and interest rate hedges	• Leading SEE franchise with 6 independent, well capitalised and largely self-funded subsidiaries • The only international banking group with exclusive focus on the SEE region	• Maintaining stable funding base • Management of well diversified liquidity reserves • Managing interest rate positions with responsive pricing policy	• Assets booked non-core subsidiaries funded via NLB d.d. • Controlled wind-down of remaining assets, including collection of claims, liquidation of subsidiaries and sale of assets
Profit b.t.	7.0	0.04	11.3	5.8	-2.2
Total assets	2,531	2,205	4,740	4,408	159
total assets(3) % of	18%	15%	33%	31%	1%
CIR	71.6%	51.9%	52.1%	24.3%	242.8%
Cost of risk (bp)	77	185	181	/	116

Notes: (1) Divestment of 50% equity stake in NLB Vita in December 2019; (2) 39% minority stake; (3) Other activities 2%.

NLB d.d.

NLB d.d., Ljubljana	"on stand alone basis"
Key financial indicators			Change		Balance sheet			Change
	1-3 2020	1-3 2019	YoY	in 000 EUR		31 Mar 2020	31 Dec 2019
ROE a.t.	2.2%	12.8%	-10.6 p.p.		Total assets	9,945,909	9,801,557	144,352	1.5%
Interest margin	1.65%	1.92%	-0.3 p.p.		Loans to customers (net)	4,682,723	4,589,170	93,553	2.0%
CIR	68.0%	51.9%	16.1 p.p.
Cost of risk net (bps)*	124	-27	150		Loans to customers (gross)	4,834,095	4,718,049	116,046	2.5%
LTD net	59.8%	62.8%	0.0		Gross loans to corporate	2,303,449	2,154,467	148,982	6.9%
Income statement			Change		Gross loans to individuals	2,354,224	2,376,792	-22,568	-0.9%
in 000 EUR	1-3 2020	1-3 2019	YoY		Gross loans to state	176,422	186,790	-10,368	-5.6%
Total net operating income	68,128	81,398	-13,270	-16.3%	Financial assets	3,053,237	3,168,624	-115,387	-3.6%
Net interest income	37,165	39,757	-2,592	-6.5%	Deposits from customers	7,834,716	7,760,737	73,979	1.0%
Net non-interest income	30,963	41,641	-10,678	-25.6%	Deposits from corporate	1,575,956	1,674,873	-98,917	-5.9%
o/w net fees and commissions	26,083	25,220	863	3.4%	Deposits from individuals	6,146,089	5,984,982	161,107	2.7%
Total costs	-46,325	-42,231	-4,094	-9.7%	Deposits from state	112,671	100,882	11,789	11.7%
Employee costs	-27,134	-24,980	-2,154	-8.6%
Other general and administrative expenses	-14,539	-12,919	-1,620	-12.5%	NPL gross	188,562	169,451	19,111	11.3%
Depreciation and amortization	-4,652	-4,332	-320	-7.4%	% NPL	3.0%	2.8%	0.2 p.p.
Result before impairments and provisions	21,803	39,167	-17,364	-44.3%	Capital (according to local legislation)
Impairments and provisions	-14,205	6,137	-20,342	-	Total capital ratio	26.1%	22.6%	3.4 p.p.
Result after tax	7,476	42,210	-34,734	-82.3%
Number of employees	2,646	2,664	-18	-0.7%

*Calculated as credit impairments and provisions over average net loans to customers.

Result after tax and before impairments and provisions

Retail Banking in Slovenia

in EUR million consolidated			Retail Banking in Slovenia
	1-3 2020	1-3 2019	Change YoY		Q1 2020	Q4 2019	Q1 2019	Change QoQ
Net interest income	21.3	23.0	-1.7	-7%	21.3	21.8	23.0	-2%
Net non-interest income	18.6	20.1	-1.4	-7%	18.6	21.4	20.1	-13%
o/w Net fee and commmission income	19.3	19.5	-0.3	-1%	19.3	20.9	19.5	-8%
Total net operating income	39.9	43.0	-3.1	-7%	39.9	43.2	43.0	-8%
Total costs	-28.6	-26.8	-1.8	-7%	-28.6	-33.8	-26.8	16%
Result before impairments and provisions	11.4	16.2	-4.9	-30%	11.4	9.3	16.2	22%
Impairments and provisions	-4.6	-1.1	-3.5	-	-4.6	-1.5	-1.1	-199%
Net gains from investments in subsidiaries, associates, and JVs'	0.2	1.1	-0.9	-81%	0.2	0.0	1.1	-
Result before tax	7.0	16.3	-9.3	-57%	7.0	7.9	16.3	-11%
			31 Mar 2020 31 Dec 2019 31 Mar 2019		Change YtD	Change YoY
Net loans to customers	2,357.4	2,385.1	2,277.1	-27.7	-1%	80.3	4%
Gross loans to customers	2,387.5	2,410.2	2,305.0	-22.7	-1%	82.6	4%
Housing loans	1,435.4	1,425.0	1,376.8	10.4	1%	58.6	4%
Interest rate on housing loans	2.51%	2.54%	2.54%		-0.03 p.p.		-0.03 p.p.
Consumer loans	679.6	688.3	628.4	-8.7	-1%	51.2	8%
Interest rate on consumer loans	6.35%	6.33%	6.28%		0.02 p.p.		0.07 p.p.
Other	272.5	296.9	299.7	-24.4	-8%	-27.2	-9%
Deposits from customers	6,618.3	6,456.2	6,095.4	162.1	3%	522.9	9%
Interest rate on deposits	0.05%	0.05%	0.06%		0.00 p.p.	-0.01 p.p.
Non-performing loans (gross)	43.0	40.8	43.9	2.2	5%	-0.9	-2%
	1-3 2020		1-3 2019 Change YoY
Cost of risk (in bps)(i)	77	19	58
CIR	71.6%	62.3%	9.3 p.p.
Interest margin	1.91%		2.24% -0.33 p.p.
(i) Cost of risk for 2019 is adjusted to new methodology.

• The segment's profit before tax amounted to EUR 7.0 million, a 57% decrease YoY, due to established credit impairments and provisions due to COVID-19 outbreak, lower profit from the Retail segment in the Bank, and lower contribution from NLB Skladi and NLB Vita(1) .

Net interest income was 7% lower YoY. Due to over liquidity of the Bank, the policy to de-stimulate the deposit collection triggered the retail deposits margin after transfer price (FTP) reduction, which resulted in EUR 3.3 million YoY lower interest income from deposits. Interest income from retail loans was EUR 1.9 million higher YoY due to higher volume and higher interest margin. In Q1 2020 the COVID-19 outbreak had already affected new production in retail loans. Especially the production of new consumer loans in Q1 2020 was lower YoY and amounted to EUR 51.5 million (EUR 100.4 million in Q1 2019). Balance of housing loans increased by EUR 58.6 million YoY (EUR 10.4 million YtD). The share of consumer loans in all gross loans decreased to 28% (from 29% at the 2019 YE).
The segment recorded EUR 18.6 million of net non-interest income. The comparison shows EUR 1.4 million (7%) decrease YoY, EUR 0.3 million due to decrease in net fee and commission income mainly due to EUR 0.7 million higher expenses of card processing.
Total costs were EUR 1.8 million (7%) higher YoY.
Net impairments and provisions were net established in the amount of EUR 4.6 million due to additional credit impairments and provisions related to COVID-19 outbreak in Q1 2020.
Deposits from customers increased EUR 522.9 million (9%) YoY (EUR 162.1 million or 3% YtD). In 2019 the segment also included the result of the JV company Vita, which was divested at the end of 2019.

