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Erste Group

Annual Report 2014

Extensive presence in Central and Eastern Europe

Slovakia
Branches: 292
Customers: 2.4 million
Employees: 4,275
Czech Republic
Branches: 644
Customers: 5.0 million
Employees: 10,504

Austria
Branches: 964
Hungary
Branches: 128
Customers: 3.4 million
Customers: 0.9 million
Employees: 15,550
Employees: 2,766

Croatia
Branches: 158
Customers: 1.1 million Romania
Employees: 2,754 Branches: 538
Customers: 3.0 million
Employees: 7,054

Serbia
Branches: 68
Customers: 0.4 million
Employees: 955

Core markets of Erste Group

Indirect presence in CEE
Key financial and operating data*
in EUR million (unless otherwise stated) 2010 2011 2012 2013 2014
Balance sheet
Total assets 205,938 210,006 213,824 200,118 196,287
Loans and receivables to credit institutions 12,412 7,506 9,008 8,377 7,442
Loans and receivables to customers 126,696 127,808 124,353 119,945 120,834
Trading, financial assets 46,582 52,981 57,932 51,269 50,131
Intangibles 4,675 3,532 2,894 2,441 1,441
Cash & Other assets 15,574 18,180 19,637 18,087 16,439
Total liabilities and equity 205,938 210,006 213,824 200,118 196,287
Bank deposits 20,154 23,785 21,822 17,299 14,803
Customer deposits 117,016 118,880 123,053 122,415 122,583
Debt securities 37,137 36,564 34,751 33,124 31,140
Trading liabilities & Other liabilities 14,499 15,597 17,860 12,494 14,319
Equity attributable to non-controlling interests 3,543 3,143 3,483 3,466 3,605
Equity attributable to owners of the parent 13,588 12,037 12,855 11,319 9,838
Own funds pursuant to Basel 3
Calculation base/total risk (final) 119,844 114,019 105,323 97,901 101,870
Total own funds 16,220 16,415 16,311 15,994 15,853
Common equity tier 1 capital (CET1) 11,019 10,681 11,848 11,199 10,811
Tier 2 capital (T2) 3,627 4,092 3,791 4,206 5,042
Total capital ratio 13.5% 14.4% 15.5% 16.3% 15.6%
CET1 capital ratio 9.2% 9.4% 11.2% 11.4% 10.6%
Income statement
Net interest income 5,186.1 5,368.7 5,041.5 4,685.0 4,495.2
Net fee and commission income 1,936.0 1,787.2 1,720.8 1,806.5 1,869.8
Net trading and fair value result 450.2 122.6 269.8 218.8 242.3
Operating income 7,843.6 7,531.0 7,281.1 6,995.1 6,877.9
Operating expenses -3,931.2 -3,971.9 -3,881.0 -3,896.1 -3,787.3
Operating result 3,912.4 3,559.1 3,400.1 3,099.0 3,090.7
Net impairment loss on financial assets not measured at fair value
through profit or loss -2,068.0 -2,365.2 -2,060.1 -1,774.4 -2,159.2
Pretax result 1,515.1 -322.1 801.2 378.4 -803.2
Net result attributable to owners of the parent 1,015.4 -718.9 483.5 60.3 -1,442.0
Operating Data
Headcount 50,272 50,452 49,381 45,670 46,067
Number of branches 3,202 3,176 3,063 2,833 2,792
Number of customers 17.0 17.0 17.0 16.5 16.2
Share price and key ratios
High (EUR) 35.59 39.45 24.33 26.94 29.71
Low (EUR) 25.10 10.65 11.95 19.34 17.02
Closing price (EUR) 35.14 13.59 24.03 25.33 19.235
Price/earnings ratio 13.1 na 19.6 180.6 na
Dividend per share (EUR) 0.70 0.00 0.40 0.20 0.00
Payout ratio 26.1% 0.0% 32.6% 142.6% 0.0%
Dividend yield 2.0% 0.0% 1.7% 0.8% 0.0%
Book value per share 29.9 26.1 27.9 26.3 22.9
Price/book ratio 1.2 0.5 0.9 1.0 0.8
Total shareholder return (TSR) 37.3% -59.3% 76.8% 7.1% -23.3%
Stock market data (Vienna Stock Exchange)
Shares outstanding at the end of the period 378,176,721 390,767,262 394,568,647 429,800,000 429,800,000
Weighted average number of outstanding shares 374,695,868 377,670,141 391,631,603 411,553,048 427,533,286
Market capitalisation (EUR billion) 13.3 5.3 9.5 10.9 8.3
Trading volume (EUR billion) 15.3 10.9 7.4 8.3 9.3
*) The figures for the years prior to 31 December 2014 are restated according to IAS 8. The resulting retrospective changes in the presentation are explained in chapter B on significant accounting policies in the consolidated
financial statements 2014.
The calculation of own funds pursuant to Basel 3 is effective as of 1 January 2014. Until 31 December 2013 the calculation was effected pursuant to Basel 2.5.
The dividend pay-out ratio represents dividends paid to owners of the parent (excluding dividends paid on participation capital) for the respective year divided by net result attributable to owners of the parent.
Shares outstanding include Erste Group shares held by savings banks that are members of the Haftungsverbund (cross-guarantee system).
9,3
4,1 Erste Stiftung, indirekt *
Lone Pine Capital 9,9
CaixaBank
4,0
Harbor 1,0
International Fund Mitarbeiter
Cash earnings per share (in EUR) Cash return on equity (in %)
9,6
47,2
10.0 Private Investoren
2.5 * Institutionelle Investoren *
2.17 2.17
7.6
2.0 8.0 7.0

2.5 6.0
4,1 10,8
1.0 0.89 4.0 3.5
UNIQA Versicherungsverein Erste Stiftung, direkt
Privatstiftung 9,3 2.3
4,1 0.42 2.0
0.5 Erste Stiftung, indirekt *
Lone Pine Capital 2014 9,9 2014
40,8
0 CaixaBank 0
4,0 2010 2011 2012 2013 Österreich 2010 2011 2012 2013
Harbor 1,0
-0.5 -2.0
International Fund Mitarbeiter
25,6
-1.0 9,6 -4.0 Nordamerika
47,2
Private Investoren 2,5
Institutionelle Investoren
-1.5 Sonstige
-6.0
-1.44 -5.8
7,8
23,3
Großbritannien & Irland
Cost/income ratio (in %) Net interest margin (in %)
Kontinentaleuropa

60.0 * 55.7 3.5 *

55.1
51.5 52.0 3.08
50.2 2.97
3.0 2.80 2.69 2.65

40,8 2.5
40.0
Österreich
2.0
25,6 4.1 10.8
Nordamerika 1.5
UNIQA Versicherungsverein Erste Stiftung, direct
2,5
20.0 Privatstiftung 9.3
Sonstige 1.0
4.1 Erste Stiftung, indirect *
7,8 Lone Pine Capital 9.9
23,3 0.5
Großbritannien & Irland CaixaBank
Kontinentaleuropa 4.0
Harbor 1.0
0 0
International2010
Fund Employees
2010 2011 2012 2013 2014 2011 2012 2013 2014
9.6
* adoption of IFRS 10 and changes in the presentation of the 47.2
Retail investors
income statement and balance sheet Institutional investors

Shareholder structure as of 31 December 2014 Shareholder structure as of 31 December 2014

by investors (in %) by regions (in %)
4.1 10.8
UNIQA Versicherungsverein Erste Stiftung, direct
Privatstiftung 9.3 40.8
4.1 Erste Stiftung, indirect * Austria
Lone Pine Capital 9.9
CaixaBank 25.6
4.0
Harbor 1.0 North America
International Fund Employees 2.5
9.6 Others
47.2
Retail investors 7.8
Institutional investors 23.3
UK & Ireland
Continental Europe
* includes voting rights of Erste Foundation, savings banks, savings bank
foundations and Wiener Städtische Wechselseitige Versicherungsverein

Ratings as of 31 December 2014 Financial calender 2015

40.8
Austria

25.6
1,
North America
2.5 0,

Fitch
Others Date Event 0,

Long-term A
23.3
7.8 7 May 2015 Results for the first quarter of 2015 0,

UK & Ireland
Short-term F1
Continental Europe 12 May 2015 Annual general meeting 0,

Outlook Negative 7 August 2015 Results for the first half year of 2015 0,

Moody‘s Investors Service 6 November 2015 Results for the first three quarters of 2015

Long-term Baa2
Short-term P-2
Outlook Negative
Standard & Poor‘s
1,0
Long-term A-
The financial
0,8 calender is subject to change.
Short-term A-2 The latest
0,6 updated version is available on Erste Group’s website

Outlook Negative (www.erstegroup.com/investorrelations).

0,4

0,2

0,0 1,0

0,8

0,6

0,4

0,2

0,0
Highlights Table of Contents
Operating result stable TO OUR SHAREHOLDERS
_ Revenue decline on low interest rate environment 2 Letter from the CEO

_ Reduced costs 4 Management board

_ Cost/income ratio slightly improved to 55.1% 6 Report of the supervisory board

8 Erste Group on the capital markets
ERSTE GROUP
12 Strategy
Loan growth returning
17 Management report
_ Performing loans up by EUR 2.0 billion
30 Segments
_ Retail business as growth driver
30 Introduction
30 Business segments
32 Retail
Asset quality substantially improved 32 SME
_ NPL ratio significantly improved to 8.5% 33 Asset/Liability Management & Local Corporate Center
_ NPL coverage increases to 68.9% in 2014 33 Savings Banks
34 Large Corporates
35 Commercial Real Estate
Capital ratios remain solid 35 Other Corporate
_ CET 1 ratio (Basel 3, final) at 10.6% 36 Group Markets
_ Moderate increase in risk-weighted assets 36 Group Corporate Center (GCC)
37 Geographical segments
37 Austria

Net profit burdened by one-off effects 39 Erste Bank Oesterreich & Subsidiaries
40 Savings Banks
_ Negative one-off effects of EUR 1,474.0 million
40 Other Austria
_ Banking taxes and FTT totalling EUR 256.3 million
42 Central and eastern Europe
_ No dividend payment for 2014
42 Czech Republic
45 Slovakia
47 Romania
Excellent funding and liquidity position 50 Hungary
_ Strong deposit base is key competitive advantage 52 Croatia
_ Loan-to-deposit ratio at 98.6% 55 Serbia
57 Commitment to society
61 Customers and suppliers
66 Employees
72 Environment
76 Corporate governance (including corporate governance report)
89 Consolidated financial statements
255 Statement of all management board members
258 GRI Index
262 Glossary
264 Addresses

1
Letter from the CEO
Dear shareholders, Economic growth accelerating in CEE
2014 was a year of change. Many of the issues we had been In Central and Eastern Europe, the macroeconomic environment
dealing with over the past few years, such as the challenging was characterised by stable developments in 2014. With the
business environment in Hungary and the risk situation in Roma- exception of Croatia and Serbia, all core markets of Erste Group
nia, were hopefully finally resolved. This resulted in a loss of in the CEE region continued growing, albeit at modest rates.
EUR 1.4 billion attributable to various one-off effects and the Austria posted real GDP growth of 0.4%, below the euro zone
suspension of dividend payments for 2014, but also led to a fair average of 0.9%. Across the region, domestic demand picked up
number of positive developments. The operating result remained visibly, with household consumption showing an extremely posi-
stable at EUR 3.1 billion, not least due to further cost reductions. tive trend in the Czech Republic and in Romania. With its large
For the first time since 2011, lending volume was up by EUR 1 share of exports, the automotive industry was again a key con-
billion. Growth was recorded primarily in the core markets of tributor to economic performance, especially in the Czech Repub-
Austria, the Czech Republic and Slovakia, while lending volume lic, Slovakia, Romania and Hungary. In Austria, public-sector
still contracted in Romania and Hungary. At the same time, asset consumption played a major role in supporting economic growth
quality improved further, particularly in Romania. We eliminated as household consumption remained weak, as did investment in
bad loans and added good loans. The NPL ratio declined by more plant and equipment. The labour market improved in many of the
than one percentage point to 8.5%. The NPL coverage ratio im- CEE economies. At 5.0%, the Austrian unemployment rate was
proved significantly to 68.9%. Even though the low interest rate again one of the lowest in Europe in 2014. The sanctions imposed
environment held little attraction for savers, customer deposits by Russia have only had a minor impact on CEE economies to
increased, which is a clear sign of trust in the bank. And in the date, as trade flows between the two regions are limited. In light
fourth quarter of 2014, Erste Group returned to profitability. Also of very low inflation pressure, the key policy rates in Romania
in 2014, we laid the groundwork for our new group-wide digital and Hungary were cut further to new historical lows. In the Czech
platform. Republic, the key interest rate stood at 5 basis points throughout
the year. The Czech koruna and the Romanian leu remained
Having radically disposed of legacy issues, we can now face the stable while the Hungarian forint depreciated slightly versus the
future with a clean slate. The changes on the management board euro despite very good economic data.
of Erste Group as of year-end underline our commitment to our
business model: we aim to be the leading bank in the eastern part Substantial negative impacts of one-off effects
of the European Union. Peter Bosek will manage the key strategic The operating result of Erste Group was stable in line with the
initiatives in retail banking group-wide, including the digital solid development in CEE markets. While operating income was
transformation and innovation. Our clear goal is to further en- affected by the persistently low interest rates, this negative impact
hance and strengthen Erste Group’s position as the pre-eminent was partly offset by a decline in general administrative expenses,
retail bank in our region. In the corporate business, Jozef Síkela, the result of rigorous cost control efforts of recent years. The
new board member for Corporate & Markets, will focus on SMEs main loss drivers for the year, however, were adverse one-off
and companies that operate in our core markets. Erste Group does effects and high risk costs, especially in Hungary and Romania.
not aspire to be a global bank, but is and will stay a regional bank One key factor was the write-down of intangible assets in the
that is firmly embedded in the real economy in CEE. Petr Brávek, total amount of EUR 964.8 million. We wrote off the entire re-
who will take up his new position as COO on 1 April 2015, will maining goodwill in Romania and in Croatia and some smaller
be responsible for the technical implementation of the digital participating interests – goodwill write-downs totalled EUR 475.0
transformation and the alignment of data management with new million – as well as customer relationships and brand in Romania
regulatory standards. in the amount of EUR 489.8 million. These write-offs were

attributable to the need to revise some original projections due to Regulatory environment
significant changes in the economic environment. Risk-induced In November 2014, the European Central Bank (ECB) assumed
one-off effects also had a negative impact in 2014. In Romania, responsibility for the supervision of significant European banks,
an additional EUR 400 million in additional risk costs was posted including Erste Group. Before that date, Erste Group had success-
in connection with the accelerated reduction of non-performing fully passed the Asset Quality Review (AQR) and the associated
loans. As a result, the Romanian NPL portfolio was sharply re- stress test conducted by ECB and the European Banking Authority
duced by almost one billion euro already in 2014. The Hungarian (EBA) respectively. It would now be desirable to achieve some
consumer loan law passed last summer had a negative net impact continuity and stability of regulatory standards after years of
of EUR 312.2 million on the annual result. The exchange rate for uncertainty.
the forced conversion of foreign-currency loans to local currency
was set in autumn at the market rate applying at that time. The Leading retail bank with a clear geographical focus
issue of foreign currency loans in Hungary should be finally In our core markets, we are well positioned to benefit from the
settled in 2015. medium- to long-term growth opportunities in the eastern part of
the European Union and Austria. We strive to offer our customers –
The banking taxes levied in Austria, Hungary and Slovakia at private individuals, professionals, SMEs and large corporate cus-
levels that were substantial by international standards were unfor- tomers – suitable and transparent modern financial products and
tunately not a one-off effect. While they were lower than in the bank services. Especially in Austria, the Czech Republic and Slo-
preceding year, they still had a negative impact of EUR 210.0 vakia, we saw lending growth driven by increased demand already
million on 2014 earnings. In addition, transaction taxes of in 2014. In Hungary, recent developments make it possible to leave
EUR 46.3 million were paid in Hungary. Levies will increase the past behind. As the government and the European Bank for
again in 2015, mainly in Austria, as the additional contributions Reconstruction and Development (EBRD) signed an agreement in
to the European bank resolution and deposit insurance funds will February 2015 designed to strengthen the financial sector and
significantly exceed the slight reduction in banking taxes of 2014. providing, among other things, for a gradual reduction of Hungari-
an banking taxes from 2016, we invited the Hungarian government
Sound capital and liquidity positions and the EBRD to acquire shares in Erste Bank Hungary. We are
Major portions of the one-off effects were not cash-effective, confident that Erste Group will be able to earn a premium on capi-
however, and had no impact on Erste Group’s regulatory capital. tal costs that is sustainable over the long term even though the
Erste Group’s position as one of the best-capitalised major Aus- steady rise in capital requirements is not exactly helpful.
trian banks was confirmed. At year-end 2014, Erste Group’s
common equity tier 1 ratio (CET1, Basel 3, fully loaded) was I would like to take the opportunity to thank all employees, as it
10.6%, well above the 10% minimum ratio target agreed with the is their competence and commitment that secure strong relation-
regulator. The solvency ratio stood at 15.7%. Erste Group’s long- ships with our customers over the long term and they translate
and short-term liquidity positions remained excellent on the back our strategy into business.
of deposit inflows.
Andreas Treichl mp

3
Management board
Andreas Treichl
Chairman

Group Strategy
Group Secretariat (incl. CSR, Group Environmental Management)
Group Communications
Group Investor Relations
Group Human Resources (incl. Group Diversity)
Group Audit
Employees’ Council
Social Banking Development

Gernot Mittendorfer
Group Asset Liability Management
Group Controlling and Information Management
Group Accounting
Participation Management
Group Services
Group Services

Andreas Gottschling
Enterprise wide Risk Management
Group Risk Operating Office
Operational Risk, Compliance & Security
Group Credit and Market Risk Management
Risk Methods and Models
Group Workout
Group Validation
Group Retail and SME Risk Management
Group Legal

Peter Bosek
Digital Sales
HUB
Group Private Banking
Group Brands Communication
Group Retail Steering and Projects
Group Retail Strategy

Jozef Síkela
Large Corporates
Erste Group Immorent
Group Capital Markets
Group Research
Group Investment Banking
Steering & Operating Office Markets
Steering & Operating Office Corporates

Petr Brávek
Group Organisation/IT
Group Banking Operations

5
Report of the supervisory board
Dear shareholders, achieved more diversity on the supervisory board. Juan Maria Nìn
In 2014, the supervisory board had to deal with substantial chal- Génova resigned from his mandate, which he had held since 2009,
lenges and the critical task of setting the course that Erste Group for personal reasons effective 11 December 2014. As of the same
Bank AG will take going forward. We took important, albeit not date, Friedrich Lackner, chairman of the employees’ council, left
always easy decisions for the future in order to secure a sound the supervisory board due to his retirement. Committee member-
base for the bank's long-term development. ship has been adjusted accordingly. I also wish to thank them both
for their many years of valuable and competent service as members
On the positive side, Erste Group passed the Asset Quality Review of the supervisory board.
and the associated stress test conducted by the European Central
Bank and the European Banking Authority respectively, and reaf- For details regarding the composition and independence of the
firmed its position as one of the best-capitalised major banks in supervisory board, the criteria for its independence, its working
Austria. The increase in risk provisions in Romania and Hungary procedures, the number and type of committees and their deci-
announced on 3 July 2014 doubtless made a significant contribu- sion-making powers, the meetings of the supervisory board and
tion to Erste Group’s successful passing of the Asset Quality the main focus of its activities, please refer to the corporate gov-
Review and stress test. While these measures resulted in a signifi- ernance report drawn up by the management board and reviewed
cant loss in the financial year 2014, the supervisory board regard- by the supervisory board.
ed them as a prerequisite for mastering the challenges in an eco-
nomically difficult environment that is characterised by moderate In the course of 46 supervisory board and committee meetings,
economic growth and low interest rates. the management board promptly and comprehensively informed
the supervisory board in both written and oral reports on all busi-
One of the key issues was certainly the strategic repositioning of ness matters. This allowed us to act in accordance with the man-
Erste Group and the related human resources decisions. For the date laid down by law, the articles of association and the Austrian
retail business, a group function has been created to which the Code of Corporate Governance , as well as to ascertain the proper
supervisory board appointed Peter Bosek as a new member of the conduct of business.
management board of Erste Group Bank AG. For the realignment
of the corporate business, which – after an initial period under The financial statements (consisting of the balance sheet, income
central control – is to be returned increasingly to local manage- statement and notes), the management report, the consolidated
ment responsibility, the supervisory board appointed Jozef Síkela financial statements and the group management report for 2014
as a member of the management board. Both started in their new were audited by the legally mandated auditor, Sparkassen-
positions on 1 January 2015. Petr Brávek was appointed by the Prüfungsverband, and by Ernst & Young Wirtschaftsprüfungs-
supervisory board to join the management board on 1 April 2015 gesellschaft m.b.H., as supplementary auditor, and received an
as Chief Operations Officer. On behalf of the entire supervisory unqualified audit opinion. Ernst & Young Wirtschaftsprüfungs-
board, I cordially thank Franz Hochstrasser and Herbert Juranek, gesellschaft m.b.H. was also contracted to perform a discretion-
who left the management board at year-end, for their many years ary audit of the corporate governance report 2014.
of successful service for Erste Group Bank AG.
The audit did not give rise to any qualifications. Representatives
The eventful year of 2014 also saw changes in the composition of of both auditors attended the financial statements review meet-
the supervisory board: at the annual general meeting, Elisabeth ings of the audit committee and the supervisory board and pre-
Bleyleben-Koren, Elisabeth Krainer Senger-Weiss and Gunter sented their comments on the audits they had conducted. Based
Griss were newly elected to the supervisory board. The employees’ upon our own review, we endorsed the findings of these audits.
council nominated Markus Haag and Barbara Pichler as new mem-
bers to the supervisory board. I am very pleased that we have thus We have approved the financial statements and these have there-
not only gained additional professional expertise but have also by been duly endorsed in accordance with section 96 (4) of the

Aktiengesetz (Austrian Stock Corporation Act). The management

report, consolidated financial statements, group management
report and corporate governance report have been reviewed and
accepted.

Even though the result of the financial year 2014 does not permit
distribution of a dividend, the supervisory board is nonetheless
convinced that due to the measures it has implemented, Erste
Group Bank AG can look forward to 2015 with optimism. The
course charted will enable the bank to grow and hold its ground
even in difficult economic conditions and in a competitive busi-
ness environment.

For the supervisory board:

Friedrich Rödler mp
Chairman of the Supervisory Board

Vienna, March 2015

7
Erste Group on the capital markets
Against the backdrop of economic growth in the US, a weakening banking system, was cut to a new record low of 0.05%. For the
euro zone economy and the impacts of geopolitical uncertainty, first time, the ECB decided to offer banks a negative interest rate
the focus of international stock markets in the past year was on for short-term deposits. With this move, the ECB intends to stim-
the central banks’ interest rate policies. While the euro zone was ulate lending and, thereby, the economy, particularly in southern
moving towards further monetary policy easing, the US central Europe, and to prevent inflation from falling too low. The Fed
bank (Fed) was considering steps to tighten its monetary policy. confirmed that it would keep its key interest rate low within a
The prospect of a first rate hike in the US since the severe finan- range of 0% to 0.25%. In view of solid US economic data, how-
cial and economic crisis buoyed up the dollar and pushed the euro ever, the Fed has already started its controlled exit from the ultra-
lower. European banking stocks were impacted by regulatory loose monetary policies pursued in recent years by tapering its
measures and reviews conducted by supervisory authorities. quantitative easing programme, i.e. large-scale asset purchases.
The Erste Group share declined by more than 20% year on year
due to the challenging environment and one-off effects (includ- Weakening economic activity in the euro zone
ing goodwill adjustments), even though the bank comfortably The US economic environment has improved significantly, with
passed the stress test and has recently seen improvements in stronger-than-expected real gross domestic product growth in the
credit quality. third quarter of 2014, robust employment data and solid econom-
ic indicators. The growth data published indirectly supported the
EQUITY MARKET REVIEW Fed’s decision to end quantitative easing and to keep its key
interest rate close to 0%. Unlike for the US, economic research
Solid performance of key markets institutes had to revise their growth forecasts for the euro zone
After most of the stock markets followed had extended the rallies downwards. This was attributable to weak economic data and,
started in 2013 well into the first half of 2014, clouded economic most importantly, the impacts expected from the Ukraine crisis in
outlooks in Europe, China and Japan as well as uncertainty about the shape of sanctions mutually imposed on each other by Russia
the Fed’s future monetary policy fuelled volatility once the quanti- and the European Union. Apart from the euro zone, the research
tative easing measures had been ended. The relative weakness of institutes and the OECD have identified further soft spots in the
European key indices compared with US indices became more global economy such as potentially lower growth in China and a
pronounced amid a softening European economy, the conflict contraction of the Japanese economy, which may dampen eco-
between Russia and Ukraine and the sanctions imposed in this nomic activity worldwide.
context. The weak euro aggravated the negative sentiment towards
Europe. While the US indices hit new record highs, European Focus on Asset Quality Review and stress test
stocks were lagging behind. The US Dow Jones Industrial Index While the continuation of the ECB’s loose monetary policy in the
closed the year 7.5% up at 17,823.07. The broader US indices form of rate cuts provided positive momentum and supported the
posted two-digit gains: the Standard & Poor’s 500 Index advanced ongoing rally in European bank stocks in the first quarter, market
11.4% to 2,058.90 and the Nasdaq Composite Index climbed conditions turned tense later in the year as 130 European banks
13.4% to 4,736.05. By comparison, the Euro Stoxx 600 Index rose had to undergo Asset Quality Reviews (AQRs) and stress tests.
4.4% to 342.54 and the Euro Stoxx 50 Index closed at 3,146.43, The results released at the end of October confirmed that the
up 1.2%. major banks of the euro zone were sufficiently resilient to with-
stand crises. The capital requirements of the 25 banks that failed
Continuation of expansionary monetary policy the test were lower than expected. Since the beginning of No-
The European Central Bank (ECB) cut its rates once again in vember 2014 the European Central Bank (ECB) has directly
response to weak macroeconomic data in Europe and growing supervised the most significant banks of the euro zone. The intro-
concerns about deflation. The inflation rate fell to 0.3%, the duction of bank recovery and resolution rules designed to force
lowest level since October 2009. The euro zone’s benchmark creditors to absorb some of the costs of winding down banks and
refinancing rate, at which central bank funds are offered to the requiring banks to contribute to a resolution fund were viewed

critically by the rating agencies Standard & Poor’s and Moody’s. downgraded by Moody’s to Baa2. On 16 October, the Erste Group
In the year ended, the Dow Jones Euro Stoxx Bank Index, which share marked its annual low at EUR 17.02. After the release of the
is composed of leading European bank stocks, declined by 4.9% results of the bank stress test and third-quarter results, the Erste
to 134.51 points. Group share increased significantly and closed the last quarter of
2014 up 6.1%. The Erste Group share ended the year 2014 at a
Vienna Stock Exchange lagging behind global markets price of EUR 19.235, down 24.1%.
While in the first half of the year the Vienna Stock Exchange was
still trending upwards, the Austrian Traded Index (ATX) slipped Performance of the Erste Group share and major
significantly against the backdrop of geopolitical crises after mid- indices (indexed)
year. The index marked its annual low in mid-October and tempo-
rarily dropped below the level of 2,000 points. The ATX ended 150
the year 2014 down 15.2% at 2,160.08 points. This comparatively
weak performance was partly due to the industry composition of
the ATX. The heavily weighted commodity and banking stocks
were affected quite heavily by the Ukraine crisis and the depreci-
ation of the rouble, which was driven by the sanctions imposed
by the EU and the US as well as by the slide of the oil price 100

following OPEC’s decision to keep production unchanged.

ERSTE GROUP SHARE

One-off effects weighing on share price 50

After significant declines in the first nine months of 2014, the 1 January 2014 31 December 2014

shares of Erste Group benefited in the last quarter of 2014 from Erste Group Share Austrian Traded Index (ATX) DJ Euro Stoxx Banks
the bank’s comfortable passing of the stress test and better-than-
expected third-quarter results (stable operating result, improved
credit quality). Apart from the asset quality review and the stress Performance of the Erste Group share versus indices*
test conducted by the EBA, the main focus of analysts in the year DJ Euro
ended was on the operating result, risk costs, the tax burden, Erste Group Stoxx Bank
share ATX Index
write-downs of intangible assets (goodwill) and the possible
Since IPO (Dec 1997) 73.6% 65.6% -
conversion of foreign currency loans in Hungary. Since SPO (Sep 2000) 63.7% 84.9% -61.7%
Since SPO (Jul 2002) 10.4% 77.1% -46.5%
At the beginning of 2014, the Erste Group share saw a visible but Since SPO (Jan 2006) -57.3% -44.6% -64.5%
Since SPO (Nov 2009) -33.7% -17.1% -40.9%
not sustainable increase, having reached its annual high at
2014 -24.1% -15.2% -4.9%
EUR 29.71 on 15 January 2014. At the end of the first quarter, the
development of the shares of Erste Group was in line with the ATX. * IPO … initial public offering, SPO … secondary public offering.

After the Erste Group share had already closed the first half of the
year down 6.8%, it declined further in early July following the Number of shares, market capitalisation and trading
release of the revised outlook for 2014 earnings reflecting the need volume
to recognise higher provisions in Hungary and in Romania. In mid- In the year ended, the number of shares of Erste Group Bank AG
August, Standard & Poor’s downgraded the rating of Erste Group – remained unchanged at 429,800,000. Due to the decline in the
along with those of other Austrian banks – to A-/A-2/negative. In share price, the market capitalisation of Erste Group decreased to
early September, the rating of long-term unsecured senior debt was EUR 8.3 billion at year-end 2014 from EUR 10.9 billion in 2013.

9
The Erste Group share is traded on the stock exchanges of Vien- INVESTOR RELATIONS
na, Prague and Bucharest. In 2014, the trading volume on these
stock exchanges averaged 985,010 shares per day and accounted Open and regular communication with investors and
for about 34% of the total trading volume in Erste Group shares. analysts
More than half of the trading activity is executed over the counter In 2014, Erste Group’s management and the investor relations
(OTC) or through electronic trading systems. team met with investors in a total of 392 one-on-one and group
meetings and conducted a large number of teleconferences with
Erste Group in sustainability indices analysts and investors. The presentation of the 2013 annual result
The Erste Group share has been included in VÖNIX, the Vienna in Vienna was followed by the annual analysts’ dinner and a road
Stock Exchange’s sustainability index, since its launch in 2008. show day with investor meetings in London. A spring road show
In addition, the Erste Group share has been included in the was conducted after the release of the first-quarter results, and an
STOXX Global ESG Leaders index, which represents the best autumn road show was held following the release of the third-
sustainable companies on the basis of the STOXX Global 1800. quarter results. Erste Group presented its strategy in the current
operating environment at international banking and investor
DIVIDEND conferences organised by the Vienna Stock Exchange, Kepler
Cheuvreux, UBS, Morgan Stanley, HSBC, RCB, Deutsche Bank,
Since 2005, Erste Group’s dividend policy has been guided by the Bank of America Merrill Lynch, Autonomous, Goldman Sachs,
bank’s profitability, growth outlook and capital requirements. The Barclays, Unicredit, and Wood. Additional meetings were held to
dividend for the financial year 2013 of EUR 0.20, approved by intensify the dialogue with bond investors. At conferences, road
the annual general meeting, was paid on 28 May 2014. On 5 June shows and workshops, a large number of face-to-face meetings
2014, pro-rated dividend payments in the amount of EUR 84.5 were held with analysts and portfolio managers.
million were made on participation capital of EUR 1.76 billion
that had already been repaid on 8 August 2013. The management The website http://www.erstegroup.com/ir provides compre-
board of Erste Group will propose to the annual general meeting hensive information on Erste Group and the Erste Group share.
not to pay any dividend for the financial year 2014. Investors and the broader public can also follow the investor
relations team on the social media platform Twitter
SUCCESSFUL FUNDING at http://twitter.com/ErsteGroupIR and on Slideshare at
http://de.slideshare.net/Erste_Group. These sites provide users
In 2014, Erste Group issued bonds in a total volume of EUR 2.3 with the latest news on Erste Group in the social web. An
billion, with an average tenor of 8 years. The underlying funding overview of Erste Group’s social media channels is available at
structure has remained unchanged: to extend or flatten the re- http://www.erstegroup.com/en/about-us/socialmedia.
demption profile. Due to still compressed spread differentials
between senior and covered bonds, Erste Group kept its focus on As an additional service for investors and analysts, Erste Group
senior funding, which was supported by a continuous demand for launched free Investor Relations Apps for iPhone, iPad, and
retail issues and private placements. In the fourth quarter 2014, Android devices in August 2012. These applications enable users
Erste Group issued a USD 500 million subordinated Tier 2 bond to access and download Erste Group Bank AG share price in-
in a total amount of EUR 975 million. The volume of new tier 2 formation, the latest investor news, multimedia files, financial
instrument and covered bond placements stood at EUR 157 mil- reports and presentations as well as an interactive financial
lion at year-end 2014. calendar and contact details for the investor relations team. More

details on this service and downloading are available at was covered by financial analysts at the following national and
http://www.erstegroup.com/en/investors/IR_App. international firms: Atlantik, Autonomous, Bank of America
Merrill Lynch, Barclays, Berenberg, Citigroup, Commerzbank,
In late June 2014, Erste Group’s investor relations team won the Concorde, Credit Suisse, Deutsche Bank, Exane BNP Paribas,
award for the best investor relations performance of an Austrian Goldman Sachs, HSBC, JP Morgan, KBW, Kepler Cheuvreux,
company for the fourth consecutive time. More than 700 buy-side Macquarie, mBank, Mediobanca, Morgan Stanley, Natixis,
and sell-side analysts and portfolio managers from across Europe Nomura, RCB, SocGen, UBS, VTB Capital and Wood.
took part in the survey conducted by IR Magazine. Its outcome
impressively underlined the investor relations team’s success in As of year-end, 11 analysts issued buy recommendations, 14 rated
focusing on transparency and competent communication with the Erste Group share neutral and two had sell recommendations.
investors as their top priority. The average year-end target price was EUR 23.24. The latest
updates on analysts’ estimates for the Erste Group share
Analyst recommendations are posted at: http://www.erstegroup.com/en/Investors/Share/
In 2014, 27 analysts released research reports about Erste Group, AnalystEstimates.
including one initial coverage analysis. The Erste Group share

11
Strategy
Erste Group aims to be the leading retail and SME bank in the Core markets in the eastern part of the European Union
eastern part of the European Union, including Austria. To achieve When Erste Group went public as an Austrian savings bank with
this goal, Erste Group aims to lend responsibly, provide a safe no meaningful foreign presence in 1997, it defined its target
harbour for deposits and in general support all its customers in region as consisting of Austria and the part of Central and Eastern
achieving their financial goals, be they retail, corporate or public Europe that had realistic prospects of joining the European
sector customers. Union. Against the backdrop of emerging European integration
and limited potential for growth in Austria, Erste Group from the
Erste Group pursues a balanced business model focused on late 1990s onwards acquired savings banks and financial institu-
providing banking services to its customers on a sustainable basis. tions in countries adjacent to Austria.
Sustainability is reflected in the bank’s ability to fund customer
loans entirely by customer deposits, with most customer deposits While the financial and economic crisis has slowed the economic
being stable retail deposits. Sustainability is also reflected in long catching-up process across the countries of Central and Eastern
term client trust, which underpins strong market shares in almost Europe, the underlying convergence trend continues unabated.
all of Erste Group’s core markets. However, market leadership is This part of Europe offered and still offers the best structural and
not an end in itself. Market leadership only creates value when it therefore long-term growth prospects.
goes hand in hand with sustainable profitability; hence Erste
Group targets to earn a premium on the cost of capital. Today, Erste Group has an extensive presence in its core markets
of Austria, the Czech Republic, Slovakia, Romania, Hungary and
Long-standing tradition in customer banking Croatia – all of which are members of the European Union. Fol-
Erste Group has been active in the retail business since 1819. lowing significant investments in its subsidiaries, Erste Group
This is where the largest part of Erste Group’s capital is tied holds considerable market positions in most of these countries. In
up, where Erste Group generates most of its income, and funds Serbia, which has been assigned European Union candidate sta-
the overwhelming part of its other core activities by drawing tus, Erste Group maintains a minor market presence, but one that
on its customers’ deposits. The retail business represents Erste may be expanded through acquisitions or organic growth as the
Group’s strength and its top priority when developing products country makes progress towards European Union integration. In
such as modern digital banking that enable the bank to meet its addition to its core markets, Erste Group also holds direct and
customers’ expectations more effectively. indirect majority and minority banking participations in Slovenia,
Montenegro, Bosnia and Herzegovina, Macedonia and Moldova.
Offering understandable products and services that meet the
individual needs and objectives of the bank customers at sus- Focus on sustainable profitability
tainably attractive terms is important to building and maintain- Earning a sustainable premium on the cost of capital in a socially
ing strong long-term customer relationships. Today, the bank responsible manner and for the benefit of all stakeholders is a key
serves a total of about 16 million retail customers in its core prerequisite for the long-term survival of any company or bank.
markets. Erste Group’s core activities also include advisory For only a sustainably profitable bank can achieve the following:
services and support for its corporate customers with regard to provide products and services to customers that support them in
financing, investment, hedging activities and access to interna- achieving their long-term financial goals; deliver the foundation
tional capital markets. Public sector funding through investing for share price appreciation as well as dividend and coupon pay-
parts of the bank’s liquidity in infrastructure projects as well as ments to investors; create a stable and rewarding work environ-
sovereign bonds issued in its region are also part of the busi- ment for employees; and, be a reliable contributor of tax revenues
ness. To meet the short-term liquidity management needs of the to society at large.
customer business, Erste Group also operates in the interbank
market.

Sustainable profits can be achieved through a combination of there will be a stronger focus on cost cutting, when the operating
growing revenues, reducing loan loss provisions, and cutting environment improves more time will be devoted to capturing
costs. It is helped by a strong retail-based funding profile. When growth in a responsible way. Irrespective of the environment,
growth opportunities are elusive, as they will be from time to Erste Group should benefit materially from operating in the
time, or the market environment is less favourable as a result of region of Europe that offers the best structural growth opportuni-
inter alia high taxation, increased regulation or low interest rates, ties for some time to come.

Erste Groupʼs strategy

Customer banking in Central and Eastern Europe

Eastern part of the EU Focus on CEE, limited exposure to other Europe

Retail banking SME/Corporate banking Capital markets Public sector Interbank business

Focus on local SME and local Focus on customer Financing sovereigns Focus on banks that
currency mortgage and corporate banking business, incl. and municipalities with operate in the core
consumer loans customer-based focus on infrastructure markets
funded by local Advisory services, with trading activities development in core
deposits focus on providing markets Any bank exposure is
access to capital In addition to core only held for liquidity or
FX loans only where markets and corporate markets, presence in Any sovereign holdings balance sheet
funded by local FX finance Poland, Turkey, are only held for management reasons
deposits (Croatia and Germany and London market-making, or to support client
Serbia) Real estate business with institutional client liquidity or balance business
that goes beyond focus and selected sheet management
Savings products, financing product mix reasons
asset management
and pension products Potential future Building debt and
expansion into Poland equity capital markets
Potential future in CEE
expansion into Poland

THE STRATEGY IN DETAIL Retail business

Erste Group’s key business is the retail business, covering the
The basis of Erste Group’s banking operations is the retail and entire spectrum from lending, deposit and investment products to
SME customer business in the eastern part of the European current accounts and credit cards. Erste Group’s core compe-
Union, including Austria. The capital markets and interbank tence in retail banking has historical roots. In 1819, wealthy
activities as well as the public sector business are defined more Viennese citizens donated funds to establish Erste Group’s
broadly to be able to meet the bank’s customer needs as effective- predecessor, the first savings bank in Central Europe. It was
ly as possible. their aim to bring basic banking services such as safe savings

13
accounts and mortgage loans to wide sections of the population. permits Erste Group to combine industry-specific and product
Today, the bank serves a total of 16 million retail customers in expertise with an understanding of regional needs and the experi-
its markets and operates about 2,800 branches. In addition, ence of the bank’s local customer relationship managers.
Erste Group uses and promotes digital distribution channels
such as internet and mobile banking. Wealthy private clients, In view of the regulatory reform efforts, advising and supporting
trusts and foundations are served by the bank’s private banking the bank’s corporate customers in capital market transactions is
staff and benefit from services that are tailored to the needs of becoming increasingly important.
this target group.
Capital markets business
Retail banking is attractive to Erste Group for a number of rea- Client-driven capital markets activities have been and will
sons: it offers a compelling business case that is built on market continue to be part of the comprehensive portfolio of products
leadership, an attractive risk-reward profile and the principle of and services that Erste Group offers to its retail and corporate
self-funding as well as a comprehensive range of products that customers. The strategic significance of the bank’s centrally
are simple and easy to understand and provide substantial cross- governed and locally rooted capital markets operations consists in
selling potential. Only a retail bank with an extensive distribution supporting all other business areas in their dealings with the
network is able to fund loans in local currency mainly from capital markets and, hence, in providing the bank’s customers
deposits made in the same currency. Erste Group is in such a with professional access to the financial markets. Erste Group,
position of strength. In short, Erste Group’s retail banking model therefore, views its capital markets business as a link between the
supports sustainable and deposit-funded growth even in economi- financial markets and the customers. As a key capital markets
cally more challenging times. player in the region, Erste Group also performs important func-
tions such as market-making, capital market research and product
Another positive factor is diversification of the retail business structuring.
across countries that are at different stages of economic develop-
ment, such as Austria, the Czech Republic, Romania, Slovakia, The capital markets business serves the needs of Erste Group’s
Hungary, Croatia and Serbia. retail and corporate customers as well as of government entities
and financial institutions. Due to Erste Group’s strong network in
SME and corporate business the eastern part of the European Union, the bank has a thorough
The second main business line, which also contributes signifi- understanding of local markets and customer needs. In Erste
cantly to Erste Group’s earnings, is the business with small and Group’s capital markets business, too, the bank concentrates on
medium-sized enterprises, regional and multi-national groups, key markets of the retail, SME and large corporate business:
and real estate companies. Erste Group’s goal is to enhance the Austria, the Czech Republic, Slovakia, Romania, Hungary,
relationships with these clients beyond pure lending business. Croatia and Serbia. For institutional customers, specialised teams
Specifically, the bank’s goal is for SMEs and large corporate have been established in Germany, Poland and Turkey as well as
customers to choose Erste Group as their principal bank and also in London, Hong Kong and New York, which offer these custom-
route their payment transfers through the Group’s banking enti- ers a tailor-made range of products.
ties and, in fact, regard Erste Group as their first point of contact
for any kind of banking service. In many countries where Erste Group operates, the local capital
markets are not yet as highly developed as in Western Europe or
Catering to their different requirements, Erste Group serves small in the United States of America. That means Erste Group’s bank-
and medium-sized enterprises locally in branches or separate ing subsidiaries are pioneers in some of these markets. Therefore,
commercial centres while multinational groups are serviced by building more efficient capital markets in the region is another
the Large Corporate and Investment Banking units. This approach strategic objective of Erste Group’s capital markets activities.

Public sector business institutions in future. To this effect, the new international regulatory
Solid deposit business is one of the key pillars of Erste Group’s framework for banks has been revised by the Basel Committee on
business model. Accordingly, customer deposits surpass lending Banking Supervision (Basel 3). The new regime is designed to
volume in many of its geographic markets. Erste Group’s banking strengthen the regulation, supervision and risk management of the
entities make a significant part of this liquidity available as financing banking sector. Within the European Union the Basel 3 legal frame-
to the region’s public-sector entities. In this way, the bank facilitates work is implemented through the Capital Requirements Directive
essential public-sector investment. Erste Group’s public-sector (CRD IV) and the Capital Requirements Regulation (CRR).
customers are primarily municipalities, regional entities and sover-
eigns that the bank additionally supports and advises in capital The goal behind the reform measures is to improve the banking
market issuance, infrastructure financing and project financing. sector’s ability to absorb any shocks arising from financial or
Furthermore, Erste Group cooperates with supranational institutions. economic stress, to strengthen the sector’s transparency and
disclosure requirements and to improve risk management and
In terms of sovereign bond investments, Erste Group is equally governance. Capital requirements have been tightened and mini-
focusing on Central and Eastern Europe. mum liquidity requirements have been introduced. To tackle
potential weaknesses in the loss-absorbing capacity of banks
Adequate transport and energy infrastructure and municipal additional capital buffers (capital conservation buffer, anti-
services are absolute key prerequisites for sustainable economic cyclical buffer, systemic risk buffer) are to be introduced in vari-
growth in the long term. Therefore, Erste Group views infrastruc- ous steps. In addition, the quality of equity and own funds in-
ture finance and all associated financial services to be of extreme struments follows stricter rules.
importance. Between 2014 and 2020, the European Union has
earmarked about EUR 90 billion from structural and investment In November 2014, the Single Supervisory Mechanism (SSM)
funds for the Czech Republic, Slovakia, Croatia, Hungary and entered into force. It is based on commonly agreed principles
Romania: this is one quarter of the total allocation under the and standards. The banking supervision is performed by the
European Union’s cohesion policy. In this context, Erste Group’s European Central Bank (ECB) together with the national super-
commitment to infrastructure development in Romania is to be visory authorities of participating member states of the euro
highlighted. The Romanian subsidiary Banca Comercială zone. The ECB is responsible for the effective and consistent
Română supports investment in essential infrastructure by fund- functioning of the SSM. To ensure efficient supervision, credit
ing key companies in all sectors. institutions are categorised as significant or less significant: the
ECB directly supervises significant banks, whereas national
Interbank business authorities are in charge of supervising less significant banks.
The interbank business is an integral part of Erste Group’s busi- Erste Group has been classified as significant.
ness model that performs the strategic function to ensure that the
liquidity needs of the bank’s customer business are met. This Austria, Germany and the UK were the first countries to imple-
involves, in particular, short-term borrowing and lending of liquid ment the EU Bank Recovery and Resolution Directive (BRRD).
funds in the interbank market. As of 1 January 2015 the BaSAG (Austrian Recovery and Resolu-
tion Act/ Bundesgesetz zur Sanierung und Abwicklung von Bank-
REGULATORY CHANGES IN BANKING en) entered into force. Further to the requirement to have recovery
and resolution plans in place, the framework also stipulates an
In the wake of the financial crisis, regulatory requirements for banks additional minimum capital requirement to ensure sufficient loss-
increased significantly with a view to establishing a framework for a absorbing capacity, the MREL (Minimum Requirement on Own
more resilient global financial system. It has become the clear regu- Funds and Eligible Liabilities), which will be further specified on
latory aim to prevent tax-payers from having to bail out financial a bank-by-bank basis in 2015. In addition, several tools to resolve

15
failing institutions have been introduced for the newly established export industries that benefit from wage costs that are low relative to
resolution authority (i.e. the FMA for Austrian banks). workforce productivity and from investor-friendly tax and welfare
systems.
As of year-end 2014, Erste Group reported a fully loaded Basel 3
CET1 (common equity tier-1) ratio of 10.6% and a total capital A comparison of per capita debt levels in Central and Eastern
ratio of 15.7%. Despite increasing regulatory pressure in general Europe with those of advanced economies reveals that even
and additional burdens on the capacity of retaining earnings as a today an enormous gap exists between these markets. Countries
result of bank levies in Austria, Hungary and Slovakia, Erste Group such as the Czech Republic and Slovakia, but also Croatia and
remained well-capitalised and benefits from an excellent liquidity Hungary, are many years away from reaching Austrian or West-
position, enabling it to proactively serve customers’ needs. ern European levels of loans per capita; also in relative terms,
these countries differ substantially regarding debt levels com-
LONG-TERM GROWTH TRENDS IN CENTRAL mon in the West. The contrast to Serbia or Romania is even more
AND EASTERN EUROPE pronounced: private debt levels, and particularly household debt,
are substantially lower than in the advanced economies. Even
While the financial and economic crisis has slowed the economic though the developments of very recent years will probably lead
catching-up process across the countries of Central and Eastern to a reassessment of what constitutes acceptable debt levels and
Europe, the underlying convergence trend continues. This is on to only a gradual rise in lending in Central and Eastern Europe,
the one hand due to the fact that the region has to make up for Erste Group still firmly believes that credit expansion accompa-
almost half a century of Communist mismanagement of the econ- nied by sustainable economic growth will prove to be a lasting
omy and on the other hand due to the fact that banking activities trend rather than a short-term process that has already peaked.
were largely non-existent during that time.
Customer loans/capita in CEE (2014) in EUR thousand
With the exception of deposit-taking, modern banking services
were largely unknown until some twenty years ago. On the lending 42

side, this was due to high nominal and real interest rates and also to 37.5
36
disposable incomes that did not support household credit growth. In
addition, a healthy competitive environment was lacking due to 30

extensive state ownership. All this has changed. In most of the

24
countries, interest rates are in a process of convergence or have
already converged to euro levels. Disposable incomes have risen 18
strongly on the back of growing gross domestic products. Most
formerly state-owned banks have been sold to strategic investors 12
9.0 8.5
7.8
that have fostered product innovation and competition. Despite the 6 4.8
recent economic slowdown and potential temporary negative im- 2.5 2.1

pacts on the banking markets in Central and Eastern Europe, these 0

Austria Czech Rep Croatia Slovakia Hungary Romania Serbia
factors will remain the driving force behind future development.

Source: Local central banks, Erste Group

In addition, most countries of Central and Eastern Europe have
human resources that are at least equivalent to those of Western Over the upcoming 15 to 20 years, on average, these countries are
European countries, but do not need to struggle with the unafforda- therefore expected to experience higher growth rates than the
ble costs in the long term of the western welfare states and have countries of Western Europe, even though periods of expansion
labour markets that are considerably more flexible. These ad- may alternate with times of economic stagnation or even setbacks
vantages are complemented by – on average – highly competitive on this long-term path of sustainable growth.

Management report
ECONOMIC ENVIRONMENT IN 2014 impacted by soft external demand in conjunction with low in-
vestments while consumption became a stabilising factor for the
The global macro economy continued its uneven recovery in economy in 2014. The European Central Bank (ECB) decided to
2014. Among advanced economies, the United States and the pursue a more expansionary monetary policy by purchasing asset-
United Kingdom left the crisis behind and achieved decent backed securities and covered bonds while cutting the interest
growth. In the euro zone, the pace of recovery was again very rates to a new historical low of 5 basis points. Consequently, the
country-specific with Spain and Germany clearly outperforming euro weakened versus the US dollar in the second half of the
France and Italy. Emerging markets and developing economies year. The ECB also announced its targeted longer-term refinanc-
continued to outgrow the advanced markets. Despite their weak- ing operations aimed at improving bank lending to the euro zone
ening economic indicators, countries such as China and India non-financial private sector. Overall, the euro zone economy
clearly achieved higher growth rates than the United States or the grew by 0.9% in 2014.
euro zone, whereas Brazil, the largest economy of Latin America,
was not able to emerge from recession after the second quarter of The Austrian economy performed broadly in line with the euro
2014. The year 2014 was also characterised by rising geopolitical zone in 2014 with annual GDP growth of 0.4%. Both exports and
tensions and a surprising and significant decline in oil prices. The domestic demand contributed to the growth, with the role of
financial crisis in Russia was the result of a rapid decline in the exports diminishing in the second half of the year. Public con-
Russian rouble relative to other currencies during the second half sumption played a significant role in supporting the economic
of 2014 and a slowdown in the Russian economy. The lack of growth while private consumption growth was weak and fixed
confidence in the Russian economy stemmed from the fall in the capital formation remained stagnant. Despite the slow economic
price of oil and from the international economic sanctions im- activity in 2014, employment growth continued, driven mainly by
posed on Russia following Russia's annexation of Crimea and job creation in the services sector. The unemployment rate re-
Russian military intervention in Ukraine. In addition, the ongoing mained one of the lowest in Europe and stood at 5.0% in 2014. In
conflict in Syria and the tense political situation in other countries terms of GDP per capita at approximately EUR 39,000, Austria
in the region caused uncertainties throughout the year. The mac- remained one of the euro zone’s most prosperous countries in
roeconomic effects of these developments were mostly confined 2014. Both private house-hold debt and public debt as a percent-
to the regions involved. All in all, the global economy grew by age of GDP remained below the euro zone average, with the latter
3.3% in 2014, after 3.0% in 2013. standing at 86.9% compared to 81.2% in 2013. This significant
increase in public debt was largely due to costs associated with
The United States were the bright spot of the global economy in the troubled financial institution Hypo Alpe Adria. Due to the
2014. Labour market conditions improved further, with solid job lower systemic support stemming from the resolution of Hypo
gains and a lower unemployment rate. Household spending rose Alpe Adria, rating agencies downgraded the debt and deposit
moderately and investments advanced, while the recovery in the ratings of most Austrian banks.
housing sector remained slow. Inflation, held down by lower
energy prices, continued to remain below the Federal Reserve’s Economic growth in Central and Eastern Europe improved fur-
longer-term objective of 2%. Improving market conditions, in- ther in 2014. Economies clearly benefitted from revived domestic
cluding diminished fears of persistently low inflation and a stead- demand and improved confidence with household consumption
ily declining jobless rate, led the Fed to end Quantitative Easing being exceptionally strong in the Czech Republic, Romania, and
and to keep the base rate close to zero. All in all, the US economy Poland. Exports have also contributed to growth of CEE econo-
grew by 2.4% in 2014. The moderate recovery in the euro zone mies with strong industrial production. The car industry, which
continued in 2014 with member states achieving significantly was one of the main contributors to exports, again supported the
varying performances. Spain and Germany clearly outperformed Czech, Slovak, Romanian and Hungarian economies. The latter’s
the average growth of the member states while France and Italy GDP growth was mainly attributable to high public spending.
weighed on growth. Economic performance of the euro zone was

17
With the exception of Croatia and Serbia, where delayed fiscal Net impairment loss on financial assets not measured at
consolidation hampered economic performance, all of the CEE fair value through profit or loss went up to EUR 2,159.2
countries grew in 2014. Inflation remained very low across the million or 169 basis points of average customer loans (+21.7%;
region. To support growth, national banks continued to cut key EUR 1,774.4 million or 137 basis points). This rise was attribut-
rates, which in Hungary and Romania stood at historical lows by able in particular to additional risk costs in Romania incurred in
the end of 2014. In the Czech Republic the base rate remained five connection with the accelerated NPL reduction. The NPL ratio
basis points throughout the year. The Czech koruna and the declined substantially to 8.5% (9.6%) on the back of successful
Romanian leu remained stable while the Hungarian forint weak- NPL sales in Romania. The NPL coverage ratio improved
ened versus the euro mainly due to lack of investors’ confidence in significantly to 68.9% (63.1%).
the unpredictable economic environment.
Other operating result amounted to EUR -1,752.9 million
PERFORMANCE IN 2014 (EUR -1,008.6 million). This was primarily due to the write-
down of goodwill in the amount of EUR 475.0 million as well as
Acquisitions and disposals in Erste Group in 2014 did not have of brand and customer relationships in Romania of EUR 489.8
any significant impact and therefore no effects on the rates of million in total. At EUR 256.3 million (EUR 311.0 million),
changes stated below. Details are provided in the notes to the levies on banking activities were again significant: EUR 130.5
consolidated financial statements. million (EUR 166.5 million) in Austria, EUR 31.5 million (EUR
41.2 million) in Slovakia and EUR 94.2 million (EUR 103.4
Overview million) in Hungary – including EUR 47.9 million in banking tax.
Net interest income declined to EUR 4,495.2 million In addition, the item other operating result included EUR 336.8
(EUR 4,685.0 million), mainly due to the persistently low interest million in expenses resulting from the consumer loan law passed
rate environment and FX translation effects. Net fee and com- by the Hungarian parliament. The net burden of the law and the
mission income increased to EUR 1,869.8 million (EUR 1,806.5 conversion of the foreign-currency loans was EUR 312.2 million.
million) on the back of an improved result from securities business
and asset management. The net trading and fair value result Result for the year attributable to owners of the parent
rose to EUR 242.3 million (EUR 218.8 million). Operating in- amounted to EUR -1,442.0 million (EUR 60.3 million).
come amounted to EUR 6,877.9 million (-1.7%; EUR 6,995.1
million). Operating result and net profit/loss for the year
attributable to owners of the parent
Operating income and operating expenses in EUR million
in EUR million
4,500
3,787 3,628
10,000 3,473
3,099 3,091
7,604 7,479
7,230 3,000
6,995 6,878
7,500

1,500
879
5,000 3,817 484
3,851 3,757 3,896 3,787
60

0
-719
2,500

-1,442

-1,500
2010 2011 2012 2013 2014
0
restated
2010 2011 2012 2013 2014
restated restated
Operating result Net profit for the year attributable
General administrative expenses Operating income to the owners of the parent

General administrative expenses declined to EUR 3,787.3 Cash return on equity, i.e. return on equity adjusted for non-
million (-2.8%; EUR 3,896.1 million), mainly due to lower per- cash expenses such as goodwill impairment and straight-line
sonnel expenses on the back of lower average headcount and amortisation of customer relationships, stood at -9.4% (reported
decreased depreciation and amortisation. This led to an operat- ROE:-13.3%) versus 3.4% (reported ROE: 0.5%) in 2013.
ing result of EUR 3,090.7 million (-0.3%; EUR 3,099.0 million)
and an improved cost/income ratio of 55.1% (55.7%).

