Unaudited financial statements of Zagrebačka banka d.d. for the period from 1 January 2018 to 30 September 2018 Content:

Transcription

1 Unaudited financial statements of Zagrebačka banka d.d. for the period from 1 January 2018 to 30 September 2018 Content: 1. Management report for the period from 1 January 2018 to 30 September Statement of the persons responsible for the preparation of the financial statements 3. Financial statements (TFI-KI statements) 3.1. Balance sheet as at 30 September Income statement for the period from 1 January 2018 to 30 September Cash flow statement for the period from 1 January 2018 to 30 September Statement of changes in equity for the period from 31 December 2017 to 30 September Notes to the financial statements

2 Management report for the period from 1 January to 30 September 2018 Zagrebačka banka d.d. recorded a profit after tax of HRK 1,451 million in the first nine months of 2018, thanks to the stable operating result and good management of risks. The capital adequacy ratio is strong, the Bank has sufficient liquidity and solid potential to support the loan activity in the upcoming periods as well. Following positive macroeconomic trends an increase was realised in new loans to retail, corporate and public sectors. The total volume of loans also increased by the merger of Prva stambena štedionica d.d. to Zagrebačka banka d.d. In the upcoming period as well, the Bank will be focused on transformation of business aiming at improving clients experience, education of employees and introduction of simpler processes based on agile approach and digital technologies. Key performance indicators: Operating income: HRK 3,177 million Operating expenses: HRK 1,370 million Profit before impairment and other provisions: HRK 1,807 million Impairment and other provisions: HRK 66 million Net loans to customers: HRK 65,809 million Deposits from customers: HRK 80,432 million

3 Management report for the period from 1 January to 30 September 2018 (continued) Operating income amounted to HRK 3,177 million, increased by HRK 100 million (+3.2%): Net interest income amounted to HRK 1,990 million, it is under the influence of lower net interest margin. Net fee and commission income amounted to HRK 829 million, it is HRK 29 million (+3.6%) higher, due to the increase in payment transaction and credit card fees. Net trading and other income amounted to HRK 358 million, increased by HRK 125 million (+53.6%), due to higher trading result. Operating expenses amounted to HRK 1,370 million, increased by HRK 15 million (+1.1%). Cost to income ratio equals 43.12%. Profit before impairment and other provisions amounted to HRK 1,807 million. The increase of HRK 85 million (+4.9%) is a result of the previously described movements in Operating income and Operating expenses. Impairment and other provisions amounted to HRK 66 million, they have decreased by HRK 1,055 million. Impairment losses on placements to companies have been significantly increased in In 2018 the ratio of non-performing loans decreased and the coverage of non-performing loans increased. Total assets of the Bank amounted to HRK 104,935 million and have increased by HRK 2,751 million (+2.7%). Net loans to customers amounted to HRK 65,809 million, increased by HRK 3,916 million (+6.3%). Following positive environment trends the loan activity in retail, corporate and public sectors increased. The total volume also increased by the merger of Prva stambena štedionica d.d. to Zagrebačka banka d.d. Deposits from customers represent primary source of funding. They amounted to HRK 80,432 million and have increased by HRK 2,882 million (+3.7%), mostly following the merger of Prva stambena štedionica d.d. Loans to deposits ratio amounts to 81.8%. Deposits from banks and borrowings amounted to HRK 3,962 million. The decrease of HRK 1,040 million (-20.8%) is a result of management of the balance sheet structure. Capital and reserves - at HRK 16,030 million.

