VUB COVERED BONDS

INVESTOR PRESENTATION

Bratislava, June 2018

Economic Research, ALM

CONTENT

Slovakia at a Glance

Intesa Sanpaolo

VUB at a Glance

VUB Covered Bonds

5.4 million people

EUR 84.9bn economy (as of 2017)

A2 / A+ / A+ (Moody’s/S&P/Fitch) credit ratings

comfortable in investment grade

GDP per capita in euro terms more than doubled in

the past decade, since 2000 it more than tripled

SLOVAKIA IS SMALL BUT FAST

CONVERGING ECONOMY

Real GDP growth (%) Slovak GDP is fast converging to

Euro area Standards

GDP per capita in PPS, EA=100

Country 2000 2010 2016

Change

16/00

Change

16/10

Slovakia 43 68 73 30 4

Czech Rep. 61 76 83 22 8

Hungary 45 59 63 18 4

Poland 40 57 65 25 8

Germany 104 110 116 12 6

Italy 102 95 91 -12 -5

EU 28 85 92 94 9 2

Source: Eurostat, VUB Note: Euro area - changing composition

…GROWING AT THE TOP OF THE REGION

IN THE PAST DECADE

Source: Macrobond, VUB

Real GDP growth 2007-2017 (%)

ECONOMY IS EXPORT-ORIENTED,

CLOSELY LINKED TO GERMANY

Source: Eurostat, Slovstat, VUB

Slovakia is one of the most opened economies in Europe. Exports and imports relative to

GDP amount to 189% (as of 2017), the most from among the CE-4 countries.

86% (as of 2017) of Slovak exports go to EU, the highest share from among all 27 EU

members.

Germany is Slovakia’s most important trading partner. Directly it buys 21% of Slovak

exports and indirectly (being a key importer of Slovakia’s next key trading partners)

probably as much too.

Share of export to EU in total exports,

2017

Structure of Slovak exports by countries

(% share, as of 2017)

THE SLOVAKIA – BOND YIELDS

The ECB asset purchase programme APP launched in March 2015 affects Slovak interest

rate environment particularly heavy. This is due to the scarcity of available bonds for the

ECB’s purchases on the thin Slovak market.

FISCALLY, SLOVAKIA IS IN GOOD SHAPE

THANKS TO LOW INDEBTEDNESS

Slovakia closely watch on its

debt

Beyond the European require-

ments, Slovakia approved in

2011 a constitutional fiscal

responsibility law, which

specifies a set of penalties

once the debt surpasses set

thresholds.

Government consolidated gross debt in EU countries,

% of GDP

Source: Eurostat, VUB, as of 2017

HOUSEHOLD DEBT RATIO STANDS AT A

FAVORABLE LEVEL TOO

Household indebtedness within EU countries

Source: Eurostat, VUB, as of 2016

PROPERTY PRICE INFLATION DECELERATES

FROM PREVIOUS FAST GROWTH

Residential property prices,

total index 2Q2008=100

Source: Eurostat, NBS, VUB

Offered property prices reported by the National Bank have moderated their y/y growth

dynamics, to 4.3% in 4Q17 from previous peak 7.6% in 1Q17, over the quarter they have

been reported even down in 4Q.

Eurostat methodology posted further growth in both q/q and y/y terms, but dynamics

decelerated

SLOVAK FINANCIAL SECTOR IS BANK

DOMINATED

Slovak financial sector by segments

(% of assets)

Source: NBS, as of 1H 2017

BANKING SECTOR IS LOCALLY FUNDED…

Source: Moody's

Funding is relatively stable, dominated by retail and corporate deposits

Wholesale or parental funding are minor vis-à-vis peers

…WITH GOOD ASSET QUALITY…

Source: Moody's

NPLs in Slovakia are below 5% of total loans

Even a peak in 2010 was relatively modest at 6.3%

NPLs are lower for households than enterprises

Non-performing loans as of total loans

…WELL CAPITALIZED…

Tier 1 Ratio (%)

…AND PROFITABLE

Return on Assets

Slovak banks are profitable, albeit in recent years profits came under pressure

Bank levy (costing 300bps in ROE when introduced in 2012). In 2015 there was a

relief as Bank levy halved, from 0.4% of the base to 0.2%. Current rate will be in force

until 2020.

Intense competition

Low interest rate environment

Cost management compares favorably against many Western European banks.

Source: Moody's

CONTENT

Slovakia at a Glance

Intesa Sanpaolo

VUB at a Glance

VUB Covered Bonds

INTESA SANPAOLO – THE ITALIAN

LEADER…

• Leader in all segments with a market share of 18% in customer loans and in customer deposits

• Largest domestic network with approximately 4,700 branches serving 12.3 million clients

Leader in Italy with unique customer reach

• Selected commercial banking presence in CEE, Middle Eastern and North African countries reaching 7.6 million clients in 12 countries

• International network with a presence in 25 countries

Strategic International Presence

• 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 Bank with sustainable profitability

• EUR 1.2bn cash payout for 2014, 2.4bn for 2015, 3bn euro paid for 2016 and 3.4bn euro of proposed dividends 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% from 2020 and 70% for 2021

Clients & Shareholders

MOODY'S

Short-term credit rating: P-2

Long-term credit rating: Baa1

Outlook: Stable

STANDARD&POOR'S

Short-term credit rating: A-2

Long-term credit rating: BBB

Outlook: Stable

FITCH RATINGS

Short-term credit rating: F2

Long-term credit rating: BBB

Outlook: Stable

Viability: bbb

Figures as at March 2018

…WITH A EUROPEAN SCALE

Eurozone ranking Banks’ market capitalisation (eur bn)