Key profitability ratios in % For 2015, loan growth in the low single digits and a significant
decline in risk costs are anticipated. Banking levies are ex-
65 30 pected to amount to about EUR 360 million in 2015, including
contributions to European bank resolution and deposit insurance
60 funds. Related discussions with the Austrian government are
55.7 55.1 20 still ongoing.
55 52.0
51.5
50.2
Risks to guidance
50 10
Consumer protection initiatives for example potential pre-election
6.7
45
CHF legislation in Croatia as well as geopolitical risks (Eastern
3.8
-5.5
0.5 0
Ukraine conflict, Greece) could have a negative impact on Erste
40 Group’s operating environment.
-13.3

35 -15 ANALYSIS OF PERFORMANCE

2010 2011 2012 2013 2014
restated restated January-December 2014 compared with January-December 2013
Cost/income ratio Return on equity

Net interest income

Cash earnings per share for the financial year 2014 amounted Net interest income declined to EUR 4,495.2 million
to EUR -1.44 (reported EPS: EUR -3.37) versus EUR 0.89 (EUR 4,685.0 million), mainly due to continuing subdued loan
(reported EPS: -0.06) in 2013. demand in a low interest rate environment. The net interest margin
(net interest income as a percentage of average interest-bearing
Total assets amounted to EUR 196.3 billion (EUR 200.1 billion). assets) contracted from 2.69% to 2.65%.
Loans and advances to customers (net) increased moderately
to EUR 120.8 billion (EUR 119.9 billion). Total risk (risk-
Net interest margin in %
weighted assets including credit, market and operational risk,
Basel 3 phased-in) increased to EUR 100.6 billion (EUR 97.9 6
billion).
5 4.56
The common equity tier 1 ratio (CET 1, Basel 3 phased-in) 4.21
3.94
3.68
stood at 10.6% versus 11.4% (Basel 2.5). The total capital ratio 4 3.60

(Basel 3 phased-in) stood at 15.7% versus 16.3% (Basel 2.5). 3.08 2.97
2.80 2.69 2.65
3
Dividend
No dividend distributions will be proposed at the Annual General 2
Meeting (2014: EUR 0.20/share). The participation capital was 2.05 2.09 2.01

fully redeemed in August 2013, when dividends of 8% per annum 1

1.44
1.60

were paid out for the last time.

0
2010 2011 2012 2013 2014
Outlook restated restated
Operating environment anticipated to be conducive to credit Central and Eastern Europe Overall group Austria
expansion
Real GDP growth is expected to be between 2% and 3% in all
Since 2013 the calculation method for the net interest margin has been based on segment figures. For the
major CEE markets, except Croatia, driven by rising domestic calculation of the average interest-bearing assets five quarterly figures are now used instead of the four in

demand. For Austria, a real GDP growth below 1% is forecast. the past.

Return on tangible equity (ROTE) expected at 8-10% in 2015 Net fee and commission income
(YE 14 TE: EUR 8.4 billion) Net fee and commission income increased to EUR 1,869.8 million
Operating result is expected to decline in the mid-single digits on (EUR 1,806.5 million), due among other factors to improved
the back of lower but sustainable operating results in Hungary results from securities business, asset management, and brokerage
(due to FX conversion related effects of lower average volume commissions.
and the expected reversal of a positive 2014 trading effect in
2015) and Romania (lower unwinding impact) as well as the
persistent low interest rate environment.

19
Net fee and commission income, structure and trend +1.1%). Depreciation and amortisation declined to EUR 466.1
in EUR million million (EUR 517.7 million) (currency-adjusted: -1.5%). The line
item other administrative expenses included deposit insurance
2,400
contributions in the amount of EUR 87.6 million (EUR 77.2 mil-
lion). The line item depreciation and amortisation included the
2,000
1,870
1,843
1,787
1,721
1,807 straight-line amortisation of intangible assets (i.e. customer rela-
1,600 tionships) in the amount of EUR 37.0 million (EUR 65.2 million).

1,200 The headcount increased slightly by 0.9%, partly due to the ex-
panded consolidation scope, to 46,067; average headcount went
800 down to 45,996 (46,843)

400
Headcount as of 31 December 2014
0
2010 2011 2012 2013 2014 Slovenská sporitel’ňa
restated restated
Erste Bank Hungary
Securities business Other Erste Bank Croatia
Lending business Payment business Insurance business (till 2012)
Erste Bank Serbia
Customer resources distributed (since 2013) Asset management (since 2013) 2,754 955
2,766 2,209

4,275
Other
Net trading and fair value result
The net trading and fair value result rose to EUR 242.3 million 10,504 Česká spořitelna

(EUR 218.8 million), mainly due to valuation results for securities

Banca Comercială Română
and derivatives held for trading. Swaps entered into with the 7,226

Hungarian National Bank to secure refinancing of foreign-currency 7,054

Erste Group in Austria
loans had a positive impact of EUR 32.4 million. A corresponding 8,324
negative counter-effect was shown in other operative result. Cross-guarantee savings banks

General administrative expenses

Operating result
General administrative expenses declined to EUR 3,787.3 million
Driven by lower net interest income, operating income declined
(EUR 3,896.1 million) (currency-adjusted: -1.5%).
to EUR 6,877.9 million (-1.7%; EUR 6,995.1 million). As general
administrative expenses were reduced at the same time to
General administrative expenses, EUR 3.787,3 million (-2.8%; EUR 3,896.1 million), the operating
structure and trend, in EUR million result remained stable at EUR 3,090.7 million (-0.3%:
EUR 3,099.0 million).
4,500

3,896
3,750
3,817 3,851
3,757 3,787 Gains/losses from financial assets and liabilities not
measured at fair value through profit or loss (net)
3,000 Gains/losses from financial assets and liabilities not measured at
fair value through profit and loss (net) declined to EUR 18.3
2,250
million (EUR 62.4 million), mainly due to the negative contribu-
tion from the repurchase of financial liabilities.
1,500

750
Net impairment loss on financial assets not measured
at fair value through profit or loss (net)
0 Net impairment loss on financial assets (net) rose to EUR 2,159.2
2010 2011 2012 2013
restated
2014
million (EUR 1,774.4 million), mainly due to higher risk costs in
Personnel expenses Other operating Depreciation of property Romania. This development was largely attributable to the rise in
expenses and equipment
the balance of the allocation and release of provisions for the
lending business together with the costs of direct loan write-offs
Personnel expenses decreased to EUR 2,184.2 million offset by income received from the recovery of loans already
(EUR 2,232.4 million) (currency-adjusted: -1.1%). Further cost written off to EUR 2,120.4 million (EUR 1,726.5 million). Net
savings were achieved in other administrative expenses impairment loss on financial assets not measured at fair value
which decreased on the back of lower office-related expenses to through profit or loss, based on the average volume of customer
EUR 1,136.9 million (EUR 1,146.0 million) (currency-adjusted: loans, amounted to 169 basis points (137 basis points). In addi-

tion, this line item included net impairment loss on financial EUR 120.8 billion (EUR 119.9 billion). Total risk (risk-weighted
assets – held to maturity and financial assets – available for sale assets including credit, market and operational risk, Basel 3
in the amount of EUR -38.8 million (EUR -47.9 million). phased-in) increased to EUR 100.6 billion (EUR 97.9 billion).

Other operating result Trading and investment securities declined slightly to

Other operating result amounted to EUR -1,752.9 million EUR 50.1 billion (EUR 51.3 billion). The rise in the line item
(EUR -1,008.6 million). This was primarily attributable to write- financial assets – available for sale did not fully offset the decline
downs: overall, goodwill write-downs amounted to EUR 475.0 in the line items financial assets – held to maturity, financial
million (thereof EUR 319.1 million in Romania, EUR 61.4 mil- assets – held for trading, and financial assets – at fair value
lion in Croatia, and EUR 94.5 million for participations in Aus- through profit or loss.
tria). In addition, an amount of EUR 489.8 million was written
down in Romania for customer relationships and brand. Loans and receivables to credit institutions (net) decreased
to EUR 7.4 billion (EUR 8.4 billion). Loans and receivables to
Other operating result also included expenses of EUR 336.8 mil- customers (net) rose to EUR 120.8 billion (EUR 119.9 billion)
lion resulting from a consumer loan law passed by the Hungarian despite continuing subdued credit demand in some business
parliament. The negative net impact of the law and the conversion segments and significant declines in Romania and Hungary.
of the foreign-currency loans was EUR 312.2 million. Allowances for loans and receivables to customers shown
as part of loans and receivables to customers decreased to
Levies on banking activities declined to EUR 256.3 million EUR 7.5 billion (EUR 7.8 billion).
(EUR 311.0 million). Banking levies charged in Austria amounted
to EUR 130.5 million (EUR 166.5 million) and in Slovakia to The NPL ratio, non-performing loans as a percentage of loans to
EUR 31.5 million (EUR 41.2 million). The Hungarian banking customers, declined significantly to 8.5% (9.6%). The NPL cov-
levies in the amount of EUR 94.2 million (EUR 103.4 million) erage ratio improved to 68.9% (63.1%).
comprised a banking tax in the amount of EUR 47.9 million (EUR
49.0 million) and a financial transaction tax in the amount of EUR
Loans and advances to customers, structure and
46.3 million (EUR 54.4 million). The latter included expenses of
trend, in EUR million
EUR 8.8 million (EUR 7.1 million) for the programme subsidising
repayment of foreign-currency loans. 150,000

132,334 134,750 131,928

Profit/loss for the year 119,945 120,834
120,000
The result for the year from continuing operations amounted to
EUR -803.2 million (EUR 378.4 million). The net result for
90,000
the year attributable to owners of the parent declined to
EUR -1,442.0 million (EUR 60.3 million).
60,000

Tax situation
Pursuant to section 9 of the Austrian Corporate Tax Act (KStG), 30,000
Erste Group Bank AG and its main domestic subsidiaries consti-
tute a tax group. Due to the high proportion of tax-exempt income
0
– particularly income from participating interests – and tax pay- 2010 2011 2012 2013 2014

ments for the permanent establishments abroad, no Austrian restated restated

Public sector Commercial customers Private customers and others

corporate income tax was payable in the financial year 2014. The
current tax loss carried forward increased in 2014.
Due to the recognition of impairments including goodwill, cus-
Taxes on income are made up of current taxes on income calculated tomer relationships and brand, intangible assets declined to
in each of the Group companies based on the results reported for EUR 1.4 billion (EUR 2.4 billion). Miscellaneous assets were
tax purposes, corrections to taxes on income for previous years, and largely unchanged at EUR 8.6 billion (EUR 8.8 billion) despite a
the change in deferred taxes. write-down of deferred tax assets.

In 2014, the reported total income tax expense amounted to Financial liabilities – held for trading increased to EUR 7.7
EUR 509.4 million (2013: EUR 178.5 million). billion (EUR 6.5 billion) due to interest yield changes.

Balance sheet development Deposits from banks decreased to EUR 14.8 billion (EUR
Total assets amounted to EUR 196.3 billion (EUR 200.1 billion). 17.3 billion), reflecting a decline in overnight deposits from
Loans and advances to customers (net) increased moderately to credit institutions. Deposits from customers increased mod-

21
erately to EUR 122.6 billion (EUR 122.4 billion) despite a Common equity tier 1 capital (CET1) according to CRR
negative impact of EUR 1.8 billion related to the final decon- in EUR million
solidation of the Czech pension fund. The loan-to-deposit
ratio stood at 98.6% (98.0%). 15,000 Basel 2.5 Basel 3

11,848
Balance sheet structure/liabilities and total equity 11,019 10,681
11,199
10,623

in EUR million
10,000

250,000

210,006 214,071
205,770 200,118
200,000 196,287
5,000

150,000

0
100,000 2010 2011 2012 2013 2014

Common equity tier 1 capital (CET1)

50,000

In Basel 2.5: Core tier-1 capital.

0
Basel 3 values are based on CRR transitional rules.
2010 2011 2012 2013 2014
restated restated restated

Deposits from banks Customer accounts The tier 1 ratio (Basel 3 phased-in), which includes the capital
Debts securities in issue Total equity and
other liabilities requirements for credit, market and operational risk, stood at
10.6% (year-end 2013, Basel 2.5: 11.8%). The common equity
tier 1 ratio (Basel 3 phased-in) amounted to 10.6% as of
Debt securities in issue, in particular bonds as well as mort-
31 December 2014 (year-end 2013, Basel 2.5: 11.4%).
gage and public sector covered bonds, declined to EUR 31.1
billion (EUR 33.1 billion) due to redemptions. Miscellaneous
liabilities rose to EUR 6.6 billion (EUR 6.0 billion). Solvency ratio and common equity tier 1 capital ratio in %

Erste Group’s total equity (IFRS) declined to EUR 13.4 billion Basel 2.5 Basel 3
20
(EUR 14.8 billion). After regulatory deductions and filtering
16.3
according to the CRR, tier 1 capital (Basel 3 phased-in) amount- 15.5 15.7
14.4
ed to EUR 10.6 billion (year-end 2013, Basel 2.5: EUR 11.6 15 13.5

billion), common equity tier 1 capital (CET1, Basel 3 phased-

in) stood at EUR 10.6 billion (year-end 2013, Basel 2.5:
EUR 11.2 billion). 10 11.2 11.4
10.6
9.2 9.4

Total risk (risk-weighted assets including credit, market and

5
operational risk, Basel 3 phased-in) increased to EUR 100.6
billion (EUR 97.9 billion).
0
2010 2011 2012 2013 2014
As of 2014, Erste Group calculates consolidated regulatory capital
Solvency ratio Common equity tier 1 capital ratio
according to Basel 3. In 2014, the calculation followed the re-
quirements as defined in the capital requirements regulation In Basel 2.5: Core tier-1 capital.
(CRR) taking into consideration transitional provisions as defined Basel 3 values are based on CRR transitional rules.

in the Austrian CRR-Begleitverordnung. These transitional provi-

sions define the percentages applicable to eligible capital instru- EVENTS AFTER BALANCE SHEET DATE
ments and regulatory deduction items as well as filters. The total
capital ratio (Basel 3 phased-in) in relation to the total risk (total On 15 January 2015, the Swiss National Bank decided to discon-
eligible qualifying capital in relation to total risk pursuant to CRR) tinue the minimum exchange rate of CHF against EUR. This
was 15.7% as of 31 December 2014 (year-end 2013, Basel 2.5: announcement resulted in significant appreciation of CHF against
16.3%), well above the legal minimum requirement. all major currencies including the currencies of CEE countries.
The impact on Erste Group arose primarily in relation to borrow-
ers who have taken out CHF-denominated loans in the past and
are now adversely affected in terms of repayment ability. Prelim-

inary sensitivity analyses performed indicate a moderate impact in 2012. Its purpose is to initiate and coordinate across-the-board
in terms of higher risk costs and increase in credit RWAs (10 bps initiatives with a strong focus on "real customer experiences". As
CET1 loss in the case of EUR/CHF parity prevailing for a longer a multidisciplinary team consisting of marketing, product, IT and
period of time). The actual impact is contingent on future ex- design experts, the Innovation Hub is tasked with creating inno-
change rate developments. vations and managing new programme initiatives.

On 26 January 2015, following a proposal by the Croatian govern- CORPORATE SOCIAL RESPONSIBILITY
ment, the Croatian parliament approved a change in the Consumer
Protection Act, to fix payments of future monthly annuities in 2015 As one of the leading banks in Austria and the eastern part of the
for CHF/HRK exchange rate at 6.39 for customers who have CHF- EU, Erste Group has committed itself to strict ethical standards
denominated loans. This change became effective as of 27 January for all the activities it carries out in its markets. Almost 200 years
2015. Erste Group expects that this will have a moderate effect via ago, the very founding concept of Erste österreichische Spar-
foreign exchange losses on profit and loss in 2015. Casse already embraced the idea of contributing to the common
good. It goes without saying that Erste Group acts responsibly
On 9 February 2015, the government of Hungary and the Europe- towards customers, employees, investors and communities. This
an Bank for Reconstruction and Development (EBRD) sealed an is why Erste Group has brought in a wide variety of measures.
agreement (the Memorandum of Understanding) aimed at
strengthening Hungary’s financial sector and boosting the flow of Adhering to laws and international initiatives against bribery and
bank credits to Hungary’s private corporations and citizens. In this corruption is common practice – nothing related to these topics was
context, Erste Group announced that it has invited the government recorded at Erste Group in 2014. In addition, a variety of measures
of Hungary and theEBRD to invest in Erste Bank Hungary by have been introduced. In 2014, a documentation and approval tool
acquiring a minority stake of up to 15% each. Negotiations are in for gifts was introduced, as was a Whistleblowing Office. The Erste
progress and the completion of the transaction is expected within Integrity Line encourages lawful, fair behaviour and enables all
the next six months, after implementation of a new Hungarian employees to report cases of suspicious misconduct.
banking tax law, as set out in the Memorandum of Understanding.
The purchase price will be negotiated between Erste Group and Commitment to society
the two parties based on market valuation methods after perform- Erste Group has always supported social, cultural, educational
ing the due diligence. The EBRD’s investment is expected to be and sports projects, such as Erste Bank Oesterreich’s MehrWERT
structured with a pre-agreed exit to Erste Group after an agreed sponsorship programme.
period of time. The transaction is subject to all necessary approv-
als required from Hungarian or European banking supervisory Social activities
and competition authorities. The Erste Group’s social commitment is marked by its long-term
cooperation with local and international organisations. This fo-
RISK MANAGEMENT cuses on combating poverty and unemployment. Since 2013 Erste
Bank Oesterreich, the savings banks and s Bausparkasse have
With respect to the explanations on substantial financial and non- been sponsoring Hilfswerk Österreich, one of the largest non-
financial risks at Erste Group as well as the goals and methods of profit providers of health care, social and family services in Aus-
risk management, we would like to draw the reader’s attention to tria. Additionally, Erste Bank Oesterreich has also supported the
the information in Notes 44, 45 and 49 to the consolidated finan- aid organisation lobby.16, which works to protect the right to
cial statements. education of unaccompanied young refugees and give them
access to education, employment and participation in social life.
ECB Asset Quality Review and EBA Stress Test Banca Comercială Română operates a platform for no-fee dona-
As regards the ECB Asset Quality Review and the EBA stress test tions, which helps finance 200 NGO projects. Approximately 90
we would like to draw the reader’s attention to the information in projects and initiatives were supported through partial financing
Note 44.3. in Serbia in 2014. Slovenská sporiteľňa continued its support for
projects that create new jobs in sheltered workplaces and for
RESEARCH AND DEVELOPMENT organisations that work with handicapped people Young people
from children’s homes have obtained scholarships under a project
As Erste Bank Group AG does not conduct independent or regu- called Success through Education. The Česká spořitelna Founda-
lar research into new scientific and technical findings or upstream tion also supports those from whom society turns away. It sup-
development work for commercial production or use, it does not ported 28 projects with people excluded for reasons of age, social
engage in any research and development activities pursuant to status, or mental handicap.
section 243 (3) no. 3 of the Austrian Commercial Code (UGB). In
order to drive improvements for retail customers and in the ongo-
ing services Erste Group Bank AG launched the Innovation Hub

23
Arts and culture time. Special attention is devoted to the quality of products and
Erste Group is dedicated to supporting an understanding of and advisory services, as these are key factors for customer satisfac-
appreciation for the arts and culture. One of the cornerstones of tion and, therefore, for building up and maintaining long-term
the activities is to enable young and socially disadvantaged peo- customer relations. The focus of Erste Group is clearly on the
ple to find access to music the performing and the applied arts. relationship with the customer, not on the transaction.
Promoting young talents is another focus of Erste Group’s arts
and culture sponsorship programme. Erste Bank Oesterreich is Erste Group believes that, despite technological progress, per-
the main sponsor of the Viennale film festival and Jeunesse, sonal contact with customers remains important. This is why the
which sup-ports young artists and the development of innovative modern branch network of Erste Group remains a key element of
concepts for sharing music. Projects focusing on social design its banking business. Customers of Erste Group who require
were financed as part of the Vienna Design Week in 2014. In the complex long-term financial services expect sound advice. The
Czech Republic Designblok, a design and arts festival, is sup- combination of digital channels and traditional sales approaches
ported. In addition, a number of music festivals and art projects enables customer relationship managers to explore customer
have been promoted in Hungary, Slovakia, Serbia and Croatia. needs even more proactively. By implementing digital applica-
tions, Erste Group in 2014 took another step closer to its cus-
Financial education tomers to help them manage their financial affairs.
A good understanding of money and finance is of the utmost
importance, because it enables individuals and households to Accessibility, transparency and comprehensibility of product
improve and secure their economic situation. Financial ignorance information are top priorities. As a result, the range of multilingual
limits social, economic and cultural life, which might become a consultation services is constantly expanding. Each branch of
risk to the individual but also creates problems for communities, Erste Bank Oesterreich features an ATM machine with braille and
countries and society in general. Erste Group believes that the number of barrier-free branches is increasing across the group.
knowledgeable and financially educated customers are more
likely to make sound appropriate financial decisions. Financially Customer retention based on high levels of satisfaction ensures
secure individuals and families will contribute positively to the bank’s long-term success. The Customer Experience Index
communities and foster economic growth and development. (CXI) is assessed in all Erste Group countries, based on repre-
Therefore, Erste Group has been engaged in financial education sentative and comprehensive surveys. This index also serves as a
activities for many years. bonus criterion for management board members.

Target-group oriented short films for adults and children provide In 2014, the main focus of financial inclusion was again on micro
basic financial and economic know-how and explain current eco- banking and social enterprise financing. Erste Group’s local
nomic situations. The weekly series of already more than one banks offer micro-financing models. Good.bee Credit provides
hundred videos is recommended by the Austrian Federal Ministry development-oriented financial products for small businesses and
of Labour, Social Affairs and Consumer Protection. Erste Group the self-employed in Romania. Start-ups are also supported
also offers workshops in the fields of financial education and debt through micro-loans in Serbia, Croatia, Slovakia and Austria that
prevention, especially for younger people. Large amounts of target the financing of social enterprises.
school and practice materials can be downloaded from the plat-
form www.geldundso.at, which was developed together with Suppliers
youths. Erste Group suppliers must fulfil strict standards in order to
preserve the sustainable business principles. Covering the
Corporate volunteering entire supply chain, Erste Group Procurement (EGP) is the
Erste Group encourages its employees to show social commit- sourcing and procurement company of Erste Group. Its basic
ment through various initiatives. Thus, the number of participants objective is to ensure clear and fair sourcing and procurement
in the Time Bank initiative, which was launched in 2012 and in activities and contracts. In addition to governance issues such
which employees dedicate some of their free time to social pro- as trade ethics, conflicts of interest, bribery and stakeholder
jects, is growing steadily. A broad range of social projects, such commitment, the supplier audit requires responses to questions
as the renovation of social institutions or support for homeless on sustainability and social topics such as child labour, and
people, are supported across the group. Employees of Česká health and safety.
spořitelna receive two free days for the support of social projects
as part of its Charity Days. Employees
Retaining experienced and committed employees is fundamen-
Customers tal to the long-term success of every company. Erste Group – as
Erste Group puts customers and their interests at the centre of its one of the largest employers in the region – therefore aims to
business activities. Only banks that understand the financial maintain its position as an employer of choice in Central and
needs of their customers can offer the right solutions at the right Eastern Europe. The employee engagement survey conducted in

2013 showed that diversity and transparency were of particular An electronic Meeting Management System was installed in
importance. The appointment of a Group Diversity Manager 2014, reducing paper printouts. Copy paper use has also been
underlines the importance of diversity for Erste Group. The key lowered through the encouragement of digital banking and mo-
objectives in 2014 were the employment of people with disa- bile apps. Recycled and certified environment-friendly paper is
bilities, generation management and increasing the number used and recycled properly for tasks that still require paper. In
of women in management positions. Erste Group signed the 2014, the annual report and the interim reports were printed on
Austrian Charta der Vielfalt (Diversity Charter) in September recycled paper for the first time. The existing cooperation with
2014. By signing the charter, Erste Group expresses its appreci- the WWF was extended.
ation and the importance of diversity in the group, as well as the
commitment to carry out measures to promote diversity inter- CAPITAL, SHARE, VOTING AND CONTROL
nally and externally. RIGHTS

Erste Group regards supporting the development of its employees’ Disclosures pursuant to
professional and social skills as a top priority to ensure that the section 243a (1) UGB (Austrian Commercial Code)
employees are well prepared to act professionally and in a socially With regard to the statutory disclosure requirements, connected to
responsible manner. The Erste Leadership Evolution Centre was the composition of the capital as well as the class of shares, a
introduced in 2014. It structures group-wide leadership develop- special reference is made to Note 36 to the consolidated financial
ment offerings. Erste Group also offers university graduates a very statements.
attractive career start with its Group Graduate Programme.
As of 31 December 2014, DIE ERSTE oesterreichische Spar-
Across Erste Group, the focus of the remuneration policy was on Casse Privatstiftung, a foundation, together with Austrian savings
an appropriate balance in rewarding the performance, competence banks held 30.04 % of the shares in Erste Group Bank AG. The
and level of responsibility of the employees and keeping a sus- foundation is holds 10.83 % of the shares directly, which makes it
tainable personnel cost base. Erste Group offers competitive, but the largest shareholder.
not market leading, compensation packages. The remuneration
schemes are designed according to the CRD IV requirements on Indirect participation of the Privatstiftung was at 9.29%, with
remuneration, ESMA guidelines (European Securities and Mar- 5.41% of the shares held by Sparkassen Beteiligungs GmbH & Co
kets Authority) and local bank laws. KG, which is an affiliated undertaking of the Privatstiftung; 0.80%
was held by Austrian savings banks acting together with the
Erste Group is committed to a proactive approach towards helping Privatstiftung and affiliated with Erste Group Bank AG through
its employees to identify and manage health risk. Therefore, a the Haftungsverbund and 3.08% by other syndicate members.
multi-professional team of occupational physicians, industrial 9.92% of the subscribed capital was controlled by the Privat-
psychologists and physiotherapists assists Erste Group’s employ- stiftung on the basis of a shareholder agreement with Caixabank
ees in any matters of health and well-being. In 2014, employees in S.A.
Austria contacted the health centre 15,883 times.
Under article 15.1 of the articles of association, for the duration
Environment of its assumption of liability for all current and future debts in the
Environmental issues affect everyone’s life and the time when event of their default on payment, the Privatstiftung is entitled,
only environmental activists paid attention is long gone. An pursuant to section 92 (9) of the Austrian Banking Act, to dele-
Environmental Steering Committee consisting of the CEO and gate up to one-third of the supervisory board members to be
COO of Erste Group and the Head of Group Environmental elected at the Annual General Meeting. Until now, the Privat-
Management was set up to monitor the group-wide implementa- stiftung has not exercised this right.
tion of the environmental strategy.
Article 15.4 of the Articles of Association concerning the ap-
To improve its ecological footprint, Erste Group introduced far- pointment and dismissal of members of the management board
reaching measures to reduce electric energy, heating energy, copy and the supervisory board is not directly prescribed by statutory
paper and CO2 emissions. Switching to LED light bulbs has law: a motion for removal of supervisory board members requires
already carried out successfully. In addition, group-wide criteria a three-quarters majority of valid votes cast and a three-quarters
for choosing heating and electric energy providers based on their majority of the subscribed capital represented at the meeting
use of renewable energies have been defined. Moreover, company considering the proposal to be successful.
cars were replaced by new ones with lower CO2 emissions and
business trips have been reduced in favour of advanced video The Articles of Association contain no restrictions in respect of
conference systems. This should help keep greenhouse gas emis- voting rights or the transfer of shares article 19.9 of the Arti-
sions to a minimum. cles of Association concerning amendments to the Articles of
Association contains a provision that is not prescribed directly

25
by statutory law: amendments to the Articles of Association, in amounts are determined by Haftungsgesellschaft and communi-
so far as they do not alter the business purpose, may be passed cated to members liable for contributions.
by a simple majority of votes cast and a simple majority of the
subscribed capital represented at the meeting considering the In 2013, collaboration with savings banks was further strength-
amendment. Where votes with a higher majority are required ened by way of an additional agreement. The purpose of the
by individual provisions of the Articles of Association, these agreement concluded in 2013 and effective as of 1 January 2014
provisions can only be amended with the same higher majority is not only to broaden the regulatory options available to Erste
of votes. Moreover, amendments to article 19.9 require a three- Group Bank AG but also to ensure compliance with point 127 of
quarters majority of the votes cast and a three-quarters majori- Article 4 (1) (1) CRR and Article 113 (7) CRR with a view to
ty of the subscribed capital represented at the meeting consid- allowing recognition of minority interests at consolidated level in
ering the proposal. acc. with Article 84 (6) CRR. Savings banks that are party to the
agreement concluded in 2013 also include Allgemeine Sparkasse
Other information Oberösterreich, which forms an institutional protection scheme as
Furthermore, it should be noted that Erste Group Bank AG – just defined under Article 113 (7) CRR with the other members of the
as nearly all Austrian savings banks – are members of the Haftungsverbund. Owing to the new legal and supervisory re-
Haftungsverbund of Sparkassengruppe. quirements, the maximum limits for support mechanisms of the
individual members were raised and an ex ante fund was set up.
Sparkassengruppe sees itself as an association of independent, Payments to the ex ante fund are made on a quarterly basis over a
regionally established savings banks which strives to bolster its period of ten years.
market position by strengthening common product develop-
ment, harmonising its market appearance and advertising con- In the financial statements, the payments by the individual mem-
cepts, pursuing a common risk policy, engaging in co- bers are recognised as participations in IPS GesbR – which has
ordinated liquidity management and applying common control- been charged with managing the ex ante fund. There was a shift in
ling standards. retained earnings from untied reserves to tied reserves. On the
basis of the contractual provisions, these retained earnings repre-
In addition, the purpose of this scheme is: sent a tied reserve. These tied retained earnings may be released
_ to identify any business issues of its member banks at an ear- only if the ex ante fund is used due to a contingency. Internally, this
ly stage and to provide effective assistance to its members in reserve may therefore not be used to cover a loss and, at member
the resolution of business issues - this can range from offering level, it does not qualify as capital under the definition of CRR; on
technical assistance or giving guarantees to providing bor- a consolidated level, however, the ex ante fund qualifies as capital.
rowed or qualifying capital, and
_ to provide customers with a deposit guarantee system that goes Additional disclosures pursuant to
beyond the legal deposit guarantee requirement (section 93 et section 243a (1) no. 7 UGB
seq. BWG) that which only guarantees certain types of custom- Pursuant to the following provisions, members of the manage-
er deposits by creating a suitable obligation to service the liabil- ment board have the right to repurchase shares, where such a
ities of other participating savings banks if the need arises. right is not prescribed by statutory law.

Haftungsverbund GmbH is responsible for implementing such As per decision of the annual general meeting of 16 May 2013:
measures and analysing the business situation of every member _ The management board is entitled to purchase up to 10% of
bank of the Haftungsverbund. Overall, the participating savings the subscribed capital in treasury shares for trading purposes
banks hold a maximum stake of 49% (assuming all savings banks according to section 65 (1) no. 7 AktG (Austrian Stock Cor-
participate) in Haftungsverbund GmbH and Erste Group Bank poration Act). However, the trading portfolio of these shares
AG always holds a minimum stake of 51%. may not exceed 5% of the subscribed capital at the end of any
calendar day. The consideration for the shares to be purchased
As required by the BWG, individual members of the Haftungs- must not be less than 50% of the closing price at the Vienna
verbund may need to provide assistance to other members (by Stock Exchange on the last trading day prior to the purchase
giving liquidity assistance, granting loans or guarantees and and must not exceed 20% of the closing price at the Vienna
providing equity capital, for instance), and, in the case of section Stock Exchange on the last trading day prior to the purchase.
93 (3) no. 1 BWG, to service the guaranteed customer deposits of This authorisation is valid for a period of 30 months, i.e. until
a Haftungsverbund member. The scope of the individual services 15 November 2015.
to be provided by individual Haftungsverbund members where _ The management board is entitled, pursuant to section 65 (1)
needed is subject to an individual and general maximum limit. no. 8 as well as (1a) and (1b) Stock Exchange Act and for a
Any contributions made by Haftungsverbund members under the period of 30 months from the date of the resolution, i.e. until
statutory deposit guarantee system pursuant to section 93 et seq. 15 November 2015, to acquire own shares of up to 10% of
BWG are likewise taken into consideration. The corresponding the subscribed capital, subject to approval by the supervisory

board, with the option of making repeated use of the 10% (PPA), by which Erste Foundation gives Caixabank, S.A.
limit, either at the stock exchange or over the counter, like- ("CaixaBank") the status of a friendly investor and preferred
wise to the exclusion of the shareholders’ right to tender pro- partner for participations. Under this agreement, CaixaBank is
portional payment. The authorisation may be exercised in authorised to nominate a person for appointment to the Supervi-
whole or in part or in several instalments and in pursuit of one sory Board of Erste Group Bank AG. In return, CaixaBank has
or several purposes. The market price per share must not be undertaken not to participate in a hostile takeover bid for Erste
below EUR 2.00 or above EUR 120.00. Pursuant to section Group Bank AG’s shares, and to give Erste Foundation the right
65 (1b) in conjunction with section 171 Stock Corporation of pre-emption and an option right to the Erste Group Bank AG
Act, the management board is authorised, from the date of the shares held by CaixaBank. Under the PPA, Erste Foundation
resolution, i.e. until 15 May 2018, on approval by the super- undertakes not to grant any rights to third parties that are more
visory board, to sell or use the company’s own shares, also by favourable than those granted to CaixaBank, except under certain
means other than the stock exchange or a public offering for circumstances. Erste Foundation’s and CaixaBank’s voting rights
any purpose allowed by law, particularly as consideration for at Erste Group Bank AG remain unaffected by the PPA. The PPA
the acquisition and financing of the acquisition of companies, has been approved by the Austrian Takeover Commission.
businesses, business divisions or shares in one or several
businesses in Austria or abroad to the exclusion of the share- Haftungsverbund
holders’ proportional purchase option. The authorisation may The agreement in principle of the Haftungsverbund provides for
be exercised in whole or in part or in several instalments and the possibility of early cancellation for good cause. Good cause
in pursuit of one or several purposes. The management board allowing the respective other contracting parties to cancel the
is authorised to redeem own shares subject to the supervisory agreement is deemed to exist if
board's approval without requiring the annual general meeting _ one contracting party harms grossly the duties resulting from
to adopt any further resolution. present agreement
_ the ownership structure of a party to the contract changes in
The management board is authorized until 28 June 2017, with the such a way – particularly by transfer or capital increase – that
consent of the supervisory board, to issue convertible bonds, one or more third parties from outside the savings bank sector
which have the conversion or subscription right for shares of the directly and/or indirectly gain a majority of the equity capital
Company, observing or excluding the subscription rights of the or voting rights in the contracting party or
shareholders. The terms and conditions may, in addition or in- _ one contracting party resigns from savings bank sector irre-
stead of a conversion or subscription right, also provide for the spective of the reason.
mandatory conversion at the end of the term or at any other time.
The issuance of the convertible bonds is limited to the extent that The Haftungsverbund's agreement in principle and supplementary
all conversion or subscription rights, and in case of a mandatory agreement expire if and as soon as any entity that is not a member
conversion stipulated in terms and conditions, the mandatory of the savings bank sector association acquires more than 25
conversion, are covered by conditional capital. The issue amount, percent of the voting power or equity capital of Erste Group Bank
the terms and conditions of the issue of the convertible bonds and AG in any manner whatsoever and a member savings bank noti-
the exclusion of the subscription rights for the shareholders will fies the Haftungsverbund's steering company and Erste Group
be determined by the management board with the consent of the Bank AG by registered letter within twelve weeks from the change
supervisory board. of control that it intends to withdraw from the Haftungsverbund.

Concerning the authorized and conditional capital we are refer- Directors and officers insurance
ring to the information given in Note 36 in the consolidated Changes in controlling interests
financial statements. All sales and purchases were carried out as In the event that any of the following transactions or processes
authorised at the annual general meeting. occur during the term of the insurance policy (each constituting a
“change of control”) in respect of the insured:
Significant agreements pursuant to _ the insured ceases to exist as a result of merger or consolida-
section 243 a (1) no. 8 UGB tion, unless the merger or consolidation occurs between two
The following paragraphs list important agreements to which the insured parties, or
company is party, and which become effective, are amended or _ another company, person or group of companies or persons
are rendered ineffective when there is a change in the control of acting in concert who are not insured parties, acquire more
the company as a result of a takeover bid, as well as their effects: than 50% of the insured’s outstanding equity or more than
50% of its voting power (giving rise to the right to control the
Preferred co-operation between Erste Foundation and voting power represented by the shares, and the right to
Caixabank S.A. appoint the management board members of the insured), then
Erste Foundation and Caixabank S.A. (formerly Criteria the insurance cover under this policy remains in full force and
CaixaCorp) have concluded a Preferred Partnership Agreement effect for claims relating to unlawful acts committed or

27
alleged to have been committed before this change in control Asset Management Agreement. The refund decreases on a linear
took effect. However, no insurance cover is provided for scale down to zero from October 2013 to October 2018.
claims relating to unlawful acts committed or allegedly com-
mitted after that time (unless the insured and insurer agree INTERNAL CONTROL AND
otherwise). The premium for this insurance cover is deemed RISK MANAGEMENT SYSTEM
to be completely earned. FOR THE GROUP FINANCIAL REPORTING
PROCEDURES
In the event that a subsidiary ceases to be a subsidiary during the
insurance period, the insurance cover under this policy shall re- Control environment
main in full force and effect for that entity for the remainder of the The management board is responsible for the establishment,
insurance period or (if applicable) until the end of the extended structure and application of an appropriate internal control and
discovery period, but only in respect of claims brought against an risk management system that meets the company’s needs in its
insured in relation to unlawful acts committed or alleged to have Group accounting procedures.
been committed by the insured during the existence of this entity
as a subsidiary. No insurance cover is provided for claims brought The management in each Group unit is responsible for implement-
against an insured in relation to unlawful acts committed or alleging Group-wide instructions. Compliance with Group rules is moni-
edly committed after this entity ceased to exist. tored as part of the audits performed by internal and local auditors.

Cooperation between Erste Group Bank AG and Vienna Consolidated financial statements are prepared by the Group
Insurance Group (“VIG”) Consolidation department and the IFRS and Tax Competence
Erste Group Bank AG and Vienna Insurance Group AG Wiener Center department. The assignment of powers, the process de-
Versicherung Gruppe (“VIG”) are parties to a General Distribution scription and the necessary control procedure are defined in the
Agreement concerning the framework of the cooperation of Erste operating instructions.
Group and VIG in Austria and CEE with respect to bank and
insurance products. In case of a change of control of Erste Group Risks relating to the financial reporting procedures
Bank AG, VIG has the right to terminate the General Distribution The main risk in the financial reporting procedures is that errors
Agreement, and in case of a change of control of VIG, Erste or deliberate action (fraud) prevent facts from adequately reflect-
Group Bank AG has a reciprocal right. A change of control is ing the company’s financial position and performance. This is the
defined, with respect to Erste Group Bank AG, as the acquisition case whenever the data provided in the financial statements and
of Erste Group Bank AG by any person other than DIE ERSTE notes is essentially inconsistent with the correct figures, i.e.
österreichische Spar-Casse Privatstiftung or Austrian savings whenever, alone or in aggregate, it is apt to influence the deci-
banks of 50% plus one share of Erste Group Bank AG’s sions made by the users of financial statements. Such a decision
voting shares, and with respect to VIG, as the acquisition of VIG may lead to serious damage, such as financial loss, the imposition
by any person other than Wiener Städtische Wechselseitiger Versi- of sanctions by the banking supervisor or reputational harm.
cherungsverein-Vermögensverwaltung-Vienna Insurance Group of
50% plus one share of VIG’s voting shares. If VIG elects to termi- Controls
nate the General Distribution Agreement after a change of control Group Accounting and Group Performance Management are
of Erste Group Bank AG has occurred, it may choose to ask for a responsible for group reporting and report to Erste Group’s CFO.
reduction of the original purchase price that it and its group com- Erste Group issues group policies used for preparation of consol-
panies have paid for the shares in the CEE insurance companies of idated financial statements in accordance with IFRS. A summary
Erste Group. The rebate corresponds to the difference between the description of the accounting process is provided in Erste Group’s
purchase price and the embedded value and is reduced to zero on a IFRS Accounting Manual. All transactions have to be recorded,
linear scale from 26 March 2013 to 16 March 2018. posted and accounted for in accordance with the accounting and
measurement methods set out in this manual. The management of
Erste Group Bank AG and VIG are furthermore parties to an each subsidiary is responsible for the implementation of group
Asset Management Agreement, pursuant to which Erste Group policies. The basic components of the internal control system
undertakes to manage certain parts of VIG's and its group compa- (ICS) at Erste Group are:
nies' securities assets. In case of a change of control (as defined
above), each party has a termination right. If Erste Group Bank _ Controlling as a permanent financial/business analysis (e.g.
AG elects to terminate the Asset Management Agreement follow- comparison of target and actual data between Accounting and
ing such a change of control of VIG, because the new controlling Controlling) and control of the company and/or individual
shareholders of VIG no longer support the Agreement, it may corporate divisions.
choose to ask for a full refund of the purchase price that it has _ Systemic, automatic control systems and measures in the
paid for 95% of Ringturm Kapitalanlagegesellschaft m.b.H., the formal procedure and structure, e.g. programmed controls
asset management company performing the services under the during data processing.

_ Principles of functional separation and the four-eye principle. Responsibilities of Internal Audit
_ Internal Audit – as a separate organisational unit – is charged Internal Audit is in charge of auditing and evaluating all areas of
with monitoring all corporate divisions in an independent yet the bank based on risk-oriented audit areas (according to the
proximate manner, particularly with regard to the effective- annual audit plan as approved by the management board and
ness of the components of the internal control system. The reported to the audit committee). The main focus of audit reviews
Internal Audit unit is monitored and/or checked by the man- is to monitor the completeness and functionality of the internal
agement board, the audit committee/supervisory board, by ex- control system. Internal Audit has the duty of reporting its find-
ternal parties (bank supervisor, in individual cases also by an ings to the Group’s management board, supervisory board and
external auditor) as well as through audit’s internal quality audit committee several times within one year.
assurance measures (self-assessments, peer reviews)
According to section 42 BWG, Internal Audit is a control body
Group Consolidation that is directly subordinate to the management board. Its sole
The data provided by the group entities is checked for plausibility purpose is to comprehensively verify the lawfulness, propriety
by the IFRS Competence Center, and the Group Consolidation and expediency of the banking business and banking operation on
department. The subsequent consolidation steps are then per- an on-going basis. The mandate of Internal Audit is therefore to
formed using the consolidation system (TAGETIK). These in- support the management board in its efforts to secure the bank’s
clude consolidation of capital, expense and income consolidation, assets and promote economic and operational performance and
and debt consolidation. Lastly, possible intragroup gains are thus in the management board’s pursuit of its business and operat-
eliminated. At the end of the consolidation process, the notes to ing policy. The activities of Internal Audit are governed in partic-
the financial statements are prepared in accordance with IFRS, ular by the currently applicable Rules of Procedure, which were
the BWG and UGB. drawn up under the authority of all management board members
and approved as well as implemented by them. The Rules of
The consolidated financial statements and the group management Procedure are reviewed on a regular basis and whenever required,
report are reviewed by the audit committee of the supervisory and adapted should the need arise.
board and are also presented to the supervisory board for
approval. They are published as part of the annual report, on Erste Audit activities of Internal Audit
Group’s website and in the Official Journal of Wiener Zeitung In its auditing activities, Internal Audit puts a special focus on:
and finally filed with the Commercial Register. _ operating and business areas of the bank;
_ operating and business processes of the bank;
Information and communication _ internal bank standards (organisational policies, regulations
Each year, the annual report shows the consolidated results in the on the division of powers, guidelines, etc.) as well as oper-
form of a complete set of consolidated financial statements. These ating instructions, also with regard to their compliance,
consolidated financial statements are examined by an external up-to-dateness and on-going updates;
auditor. In addition, the management summary (Group manage- _ audit areas stipulated by the law, such as the material accuracy
ment report) provides verbal comments on the consolidated results and completeness of notifications and reports to the Financial
in accordance with the statutory requirements. Throughout the Market Authority and Oesterreichische Nationalbank or the
year the Group produces consolidated monthly reports for Group annual audit of rating systems and their effectiveness.
management. Statutory interim reports are produced that conform
to the provisions of IAS 34 and are also published quarterly in Internal Audit performs its responsibilities based on its own
accordance with the Austrian Stock Corporation Act. Before pub- discretion and in compliance with the annual audit plan as
lication, the consolidated financial statements are presented to approved by the management board. Once approved, the audit
senior managers and the Chief Financial Officer for final approval plan is also reported to the audit committee.
and then submitted to the supervisory board’s audit committee.
Vienna, 27 February 2015
Reporting is almost fully automated, based on source systems and
automated interfaces, and guarantees up-to-date data for control- Management board
ling, segment reporting and other analyses. Accounting infor-
mation is derived from the same data source and is reconciled Andreas Treichl mp Gernot Mittendorfer mp
monthly for reporting purposes. Close collaboration between Chairman Member
accounting and controlling permits continual target/actual com-
parisons for control and reconciliation purposes. Monthly and Andreas Gottschling mp Peter Bosek mp
quarterly reports to the management board and the supervisory Member Member
board ensure a regular flow of financial information and monitor-
ing of the internal control system. Jozef Síkela mp
Member

29
Segments
Introduction 2013 comparative figures have been restated. Details are de-
scribed in section B. “Significant accounting policies (d) Signifi-
Erste Group’s segment reporting is based on IFRS 8 Operating cant accounting judgments, assumptions and estimates and (e)
Segments, which adopts the management approach. Accordingly, Application of amended and new IFRS/IAS” of the Notes to the
segment information is prepared on the basis of internal man- Group Financial Statements.
agement reporting that is regularly reviewed by the chief operat-
ing decision maker to assess the performance of the segments and The tables and information in this chapter provide a brief over-
make decisions regarding the allocation of resources. Within view and focus on selected and summarised items. For more
Erste Group, the function of the chief operating decision maker is details, please see Note 37. Additional information is available in
exercised by the management board. Excel format at www.erstegroup.com.

Following a strategic review, the segment structure as well as the Operating income consists of net interest income, net fee and
methodology for capital allocation was changed. Erste Group commission income, net trading and fair value result as well as
therefore introduced a new segment reporting, starting from dividend income, net result from equity method investments and
1 January 2014. It is based on the matrix organisation (business rental income from investment properties & other operating
and geographical information) and provides comprehensive in- leases. The latter three listed items are not separately disclosed in
formation to assess the performance of the business and geograph- the tables below. Operating expenses equal the position general
ical segments. administrative expenses. Operating result is the net amount of
operating income and operating expenses. Risk provisions for
However, the segmentation criteria for corporate business were loans and receivables are included in the position net impairment
changed as well with no retrospective adjustments. The former loss on financial assets not measured at fair value through P&L.
local large corporate business (included in the SME segment in Other result summarises the positions other operating result and
2013) was reallocated either to the Large Corporates segment or gains/losses from financial assets and liabilities not measured at
to the SME segment, depending on annual turnover thresholds. fair value through profit or loss. Cost/income ratio is calculated
as operating expenses in relation to operating income. The return
As a result of IFRS 10 application as of 1 January 2014, Erste on allocated equity is defined as the net result after tax/before
Group started with consolidation of 18 investment funds. The minorities in relation to the average allocated equity.
consolidation has been applied retrospectively, hence all affected

Business segments

Erste Group – business segments

Group
ALM & Savings Large Commercial Other Group Intragroup
Retail SME Corporate
Local CC Banks Corporates Real Estate Corporate Markets Elimination
Center

The Retail segment comprises the entire business with private business) for corporate clients, project developers, real estate
individuals, free professionals and micros in the responsibility of investors, municipalities and other public sector agencies.
account managers in the retail network of the local banks cooper-
ating with their specialised subsidiaries (such as factoring, leasing The Other Corporate segment consists of two operating seg-
and asset management companies). ments – International Business and Investment Banking – that are
below the threshold criteria defined by IFRS 8. International
The SME segment consists of business with clients which are in Business comprises all lending and investing activities outside
the responsibility of the local corporate account managers, mainly Erste Group’s core markets (including the branches in London,
consisting of micros, SMEs, small public sector companies and Hong Kong and New York) and is responsible for business devel-
small financial institutions (e.g. third party leasing companies). opment with and credit line management for banks and non-
banking financial institutions. Investment Banking covers equity-
The Asset/Liability Management & Local Corporate Center related business focusing mainly on corporate finance, equity
(ALM & LCC) segment includes all local asset/liability manage- capital markets services, equity brokerage (institutional sales) and
ment functions as well as the one from Erste Group Bank AG and merchant banking.
the local corporate centers which comprise all non-core banking
activities, non-profit servicing participations and reconciliation The Group Markets segment comprises the divisionalised busi-
items to local entity results. ness units Group Treasury and Capital Markets (except Equity
Capital Markets) and includes the treasury activities of Erste
The Savings Banks segment includes the savings banks that are Group Bank AG, the CEE subsidiaries, foreign branch offices in
members of the Haftungsverbund (cross-guarantee system) of the Hong Kong, New York, Berlin and Stuttgart as well as business
Austrian savings banks sector except for Erste Bank Oesterreich, with institutional clients of Erste Asset Management.
Tiroler Sparkasse, Salzburger Sparkasse, and Sparkasse Hainburg.
The Group Corporate Center segment covers mainly centrally
The Large Corporates segment comprises business with large managed activities and items that are not directly allocated to
corporate customers whose annual turnover exceeds a defined other segments. It includes the Corporate Center of Erste Group
threshold that varies depending on the country. Bank AG, internal non-profit service providers, goodwill impair-
ments and the free capital of Erste Group.
The Commercial Real Estate segment covers the real estate
value chain (lending, leasing, real estate investment, project Intragroup Elimination (IC) is not defined as a segment but is
development and construction services as well as infrastructure the reconciliation to the consolidated accounting result.

31
RETAIL

Financial review
in EUR million 2013 2014 Change
Net interest income 2,216.8 2,175.1 -1.9%
Net fee and commission income 1,053.4 1,050.3 -0.3%
Net trading and fair value result 62.2 59.8 -3.8%
Operating income 3,361.0 3,317.4 -1.3%
Operating expenses -1,839.2 -1,814.3 -1.4%
Operating result 1,521.8 1,503.1 -1.2%
Cost/income ratio 54.7% 54.7%
Net impairment loss on financial assets not measured at fair value through profit or loss -466.0 -671.7 44.1%
Other result -93.0 -393.2 >100.0%
Net result attributable to owners of the parent 739.0 271.7 -63.2%
Return on allocated capital 37.3% 13.6%

The decrease in net interest income was driven by lower income Credit risk
from unwinding as well as lower deposit volumes and margins in Credit risk exposure in the Retail segment rose slightly to
Romania and shrinking loan volumes and margins in Hungary. EUR 51.7 billion (+1.3%). The customer loan portfolio increased
These developments were partly offset by positive contributions to a similar extent to EUR 47 billion. The share of the retail busi-
from deposits in Austria and growing lending business in Slovakia. ness in Erste Group’s total customer loans remained practically
Rental income increased due to the consolidation of a leasing sub- unchanged at 36.7%. The collateralisation ratio, which reflects
sidiary in Croatia. Cost-saving measures in the Czech Republic and the ratio of collateral to loan volume, was 63.5%.
Romania led to a reduction in operating expenses. Although the
decrease in costs could not fully offset the net interest income The quality of the retail customer loan portfolio improved signifi-
decline and the operating result decreased, the cost/income ratio cantly. The ratio of non-performing loans to total retail customer
remained stable. The deterioration of net impairment loss on finan- loans decreased over the course of the year to 6.2% (7.4%).
cial assets not measured at FV through P&L was driven by signifi- Measured by the NPL ratio, this segment featured the highest
cantly higher risk costs in Romania on the back of the accelerated quality of all business segments with significant loan portfolios.
NPL reduction. The line item other result included expenses related Apart from a decline of almost EUR 530 million in non-
to the Hungarian consumer loan law in an amount of EUR 304.4 performing loans, there was also a major migration of performing
million (further expenses of EUR 32.4 million related to the con- loans to better risk classes. The share of loans with low default
version of the foreign-currency loans were included in the segment risk to total retail customer loans rose to almost 82%.
Asset/Liability Management & Local Corporate Center). This
triggered the significant decrease of the net result attributable to the
owners of the parent.

SME

Financial review
in EUR million 2013 2014 Change
Net interest income 671.0 569.4 -15.1%
Net fee and commission income 231.2 198.4 -14.2%
Net trading and fair value result 29.1 31.9 9.7%
Operating income 937.9 832.7 -11.2%
Operating expenses -288.0 -292.8 1.7%
Operating result 650.0 539.9 -16.9%
Cost/income ratio 30.7% 35.2%
Net impairment loss on financial assets not measured at fair value through profit or loss -455.0 -461.1 1.3%
Other result -34.2 0.6 n/a
Net result attributable to owners of the parent 109.9 50.4 -54.2%
Return on allocated capital 6.8% 3.6%

The declines in net interest income and in net fee and commission loss on financial assets not measured at FV through profit and
income were primarily related to the reallocation of a local large loss went up moderately. The other result improved mainly due to
corporate portfolio, which in 2013 had been shown in the SME one-off income related to an insurance payment in Austria. The
segment, to the Large Corporate segment: operating expenses net result attributable to the owners of the parent declined.
increased slightly; the cost/income ratio rose. Net impairment

Credit risk Supported by write-downs and sales on the secondary market as

In the SME business segment, total credit risk exposure decreased well as by a decrease in new bad loans, the portfolio of non-
to EUR 25.8 billion (-15.8%) in 2014. This development was performing loans declined by EUR 1.1 billion to EUR 2.3 billion.
mainly driven by the shift of larger SME clients to the Large The NPL ratio dropped within one year by 3.7 percentage points
Corporates segment at the beginning of the year. The volume of to 10.7%. The ratings of performing loans also showed a positive
loans to customers also decreased considerably to EUR 21.2 development: while the share of loans requiring management
billion. Measured as a percentage of total loans to customers of attention and assessed as having a higher default risk dropped to
Erste Group, the share of SMEs declined to 16.5% (18.5%). 50% 13.3% (15.7%) of the SME loan portfolio, the share of loans
(47%) of the loans were secured by collateral. Credit quality in assessed as low risk increased significantly.
the SME business segment improved significantly.

ASSET/LIABILITY MANAGEMENT & LOCAL CORPORATE CENTER

Financial review
in EUR million 2013 2014 Change
Net interest income 220.5 164.7 -25.3%
Net fee and commission income -102.6 -65.3 -36.4%
Net trading and fair value result -92.2 24.7 n/a
Operating income 86.7 184.6 >100.0%
Operating expenses -120.6 -112.9 -6.5%
Operating result -33.9 71.8 n/a
Cost/income ratio >100.0% 61.1%
Net impairment loss on financial assets not measured at fair value through profit or loss -5.0 1.2 n/a
Other result -85.1 -214.2 >100.0%
Net result attributable to owners of the parent 20.8 -174.8 n/a
Return on allocated capital 0.6% -9.9%

Net interest income decreased considerably mainly due to a lower a consequence of the impairment of real estate property and
ALM contribution driven by flat curves and the low interest rate intangible assets in Banca Comercială Română as well as one-off
environment as well as high spreads for Austrian banks. The revenues earned in 2013 in the Czech Republic. The line item
increase in net fee and commission income was primarily related other result also included expenses related to the conversion of
to the positive impact from lower fee expenses in Austria. The net the foreign-currency loans in Hungary in an amount of EUR 32.4
trading and fair value result improved substantially due to a better million. Taxes on income in 2013 benefited from a positive one-
result from derivatives. Operating expenses also improved, main- off impact from the release of deferred tax liabilities in Romania
ly due to lower personnel expenses in Romania. Thus, the operat- in the amount of EUR 127.7 million. Consequently, the net result
ing result improved significantly. The other result deteriorated as attributable to the owners of the parent decreased significantly.

SAVINGS BANKS

Financial review
in EUR million 2013 2014 Change
Net interest income 814.7 891.8 9.5%
Net fee and commission income 396.4 419.3 5.8%
Net trading and fair value result 22.0 1.1 -94.8%
Operating income 1,304.5 1,379.0 5.7%
Operating expenses -926.5 -932.1 0.6%
Operating result 378.0 446.9 18.2%
Cost/income ratio 71.0% 67.6%
Net impairment loss on financial assets not measured at fair value through profit or loss -229.2 -199.4 -13.0%
Other result -3.7 -15.4 >100.0%
Net result attributable to owners of the parent 22.4 18.4 -18.0%
Return on allocated capital 4.4% 9.0%

The increase in net interest income was attributable to the reduc- ratio improved. Net impairment loss on financial assets not meas-
tion of deposit interest rates due to the lower interest rate envi- ured at FV through profit and loss decreased. The decline in other
ronment and a change in deposit structure. Together with the result was mainly caused by valuation effects. The banking tax
improved net fee and commission income, it offset the drop in net increased to EUR 15.9 million (EUR 8.9 million) due to the re-
trading and fair value result. Total operating income increased. vised banking tax regulation.
Although operating expenses went up slightly, the cost/income

33
Credit risk Erste Group’s subsidiaries in Central and Eastern Europe. This
Total credit risk exposure in the Savings Banks segment increased reflects the structure of Austria’s economy with a very high share of
to EUR 53.9 million (+2.0%; EUR 52.8 billion) while loans to small and medium-sized enterprises compared with other countries.
customers advanced by 1.7% to EUR 38.6 billion. In the distribu-
tion of borrowers by customer segments, there was a noticeable Foreign-currency loans in Swiss francs declined sharply by
shift from medium-sized and large enterprises to retail customers, EUR 665 million to EUR 3.9 billion (-14.5%). The trend towards
with robust growth primarily in private households. Business with higher collateralisation of loans continued. The quality of the loan
the free professions, other self-employed customers and small portfolio improved. Non-performing loans as a percentage of
businesses declined slightly but, compared with other group enti- total loans to customers decreased by 45 basis points, to 6.3%.
ties, the Austrian savings banks still conducted a much larger pro- Compared by customer segments, the development was especial-
portion of their business with this category. At 17% of total loans, ly positive among retail customers and smaller businesses. The
the share of this customer segment is significantly larger than at NPL coverage ratio also improved to 64.0%.

