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 8.8 bn 51.9 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

5 HYPO Oberösterreich TARGET GROUPS Housing - private and public sector Public institutions Corporate clients Clerical and social institutions Physicians and self-employed professionals Private clients Schärding Ried im Innkreis Wels Linz Wien Steyr DISTRIBUTION CHANNELS Vöcklabruck 433 employees 13 branches Online banking 5

HYPO Oberösterreich OWNERSHIP STRUCTURE Strong ownership structure with the Federal State of Upper Austria as Hypo Oberösterreich s major stakeholder.

6 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% 6

7 CORE MARKETS 7

8 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 % 2.0 % 1.8 % 2.0 % 1.6 % Inflation (HVPI) 0.9 % 0.9 % 1.7 % 1.7 % 0.0 % 0.2 % Unemployment rate 5.7 % 6.0 % 5.9 % 5.9 % 10.9 % 10.3 % Government deficit % of GDP 1.1 % 1.6 % 1.2 % 0.7 % 2.1 % 1.5 % Government debt % of GDP 85.5 % 84.6 % 90.3 % 89.2 % * estimated Source: Statistics Austria, WIFO, Eurostat, European Commission 8

9 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 % 5.7 % 4 Exports 2015 EUR 33.5 bn EUR bn 1 Industrial production 2015 EUR 36.9 bn EUR bn 1 Additional gross value ( average) % % 4 Source: Statistics Austria, OeNB, Eurostat, WKO-Statistics, WIFO June

10 Core Markets REAL ESTATE MARKET Constant development of real estate prices in Austria (excl. Vienna) above Eurozone Federal States get closer to Vienna levels Fundamental indicator for residential property prices of the Oesterreichische Nationalbank (OeNB) Q overvalued by 4.8 % for Austria and overvalued by 18.6 % 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 10

Core Markets HOUSING BUSINESS Subsidies for Residential Buildings

subsidisation dominating in Austria Individual subsidisation is

buildings subsidies schemes Projects and Buildings Direct Loans of

11 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 11

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. 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

13 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 Matching the constructional and energy-efficiency restrictions are indispendable conditions The subsidy combines an interest rate subsidy and an interest rate cap for the client by the State of Upper Austria 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 Interest rate cap Annuity Year % 1.50 % Year % 3.00 % Year % 5.00 % Year % 7.00 % Year % 9.50 % * depending on level of energy efficiency 13

14 BUSINESS DEVELOPMENT 14

Business Development IFRS TOTAL ASSETS 31.12.

000 7.000 203 80 430 1.332 Other liabilites Subordinated capital Financial assets Trading assets 889 6.000 5.000 4.000 1.

15 Business Development IFRS TOTAL ASSETS EUR 8,575 MN Other assets Investments in companies accounted at equity Cash reserve Other liabilites Subordinated capital Financial assets Trading assets Equity Liabilities to financial institutions Loans and advances to credit institutions Loans and advances to customers Liabilities to customers Liabilities evidenced by certificates 0 15

Business Development TOTAL ASSETS IFRS 10.000 8.000 6.000 4.000 2.000 0 in mn 9.401 8.614 8.934 8.

16 Business Development TOTAL ASSETS IFRS in mn Regulatory ratios Liquidity coverage Ratio % Net stable funding ratio 98.8 % Leverage ratio 4.9 % Stable development of total assets Continuous growth in all core markets 16

Business Development CONSOLIDATED CAPITAL ACCORDING TO CRR 2015 2016 800 16% Risk weighted assets 3,026 3,102

5 % 600 400 12% 8% Tier 2 capital 76 69 Tier 2 in % 2.5 % 2.2 % Total capital ratio in % 13.5 % 14.

17 Business Development CONSOLIDATED CAPITAL ACCORDING TO CRR % Risk weighted assets 3,026 3,102 Common equity tier Common equity tier1 ratio 11.0 % 12.5 % % 8% Tier 2 capital Tier 2 in % 2.5 % 2.2 % Total capital ratio in % 13.5 % 14.7 % in mn % 0% in% Further increase of common equity tier1 through retained earnings CET1 Total capital CET1 ratio in % Total capital in % 17

Business Development CONSOLIDATED RESULTS IFRS earnings before taxes 60 51.9 50 40 30 30.1 21.0 31.0 20 5.

9 Moderate increase of interest income Income from reversal of risk provisions Trading results from valuation of own

18 Business Development CONSOLIDATED RESULTS IFRS earnings before taxes in mn * Development components of results Moderate increase of interest income Income from reversal of risk provisions Trading results from valuation of own credit rating Endowments for resolution fund and deposit guarantee in other comprehensive income * result with/without EUR 15.5 mn HETA-risk provisions 18

19 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% 90% % % 60% 50% % 30% % 10% % Total exposure 8,307 mn 9,080 mn 8,874 mn 8,725 mn Constant rate of 30% in our core market of subsidised housing Continuous growth in public utility housing enterprises Stable development in all our other business segments * Financial markets incl. LCR-portfolio and derivatives 19

Business Development QUALITY CREDIT PORTFOLIO Development NPL-ratio 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% 4.10% 4.40% 4.30% 0.73% 0.61% 1.38% 0.41% 4,00% 0.30% 2013 2014 2015 2016 incl.

