HYPO UPPER AUSTRIA HYPO OBERÖSTER- REICH

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1 HYPO UPPER AUSTRIA HYPO OBERÖSTER- REICH

2 TABLE OF CONTENT 1. HYPO Oberösterreich 2. Core Markets 3. Business Development 4. Liquidity and Funding 5. Cover Pool 6. Summary 7. Contact 8. Appendix as of

3 HYPO OBERÖSTERREICH 3

4 HYPO Oberösterreich KEY DATA Founded as a special bank for mortgage business in 1891 Regional bank with 13 branches in Upper Austria and Vienna with 433 employees More than customers Key Figures Total assets in EUR Earnings before taxes in EUR 8.3 bn 5.2 mn Bank of the Federal State of Upper Austria Market leader in the public and subsidised housing sector of Upper Austria The Federal State of Upper Austria is the major stakeholder Rating S & P Long-term A+ Short-term A-1 Mortgage Covered Bond AA + 4

HYPO Oberösterreich KEY BUSINESS SEGMENTS Housing Public Institutions Corporate Institutions Private Clients Physicians & Self employed Professionals Clerical & Social Institutions Financial Markets

bank of the State of Upper Austria Financing of infrastructure investments and communities Support and Service of SMEs in Upper Austria Participation in syndicate transactions on a small scale

5 HYPO Oberösterreich KEY BUSINESS SEGMENTS Housing Public Institutions Corporate Institutions Private Clients Physicians & Self employed Professionals Clerical & Social Institutions Financial Markets Participations Real Estate Financing (subsidised and non-subsidised) Financing of subsidised owner occupied home loans as well as buy and completion loans on behalf of the state of Upper Austria Home bank of the State of Upper Austria Financing of infrastructure investments and communities Support and Service of SMEs in Upper Austria Participation in syndicate transactions on a small scale Classical private retail customer business in 13 branches Market leader in the field of resident physicians due to specialist consultants, sector-specific knowledge and expertise Focus on employed and resident physicians and freelance professions Field-expertise in clerical and social institutions Asset-liability management Own asset allocation with focus on the liquidity portfolio Subsidiaries in Leasing and Real Estate business 5

6 HYPO Oberösterreich TARGET GROUPS Proportion loans and advances to customers Housing 61.0% Public institutions 20.0% Schärding Private clients Corporate clients Physicians & Self employed Clerical & Social institutions 6.5% 6.0% 3.5% 3.0% Ried im Innkreis Vöcklabruck Wels Linz Steyr Wien Distribution Channels 433 employees Headquarter in Linz and 12 branches Direct banking 6

7 HYPO Oberösterreich OWNERSHIP STRUCTURE Strong ownership structure with the Federal State of Upper Austria as Hypo Oberösterreich s major stakeholder. HYPO Oberösterreich benefits of doing business in one of Europe s strongest economic regions. The Federal State of Upper Austria has the excellent Standard&Poor s credit rating of AA+. 3.0% 0.8% 7.0% 50.6 % Federal State of Upper Austria 38.6 % Raiffeisenlandesbank Oberösterreich AG 7.0 % Oberösterreichische Versicherung AG 3.0 % Generali Holding Vienna AG 0.8 % Employee participation 38.6% 50.6% 7

8 CORE MARKETS 8

9 Core Markets ECONOMIC DEVELOPMENT OF AUSTRIA One of the lowest unemployment rates in the Eurozone One of the highest GDPs and individual consumption ratios per capita Government debt and deficit below Eurozone average Economic Indicator Austria Eurozone (19) * 2018 * GDP 1.0 % 1.5 % 2.4 % 2.0 % 2.0 % 1.8 % Inflation (HVPI) 0.8 % 1.0 % 2.0 % 1.7 % 0.0 % 0.2 % Unemployment rate 5.7 % 6.0 % 5.7 % 5.6 % 10.9 % 10.0 % Government deficit % of GDP 1.1 % 1.6 % 0.7 % 0.5 % 2.1 % 1.5 % Government debt % of GDP 85.5 % 84.6 % 82.8 % 81.2 % 90.3 % 89.2 % * estimated Source: Statistics Austria, WIFO, Eurostat, European Commission 9

