Česká spořitelna...Page •In June, at 19 of its branches, CS launched its unique My Healthy Finance (MHF) service, in which it sees the future of banking advisory services. With

Page

Accelerated growth of the Czech economy and strong consumer

confidence leads to business growth in major CS segments

7 August 2015

Česká spořitelna -

H1 2015 consolidated results (unaudited, IFRS)

Page

Executive summary –

Czech economy shifts into higher gear

2

• Unexpectedly strong expansion of the Czech

economy at the beginning of 2015 (4.0% y/y in Q1

2015), paves the way for more than 3% GDP growth

for the whole 2015

• CPI climbing to 0.8% in June, confirming successful

transformation of ongoing economic expansion into

demand-inflation pressures

• EUR/CZK moving significantly closer to the 27 CNB‘s

floor, due to a large extent to increasing demand for

Czech exports from the EMU countries

• Following the recent upswing in the yields of German

10Y benchmarks encouraged by recent increase in

CPI within the EMU, the yields of the Czech 10Y

T-bonds have jumped from their historical lows at

0.37% reached in late April up to 1.26% at the end of

H1 2015; persisting ultra easy monetary policies are

pushing the yields of 2Y T-bonds to negative territory

• Recent escalation of situation in Greece not to have

direct impact on the Czech economy

-8%

-6%

-4%

-2%

0%

2%

4%

6%

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

2009 2010 2011 2012 2013 2014 15

Contributions to GDP Growth (y/y)

Net Exports Inventories

Fixed Investment Government Final Consumption Exp.

Household Final Consumption Exp. GDP Growth (y/y, %)

0%

1%

2%

3%

1-14

2-14

3-14

4-14

5-14

6-14

8-14

9-14

10-1

4

11-1

4

12-1

4

1-15

2-15

4-15

5-15

6-15

10Y T-Bond YieldsCZGB10YR IndexGDBR10 IndexGTATS10Y Govt

Page

Executive summary – Core income increased by 2% in Q2 vs Q1 2015

3

• Net profit of Ceska sporitelna declined by almost 6% y/y to CZK 7.3 bn in H1 2015

• Negatively influenced by creation of provision for expected annual contribution to Resolution

Fund in 2015 (CZK 444 mil)

• Operating result down by 5% due to decline of operating income reflecting difficult

market conditions, core income (NII+net fee income) decreased y/y but in Q2

increased by 2% vs Q1 2015

• Net interest income still determined by low interest rate environment, contracted by almost 3%

y/y but in Q2 NII increased by 1% compared to Q1 2015

• Net fee income fell by almost 8% y/y. In Q2 increased by 2% vs Q1 2015 supported by strong

fee income from securities business

• Net trading and FV result grew by 20% y/y in H1 2015, affected by one off income of CZK 520

mil (methodology change of derivatives valuation - implementation of OIS* discounting in Q1

2015)

• Operating expenses remained flat compared to H1 2014 as a result of strict cost control

• Creation of credit risk provisions dropped by 27% y/y reflecting continuously improving

risk profile

*Overnight index swap

Page

Executive summary – Faster growing loans, significantly reduced risk costs

4

• Customer loans achieved the highest growth rate since December 2013, increased by

4% y/y

• Major growth drivers are private mortgages (+10%y/y), commercial real estate loans (+7%)

and loans to large corporates (+6%)

• Volume of new private mortgages expanded by 47% in Q2 vs Q1 2015; CS became market

leader in private mortgages generation in Q2 2015 (with market share of 27%)

• Risk costs sharply declined from 75 bps to 53 bps due to improved loan quality

in all segments

• Share of NPLs reduced y/y from 4.6% to 4.2%

• NPL coverage by credit risk provisions stable at strong 81%

• Growing demand for investment products mirrored in growing assets in pension funds

of CSPS (up by 13% y/y) and in domestic and foreign mutual funds (up by 33% y/y).

Assets under discretionary management up by 12% y/y

• CS Group is strongly capitalized, CET 1 capital ratio increased to 19.2%

(from 18.6% in June 2014)

• Strong financial and business position of CS acknowledged by rating agencies,

Standard & Poor´s and Moody´s confirmed all CS´s ratings

Page

• In June, at 19 of its branches, CS launched its unique My Healthy Finance (MHF)

service, in which it sees the future of banking advisory services. With the MHF service,

the bank is returning to its original mission – helping clients to save. With the MHF service,

it helps clients better manage their finance and, uniquely on the banking market, truly reduce

their regular monthly expenditures (e.g., on utilities or telephone)

• CS keeps improving its mortgage offering: in addition to attractive low interest

rates, it is newly presenting the possibility of mortgage refinancing without any

paperwork. Clients can reserve the advantageous interest rate for up to one year

free of charge.

• In May 2015, Investicni spolecnost Ceske sporitelny won

the Best Investment Company in Central and Eastern

Europe award for 2015 granted by The European

magazine

• CS’s clients increasingly use ATMs for cashless transactions: since January 2015, they have entered

nearly 1.8 million payments (+12% y/y) amounting to an aggregate of CZK 8.7 bn (+26% y/y). After cash

withdrawals and balance enquiries, payment orders are the third most frequently used service. Thanks to ATMs,

clients do not need to visit a branch even when they want to arrange or top up an overdraft facility, take out

travel insurance, or boost their credit card limit

• In May and June, Ceska sporitelna offered students over the age of 18 unlimited free withdrawals from

CS ATMs and outgoing payments for two years, with every newly opened FRESH account

Q2 2015 business highlights - Retail

5

Page

Q2 2015 business highlights – Corporates

• Ceska sporitelna provided short-term multicurrency working capital financing facility in the amount of

CZK 500 mil to T-Mobile Czech Republic a.s. The new financing followed listing of Erste Group as a relationship

bank of Deutsche Telekom Group

• Ceska sporitelna provided a loan in total amount of CZK 1 bn for general corporate purposes with exceptionally

favourable conditions to one of the largest electricity suppliers in the Czech Republic, Prazska energetika, a.s.

