#1VUB COVERED BONDS INVESTOR PRESENTATION Bratislava, March 2021 This material is addressed to and intended to be used by a targeted group of recipients that fall within the category of qualified investors as defined pursuant to the Regulation (EU) 2017/1129 of The European Parliament and of The Council on the Prospectus. Bank of INTESA SANPAOLO VÚB BANKA#2HIGHLIGHTS A National Champion in a Fast Growing Economy Slovakia is an A-rated country and one of the most open economies among the members of the core Eurozone VUB is the second-largest banking group in Slovakia. As of Dec20, VUB Bank had a strong market share in all the key areas: total assets (20.4%), gross loans (21.1%), housing loans (24.1%), deposits (19.2%), asset management (17.0%) and branches (18.3%). Its significant sales force is based on 197 domestic branches and a foreign branch office in the Czech Republic Strong Credit Rating based on good financial position and good profitability VUB is rated A2 by Moody's, based on its good economic and financial figures: as of Dec20 total assets amounted to EUR 18.7 bln. Net Profit as of Dec20 was EUR 85 mln Robust Capital Structure VUB Group has a strong capital structure compared to its peers, with a CET1 ratio at 16.7% and Total Capital Ratio of 18.8% as of Dec20, well above regulatory requirements Solid growth in Loans to Customers driven by mortgage activity As of Dec20, 82.1% of Retail Loans was represented by mortgages: number of housing loans were 132,385 (+5.3% YoY) and housing loans outstanding amounted to EUR 7.8 bln (+13.1% YoY) Market Leader in the Covered Bond Market VUB has the biggest mortgage bonds portfolio in Slovakia with a 100% Residential Real Estate mortgage pool. As a result, it has the largest Covered Bond book in the sector (18.3% of its liabilities vs. 4%-10% reported by its top three peers) VUB has EUR 3.4 bln of outstanding covered bonds (the largest amount outstanding in Slovakia), which are rated Aa2 by Moody's. Mortgage bonds issued before 2018 were transferred to the new Covered Bond Programme according to the new Slovak legislation on covered bonds Strong Foreign Shareholder Support VUB has a strong shareholder support from Intesa Sanpaolo, one of the leading European groups with a worldwide network of 6,314 branches, approx. 21.8 million clients, and a strategic presence in the CEE 2#3CONTENT Slovakia at a Glance Intesa Sanpaolo Group VUB at a Glance VUB's Mortgage activity VUB's Covered Bonds 3#4Geographical Socio-Economic info Memberships SLOVAKIA COUNTRY'S ESSENTIALS Basic information Official Name: Slovak Republic (Slovenská republika) Area: 49,037 km² Population: 5.5 million Capital: Bratislava (433,000) Other cities: Košice (239,000), Prešov (89,000) Official Language: Slovak Currency: Euro (EUR) since January 1, 2009 Ethnic groups: • 80.7% Slovaks • 8.5% Hungarians • 10.8% non-identified, Roma, Czechs, Rusyns... Slovakia is a member of: ⚫ European Union, since May 2004 • NATO, since March 2004 Euro area, since January 2009 Slovakia European Union (Euro Zone members) European Union (Non Euro Zone members) Political framework Form of State: Parliamentary Republic Political Structure: President, unicameral National Council of the Slovak Republic with 150 seats serving four-year term Elections: last ones held in February 2020: Four parties' coalition: • OĽaNO with 53/150 seats • Sme rodina with 17/150 seats • Sloboda a Solidarita with 13/150 seats • Za ľudí with 12/150 seats President: Ms. Zuzana Čaputová Prime Minister: Mr. Igor Matovič Governor of the Slovak National Bank: Mr. Peter Kažimír 4 Structure Parliament Relevant persons#5ECONOMY - SMALL, FAST CONVERGING... Real GDP growth (% y/y) → A2/A+/A (Moody's/S&P/Fitch) credit ratings comfortable in investment grade EUR 94.2 bln economy (as of 2019). Decline of real GDP in the pandemic year 2020 less steep than in Eurozone (-5.2%) and also less steep than in 2009 GDP per capita in euro terms increased by 46% in the past decade, since 2000 it more than quadrupled (from EUR 4,100 to EUR 17,300 in 2019) GDP per capita in purchasing power standard (PPS) increased from 43% of former EU15 average in 2000 to 69% in 2019 GDP per capita in PPS (EU15=100; in %) 11% 9% 7% 5% 3% 1% -1% -3% -5% -7% 1998 2000 2002 2004 2006 2008 2010 2012 2014 Slovakia Euro Area 2016 2018 2020 Slovak GDP by components (p.p. contribution and % y/y change) 7% 5% Change 4.0% 3.0% Country 2000 2017 2018 2019 '19/'00 3% Slovakia 43 66 68 69 26 1% Czech Rep. 62 83 84 85 23 -1% Hungary 45 63 66 68 23 -3% Poland 41 64 66 68 27 -5% Germany 104 114 114 113 9 -7% Austria 112 117 119 119 7 2017 2018 EU 27 86 93 93 94 8 Source: Ameco database, retrieved on March 5, 2021, Slovak Stats Office Consumption Net exports Fixed investments GDP total 2019 2.3% 2020 Inventories & Other 5 -5.2% -5.2% -6.8%#63% 1% -1% -3% -5% -7% -9% 6% 5% 4% 3% 2% 1% 0% -1% ...WITH STABLE MACROECONOMIC ENVIRONMENT 2005 2006 2007 Inflation (% y/y) Unemployment (%, all-economy) 15% Slovakia, Inflation, Total Euro Area, HICP, All-Items 13% 11% 2008 2009 2010 Current account balance (% GDP) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2005 Source: Eurostat, Slovak Stats Office 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 9% 0.7% 0.9% 7% 10% 8% 6% -2.7% 4% 2% 0% -2% 5% 2005 2006 2007 2008 2009 2010 2011 2012 2013 Disposable income (% y/y, nominal) 2014 2015 2016 2017 2018 2019 2020 2006 2007 2008 2009 2010 2011 2012 им 2013 2014 2015 2016 2017 2018 2019 2020 6 4.2% ⚫Slovakia Euro Area 8.3% 7.0%#780% ECONOMY IS EXPORT-ORIENTED, CLOSELY LINKED TO GERMANY → Slovakia is one of the most opened economies in the world. Exports and imports of goods and services relative to GDP amounted together to 190% (as of 2018), the highest level among the CE-4 countries → 80% (as of 2019) of Slovak exports go to the EU27, the highest share among EU members → Germany is Slovakia's most important trading partner. It directly buys 22% of Slovak exports of goods and probably additional similar share indirectly (being a key importer of Slovakia's other key trading partners) Share of export to EU in total exports (% share, as of 2019) Structure of Slovak exports by countries (% share, as of 2019) 70% 60% 50% 40% 30% 20% 10% 0% Ireland Cyprus Italy France Greece Germany Sweden Denmark Malta Finland Lithuania Spain Latvia Bulgaria Belgium Netherlands Source: Eurostat, Slovak Stats Office Croatia Austria Estonia Portugal Slovenia Romania Poland Hungary Czechia Luxembourg Slovakia 80.0% Others 30.7% Asia 4.9% UK 4.9% AT HU FR 5.6% 6.4% 7.0% PL 7.5% 7 DE 22.0% CR 11.0%#8FISCALLY, SLOVAKIA IS IN A GOOD SHAPE... Slovakia meets Maastricht criteria: → 2019 deficit 1.3% and debt of 48% of GDP → COVID-19 clearly hit fiscal plans big, but less than feared early in the crisis (deficit rose to 7% of GDP an debt slightly over 61%, resp.) In 2011, Slovakia adopted a constitutional law preventing debt to breach 60% (by 2027 only 50%) of GDP and established an independent fiscal watchdog. COVID-19 pandemic is seen to derail these plans only temporarily Public finance balance (% GDP) 200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% Public debt in comparison (% GDP, as of 3Q 2020) Estonia Bulgaria Luxembourg Czechia Sweden Norway Denmark Romania Latvia Lithuania Malta Netherlands 60.8% 97.3% Poland Slovakia Ireland Finland Germany Hungary Slovenia Austria Croatia Belgium Euro area Public debt development (% GDP) Spain 1% 0% -1% -2% -3% -2.9% -4% -3.6% -5% -6% -7% -8% -9% 2005 2006 2007 Source: Eurostat, European Commission -2.1% 2.5% 2008 2009 2010 France Cyprus Portugal Italy 65% 61.3% 60% -0.9% 1.0% 55% -1.4% 50% -2.6% -2.9% -3.1% -4.3%-4.4% -7.5% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E -2.7% 45% 41.0% 40% 34.7% 36.4% 35% 31.4% 30.3% 30% 28.6% -7.0% 25% 20% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 51.8% 54.7%53.6% ---51.9% 52.4% 51.7% 49.9% 48.5% 43.4% 2018 2019 0° 2020E Greece#9Source: Bloomberg, Ardal ...WHICH IS APPRECIATED BY INVESTORS Slovakia is an A-rated country and one of the most interconnected economies in the Eurozone → In 2018, Slovak government was the first in CEE to successfully issue a 50-year bond → Slovak yields copy German with a tight spread, which rose only temporarily amidst COVID-19 uncertainty in the Spring 2020 Most recent rating action was by S&P, which on January 23, 2021 improved the outlook on the A+ Slovak sovereign from negative to stable Evolution of Slovakia's rating 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% 2017 2018 Yields development (10y maturity, % p.a.) Slovakia Germany spread (rhs) 2019 Yields in comparison (10y maturity, % p.a., as of February 24, 2021) A+ 3.0% 2.5% A 2.0% A- 1.5% BBB+ 1.0% S&P BBB 0.5% -Moody's 0.0% BBB- Fitch -0.5% -0.2% BB+ BB BB- Germany Netherlands Slovakia Finland Belgium Austria France Lithuania Ireland Slovenia Latvia Portugal Cyprus Spain Italy Poland Czechia Hungary 2020 2021 140 130 120 110 100 90 70 50 40 30 OBRE 20#10BANKING SECTOR IS STABLE, WELL CAPITALIZED AND PROFITABLE → Funding of banks in Slovakia is dominated by retail and corporate deposits, LTD is 104% → Gross NPLs in Slovakia are below-EU, CAR is above 17% Slovak banks are profitable, albeit in recent years profits came under pressure due to bank levy, intense competition and margin pressure → In 2020, Bank Levy was increased from 0.20% of the base (all liabilities ex equity) to 0.40%, but amidst the COVID-19 pandemic, new government agreed to scrap the levy from July 1, 2021, finally ending this competitive disadvantage ROE (%, as of 3Q 2020) Principal funding sources of Slovak banking sector (%, as of 2020) other equity 10.2% issued bonds 1.5% 7.7% interbank deposits 7.3% 2.5% public deposits 70.8% private deposits NPL (%, as of 3Q 2020) 18% 8% 16% 7% 14% 6% 12% 10% 5% 8% 6.0% 4% 2.8% 6% 3% 2.3% 4% 2.5% 2% 2% 0% 1% -2% 0% CENTOS Source: NBS, EBA 10#11HOUSEHOLD DEBT IS RISING, YET DEBT SERVICE REMAINS MANAGEABLE Slovak household debt has been for years increasing at the fastest clip in the EU, debt relative. to income and GDP is above CEE countries, but remains below Western EU countries (except Italy) Thanks to rising income and low interest rates, debt service nevertheless remains at a manageable levels and NPLs were historic low in early 2020 and seen contained also post the pandemic and end of loan moratoria prevailing till March 2021 Debt service to income Household debt to income (%, change 2019/2009, stock as of 2019) 33.0%Slovakia 21.3% Belgium 19.3% Sweden Romania 24.0% Latvia 32.2% Hungary 33.3% 18.2% France Lithuania 36.4% 16.8% Finland Slovenia 44.4% 9.1% Poland Croatia 53.8% Poland 8.4% Czechia 57.7% Czechia 58.9% 0.9% Italy Italy 61.6% -0.3% Slovenia Estonia 66.3% -0.9% Austria Slovakia 69.6% -4.0% Euro area Austria 82.7% (%, HFCS survey 2017, households with debt payments) -6.2% Germany Greece 82.9% -7.0% Croatia Germany 84.7% -9.1% Romania Portugal 92.6% 25% -9.1% Lithuania Spain 93.0% -9.9% UK Euro area 93.8% 20% -25.1% Cyprus France 98.1% -27.8% Estonia 15% 13.0% 11.4% 10% Belgium 104.3% -29.2% Hungary Ireland 111.6% -33.4% Portugal Finland 115.3% -38.6% Latvia UK 122.6% 5% -39.4% Spain Cyprus 134.2% -55.6% Denmark Sweden 159.6% 0% Ireland Denmark 214.2% 58322X -80% -40% 0% 40% 0% 75% 150% 225% Source: ECB, Eurostat 11#121900 1700 1500 1300 1100 900 4Q06 4Q07 4Q08 REAL ESTATE MARKET IS NOW FAST DEVELOPING, SUPPLY RESPONDS TO DEMAND Slovak residential property market went through a boom and bust in the run-up to 2008 crisis and euro adoption in January 2009 Market started to recover in 2014. Since then property prices were growing steadily about 8% p.a., growth now encompasses all regions and types of housing. → Slovak real estate price growth though is not excessive in regional comparison, prices in the neighboring countries have grown even faster in the past three years 2300 2100 Property price development (EUR per m², offered - NBS methodology) 24 000 20 000 16 000 12 000 8 000 4 000 0 Completed housing 1996 1998 2000 2002 2004 (units) 2006 2008 2010 2012 2014 2016 2018 2020 Property price inflation in comparison (cumulative increase in the past 3 years, 3Q20 vs 3Q17) 4Q09 Source: Slovak Stats Office, Eurostat, NBS 4Q10 4Q11 4Q12 50% Flats 40% 30% Total 20% 10% 0% Family houses 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 4Q19 4Q20 Italy Cyprus Finland Sweden Belgium France Ireland Denmark Romania Spain Malta Estonia Bulgaria Slovenia Lithuania Austria 30.3% Croatia Germany Latvia Slovakia Netherlands Poland Portugal Czechia Hungary Luxembourg 12 21 490#13-3 2Q06 3Q06 4Q06 1Q07 -2 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 -1 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 0 4Q10 1Q11 2Q11 3Q11 4Q11 1 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 2 RISKS IN THE HOUSING MARKET HAVE RISEN DURING THE PANDEMIC... → Most recent increases in property prices have not been fully offset by the decline in mortgage rates or the rise in household income. Plus, rents have declined, which all contributed to the increase in the central bank's Composite Index of the housing market toward the,,Risk" zone → If the economy bounces in 2H21 as generally forecast, some of the overheating could ebb though Composite index of housing price development 4 13 Bubble Note: CI_Total CI_Flats Only The Composite Index comprises five sub-indices. The index is calculated as the average of trend-adjusted and standardized indicators, weighted using a principal component analysis. The index level shows the deviation in standard deviations from the average, normalized to zero. The index value is categorized into one of five levels based on the current value: downward trend (below -1), balance (between -1 and 0), boom (between 0 and 1), risk (between 1 and 2) and bubble (above 2). Source: analysis of NBS 13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Slump 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 Risk Boom Balance 2Q20 3Q20 4Q20#14...HOUSING AFFORDABILITY NONETHELESS STILL REMAINS REASONABLE Market is meanwhile driven by mortgages for real homes, speculative demand is rather. marginal when compared to boom/bust a decade ago. Home ownership is high at over 90%, of which 70 percentage points without debt (EU average is <70%, resp. 43 points) Price to income ratio is still reasonable and comparable to long-term average → Factoring in low mortgage rates, also housing affordability index hovers near long-term average Rates on new housing loans Slovakia (% p.a., APR) 140 130 120 110 100 90 80 6% 5% 4% Eurozone 3% Difference 2% 1% 0% -1% Dec-10 Dec-11 Dec-12 Dec-13 Source: NBS, Slovak Stats Office Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 30- 20 Property price to income ratio (1Q 05=100) Long term average www ww 1Q05 4Q05 3Q06 2Q07 1Q08 4Q08 3Q09 2Q10 1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16 1Q17 4Q17 3Q18 2Q19 1Q20 4Q20 Housing Affordability Index (% vs historic average, by regions, prices of flats) "overvalued" 10- 20- 30 "undervalued" 10 2010 10 2011 10 2012 LQ 2016 10 2013 10 2014 10 2015 10 2017 1Q 2018 -BATT TN NR ZA BB --PO KE -SR 1Q 2019 10 20 201 14#15CONTENT Slovakia at a Glance Intesa Sanpaolo Group VUB at a Glance VUB's Mortgage activity VUB's Covered Bonds 15#16INTESA SANPAOLO GROUP AT A GLANCE Total Assets Operating Income 2020 Net Income (*) Common Equity(**) Ratio Presence EUR 1,002,614 mln EUR 19,023 mln EUR 3,277 mln 15.4% in 38 countries Customers Branches ~21.8 mln (of which ~14.7 mln in Italy) 6,314 (of which 5,299 in Italy) 105,615 Employees DBRS Morningstar MOODY'S Long-term: BBB (high) Long-term: Short-term: R-1 (low) Short-term: Trend Long-term: Negative Outlook LT: Baa1 P-2 Negative Long-term: S&P GLOBAL RATINGS BBB FITCH RATINGS Long-term: BBB- Short-term: Outlook LT: A-2 Stable Short-term: Viability: F3 bbb- Trend Short-term: Negative Outlook LT: Stable Figures as at 31 December 2020 and including UBI Banca. On 5 August 2020, Intesa Sanpaolo acquired control of UBI Banca. The merger by incorporation into the Parent Company is expected to take place by April 2021 (*) €3,505mln adjusted Net income excluding the items related to the acquisition of UBI Banca (PPA - Purchase Price Allocation - and integration charges) and the write-off of goodwill of the Banca dei Territori Division (**) Pro-forma fully loaded Basel 3 (31.12.20 financial statements considering the total absorption of DTA related to IFRS9 FTA, goodwill realignment/adjustments to loans/non-taxable public cash contribution of €1,285m covering the integration and rationalisation charges relating to the acquisition of the operations of the two former Venetian banks, the expected absorption of DTA on losses carried forward and DTA related to the combination with UBI Banca arising from PPA, integration charges and the disposal to BPER Banca of a portion of branches and related assets and liabilities and the expected distribution of FY20 Net income of insurance companies). 