LARGE CORPORATES

Financial review
in EUR million 2013 2014 Change
Net interest income 185.3 214.1 15.5%
Net fee and commission income 86.0 99.2 15.4%
Net trading and fair value result 8.4 9.3 10.9%
Operating income 279.6 322.5 15.3%
Operating expenses -67.7 -85.0 25.6%
Operating result 211.9 237.5 12.1%
Cost/income ratio 24.2% 26.4%
Net impairment loss on financial assets not measured at fair value through profit or loss -229.2 -386.2 68.5%
Other result -34.5 14.8 n/a
Net result attributable to owners of the parent -45.1 -113.1 >100.0%
Return on allocated capital -5.6% -15.1%

The increase in net interest income and net commission income Credit risk
was largely attributable to the reallocation of a local large corpo- The credit risk exposure in the Large Corporates business seg-
rate portfolio to the Large Corporates segment (shown in the ment was EUR 17.6 billion (+40%). Loans to customers rose by
segment SME in 2013), partially offset by negative impacts on EUR 3.1 billion to almost EUR 10.0 billion. The high growth
the income attributable to unwinding effects related to the rates in this segment were mainly driven by the restructuring of
Romanian Large Corporates portfolio. Net trading and fair value customer relationship management whereby a substantial share of
result improved moderately. The increase in operating expenses large corporates – including in particular companies at risk of
was also mainly driven by the portfolio reallocation. Overall, the default and defaulted companies – were transferred from regional
operating result improved. The cost/income ratio increased. Net responsibility to central management. The relatively big differ-
impairment loss on financial assets not measured at FV through ence between credit exposure volume and the customer loan
profit and loss increased substantially on the back of higher risk portfolio in the Large Corporates segment is due, above all, to the
provisions for loans and receivables in Romania, partially offset large volume of guarantees and unused loan commitments.
by decreasing risk provisions in Austria and Slovakia. The im-
provement in other result was largely attributable to lower provi- The transfer of many non-performing loans to the Large Corpo-
sions for commitments and guarantees in Romania and Austria. rates segment reduced the loan quality. The NPL ratio rose to
Net result attributable to the owners of the parent deteriorated. 11.8% (7.8%). The share of low risk loans remained almost un-
changed. Risk provisions rose by the same proportion as non-
performing loans so that NLP coverage was hardly changed at
77%. Taking into account available collateral, the credit risk loss
was fully covered.

COMMERCIAL REAL ESTATE

Financial review
in EUR million 2013 2014 Change
Net interest income 170.0 150.1 -11.7%
Net fee and commission income 14.3 15.8 10.1%
Net trading and fair value result 5.9 -6.2 n/a
Operating income 276.7 205.7 -25.6%
Operating expenses -134.0 -88.2 -34.1%
Operating result 142.7 117.5 -17.7%
Cost/income ratio 48.4% 42.9%
Net impairment loss on financial assets not measured at fair value through profit or loss -380.5 -364.3 -4.3%
Other result -50.3 -45.9 -8.8%
Net result attributable to owners of the parent -257.0 -279.6 8.8%
Return on allocated capital -28.5% -36.1%

The decline in net interest income was mainly attributable to the Credit risk
deconsolidation of leasing entities of Immorent as well as the Business activity in the Commercial Real Estate segment de-
non-recurrence of a positive one-off effect. Net fee and commis- clined again due to the adverse economic situation in the real
sion income improved slightly on the back of higher fees in estate industry in the past years. Credit risk exposure decreased
Czech, Slovak and Hungarian real estate portfolios. The decline over the course of the year by EUR 1 billion to EUR 9.9 billion,
in the net trading and fair value result was attributable to FX while loans to customers declined to EUR 9.3 billion (-8.7%). As
revaluation losses in Immorent. Rental income declined mostly a result, the share of the Commercial Real Estate segment in Erste
due to the deconsolidation of Immorent leasing entities. The Group’s total customer loan portfolio dropped to 7.2% (8.0%).
decline in operating expenses was driven by strict cost manage-
ment and the deconsolidation of leasing entities. The operating The quality of loans barely changed, a further deterioration was
result decreased but the cost/income ratio improved. Net impair- successfully prevented. Non-performing loans as a percentage of
ment loss on financial assets not measured at FV through profit total commercial real estate financing decreased to 20.9%
and loss reflected an improvement in risk structure, but remained (21.1%). Among loans with high credit ratings, migration to
at a high level; mainly driven by Erste Group Bank AG, Im- better risk classes prevailed, which means that a more positive
morent, BCR and Erste Bank Hungary. The other result was development in loan losses may be expected over the short to
impacted by higher gains from repossessed assets in Hungary and medium term.
development projects in Immorent. Net result attributable to the
owners of the parent declined further.

OTHER CORPORATE

Financial review
in EUR million 2013 2014 Change
Net interest income 68.9 75.2 9.1%
Net fee and commission income 27.7 18.9 -31.9%
Net trading and fair value result 13.1 4.8 -63.6%
Operating income 109.7 99.4 -9.4%
Operating expenses -50.9 -58.2 14.3%
Operating result 58.8 41.1 -30.0%
Cost/income ratio 46.4% 58.6%
Net impairment loss on financial assets not measured at fair value through profit or loss -6.2 -12.9 >100.0%
Other result 8.7 1.5 -82.3%
Net result attributable to owners of the parent 47.9 22.9 -52.1%
Return on allocated capital 14.4% 10.9%

The improvement of net interest income was mostly attributable ly due to negative valuation effects. Lower operating income and
to aircraft business in London and to increased lending activities increased operating expenses led to a decline in the operating
in the New York International Business portfolio. Net fee and result, the cost/income ratio went up. Net impairment loss on
commission income declined primarily due to lower fees in the financial assets not measured at FV through profit and loss in-
structured trade finance portfolio in London, lower corporate creased on the back of higher risk provisions for loans and re-
finance and institutional equity sales fees in the Czech Republic ceivables in London Investment Banking portfolio related to the
and further reductions of the loan book of International Business downgrade of Ukrainian customers. Net result attributable to the
in Austria. The drop in net trading and fair value result was main- owners of the parent declined.

35
Credit risk entire group’s customer loan portfolio, the Other Corporate seg-
Credit risk exposure in the Other Corporate segment declined by ment is of minor significance overall.
EUR 600 million to EUR 3.4 billion and loans to customers
decreased to EUR 1.7 billion (-6.4%). The low share of customer Loan quality developed well. The NPL ratio dropped to 4.2%
loans in the total credit risk exposure compared with other busi- (6.8%), and loan losses were sufficiently covered by risk provi-
ness segments is mainly due to the relatively high level of in- sions and collateral. The ratings of performing loans also im-
vestments in securities and loans to credit institutions. With a proved substantially. 82% (72%) of total loans were classified in
share of merely 1.6% of the credit risk exposure or 1.3% of the the low risk category.

GROUP MARKETS

Financial review
in EUR million 2013 2014 Change
Net interest income 217.2 191.2 -12.0%
Net fee and commission income 104.9 102.9 -1.9%
Net trading and fair value result 116.8 116.1 -0.6%
Operating income 439.3 412.6 -6.1%
Operating expenses -188.1 -179.1 -4.8%
Operating result 251.3 233.4 -7.1%
Cost/income ratio 42.8% 43.4%
Net impairment loss on financial assets not measured at fair value through profit or loss 12.2 -0.1 n/a
Other result -3.2 -0.7 -78.4%
Net result attributable to owners of the parent 206.0 185.3 -10.1%
Return on allocated capital 45.3% 38.3%

The net interest income declined primarily due to the extremely vestments portfolio management as well as valuation effects of
low interest rate environment affecting interest-rate-related interest-related products. The operating result declined, attribut-
products. Net fee and commission income declined due to the able to decreased operating income, although operating expenses
lower bond issuance activities and institutional and retail sales. were reduced. The cost/income ratio deteriorated moderately.
The moderate decline in the net trading and fair value result was The other result improved. Net result attributable to the owners
mainly attributable to credit and rates trading, alternative in- of the parent declined.

GROUP CORPORATE CENTER (GCC)

Financial review
in EUR million 2013 2014 Change
Net interest income 136.1 70.2 -48.5%
Net fee and commission income 137.6 69.1 -49.8%
Net trading and fair value result 20.9 -11.3 n/a
Operating income 361.8 183.3 -49.3%
Operating expenses -669.0 -710.5 6.2%
Operating result -307.2 -527.2 71.6%
Cost/income ratio >100.0% >100.0%
Net impairment loss on financial assets not measured at fair value through profit or loss -15.4 -64.7 >100.0%
Other result -425.1 -655.7 54.2%
Net result attributable to owners of the parent -783.6 -1,423.1 81.6%
Return on allocated capital -12.7% -28.7%

The net interest income decrease was mainly attributable to the group level, the impact was neutral due to consolidation). The
decreasing 5-year moving average rate and thus a lower capital deterioration of the other result was driven mainly by higher
benefit from the free capital of the group. Net fee and commis- goodwill impairments of EUR 475.0 million (2013: EUR 380.8
sion income declined considerably due to higher fee expenses million), where Romania accounted for EUR 319.1 million,
from internal service providers. However, at group level the Croatia for EUR 61.4 million, and Austrian participations for
impact was neutral due to consolidation shown in Intercompany EUR 94.5 million, as well as the write-down of the entire remain-
Elimination. Operating expenses went up as a consequence of a ing value of customer relationships and brand of BCR of
change in the methodology of cost reimbursements. The corre- EUR 470.7 million. A negative change in deferred taxes had a
sponding positive counter-effect was shown in the other result (at further unfavourable impact on the result of the segment.

Geographical segments Geographical areas are defined according to the country markets in
which Erste Group operates. Based on the locations of the banking
and other financial institution participations, the geographical areas
For the purpose of segment reporting by geographical areas the
consist of two core markets – Austria and Central and Eastern
information is presented based on the location of the booking
Europe – and a residual market, Other, which comprises the re-
entity (not the country of risk). For of information regarding a
maining business activities of Erste Group outside its core markets
partial group, the allocation is based on the location of the respec-
as well as the reconciliation to the consolidated accounting result.
tive parent entity.

Erste Group – geographical segmentation

Austria Central and Eastern Europe Other

EBOe & Savings Other Czech

Slovakia Romania Hungary Croatia Serbia
Subsidiaries Banks Austria Republic

The geographical area Austria consists of the following three Austria

segments:
Economic review
The Erste Bank Oesterreich & Subsidiaries (EBOe & Sub- Austria is an open and developed economy. In 2014, real GDP
sidiaries) segment comprises Erste Bank der oesterreichischen growth accelerated only slightly to 0.4% compared to the previ-
Sparkassen AG (Erste Bank Oesterreich) and its main subsidiaries ous year, and was broadly in line with the performance of the
(e.g. sBausparkasse, Salzburger Sparkasse, Tiroler Sparkasse, euro zone. Real GDP growth in 2014 was fuelled primarily by
Sparkasse Hainburg). consumption. Exports also contributed to the growth despite a
weaker performance in the second half of the year. Foreign trade
The Savings banks segment is identical to the business segment remained key, with an export share of more than 50% of GDP.
Savings banks. The country’s most important trading partners were Germany and
Central and Eastern Europe. Importantly, services continued to
The Other Austria segment comprises Erste Group Bank AG perform well in 2014, and tourism was again a growth contribu-
(Holding) with its Large Corporates, Commercial Real Estate, tor. The Austrian labour market, with its skilled and highly edu-
Other Corporate and Group Markets business, Erste Group Im- cated workforce, continued to play a major role in the economic
morent AG and Erste Asset Management GmbH. developments. The unemployment rate was one of the lowest in
Europe at 5.0%, albeit rising for the third consecutive year. At
The geographical area Central and Eastern Europe (CEE) EUR 39,000, GDP per capita remained one of the highest in
consists of six segments covering Erste Group’s banking subsidi- Europe.
aries located in the respective CEE countries:
_ Czech Republic (comprising Česká spořitelna Group) Social and political stability remained one of the key characteris-
_ Slovakia (comprising Slovenská sporitel’ňa Group) tics of Austria in 2014. The government continued its efforts re-
_ Romania (comprising Banca Comercială Română Group) garding fiscal consolidation. In the stability programme that was
_ Hungary (comprising Erste Bank Hungary Group) presented to the European Commission in October 2014, the
_ Croatia (comprising Erste Bank Croatia Group), and government confirmed that it would maintain the consolidation
_ Serbia (comprising Erste Bank Serbia Group). path for government finances and implement the proposed struc-
tural reforms. The structural reform programme included optimisa-
The residual segment Other consists mainly of centralised ser- tion of administrative costs in the public sector and adjusting the
vice providers, Group Asset/Liability Management and the Cor- health care and pension systems in the following years. Important-
porate Center of Erste Group Bank AG as well as the reconcilia- ly, Austria’s general government deficit stood at 3.0% of GDP ,and
tion to the consolidated accounting result (e.g. intercompany the country exited the Excessive Deficit Procedure in 2014. The
elimination, dividend elimination), goodwill impairments, amor- increase of general government debt as a percentage of GDP to
tisation of customer relationships and free capital. 86.9% in 2014 was mainly due to the inclusion of liabilities related
to Hypo Alpe-Adria-Bank and the reclassification of debt for a
number of public sector companies. The estimated impact of the

37
costs associated with the troubled financial institution Hypo Alpe- euro zone at 1.5%. Real estate prices remained broadly stable.
Adria-Bank amounted to EUR 17.8 billion or 5.5% of GDP. Interest rates fell on the back of the European Central Bank cut-
ting its refinancing rate to a new historical low of 5 basis points
Despite slow economic growth and the disinflationary impact during 2014.
from energy prices, inflation remained among the highest in the

Key economic indicators – Austria 2011 2012 2013 2014e

Population (ave, million) 8.4 8.4 8.5 8.5
GDP (nominal, EUR billion) 308.7 317.2 322.6 328.7
GDP/capita (in EUR thousand) 36.9 37.7 38.2 38.7
Real GDP growth 3.1 0.9 0.2 0.4
Private consumption growth 0.8 0.5 -0.2 0.2
Exports (share of GDP) 39.5 38.9 39.0 39.0
Imports (share of GDP) 42.4 41.6 40.5 40.7
Unemployment (Eurostat definition) 4.2 4.4 4.9 5.0
Consumer price inflation (ave) 3.6 2.6 2.1 1.5
Short term interest rate (3 months average) 1.4 0.2 0.3 0.2
EUR FX rate (ave) 1.0 1.0 1.0 1.0
EUR FX rate (eop) 1.0 1.0 1.0 1.0
Current account balance (share of GDP) 1.6 1.5 1.0 2.4
General government balance (share of GDP) -2.6 -2.3 -1.5 -3.0

Source: Erste Group

Market review
The Austrian banking market, with total assets equivalent to Erste Bank Oesterreich and the savings banks held on to their
273% of GDP (total domestic assets of GDP: 186%) in 2014, is a very strong market position in the Austrian market. Their com-
highly competitive and developed banking market. It is character- bined market share as measured by total assets stood at 19% at
ised by significantly lower margins than in Central and Eastern year-end 2014. Based on their balanced business models, Erste
Europe. Growth rates remained low throughout the year, with Bank Oesterreich and the savings banks maintained their market
customer loans expanding by less than 1% while deposits rose by shares between 18% and 20% in both the retail and corporate
3.2%. The banking system’s loan-to-deposit ratio stood at 102% segments.
at year-end. Capitalisation of the banking system improved fur-
ther in 2014. The special banking tax intended to tackle the coun-
Market shares – Austria (in %)
try’s budget deficit remained unchanged at EUR 625 million in
2014. In light of the bail-in legislation on Hypo Alpe-Adria-Bank, 25

rating agencies downgraded several systemically important Aus-

trian banks in response to the reduced predictability of govern- 20 19 19 19 19
18 18 18 18
ment support. 17

Financial intermediation – Austria (in % of GDP)

300

225 214
200 0
186
2012 2013 2014

150
Total assets Retail loans Retail deposits

102 99 95 97 95
94

75 Source: Oesterreichische Nationalbank, Erste Group

0
2012 2013 2014e

Domestic assets Domestic loans Domestic deposits

Source: Oesterreichische Nationalbank, Erste Group

ERSTE BANK OESTERREICH & was introduced in 2013, has become well established and the
SUBSIDIARIES range of apps offered for smartphones and tablets was enlarged
again in 2014.
Business review – Highlights
Growth continuously driven by new customers. Top quality George – the most modern online banking system in Austria –
in customer relationship management is key to winning new was tested in 2014 in a pre-launch phase and went live at the
customers. Despite customers’ steadily rising expectations and beginning of 2015. Additional apps are planned to enlarge
the general public’s critical attitude towards banks, surveys con- George’s already extensive basic features to match specific cus-
ducted by the Banking Market Study 2014 indicate a high degree tomer needs and permit even more individualised settings.
of satisfaction, a willingness to recommend the bank, and a high-
er level of trust among customers of Erste Bank Oesterreich than Focus on wealth management. Against the backdrop of per-
in the financial industry as a whole. This positive perception sistently low interest rates, customers perceive securities as in-
resulted in the acquisition of about 30,000 new customers. creasingly attractive as an alternative to savings products.
Demand for high-quality advisory services is particularly strong
New branch concept. Customer needs change over the course in the affluent customer segment. Individual financial needs of
of time and reflect demographic and technology changes. Today, the customer base, in particular a balance between expected yield
customers expect their bank to offer better accessibility and more and risk profiles, are at the centre of attention.
flexibility than a few years ago. The business model makes bank-
ing services available through a variety of channels. A key contributor to increase in fee income was the investment tool
YOU INVEST, which was introduced in late 2013 and gives cus-
Branches also have to offer services in different formats and tomers more flexibility as well as maximum transparency. In 2014,
require a cost-efficient sales organisation. As a basic service, cash new investment volume stood at about EUR 300 million. Insurance
dispensers are provided across the country. In the future, simple business also performed very well with an increase of over 20%. A
business will be dealt with quickly at new service centres situated major contributor to this rise was the prolongation and the rein-
at high-frequency locations, along people’s daily routes. For more vestment of maturing life insurance policies.
complex customer needs, Erste Bank Oesterreich offers a wide
range of products and services at its large customer support Cost projects. The measures initiated already in 2013 to reduce
centres designed to create a new type of relaxed atmosphere. For other administrative expenses and bundle human resources were
customers, this means clearly designed and welcoming branches, continued. Branch consolidation and natural employee turnover
more rooms for discrete meetings, faster handling of their re- resulted in lower staffing levels. To maintain the high quality of
quests, and proactive support in the foyers. customer support and advisory services, the organisation of work-
flows at the branches and among teams was optimised and the
In October 2014, the first service centre in the new design was administrative workload at branches reduced to free up more time
opened at Vienna’s Central Train Station, and by the end of the for serving customers.
year, three such branches were in operation. Furthermore, open-
ing hours were adjusted to meet customer expectations: at least Private banking awards. The British business magazine The
one branch in every district of Vienna is open from 9.00 a.m. to Banker once again named Erste Bank Oesterreich the best private
6.00 p.m. on working days. banking institution in Austria. Together with the award for best
private banking in Central and Eastern Europe, also conferred by
Innovation in banking. Along with the new branch concept, The Banker, this highlights the success of Erste Group in position-
access to banking services through digital channels is also being ing itself as the top private banking institution in the CEE region.
optimised continuously. The application Finanzmanager, which

Financial review
in EUR million 2013 2014 Change
Net interest income 559.6 613.5 9.6%
Net fee and commission income 332.2 354.9 6.8%
Net trading and fair value result 11.3 8.7 -22.5%
Operating income 943.2 1,020.3 8.2%
Operating expenses -606.9 -630.7 3.9%
Operating result 336.3 389.6 15.9%
Cost/income ratio 64.3% 61.8%
Net impairment loss on financial assets not measured at fair value through profit or loss -77.5 -104.5 34.7%
Other result -34.4 6.2 n/a
Net result attributable to owners of the parent 160.5 214.5 33.7%
Return on allocated capital 14.8% 20.8%

39
The increase in net interest income was primarily attributable to law. The cross-guarantee system supplements the statutory depos-
deposit repricing and a change in deposit structure. Net fee and it insurance and investor compensation system as an additional
commission income increased due to the merger with Brokerjet as safety net. To conform to new regulations governing the protection
well as higher payment and insurance fees. The decrease in the of deposits held with credit institutions, the agreements were
net trading and fair value result was mainly due to lower valua- extended in 2013, in particular to further intensify the control
tion gains from derivatives. Although operating expenses in- elements through the holding. This change took effect on 1 Janu-
creased due to the merger with Brokerjet, higher pension plan ary 2014 and has further strengthened the cooperation between
contributions and increased IT and marketing expenses, the oper- the holding, Erste Bank Oesterreich and the savings banks.
ating result and cost/income ratio improved. Net impairment loss
on financial assets not measured at FV through profit and loss Sales support. The savings banks are supported by a dedicated
increased due to higher portfolio provisions. Other result was service unit of Erste Bank Oesterreich. The main priorities are the
positively affected by one-off income from insurance payments, further optimisation of sales potential and sales management. The
whereas 2013 was impacted by impairment of carrying amounts development of customers’ business performance is monitored to
from participations. Overall, the net result attributable to owners permit early identification of any need for support in financial
of the parent improved considerably. matters and the initiation of targeted measures to continually
improve the quality of services offered by the savings banks.
Credit risk
Total credit risk exposure in the Erste Bank Oesterreich and Focus on wealth management. Securities are becoming in-
Subsidiaries geographical segment rose significantly to EUR 37.0 creasingly attractive for customers as an alternative to savings
billion (+4.4%). The volume of customer loans grew at a similar products. With YOU INVEST, the investment scheme of Erste
pace and totalled approx. EUR 29 billion. The share of this seg- Bank and Sparkassen introduced in 2013, customers can define
ment in Erste Group’s total loan portfolio rose by 0.6 percentage their own investment strategy according to their individual pref-
points to 22.6%. The breakdown by customer segments showed a erences and needs, while a balance between expected yields and
slight shift from retail customers towards medium-sized and the customers’ risk profiles is at the centre of attention.
larger companies. The share of retail customers in the total credit
volume decreased from 41.0% to 40.5%, while the share of cor- Cost projects. Measures to optimise other administrative and
porates, including self-employed individuals and small business- personnel expenses across the savings banks were implemented
es, increased to 53.8%. Loans to the free professions, the self- to permit them to compare their own costs with those of their
employed and small businesses are less significant than they are peers, to identify potential action points and to ultimately deploy
for the savings banks. These loans amounted to 10.0% of total their resources more efficiently. Measures were drawn up to
loans to customers. tackle weaknesses and follow best practice examples. This helps
savings banks to identify and exploit optimisation potential.
Driven by the continued targeted advice campaign to promote the
conversion of foreign-currency loans, the share of Swiss franc OTHER AUSTRIA
loans in the total loan portfolio decreased once again significantly
from 9.7% to 8.4%. Business review – Highlights
Strong performance of Erste Asset Management. Across
The quality of the loan portfolio improved in the course of the Erste Group, all asset management activities are coordinated and
year. The share of non-performing loans as a ratio of total loans to managed by Erste Asset Management (EAM). EAM serves both
customers declined by 0.3 percentage points to 3.5%. The devel- retail and institutional customers. While the business develop-
opment was positive across all customer segments. Especially ment with retail customers was mainly driven by a shift from
notable was the further improvement of loan quality among the bond and money market funds to mixed funds (due to the in-
self-employed and small businesses. Apart from the public sector, creased demand for YOU INVEST investment products), business
private households were again the group with the fewest defaults. with institutional clients was focused on emerging markets bonds,
fixed income products and sustainable investments. EAM suc-
SAVINGS BANKS cessfully increased its business volumes and strengthened its
leading market position in Austria and Romania and was again
The geographical segment Savings Banks is identical to the busi- one of the top three asset management companies in its other
ness segment Savings Banks (see page 33 et seq.). CEE markets.

Business review – Highlights Assets under management rose to EUR 53.8 billion (+13.6%).
Haftungsverbund (cross-guarantee system). Under a system Backed by strict cost management, EAM increased its net profit
of cross-guarantee agreements, Erste Bank and the savings banks by almost 42% to EUR 16.5 million.
guarantee customer deposits far beyond the amounts protected by

Leading position in CEE new issues. Debt Capital Markets Benchmark real estate financing deals included a combined share
defended its top position for eurobond issuance and thus again and asset deal for the Austria Campus and a syndicated loan for
managed to be among the most successful issuance banks in Erste the acquisition of the Millennium City shopping centre, both in
Group’s core region. Notable deals comprise the joint lead man- Vienna, refinancing transactions for the CTP group in the Czech
agement of an issuance of the Republic of Austria totalling Republic, and the Apollo Rida Portfolio in Poland. Infrastructure
EUR 4 billion, of a EUR 500 million bond issue byÖBB, the financing projects included wind farms in Croatia and Romania.
Austrian railway company, and of a EUR 500 million issue by
Hypo Vorarlberg. In CEE, Erste Group acted successfully among In 2014, Erste Group Immorent CZ was named the best financial
others as joint lead manager in the EUR 1.5 billion bond issuance service provider in real estate in the Czech Republic by the real
of the Slovak Republic. In addition, Erste Group was joint estate magazine Construction and Investment Journal. Banca
bookrunner for mBank in Poland and Vakif Bank in Turkey, each Comercială Română and Erste Group Immorent RO were named
totalling EUR 500 million. Bank of the Year by EuropaProperty’s Awards for real estate and
infrastructure investments in Romania.
Success with syndicated loans. Erste Group again demon-
strated its syndicated loan capabilities. Erste Group acted among Solid investment banking franchise. Erste Group’s competi-
others as mandated lead arranger and book-runner for a EUR 435 tive advantage in investment banking stems from the combination
million revolving credit facility for Porsche Corporate Finance, of expertise, professional service and local presence. The busi-
for a EUR 250 million revolving credit facility for Novomatic, ness model is built on integration with Erste Group’s corporate
and for a USD 1.55 billion multicurrency revolving credit facility business.
for MOL.
Against the backdrop of an increasingly competitive market
Strong transaction banking. Erste Group has positioned itself environment Erste Group’s merchant banking managed to slightly
as a reliable partner in transaction banking: it covers all transac- increase its asset base at stable net margins. The financing for
tional customer needs from cash management to trade finance by PPF Arena for the acquisition of Telefónica Czech Republic,
providing expertise in export finance and documentary business, where Erste Group acted as mandated lead arranger through
and it covers the entire supply chain financing needs through Česká spořitelna, was named Deal of the Year 2014 by the maga-
factoring or receivables financing solutions. In 2014, Erste Group zine The Banker.
became the main bank for cash collection and payments for
Petrom. Erste Group participated again in book-running for all Austrian
equity capital markets transactions (except those, where issuer
Real estate business in CEE. The size of the real estate portfo- and book runner were affiliates), most notably the first IPO on the
lio of Erste Group Immorent (EGI) continued to decline. More Vienna Stock Exchange in three years, FACC, and the capital
than 90% of the exposure is located in Erste Group’s core mar- increases in Telekom Austria, PORR and the spin-offs of
kets, with more than half of it attributable to Austria, the Czech BUWOG from IMMOFINANZ and PIAG from PORR. Major
Republic and Slovakia. The majority of EGI’s business is located transactions in CEE included accelerated book-building for Rom-
in or in close proximity to the major economic centres. The port- gaz in Bucharest and the IPO of Pivovary Lobkowicz in Prague.
folio comprises mainly commercial real estate (retail shopping
properties, office buildings and logistics) but also hotels/tourism A small team at the London branch successfully positioned itself
and infrastructure. Overall, the CEE real estate market continued in a highly specialised aerospace financing segment. The business
to be challenging; this was reflected in a continuously high level model is to provide secured asset-based loans to investors in
of risk provisioning. commercial aircraft and aircraft engines.

Financial review
in EUR million 2013 2014 Change
Net interest income 412.4 395.4 -4.1%
Net fee and commission income 180.2 174.0 -3.5%
Net trading and fair value result 34.9 3.1 -91.2%
Operating income 714.9 621.5 -13.1%
Operating expenses -365.1 -323.3 -11.4%
Operating result 349.8 298.1 -14.8%
Cost/income ratio 51.1% 52.0%
Net impairment loss on financial assets not measured at fair value through profit or loss -440.1 -269.2 -38.8%
Other result -27.4 -7.2 -73.7%
Net result attributable to owners of the parent -121.1 -31.0 -74.4%
Return on allocated capital -7.3% -2.1%

41
The decline in net interest income was mainly attributable to the Central and Eastern Europe
deconsolidation of leasing entities in Immorent as well as the
non-recurrence of a positive one-off effect and to lower income
CZECH REPUBLIC
from money market transactions and bonds due to the low interest
rate environment that was partially compensated by new business
Economic review
at the London and New York branches. As an increased volume
The Czech Republic is one of the most developed and stable
of assets under management from retail and institutional clients
countries in Central and Eastern Europe. Although the country is
did not fully offset lower fees in investment banking and lower
among the most open economies in the region, growth in 2014
treasury sales results, net fee and commission income declined.
was clearly driven by household consumption and investments.
The net trading and fair value result decreased primarily due to
Consumption was positively impacted by higher consumer confi-
lower treasury results of Erste Group Bank AG, namely from
dence, lower unemployment and accelerating growth of real
strategic positions and hedge funds, the yield curve and spreads
wages. In addition, the European funds absorption rate improved
impact as well as the fair value market pricing of the structured
further in 2014 and supported investments. Exports, on the other
credit portfolio of International Business in Vienna. In addition,
hand, performed only moderately with the automotive industry
the trading result of Immorent decreased mainly due to valuation
remaining one of the bright spots. Overall, real GDP expanded by
losses and unfavourable developments of FX rates. Consequently,
2.0% in 2014, while GDP per capita stood at EUR 14,800. Re-
the operating result declined. Net impairment loss on financial
flecting the strong economic performance, the unemployment rate
assets not measured at FV through profit and loss improved sub-
declined further in 2014 to 5.9%.
stantially on the back of lower specific risk provisions in large
corporate business and commercial real estate business in Erste
The Czech Republic experienced political stability in 2014. After
Group Bank AG as well as in Immorent but remained at an ele-
the political turmoil of 2013, the outcome of the lengthy negotia-
vated level. The net result attributable to the owners of the parent
tions was the formation of a three-party coalition that consists of
improved; nevertheless, it remained negative.
the Czech Social Democratic Party, the newly founded party
ANO and the Christian Democrats. This agreement among parties
Credit risk
was reached in January 2014 and played an important role in the
The credit risk exposure in the Other Austria segment, which is
prudent fiscal policy. Stronger real GDP growth supported tax
almost completely made up of Erste Group Bank and Erste Group
revenues in 2014, while a higher value-added tax rate of 21% had
Immorent, rose to EUR 33.1 billion (EUR 32.6 billion), which was
already been introduced the previous year. As a result, the gov-
almost 16% of the credit risk exposure of Erste Group. A large
ernment deficit of 1.2% in 2014 remained significantly below the
share of business in this segment was accounted for by securities
3% Maastricht criterion and the country exited the Excessive
and investments with banks. The share of loans to customers as a
Deficit Procedure during the year. Public debt as a percentage of
percentage of Erste Group’s total loan portfolio was significantly
GDP remained one of the lowest in Central and Eastern Europe
lower at 9.8%. Loans to customers rose to EUR 12.6 billion (EUR
and declined even further to 43.6% in 2014. Rating agencies
12.2 billion), with loans to the relatively low risk public sector and
acknowledged the performance of the Czech economy with S&P,
to large corporates posting robust growth. In contrast, financing
Moody’s and Fitch affirming the country’s long-term credit rating
for commercial real estate decreased again sharply, reflecting the
at AA-, A1, and A+ respectively in 2014.
weak economy and the problems of the real estate industry in most
of Erste Group’s core markets.
The Czech National Bank began intervening back in 2013 to
weaken the koruna by targeting an exchange rate of CZK 27
The share of non-performing loans in the total loan portfolio
against the euro as part of its attempt to avoid deflation. Despite
declined markedly to 11.8% (13.4%). NPL coverage by risk
the maintenance of this exchange rate floor by the National bank,
provisions was 58.1%, with the balance fully covered by collat-
inflation remained low throughout 2014. The average consumer
eral. Within the category of performing loans there was a clear
price index was at 0.4% in 2014, impacted by lower regulated
migration to better risk categories, which also indicates improved
energy prices from the beginning of the year. The Czech koruna,
credit quality.
supported by the country’s strong fundamentals, traded within a
narrow range of CZK 27-28 versus the euro. The Czech National
Bank left its base rate unchanged at 0.05% throughout 2014.

Key economic indicators – Czech Republic 2011 2012 2013 2014e

Population (ave, million) 10.5 10.5 10.5 10.5
GDP (nominal, EUR billion) 163.3 160.8 157.2 155.6
GDP/capita (in EUR thousand) 15.6 15.3 15.0 14.8
Real GDP growth 2.0 -0.7 -0.7 2.0
Private consumption growth 0.3 -1.8 0.4 1.4
Exports (share of GDP) 64.0 67.3 68.2 73.3
Imports (share of GDP) 63.7 65.7 65.6 69.6
Unemployment (Eurostat definition) 6.6 7.2 6.8 5.9
Consumer price inflation (ave) 1.9 3.3 1.4 0.4
Short term interest rate (3 months average) 1.2 1.0 0.5 0.4
EUR FX rate (ave) 24.6 25.2 26.0 27.6
EUR FX rate (eop) 25.6 25.6 27.5 27.9
Current account balance (share of GDP) -2.1 -1.6 -1.4 0.0
General government balance (share of GDP) -2.9 -4.0 -1.3 -1.2

Source: Erste Group

Market review buffers of 1-3% for systemically important institutions and a

The Czech banking market benefitted from improved macroeco- conservation buffer of 2.5% for all banks. The country’s banking
nomic conditions, which lead to an increased demand for banking market continued to be well capitalised with a total capital ratio of
products. Supported by increased household consumption and an 18% as of year-end 2014. The Czech banking system remained
improved consumer confidence level, customer loans grew by very profitable in 2014, with favourable asset quality indicators
4.8% in 2014. The lending market was clearly driven by retail playing a significant role. Foreign exchange-based lending re-
loans while corporate loans rose only slightly. Customer deposits mained insignificant compared to some other Central Eastern
increased only moderately by2.9%. This was entirely due to the European countries.
public sector, while deposits from households and corporate
customers increased by 6.7%. Overall, the Czech banking market Česká spořitelna maintained its market leadership positions
remained one of the most liquid in Central and Eastern Europe. across all major product categories in 2014. Its retail market
The loans to deposits ratio across the banking sector stood at 77% shares ranged from 23% to 26%, while its share in the corporate
as of year-end 2014. segment remained lower at around 20%. Overall, its market share
as measured by total assets stood at 18.3%. Česká spořitelna also
Financial intermediation – Czech Republic retained its number-one position in consumer lending including
(in % of GDP) the credit card market with a market share of 34%. In addition,
Česká spořitelna continued to control more than one quarter of
150 the asset management market.

127 126
125
118 Market shares – Czech Republic (in %)
100
35
82 80
77
75 30
28
62 62 27
58 26
50
25 24 24
23

20 20 19
25 18

15
0
2012 2013 2014e
10

Total assets Customer loans Customer deposits

0
Source: Czech National Bank, Erste Group
2012 2013 2014

The latest results of the semi-annual stress tests of the Czech Total assets Retail loans Retail deposits

National Bank were published in December 2014 and confirmed

that the banking sector as a whole continued to be sufficiently Source: Czech National Bank, Erste Group
resilient to potential adverse shocks. The National Bank also
implemented new capital requirements in line with the European
Union’s Capital Requirements Directive IV including capital

43
Business review – Highlights bank. Česká spořitelna aims at establishing a lifelong relationship
Front-runner in electronic banking. In October 2014, Česká with customers and has therefore designed the BLUE service to
spořitelna introduced a new version of the well-established inter- meet the customers’ needs at each stage of their life cycle. BLUE
net banking solutions. In the SERVIS 24 application, existing service customers may obtain the services of a personal banker
functions, such as the blocking, unblocking or issue of replace- and have the option of gaining advisory services and complex
ment cards, ordering a card with a customised design or an im- financial planning.
proved transaction history, were enhanced. Comprehensive pay-
ment card administration is a novelty for BUSINESS 24. SERVIS Solid performance in corporate business. The holding and
24 is the most popular internet banking application in the Czech Česká spořitelna cooperated on the largest corporate CZK bond
Republic with almost 1.8 million users. issue of the last decade in the Czech Republic – the issuance of
NET4GAS bonds. NET4GAS, the operator of a natural gas
In addition, Česká spořitelna launched the service 3D Secure, transmission network, issued bonds in EUR and in CZK, in an
secure online card payments that provide customers with the aggregate volume of EUR 710 million.
highest possible security, to further strengthen the bank’s position
in electronic banking. The bank achieved a two-digit increase in As part of its digital banking services for corporate customers,
transaction volumes made at merchants using Česká spořitelna Česká spořitelna presented BUSINESS 24 Mobile Bank. It is the
cards in the last years, and the total number of issued active pay- first bank offering a special mobile application for corporate
ment cards exceeded 3 million. clients allowing them to fully administer their own account.
Česká spořitelna also implemented extended functionalities in the
New branch concept and focus on customer relations. In areas of trade finance, in documentary transactions and bank
October 2014, Česká spořitelna opened an experimental branch in guarantees.
Plzeň - Lochotín. This new type of branch aims to strengthen the
customer service model, expand self-service devices for routine International and local recognition. In the 2014 Fincentrum
banking operations and improve the quality of the provided advi- Bank of the Year competition, Česká spořitelna won the Bank
sory services. Without Barriers Award, the Mortgage of the Year Award and
for the eleventh year running defended The Most Trusted Bank
A novelty in Czech retail banking was the introduction of person- Award. Thanks to the bank’s innovative approach of offering
al banking for middle-income customers under the BLUE brand, mortgages via Facebook as well, Česká spořitelna won first
which Česká spořitelna began offering at 140 branches in October place in the Best Use of Digital Media category of the FLEMA
2014. This targets customers who expect extensive service and a Media Awards.
wide range of high-quality personal banking services from the

Financial review
in EUR million 2013 2014 Change
Net interest income 999.4 924.0 -7.5%
Net fee and commission income 434.9 410.6 -5.6%
Net trading and fair value result 79.7 83.1 4.2%
Operating income 1,547.9 1,449.4 -6.4%
Operating expenses -721.8 -662.2 -8.3%
Operating result 826.1 787.1 -4.7%
Cost/income ratio 46.6% 45.7%
Net impairment loss on financial assets not measured at fair value through profit or loss -140.1 -135.4 -3.4%
Other result 9.8 -16.6 n/a
Net result attributable to owners of the parent 551.9 506.2 -8.3%
Return on allocated capital 34.9% 35.8%

The devaluation of the CZK due to the intervention of the Czech penses related to cost reduction measures could not offset the
National Bank in November 2013 had a significant negative decrease in operating income, resulting in a decline in the operat-
impact on the EUR figures of the Czech Republic segment. Net ing result. However, the operating result in local currency terms
interest income in the Czech Republic segment (comprising went up and the cost/income ratio improved. The deviation in the
Česká spořitelna Group) decreased due to the persistently low net impairment loss on financial assets not measured at FV
interest rate environment and subdued loan demand, especially through P&L was mainly attributable to the FX impact. Other
for consumer loans; mortgage loan volumes increased though. result declined due to the non-recurrence of a one-off positive
Net fee and commission income remained flat in local currency effect from 2013, but also due to impairments on own buildings
terms. Net trading and FV result increased due to the improved and real estate funds. Overall, these developments led to a decline
result from foreign exchange transactions. Lower operating ex- in the net result attributable to the owners of the parent.

Credit risk was positively impacted by the significant pickup of domestic

Total credit risk exposure in the Czech Republic geographical demand, which was mainly driven by higher real disposable
segment declined by more than EUR 1.6 billion to slightly above income and increased consumer confidence. In addition, gross
EUR 32 billion (-4.9%). In contrast to this trend in total credit fixed capital formation performed well, with investments in
exposure, loans to customers rose slightly to almost EUR 18.7 machinery being an important factor. Exports, on the other hand,
billion, with growth being confined to the retail business. Loans increased at a lesser pace than in the previous year, mainly be-
to medium-sized and large enterprises were slightly down. Cus- cause of slower growth by Slovakia’s main trading partners.
tomer loans in this segment as a percentage of Erste Group’s Altogether, real GDP grew by 2.4% in 2014 and GDP per capita
total loans to customers were almost unchanged at around stood at EUR 13,900 by year-end. The increased economic activi-
14.6%. The Czech Republic is hence still by far the second most ty supported the country’s labour market, which improved signif-
important market for Erste Group after Austria. In the Czech icantly in 2014. The unemployment rate stood at 13.3% at the end
Republic, loans continue to be granted almost exclusively in of 2014, representing a 0.9 percentage point improvement com-
local currency. Slightly more than one half of loans to customers pared to 2013.
were collateralised.
The fiscal stance of Slovakia improved notably in the past two
The quality of customer loans was again significantly better than years and the country exited the Excessive Deficit Procedure in
in other markets in Central and Eastern Europe in which Erste 2014. After declining to 2.6% of GDP in 2013, the fiscal deficit
Group operates. Due to proactive and effective credit risk man- stood at 2.9% in 2014. An improving labour market along with
agement, non-performing loans as a percentage of the total cus- the higher tax intake efficiency helped the budget revenues in
tomer loan portfolio decreased to 4.4% (4.6%), which continued 2014. Public deficit as a percentage of GDP remained slightly
the positive development of recent years. In 2014, this trend was below the threshold of the debt brake rule of 55%. Rating agen-
supported by the retail business, in which credit quality improved cies acknowledged the performance of the Slovak economy with
both among retail clients and micro-businesses. Risk provisions S&P raising the credit rating outlook from stable to positive.
as a percentage of non-performing loans improved to almost
79%. Including collateral, surplus cover amounted to 17% at Consumer prices in 2014 slowed down even more noticeably than
year-end. in the previous year. Inflation was impacted by favourable harvest
conditions and lower food and energy prices. In addition, prices
SLOVAKIA in the service sector grew only very moderately. Altogether,
average consumer prices decreased marginally, by 0.1% in 2014.
Economic review Having adopted the euro back in 2009, Slovakia continued to
Slovakia exhibited one of the most dynamic recoveries of the benefit from low euro zone interest rates.
Central and Eastern European region in 2014. Economic growth

Key economic indicators – Slovakia 2011 2012 2013 2014e

Population (ave, million) 5.4 5.4 5.4 5.4

GDP (nominal, EUR billion) 70.2 72.2 73.6 75.2
GDP/capita (in EUR thousand) 13.0 13.4 13.6 13.9
Real GDP growth 2.7 1.6 1.4 2.4
Private consumption growth -0.7 -0.5 -0.8 2.1
Exports (share of GDP) 80.9 86.1 87.2 86.1
Imports (share of GDP) 79.5 81.2 81.4 79.9
Unemployment (Eurostat definition) 13.6 13.9 14.2 13.3
Consumer price inflation (ave) 3.9 3.6 1.4 -0.1
Short term interest rate (3 months average) 1.4 0.6 0.2 0.2
Current account balance (share of GDP) -3.7 2.2 2.1 3.1
General government balance (share of GDP) -4.1 -4.2 -2.6 -2.9

Source: Erste Group

Market review deposit ratio of 91%, Slovakia maintained one of the most liquid
The positive macroeconomic environment continued to favourably and balanced banking sectors in the region. In order to maintain a
impact Slovakia’s banking market. Customer loans grew by 6.4% sound and prudent banking market, the National Bank of Slovakia
in the year, with the retail segment leading the way on the back of published its recommendations for financial institutions in October
improved consumer confidence. Corporate loan volumes increased 2014, in which it addressed important parameters such as loan-to-
only marginally. Foreign-currency lending remained insignificant. value ratios, maturity of loans, and a prudential approach to prop-
Customer deposits grew less than loans at 3.8%. With its loan-to- erty valuations. Having reached the first threshold of paid-in bank-

45
ing tax in the resolution funds, financial institutions did not need Business review – Highlights
to pay the special banking tax in the last quarter of 2014. Further- Retail product innovation. Slovenská sporiteľňa introduced an
more, the banking tax for 2015 was halved compared to 2013. All-inclusive mortgage, a unique product in Slovakia. In addition
to granting the mortgage, the bank pays for the valuation of the
real estate that serves as collateral and processes the registration
Financial intermediation – Slovakia (in % of GDP)
of pledge in the land register. As a result, the customer experience
100 further improved and about 80% of the customers who signed a
housing loan made use of this offer. Product innovations like this
80
81 81 83
support Slovenská sporiteľňa’s efforts to increase its market
shares. The bank’s position in retail business improved on the
60 59 60 61 back of product innovation, focused direct marketing and process
56
52
54
improvements.
40
Banking for corporate customers. In corporate business,
Slovenská sporiteľňa strengthened its position. The bank not only
20
participated in all major local-market transactions but also in-
creased revenues from transaction banking. Especially the factor-
0
2012 2013 2014e
ing business showed impressive growth. Through streamlining of
internal processes and increased efficiency, Slovenská sporiteľňa
Total assets Customer loans Customer deposits aims at improving the customer satisfaction of SMEs and large
corporates to further increase its position in corporate business.
Source: National Bank of Slovakia, Erste Group
Focus on digital banking. In line with group-wide cooperation
In the improved banking market environment, Slovenská efforts, Slovenská sporiteľňa established a new unit focusing on
sporitel’ňa successfully retained its leading market positions. The digital banking. This team supports the bank’s digital evolution
bank continued to control one-fifth of the country’s banking to better meet the growing expectations and needs of its custom-
market as measured by total assets, while it also led the market in er base. It is the bank’s goal to create an exceptional
customer loans and deposits. In the housing loan business, Slov- experience for its customers. Visible website improvements will
enská sporitel’ňa’s market share increased further in 2014 to be implemented in 2015, and new digital business ideas to fur-
27.6%. On the deposit side, its market share was significantly ther improve customer convenience have already been success-
lower in corporate business, at 10.6%, than in retail, at 26.4%. fully piloted.

International and local recognition. Its strong market position,

Market shares – Slovakia (in %)
high profitability, even further improved asset quality and a
40 strengthened capital position are the main reasons why Slovenská
sporiteľňa won various awards in 2014. For the third consecutive
35
year the bank won the most prestigious banking award in Slo-
30
27 27 27
vakia – TREND TOP Bank of the Year. In addition, the British
26 26 26
25 journal The Banker named Slovenská sporiteľňa Bank of the Year
20 20
21 2014 in Slovakia, and for the fourth time it won the Euromoney
20
Awards for Excellence.
15

0
2012 2013 2014

Total assets Retail loans Retail deposits

Source: National Bank of Slovakia, Erste Group

Financial review
in EUR million 2013 2014 Change
Net interest income 431.2 451.0 4.6%
Net fee and commission income 117.4 123.4 5.1%
Net trading and fair value result 11.6 9.6 -17.2%
Operating income 572.3 593.5 3.7%
Operating expenses -249.0 -266.2 6.9%
Operating result 323.3 327.3 1.2%
Cost/income ratio 43.5% 44.9%
Net impairment loss on financial assets not measured at fair value through profit or loss -47.2 -51.4 8.8%
Other result -45.0 -43.0 -4.6%
Net result attributable to owners of the parent 180.7 178.7 -1.1%
Return on allocated capital 35.7% 34.9%

The increase in net interest income in the Slovakia segment NPL coverage ratio based on risk provisions declined but at
(comprising Slovenská sporitel’ňa Group) was mainly attributa- 82.4% was still above average.
ble to higher new business volumes, namely housing and con-
sumer loans, and a changed deposit structure. Despite the cancel- ROMANIA
lation of loan account fees imposed by legislation, the net fee and
commission income improved due to current account, insurance Economic review
and securities fees. The decrease in the net trading and fair value Although growth slowed down from the previous year, Roma-
result was driven by valuation losses from derivatives. The in- nia’s economy continued to perform well in 2014. Growth was
crease in operating expenses was mostly related to the EUR 8.9 mainly driven by private consumption and exports, while in-
million payment into the deposit insurance fund (no correspond- vestments failed to pick up during 2014. Private consumption
ing payment in 2013) and higher personnel expenses. Owing to was supported by higher real disposable income and improved
improved operating income, the operating result increased. The consumer confidence levels. Exports also performed well in
cost/income ratio increased. Net impairment loss on financial 2014, with industrial production being an important driver. With
assets not measured at FV through profit and loss increased due 70%, the European Union continued to represent the main export
to allocation of higher provisions in the commercial real estate destination from Romania. Dacia, a Romanian car maker, had
business, while large corporates developed positively. Other another excellent year. In addition, information technology, paper
result improved slightly due to a decrease in banking tax (no manufacturing and agriculture also had positive impacts on the
payment in the fourth quarter of 2014). The net result attributable economic performance. The latter with its relatively high share in
to the owners of the parent declined moderately. the overall economy, however, contributed to economic growth to
a much lower extent than in the exceptionally favourable condi-
Credit risk tions of the previous year. In addition, European funds absorption
Total credit risk exposure in the Slovakia geographical segment clearly improved further in 2014 and reached 52%, still low
amounted to EUR 13.7 billion (+10.6%; EUR 12.6 billion). compared to other countries in the region. Altogether, real GDP
Loans to customers increased to EUR 8.4 billion (+12.2%; grew by 2.9% in 2014 and GDP per capita rose to EUR 7,600.
EUR 7.5 billion). The share of the Slovakia geographical segment The unemployment rate improved to 6.7%.
in Erste Group’s total loan portfolio rose by almost 0.7 percent-
age points to 6.5%. Under the third precautionary agreement with the International
Monetary Fund, Romania continued its fiscal consolidation pro-
A breakdown of the portfolio by customer segment shows a gramme in 2014. Despite the reorganisation of the existing gov-
continuation of the trend seen in previous years. The percentage ernment in 2014 and the approval of some populist measures
of better rated loans to retail customers in the total portfolio – as ahead of presidential elections in November, the budget deficit
measured by asset quality – rose further at the expense of the remained at a low level of 1.9% of GDP. Impacted by capping
corporate loans. Loans to corporates accounted for approx. 29% public investments, co-financing of European Union projects,
of total loans to customers, loans to private households for almost higher excise duties and property taxes, the deficit stayed within
71%. This customer mix also explains the large share of secured the agreed target of a maximum of 3% for the third consecutive
business of almost 59% of the entire loan portfolio. Again, no year. The rating agencies Moody’s and S&P acknowledged the
foreign-currency loans were granted to retail customers. performance of the Romanian economy. Romania’s public debt
level to GDP remained one of the lowest in the European Union
The positive development of credit quality continued. The NPL at 38.6% at the end of 2014.
ratio dropped to 5.0% (5.4%), with significant improvements
seen primarily in retail loans – loans to private individuals as well Inflation remained subdued in 2014 and stood in the lower bound
as loans to self-employed people and micro-businesses – while of the interval regarding the National Bank’s target range of
the quality of loans to larger corporates deteriorated slightly. The 1.5%-3.5%. The low inflation was mainly attributable to lower

47
global energy prices, low food prices, the cut in VAT for bread, the base rate several times in 2014 to 2.75% by the end of the
and delays in gas price liberalisation. Overall, average consumer year. The Romanian leu did not change significantly versus the
prices rose by 1.1% in 2014. The Romanian National Bank cut euro and stood in the range of 4.4-4.5 throughout the year.

Key economic indicators – Romania 2011 2012 2013 2014e

Population (ave, million) 20.2 20.1 20.0 19.9
GDP (nominal, EUR billion) 133.3 133.9 144.7 151.8
GDP/capita (in EUR thousand) 6.6 6.7 7.2 7.6
Real GDP growth 2.3 0.6 3.5 2.9
Private consumption growth 1.4 1.5 0.9 3.6
Exports (share of GDP) 34.0 33.7 34.3 34.6
Imports (share of GDP) 41.2 40.9 38.2 38.5
Unemployment (Eurostat definition) 7.2 6.8 7.1 6.7
Consumer price inflation (ave) 5.8 3.3 4.0 1.1
Short term interest rate (3 months average) 5.8 5.3 4.2 2.5
EUR FX rate (ave) 4.2 4.5 4.4 4.4
EUR FX rate (eop) 4.3 4.4 4.5 4.5
Current account balance (share of GDP) -4.6 -4.5 -0.8 -0.5
General government balance (share of GDP) -5.5 -2.9 -2.3 -1.9

Source: Erste Group

Market review The Romanian National Bank, ahead of the European Central
Although interest rates continued to decline and reached histori- Bank’s asset quality review, recommended local banks to reduce
cal lows in Romania, demand for customer loans remained low fully provisioned non-performing loans in the banking system in
throughout 2014. Customer loans fell by 3.3%, mainly driven by an accelerated manner. Following this recommendation, banks
a decline in the corporate sector of 5.2%. This significant reduc- took decisive measures aimed at cleaning up their balance sheets
tion was due not only to low demand but also to the reduction in through write-offs, sales and recoveries. These efforts led not only
non-performing loans following the recommendation of the Ro- to significantly higher risk costs but also to lower non-performing
manian National Bank. Retail loans remained stable throughout loan ratios and higher coverage, most visibly in the corporate
2014 and were characterised by significantly increasing local sector. In 2014, the country’s banking sector was loss-making due
currency lending which became more attractive due to lower the accelerated NPL reduction. The Romanian National Bank also
interest rates. In addition, Prima Casa, a government-guaranteed continued to support local funding and local currency based lend-
mortgage programme, was exclusively available in local currency ing throughout 2014 by maintaining the rules on limitations on
after August 2013. Customer deposits, on the other hand, grew by tenor, debt-to-income ratio, loan-to-value ratio, and collateral
7.9% in 2014 which represented a slowdown compared to 2013. coverage. Overall, the Romanian banking market remained well
Both retail and corporate deposits were impacted by higher yield balanced, with the loan-to-deposit ratio declining further to 93%
investment products in asset management. by the end of 2014. In addition the banking sector remained very
strongly capitalised with a total capital ratio of 17%.
Financial intermediation – Romania (in % of GDP)
Market shares – Romania (in %)
80
35

61 30
60 57
54
25

40
40 20
36 35 35
20 19
34 33 18 18 18 18 18
17
16
15

20
10

5
0
2012 2013 2014e
0
2012 2013 2014
Total assets Customer loans Customer deposits

Total assets Retail loans Retail deposits

Source: National Bank of Romania, Erste Group

Despite losing some market shares on both the lending and de- Local currency lending accelerated, driven by a significant uplift
posit sides, Banca Comercială Română held on to its leadership in both secured and unsecured loan originations. The retail per-
position in almost all major product categories. By the end of forming book was driven by a substantial increase in standard
2014, the bank was ranked number one based on total assets, mortgages and Prima Casa (the state-guaranteed housing loans
customer loans, customer deposits, and asset management. Banca programme) new sales. The volume in new production tripled
Comercială Română’s customer loan market share, however, was year-on-year. Banca Comercială Română captured about one third
impacted by the significant reduction of non-performing loans, of the newly underwritten mortgage market, and remained – also
most visibly in the corporate sector in which the market share in terms of cash loans – among the top three largest banks. The
decreased to 17.1%. Customer deposit market shares remained bank continued the marketing campaigns promoting local curren-
stable in 2014. Overall, Banca Comercială Română had a market cy unsecured consumer loans and credit cards.
share as measured by total assets of 16.2% at the end of 2014.
Continued cost efficiency. The cost dynamics were successful-
Business review – Highlights ly aligned with the revenue generation capacity thanks to the
Substantially improved asset quality. Banca Comercială bank’s considerable optimisation measures and strict cost man-
Română decided to accelerate the resolution of the NPL legacy agement. As a result of the comprehensive turnaround pro-
issues to enhance its asset quality. Following significant write- gramme, Banca Comercială Română improved processes and
offs, sales and recoveries, the NPL stock decreased by almost decreased the cost base. The headcount was reduced to 7,054 and
30%. The risk costs increased to EUR 999.1 million. As a result, 25 branches were closed.
the NPL ratio decreased to 23.7% and the NPL coverage im-
proved significantly to 82.2%. Transaction banking and cash management initiatives. To
better meet the needs of the corporate customers, Banca Comer-
Success in local currency retail lending. Retail lending fo- cială Română redesigned its transaction banking business and
cused on financing customers with good credit ratings and on introduced new products. Further to that, it extended its cash
improving client activation. Banca Comercială Română launched management service coverage and simplified product packages.
a new standard mortgage loan with a 5-year fixed interest rate. In The number of corporate outgoing local currency payments in-
addition, the bank simplified the documentation for secured creased by about 5.8%.
lending, optimised the cash and non-cash transactions processes
and, as a result, improved customer satisfaction by implementing
a queue management system in the 70 most important branches.