10 Core Markets ECONOMIC SITUATION OF UPPER AUSTRIA One of the strongest business regions in the heart of Europe Most industrialised state of Austria Austria s highest export rate Low unemployment rate Low public debt Excellent Standard & Poor s Rating AA+ High standard of living Upper Austria Austria Ranking GDP/regional GDP 2015 EUR 58.1 bn EUR bn 2 Unemloyment rate % 6.0 % 4 Exports 2016 EUR 33.9 bn EUR bn 1 Industrial production 2016 EUR 36.6 bn EUR bn 1 Additional gross value ( average) % % 3 Source: Statistics Austria, OeNB, Eurostat, WKO-Statistics, WIFO März

11 Core Markets REAL ESTATE MARKET Constant development of real estate prices in Austria of +7.3% in 2016 Federal States get closer to Vienna levels Fundamental indicator for residential property prices of the Oesterreichische Nationalbank (OeNB) Q overvalued by 6.0 % for Austria and overvalued by 19.8 % for Vienna Housing demand in Upper Austria slightly increasing on a high level Net demand of appartments around Population growth of 0.5 % p.a. expected House Price Index 2010 = Austria total Austria ex Vienna Vienna Eurozone Source: OeNB, Eurostat, normalized values 11

Core Markets HOUSING BUSINESS Subsidies for Residential Buildings

subsidisation dominating in Austria Individual subsidisation is

buildings subsidies schemes Projects and Buildings Direct Loans of

12 Core Markets HOUSING BUSINESS Subsidies for Residential Buildings Residential building subsidies in Austria Projects/building subsidisation dominating in Austria Individual subsidisation is necessary in order to enable affordable living for households with a low income. HYPO Oberösterreich only provides loans under the projects and buildings subsidies schemes Projects and Buildings Direct Loans of the Federal States of Austria Annuity-/interest grants for bank loans Direct Individuals Indirect e.g. via tax benefits Housing Benefits 12

Core Markets RESIDENTIAL BUILDING SUBSIDIES HYPO Oberösterreich exclusively manages all residential subsidies granted by the Federal state of Upper Austria. Volume of subsidies totals around EUR 3 bn.

13 Core Markets RESIDENTIAL BUILDING SUBSIDIES HYPO Oberösterreich exclusively manages all residential subsidies granted by the Federal state of Upper Austria. Volume of subsidies totals around EUR 3 bn. Main targets Create ownership Ensure affordable living Combine living and quality Energy efficient building Exclusive execution by HYPO Oberösterreich of Owner occupied homes Condominiums Buy and completion Average energy efficiency indicator in kwh per m² and year Source: OÖ Wohnbaubericht

14 Cover Pool EXAMPLE HOME-OWNER SUBSIDY Eligibility criteria Applicant of subsidy is owner of the object Object is the primary residence of the owner Owner s income matches the income limit criteria Subsidy Low energy house* from EUR 50,000 to EUR 53,000 Ultra low energy house EUR 61,000 Add-on per child EUR 12,000 Barrier-free building EUR 3,000 With ecological insulation EUR 8,000 Matching the constructional and energy-efficiency restrictions are indispendable conditions Subsidised loans with floating rate interests and 30 years maturity or Fixed rate interests and 20 years maturity The subsidy combines an interest rate subsidy and an interest rate cap for the client by the State of Upper Austria * depending on level of energy efficiency 14

15 BUSINESS DEVELOPMENT 15

Business Development IFRS TOTAL ASSETS 30.06.

16 Business Development IFRS TOTAL ASSETS EUR 8,334 MN Other assets Investments in companies accounted at equity Cash reserve Financial assets ,000 8,000 7,000 6,000 5, ,237 1,847 Other liabilites Subordinated capital Equity Trading assets Loans and advances to credit institutions Loans and advances to customers 5,647 4,000 3,000 2,000 1, ,562 Liabilities to financial institutions Liabilities to customers Liabilities evidenced by certificates 16

Business Development TOTAL ASSETS IFRS 10,000 8,000 6,000 4,000 2,000 0 in mn 9,401 8,934 8,757 8,334 2014 2015 2016 H1 2017 Regulatory ratios Liquidity coverage Ratio 179.