4 Financial results for the period from 1 January to 30 September 2018 Zagrebačka banka d.d. Δ 2018 vs Income statement (HRK mln) 9m m 2018 % HRK mln (4/1) 4 (2-1) Interest income 3,397 3,040 (10.5 %) (357) Interest expense (1,353) (1,050) (22.4 %) 303 Net interest income 2,044 1,990 (2.6 %) (54) Fee and commission income % 56 Fee and commission expense (125) (152) 21.6 % (27) Net fee and commission income % 29 Net trading and other income % 125 Operating income 3,077 3, % 100 Operating expenses (1,355) (1,370) 1.1 % (15) Profit before impairment and other provisions 1,722 1, % 85 Impairment and other provisions (1,121) (66) (94.1 %) 1,055 Profit before tax 601 1, % 1,140 Income tax (92) (290) % (198) Profit after tax 509 1, % 942 Zagrebačka banka d.d. Δ 2018 vs Balance sheet (HRK mln) 31 Dec Sep 2018 % HRK mln (4/1) 4 (2-1) Cash and deposits with the CNB 18,269 17,588 (3.7 %) (681) Loans and receivables from financial institutions 7,954 6,852 (13.9 %) (1,102) Securities 8,578 10, % 1,749 Net loans to customers 61,893 65, % 3,916 Tangible and intangible assets 1,399 1,345 (3.9 %) (54) Other assets 4,091 3,014 (26.3 %) (1,077) Total assets 102, , % 2,751 Deposits from customers 77,550 80, % 2,882 Deposits from banks and borrowings 5,002 3,962 (20.8 %) (1,040) Other liabilities 3,934 4, % 577 Equity 15,698 16, % 332 Total liabilities and equity 102, , % 2,751

5 Financial results for the period from 1 January to 30 September 2018 (continued) Ratings 30 September 2018 Standard & Poor s Counterparty Credit Rating BB+/Stable Fitch Ratings Ltd. Long Term Issuer Default Rating BBB- Short Term Rating F3 Viability bb+ Support 2 Outlook Negative Zagreb, 25 October 2018 Chairman of the Management Board Miljenko Živaljić

6 Statement of the persons responsible for the preparation of financial statements Pursuant to the provisions of the Capital Market Act, to the best of our knowledge: 1. the set of summary financial statements of Zagrebačka banka d.d. prepared in accordance with the applicable standards for financial reporting for banks in the Republic of Croatia gives a true and complete view of the assets and liabilities, profit and loss, the financial position and business operations of Zagrebačka banka d.d.; 2. the Management Report gives a true view of business developments, operating results and the position of Zagrebačka banka d.d. Head of Accounting and Regulatory Reporting Marijana Brcko Member of the Management Board Lorenzo Ramajola Additional info: Public Relations Tel: 00385(1) PR@unicreditgroup.zaba.hr

7 Appendix 3. Reporting period: to Identification number (MB): Subjects identification number (MBS): Quarterly financial report for credit institutions-tfi-ki Personal identification number (OIB): Issuer company: Zagrebačka banka d.d. Post office number and city: Zagreb Street and number: Trg bana Josipa Jelačića 10 address: Internet address: Code and name of municipality/city: 133 Zagreb Code and name of county: Consolidated report: 21 GRAD ZAGREB Number of employees: 4,003 (as at the quarter-end) NO Code in NKD: Companies included in consolidation (according to IFRS): Headquarters: MB: Accounting: Contact person: Ana Jurič (only surname and name of contact person is included) Phone: 01/ Fax: address: Surname and name: Živaljić Miljenko (person representing the company) Documentation to be published: 1. Financial reports (balance, income statement, cash flow statement, statement on changes in equity and notes to financial statements) 2. Interim Management report 3. Statement of person responsible for preparation of financial reports M.P. (signature of the President of the Management Board)