Financial review
in EUR million 2013 2014 Change
Net interest income 610.1 484.7 -20.6%
Net fee and commission income 169.1 160.0 -5.4%
Net trading and fair value result 99.9 81.2 -18.7%
Operating income 887.1 732.2 -17.5%
Operating expenses -369.3 -331.9 -10.1%
Operating result 517.8 400.3 -22.7%
Cost/income ratio 41.6% 45.3%
Net impairment loss on financial assets not measured at fair value through profit or loss -454.3 -999.1 >100.0%
Other result -67.1 -117.2 74.7%
Net result attributable to owners of the parent 114.9 -614.1 n/a
Return on allocated capital 8.6% -60.3%

Net interest income in the Romania segment (comprising Banca Credit risk
Comercială Română Group) decreased after sharp key rate cuts in Due to the continued consolidation strategy, business volumes in
2013 and 2014, but also due to lower income from unwinding and the Romania geographical segment declined again noticeably in
declining corporate business. Net fee and commission income almost all business areas. While total credit risk exposure was
declined mainly due to lower fees from loans, current accounts and reduced by EUR 1.1 billion to EUR 14.3 billion, loans to custom-
transaction banking. Net trading and fair value result declined due ers contracted visibly to EUR 9.0 billion (-13.8%). This repre-
to a lower result from derivatives. Consequently, operating income sented a share of 7.0% (8.2%) of Erste Group’s total loans to
decreased. Operating expenses decreased on the back of cost reduc- customers. The decline in the loan portfolio was attributable to
tion measures. The operating result declined and the cost/income more restrictive lending in the face of increased credit quality
ratio deteriorated. The net impairment loss on financial assets not requirements and, above all, to extensive selling of non-
measured at FV through profit and loss increased on the back of the performing loans in the amount of EUR 747 million.
announced accelerated NPL reduction. The net result attributable to
the owners of the parent decreased significantly.

49
The loan portfolio of the Romania geographical segment was made significantly in 2014 to 7.7% mainly due to maintenance of the
up of 53% collateralised and 47% non-collateralised loans, which government’s Public Work Scheme. Employment also slightly
significantly increased the degree of collateralisation. The share of increased in the private sector.
foreign-currency loans decreased to 60% (63%) and was almost
completely denominated in euros. This development was due to the Political stability prevailed in Hungary in 2014, with the coalition
state-subsidised Prima Casa programme for residential housing of the centre right FIDESZ and the Christian Democrats winning
loans. Since the autumn of 2012, Banca Comercială Română has both the general parliamentary and municipal elections. In order to
been offering this programme exclusively in local currency. reach its deficit goal of 2.9% the re-elected government announced
fiscal adjustment measures in July 2014 including a freeze of
The NPL ratio declined by almost one third, last but not least due government expenditures. Additionally, the government decided to
to sales in the secondary market, to 23.7% (29.2%), with non- maintain the special taxes in sectors such as energy, telecoms,
performing corporate loans down more sharply. Loans to private retail and finance. In addition, strict cost control continued in the
households continued to show the highest quality in the loan public sector. Overall, the general government deficit remained
portfolio. Risk provisions were substantially increased once again below the 3% Maastricht criterion at 2.7%. The public debt ratio
so that the NPL coverage ratio improved to 82.2% (66.9%). of Hungary continued to stay above the average of other CEE
countries and stood at 76.5% at the end of 2014. Although bond
HUNGARY issuance by Hungary was limited in 2014, the weaker currency
exchange level had a significant impact on indebtedness as a
Economic review percentage of GDP. None of the three main rating agencies
The Hungarian economy grew surprisingly well in 2014 at 3.6%, changed the sovereign rating of Hungary in 2014, but their outlook
the strongest growth since 2006. This development was mainly perspectives were modified to a stable outlook.
supported by household consumption and investments; however,
exports also contributed positively to the country’s overall eco- Inflation remained under control during 2014. Consumer prices in
nomic performance. The surge in both public and private invest- 2014 were broadly unchanged due to the subdued imported infla-
ments was partly supported by one-off factors such as an acceler- tion, low food prices, and regulated price cuts. Artificial price
ated absorption of European Union funds and measures of the reductions of electricity and gas services as well as some other
National Bank, such as the Funding for Growth scheme. The services provided by local councils, such as water charges, sew-
highest growth rates in investments were registered in manufactur- erage and refuse disposal, played a role in disinflation. Average
ing, logistics, defence and agriculture. Exports were supported by consumer prices decreased by 0.2% in 2014. Despite the stable
car manufacturers, such as Mercedes, Audi and General Motors, economic environment, the forint depreciated slightly against the
which again performed well in 2014. High distortionary taxes, euro reaching HUF 315 at the end of 2014. The National Bank
most notably very high additional burdens on the financial sector, continued its policy of further reducing the base rate, which was
however, remained a drag on the economic performance in 2014. cut seven times until July 2014. The main monetary policy rate
Altogether, Hungary’s GDP performance was better than most was then left unchanged at the historical low of 2.1% until the
market participants expected. The unemployment rate decreased end of the year.

Key economic indicators – Hungary 2011 2012 2013 2014e

Population (ave, million) 10.0 10.0 9.9 9.9
GDP (nominal, EUR billion) 100.4 98.6 100.5 103.3
GDP/capita (in EUR thousand) 10.1 9.9 10.1 10.4
Real GDP growth 1.8 -1.5 1.5 3.6
Private consumption growth 0.7 -2.0 0.2 1.1
Exports (share of GDP) 71.5 71.3 72.0 73.9
Imports (share of GDP) 68.6 68.2 68.5 71.2
Unemployment (Eurostat definition) 10.9 10.9 10.3 7.7
Consumer price inflation (ave) 3.9 5.7 1.7 -0.2
Short term interest rate (3 months average) 6.2 7.0 4.3 2.4
EUR FX rate (ave) 279.2 289.4 296.9 308.6
EUR FX rate (eop) 311.1 291.3 296.9 314.9
Current account balance (share of GDP) 0.8 1.9 4.1 3.8
General government balance (share of GDP) 4.2 -2.2 -2.4 -2.7

Source: Erste Group

Market review tion to the retroactive correction of bid-ask spreads applied to FX

For Hungary’s banking market, 2014 was another challenging loans and the abolition of unilateral interest rate and fee changes
year. Following the Supreme Court’s decision in June 2014, the applied for both forint- and foreign-currency-based loans. In
Hungarian parliament approved two laws on retail loans in rela- November 2014, another law was passed, which regulated the

conversion of foreign-currency household loans to Hungarian Despite its significantly shrinking balance sheet and lower
forint at fixed exchange rates. The currency conversion pro- market shares, Erste Bank Hungary continued to be a major
gramme was facilitated by the Hungarian National Bank, which market player in the country. The bank remained loss-making in
allocated up to EUR 9 billion from its foreign currency reserves 2014 mainly due to very limited customer demand, elevated risk
for banks. The programme was designed to neutralise any impact provisions, and a number of extraordinary items that the govern-
from conversions on the forint spot market. The fair banking law ment imposed on banks. As part of its strategy, Erste Bank Hun-
was also approved in November 2014, which set reference rates gary continued to focus on local-currency lending from locally
for new retail loans, regulated unilateral interest and fee changes, sourced liquidity and a reduction of parent company funding.
and placed contractual obligations on banks as of February 2015. The bank’s market shares were impacted by the relatively high
The special banking tax and the financial transaction tax re- portion of foreign-currency-based loans, which declined signifi-
mained unchanged throughout 2014. cantly in 2014. Overall, Erste Bank Hungary’s total asset market
shares decreased to 5.6% in 2014.
The Hungarian government, which has advocated a Hungarian
ownership of more than 50% in the banking sector for years, Market shares – Hungary (in %)
achieved that goal in 2014. With the acquisition of the Hungarian
subsidiaries of Bayerische Landesbank and General Electric 20

Capital, state ownership in the banking sector increased to slight-

16
ly above 50%. The government also decided to set up a new 16 15
integration organisation for savings cooperatives in 2014 and 14

formed a strategic alliance of the Hungarian Post and a number 12

of financial institutions representing around 14% of the country’s
9
total assets. 8
8 7 7
6 6

Hungary’s banking market was loss-making in 2014. As a result

4
of the measures imposed on financial institutions, demand for
customer loans remained low throughout 2014. Despite the low
0
interest rate environment, both retail and corporate loans shrank 2012 2013 2014
in 2014. On the positive side, the National Bank continued its
Funding for Growth scheme for small and medium-sized enter- Total assets Retail loans Retail deposits

prises in 2014 with the aim of stimulating the economy. The

scheme was extended in September 2014 to a maximum amount Source: National Bank of Hungary, Erste Group

of HUF 1,000 billion. As part of the programme, the National

Bank provided commercial banks with free funding, while credit Business review – Highlights
institutions could lend to SMEs at a preferential interest rate. Focus on process improvements. The cycle time of key
processes in the mortgage and credit card business was signifi-
Financial intermediation – Hungary (in % of GDP) cantly reduced. Mortgage post-disbursement processes were
centralised in February 2014, resulting in completely unified and
150 standardised processes. Erste Bank Hungary also ran a document
rationalisation project. The focus was on redesigning and simpli-
120 fying of the forms used in branches.
110 110
104

90
Improvements in the customer experience with the branch net-
work as well as optimisation of unsecured and micro-companies
lending processes are planned for 2015.
60 56 54
51 51 52
48

Strengthened digital channels. Digitalisation is a key element

30
of the bank’s efficiency improvement. Erste Bank Hungary close-
ly cooperates with Erste Group’s innovation centre to align with
0
group-level initiatives. In 2014, the bank launched a remote
2012 2013 2014e
mobile payment system providing functions such as: bill pay-
Total assets Customer loans Customer deposits ment, peer-to-peer payment, and parking fee payment. Further-
more, Erste Bank Hungary’s netbanking was upgraded with more
Source: National Bank of Hungary, Erste Group
user-friendly functions based on customer feedback and business
requirements.

51
New business initiatives. New sales figures improved in the The decline of retail deposit volumes due to the low interest rate
bank’s most important product categories. Credit card business as environment is counterbalanced by increasing volumes being
well as both personal and mortgage new loan disbursements placed in investment funds. Overall, the number of customers
improved during the last two years. New retail loans, albeit from and the transaction volumes increased.
a very low base, more than doubled. New credit card sales also
outperformed last year’s results.

Financial review
in EUR million 2013 2014 Change
Net interest income 298.7 263.4 -11.8%
Net fee and commission income 131.7 139.3 5.8%
Net trading and fair value result 4.1 38.8 >100.0%
Operating income 435.1 442.3 1.7%
Operating expenses -180.1 -175.8 -2.4%
Operating result 255.0 266.5 4.5%
Cost/income ratio 41.4% 39.7%
Net impairment loss on financial assets not measured at fair value through profit or loss -201.3 -152.2 -24.4%
Other result -136.7 -434.9 >100.0%
Net result attributable to owners of the parent -89.5 -330.6 >100.0%
Return on allocated capital -17.8% -67.5%

Net interest income in the Hungary segment (comprising Erste The noticeable downwards trend in business volume was attribut-
Bank Hungary Group) declined mainly due to decreasing loan able to highly restrictive new lending amid weak loan demand.
volumes and margins in the retail business as well as the conver- Due to repayments and the conversion of foreign-currency
sion of retail foreign currency denominated loans. Net fee and loansto local-currency loans, the share of financing denominated
commission income improved primarily on the back of higher in Hungarian forint in total loans rose to 33%. Foreign-currency
fees from cash management, custody business and asset man- loans to customers were denominated mostly in Swiss francs.
agement. Swaps entered into with the Hungarian National Bank
to secure refinancing of foreign-currency loans at fixed exchange The negative trend in asset quality that had started with the onset
rates had a positive impact of EUR 32.4 million on the net trading of the financial and economic crisis in 2008 continued, albeit at a
and fair value result. A corresponding negative counter-effect is weaker rate. This development had already emerged in the second
included in the other result. Although operating expenses in- half of 2013. The NPL ratio stood at 26.8% (26.4%). This devel-
creased slightly in local currency terms due to higher IT charges opment of loan quality was also attributable to sales of non-
and depreciation that could not be offset by lower personnel performing loans – both retail and corporate loans – in the
costs, they declined in euro terms. This led to an increase in the amount of EUR 71.7 million. NPL coverage of non-performing
operating result and an improvement in the cost/income ratio. Net loans by risk provisions improved to 64.0%.
impairment loss on financial assets not measured at FV through
profit and loss declined due to lower risk provisions on loans to CROATIA
customers in SME as well as in the retail business. Other result
included expenses related to the Hungarian consumer loan law in Economic review
the amount of EUR 336.8 million. The net burden of the law and The Croatian economy struggled to fully recover, and the country
the conversion of the foreign-currency loans was EUR 312.2 concluded 2014 as the sixth consecutive year of recession. Do-
million. This led to a significant deterioration in the net result mestic demand remained weak throughout the year and was
attributable to the owners of the parent. impacted by low consumer confidence. Investments continued to
be sluggish in 2014 mainly due to the low activity of the private
Credit risk sector. The bright spot of the economy was the performance of
In the Hungary geographical segment, credit risk exposure de- exports with transport equipment, textiles and machinery being
clined even more strongly than in previous years, to EUR 6.3 the most important sectors. Croatia’s well-developed tourism
billion (-19.5%), in an environment marked by severe economic industry with more than 10 million visitors annually also per-
and political challenges for the banking sector. The loan portfolio formed well in 2014. Altogether, real GDP showed a decline of
declined at a similar rate, to EUR 4.3 billion (EUR 5.4 billion). 0.4% in 2014, while GDP per capita stood at EUR 10,000 at the
As a result, the share of this segment in Erste Group’s total loans end of the year. The unemployment rate reflected the economic
to customers decreased to 3.4% (4.2%). The composition of the performance and remained high at 17.2% by the end of 2014.
loan portfolio by customer segment shows another shift from
corporates and the public sector to retail customers. Loans to Reflecting weak domestic consumption and lower food and ener-
private households as a percentage of total loans to customers gy prices, inflation remained very low in 2014, with consumer
reached 68.4%. prices being flat throughout the year. Given the country’s very

high use of the euro, the Croatian National Bank’s main objective VAT revenue collection in the second half of the year. Croatia’s
remained to preserve nominal exchange rate stability. Fiscal public debt increased further to 81.5% in 2014, due not only to
consolidation failed to meet expectations in 2014, which resulted the shrinking economy but also to the inclusion of two major
in a budget deficit of 5.5% of GDP. This was in particular due to state-owned enterprises.
unexpected flood-related expenses and a lower than anticipated

Key economic indicators – Croatia 2011 2012 2013 2014e

Population (ave, million) 4.3 4.3 4.3 4.3
GDP (nominal, EUR billion) 44.8 44.0 43.6 43.1
GDP/capita (in EUR thousand) 10.4 10.2 10.1 10.0
Real GDP growth -0.3 -2.2 -0.9 -0.4
Private consumption growth 0.3 -3.0 -1.3 -0.7
Exports (share of GDP) 21.4 21.9 20.5 20.5
Imports (share of GDP) 36.4 36.9 36.1 36.3
Unemployment (Eurostat definition) 13.5 15.8 17.3 17.2
Consumer price inflation (ave) 2.3 3.4 2.3 -0.2
Short term interest rate (3 months average) 3.1 3.4 1.5 0.9
EUR FX rate (ave) 7.4 7.5 7.6 7.6
EUR FX rate (eop) 7.5 7.5 7.6 7.7
Current account balance (share of GDP) -0.8 -0.1 0.9 0.2
General government balance (share of GDP) -7.7 -5.6 -5.2 -5.5

Source: Erste Group

Market review
In 2014, Croatia’s banking market reflected the weak macroeco- Erste Bank Croatia remained among the top three players in the
nomic developments of the country. The country’s lending market market, with a total asset market share of 14.9%. Erste Bank
shrank, driven mainly by lower corporate volume. The retail Croatia’s performance reflected the development of the overall
market showed more activity but was still subdued due to weak banking market, with customer loans declining and deposits
domestic demand. Overall, loans to customers decreased by increasing. The bank’s loan-to-deposit ratio decreased to 123% by
2.5%, while customer deposits increased by 2.5%. This increase year-end 2014.
in savings was heavily impacted by higher corporate deposits,
while retail deposits rose by only 2.0%. The profitability of the Market shares – Croatia (in %)
Croatian banking sector was impacted by the significantly in-
creased level of provisioning during 2014. Despite lower returns 20

at sector levels, the level of capital adequacy remained satisfacto-

ry. The country’s level of financial intermediation remained 16 15 15 15
14 14 14
among the highest in Central and Eastern Europe, with total 13 13 13

banking assets at 123% of GDP. 12

Financial intermediation – Croatia (in % of GDP) 8

150 4

122 123 123

120
0
2012 2013 2014

90 86 87 86
Total assets Retail loans Retail deposits
75 78
69

60
Source: National Bank of Croatia, Erste Group

30 Business review – Highlights

Local currency lending. As in other markets, the focus was on
0 strengthening the position in retail loans denominated in local
2012 2013 2014e
currency. Business volumes were lively and allowed the bank to
Total assets Customer loans Customer deposits position itself as one of the market leaders in the segment.

Source: National Bank of Croatia, Erste Group

53
Local currency consumer lending characterised the business virtual ticket number and the app will notify the user when they
developments in the retail business segment. The continuous are 9th, 6th or 3rd in line. Erste Wallet is a new system on the mar-
drive for efficiency further boosted business amid the commit- ket and serves as a mobile payment method. It allows users to
ment to provide approval decisions to clients within 24 hours. make in-store payments and conduct peer-to-peer payments
between Erste Wallet users. The main advantage of this payment
Focus on SME business. Fostering long-term relationships feature is the significantly lower costs for the customers com-
with customers is of utmost importance for Erste Bank Croatia. pared to the credit card business. The Personal Finance Manager
Hence, a new operating model in SME business, shifting the systematically gathers information on incoming payments or
focus to an industry-specific approach, was introduced. Specialist payouts and allocates this data to specific categories, such as food,
teams were formed to better combine SME-specific know-how housing or entertainment. Customers are provided with a concise
and risk management capacities. This allows the introduction of overview of their personal earnings and spending behaviour.
tailor-made finance products and a service-oriented approach.
The new SME product packages represent an important qualita- International and local recognition. The bank’s main
tive step forward and set the stage for a more competitive ap- strengths compared to its competitors are innovation, a wide
proach aimed at becoming the customers’ first bank. range of products and a special emphasis on customer care. The
financial magazine The Banker has named Erste Bank Croatia’s
Banking innovations. Erste Bank Croatia introduced various Private Banking the best private banking service in Croatia. In
innovations on the local market, such as the Erste Queuing app, addition, the bank was already top-ranked in the MIXX competi-
Erste Wallet and also launched the Personal Finance Manager. tion, a nationwide competition for the best online campaigns.
The Erste Queueing app allows users to get a ticket for a branch Erste Bank Croatia won two out of the seven major categories –
they want to visit. The user does not need to queue as he gets a Digital Brand Awareness and Mobile.

Financial review
in EUR million 2013 2014 Change
Net interest income 240.5 261.2 8.6%
Net fee and commission income 72.6 79.9 10.0%
Net trading and fair value result 20.4 24.1 18.3%
Operating income 334.5 399.3 19.4%
Operating expenses -143.7 -183.5 27.7%
Operating result 190.8 215.9 13.2%
Cost/income ratio 43.0% 45.9%
Net impairment loss on financial assets not measured at fair value through profit or loss -159.2 -155.3 -2.5%
Other result -13.0 -4.4 -65.7%
Net result attributable to owners of the parent 10.1 32.6 >100.0%
Return on allocated capital 3.9% 10.7%

Net interest income in the Croatia segment (comprising Erste EUR 6.9 billion (+1.2%). The share of this segment in Erste
Bank Croatia Group) increased due to lower interest expenses for Group’s total loans was stable at 5.3%. The composition of the
liabilities. The consolidation of additional subsidiaries affected loan portfolio by customer segments shifted from corporate loans
the revenue and expenditure side. Net fee and commission in- to better-quality loans to municipalities, with the latter accounting
come improved primarily on the back of higher fees in retail for as much as 19.5% (18.4%) of the customer loan portfolio.
business as well as fees for arranging a government bond issue.
The increase in the rental income by EUR 31.5 million due to The majority of loans are still denominated in foreign currency,
consolidation of a leasing subsidiary also had a positive impact especially euros, even though the focus has recently been on
on the operating income. Despite increased operating expenses lending in Croatian kuna. The share of foreign-currency loans
due to the consolidation of subsidiaries (a leasing subsidiary and was above 76% (77.5%). The high share of foreign-currency
a Slovenian credit card company), the operating result improved. loans is due to the widespread use of the euro in Croatia. Euro
The cost/income ratio went up. The decrease in the net impair- loans are typically matched by corresponding income or deposits
ment loss on financial assets not measured at FV through profit denominated in euro.
and loss was driven by lower provisioning requirements in SME
business that more than offset the higher risk provisions in com- Against the backdrop of persistently harsh macroeconomic
mercial real estate business. NPL coverage rose to 60.4%. The net conditions, the Croatian economy contracted. Partly due to
result attributable to the owners of the parent improved. regulatory changes, asset quality continued to deteriorate, even
though the increase in non-performing loans was significantly
Credit risk weaker than in previous years. NPLs rose by EUR 82.6 million
In the Croatia geographical segment, credit risk exposure rose by to EUR 1,262 million. As a percentage of total loans to custom-
3.6% to EUR 9.7 billion. Loans to customers were slightly up at ers, they rose to 18.4% (17.4%). Most of the deterioration was

seen in commercial lending to medium-sized and larger enter- results of 2013. In addition, domestic demand remained subdued
prises while the above-average growth in loans to the public throughout the year. Despite some improvements in labour mar-
sector contributed to a certain stabilisation of credit quality. NPL ket indicators, the unemployment rate was impacted by the weak
coverage by risk provisions was 60.4%. Including collateral, economic performance and remained one of the highest in Europe
NPLs were fully covered. at 18.9%. Overall, real GDP decreased by 1.8% and GDP per
capita stood at EUR 4,600.
SERBIA
Despite an improved tax collection and cuts in capital spending the
Economic review budget deficit rose to 6.6% of GDP in 2014. To improve the fiscal
The Serbian economic recovery was significantly disrupted by situation, the Serbian government signed a precautionary ar-
the heavy floods in 2014. As a result, industrial activity in sectors rangement with the International Monetary Fund to implement
such as mining and energy strongly deteriorated in 2014. Agricul- further fiscal consolidation measures such as a 10% cut in public
ture was one of the most impacted sectors, with production fall- wages, pension cuts, a reduction in subsidies, privatisation and
ing by approximately 7% in 2014. Manufacturing dropped as restructuring plans for state-owned enterprises. The nominal pub-
well, driven mainly by the steep decline in the production of lic debt trajectory remained stable in 2014 and, similarly to previ-
motor vehicles. Flooding also had a negative impact on the per- ous years, grew by approximately EUR 2 billion. Public debt to
formance of exports, which worsened in 2014 after the excellent GDP increased to 70.9% as a result of the shrinking economy.

Key economic indicators – Serbia 2011 2012 2013 2014e

Population (ave, million) 7.2 7.2 7.2 7.2
GDP (nominal, EUR billion) 30.1 31.7 33.3 32.7
GDP/capita (in EUR thousand) 4.2 4.4 4.6 4.6
Real GDP growth 1.4 -1.0 2.6 -1.8
Private consumption growth -1.2 -2.0 -1.5 -1.5
Exports (share of GDP) 28.0 26.5 31.7 33.2
Imports (share of GDP) 45.7 44.3 44.2 45.3
Unemployment (Eurostat definition) 23.0 24.0 22.1 18.9
Consumer price inflation (ave) 11.2 7.3 7.9 2.1
Short term interest rate (3 months average) 12.9 11.6 10.0 8.0
EUR FX rate (ave) 113.1 113.1 116.5 118.7
EUR FX rate (eop) 104.6 113.7 114.6 120.3
Current account balance (share of GDP) -9.1 -12.3 -6.5 -6.6
General government balance (share of GDP) -4.9 -6.5 -5.0 -6.6

Source: Erste Group

Market review Bank of Serbia cut the base rate three times in 2014 from 9.5% to
Despite the weak macroeconomic developments, the Serbian bank- 8% by the end of the year.
ing market continued to grow in 2014. Growth was clearly driven by
retail loans, which increased by 7.6% while corporate loans shrank Financial intermediation – Serbia (in % of GDP)
slightly. Non-performing loans stabilised at 23% as a percentage of
customer loans. Asset-quality-related issues were especially visible 100

in corporate business, with non-performing loans at 27% while they 88

85
81
remained below 10% in e retail business. More than 70% of the 80

system’s customer loans were denominated in foreign currency,

mainly in euro. Overall, customer loans increased marginally, while 60
53
customer deposits increased by 6.9% leading to a decrease in the 47 48

system’s loan-to-deposit ratio to 111%. The system’s capital adequa- 40

42
40
43

cy ratio remained high at 19.2%, and the implementation of Basel 3

also moved further ahead in 2014. The attractiveness of the coun-
20
try’s banking market was also reflected in new foreign market par-
ticipants entering the market. United Arab Emirates’ Mirabank
0
started to operate in the final quarter of the year. Foreign-owned 2012 2013 2014e
banks maintained their dominant position in the banking sector with
a market share of approximately 75%. Inflation, traditionally very Total assets Customer loans Customer deposits

high compared to other Central and Eastern European countries, was

lower in 2014 than in the previous years and remained in the Na- Source: National Bank of Serbia, Erste Group

tional Bank’s target range of 2.5%-5.5%. Consequently, the National

55
Erste Bank Serbia maintained its position among the country’s lending processes for private and corporate customers. The short-
top 15 banks in 2014. Erste Bank Serbia’s market shares for ened time requirement speeds up loan approvals and improves
customer loans remained stable at 3.1% by maintaining retail and customer satisfaction.
corporate market shares at 3.5% and 2.8% respectively. On the
deposit side, Erste Bank Serbia’s activities regarding foreign Focus on innovation. To meet the financial requirements of its
exchange and local currency savings continued. As a result, the customers through different channels the bank launched several
bank’s deposit base remained fairly divided between euro and digitalisation projects and continued to upgrade its netbanking
dinar deposits. Overall, the bank’s market share for customer solution with new functions, such as a digital finance advisor,
deposits stood at 3.5% at the end of 2014. online account opening or a Skype call centre. Erste Bank Serbia
also implemented additional online banking services.
Business review – Highlights
Balanced business model. Erste Bank Serbia remained one of Supporting corporate customers on renewable energy. In
the most balanced financial institutions in the country, with a loan- light of the increasing importance of renewable energy, the bank
to-deposit ratio of around 90%, both in euro and Serbian dinar. funded several projects, such as a wind farm near Kula, a solar
plant near Beočin and 17 mini hydropower plants and two biogas
Continued cost efficiency. To further improve its cost efficien- plants.
cy, the bank implemented specific projects for the automation of

Financial review
in EUR million 2013 2014 Change
Net interest income 32.5 34.4 5.9%
Net fee and commission income 13.4 13.4 0.1%
Net trading and fair value result 2.6 2.9 11.9%
Operating income 48.5 50.5 4.3%
Operating expenses -36.5 -38.6 5.8%
Operating result 12.0 11.9 -0.4%
Cost/income ratio 75.3% 76.4%
Net impairment loss on financial assets not measured at fair value through profit or loss -9.6 -15.7 63.0%
Other result -0.1 -1.3 >100.0%
Net result attributable to owners of the parent 1.4 -5.4 n/a
Return on allocated capital 2.8% -10.2%

Net interest income in the Serbia segment (comprising Erste Europe. This applies in particular to loans to the self-employed
Bank Serbia Group) increased mainly as a result of higher mar- and to micro-businesses.
gins from consumer loans in retail business. In addition,
asset/liability management benefitted from liquidity surplus Even though the increase in loan volume was confined almost
placements. Operating expenses increased mostly due to higher exclusively to loans denominated in Serbian dinar, a much larger
workout and IT costs as well as the consolidation of a leasing share of loans (75%) is still denominated in foreign currency,
company. The increase in the net impairment loss on financial especially in euros. This is mainly due to the wide-spread use of
assets not measured at FV through profit and loss was driven by the euro in Serbia as a result of the weakness of the local curren-
the increase in coverage for SME clients. As a result, the net cy. Euro loans are usually matched by corresponding income or
result attributable to the owners of the parent turned negative. deposits in euros.

Credit risk After cleaning up its loan portfolio in the final quarter, Erste Bank
Total credit exposure in the Serbia geographical segment rose Serbia achieved a trend reversal following several years of rising
only slightly by EUR 14 million to EUR 879 million. Loans to NPL ratios. The share of non-performing loans in total loans to
customers posted slightly more robust growth to EUR 588 mil- customers declined by 1.2 percentage points, to 14.1%. Essential-
lion (+EUR 26 million). With a share of 0.5% in total customer ly, this development was driven by a noticeable improvement in
loans, this segment was still only of relatively minor significance the quality of corporate loans. NPL coverage by risk provisions
for Erste Group. Despite a declining trend, the share of corporate excluding collateral was 76%.
loans in the total loan portfolio was still above average, at more
than 62%, compared with other markets in Central and Eastern

Commitment to society
Almost 200 years ago, the very founding concept of Erste hensive understanding of financial concepts and recent economic
österreichische Spar-Casse already embraced the idea of developments. Detailed knowledge of the range of financial
contributing to the common good. Erste Group has expanded its products offered by the bank is simply not enough. Erste Group’s
core activities from those of a traditional savings bank focused on employees have to be able to understand the bigger picture and to
retail lending and deposit-taking to include those of an advise customers to choose the appropriate financial products.
international bank providing financial services to all sectors of
the economy in its core markets. Unlike the operations of Erste Group is continually developing new products to support
investment banks or many other financial institutions, Erste people in managing their finances better, e.g. smart phone apps
Group’s business has always been firmly embedded in the real such as Quick Check or Fair Split. In addition, Erste Group is
economy. Customer savings deposits fund the loans for housing committed to ensuring that the financial products and services
construction or purchases or investments by companies. This is offered are transparent and easy to understand and meet the cus-
how Erste Group creates sustainable value for society. In tomers’ short- and long-term financial needs.
conducting its business, bearing corporate responsibility towards
its customers, employees, investors, local communities and A weekly series of already more than one hundred videos ex-
national economies is a defining feature of the bank. As one of plaining basic financial concepts and current economic questions
the leading providers of financial services in Central and Eastern in an easy-to-understand manner proved very successful. The
Europe, Erste Group is also an important employer, a customer of short three- to five-minute videos are publicly available in Ger-
– mostly local – suppliers and a tax payer. man and English on the bank’s website (www.erstebank.at/
finanzbildung/erwachsene) and on YouTube. They are recom-
FINANCIAL LITERACY mended by the Austrian Federal Ministry of Labour, Social Af-
fairs and Consumer Protection.
A good understanding of money and finance is of the utmost
importance, because it enables individuals and households to The bank engages in many activities for children and young
improve and secure their economic situation. Financial ignorance people. In Austria, the savings banks have been working closely
limits social, economic and cultural life, which might become a together with youth organisations and debt counsellors for many
risk to the individual but also creates problems for communities, years. Young adults with questions about financial issues or who
countries and society in general. Financial literacy is important need help are provided with advice. Employees of the savings
for creating equal opportunities, social inclusion and economic banks visit up to 40,000 children and youths every year at schools
well-being. to teach them how to handle money in a responsible manner.
Educational modules designed for specific age groups and school
Erste Group believes that knowledgeable and financially educat- grades were developed together with debt counselling experts.
ed customers are more likely to make sound appropriate financial Primary school pupils are taught the fundamentals of economic
decisions. Financially secure individuals and families will con- and monetary cycles, while the focus for young people is on
tribute positively to communities and foster economic growth and budgeting and debt prevention. The savings banks offer special-
development. This in turn supports sustainable economic devel- ised workshops on various subject areas for teachers.
opment in the region and has a positive effect on market stability.
The platform www.geldundso.at was developed together with
Therefore, Erste Group has been engaged in financial education youths. The website includes information on a wide range of
activities for many years. The main objectives of Erste Group’s issues relating to responsibility for one’s own finances. Special
financial education activities are to enable people of all ages to education kits for schools are provided that contain extensive
gain adequate skills and competencies to make informed and materials on current economic topics and how to deal with money.
appropriate financial decisions and to assure that the employees The materials were developed in co-operation with the Institute
of Erste Group have up-to-date knowledge as well as a compre- for Business Education of the Vienna University of Economics

57
and Business and Impulszentrum für Entrepreneurship-Education. family services in Austria. Additionally, Erste Bank Oesterreich
In the Czech Republic, the web platform www.dnesni-financni- has also been supporting the aid organisation lobby.16, which
svet.cz/cs/ (Today’s Financial World Programme) offers text- works to protect the right to education of unaccompanied young
books and tools for teachers and students. It even includes a refugees and give them access to education, employment and
financial literacy board game for schools. participation in social life.

Sparefroh TV is an animated video series about economics for Banca Comercială Română operates www.BursaBinelui.ro, a
primary school children produced by Erste Bank Oesterreich and platform for no-fee donations. Donors know that even small
the savings banks. The Sparefroh character explains economic donations fully benefit the selected projects of 200 small to medi-
principles in the context of the children’s own finances in four um-sized NGOs. Bursa Binelui again hosted Campionatul de
episodes. It is accompanied by teaching materials that were de- Bine (The Good Championship), a fundraising contest. Erste
signed in co-operation with the Austrian Federal Ministry of Bank Serbia supported around 90 different projects and initiatives
Education, Arts and Culture. All episodes are available in German in 2014. The bank continued to reward and support young, active,
and English on YouTube, www.facebook.com/sparefroh and talented and creative people who have achieved outstanding
www.sparefroh.at. results through a programme called Club SUPERSTE. Slovenská
sporiteľňa continued its support for projects that create new jobs
Within the scope of the MehrWERT sponsoring programme, an in sheltered workplaces and for organisations like Civic Associa-
exhibition on the topic of money was designed to deal with the tion Inkluzia that work with handicapped people. Every year,
basic concepts of finance and money matters. The travelling Christmas and Easter markets are organised at which employees
exhibition for the target group of children aged six to twelve of sheltered workplaces from all over Slovakia offer their prod-
years has been shown in renowned institutions in Vienna, ucts for sale to bank employees at bank premises. For the past six
Bratislava, Bucharest, Prague and Belgrade, and by the end of years, young people from children’s homes have obtained schol-
2014 it had already recorded 120,000 visitors. The Technical arships under a project called Vzdelávaním k úspechu (Success
Museum of Zagreb will be the next venue to host the exhibi- through Education).
tion in 2015.
Smile as a gift is a scholarship programme with the Association
SPONSORING of the Friends of Children from Children’s Homes supporting
studies at high schools and universities. The Česká spořitelna
For Erste Group, sponsoring is the voluntary promotion and Foundation is governed by the motto “We are with those from
support of institutions, initiatives and projects relating to social whom society turns away”. It supported 28 projects with people
welfare, culture and education. The bank also has a long tradition excluded for reasons of age, social status or mental handicap.
in supporting specific sports.Erste Group considers sponsoring as
an opportunity to pass on added value earned from business ART AND CULTURE
activities to society. The MehrWERT sponsoring programme of
Erste Bank Oesterreich shows Erste Group’s commitment to Erste Group supports and promotes partnerships between cultural
social responsibility and the values it considers worthy of support and social institutions with the aim of jointly developing ideas
beyond its business activities. and strategies for deepening the understanding and appreciation
of art. Erste Bank Oesterreich is the principal sponsor of Jeu-
SOCIAL ACTIVITIES nesse, which offers a broad concert programme covering classi-
cal, jazz, world and new music as well as children’s concerts. The
Erste Group’s long tradition of co-operation with established focus is on the promotion of young artists by giving them oppor-
local and international organisations reflects its commitment to tunities to perform professionally on stage as well as on the de-
the promotion of social welfare. The focus is on providing practi- velopment of new concepts for teaching music appreciation.
cal and swift assistance to people in difficult life situations and on A further goal of co-operation is to give socially disadvantaged
support for initiatives for the long-term personal development of persons a chance to experience music. Erste Group also works
disadvantaged people and the creation of new opportunities. with charitable social organisations such as Caritas to implement
specific activities for bringing music to people. In Slovakia,
Erste Bank Oesterreich has been a partner of Caritas for many Slovenská sporiteľňa is most visibly associated with the Bratisla-
years. The fight against poverty is a key priority within the wide va Jazz Days, but also provided support to the music festival Viva
range of joint aid projects. Erste Bank Oesterreich sponsored the musica!, to exhibitions held in a modern art museum, Danubiana,
annual domestic aid campaigns as well as campaigns in Eastern to the film festival Jedensvet (One World) as well as to five re-
Europe. It also continued its support for the youngcaritas.at gional theatres. Česká spořitelna is the most dedicated long-term
project. Since 2003, Erste Bank Oesterreich, the savings banks promoter of music in the Czech Republic. The portfolio includes
and s Bausparkasse have been sponsoring Hilfswerk Österreich, the biggest multi-genre festivals – Colours of Ostrava and United
one of the largest non-profit providers of health care, social and Islands. For the first time, the bank supported the Bohemia Jazz

Fest. Česká spořitelna is also a patron of Pražské jaro and Smeta- 2012 and is a scheme that matches employees who want to do-
nova Litomyšl, two festivals of classic music. nate their spare time and skills with currently 32 partner organisa-
tions. Time Bank has proved highly successful in providing short-
For the eleventh time, Erste Bank Oesterreich acted as the princi- term assistance when urgently required. Due to its success in the
pal sponsor of the Viennale, Austria’s largest international film Vienna area, many of the regional savings banks joined Time
festival. For the fourth time, Erste Bank Oesterreich awarded the Bank, enabling employees across Austria to volunteer their time
MehrWERT Film Prize to a film by an Austrian film director in their local communities. Some local banks added corporate
presented at the Viennale. volunteering to its executive development programme run by
Human Resources.
With the support of Erste Bank Oesterreich, selected designers
are offered an opportunity to work on projects as part of the The Good Deeds Bakery project of Banca Comercială Română
Vienna Design Week every year. In 2014, five projects with a was again organised as an internal competition that awards prizes
focus on “Social Design” were funded. Each year, Česká to suitable projects in selected eligible categories including edu-
spořitelna sponsors the prestigious Czech Grand Design award cation, social solidarity, the environment, health and animal
ceremony and Designblok, a festival of design and modern art. rights. In August 2014, at an initiative to help flood victims,
Banca Comercială Română employees donated items ranging
Kontakt, Erste Group’s art collection, concentrates on art from from clothes, toys, blankets, electronics and personal hygiene
Central, Eastern and Southeast Europe. The collection reflects the items to food for affected families.
political and historical transformation in Europe and the signifi-
cance of art against the backdrop of specific cultural, social and In 2014, Erste Bank Serbia organised several volunteering activi-
economic developments in the post-Communist countries. Erste ties and participated in some organised by partners. Volunteers
Bank Oesterreich acted again as a principal sponsor of Vien- refurbished for example an old people’s home, a kindergarten, an
nafair, an international art fair specialising in the CEE region, by elementary school, picnic areas and hiking paths. Most of the
enabling galleries from Central and Eastern Europe to participate. volunteering resources though were allocated to flooded areas
Erste Bank Croatia organised a well-known competition for where volunteers helped people whose houses had been ruined.
emerging artists and art students, called Erste fragments, for the
tenth time in 2014. The bank purchased the award-winning works Slovenská sporiteľňa cooperates with the Pontis Foundation,
of art and granted a cash prize. Additionally, one art student which established a network called Engage bringing together
received an annual scholarship, while a special award was con- firms active in corporate social responsibility activities and
ferred by visitors of the bank’s Facebook page. Many of the voluntary efforts. Employees took part in numerous voluntary
young artists who won awards in prior years have become re- activities aimed at the support of local communities. Erste Bank
nowned names in the art scene. Hungary participated in the Közös Lábos (Common Cooking Pot)
programme organised by Szimplakerti Háztáji Piac (Simple
Erste Bank Serbia continued to support local cultural and social Garden Home-grown Market) where employees prepared and
initiatives, including NGOs, across the country through its cultur- sold meals. The money raised was given to Szimbiózis Founda-
al programme Centrifuge. Since 2008, Erste Bank Hungary has tion (an initiative dealing with the integration of mentally disad-
been the sponsor of Művészetek Palotája (Palace of Arts), a high- vantaged people) and to HabitatPont (providing cheap construc-
ly recognised and acclaimed institution both in Hungary and tion material, tool rental and technical advice to some of the
internationally. In 2014, the bank supported a new initiative of the poorest communities in Hungary).
Liszt Ferenc Music Academy, three concerts with world-famous
conductors. Česká spořitelna contributes to the development of the Czech
non-profit sector by actively supporting the publicly beneficial
CORPORATE VOLUNTEERING volunteer work of its employees. Since 2007, employees have
been granted two working days off each year to volunteer as part
Erste Group facilitates, supports and encourages employees to of Česká spořitelna’s Charity Days programme.
actively contribute and volunteer. Donating money is not the only
possibility of supporting people, communities or non-profit or- More than 400 employees of Erste Bank Oesterreich and the
ganisations. Employees and managers of Erste Group prove their savings banks work on a voluntary basis at Zweite Sparkasse.
commitment by providing time and experience. People with no access to banking services can open an account
without an overdraft facility at Zweite Sparkasse. The accounts
Erste Group’s Austrian initiative Time Bank is based on the idea are offered in close co-operation with partners such as Caritas or
that personal commitment and practical assistance are required debt-counselling centres.
more often than funds. The Time Bank initiative was launched in

59
SPORTS Since 2003, Erste Bank Oesterreich has been the name-giving
main sponsor of the professional Austrian Ice Hockey League, the
Erste Group has been supporting amateur and professional sport- Austrian national ice hockey team as well as the local Vienna
ing events in Austria and Central Europe for many decades. Pro- Capitals team. To support young Austrian ice hockey players, two
jects are carried out in a spirit of close partnership with the organ- youth series – Erste Bank Young Stars League and Erste Bank
isers and hosts of these events. Ice hockey, running and tennis are Juniors League – were introduced.
given particular emphasis, as is the promotion of activities for
young athletes. For almost 40 years, Erste Bank Oesterreich and the savings
banks have supported the school leagues in soccer and volleyball.
In tennis, activities range from support for amateur initiatives This commitment represents the longest-standing sponsorship of
such as the BCR Tennis Partner Circuit in Romania to profes- young athletes in Austrian sports. With more than 1,000 schools
sional tennis. In 2014, Erste Bank Oesterreich was again the participating every year, these are the largest youth competitions
main, name-giving sponsor of Austria’s most important tennis in Austria.
tournament, the Erste Bank Open in Vienna.
If you are interested in the many other activities being pursued at
In 2014, Erste Group sponsored a large number of running Erste Group, you will find more information on the subsidiaries’
events, including many in support of social projects such as the websites in the respective local language and some also in English.
erste bank vienna night run in Austria, the Bratislava Kids Run in
Slovakia and the Homo si Tec Marathon in Croatia. Erste Bank
Sparkasse Running 2014 comprised more than 200 running
events and more than 150,000 participants dashing some million
kilometres through Austria. As Austria’s largest running initiative,
the Erste Bank Sparkasse Running community also maintains its
own online presence on Facebook.

Customers and suppliers

FOCUS ON CUSTOMER RELATIONS By implementing digital applications, Erste Group in 2014 took
another step closer to its customers to help them manage their
Erste Group puts customers and their interests at the centre of its financial affairs. Among these are, for example, mobile payment
business activities. Only banks that understand the financial applications for smartphones and the option to open accounts
needs of their customers can offer the right solutions at the right online on the web.
time. Special attention is devoted to the quality of products and
advisory services, as these are key factors for customer satisfac- Top priorities of product information remain transparency and
tion and, therefore, for building up and maintaining long-term easy-to-understand products and services, both in terms of tech-
customer relations. Erste Group strives to offer its customers nical details and language. Erste Bank Oesterreich is therefore
appropriate and understandable products and advisory services. continuing to expand its range of multilingual advisory and other
This includes constant efforts to keep service quality and products services in English, Turkish, Serbian, Croatian and Czech. Banca
aligned to customers’ needs and requirements and to recognise Comercială Română provides information on products and ser-
customers’ needs at an early stage to be able to offer the right vices in Hungarian.
solutions in time. Factors such as financial literacy and experi-
ence as well as the financial position and the risk appetite of the For partially sighted people, Erste Bank Oesterreich offers bank
individual customer are taken into account. The high standard of cards printed in braille, and each branch of Erste Bank as well as
quality aimed at in advisory services is guaranteed by the contin- each VIVA shop (where available) operates at least one cash
uous training of Erste Group’s employees. The focus of Erste dispenser equipped to provide audio instructions. Česká
Group is clearly on the relationship with the customer, not on the spořitelna has further increased the number of cash dispensers
transaction. designed for use by persons with impaired vision so that by now
more than one third of all machines boast this feature. The
ACCESSIBILITY number of branches with barrier-free access has risen further
across Erste Group. Erste Bank Hungary has already remodelled
Customer centricity also means providing customers with access more than 50% of its branches, and access is likewise barrier-free
to banking services through many different channels. Customer at all new or remodelled branches of Erste Bank Serbia. In addi-
expectations of a modern bank are subject to constant change. tion, Erste Bank Serbia offers special advisory services to people
Digital channels have become as natural to many customers as who are deaf or hard of hearing.
barrier-free access to branches. Today, many customers appreci-
ate being able to conduct their banking transactions at any time, As part of the Barrier-free Bank initiative, Česká spořitelna certi-
from anywhere, via their smartphones or on the internet. fied another 21 branches in 2014. It is the first bank in the Czech
Republic that has its branches certified as barrier-free and pro-
Erste Group believes that, despite technological progress, person- vides the required training to its staff. In 26 branches, people with
al contact with customers remains important. Customers of Erste impaired hearing are offered the online transcription service
Group who require complex long-term financial services expect www.escribecz. For these efforts, Česká spořitelna was awarded
sound advice. Erste Group therefore invests in new concepts, the title Barrier-free Bank 2014 in the Fincentrum Bank of the
refurbishes its branches and meets customers’ requirements and Year 2014 competition.
expectations, also by extending banking hours. The combination
of digital channels and traditional sales approaches enables cus- The websites of the local banks of Erste Group are continuously
tomer relationship managers to explore customer needs even adapted. In this respect, the focus is on accessibility, usability and
more proactively. This is why the modern branch network of easy–to-understand content. The websites of the holding, Erste
Erste Group remains a key element of its banking business. Bank Oesterreich, Erste Bank Serbia, Erste Bank Croatia and Ban-
ca Comercială Română feature responsive design, which means

61
that the website adapts automatically to screen size and resolution experience Erste Group is market leader in retail in Slovakia,
for optimum display. Croatia and Serbia.

75% of bank cards have been successfully set up for contactless In private banking and asset management, Erste Group further
payment at POS terminals. 9% of the cards are already being used strengthened its position in Central Europe despite the persistent
for contactless payment. This is significantly above the market low-interest-rate environment. The focus of the services offered
average of 5%. At year-end 2014, Erste Group started an initia- was on long-term wealth accumulation, estate planning, asset
tive to encourage the increased use of prepaid cards. These are management and foundation management. In addition, new
cards that can be loaded with money like prepaid phone cards, for products featuring direct investments in real estate, gold and
example. The amount that has been loaded can be used for mak- diamonds were developed. Besides the continuing strengthening
ing payments at POS terminals. of the market positions of Erste Group and its local banking
subsidiaries in Central and Eastern Europe, the main priority in
INNOVATION AND PRODUCT QUALITY the coming two years will be the implementation of the new
regulatory requirements under MiFID II. Erste Private Banking
Further to developing new products, the aim is to identify and will focus on offering its customers advisory excellence and
realise potential for improvement. Assuring the high quality of transparency. With a view to MiFID II, Erste Group developed
the financial products and services offered is an essential element an up-to-date training curriculum for Private Banking relation-
in product development. The Product Approval Process imple- ship managers in 2014.
mented for newly developed products in 2013 has by now be-
come well-established. To meet customer expectations as well as The awards won by Erste Group banking subsidiaries in Central
Erste Group’s own quality standards, all new products are re- and Eastern Europe are proof of the high degree of customer
viewed for marketability prior to their launch. Standardisation of satisfaction. At the same time, the bank regards it as its duty to
processes, documentation rules and decision-making bodies steadily strive to maintain the status of being one of the best and
guarantee consistent product standards and product approval most trustworthy banks for retail and corporate customers. The
across the Group. fact that all banking subsidiaries of Erste Group operate under a
brand name of very high recognition value and trustworthiness
In 2014, newly developed financing, insurance and card products represents a significant competitive advantage in the banking
were reviewed under the Product Approval Process before being business, which has manifested itself, among other things, in
launched in the market. steady inflows of deposits and funds under management at times
of economic uncertainty.
CUSTOMER SATISFACTION
SUSTAINABLE INVESTMENT
High levels of customer satisfaction and thus customer loyalty
secure the bank’s long-term success. The quality of customer Erste Asset Management was an early mover in anticipating the
relations ultimately depends on the customers’ experiences in their growing needs of investors to increasingly emphasise environmen-
day-to-day dealings with the bank. Such experiences may be direct tal and socio-ethical aspects in their investment decisions. Over
or indirect, significant or less significant, conscious or subcon- the past decade, Erste Group has developed the most diverse
scious. Customer satisfaction is evaluated by means of representa- portfolio of sustainable funds in Austria. Since 2012, all asset
tive and extensive surveys conducted across all markets of Erste management entities of Erste Group have been operating under the
Group. umbrella of Erste Asset Management UN PRI Signatories and
have hence committed themselves to complying with the UN
On this basis, the Customer Experience Index (CXI) is calculated, Principles of Responsible Investment (PRI). The decision not to
which assesses the quality of customer relationships and classifies allow any actively managed mutual fund to invest in companies
them in five categories. The CXI is also used to determine the engaged in controversial weapons such as land mines, nuclear
positioning as well as the strengths and weaknesses of the local weapons or cluster bombs had already been taken in 2011. By
banks of Erste Group relative to the top three competitors in each signing the Bangladesh Memorandum in 2013, Erste Asset Man-
country. Furthermore, the CXI is a bonus criterion for both the agement agreed to refrain from investments in companies and
management board of Erste Group and the management board subcontractors of such companies that commit violations of labour
members of the local banks. laws or human rights in their countries’ textile industry. Further-
more, funds are not allowed to engage in food speculation.
With respect to customer satisfaction, Erste Group held its
overall position across all markets and segments in 2014. The Erste Asset Management is an acknowledged and leading pro-
results in Slovakia and Hungary improved in comparison to vider of sustainable investment funds in Austria and in the CEE
those of Erste Group’s top competitors. In terms of customer region. In 2014, Erste Asset Management managed assets worth
EUR 53.8 billion. Its subsidiary Erste-Sparinvest KAG has

gained market leadership in Austria. Actively managed funds branches were opened. The Good.bee Credit network comprises
that are screened for prohibited weapons amounted to approx. 17 branches and serves 40 districts in Romania. At year-end
EUR 25 billion. The total volume of assets managed by sustain- 2014, almost 5,000 loans with a total volume of EUR 36 million
able investment funds reached EUR 3.7 billion in 2014, up 62% had been granted.
versus 2013.
In 2014, Erste Bank Serbia and the Serbian National Employment
In 2014, sustainability experts of Erste Asset Management man- Agency continued supERSTEp, a programme designed to support
aged 26 investment funds in the categories public funds and unemployed young people and start-ups with capital and training
special funds/externally mandated portfolios. The managed public to help them set up or continue developing their own businesses.
funds comprised six bond funds, five regional stock funds, one Erste Bank Croatia adapted its existing micro-lending programme
micro-finance fund of funds, two theme funds for climate protec- in 2014 to include micro loans for the start-ups of small business-
tion and the environment (the latter two funds were managed es as a standard offering. Its implementation is planned for 2015.
jointly with WWF Austria) as well as one asset allocation fund of
funds. 2014 was characterised by strong investor demand for Slovenská sporiteľňa supports micro-entrepreneurs with the aim
funds that invest in emerging market corporate bonds globally, in of creating and securing jobs. Apart from providing financing in
conformity with sustainability rules. the start-up phase, the focus is also on the transfer of business
management expertise. The initiative was started in three regions
As regards Engagement and Interaction with Investees/Business in 2014 and is set for nation-wide roll-out in 2015. For its efforts,
Partners/Clients, global companies were contacted on various Erste Bank Hungary received the Hungarian Donors’ Forum’s
subject matters, with the key topics being the automobile indus- award for the most innovative micro-financing programme for the
try/CO2 emissions, major sports events, tourism, the oil industry third consecutive time.
and luxury goods. Debates were held with external sustainability
experts and analysts, and questions on sustainability were In Austria, the micro-finance initiative was continued in co-
addressed to key representatives of relevant industries. In 2014, operation with the Federal Ministry of Labour, Social Affairs and
international co-operation (e.g. UN PRI) was intensified under Consumer Protection for the fifth consecutive year. Under this
the heading of Engagement in order to be able to approach com- initiative, Erste Bank Oesterreich offers start-up loans to people
panies from a position of greater strength. who were previously jobless or threatened by unemployment. So
far, more than 400 start-ups have received funding under this
The establishment of an ethics board – the Erste Responsible programme from savings banks and Austria Wirtschaftsservice.
Advisory Board – was approved in 2014. The EAM SRI Universe Until the end of September 2014, loans were also guaranteed by
Report is a monthly publication that covers the investment uni- the European Investment Fund. Under this guarantee programme,
verse for the sustainability funds. A guideline issued for the entire Erste Bank Oesterreich was the exclusive partner of the European
ERSTE RESPONSIBLE product range lays down Erste Asset Investment Fund in Austria. A study on the social impact of this
Management’s principles and views on sustainability. programme was conducted with micro-loan customers. It was
scheduled for completion in early 2015.
FINANCIAL INCLUSION
Social enterprise financing
Offering simple banking services to the otherwise unbanked part Social entrepreneurship means initiatives of private individuals,
of the population was among the main reasons behind the founda- organisations or networks that pursue charitable purposes through
tion of Erste österreichische Spar-Casse in 1819. For a variety of entrepreneurial activities. Besides the areas of work, health and
reasons, even today some segments of the population do not have education, social entrepreneurship also includes the environment
access to financial services of commercial banks. and culture. These initiatives offer products and services as well
as employment opportunities that satisfy fundamental needs in
In 2014, the main focus of financial inclusion was again on micro society or offer alternative approaches that are socially and eco-
banking and social enterprise financing. In addition, local net- logically more agreeable.
works promote the training of social entrepreneurs by helping
them acquire the expertise and the skills required for running The local banks of Erste Group stepped up their activities for
their businesses successfully. social enterprises in 2014, which resulted in growing loan portfo-
lios especially in Austria, the Czech Republic and Hungary.
Micro financing
All local banks of Erste Group offer micro-financing schemes Erste Bank Oesterreich, for example, supports social enterprise
customised for their markets. In Romania, Good.bee Credit offers customers with financing even after the start-up phase and also
self-employed persons and small businesses development- offers business management consulting services, including access
oriented financing products and supports regional economic to business angels (e.g. Ideas meet money or the Social Impact
development by providing micro loans. In 2014, three new Hub’s Investment ready programme in Vienna). The For Best

63
Students initiative supports students by providing the financial SUPPLY CHAIN
means to cover tuition fees, living costs, etc. In co-operation with
debt counselling services, the initiative called betreute Konten The focus of Erste Group’s supply chain is on indirect expenses
(assisted accounts) was developed further and has proved to be an that support the group’s core business. The total amount spent on
instrument that may help many vulnerable people to retain their companies outside Erste Group was slightly below
full legal capacity. It also helps to prevent homelessness. A care EUR 1 billion, and the majority of it is linked to services, opera-
card has been developed jointly with organisations offering care tions and marketing (amounting to 40% of the total amount spent),
services. This card enables home care services to spend small followed by IT (36%) and facility management (22%). Out of a
amounts on purchases without needing access to the client’s total of approximately 19,000 suppliers on group level, 80% of the
account. This facilitates the management of finances for care total procurement expenses relate to 628 suppliers. 88.8% of the
organisations. suppliers (reflecting 95,4% of the expenses) were located in the
European Union, highlighting Erste Group’s focus on its markets in
Česká spořitelna also supports social enterprises with a broad CEE. Additional 10.6% were located in other European countries,
range of initiatives, including in particular special loan offers and the rest were based in North America (0.5%) and Asia (0.1%).
the training programmes of the Česká spořitelna Social Enterprise
Academy. In addition, Česká spořitelna offers the Social Impact Only 13.1% of Erste Group’s purchases are made across borders.
Award, an award for social and innovative ideas proposed by The dominance of local procurement positively impacts the econ-
students. omy in Erste Group’s core countries.