Retail banking in Slovenia

High and stable market shares across products

Market share of net loans to individuals in Slovenia Market share of deposits from individuals in Slovenia

Upside from fee generating products

NLB Private banking offering NLB Bankassurance GWP (EURm)

Dec-17 Dec-18 Dec-19 Q1 2019Q1 2020

Life Non-life

Long-term deposits Sight deposits Short-term deposits

Improving macro and low household indebtedness (21% GDP) driving retail banking growth
Further extending set of products and services offered to clients using digital channels.
1 player in Private Banking(1)
- Limited competition and strong cross-selling capabilities with Bankassurance and asset management
1 player in Slovenian asset management(2) ; market share of NLB Skladi at mutual funds in Slovenia equals 33.8% as of 31 March 2020
- AuM of 1,311.9 EURm as of 31 March 2020 including investments in mutual funds and discretionary portfolios
Bankassurance business
- Life: selling NLB Vita insurance products
- Non-life: beside NLB Vita insurance products also partnership with #2 non-life company Generali

Source: Bank of Slovenia (retail loans and deposits), Company information, Slovenian Fund Management Association Note: (1) Company information; (2) By AuM (Slovenian Fund Management Association).

Corporate and Investment banking in Slovenia

in EUR million consolidated			Corporate and Investment Banking in Slovenia
	1-3 2020	1-3 2019	Change YoY		Q1 2020	Q4 2019	Q1 2019	Change QoQ
Net interest income	9.4	10.8	-1.4	-13%	9.4	8.9	10.8	5%
Net non-interest income	10.9	15.5	-4.6	-30%	10.9	9.6	15.5	13%
o/w Net fee and commmission income	8.7	8.2	0.5	6%	8.7	7.7	8.2	13%
Total net operating income	20.2	26.3	-6.1	-23%	20.2	18.5	26.3	9%
Total costs	-10.5	-10.2	-0.3	-3%	-10.5	-12.8	-10.2	18%
Result before impairments and provisions	9.7	16.1	-6.4	-40%	9.7	5.7	16.1	72%
Impairments and provisions	-9.7	3.3	-13.0	-	-9.7	3.2	3.3	-
Result before tax	0.0	19.4	-19.4	-100%	0.0	8.9	19.4	-100%
		31 Mar 2020 31 Dec 2019 31 Mar 2019 Change YtD		Change YoY
Net loans to customers	2,168.8	2,049.6	2,011.4	119.2	6%	157.4	8%
Gross loans to customers	2,287.5	2,150.9	2,183.8	136.7	6%	103.7	5%
Corporate	2,124.0	1,976.8	1,987.7	147.2	7%	136.4	7%
Key/SMECorporates	1,962.4	1,819.3	1,697.2	143.1	8%	265.3	16%
Interest rate on Key/SME Corporates loans	1.82%	1.82%	1.87%	0.00 p.p.		-0.05 p.p.
Investment banking*	0.2	0.1	0.1	-		-
Restructuring and Workout	161.4	157.4	290.4	4.0	3%	-129.0	-44%
State	163.1	173.6	195.8	-10.5	-6%	-32.7	-17%
Interest rate on State loans	3.24%	1.88%	2.84%	1.36 p.p.		0.40 p.p.
Deposits from customers	1,203.5	1,299.1	1,111.7	-95.6	-7%	91.8	8%
Interest rate on deposits	0.07%	0.07%	0.07%	0.00 p.p.		0.00 p.p.
Non-performing loans (gross)	145.5	128.7	262.8	16.9	13%	-117.2	-45%
	1-3 2020		1-3 2019 Change YoY
Cost of risk (in bps) (i)	185	-62	247
CIR	51.9%		38.8% 13.2 p.p.
Interest margin	2.19%		2.38% -0.19 p.p.

The segment's profit before tax amounted to EUR 0.04 million, EUR 19.4 million decrease YoY. The decrease is mostly due to establishment of credit impairments and provisions due to COVID-19 outbreak in Q1 2020 and lower non-interest income due to a positive one-off effect of partial repayment of a larger exposure measured at fair value through profit and loss in Q1 2019.
Net interest income decreased EUR 1.4 million YoY, due to lower interest rates on loans, despite the EUR 103.7 million increase in gross loans to customers YoY (EUR 136.7 million YtD). Key and SME clients recorded a growth in gross loans (EUR 265.3 million), while gross loans in Restructuring and workout and gross loans to state recorded a decrease YoY (EUR -129.0 million and EUR -32.7 million respectively). YtD increase in corporate loans is partially linked to the COVID-19 situation (additional demand for working capital loans, revolving loans and limits for the daily liquidity).
Net fee and commission income increased EUR 0.5 million YoY (6%), mostly due to increase in fees from investment banking and higher income from fees on high deposits (EUR 0.7 million in Q1 2020).
Total costs increased EUR 0.3 million YoY.
Impairments and provisions were established in the amount of EUR 9.7 million due to additional credit impairments and provisions related to COVID-19 outbreak in Q1 2020.
The Investment Banking and Custody recorded non-interest income in the amount of EUR 3.2 million and increased by EUR 0.7 million YoY. Total income growth is the result of a larger volume of transactions and tariff adjustments. The total value of assets under custody decreased to EUR 14.1 billion (EUR 14.8 billion at 2019 YE).

Corporate banking in Slovenia High market shares across products(1)

#1 in corporate and state loans #1 in corporate and state deposits #1 in guarantees and letters of credit

Largest bank in the country with high capacity to lend to and service large clients serving over 9,000 corporate clients as of 31 March 2020.
Competitive advantage in SME market due to largest branch network fueled the growth in Mid Corporate and Small Enterprises.
Investment Banking being successful organizer of syndicated loans, and co-organizer of the Banks own subordinated bonds

Strong local corporate fee business, across merchant acquiring, investment banking and custody services

13.6 k (2) POS terminals

37.6% market share(2) in merchant acquiring

EUR 14.1 bn assets under custody

Strategic foreign markets

in EUR million consolidated			Strategic Foreign Markets
	1-3 2020	1-3 2019	Change YoY		Q1 2020	Q4 2019	Q1 2019	Change QoQ
Net interest income	39.8	38.6	1.2	3%	39.8	40.0	38.6	0%
Net non-interest income	13.0	12.5	0.5	4%	13.0	15.4	12.5	-16%
o/w Net fee and commmission income	13.3	12.2	1.1	9%	13.3	14.5	12.2	-8%
Total net operating income	52.8	51.1	1.7	3%	52.8	55.4	51.1	-5%
Total costs	-27.6	-25.7	-1.8	-7%	-27.6	-29.1	-25.7	5%
Result before impairments and provisions	25.3	25.4	-0.1	0%	25.3	26.3	25.4	-4%
Impairments and provisions	-13.9	-3.2	-10.7	-	-13.9	-5.3	-3.2	-163%
Result before tax	11.3	22.2	-10.8	-49%	11.3	21.0	22.2	-46%
o/w Result of minority shareholders	1.2	2.0	-0.8	-41%	1.2	2.0	2.0	-43%
	31 Mar 2020 31 Dec 2019 31 Mar 2019				Change YtD	Change YoY
Net loans to customers	3,086.7	3,024.6	2,753.6	62.1	2%	333.1	12%
Gross loans to customers	3,232.9	3,162.1	2,915.8	70.9	2%	317.2	11%
Individuals	1,632.3	1,603.8	1,466.7	28.5	2%	165.6	11%
Interest rate on retail loans	6.48%	6.71%	6.80%	-0.23 p.p.		-0.32 p.p.
Corporate	1,494.8	1,470.3	1,364.6	24.5	2%	130.1	10%
Interest rate on corporate loans	4.29%	4.49%	4.71%	-0.20 p.p.		-0.42 p.p.
State	105.9	88.0	84.4	17.9	20%	21.5	25%
Interest rate on state loans	3.34%	4.00%	4.23%		-0.66 p.p. -0.89 p.p.
Deposits from customers	3,825.7	3,856.7	3,466.1	-30.9	-1%	359.6	10%
Interest rate on deposits	0.48% 0.53% 0.56% -0.05 p.p. -0.08 p.p.
Non-performing loans (gross)	111.5	111.6	146.2	-0.1	0%	-34.7	-24%
	1-3 2020		1-3 2019 Change YoY
Cost of risk (in bps)(i)	181	-10	191
CIR	52.1%	50.3%	1.8 p.p.