17 Business Development TOTAL ASSETS IFRS 10,000 8,000 6,000 4,000 2,000 0 in mn 9,401 8,934 8,757 8, H Regulatory ratios Liquidity coverage Ratio % Net stable funding ratio % Leverage ratio 5.1 % Slight decline in total assets due to maturity of bonds with state guarantee Continuous growth in all core markets 17

Business Development CONSOLIDATED CAPITAL ACCORDING TO CRR 2016 H1 2017 Risk weighted assets 3,102 3,057 Common equity tier1 389 396 Common equity tier1 ratio 12.5 % 13.

18 Business Development CONSOLIDATED CAPITAL ACCORDING TO CRR 2016 H Risk weighted assets 3,102 3,057 Common equity tier Common equity tier1 ratio 12.5 % 13.0 % Tier 2 capital Total capital Total capital ratio in % 14.8 % 15.1 % Further increase of common equity tier1 through retained earnings No intra-annual crediting of profits in mn 0 16% 12% 8% 4% in% 0% H CET1 Total capital CET1 ratio in % Total capital in % 18

Business Development CONSOLIDATED RESULTS IFRS earnings before taxes 40 34.4 32.3 34.9 30 32.

2 Earnings before taxes Interest Income Net interest income marginally under last year Net

19 Business Development CONSOLIDATED RESULTS IFRS earnings before taxes Development components of results Earnings before taxes Interest Income Net interest income marginally under last year Net commission result moderately improved Difference in trading results due to tightening of own credit spread 19

20 Business Development EXPOSURE BY BUSINESS SEGMENTS Portfolio as of Financial markets* Leasing Clerical&Social institutions Physicians&Professionals Private clients Corporate clients Public sector clients Home building society Subsidised housing 100% 80% 60% 40% 20% 2,431 2,063 2,161 1,766 1,550 1,720 1,460 1,564 1,177 1,250 1,258 1,311 2,615 2,589 2,495 2,458 0% Total H exposure 9,080 mn 8,874 mn 8,725 mn 8,424 mn Continuous growth in the target market of housing or mortgage-backed financing Decline in the field of financial markets resulting from maturities of state-guaranteed bonds and the connected hedging transactions and short-term prefunding. * Financial markets incl. LCR-portfolio and derivatives 20

BBB+ BBB u. BBB- < BBB 38.1% 5.8% 1.6% 9.5% 19.8% More than 30 % A+ rating or better 94.

21 Business Development QUALITY CREDIT PORTFOLIO Development NPL-ratio 5% 4% 3% 2% 1% 0% 4.40% 4.30% 0.61% 1.38% 3.50% 0.30% 0.29% H HYPO OOE Ø AT Breakdown by rating (S&P) AAA AA A+ A u. A- u. BBB+ BBB u. BBB- < BBB 38.1% 5.8% 1.6% 9.5% 19.8% More than 30 % A+ rating or better 94.2 % investmentgrade rating NPL-ratio 0.29 % Impairment coefficient of 0.17 % 25.3% * Quelle: OeNB Financial Stability Report 33; June

22 LIQUIDITY AND FUNDING 22

Liquidity and Funding REFINANCING STRATEGY Diversified funding mix /

porfolio of customer deposits Tax-privileged housing bonds for

pools and establishment of additional new cover assets Refinancing

2017 Tax-privileged housing bonds Public covered bonds Mortgage

23 Liquidity and Funding REFINANCING STRATEGY Diversified funding mix / matched asset liability profile/ balanced maturity profile Stable porfolio of customer deposits Tax-privileged housing bonds for continuous long-term retail funding Utilisation of existing cover pools and establishment of additional new cover assets Refinancing structure as of Tax-privileged housing bonds Public covered bonds Mortgage covered bonds Senior bonds Promissory notes Subordinated bonds Bank deposits Customer deposits 16.9% 22.3% 1.1% 3.0% 12.8% 11.9% 6.4% 25.6% 23

24 Liquidity and Funding MATURITY PROFILE CAPITAL MARKETS FUNDING Public guaranteed funding maturing until September 2017 Liquidity reserve generated through pre-funding over the last years Smoothing of maturity profile with buy-backs and short-term investments Balanced maturity profile after , Maturity EUR 300mn subbenchmark mortgage covered bond 24

15 years Plain Vanilla, (Sub)Benchmark Public covered bonds* EUR max.