Source: Bloomberg, as at 29 March 2018

26.825.623.423.2

35.7

34.7

7

35.335.1

29.628.3

37.66 37.8

40.25 42.9

49.73 53.2

53.255.0

2 75.277.5

1 85.4170.3HSBC

Banco Santander

Sberbank

BNP Paribas

UBS

Lloyds Banking Group

ING

Intesa Sanpaolo

BBVA

Barclays

Unicredit

Crédit Agricole

Société Générale

Royal B. of Scotland

Nordea Bank

Credit Suisse

KBC

Danske Bank

Standard Chartered

DNB

Deutsche Bank

Caixabank

8

4

9

10

INTESA SANPAOLO GROUP AT A GLANCE

Figures as at 31 December 2017

* €3,816m excluding the public cash contribution of €3,5bn offseting the impact on the capital ratios resulting from the Aggregate Set

** Including net income

Total Assets EUR 796,861 mln

Operating Income EUR 17,443 mln

2017 Net Income* EUR 7,316mln

Customers ~19,9 mln

Branches 5,843

Cost/Income Ratio 52.8%

Shareholder's Equity** EUR 56,205 mln

Common Equity Ratio 14.0%

INTESA SANPAOLO – THE INTERNATIONAL

SUBSIDIARY BANKS DIVISION

CONTENT

Slovakia at a Glance

Intesa Sanpaolo

VUB at a Glance

VUB Covered Bonds

BRIEF HISTORY

1990 - 1998 State owned / controlled universal bank with primary focus on commercial sector –large industrial groups

1992 Partially privatized

1999 - 2000 Experienced significant crisis due to non performing loans and received significant state support, EUR 1.5bln

2000 - 2001 Privatization of the bank: Intesa Sanpalo obtained 95% share in 11/2001

2002 - 2004 Restructured and refocused under Intesa Sanpaolo ownership to cater to retail, small business and SME segments since late 2002

2004 Purchase of Consumer Finance Holding (Quatro, Triangel i.a.)

2004 - 2005 Establishment of pension fund JV of VUB bank and Generali insurer, VUB Generali now 3.largest in Slovakia

2007 Purchase of BOF Leasing, rebranded as VUB Leasing since 2010

2008 Rebranding to Intesa Sanpaolo model, new logo

2017 Consumer Finance Holding and VUB Factoring merged with VUB Bank

VUB GROUP – KEY INDICATORS

Total Assets ≈ EUR 15.2 bln

Revenues ≈ EUR 149 mln

Net Profit ≈ EUR 57 mln

Branch Network 224

ATM Network 579

Clients 1.5 mln

Employees (Group) ≈ 3968

VUB Group is

2nd largest bank in Slovakia

VUB ownership

2.97%

~30,000 minority

shareholders

97.03%

IntesaSanpaolo

Figures as at 31 March 2018

NATIONWIDE BRANCH NETWORK

224 point of sales (186 Retail, 29 Corporate, other)

One branch in the Czech Republic

VUB GROUP – BANK AND 3 PRODUCT

SUBSIDIARIES

Currently close to 70% of revenues are derived from

Retail Banking and Consumer Finance Activities

VUB

Retail Banking

Quatro (former CFH)

SB Banking

SME Banking

Corporate Banking

LEASING

SME Leasing

Fleet mgm

Q-Car

(2007)

PENSION FUND

Pension Funds

(2005)

RECOVERY

Collections

Dormant co.

(Restruct. 2003)

BEST RATED BANK ON THE SLOVAK

MARKET

A2 / A

A1 / A+

A3 / A-

Aaa / AAA

Aa2 / AA

Aa3 / AA-

CSOB

Aa1 / AA+

SLOVAK BANK ULTIMATE PARENT

Baa1 / BBB+

Baa2 / BBB

KBC

Unicredit SK**

OTP Bank HUBaa3 / BBB-

Ba1 / BB+

COUNTRY

Austria

Hungary

SK

Belgium

highest quality

high quality

upper-medium grade

moderate

credit riskItaly

Speculative Rating GradeBa2 / BB

Moody’s /

S&P, Fitch scale

CZ

VUB

RZBErste

Unicredit

Deposit ratings by Moody’s www.moodys.com except SLSP* and Erste* (by Fitch) as of Apr, 2018

*Ratings by Fitch using different methodology **Rating withdrawn from this level, December 2013

ISPSLSP*Tatra banka Erste*

SECOND LARGEST IN SLOVAKIA…

Bank

Slovenská sporiteľňa

VUB

Tatra banka

ČSOB

Poštová banka

PSS

Sberbank

Prima banka

OTP banka

Total assets

(EUR bln)

Market share

(%)

21.5

19.0

16.2

10.6

5.7

3.9

4.8

0

2.0

Shareholder structure

Erste Bank 100%

Intesa Sanpaolo 97.03%

Raiffeisen Bank 79%

KBC 100%

J&T Finance 51.7% J&T Banka 36.4%

Erste Bank 35%; Raiffeisen 32.5% Bausparkasse 32.5%

Penta Investments 99.5%

Acquired by Prima

OTP Bank 99.2%1.4

0

3.6

2.9

4.2

8.0

11.7

14.4

16.3

Source: NBS, individual financial statements, as of December 2017

...HOLDING STRONG POSITION IN ALL KEY

PRODUCT SEGMENTS

2nd Loans (netto) 20.3%

2nd Housing loans 21.5%

2nd Branches 19.1%

2nd Total assets 19.6%

2nd Asset management 19.2%

2nd Deposits 18.0%

Product Market Share (%) and Ranking of VUB

Source: NBS, as of 31 March 2018

FINANCIAL FIGURES – BALANCE SHEET

STRUCTURE

Balance Sheet (BS) is showing strong performance

in commercial and sales area supporting the growth

in Loans and Client Deposits.