8 BALANCE SHEET balance as at Position name ASSETS 1. CASH AND DEPOSITS WITH THE CNB ( ) 1.1.Cash 1.2.Deposits with the CNB 2. DEPOSITS WITH BANKING INSTITUTIONS 3. TREASURY BILLS AND CNB BILLS 4. SECURITIES AND OTHER FINANCIAL INSTRUMENTS HELD FOR TRADING 5. SECURITIES AND OTHER FINANCIAL INSTRUMENTS AVAILABLE FOR SALE 6. SECURITIES AND OTHER FINANCIAL INSTRUMENTS HELD TO MATURITY 1 AOP code Previous period Amounts in HRK Current period ,269,317,553 17,587,646, ,380,277,098 2,681,858, ,889,040,455 14,905,788, ,600,391,033 5,274,741, ,351,394,625 4,240,966, ,282,895 54,416, ,025,966,691 5,770,703, ,878 89, SECURITIES AND OTHER FINANCIAL INSTRUMENTS WHICH ARE NOT ACTIVELY TRADED, BUT ARE DESIGNATED TO FAIR VALUE THROUGH PROFIT OR LOSS 8. DERIVATIVE FINANCIAL ASSETS 9. LOANS TO FINANCIAL INSTITUTIONS 10. LOANS TO OTHER CUSTOMERS 11. INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES 12. FORECLOSED ASSETS 13. PROPERTY, PLANT AND EQUIPMENT (NET OF DEPRECIATION) 14. INTEREST, FEES AND OTHER ASSETS A) TOTAL ASSETS ( to 016) LIABILITIES 1. BORROWINGS FROM FINANCIAL INSTITUTIONS ( ) 1.1. Short-term borrowings 1.2. Long-term borrowings 2. DEPOSITS (AOP 022 to 024) 2.1. Giro and current accounts 2.2. Savings deposits 2.3. Term deposits 3. OTHER BORROWINGS ( ) 3.1. Short-term borrowings 3.2. Long-term borrowings 4. LIABILITIES ARISING FROM DERIVATIVES AND OTHER LIABILITIES HELD FOR TRADING 5. ISSUED DEBT SECURITIES ( ) 5.1. Short-term issued debt securities 5.2. Long-term issued debt securities 6. ISSUED SUBORDINATED INSTRUMENTS 7. ISSUED HYBRID INSTRUMENTS 8. INTERESTS, FEES AND OTHER LIABILITIES B) TOTAL LIABILITIES ( ) EQUITY 1. SHARE CAPITAL 2. CURRENT YEAR PROFIT / (LOSS) 3. RETAINED EARNINGS / (LOSS) 4. LEGAL RESERVES 5. STATUTORY AND OTHER CAPITAL RESERVES 6. UNREALISED GAIN / (LOSS) ON VALUE ADJUSTMENT OF AVAILABLE-FOR-SALE FINANCIAL ASSETS ,006, ,235, ,411, ,576, ,354,243,470 1,577,482, ,893,146,186 65,809,428, ,637,474,553 1,537,474, ,969,983 67,599, ,329,824,878 1,277,304, ,497,585, ,539, ,184,084, ,935,205, ,620, ,939, ,657,601 3,723, ,962, ,216, ,548,150,579 81,841,265, ,960,385,825 26,462,255, ,668,124,330 21,689,680, ,919,640,424 33,689,330, ,304,310,576 1,905,323, ,577, ,939, ,029,732,725 1,779,383, ,507, ,757, ,140,708 54,093, ,140,708 54,093, ,071,148,776 3,602,558, ,485,878,247 88,904,938, ,404,839,100 6,404,839, ,359,939 1,450,661, ,241,636,485 3,992,431, ,048,522 68,048, ,914,647,366 3,868,788, ,674, ,498, HEDGE ACCOUNTING RESERVES C) TOTAL EQUITY (036 to 042) ,698,206,281 16,030,267,449 D) TOTAL LIABILITIES AND EQUITY ( ) ,184,084, ,935,205,605 BALANCE SHEET SUPPLEMENT (to be inputed by issuer preparing consolidated financial reports) 1. TOTAL EQUITY Attributable to equity holders of the Bank Attributable to minority interests ( )