• Ceska sporitelna was the Lead Arranger and agent of a syndicated loan, which provided working capital

financing to Prazska plynarenska, a.s., one of the most significant companies in energy supply. Total client loan

limit reached CZK 4 bn

• Ceska sporitelna as a Mandated Lead Arranger participated in the long-term club credit facility in the total

amount of EUR 250 mil for the financing of a strategic investment of Duslo, a.s. into Ammonia 4

construction. The investment is focused on long-term sustainable corporate competitiveness and strengthening of

Duslo's significant position on the European fertilizer market. The financing is one of the largest transactions closed

on the Slovak market in 2015

• Ceska sporitelna provided financing in the amount of EUR 17.5 mil in form

of purchase of receivables to the company SKODA ELECTRIC a.s., where the final customer was the

transport company of Riga City Municipality, Rigas Satiksme, Latvia. Ceska sporitelna finances

receivables regarding delivery of 2nd lot of 25pieces of trolley-busses under 5-year frame export contract for the total

of 125 pieces of trolley-busses, whereby the 1st lot was also financed by Ceska sporitelna. The transaction was

insured by Exportni garancni a pojistovaci spolecnost a.s.

• Erste Group Bank was a Sole Lead Arranger of the private placements in the form of bearer bonds under

German law issued by Ceske drahy, a.s. Total issue size was EUR 115.2 mil, out of which amount of EUR 77.5

mil was represented by 20-year tranche with a coupon of 3% p.a. and EUR 37.7 mil by 7-year tranche with a coupon

of 1.89% p.a. The issuer took advantage of the low interest rate environment and favourable market conditions. With

20yr tranche, Ceske drahy issued its longest-dated debt issue ever

6

Page

Q2 2015 Good things matter (CSR)

• Ceska sporitelna won the Zlata koruna (Golden Crown) award for Corporate

Social Responsibility, newly granted in 2015. The winner was determined

on the basis of an exclusive survey that Zlata koruna commissioned from Ipsos

• The oldest socially responsible project supported by Ceska sporitelna is the Palata Home,

a facility providing care to visually impaired people. The bank was one of its founders 120 years ago,

and it stands by its side to this day. In April and May, Ceska sporitelna’s clients had the opportunity to help Palata in the

Your Card Too Can Help project. For each payment with a Ceska sporitelna card, the bank made a contribution to the

home for the purchase of special positioning care beds. In the year 2015, the contribution amounted to CZK 1,017,655;

in the previous year it also exceeded CZK 1 mil

• The Ceska sporitelna Foundation distributed CZK 1 mil among 15 successful non-profit projects. In the third

annual Grant Programme of the Ceska sporitelna Foundation, our clients could obtain up to CZK 70,000 for a non-profit

organisation with which they cooperate, which is CZK 20,000 more than last year. The bank also distributed a million

crowns in its grant programme for employees, who applied for finance for the non-profits in which they volunteer. The

Ceska sporitelna Foundation granted its Floccus award to organisations and individuals helping people who are

on the fringe of society

• The country’s oldest university, Charles University, and the country’s oldest bank, Ceska sporitelna, have

decided to join forces in enhancing education and science in the Czech Republic. The two institutions signed a

Memorandum of Partnership and Cooperation in which they expressed their interest in cooperating in the Elixir for

Schools project managed by the Depositum Bonum Foundation

• Ceska sporitelna is also the General Partner of the University of Hradec Kralove and also cooperates with universities in Brno,

Ostrava, Olomouc and Jindrichuv Hradec

7

Page

Presentation topics

8

• Česká spořitelna

• Financial performance analysis

• Macroeconomic developments

• Economic trends in details

• Banking market

• Czech banking market developments

• Česká spořitelna market shares

• Appendix

Page

1-6 14 1-6 15 Change

Net interest income 13,305 12,933 -2.8%

Net fee and commision income 5,555 5,115 -7.9%

Dividend income 46 57 23.9%

Net trading and fair value result 1,195 1,435 20.1%

Rental income from investment properties & other operating leases 412 401 -2.7%

General administrative expenses -9,045 -9,084 0.4%

Gains/losses from financial assets and liabilities not measured at fair value through profit or loss, net 136 143 5.1%

Net impairment loss on financial assets not measured at fair value through profit or loss -1,917 -1,390 -27.5%

Other operating result 10 -577 -

Pre-tax result from continuing operations 9,697 9,033 -6.8%

Taxes on income -1,898 -1,713 -9.7%

Post-tax result from continuing operations 7,799 7,320 -6.1%

Net result for the period

Net result attributable to non-controlling interests 17 -1 -

Net result attributable to owners of the parent 7,782 7,321 -5.9%

Operating income 20,513 19,941 -2.8%

Operating expenses -9,045 -9,084 0.4%

Operating result 11,468 10,857 -5.3%

Cost/income ratio 44.1% 45.5%

Return on equity 15.0% 13.3%

Financial statements – Income statement (CZK mil)

9

Page

Financial statements – Balance sheet I (CZK mil)

Assets

10

Assets Dec 14 Jun 15 Change

Cash and cash balances 54,489 70,975 30.3%

Financial assets - held for trading 23,231 17,890 -23.0%

Derivatives 18,740 14,596 -22.1%

Other trading assets 4,491 3,294 -26.7%

Financial assets - designated at fair value through profit or loss 1,272 925 -27.3%