The deposits from customers are driven primarily by

Retail.

Financial Assets consist mainly of Slovak

Government bonds, Italy Gov. Bonds and securities

issued by largest Slovak Banks.

Loans with banks represent placements of excess

of liquidity mainly in Group banks (VUB Praha as

short loans, ISP Milano as mid term loans).

Due to banks comprise long term funding from

European Investment Bank, European Bank for

Reconstruction and Development and Short Term

deposits of ISP Milano.

Debt securities issued represent Mortgage Bonds

sold to ISP, Retail and Corporate investors. Last

Mortgage Bonds were issued in September 2017 .

Other Assets

Other Financial Assets

Loans and receivables with customers

Due from Banks

Cash and balances with CBs

Assets

14,942

271986

11,817

125

1,742

Equity

Other Liabilities

Debt securities in issue

Deposits from customers

Deposits from banks

Liabilities

14,942

1532493

2,246

10,223

448

EUR mln

Individual Balance Sheet as of 31 March 2018

Development

+6.3%

1Q2018

14,942

1Q2017

14,062

+13.2%

1Q2018

11,817

1Q2017

10,437

1Q2017

9,831

+3.9%

1Q2018

10,223

+17.5%

1Q2018

2,246

1Q2017

1,912

Balance Sheet Loans to Customer Customer Deposits Securities Issued

EUR mln

FINANCIAL FIGURES – BUSINESS

DEVELOPMENT

Strong growth in Retail lending is

driven by active participation on the

Mortgage lending on the market in

line with the Bank Strategy supported

by solid increase in consumer

lending.

Corporate lending supports the

overall growth strategy of the bank

with stable volume and profitability

growth.

The Bank increased the base of

customers deposits YoY 4% and

thus preserved sound liquidity

position represented by prudent loan

to deposit ratio. This allows the

Group to focus on further

improvement of the main services to

customers such as loans to

households, companies and

municipalities.

11,284

2Q2017

10,859

1Q2017

10,437

+13.2%

Corporate

Retail - other lending

Retail -mortgage

1Q2018

11,817

4Q217

11,488

3Q2017

Loans to Customers

Deposits from Customers

+3.9%

1Q2018

10,223

4Q2017

9,855

3Q2017

10,106

2Q2017

9,936

1Q2017

9,831

EUR mln

EUR mln

CAPITAL STRUCTURE AS OF 31/3/2018

(CONSOLIDATED)

Basel III regulatory limit set at 14.25%, including capital

conservation buffer

CET1 ratio reached 16.23%

Advanced IRB implemented for Large Corporates, SME, Small

Business and Mortgages portfolios

Specialized lending (SPV) on IRB – Slotting

Bank plans to roll-out IRB to Other retail products to optimize

capital utilization and create space for future lending growth

Remaining segments are on PPU

211

1,544

Tier 2 Capital

1,333Tier 1 Capital

796

7,549

419168

8,932

Credit Risk

Market Risk

Operational Risk

CVA

Retail - Others

697

1,169

Retail - Mortgages - IRB

7,549

Large Corporates

683

SPV

Other

Financial institutions (non-banks)

SME

1,274

931

1,539

1,256Capital RWA

EUR mln

CAR: 18.68%

LIQUIDITY

>100% >100%

NSFRLCR

Liquidity Coverage Ratio (LCR – Delegated ACT version), well above Basel 3

requirements for 2018, and above recommendation of National Bank of Slovakia

Net Stable Funding Ratio (NSFR) well above Basel 3 requirements for 2018

FINANCIAL FIGURES – PROFIT AFTER TAX

AND DIVIDEND PAYOUT

2014

81%

20172015

80%

27%

2016

100%

EUR mln

The bank kept its strong capital structure over the time (VUB Group capital

adequacy ratio 18.68% March-18).

FINANCIAL FIGURES - PROFITABILITY

Net Non-Interest Gross Operational Profit

EUR mln

Revenues

Net Interest Operating Costs

HR Costs Impairment Losses

Profit Before Tax

Profit After Tax

+28.53%

146

467

3Q17

325

2Q17

240

1Q17

114

1Q184Q17

+9.56%

88

319

3Q17

239

2Q17

159

1Q17

80

4Q17 1Q18

+73.66%

1Q184Q173Q17

113

2Q17

81

1Q17

34

148

58

226

3Q17

159

2Q17

101

1Q17

54

+30.52%

70

4Q17 1Q18

+17.18%

31

109

3Q17

79

2Q17

52

1Q17

26

4Q17 1Q18

241

+26.74%

1Q183Q17

193

2Q17

139

1Q17

60

4Q17

76

-68.68%

3

38

3Q17

30

2Q17

19

1Q17

9

4Q17 1Q18

+42.87%

3Q17

163

2Q17

120

1Q17

51

203

73

4Q17 1Q18

58

160

+43.10%

3Q17

128

2Q17

94

1Q17

40

4Q17 1Q18

The Revenues have increased

year over year mainly thanks to

trading income.

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.

The bank showed rise of

operating costs by 30%.