Similar social entrepreneurship initiatives have also been imple- SUPPLIER SELECTION PROCESS
mented by the local banking subsidiaries of Erste Group.
To ensure that Erste Group’s suppliers meet the group’s corporate
SUPPLIERS responsibility standards, audit questionnaires are requested for
any purchase of more than EUR 100,000, and regular supplier
Erste Group views suppliers as partners in shaping its business to
business reviews are performed.
be more sustainable. Therefore, procurement decisions include
assessments of the suppliers’ social and environmental impacts.
The supplier audit questionnaire was integrated into EGP’s IT
system in February 2014. This operational tool allows timely
Covering the entire supply chain, Erste Group Procurement
assessment and risk identification before entering into contracts
(EGP) is the sourcing and procurement company of Erste Group.
with suppliers.
Its basic objective is to ensure clear and fair sourcing and pro-
curement activities and contracts. Meeting all the needs of Erste
The results of the audits, which are complemented by supporting
Group entities for goods and services in time and in accordance
information material, form the basis for the supplier evaluation in
with their particular quality requirements, at the best possible
procurement. The results of the evaluation are aggregated in a
terms (e.g. price, terms of payment, guarantees and liability),
supplier scorecard.
purchased locally or across borders, therefore represents a key
element. Erste Group’s suppliers are obliged to meet defined
The audit and evaluation has to be completed, otherwise the IT
standards in the areas of business ethics, environmental protection
application inhibits any further processing of the respective sup-
and human rights.
plier. Any non-compliance with the supplier code of conduct is
brought before a committee, which decides – if required – upon
Suppliers of materials, equipment and services, selected as group
further measures. In addition to the initial evaluation, regular
partners, are expected to:
supplier business reviews are performed, covering the most im-
_ comply with national or local laws, decrees and regulations
portant or most risk-associated suppliers.
_ fulfil all their legal obligations regarding the health and safety
of their employees and their contractors
_ comply determinedly with environmental legislation
_ respect and implement the following basic principles of cor-
porate social responsibility
_ protection of fundamental human and labour rights
_ protection of the environment
_ promotion of health & safety
_ engagement against corruption

Environmental aspects Social aspects

Based on Erste Group’s efforts towards environmental protection, As the supplier selection process includes social aspects as well,
environmental aspects are part of EGP’s supplier selection pro- the supplier audit questionnaire also comprises specific topics
cess. The supplier audit questionnaire comprises specific topics such as the
such as the _ effective abolition of child labour
_ existence of an environmental management system _ elimination of all forms of forced and compulsory labour
_ participation in the Carbon Disclosure Project _ elimination of discrimination in respect of employment
_ existence of a written environmental policy _ freedom of association and the right to collective bargaining
_ method of measuring CO2 emissions _ reasonable working hours and fair remuneration
_ existence of environmental targets _ health protection
_ information on fines or charges for environmental infringe- _ occupational health and safety
ments _ job restructuring
_ description of the supply chain of the supplier _ remuneration
_ fair working conditions
For the procuring of goods, the audit questionnaire is extended by _ other social criteria in the supply chain
questions on potentially hazardous chemicals, recycling capabili-
ties of the product, the return policy at the end of the product’s 13.5% of the suppliers of new and renewed contracts were audit-
useful life and ENERGY STAR or similar standards. ed according to both labour practice standards and human rights
criteria in 2014. No supplier was subject to specific labour prac-
13.5% of the suppliers of new and renewed contracts were audited tice or human rights impact assessments beyond the standard
according to environmental standards in 2014. No supplier was audit questionnaire nor was any supplier identified as having had
subject to a specific environmental impact assessment beyond the significant actual or potentially negative labour practice or human
standard audit questionnaire nor was any supplier identified as rights impacts. There were no actual and potentially negative
having had significant actual and potentially negative environ- labour practice or human rights impacts identified in the supply
mental impacts. No actual and potentially negative environmental chain, and no supplier contract had to be terminated as a result of
impacts were identified in the supply chain. Finally, no supplier significant actual and potentially negative labour practice or
contract had to be terminated as a result of significant actual and human rights impacts.
potentially negative environmental impacts.
Furthermore, no supplier was subject to violation of or put at risk
the right to exercise freedom of association and collective bar-
gaining, nor was any supplier subject to having a significant risk
of child labour or young workers exposed to hazardous work, and
nor was any supplier subject to having had a significant risk of
incidents of forced or compulsory labour.

65
Employees
Retaining experienced and committed employees is fundamental As a result, Erste Group analysed diversity issues further. The
to the long-term success of every company. Erste Group – as one two main points of concern were transparency and the low num-
of the largest employers in the region – therefore aims to maintain ber of women in executive positions.
its position as an employer of choice in Central and Eastern
Europe; it encourages its employees to continually strive for pro- Erste Group places a strong emphasis on ensuring that its employ-
fessional and personal development and offers equal opportunities ees are provided with a safe and healthy work environment. As an
to everyone in the organisation. Competence building and devel- employer of choice, Erste Group recognises that a satisfying work-
oping performance-oriented teams are cornerstones of the strategy. life balance enhances a stable work environment. Employees are
also encouraged to give back to the society and communities in
Erste Group focuses on operational excellence, market- which the bank operates, by volunteering their time and sharing
competitive reward and recognition and attracting and retaining their knowledge and expertise.
the best people. The leadership culture is engaging and empower-
ing and fosters a high-performing and inclusive work environ- DIVERSITY AND INCLUSION
ment, where every employee has equal opportunities to develop
and advance. Companies that are committed to diversity and inclusion benefit
from more engaged employees, a better brand image and higher
Erste Group reshaped its people management processes and customer satisfaction. Innovation and sustainable success can
strategies to better reflect the changing demands of the business only be achieved by leveraging the skills and abilities of individ-
environment. The pillars for people management are: uals with a broad range of educational backgrounds, professional
_ competence and other interests, work experience, life experience and cultural
_ culture perspectives. Erste Group sees diversity as a vital part of its
_ competitiveness. business strategy in attracting and retaining talented employees,
and developing and offering the right products and services for a
Erste Group considers employee engagement as a vital element for diverse client base. The appointment of a Group Diversity Man-
the success of the bank. Systematic and regular group-wide em- ager underlines the importance of diversity for Erste Group. Erste
ployee engagement surveys allow employees to give feedback on Group’s Diversity Agenda and its activities and initiatives have
different aspects of their working experience. In 2013, more than the support of the management board.
100 companies across Erste Group participated. The main focus in
2014 was on analysing and working with the results of the survey. Erste Group provides a work environment free of discrimination
An action plan with initiatives and follow-up measures to tackle and harassment, values the work of each and every person, and
the identified issues and to reach defined goals was devised. The treats the employees as unique individuals, regardless of gender,
main measures were planned and implemented locally – based on age, disability, marital status, sexual orientation, skin colour, reli-
local results. The next survey is planned for 2015. gious or political affiliation, ethnic background, nationality or any
other aspect unrelated to their employment. Erste Group is firmly
The most important topics singled out by employees were: committed to creating conditions for greater diversity in decision-
_ diversity: specifically the topic of equal opportunity, making bodies as well as a work environment where each and
closing the pay gap every employee has equal opportunities.
_ strategy: clearer communication of the strategy and vision
of Erste Group.

Erste Group monitors and reports the following diversity indica- 2014, WoMen Business joined forces with Erste Women’s Hub,
tors: gender balance on all levels including managerial positions, which was launched in July 2014, and organised two networking
gender representation in talent programmes and in the succession business breakfasts which were open to all female employees in
pools, age distribution across the group, the share of employees the holding, Erste Bank Oesterreich and the subsidiaries in Aus-
on parental leave by gender, part-time/flexible working arrange- tria and attracted a total of 220 participants.
ments by gender, and the average training days per employee by
gender. Other monitored areas include gender representation in The goal of Erste Women’s Hub is to create a network that is driv-
recruitment to managerial positions and the gender pay gap. A en by its members and adds value to the business. Three working
comprehensive “Erste Group Diversity Fact Sheet” is updated on groups with specific goals and initiatives were established: Women
an annual basis. – Careers – Opportunities; Women Financial Lifetime and Erste
World (organisational culture).
Česká spořitelna launched its comprehensive Diversity and Inclu-
sion Programme (“Diversitas”) back in 2008. The programme has In the 2013 Group-wide employee engagement survey, only 48%
focused on all aspects of diversity management, such as support- of the employees agreed that Erste Group provides equal
ing the career advancement of women through mentoring, coach- opportunities, which is significantly below the external
ing, leadership development and networking, offering flexible benchmark. To better assess and address the situation, some 3,000
work arrangements and a parental support programme as well as employees were asked on their perceptions of equal opportunities
age management and an intergenerational dialogue. The latter is at Erste Group. Roughly 75% of the respondents rated
especially important as over 8% of the workforce is over 50. In Erste Group positively for providing equal opportunities based on
2014, Česká spořitelna focused on special training and develop- religion, race/ethnicity and nationality. Areas where respondents
ment activities for employees over 50, e.g. workshops, English perceive Erste Group as offering comparably fewer equal
lessons and intergenerational topics. A reverse mentoring pro- opportunities are seniority, age, part-time/full-time employment
gramme (for employees older than 50 and younger than 30) will and position/hierarchy. Women see much less commitment by
start in 2015. Erste Group to gender and family issues than their male
colleagues. An overwhelming majority felt that Erste Group
Attracting and retaining handicapped employees was another needs to be more transparent - not only when it comes to remu-
priority at Česká spořitelna. Česká spořitelna continued to offer neration, but also when it comes to promotions and filling
internships for handicapped people and provided more ergonomic managerial positions.
working conditions. Česká spořitelna ranked second both in the
2014 Company of the Year: Equal Opportunities Awards and the At the beginning of 2014, Erste Group set a group-wide internal
TOP Responsible Company CSR Awards. target of having 35% women in top management and on superviso-
ry boards by 2019. Currently there are 30% women in top man-
Erste Bank Oesterreich launched the WoMen Business programme agement, which is a 4 percentage point increase over 2013. In 2014,
in 2011 to achieve a better gender balance at management levels. Erste Group Bank appointed two further female board minus 1
This ambitious initiative covers a range of measures to support managers, increasing the corresponding proportion to 18.8% from
female leadership, talent development (including for women over 12.5% at the beginning of 2013. Two additional female members
40) and customer relationships. In 2014, Erste Bank Oesterreich were appointed to Erste Group’s supervisory board in 2014, raising
continued to support measures to increase the number of women the total share of women on supervisory boards group-wide to 23%
in management positions, and has set an internal target of 40% by compared with 16% at the beginning of 2013. To increase the
2017. At the end of 2014, the figure stood at 33%. number of women in senior management positions, Erste Group
aims for a greater gender and age balance in its talent pools. The
Networking events, such as the Securities Dialogue for Women, latest international talent pool is made up of almost 40% women.
give women the opportunity to discuss topics of relevance. In

67
Erste Group signed the Austrian Charta der Vielfalt (Diversity The Erste Leadership Evolution Centre was introduced in 2014. It
Charter) in September 2014. By signing the charter, Erste Group structures group-wide leadership development offerings. The
expresses its appreciation and the importance of diversity in the Group Leadership Development Programme is Erste Group’s
group, as well as the commitment to carry out measures to pro- training programme for members of the key position pool. Erste
mote diversity internally and externally. Erste Group joined more Group’s Talent Management has launched three gender-balanced
than 130 Austrian and global companies operating in Austria and talent pools. The creation of these talent pools provides transpar-
associates of the European Diversity Charter initiative platform. ency and a perspective for Erste Group’s talents, and serves as the
Česká spořitelna has also signed its national diversity charter. group’s talent pipeline. The newly implemented International
Talent Pool targets high-performing employees and includes
The diversity priorities for 2015 are the following: junior professionals up to board minus 3 management levels. The
_ develop three new initiatives within the framework of Erste next level is represented by the already existing Key Positions
Women’s Hub Pool, which aims at preparing managerial talents for roles at
_ increase the number of women in the international talent pool division head level. A new Executive Pool, which identifies and
by at least 5 percentage points develops top executive level talent, has been introduced.
_ nominate at least one new female supervisory board member
and increase the number of women in top management to 32% Erste Group also offers an annual Graduate Programme for uni-
_ establish a group-wide diversity policy framework versity graduates. The aim of the programme is to attract top
_ continue to encourage local diversity initiatives across the group graduates from the external market and provide fundamental
_ take necessary steps to close the gender pay gap by 2025. banking and risk management knowledge.

LEARNING, TALENT MANAGEMENT, In 2014, each employee of Erste Group had on average 3.4 train-
LEADERSHIP AND ing days for professional development. In addition, Erste Group
COMPETENCY DEVELOPMENT had an average of 4.04 training days per participant in all group-
wide learning and training activities offered by Erste School. The
Erste Group regards supporting the development of its employees’ total group-wide training budget amounted to EUR 13.6 million
professional and social skills as a top priority to ensure that the (i.e. approx. EUR 597 on average per employee).
employees are well prepared to act professionally and in a socially
responsible manner. Learning, talent management and leadership For 2015, it is planned to focus on mobilising identified talents
development are dedicated to supporting the general 2015 Human within the Group, improving cross-pool co-operation, complet-
Resources strategy for Erste Group. Erste Group continuously ing the Erste Leadership Evolution Centre offering and finalising
develops and aligns group-wide training programmes for senior the functional competencies definition.
experts and managers. In 2014, the focus was on implementing the
new group-wide talent management landscape, improving leader- REMUNERATION AND
ship development and defining the functional competencies need- PEOPLE PERFORMANCE MANAGEMENT
ed across Erste Group.
Across Erste Group, the focus of the remuneration policy was on
Erste School of Banking and Finance, the group’s centre of an appropriate balance in rewarding the performance, competence
competence for learning and development activities, offers exec- and level of responsibility of the employees and keeping a sus-
utive training and comprises open enrolment courses including tainable personnel cost base. Erste Group’s reward system is
personal development training courses as well as programmes consistent, competitive and transparent. The remuneration policy
for specific business areas. Developed in co-operation with the aims to
respective business lines, these courses provide expert _ create an environment where employees can perform, develop
knowledge and assure a uniform understanding of standards and and be engaged
processes at different levels. _ reward to attract and retain competence and performance
_ be cost-competitive and cost-flexible for a sustainable business
To complement the existing core competencies (cooperate as a _ support leadership and employee behaviour that creates an
team, act responsibly, be accountable, foster growth, excel in engaging and unique customer experience.
execution), five major categories of functional competencies have
been identified: formal education, specific functional know-how, The regulatory pressure on variable pay has had an impact on the
IT literacy, language skills and relevant experience. In 2014, the average fixed salary level in the Czech Republic and Slovakia.
focus was on the financial and risk management divisions of the Overall, Erste Group has been able to keep its fix wages flat,
holding. It is planned to harmonise and align these definitions while maintaining cost flexibility in rewarding performance.
group-wide. After identification of the functional competencies for Erste Group offers competitive, but not market leading, compen-
the various positions, managers will agree with their employees on sation packages. The local banks’ remuneration practices remain
measures to close the identified competency gaps. well-balanced with the business line needs and local country pay

practices. The remuneration schemes are designed according to regulations) and 60% of variable compensation is deferred when
the CRD IV requirements on remuneration, ESMA guidelines exceeding EUR 150,000. The total amount of variable compensa-
(European Securities and Markets Authority) and local bank laws. tion is split into 50% cash and 50% instruments. Instruments are
retained for at least one year; in some countries, the retention
The fixed salary is the core component of any employee’s salary period is longer due to regulatory requirements.
and is based on the job complexity, individual contributions, re-
sponsibility and local market conditions. The fixed salary repre- The variable compensation is subject to appropriate ex-ante and
sents a sufficiently high proportion of the total remuneration to ex-post risk adjustment measures. Both of them comprise quantita-
allow the operation of a flexible and variable remuneration policy. tive and qualitative parameters. Erste Group believes that this risk-
The total remuneration is balanced in such a way that it is linked to adjusted assessment represents a strong governance mechanism.
sustainability and does not promote excessive risk-taking. The
variable salary component may be offered to all employees. Award- In 2015, Erste Group plans to continue with the remuneration
ing a variable salary is based on company, business line and indi- strategy set forward in 2012 to continue to create an environment
vidual performance and also reflects local country practices. On all where performance (target setting and evaluation) and develop-
these levels, Erste Group uses a balance between financial, business ment (career, employability) are fully integrated in the bank’s
growth, risk, customer and cost indicators. The overall performance reward and promotion decisions. A group-wide core competency
evaluation also includes the employee’s behaviour and competence. model has been established that sets the framework for the core
Commission-based schemes are offered to selected employees behavioral aspects for every employee.
working in the retail business line and are based on company,
business line and individual performance. Pension and insurance HEALTH, SAFETY & WORK-LIFE BALANCE
schemes aim to ensure that employees have an appropriate standard
of living after retirement as well as personal insurance during The workplace is the centre for health promotion. It offers an
employment. Pension and insurance provisions are according to ideal setting and infrastructure to support and promote health
local law, regulation and market practice. Benefits are provided as a issues to large groups of people, thus making occupational health
means to stimulate the well-being in the work environment and to an important contributor to public health.
support an appropriate work-life balance. Examples of benefits are
flexible working time, study leave, parental leave and the health Erste Group is committed to a proactive approach towards helping
centre expertise. its employees to identify and manage health risks. Therefore, a
multi-professional team of occupational physicians, industrial
The variable component for material risk takers is designed ac- psychologists and physiotherapists assists Erste Group’s employees
cording to the respective local capital and ESMA guidelines for in any matters of health and well-being. The managerial importance
remuneration and consists, in general, of a cash and non-cash part. of the topic of health is also supported by a direct reporting line
The non-cash instrument is in most companies across Erste Group from the health centre to the management board. In Austria, thanks
the phantom share. The condition of pay-out of variable salary and to Erste Group’s medical and psychological support programme,
any deferred component to material risk takers is linked to mini- the health centre enjoys great popularity with an increasing number
mum profitability criteria as approved by the supervisory board. of employees. In 2014, employees in Austria contacted the health
The Long-Term Incentive plan (LTI) is offered only to Erste centre 15,883 times, and a total of about 7,000 employees in Aus-
Group’s management board. The LTI is linked to the long-term tria were assisted by the health centre.
competitive performance of Erste Group. The last LTI plan is from
2010. Since then, no new LTI plans have been granted. Besides complying with legal requirements of the Austrian Em-
ployee Act (including the evaluation of the psychological strain of
The respective group and local remuneration policies and execu- every single workplace), the health centre is a model of good
tion are annually evaluated to ensure that remuneration practices practice in prevention of disease: focusing on risk factors (e.g.
are compliant with respective international and national regula- prevention of heart disease and stroke) or on changing personal
tions. The governance principles of remuneration for executives health practices and behavioural patterns (e.g. smoking and diet),
are outlined in the remuneration policy. The policy and the execu- employees are provided with a broad range of assistance, such as
tion of the remuneration practices is overseen and monitored by medical check-ups, screening of the carotid artery for stroke
the remuneration committee of the supervisory board. The remu- prevention, back therapy training, relaxation techniques and nutri-
neration committee provides an independent view on compensa- tional consulting.
tion practices and consulted an external advisor in 2014.
All of Erste Group’s health-related activities were evaluated and
For all executives, the variable compensation is capped at 100% of again rewarded with the Seal of Quality for Health Promotion by
the fixed salary. The remuneration committee has determined that the Austrian Ministry of Health (2012 – 2014).
40% of variable compensation exceeding EUR 60,000 is deferred
over a period of three to five years (depending on local country

69
In co-operation with Erste Group’s health insurance partner, an management contract was signed to accept an obligation on this
analysis of sickness absence rates of Erste Group’s employees topic. This programme clearly defines responsibilities of employ-
due to all relevant diagnoses of the service sector was conducted. ees and managers in the process of resuming work after a longer
It shows that within the last few years, the sickness rate, due to period of sick leave and is supported and accompanied by physi-
both mental and musculoskeletal diseases has decreased cians and psychologists of the health centre. According to this
significantly. Erste Group, therefore, received a Model of Good agreement, employees can reduce their work time factor or operat-
Practice reward from the European Network of Workplace Health ing procedures up to a maximum of two months on full pay. Erste
Promotion. Group is the first company in Austria that implemented this sys-
tem in close collaboration with the Austrian Medical Association,
The World Health Organisation recognises mental health as a top Safety Inspection and Federal Ministry of Labour, Social Affairs
priority. Mental health problems are among the most important and Consumer Protection.
contributors to the burden of disease and disability worldwide
(five of the ten leading causes of disability worldwide are mental Respecting and promoting work-life balance among its employ-
health problems). In 2013, Erste Group started to place a more ees has been a long-standing priority of Erste Group. Erste Bank
intense and special focus both on the prevention of psychosocial Oesterreich offers a wide variety of family-friendly measures and
diseases and on reintegration of employees after such a disease – evaluates them on a regular basis in order to ensure that they truly
with a dedicated project to reintegrate employees after longer meet the employees’ needs. These measures include flexible work
periods of sick leave, which attracted a lot of media attention in arrangements, short sabbaticals, regular meetings for employees
Austria. Besides person-focused interventions (training for man- on maternity/parental leave, a work-life centre focusing on work-
agers, promotion of good mental health practices, and providing life balance issues and a Family and Women’s Committee to
tools for recognition and early identification of mental health prepare initiatives and resolutions for the promotion of equal
problems), Erste Group also involved employees, management opportunities to be discussed with the management board. The
and further stakeholders to integrate health promoting policies, Family and Women’s Committee acts as a communication plat-
systems and practices in their daily life. In January 2014, a labour- form and lobby for all employees.

Staff indicators *

Share of female part- Share of male part-

Share of part-time time staff from total time staff from total Share of executive
Share of female staff staff part-time workforce male workforce positions
2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
Austria 55.1% 53.1% 27.5% 25.2% 86.9% 88.3% 8.0% 6.3% 1.5% 1.4%
Czech Republic 71.4% 74.5% 8.6% 8.8% 94.0% 94.1% 1.8% 2.0% 0.5% 0.5%
Slovakia 72.0% 72.5% 0.4% 0.6% 89.5% 83.3% 0.3% 0.3% 1.0% 1.1%
Hungary 63.8% 65.7% 2.4% 1.3% 72.7% 82.9% 1.8% 0.7% 1.4% 1.4%
Croatia 69.2% 68.9% 0.9% 1.2% 100.0% 83.3% 0.0% 0.6% 2.5% 2.6%
Serbia 70.7% 71.3% 0.1% 0.1% 0.0% 0.0% 0.3% 0.4% 2.4% 1.7%
Romania 71.2% 70.9% 5.6% 5.0% 82.0% 84.5% 3.5% 2.7% 0.9% 1.1%

Share of women in Average number of

Other managerial Share of women in other managerial sick leave days per Number of employees
positions executive positions positions employee with health disability
2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
Austria 8.2% 8.2% 20.9% 15.9% 30.8% 28.0% 7.8 7.8 112 102
Czech Republic 5.6% 4.5% 25.5% 26.9% 39.5% 35.0% 5.2 5.4 107 73
Slovakia 8.4% 8.5% 27.9% 28.3% 55.5% 54.6% 7.1 7.3 82 65
Hungary 12.4% 12.6% 23.7% 25.0% 51.0% 53.5% 6.9 6.0 6 6
Croatia 12.8% 13.4% 35.8% 38.5% 56.8% 58.2% 5.3 4.0 22 2
Serbia 14.3% 16.2% 37.5% 58.8% 55.9% 49.7% 5.3 6.1 2 0
Romania 6.8% 6.5% 41.5% 39.7% 55.8% 55.5% 7.0 8.2 18 23

Turnover rate <30 yrs 31-40 yrs 41-50 yrs >50 yrs
initiated by initiated by initiated by initiated by initiated by initiated by initiated by initiated by
2013 Total the employee the employer the employee the employer the employee the employer the employee the employer
Austria 5.0% 42.5% 0.4% 29.8% 1.1% 16.8% 1.1% 7.6% 0.7%
Czech R. 16.8% 15.4% 15.8% 20.7% 12.3% 10.9% 7.8% 14.4% 2.7%
Slovakia 8.6% 19.6% 14.3% 14.9% 20.4% 6.3% 12.4% 4.1% 8.0%
Hungary 14.5% 21.3% 5.8% 29.5% 18.7% 10.8% 12.1% 0.3% 1.6%
Croatia 7.9% 6.4% 10.4% 17.3% 12.9% 5.0% 4.0% 0.5% 43.6%
Serbia 4.1% 7.5% 7.5% 27.5% 15.0% 2.5% 7.5% 0.0% 32.5%
Romania 31.4% 7.9% 4.8% 8.5% 18.0% 3.5% 32.0% 0.7% 24.6%

Turnover rate <30 yrs 31-40 yrs 41-50 yrs >50 yrs
initiated by initiated by initiated by initiated by initiated by initiated by initiated by initiated by
2014 Total the employee the employer the employee the employer the employee the employer the employee the employer
Austria 6.0% 35.4% 3.1% 33.5% 2.4% 15.7% 1.2% 7.1% 1.6%
Czech R. 13.9% 23.1% 12.1% 19.6% 13.1% 12.6% 6.1% 6.9% 6.5%
Slovakia 13.0% 22.6% 16.2% 13.3% 18.0% 5.2% 11.1% 1.1% 12.6%
Hungary 19.0% 22.3% 7.7% 33.8% 13.0% 9.1% 9.2% 1.3% 3.6%
Croatia 6.1% 14.3% 23.6% 22.4% 19.3% 3.1% 3.1% 0.0% 14.3%
Serbia 4.4% 18.2% 9.1% 34.1% 13.6% 6.8% 6.8% 9.1% 2.3%
Romania 15.6% 30.7% 7.4% 28.8% 7.7% 11.6% 7.3% 2.5% 4.0%

* Executive positions cover all the board and board-1 positions. Other managerial positions cover all the board-2 and board-3 positions.
The scope of reporting was extended in 2013, the subsidiaries of the CEE banks were included.

71
Environment
The 2014 Assessment Report of the IPCC (Intergovernmental _ climate protection and sustainable use of natural resources:
Panel on Climate Change) was a wake-up call for many people increased use of energy from renewable sources, improvement
and politicians worldwide. The message is quite clear: climate of energy efficiency at all office locations and branches across
change has become a reality and has started to impact ecosystems, Erste Group, improving the energy efficiency of data centres,
societies and economies. The only option to limit the negative reduction in the number of business trips supported by in-
consequences of the greenhouse gas emissions is to confine global creased use of telephone and video conferences
warming to +2°C. But even at this level, there will be severe and _ ecological impact of procured products and services: further
widespread consequences on all continents due to the rising sea development and implementation of ecological procurement
levels and increasing climate-related hazards. Environmental criteria
issues affect everyone’s life, and the time when only _ waste management: implementation and optimisation of inter-
environmental activists paid attention is long gone. nal waste management and waste separation
_ sustainable banking products: definition of criteria for sustaina-
The direct impact of banks on the environment may be very ble financing and investments, participation in international
limited. But Erste Group recognises its responsibility to also take environmental agreements
into account potential environmental risks related to lending and
investment. Balancing financial and ecological interests will be ENVIRONMENTAL TARGETS
one of the main challenges in the upcoming years.
To improve the environmental footprint of the business activities,
ENVIRONMENTAL STRATEGY Erste Group defined the following measurable group-wide reduc-
tion targets by 2016 compared to 2012 data:
Erste Group’s environmental strategy is built on four pillars: _ Electricity consumption by -10%
_ implementation of an Environmental Management System _ Heating energy by -10%
_ implementation of a Supply Chain Management System for all _ Copy paper consumption by -20%
products and services needed to run the banking business _ Carbon dioxide (CO2, scope 1 and 2) emissions by -30%
_ integration of environmental criteria into banking products and
services (especially financing products) Development of the environmental footprint in 2014
_ co-operation with environmental NGOs. versus 2012
_ Electric energy: - 11.6% to 164.9 GWh
An Environmental Steering Committee consisting of the CEO and _ Heating energy: - 6.0% to 152.6 GWh
COO of Erste Group and the Head of Group Environmental _ Copy paper: - 13.0% to 1,489 t
Management was set up to monitor the group-wide implementation _ CO2 emissions (scope 1 and 2): - 23.6% to 98,171 t
of the environmental strategy. In each banking subsidiary, one
board member is responsible for implementing the environmental GROUP-WIDE ACTIVITIES
strategy on a local level. Over the next few years, it will become
common practice to integrate environmental aspects into day-to- Reduction of greenhouse gas emissions
day banking business wherever appropriate. The Supply Chain Not surprisingly, heating and electric energy are key in optimis-
Management System ensures that ecological and commercial ing Erste Group’s environmental impact followed by the use of
considerations are equally taken into account in purchasing paper and electronic equipment.
decisions.
Erste Group defined the following group-wide criteria for the
Medium-term priorities selection of heating and electricity suppliers. Whenever available,
In line with the environmental strategy, the following key priori- district heating – preferably from renewable sources or waste – is
ties were confirmed: to be used followed by natural gas or LNG (liquefied natural gas),

electricity and, finally, heating oil. If available, electricity is to be also had a positive energy-saving impact (electricity consumption
purchased from 100% renewable sources or from local suppliers declined by 3.7%, heating energy consumption by 16.9%).
with the highest share of renewable energy or the lowest
CO2/kWh ratio. Erste Bank Serbia reduced the number of illuminated logo signs
and many of them are now switched off between midnight and
Erste Group started to use exclusively green electricity – CO2 the early hours of the morning. Normal bulbs have been replaced
free, from renewable sources only – in 2012 in Austria. Approxi- by LED. Sun protection films were tested which, by keeping the
mately 40% of the Austrian electric energy demand is covered by heat outside, reduce the energy consumption of air conditioning.
Erste Group’s own hydro power plant in Styria. In June 2014, Overall, energy consumption declined by 9.6%. Together with an
Erste Bank Croatia became the first Croatian bank to purchase external advisor an in-depth energy efficiency audit of one of the
only 100% CO2-free electricity. Unfortunately a switch will not main office buildings was finalised. The technical realisation of
be possible in all core markets in the near future due to a lack of the identified energy-savings potentials is planned for 2015.
appropriate local energy providers selling country-wide CO2-free
electricity in some countries. Another well-proven way to reduce greenhouse gas emissions is
to reduce business travel and to switch to business cars with
A wide variety of energy-saving programmes has been imple- lower CO2 emissions. The group-wide installation of state-of-the-
mented in all local banking subsidiaries. In Banca Comercială art video conferencing equipment enabling face-to-face interac-
Română simple but very efficient measures were taken to reduce tion close to “being there” limited the increase in business air
energy consumption. These range from shorter operation hours of travel to 1.6%.
air-condition units and adjusting the room temperature or the
obligatory switching-off of computers and laptops when leaving Erste Bank Oesterreich implemented further individual electric
the working place to reducing the lighting of branches outside energy monitoring systems at branches with a higher than average
business hours. Erste Bank Hungary installed opening sensors for energy consumption to identify reasons for the elevated energy
windows and, together with other measures, it reduced the energy consumption. Due to the upcoming move to the new headquarters
consumption of the headquarters by 3% within one year. in Vienna – approximately 4,500 employees will work at Erste
Campus – nearly no investments were undertaken at currently
Slovenská sporitel’ňa continued its energy-saving efforts on used office buildings to improve energy efficiency.
buildings with higher than average energy consumption. At the
headquarters in Bratislava, roughly 500 energy-intensive halogen Erste Campus has been awarded preliminary DGNB Gold certifi-
lamps can now be better controlled and are turned on only when cation by the Austrian Society for Sustainable Real Estate
really needed. In addition, CO2-controlled ventilation and switch- (ÖGNI). The construction is on-time and on-budget and the certi-
ing off of IT equipment in many branches helped to further re- fication is expected to be confirmed when the building is in full
duce energy consumption. Electricity consumption declined by used in 2016. Calculations show a reduction of 30-50% on elec-
roughly 9%, heating energy consumption by roughly 14%. Česká tric energy compared with the consumption of the existing build-
spořitelna continued a special energy reduction programme for its ings used in Vienna.
branch network. Since the end of 2014, the individual energy
consumption of each branch can be monitored over the intranet. Measures to reduce office paper consumption
The roll-out of the remote monitoring of building technologies Without doubt, besides measures relating to energy, one of the
continued and monitoring devices for energy consumption and greatest direct contributions that a financial institution can make to
management were installed in 70 additional buildings. Energy protect the environment is cutting paper consumption. The produc-
efficiency audits were finalised for 95 buildings. Simple measures tion of recycled paper requires approximately 80% less water and
such as shortening the daily running time of indoor advertising 70% less energy, overall the CO2 footprint is 50% less.
panels by two hours or the limitation of room temperature to 22°C

73
To minimise the environmental impact of the group-wide paper working environment in the new headquarters in Vienna will
consumption Erste Group continuously runs paper-saving initia- provide various forms of workspaces, employees will have very
tives. In addition, group-wide sourcing rules for paper are in place: limited space to store paper and files. In preparation for the move
_ When purchasing paper, environmental criteria are as important to Erste Campus, all Vienna-based employees were asked to
as other business criteria such as price, availability, product dispose of as much stored paper as possible in a one-time effort in
quality and regulatory requirements. summer 2014. An astonishing amount of more than 130 tonnes of
_ Target for 2015: waste paper was disposed of in line with data protection require-
_ Wherever technically possible, only 100% recycled paper is to ments. As an additional incentive for the employees the manage-
be used, especially in the case of copy paper and all paper used ment board supported a WWF nature conservation project, the
for internal purposes. Marchegg meadowland reserve (www.wwf.at/march) with a
_ If recycled paper cannot be used, only FSC (Forest Steward- donation linked to the total volume of paper disposal.
ship Council) or PEFC (Programme for the Endorsement of
Forest Certification Schemes)-certified paper is to be chosen, Other environmental initiatives
to prevent the use of paper from illegally harvested wood One of the main challenges is to keep the employees informed
sources. about the ecological consequences of their activities. Slovenská
sporitel’ňa developed an e-learning tool for all employees focus-
In Slovakia, the Czech Republic, Hungary, Serbia and Croatia, ing on conscious usage of resources such as energy and paper. If
the targeted level of 100% recycled copy paper has been almost possible, this tool will be used in other countries as well.
reached, and Austria was close with over 80%. Only Romania is
lagging behind with a recycled copy paper share of only 10%. Česká spořitelna supports its employees to commute to the office
The overall consumption of copy paper was reduced in 2014 by by bike by installing bike parking areas. A similar effort is being
41 tonnes to 1,489 tonnes. Since 2011, the total volume declined undertaken by Erste Bank Serbia, which installed bicycle stands
by 500 tonnes or 27%. For the first time, the annual report and in front of the headquarters and branches and teamed up with a
the quarterly report of Erste Group were printed on recycled local bicycle association to create public awareness about its
paper. Furthermore, as more and more readers use the on-line environmental activities. Holding and Erste Bank Oesterreich
version, the number of printed copies is declining. employees can borrow E-bikes to ride between the different bank
locations in Vienna faster and more healthily than by using public
Technology is becoming an increasingly useful tool to reduce transport or cars.
paper dependency. Meeting management of the management
board or the supervisory board and its committees previously One element of Erste Group’s environmental strategy is the co-
involved a lot of printed paper. In January 2014, the holding and operation with NGOs. Independent environmental NGOs offer
Erste Bank Oesterreich introduced an electronic meeting man- access to their local and international know-how and provide
agement system that not only eliminates the need for printing all valuable assistance in Erste Group’s efforts to become an even
applications and reports but also increases data security and more environmentally sustainable company. Erste Group pro-
accessibility anytime, anywhere. This single measure reduced the longed its co-operation with the WWF Climate Group till 2017.
annual copy paper consumption at the Group Secretariat by at The aim of the initiative is to mobilise companies to cut global
least one million pages. It is intended to implement this system in carbon dioxide emissions. Further information is available at
all local bank subsidiaries as well as the large savings banks. www.climategroup.at. In 2014, many Austrian NGOs (not only
environmental ones) chose Erste Bank Oesterreich as their pre-
Erste Group’s advanced electronic banking solutions including ferred bank partner, especially for payment transactions, thus
different apps for mobile phones and other mobile electronic acknowledging its commitment to supporting society.
devices enable customers to carry out basic banking transactions
wherever and whenever they want. Erste Bank Oesterreich con- Impact of procured products and services
firmed its innovation leadership by launching a new digital plat- Erste Group Procurement (EGP) continued its efforts to include
form George Digital banking also helps the environment, as it environmental criteria in its purchasing activities by screening the
saves paper – e-statements replace printed statements and the top 150 suppliers and adapting its sourcing criteria in line with
handling of payment forms is reduced. Erste Group’s environmental strategy.

Waste management activities In 2014, EGP finalised its Ethical and Environmental Code of
Erste Group aims at reducing waste as this is the most efficient Conduct for Suppliers of Goods and Services, which will be used
and cost saving environmental measure. across the group. The supply audit evaluation includes not only
sustainability/environmental aspects. For further details, please
An additional disadvantage of printing and copying is the fre- refer to the Customers and Suppliers chapter.
quently related inefficient paper filing and storage. While the

Environmental data quality for all Erste Group entities including the savings banks
At the end of 2014, the selection process for suitable software (until now savings banks data was not reported) and to give a
facilitating easier environmental data collection and evaluation comprehensive picture of Erste Group’s environmental impact.
was completed. The new software should allow to improve data

Environmental indicators 2014*

Tonnes CO2eq Total Austria Croatia Czech Rep Hungary Romania Serbia Slovakia
Heating/ warm water 29,359 2,905 643 9,502 1,366 11,483 389 3,072
Electricity 57,680 0 0 25,272 5,319 16,331 2,391 8,367
Diesel for electricity 31 1 0 17 0 0 3 10
Mobility 9,969 1,533 595 4,182 980 1,534 264 881
Cooling agents 1,131 119 279 332 25 195 63 118
Total 98,171 4,558 1,517 39,305 7,690 29,543 3,110 12,448

Relative values Heating Electricity Copy paper Waste CO2eq

per FTE or m² kWh/m² kWh/m² kg/FTE kg/FTE t/FTE
Austria 73 160 26 197 0.61
Croatia 49 139 43 12 0.63
Czech Republic 91 98 25 135 3.16
Hungary 101 145 48 219 2.45
Romania 144 77 87 na 4.85
Serbia 85 120 55 41 3.33
Slovakia 79 104 30 280 2.84

Environmental indicators 2013*

Tonnes CO2eq Total Austria Croatia Czech Rep Hungary Romania Serbia Slovakia
Heating/ warm water 32,251 3,172 887 11,424 1,690 11,093 424 3,561
Electricity 74,552 0 2,490 32,915 6,821 20,522 2,645 9,159
Diesel for electricity 29 5 4 11 0 0 3 6
Mobility 9,066 1,631 574 2,705 1,088 1,910 235 923
Cooling agents 1,134 184 255 262 262 128 41 2
Total 117,033 4,992 4,210 47,317 9,861 33,654 3,348 13,651

Relative values Heating Electricity Copy paper Waste CO2eq

per FTE or m² kWh/m² kWh/m² kg/FTE kg/FTE t/FTE
Austria 82 148 28 214 0.73
Croatia 66 141 45 12 1.85
Czech Republic 106 99 24 153 3.83
Hungary 113 168 54 321 3.09
Romania 136 94 101 na 5.52
Serbia 97 138 58 43 3.62
Slovakia 92 115 27 285 3.17

* FTE (full-time equivalent) is defined as an employee times his/her employment factor

CO2eq = CO2 equivalents (scope 1 and 2); deviations to the Annual Report 2013 due to improved data quality

Copy paper
2013 2014
total weight recycled not-recycled total weight recycled not-recycled
(tonnes) % % (tonnes) % %
Austria 191.80 88.40 11.60 191.43 79.20 20.80
Croatia 96.60 63.10 36.90 95.83 99.90 0.10
Czech Republic 303.27 76.40 23.60 302.36 100.00 0.00
Hungary 151.27 100.00 0.00 132.68 100.00 0.00
Romania 618.13 10.70 89.30 584.10 7.60 92.40
Serbia 53.49 9.10 90.90 51.42 90.60 9.40
Slovakia 115.58 15.00 85.00 131.22 95.10 4.90

75
Corporate governance
Corporate governance report The management board is responsible for managing the company
as required for the benefit of the company taking into account the
In 2003, Erste Group Bank AG declared its commitment to com- interests of the shareholders and the employees as well as public
ply with the rules of the Austrian Code of Corporate Governance interest. The management board develops the strategic orientation
(Austrian CCG) with the objective of ensuring responsible and of the company and aligns it with the supervisory board. It en-
transparent corporate governance. The Corporate Governance sures effective risk management and risk control. The manage-
Report has been prepared in accordance with section 243b of the ment board takes its decisions in compliance with all relevant
Austrian Commercial Code and Rules 60 et seq of the Austrian legal provisions, the articles of association and its internal rules
CCG and also complies with sustainability reporting guidelines of procedure.
(www.globalreporting.org). The current version of the Austrian
CCG as well as its English translation are publicly available on the The supervisory board advises the management board on its
website www.corporate-governance.at. strategic planning and actions. It takes part in making decisions
as provided for by law, the articles of association and its inter-
The Austrian CCG is based on voluntary, self-imposed obligations nal rules of procedure. The supervisory board has the task of
and its requirements are more stringent than the legal requirements overseeing the management board in the management of the
for stock corporations. The aim is to establish responsible corpo- company.
rate management and control oriented to creating value over the
long term. Application of the Austrian CCG guarantees a high Selection and assessment of members of management
degree of transparency for all stakeholders including investors, bodies
customers and employees. The Code contains the following sets of The qualification requirements for members of the management
rules: L-Rules (Legal Requirements – mandatory legal norms), bodies (management board and supervisory board) of Erste Group
C-Rules (Comply-or-Explain – deviations are permitted, but must Bank AG are governed by the internal guidelines for the selection
be explained) and R-Rules (Recommendations – these rules are and assessment of members of the management and supervisory
more similar to recommendations; non-compliance does not need boards. These guidelines define, in accordance with applicable
to be disclosed or explained). legal provisions, the internal framework for the selection and
assessment of proposed and appointed members of the manage-
In the financial year 2014, Erste Group Bank AG complied with ment bodies and are also an important tool for ensuring good
all L-Rules and R-Rules of the Austrian CCG. The deviation from corporate governance and control. The assessment of proposed
one C-rule is described and explained below. Pursuant to C-Rule and appointed members of management bodies is based on the
52a of the Austrian CCG, the number of supervisory board mem- following criteria: personal reputation, professional qualifications
bers (without employee representatives) shall not be higher than and experience as well as governance criteria (potential conflicts
ten. Due to the size of the company, however, the number of of interest, independence, time availability, overall composition of
shareholder representatives temporarily reached eleven in the the management or supervisory board and diversity).
course of the financial year 2014. After the resignation of Juan
Maria Nìn Génova on 11 December 2014, the number of share- Training and development
holder representatives was ten as of 31 December 2014. To maintain an appropriate level of professional qualification of
members of the management bodies, Erste Group regularly or-
Working methods of the management board and the ganises events and seminars for its staff and management. Speak-
supervisory board ers at these events are in-house and outside experts.
Erste Group Bank AG has a two-tier governance structure with a
management board and a supervisory board as management bodies.

MANAGEMENT BOARD

Date of initial End of the current

Management board member Year of birth appointment period of office
Andreas Treichl (Chairman) 1952 1 October 1994 30 June 2017
Franz Hochstrasser (Vice Chairman) 1963 1 January 1999 31 December 2014
Herbert Juranek 1966 1 July 2007 31 December 2014
Gernot Mittendorfer 1964 1 January 2011 30 June 2017
Andreas Gottschling 1967 1 September 2013 30 June 2017

In the financial year 2014, the management board consisted of effective 1 January 2015) and Petr Brávek (effective 1 April
five members. Franz Hochstrasser and Herbert Juranek resigned 2015) as new members of the management board.
from the management board as of 31 December 2014. The
supervisory board appointed Peter Bosek and Jozef Síkela (both In the financial year 2014, the allocation of duties among the
members of the management board was as follows:

Allocation of duties on the management board

Management board member Areas of responsibility

Group Strategy, Group Secretariat (including Corporate Social Responsibility, Group Environmental Management), Group
Andreas Treichl Communications, Group Investor Relations, Group Human Resources (including Group Diversity), Group Audit, Group Brands,
(Chairman) Employees’ Council, Social Banking Development
Until the resignation as of 31 December 2014:
Franz Hochstrasser Large Corporates, Erste Group Immorent, Group Capital Markets, Group Research, Group Investment Banking, Steering & Operating
(Vice Chairman) Office Markets, Steering & Operating Office Corporates
Until the resignation as of 31 December 2014:
Herbert Juranek Group Organisation/IT, Group Banking Operations, Group Services
Gernot Mittendorfer Group Asset Liability Management, Group Controlling, Group Accounting, Group Business Information Center, Participation Management
Enterprise wide Risk Management, Group Risk Operating Office, Operational Risk, Compliance & Security, Group Credit and Market Risk
Andreas Gottschling Management, Risk Methods and Models, Group Workout, Group Validation, Group Retail and SME Risk Management, Group Legal

Supervisory board mandates and similar functions Franz Hochstrasser

In the financial year 2014, the management board members held CEESEG Aktiengesellschaft, Oesterreichische Kontrollbank
the following supervisory board mandates or similar functions in Aktiengesellschaft (Vice Chair), Wiener Börse AG
domestic or foreign companies not included in the consolidated
financial statements: Herbert Juranek, Gernot Mittendorfer and Andreas Gottschling
did not hold any supervisory board mandates or similar functions
Andreas Treichl in domestic or foreign companies not included in the consolidated
DONAU Versicherung AG Vienna Insurance Group (Vice Chair), financial statements.
MAK – Österreichisches Museum für angewandte Kunst (Chair),
Sparkassen Versicherung AG Vienna Insurance Group (Chair)

77
SUPERVISORY BOARD

In the financial year 2014, the following persons were members

of the supervisory board.

Year of Date of initial End of the current

Position Name birth Occupation appointment period of office
Chairman Friedrich Rödler 1950 Auditor and tax advisor 4 May 2004 AGM 2019
Former rector of the University of Vienna and
1st Vice Chairman Georg Winckler 1943 Professor emeritus of Economics 27 April 1993 AGM 2015
2nd Vice Chairman Jan Homan 1947 General Manager, ret. 4 May 2004 AGM 2019
Member Elisabeth Bleyleben‑Koren 1948 General Manager, ret. 21 May 2014 AGM 2019
Member Bettina Breiteneder 1970 Entrepreneur 4 May 2004 AGM 2019
Member Gunter Griss 1945 Lawyer 21 May 2014 AGM 2019
Member Elisabeth Krainer Senger-Weiss 1972 Lawyer 21 May 2014 AGM 2019
Member Brian D. O'Neill 1953 Vice Chairman Lazard International 31 May 2007 AGM 2017
Member Juan Maria Nìn Génova 1953 CEO, ret. 12 May 2009 11 December 2014
Member Wilhelm Rasinger 1948 Consultant 11 May 2005 AGM 2015
Member John James Stack 1946 CEO, ret. 31 May 2007 AGM 2017
Delegated by the employees' council
Member Markus Haag 1980 21 November 2011 until further notice
Member Andreas Lachs 1964 9 August 2008 until further notice
Member Friedrich Lackner 1952 24 April 2007 11 December 2014
Member Bertram Mach 1951 9 August 2008 until further notice
Member Barbara Pichler 1969 9 August 2008 until further notice
Member Karin Zeisel 1961 9 August 2008 until further notice

Changes in the supervisory board in the financial year: at the Homan, Juan Maria Nìn Génova and Friedrich Rödler were re-
annual general meeting (AGM) held on 21 May 2014, the share- elected on the same date. Concurrently Markus Haag and Barbara
holder representatives Elisabeth Bleyleben-Koren, Gunter Griss Pichler were delegated by the employees’ council. Juan Maria Nìn
and Elisabeth Krainer Senger-Weiss were elected to the superviso- Génova resigned on 11 December 2014, however. Concurrently,
ry board. The shareholder representatives Bettina Breiteneder, Jan the delegation of Friedrich Lackner was revoked.

Membership in supervisory board committees

Committee membership as of 31 December 2014:

Construction Executive Nomination Audit Risk Remuneration

Name committee committee committee committee committee committee

Friedrich Rödler Vice Chairman Chairman Chairman Vice Chairman* Chairman Chairman**
Georg Winckler Member Vice Chairman Vice Chairman Chairman Vice Chairman Vice Chairman
Jan Homan - Member Member Substitute Member Substitute
Elisabeth Bleyleben-Koren - - - Member Member -
Bettina Breiteneder Chairwoman - Substitute Member Member -
Gunter Griss - - - - - Member
Elisabeth Krainer Senger-Weiss Member - - - - -
Brian D. O'Neill - - - - - Member
Wilhelm Rasinger - Substitute - Member Member -
John James Stack - - - - - Member
Delegated by the employees' council
Markus Haag - - - Substitute Substitute -
Andreas Lachs Substitute Substitute Member Member Member Member
Bertram Mach Member Member Member - Member Member
Barbara Pichler Member Member Substitute Member - Substitute
Karin Zeisel - - - Member Member Member
*Financial expert, **Remuneration expert

Mandates on supervisory boards or similar functions Barbara Pichler (since 16 December 2014)
As of 31 December 2014, the supervisory board members held DIE ERSTE österreichische Spar-Casse Privatstiftung
the following additional supervisory board mandates or similar
functions in domestic or foreign companies. Listed companies are Andreas Lachs
marked with *. VBV-Pensionskasse AG

Friedrich Rödler Markus Haag, Bertram Mach and Karin Zeisel did not hold any
Erste Bank der oesterreichischen Sparkassen AG, Erste Bank mandates on supervisory boards or similar functions in domestic
Hungary Zrt., Österreichische Industrie Holding AG or foreign companies.

Georg Winckler Mechanism for shareholders and employees to provide

DIE ERSTE österreichische Spar-Casse Privatstiftung (Chair), recommendations and direction to the supervisory board
Educational Testing Service (ETS) (Trustee), Erste Bank der In accordance with the law and the articles of association, the
oesterreichischen Sparkassen AG, UNIQA Versicherungsverein Employees’ Council has the right to delegate one member from
Privatstiftung (Vice Chair) among its ranks for every two members appointed by the annual
general meeting (statutory one-third parity rule). If the number of
Jan Homan shareholder representatives is an odd number, then one more
Allianz Elementar Versicherungs-Aktiengesellschaft, Billerud member is appointed as an employee representative.
Korsnäs AB*, Constantia Flexibles Group GmbH, Frapag Betei-
ligungsholding AG (Chair), Slovenská sporiteľňa, a.s. Under Erste Group Bank AG’s articles of association (Art. 15.1),
DIE ERSTE österreichische Spar-Casse Privatstiftung, a private
Bettina Breiteneder foundation, is accorded the right to delegate up to one third of the
Generali Holding Vienna AG, ZS Einkaufszentren Errichtungs- & members of the supervisory board to be elected by the annual gen-
Vermietungs-Aktiengesellschaft eral meeting. The Privatstiftung has not exercised this right to date.

Gunter Griss Measures to avoid conflicts of interest

AVL List GmbH (Chair), Bankhaus Krentschker & Co. AG (Vice The members of the supervisory board are annually obligated to
Chair), BDI - BioEnergy International AG* (Chair), Steiermärki- consider the regulations of the Austrian CCG regarding conflicts
sche Bank und Sparkassen AG (Chair) of interest. Furthermore, new members of the supervisory board
receive comprehensive information regarding the avoidance of
Brian D. O’Neill conflicts of interest when taking up their supervisory board
Council of the Americas (BoD), Emigrant Bank (BoD), Inter- functions.
American Dialogue (BoD), Banca Comercială Română S.A.,
Seven Seas Water (BoD) Independence of the supervisory board
Pursuant to C-Rule 53 of the Austrian CCG, the majority of the
Juan Maria Nìn Génova (resigned as of 11 December 2014) members of the supervisory board elected by the general meeting
Gas Natural SDG, S.A.* (BoD), Repsol YPF* (BoD) or delegated by shareholders in accordance with the articles of
association shall be independent of the company and its manage-
Wilhelm Rasinger ment board.
Friedrichshof Wohnungsgenossenschaft reg. Gen. mbH (Chair),
Gebrüder Ulmer Holding GmbH, Haberkorn Holding AG, Haber- A member of the supervisory board is deemed to be independent if
korn GmbH, S IMMO AG*, Wienerberger AG* such person does not have any business or personal relations with
the company or its management that would constitute a material
John James Stack conflict of interest and, therefore, might influence the member’s
Ally Bank (BoD), Ally Financial Inc.* (BoD), Česká spořitelna, conduct. The supervisory board adheres to the independence
a.s. (Chair), Mutual of America Capital Management (BoD) criteria guidelines as set out in Annex I of the Austrian CCG.

Elisabeth Bleyleben-Koren and Elisabeth Krainer Senger-Weiss did _ The supervisory board member shall not have been a member
not hold any mandates on supervisory boards or similar functions of the management board or a managing employee of the com-
in domestic or foreign companies as of 31 December 2014. pany or of a subsidiary of the company in the past five years.
_ The supervisory board member shall not have or not have had
Delegated by the employees’ council: in the past year any business relations with the company or a
subsidiary of the company to an extent of significance for the
Friedrich Lackner (until 15 December 2014) supervisory board member. This shall also apply to business
DIE ERSTE österreichische Spar-Casse Privatstiftung relations with companies in which the supervisory board mem-

79
ber has a significant economic interest, but not to positions held SUPERVISORY BOARD COMMITTEES AND
in the Group’s managing bodies. The approval of individual THEIR DECISION-MAKING POWERS
transactions by the supervisory board pursuant to L-Rule 48
does not automatically qualify the respective supervisory board The supervisory board has set up six committees: the risk com-
member as not being independent. mittee, the executive committee, the audit committee, the nomi-
_ The supervisory board member shall not have served as auditor nation committee, the remuneration committee and the construc-
for the company or been involved in an audit or worked as an tion committee.
employee of the audit firm that audited the company in the past
three years. Risk committee
_ The supervisory board member shall not serve as a management The risk committee advises the management board with regard to
board member at another company in which a member of the the bank's current and future risk appetite and risk strategy and
company’s management board is a supervisory board member. monitors the implementation of this risk strategy. The committee
_ The supervisory board member shall not serve on the superviso- also reviews whether the services and products offered are ade-
ry board for more than 15 years. This shall not apply to members quately priced in accordance with the bank’s business model and
of the supervisory board that hold investments with a business risk strategy. Without prejudice to the duties of the remuneration
interest or that represent the interests of such a shareholder. committee, the risk committee is also responsible for reviewing
_ The supervisory board member shall not be a close family mem- whether the incentives offered by the internal remuneration sys-
ber (child, spouse, life partner, parent, uncle, aunt, sibling, niece, tem adequately take into account risk, capital, liquidity and the
nephew) of a member of the management board or of persons probability and timing of profit realisation. The risk committee is
holding one of the positions described in the points above. responsible for granting approval in all those cases in which loans
and exposures or large exposures reach an amount exceeding the
Based on the above criteria, all members of the supervisory board approval authority of the management board defined in the ap-
have declared their independence. proval authority regulation. The approval of the risk committee is
required for any exposure or large exposure as defined in sec-
In 2014, three members of the supervisory board (Georg Winck- tion 28a of the Austrian Banking Act if the carrying value of such
ler, Friedrich Lackner and Barbara Pichler) served on a manage- an investment exceeds 10% of the company’s eligible own funds
ment body of a company holding more than 10% of the shares of or of the banking group’s eligible consolidated own funds. In
Erste Group Bank AG. One member (Wilhelm Rasinger) repre- addition, it may grant advance approvals to the extent permitted
sented in particular the interests of retail shareholders. by law. The risk committee is responsible for monitoring the risk
management of Erste Group Bank AG. A report providing key
Attendance of supervisory board meetings information about the organisation, structure and operation of the
Friedrich Lackner could not attend at least half of the meetings in risk management system in place for the company and major
2014 due to illness. All other members of the supervisory board subsidiaries has to be submitted to the committee at least once a
attended at least half of the meetings. year. The supervisory board has delegated to the risk committee
the right to approve the establishment and closure of branches, to
Self-evaluation of the supervisory board grant special statutory power of attorney (Prokura) or commercial
The supervisory board performed a self-evaluation of its activity power (Handlungsvollmacht) for all business operations. The
pursuant to C-Rule 36 of the Austrian CCG. In the supervisory committee is responsible for monitoring the Group’s portfolio of
board meeting of 22 October 2014, it considered the efficiency participations except in cases where this is the responsibility of
of its activity, including in particular its organisation and methods the audit committee. The tasks of the risk committee include the
of work. acknowledgement of reports on legal disputes and on the risk
impact and costs of major IT projects as well as of reports on im-
Contracts subject to approval pursuant to portant audits of subsidiaries conducted by regulatory authorities.
section 95 para 5 no 12 Austrian Stock Corporation Act
(C-Rule 49 Austrian CCG) Executive committee
In 2014, the firm Griss & Partner Rechtsanwälte, in which Gunter The executive committee meets on an ad hoc basis at the superviso-
Griss is a senior partner, invoiced companies of Erste Group for ry board’s request for the purpose of preparing specific topics for
legal representation and consulting services in the total amount of meetings or for resolutions to be taken by circular. The committee
EUR 17,777.28. may also be assigned the power to take final decisions. In case of
imminent danger and to prevent severe damage, the executive
committee may be convened by its chairperson in order to take
action in the interest of the company even without a specific man-
date from the supervisory board.