Financial assets - available-for-sale 99,289 94,087 -5.2%

Financial assets - held to maturity 151,513 161,158 6.4%

Loans and receivables to credit institutions 38,533 34,942 -9.3%

Loans and receivables to customers 500,039 510,765 2.1%

Derivatives - hedge accounting 878 823 -6.3%

Property and equipment 13,431 13,081 -2.6%

Investment properties 7,342 5,894 -19.7%

Intangible assets 3,593 3,413 -5.0%

Current tax assets 543 969 78.5%

Deferred tax assets 159 144 -9.4%

Assets held for sale 0 1,634 -

Other assets 8,277 6,799 -17.9%

Total assets 902,589 923,499 2.3%

*

*New item; sale of commercial real estate project

Page

Financial statements – Balance sheet II (CZK mil)

Liabilities

11

Liabilities and equity Dec 14 Jun 15 Change

Financial liabilities - held for trading 23,431 24,985 6.6%

Derivatives 20,654 16,013 -22.5%

Other trading liabilities 2,777 8,972 >100%

Financial liabilities designated at fair value through profit or loss 9,664 6,467 -33.1%

Deposits from customers 8,874 6,467 -27.1%

Debt securities issued 790 0 -100.0%

Financial liabilities measured at amortised cost 751,959 774,850 3.0%

Deposits from banks 54,570 65,124 19.3%

Deposits from customers 671,565 683,988 1.8%

Debt securities issued 23,043 22,811 -1.0%

Other financial liabilities 2,781 2,927 5.2%

Derivatives - hedge accounting 169 267 58.0%

Provisions 2,418 2,885 19.3%

Current tax liabilities 45 104 >100%

Deferred tax liabilities 474 310 -34.6%

Liabilities associated with assets held for sale 0 904 -

Other liabilities 6,646 9,636 45.0%

Total equity 107,783 103,091 -4.4%

Equity attributable to non-controlling interests -26 -27 3.8%

Equity attributable to owners of the parent 107,809 103,118 -4.4%

Total liabilities and equity 902,589 923,499 2.3%

*New item; liabilities connected with sale of commercial real estate project

*

Page

7,782

7,321-811

240 -39527 -580 185 18

1-6 14 Coreincome

Otherincome

Operatingexpenses

Risk costs Otherresult

Taxes onincome

Minorities 1-6 15

Operating income 0

-6%

3,6663,655

149 -872

-242340 618

-3 1

Q1 15 Coreincome

Otherincome

Operatingexpenses

Risk costs Otherresult

Taxes onincome

Minorities Q2 15

Operating income 0

0%

Financial performance – Executive summary

Core income increased in Q2 versus Q1

Q/Q net profit reconciliation (CZK mil) Y/Y net profit reconciliation (CZK mil)

12

• Net profit flat between Q1 and Q2 2015

• Core income (NII and net fee income) increased by 2% Q/Q.

• NII rose by CZK 75 mil mainly due to repricing of deposits

• Net fee income increased by CZK 74 mil due to higher income from card

business and from securities business

• Contraction of other income attributed to methodology change of

derivatives valuation (CZK -880 mil)

• Positive deviation in Other result caused by booking of provision

for expected annual contribution to Resolution Fund in Q1 2015

(CZK 444 mil) and by income from sale of bonds in AFS and HTM portfolio

in Q2 2015

• Booking of provision for expected annual contribution to Resolution

Fund in 2015 (CZK 444 mil in Other result) and lower operating income

led to decrease of net profit

• Decline of net fee income and NII (=core income) partly offset by

growing net trading and FV result (in other income)

• Net trading and FV result includes one-off gain from methodology change

of derivatives valuation (OIS discounting)

• Operating expenses remained flat

• Risk costs declined by 27% reflecting better risk profile across the

segments (details in the lending part)

P/L positive

P/L negative

* Includes Gains/losses from financial assets and liabilities not measured at fair value and Other operating result

* *

Page

Positive

Negative

902,589

923,499

3,900

10,554

10,017 -232 1,365 -4,693

Dec 14 Trading

liabilities

Bank

deposits

Customer

deposits

Debt

securities

Other

liabilities

Equity Jun 15

2%

902,589

923,49916,486 -1,245 -3,591

10,726 -180 -1,286

Dec 14 Cash andbalances

with CNB

Trading,financial

assets

Loans tobanks

Net loans Intangibles Other assets Jun 15

2%


Inflow of deposits continues

YTD total asset reconciliation (CZK mil) YTD total liability reconciliation (CZK mil)

13

• Cash and balances with CNB increased by 30% since YE 2014

as growing customer deposits were partially placed with CNB

• Net customer loans expanded by 2%

• Driven by private mortgages, commercial real estate loans

and loans to large corporates

• Total balance sheet raised by almost CZK 21 bn

• Deposits from banks went up by 19% (CZK 10.6 bn)

• Mainly driven by term deposits

• Customer deposits grew by more than CZK 10 bn (+1%) in 2015

• Deposits in parent bank representing 88% of group customer

deposits rose by 3%, driven by demand deposits, representing

already 91% of deposits

• Public sector deposits rose by 24% (excl. repo by 47%)

• Equity lowered by dividend payment

Increase

Decrease

Page


Strong solvency ratio and improving Loan/deposit ratio

Cost/income ratio

14

Loan/deposit ratio Number of branches

ROE Solvency ratio Number of employees (eop)

45.1%44.1%

45.5%

1-6 13 1-6 14 1-6 15

17.1%

15.0%13.3%

1-6 13 1-6 14 1-6 15

653644

633

Jun 13 Jun 14 Jun 15

10,621 10,474 10,545

Jun 13 Jun 14 Jun 15

72.7% 73.5% 74.0%

Jun 14 Dec 14 Jun 15

18.7% 18.5%19.2%

Jun 14 Dec 14 Jun 15

Page

Operating result –

Lower by 5% compared to H1 2014

• Operating result decreased as strong

growth of net trading and FV result did

not outweigh decline of net interest

income and net fee income

• NII still affected by low interest rate

environment

• Contraction in NFCI driven by declining

fees from account maintenance and from

lending

• Net trading and FV result affected

by one off income from methodology

change in valuation of derivatives (impact

CZK 520 mil); fuelled also by higher result

from customer derivatives

• Operating expenses remained flat

Operating result (CZK mil)