(i) Cost of risk for 2019 is adjusted to new methodology.

Interest margin 3.43% 3.71% -0.28 p.p.

The segment's profit before tax amounted to EUR 11.3 million, 49% decrease YoY, mostly due to established impairments and provisions due to COVID-19 outbreak.
Increase of net interest income by EUR 1.2 million (3%) YoY was recorded due to higher volume (increase of gross loans to customers by 11% YoY), despite the decreasing trend of interest margins.
Net non-interest income increased by EUR 0.5 million or 4% YoY while net fee and commission income increased by EUR 1.1 million or 9% YoY, mostly from retail segment.
Total costs increased by EUR 1.8 million or 7% YoY, mostly due to increase in employee costs (EUR 0.8 million YoY).
Impairments and provisions net established in the amount of EUR 13.9 million due to COVID-19 outbreak in Q1 2020.
Gross loans to customers increased by EUR 70.9 million (2%) YtD due to increase in gross loans in all subsidiary banks, whereas the largest YoY increases were recorded in NLB Banka, Beograd (EUR 26.3 million), NLB Banka, Prishtina (EUR 15.0 million), and NLB Banka, Podgorica (EUR 14.3 million).

SEE banks continuing solid performance

✓ 3% growth of net interest income YoY
✓ Net non-interest income 3% higher YoY, mostly due to increase in net fee and commission income
✓ Growing credit portfolio in all markets, with aggregate deposits balance slight decrease YtD

	Skopje	NLB Banka	NLB Banka Banja Luka		NLB Banka Sarajevo		Prishtina	NLB Banka	Podgorica	NLB Banka	NLB Banka Beograd			Total
														core banks(1)
B/S (EURm)	31 Mar 2020	31 Dec 2019	31 Mar 2020	31 Dec 2019	31 Mar 2020	31 Dec 2019	31 Mar 2020	31 Dec 2019	31 Mar 2020	31 Dec 2019	31 Mar 2020	31 Dec 2019	31 Mar 2020	31 Dec 2019	Δ
Total assets	1,472	1,462	769	773	634	638	800	801	530	548	633	614	4,839	4,837	0%
Net loans to customers	921	915	413	412	404	399	552	540	360	346	438	412	3,087	3,025	2%
Deposits from customers	1,185	1,176	611	618	507	515	683	685	414	437	437	437	3,837	3,868	-1%
P&L (EURm)	1-3 2020	1-3 2019	1-3 2020	1-3 2019	1-3 2020	1-3 2019	1-3 2020	1-3 2019	1-3 2020	1-3 2019	1-3 2020	1-3 2019	1-3 2020	1-3 2019	Δ
NII(2)	12.1	12.4	4.5	4.8	4.5	4.4	8.2	7.4	5.2	4.8	5.4	4.9	39.8	38.6	3%
NNII(2)	4.6	4.2	3.1	3.1	2.5	2.5	1.6	1.5	1.6	1.8	1.7	1.5	15.1	14.7	3%
OpEx	-6.7	-6.8	-3.5	-3.3	-3.8	-3.5	-3.1	-3.0	-3.4	-3.1	-4.9	-4.6	-25.4	-24.4	4%
PPI	10.0	9.8	4.1	4.5	3.2	3.4	6.7	5.9	3.4	3.4	2.1	1.8	29.5	28.9	2%
Result a.t.	5.4	8.0	1.7	6.2	1.1	3.0	2.8	5.0	0.7	0.0	0.6	1.4	12.4	23.6	-48%
Ratios	1-3 2020	1-3 2019	1-3 2020	1-3 2019	1-3 2020	1-3 2019	1-3 2020	1-3 2019	1-3 2020	1-3 2019	1-3 2020	1-3 2019
RoE a.t.	9.1%	14.8%	6.1%	25.9%	4.2%	13.5%	11.8%	25.8%	0.7%	-2.8%	1.5%	6.2%
Net interest margin(3)	3.43%	3.84%	2.41%	2.67%	2.95%	3.02%	4.12%	4.43%	4.16%	4.22%	3.64%	4.21%
CIR	41.5%	42.4%	47.9%	43.9%	56.2%	52.8%	32.8%	34.4%	55.0%	52.0%	73.4%	76.1%
LTD net	77.7%	80.6%	67.6%	63.8%	79.6%	77.9%	80.8%	81.4%	87.0%	83.2%	100.2%	94.2%

Source: Company information

Note: (1) Calculated as simple sums for each item; (2) NII: Net interest income; NNII: Net non-interest income; (3) Calculated on the basis of interest bearing assets ;

NLB Banka, Skopje

NLB Banka AD Skopje	"on stand alone basis"
Key financial indicators			Change
	1-3 2020	1-3 2019	YoY
ROE a.t.	9.1%	14.8%	-5.6 p.p.
Interest margin	3.43%	3.84%	-0.4 p.p.
CIR	41.5%	42.4%	-0.8 p.p.
Cost of risk net (bps)*	174	37	137
LTD net	77.7%	80.6%	-2.9 p.p.
Income statement			Change
in 000 EUR	1-3 2020	1-3 2019	YoY
Total net operating income	16,114	16,120	-6	0.0%
Net interest income	12,055	12,413	-358	-2.9%
Net non-interest income	4,059	3,707	352	9.5%
o/w net fees and commissions	3,538	3,561	-23	-0.6%
Total costs	-6,693	-6,830	137	2.0%
Employee costs	-3,558	-3,416	-142	-4.2%
Other general and administrative expenses	-2,075	-2,332	257	11.0%
Depreciation and amortization	-1,060	-1,082	22	2.0%
Result before impairments and provisions	9,421	9,290	131	1.4%
Impairments and provisions	-4,027	-946	-3,081	-
Result after tax	4,853	7,502	-2,649	-35.3%
Number of employees	883	878	5	0.6%

Balance sheet			Change
in 000 EUR	31 Mar 2020	31 Dec 2019	YtD
Total assets	1,471,752	1,462,306	9,446	0.6%
Loans to customers (net)	920,807	915,149	5,658	0.6%
Loans to customers (gross)	978,656	969,213	9,443	1.0%
Gross loans to corporate	382,407	393,137	-10,730	-2.7%
Gross loans to individuals	576,499	573,826	2,673	0.5%
Gross loans to state	19,750	2,250	17,500	-
Financial assets	242,280	242,360	-80	0.0%
Deposits from customers	1,185,461	1,175,612	9,849	0.8%
Deposits from corporate	311,393	314,598	-3,205	-1.0%
Deposits from individuals	866,925	854,135	12,790	1.5%
Deposits from state	7,143	6,879	264	3.8%
NPL gross	51,833	48,311	3,522	7.3%
% NPL	4.4%	4.2%	0.2 p.p.
Capital (according to local legislation)
Total capital ratio	16.3%	16.4%	-0.1 p.p.

* Calculated as credit impairments and provisions over average net loans to customers.