16.9% excluding the impact from the combination with UBI Banca 16#17INTESA SANPAOLO SOLID VALUE CREATION FOR ALL STAKEHOLDERS Clients Shareholders Employees Society and Environment ■ A real-economy Bank that supports the real economy, leveraging a strong balance sheet to match healthy credit demand, and manages the financial wealth of clients with care ■ A simple yet innovative Bank, acting with a truly multi-channel model ■ A Bank with sustainable profitability in which operating performance, productivity, risk profile, liquidity and solidity/leverage are carefully balanced ■ Strong and increasing cash dividend distribution over the course of the 2014-2017 Business Plan: EUR 1.2 bln paid for 2014, EUR 2.4 bln paid for 2015, EUR 3 bln paid for 2016 and EUR 3.4 bln paid for 2017. In the 2018-2021 Business Plan, commitment to paying out 85% of net income as cash dividends for 2018, 80% for 2019, 75% for 2020 and 70% for 2021: EUR 3.4 bln of dividends paid for 2018 and net income for the financial year 2019 allocated to reserves, in compliance with the ECB recommendation dated 27 March 2020 on dividend policy, then replaced by the recommendation dated 15 December 2020 in force till 30 September 2021. For 2020, proposal to distribute cash dividends of EUR 694 mln, the maximum distributable amount according to the ECB recommendation, and intention to propose, subject to the ECB indications, a cash distribution from reserves after 30 September 2021, for the 2020 results, that adds to the aforementioned dividends and leads to the payment of a total amount corresponding to a payout ratio of 75% of the EUR 3,505 mln adjusted net income Empowered and motivated people through training, job re-allocation, acknowledgement of individual merit in career development, flexibility programs and upgrade of long-term incentives linked to productivity and results A Bank with a distinctive identity/reputation, committed to contributing to the growth and development of the economy and society ■ CSR deeply rooted in all business areas and staff functions, embedded in the Bank's strategy, supporting social and environmental value creation for a long-term economic development and respecting all stakeholders 17#18INTESA SANPAOLO - LEADERSHIP IN ITALY BUILT ON LONG-STANDING RELATIONSHIPS WITH CUSTOMERS(*)... RANKING IN ITALY 1 Loans 1 20.6% Deposits (1) 22.0% 1 Pension Funds (2) 23.5% 1 1 Asset Management (3) 24.8% Factoring (2) 27.6% Figures as at 31 December 2020 (*) Including UBI Banca and considering the impact of the going concern to be sold to BPER Banca (1) Including bonds (2) Figures as at 30 September 2020 (3) Mutual funds; figures as at 30 September 2020 18#19... ON A EUROPEAN SCALE Eurozone ranking HSBC Sberbank BNP Paribas 1 Banks' market capitalisation (EUR bln) 100.2 64.6 61.6 Banco Santander 2 50.2 UBS 49.5 Intesa Sanpaolo 3 41.5 ING 4 35.3 Crédit Agricole 5 33.9 Barclays 32.0 Lloyds Banking Group 31.9 BBVA 6 30.7 Nordea Bank 7 30.4 Credit Suisse 29.2 NatWest 25.8 DNB 25.0 KBC 8 24.8 Deutsche Bank 9 21.1 SEB 20.9 UniCredit 10 19.1 Société Générale 11 17.5 Svenska Handelsbank 17.4 Standard Chartered 16.8 Swedbank 16.5 Caixabank 12 14.4 Danske Bank 13.2 Source: Bloomberg, prices as at 26 February 2021 19#20INTESA SANPAOLO A CUSTOMER-ORIENTED ORGANIZATION(*) Managing Director and CEO Carlo Messina IMI Corporate & Banca dei Territori Division(**) Investment Banking Division International Subsidiary Banks Division Private Banking Division Asset Management Division Insurance Division Stefano Barrese Mauro Micillo Marco Elio Rottigni Tommaso Corcos Saverio Perissinotto Nicola Maria Fioravanti (*) UBI Banca (CEO Gaetano Miccichè) has been temporarily considered as a separate business area (**) Domestic Commercial Banking 20 20#21INTESA SANPAOLO THE INTERNATIONAL SUBSIDIARY BANKS DIVISION Albania INTESA SANPAOLO BANK Albania Bosnia and Herzegovina m INTESA SANPAOLO BANKA Bosna i Hercegovina Croatia m PRIVREDNA BANKA ZAGREB Czech Republic VÚB BANKA Egypt بنك الإسكندرية | ALEXBANK | Hungary CIB BANK Figures as at 31 December 2020 7.0 million Customers and 964 Branches in 12 Countries Strategic international presence in commercial banking in Central Eastern Europe and Middle Eastern and North African areas Moldova nan EXIMBANK Romania INTESA SANPAOLO BANK Romania Serbia BANCA INTESA Beograd Slovakia VÚB BANKA Slovenia non INTESA SANPAOLO BANK Ukraine mon PRAVEX BANK 21#22INTESA SANPAOLO INTERNATIONAL PRESENCE OF THE GROUP PRODUCT COMPANIES Consumer Credit, E-money and Payment Systems PRODUCT COMPANIES PBZ LEASING EURIZON ASSET MANAGEMENT Pramerica Wealth Management FIDEURAM ASSET MANAGEMENT IRELAND CIB LEASING INTESA SANPAOLO เทกก LIFE INTESA เกกก Leasing LEASING Beograd INTESA INVEST mmm PBZ LEASING m VÚB LEASING Beograd nm 意才 เอกก YI TSAI 22 22#23CONTENT Slovakia at a Glance Intesa Sanpaolo Group VUB at a Glance VUB's Mortgage activity VUB's Covered Bonds 23#24VUB AT A GLANCE VUB Group # 2nd Largest Banking Group in Slovakia VUB Group with: Total Assets: Revenues: Net Profit: Clients: EUR 19.2 bln EUR 437.2 mln EUR 82.7 mln ≈ 1.1 mln Total assets and profitability (1) VUB Bank Key economic and financial figures: Total Assets: EUR 18.7 bln Net Profit: EUR 85.0 mln NII: EUR 277.6 mln □ROE: 6.85% □ROA: 0.59% □ C/I: 53.0% Strong Credit Ratings VUB is rated by Moody's A2, according to which VUB is profiting from its good financial condition and good profitability Moody's INTESA SANPAOLO Baa1 VÚB BANKA A2 VUB Group - Structure ISP S.p.A. (100%) Minority shareholders (2.97%) ISP Holding International S.A.(*) (97.03%) Ownership (*) 97.03% of VUB Bank share capital is owned by Intesa Sanpaolo Banking Group 2.97% of VUB Bank share capital is held by minority shareholders # 2nd Largest retail network in Slovakia Significant sales force based on a strong nationwide retail network with 197 domestic branches and 1 branch located in the Czech Republic VUB Leasing (100%) VUB VUB Generali Pension Fund Market Position and ranking in Slovakia(2) Strong Market share in all key product segments: #1 Gross Loans: (50%) Currently close to 70% of revenues are derived from Retail Banking and Consumer Finance Activities 21.1% #2 Housing Loans: 24.1% #2 Branches: 18.3% #2 Total Assets: 20.4% #2 Asset Management: 17.0% #2 Deposits: 19.2% Source: (1) Individual financial statements; (2) NBS Figures as of 31 December 2020 * Note: VUB Bank has become a private joint-stock company on 27 February 2021 as a result of delisting of its shares from the 24 Bratislava Stock Exchange. The mandatory public offer closed on 19 February 2021 and Intesa Sanpaolo Holding International S.A. acquired additional 0.14% share in the registered capital in the VUB, bringing its total shareholding to 97.17%#25BRIEF HISTORY 1990 - 1998 1997 2000 - 2001 2002 - 2004 2004 2004 - 2005 2007 2013 2017 2018 2019 State owned/controlled universal bank with primary focus on commercial sector VUB as the first issuer of Mortgage Bonds in Slovakia Privatization of the bank: Intesa Sanpaolo obtained 95% share in 11/2001 Restructured and refocused under Intesa Sanpaolo ownership Purchase of CFH (Consumer Finance) Establishment of pension fund JV of VUB Bank and Generali insurer, VUB Generali now 3rd largest in Slovakia Purchase of BOF Leasing, rebranded as VUB Leasing since 2010 EMTN Mortgage Covered Bond Program established First sub-benchmark Covered Bond issued in Slovakia by VUB Bank Consumer Finance Holding and VUB Factoring merged with VUB Bank New legislation relating to Covered Bonds adopted in Slovakia First Slovak benchmark Covered Bond issued by VUB (included in the IBoxx_€_covered index) 25#26SECOND LARGEST IN SLOVAKIA Bank Shareholder structure Total assets Market share CAR CET1 (EUR bln) (%) (%) (%) Slovenská sporiteľňa Erste Bank 100% 20.3 22.4 18.3 14.7 Intesa Sanpaolo VUB 18.2 20.1 18.8 16.6 97.03% Raiffeisen Bank Tatra banka 15.0 16.5 19.2 16.4 79% KBC ČSOB 9.6 10.6 20.2 17.6 100% J&T Finance 51.7% Poštová banka 4.4 4.8 17.3 17.1 J&T Banka 36.4% Penta Investments Prima banka 4.5 4.9 17.9 16.7 99.5% Erste Bank 35% PSS Raiffeisen 32.5% 2.9 3.3 Bausparkasse 32.5% OTP Bank OTP banka 1.4 1.5 15.7 14.3 99.2% Source: NBS, Individual financial statements as of 30 September 2020 26#27FINANCIAL FIGURES BALANCE SHEET STRUCTURE Individual Balance Sheet as of 31 December 2020 EUR mln EUR mln 18,741 Cash and cash equivalents 1,572 Due to Banks 205 Due from other Banks 18,741 171 -> Due to Customers 12,978 Due from Customers 14,724 Debt Securities in issue Subordinated Debt Other Financial Assets Other Assets 1,887 353 Assets -> Balance Sheet (BS) is showing strong performance in commercial and sales area supporting the growth in Loans and Client Deposits Due to Customers are driven by both Retail and Corporate deposits with main focus on retail Financial Assets