15

11,510 11,468 10,857

1-6 13 1-6 14 1-6 15

-5%

Operating income structure (CZK mil)

13,681 13,305 12,933

5,725 5,555 5,115

1,090 1,1951,435

475 458458

1-6 13 1-6 14 1-6 15

Net interest income Net fee and commision Net trading and fair value result Other

Page

13,681 13,305 12,933

1-6 13 1-6 14 1-6 15

-3%

Net interest income –

Effected by low interest rates environment

• Despite higher growth dynamics in lending

net interest income contracted as the interest

income generation is limited by zero market

interest rates

• Volume growth did not compensate for

continuously maturing higher yielding

assets and changes in balance sheet structure

• On the other hand, ongoing repricing of

deposits led to optimisation of costs of funds

• In Q2 NII increased by 1% compared to Q1

2015 driven mainly by further repricing of

deposits; supported by continuing lending

growth (e.g. private mortgages q/q up by

3.5%)

• Net interest margin decreased to 3.34% but

went up by 2 bps compared to Q1 2015

16

Net interest margin

Net interest income (CZK mil)

3.60% 3.55% 3.34%

0.95% 1.03%

0.55%

1-6 13 1-6 14 1-6 15

Net interest margin 5Y IRS H1 AVG

Page

5,725 5,5555,115

1-6 13 1-6 14 1-6 15

-8%

1,586 1,437 1,139

3,229 3,0642,873

378 562693

532 493411

1-6 13 1-6 14 1-6 15

Lending Payment transfers Securities transactions Other

Net fee and commission income –

Down by 8% y/y

• Decline of net fee income from current

account maintenance and from lending was

partly mitigated by growing income from

securities business

• Shift of clients´ interest from deposits to

investment products contributed to 23% y/y

growth of net fee income from securities

business

• Successful sale of investment products evidenced

in 33% growth of clients´ assets in mutual funds

• Lower fee income from current account

maintenance and payment transactions

reflected higher usage of advantageous

products and approaching new EU regulation

of card fees

• Lending fees suffered from fee holidays in

retail loans

17

Net fee and commission income structure (CZK mil)

Net fee and commission income (CZK mil)

*

* Including fees from account maintenance and payment cards fees

Page

4,685 4,311 4,368

3,6223,582 3,645

1,1541,152 1,071

1-6 13 1-6 14 1-6 15

Personnel expenses Other administrative expenses

Depreciation and amortisation

9,461 9,045 9,084

1-6 13 1-6 14 1-6 15

0%

Operating expenses –

Remained flat

• Operating expenses stayed flat

reflecting new cost optimization

initiatives

• Other administrative expenses (OAE)

up by 2% y/y

• Excluding contribution to Deposit insurance

fund OAE up by 1%

• Personnel expenses up by 1%

• Depreciation down by 7%

• Major decline in depreciation of tangible

assets (hardware and office equipment)

Operating expenses (CZK mil)

18

Operating expenses structure (CZK mil)

Page

Group capital adequacy* –

CET 1 ratio at strong 19.2%

• CS Group is strongly capitalized,

CET 1 capital adequacy increased by

60 bps y/y to 19.2% as a result of

higher Tier I capital

• Tier I capital increased by almost 10%

compared to June 2014 due to inclusion

of retained profit; supported by AFS

reserve

• Group solvency ratio (Tier I+Tier II)

equal to Tier I ratio (zero Tier II capital)

• All subordinated debt bought back due

to strong capital position of CS

19

Basel III Basel III Basel III

30/6/2014 31/12/2014 30/06/2015

Tier I capital 81,855 84,165 89,668

Tier I+II capital 82,015 84,361 89,676

Risk exposure to credit risk 371,485 389,721 396,821

Risk exposure to market risks 9,528 8,261 12,263

Risk exposure to operational risk 58,595 58,682 57,033

Total risk exposure 439,608 456,664 466,117

Capital Adequacy Tier I ratio 18.6% 18.4% 19.2%

Capital Adequacy Tier I+II ratio 18.7% 18.5% 19.2%

CS Group, CZK mil.

*Preliminary figures

Page

Balance sheet development –

Loan to deposit ratio increased to 74.0%

Net customer loans (CZK mil) Group customer deposits (CZK mil)

20

• Net customer loans increased by 4% since June 2014,

driven by private mortgages, corporate real estate loans

and loans to large corporates /details in the lending part of

the presentation/

• Group customer deposits picked up by 3% y/y mainly

due to continuous inflow of deposits from individuals

• Excluding repo operations the deposits would increase

slightly slower by 2% y/y

489,483 491,289 500,039 505,080 510,765

Jun 14 Sep 14 Dec 14 Mar 15 Jun 15

4%673,558 664,746 680,439 686,320 690,455


3%

Page

851.9 887.7 918.4

30/06/2014 31/12/2014 30/6/2015

Assetmanagement

Dom. andforeign mutualfunds

CSPS

SSCS

CS

CZK

bn

CS Group deposits – Market environment advantaging alternative deposit products • Customer deposits in parent bank increased

by nearly 7% y/y

• Growth came mainly from deposits of individuals

and public sector deposits (both added around +9% y/y)

• Growth of clients´ assets in pension company

carried on by 13% y/y

• Driven by persisting rise of clients´ funds

in the 3rd pillar (both in transformed fund and participants´

funds)