Result after tax and before impairments and provisions (EUR million)

NLB Banka, Banja Luka

NLB Banka A.D., Banja Luka	"on stand alone basis"
Key financial indicators			Change
	1-3 2020	1-3 2019	YoY
ROE a.t.	6.1%	25.9%	-19.8 p.p.
Interest margin	2.41%	2.67%	-0.3 p.p.
CIR	47.9%	43.9%		4.0 p.p.
Cost of risk net (bps)*	184	-208		392
LTD net	67.6%	63.8%		3.8 p.p.
Income statement			Change
in 000 EUR	1-3 2020	1-3 2019		YoY
Total net operating income	7,222	7,541	-319	-4.2%
Net interest income	4,475	4,756	-281	-5.9%
Net non-interest income	2,747	2,785	-38	-1.4%
o/w net fees and commissions	2,829	2,579	250	9.7%
Total costs	-3,457	-3,310	-147	-4.4%
Employee costs	-2,188	-2,104	-84	-4.0%
Other general and administrative expenses	-926	-871	-55	-6.3%
Depreciation and amortization	-343	-335	-8	-2.4%
Result before impairments and provisions	3,765	4,231	-466	-11.0%
Impairments and provisions	-2,133	1,914	-4,047	-
Result after tax	1,361	5,862	-4,501	-76.8%
Number of employees	486	481	5	1.0%

Balance sheet			Change
in 000 EUR	31 Mar 2020 31 Dec 2019	YtD
Total assets	769,339	773,410	-4,071	-0.5%
Loans to customers (net)	412,847	411,739	1,108	0.3%
Loans to customers (gross)	429,709	426,844	2,865	0.7%
Gross loans to corporate	167,950	173,476	-5,526	-3.2%
Gross loans to individuals	206,689	200,454	6,235	3.1%
Gross loans to state	55,070	52,914	2,156	4.1%
Financial assets	175,620	148,104	27,516	18.6%
Deposits from customers	610,599	618,095	-7,496	-1.2%
Deposits from corporate	130,606	145,915	-15,309	-10.5%
Deposits from individuals	431,164	435,123	-3,959	-0.9%
Deposits from state	48,829	37,057	11,772	31.8%
NPL gross	7,584	7,620	-36	-0.5%
% NPL	1.3%	1.3%	0.0 p.p.
Capital (according to local legislation)
Total capital ratio	17.7%	15.9%	1.8 p.p.

* Calculated as credit impairments and provisions over average net loans to customers.

Result after tax and before impairments and provisions (EUR million)

NLB Banka, Sarajevo

NLB Banka d.d., Sarajevo		"on stand alone basis"
Key financial indicators			Change
	1-3 2020	1-3 2019	YoY
ROE a.t.	4.2%	13.5%	-9.4 p.p.
Interest margin	2.95%	3.02%	-0.1 p.p.
CIR	56.2%	52.8%	3.5 p.p.
Cost of risk net (bps)*	199	-10	209
LTD net	79.6%	77.9%	1.7 p.p.
Income statement			Change
in 000 EUR	1-3 2020	1-3 2019	YoY
Total net operating income	6,716	6,649	67	1.0%
Net interest income	4,488	4,359	129	3.0%
Net non-interest income	2,228	2,290	-62	-2.7%
o/w net fees and commissions	2,229	2,010	219	10.9%
Total costs	-3,776	-3,508	-268	-7.6%
Employee costs	-2,106	-2,053	-53	-2.6%
Other general and administrative expenses	-1,242	-1,109	-133	-12.0%
Depreciation and amortization	-428	-346	-82	-23.7%
Result before impairments and provisions	2,940	3,141	-201	-6.4%
Impairments and provisions	-1,959	-40	-1,919	-
Result after tax	856	2,748	-1,892	-68.9%
Number of employees	443	449	-6	-1.3%

Balance sheet			Change
in 000 EUR	31 Mar 2020	31 Dec 2019	YtD
Total assets	633,814	637,739	-3,925	-0.6%
Loans to customers (net)	403,625	399,299	4,326	1.1%
Loans to customers (gross)	422,745	420,236	2,509	0.6%
Gross loans to corporate	188,473	189,476	-1,003	-0.5%
Gross loans to individuals	229,831	226,355	3,476	1.5%
Gross loans to state	4,441	4,405	36	0.8%
Financial assets	52,719	50,054	2,665	5.3%
Deposits from customers	506,945	515,230	-8,285	-1.6%
Deposits from corporate	133,400	134,566	-1,166	-0.9%
Deposits from individuals	292,383	300,051	-7,668	-2.6%
Deposits from state	81,162	80,613	549	0.7%
NPL gross	15,204	18,582	-3,378	-18.2%
% NPL	2.8%	3.3%		-0.5 p.p.
Capital (according to local legislation)
Total capital ratio	15.9%	16.0%	-0.1 p.p.

* Calculated as credit impairments and provisions over average net loans to customers.

Result after tax and before impairments and provisions (EUR million)

NLB Banka, Prishtina

NLB Banka sh.a., Prishtine		"on stand alone basis"
Key financial indicators			Change
	1-3 2020	1-3 2019	YoY
ROE a.t.	11.8%	25.8%	-14.0 p.p.
Interest margin	4.12%	4.43%	-0.3 p.p.
CIR	32.8%	34.4%		-1.6 p.p.
Cost of risk net (bps)*	247	-6	253
LTD net	80.8%	81.4%		-0.7 p.p.
Income statement			Change
in 000 EUR	1-3 2020	1-3 2019		YoY
Total net operating income	9,493	8,703	790	9.1%
Net interest income	8,154	7,384	770	10.4%
Net non-interest income	1,339	1,319	20	1.5%
o/w net fees and commissions	1,977	1,575	402	25.5%
Total costs	-3,118	-2,997	-121	-4.0%
Employee costs	-1,676	-1,490	-186	-12.5%
Other general and administrative expenses	-963	-1,061	98	9.2%
Depreciation and amortization	-479	-446	-33	-7.4%
Result before impairments and provisions	6,375	5,706	669	11.7%
Impairments and provisions	-3,481	-363	-3,118	-
Result after tax	2,567	4,787	-2,220	-46.4%
Number of employees	470	470	0	0.0%

Balance sheet			Change
in 000 EUR	31 Mar 2020	31 Dec 2019	YtD
Total assets	800,270	801,085	-815	-0.1%
Loans to customers (net)	551,648	540,073	11,575	2.1%
Loans to customers (gross)	582,100	567,103	14,997	2.6%
Gross loans to corporate	370,822	359,414	11,408	3.2%
Gross loans to individuals	211,253	207,689	3,564	1.7%
Gross loans to state	25	0	25	-
Financial assets	75,074	77,977	-2,903	-3.7%
Deposits from customers	683,093	685,385	-2,292	-0.3%
Deposits from corporate	192,199	196,818	-4,619	-2.3%
Deposits from individuals	479,167	476,546	2,621	0.5%
Deposits from state	11,727	12,021	-294	-2.4%
NPL gross	11,115	10,939	176	1.6%
% NPL	1.6%	1.5%	0.0 p.p.
Capital (according to local legislation)
Total capital ratio	17.7%	16.4%	1.3 p.p.

* Calculated as credit impairments and provisions over average net loans to customers.

Result after tax and before impairments and provisions (EUR million)

NLB Banka, Podgorica

NLB Banka a.d., Podgorica	"on stand alone basis"
Key financial indicators			Change
	1-3 2020	1-3 2019	YoY
ROE a.t.	0.7%	-2.8%	3.5 p.p.
Interest margin	4.16%	4.22%	-0.1 p.p.
CIR	55.0%	52.0%	3.0 p.p.
Cost of risk net (bps)*	63	-21	84
LTD net	87.0%	83.2%	3.8 p.p.
Income statement			Change
in 000 EUR	1-3 2020	1-3 2019	YoY
Total net operating income	6,254	6,052	202	3.3%
Net interest income	5,231	4,788	443	9.3%
Net non-interest income	1,023	1,264	-241	-19.1%
o/w net fees and commissions	1,302	1,318	-16	-1.2%
Total costs	-3,440	-3,146	-294	-9.3%
Employee costs	-1,877	-1,809	-68	-3.8%
Other general and administrative expenses	-1,217	-958	-259	-27.0%
Depreciation and amortization	-346	-379	33	8.7%
Result before impairments and provisions	2,814	2,906	-92	-3.2%
Impairments and provisions	-2,668	-3,369	701	20.8%
Result after tax	117	-489	606	-
Number of employees	304	300	4	1.3%

Balance sheet			Change
in 000 EUR	31 Mar 2020	31 Dec 2019	YtD
Total assets	530,339	548,483	-18,144	-3.3%
Loans to customers (net)	360,122	346,299	13,823	4.0%
Loans to customers (gross)	373,904	359,180	14,724	4.1%
Gross loans to corporate	111,294	100,961	10,333	10.2%
Gross loans to individuals	237,690	231,506	6,184	2.7%
Gross loans to state	24,920	26,713	-1,793	-6.7%
Financial assets	22,178	57,339	-35,161	-61.3%
Deposits from customers	413,792	436,545	-22,753	-5.2%
Deposits from corporate	126,064	135,396	-9,332	-6.9%
Deposits from individuals	270,659	283,091	-12,432	-4.4%
Deposits from state	17,069	18,058	-989	-5.5%
NPL gross	17,781	18,129	-348	-1.9%
% NPL	3.8%	4.0%	-0.2 p.p.
Capital (according to local legislation)
Total capital ratio	14.1%	15.0%	-0.8 p.p.