consist mainly of Slovak, Italian Government bonds and other EU state and covered bonds Due from other Banks represent placements of excess liquidity mainly in Group banks Due to Banks comprise long term funding from EIB, EBRD, Short and Mid Term deposits from ISP Milano 3,423 Other Liabilities Equity 200 1,693 276 Liabilities Debt Securities in Mortgage/Covered Bonds issue represent issued Development Balance Sheet Due from Customers +8.0% 17,361 18,741 4Q2019 4Q2020 +4.6% Due to Customers Debt Securities in issue +9.0% +9.7% 14,078 14,724 11,905 12,978 3,121 3,423 4Q2019 Source: Individual financial statements as of 31 December 2020 4Q2020 4Q2019 4Q2020 4Q2019 4Q2020 27#28FINANCIAL FIGURES BUSINESS DEVELOPMENT Loans to Customers +4.6% EUR min 14,078 14,083 14,125 14,451 Retail -mortgage Retail other lending 14,724 Strong growth in Retail lending is driven by active participation on the Mortgage lending, which continued in 2020 despite the starting impacts of COVID-19 Corporate lending while keeping strong lending market position, has however decreased slightly over the year, mainly due to public sector and also one-off transaction of transferring VUB Leasing financing to ISP Corporate 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 EUR mln Customer Deposits +9.0% 11,905 11,847 12,198 12,535 12,978 4Q2019 1Q2020 Source: Individual financial statements as of 31 December 2020 2Q2020 3Q2020 4Q2020 The Bank increased the base of customers deposits (YoY 9%) and thus preserved its liquidity position. In order to support further growth of loans, the Bank remains focused mainly on the retail deposits in the upcoming period. This allows the Group to focus on further improvement of the main services to customers such as loans to households, municipalities companies and 28#29CAPITAL STRUCTURE AND LIQUIDITY POSITION →> CET1 ratio reached 16.66% in 2020 Capital Structure Capital Asset Ratio (CAR) at 18.79% 9,212 9,019 9,080 17.18% 17.38% 18.79% 2.13% 17.18% 17.38% Tier 2 ratio 2.29% 2.12% 16.66% CET 1 ratio 14.89% 15.26% 2018 2019 2020 Total Capital Ratio RWA >100 >100 LCR NSFR Figures as of 31 December 2020 based on consolidated basis 18.79% 2018 2019 2020 CAR Liquidity Position Liquidity Coverage Ratio (LCR): well above Basel 3 requirements (set to 100%) and above recommendation of National Bank of Slovakia (buffer set to 115%) Net Stable Funding Ratio (NSFR) well above Basel 3 requirements (set to 100%) 29#30FINANCIAL FIGURES PROFITABILITY EUR mln Revenues -2.8% Operating Costs Net Interest +0.5% -14.5% 432 420 221 222 325 278 310 166 211 204 110 141 100 54 71 4Q19 1Q20 2Q20 3Q20 4Q20 4Q19 1Q20 2Q20 3Q20 4Q20 4Q19 1Q20 2Q20 3Q20 4Q20 Profit After Tax and Dividend Payout EUR mln 200 80% 150 80% 100 156 50 125 50 0 2018 114 91 85 2019 Dividend payout Profit after tax The Revenues of the bank have decreased year over year. The decrease is driven primarily by lowering the interest rates The bank showed slight rise of operating costs (0.5%) NII was primarily impacted by the low interest rates also coming from increasing competition on the Mortgage and Consumer loans market, partially compensated by the increasing volumes ROE (on yearly basis) -3.1% 2020 Cost / Income Ratio ROA (on yearly basis) (excl. Bank Levy) +1.9% -0.3% 9.9% 0.8% 6.8% 0.6% 4.6% 5.6% 0.4% 0.5% 3.7% 0.3% 4Q19 1Q20 2Q20 3Q20 4Q20 4Q19 1Q20 2Q20 3Q20 4Q20 51.0% 54.6% 54.3% 53.5% 53.0% 4Q19 1Q20 2Q20 3Q20 4Q20 -> ROE down 3.1% due to significant decrease of the profit (lower revenue and higher provisions) ROA shows negative development YoY with lower net income and increase of total assets C/I ratio increased by 1.9% due to lower income mainly Source: Individual financial statements as of 31 December 2020 30#31VUB - THINKING GREEN The environmental protection and sustainable development is a natural part of VUB's operations. → VUB's Environmental Policy focuses on: support for investment projects concentrating on energy saving and renewable resources → saving measures to reduce energy and material consumption waste sorting and measures reducing waste production raising the environmental awareness among employees → VUB has adopted an Environmental Sustainability Action Plan, concentrating on energy savings: replacement of obsolete electrical appliances with new ones featuring on the highest ecological parameters complex introduction of LED technology optimization of heating systems replacement of measuring and control systems and technology → VUB adheres to UN Global Compact and Equator Principles taking a responsible approach to project financing and lending → VUB Foundation widely supports community projects focused on: mitigating the environmental impact of climate changes protection and preservation of natural heritage of Slovakia supporting education in the environmental area, activists and volunteers with an active approach to protect the nature 31#32VUB - THINKING GREEN In 2020, VUB has become the first bank in Slovakia to declare its commitment to support sustainability and environmental protection by publishing its GREEN MANIFESTO ...it means more significant involvement of VUB Bank and its VUB Foundation in order to support the development of the green economy and the protection of biodiversity which is also based on the strategy of the Intesa Sanpaolo Group, of which VUB is a part. As a strategic partner of the Ellen MacArthur Foundation, ISP banking group is one of the world's leaders in financing new business models that support the global transition to a circular economy. VUB declares its green promise towards to: Clients.... VUB want to improve and develop its primary business so that VUB is a motivation and support for its clients in their efforts to act ecologically and so that together we can repaint the economy green → Its own standards, suppliers and employees... VUB want to change internally and instill enviro principles even more significantly into the core of our processes and the work of our entire team Whole Slovak society... VUB want to further support the non-governmental sector, which is involved in projects co- creating a greener world. VUB does not want to stick only to symbolic steps and words. We are convinced that our planet - our future, needs above all our hearts and actions. We believe that in the coming years, which the world's scientific capacities define as crucial, we will be able to achieve what we have set out to do. And we believe that we will inspire you - our clients, employees, suppliers and partners - for this joint initiative. We are VUB. The first bank to elevate sustainability and environmental protection to the DNA of its business. A bank that has publicly signed up to the Green Manifesto. 32#33VUB - THINKING GREEN VUB green thinking in numbers: Thanks to digitalization, VUB is saving up to 15 million sheets of paper and more than 5 million envelopes a year, which is equal to 100 tons of paper what represent a forest of 1,700 trees In September 2020, VUB became the general partner of the Slovakia Going Zero Waste conference for the first time A new grant program of the VUB Foundation for the Environment which has never had an equivalent in Slovakia, in the amount of EUR 100,000 distributed within December 2020 The program supports projects in areas that have a major impact on the current state and future development of our country and society in areas of Biodiversity protection and Green economy The capital Bratislava has launched one of the largest tree planting projects in its modern history. By 2022, 10,000 trees are to be planted in Bratislava and three new city alleys are to be built. VUB Foundation took the opportunity to help first by assigning almost EUR 40,000 for this purpose As a green bank, VUB is proud to present „ATLAS" - an award of VUB Foundation for those who protect Slovak nature. With the ATLAS award, VUB would like to appreciate the important efforts of everyone who has decided to bear the burden of saving our planet and not give up this difficult task, and to appreciate such efforts with a grant of 4 x EUR 10,000 that will ensure the continuation of promising environmental projects in Slovakia 33 33#34CONTENT Slovakia at a Glance Intesa Sanpaolo Group VUB at a Glance VUB's Mortgage activity VUB's Covered Bonds 34 4#35ORIGINATION AND UNDERWRITING Sales force Underwriting & Risk Policies Property Valuation & Collateral Management All mortgages are originated either directly through VUB branches or through commercial agreements with more than 50 external partners (have just the first contact with the client, the processing of the