However among other factors

there are some extraordinary such

as income from litigations in 2017.

The bank was able to keep its

portfolio of loans in good shape

with satisfactory NPL ratio. IFRS 9

adoption allowed lower PL loans

provisions creation compared to

PY.

FINANCIAL FIGURES – PERFORMANCE

RATIOS

ROE (on yearly basis) ROA (on yearly basis)

Cost / Income Ratio

19.07%

14.56%

+4.14%

1Q20184Q20173Q2017

15.80%

2Q2017

17.49%

1Q2017

14.93%1.40%

1Q20184Q2017

+0.55%

2.00%

3Q2017

1.50%

2Q2017

1.68%

1Q2017

1.45%

1Q2018

45.16%

+0.73%

48.35%

4Q20173Q2017

48.09%

1Q2017

47.36%

2Q2017

42.22%

EUR mln

VUB is rated by Moody’s A2/Prime-1 according to which VUB is

profiting from its good financial condition, strong capital adequacy,

comfort liquidity, quality o assets and good profitability.

ROE increased rapidly mainly thanks to good results on revenues

side.

ROA shows positive development YoY with growing revenues and

total assets.

C/I ratio decrease confirms the banks operational excellence

maintaining its costs well under control.

75.5%

2.9%5.0%

12.8%

3.7%

9.7%

0.2%

386.7 370.0

3.41% 3.23%

0

0.05

0.1

0.15

0.0

100.0

200.0

300.0

400.0

500.0

1 2

2.7%

8.1%

10.6%10.0%

19.7%

2.2%

12.2%

13.5% 3.4%

17.4%

Services

Real EstatesFinancial

Construction

Transportation

Agriculture

Municipalities

0.61%0.79%53.06% 55.86%

FINANCIAL FIGURES – CREDIT PORTFOLIO

OVERVIEW AS OF MARCH 2018

-0.18% 0.19%

Mar-18Dec-17 Mar-18Dec-17Mar-18 NPL shareDec-17

NPLs Provision Coverage on NPLs

Retail Gross Exposure by Product Corporate Gross Exposure by Industry

Retail

8 333.3

57.5%

Corporate

6 764.7

42.5%

Gross Exposure

(On BS + Off BS

in EUR mln)

NPLs Provision Coverage on NPLsEUR mln Provision Coverage on PLsNPLsBoth NPL volume and

share decreased since

12/2017 mostly due to

positive evolution in

terms of asset quality as

well as several

successful high ticket

NPL recoveries and

write offs.

Increased expected loss

on performing portfolio

at 0.79% is still

favorable compared to

revenues.

Portfolio

diversification high,

both between retail and

corporate as well as

within corporate

customers. Majority of

retail corresponds to

Housing loans.

2.8%

Industry

Utilities

Traders

Mortgages

Small Business

Consumer Loans

Credit CardsOverdrafts

CFH CZ

CFH SK

CONTENT

Slovakia at a Glance

Intesa Sanpaolo

VUB at a Glance

VUB Covered Bonds

SLOVAK COVERED BONDS AT A GLANCE

The new legislation since Jan 2018 following EBA recommendations

The cover pool secures the investors' claims to repayment

Mandatory minimum overcollateralization of 5%

Collateral could be only residential housing loans secured by a lien to real estate

Liquidity buffer and stress testing applied under the new law

COVERED BONDS ISSUED BY VUB BANK

VUB COVERED BONDS

Issued under EMTN Program

ECB eligible

Aa2

rating

(Moody's)

10%

Over-Collateralization

Listed on the Bratislava Stock

Exchange

Outstanding amount of

EUR 2.24 bln

5.2Yweighted

average residual maturity

LEGISLATION OVERVIEW

Amendment to Act on Banks and other relevant laws are effective since January 1, 2018.

Covered bond area legislation in Slovakia:

Act No. 483/2001 Coll. on Banks;

Act No. 530/1990 Coll. on Bonds;

Act No. 566/2001 Coll. on Securities and Investment Services;

Act. No. 7/2005 Coll. on Insolvency

In order to become a covered bond issuing institution, the respective bank has to apply

the National Bank of Slovakia for a prior consent to the performance of activities

related to the covered bond programme.

The issuance and management of the covered bond is subject to the supervision of the

covered bond programme administrator and the supervision of National Bank of

Slovakia under the Act on Banks and under a special regulation.

NEW LEGISLATION SINCE JANUARY 2018*

Covered bond (CB) under Act on Bonds, Article 67

„Covered bond is a secured bond under a special regulation, the nominal value and aliquot interest income of

which are fully covered by assets or asset values in a covered pool under Art. 68(1) and correspond to the value

of assets which, for the whole period of validity of the covered bond, are preferentially intended to satisfy claims

arising from this covered bond and these assets, in case the bank issuing these bonds, is not able to properly

and timely pay its liabilities arising from them, will be preferentially used to pay the nominal value of the covered

bond and aliquot interest income. “

Covered pool under Act on Banks, Article 68(1)

„Covered pool consists of the following parts:

a) underlying assets under Art. 70,

b) additional assets under Art. 72,

c) hedging derivatives under Art. 73,

d) liquid assets under Art. 74.“

Underlying assets under Act on Banks, Article 70

„Underlying assets under Art. 68(1)(a) consist of the receivables of the bank issuing the covered bonds from

mortgage loans with a maturity period not longer than 30 years granted to consumers under a special regulation,

which are secured by liens to real estate under Art. 71 and which are registered by the bank in the registry of

covered bonds at its discretion.