* Calculated as credit impairments and provisions over average net loans to customers.

Result after tax and before impairments and provisions

NLB Banka, Beograd

NLB Banka a.d., Beograd	"on stand alone basis"
Key financial indicators			Change		Balance sheet
	1-3 2020	1-3 2019	YoY
ROE a.t.	1.5%	6.2%	-4.7 p.p.
Interest margin	3.64%	4.21%	-0.6 p.p.
CIR	73.4%	76.1%	-2.6 p.p.
Cost of risk net (bps)*	141	34	108
LTD net	100.2%	94.2%	6.0 p.p.
Income statement			Change
in 000 EUR	1-3 2020	1-3 2019	YoY
Total net operating income	6,737	6,034	703	11.7%
Net interest income	5,407	4,913	494	10.1%
Net non-interest income	1,330	1,121	209	18.6%
o/w net fees and commissions	1,433	1,190	243	20.4%
Total costs	-4,948	-4,590	-358	-7.8%
Employee costs	-2,703	-2,477	-226	-9.1%
Other general and administrative expenses	-1,549	-1,452	-97	-6.7%
Depreciation and amortization	-696	-661	-35	-5.3%
Result before impairments and provisions	1,789	1,444	345	23.9%
Impairments and provisions	-1,519	-392	-1,127	-
Result after tax	270	1,052	-782	-74.3%
Number of employees	482	455	27	5.9%

Balance sheet			Change
in 000 EUR	31 Mar 2020	31 Dec 2019	YtD
Total assets	633,203	614,268	18,935	3.1%
Loans to customers (net)	437,609	412,046	25,563	6.2%
Loans to customers (gross)	445,834	419,521	26,313	6.3%
Gross loans to corporate	273,827	253,842	19,985	7.9%
Gross loans to individuals	170,335	164,003	6,332	3.9%
Gross loans to state	1,672	1,676	-4	-0.2%
Financial assets	80,547	74,781	5,766	7.7%
Deposits from customers	436,628	437,268	-640	-0.1%
Deposits from corporate	190,460	186,376	4,084	2.2%
Deposits from individuals	242,231	249,021	-6,790	-2.7%
Deposits from state	3,937	1,871	2,066	110.4%
NPL gross	8,014	8,004	10	0.1%
% NPL	1.5%	1.6%	-0.1 p.p.
Capital (according to local legislation)
Total capital ratio	18.6%	19.5%	-0.8 p.p.

* Calculated as credit impairments and provisions over average net loans to customers.

Result after tax and before impairments and provisions

Financial markets in Slovenia

in million EUR consolidated	Financial Markets in Slovenia
	1-3 2020	1-3 2019		Change YoY	Q1 2020	Q4 2019	Q1 2019	Change QoQ
Net interest income	6.5	6.0	0.5	9%	6.5	8.4	6.0	-22%
Net non-interest income	1.2	2.1	-1.0	-45%	1.2	0.3	2.1	-
Total net operating income	7.7	8.1	-0.4	-5%	7.7	8.7	8.1	-11%
Total costs	-1.9	-1.7	-0.2	-10%	-1.9	-2.3	-1.7	19%
Result before impairments and provisions	5.8	6.4	-0.6	-9%	5.8	6.3	6.4	-8%
Impairments and provisions	0.0	-0.3	0.3	94%	0.0	0.0	-0.3	-
Result before tax	5.8	6.1	-0.3	-5%	5.8	6.4	6.1	-9%
			31 Mar 2020 31 Dec 2019 31 Mar 2019		Change YtD Change YoY
Balances with Central banks	1,082.0	1,044.1	666.3	37.9	4%	415.7	62%
Banking book securities	2,977.5	3,093.6	2,924.1	-116.1	-4%	53.4	2%
Interest rate on banking book securities	0.80%	1.03%	1.10%		-0.23 p.p. -0.30 p.p.
Wholesale funding(i)	161.5	161.6	244.0	-0.1	0%	-82.5	-34%
Interest rate on wholesale funding (i)	0.57%	0.50%	0.51%		0.07 p.p. 0.06 p.p.
Subordinated liabilities	286.6	210.6	0.0	76.1	36%	-	0.0
Interest rate on subordinated liabilities	3.41%	4.03%	-		-	-
(i) Item includes only borrowings, till 30 June 2019 it included also deposits from banks.

• Net interest income EUR 0.5 million (9%) higher YoY, mostly due to balance sheet management strategy where key priority is de-stimulating of deposit collection due to over liquidity of the bank. FTP for collected deposits decreased, driving ALM expenses substantially lower. This effect was partly neutralized with lower income from the banking book securities portfolio.

Lower net non-interest income, EUR 1.0 million YoY, mostly due to open FX position in HRK, AUD, NOK, RUB and CAD and volatility of those currencies on financial markets. This effect was partly neutralized with higher net interest income from money market deposits in foreign currencies.
Increase in balances with central banks (EUR 415.7 million YoY and EUR 37.9 million YtD), while Banking book securities decreased substantially YtD (EUR - 116.1 million). Change in the position reflects measures related to management of credit spread risk exposure and regulatory capital optimization. Cashflow from due and sold securities and from raised subordinated debt was placed with the Central Bank.

Financial markets in Slovenia

Strong liquidity position

Well positioned and funded division

Strong liquidity buffer provides solid base for future core growth consisting of liquid assets which are not encumbered for operational or regulatory purposes
Banking book securities portfolio is well diversified in terms of asset class and geography to minimize concentration risk, and is invested predominantly in high quality issuers on prudent tenors
Liquidity ratios (as of 31 Mar 2020): LCR 339% (NLB d.d.) and 304% (NLB Group); NSFR (preliminary) 158% (NLB d.d.) and 158% (NLB Group)

The volume of ECB eligible credit claims increased due to the modification in ECB eligibility criterion adopted on 10 May 2019 in ECB Guideline (EU) 2019/1032.

Well diversified banking book by geography (31 Mar 2020)

Maturity profile of banking book securities(3) (31 Mar 2020, EURm) (4)

Note: Numbers refer to NLB d.d. only; (1) Incl. trading and banking book securities; (2) Includes other European countries, US, Australia and Russian federation; (3) Including DARS bonds;

¸ (4) Loans booked under segment Corporate Banking Slovenia.