Audit committee that have become vacant. In filling vacant management board and
The audit committee is responsible for overseeing the accounting supervisory board mandates, the focus is in particular on the
process; monitoring the effectiveness of the company’s internal members’ personal and professional qualifications, a well-balanced
control system, internal audit system and risk management system; board composition in terms of expertise, a well-balanced and broad
overseeing the annual audit of single-entity and consolidated range of knowledge, skills and experience of the members on each
financial statements; reviewing and monitoring the qualification body, and on aspects of diversity. The nomination committee also
and independence of the auditor (Group auditor), especially with defines a target quota for the underrepresented gender and develops
regard to additional services rendered for the audited company a strategy to achieve this target. Furthermore, the nomination
and/or consolidated group companies; reviewing and preparing committee has to ensure that the management board’s and the
the adoption of annual financial statements, the proposal for the supervisory board’s decision-making processes are not dominated
appropriation of profits, the management report and the corporate by one single person or a small group of persons. The nomination
governance report and submitting a report on the results of the committee periodically assesses the management board’s and the
review to the supervisory board; reviewing the consolidated finan- supervisory board’s structure, size, composition and performance
cial statements of Erste Group and the Group management report; and submits proposals for changes to the supervisory board, if
preparing the supervisory board’s proposal for the selection and necessary. In addition, the nomination committee has to conduct
revocation of the auditor; conclusion of the contract with the periodic assessments of the expertise, skills and experience of both
appointed auditor for the performance of the annual audit and the management board members and the individual members of the
agreement on the auditor’s remuneration; acknowledging timely supervisory board as well as of each body in its entirety and to report
information on the focal points of the audit and submitting pro- its findings to the supervisory board. As regards the selection for
posals for additional focal points of the audit; taking note of the senior management positions, the nomination committee has to
annual financial statements of key subsidiaries and of the partici- review the course of action adopted by the management board
pations report; acknowledging the audit plan of the company’s and supports the supervisory board in making recommendations
internal audit function; acknowledging information on current to the management board.
matters relevant for the internal audit of the Group and on the
efficiency and effectiveness of the internal audit; acknowledging Remuneration committee
the internal auditors’ report on the audit areas and material audit The remuneration committee prepares resolutions on remuneration
findings and the activity report pursuant to section 20 in connec- matters, including resolutions that have an impact on the bank’s
tion with section 21 (2) of the Austrian Securities Supervisory Act risk and risk management and have to be passed by the superviso-
(Wertpapieraufsichtsgesetz); acknowledging immediate infor- ry board. The remuneration committee approves the general prin-
mation on material findings of the auditor, the internal audit func- ciples of remuneration policy, reviews them regularly and is also
tion or an audit conducted by a regulatory authority; acknowledg- responsible for their implementation. The committee monitors
ing immediate information on loss events that could exceed 5% of remuneration policy, remuneration practices and remuneration-
consolidated equity or 10% of the budgeted net result; acknowl- linked incentive programmes, in relation to the control, monitoring
edging reports of the management board on current developments and containment of risks, the capital base and liquidity, with due
and compliance regarding corporate governance and anti-money regard to the long-term interests of the bank’s shareholders, inves-
laundering rules; acknowledging the compliance activity report tors and employees as well as the national interest in a well-
pursuant to section 18 in connection with section 21 (2) of the functioning banking system and financial market stability. The
Austrian Securities Supervisory Act (Wertpapieraufsichtsgesetz). committee monitors the payment of variable remuneration to
members of the management board and to the company’s second
management level as well as to management board members of
Nomination committee major subsidiaries. Furthermore, the remuneration of senior man-
Meetings of the nomination committee are held as needed (begin- agers in risk management and in compliance functions is reviewed
(beginning with 1 January 2014 at least once a year) or when a directly by the remuneration committee. Once a year, the commit-
member of the committee or of the management board requests a tee is presented with a comprehensive report on the remuneration
meeting. The nomination committee submits proposals to the system including key performance indicators as well as a report on
supervisory board for filling management board mandates that the situation regarding personnel and management in the Group.
become vacant and deals with issues of succession planning. The
committee discusses and decides on the content of employment
contracts for members of the management board. It deals with and Construction committee
decides on relationships between the company and the members of The construction committee is responsible for advising the man-
the management board except for resolutions to appoint members to agement board and for preparing resolutions of the supervisory
the management board or revoke such appointments and on the board with respect to Erste Campus, the future headquarters of
granting of company stock options. Furthermore, the nomination Erste Group. The supervisory board may assign further tasks to
committee supports the supervisory board in making proposals to the committee, if necessary.
the annual general meeting for filling supervisory board mandates

81
MEETINGS OF THE SUPERVISORY BOARD remuneration of supervisory board members approved by the
AND REPORT ON PRINCIPAL ACTIVITIES annual general meeting was adopted for 2013.

Eight meetings of the supervisory board were held in the financial At the meeting held on 26 June 2014, the report on major partici-
year 2014. pations for 2013 and the first quarter of 2014, the report on direc-
tors’ dealings and the annual compliance report were discussed.
At each ordinary meeting of the supervisory board, the monthly The Group Recovery Plan 2014 was submitted to the supervisory
developments of the balance sheet and the income statement were board for its information and discussed.
presented and reports were given on individual risk types and the
bank’s total risk; the status of individual banking subsidiaries in At the meeting held on 17 September 2014, a report was given on
Central and Eastern Europe was discussed and reports were deliv- the FMA’s revised Fit & Proper circular concerning the assess-
ered on the areas audited and on the internal audit department’s ment of the qualifications of directors, supervisory board mem-
material audit findings. The chairpersons of the committees report- bers and holders of key functions and information was provided
ed on the main topics dealt with by the committees since the last on the resulting consequences. In addition, it was announced that
supervisory board meeting. A recurring topic at the supervisory a self-evaluation of the supervisory board would be performed in
board meetings in the financial year 2014 was reports on current accordance with section 29 no 6 and 7 of the Austrian Banking
regulatory developments in the banking environment and their Act and information was provided on the further procedure.
impacts on Erste Group, including in particular the status of the
banking supervisory regime at the European level and in Austria. In
the financial year 2014, reports were also issued repeatedly on the At the meeting held on 22 October 2014, the main focus was on the
current status of the asset quality review and the stress test conduct- changes to the management board following the resignations of
ed by the European Central Bank (ECB) and the European Banking Franz Hochstrasser and Herbert Juranek. It was decided to appoint
Authority (EBA), respectively. The management board regularly Peter Bosek as a new member of the management board of Erste
presented proposals to the supervisory board that require its ap- Group Bank AG as of 1 January 2015. Because of his expertise and
proval under the law, the articles of association and the rules of experience as management board member of Erste Bank Oester-
procedure. reich, it was decided that Peter Bosek will steer the retail business on
a group-wide basis in addition to Austria in the newly created posi-
On 13 March 2014, the financial statements and the management tion of Retail Officer of Erste Group Bank AG. In addition, the
report 2013, the consolidated financial statements and consolidat- results of the supervisory board’s self-evaluation were discussed.
ed management report 2013 as well as the corporate governance
report 2013 were reviewed; the bank auditors’ reports were dis-
cussed, the financial statements 2013 were adopted in accordance At the extraordinary meeting of 24 October 2014, the resignations of
with the recommendation of the audit committee, and the pro- Franz Hochstrasser and Herbert Juranek effective 31 December
posal for the appropriation of the profit 2013 was approved. 2014 were dealt with once again and the proposed nomination of
Furthermore, the resolutions proposed for the annual general Jozef Síkela as a new member of the management board of Erste
meeting were discussed and approved. It was also decided to Group Bank AG was discussed. The supervisory board subsequently
propose Ernst & Young Wirtschaftsprüfungsgesellschaft m.b.H. decided by circular resolution dated 26 October 2014 to authorise
to the annual general meeting on 21 May 2014 as an additional the chairman to terminate the contracts with the resigning manage-
auditor of the (consolidated) financial statements for the financial ment board members. The appointment of Jozef Síkela as a new
year 2015. In addition, a report was delivered on the economic member of the management board of Erste Group Bank AG as of
outlook in the CEE region for the years 2014 and 2015. 1 January 2015 was likewise approved by circular resolution on
26 October 2014. It was also decided that in view of his expertise
and experience as chairman of the management board of the Slovak
At the meeting held on 24 April 2014, a report was given on the subsidiary Slovenská sporiteľňa, a.s. Jozef Síkela would take over
status quo and the business development of the Slovak subsidiary the responsibility for Erste Group’s Corporate & Markets division
Slovenská sporiteľňa, a.s. In addition, resolutions were adopted from Franz Hochstrasser.
relating to variable remuneration components and the allocation of
duties on the management board. At the meeting held on 11 December 2014, the appointment of
Petr Brávek as a new management board member of Erste Group
At the constituent meeting of 21 May 2014 held after the annual Bank AG as of 1 April 2015 was approved. It was decided that in
general meeting, Friedrich Rödler was elected chairman of the view of his expertise and experience as a member of the manage-
supervisory board and Jan Homan second vice chairman. In management board of the Slovak subsidiary Slovenská sporiteľňa,
addition, supervisory board members were elected to the respec- a.s., Petr Brávek would succeed Herbert Juranek as Chief
respective supervisory board committees and the composition of Operations Officer of Erste Group Bank AG and would hence
the committees was thus realigned. The distribution key for the have responsibility for Organisation/IT and Banking Operations.

The realignment of the allocation of duties and updated rules of taken to propose Ernst & Young Wirtschaftsprüfungsgesellschaft
representation for the management board as of 1 January 2015 – m.b.H. to the annual general meeting on 21 May 2015 as an
required due to the changes in the management board – were also additional auditor of the (consolidated) financial statements for
approved. Finally, a cordial farewell was bid to Juan Maria Nìn the financial year 2016. The auditors provided information about
Génova, who had announced his resignation from the supervisory the preliminary audit of the single-entity and consolidated
board as of the end of 11 December 2014. financial statements for 2014. They also reported about the audit
conducted by Österreichische Prüfstelle für Rechnungslegung
MEETINGS OF THE COMMITTEES AND (OePR), the Austrian Financial Reporting Enforcement Panel
REPORT ON ACTIVITIES (AFREP), as well as about the impacts of the asset quality review
conducted by the ECB and the EBA. Tax issues relating to the
The risk committee held seventeen meetings in 2014 at which it recognition of deferred tax assets were also discussed. In
regularly took decisions on exposures and loans exceeding the addition, the audit committee explored the impacts of the entry
powers of the management board and was briefed on loans grant- into force of the EU Statutory Audit Directive and the
ed within the scope of authorisation of the management board. implementation of the group policy on the independence of
The committee was regularly informed of the individual risk auditors (Pre-Approval Policy).
types, risk-bearing capacity and large exposures. Furthermore,
reports were given on the situation of specific sectors and indus- The nomination committee met four times in 2014 and dealt with
tries, on the audits conducted by supervisory authorities, on vari- various personnel matters relating to the management board and
ous legal disputes as well as on risk development in certain coun- the supervisory board. These included, first of all, the election of
tries and subsidiaries, on the activities of Group Compliance and supervisory board members at the annual general meeting 2014.
on the new supervisory regime at the European level and in Aus- The nomination committee assessed the qualifications of the
tria. In the financial year 2014, recurring reports were issued on candidates nominated for first-time or re-election and recom-
developments in Hungary, in particular in connection with for- mended that the supervisory board propose to the annual general
eign-currency loans, as well as on the current status of the asset meeting the first-time election of Elisabeth Bleyleben-Koren,
quality review and the stress test conducted by the European Gunter Griss and Elisabeth Krainer Senger-Weiss and the re-
Central Bank (ECB) and the European Banking Authority (EBA), election of Bettina Breiteneder, Jan Homan, Juan Maria Nìn
respectively. Reports were also delivered on the activities of Génova and Friedrich Rödler to the supervisory board. Due to the
Group Compliance and on regulatory developments at the Euro- changes in the management board, the nomination committee
pean level and in Austria. also assessed the qualifications of the candidates nominated for
appointment to the management board – Peter Bosek, Jozef Síke-
The executive committee did not meet in 2014. la and Petr Brávek – and recommended their appointment by the
supervisory board. In addition, the nomination committee re-
The audit committee met seven times in 2014. Among other viewed the evaluation pursuant to C-Rule 36 of the Austrian CCG
things, the auditors reported on the audit of the single-entity and and evaluation of the management board and the supervisory
consolidated financial statements for 2013, and the audit commit- board pursuant to section 39 no 6 and 7 of the Austrian Banking
committee subsequently conducted the final discussion. The Act.
financial statements and the management report, the consolidated
financial statements and the consolidated management report as The remuneration committee met five times in 2014 and dis-
well as the corporate governance report were audited and cussed various remuneration topics relating to Erste Group and its
recommended to the supervisory board for adoption, and the subsidiaries including the structure of key performance indicators
proposal of the management board for the appropriation of the net and the bonus policy concerning the requirements for the pay-
profit for the financial year 2013 was acknowledged. The head of ment of variable remuneration components. In addition, infor-
the internal audit department reported on the audit subjects and mation was provided about regulatory developments concerning
material audit findings for the year 2013 and explained the audit remuneration, including in particular the impacts of
plan for 2014. The internal audit department presented its reports CRD IV/CRR rules.
pursuant to section 42 para 3 of the Austrian Banking Act. A
report was given on the audit of the functionality of the risk The construction committee met five times in 2014. Its main
management system according to Rule 83 of the Austrian CCG topics were project planning, project organisation, the budget,
and on the effectiveness of the internal control system. The audit costs and risks as well as procedures relating to tenders, schedul-
committee also discussed its work plan for 2015 and defined scheduling and developments regarding Erste Campus, the Erste
which topics were to be placed on the agendas of which meetings. Group headquarters building currently under construction in
Subject to the approval of the supervisory board, the decision was Vienna.

83
MEASURES TAKEN TO PROMOTE WOMEN top managers of 41%, the target was already met at the end of
ON MANAGEMENT BOARDS, SUPERVISORY 2014. The share of female top managers (from the second man-
BOARDS AND IN MANAGING POSITIONS agement level) was 36%, up three percentage points over 2013.
Its WoMen Business programme contributes towards the devel-
Erste Group was founded on the principles of accessibility and opment and promotion of female leadership by offering special
inclusion. Diversity and equal opportunities are firmly embedded training programmes and networking events for women. Česká
in Erste Group’s corporate philosophy and corporate culture, thus spořitelna’s diversity and inclusion programme Diversitas, which
providing a solid foundation for building strong and mutually was launched in 2008, supports mentoring and networking for
beneficial relationships between Erste Group, its employees and women and has received many awards and recognitions for its
the communities and societies in Erste Group’s markets. The- diversity efforts. It is considered a best practice model on the
commitment to promoting equal opportunities and diversity was Czech labour market and within Erste Group.
institutionalised by appointing a Diversity Manager responsible
for developing a group-wide diversity policy, identifying targets REMUNERATION OF THE MANAGEMENT
and measures, as well as regular monitoring and reporting on BOARD AND THE SUPERVISORY BOARD
targets.
Principles governing the remuneration policy
At the beginning of 2014, the management board together with The principles governing management board remuneration are
the supervisory board set a group-wide internal target of having specified in the remuneration policy of Erste Group Bank AG,
35% women at top management level (management board and including in particular the definition and evaluation of perfor-
senior management) and on supervisory boards by 2019. At the mance criteria. The contractual maximum value of performance-
end of 2014, the share of female top managers was 31%, which is linked payments to management board members shall not exceed
an increase of one percentage point over 2013 or five percentage 100% of the fixed salaries. The method for determining whether
points over 2012. In 2014, two more female managers were the performance criteria have been met is defined at the begin-
appointed at the first management level below the Holding board, ning of the year by the supervisory board following a proposal of
increasing the share of women at that management level to 19% the responsible organisational units (Group Performance Man-
from 13% at the beginning of 2013. As two more women joined agement, Group Risk Management and Group Human Re-
the supervisory board in 2014, the total share of women on su- sources). For 2014, both the ratio between fixed and short-term
pervisory boards rose to 25% compared with 16% at the begin- variable remuneration components and the maximum levels were
ning of 2013. One of the measures to increase the number of reduced. Management board members have to achieve defined
women in top management positions is to strive for a greater performance criteria at both company level and individual level.
gender and age balance in our talent pools. The new international The first criterion is Erste Group’s overall performance. For the
talent pool is made up of almost 40% women. Other measures to year 2014, this criterion is measured by reference to four indica-
help increase the number of women in top management include tors: the operating result, the solvency ratio (JRAD), the common
succession pool and career planning for women, as well as men- equity tier 1 ratio and the achievement of strategic goals. The
toring, coaching and networking. second performance criterion is the achievement of individual
objectives. These are, for example, the operating result, the com-
The Erste Women’s Hub network was launched on 24 July 2014 mon equity tier 1 ratio, the NPL coverage ratio, customer satisfac-
and brings together women at all stages in their professional cation and leadership quality.
reers from the Holding, Erste Bank Oesterreich and subsidiaries. It
aims to create an inclusive, sustainable network that is driven and Since the financial year 2010, the variable part of the manage-
owned by its members. Three working groups with specific goals ment board’s remuneration, including both cash payments and
and initiatives were established: Women - Careers - Opportunities, share equivalents, is distributed over five years in accordance
Women Financial Lifetime and Erste World. with legal requirements and is paid out only under certain condi-
tions. Share equivalents are not exchange-traded shares but phan-
Local initiatives to support measures to promote gender parity in tom shares that are paid out in cash after a one-year vesting peri-
management positions also continued in 2014. Erste Bank Oester- od based on defined criteria.
reich set its own internal target to increase the share of women in
management positions to 40% by 2017. With a share of female

Remuneration of management board members

Remuneration in 2014
Performance-linked remuneration
in EUR thousand Fixed salaries Other remuneration for 2013 for previous years Total
Andreas Treichl 1,333.7 498.2 225.2 122.2 2,179.4
Franz Hochstrasser 792.4 260.3 167.0 71.1 1,290.7
Herbert Juranek 666.9 92.3 56.4 32.9 848.5
Gernot Mittendorfer 633.0 88.3 69.1 17.2 807.6
Andreas Gottschling 633.0 76.2 30.0 0.0 739.2
Total 4,059.0 1,015.2 547.8 243.4 5,865.3

The item “Other remuneration” comprises pension fund contribu- still active. It was started on 1 January 2010 but did not result in
tions, contributions to employee provision funds (for new-type any payment in 2014.
severance payments) and remuneration in kind. In 2014, perfor-
mance-linked remuneration and share equivalents were paid out In 2014, EUR 2,080.0 thousand was paid in cash and 2,572 share-
or vested for the financial year 2013 and previous years. No equivalents were assigned to former members of management
performance-linked remuneration was paid to members of the bodies and their dependants.
management board for the financial year 2011. No performance-
linked remuneration will be paid to members of the management Principles governing the pension scheme for
board for the financial year 2014 either. management board members
Members of the management board participate in the defined
Non-cash performance-linked remuneration in 2014 contribution pension plan of Erste Group on the basis of the same
for previous principles as employees. For one member of the management
Share equivalents (in units) for 2013 years
board, compensatory payments have to be made to the pension
Andreas Treichl 10,881 5,502
fund in case the management board member’s tenure ends before
Franz Hochstrasser 6,918 3,083
Herbert Juranek 2,365 1,498
he reaches the age of 65 by no fault of the member.
Gernot Mittendorfer 3,145 1,005
Andreas Gottschling 1,285 0 Principles governing vested benefits and entitlements
Total 24,594 11,088
of management board members in case of termination
of the position
Pay-outs will be made in the year 2015 after the one-year vesting Regarding vested benefits and entitlements of management board
period. Share equivalents are valued at the average weighted members in the event of termination of their position, the standard
daily share price of Erste Group Bank AG of the year 2014 in the legal severance benefit provisions of section 23 of the Austrian
amount of EUR 22.25 per share. Salaried Employees Act (Angestelltengesetz) still apply to one
member of the management board. All other members of the man-
Long-term incentive programme agement board are not entitled to receive any severance benefits.
Currently, one long-term incentive programme (LTI), which is
based on changes in the share price of Erste Group Bank AG The remuneration granted to the management board members
versus a group of peers and the Dow Jones Euro Stoxx Banks, is complies with the banking rules on management remuneration.

85
Remuneration of members of the supervisory board

Supervisory board
Meeting fees compensation
in EUR thousand for 2014 for 2013 Total
Friedrich Rödler 46.0 100.0 146.0
Georg Winckler 44.0 75.0 119.0
Jan Homan 21.0 50.0 71.0
Elisabeth Bleyleben-Koren 14.0 0.0 14.0
Bettina Breiteneder 29.0 50.0 79.0
Gunter Griss 9.0 0.0 9.0
Theresa Jordis 0.0 43.4 43.4
Elisabeth Krainer Senger-Weiss 9.0 0.0 9.0
Brian D.O´Neill 12.0 50.0 62.0
Juan Maria Nìn Génova 7.0 50.0 57.0
Wilhelm Rasinger 30.0 50.0 80.0
John James Stack 12.0 50.0 62.0
Werner Tessmar Pfohl 0.0 18.8 18.8
Markus Haag 0.0 0.0 0.0
Friedrich Lackner 0.0 0.0 0.0
Andreas Lachs 0.0 0.0 0.0
Bertram Mach 0.0 0.0 0.0
Barbara Pichler 0.0 0.0 0.0
Karin Zeisel 0.0 0.0 0.0
Total 233.0 537.3 770.3

The annual general meeting 2014 granted the members of the super- SHAREHOLDERS’ RIGHTS
visory board remuneration totalling EUR 537,317.0 for the financial
year 2013. The distribution of this remuneration is at the supervisory Voting rights
board’s discretion and was approved at the constituent meeting of Each share of Erste Group Bank AG entitles its holder to one vote
the supervisory board on 21 May 2014. In addition, attendance fees at the annual general meeting. In general, shareholders may pass
paid to the members of the supervisory board were set at EUR 1,000 resolutions at an annual general meeting by a simple majority of
per meeting of the supervisory board or one of its committees. the votes cast or, in the event that the majority of the share capital
present is required to approve a measure, by a simple majority of
Directors’ and officers’ liability insurance the share capital present, unless Austrian law or the articles of
Erste Group Bank AG has directors’ and officers’ liability insur- association require a qualified majority vote. The articles of
ance. The insurance policy covers former, current and future association differ from the statutory majority requirements in
members of the management board or managing directors, of the three cases: First, the appointment of supervisory board members
supervisory board, the administrative board and the advisory can be revoked before the end of their respective term by a reso-
board as well as senior management, holders of statutory powers lution of the annual general meeting that requires a majority of
of attorney (Prokuristen) and management staff of Erste Group 75% of the votes cast and a majority of 75% of the share capital
Bank AG and the subsidiaries in which Erste Group Bank AG present at such meeting. Second, the articles of association may
holds more than 50% of the shares or voting rights either directly be amended by a resolution of the annual general meeting. Pro-
or indirectly through one or more subsidiaries. The costs are vided that such amendment does not concern the business pur-
borne by the company. pose, this requires a simple majority of the votes cast and a sim-
ple majority of the share capital present at such meeting. Third,
EXTERNAL EVALUATION any provision regulating increased majority requirements can
only be amended with the same increased majority.
Erste Group Bank AG commissioned a voluntary external evalua-
tion of compliance with the Austrian Code of Corporate Govern- Dividend rights
ance in accordance with R-Rule 62 of the Austrian CCG in the Each shareholder is entitled to receive dividends, if and to the
years 2006, 2009 and 2012 for the respective preceding business extent the distribution of dividends is resolved by the annual
years. All evaluations reached the conclusion that Erste Group general meeting.
Bank AG had met all requirements of the Code. Summary reports
on these evaluations are available at the website of Erste Group Liquidation proceeds
Bank AG. A voluntary external evaluation for 2014 is scheduled In case of dissolution of Erste Group Bank AG, the assets remaining
for spring 2015. A summary report of this evaluation will also be after the discharge of liabilities and repayment of supplementary
available at the website. capital will be distributed pro rata to the shareholders. The dissolu-
tion of Erste Group Bank AG requires a majority of at least 75% of
the share capital present at an annual general meeting.

Subscription rights ADDITIONAL CORPORATE GOVERNANCE

All holders of shares have subscription rights allowing them to PRINCIPLES
subscribe to any newly issued shares to maintain their existing
share in the share capital of Erste Group Bank AG. Such subscrip- Erste Group is committed to the highest standards of corporate
tion rights are in proportion to the number of shares held by such governance and responsible behaviour by individuals and con-
shareholders prior to the issue of the new shares. The said subscrip- ducts its business in compliance with the applicable laws and
tion rights do not apply if the respective shareholder does not exer- regulations. In addition, Erste Group has introduced various
cise these subscription rights, or subscription rights are excluded in policies and guidelines defining rules and principles for its em-
certain cases by a resolution of the annual general meeting or by a ployees.
resolution of the management board and the supervisory board.
Compliance
The Austrian Stock Corporation Act contains provisions that The responsibility for all compliance issues at Erste Group rests
protect the rights of individual shareholders. In particular, all with Operational Risk, Compliance and Security. In organisational
shareholders must be treated equally under equal circumstances terms, it is assigned to the Chief Risk Officer but reports directly
unless the shareholders affected have consented to unequal treat- to the management board. The compliance rules of Erste Group
ment. Furthermore, measures affecting shareholders’ rights, such are based on the relevant legislation, such as the Austrian Stock
as capital increases and the exclusion of subscription rights, Exchange Act and the Securities Supervision Act; on the Standard
generally require a shareholders’ resolution. Compliance Code of the Austrian banking industry as well as on
international practices and standards. Conflicts of interest between
The articles of association of Erste Group Bank AG do not con- customers, Erste Group and employees are covered by clear rules
tain any provisions regarding a change in the share capital, the such as Chinese walls, provisions on employee transactions, re-
rights associated with the shares or the exercise of the sharehold- search disclaimer or gift policy. Further key topics are procedures
ers’ rights that differ from statutory requirements. and measures to prevent money laundering and terrorist financing
Stock corporations like Erste Group Bank AG must hold at least and to monitor sanctions and embargoes, as well as the establish-
one annual general meeting (ordinary shareholders’ meeting) per ment and coordination of measures to prevent financial crimes
year, which must be held within the first eight months of any within Erste Group.
financial year and cover at least the following items:
_ Presentation of certain documents Based on different international anti-bribery and anti-corruption
_ Appropriation of profit initiatives (e.g. the OECD Anti-Bribery Convention, the United
_ Discharge of the members of the management board and the Nations Convention against Corruption) local national authorities
supervisory board for the financial year ended. in many countries have approved laws and regulations that general-
ly prohibit the acceptance of benefits by public officials for the
At annual general meetings, shareholders may ask for infor- purpose of obtaining or retaining business, or otherwise securing an
mation about the company’s affairs to the extent that this is improper advantage. All of Erste Group’s businesses are subject to
required for the proper assessment of an agenda item. the laws and regulations in the countries in which the bank oper-
ates. Most laws and regulations cover bribery in both the private
and public sector, partly with a global scope (e.g. the Criminal Law
Vienna, 27 February 2015 in Austria, the Bribery Act in the UK, the Foreign Corrupt Practices
Act (FCPA) in the US).
Management board
Public officials are subject to the respective domestic laws and
Andreas Treichl mp Gernot Mittendorfer mp regulations relating to gifts, hospitality and entertainment. Laws
Chairman Member may differ from country to country and are to some extent ex-
tremely restrictive. Improper payments or other inducements for
Andreas Gottschling mp Peter Bosek mp the benefit of a public official, even if made indirectly through an
Member Member intermediary, are prohibited. Erste Group under no circumstances
offers anything of value to a public official, nor to members of a
Jozef Síkela mp public official’s family or to any charitable organisation suggest-
Member ed by a public official, for the purpose of influencing the recipient
to take or refrain from taking any official action or to induce the
recipient to conduct business with Erste Group. This also includes
facilitating payments.

87
In 2014, Erste Group did not detect any incident of corruption. To Transparency
ensure compliance with all laws and regulations group-wide Transparent operations and reporting play a crucial part in estab-
standards, policies and procedures are evaluated and refined lishing and upholding investor confidence. Accordingly, it is one
continuously. of the main goals of Erste Group to provide accurate, timely and
comprehensible information about the business development and
The mandatory compliance training for all new employees in- financial performance. Erste Group’s financial disclosure adheres
cludes awareness training and an introduction to prevention of to applicable legal and regulatory requirements and is prepared in
corruption. For employees in selected business areas regular line with best practice.
compliance trainings are mandatory.
Risk management
Activities in 2014 Erste Group’s approach to risk management seeks to achieve the
_ implementation of a new gift policy with a special focus on best balance between risk and return for earning a sustainable
anti-bribery and anti-corruption return on equity. A detailed report on risk policy, risk manage-
_ introduction of a documentation and approval tool for gifts and ment strategy and organisation, as well as a thorough discussion
invitations to standardise the process and facilitate adequate of the individual risk categories, is included in the Notes begin-
compliance monitoring ning on page 170. In addition, credit risk is analysed in detail in a
_ providing regular information relating to the latest anti-bribery separate section starting on page 30, in the “Segments” section of
and anti-corruption laws and regulations as well as training for this report.
employees
_ implementation of a whistleblowing office and a procedure for Accounting and auditors
potential whistleblowing cases and their documentation. Em- The company financial statements, company management report,
ployees are encouraged to report suspected unethical and/or consolidated financial statements and group management report
unlawful behaviour via a designated tool (Erste Integrity Line) of Erste Group Bank AG for the financial year 2014 were audit-
to the whistleblowing office. The whistleblowing platform of- ed by Sparkassen-Prüfungsverband as the legally mandated
fers the possibility to file reports and ask questions in case of auditor and by Ernst & Young Wirtschaftsprüfungsgesellschaft
suspected misconduct of financial crime (such as fraud, corrup- m.b.H., appointed by the Annual General Meeting, as the sup-
tion, embezzlement), theft (e.g. concerning assets of custom- plementary auditor.
ers), securities and markets issues (e.g. insider trading), money
laundering and terrorism financing, conflicts of interest outside
the securities business (e.g. illegitimate gifts, secondary
employment) or regulatory issues (pursuant to section 99g
of the Austrian Banking Act).

Activities started in 2014 with roll out planned for 2015

_ new policy regulating personal conflicts of interests outside of
the securities business including the implementation of a tool
for employees to report secondary employment, ownership,
participations and mandates
_ new group policy for anti-corruption

Directors’ dealings
In accordance with the Austrian Stock Exchange Act and the
Issuer Compliance Regulation of the Austrian Financial
Market Authority (FMA), individual trades by members of the
management board and supervisory board in Erste Group
shares are published on the websites of Erste Group
(www.erstegroup.com/investorrelations) and the FMA.

88
Group Consolidated Financial
Statements 2014 (IFRS)

I. Group Statement of Comprehensive Income of Erste Group for the Year ended 31 December 2014 ................................................................................................... 90

II. Group Balance Sheet of Erste Group as of 31 December 2014................................................................................................................................................................... 92
III. Group Statement of Changes in Total Equity ............................................................................................................................................................................................... 93
IV. Group Cash Flow Statement ........................................................................................................................................................................................................................... 94
V. Notes to the Group Financial Statements of Erste Group ........................................................................................................................................................................... 95
1. Net interest income ................................................................................................................................................................ 126
2. Net fee and commission income ........................................................................................................................................... 126
3. Dividend income .................................................................................................................................................................... 127
4. Net trading and fair value result ............................................................................................................................................. 127
5. Rental income from investment properties & other operating leases.................................................................................... 127
6. General administrative expenses .......................................................................................................................................... 127
7. Gains/losses from financial assets and liabilities not measured at fair value through profit or loss, net .............................. 128
8. Net impairment loss on financial assets not measured at fair value through profit or loss ................................................... 128
9. Other operating result ............................................................................................................................................................ 128
10. Taxes on income .................................................................................................................................................................... 130
11. Appropriation of profit ............................................................................................................................................................ 130
12. Cash and cash balances ....................................................................................................................................................... 131
13. Derivatives – held for trading ................................................................................................................................................. 131
14. Other trading assets .............................................................................................................................................................. 131
15. Financial assets - at fair value through profit or loss ............................................................................................................. 131
16. Financial assets - available for sale....................................................................................................................................... 132
17. Financial assets – held to maturity ........................................................................................................................................ 132
18. Securities ............................................................................................................................................................................... 132
19. Loans and receivables to credit institutions ........................................................................................................................... 133
20. Loans and receivables to customers ..................................................................................................................................... 134
21. Impairment loss for financial instruments .............................................................................................................................. 135
22. Derivatives – hedge accounting ............................................................................................................................................ 136
23. Equity method investments.................................................................................................................................................... 136
24. Unconsolidated structured entities ........................................................................................................................................ 137
25. Non controlling interest .......................................................................................................................................................... 139
26. Property, equipment and Investment properties .................................................................................................................... 140
27. Intangible assets .................................................................................................................................................................... 141
28. Tax assets and liabilities ........................................................................................................................................................ 144
29. Assets held for sale and liabilities associated with assets held for sale ............................................................................... 145
30. Other assets........................................................................................................................................................................... 145
31. Other trading liabilities ........................................................................................................................................................... 145
32. Financial liabilities – at fair value through profit and loss ...................................................................................................... 146
33. Financial liabilities measured at amortised costs .................................................................................................................. 146
34. Provisions .............................................................................................................................................................................. 148
35. Other liabilities ....................................................................................................................................................................... 152
36. Total equity ............................................................................................................................................................................. 152
37. Segment reporting ................................................................................................................................................................. 154
38. Assets and liabilities denominated in foreign currencies and outside Austria and return on assets ..................................... 163
39. Leases ................................................................................................................................................................................... 163
40. Related-party transactions and principal shareholders ......................................................................................................... 164
41. Collateral ................................................................................................................................................................................ 168
42. Transfers of financial assets – repurchase transactions and securities lending ................................................................... 168
43. Offsetting ................................................................................................................................................................................ 169
44. Risk management .................................................................................................................................................................. 170
44.1) Risk policy and strategy ............................................................................................................................................... 170
44.2) Risk management organisation .................................................................................................................................... 170
44.3) Regulatory topics .......................................................................................................................................................... 176
44.4) Group-wide risk and capital management.................................................................................................................... 177
44.5) Credit risk ..................................................................................................................................................................... 181
44.6) Market risk .................................................................................................................................................................... 209
44.7) Liquidity risk .................................................................................................................................................................. 212
44.8) Operational risk ............................................................................................................................................................ 215
45. Hedge accounting .................................................................................................................................................................. 216
46. Fair value of assets and liabilities .......................................................................................................................................... 217
47. Financial instruments per category according to IAS 39 ....................................................................................................... 225
48. Audit fees and tax consultancy fees ...................................................................................................................................... 227
49. Contingent liabilities ............................................................................................................................................................... 227
50. Analysis of remaining maturities ............................................................................................................................................ 228
51. Own funds and capital requirements ..................................................................................................................................... 228
52. Events after the balance sheet date ...................................................................................................................................... 231
53. Country by country reporting ................................................................................................................................................. 232
54. Details of the companies wholly or partly owned by Erste Group as of 31 December 2014 ................................................ 233
AUDITORS REPORT (REPORT OF THE INDEPENDENT AUDITORS) ........................................................................................................................................................... 253
STATEMENT OF ALL MEMBERS OF THE MANAGEMENT BOARD ............................................................................................................................................................... 255

89
I. Group Statement of Comprehensive Income of Erste Group
for the Year ended 31 December 2014
Income statement

1-12 13
in EUR thousand Notes restated 1-12 14
Net interest income 1 4,685,041 4,495,201
Net fee and commission income 2 1,806,463 1,869,848
Dividend income 3 89,676 74,217
Net trading and fair value result 4 218,816 242,259
Net result from equity method investments 21,818 15,810
Rental income from investment properties & other operating leases 5 173,326 180,593
Personnel expenses 6 -2,232,410 -2,184,224
Other administrative expenses 6 -1,145,997 -1,136,930
Depreciation and amortisation 6 -517,688 -466,113
Gains/losses from financial assets and liabilities not measured at fair value through profit or loss, net 7 62,365 18,283
Net impairment loss on financial assets not measured at fair value through profit or loss 8 -1,774,371 -2,159,242
Other operating result 9 -1,008,622 -1,752,936
Levies on banking activities 9 -311,035 -256,271
Pre-tax result from continuing operations 378,418 -803,232
Taxes on income 10 -178,539 -509,404
Net result for the period 199,880 -1,312,636
Net result attributable to non-controlling interests 139,605 129,357
Net result attributable to owners of the parent 60,275 -1,441,993

Adoption of IFRS 10 led to retrospective consolidation of several entities and additionally the new implemented structure of Income
Statement and Balance Sheet resulted in retrospective changes in the presentation, as further explained in section “B. SIGNIFICANT
ACCOUNTING POLICIES”.

Statement of comprehensive income

1-12 13
in EUR thousand Notes restated 1-12 14
Net result for the period 199,880 -1,312,636

Other comprehensive income

Items that may not be reclassified to profit or loss
Remeasurement of net liability of defined pension plans 34 -6,713 -188,196
Deferred taxes relating to items that may not be reclassified 2,260 47,093
Total -4,453 -141,102

Items that may be reclassified to profit or loss

Available for sale reserve (including currency translation) -113,178 581,154
Gain/loss during the period 7;8 -121,843 574,144
Reclassification adjustments 8,665 7,011
Cash flow hedge reserve (including currency translation) -71,942 172,783
Gain/loss during the period 45 -72,380 224,285
Reclassification adjustments 438 -51,502
Currency translation -241,390 -63,062
Gain/loss during the period -321,192 -63,062
Reclassification adjustments 9 79,802 0
Deferred taxes relating to items that may be reclassified 28 44,931 -190,587
Gain/loss during the period 40,962 -193,353
Reclassification adjustments 3,969 2,765
Total -381,579 500,288
Total other comprehensive income -386,032 359,186

Total comprehensive income -186,152 -953,450

Total comprehensive income attributable to non-controlling interests 17,353 270,310
Total comprehensive income attributable to owners of the parent -203,505 -1,223,760

90
Earnings per share
Earnings per share constitute net profit/loss for the year attributable to owners of the parent – adjusted for dividend on participation
capital in the amount of EUR 0 million (2013: EUR 84.7 million) – divided by the average number of ordinary shares outstanding.
Diluted earnings per share represent the maximum potential dilution (through an increase in the average number of shares) that would
occur if all subscription and conversion rights granted were exercised (also see Note 36 Total equity).

1-12 13
restated 1-12 14
Net result attributable to owners of the parent in EUR thousand 60,275 -1,441,993
Dividend on participation capital in EUR thousand -84,660 0
Net result for the period attributable to owners of the parent after deduction of the participation capital dividend in EUR thousand -24,385 -1,441,993
Weighted average number of outstanding shares 411,553,048 427,533,286
Earnings per share in EUR -0.06 -3.37
Weighted average diluted number of outstanding shares 411,553,048 427,533,286
Diluted earnings per share in EUR -0.06 -3.37

91
II. Group Balance Sheet of Erste Group as of 31 December 2014
01.01.2013 31.12.2013
in EUR thousand Notes restated restated Dec 14

Assets
Cash and cash balances 12 9,740,458 9,300,683 7,835,417
Financial assets - held for trading 15,954,801 12,283,046 10,530,878
Derivatives 13 10,776,816 6,342,237 7,173,380
Other trading assets 14;18 5,177,984 5,940,808 3,357,498
Financial assets - at fair value through profit or loss 15;18 715,800 528,984 349,583
Financial assets - available for sale 16;18 22,537,158 20,677,648 22,373,356
Financial assets - held to maturity 17;18 18,971,705 17,779,013 16,877,214
Loans and receivables to credit institutions 19 9,007,832 8,376,688 7,442,288
Loans and receivables to customers 20 124,353,061 119,944,501 120,833,976
Derivatives - hedge accounting 22 2,658,845 1,943,645 2,871,607
Property and equipment 26 2,439,100 2,319,501 2,264,041
Investment properties 26 1,022,911 950,572 950,168
Intangible assets 27 2,893,886 2,440,833 1,440,946
Investments in associates and joint ventures 23 174,099 207,594 194,984
Current tax assets 28 127,634 100,398 107,310
Deferred tax assets 28 657,508 719,015 301,469
Assets held for sale 29 708,119 74,774 291,394
Other assets 30 2,108,221 2,470,898 1,622,702
Total assets 214,071,137 200,117,792 196,287,334

Liabilities and equity

Financial liabilities - held for trading 10,640,382 6,474,745 7,746,381
Derivatives 13 10,159,387 6,086,938 7,188,386
Other trading liabilities 31 480,995 387,807 557,994
Financial liabilities - at fair value through profit or loss 2,552,290 2,339,171 2,072,725
Deposits from banks 0 0 0
Deposits from customers 632,477 459,964 319,960
Debt securities issued 32 1,919,813 1,879,207 1,752,765
Other financial liabilities 0 0 0
Financial liabilities measured at amortised cost 177,321,576 170,785,614 166,921,248
Deposits from banks 33 21,822,081 17,299,491 14,802,602
Deposits from customers 33 122,366,767 121,955,141 122,262,612
Debt securities issued 33 32,810,004 31,244,697 29,386,741
Other financial liabilities 322,724 286,286 469,294
Derivatives - hedge accounting 22 719,499 644,319 725,928
Changes in fair value of portfolio hedged items 1,646,691 733,747 1,225,473
Provisions 34 1,487,745 1,447,605 1,652,688
Current tax liabilities 28 53,022 84,519 91,050
Deferred tax liabilities 28 323,507 169,392 98,778
Liabilities associated with assets held for sale 338,870 0 0
Other liabilities 35 2,650,619 2,653,713 2,309,605
Total equity 16,336,937 14,784,966 13,443,457
Equity attributable to non-controlling interests 3,491,397 3,465,959 3,605,371
Equity attributable to owners of the parent 12,845,540 11,319,006 9,838,086
Total liabilities and equity 214,071,137 200,117,792 196,287,334

92
III. Group Statement of Changes in Total Equity
Remeasurement Equity Equity
of net liability of attributable to attributable to
Subscribed Capital Retained Cash flow Available for Currency defined pension owners of the non-controlling
in EUR million capital reserves* earnings* hedge reserve sale reserve translation plans Deferred tax parent interests Total equity
As of 31 December 2013 860 7,037 4,256 -33 259 -785 -277 2 11,319 3,466 14,785
Changes in treasury shares 0 0 -77 0 0 0 0 0 -77 0 -77
Dividends paid 0 0 -171 0 0 0 0 0 -171 -122 -292
Capital increases 0 0 0 0 0 0 0 0 0 0 0
Participation capital 0 0 0 0 0 0 0 0 0 0 0
Change in interest in subsidiaries 0 0 -10 0 0 0 0 0 -10 -9 -19
Other changes 0 -5,559 5,559 0 0 0 0 0 0 0 0
Acquisition of non-controlling interest 0 0 0 0 0 0 0 0 0 0 0
Total comprehensive income 0 0 -1,442 173 321 -65 -117 -94 -1,224 270 -953
Net result for the period 0 0 -1,442 0 0 0 0 0 -1,442 129 -1,313
Other comprehensive income 0 0 0 173 321 -65 -117 -94 218 141 359
As of 31 December 2014 860 1,478 8,116 140 580 -849 -394 -92 9,838 3,605 13,444

As of 1 January 2013 2,547 6,472 4,395 41 227 -555 -268 -4 12,855 3,483 16,338
Restatement 0 0 1 0 -11 0 0 0 -10 8 -2
Restated as of 1 January 2013 2,547 6,472 4,396 41 216 -555 -268 -4 12,845 3,491 16,336
Changes in treasury shares 0 0 100 0 0 0 0 0 100 0 100
Dividends paid 0 0 -299 0 0 0 0 0 -299 -44 -343
Capital increases 70 571 0 0 0 0 0 0 642 0 642
Participation capital -1,757 -7 0 0 0 0 0 0 -1,764 0 -1,764
Change in interest in subsidiaries 0 0 -2 0 0 0 0 0 -2 1 0
Other changes -1 0 1 0 0 0 0 0 0 0 0
Acquisition of non-controlling interest 0 0 0 0 0 0 0 0 0 0 0
Total comprehensive income 0 0 60 -73 44 -231 -9 5 -203 17 -185
Net result for the period 0 0 60 0 0 0 0 0 60 140 200
Other comprehensive income 0 0 0 -73 44 -231 -9 5 -263 -123 -386
As of 31 December 2013 860 7,037 4,256 -33 259 -785 -277 2 11,319 3,466 14,785

*) The reclassification between capital reserves and retained earnings is due to a group internal merger between EGB Ceps Beteiligungen GmbH and EGB Ceps Holding GmbH with Erste Group Bank AG.

For further details, see Note 36 Total equity.

93
IV. Group Cash Flow Statement
1-12 13
in EUR million restated 1-12 14
Net result for the period 200 -1,313
Non-cash adjustments for items in net profit/loss for the year
Depreciation, amortisation, impairment and reversal of impairment, revaluation of assets 972 1,612
Allocation to and release of provisions (including risk provisions) 1,808 2,194
Gains/(losses) from the sale of assets 7 -153
Other adjustments -272 -23
Changes in assets and liabilities from operating activities after adjustment for non-cash components
Financial assets - held for trading 3,671 1,902
Financial assets - at fair value through profit or loss 179 107
Financial assets - available for sale 1,924 -1,382
Loans and receivables to credit institutions 642 -1,186
Loans and receivables to customers 4,230 -890
Derivatives - hedge accounting 569 -755
Other assets from operating activities -1,521 986
Financial liabilities - held for trading -3,574 1,272
Financial liabilities - at fair value through profit or loss 173 -266
Financial liabilities measured at amortised cost
Deposits from banks -4,696 -2,497
Deposits from customers -757 307
Debt securities issued -1,432 -1,875
Other financial liabilities 0 183
Derivatives - hedge accounting 68 82
Other liabilities from operating activities -1,914 4
Cash flow from operating activities 277 -1,691
Proceeds of disposal
Financial assets - held to maturity and associated companies 5,660 3,078
Property and equipment, intangible assets and investment properties 347 231
Acquisition of
Financial assets - held to maturity and associated companies -4,500 -2,160
Property and equipment, intangible assets and investment properties -726 -634
Acquisition of subsidiaries (net of cash and cash equivalents acquired) 0 0
Disposal of subsidiaries 62 0
Cash flow from investing activities 844 514
Capital increases 642 0
Capital decrease -1,764 0
Acquisition of non-controlling interest 0 0
Dividends paid to equity holders of the parent -299 -171
Dividends paid to non-controlling interests -44 -122
Other financing activities 0 0
Cash flow from financing activities -1,465 -292
Cash and cash equivalents at beginning of period 1 9,740 9,301
Cash flow from operating activities 277 -1,691
Cash flow from investing activities 844 514
Cash flow from financing activities -1,465 -292
Effect of currency translation -95 4
Cash and cash equivalents at end of period1 9,301 7,835

Cash flows related to taxes, interest and dividends 4,566 4,302

Payments for taxes on income (included in cash flow from operating activities) -209 -267
Interest received 6,984 6,301
Dividends received 90 74
Interest paid -2,299 -1,806

1) Cash and cash equivalents are equal to cash in hand and balances held with central banks.

94
V. Notes to the Group Financial Statements of Erste Group
A. GENERAL INFORMATION

Erste Group Bank AG is Austria’s oldest savings bank and the largest wholly privately owned Austrian credit institution listed on the
Vienna Stock Exchange. It is also quoted on the Prague Stock Exchange (since October 2002) and on the Bucharest Stock Exchange
(since February 2008). The registered office of Erste Group Bank AG is located at Graben 21, 1010 Vienna, Austria.

Erste Group offers a complete range of banking and other financial services, such as savings accounts, asset management (including
investment funds), consumer credit and mortgage lending, investment banking, securities and derivatives trading, portfolio management,
project finance, foreign trade financing, corporate finance, capital market and money market services, foreign exchange trading, leasing
and factoring.

It is planned for the management (following a presentation to the supervisory board) to approve the consolidated financial statements for
publication on 27 February 2015.

Erste Group is subject to the regulatory requirements of Austrian and European supervisory bodies (National Bank, Financial Market
Authority, Single Supervisory Mechanism). These regulations include those pertaining to minimum capital adequacy requirements, cate-
gorisation of exposures and off-balance sheet commitments, credit risk connected with clients of the Group, liquidity and interest rate
risk, items denominated in foreign currencies and operating risk.

In addition to the banking entities, some Group companies are subject to regulatory requirements, specifically in relation to asset man-
agement.

B. SIGNIFICANT ACCOUNTING POLICIES

a) BASIS OF PREPARATION

The consolidated financial statements of Erste Group for the financial year ending on 31 December 2014 and the related comparative
information were prepared in compliance with applicable International Financial Reporting Standards (IFRS) as adopted by the European
Union on the basis of IAS Regulation (EC) No. 1606/2002. This satisfies the requirements of Section 59a of the Austrian Banking Act
and Section 245a of the Austrian Commercial Code.

In accordance with the applicable measurement models prescribed or permitted under IFRS, the consolidated financial statements have
been prepared on a cost (or amortised cost) basis, except for financial assets - available for sale, financial assets and liabilities held for
trading (including derivatives), instruments subject to hedge accounting and financial assets and liabilities designated at fair value
through profit or loss, all of which have been measured at fair value.

The consolidated financial statements have been prepared on a going concern basis.

Except for regulatory restrictions on capital distributions stemming from the EU-wide capital requirements regulations applicable to all
financial institutions based in Austria and Central and Eastern Europe, Erste Group does not have any other significant restrictions on its
ability to access or use the assets and settle the liabilities of the Group. Also, the owners of non-controlling interests in Group subsidiaries
do not have protective rights that can significantly restrict the Group’s ability to access or use the assets and settle the liabilities of the
Group.

Except as otherwise indicated, all amounts are stated in millions of euro. The tables in this report may contain rounding differences.

The consolidated financial statements have not been reviewed and accpeted by the supervisory board and the financial statements of Erste
Group Bank AG have not been approved by the supervisory board yet.

95
b) BASIS OF CONSOLIDATION

Subsidiaries
All entities directly or indirectly controlled by Erste Group Bank AG are consolidated in the Group financial statements on the basis of
their annual accounts as of 31 December 2014, and for the year then ended.

Subsidiaries are consolidated from the date when control is obtained until the date when control is lost. Control is achieved when Erste
Group is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns
through its power to direct the relevant activities of the investee. Relevant activities are those which most significantly affect the variable
returns of an entity.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income
from the date of acquisition or up to the date of disposal. The financial statements of the bank’s subsidiaries are prepared for the same
reporting year as that of Erste Group Bank AG and using consistent accounting policies. All intra-Group balances, transactions, income
and expenses as well as unrealised gains and losses and dividends are eliminated.

Non-controlling interests represent those portions of total comprehensive income and net assets that are not attributable directly or indi-
rectly to the owners of Erste Group Bank AG. Non-controlling interests are presented separately in the consolidated statement of com-
prehensive income and within equity on the consolidated balance sheet. Acquisitions of non-controlling interests as well as disposals of
non-controlling interests that do not lead to a change of control are accounted for as equity transactions, whereby the difference between
the consideration transferred and the share in the carrying amount of the net assets acquired is recognised as equity.

Investments in associates and joint ventures

Investments in associates and joint ventures are accounted for using the equity method. Under the equity method, an interest in an associ-
ate or joint venture is recognised on the balance sheet at cost plus post-acquisition changes in the Group’s share of the net assets of the
entity. The Group’s share of the associate’s or joint venture’s profit or loss is recognised in the income statement. Entities accounted for
using the equity method are recognised on the basis of annual financial statements as of 31 December 2014 and for the year then ended.

Associates are entities over which Erste Group exercises significant influence (‘associates’). Significant influence is the power to partici-
pate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. As a general rule,
significant influence is presumed to mean an ownership interest of between 20% and 50%.

Joint ventures are joint arrangements over which Erste Group exercises control jointly with one or more other venturers, with the ventur-
ers having rights to the net assets of the arrangement, rather than to the assets and liabilities relating to the arrangement. Joint control
exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Erste Group is not
involved in joint operations.

Scope of consolidation
As at 31 December 2014, Erste Group Bank AG, as parent entity of Erste Group, includes in its IFRS scope of consolidation a total of
528 subsidiaries (31 December 2013: 549). This includes a total of 47 local savings banks which, alongside Erste Group Bank AG and
Erste Bank der oesterreichischen Sparkassen AG, are members of the Haftungsverbund (cross-guarantee system) of the Austrian savings
bank sector (please refer to “(d) Significant accounting judgements, assumptions and estimates” for further details).

The IFRS scope of consolidation of Erste Group has been increased by a total of 34 entities. Additionally, 18 own-managed investment
funds were included retrospectively as a result of adopting IFRS 10 “Consolidated Financial Statements” (please refer to “(d) Significant
accounting judgements, assumptions and estimates” and “(e) Application of amended and new IFRS/IAS” for further details, including
the ensuing quantitative impact on the comparatives as at 31 December 2013).

Following the implementation of the new agreements of the cross-guarantee system (please refer to chapter d) Significant accounting
judgements, assumptions and estimates) and the related financial support of the members an ex-ante funds was established. The fund is
managed by a civil law company named IPS GesbR. The assets of the fund – the members of the cross-guarantee system are required to
pay into the fund over a period of ten years - are bound and can be used solely for the purpose to cover loss events of members of the
cross-guarantee system. The company IPS GesbR was included in the scope of consolidation in year 2014.

96
Opening balance as of 31 December 2013 549
Additions
Entities newly added to the scope of consolidation 34
Disposals
Companies sold or liquidated 31
Mergers 24
Closing balance as of 31 December 2014 528

Further details regarding the scope of consolidation please refer to Note 54 Details of the companies wholly or partly owned by Erste
Group as of 31 December 2014.

Additions in 2014
No material additions of new subsidiaries occurred during the year 2014.

Disposals in 2014
As of 1 January 2014, the Czech pension fund entity “Transformovaný fond penzijního připojištění se státním příspěvkem Česká
spořitelna – penzijní společnost, a.s.” (Transformed pension fund) has been deconsolidated. This deconsolidation was triggered by signifi-
cant amendments to the fund’s investment strategy (due to changes in the fund’s articles of incorporation) that limited the fund manager’s
decision-making powers over relevant fund activities (please refer to “(d) Significant accounting judgements, assumptions and esti-
mates” for further details). This resulted in a loss of control in accordance with IFRS 10. The impact of deconsolidation was a decrease in
Group assets by EUR 1,702 million (thereof financial assets - available-for-sale EUR 608 million, financial assets - held to maturity
EUR 368 million and loans and receivables to credit institutions EUR 710 million) and decrease of the group liabilities by
EUR 1,853 million (thereof financial liabilities measured at amortised cost – deposits from customers EUR 1,829 million).

Additions in 2013
No material additions of new subsidiaries occurred during the year 2013.

Disposals in 2013
Public Company ‘Erste Bank’ (Erste Bank Ukraine). On 29 April 2013, following the signing of the contract in December 2012 and
having received the formal approval of the transaction by the market supervising authorities in Austria and Ukraine, Erste Group finalised
the sale of its 100% participation in Erste Bank Ukraine to FIDOBANK, an unrelated party. Having met the qualifying criteria of IFRS 5
‘Discontinued operations and non-current assets held for sale’, Erste Bank Ukraine was classified as a disposal group held for sale and
included in the consolidated balance sheet items ‘Assets held for sale’ and ‘Liabilities associated with assets held for sale’ in the Annual
Report 2012. Upon the closing of the transaction, these assets and liabilities were derecognised from the balance sheet of Erste Group. The
proceeds from the transaction, all in the form of cash, amounted to EUR 62.3 million (USD 81.8 million), compared to the sold net equity
of Erste Bank Ukraine amounting to EUR 132.5 million as of 31 December 2012. An impairment loss in the amount of EUR 75.0 million
for the negative difference between the selling price and net equity of Erste Bank Ukraine as of 31 December 2012 was already recognised in
the income statement of Erste Group for the financial year 2012. The income statement of Erste Group for the financial year 2013 is affected
by a further negative EUR 76.6 million, resulting mainly from the reclassification of the cumulated negative currency translation reserve in
relation to Erste Bank Ukraine from other comprehensive income to income statement. This impact is recognised in ‘Other operating result’.

c) ACCOUNTING AND MEASUREMENT METHODS

In the financial year 2014 Erste Group has changed its balance sheet and income structure according to the measurement categories as per
IAS 39, to provide more relevant and reliable information on the financial position and performance of the company. A number of disclo-
sures were adjusted accordingly - both presentation format and figures.

The new structure was also introduced to generate synergies with the new IFRS based regulatory requirements (“FINREP”) and to facili-
tate the comparability with published reports of the financial authorities, competitors and Erste Group. In the year 2014 FINREP was
introduced by the European Banking Authority (“EBA”) and represents a regulatory framework on a compulsory basis, which must be
applied by financial institutions within the EU. This harmonization makes the reconciliation of published reports by the regulator with
reports of Erste Group much easier.
The following tables show the relationships between old and new positions of the income statement, of the Group statement of compre-
hensive Income, of the Group balance sheet and of the Group cash flow statement. The values for the old structure were adjusted by
newly consolidated funds (retrospective application of IFRS 10). For further details on the retrospective application according to IFRS
please refer to chapter “b) BASIS OF CONSOLIDATION – Subsidiaries”.