Mortgage loan under Act on Banks, Article 5

„' mortgage loan' is a loan secured by a lien or other security right to real estate, including building under

construction, apartment, including apartment under construction or non-residential premises, including non-

residential premises under construction (hereinafter the “real estate”), a part of real estate or future real estate

and granted by a bank, foreign bank or a branch of a foreign bank”.

* Legislation in more detail is in attachment

LEGISLATION CHANGES SINCE 2018

Main changes in Slovak legislation for covered bonds:

Cancelling of Financing ratio (forcing banks to issue covered bonds to finance mortgage loans)

Widening of cover pool by including housing loans backed by residential properties

Maximum LTV at the level of 80%

Compulsory overcollateralization at minimum level of 5%

Including derivatives to the cover pool

Mandatory liquidity buffer (180 days)

Mandatory yearly stress testing

Special maturity extension in case of issuer's insolvency with the aim to allow selling of the cover pool

and covered bonds to other bank

Covered bonds bought back by issuer do not terminate

Strengthening of the role of Covered Bonds Programme Administrator

New disclosure requirements

Mortgage bonds issued before year 2018 can be transferred together with the all covering mortgage

loans to the new covered bond programme according to the new law by the end of 2018.

In that case the transferred mortgage bonds will be treated as new covered bonds with the

exception of maximum LTV (staying at the level 70%) and the maturity extension in case of issuer's

insolvency.

PRIMARY PLACEMENT

AMERICAN AUCTION METHOD

Decision to issue the covered bonds

Cover pool preparation and Certificate of CB Program Administrator issuance

Addressing of potential investorsT-10

T-9

T-1

Tradedate (T)

T+1

T+2 / T+5

T+7

C

O

M

M

O

N

I

S

S

U

A

N

C

E

P

R

O

C

E

S

S

ISIN assignment

Indicative Term Sheet and issue timing sent to potential investors (no Lead

Manager or Bookrunner is being used)

Rating assignment by Moody's

Final Terms distribution

IOI's collection

Firm Orders collection - amount and I-Spread (bookbuilding)

Closing the deals, confirmations via Bloomberg

Issue registration at Central Securities Depository of Slovakia

Settlement

Issue admission for trading on the Bratislava Stock Exchange

TARGET MARKET FOR COVERED BONDS

POSITIVE TARGET MARKET

Type of investor: Retail investor, professional investor, eligible counterparty

Knowledge and experience of Investor:Investor with low knowledge of investment products and experience

with them

Financial situation with a focus on the ability to bear losses: Ability of investor to bear a minor loss

Risk tolerance and compatibility of the risk/reward profile of the

product with the target market:Investor that accepts low risk investment that carries lower returns

Investor’s objectives and needs: Preserve, Income/Growth

Distribution strategy:

All strategies, with no additional requirements or restrictions on

distributors, including the sale with or without advice (including

execution only), tele sale, internet sale

NEGATIVE TARGET MARKET

Type of investor: -

Knowledge and experience of Investor: -

Financial situation with a focus on the ability to bear losses: -

Risk tolerance and compatibility of the risk/reward profile of the

product with the target market:-

Investor’s objectives and needs: -

Distribution strategy: -

In accordance with the new regulation MIFID II effective from January 1, 2018 the

approved target market for VUB’ covered bonds are as follows:

SETTLEMENT AND TAXATION

Settlement

Each issue is registered at Slovak Central Securities Depository (CSD).

The primary placement is settled as “delivery versus payment”.

The primary market (issuer vs first bond holder) works as follows:

the deal is agreed via e-mail and confirmed via Bloomberg (settlement is usually T+2 or T+5);

on a settlement day, based on DVP instructions, the bonds are credited to investor's securities account held in

CSD directly or via his custodians (CSOB/KBC bank for Clearstream or CITI Bank for Euroclear).

Taxation

The covered bonds are subject to general rules on taxation of debt securities under Slovak law

Income of Slovak resident – income from covered bonds will be generally taxed as a capital income

From 1 July 2013, no Slovak tax will apply to any income from covered bonds (or other Slovakdebt securities) realized by bond holders which are not Slovak tax residents

RATING - VUB COVERED BONDS ARE HIGH

QUALITY LEVEL

Source: Bloomberg, VUB; as of May 2018

Erste AG UniCredit

* Rating by Fitch using different methodology

Slovenska

sporitelna *

RBI AG

mBank Hip.*Pekao Hip.*

Tatra bankaNot rated

A2 / A

A1 / A+

A3 / A-

Aaa / AAA

Aa2 / AA

Aa3 / AA-

Aa1 / AA+

SLOVAKIA

Baa1 / BBB+

Baa2 / BBB

Unicredit CZ&SK

Baa3 / BBB-

highest quality

high quality

upper-medium

grade

moderate

credit risk

VUB

CZECH REP. AUSTRIA POLAND

Raiffeisenbank PKO Bank Hip.

MB ratings

Moody’s / S&P, Fitch scale

VUB COVERED BONDS – PORTFOLIO

STRUCTURE

100%

Type of Cover Assets

Real Estate-Residential

As of June 4, 2018 VUB has all its existing mortgage bonds transferred to the new covered

bonds register on the basis of which the bonds are deemed to be covered bonds.

All graphs on this slide include transferred mortgage bonds.