• Domestic and foreign mutual funds grew on fast

track; added 33% y/y

• Driven by persisting higher clients´ demand

for investment products stemming from low-rates

environment

• Assets under discretionary management increased

significantly by 12% y/y

• Asset management for private individuals more than

doubled in y/y comparison

• SSCS (building society) showed further outflow of

deposits

CS Group deposits (CZK bn)

21

8%

IFRS, in CZK bn 30/06/2014 31/12/2014 30/6/2015Change

(y/y)

CS - customer deposits 573.2 596.1 611.6 6.7%

SSCS - building society 89.0 81.4 77.6 -12.8%

CSPS - pension company 54.2 57.7 61.3 13.1%

Dom. and foreign mutual funds 75.9 86.4 100.9 33.0%

Asset management 59.6 66.0 67.0 12.4%

Total 851.9 887.7 918.4 7.8%

Page

Group loan portfolio – Summary

Mortgage driven growth continues, sharp drop in risk costs

22

• Loan portfolio in CS Group (gross) increased by 4% y/y

• Growth driven by private mortgages supported by continuing improvement of consumer

confidence, by commercial real estate loans and large corporates (blue chip names mainly

from energy sector and beverages)

• Risk costs decreased significantly from 75 bps to 53 bps y/y

• Better performance in all segments, but mainly supported by recoveries in corporate area

• Quality of loan portfolio as share of NPLs on total customer loans improved from 4.6%

to 4.2% y/y

• Provision to NPL coverage stable at strong 81%

• Total NPL coverage (including collateral) at 118.0%

Page

Group loan portfolio –

Group loans increased by 4% y/y

CS Group Loan Portfolio (gross) Loan Book by Group members as of June 2015

23

• CS Bank dominates the CS Group

• Continuing economic recovery in corporate and positive sentiment of housing market fuels growth in CS

bank and leasing companies

• Decline in Stavebni sporitelna CS caused by prevailing low interest rate environment unwinding advantages

of building savings loans compared to mortgages

in CZK mil, IFRS 30/06/2014 31/12/2014 30/06/2015Y/Y

Change

I. CS Bank 473,174 482,033 493,519 4.3%

II.1. Stavebni sporitelna CS 37,091 36,442 35,320 -4.8%

II.2. Leasing (sAL, EL) 13,568 13,711 14,060 3.6%

II.3. Factoring CS 2,085 2,134 1,813 -13.0%

II.4. Other subsidiaries 2,022 2,431 2,574 27.3%

III. Consolidation items -19,853 -18,563 -18,800 -5.3%

Total Loans (consolidated) 508,087 518,188 528,486 4.0%

Bank90.2%

Stavebni sporitelna

6.5%

Leasing subs.2.6%

Factoring0.3%

Others0.5%

Page

Bank loan portfolio –

Private mortgages added 10% y/y

Loan portfolio development - CS Bank Loan portfolio by customer segments

as of June 2015

24

• Loans to retail rose by 4% y/y

• Growth driven by mortgages (+10%) supported

by present low interest rates and strong consumer

confidence

• Loans to corporate added 4% y/y

• Growth driven by Real estate with key projects in

logistics and shopping malls

• Large corporates of blue chip names in energy

sector and beverages

Large corporates

8.0%

SME33.9%

Consumer, private credit

cards, overdrafts and home equity

13.3%

Mortgage & real est.41.9%

Others 2.8%

267.1275.9 278.5 284.0 290.8

193.6 197.0 194.7 198.0 202.7

4% 5% 3%2%

4%

-10%

10%

30%

50%

0

50

100

150

200

250

300

Jun 13 Dec 13 Jun 14 Dec 14 Jun 15

in C

ZK

bn

Retail loans Corporate loans Total loan growth (y/y)

Page

Bank loan portfolio –

Growing mortgage book further strengthens the risk profile

Private mortgages development Consumer lending development*

25

• Private mortgages rose to CZK 175.8 bn

(+10% y/y)

• Healthy growth with low risk costs continues

• In Q2 2015 volume of new private mortgages rose

by 47 % q/q

• Whole portfolio: average weighted maturity at 23.2

years, residual maturity at 19 years; LTV ratio at

comfortable 64.5%

• Consumer lending* at CZK 64.6 bn (-5% y/y)

• Higher new business in fix term loans held back by

overdrafts and credit cards

• Nevertheless, consumer lending excluding

overdrafts and credit cards stabilised vis-à-vis Dec

2014

*Consumer lending here includes also home equity loans, credit cards

and overdrafts. Social loans are excluded.

146.0155.1 160.3 167.2

175.8

10%11%

10% 8%10%

-5%

5%

15%

25%

020406080

100120140160180200


in C

ZK

bn

Private Mortgages Private Mortgages growth (y/y)

70.4 69.7 67.7 66.2 64.6

-5% -4% -4% -5% -5%

-20%

0%

20%

40%

60%

0

20

40

60

80

100


in C

ZK

bn

Consumer Lending Consumer Lending growth (y/y)

Page

Group asset quality Gradual improvements of portfolio quality with sharply declining risk costs

NPL ratio and NPL coverage Risk cost development

26

• Group share of NPL declined to 4.2% y/y

• Portfolio quality further improved in retail as well

as corporate

• Provision coverage at strong 81%

• Total coverage (provisions and collateral

to NPL) at 118.0%

• Annualized group risk* costs declined to 53 bps

• Following positive development especially in real estate

(upgrades and recoveries)

• Lower risk costs observed also in other major segments

(private mortgages, SMEs, micro enterprises)