97
98

Consoli- Reallocation Switch of

Switch of Switch of Split of dation of Reallo- of customer realised Switch of Switch of
rental equity general net trading cation of relationship AfS or AfS or off
Published Switch of and method administ- and fair other amortisation HtM HtM balance
Published IFRS 10 figures dividend leasing investment rative value operating and deposit gains/ measure- sheet
in EUR million figures effect restated income income income expenses result result insurance losses ment provisions

Dec 13
Old structure New structure restated restated
Interest income 7,650.8 11.5 7,662.3 -89.7 -73.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Interest expenses -2,814.5 0.0 -2,814.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Income from equity method investments 21.8 0.0 21.8 0.0 0.0 -21.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net interest income 4,858.1 11.5 4,869.6 -89.7 -73.1 -21.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net interest income 4,685.0
Risk provisions for loans and advances -1,763.4 0.0 -1,763.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1,763.4
Fee and commission income 2,305.6 0.0 2,305.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Fee and commission expenses -495.6 -3.6 -499.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net fee and commission income 1,810.0 -3.6 1,806.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net fee and commission income 1,806.5
0.0 0.0 0.0 89.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Dividend income 89.7
Net trading result 293.2 1.9 295.1 0.0 0.0 0.0 0.0 -295.1 0.0 0.0 0.0 0.0 0.0
General administrative expenses -3,653.5 0.0 -3,653.5 0.0 0.0 0.0 3,653.5 0.0 0.0 0.0 0.0 0.0 0.0
Other operating result -1,081.9 0.1 -1,081.8 0.0 0.0 0.0 0.0 0.0 939.5 142.4 0.0 0.0 0.0
Result from financial instruments –
at fair value through profit or loss -76.3 0.0 -76.3 0.0 0.0 0.0 0.0 295.1 0.0 0.0 0.0 0.0 0.0 Net trading and fair value result 218.8
Net result from equity method
0.0 0.0 0.0 0.0 0.0 21.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 investments 21.8
Rental income from investment
0.0 0.0 0.0 0.0 173.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 properties & other operating leases 173.3
0.0 0.0 0.0 0.0 0.0 0.0 -2,232.4 0.0 0.0 0.0 0.0 0.0 0.0 Personnel expenses -2,232.4
0.0 0.0 0.0 0.0 0.0 0.0 -1,068.8 0.0 0.0 -77.2 0.0 0.0 0.0 Other administrative expenses -1,146.0
0.0 0.0 0.0 0.0 -100.2 0.0 -352.3 0.0 0.0 -65.2 0.0 0.0 0.0 Depreciation and amortisation -517.7
Gains/losses from financial assets and
liabilities not measured at fair value
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.3 0.0 56.1 0.0 0.0 through profit or loss, net 62.4
Result from financial assets -
available for sale -13.5 -5.8 -19.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -48.9 68.2 0.0
Result from financial assets -
held to maturity 1.5 0.0 1.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -7.2 5.7 0.0
Net impairment loss on financial assets
not measured at fair value through profit
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -48.0 -1,726.5 or loss -1,774.4
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -945.7 0.0 0.0 -25.9 -37.0 Other operating result -1,008.6
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -311.0 0.0 0.0 0.0 0.0 Levies on banking activities -311.0
Pre-tax result from continuing
Pre-tax profit/loss 374.3 4.1 378.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 operations 378.4
Taxes on income -178.5 0.0 -178.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Taxes on income -178.5
Net profit/loss for the period 195.8 4.1 199.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net result for the period 199.9
Net result attributable to
Attributable to non-controlling interests 134.8 4.8 139.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 non-controlling interests 139.6
Net result attributable to
Attributable to owners of the parent 61.0 -0.7 60.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 owners of the parent 60.3
IFRS 10 Published figures Changes due to
n EUR million Published figures restatement restated new structure Dec 13 restated
Net result for the period 195.8 4.1 199.9 0.0 199.9
Other comprehensive income
Items that may not be reclassified to profit or loss
Remeasurement of net liability of defined pension plans -6.7 0.0 -6.7 0.0 -6.7
Deferred taxes relating to items that may not be reclassified 2.3 0.0 2.3 0.0 2.3
Total -4.5 0.0 -4.5 0.0 -4.5
Items that may be reclassified to profit or loss
Available for sale reserve (including currency translation) -114.3 1.2 -113.2 0.0 -113.2
Gain/loss during the period -128.8 7.0 -121.8 0.0 -121.8
Reclassification adjustments 14.5 -5.8 8.7 0.0 8.7
Cash flow hedge reserve (including currency translation) -71.9 0.0 -71.9 0.0 -71.9
Gain/loss during the period -72.4 0.0 -72.4 0.0 -72.4
Reclassification adjustments 0.4 0.0 0.4 0.0 0.4
Currency translation -241.4 0.0 -241.4 0.0 -241.4
Gain/loss during the period -321.2 0.0 -321.2 0.0 -321.2
Reclassification adjustments 79.8 0.0 79.8 0.0 79.8
Deferred taxes relating to items that may be reclassified 44.9 0.0 44.9 0.0 44.9
Gain/loss during the period 41.0 0.0 41.0 0.0 41.0
Reclassification adjustments 4.0 0.0 4.0 0.0 4.0
Total -382.7 1.2 -381.6 0.0 -381.6
Total other comprehensive income -387.2 1.2 -386.0 0.0 -386.0
Total comprehensive income -191.4 5.3 -186.2 0.0 -186.2
Total comprehensive income attributable to non-controlling interests 16.5 0.8 17.4 0.0 17.4
Total comprehensive income attributable to owners of the parent -208.0 4.4 -203.5 0.0 -203.5
99
100

Assets
Reallocation
of non-
Reallocation consolidated Reallocation Switch to net Product split
Published of demand subsidiaries of movable book value of into
Published IFRS 10 figures deposits and other loans and measurement
in EUR million figures effect restated (<24h) associates property receivables categories
Dec 13
Old structure New structure restated restated
Cash and balances with central banks 8,670 0 8,670 630 0 0 0 0 Cash and cash balances 9,301
Loans and advances to credit institutions 9,062 0 9,062 -630 0 0 -8,431 0
Loans and advances to customers 127,698 0 127,698 0 0 0 -127,698 0
Risk provisions for loans and advances -7,810 0 -7,810 0 0 0 7,810 0
0 0 0 0 0 0 0 0 Financial assets - held for trading 12,283
Derivative financial instruments 8,285 1 8,286 0 0 0 0 -1,944 Derivatives 6,342
Trading assets 5,941 0 5,941 0 0 0 0 0 Other trading assets 5,941
Financial assets - at fair value through profit or loss 529 0 529 0 0 0 0 0 Financial assets - at fair value through profit or loss 529
Financial assets - available for sale 20,581 241 20,822 0 -144 0 0 0 Financial assets - available for sale 20,678
Financial assets - held to maturity 17,781 0 17,781 0 0 0 -2 0 Financial assets - held to maturity 17,779
0 0 0 0 0 0 8,377 0 Loans and receivables to credit institutions 8,377
0 0 0 0 0 0 119,944 0 Loans and receivables to customers 119,945
0 0 0 0 0 0 0 1,944 Derivatives - hedge accounting 1,944
0 0 0 0 0 0 0 0 Changes in fair value of portfolio hedged items 0
Property and equipment 2,057 0 2,057 0 0 263 0 0 Property and equipment 2,320
Investment properties 951 0 951 0 0 0 0 0 Investment properties 951
Intangible assets 2,441 0 2,441 0 0 0 0 0 Intangible assets 2,441
Equity method investments 208 0 208 0 0 0 0 0 Investments in associates and joint ventures 208
Current tax assets 100 0 100 0 0 0 0 0 Current tax assets 100
Deferred tax assets 719 0 719 0 0 0 0 0 Deferred tax assets 719
Assets held for sale 75 0 75 0 0 0 0 0 Assets held for sale 75
Other assets 2,590 0 2,590 0 144 -263 0 0 Other assets 2,471
Total assets 199,876 242 200,118 0 0 0 0 0 Total assets 200,118
Liabilities and equity
Published Reallocation of Product split into
Published figures subordinated Reallocation measurement
in EUR million figures IFRS 10 effect restated liabilities derivatives categories
Old structure New structure restated Dec 13 restated
0 0 0 0 0 0 Financial liabilities - held for trading 6,475
0 0 0 0 6,087 0 Derivatives 6,087
0 0 0 0 0 388 Other trading liabilities 388
0 0 0 0 0 0 Financial liabilities - at fair value through profit or loss 2,339
0 0 0 0 0 0 Deposits from banks 0
0 0 0 0 0 460 Deposits from customers 460
0 0 0 0 0 1,879 Debt securities issued 1,879
0 0 0 0 0 0 Other financial liabilities 0
0 0 0 0 0 0 Financial liabilities measured at amortised cost 170,786
Deposits by banks 17,126 0 17,126 173 0 0 Deposits from banks 17,299
Customer deposits 122,442 -27 122,415 0 0 -460 Deposits from customers 121,955
Debt securities issued 27,986 -21 27,965 5,159 0 -1,879 Debt securities issued 31,245
0 0 0 0 0 286 Other financial liabilities 286
0 0 0 0 644 0 Derivatives - hedge accounting 644
Value adjustments from portfolio fair value hedges 734 0 734 0 0 0 Changes in fair value of portfolio hedged items 734
Derivative financial instruments 6,731 0 6,731 0 -6,731 0
Trading liabilities 388 0 388 0 0 -388
Provisions 1,448 0 1,448 0 0 0 Provisions 1,448
Current tax liabilities 85 0 85 0 0 0 Current tax liabilities 85
Deferred tax liabilities 169 0 169 0 0 0 Deferred tax liabilities 169
0 0 0 0 0 0 Liabilities associated with assets held for sale 0
Other liabilities 2,654 286 2,940 0 0 -286 Other liabilities 2,654
Subordinated liabilities 5,333 0 5,333 -5,333 0 0
Total equity 14,781 4 14,785 0 0 0 Total equity 14,785
Attributable to non-controlling interests 3,457 9 3,466 0 0 0 Equity attributable to non-controlling interests 3,466
Attributable to owners of the parent 11,324 -5 11,319 0 0 0 Equity attributable to owners of the parent 11,319
Total liabilities and equity 199,876 242 200,118 0 0 0 Total liabilities and equity 200,118

Published figures Changes due to New structure

in EUR million Published figures IFRS 10 effect restated new structure restated
Cash and cash equivalents at beginning of period 9,740 0 9,740 - 9,740
Cash flow from operating activities -433 0 -433 711 277
Cash flow from investing activities 895 0 895 -52 844
Cash flow from financing activities -1,437 0 -1,437 -28 -1,465
Effect of currency translation - 95 0 -95 - -95
Cash and cash equivalents at end of period 8,670 0 8,670 630 9,301
101
102

Assets
Reallocation of Switch to
Reallocation non- Reallocation net book Product split
Published of demand consolidated of movable value of into
Published IFRS 10 figures deposits subsidiaries other loans and measurement
in EUR million figures effect restated (<24h) and associates property receivables categories
Dec 12
Old structure New structure restated angepasst
Cash and balances with central banks 9,740 0 9,740 0 0 0 0 0 Cash and cash balances 9,740
Loans and advances to credit institutions 9,074 0 9,074 0 0 0 -9,074 0
Loans and advances to customers 131,928 0 131,928 0 0 0 -131,928 0
Risk provisions for loans and advances -7,644 0 -7,644 0 0 0 7,644 0
0 0 0 0 0 0 0 0 Financial assets - held for trading 15,955
Derivative financial instruments 13,289 0 13,289 0 0 0 0 -2,513 Derivatives 10,777
Trading assets 5,178 0 5,178 0 0 0 0 0 Other trading assets 5,178
Financial assets - at fair value through profit or Financial assets - at fair value through profit or
loss 716 0 716 0 0 0 0 0 loss 716
Financial assets - available for sale 22,418 247 22,665 0 -128 0 0 0 Financial assets - available for sale 22,537
Financial assets - held to maturity 18,975 0 18,975 0 0 0 -3 0 Financial assets - held to maturity 18,972
0 0 0 0 0 0 9,007 0 Loans and receivables to credit institutions 9,008
0 0 0 0 0 0 124,354 0 Loans and receivables to customers 124,353
0 0 0 0 0 0 0 2,659 Derivatives - hedge accounting 2,659
0 0 0 0 0 0 0 0 Changes in fair value of portfolio hedged items 0
Property and equipment 2,228 0 2,228 0 0 211 0 0 Property and equipment 2,439
Investment properties 1,023 0 1,023 0 0 0 0 0 Investment properties 1,023
Intangible assets 2,894 0 2,894 0 0 0 0 0 Intangible assets 2,894
Equity method investments 174 0 174 0 0 0 0 0 Investments in associates and joint ventures 174
Current tax assets 128 0 128 0 0 0 0 0 Current tax assets 128
Deferred tax assets 658 0 658 0 0 0 0 0 Deferred tax assets 658
Assets held for sale 708 0 708 0 0 0 0 0 Assets held for sale 708
Other assets 2,338 0 2,338 0 128 -211 0 -146 Other assets 2,108
Total assets 213,824 247 214,071 0 0 0 0 0 Total assets 214,071
Liabilities and equity
Product split
Published Reallocation of into
Published figures subordinated Reallocation measurement
in EUR million figures IFRS 10 effect restated liabilities derivatives categories
Old structure New structure restated Dec 12 angepasst
0 0 0 0 0 0 Financial liabilities - held for trading 10,640
0 0 0 0 10,159 0 Derivatives 10,159
0 0 0 0 0 481 Other trading liabilities 481
Financial liabilities - at fair value through profit or
0 0 0 0 0 0 loss 2,552
0 0 0 0 0 0 Deposits from banks 0
0 0 0 0 0 632 Deposits from customers 632
0 0 0 0 0 1,920 Debt securities issued 1,920
0 0 0 0 0 0 Other financial liabilities 0
0 0 0 0 0 0 Financial liabilities measured at amortised cost 177,322
Deposits by banks 21,822 0 21,822 0 0 0 Deposits from banks 21,822
Customer deposits 123,053 -54 122,999 0 0 -633 Deposits from customers 122,367
Debt securities issued 29,427 -21 29,406 5,323 0 -1,920 Debt securities issued 32,810
0 0 0 0 0 323 Other financial liabilities 323
0 0 0 0 719 0 Derivatives - hedge accounting 719
Value adjustments from portfolio fair value hedges 1,220 0 1,220 0 0 427 Changes in fair value of portfolio hedged items 1,647
Derivative financial instruments 10,878 1 10,879 0 -10,879 0
Trading liabilities 481 0 481 0 0 -481
Provisions 1,488 0 1,488 0 0 0 Provisions 1,488
Current tax liabilities 53 0 53 0 0 0 Current tax liabilities 53
Deferred tax liabilities 324 0 324 0 0 0 Deferred tax liabilities 324
Liabilities associated with assets held for sale 339 0 339 0 0 0 Liabilities associated with assets held for sale 339
Other liabilities 3,077 323 3,400 0 0 -749 Other liabilities 2,651
Subordinated liabilities 5,323 0 5,323 -5,323 0 0
Total equity 16,339 -2 16,337 0 0 0 Total equity 16,337
Attributable to non-controlling interests 3,483 8 3,491 0 0 0 Equity attributable to non-controlling interests 3,491
Attributable to owners of the parent 12,855 -10 12,846 0 0 0 Equity attributable to owners of the parent 12,846
Total liabilities and equity 213,824 247 214,071 0 0 0 Total liabilities and equity 214,071
103
Foreign currency translation
The consolidated financial statements are presented in euro, which is the functional currency of Erste Group Bank AG. The functional
currency is the currency of the primary business environment in which an entity operates. Each entity in the Group determines its own
functional currency and items included in the financial statements of each entity are measured using that functional currency.

For foreign currency translation, exchange rates quoted by the central banks in each country are used. For Group entities with the euro as
functional currency, these are the European Central Bank reference rates.

(i) Transactions and balances in foreign currency

Transactions in foreign currencies are initially recorded at the functional currency exchange rate effective as of the date of the transaction.
Subsequently, monetary assets and liabilities denominated in foreign currencies are translated at the functional currency exchange rate as
of the balance sheet date. All resulting exchange differences that arise are recognised in the income statement under the line item ‘Net
trading and fair value result’. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using
the exchange rates as of the dates of the initial transactions.

(ii) Translation of the statements of Group companies

Assets and liabilities of foreign operations (foreign subsidiaries and branches) are translated into Erste Group’s presentation currency, the
euro, at the rate of exchange as of the balance sheet date (closing rate). Their statements of comprehensive income are translated at aver-
age exchange rates calculated on the basis of daily rates. Goodwill, intangible assets recognised on acquisition of foreign subsidiaries (i.e.
customer relationships and brand) and fair value adjustments to the carrying amounts of assets and liabilities on the acquisition are treated
as assets and liabilities of the foreign subsidiaries and are translated at the closing rate. Exchange differences arising on translation are
recognised in other comprehensive income. On disposal of a foreign subsidiary, the cumulative amount of translation differences recog-
nised in other comprehensive income is recognised in the income statement under the line item ‘Other operating result’.

Financial instruments – recognition and measurement

A financial instrument is any contract giving rise to a financial asset of one party and a financial liability or equity instrument of another
party. In accordance with IAS 39, all financial assets and liabilities – which also include derivative financial instruments – have to be
recognised on the balance sheet and measured in accordance with their assigned categories.

Erste Group uses the following categories of financial instruments:

_ financial assets or financial liabilities at fair value through profit or loss
_ available-for-sale financial assets
_ held-to-maturity investments
_ loans and receivables
_ financial liabilities measured at amortised cost

IAS 39 categories of financial instruments are not necessarily the line items presented on the balance sheet. Relationships between the
balance sheet line items and categories of financial instruments are described in the table at point (xi).

(i) Initial recognition

Financial instruments are initially recognised when Erste Group becomes a party to the contractual provisions of the instrument. Regular
way (spot) purchases and sales of financial assets are recognised at the settlement date, which is the date that an asset is delivered. The
classification of financial instruments at initial recognition depends on their characteristics as well as the purpose and management’s
intention for which the financial instruments were acquired.

(ii) Initial measurement of financial instruments

Financial instruments are measured initially at their fair value including transaction costs. In the case of financial instruments at fair value
through profit or loss, however, transaction costs are not included but are recognised directly in profit or loss. Subsequent measurement is
described in the chapters below.

(iii) Cash and cash balances

Cash balances include only claims (deposits) against central banks and credit institutions that are repayable on demand. Repayable on
demand means that they may be withdrawn at any time or with a term of notice of only one business day or 24 hours. Mandatory mini-
mum reserves are also shown under this item.

104
(iv) Derivative financial instruments
Derivative financial instruments are used by Erste Group to manage exposures to interest rate, foreign currency and other market price
risks. Derivatives used by Erste Group include mainly interest rate swaps, futures, forward rate agreements, interest rate options, currency
swaps and currency options as well as credit default swaps.

For presentation purposes derivatives are split into

_Derivatives – held for trading; and
_Derivatives – hedge accounting

Derivative financial instruments are carried at fair value (dirty price) on the Consolidated Balance Sheet - regardless of whether they are
held for trading or hedge accounting purposes. Derivatives are carried as assets if their fair value is positive and as liabilities if their fair
value is negative.

Derivatives – held for trading are those which are not designated as hedging instruments for hedge accounting. They are presented in the
line item ‘Derivatives’ under the heading ‘Financial assets / financial liabilities – held for trading’. All kinds of non-hedging derivatives
without regard to their internal classification, i.e. both derivatives held in the trading book and banking book are presented in this line item.

Changes in the fair value (clean price) of derivatives held for trading are reported in the income statement in the line item ‘Net trading and
fair value result’. Interest income/expense related to derivatives – held for trading is recognised in the income statement under the line
item ‘Net interest income’ if held in the banking book or under the line item ‘Net trading and fair value result’ if held in the trading book.

Derivatives – hedge accounting are those which are designated as hedging instruments in hedge accounting relationships fulfilling the
conditions of IAS 39 (please refer to Hedge Accounting). In the balance sheet, they are presented in the line item ‘Derivatives - hedge
accounting’ on asset or liability side.

Changes in the fair value of derivatives (clean price) in fair value hedges are recognised in the income statement in the line item ‘Net
trading and fair value result’. Interest income/expense related to derivatives in fair value hedges is reported in the income statement in the
line item ‘Net interest income’.

The effective part of changes in the fair value (clean price) of derivatives in cash flow hedges is reported in other comprehensive income
in the line item ‘Cash flow hedge reserve’. The ineffective part of changes in the fair value (clean price) of derivatives in cash flow hedges
is recognised in profit or loss under the line item ‘Net trading and fair value result’. Interest income/expense from hedging derivatives in
cash flow hedges is disclosed in the income statement in the line item ‘Net interest income’.

v) Financial assets and financial liabilities - held for trading

Financial assets and financial liabilities – held for trading comprise derivatives and other trading assets and liabilities. Treatment of deriv-
atives – held for trading is discussed above in (iv).

Other trading assets and liabilities are non-derivative instruments. They include debt securities as well as equity instruments acquired or
issued principally for the purpose of selling or repurchasing in the near term. In the balance sheet, they are presented as ‘Other trading
assets’ or ‘Other trading liabilities’ under the heading ‘Financial assets / financial liabilities – held for trading’ .

Changes in fair value (clean price for debt instruments) resulting from other trading assets and liabilities are reported in the income state-
ment under the line item ‘Net trading and fair value result’. Interest income and expenses are reported in the income statement under the
line item ‘Net interest income’. Dividend income is shown under the line item ‘Dividend income’.

If securities purchased under agreement to resell or borrowed through securities lending transactions are subsequently sold to third parties,
the obligation to return the securities is recorded as a short sale within ‘Other trading liabilities’.

(vi) Financial assets or financial liabilities designated at fair value through profit or loss
Financial assets or financial liabilities classified in this category are those that have been designated by management on initial recognition
(fair value option).

105
Erste Group uses the fair value option in the case of financial assets managed on a fair value basis. In accordance with a documented
investment strategy, the performance of the portfolio is evaluated and regularly reported to the management board. The portfolio contains
mostly items of Asset Backed Securities (predominantly Mortgage Backed Securities), Funds, Financials and Sovereigns.

Financial assets - designated at fair value through profit or loss are recorded on the balance sheet at fair value under the line item ‘Finan-
cial assets - designated at fair value through profit or loss’, with changes in fair value recognised in the income statement under the line
item ‘Net trading and fair value result’. Interest earned on debt instruments is reported under the line item ‘Net interest income’. Dividend
income on equity instruments is shown under the line item ‘Dividend income’.

Furthermore, Erste Group uses the fair value option in the case of some hybrid financial liabilities. This is relevant when:
_ such classification eliminates or significantly reduces an accounting mismatch between the financial liability otherwise measured at
amortised cost and the related derivative measured at fair value; or
_ the entire hybrid contract is designated at fair value through profit or loss due to the existence of an embedded derivative.

The amount of fair value change attributable to changes in own credit risk for financial liabilities designated at fair value through profit or
loss is calculated by the method described by IFRS 7. This amount is the difference between the present value of the liability and the
observed market price of the liability at the end of the period. The rate used for discounting the liability is the sum of the observed
(benchmark) interest rate at the end of the period and the instrument-specific component of the internal rate of return determined at the
start of the period.

Financial liabilities designated at fair value through profit or loss are reported on the balance sheet under the line item ‘Financial liabilities
designated at fair value through profit or loss’ further broken down into ‘Deposits’ (both from customers and banks), ‘Debt securities
issued’ and ‘Other financial liabilities’. Changes in fair value are recognised in the income statement under the line item ‘Net trading and
fair value result’. Interest incurred is reported under the line item ‘Net interest income’.

(vii) Financial assets – available for sale

Available-for-sale financial assets include debt and equity securities as well as other interests in entities with lower than significant influ-
ence. Equity investments classified as available for sale are those that are neither classified as held for trading nor designated at fair value
through profit or loss. Debt securities in this category are those that are intended to be held for an indefinite period of time and that may
be sold in response to needs for liquidity or in response to changes in market conditions.

Available-for-sale financial assets are measured at fair value. On the balance sheet, available-for-sale financial assets are disclosed under
the line item ‘Financial assets – available for sale’.

Unrealised gains and losses are recognised in other comprehensive income and reported in the ‘Available for sale reserve’ until the finan-
cial asset is disposed of or impaired. If available-for-sale assets are disposed of or impaired, the cumulative gain or loss previously recog-
nised in other comprehensive income is reclassified to profit or loss and reported in the line item ‘Gains/losses on financial assets and
liabilities not measured at fair value through profit or loss, net’ in the case of sale or in the line item ‘Net impairment loss on financial
assets not measured at fair value through profit or loss’ in the case of impairment.

Interest income on available-for-sale financial assets is reported under the line item ‘Net interest income’. Dividend income is reported
under the line item ‘Dividend income’.

If the fair value of investments in non-quoted equity instruments cannot be measured reliably, they are recorded at cost less impairment.
This is the case when the range of reasonable fair value estimates as calculated by valuation models is significant and the probabilities of
the various estimates cannot be reasonably assessed. There is no market for such investments.

(viii) Financial assets – held to maturity

Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held-to-maturity and reported
on the balance sheet as ‘Financial assets – held to maturity’ if Erste Group has the intention and ability to hold them until maturity. After
initial recognition, held-to-maturity financial assets are measured at amortised cost. Amortised cost is calculated by taking into account
any discount, premium and/or transaction costs that are an integral part of the effective interest rate.

Interest earned on financial assets held to maturity is reported in the income statement under the line item ‘Net interest income’. Losses
arising from impairment of such financial assets are presented as ‘Net impairment loss on financial assets not measured at fair value

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through profit or loss’. Occasional realised gains or losses from selling are recognised in the income statement under the line item
‘Gains/losses on financial assets and liabilities not measured at fair value through profit or loss, net’.

(ix) Loans and receivables

In dem Bilanzposten "Kredite und Forderungen an Kreditinstitute" werden finanzielle Vermögenswerte erfasst, die der Kategorie Kredite
und Forderungen zugeordnet sind und eine vertragliche Laufzeit von mehr als 24 Stunden haben. In dem Bilanzposten "Kredite und For-
derungen an Kunden" werden finanzielle Vermögenswerte mit unabhängigen vertraglichen Laufzeit erfasst, die der Kategorie Kredite und
Forderungen zugeordnet sind. Furthermore, finance lease receivables that are accounted for using IAS 17 are presented under these bal-
ance sheet line items.

Loans and receivables are non-derivative financial assets (including debt securities) with fixed or determinable payments that are not
quoted in an active market, other than:
_ those that Erste Group intends to sell immediately or in the near term and those that Erste Group upon initial recognition designates as
at fair value through profit or loss;
_ those that Erste Group, upon initial recognition, designates as available for sale; or
_ those for which Erste Group may not recover substantially all of its initial investment, other than because of credit deterioration.
After initial recognition, loans and receivables are measured at amortised cost. Finance lease receivables are subsequently measured as
specified in the chapter 'Leasing'. Interest income earned is included under the line item ‘Net interest income’ in the income statement.

Impairment losses arising from loans and receivables are recognised in the income statement under the line item ‘Net impairment loss on
financial assets not measured at fair value through profit or loss ’.

(x) Financial liabilities measured at amortised cost

Financial liabilities are measured at amortised cost, unless they are measured at fair value through profit or loss.

For presentation on the balance sheet, the line item ‘Financial liabilities measured at amortised cost’ is used. The liabilities are further
broken down by ‘Deposits from banks’, ‘Deposits from customers’, ‘Debt securities issued’ and ‘Other financial liabilities’.

Interest expenses incurred are reported in the line item ‘Net interest income’ in the income statement. Gains and losses from derecognition
(mainly repurchase) of financial liabilities at amortised cost are reported under the line item ‘Gains/losses from financial assets and liabili-
ties not measured at fair value through profit or loss, net’.

(xi) Relationships between balance sheet items, measurement methods and categories of financial instruments:
Measurement principle
Balance sheet position Fair value At amortised cost Other Financial instrument category
ASSETS
Cash and cash balances x Nominal value n/a / Loans and receivables
Financial assets - held for trading
Derivatives x Financial assets at fair value through profit or loss
Other trading assets x Financial assets at fair value through profit or loss
Financial assets - at fair value through profit or loss x Financial assets at fair value through profit or loss
Financial assets - available for sale x Available for sale financial assets
Financial assets - held to maturity x Held to maturity investments
Loans and receivables to credit institutions x Loans and receivables
thereof Finance lease IAS 17 n/a
Loans and receivables to customers x Loans and receivables
thereof Finance lease IAS 17 n/a
Derivatives - hedge accounting x n/a
LIABILITIES AND EQUITY
Financial liabilities - held for trading
Derivatives x Financial liabilities - at fair value through profit or loss
Other trading liabilities x Financial liabilities - at fair value through profit or loss
Financial liabilities - at fair value through profit or loss x Financial liabilities - at fair value through profit or loss
Financial liabilities measured at amortised cost x Financial liabilities measured at amortised cost
Derivatives - hedge accounting x n/a

Furthermore, two additional classes of financial instruments which are not presented in the table above are part of IFRS 7 disclosures.
These are financial guarantees and irrevocable credit commitments.

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Embedded derivatives
Erste Group, as part of its business, is confronted with debt instruments containing structured features. Structured features mean that a
derivative is embedded in the host instruments. Embedded derivatives are separated from the host debt instruments if
_ the economic characteristics of the derivatives are not closely related to the economic characteristics and risks of the host debt instru-
ments;
_ the embedded derivative meets the IAS 39 definition of derivative; and
_ the hybrid instrument is not a financial asset or liability held for trading or designated at fair value through profit or loss.

Embedded derivatives that are separated are accounted for as stand-alone derivatives and presented on the balance sheet under the line
item ‘Derivatives’ in financial assets – held for trading and financial liabilities – held for trading.

At Erste Group, derivatives that are not closely related and are separated are predominantly embedded in issued host debt instruments
recognised as liabilities. The most typical cases are issues of bonds and deposits that contain interest caps, floors or collars in the money,
CMS bonds without appropriate cap, contractual features linking payments to non-interest variables such as FX rates, equity and com-
modity prices and indices, or third-party credit risk.

Reclassifications of financial assets

IAS 39 provides various possibilities to reclassify financial assets between categories of financial instruments. It also places restrictions
on some reclassifications. Erste Group makes use of reclassification alternatives only in the case of held-to-maturity financial assets. If a
significant credit deterioration in a held-to-maturity financial asset results in a change in the intention and ability to hold the asset until
maturity, the asset is reclassified into the available-for-sale financial assets category. Furthermore, reclassifications are done in case of
sales, which are performed closed to the maturity date. Such reclassifications are not included in the limit that triggers automatic reclassi-
fication of the entire held-to-maturity portfolio.

Derecognition of financial assets and financial liabilities

A financial asset (or where applicable part of a financial asset or part of a group of similar financial assets) is derecognised when:
_ the contractual rights to receive cash flows from the asset have expired; or
_ Erste Group has transferred its rights to receive cash flows from the asset
or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ ar-
rangement; and either:
_ it has transferred substantially all the risks and rewards connected with the ownership of the asset, or
_ has neither transferred nor retained substantially all the risks and rewards connected with the ownership of the asset but has trans-
ferred control of the asset.

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.

Repurchase and reverse repurchase agreements

Transactions where securities are sold under an agreement to repurchase at a specified future date are also known as ‘repos’ or ‘sale and
repurchase agreements’. Securities sold are not derecognised from the balance sheet, as Erste Group retains substantially all the risks and
rewards of ownership because the securities are repurchased when the repo transaction ends. Furthermore, Erste Group is the beneficiary
of all the coupons and other income payments received on the transferred assets over the period of the repo transactions. These payments
are remitted to Erste Group or are reflected in the repurchase price.

The corresponding cash received is recognised on the balance sheet with a corresponding obligation to return it as a liability under the line
item ‘Financial liabilities measured at amortised cost’, sub-items ‘Deposits from banks’ or ‘Deposits from customers’ reflecting the trans-
action’s economic substance as a loan to Erste Group. The difference between the sale and repurchase prices is treated as interest expense
and recorded in the income statement under the line item ‘Net interest income’ and is accrued over the life of the agreement. Financial
assets transferred out by Erste Group under repurchase agreements remain on the Group’s balance sheet and are measured according to
the rules applicable to the respective balance sheet item.

Conversely, securities purchased under agreements to resell at a specified future date are not recognised on the balance sheet. Such trans-
actions are also known as ‘reverse repos’. The consideration paid is recorded on the balance sheet under the respective line items ‘Loans
and receivables to credit institutions’ or ‘Loans and receivables to customers’, reflecting the transaction’s economic substance as a loan by
Erste Group. The difference between the purchase and resale prices is treated as interest income and is accrued over the life of the agree-
ment and recorded in the income statement under the line item ‘Net interest income’.

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Securities lending and borrowing
In securities lending transactions, the lender transfers ownership of securities to the borrower on the condition that the borrower will
retransfer, at the end of the agreed loan term, ownership of instruments of the same type, quality and quantity and will pay a fee deter-
mined by the duration of the lending. The transfer of the securities to counterparties via securities lending does not result in derecognition.
Substantially all the risks and rewards of ownership are retained by Erste Group as a lender because the securities are received at the end
of the securities lending transaction. Furthermore, Erste Group is the beneficiary of all the coupons and other income payments received
on the transferred assets over the period of the securities lendings.

Securities borrowed are not recognised on the balance sheet unless they are then sold to third parties. In this case, the obligation to return
the securities is recorded as ‘Other trading liability’.

Impairment of financial assets and credit risk losses of contingent liabilities

Erste Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets is
impaired. A financial asset or group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment
as a result of one or more events that have occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event
(or events) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably
estimated.

Erste Group uses the Basel II definition of default as a primary indicator of loss events. Default, as a loss event, occurs when
_ the obligor is more than 90 days past due on any material credit obligation;
_ as a result of specific information or an event, the obligor is unlikely to fulfil its credit obligations in full, without recourse to actions
such as realising security;
_ the obligor is subject to distressed restructuring, i.e. a change in contract terms, for clients in financial difficulties, resulting in a mate-
rial loss;
_ the obligor is subject to bankruptcy or similar protection proceedings.
For assessment at portfolio level, Erste Group uses the incurred but not reported losses concept. It identifies the time period between the
moment of the loss event causing future problems and actual detection of the problems by the bank at the moment of default.

Credit risk losses resulting from contingent liabilities are recognised if it is probable that there will be an outflow of resources to settle a
credit risk bearing contingent liability that will result in a loss.

(i) Financial assets carried at amortised cost

Erste Group first assesses individually for significant loans and held-to-maturity securities whether objective evidence of impairment
exists. If no objective evidence of impairment exists for an individually assessed financial asset, Erste Group includes the asset in a group
of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually as-
sessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of
impairment.

If an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and
the present value of estimated future cash flows discounted at the original effective interest rate. The calculation of the present value
of the estimated future cash flows of a collateralised financial asset also reflects the cash flows that may result from foreclosure less
costs for obtaining and selling the collateral.

Impairment losses on financial assets carried at amortised cost are recognised as loss allowance. On the balance sheet, loss allowances
decrease the value of the assets. I.e. the net carrying amount of the financial asset presented on the balance sheet is the difference between
the gross carrying amount and the cumulative loss allowance. This treatment holds for loss allowances for loans and receivables and for
incurred but not reported losses (i.e. portfolio allowances) on held-to-maturity financial assets. Reconciliation of changes in these loss
allowance accounts is disclosed in the notes. However, individual loss allowances for held to maturity financial assets are treated as direct
reduction of the asset carrying amount and therefore reconciliation of changes is not disclosed in the notes.

In the income statement, impairment losses and their reversals are presented in the line item ‘Net impairment loss on financial assets’.
Loans together with the associated allowance are removed from the balance sheet when there is no realistic prospect of future recovery
and all collaterals have been realised by Erste Group.

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If, in a subsequent year, the amount of the estimated impairment loss increases or decreases, the previously recognised impairment loss is
increased or reduced by adjusting the loss allowance.

(ii) Available-for-sale financial assets

In cases of debt instruments classified as available for sale, Erste Group assesses individually whether there is objective evidence of im-
pairment based on the same criteria as used for financial assets carried at amortised cost. However, the amount recorded for impairment is
the cumulative loss measured as the difference between the amortised cost and the current fair value, less any impairment loss on that
asset previously recognised in the income statement. On recognising impairment, any loss retained in the other comprehensive income
item ‘Available for sale reserve’ is reclassified to the income statement and shown as an impairment loss under the line item ‘Net impair-
ment loss on financial assets’.

Wenn sich der Fair Value eines Schuldinstruments in einer der folgenden Perioden erhöht und sich diese Erhöhung objektiv auf ein positi-
ves Ereignis zurückführen lässt, das nach der ergebniswirksamen Verbuchung der Wertminderung eingetreten ist, wird der Betrag der
Wertaufholung in der Gewinn- und Verlustrechnung in dem Posten "Wertberichtigungen für nicht erfolgswirksam zum Fair Value bilan-
zierte finanzielle Vermögenswerte (netto)" erfasst. In der Bilanz werden Wertminderungsverluste und etwaige Wertaufholungen unmittel-
bar gegen den Vermögenswert verrechnet.

In cases of equity investments classified as available for sale, objective evidence also includes a ‘significant’ or ‘prolonged’ decline
in the fair value of the investment below its cost. For this purpose at Erste Group, ‘significant’ decline means a market price below
80% of the acquisition cost and ‘prolonged’ decline refers to a market price that is permanently below the acquisition cost for a
period of nine months up to the reporting date.

Where there is evidence of impairment on equity investments, the cumulative loss measured as the difference between the acquisition cost
and the current fair value, less any impairment loss on that investment previously recognised in the income statement, is shown as an
impairment loss in the income statement under the line item ‘Net impairment loss on financial assets’. Any loss previously recognised
under the other comprehensive income item ‘Available for sale reserve’ has to be reclassified to the income statement as part of an im-
pairment loss under the line item ‘Net impairment loss on financial assets’.

Impairment losses on equity investments are not reversed through the income statement; increases in the fair value after impairment are
recognised directly in other comprehensive income. Impairment losses and their reversals are recognised directly against the assets on the
balance sheet.

For investment in unquoted equity instruments carried at cost because their fair value cannot be determined reliably, the amount of the
impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future
cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses shall not be reversed.

(iii) Contingent liabilities

Provisions for credit losses of contingent liabilities (particularly financial guarantees as well as credit commitments) are included under
the balance sheet line item ‘Provisions’. The related expense or its reversal is reported in the income statement under the line item ‘Other
operating result’.

Hedge accounting
Erste Group makes use of derivative instruments to manage exposures to interest rate risk and foreign currency risk. At inception of a
hedge relationship, the bank formally documents the relationship between the hedged item and the hedging instrument, including the
nature of the risk, the objective and strategy for undertaking the hedge and the method that will be used to assess the effectiveness of the
hedging relationship. A hedge is expected to be highly effective if the changes in fair value or cash flows attributable to the hedged risk
during the period for which the hedge is designated are expected to offset the fair value changes of the hedging instrument in a range of
80% to 125%. Hedge effectiveness is assessed at inception and throughout the term of each hedging relationship. Exact conditions for
particular types of hedges and for testing the hedge effectiveness by Erste Group are specified internally in the hedge accounting policy.

(i) Fair value hedges

Fair value hedges are employed to reduce market risk. For qualifying and designated fair value hedges, the change in the fair value (clean
price) of a hedging instrument is recognised in the income statement under the line item ‘Net trading and fair value result’. Interest income
and expenses on hedging derivatives are reported under the line item ‘Net interest income’. The change in the fair value of the hedged

110
item attributable to the hedged risk is also recognised in the income statement under the line item ‘Net trading and fair value result’ and
adjusts the carrying amount of the hedged item.

Erste Group also applies portfolio fair value hedges of interest rate risk as regulated by IAS 39.AG114-AG132. Currently only interest
rate risk from issued bonds is being hedged (i.e. no assets are included as hedged items). The change in the fair value of the hedged items
attributable to the hedged interest risk is presented on the balance sheet under the line item ‘Changes in fair value of portfolio hedged
items’. Erste Group does not make use of the relaxation of hedge accounting requirements provided for portfolio fair value hedges by the
EU carve-out.

If the hedging instrument expires, is sold, is terminated or is exercised, or when the hedge no longer meets the criteria for hedge account-
ing, the hedge relationship is terminated. In this case, the fair value adjustment of the hedged item is amortised to the income statement
under the line item ‘Net interest income’ until maturity of the financial instrument.

(ii) Cash flow hedges

Cash flow hedges are used to eliminate uncertainty in the future cash flows in order to stabilise net interest income. For designated and
qualifying cash flow hedges, the effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive
income and reported under the ‘Cash flow hedge reserve’. The ineffective portion of the gain or loss on the hedging instrument is recog-
nised in the income statement under the line item ‘Net trading and fair value result’. For determination of the effective and ineffective
portions, the derivative is considered at its clean price, i.e. excluding the interest component. If the hedged cash flow affects the income
statement, the gain or loss on the hedging instrument is reclassified from other comprehensive income on the corresponding income or
expense line item in the income statement (mainly ‘Net interest income’). As far as accounting for hedged items in cash flow hedges is
concerned there is no change compared to the situation when no hedging is applied.

When a hedging instrument expires, is sold, is terminated, is exercised, or when a hedge no longer meets the criteria for hedge accounting,
the hedge relationship is terminated. In this case, the cumulative gain or loss on the hedging instrument that has been recognised in other
comprehensive income remains in ‘Cash flow hedge reserve’ until the transaction occurs.

Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount is reported on the balance sheet if, and only if, there is a currently
enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the
liability simultaneously.

Determination of fair value

Fair value is the price that would be received if an asset were sold or paid, if a liability were transferred in an orderly transaction between
market participants on the measurement date.

Details on valuation techniques applied for fair value measurement and on the fair value hierarchy are disclosed in Note 46 Fair value of
assets and liabilities.

Leasing
A lease is an agreement whereby the lessor conveys to the lessee the right to use an asset for an agreed period of time in return for a pay-
ment or series of payments. A finance lease at Erste Group is a lease that transfers substantially all the risks and rewards incidental to
ownership of an asset. All other lease agreements at Erste Group are classified as operating leases.

Erste Group as a lessor

The lessor in the case of a finance lease reports a receivable from the lessee under the line item ‘Loans and receivables to customers’ or
‘Loans and receivables to credit institutions’. The receivable is equal to the present value of the contractually agreed payments taking into
account any residual value. Interest income on the receivable is reported in the income statement under the line item ‘Net interest in-
come’.

In the case of operating leases, the leased asset is reported by the lessor in ‘Property and equipment’ or in ‘Investment properties’ and is
depreciated in accordance with the principles applicable to the assets involved. Lease income is recognised on a straight-line basis over
the lease term in the income statement under the line item ‘Rental income from investment properties & other operating leases’.

Lease agreements in which Erste Group is the lessor almost exclusively comprise finance leases.

111
Erste Group as a lessee
As a lessee, Erste Group has not entered into any leases meeting the conditions of finance leases. Operating lease payments are recognised
as an expense in the income statement on the line item ‘Other administrative expenses’ on a straight-line basis over the lease term.

Business combinations and goodwill

(i) Business combinations
Business combinations are accounted for using the acquisition method of accounting. Goodwill represents the future economic benefits
resulting from the business combination, arising from assets that are not individually identified and separately recognised. Goodwill is
measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests and the fair value of the
previously held equity interest over the net of the acquisition-date amounts of the identifiable assets acquired as well as the liabilities
assumed. At the acquisition date, the identifiable assets acquired and the liabilities assumed are generally recognised at their fair values.

If, after reassessment of all components described above, the calculation results in a negative amount, it is recognised as a bargain pur-
chase gain and reported in the income statement under the line item ‘Other operating result’ in the year of acquisition.

Non-controlling interests that are present ownership interests in the acquiree are measured at the proportionate share of the acquiree’s
identifiable net assets. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in
another IFRS. Acquisition costs incurred are expensed and included under the income statement line item ‘Other operating result’.

(ii) Goodwill and goodwill impairment testing

Goodwill arising on acquisition of a business is carried at cost as established as of the date of acquisition of the business less accumulated
impairment losses, if any. Goodwill is tested for impairment annually in November, or whenever there is an indication of possible im-
pairment during the year, with any impairment determined recognised in profit or loss. The impairment test is carried out for each cash-
generating unit (CGU) to which goodwill has been allocated. A CGU is the smallest identifiable group of assets that generates cash in-
flows that are largely independent of the cash inflows from other assets or groups of assets.

Goodwill is tested for impairment by comparing the recoverable amount of each CGU to which goodwill has been allocated with its car-
rying amount. The carrying amount of a CGU is based on the amount of net asset value allocated to the CGU taking into account any
goodwill and unamortised intangible assets recognised for the CGU at the time of business combination.

The recoverable amount is the higher of a CGU’s fair value less costs of disposal and its value in use. Where available, the fair value less
costs of disposal is determined based on recent transactions, market quotations or appraisals. The value in use is determined using a dis-
counted cash flow model (DCF model), which incorporates the specifics of the banking business and its regulatory environment. In de-
termining value in use, the present value of future earnings distributable to shareholders is calculated.

The estimation of future earnings distributable to shareholders is based on financial plans for the CGUs as agreed by the management
while taking into account the fulfilment of the respective regulatory capital requirements. The planning period is five years. Any forecast-
ed earnings beyond the planning period are derived on the basis of the last year of the planning period and a long-term growth rate. The
present value of such perpetual earnings growing at a stable rate (referred to as terminal value) takes into consideration macroeconomic
parameters and economically sustainable cash flows for each CGU. Values for the long-term growth rates are disclosed in Note 27 Intan-
gible assets in the subsection ‘Development of goodwill’.

The cash flows are determined by subtracting the annual capital requirement generated by a change in the amount of risk-weighted assets
from the net profit. The capital requirement was defined through the target tier 1 ratio in light of the expected future minimum regulatory
capital requirements.

The value in use is determined by discounting the cash flows at a rate that takes into account present market rates and the specific risks of
the CGU. The discount rates have been determined based on the capital asset pricing model (CAPM). According to the CAPM, the dis-
count rate comprises a risk-free interest rate together with a market risk premium that itself is multiplied by a factor that represents the
systematic market risk (beta factor). Furthermore, a country-risk premium component is considered in calculation of the discount rate.
The values used to establish the discount rates are determined using external sources of information. Discount rates applied to determine
the value in use are disclosed in Note 27 Intangible assets in the subsection ‘Development of goodwill’.

Where the recoverable amount of a CGU is less than its carrying amount, the difference is recognised as an impairment loss in the income
statement under the line item ‘Other operating result’. The impairment loss is allocated first to write down the CGU’s goodwill. Any

112
remaining impairment loss reduces the carrying amount of the CGU’s other assets, though not to an amount lower than their fair value
less costs of disposal. No impairment loss is recognised if the recoverable amount of the CGU is higher than or equal to its carrying
amount. Impairment losses relating to goodwill cannot be reversed in future periods.

The goodwill included in the acquisition cost of investments in associates and joint ventures is not tested separately by performing the
recurring impairment assessments applicable to goodwill. Instead, the entire carrying amount of the investment is tested for impairment as
a single asset by comparing its recoverable amount (higher of fair value in use and fair value less costs to sell) with its carrying amount
(after application of the equity method) whenever relevant objective evidence of impairment is identified. Such evidence includes infor-
mation about significant changes with an adverse effect that have taken place in the technological, market, economic or legal environ-
ments in which associates and joint ventures operate, indicating that the cost of the investment may not be recovered.

Property and equipment

Property and equipment is measured at cost less accumulated depreciation and accumulated impairment. Borrowing costs for qualifying
assets are capitalised into the costs of property and equipment.

Depreciation is calculated using the straight-line method to write down the cost of property and equipment to their residual values over
their estimated useful lives. Depreciation is recognised in the income statement on the line item ‘Depreciation and amortisation’ and
impairment under the line item ‘Other operating result’.

The estimated useful lives are as follows:

Useful lifein years
Buildings 15-50
Office furniture and equipment 4-10
Passenger cars 4-8
Computer hardware 4-6

Land is not depreciated.

Property and equipment is derecognised on disposal or when no future economic benefits are expected from its use. Any gain or loss
arising on disposal of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is
recognised in the income statement under the line item ‘Other operating result’.

Investment properties
Investment property is property (land and buildings or part of a building or both) held for the purpose of earning rental income or for
capital appreciation. In the case of partial own use, the property is investment property only if the owner-occupied portion is insignificant.
Investments in land and buildings under construction, where the future use is expected to be the same as for investment property, are
treated as investment property.

Investment property is measured initially at cost, including transaction costs. Subsequent to initial recognition, investment property is
measured at cost less accumulated depreciation and impairment. Investment property is presented on the balance sheet in the line item
‘Investment properties’.

Rental income is recognised in the line item ‘Rental income from investment properties and other operating leases’. Depreciation is pre-
sented in the income statement in the line item ‘Depreciation and amortisation’ using the straight-line method over an estimated useful
life. The useful lives of investment properties are identical to those of buildings reported under property and equipment. Any impairment
losses, as well as their reversals, are recognised under the income statement line item ‘Other operating result’.

Property Held for Sale (Inventory)

The Group also invests in property that is held for sale in the ordinary course of business or property in the process of construction or
development for such sale. This property is presented as ‘Other assets’ and is measured at the lower of cost and net realisable value in
accordance with IAS 2 Inventories.

The cost of acquiring inventory includes not only the purchase price but also all other directly attributable expenses, such as transportation
costs, customs duties, other taxes and costs of conversion of inventories, etc. Borrowing costs are capitalised to the extent to which they
directly relate to the acquisition of real estate.

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Sales of these assets/apartments are recognised as revenues under the income statement line item ‘Other operating result’, together with
costs of sales and other costs incurred in selling the assets.

Intangible assets
In addition to goodwill, Erste Group’s intangible assets include computer software and customer relationships, the brand, the distribution
network and other intangible assets. An intangible asset is recognised only when its cost can be measured reliably and it is probable that
the expected future economic benefits that are attributable to it will flow to the bank.

Costs of internally generated software are capitalised if Erste Group can demonstrate the technical feasibility and intention of completing
the software, the ability to use it, how it will generate probable economic benefits, the availability of resources and the ability to measure
the expenditures reliably. Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.

The cost of intangible assets acquired in a business combination is their fair value as of the date of acquisition. In the case of Erste Group,
these are brands, customer relationships and distribution networks, and they are capitalised on acquisition if they can be measured with
sufficient reliability.

Intangible assets with finite lives are amortised over their useful economic lives using the straight-line method. The amortisation period
and method are reviewed at least at each financial year-end and adjusted if necessary. The amortisation expense on intangible assets with
finite lives is recognised in the income statement under the line item ‘Depreciation and amortisation’.

The estimated useful lives are as follows:

Useful lifein years
Computer software 4-8
Customer relationships 10-20
Distribution network 5.5

Brands are not amortised as they are assumed to have an indefinite useful life. An intangible asset has an indefinite useful life, if there are
no legal, contractual, regulatory or other factors limiting that useful life. Brands are tested for impairment annually within the cash-
generating unit to which they belong, and impairment is recognised if appropriate. Furthermore, each period brands are reviewed as to
whether current circumstances continue to support the conclusion as to indefinite life. In the event of impairment, impairment losses are
recognised in the income statement under the line item ‘Other operating result’.

Impairment of non-financial assets (property and equipment, investment properties, intangible assets)
The bank assesses at each reporting date whether there is an indication that a non-financial asset may be impaired. Testing for impairment
is done at individual asset level if the asset generates cash inflows that are largely independent of those from other assets. The typical case
is investment property. Otherwise the impairment test is carried out at the level of the cash-generating unit (CGU) to which the asset
belongs. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows
from other assets or groups of assets. For specific rules related to impairment of goodwill and impairment allocation rules for CGUs
please see the chapter ‘Business combinations and goodwill’, part (ii) Goodwill and goodwill impairment testing.

If any indication of impairment exists, or when annual impairment testing for an asset is required, the bank estimates the asset’s recovera-
ble amount. An asset’s recoverable amount is the higher of the asset’s or CGU's fair value less costs of disposal and its value in use. If the
carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recovera-
ble amount. In measuring value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset.
At each reporting date an assessment is made as to whether there is any indication that previously recognised impairment losses may no
longer exist or may have decreased. If such an indication exists, the bank estimates the asset’s or CGU’s recoverable amount. The previ-
ously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable
amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its
recoverable amount or does not exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss
been recognised for the asset in prior years.

Impairments and their reversals are recognised in the income statement under the line item ‘Other operating result’.

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Non-current assets and disposal groups held for sale
Non-current assets are classified as held for sale if they can be sold in their present condition and the sale is highly probable within 12
months of classification as held for sale. If assets are to be sold as part of a group that may also contain liabilities (e.g. a subsidiary) they
are referred to as disposal group held for sale.

Assets classified as held for sale and assets belonging to disposal groups held for sale are reported under the balance sheet line item ‘As-
sets held for sale’. Liabilities belonging to the disposal groups held for sale are presented on the balance sheet under the line item ‘Liabili-
ties associated with assets held for sale’.

Non-current assets and disposal groups that are classified as held for sale are measured at the lower of carrying amount and fair value less
costs to sell. Should the impairment loss in a disposal group exceed the carrying amount of the assets that are within the scope of IFRS 5
measurement requirements, there is no specific guidance on how to treat such a difference. Erste Group recognises this difference as a
provision under the balance sheet line item ‘Provisions’.

Financial guarantees
In the ordinary course of business, Erste Group provides financial guarantees, consisting of various types of letters of credit and guaran-
tees. According to IAS 39, a financial guarantee is a contract that requires the guarantor to make specified payments to reimburse the
holder for a loss it incurs in case a specified debtor fails to make a payment when due in accordance with the original or modified terms of
a debt instrument.

If Erste Group is in a position of being a guarantee holder, the financial guarantee is not recorded on the balance sheet but is taken into
consideration as collateral when determining impairment of the guaranteed asset.

Erste Group as a guarantor recognises financial guarantees as soon as it becomes a contracting party (i.e. when the guarantee offer is
accepted). Financial guarantees are initially measured at fair value. Generally, the initial measurement is the premium received for a guar-
antee. If no premium is received at contract inception, the fair value of a financial guarantee is nil, as this is the price that would be paid to
transfer the liability in an orderly transaction between market participants. Subsequent to initial recognition, the financial guarantee con-
tract is reviewed for the possibility that provisioning will be required under IAS 37. Such provisions are presented on the balance sheet
under the line ‘Provisions’.

The premium received is recognised in the income statement under the line item ‘Net fee and commission income’ on a straight-line basis
over the life of the guarantee.

Defined employee benefit plans

Defined employee benefit plans operated by Erste Group are for pensions, severance and jubilee benefits. From IAS 19 categorisation
perspective pension and severance benefits qualify as post-employment defined benefits plans whereas jubilee benefits are other long-
term employee benefits.

The defined benefit pension plans relate only to retired employees. The pension obligations for current employees were transferred to
external pension funds in previous years. Remaining with Erste Group is a defined-benefit obligation for entitlements of former employ-
ees who were already retired as of 31 December 1998 before the pension reform took effect, and for those former employees who retired
only in 1999 but remained entitled to a direct pension from Erste Group under individual agreements. Also included are entitlements to
resulting survivor pensions. Severance benefit obligations exist in relation to Austrian employees who entered the Group’s employment
before 1 January 2003. The severance benefit is one-time remuneration to which employees are entitled when their employment relation-
ship ends. The entitlement to this severance payment arises after three years of employment. Defined-benefit plans include jubilee benefits.
Jubilee payments (payments for long service and/or loyal service) are remuneration tied to the length of an employee’s service to the employ-
er. The entitlement to jubilee benefits is established by collective agreement, which defines both the conditions and amount of the entitlement.

Obligations ensuing from defined employee benefit plans are determined using the projected unit credit method. Future obligations are
determined based on actuarial expert opinions. The calculation takes into account not only those salaries, pensions and vested rights to
future pension payments known as of the balance sheet date but also anticipated future rates of increase in salaries and pensions. The
liability recognised under a defined-benefit plan represents the present value of the defined benefit obligation less the fair value of the
plan assets available for the direct settlement of obligations. For all plans, the present value of the obligation exceeds the fair value of the
plan assets. The resulting defined benefit liability is reported on the balance sheet under the line item ‘Provisions’. At Erste Group, the
plan assets consist of qualifying insurance policies purchased to back severance and jubilee benefit provisions.

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Remeasurements consist of actuarial gains and losses on the defined benefit obligations and the return on plan assets. Remeasurements of
pension and severance defined-benefit plans are recognised in other comprehensive income. Remeasurements of jubilee defined-benefit
plans are recognised in the income statement under the line item ‘Personnel expenses’.

Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
On the balance sheet, provisions are reported under the line item ‘Provisions’. They include credit risk loss provisions for contingent
liabilities (particularly financial guarantees and loan commitments) as well as provisions for litigation and restructuring. Expenses or
income related to provisions are reported under the line item ‘Other operating result’.