88%

12%

Covered Bondsby Coupon

Fix

Float96%

1%3%

Covered Bondsby Denomination

EUR

CZK

USD

0.9%

45.5%

41.1%

12.5%

DomesticSmall/Retail

DomesticInstitutional

ForeignInstitutional

ISP

3%

57%

28%

10%

2%<5Y

5 - 10 Y

10 - 15 Y

15 - 20 Y

>20 Y

Original maturities by %

of total amountCovered Bonds by Investor

VUB COVERED BONDS – PORTFOLIO

OUTSTANDING

In Slovakia VUB has the biggest portfolio of issued covered bonds (market share

over 40%)

Source: VUB, NBS; as of May 2018

220267

236

48

300

170

288

217

275

218

0

50

100

150

200

250

300

350

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 over 2028

EUR mlnMaturity Structure of VUB Covered Bonds

REGISTER OF COVERED BONDS

Cover assets comprise of housing loans only

The bank is obliged to keep the cover assets on its balance sheet

Housing loans, that no longer fulfill the legal requirements for cover asset, are excluded from the

register of covered bonds (e.g. LTV criterion, defaulted debtor, max maturity over 30 years, etc.)

The issuer is obliged to hold liquid assets in the register of covered bonds. VUB calculates and

keeps the liquid assets on top of the cover assets (on top of O/C).

Amount and type of cover assets:

Housing loans secured by residential property 2 487 360 100€

Outstanding value of covered bonds 2 256 557 591€

Overcollateralization 10.2%

Housing loans secured by residential property:

Average outstanding loan amount 42 974€

Average original loan amount 51 390€

Number of loans 54 077

Number of debtors 51 465

Denomination 100% in EUR

Average maturity 25.1years

Average utilization 4.3 years

Average LTV 48.48%

Interest rate 100% with fixed interest rate

Type of borrower 100% retail

Figures as of June, 2018

COVER POOL – 100% RESIDENTIAL REAL

ESTATE

Figures as of June, 2018

1.6% 6.6%

10.8%

9.6%

13.3%

18.5%

39.7%

Residual Maturity Structure

<0

0-5Y

5-10Y

10-15Y

15-20Y

20-25Y

25-30Y

31.9%

4.7%

5.0%

6.8%9.4%

16.5%

25.7%

LTV Distribution

<=40%

(40-45>%

(45-50%>

(50-55%>

(55-60%>

(60-65>%

>65%

18.4%

20.1%

16.1%

15.3%

30.0%

Regional distribution

North Slovakia

West Slovakia

East Slovakia

Central Slovakia

Bratislava

76.6%

13.7%

9.3% 0.4%

Loan Purpose

Purchase

Construction

Renovation

Remortgage

CREDIT RISK MANAGEMENT APPROACH

OVERVIEW

Underwriting

& Risk

Policies

Collateral

Management

& Portfolio

Monitoring

Collection

All risk policies related to origination are applied equally on all housing loans regardless of their presence in the

cover pool. Portfolio management and monitoring is performed on all housing loans, 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

housing loans 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.

Housing loans 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.

Besides policies applied within underwriting process, complex monitoring and portfolio management approach is

adopted during the whole lifecycle of the housing loan. Past due timelines, NPLs, rating distributions, vintages, nonstarters

and first payment defaulters are analyzed regularly in “PD area” while collateral concentration, residual LTVs, soft to hard

collection migrations and general collection efficiency in “LGD area”. Additionally, collateral values are subject to regular re-

evaluations supported by regularly validated statistical models.

Collection process consists of standard phases for soft and hard collection with standardized steps and collection

strategies (phone calls and SMSs messages from early delinquency stages, through letters and tailor made solutions

including payment calendar rescheduling and forbearance, to loan acceleration and liquidation of the collateral). Collection

activities on the housing loans have no relation to cover assets as housing loan covering particular bond issue is

automatically replaced by suitable candidate in case housing loan is more than 90 days past due.

CREDIT QUALITY (PAYMENT DISCIPLINE)

ON VUB’S HOUSING LOANS

Delinquency rate-s across vintages shows better

performance of loans originated in 2012 and later indicating

strong combination of risk policies and stability on the

market. Even 2011 vintage does not show unhealthy levels

of past dues.

In terms of payment discipline, VUB perceives environment

of mortgages as very favorable for longer time period

already.

Past due rate timelines show decreasing trend

(improvement) for several years already with no signs of

deterioration.

NPL rates confirm the same message, while one shot

increase at the beginning of 2015 was driven by

methodological change towards harmonized group NPL

definition. Otherwise, continuous decrease of NPLs due to

portfolio improvement and collection success is confirmed

throughout whole observed time period.

6M 12M 24M 36M

0,18% 0,47% 1,13% 1,88%

0,07% 0,39% 0,73% 1,19%

0,04% 0,17% 0,76% 1,04%

0,04% 0,14% 0,39% 0,75%

0,02% 0,09% 0,39%

0,00% 0,07%

0,02%

AVG 2016

Average Vintages (90+ DPD)

Year/ Vintage

AVG 2011

AVG 2012

AVG 2013

AVG 2014

AVG 2015

AVG 2017

DLQ Rate 30-360 DPD

0.74%DLQ Rate 90-360 DPD

0.26%

Share NPL

1.36%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

1/14 3/14 5/14 7/14 9/1411/141/15 3/15 5/15 7/15 9/1511/151/16 3/16 5/16 7/16 9/1611/161/17 3/17 5/17 7/17 9/1711/171/18 3/18

Housing Loans DLQ and NPL Rates

DLQ Rate 30-360 DPD DLQ Rate 90-360 DPD Share NPL

CREDIT QUALITY (RECOVERY MEASURES)

ON VUB’S HOUSING LOANS

Evolution of collection effectiveness is showing very positive results for longer time period, mainly in:

1. Stock in soft collection under control despite very significant portfolio growth recently

2. Very low migrations between soft and hard collections as cases are successfully resolved before loan acceleration

3. Decreasing stock in hard collection where key drivers are principal decrease and full repayment

Residual LTVs are recomputed regularly taken into

consideration current outstanding on the housing loans as

well as re-evaluated collateral. VUB adopted conservative

constrain not allowing increase of the collateral value within

re-evaluation.