* Since 2013 on-balance risk costs only

5.2%4.6% 4.6% 4.4% 4.2%

73%78% 79% 80% 81%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%


Group NPLs Risk Provisions / NPLs

81

67

75 72

53

-13% -11% -7% 7%

-30%

-100%

0%

100%

200%

300%

0

10

20

30

40

50

60

70

80

90


in b

ps

Group Y/Y change

Page

Presentation topics

27


• Segment financial performance analysis



• Banking market



• Appendix

Page

Macroeconomic developments –

GDP growth in Q1 15 beating all estimates

Real GDP growth y/y Components of GDP

28

• Czech GDP growth skyrocketed by 2.5% q/q (4.0% y/y) in Q1

2015, reaching its highest-ever level

• Although the acceleration of economic growth in q/q terms was

significantly boosted by a one-off increase in tax collection due to

legislative changes in the area of excise taxes on tobacco

products, the 1.3% q/q GDP increase after adjusting for taxes on

these products confirms the surprisingly strong expansion of the

Czech economy (higher utilization of EU funds serving as one of

the most supportive elements)

• Similarly to previous quarters, the main contributions to the Czech GDP

growth in Q1 2015 (y/y) came from capital formation (contributing by 2.5 p.p.

to the y/y growth, due mainly to an increase in inventories) and private

consumption (adding 1.4 p.p. thanks to 2.9% y/y growth), boosted by

accelerating growth in real wages and declining unemployment

• Net exports subtracted -0.3 p.p. from the y/y GDP growth in Q1 2015

• Manufacturing sector supported to a large extent by continuing expansion in

the automotive industry and remained the most significant positive

contributor to the GDP growth on the supply side (adding 1.7 p.p.)

-0.5%

2.0%

3.7%

2.2% 2.4%

2013 2014 2015e 2016e 2017e

0.7%1.5%

2.9% 3.0% 2.6%

-2.8%

2.0%

6.1%

-0.4%

1.2%

2013 2014 2015e 2016e 2017e

Private consumption growth

Fixed capital formation growth

Page


CPI bottoming out in H1 2015

Unemployment and inflation General government debt and government balance

29

• CPI climbed to 0.8% at the end of H1 2015, reaching the highest level

since December 2013

• General unemployment rate remaining close to lowest ever levels (6.0%

in May)

• Unexpectedly strong expansion of the Czech economy at the beginning

of 2015, suggests that central government’s cash-flow-based budget

deficit will end up fairly below the level of CZK 100 bn, approved by the

Czech government for the year 2015

• The MoF‘s excessive cash buffer (roughly CZK 200 bn as of the end of

H1 2015) will be sufficient to fully cover the central government deficit in

2015 and keep the central government debt at a stable level

8.2%7.5%

6.7% 6.5% 6.5%

1.4%0.4% 0.7%

1.6%2.1%

2013 2014 2015e 2016e 2017e

Unemployment rate (eop)

Consumer price inflation (ave)

45.7% 42.6% 41.1% 41.2% 41.9%

-1.3% -2.0% -2.0% -1.4% -1.3%

2013 2014 2015e 2016e 2017e

Public debt (share of GDP)

General government balance (share of GDP)

Page


Risk of deflation warded-off, CZK/EUR foreseen to remain close to 27 • CPI increased to 0.8% at the end of H1 2015, as adjusted

(core) inflation reflecting successful transformation of

ongoing domestic economic expansion into inflation

pressures has served as its main driver

• Recent upswing in headline CPI significantly lowers the

probability that the CNB will have to proceed with further

monetary easing (most probably via further CZK

weakening) in the coming months

• Moreover, headline CPI heading closer to 2% in H1 2016

may force the CNB to contemplate abandoning of its FX

intervention commitment (to keep the EUR/CZK close to

27) in early H2 2016

• Surging Czech current account surplus represents one of

the key fundamental factors standing behind the recent

EUR/CZK decline close to the 27 level

• In order to avoid a loss of credibility related to the risk of a

sudden EUR/CZK decrease below the 27 floor, the CNB

stressed that it is determined to prevent excessive firming

of CZK below the 27 threshold, instead of committing

itself to a full-fledged defence

• EUR/CZK is expected to hover close to 27 in H2 2015

30

Development of CPI and its structure

-3%

-2%

-1%

0%

1%

2%

3%

4%

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

2012 2013 2014 2015

Fuel prices

Adjusted inflation excluding fuels and food

Food prices (including alcoholic beverages and tobacco)

Indirect taxes in nonregulated prices

Regulated prices

Annual consumer price inflation (in per cent)

Page

Presentation topics

31





• Banking market



• Appendix

Page

• The Czech banking sector is resilient to potential

adverse shocks, thanks to its high capital adequacy

ratio (Tier 1 at 18.0% in 3/2015) and sufficient liquidity

• This is confirmed by CNB stress tests (6/2015)

• Rating agency Moody's changed its outlook for the

Czech banking system to stable from negative

Czech banking market –

Sufficiently capitalized and resilient

Capital ratios of Czech banks* (%) Non-performing loans ratios (%)

• The shares of non-performing loans (NPL)

in residential sectors have further declined

with improving economic situation

• High NPL in non-residential loans due to one-off

developments in non-commercial financing

32

* Compliant with CNB segmentation of banks

17.1 17.419.9

21.6

13.215.1

0

5

10

15

20

25

Q1 2014 Q1 2015 Q1 2014 Q1 2015 Q1 2014 Q1 2015

Large banks Medium-sized banks banks Small banks

T1 Capital ratio Total capital ratio

5.4

7.2

4.9

14.3

4.76.1

4.4

14.9

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Total Non-financialcorporations

Households

Residents Non-residents

31/05/2014 31/05/2015

Page


Continuing growth in loans and deposits

Retail and corporate loans* (Y/Y growth) Retail and corporate deposits* (Y/Y growth)

33

• As of 30/6/2015 growth of total loans slightly bellow 6% y/y,

thanks to strong growth in housing loans (7% y/y)

• In 2015, CS expects average growth rate of client loans of

around 5%. Retail loans will keep their 2014 dynamics, with

housing loans growing 6% and consumer loans 2% y/y

• Total deposits grew by 2% y/y as of 30/6/2015 driven by strong

increase of retail and corporate deposits, while public sector

deposits were significantly reduced (-25% y/y)