loan brought is done at the branch) Most of the external partners are concentrated in the region of Bratislava All risk policies related to origination are applied equally on all mortgages regardless of their presence in the cover pool. Portfolio management and monitoring is performed on all mortgages, with possibility to distinguish between those in and out of the cover pool Credit delegated powers are fully centralized and granted only within risk management division at VUB headquarters. All mortgage applications in terms of credit are processed with steps that are either automated (by rules in risk policies) or executed by corresponding risk management roles under credit delegated powers policies Mortgage underwriting techniques includes rating cut-offs according to PDs with corresponding risk based pricing, income verification required by the local regulator including operational stress test on interest rate, Loan to Value policy based on several LGD impacting variables and their combinations, and methodology for collateral value acceptance on the top of official external evaluations Debt capacity ability to repay the loans is evaluated in accordance with valid local regulation in all cases. Income as well financial expenditures must be verified through independent source (pure client statement is not acceptable). Credit bureau information are always taken into consideration (credit behavior, debt service). The 4-eye principle is followed in any case. When fraudulent characteristics are identified, case is specially investigated by fraud department Collateral valuation at loan origination: The value used as reference in case of acquisition purpose is the lower of (i) purchase price (ii) collateral value resulting from an external valuation performed by an appraiser with valid license in the relevant area and (iii) internal valuation. In case of other purposes (other than acquisition) value used as reference is either (i) collateral value resulting from an external valuation which be can reviewed by an internal appraiser who may validate such value or apply additional haircut or (ii) internal valuation. Process of collateral valuation is independent from credit decision (regulatory requirement) Collateral revaluation: Revaluation of Residential Real Estates (RRE) is performed on annually basis using a statistical model. Such model is based on (i) external market data (GfK Purchasing Power Index (PPI)) and (ii) internal market data (valuation of comparable properties made for recently approved applications) 35#36HOUSING LOAN LIFECYCLE 2ND PHASE 1ST PHASE FINAL DECISION Final pricing and loan conditions determination Final loan amount determination to possible LTV / Debt capacity setting CENTRAL LOAN SUPPORT conditions fulfillment verification AFTER- SALES ACTIVITIES APPLICATION Collection of documents from the borrower: • ID Income verification via third party-credit bureau or Social Insurance or confirmation on tax declaration, Information on the applicant Type of job Expenses UNDERWRITING (Internal rating and scoring) Assessment of the borrower's credit worthiness using third party verification SRBI, NRKI, Social insurance => max. mortgage amount calculation incl. DTI, DSTI limits COLLATERAL VALUATION process is independent from credit decision (regulatory requirement) COLLATERAL SPECIFICATION Purpose documents Collateral documents & External experts appraisal / Internal bank appraisal YES (within 72h) AUTOMATIC CONTRACT GENERATION Execution of loan & guarantor's contract and other docs, e.g. for collateral insurance CONTRACT SIGNATURE 1ST DRAWDOWN Docs necessary for disbursement given by contract DISBURSEMENT (within app. 1-2W) Registration of the lien over the property loan disbursement possible upon the seal/pledge proposal confirmation NEXT DRAWDOWN (if in tranches) LOAN ADMINISTRATION during its maturity date: Contractual changes Repayments (partial/full) Other services/ Bank confirmations Contractual/ specific conditions fulfilment monitoring ACQUITTANCE TRANCHE VOLUMES APPROVED BY RISK RECOVERY PROCESS by Recovery Department Branch Risk/S1/Credit flow Back Office Each mentioned department involved TRANCHE DISBURSEMENT VERIFICATION Housing loans credit approving competencies Credit Analyst (≤ 130 ths), Senior Credit Analyst (≤ 250 ths), Secured Loans Analyst Team Leader (≤ 300 ths), Head of Office Retail Underwriting (≤ 350 ths), Head of Corporate and Retail Underwriting Dpt. (≤ 500 ths), Head of Risk Management Division=MB Member(≤ 3 000 ths), Corporate Credit Committee (≥ 3 000 ths) 36#37CREDIT SCORING TOOLS Usage of Credit risk models in the Bank The models used in the bank are covering following areas Managerial purposes (Underwriting, Monitoring, Pricing, Provisioning) → Regulatory purposes (RWA calculation) → Generally, the models enter into the processes from the origination of a loan and are used during the whole life-time of a loan as well Approval process for all segments Risk margin calculation and Pricing determination Income of client determination Loan amount determination / Debt capacity setting • • Collateral value revaluation Re-fix of loan interest rate Provisioning RWA and Capital calculation Monitoring of clients and portfolio Origination of a Loan Life-time of a Loan 37#38ARREARS COLLECTION POLICY 1 Service DPD approach SOFT Service/ 30 Standard DPD approach TIMING 4 weeks 4 weeks - 12 weeks (applied 3 times - every month) - - ACTION TAKEN INTERNAL PROCESSES AND DOCUMENTS The client is contacted by phone SMS or formal letter for a soft reminder of the unpaid receivables The borrower is contacted by phone to understand the reason of the overdue Second SMS and letter sent Possible restructuring of the unpaid debt Request for payment of the unpaid The client is contacted by phone explaining the potential risk of not paying Last reminder (SMS and letter) sent out Formal request for payment of the unpaid Recording info into Credex (1) (payment promise details) Recording info into Credex (payment promise details) Recording payment promise in Credex If actions above do not succeed, client is automatically transferred to Hard Collection Module in Credex COLLECTION Standard 60 DPD - 180 approach 180+ DPD Hard collection process starts First/ Second Step HARD Up to final recovery The last pre-termination letter sent to the client If no feedback from client has been received, loan is accelerated (the whole amount becomes due and payable) After loan acceleration, client has the following alternative to work out: Voluntary repayment of the whole loan Repayment schedule COLLECTION Property sold by the client: the client should sell the property by 6 months form the agreement Best choice for the Bank The whole loan amount will be repaid by the client through an updated amortisation plan The best choice for the client Monitored automatically If alternatives above do not succeed, properties are auctioned Standard process set up with Auction company - - step - - Worst choice for client, simple process for the Bank Auction - No intervention of the Court while selling the assets - Collateral realisation through auction takes in average from 3 to 9 months since process triggered 38 (1) Credex is VUB IT system designed for collection activities only Note: due to COVID-19 legislative restrictions voluntary auctions are temporarily postponed Final#39MORTGAGE BUSINESS FURTHER DETAILS In the last few years, VUB has experienced a solid growth due to still strong demand from customers side and favorable economic environment Yearly Contracts Growth Yearly Outstanding Growth (outstanding EOM) Units 117,491 (contracts EOM) +5.3% +7.0% 125,756 132,385 EUR mln +11.8% 6,896 6,170 +13.1% 7,799 Dec-18 Dec-19 Number of Housing Loans Dec-20 Dec-18 Dec-19 Outstanding of Housing Loans Dec-20 Mortgage growth at the beginning of 2017 slowed down mainly due to newly introduced NBS macro prudential rules in order to slowdown the trend in development of overall indebtedness of Slovak households and mitigate unfavorable development on real estate market values. • • LTV limits on new production. Only 20% of new bookings within LTV 80-90% is allowed. No LTV above 90% is allowed since 07/2019. Net refinancing mortgage loans production is not limited DSTI (the consumer's ability to repay) should not exceed 60% of net income less the subsistence minimum since 01/2020. Some limits exceptions are allowed (5% of new loans + additional 5% for loans with maturity <= 5) but with maximum DSTI equal to 70% DTI (debt-to-income) introduced in 2018 should not exceed 8. The maximum