9 1. Interest income 2. Interest expense 3. Net interest income ( ) 4. Fee and commission income 5. Fee and commission expense INCOME STATEMENT for the period to Amounts in HRK Position name AOP code Previous period Current period Cumulative Quarterly Cumulative Quarterly ,396,952,980 1,083,269,225 3,040,489, ,335, ,353,464, ,393,881 1,049,531, ,839, ,043,488, ,875,344 1,990,958, ,495, ,904, ,288, ,679, ,032, ,365,794 58,464, ,049,549 73,832, ,538, ,824, ,630, ,200, Net fee and commission income ( ) 7. Gains / losses from investment in subsidiaries, associates and joint ventures 8. Gains / losses from trading activities 9. Gains / losses from embedded derivatives 10. Gains / losses from assets which are not actively traded, but are designated at fair value through profit or loss 11. Gains / losses from activities related to available-for-sale financial assets 12. Gains / losses from activities related to held-to-maturity investments 13. Gains / losses from hedging transactions 14. Income from investments in subsidiaries, associates and joint ventures 15. Income from other equity investments 16. Gains / losses from foreign exchange differences 17. Other income 18. Other expenses 19. General administrative expenses and depreciation ,024,232-40,674,031-18,719,617-20,984, ,018 2,410,452 20,525,916 7,019, ,396,981 7,914,502 7,659,193 2,604, ,293, ,602, ,211, ,100 15,956, , ,893,735 68,015, ,475,808 64,987, ,809,901 14,814,946 67,458,906 21,466, ,234,690 31,761, ,558,249 39,519, ,195,764, ,861,745 1,194,544, ,920, Net income from operations before impairment and other provisions 067 1,722,122, ,804,239 1,807,444, ,721, Impairment losses and other provisions 22. PROFIT / LOSS BEFORE TAX ( ) 23. INCOME TAX EXPENSE 24. PROFIT / LOSS FOR THE PERIOD ( ) 25. Earnings per share 068 1,120,920, ,516,275 66,300, ,110, ,201, ,287,964 1,741,144, ,831, ,827,939 66,944, ,483, ,275, ,373, ,343,852 1,450,661, ,556, INCOME STATEMENT SUPPLEMENT (to be inputed by issuer preparing consolidated financial statements) 1. PROFIT / LOSS FOR THE PERIOD Attributable to equity holders of the Bank Attributable to minority interests ( )

10 CASH FLOW STATEMENT - Indirect method in the period from to Amounts in HRK Position name AOP code Previous period Current period Operating activities 1. Cash flow from operating activities before changes in operating assets (002 do 007) 1.1.Profit/(loss) before tax 1.2. Impairment losses 1.3. Depreciation and amortisation 1.4. Unrealised (gains)/losses on securities at fair value through profit or loss 1.5. (Gains)/losses from sale of tangible assets 1.6. Other (gains)/losses 2. Net Increase/decrease in operating assets (009 do 016) 2.1. Deposits with the CNB 2.2. Ministry of Finance treasury bills and CNB bills 2.3. Deposits with banking institutions and loans to financial institutions 2.4. Loans to other clients 2.5. Securities and other financial instruments held for trading 2.6. Securities and other financial instruments available for sale 2.7. Securities and other financial instruments at fair value through profit or loss which are not actively traded 2.8. Other operating assets 3. Net (increase)/decrease in operating liabilities (018 do 021) 3.1. Demand deposits 3.2. Savings and term deposits 3.3. Derivative financial liabilities and other liabilities held for trading 3.4. Other liabilities 4. Net cash flow from operating activities before income taxes paid ( ) 5. Paid income tax 6. Net inflow/(outflow) of cash from operating activities ( ) Investment activities 7. Net cash flow from investment activities (026 do 030) 7.1. Receipts from sale of / (payments to acquire) property, plant and equipment and intangible assets 7.2. Receipts from disposal of / (payments for purchase) investments in subsidiaries, associates and joint ventures 7.3. Receipts from sale of / (payments to acquire) securities and other investments held to maturity 7.4. Received dividends 7.5. Other receipts/(payments) from investment activities Financial activities 8. Net cash flow from financing activities (032 do 037) 8.1. Net increase/(decrease) in borrowings 8.2. Net increase /(decrease) of issued debt securities 8.3. Net increase /(decrease) of subordinated and hybrid instruments 8.4. Receipts from issue of capital 8.5. Payment of dividends 8.6. Other receipts/(payments) from financial activities 9. Net increase/(decrease) in cash and cash equivalents ( ) 10. Effects of foreign exchange differences on cash and cash equivalents 11. Net increase/(decrease) in cash and cash equivalents ( ) 12. Cash and cash equivalents at the beginning of the year 13. Cash and cash equivalents at the end of the year ( ) ,787,959,753 1,760,853, ,201,439 1,741,144, ,120,920,969 66,300, ,160, ,472, ,399, ,764, ,963,151-16,119, ,759, ,820, ,008,556,089-1,790,743, ,790, ,821, ,669, ,707, ,719,693,983 1,707,682, ,433,311-2,876,923, ,738,621 40,331, ,805, ,376, ,878,773 73,962, ,918, ,693, ,089, ,567, ,187,386,611 2,502,489, ,746,173,189-2,143,389, ,697, ,531, ,365,426, ,678, ,572, ,491, ,031,853,716 39,186, ,347,276 15,261, ,649,000-69,469, , ,708-19, ,960,568 84,719, ,957, ,454, ,494, ,570, , , ,060, ,481, ,754,243, ,005, ,190,692 16,061, ,664,052, ,944, ,911,613,666 14,291,603, ,575,666,127 13,758,659,959