Non-core members

in EUR million consolidated			Non-Core Members
	1-3 2020	1-3 2019	Change YoY		Q1 2020	Q4 2019	Q1 2019	Change QoQ
Net interest income	0.4	1.0	-0.6	-61%	0.4	0.6	1.0	-33%
Net non-interest income	1.0	2.9	-1.9	-65%	1.0	1.9	2.9	-45%
Total net operating income	1.4	3.9	-2.5	-64%	1.4	2.5	3.9	-43%
Total costs	-3.4	-3.2	-0.3	-9%	-3.4	-4.2	-3.2	18%
Result before impairments and provisions	-2.0	0.7	-2.8	-	-2.0	-1.7	0.7	-16%
Impairments and provisions	-0.2	0.7	-0.9	-	-0.2	-1.4	0.7	84%
Result before tax	-2.2	1.4	-3.7	-	-2.2	-3.2	1.4	29%
	31 Mar 2020 31 Dec 2019 31 Mar 2019				Change YtD	Change YoY
Segment assets	158.7	169.5	216.9	-10.7	-6%	-58.2	-27%
Net loans to customers	60.2	67.4	103.8	-7.2	-11%	-43.6	-42%
Gross loans to customers	130.9	137.2	196.0	-6.3	-5%	-65.1	-33%
Investment property and property & equipment received for repayment of loans	74.5	75.6	85.4	-1.0	-1%	-10.9	-13%
Other assets	24.0	26.5	27.7	-2.5	-9%	-3.7	-14%
Non-performing loans (gross)	93.4	93.6	126.3	-0.2	0%	-32.9	-26%
	1-3 2020		1-3 2019 Change YoY
Cost of risk (in bps)(i)	116	-243	359
CIR	242.8%		81.1% 161.8 p.p.

(i) Cost of risk for 2019 is adjusted to new methodology.

A substantial decrease in total assets of the segment YoY (EUR 58.2 million) which is in line with the divestment strategy of the non-core segment, hence EUR 2.5 million YoY decrease of net operating income.
The segment recorded EUR 2.2 million of loss before tax.
Lower net non-interest income due to positive effect from contractual penalty (EUR 1.3 million) in Q1 2019.
Additional impairments for credit risk.

Other

in EUR million consolidated		Other
	1-3 2020	1-3 2019		Change YoY	Q1 2020	Q4 2019	Q1 2019	Change QoQ
Total net operating income	2.2	2.4	-0.2	-8%	2.2	2.2	2.4	1%
Total costs	-3.2	-2.5	-0.7	-30%	-3.2	-6.2	-2.5	48%
Result before impairments and provisions	-1.0	-0.1	-0.9	-	-1.0	-4.0	-0.1	75%
Impairments and provisions	0.1	0.0	0.1	-	0.1	-5.7	0.0	-
Result before tax	-0.9	-0.1	-0.8	-	-0.9	-9.7	-0.1	91%

• The segment Other recorded EUR 0.9 million of loss before tax, EUR 0.8 million decrease YoY.

• EUR 3.2 million of total costs, related mostly to IT, cash transport, external realization, restructuring costs and empty business premises. EUR 0.9 million increase YoY related mostly due to EUR 0.8 million higher IT costs (mostly licenses).

Appendix 2: Macro Overview

NLB Group – Macro overview

NLB d.d. & 6 subsidiary banks operate in Slovenia (EU member) & 5 SEE countries (convergence to EU)

	EUR
GDP (EURbn)	48.0
Real GDP growth (%)	2.4
Population (m)	2.1
indebtedness(1) Household	22.3%
Credit ratings (S&P / Moody's / Fitch)	AA- / Baa1 / A

	EUR(3)
GDP (EURbn)	18.3
Real GDP growth (%)	2.6
Population (m)	3.5
indebtedness(1) Household	28.4%
Credit ratings (S&P / Moody's / Fitch)	B / B3 / n.a.

	EUR
GDP (EURbn)	4.9
Real GDP growth (%)	3.6
Population (m)	0.6
indebtedness(1) Household	27.4%
Credit ratings (S&P / Moody's / Fitch)	B+ / B1 / n.a.

Slovenia	EUR
GDP (EURbn)	48.0
Real GDP growth (%)	2.4
Population (m)	2.1
indebtedness(1) Household	22.3%
Credit ratings (S&P / Moody's / Fitch)	EUR AA- / Baa1 / A

Kosovo
GDP (EURbn)	7.1
Real GDP growth (%)	4.2
Population (m)	1.8
indebtedness(1) Household	15.5%
Credit ratings (S&P / Moody's / Fitch)	n.a. / n.a. / n.a.

North Macedonia
GDP (EURbn)	11.3
Real GDP growth (%)	3.6
Population (m)	2.1
indebtedness(1) Household	24.5%
Credit ratings (S&P / Moody's / Fitch)	BB- / n.a. / BB+

Source: Central banks, National Statistics Offices, FocusEconomics, NLB.

Note: GDP volume and growth for 2019; (1) Includes households loans as % of GDP, Q4 2019, annualized; (2) Bosnia and Herzegovina is comprised of 2 entities, The Federation of Bosnia and Herzegovina and Republika Srpska; (3) Official currency is BAM – Bosnia-Herzegovina Convertible Mark, pegged to EUR.

Macro Overview

Economic data Fiscal data Monetary data

The COVID-19 outbreak has deeply affected economies, causing shocks on both sides, supply and demand.
The economic growth in the Group's region could contract by around -4.5% this year due to the virus outbreak.
If the outbreak is not put under control and the lockdowns lifted by the end of May 2020, more severe recession could be expected.
Adopted enormous fiscal measures are meant to help the companies and households to overcome the economic shock caused by the coronavirus outbreak.
Fiscal measures will be mostly financed by government budgets, which will force them into borrowing, which will in turn increase their public debts.
Monetary measures aiming to ensure enough liquidity and smooth operations in the money markets and among financial intermediaries are being implemented.
Fed, ECB and other major central banks, have provided major stimulus on COVID-19 shock and expressed their "whatever it takes" commitments.

Real GDP growth, %

KEY FINDINGS:

Highest contraction of economic growth in 2020 is expected in Montenegro (- 9%) due to its dependency to highly affected tourist sector, followed by Bosnia and Herzegovina and Slovenia (-6%).

The economic growth in the Group's region could contract by around -4.5% this year due to the virus outbreak, if the outbreak is put under control and the lockdowns lifted by the end of May 2020, else deeper recession could be expected.

Real GDP growth, %	2015	2016	2017	2018	2019	2020	2021
Bosnia and Herzegovina	4.1	3.4	3.2	3.3	2.6	-6.0	3.0
North Macedonia	3.9	2.8	1.1	2.7	3.6	-3.0	5.0
Kosovo	4.1	4.1	4.2	3.8	4.2	-2.5	4.5
Serbia	1.8	3.3	2.0	4.4	4.2	-2.0	4.0
Montenegro	3.4	2.9	4.7	5.1	3.6	-9.0	6.0
Slovenia	2.2	3.1	4.8	4.1	2.4	-6.0	4.0
Eurozone	2.0	1.9	2.7	1.9	1.2	-6.5	3.5

Sources: Statistical Offices, NLB

Average inflation rate, %

KEY FINDINGS:

Due to shocks on both sides, supply and demand, along with low oil prices, it is expected low inflationary environment in 2020.

Since the uncertainty and low-inflationary expectation exist, the producers are forced to keep low prices, while the consumers are precautionary, which is resulting in the lowinflationary spiral.

Average inflation rate, %	2015	2016	2017	2018	2019	2020	2021
Bosnia and Herzegovina	-1.1	-1.6	0.8	1.4	0.6	0.6	1.5
North Macedonia	-0.3	-0.2	1.4	1.4	0.8	0.6	1.5
Kosovo	-0.5	0.3	1.5	1.1	2.7	1.2	1.8
Serbia	1.4	1.1	3.2	2.0	1.9	1.5	2.5
Montenegro	1.5	-0.3	2.4	2.6	0.4	0.9	1.7
Slovenia	-0.8	-0.2	1.6	1.9	1.7	1.0	1.9
Eurozone	0.2	0.2	1.5	1.8	1.2	0.6	1.2

Sources: Statistical Offices, NLB

Unemployment rate, %

KEY FINDINGS:

Due to the global Covid-19 shock, the unemployment is projected to increase vastly all around the world and in the Group's region as well.