share of new loans with DTI above 8 is set to 5% (+5% if additional conditions related to young applicants are met) since 3Q2019 39#40CONTENT Slovakia at a Glance Intesa Sanpaolo Group VUB at a Glance VUB's Mortgage Activity VUB's Covered Bonds 40 40#41SLOVAK CB LEGISLATION AT A GLANCE COVERED BOND LEGISLATION IN FORCE SINCE JAN 2018 The issuer - in addition to standard banking license - must obtain prior consent of the NBS to issue covered bonds → On-balance sheet segregation: cover assets remain on issuer's balance sheet but constitute a 'separate' estate The issuer must maintain a Covered Bonds Register ("Covered Bond Estate") into which assets and proceeds from the cover pool are individually recorded NBS decree established all information to be included (since Jan 2019) in the Covered Bond Register Bankruptcy remoteness: inclusion in the Register has the same effect as true sale in case of bankruptcy proceedings: the Covered Bonds Estate is not part of the bankruptcy general estate: proceeds from the cover assets may only be used to satisfy the claims of the covered bondholders → Bankruptcy proceedings do not automatically cause the acceleration of Slovak covered bonds → Dual recourse: covered bondholders have recourse against both: the Covered Bonds Estate the general estate of the Issuer 41#42SLOVAK CB LEGISLATION AT A GLANCE COVER POOL COMPOSITION Base Assets: at least 90% of the aggregate value of the cover pool (excluding the Liquid Assets) residential mortgage loans to individuals residual term up to 30 years LTV up to 80% exclusion and deletion of the loans whose debtor is defaulted from the Covered Bond Register (does not apply to loans with repayments postponed due to COVID-19 legislation, as they are not considered "defaulted") → properties located in the Slovak Republic Substitute Assets: up to 10% of the aggregate value of the cover pool less the Liquid Assets cash or deposits with NBS, ECB, EU Member state central bank and all other assets that meet conditions under Article 129 (1)(c) of EU Regulation No. 575/2013 → Hedging derivatives: cash flows and posted collateral of derivative whose purpose is to manage and mitigate currency or interest rate risk connected with issued CBs → Liquid Assets: required to cover 180-days expected negative cash flows from the CB, if any HQLA Tier 1 & Tier 2A assets under Articles 10 and 11 of EU Regulation 2015/61 42#43SLOVAK CB LEGISLATION AT A GLANCE THE COVERED BOND PROGRAMME MONITOR → Is an independent individual appointed (and revoked) by the NBS, acting on its own initiative or on the proposal of the issuer → Before issuance of CB, Programme Monitor: verifies that assets that are going to be added to the cover pool fulfill eligibility requirements issues a written certificate confirming that covered bonds are covered and that an entry in the Covered Bond Register has been made verifies issuer's compliance with all legal and regulatory requirements with regard to covered bonds → At least once a month checks: Cover assets consistency with regulatory requirements Whether requirements in relation to the Covered Bond Register are met By 30 April of each year submits to NBS a report on previous year containing, inter alia, information about issues of CB (number, volume, issue proceeds) cover pool (both composition and assets characteristics) reasons for material changes in replenishing, or elimination of assets from the cover pool estimated liabilities & stress tests calculation 43#44SLOVAK CB LEGISLATION AT A GLANCE SPECIAL LEGAL INSTITUTION – COVERED BOND PROGRAMME TRANSFER → A transfer of CB programme is expected to be used mostly in special circumstances where the bank issuing CBS is subject to involuntary administration or bankruptcy proceedings → Involuntary administrator or trustee operates the CB Programme of the issuing bank and shall: cooperate with the Programme Monitor assess with due professional care whether or not the further management of the CB programme would result in an overall decrease in satisfaction of the owners of CBS Involuntary administrator/trustee can, with the prior approval of the NBS, transfer the whole CB Programme to another authorized Slovak bank Programme transfer shall be carried out within one year from the notification to the NBS. Involuntary administrator/bankruptcy trustee could request a one year extension to terminate the transfer process soft bullet extension: pending the transfer, the final maturity of the covered bonds, whose original maturity expires during the period of the transfer, will be extended by a maximum of one year (or two years in total, in case of repeated attempt to transfer) no suspension of interest payments on the covered bonds due to maturity extension If the trustee fails to transfer the CB Programme, it is entitled to transfer receivables arising under mortgage loans included in the assets of the cover pool for remuneration to bank, foreign bank, branch of a foreign bank. Acceleration and early repayment of CB are triggered as of the date the trustee terminates the operation of the bankrupt bank's business after declaration of bankruptcy which generally follows immediately after the trustee has failed to ensure realisation of the bankrupt bank's assets via the transfer of the CB programme. 44#45SLOVAK CB LEGISLATION AT A GLANCE MANDATORY TESTS • Overcollateralisation - minimum level 5% the value of the cover pool must be at least 105% of the nominal amount of outstanding covered bonds (&related costs) Stress Test ⚫ testing of credit risk, interest risk, currency risk, liquidity risk, counterparty risk, operative risk and risk of decrease in property's value. The parameters of the stress testing are to correspond with the parameters used in the evaluation of capital adequacy of the Issuing Bank ⚫ carried out at least once per year Liquidity test • all estimated negative cash flows, if any, during the following 180-days shall be covered with a buffer of Liquid Assets · performed on a daily basis 45#46COVERED BOND LEGISLATIVE FRAMEWORK COMPARISON Issuer Cover Assets Structure Slovakia Austria - Fundierte Bankschuldverschreibung Universal credit institution with a prior approval Universal credit institution with a special license for activities connected with Covered Bond Programme On balance sheet-but maintained in a separate credit institution acting as fiduciary Cover assets are held for the issuer by the cover register Regulatory supervision and Supervision Authority Yes with additional requirements compared to general banking supervision regulations. Special supervision by NBS FMA Poland Specialized credit institution Apart from the mortgage banks, also 1 state bank (Bank Gospodarstwa Krajowego) is allowed to issue covered bonds in Poland. Cover assets held on balance sheet of the issuer but are maintained in a separate cover register Yes, with additional requirements compared to general banking supervision regulations. Supervised by Polish Financial Supervision Authority (Komisja Nadzoru Finansowego, KNF) GERMAN Pfandbrief The issuer of Pfandbrief is no longer required to be a specialised bank. Any entity which is allowed to exercise all activities of a credit institution - Core Capital of at least 25mn eur General Banking license - Suitable risk management procedures Cover assets held on balance sheet of the issuer but are maintained in a separate cover register France - Société de Financement de l'Habitat SFH Licensed specialist institutions, so-called Societe de Financement de l'Habitat (SFH) At parent institution, but pledged to issuer (SFH) Transfer according to trigger event Yes, SFH is a mortgage credit institution under French Banking law Yes, use of each of the respective Pfandbrief types Supervised by French banking regulator (ACP), is subject to a license Supervised by Bundesanstalt fur Finanzdienstleistungsaufsicht (BaFin) Comite des Etablissements de Credit et des Entreprises d'Investissement (CECEI), Autorite des Marches Financiers (AMF) and special controller Elligible Underlying Assets Cover Pool Assets Cover Pool Geography Max LTV Residential mortgage loans, up to 30 years granted to retail customers Underlying assets, substitution assets, currency and interest rate hedging derivatives, liquid assets Slovakia 80% Substitution assets Minimum legal OC Up to 10% 5% Exposures to public sector entities Mortgage loans (Mortgage loans for the purpose Exposures to public sector entities, mortgage of this question are taken to include guaranteed loans (Mortgage loans for the purpose of this real-estate loans.) question are taken