• In 2015, CS expects growth rate of total deposits of 2-3%,

since uncertainty about public sector deposits continues

* 2014 growth rates of both total loans and total deposits were influenced by FX interventions of CNB

4.7%4.0%

4.4%

6.7%

0.2%0.9%

3.0%

4.8%

30/9/14 31/12/14 31/3/15 30/6/15

Retail loans Corporate loans

4.8%

6.1% 5.7% 5.3%6.4%

8.0%

10.0%10.6%

30/9/14 31/12/14 31/3/15 30/6/15

Retail deposits

Corporate deposits

Page


Around 90% of loans and deposits denominated in local currency

Customer loans (June 2015) Customer deposits (June 2015)

34

58.4%

32.5%

0.1% 9.0%

LC retail loans LC corporate loans

FX retail loans FX corporate loans

67.6%

21.9%

3.0%7.6%

LC Retail deposits LC Corporate deposits

FX Retail deposits FX Corporate deposits

Page

Banking market –

Market shares of CS (June 2015)

Asset side Liability side

35

• Market leadership in:

• Total loans (market share of 19%)

• Number of customers (5.0 mil)

• Total mortgages (market share of 27%)

• Consumer loans incl. credit cards (market share of 30%)

• No. 2 in:

• Total assets (market share 18%)

• Market leadership in:

• Total deposits (market share of 20%)

• 25% in retail deposits, 12% in corporate deposits

• No. 2 in mutual funds with market share of 26%*

18% 18% 18% 18% 18%

24% 23% 23% 23% 23%

19% 19% 19% 19% 19%


Total assets Retail loans Corporate loans

26% 26% 26% 26% 26%

11% 11% 11% 12% 12%


Retail deposits Corporate deposits

*As of 31/3/2015

Page

Presentation topics

36





• Banking market



• Appendix

Page

37

Structure of CS Group loan portfolio (gross) –

Group customer loans

Outstand. Share Outstand. Share Outstand. Share Outstand. Rate Outstand. Rate

Retail 278,455 54.8% 284,029 54.8% 290,802 55.0% 6,773 2.4% 12,347 4.4%

Private overdrafts 5,622 1.1% 5,188 1.0% 4,568 0.9% -620 -12.0% -1,054 -18.7%

Private credit cards 4,201 0.8% 4,184 0.8% 3,724 0.7% -460 -11.0% -478 -11.4%

Consumer lending 52,148 10.3% 51,647 10.0% 51,681 9.8% 33 0.1% -468 -0.9%

Private social 1,270 0.2% 1,159 0.2% 1,051 0.2% -109 -9.4% -219 -17.3%

Home equity mortgages 5,756 1.1% 5,178 1.0% 4,654 0.9% -524 -10.1% -1,102 -19.1%

Private mortgages 160,328 31.6% 167,160 32.3% 175,818 33.3% 8,658 5.2% 15,490 9.7%

Micro and Small Enterprises 39,633 7.8% 39,755 7.7% 39,770 7.5% 15 0.0% 137 0.3%

Municipalities 9,496 1.9% 9,758 1.9% 9,537 1.8% -221 -2.3% 41 0.4%

Corporate 194,719 38.3% 198,004 38.2% 202,717 38.4% 4,713 2.4% 7,998 4.1%

Large corporate 35,671 7.0% 35,448 6.8% 37,705 7.1% 2,257 6.4% 2,034 5.7%

SME 126,761 24.9% 123,473 23.8% 126,848 24.0% 3,375 2.7% 87 0.1%

Real estate 32,101 6.3% 36,459 7.0% 34,497 6.5% -1,962 -5.4% 2,396 7.5%

ALM/Other 186 0.0% 2,623 0.5% 3,666 0.7% 1,043 39.8% 3,481 >100%

BANK: LOANS TO CUSTOMERS 473,174 93.1% 482,033 93.0% 493,519 93.4% 11,486 2.4% 20,346 4.3%

SUBSIDIARIES 54,766 10.8% 54,718 10.6% 53,767 10.2% -951 -1.7% -999 -1.8%

CONSOLIDATION ITEMS -19,853 -3.9% -18,563 -3.6% -18,800 -3.6% -237 1.3% 1,053 -5.3%

GROUP: LOANS TO CUSTOMERS 508,087 100.0% 518,188 100.0% 528,486 100.0% 10,298 2.0% 20,399 4.0%

in CZK mil, IFRS30/06/2014 31/12/2014 30/06/2015 YTD change YTY change

Page

Ratings of Ceska sporitelna

Status as of 31 July 2015

38

Fitch A- F2 a- 2 stable 20/05/2015

Moody's A2 Prime - 1 stable 17/03/2015

Standard & Poor's A- A-2 negative 09/06/2015

Latest

actionsRating Agency Long-term Short-term Viability Support Outlook

• Latest rating actions

• Rating agency Standard & Poor´s confirmed all CS ratings on 9 June 2015

• Fitch downgraded LT and ST ratings of CS on 20 May after downgrade of parent company Erste Group

Bank as government support has been taken out

• Moody´s revised the outlook for LT rating of CS from negative to stable on 17 March 2015

Page

Macroeconomic figures –

Historical and forecasted macroeconomic data

39

2011 2012 2013 2014 2015e

Population (ave, m) 10.5 10.5 10.5 10.5 10.5

GDP/capita (EUR thsd) 15.6 15.3 15.0 14.7 15.0

Real GDP growth 2.0 -0.8 -0.5 2.0 3.7

Consumer price inflation (ave) 1.9 3.3 1.4 0.4 0.7

Unemployment rate (eop) 6.8 7.4 8.2 7.5 6.7

Current account balance (share of GDP) -2.1 -1.6 -0.5 0.6 1.4

General government balance (share of GDP) -2.9 -4.0 -1.3 -2.0 -2.0

Public debt (share of GDP) 41.0 45.5 45.7 42.6 41.1

Short term interest rate (3 months, eop) 1.2 0.5 0.4 0.3 0.3

EUR FX rate (eop) 25.56 25.57 27.50 27.90 27.30

Page

Financial statements – Quarterly development (CZK mil)