If the scenario that the outbreak is put under control and the lockdowns are lifted by the end of May 2020 holds, the economic growth will follow in 2021 and unemployment rate could start gradually diminishing.

Unempoyment rate, %	2015	2016	2017	2018	2019	2020	2021
Bosnia and Herzegovina	43.2	41.7	38.4	36.0	33.3	38.0	37.5
North Macedonia	26.1	23.7	22.4	20.7	17.3	22.0	21.0
Kosovo	32.9	27.5	30.5	29.5	25.7	30.0	28.5
Serbia	17.7	15.3	13.5	12.7	10.4	14.5	14.0
Montenegro	17.6	17.7	16.1	15.2	15.1	20.0	18.0
Slovenia	9.0	8.0	6.6	5.1	4.6	9.0	7.5
Eurozone	10.9	10.0	9.1	8.2	7.6	10.0	10.0

Sources: Statistical Offices, NLB

Current account, % GDP

KEY FINDINGS:

Current accounts will slightly deteriorate in the Group's region in 2020.

Trade deficits and surpluses are being affected on both sides with stalled imports and exports.

Currrent Account, % GDP	2015	2016	2017	2018	2019	2020	2021
Bosnia and Herzegovina	-4,9	-4,5	-4,2	-3,6	-3,5	-5,6	-4,6
North Macedonia	-1,9	-2,9	-1,1	-0,1	-2,8	-1,9	-1,7
Kosovo	-8,6	-7,9	-5,4	-7,6	-5,8	-6,8	-5,2
Serbia	-3,5	-2,9	-5,2	-5,2	-6,9	-5.5	-5.0
Montenegro	-11.0	-16.2	-16.1	-17.0	-15.2	-18.1	-15.2
Slovenia	3.8	4.8	6.1	5.7	6.6	3.5	4.1
Eurozone	2.6	3.3	3.1	3.1	2.7	2.8	2.6

Sources: Statistical Offices, NLB

Macro Overview – Fiscal data

Fiscal Balance, % GDP

KEY FINDINGS:

Fiscal measures for countervailing the virus outbreak will be mostly financed by government budgets, which will force them into borrowing, which will in turn increase their public debts.

Fiscal balance, % GDP	2015	2016	2017	2018	2019	2020	2021
Bosnia and Herzegovina	0.7	1.2	2.6	2.3	1.3	-4.5	-3.0
North Macedonia	-3.5	-2.7	-2.7	-1.8	-2.0	-6.0	-3.5
Kosovo	-1.6	-1.1	-1.1	-2.6	-2.5	-5.0	-3.5
Serbia	-3.5	-1.2	1.1	0.6	-0.2	-7.0	-2.5
Montenegro	-8.0	-3.4	-5.5	-3.6	-2.9	-7.5	-4.0
Slovenia	-2.8	-1.9	0.0	0.8	0.5	-7.0	-3.0
Eurozone	-2.0	-1.4	-0.9	-0.5	-0.8	-5.5	-3.5

Sources: Statistical Offices, NLB

Macro Overview – Fiscal data

Public Debt, % GDP

KEY FINDINGS:

Public debt will increase in the whole Group's region, since the medical and fiscal measures will be financed by the governments budgets and borrowing.

Public debts spanned in 2019 from very low in Kosovo (17.5%) up to 75% in Montenegro, hence setting them in different positions regarding the free fiscal space for borrowing.

Public debt will increase by around 6 p.p. up to 14 p.p. in 2020 in the Group's region.

Public debt, % GDP	2015	2016	2017	2018	2019	2020	2021
Bosnia and Herzegovina	45.5	44.1	39.2	34.3	33.3	40.0	42.0
North Macedonia	38.1	39.9	39.4	40.6	40.2	48.0	49.0
Kosovo	13.1	14.4	16.2	17.1	17.5	23.5	26.0
Serbia	69.5	67.6	59.3	53.7	52.0	60.0	60.0
Montenegro	66.2	64.4	64.2	70.1	75.1	89.5	88.0
Slovenia	82.6	78.7	74.1	70.4	66.1	78.0	78.0
Eurozone	90.8	90.0	87.8	85.9	85.0	96.5	97.0

Sources: Statistical Offices, NLB

Loans growth (NFC + Households), %

KEY FINDINGS:

In February 2020, the levels of credit growth are still unaffected by Covid-19 outbreak.

Kosovo (10.7%) and Serbia (9.2%) leading the credit growth in the region in February 2020.

Loan growth (NFC + Households), %	2015	2016	2017	2018	2019	Feb 2020
Bosnia and Herzegovina	2.4	3.8	7.3	5.5	6.3	3.9
North Macedonia	9.6	-0.1	5.4	7.2	6.1	6.8
Kosovo	7.3	10.6	12.4	10.9	10.0	10.7
Serbia	3.3	5.5	3.6	9.5	8.4	9.2
Montenegro	2.5	5.4	7.7	9.1	6.6	6.0
Slovenia	-5.1	1.8	4.6	4.7	5.6	5.7
Eurozone	0.8	1.7	1.7	2.3	2.5	2.7

Sources: National Central Banks, ECB, Own calculations

Total Loans (NBS), % GDP

KEY FINDINGS:

Entire region below Eurozone average with a solid growth potential.

Stable loans to GDP ratio in BiH, North Macedonia and Serbia.

In Slovenia, the negative trend stabilized in 2019. In Montenegro, the ratio is continuing to fall. In Kosovo, the share of loans in GDP is steadily increasing, but still the lowest among peers.

Total Loans as % of GDP	2014	2015	2016	2017	2018	2019
Bosnia and Herzegovina	60.1	58.9	57.3	58.3	58.2	58.9
North Macedonia	48.6	49.8	47.0	47.4	48.1	48.2
Kosovo	33.5	34.9	37.1	39.2	41.9	42.5
Serbia	56.7	57.5	58.7	56.8	57.0	57.5
Montenegro	69.6	67.8	62.1	63.2	63.6	62.1
Slovenia	58.3	52.3	49.5	49.3	48.6	49.0
Eurozone	92.0	91.4	90.8	90.1	90.5	91.7

Sources: National Central Banks, ECB, Own calculations

Note: Eurozone Total loans includes only NFC + Households loans

Deposits growth (NFC + Households), %

KEY FINDINGS:

In February 2020, the levels of deposit growth are still unaffected by Covid-19 outbreak.

Kosovo (14.0%) leads the deposit growth in the region in February 2020, followed by strong growth of other countries in the region.

An exception is Montenegro, which is the only country with the negative growth in 2019 and February 2020. Its growth was influenced by the exclusion of deposits from Invest Bank and Atlas Bank due to their bankruptcy proceedings.

Deposit growth (NFC + Households), %	2015	2016	2017	2018	2019	Feb 2020
Bosnia and Herzegovina	8.2	7.8	8.6	8.7	9.0	9.3
North Macedonia	6.4	5.4	5.0	9.5	9.8	9.1
Kosovo	7.4	8.7	4.1	7.3	14.3	14.0
Serbia	7.1	11.5	3.1	14.9	7.8	8.4
Montenegro	11.8	10.5	13.7	3.2	-2.5	-1.4
Slovenia	5.6	7.1	6.9	6.8	6.3	6.0
Eurozone	3.0	4.6	1.7	2.3	2.5	2.7

Sources: National Central Banks, ECB, Own calculations

Total Deposits (NBS), % GDP

KEY FINDINGS:

In 2019, growing deposits to GDP ratio in the whole region with the exception of Montenegro, though in the latter the ratio is still above its peers in the region.

Across the whole region the share of deposits in GDP is lower than in Eurozone.