25 Liquidity and Funding INSTRUMENTS AND PROGRAMS Programs Angebotsprogramm für Strukturierte Schuldverschreibungen EUR 1 bn Debt Issuance Programme (DIP) Stand alone documentation Instrument Currency Maturity Structures Mortgage covered bonds* EUR max. 15 years Plain Vanilla, (Sub)Benchmark Public covered bonds* EUR max. 30 years Plain Vanilla, Callables Senior unsecured* EUR, FX on request max. 40 years Plain Vanilla, Callables, Zeros Promissory notes EUR, FX on request max. 40 years Plain Vanilla, Callables, Zeros * also registered 25

26 COVER POOL 26

27 Cover Pool OVERVIEW COVER POOL HYPO Oberösterreich is issuing highest quality covered bonds for more than 125 years High quality standards and strict internal controls on creditworthiness are de facto eliminating the risk of defaults No derivatives and non-performing loans in the cover pool Covered bonds are issued on basis of the very strict Pfandbrief Act (Pfandbriefgesetz) Mortgage cover pool Cover assets EUR 2,829 mn Covered bonds EUR 1,874 mn Overcollateralisation EUR 955 mn 51 % Public cover pool Cover assets EUR 708 mn Covered bonds EUR 466 mn Overcollateralisation EUR 243 mn 52 % Data as of

28 Cover Pool LEGAL FRAMEWORK AUSTRIA Austrian covered bond law Pfandbriefe (Mortgage and Public Pfandbriefe) Fundierte Bankschuldverschreibungen (Covered Bonds) Hypothekenbankgesetz (Mortgage Banking Act of 1899) Pfandbriefgesetz (Pfandbrief Act of 1927) Gesetz betreffend Fundierte Bankschuldverschreibungen (Covered Bond Act of 1905) Erste Group Bank Bank Austria Österreichische Landes- Hypothekenbanken Hypo Oberösterreich BAWAG Kommunalkredit Raiffeisen Volksbank Wien AG Since 1927 Pfandbriefe are issued on the basis of the Pfandbrief Act in accordance with our articles of association Source: Pfandbriefforum 28

29 Cover Pool MORTGAGE COVER POOL Cover assets Covered bonds Cover assets EUR 2,829 mn EUR 1,874 mn Bonds outstanding Number 54,154 pieces 120 pieces Number Ø Size ca. EUR 52,240 ca. EUR 15.6 mn Ø Size Ø Duration 9 years 10.5 years Ø Duration Overcollateralisation in % 51 % EUR 955 mn Max. LTV in % 60 % Weighted Average LTV 31.8 % Country 100 % Austria Investors predominantly from Germany and Austria Nominal Overcollateralisation Country Currency 100 % in EUR 100 % in EUR Currency Property type 100 % residential Data as of

30 Cover Pool MORTGAGE COVER POOL Regional distribution of assets in Austria Cover assets by volume 1.0% 1.0% 1.0% 2,500 Vienna Lower Austria 2,000 1,500 2,247 Upper Austria 1,000 Styria % 0 in mn Data as of

Cover Pool MORTGAGE COVER POOL Development 3,500 3,000 2,500 2,000 1,500 1,000 500 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.

31 Cover Pool MORTGAGE COVER POOL Development 3,500 3,000 2,500 2,000 1,500 1, % 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% Maturity profile 1,400 1,200 1, in mn June * 2018* 0.0% 0 in mn up to 12M 1-3 years 3-5 years 5-10 years >10 years Cover assets Covered bonds OC Cover assets Covered bonds Data as of * expected without new issues 31

Cover Pool SUBBENCHMARK MORTGAGE COVERED BOND Terms and Conditions Maturity 7 years

203% (MS +8BP) Distribution by geography 5% 2% Austria Germany Nordics Italy Asia

2016 Announcement of maturity and size 20.10.

32 Cover Pool SUBBENCHMARK MORTGAGE COVERED BOND Terms and Conditions Maturity 7 years Size EUR 300 bn Cupon 0.125% Yield 0.203% (MS +8BP) Distribution by geography 5% 2% Austria Germany Nordics Italy Asia France 13% 6% 31% 43% Highlights Announcement of maturity and size books opened at guidance of ms+10 BP spread was fixed at ms+8bp orderbook closed after just 1 hour with EUR 830 bn and more than 60 investors Distribution by investor type 12% Banks Asset Manager Central banks Insurance 23% 24% 41% 32