QoQ increase in NII and NFCI

40

Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q/Q %

Net interest income 6,595 6,641 6,727 6,429 6,504 1.2%

Net fee and commision income 2,768 2,697 3,054 2,521 2,595 2.9%

Dividend income 36 3 1 1 57 >100%

Net trading and fair value result 606 527 566 1,190 245 -79.4%

Rental income from investment properties & other operating leases 193 208 203 191 209 9.4%

General administrative expenses -4,526 -4,553 -4,636 -4,421 -4,663 5.5%

Gains/losses from financial assets and liabilities not measured at fair value through profit or loss, net 21 2 8 9 134 >100%

Net impairment loss on financial assets not measured at fair value through profit or loss -941 -983 -829 -865 -525 -39.3%

Other operating result -55 -294 -319 -535 -42 -92.1%

Pre-tax result from continuing operations 4,696 4,249 4,774 4,521 4,512 -0.2%

Taxes on income -905 -801 -951 -855 -858 0.4%

Post-tax result from continuing operations 3,791 3,447 3,824 3,666 3,654 -0.3%

Net result for the period

Net result attributable to non-controlling interests 9 4 -22 0 -1 -

Net result attributable to owners of the parent 3,782 3,443 3,846 3,666 3,655 -0.3%

Operating income 10,197 10,076 10,550 10,332 9,609 -7.0%

Operating expenses -4,526 -4,553 -4,636 -4,421 -4,663 5.5%

Operating result 5,671 5,522 5,915 5,910 4,947 -16.3%

Page

Segment financial statements –

Segment Czech Republic - income statement (EUR mil)

41

1-6 14 1-6 15 Change

Net interest income 462.7 450.9 -2.5%

Net fee and commission income 202.4 186.0 -8.1%

Dividend income 1.7 2.1 na

Net trading and fair value result 43.5 52.2 19.8%

Rental income from investment properties & other operating leases 15.0 14.6 -3.0%

General administrative expenses -329.6 -330.3 0.2%

Gains/losses from financial assets and liabilities not measured at fair value through profit or loss, net 5.0 5.2 4.8%

Net impairment loss on financial assets not measured at fair value through profit or loss -69.9 -50.5 -27.7%

Other operating result 0.3 -21.0 -

Pre-tax result from continuing operations 331.2 309.1 -6.7%

Taxes on income -64.9 -57.7 -11.1%

Post-tax result from continuing operations 266.2 251.4 -5.6%

Net result for the period 266.2 251.4 -5.6%

Net result attributable to non-controlling interests 2.9 2.4 -15.3%

Net result attributable to owners of the parent 263.4 249.0 -5.5%

Operating income 725.3 705.8 -2.7%

Operating expenses -329.6 -330.3 0.2%

Operating result 395.7 375.5 -5.1%

Cost/income ratio 45.4% 46.8%

Return on allocated capital 36.7% 36.3%

Page

Segment financial statements – Quarterly development

Segment Czech Republic - income statement (EUR mil)

42

Q2 14 Q3 14 Q4 14 Q1 15 Q2 15

Net interest income 229.3 230.2 231.1 222.9 228.0

Net fee and commission income 100.8 97.6 110.6 91.3 94.7

Dividend income 1.3 0.1 0.0 0.0 2.1

Net trading and fair value result 22.1 19.1 20.5 43.1 9.1

Rental income from investment properties & other operating leases 7.0 7.5 7.3 6.9 7.6

General administrative expenses -165 -164.8 -167.8 -160.0 -170.2

Gains/losses from financial assets and liabilities not measured at fair value through profit or loss, net 0.8 0.1 0.3 0.3 4.9

Net impairment loss on financial assets not measured at fair value through profit or loss -34.3 -35.6 -30.0 -31.3 -19.2

Other operating result -2.0 -10.7 -11.6 -19.4 -1.7

Pre-tax result from continuing operations 160.1 143.5 160.5 153.8 155.3

Taxes on income -30.9 -27.1 -32.0 -28.6 -29.1

Post-tax result from continuing operations 129.2 116.4 128.4 125.2 126.2

Net result for the period 129.2 116.4 128.4 125.2 126.2

Net result attributable to non-controlling interests 2.1 0.9 1.1 1.1 1.3

Net result attributable to owners of the parent 127.2 115.5 127.4 124.0 124.9

Operating income 360.5 354.5 369.6 364.2 341.5

Operating expenses -165 -164.8 -167.8 -160.0 -170.2

Operating result 195.6 189.7 201.8 204.2 171.3

Cost/income ratio 45.7% 46.5% 45.4% 43.9% 49.8%

Return on allocated capital 35.6% 32.6% 37.1% 36.4% 36.1%

Page

Investor Relations contacts

43

Česká spořitelna Milos Novak

Tel: +420 956 712 410

E-Mail: [email protected]

Eva Culikova

Tel: +420 956 712 011

E-mail: [email protected]

Josef Bocek

Tel: +420 956 712 461

E-mail: [email protected]

Erste Group Thomas Sommerauer, Head of Group Investor Relations

Tel: +43 50100 17326


Peter Makray, Investor Relations Manager

Tel: +43 50100 16878


mailto:[email protected]





Documents

Česká spořitelna...Page •In June, at 19 of its branches, CS launched its unique My Healthy Finance (MHF) service, in which it sees the future of banking advisory services. With