Residual LTVs are showing improvement in terms of high LTV

concentration risk due to :

1. Executed LTV policy tightening activities in

order to meet regulatory limits defined by local

regulator at the end of 2014.

2. Adoption of LTV excess insurance (where

crystallized loan loss related to LTV over 80%

can be subject to insurance claim)

As of 30.12.2016 As of 29.12.2017 As of 29.3.2018

<80% 65,36% 71,57% 73,36%

80-90% 22,56% 20,70% 19,66%

90-100% 11,05% 7,19% 6,52%

>100% 1,03% 0,55% 0,46%

Total Housing Loan Stock - Residual LTV with applied LTV Insurance

Residual LTVOutstanding (%)

INFORMATION FOR INVESTOR

Financial statements of VUBhttps://www.vub.sk/en/financial-indicators/information-about-bank-activities/

Cover Pool Overview, Moody's Performance Overviewhttps://www.vub.sk/en/information-service/information-investors/

Base Prospectus & Covered Bonds issued within the Offering Programhttps://www.vub.sk/en/information-service/securities-prospectuses/

Ratinghttps://www.vub.sk/en/banks-profile/banks-profile/#tab_3

Bloomberg page: VUBB – VUB Covered Bonds

CONTACTS

Andrej Hronec, CFA, FRM

Head of Department

Treasury & ALM

Email: ahronec@vub.sk

Phone: +421 2 5055 288

Slavomira Palenikova

Primary Issue Specialist Senior

Treasury & ALM

Email: spalenikova@vub.sk

Phone: +421 2 5055 2517

Iveta Zaborska

Primary Issue Specialist

Treasury & ALM

Email: izaborska1@vub.sk

Phone: +421 2 5055 1885

Pavel Jansta, CFA

ALM Specialist Senior

Treasury & ALM

Email: pjansta@vub.sk

Phone: +421 2 5055 9005

ATTACHMENT

LEGISLATION SUMMARY – COVER BOND

PROGRAMME AND REGISTER

Covered bond under Act on Banks, Article 67:Par.(1): „Covered bond is a secured bond under a special regulation, the nominal value and aliquot

interest income of which are fully covered by assets or asset values in a covered pool under § 68(1) and

correspond to the value of assets which, for the whole period of validity of the covered bond, are

preferentially intended to satisfy claims arising from this covered bond and these assets, in case the bank

issuing these bonds, is not able to properly and timely pay its liabilities arising from them, will be

preferentially used to pay the nominal value of the covered bond and aliquot interest income. The covered

bond can be issued only by a bank under the provisions of this Act and the title must include the words

“covered bond”.“

Covered Bond Programme under Act on Banks, Article 67:Par.(5): „The covered bond programme is a set of all rights and duties of the bank issuing the covered

bonds related to the issuance of these bonds and the covered pool. The individual covered bond

issuances with the same type of underlying asset are considered a single covered bond programme. “

Register of Covered Bonds under Act on Banks, Article 75:Par.(1): „The bank issuing covered bonds shall enter the cover pool, the issued covered bonds, the

liabilities and costs referred to in Art. 68(3) in the register of covered bonds.“

Par.(2): „The bank issuing covered bonds shall make entries in the register of covered bonds in order to

register the value of assets and other property values comprising the cover pool, together with the

allocated values of the rights and liabilities of the Covered Bond Program broken down by individual

issues of covered bonds in the scope of coverage pursuant to Art. 69 for each individual issue.

Registration of a mortgage, as collateral, in the register of covered bonds shall not affect the requirements

for registration of the mortgage in the land register pursuant to a special regulation. “

LEGISLATION SUMMARY – PROPERTY

VALUATION & LTV CRITERIA

LTV criteria under Act on Banks, Article 71:Par.(1): „Real estate used to secure the underlying assets under § 70(1) must meet the following requirements:

a) it is a real estate that meets requirements under a special regulation and that is located on the

territory of the Slovak republic,

b) at the time of registration in the register of covered bonds under § 68(2) the outstanding principal of

a relevant mortgage loan under § 70(1) together with permissible liens under point (c) do not exceed

80 % of the value of the pledged property,

c) there is no lien or restriction on property transactions related to the real estate except liens or

restriction on property transactions under special regulations.“

Par.(2): „If the value of the pledged property drops to the amount of the currently outstanding principle of the

mortgage loan under § 70(1) together with extras, receivable from this mortgage loan is included into the

underlying assets only up to the amount that does not exceed 80 % of the value of the pledged property. If the

value of the pledged property drops below the amount of the outstanding principal of the mortgage loan under §

70(1) together with extras, receivable from such mortgage loan is not included into the underlying assets. The

bank issuing the covered bonds will immediately delete this asset from the register of covered bonds.“