to include guaranteed real- estate loans.) Exposures to credit institutions Austria/EEA/Switzerland not regulated 2% Public-sector loans, residential and commercial EEA, OECD Residential and commercial mortgage loans, public-sector assets, aircraft and ship mortgages Residential property loans only Public sector loans, Mortgage loans, Derivatives (up to 12%), Substitute assets Residential mortgages Guaranteed home loans. Securitisations (subject to certain criteria) EEA, USA, Canada, Switzerland, Japan, Australia, Asset located in the EU, the EEA or any highly New Zealand and Singapore rated country 80% Residential 80% and Commercial 60% Up to 15% 60% Up to 20% Up to 15% 10% 2%on stressed present value basis Min 5% Liquidity Securing Assets coverage test Bankruptcy of parent institution / originator(s) Natural" matching (matching without the use of off-balance sheet instruments) and stress 180 days coverage of negative balance of cash testing (Natural matching is taken to include flow from Covered Bonds Programme replacing CBS with new issues, as well as substitute assets.) Nominal cover. Eligibility of Assets test applied daily. Coverage ratio test monthly. Yearly stress tests mandatory. Daily frequency Natural" matching (matching without the use of off-Coverage by nominal value and by net-present balance sheet instruments) and stress testing value required. Specific coverage of liquidity risk (Natural matching is taken to include replacing CBS with new issues, as well as substitute assets.) over a 180 day period Nominal cover test applied daily and verifying the relation of nominal values of cover pool to covered bonds, relation of cover pool interest to covered bonds interest and level of liquidity buffer. There are additional, semi-annual tests. In case of bankruptcy of a mortgage bank the cover register shall constitute a separate Assets in the cover pool are fully segregated from the general insolvency estate of the bankrupt bank. The general insolvency trustee observes special procedures that are aimed to Covered bond creditors have preferential claim to satisfy claims of covered bondholders. The extend covered bonds' maturity in the event of bankruptcy and postpone immediate acceleration No acceleration of covered bonds on the cover assets Coverage is mandatory at all times Assets within the cover register are exempt from Liquidity maintained for the next 180 days and ability to repo own issuances Dynamic ACT, formerly 92.5% asset percentage applied to the entire pool Regulated by the issuer bankruptcy estate which may be used exclusively bankruptcy proceedings. After the launching of the No acceleration of covered bonds court appoints the curator (Kurator) who represents the rights of covered bondholders. The soft-bullet maturity of the covered bonds is triggered automatically after insolvency. insolvency proceedings, a special cover pool administrator (Sachwalter) carries out the administration of the cover assets Covered bond creditors have preferential claim on the cover assets Independent Cover Pool Monitor Yes Compliance with UCITS Yes Directive Compliance with CRD Yes standards Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes 46#47REGULATORY OVERVIEW Regulatory classification based on typical euro covered bond benchmarks DE, FR, NL etc. VUB PL NO CA EEA UCITS ECB repo Standard risk weight LCR CBPP3 10% 1(B) 10% 1(B) 10% 1(B) × 10% 1(B) × 20% 2A × AU, NZ 20% 2A × 47#48VUB COVERED BOND PROGRAMME PROGRAMME KEY FEATURES Issuer Rating Programme size Všeobecná úverová banka, a.s. (VUB) Aa2 (Moody's) EUR 5,000,000,000 Total CB Outstanding (nominal) EUR 3,315,304,192 Cover pool Prime Slovak residential mortgage loans Overcollateralization Minimum OC Slovak Law 5% Current OC 12.17% Governing Law Slovak Maturity type 12/24 months soft-bullet feature Paying Agent Všeobecná úverová banka, a.s. (VUB) Programme Monitor Listing Clearing Independent party appointed by the NBS Burza cenných papierov v Bratislave, a.s. (Bratislava Stock Exchange), Luxembourg Stock Exchange Slovak CSD/Euroclear/Clearstream Figures as of 31 December 2020 48#49VUB COVERED BOND PROGRAMME PROGRAMME STRUCTURE DIAGRAM Pre-bankruptcy VÚB BANKA Assets Liabilities National Bank of Slovakia Periodic reporting General estate assets General estate liabilities Yearly/ ad hoc reporting Periodic review Programme Monitor Cover Pool Assets Covered bonds Post bankruptcy - National Bank of Slovakia Periodic reporting Involuntary administrator/trustee in cooperation with Programme Monitor VÚB BANKA Liabilities RECOURSE Covered bondholder Assets General Estate Assets General Estate Liabilities DUAL RECOURSE Covered bondholder Cover pool management Cover Pool Assets as Separate Estate Covered Bonds 49#50VUB COVERED BOND RATING Domestic Market Comparable Markets Poland Issuer Rating CB Rating PKO Bank Hip. Baa1 Aa1 mBank Hip. Baa2 Aa2 Slovakia Pekao Hip. BBB+ A- Deposit rating CB Rating VUB A2 Aa2 Czech Republic Slovenská sporiteľňa A2 Aaa Deposit rating CB Rating Tatra banka A3 Aaa Raiffeisen Bank A3 Aa2 Komerční banka A AAA Source: Bloomberg, VUB as of March, 2021 Estonia Deposit rating CB Rating Luminor Bank Baa1 Aa1 50#51VUB COVERED BONDS OUTSTANDING ISSUANCES OVERVIEW (1/2) → EUR 3.3 bln of outstanding covered bonds (the largest in Slovakia) Distribution by Investors 71.3% 28.7% Domestic Institutional Foreign Institutional Distribution by Currency 100.0% EUR Maturity Profile of VUB Covered Bonds Distribution by Original Maturities 0.0% 7.0% 2.0% 33.0% 58.0% <5Y 5-10 Y 10-15 Y >20 Y 15-20 Y EUR mln 800 788 717 700 600 550 500 400 420 300 325 300 168 200 ------ 100 48 0 0 0 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 51 Figures as of 31 December 2020 and over#52VUB COVERED BONDS OUTSTANDING ISSUANCES OVERVIEW (2/2) In 2019&2020 main focus on EUR 500 mln issue size – 3 syndicated deals → Continuing increased demand from foreign investors across all investor types. Funds/Insurances, Banks & CB/Ols AM, Pension → Foreign investors took 91% out of these issues, the biggest bulk to DACH region followed by Nordics → Total ECB participation (through the National Bank of Slovakia) just 3% Source: VUB Issue Description Date of Issue Maturity Issue Size ISIN VUBSK 0.25 26/03/2024 March 2019 5y EUR 500 mln SK4120015108 VUBSK 0.50 26/06/2029 June 2019 10y EUR 500 mln SK4000015475 VUBSK 0.01 23/06/2025 June 2020 5y EUR 500 mln SK4000017455 Distribution by Regions 9.0% 2.0% 4.0% 9.0% 9.0% 17.0% Distribution by Investor Type GER/AT Nordics 37.0% 44.0% 50.0% UK Domestic Asset Managers Switzerland Italy Others 3.0% 16.0% Banks CB/Ois Pension Funds/Insurers 52#53COVER POOL KEY STATISTICS Originator Všeobecná úverová banka, a.s. Number of loans 83,842 67,026 EUR 3,684,971,712 Number of debtors Total Current Balance Average Current Balance (by loan) Average Current Balance (by debtor) EUR 43,951 EUR 54,978 59.4% WA current LTV WA Residual life 21.1 years WA Seasoning Rate type Property type Loans currency denomination WA interest rate Principal Payment type 3.9 years 100% fixed rate loans 100% residential 100% Euro 1.25% 99.9% annuity Figures as of 31 December 2020 53 35#54VUB COVERED BOND PROGRAMME COVER POOL BASE ASSETS FEATURES (1/3) 25% 20% 15% Origination Year Distribution Residual Maturity Distribution 35.7% 1.8% 10% 21.0% 18.2% 14.0% 12.6% 5% 10.4% 6.1% 1.9% 1.9% 4.9% 6.1% 2.8% 0% 26.7% Before 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 Seasoning (months) 6.4% 10.4% <0-5Y> (5-10Y> 19.1% (10-15Y> (15-20Y> (20-25Y> (25-30Y> Arrears Distribution <12-24M) 30% 25% 20% 15% 26.7% 23.7% 10% 21.0% 18.2% 5% 10.4% 0% <12M DAYS IN ARREARS CURRENT BALANCE (in EUR) % 0 3 655 786 168 99.2% 1-30 24 993 133 0.7% 30-60 3 015 847 0.1% 60-90 1 176 565 0.0% <24-36M) <36-60M) (60+> Figures as of 31 December 2020 54 54#55VUB COVERED BOND PROGRAMME COVER POOL BASE ASSETS FEATURES (2/3) 35% 30% Loan Purpose Distribution 9.5% 7.8% 1.8% Regional Distribution 9.2% 9.9% 7.1% Construction 41.5% 39.4% Renovation 8.8% Purchase Remortgage No purpose Current LTV Distribution 25% 20% 16.1% 15% 10.7% 10% 7.4% 4.5% 5% 2.2% 0.5% 0% 24.1% 34.4% ----- 0%-10% 10%-20% 20%-30% 30%-40% 40%-50% 50%-60% 60%-70% 70%-80% Figures as of 31 December 2020 Bratislava 36.3% Trnava Banská Bystrica Nitra Trenčín Prešov 10.4% Žilina 11.9% 6.5% Košice Property Type Distribution 43.6% 0.9% 0.4% Family house Flat Lot Other 55.1% 55#56VUB COVERED BOND PROGRAMME COVER POOL BASE ASSETS FEATURES (3/3) Current Outstanding Balance Distribution RANGE (in EUR) 45% DEBTORS % EUR % 40% 35% 0-25,000 19 818 29.6% 397 186 255 10.8% 30% 25% 25,000-50,000 