Consolidated, unaudited financial results of Slovenská sporiteľňa as of 30 September 2017 according to International Financial Reporting Standards (IFRS).

„The results for the first nine months provided us with several positive messages. The best one is that Slovenská sporiteľňa continues to maintain its position as market leader in deposits and loans. The achieved double-digit growth and decline of risk costs confirms that we are taking a responsible approach to lending in a tough competitive environment,“ Štefan Máj, Chairman of the Board of Directors and General Manager of Slovenská sporiteľňa commented on the results.

FINANCIAL HIGHLIGHTS AS OF 30 SEPTEMBER 2017 (Y/Y COMPARISON)

• Net interest income went down by 5.3% y/y from EUR 346.4 million to EUR 328.2 million
• Net fee and commission income decreased by 9.9% y/y from EUR 92.6 million to EUR 83.4 million
• Operating profit went down by 10.4% y/y from EUR 244.7 million to EUR 219.3 million
• Net profit after tax decreased by 26.7% y/y from EUR 172.1 million to EUR 126.2 million
• Volume of loans and receivables to customers grew by 15.3% y/y from EUR 9.9 billion to EUR 11.4 billion
• Deposits from customers increased by 9.5% y/y from EUR 11.2 billion to EUR 12.3 billion
• Cost income ratio reached 48.5%
• Capital adequacy reached 18.96% and considerably exceeds the limit stipulated by the law (according to ECB/ NBS, Basel III requirements and IRB approach)
• Loan-to-deposit ratio increased y/y from 88% to 92.7%

BUSINESS PERFORMANCE OVERVIEW OF SLOVENSKÁ SPORITEĽŇA AS OF 30 september 2017

Net interest income decreased by 5.3% y/y from EUR 346.4 million to EUR 328.2 million. This decrease is the result of low interest rates on the market and strong pressure on margins for new and refinanced loans. The current amount of net interest income was also influenced by replacing matured securities in the bank’s portfolio which are purchased with lower interest income.

Net fee and commission income went down by 9.9% y/y from EUR 92.6 million to EUR 83.4 million. This decrease is the result of the changes on the banking market which took place last year. Another reason behind this decrease is the transfer of part of the undertaking (merchant acquiring business) into the newly founded company Global Payments, s.r.o. which took place in the third quarter of last year.

The net profit in the amount of EUR 11.2 million in the area of net trading and fair value result is mainly related to the development of the valuation of derivate instruments and higher by 19.1% compared with the first nine months of 2016 (EUR 9.4 million).

General administrative expenses went down slightly by 0.1% in y/y comparison and reached EUR 206.3 million (in 2016 it was EUR 206.6 million). The bank continues to invest into higher service quality for clients and is still able to maintain administrative expenses at a reasonable level. Cost income ratio changed from 45.8% to 48.5% y/y as a result of the lower operating income.

Risk costs for loans and receivables achieved EUR 29.7 million in 2017 which is a decrease by EUR 0.8 million compared with the corresponding period of 2016. The current status and development throughout the year are influenced by the positive development of bank clients in the area of credit risk and the bank’s prudent lending approach. The share of defaulted loans on total loan volume decreased from 5.2% to 4.0% while the coverage with provisions went up from 66.3% to 78.2%.

Total risk costs of the bank (for loans, receivables and off-balance items) went down despite the 15.3% increase of loan portfolio and amounted to EUR 25.1 million compared with EUR 29.4 million in 2016.

Consolidated net profit after tax attributable to owners of parent went down by 26.7% y/y and reached EUR 126.2 million. The reasons behind this decrease are two extraordinary transactions which influenced business results in 2016. The revenue from the sale of the stake in the company Visa Europe Ltd. to the company Visa Inc. in the amount of EUR 26.8 million out of which the bank dedicated 10% to the Foundation of Slovenská sporiteľňa and the extraordinary revenue of EUR 14.5 million from the transfer of part of the undertaking (merchant acquiring business) into the company Global Payments, s.r.o.

In the first three quarters of 2017 the bank reported a contribution into the Resolution fund in the amount of EUR 2.8 million (in 2016 it was EUR 4 million) and a contribution into the Deposit Protection Fund in the amount of EUR 0.8 million (in 2016 it was EUR 2.5 million). Total levies (bank levy, contribution into the Deposit Protection Fund, contribution into the Resolution Fund) amounted to EUR 23.8 million at the end of Q3 2017 (EUR 25.1 million in 2016).

The volume of loans to customers increased by 15.3% compared with 2016 and achieved EUR 11.4 billion. Retail loans were the major driving force; they increased by 14.1% y/y (by EUR 1.1 billion). Slovenská sporiteľňa again confirmed its position as market leader in retail loans; its market share reached 27.7%. The main growth driver were housing loans which grew by 15.7% (EUR 911 million in absolute terms) and consumer loans which grew by 9.5% (by EUR 143 million). Loans to corporate clients increased by 15.0% y/y (by EUR 353 million) and reached EUR 2.7 billion.

Retail deposits increased from EUR 9.3 billion to EUR 10.1 billion, providing a solid base for financing and room for further growth of the bank. Deposits from customers rose by 9.5% from EUR 11.2 billion to EUR 12.3 billion compared with the year 2016.