33 Cover Pool PUBLIC COVER POOL Cover assets Covered bonds Cover assets EUR 708 mn EUR 466 mn Bonds outstanding Number 279 pieces 24 pieces Number Ø Size ca. EUR 2.5 mn ca. EUR 19.4 mn Ø Size Ø Duration 11.7 years 10.6 years Ø Duration Overcollateralisation in % 52 % EUR 243 mn Country 100 % Austria Investors predominantly from Germany and Austria Nominal Overcollateralisation Country Currency 100 % in EUR 100 % in EUR Currency Data as of

34 Cover Pool PUBLIC COVER POOL Maturity profile 100% Austrian cover assets No foreign currencies No derivatives in the cover pool EUR 243 mn potential for new covered bond issues in mn up to 12M 1-3 years 3-5 years 5-10 years >10 years Cover assets Covered bonds Data as of

Cover Pool PUBLIC COVER POOL Cover assets by

federal states 200 Guaranteed by municipals 83.

35 Cover Pool PUBLIC COVER POOL Cover assets by debtor and guarantor Cover assets by volume Federal state 1.7% 2.9% 11.7% Municipals Guaranteed by federal states 200 Guaranteed by municipals 83.7% in mn Data as of

36 SUMMARY 36

37 Summary 125 years of experience Bank of the Federal State of Upper Austria Regional bank in Austria s economically strongest province Conservative and solid business strategy Stable economic performance Best rated universal bank of Austria S&P A+ Prime C Sustainability Rating by Oekom S&P AA+ rated mortgage cover pool with outstandingly high granularity 5th largest mortgage cover pool in Austria 37

38 CONTACT 38

39 Contact HYPO Oberösterreich (Oberösterreichische Landesbank AG) Landstraße 38, 4010 Linz Tel / 732 / Treasury & Asset Liability Management Christoph Zoitl Head of Treasury & Asset Liability Management Tel / 732 / christoph.zoitl@hypo-ooe.at Nicole Kimmel Andreas Lehner Tel / 732 / Tel / 732 / nicole.kimmel@hypo-ooe.at andreas.lehner@hypo-ooe.at 39

40 APPENDIX 40

41 Appendix DISCLAIMER All rights reserved for Hypo Oberösterreich. This document was created by Hypo Oberösterreich exclusively for the purpose of giving corporate presentation by Hypo Oberösterreich. This presentation may only be shown to business customers and institutional clients. This document may not be changed or shared with third parties without the express consent of Hypo Oberösterreich. Anyone in possession of this information or document is obliged to learn about the legal regulations concerning possession and sharing of such information and has to comply with those regulations. This presentation may not be shared with or transmitted to any country with laws restricting the sharing or transmission of such information. This presentation is exclusively for general information purposes. It does not represent an offer to conclude an agreement on the provision of investment advisory services or the purchase of securities. Where this presentation cites information not originating from Hypo Oberösterreich or not produced at its request, such information has been compiled from sources deemed trustworthy without being verified. For this reason, Hypo Oberösterreich assumes no guarantee that such information is complete or correct. Hypo Oberösterreich assumes no responsibility or liability whatsoever for expenses, losses or damage from or in connection with the use of all or part of the information contained in this presentation. This presentation may contain forward-looking statements concerning future expectations and other forward-looking statements or information about future predictions of developments based on current planning, opinions and/or assumptions. Such statements are made subject to known or unknown risks and uncertainties that are generally difficult to predict and beyond the control of Hypo Oberösterreich. This may result in material differences between the results, performance and/or events implied in these statements and the actual results posted in the future. Hypo Oberösterreich assumes no obligation to publicly update or revise its forward-looking statements on the basis of new information, future events or for other reasons. 41

HYPO UPPER AUSTRIA HYPO OBERÖSTER- REICH

HYPO UPPER AUSTRIA HYPO OBERÖSTER- REICH TABLE OF CONTENT 1. HYPO Oberösterreich 2. Core Markets 3. Business Development 4. Liquidity and Funding 5. Cover Pool 6. Summary 7. Contact 8. Appendix as of 31.12.2016