18 912 28.2% 764 891 059 20.8% 20% 50,000-75,000 11 902 17.8% 15% 732 595 784 19.9% 10% 75,000-100,000 6 668 9.9% 561 398 084 15.2% 5% 0% 100,000-125,000 4 473 6.7% 473 729 538 12.9% 125,000-150,000 2 414 3.6% 298 813 762 8.1% >150,000 2 839 4.2% 456 357 232 12.4% by debtors by amount 0-25,000 25,000-50,000 50,000-75,000 75,000-100,000 100,000-125,000 125,000-150,000 >150,000 Interest Rate Distribution RANGE (in %) CURRENT BALANCE % (in EUR) 60% 0%-1% 1 168 029 152 31.7% 50% 1%-1.5% 2 119 666 652 57.5% 40% 1.5%-2% 173 075 206 4.7% 30% 57.5% 2%-2.5% 97 466 924 2.6% 20% 31.7% 2.5%-3% 102 383 911 2.8% 10% 3%-3.5% 15 160 999 0.4% 0% >=3.5% 9 188 686 0.2% Figures as of 31 December 2020 4.7% 2.6% 2.8% 0.4% 0.2% 0%-1% 1%-1.5% 1.5%-2% 2%-2.5% 2.5%-3% 3%-3.5% >=3.5% 56#57INFORMATION FOR INVESTORS → Prospectuses, → Rating, → Financial Reports, → Cover Pool Information, → Covered Bonds issued within the Offering Programme → Additional Information... are available here: https://www.vub.sk/en/people/information-service/vub-bonds/vub-covered-bonds/ Bloomberg page: VUBB - VUB Covered Bonds 57#58CONTACTS Andrej Hronec, CFA, FRM Head of Department Treasury & ALM Email: [email protected] Phone: +421 2 5055 2883 Slavomira Palenikova Primary Issue Specialist Senior Treasury & ALM Email: [email protected] Phone: +421 2 5055 2517 Iveta Zaborska Primary Issue Specialist Treasury & ALM Email: [email protected] Phone: +421 2 5055 1885 Zdenko Stefanides Head of Department Research Email: [email protected] Phone: +421 250552567 58#59IMPORTANT NOTICE This document and all information contained herein have been prepared by Všeobecná úverová banka, a.s. (VUB) exclusively for information purposes with the aim of presenting the most relevant aspects which shall be considered in connection with the covered bonds issued by VUB (the Covered Bonds). The respective material is addressed to and intended to be used by a targeted group of recipients that fall within the category of qualified investors as defined pursuant to the Regulation (EU) 2017/1129 of The European Parliament and of The Council on the Prospectus, (hereinafter ,,Prospectus Regulation"). All the data, facts, figures and values presented herein, including any statement, explanation, opinion, appraisal, assessment, evaluation, commentary, comparison, analysis, research, survey or summary made or provided wither respect to them are based on general information obtained from the publicly available sources at the time this material was elaborated and therefore they may be subject to any change without prior notice. VUB relies on the information obtained from the sources believed to be reliable but does not guarantee its accuracy, adequacy, correctness or completeness. Such sources may often present relevant information and data in an aggregate or summarized form, refer to approximate figures or values or be operated by fault-prone personnel or autonomous automated systems and therefore VUB shall not be responsible for any inaccuracy, incompleteness, inadequacy, error, omissions, misrepresentation or other failures regarding such information or sources. VUB will not update information set forth herein that appears to be inaccurate, incorrect, incomplete, erroneous, misleading or otherwise faulty due to subsequent changes or modifications to the sources upon which such information is based, unless, in the view of VUB, the failure to update the respective information could have a material effect on the purpose and objective sought by this presentation. This document and all information contained herein shall not represent or be interpreted (whether expressly or impliedly) as a notice or information about preparation, declaration, organisation, performance or course of the public offering of securities pursuant to Prospectus Regulation, the commercial public tender pursuant to para. 281 et. sub. or the public offer for conclusion of a contract pursuant to para. 276 et. sub. of the Commercial Code (as amended). In addition, this document does not constitute in any respect a private offering of securities or a solicitation of any offer to subscribe for or purchase securities in any manner whatsoever. Nothing in this document shall be construed (whether expressly or impliedly) as a proposal, promise or act of VUB to enter into or be unconditionally and irrevocably bound by any contractual arrangement with the recipient of this document or to form any legally binding commitment. This document does not purport and shall not be considered to be an explanation or advice on legal, tax or financial matters and does not constitute any investment research, advice or recommendation for investing in the Covered Bonds. Each recipient shall consult its legal, tax and financial advisor prior to taking any relevant decision with respect to the Covered bonds. No reliance shall be placed for any purpose whatsoever on the information contained in this document or any other material discussed verbally or otherwise, or on its accuracy, completeness, adequacy, correctness or fairness. 59 59#60IMPORTANT NOTICE This document does not contain complex and complete information on the facts and circumstances relevant for taking sound and informed decision to invest in the Covered Bond. This document neither provides for sufficiently complex and complete information about the risks associated with the Covered Bond nor constitutes the basis for assessment and evaluation of these risks. Prior to making any investment decision with respect to the Covered Bonds and for the purposes of evaluating all relevant risks associated thereto each recipient of this presentation shall get acquainted with and take into consideration all information provided for in the prescribed mandatory documents prepared in accordance with applicable legislation (i.e. Act No. 566/2001 Coll. on securities and investment services, as amended, Prospectus Regulation and all relevant implementing measures). Nothing in this document constitutes an offer of securities for sale in the United States or any other jurisdiction where it is unlawful to do so. The Covered Bonds presented herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the US Securities Act), or the securities laws of any state of the United States or other jurisdiction. The Covered Bonds may not be offered or sold, directly or indirectly, within the United States or to, or for the account or benefit of U.S. Persons (as defined in Regulation S under the US Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and applicable state or local securities laws. VUB does not purport to register any portion of the Covered Bonds in the United States or conduct an offer or sale of the Covered Bonds in the United States. This document or any copy of it may not be forwarded or distributed, directly or indirectly, in the United States and to any other person, in particular to any U.S. Person or U.S. address, and may not be reproduced in any manner whatsoever. Any forwarding, distribution or reproduction of this document in whole or in part is unauthorized. Failure to comply with this directive may result in a violation of the US Securities Act or the applicable laws of other jurisdiction. Each recipient of this document shall inform itself of and observe any restrictions regarding access to this document imposed on it by applicable laws of the relevant jurisdiction. Without prejudice to the foregoing provisions, the recipients of this document may not forward it to any third person without prior consent of VUB. Without prejudice to anything mentioned herein, this document may only be distributed to and is directed at (a) persons who are outside the United Kingdom; or (b) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order); or (iii) high net worth entities, and other persons to whom it may be lawfully communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as relevant persons). Any person who is not a relevant person should not act or rely on this document or any of its contents. Any results presented herein that are based on historical data, figures or values and relate to past performance, ranking, profitability or other similar indicators shall not be considered as providing the guarantee or safeguards for achievement of the same results in the future and they may differ from each other in one or more respects. Where reference to information regarding tax matters is made in this document, each recipient must determine the relevance of such information and consider its effect on the basis of its own specific facts and circumstances. 60