11 Position name in the period from AOP code Share capital STATEMENT OF CHANGES IN EQUITY to Attributable to shareholders of the Bank Treasury shares Legal, statutory, capital and other reserves Retained earnings/ loss Profit/loss for the period Unrealised gain/loss from revaluation of AFS financial assets Minority interests Amounts in HRK Total Balance as at 1 January of the current period Changes in accounting policies and errors Restated balance as at 1 January of the current period ( ) Disposal of available-for-sale financial assets Changes in fair value of available-for-sale financial assets 1 Deferred tax on movements in fair value reserve of available-for-sale financial assets Other gains/losses recognised directly in equity Net gains/losses recognised directly in equity ( ) Profit / loss for the period Total recognised income and expense for the current period ( ) Increase / decrease of share capital Acquisition / disposal of treasury shares Other movements Transfer to reserves Dividends payout Distribution of profit ( ) Balance as at reporting date ( ) ,404,839, ,978,695,888 4,241,636, ,359, ,674, ,698,206, ,797, ,188, ,986, ,404,839, ,978,695,888 3,835,838, ,359, ,485, ,247,219, , ,659, ,436, ,823, ,823, ,764, ,764, ,612, ,612, , ,012, ,234, ,450,661, ,450,661, , ,450,661,094 57,012, ,507,895, ,787, , ,643, ,437, ,137, ,700, ,359, ,359, ,904, ,904, , ,359, ,904, ,404,839,100-35,787,503 3,972,624,873 3,992,431,643 1,450,661, ,498, ,030,267,449 Banks w hich prepare consolidated annual financial statements separately disclose changes in minority interests in the relevant sections of equity. The impact of obligatory adoption of IFRS 9 Financial instruments and the CNB s Decision on classification of exposures to risk classes and method to determine credit losses (Official Gazette no. 114/2017) is presented within the position Changes in accounting policies and errors.