20 Business Development QUALITY CREDIT PORTFOLIO Development NPL-ratio 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% 4.10% 4.40% 4.30% 0.73% 0.61% 1.38% 0.41% 4,00% 0.30% incl. Heta without Heta Ø AT Breakdown by rating (S&P) AAA AA A+ A u. A- u. BBB+ BBB u. BBB- < BBB 37.8% 6.4% 1.4% 9.6% 18.6% 29.5 % A+ rating or better 93.6 % investmentgrade rating NPL-ratio 0.30 % Impairment coefficient of 0.19 % 26.2% * Quelle: OeNB Financial Stability Report 32; December

21 LIQUIDITY AND FUNDING 21

Liquidity and Funding REFINANCING STRATEGY Diversified funding mix / matched asset liability

housing bonds for continuous long-term retail funding Utilisation of existing cover pools and

2016 Tax-privileged housing bonds Public covered bonds Mortgage covered bonds Senior bonds

22 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 17.5% 18.9% 1.1% 3.5% 14.8% 12.9% 5.2% 26.1% 22

23 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

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

24 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 24

25 COVER POOL 25

26 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 2,778 mn Covered bonds EUR 1,982 mn Overcollateralisation EUR 796 mn 40 % Public cover pool Cover assets EUR 716 mn Covered bonds EUR 398 mn Overcollateralisation EUR 318 mn 80 % Data as of

27 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 27

28 Cover Pool MORTGAGE COVER POOL Cover assets Covered bonds Cover assets EUR 2,778 mn EUR 1,982 mn Bonds outstanding Number 54,339 pieces 124 pieces Number Ø Size ca. EUR 51,120 ca. EUR 16 mn Ø Size Ø Duration 9.1 years 10.8 years Ø Duration Overcollateralisation in % 40 % EUR 796 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

Cover Pool MORTGAGE COVER POOL Regional distribution of assets in Austria 0.6% 0.7% 0.7% Cover assets by volume 2.

29 Cover Pool MORTGAGE COVER POOL Regional distribution of assets in Austria 0.6% 0.7% 0.7% Cover assets by volume Vienna Lower Austria Upper Austria Styria 98.0% in mn Data as of

30 Cover Pool MORTGAGE COVER POOL Development Maturity profile in mn * 2018* 0 in mn up to 12M 1-3 years 3-5 years 5-10 years >10 years Cover assets Covered bonds Cover assets Covered bonds Data as of * expected without new issues 30

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

203% (MS +8BP) Distribution by geography Austria Germany Nordics Italy Asia France 13% 6% 31%

m. spread was fixed at ms+8bp 10:00 a.m. orderbook closed after just 1 hour with EUR 830 bn

31 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 Austria Germany Nordics Italy Asia France 13% 6% 31% 5% 2% 43% Highlights Announcement of maturity and size :00 a.m. books opened with a guidance of ms+10 BP 9:45 a.m. spread was fixed at ms+8bp 10:00 a.m. 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% 31

32 Cover Pool PUBLIC COVER POOL Cover assets Covered bonds Cover assets EUR 716 mn EUR 398 mn Bonds outstanding Number 282 pieces 21 pieces Number Ø Size ca. EUR 2.5 mn ca. EUR 18.9 mn Ø Size Ø Duration 11.9 years 8.4 years Ø Duration Overcollateralisation in % 80 % EUR 318 mn Country 100 % Austria Investors predominantly from Germany and Austria Nominal Overcollateralisation Country Currency 100 % in EUR 100 % in EUR Currency Data as of

new covered bond issues 500 400 300 200 100 0 in mn up to 12M 1-3 years 3-5

33 Cover Pool PUBLIC COVER POOL Maturity profile 100% Austrian cover assets No foreign currencies No derivatives in the cover pool EUR 318 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 Guaranteed by municipals 83.

34 Cover Pool PUBLIC COVER POOL Cover assets by debtor and guarantor Cover assets by volume State Federal state 0.0% 2.0% 3.0% 12.0% Municipals 300 Guaranteed by federal states Guaranteed by municipals 83.0% in mn Data as of

35 SUMMARY 35

36 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 36

37 CONTACT 37

38 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 38

39 APPENDIX 39

40 Appendix BALANCE SHEET 40

41 Appendix INCOME STATEMENT 41

42 Appendix PORTFOLIO AS OF Overview Exposure total EUR 930 mn Public EUR 486 mn Banks EUR 290 mn Covered EUR 112 mn Others EUR 42 mn LCR Assets Level 1 EUR 399 mn Level 2A EUR 11 mn Portfolio by Rating AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- <BBB- 17.1% 16.7% 1.0% 0.3% 3.5% 4.8% 4.7% 8.2% 11.9% 5.4% 26.4% 4.1% 4.7% 2.9% 7.1% 5.9% 5.1% 3.0% Austria Germany France Netherlands Italy Rest Eurozone Rest EU28 Others 67.3% Portfolio by country risk 42

43 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. 43

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 30.06.2017