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

“We are satisfied with the results for the first six months as our business activities are developing as expected. Even in a tough competitive market, Slovenská sporiteľňa is able to confirm its leading position in deposits and loans. In a period of the lowest interest rates ever, we are focusing on improvement of customer experience with emphasis on digitalisation and improvement of efficiency and responsible cost management,” Štefan Máj, Chairman of the Board of Directors and General Manager of Slovenská sporiteľňa commented on the results.

Financial highlights as of 30 June 2017 (y/y comparison):

• net interest income went down by 5.8% y/y from EUR 231.5 million to EUR 218.0 million,
• net fee and commission income decreased by 15.3% y/y from EUR 64.7 million to EUR 54.8 million,
• operating profit went down by 13.2% y/y from EUR 169.5 million to EUR 147.1 million,
• net profit after tax decreased by 35.7% y/y from EUR 134.6 million to EUR 86.5 million,
• volume of loans and receivables to customers grew by 14.2% y/y from EUR 9.6 billion to EUR 11.0 billion,
• deposits from customers increased by 10.8% y/y from EUR 10.9 billion to EUR 12.1 billion ,
• cost income ratio reached 48.1%,
• capital adequacy reached 20.7% 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 87.8% to 90.6%.

Business performance overview of Slovenská sporiteľňa as of 30 June 2017

Net interest income decreased by 5.8% y/y from EUR 231.5 million to EUR 218.0 million. This decrease is the result of low interest rates on the market and strong pressure on margins for new and refinanced loans. Additionally, the market development was noticeably hit by legislative changes with full impact from the second quarter of 2016. The current amount of net interest income was also influenced by the maturity of state securities in the bank’s portfolio with a negative y/y impact on the net interest income in the amount of EUR 3.1 million.

Net fee and commission income went down by 15.3% y/y from EUR 64.7 million to EUR 54.8 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 8.4 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 23.5% compared with the first half of 2016 (EUR 6.8 million).

General administrative expenses went up slightly by 0.4% in y/y comparison and reached EUR 136.3 million (in 2016 it was EUR 135.8 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 44.5% to 48.1% y/y as a result of the lower operating income.

Risk costs for loans and receivables achieved EUR 19.5 million in 2017 which is a decrease by EUR 1.8 million compared with the previous year. 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 5.3% to 4.1% while the coverage with provisions went up from 65.9% to 75.3%.

Total risk costs of the bank (for loans, receivables and off-balance items) went down considerably despite the 14.2% increase of loan portfolio and amounted to EUR 15.9 million compared with EUR 18.8 million in 2016.

Consolidated net profit after tax attributable to owners of parent went down by 35.7% y/y and reached EUR 86.5 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 half 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 16.9 million in 2016 (EUR 18.8 million in 2016).

The volume of loans to customers increased by 14.2% compared with 2016 and achieved EUR 11.0 billion. Retail loans were the major driving force; they increased by 14.4% y/y (by EUR 1.1 billion). Slovenská sporiteľňa again confirmed its position as market leader in retail loans; its market share reached 27.6%. The main growth driver were housing loans which grew by 16.4% (by EUR 916 million) and consumer loans which grew by 7.8% (by EUR 116 million). Loans to corporate clients increased by 9.3% y/y (by EUR 220 million) and reached EUR 2.6 billion.

Retail deposits increased from EUR 9.2 billion to EUR 10.0 billion, providing a solid base for financing and room for further growth of the bank. Deposits from customers rose by 10.8% from EUR 10.9 billion to EUR 12.1 billion compared with the year 2016.

Slovenská sporiteľňa – Contact for media:

Marta Cesnaková; tel,: +421 2 4862 4360; cesnakova.marta@slsp.sk

Erste Group – Public Relations:

Carmen Staicu; tel,: +435010011681; carmen.staicu@erstegroup.com

Erste Group – Investor Relations:

Thomas Sommerauer; tel,: +435010017326; thomas.sommerauer@erstegroup.com