12 NOTES TO THE FINANCIAL STATEMENTS in HRK Liquid assets Cash 2,380,277,098 2,681,858,050 Deposits w ith the CNB 15,889,040,455 14,905,788,721 Deposits w ith banking institutions 5,600,391,033 5,274,741,417 Treasury bills and CNB bills 4,351,394,625 4,240,966,219 Securities and other financial instruments held for trading 95,282,895 54,416,876 Secutiries and other financial instruments available for sale 4,025,966,691 5,770,703,586 Securities and other financial instruments w hich are not actively traded, but are designated at fair value in income statement 105,006, ,235,831 32,447,358,974 33,189,710,700 Loans to and receivables from customers Companies and similar organisations and government 40,782,053,475 41,371,941,670 Individuals and unincorporated businesses 26,847,027,925 29,325,608,346 Total gross loans 67,629,081,400 70,697,550,017 Companies and similar organisations and government (4,719,917,001) (3,935,999,921) Individuals and unincorporated businesses (1,016,018,213) (952,121,361) Impairment allow ance (5,735,935,214) (4,888,121,282) 61,893,146,186 65,809,428,734 Deposits and borrow ings Companies and similar organisations and government 28,372,320,994 27,604,421,614 Individuals and unincorporated businesses 49,177,507,809 52,827,764,787 Banks and other financial institutions 5,002,252,792 3,962,341,722 82,552,081,595 84,394,528,123 Share capital Share capital 6,404,839,100 6,404,839,100 Number of ordinary shares 320,241, ,241,955 Nominal value per share in kuna Ordinary shares carry voting rights at shareholders' meetings. The shareholder structure of the Bank is as follow s: % of ow nership % of ow nership UniCredit S.p.A Allianz SE Others As at 30 Sep 2018 the price of the Bank's shares quoted on the Zagreb Stock Exchange w as HRK (31 December 2017: HRK 52.70) per share.

13 Net interest income Previous period Current period Cumulative Quarterly Cumulative Quarterly Interest and similar income 3,396,952,980 1,083,269,225 3,040,489, ,335,678 Loans to and receivables from customers 2,338,069, ,282,160 2,072,364, ,434,207 Debt securities 82,901,207 27,684, ,501,009 41,851,696 Loans to and receivables from banks 28,133,381 15,508,741 42,066,010 16,102,780 Derivative instruments 947,848, ,794, ,557, ,946,995 Interest expense and similar charges 1,353,464, ,393,881 1,049,531, ,839,790 Current accounts and deposits from banks 26,094,834 4,957,821 11,059,207 4,069,061 Current accounts and deposits from individuals 266,209,209 83,015, ,851,230 57,993,597 Current accounts and deposits from companies and other organisations 94,522,799 29,579,628 43,494,800 12,842,870 Borrow ings 48,954,779 15,681,466 31,149,418 9,830,345 Derivative instruments 917,091, ,960, ,378, ,901,728 Other 591, , , ,189 2,043,488, ,875,344 1,990,958, ,495,888 Net fee and commission income Previous period Current period Cumulative Quarterly Cumulative Quarterly Fee and commission income 924,904, ,288, ,679, ,032,220 Domestic payment transaction related fees and commissions 387,277, ,886, ,685, ,273,160 Credit card related fees and commissions 242,352, ,040, ,208, ,568,139 Foreign payment transaction related fees and commissions 41,537,899 8,417,666 24,932,079 8,783,959 Investment management, brokerage and consultancy fees 134,176,777 36,233, ,889,269 56,736,828 Other fees and commissions 119,559,771 38,710, ,964,732 41,670,134 Fee and commission expense 125,365,794 58,464, ,049,549 73,832,059 Credit card related charges 92,825,760 47,152, ,435,176 59,119,980 Domestic payment transaction related charges 23,126,249 8,312,100 25,720,725 11,358,974 Foreign payment transaction related charges 3,190,271 1,117,119 3,256,603 1,103,969 Other fees and commissions 6,223,514 1,882,423 5,637,045 2,249, ,538, ,824, ,630, ,200,161 Impairment losses and provisions Previous period Current period Cumulative Quarterly Cumulative Quarterly Impairment losses on loans to and receivables from customers (1,041,427,403) (180,902,683) 2,879, ,403,642 Other impairment losses and provisions (79,493,566) (57,613,592) (69,179,973) (93,292,887) (1,120,920,969) (238,516,275) (66,300,662) 118,110,755 Earnings per share Previous period Current period Profit attributable to equity holders of the Bank 839,359,939 1,450,661,094 Weighted average number of ordinary shares in issue 320,233, ,954,403 Basic and diluted earnings per share (expressed in HRK per share)