Total Deposits as % of GDP	2014	2015	2016	2017	2018	2019
Bosnia and Herzegovina	55.8	57.5	59.0	62.6	64.5	67.6
North Macedonia	53.1	53.4	52.5	53.2	55.7	57.5
Kosovo	45.3	46.1	47.5	47.8	50.6	54.0
Serbia	41.7	42.7	45.1	44.3	46.1	48.3
Montenegro	65.9	72.4	72.2	74.8	74.1	71.4
Slovenia	65.9	65.5	63.8	63.4	62.7	63.8
Eurozone	80.9	82.1	83.9	85.3	87.1	91.2

Sources: National Central Banks, ECB, Own calculations

Note: Eurozone Total deposits includes only NFC + Households deposits; For Montenegro, deposits data excludes deposits with Invest Bank and Atlas Bank, according to CBCG

Appendix 3 Financial statements

NLB Group Income Statement

(EURm)	1-3 2020	1-3 2019	YoY	Q1 2020	Q4 2019	Q1 2019	QoQ
Interest and similar income	90.6	90.4	0%	90.6	92.1	90.4	-2%
Interest and similar expense	-13.2	-11.1	-19%	-13.2	-12.4	-11.1	-6%
Net interest income	77.4	79.4	-3%	77.4	79.7	79.4	-3%
Fee and commission income	57.8	53.8	7%	57.8	61.3	53.8	-6%
Fee and commission expense	-15.4	-13.8	-12%	-15.4	-17.8	-13.8	13%
Net fee and commission income	42.4	40.1	6%	42.4	43.5	40.1	-2%
Dividend income	0.0	0.1	-86%	0.0	0.0	0.1	-35%
Net income from financial transactions	3.8	12.3	-69%	3.8	5.8	12.8	-35%
Other operating income	0.2	2.7	-91%	0.2	0.8	2.7	-71%
Total net operating income	123.8	134.5	-8%	123.8	129.8	134.5	-5%
Employee costs	-42.9	-40.1	-7%	-42.9	-48.0	-40.1	11%
Other general and administrative expenses	-23.7	-21.9	-8%	-23.7	-32.3	-21.9	27%
Depreciation and amortisation	-8.1	-7.7	-4%	-8.1	-7.7	-7.7	-5%
Total costs	-74.6	-69.7	-7%	-74.6	-88.0	-69.7	15%
Result before impairments and provisions	49.2	64.8	-24%	49.2	41.9	64.8	17%
Impairments and provisions for credit risk	-28.2	3.3	-	-28.2	-2.3	3.3	-
Other impairments and provisions	-0.2	-3.9	95%	-0.2	-8.4	-3.9	98%
Gains less losses from capital investments in subsidiaries, associates and joint ventures	0.2	1.1	-81%	0.2	0.0	1.1	-
Result before Tax	21,0	65.3	-68%	21,0	31.2	65.3	-32%
Income tax expense	-1.6	-5.4	71%	-1.6	2.2	-5.4	-
Non Controlling Interests	1.2	2.0	-41%	1.2	2.0	2.0	-43%
Net Profit / (Loss) Attributable to Shareholders	18.3	57.9	-68%	18.3	31.3	57.9	-42%

NLB Group Statement of Financial Position

(EURm)	31 Mar 2020	31 Dec 2019	YtD
ASSETS
Cash and balances with Central Banks and other demand
deposits at banks	2,095.4	2,101.3	0%
Financial instruments	3,711.3	3,829.7	-3%
o/w Trading Book	25.6	24.0	6%
o/w Non-trading Book	3,685.7	3,805.7	-3%
Loans and advances to banks (net)	93.6	93.4	0%
o/w gross loans	93.7	93.5	0%
o/w impairments	-0.1	-0.1	13%
Loans and advances to customers	7,759.8	7,604.7	2%
o/w gross loans	8,125.6	7,938.3	2%
- Corporates	3,823.6	3,646.3	5%
- State	286.0	278.6 4,013.5	3%
- Individuals o/w impairments and valuation	4,016.1	-333.6	0%
Investments in associates and JV	-365.8	7.5	10%
Goodwill	7.7 3.5	3.5	3% 0%
Other intagible assets	34.4	36.0	-5%
Property, plant and equipment	193.3	195.6	-1%
Investment property	52.2	52.3	0%
Other assets	337.2	250.0	35%
Total Assets	14,288.3	14,174.1	1%

LIABILITIES & EQUITY
Deposits from banks and central banks	63.1	42.8	47%
Deposits from customers	11,652.9	11,612.3	0%
- Corporates	2,641.7	2,772.0	-5%
- State	282.5	257.4	10%
- Individuals	8,728.6	8,582.9	2%
Borrowings	232.5	234.8	-1%
Subordinated liabilities Other liabilities	286.6	210.6 342.6	36%
	328.4	12,443.2	-4%
Total Liabilities Shareholders' Equity	12,563.6	1,685.9	1%
Non Controlling Interests	1,678.9 45.9	45.0	0% 2%
Total Equity	1,724.7	1,730.9	0%
Total Liabilities & Equity	14,288.3	14,174.1	1%

AI assistant

NLB — Investor Presentation 2020

1985_rns_2020-05-18_e05753e4-f3e0-4228-88c8-66bb93583695.pdf

NLB Group Presentation 1Q2020 Results

Disclaimer

NLB Group Highlights

Key developments

• Covid-19 outbreak

• Acquisition of Komercijalna banka a.d. Beograd

• Capital measures

• Regulatory changes

• Annual General Meeting

COVID-19 Impact

Covid-19 measures by country

NLB Group Assets by segment and geography

Well diversified credit portfolio, with substantial retail exposure

Segmentation by industry & sectors

Limited exposure to sectors considered as sensitive

Portfolio response

Impairments and provisions & cost of risk

Cost of risk high

Key Developments

Key performance indicators of NLB Group

Revenues and Cost Dynamics

Net non-interest income (Group, EURm)

Net impairments and provisions (Group, EUR m)

Loan dynamics

Gross loans to individuals Gross loans to corporate

Income Statement

Result before impairments and provisions (Group, EURm) Contribution to the NLB Group consolidated result a.t. (EURm)

Balance sheet structure – NLB Group

Simple client business driven balance sheet

NLB Group – performance indicators across SEE countries

Business Performance

Net interest income & net interest margin

Interest income remains under pressure

Net interest margin(1) in NLB Group banks (in %)

Net interest income drivers – NLB d.d.

Net interest income drivers – Strategic foreign markets(1)

Net non-interest income – NLB Group Good performance in Fees and Commissions

Net fee and commission income growing YoY (Group, EURm)

Costs – NLB Group

Costs increased YoY

of branches

Impairments and provisions & cost of risk

Cost of risk high

Assets and Liabilities

NLB Group Assets

Well diversified loan book, strong liquidity position

Banking book portfolio by asset class (Group, 31 Mar 2020)

NLB Group Assets – Loan portfolio

Balanced loan portfolio with loan growth in most of banks

NLB Group Liabilities and Equity

NLB Group Liabilities

Stable deposit base with decreasing interest rate

Capital - NLB Group

Strong capital position

NLB Group capital ratios (%) Capital structure and ratios

RWA structure (EURm)

NLB Group capital ratios and local requirements (31 Mar 2020, %)

Capital evolution and requirements

Strong capital position

Asset Quality

Credit portfolio(1) by segment (Group, 31 Mar 2020, EURm)

Credit portfolio(1) by geography (Group, 31 Mar 2020, EURm)

NPLs fully covered by provisions and collateral

Strategy & IT

NLB went through difficult times – A new period is about to start

Restructuring

Strategy 2020

Strategy update 2025

We are a successful, geographical niche player with strong foundations to build on

Foundations to benefit from

Strong market positions

Regional roots

Positive brand perception at subsidiaries

Recent successes, local innovation Good recent performance, acknowledged innovations (digital) in Slovenia

Untapped opportunities

Track record of innovation

Demonstrated success in moving to digital

NLB Investor Presentation 2020