Property valuation under Act on Banks, Article 71:Par.(3): „The value of the property under paragraph 1 will be determined by the bank issuing the covered bonds

based on an overall assessment of the property. The bank issuing the covered bonds is bound solely by own

assessment of the property. When determining the value of the property, the bank issuing the covered bonds is

obligated to take into account the prudent assessment of the capability of the property being tradeable in the

future, its value being sustainable in a long-term perspective, the market conditions and its utilization. The value

of the property under paragraph 1 must be documented in a demonstrable manner.“

Par.(4): „The bank issuing the covered bonds is obligated to continuously monitor and regularly reappraise the

value of the pledged property under special regulations.“

LEGISLATION SUMMARY – COVERAGE

RATIO AND OVERCOLLATERALIZATION

Coverage ratio under Act on Banks, Article 69:Par.(1): „Coverage ratio is a ratio of the value of the cover pool under Art. 68(1) and the total of the values of

liabilities and costs under Art. 68(3) incurred by the bank issuing the covered bonds. The bank issuing the

covered bonds is obligated to calculate the coverage ratio as of the last day of the relevant month.“

Mandatory overcollateralization under Act on Banks, Article 69:Par.(2): „The bank issuing the covered bonds is obligated to keep the coverage ratio continuously at the

minimum level of 105 % or at the higher level depending on the rating, other assessment, evaluation or testing

of coverage ratio; this provision shall be without prejudice to the requirements for coverage ratio under

paragraph 3.“

Par.(3): „In individual terms and conditions of the issuance of the covered bonds, the bank issuing the covered

bonds can determine a higher coverage ratio than the one stated in paragraph 2 and the bank issuing the

covered bonds is obligated to maintain such a higher coverage ratio until the full repayment of the covered bond

issuance for the entire relevant covered bond programme. If the bank issuing the covered bonds determines

several higher coverage ratios for different issuances, it is obligated to maintain the highest coverage ratio for

the entire relevant covered bond programme until the full repayment of the covered bonds issuance with such

highest coverage ratio, while the bank is also obligated to immediately replenish and continuously replenish the

cover pool to the extent corresponding to such highest coverage ratio. „

LEGISLATION SUMMARY – LIQUIDITY

BUFFER

Buffer of liquid assets under Act on Banks, Article 74:Par.(1): „If the bank issuing the covered bonds has not aligned the maturities of positive cash flows and

negative cash flows within the covered bond programme in every moment during the following 180 days

then, in order to cover all expected negative cash flows from the covered bond programme, it is obligated

to cover them from a buffer of liquid assets at least in the value of uncovered negative cash flows, unless

Art. 67(13) stipulates otherwise; these assets are a part of the covered pool under Art. 68(1)(d).“

Par.(2): „The buffer of liquid assets consists of

a) assets of tier 1 and assets of tier 2A under a special regulation, except own covered bonds

issued by the bank issuing the covered bonds and

b) exposure toward institutions.“

Par.(4): „The value of securities entering the buffer of liquid assets shall be determined on the basis of

their fair value including an aliquot interest income.“

Par.(5): „The value of the buffer of liquid assets is a part of the coverage ratio.“

According to Act on Banks, Article 122ya: „The requirement for calculation of the buffer of liquid assets

referred to in Article 74(3)(b) shall be implemented in following stages:

(a) as from 1 January 2018, for the period of the following 31 to 180 days the calculation includes positive cash flows and

negative cash flows from interests in full amount and negative cash flows from principal multiplied by a coefficient of 0.6;

(b) as from 1 January 2019, for the period of the following 31 to 180 days the calculation includes positive cash flows and

negative cash flows from interests in full amount and negative cash flows from principal multiplied by a coefficient of 0.8;

(c) as from 1 January 2020, for the period of the following 31 to 180 days the calculation includes positive cash flows and

negative cash flows from interests in full amount and negative cash flows from principal in full amount.“

LEGISLATION SUMMARY – STRESS TEST

Stress test under Act on Banks, Article 76:Par. (1): „The bank issuing covered bonds shall carry out stress tests as part of its covered bond program

in order to identify potential change in compliance with coverage indicator resulting from potential changes

in market conditions that might have adverse effect on the coverage indicator.“

Par. (2): „The bank issuing covered bonds shall perform stress test at least once per year according to the

data available as on 31 December of the preceding calendar year on or before 31 march of the

subsequent „

Par. (3): „The stress test referred to in paragraph 1 shall include test for:

a) credit risk;

b) interest rate risk;

c) currency risk;

d) liquidity risk;

e) counterparty risk;

f) operational risk;

g) immovable property prices decline risk.“

Par. (3): „The bank issuing covered bonds is required to prove in the stress test that it is able to keep the

coverage ratio at the level specified in Art. 69(2) and (3) also during the stress test period.“

LEGISLATION SUMMARY – STATUS OF

COVERED BOND HOLDER

Status of CB holder under Act on Insolvency, Article 195a:Par. (1): „If the bankrupt is a bank issuing covered bonds, separate part of the bankrupt's estate relating

to secured creditors who are owners of covered bonds issued by such bank shall be comprised of assets

and other property values serving for the coverage of such issued covered bonds and, at the same time,

also for securing the claims of owners of such bonds against such bank that are part of the cover pool

according to special regulation; such separate estate includes also receivables from mortgage loans,

including liens to immovable property securing the claims under mortgage loans serving for the coverage

of the issued covered bonds.“

IMPORTANT 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 Act No. 566/2001 Coll. on securities and investment services, as amended (the Securities Act) and the

Directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading, as amended (the

Prospectus Directive).

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 para.120 et sub. of

the Securities Act, 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.

IMPORTANT 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. Securities Act, Prospectus Directive 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.