Taxes
(i) Current tax
Current tax assets and liabilities for the current and prior years are measured as the amount expected to be recovered from or paid to the
taxation authorities. The tax rates and tax laws used to compute the amounts are those enacted by the balance sheet date.

(ii) Deferred tax

Deferred tax is recognised for temporary differences between the tax bases of assets and liabilities and their carrying amounts as of the
balance sheet date. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all
deductible temporary differences and unused tax losses to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences and carry forward of unused tax losses can be utilised. Deferred taxes are not recognised on tempo-
rary differences arising from the initial recognition of goodwill.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are
reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the
deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liabil-
ity is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted as of the balance sheet date. For the subsid-
iaries, local tax environments apply.

Deferred tax relating to items recognised in other comprehensive income is recognised in other comprehensive income and not in the
income statement.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right to offset exists and the deferred taxes relate to the
same taxation authority.

Treasury shares and contracts on treasury shares

Equity instruments of Erste Group that it or any of its subsidiaries acquire (referred to as treasury shares) are deducted from equity. Con-
sideration paid or received on the purchase, sale, issue or cancellation of Erste Group’s own equity instruments, including transaction
costs, is recognised directly in equity. No gain or loss is recognised in the statement of comprehensive income on the purchase, sale, issue
or cancellation of its own equity instruments.

Fiduciary assets
The Group provides trust and other fiduciary services that result in the holding or investing of assets on behalf of its clients. Assets held in
a fiduciary capacity are not reported in the financial statements, as they are not the assets of Erste Group.

Dividends on ordinary shares

Dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by Erste Group’s shareholders.

Recognition of income and expenses

Revenue is recognised to the extent that the economic benefits will flow to the entity and the revenue can be reliably measured. The de-
scription and revenue recognition criteria of the line items reported in the income statement are as follows:

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(i) Net interest income
Interest income and interest expense is recorded using the effective interest rate (EIR) method. The calculation includes origination fees
resulting from the lending business as well as transaction costs that are directly attributable to the instrument and are an integral part of
the EIR (apart from financial instruments at fair value through profit or loss), but no future credit losses. Interest income from individually
impaired loans and receivables and held-to-maturity financial assets is calculated by applying the original effective interest rate used to
discount the estimated cash flows for the purpose of measuring the impairment loss.

Interest income includes interest income on loans and receivables to credit institutions and customers, on cash balances and on bonds and
other interest-bearing securities in all financial assets categories. Interest expenses include interest paid on deposits from customers, de-
posits from banks, debt securities issued and other financial liabilities in all financial liabilities categories.

Net interest income also includes interest on derivative financial instruments held in the banking book. In addition, net interest cost on
severance payment, pension and jubilee obligations is presented here.

(ii) Net fee and commission income

Erste Group earns fee and commission income from a diverse range of services that it provides to its customers.

Fees earned for the provision of services over a period of time are accrued over that period. These fees include lending fees, guarantee
fees, commission income from asset management, custody and other management and advisory fees as well as fees from insurance bro-
kerage, building society brokerage and foreign exchange transactions.

Fee income earned from providing transaction services, such as arranging the acquisition of shares or other securities or the purchase or
sale of businesses, is recognised upon completion of the underlying transaction.

(iii) Dividend income

Dividend income is recognised when the right to receive the payment is established.

This line item includes dividend from shares and other equity-related securities in all portfolios as well as income from other investments
in companies categorised as available for sale. It also contains dividends from subsidiaries and from associates or joint ventures that are
not consolidated or not accounted for using the equity method due to their insignificance.

(iv) Net trading and fair value result

Results arising from trading activities include all gains and losses from changes in the fair value (clean price) of financial assets and fi-
nancial liabilities classified as held for trading, including all derivatives not designated as hedging instruments. In addition, for derivative
financial instruments held in the trading book, the net trading result also contains interest income or expense. However, interest income or
expenses related to non-derivative trading assets and liabilities and to derivatives held in the banking book are not part of the net trading
result as they are reported as ‘Net interest income’. The net trading result also includes any ineffective portions recorded in fair value and
cash flow hedge transactions as well as foreign exchange gains and losses.

The fair value result relates to changes in the clean price of assets and liabilities designated at fair value through profit or loss.

(v) Net result from equity method investments

The line item contains result from associates and joint ventures recorded by applying the equity method (measured as the investor’s share
of profit or loss in the associates and joint ventures).

However, impairment losses, reversal of impairment losses and realised gains and losses on investments in associates or joint ventures
accounted for using the equity method are reported under the line item ‘Other operating result’.

(vi) Rental income from investment properties & other operating leases
Rental income from investment properties and other operating leases is recognised on a straight-line basis over the lease term.

(vii) Personnel expenses

Personnel expenses include wages and salaries, bonuses, statutory and voluntary social security contributions, staff-related taxes and
levies. They also include service cost for severance payment, pension and jubilee obligations and remeasurements of jubilee obligations.

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(viii) Other administrative expenses
Other administrative expenses include information technology expenses, expenses for office space, office operating expenses, advertising
and marketing, expenditures for legal and other consultants as well as sundry other administrative expenses. Furthermore the line item
contains deposit insurance contributions expenses.

(ix) Depreciation and amortisation

This line item comprises depreciation of property and equipment, depreciation of investment property and amortisation of intangible assets.

(x) Gains/losses on financial assets and liabilities not measured at fair value through profit or loss, net
This line item includes selling and other derecognition gains or losses on available-for-sale and held-to-maturity financial assets, loans
and receivables and financial liabilities measured at amortised cost. However, if such gains/losses relate to individually impaired financial
assets they are included as part of net impairment loss.

(xi) Net impairment loss on financial assets not measured at fair value through profit or loss
Net impairment losses on financial assets comprise impairment losses and reversals of impairment on loans and receivables, held-to-
maturity and available-for-sale financial assets. Net impairment losses relate to allowances recognised both at individual and portfolio
(incurred but not reported) level. Direct write-offs are considered as part of impairment losses. This line item also includes recoveries on
written-off loans removed from the balance sheet.

(xii) Other operating result

The other operating result reflects all other income and expenses not directly attributable to Erste Group’s ordinary activities. Further-
more, levies on banking activities are considered as part of the other operating result.

The other operating result includes impairment losses or any reversal of impairment losses as well as results on the sale of property and
equipment and intangible assets. Also included here are any impairment losses on goodwill.

In addition, the other operating result encompasses the following: expenses for other taxes; income from the release of and expenses for
allocations to provisions; impairment losses (and their reversal if any) as well as selling gains and losses on equity investments accounted
for using the equity method; and gains or losses from derecognition of subsidiaries.

d) SIGNIFICANT ACCOUNTING JUDGEMENTS, ASSUMPTIONS AND ESTIMATES

The consolidated financial statements contain amounts that have been determined on the basis of judgements and by the use of estimates
and assumptions. The estimates and assumptions used are based on historical experience and other factors, such as planning as well as
expectations and forecasts of future events that are currently deemed to be reasonable. As a consequence of the uncertainty associated
with these assumptions and estimates, actual results could in future periods lead to adjustments in the carrying amounts of the related
assets or liabilities. The most significant uses of judgements, assumptions and estimates are as follows:

Control
IFRS 10 “Consolidated Financial Statements” defines the investor’s control over an investee in terms of the investor having all of the
following: (a) power to direct the relevant activities of the investee, i.e. activities that significantly affect the investee’s returns; (b) expo-
sure, or rights, to variable returns from its involvement with the investee; and (c) the ability to use its power over the investee to affect the
amount of the investor’s returns.

Hence, assessing the existence of control under this definition may require considerable accounting judgements, assumptions and esti-
mates, notably in non-standard situations such as: (1) power stemming both from voting rights and from contractual arrangements (or
mostly from the latter); (2) exposure stemming both from on-balance investments and from off-balance commitments or guarantees (or
mostly from the latter); or (3) variable returns stemming both from readily identifiable income streams (e.g. dividends, interest, fees) and
from cost savings, economies of scale and/or operational synergies (or mostly from the latter) .
In the case of Erste Group, such accounting judgements, assumptions and estimates have been primarily relevant for the assessment of the
following cases:

(i) The savings bank members of the Austrian cross-guarantee system (Haftungsverbund)
Erste Group Bank AG is a member of the Haftungsverbund (cross-guarantee system) of the Austrian savings bank sector. As of the bal-
ance sheet date, all of Austria’s savings banks, in addition to Erste Group Bank AG and Erste Bank der oesterreichischen Sparkassen AG,

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formed part of this cross-guarantee system. The provisions of the agreement governing the Haftungsverbund are implemented by the
steering company Haftungsverbund GmbH. Erste Group Bank AG always holds directly and indirectly at least 51% of the voting rights of
the steering company, through Erste Bank der oesterreichischen Sparkassen AG and through savings banks in which the Group holds the
majority of voting rights.

In 2013, collaboration with savings banks was further strengthened by way of an additional agreement. The purpose of the agreement
concluded in 2013 and effective as of 1 January 2014 is not only to broaden the regulatory options available to Erste Group Bank AG but
also to ensure compliance with point 127 of Article 4 (1) (1) CRR and Article 113 (7) CRR with a view to allowing recognition of minori-
ty interests at consolidated level in acc. with Article 84 (6) CRR. Savings banks that are party to the agreement concluded in 2013 also
include Allgemeine Sparkasse Oberösterreich, which forms an institutional protection scheme as defined under Article 113 (7) CRR with
the other members of the Haftungsverbund.

For all savings banks in which Erste Group holds less than 50% of the voting rights, an assessment of whether control is achieved through
the provisions of the Haftungsverbund agreement has been performed.

Based on the contractual agreement, Haftungsverbund GmbH as the steering company is vested with the following substantive rights
related to the savings banks:
_ participation in the appointment of board members
_ approval of budgets including capital decisions
_ provision of binding guidelines in the areas of risk and liquidity management as well as internal audit
_ determination of thresholds for capital requirement including the payout of dividends

Furthermore, taking into account the magnitude of Erste Group’s involvement with the member banks - whether in the form of synergies,
investments, commitments, guarantees, or access to common resources - the Group has significant exposure to each of the member banks’
variable returns. As Haftungsverbund GmbH is able to affect the variable returns through its power, it has been assessed that Haftungsver-
bund GmbH has control over the savings banks.

As Erste Group Bank AG controls the steering company, it exercises control over the members of the cross-guarantee system.

(ii) Investment funds under own management

The Group has assessed whether the investment funds it manages through its asset management subsidiaries are controlled and hence
shall be consolidated. This assessment has been made on the basis that power over such investment funds is generally conferred based on
the contractual arrangements appointing an Erste Group subsidiary as fund manager, without any substantive removal rights the by fund’s
investors. Furthermore, Erste Group made the conclusive judgement that its exposure to such own-managed funds’ variable returns shall
be considered as significant if, additionally to the exposure through management fees, the Group is also exposed in the form of at least
20% investment in the fund. Furthermore, in its capacity as fund manager, Erste Group is also able to affect the returns of the funds
through its power. Following this assessment, investment funds under own management in which the Group - directly or through its sub-
sidiaries - has significant unit holdings are deemed to be controlled and included in the scope of consolidation

(iii) Pension funds under own management

The Group has assessed whether the contractual arrangements appointing an Erste Group subsidiary as pension fund manager (with no
substantive removal rights by the fund’s participants) are generally expected to confer power over such funds, followed by an assessment
of the Group’s exposure/rights to the pension fund’s variable returns. The relevant legal requirements regulating the activities of such
pension funds in their respective jurisdictions were also considered, notably in assessing the significance of the rights to variable returns
from management fees, as well as of the exposure to losses from any guarantees that the fund manager may be legally bound to.

As a result of this review, the Czech pension fund “Transformovaný fond penzijního připojištění se státním příspěvkem Česká spořitelna –
penzijní společnost, a.s” (the “Transformed pension fund”) has been deconsolidated with effect from with 2014, as a result of significant
statutory changes in the fund’s articles of incorporation. These changes resulted in the narrowing of the fund manager’s investment man-
date, limiting the scope of the fund manager’s decision making authority and restricting the manager’s (and therefore Erste Group’s)
exposure to the fund’s variability of returns and other interests (including guarantees).

Joint control and classification of joint arrangements

IFRS 11 “Joint Arrangements” defines joint control as a contractual sharing of control whereby decisions about the relevant activities
require the unanimous consent of the parties sharing control. Furthermore, IFRS 11 distinguishes between joint operations and joint ven-

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tures. Joint operations are defined as joint arrangements whereby the parties that have joint control of the arrangement have rights to the
assets and obligations for the liabilities relating to the arrangement. Joint ventures are joint arrangements whereby the parties that have
joint control of the arrangement have rights to the net assets of the arrangement.

Hence, assessing either the existence of joint control or the type of joint arrangement (or both) under these definitions may require con-
siderable accounting judgements, assumptions and estimates.

In the case of Erste Group, such accounting judgements, assumptions and estimates have been primarily relevant for the assessment of the
Group’s involvement in partnerships and ventures in the commercial real estate sector (development, management, leasing), notably
through Erste Group Immorent AG.

As a result of such assessment, only one company has been identified as a joint arrangement in force as at 31 December 2014. This com-
pany is structured as a separate vehicle qualifying for treatment as a joint venture under the terms of the aforementioned definitions, and it
has an immaterial carrying amount (below EUR 1 million). For the ensuing IFRS 12-driven disclosure requirements, please refer to Note
23 Equity method investments.

For the ensuing IFRS 12-driven disclosures applicable to joint ventures (and associates), please refer to Note 23 Equity method investments.

Significant influence
IAS 28 “Investments in Associates and Joint Ventures” defines significant influence as the power to participate in the financial and operat-
ing policy decisions of the investee without having control or joint control of those policies. Furthermore, IAS 28 indicates that if an
entity holds, directly or indirectly 20% or more of the voting power of the investee, it is presumed that the entity has significant influence,
unless it can be clearly demonstrated that this is not the case.

In the case of Erste Group, all equity method investments are direct or indirect investments in associates and joint ventures over which the
Group exercises significant influence or joint control stemming from voting power higher than 20% up to 50%.

Interests in structured entities

IFRS 12 “Interests in Other Entities” defines structured entities as entities that have been designed so that voting or similar rights are not
the dominant factor in deciding who controls the entity, such as when any voting rights relate to the administrative tasks only and the
relevant activities are directed by means of contractual arrangements. IFRS 12 defines the interests as contractual and non-contractual
involvements exposing an entity to the variability of returns from the performance of the other entity. However, such interests may not
necessarily arise solely because of a typical customer supplier relationship.

Hence, assessing which entities are structured entities, and which involvements in such entities are interests, may require considerable
accounting judgements, assumptions and estimates. In the case of Erste Group, such accounting judgements, assumptions and estimates
have been primarily relevant for assessing involvements with securitisation vehicles and investment funds. In respect to securitisation
vehicles, Erste Group assessed that on-balance or off-balance exposures to entities involved in securitisation activities meet the definition
of interests in structured entities. For investment funds, Erste Group concluded that such investment funds would typically satisfy the
characteristics of a structured entity - irrespective of whether they are own-managed funds or third party managed funds. Moreover, the
Group reached the conclusion that direct Group investments higher than 0% would typically indicate an interest in these structured enti-
ties. In alignment with the accounting judgement described under the paragraph “Investment funds under own management” above, inter-
ests below 20% are not consolidated due to lack of control. Own-managed funds with all fund units held by third-party (non-Group)
investors, without any other type of sponsorship by any entity within the Group, were considered as only reflecting an involvement typical
in a customer/-supplier relationship, hence they do not meet the definition of interests in structured entities.

Additionally, all on-balance or off-balance exposures to investment funds managed by third parties -mostly in the form of units held in
such funds- were considered as being interests in structured entities.

For the ensuing IFRS 12-driven disclosures applicable to structured entities, please refer to Note 24 Unconsolidated structured entities.

Fair value of financial instruments

Where the fair values of financial assets and financial liabilities recorded on the balance sheet cannot be derived from active markets, they
are determined using a variety of valuation techniques that include the use of mathematical models. The inputs to these models are de-
rived from observable market data where possible, but where observable market data is not available judgement is required to establish

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fair values. Disclosures for valuation models, the fair value hierarchy and fair values of financial instruments can be found in Note 46 Fair
value of assets and liabilities.

In 2014 no Funding Value Adjustment (FVA) was considered for the valuation of OTC derivatives. Erste Group is currently analyzing the
different developments on the market. The observations will be considered in the future methodology.

Impairment of financial assets

Erste Group reviews its financial assets not measured at fair value through profit or loss at each balance sheet date to assess whether an
impairment loss should be recorded in the income statement. In particular, it is required to determine whether there is objective evidence
of impairment as a result of a loss event occurring after initial recognition and to estimate the amount and timing of future cash flows
when determining an impairment loss.

Disclosures concerning impairment are provided in Note 44 Risk management in the ‘Credit risk’ subsection entitled – ‘Non-performing
credit risk exposure, risk provisions and collateral’. The development of loan loss provisions is described in Note 21 Impairment loss for
financial instruments.

Impairment of non-financial assets

Erste Group reviews its non-financial assets at each balance sheet date to assess whether there is an indication of impairment loss that
should be recorded in the income statement. Furthermore, cash-generating units to which goodwill is allocated are tested for impairment
on a yearly basis. Judgement and estimates are required to determine the value in use and fair value less costs of disposal by estimating
the timing and amount of future expected cash flows and the discount rates. Assumptions and estimates used for impairment on non-
financial asset calculations are described in the parts ‘Business combinations and goodwill’ and ‘Impairment of non-financial assets
(property and equipment, investment property, intangible assets)’ in the Accounting Policies. Inputs used for goodwill impairment testing
and their sensitivities can be found in Note 27 Intangible assets in the section ‘Development of goodwill’.

Deferred tax assets

Deferred tax assets are recognised in respect of tax losses and deductible temporary differences to the extent that it is probable that taxable
profit will be available against which the losses can be utilised. Judgement is required to determine the amount of deferred tax assets that
can be recognised, based upon the likely timing and level of future taxable profits, together with future tax planning strategies. For this
purpose a planning period of 5 years is used. Disclosures concerning deferred taxes are in Note 28 Tax assets and liabilities.

Defined benefit obligation plans

The cost of the defined benefit pension plan is determined using an actuarial valuation. The actuarial valuation involves making assump-
tions about discount rates, expected rates of return on assets, future salary increases, mortality rates and future pension increases. Assump-
tions, estimates and sensitivities used for the defined benefit obligation calculations as well as related amounts are disclosed in Note 34 a
Long-term employee provisions.

Provisions
Recognition of provisions requires judgement with respect to whether Erste Group has a present obligation as a result of a past event and
whether it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Furthermore,
estimates are necessary with respect to the amount and timing of future cash flows when determining the amount of provisions. Provisions
are disclosed in Note 27 Provisions and further details on provisions for contingent credit liabilities in Note 44.5 Credit risk. Legal pro-
ceedings that do not meet the criteria for recognition of provisions are described in Note 49 Contingent liabilities.

Leases
From Erste Group’s perspective as a lessor, judgement is required to distinguish whether a given lease is a finance or operating lease based
on the transfer of substantially all the risk and rewards from the lessor to the lessee. Disclosures concerning leases are in Note 39 Leases.

e) APPLICATION OF AMENDED AND NEW IFRS/IAS

The accounting policies adopted are consistent with those used in the previous financial year except for standards and interpretations that
became effective for financial years beginning on or after 1 January 2014. As regards new standards and interpretations and their amend-
ments, only those that are relevant for the business of Erste Group are listed below.

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Effective standards and interpretations
The following standards and their amendments have been mandatory since 2014:
_ Amendments to IAS 32 – Offsetting Financial Assets and Liabilities
_ Amendments to IAS 39 - Novation of Derivatives and Continuation of Hedge Accounting
_ Amendments to IAS 36 – Recoverable Amounts Disclosures for Non-financial Assets
_ IFRS 10 Consolidated Financial Statements
_ IFRS 11 Joint Arrangements
_ IFRS 12 Disclosure of Interests in Other Entities
_ Amendments to IFRS 10, IFRS 11 and IFRS 12 – Transition guidance
_ Amendments to IFRS 10, IFRS 12 and IAS 27 – Investment entities
_ IAS 27 (revised 2011) Separate Financial Statements
_ IAS 28 (revised 2011) Investments in Associates and Joint Ventures

Amendments to IAS 32 – Offsetting Financial Assets and Liabilities

These amendments clarify the meaning of ’currently has a legally enforceable right to set-off’ and the criteria for non-simultaneous set-
tlement mechanisms of clearing houses to qualify for offsetting and is applied retrospectively. The amended rights of set-off must not only
be legally enforceable in the normal course of business and for the whole contract period, but must also be enforceable in the event of
default and the event of bankruptcy or insolvency. These amendments have no impact on the Group, since none of the entities in the
Group has offsetting arrangements which would have qualified for offsetting based on these clarifications.

Amendments to IAS 39 - Novation of Derivatives and Continuation of Hedge Accounting

Amendments to IAS 39 were issued in June 2013 and are effective for annual periods beginning on or after 1 January 2014.Under the
amendments there is no need to discontinue hedge accounting if a hedging derivative is novated, provided certain criteria are
met.Application of these amendments did not have any significant impact on Erste Group’s financial statements.

Amendments to IAS 36 – Recoverable Amounts Disclosures for Non-financial Assets

IAS 36 removed the requirement to disclose recoverable amounts of assets or CGUs for periods when there has been no impairment or
reversal of impairment. Furthermore, the amendments extend the disclosure requirements when the recoverable amount of an asset or
CGU is based on fair value less cost of disposal. Erste Group incorporated these new disclosure requirements accordingly (see Note 9
Other operating result and Note 27 Intangible assets). There is no impact on the Group’s financial position or results.

IFRS 10 Consolidated Financial StatementsIFRS 10 replaces the guidance on control and consolidation in IAS 27 “Consolidated and
Separate Financial Statements” and in SIC 12 “Consolidation – Special Purpose Entities”. As a result of IFRS 10 application as of
1 January 2014, Erste Group started with consolidation of 18 investment funds managed by asset management companies of the Group. In
all of them, Erste Group is also a significant investor, when considering investments held by individual Erste Group entities. Based on
SIC 12, these funds did not meet the consolidation criteria up to 31 December 2013. The consolidation has been applied retrospectively,
hence all affected 2013 comparative figures have been restated. As a result of the retrospective application, total assets increased by
EUR 247 million and total equity decreased by EUR 2 million per 1 January 2013. As of 31 Dezember 2013 the retrospective application
of IFRS 10 resulted in an increase of otal assets in the amount of EUR 242 million and an increase in the total equity by EUR 4 million.
The overall result increased by EUR 5 million in the fiscal year 2013.

For further details on the retrospective application of IFRS 10 please refer to chapter “c) ACCOUNTING AND MEASUREMENT
METHODS”.

When notes have been adjusted in the course of the retrospective application of IFRS 10, this was marked with “adjusted” in the respec-
tive Note.

IFRS 12 Disclosure of Interests in Other Entities

IFRS 12 sets out the requirements for disclosures relating to an entity`s interests in subsidiaries, joint arrangements, associates and uncon-
solidated structured entities. The standard requires entities to disclose significant judgements and assumptions made in determining
whether an entity controls, jointly controls, significantly influences or has some other interests in other entities. Furthermore, entities are
required to provide disclosures relating to interests in structured entities. The requirements in IFRS 12 are more comprehensive than the
previous disclosure requirements. Therefore, the application of IFRS 12 resulted in new disclosures in the consolidated financial state-
ments, which are provided in Note 23 Equity method investments, Note 24 Unconsolidated structured entities, Note 25 Non Controlling

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Interests and chapter “d) Significant accounting judgements, assumptions and estimates”. There is no impact on the Group’s financial
position or results.

Application of other standards and amendments had no material effect on the financial statements of Erste Group.

Standards and interpretations not yet effective

The standards, amendments and interpretations shown below were issued by the IASB but are not yet effective.

Following standards, amendments and interpretations are not yet endorsed by the EU:
_ IFRS 9: Financial Instruments
_ IFRS 14 Regulatory Deferral Accounts
_ IFRS 15: Revenue from Contracts with Customers
_ Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
_ Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the Consolidation Exception
_ Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation
_ Amendments to IFRS 11: Accounting for Acquisitions of Interest in Joint Operations
_ Amendments to IAS 27: Equity Method in Separate Financial Statements
_ Amendments to IAS 1: Disclosure Initiative

Following standards, amendments and interpretations are already endorsed by the EU:
_ Amendments to IAS 19 – Defined Benefit Plans: Employee Contributions
_ IFRIC 21 Levies
_ Annual Improvements to IFRSs 2010 2012 and 2011 2013 Cycle
_ Annual Improvements to IFRSs 2012-2014 Cycle

Annual Improvements to IFRSs 2010-2012 and 2011-2013 Cycle

In December 2013, the IASB issued two sets of amendments to various standards. The amendments are effective for annual periods be-
ginning on or after 1 July 2014.Application of these amendments does not have a significant impact on Erste Group’s financial statements.

IFRS 9: Financial Instruments (IASB Effective Date: 1 January 2018)

IFRS 9 was issued in July 2014 and is effective for annual periods beginning on or after 1 January 2018.IFRS 9 addresses three main areas
of accounting for financial instruments: classification and measurement, impairment and hedge accounting.

IFRS 9 introduces two classification criteria for financial assets: 1) an entity’s business model for managing the financial assets, and 2) the
contractual cash flow characteristics of the financial assets. As a result, a financial asset is measured at amortised cost only if both the
following conditions are met: a) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely pay-
ments of principal and interest on the principal outstanding and b) the asset is held within a business model whose objective is to hold
assets in order to collect contractual cash flows. Measurement of a fair value through other comprehensive income is applicable to finan-
cial assets that meet condition a) but the business model applied to them is focused both on holding the assets to collect contractual cash
flows and selling the assets. All other financial assets are measured at fair value with changes recognised in profit or loss. For investments
in equity instruments that are not held for trading, an entity may make an irrevocable election at initial recognition to measure them at fair
value with changes recognised in other comprehensive income.

IFRS 9 does not change classification and measurement principles for financial liabilities compared to IAS 39. The only change is related
to financial liabilities designated at fair value through profit or loss (fair value option). The fair value changes related to the credit risk of
such liabilities will be presented in other comprehensive income.

The standard provides a uniform impairment model applied to both financial assets and off-balance sheet credit risk bearing exposures
(loan commitments and financial guarantees). At initial recognition of financial instruments loss allowance to reflect credit loss is recog-
nised in the form of 12-month expected losses. Lifetime expected losses are to be recognised for all instrument whose credit risk increases
subsequently after initial recognition. Furthermore the standard brings new rules for accounting for losses resulting from modification of
contractual conditions of financial assets.

The objective of the new hedge accounting model is to reflect in accounting actual risk management practices of entities hedging risks.
For Erste Group, the following areas are expected to be relevant to achieve this objective: only the prospective effectiveness test is re-

123
quired and the retrospective effectiveness test with the 80%-125% corridor was abandoned; when options are used as hedging instru-
ments, the volatility of the time value is recognised through OCI rather than profit or loss; the possibility of hedging synthetic items con-
taining derivatives.

This standard will have a significant effect on balance sheet items and measurement methods for financial instruments. The contractual
cash flow characteristics of financial assets will have to be reviewed and Erste Group faces the risk that part of its loan portfolio will have
to be measured at fair value through profit or loss. On the other hand, some debt securities currently measured at fair value through other
comprehensive may be measured at amortised cost due to the ’held-to-collect contractual cash’ flows business model applied to them. In
the area of impairment loss, allowances are expected to increase significantly. In 2015 Erste Group will start with determing the quantita-
tive impacts resulting from the application of IFRS 9.

IFRS 14 Regulatory Deferral Accounts (IASB Effective Date: 1 January 2016)

IFRS 14 Regulatory Deferral Accounts permits an entity which is a first-time adopter of International Financial Reporting Standards to
continue to account, with some limited changes, for 'regulatory deferral account balances' in accordance with its previous GAAP, both on
initial adoption of IFRS and in subsequent financial statements. The Group does not expect any significant impact from application of
IFRS 14.

IFRS 15 Revenue from Contracts with Customers (IASB Effective Date: 1 January 2017)
IFRS 15 was issued in May 2014 and is effective for annual periods beginning on or after 1 January 2017. IFRS 15 specifies how and when
an entity recognises revenue from contracts with customers. It also requires such entities to provide users of financial statements with more
informative and more relevant disclosures. The standard provides a single, principles based five-step model to be applied to all contracts
with customers. As the standard is not focused on recognition of revenues from financial services, application of this standard is not ex-
pected to have a significant impact on Erste Group’s financial statements.

Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (IASB Effective
Date: 1 January 2016 to be amended)
Amendments to IFRS 10 and IAS 28 were issued in September 2014 and are effective for annual periods beginning on or after
1 January 2016.These amendments deal with the sale or contribution of assets or subsidiaries in a transaction between an investor and its
associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognised only when the assets or the
subsidiaries constitute a business.Application of these amendments is not expected to have a significant impact on Erste Group’s financial
statements.

Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the Consolidation Exception (IASB Effective Date:
1 January 2016)
The amendments confirm that the exemption from preparing consolidated financial statements for an intermediate parent entity is available
to a parent entity that is a subsidiary of an investment entity, even if the investment entity measures all of its subsidiaries at fair value. Also,
they clarify that when applying the equity method to an associate or a joint venture, a non-investment entity investor in an investment entity
may retain the fair value measurement applied by the associate or joint venture to its interests in subsidiaries. Application of these amend-
ments is not expected to have a significant impact on Erste Group’s financial statements.

Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation (IASB Effective Date:
1 January 2016)
Amendments to IAS 16 and IAS 38 were issued in May 2014 and are effective for annual periods beginning on or after 1 January 2016.The
amendments prohibit the use of revenue-based depreciation for property, plant and equipment and significantly limiting the use of revenue-
based amortisation for intangible assets. Application of these amendments is not expected to have a significant impact on Erste Group’s
financial statements.

Amendments to IFRS 11: Accounting for Acquisitions of Interest in Joint Operations (IASB Effective Date: 1 January 2016)
Amendments to IFRS 11 were issued in May 2014 and are effective for annual periods beginning on or after 1 January 2016.The amend-
ments specify that the acquirer of an interest in a joint operation in which the activity constitutes a business, as defined in IFRS 3, is re-
quired to apply all of the principles on business combinations accounting in IFRS 3 and other IFRSs with the exception of those principles
that conflict with the guidance in IFRS 11.Application of these amendments is not expected to have a significant impact on Erste Group’s
financial statements.

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Amendments to IAS 1: Disclosure Initiative (IASB effective date: 1 January 2016)
Disclosure Initiative (Amendments to IAS 1) makes the following changes:

_Materiality
The amendments clarify that (1) information should not be obscured by aggregating or by providing immaterial information, (2) materiali-
ty considerations apply to the all parts of the financial statements, and (3) even when a standard requires a specific disclosure, materiality
considerations do apply.

_Statement of financial position and statement of profit or loss and other comprehensive income
The amendments (1) introduce a clarification that the list of line items to be presented in these statements can be disaggregated and aggre-
gated as relevant and additional guidance on subtotals in these statements and (2) clarify that an entity's share of OCI of equity-accounted
associates and joint ventures should be presented in aggregate as single line items based on whether or not it will subsequently be reclassi-
fied to profit or loss.

_Notes
The amendments add additional examples of possible ways of ordering the notes to clarify that understandability and comparability
should be considered when determining the order of the notes and to demonstrate that the notes need not be presented in the order so far
listed in paragraph 114 of IAS 1. The IASB also removed guidance and examples with regard to the identification of significant account-
ing policies that were perceived as being potentially unhelpful.

These changes and clarifications are not expected to trigger significant changes in the presentation of Group’s IFRS consolidated financial
statements.

Amendments to IAS 19 – Defined Benefit Plans: Employee Contributions

Amendments to IAS 19 were issued in November 2013 and are effective for annual periods beginning on or after 1 July 2014. The
amendments clarify that contributions from employees or third parties that are linked to service must be attributed to periods of service
using the same attribution method as used for the gross benefit. However, the contribution may be recognised as a reduction in the service
cost if the amount of the contributions is independent of the number of years of service. Application of these amendments does not have a
significant impact on Erste Group’s financial statements.

IFRIC 21 Levies
IFRIC 21 clarifies that an entity recognises a liability for a levy when the activity that triggers payment, as identified by the relevant
legislation, occurs. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be
anticipated before the specified minimum threshold is reached. Retrospective application is required for IFRIC 21. This interpretation has
no impact on the Group as it has applied the recognition principles under IAS 37 Provisions, Contingent Liabilities and Contingent Assets
consistent with the requirements of IFRIC 21 in prior years.

Annual Improvements to IFRSs 2010 2012 and 2011 2013 Cycle

In December 2013, the IASB issued two sets of amendments to various standards. The amendments are effective for annual periods be-
ginning on or after 1 July 2014. Application of these amendments is not expected to have a significant impact on Erste Group’s financial
statements.

Annual Improvements to IFRSs 2012-2014 Cycle (IASB effective date: 1 January 2016)
In September 2014, the IASB issued a set of amendments to various standards. The amendments are effective for annual periods begin-
ning on or after 1 January 2016.Application of these amendments is not expected to have a significant impact on Erste Group’s financial
statements.

125
C. NOTES TO THE STATEMENT OF COMPREHENSIVE INCOME AND THE BALANCE SHEET OF
ERSTE GROUP

1. Net interest income

1-12 13
in EUR million restated 1-12 14
Interest income
Financial assets - held for trading 521.9 326.3
Financial assets - at fair value through profit or loss 8.7 3.2
Financial assets - available for sale 509.6 473.6
Financial assets - held to maturity 686.3 610.8
Loans and receivables 5,269.3 4,875.7
Derivatives - hedge accounting, interest rate risk -45.8 -17.3
Other assets 34.3 28.7
Total interest income 6,984.3 6,301.1

Interest expenses
Financial liabilities - held for trading -159.7 -84.3
Financial liabilities - at fair value through profit or loss -59.7 -39.2
Financial liabilities measured at amortised cost -2,546.4 -2,106.9
Derivatives - hedge accounting, interest rate risk 469.4 463.9
Other liabilities -2.8 -39.4
Total interest expense -2,299.3 -1,805.9
Net interest income 4,685.0 4,495.2

For financial assets or liabilities that are not measured at fair value through profit or loss, the total interest income amounted to
EUR 5,988.9 million (2013: EUR 6,499.6 million) and the total interest expense to EUR – 2,146.3 million (2013: EUR -2,549.2 mil-
lion). Net interest income for these items is therefore EUR 3,842.7 million (2013: EUR 3,950.3 million).

2. Net fee and commission income

1-12 13
in EUR million restated 1-12 14
Securities 157.3 185.4
Own issues 31.1 16.7
Transfer orders 114.5 153.5
Other 11.7 15.1
Clearing and settlement 3.5 9.2
Asset management 198.5 217.8
Custody 67.9 44.3
Fiduciary transactions 1.9 2.2
Payment services 903.7 896.8
Card business 210.5 215.1
Other 693.3 681.7
Customer resources distributed but not managed 157.9 180.3
Collective investment 7.5 19.7
Insurance products 99.7 110.7
Building society brokerage 22.9 18.3
Foreign exchange transactions 23.1 19.4
Other 4.7 12.2
Structured finance 0.0 0.1
Servicing fees from securitization activities 1.5 0.0
Lending business 259.0 233.3
Guarantees given, guarantees received 25.9 43.0
Loan commitments given, loan commitments received 65.5 62.0
Other lending business 167.6 128.3
Other 55.2 100.5
Net fee and commission income 1,806.5 1,869.8
Fee and commission income 2,305.6 2,354.7
Fee and commission expenses -499.1 -484.8

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3. Dividend income

in EUR million 1-12 13 1-12 14

Financial assets - held for trading 5.1 1.5
Financial assets - at fair value through profit or loss 4.9 3.4
Financial assets - available for sale 66.7 43.8
Dividend income from equity investments 13.1 25.5
Dividend income 89.7 74.2

4. Net trading and fair value result

1-12 13
in EUR million restated 1-12 14
Net trading result 231.9 314.8
Securities and derivatives trading -2.6 131.5
Foreign exchange transactions 234.5 183.4
Result from financial assets and liabilities designated at fair value through profit or loss -13.1 -72.6
Result from measurement/sale of financial assets designated at fair value through profit or loss 10.5 8.7
Result from measurement/sale of financial liabilities designated at fair value through profit or loss -23.6 -81.3
Net trading and fair value result 218.8 242.3

From cashflow and fair value hedges, an amount of EUR 30.8 million (2013: EUR 7.4 million) is reported under the line item ‘Net trading
result’.

The amounts of the fair value changes that are attributable to changes in own credit risk can be found in the Notes 32 Financial liabilities – at
fair value through profit and loss. Additional information to hedge relationships are described in detail in Note 45 Hedge Accounting.

5. Rental income from investment properties & other operating leases

in EUR million 1-12 13 1-12 14

Investment properties 79.3 85.4
Other operating leases 94.0 95.2
Rental income from investment properties & other operating leases 173.3 180.6

6. General administrative expenses

in EUR million 1-12 13 1-12 14

Personnel expenses -2,232.4 -2,184.2
Wages and salaries -1,643.6 -1,628.4
Compulsory social security -401.7 -423.9
Long-term employee provisions -48.0 -21.0
Other personnel expenses -139.1 -110.9
Other administrative expenses -1,146.0 -1,136.9
Deposit insurance contribution -77.2 -87.6
IT expenses -258.9 -262.5
Expenses for office space -256.4 -248.3
Office operating expenses -138.7 -117.2
Advertising/marketing -164.0 -167.8
Legal and consulting costs -138.2 -128.3
Sundry administrative expenses -112.6 -125.3
Depreciation and amortisation -517.7 -466.1
Software and other intangible assets -146.8 -150.4
Owner occupied real estate -84.1 -77.4
Investment properties -100.2 -103.4
Customer relationships -65.2 -37.0
Office furniture and equipment and sundry property and equipment -121.3 -97.8
General administrative expenses -3,896.1 -3,787.3

Personnel expenses include expenses of EUR 60.7 million (2013: EUR 49.5 million) for defined contribution plans, of which
EUR 0.9 million (2013: EUR 0.9 million) relates to members of the management board.

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Average number of employees during the financial year (weighted according to the level of employment)
1-12 13 1-12 14
Domestic 15,810 15,593
Erste Group, EB Oesterreich and subsidiaries 8,481 8,330
Haftungsverbund savings banks 7,329 7,263
Abroad 31,033 30,403
Česká spořitelna Group 10,629 10,471
Banca Comercială Română Group 7,418 7,066
Slovenská sporiteľňa Group 4,247 4,223
Erste Bank Hungary Group 2,770 2,789
Erste Bank Croatia Group 2,551 2,714
Erste Bank Serbia Group 929 959
Erste Bank Ukraine 374 0
Savings banks subsidiaries 1,126 1,149
Other subsidiaries and foreign branch offices 989 1,032
Total 46,843 45,996

7. Gains/losses from financial assets and liabilities not measured at fair value through profit or loss, net

in EUR million 1-12 13 1-12 14

From sale of financial assets available for sale 48.9 32.2
From sale of financial assets held to maturity 7.2 3.6
From sale of loans and receivables 0.8 -0.8
From repurchase of liabilities measured at amortised cost 5.5 -16.8
Gains/losses from financial assets and liabilities not measured at fair value through profit or loss, net 62.4 18.3

The carrying amount of investments in equity instruments measured at cost that were sold during the period was EUR 2.5 million
(2013: EUR 1.9 million). The resulting gain on sale was EUR 0 million (2013: EUR 1.0 million).

8. Net impairment loss on financial assets not measured at fair value through profit or loss

1-12 13
in EUR million restated 1-12 14
Financial assets - available for sale -42.2 -39.3
Loans and receivables -1,726.5 -2,120.4
Allocation to risk provisions -3,321.0 -4,117.3
Release of risk provisions 1,733.6 2,023.9
Direct write-offs -257.3 -227.5
Recoveries recorded directly to the income statement 118.2 200.5
Financial assets - held to maturity -5.7 0.4
Net impairment loss on financial assets not measured at fair value through profit or loss -1,774.4 -2,159.2

9. Other operating result

1-12 13
in EUR million restated 1-12 14
Result from properties/movables/other intangible assets other than goodwill -59.2 -580.4
Allocation to/release of other provisions -40.3 -57.7
Allocation to/release of provisions for commitments and guarantees given -36.9 -16.2
Levies on banking activities -311.0 -256.3
Banking tax -256.6 -210.0
Financial transaction tax -54.4 -46.3
Other taxes -18.7 -26.0
Impairment of goodwill -383.0 -475.0
Result from other operating expenses/income -159.4 -341.5
Other operating result -1,008.6 -1,752.9

Operating expenses (including repair and maintenance) for ‘Investment properties’ not held for rental income totalled EUR 1.0 million
(2013: EUR 3.5 million).

Operating expenses (including repair and maintenance) for ‘Investment properties’ held for rental income totalled EUR 12.0 million (2013:
EUR 2.8 million).

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The amount of impairment loss on assets held for sale recognised in the result from other operating expenses/income is EUR -7.4 million
(2013: EUR -2.9 million).

In the line item ‘Result from other operating expenses/income’ an amount of EUR 76.6 million was recognised for the disposal of Erste
Bank Ukraine in 2013.

Foreign currency denominated loans in Hungary

As a result of a law formally passed by the Hungarian Parliament early in July 2014, Erste Bank Hungary is required to compensate its
customers in the area of consumer loans provided since May 2004. The compensation refers to bid-ask exchange rate spreads applied by
the bank for disbursements and repayments of foreign exchange denominated loans and unilateral interest rate increases for both FX and
HUF loans.

During November and December 2014 the Hungarian National Bank released three decrees stipulating the manner of settlement and
calculation methods for the compensation payments to affected customers. Based on these rules, the expense for compensating customers
regarding the bid-ask exchange rate spreads applied for disbursements and repayments amounts to EUR 304.4 million, disclosed under
other operating result. Thereof EUR 238 million (‘Result from other operating expenses/income’) relate to active loans and were netted
with the respective exposures. The residual expense of EUR 66.4 million relating to already closed loans is disclosed under “Other provi-
sions”.

In November 2014 the Hungarian parliament issued the Conversion Law stipulating the compulsory conversion of defined fx denominat-
ed loans in February 2015 at a fixed exchange rate. As of the balance sheet date, the affected loans were translated with the legally fixed
exchange rate. The application of the law resulted in an expense of EUR 32.4 million shown under other operating result. On the other
hand an income from fx translation amounting to EUR 32.4 million (‘Result from other operating expenses/income’) is reported under net
trading and fair value result.

Impairment of goodwill and other intangibles

Banca Comercială Română SA (BCR) significantly lowered its expectations of recovery for several large packages of non-performing
loans. In addition based on the instructions of the Romanian National Bank the sale of such non-performing portfolios has been accelerat-
ed. In the light of the low price offers received for benchmark sales during the second quarter of 2014 the collaterals for such loans had to
be reassessed. This subsequently led to a significant rise of the risk costs and a decrease in the planned interest income on such non-
performing loans. Due to these developments the residual goodwill as well as the customer list and the brand were fully impaired in the
first half of 2014. In the course of the preparation of the annual report 2014 the underlying assumptions from the first half-year of 2014
have been reviewed. This did not lead to any changes.

Erste Bank Croatia (“EBC”) had to accommodate local regulations introduced in 2014 regarding higher capital requirements, therefore
indicating a potential decrease in EBC`s future cash-generating capacity and distributable dividends. This indication was deemed as po-
tentially further affecting the cash generating unit of Steiermärkische Bank und Sparkassen Aktiengesellschaft (“STMK”), which holds a
significant participation in Erste Bank Croatia. As a result the goodwill Erste Bank Croatia (EBC) as well as the goodwill allocated to
Steiermärkische Bank und Sparkassen Aktiengesellschaft (STMK) has already been fully impaired in the first half of 2014.

The goodwill allocated to Girocredit was fully impaired in 2014 as a result of the impairment test performed.

The development of the goodwill of all subsidiaries (cash generating units) for 2014 is presented in Note 27 Intangible Assets. In addition,
the key parameters and assumptions on which the impairment tests are based are summarized in this note.

Other impairments
The main classes of assets affected by impairment losses where property plant and equipment, investment properties, intangible assets and
foreclosed assets. The main events that led to the recognition of impairment losses can be summarized as:
_the intention to sell fixed assets and accordingly their re-measurement before reclassifying them based on IFRS 5,
_not fully occupied buildings that triggered a lower recoverable amount
_recurring measurement for foreclosed assets at the balance sheet date and
_concessions and other intangibles for which measurable economic benefits are no longer expected in the future

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10. Taxes on income

Taxes on income are made up of current taxes on income calculated in each of the Group companies based on the results reported for tax
purposes, corrections to taxes on income for previous years, and the change in deferred taxes.

in EUR million 1-12 13 1-12 14

Current tax expense / income -311.1 -312.4
current period -284.8 -287.8
prior period -26.3 -24.5
Deferred tax expense / income 132.6 -197.0
current period 117.8 -195.6
prior period 14.7 -1.5
Total -178.5 -509.4

The following table reconciles the income taxes reported in the income statement to the pre-tax profit/loss multiplied by the nominal
Austrian tax rate.

in EUR million 1-12 13 1-12 14

Pre-tax profit/loss 378.4 -803.2
Income tax expense for the financial year at the domestic statutory tax rate (25%) -94.6 200.8
Impact of different foreign tax rates and special tax regimes 41.5 -105.6
Impact of tax-exempt earnings of investments and other tax-exempt income 132.3 139.1
Tax increases due to non-deductible expenses, additional business tax and similar elements -160.9 -147.0
Impact of the goodwill impairment loss recognized at Group level, added back to theoretical tax -95.8 -118.7
One-off release of loan loss risk provision related deferred tax liabilities 127.7 0.0
Impact from tax deductible participations impairment eliminated upon consolidation (before related valuation assessment) 61.7 345.8
Impact of current non-valued fiscal losses and temporary differences for the year -97.0 -439.2
Net Impairment of deferred tax assets from previously valued carried forward fiscal losses and temporary deductible differences -81.9 -358.6
Tax expense not atributable to the reporting period -11.5 -26.0
Total -178.5 -509.4

Group's effective tax expense for the year 2014 has been adversely impacted by write-offs of deferred tax assets which had been recog-
nised as at the end of prior year, as well as by non-valuations of deductible temporary differences and tax losses of the current year.

The main reasons of this impact are described in further detail in Note 28 Tax assets and liabilities.

Tax effects relating to each component of other comprehensive income:

1-12 13 restated 1-12 14

Before-tax Net-of-tax Before-tax Net-of-tax
in EUR million amount Tax benefit amount amount Tax benefit amount
Available for sale-reserve (including currency translation) -115.5 27.6 -87.9 581.2 -180.8 400.4
Cash flow hedge-reserve (including currency translation) -71.9 17.4 -54.6 172.8 -17.5 155.3
Remeasurement of net liability of defined pension plans -6.7 2.3 -4.5 -188.2 54.8 -133.4
Currency translation -241.4 0.0 -241.4 -63.1 0.0 -63.1
Other comprehensive income -435.5 47.2 -388.4 502.7 -143.5 359.2

11. Appropriation of profit

For the year 2014, Erste Group Bank AG posted a post-tax loss of EUR 5,822.8 million under the Austrian accounting regulations, which
reduced its distributable capital accordingly (2013: EUR 170.6 million post-tax distributable profit). Most of this loss (EUR 5,554.0 million)
arose from a group internal merger between EGB Ceps Beteiligungen GmbH and EGB Ceps Holding GmbH with Erste Group Bank AG.

Consequently, no dividend distributions will be proposed at the forthcoming Annual General Meeting of Erste Group Bank AG
(EUR 0.20/share, amounting to a total pay-out of EUR 85,960,000.00 for 2013).

The participation capital was fully redeemed in August 2013, when dividends of 8% per annum (in a total amount of EUR 84,659,712.00)
were paid out for the last time.

130
12. Cash and cash balances

in EUR million Dec 13 Dec 14

Cash on hand 2,327 2,467
Cash balances at central banks 6,343 4,509
Other demand deposits 630 859
Cash and cash balances 9,301 7,835

A portion of ‘Balances with central banks’ represents mandatory reserve deposits that are not available for use in the day-to-day opera-
tions of Erste Group.

13. Derivatives – held for trading

As of 31 December 2013 restated As of 31 December 2014

Positive fair Negative fair Positive fair Negative fair
in EUR million Notional value value value Notional value value value
Derivatives held in the trading book 182,478 5,269 5,223 159,252 6,134 5,942
Interest rate 151,475 4,463 4,546 127,497 5,450 5,403
Equity 734 50 13 801 35 5
Foreign exchange 29,601 746 653 29,981 628 508
Credit 331 0 6 362 1 4
Commodity 252 2 4 402 19 21
Other 84 8 1 209 1 0
Derivatives held in the banking book 38,241 1,073 864 34,726 1,040 1,246
Interest rate 21,175 720 608 18,473 781 928
Equity 1,860 41 40 1,512 83 66
Foreign exchange 14,354 254 141 13,588 127 237
Credit 496 9 8 600 13 12
Commodity 44 4 5 74 2 1
Other 313 45 63 478 34 3
Total 220,719 6,342 6,087 193,978 7,173 7,188

14. Other trading assets

in EUR million Dec 13 Dec 14

Equity instruments 273 185
Debt securities 5,668 3,124
General governments 3,397 2,377
Credit institutions 1,960 333
Other financial corporations 21 154
Non-financial corporations 289 260
Loans and advances 0 49
Other trading assets 5,941 3,357

15. Financial assets - at fair value through profit or loss

in EUR million Dec 13 Dec 14

Equity instruments 207 211
Debt securities 322 139
General governments 63 6
Credit institutions 125 83
Other financial corporations 7 49
Non-financial corporations 127 1
Loans and advances 0 0
Financial assets - at fair value through profit or loss 529 350

131
16. Financial assets - available for sale

Dec 13
in EUR million restated Dec 14
Equity instruments 1,236 1,272
Debt securities 19,442 21,102
General governments 10,439 13,814
Credit institutions 3,434 3,658
Other financial corporations 1,285 878
Non-financial corporations 4,284 2,752
Loans and advances 0 0
Financial assets - available for sale 20,678 22,373

The carrying amount of investments in equity instruments measured at cost is EUR 68 million (2013: EUR 196 million). Of this, Erste
Group intends to dispose of investments in carrying amount of EUR 2 million (82 million in 2013) through direct sales.

17. Financial assets – held to maturity

Gross carrying amount Collective allowances Net carrying amount

in EUR million Dec 13 Dec 14 Dec 13 Dec 14 Dec 13 Dec 14
General governments 15,195 15,024 -2 0 15,194 15,023
Credit institutions 1,529 1,024 0 -1 1,529 1,023
Other financial corporations 229 242 0 0 229 241
Non-financial corporations 828 590 0 -1 828 590
Total 17,781 16,879 -2 -2 17,779 16,877

18. Securities

Financial assets
Loans and
advances to At fair value
customers and through profit or
credit institutions Trading assets loss Available for sale Held to maturity Total
Dec 13 Dec 13 Dec Dec 13 Dec 13 Dec 13 Dec 13
in EUR million restated Dec 14 restated 2014 restated Dec 14 restated Dec 14 restated Dec 14 restated Dec 14
Bonds and other interest-
bearing securities 831 694 5,668 3,124 322 139 18,795 21,102 17,779 16,878 43,395 41,937
Listed 0 0 3,448 2,475 286 98 16,995 18,285 17,033 15,535 37,761 36,393
Unlisted 831 694 2,220 649 36 41 1,800 2,817 746 1,343 5,634 5,543
Equity-related securities 0 0 273 185 207 211 1,622 1,204 0 0 2,102 1,600
Listed 0 0 86 57 151 44 874 716 0 0 1,112 817
Unlisted 0 0 186 128 56 167 748 488 0 0 991 783
Equity holdings 0 0 0 0 0 0 261 68 0 0 261 68
Total 831 694 5,941 3,309 529 350 20,678 22,373 17,779 16,878 45,758 43,604

Investment funds are disclosed within equity-related securities.

Held-to-maturity financial assets include bonds and other interest-bearing securities that are quoted in active markets and are intended to
be held to maturity.

Securities lending and repurchase transactions are disclosed in Note 42 Transfers of financial assets – repurchase transactions and securi-
ties lending.

During the financial year 2014, bond investments with a carrying amount of EUR 273.4 million (2013: EUR 29.1 million) were reclassi-
fied from the category HtM to AfS, of which EUR 228.9 million (2013: EUR 25.6 million) was sold up to year-end. Reclassifications
(and subsequent sales) in the amount of EUR 206.2 million were made considering that the related securities were maturing within 2
months from the sale dates.

Consequently, a total adverse net effect of EUR 0.2 million (2013: EUR 9.8 million) was recognised in the income statement for the year,
whilst a further adverse effect of EUR 3.6 million (2013: nil) was reflected in other comprehensive income in respect of reclassified bonds
not yet sold at year-end.

132
19. Loans and receivables to credit institutions

Loans and receivables to credit institutions

Gross carrying Specific Collective Net carrying
in EUR million amount allowances allowances amount
As of 31 December 2014
Debt securities 442 0 -1 440
Central banks 74 0 0 74
Credit institutions 368 0 -1 366
Loans and receivables 7,019 -15 -3 7,002
Central banks 2,163 0 0 2,162
Credit institutions 4,857 -15 -2 4,840
Total 7,461 -15 -4 7,442

As of 31 December 2013
Debt securities 526 0 0 526
Central banks 76 0 0 76
Credit institutions 450 0 0 450
Loans and receivables 7,906 -54 -1 7,851
Central banks 1,278 0 0 1,278
Credit institutions 6,627 -54 -1 6,573
Total 8,431 -54 -1 8,377

In the balance sheet, loans and receivables to credit institutions are disclosed with the carrying amount net of any. impairments. In the previ-
ous financial statements the carrying amount was reported before any impairments. The comparative figures for 2013 restated accordingly.

Allowances for loans and receivables to credit institutions

Interest Recoveries
income from Exchange rate of amounts
impaired and other Amounts previously
in EUR million As of Allocations Use Releases loans changes (+/-) As of written off written off
Dec 13 Dec 14
Specific allowances -54 -5 46 64 0 -66 -15 -8 4
Debt securities 0 0 0 3 0 -3 0 0 0
Central banks 0 0 0 0 0 0 0 0 0
Credit institutions 0 0 0 3 0 -3 0 0 0
Loans and receivables -54 -5 46 62 0 -64 -15 -8 4
Central banks 0 0 0 1 0 -1 0 0 0
Credit institutions -54 -5 46 60 0 -62 -15 -8 4
Collective allowances -1 -7 0 8 0 -4 -3 0 0
Debt securities 0 -1 0 0 0 0 -1 0 0
Central banks 0 0 0 0 0 0 0 0 0
Credit institutions 0 -1 0 0 0 0 -1 0 0
Loans and receivables -1 -6 0 8 0 -4 -2 0 0
Central banks 0 0 0 0 0 0 0 0 0
Credit institutions -1 -6 0 8 0 -4 -2 0 0
Total -55 -12 46 73 0 -70 -17 -8 4

Dec 12 Dec 13
Specific allowances -61 -2 7 2 0 0 -54 -13 6
Debt securities 0 0 0 0 0 0 0 -3 2
Central banks 0 0 0 0 0 0 0 0 0
Credit institutions 0 0 0 0 0 0 0 -3 2
Loans and receivables -61 -2 7 2 0 0 -54 -10 4
Central banks 0 0 0 0 0 0 0 0 0
Credit institutions -61 -2 7 2 0 0 -54 -10 4
Collective allowances -6 -16 0 20 0 0 -1 0 0
Debt securities 0 0 0 0 0 0 0 0 0
Central banks 0 0 0 0 0 0 0 0 0
Credit institutions 0 0 0 0 0 0 0 0 0
Loans and receivables -6 -16 0 20 0 0 -1 0 0
Central banks 0 0 0 0 0 0 0 0 0
Credit institutions -6 -16 0 20 0 0 -1 0 0
Total -67 -18 7 22 0 0 -55 -13 6

133
20. Loans and receivables to customers

Loans and receivables to customers

Gross carrying Specific Collective Net carrying
in EUR million amount allowances allowances amount
As of 31 December 2014
Debt securities with customers 269 -13 -2 254
General governments 108 0 -1 107
Other financial corporations 25 0 0 25
Non-financial corporations 135 -13 -1 122
Loans and advances to customers 128,056 -6,710 -766 120,580
General governments 7,701 -6 -14 7,681
Other financial corporations 5,249 -142 -25 5,082
Non-financial corporations 54,319 -4,134 -440 49,745
Households 60,786 -2,428 -287 58,071
Total 128,325 -6,723 -768 120,834

As of 31 December 2013
Debt securities with customers 306 -9 -2 294
General governments 36 0 0 36
Other financial corporations 0 0 0 0
Non-financial corporations 270 -9 -2 258
Loans and advances to customers 127,392 -7,093 -649 119,650
General governments 6,864 -6 -11 6,848
Other financial corporations 4,164 -187 -17 3,960
Non-financial corporations 59,571 -4,551 -365 54,655
Households 56,793 -2,348 -257 54,188
Total 127,698 -7,102 -651 119,945

In the balance sheet, loans and receivables to customers are disclosed with the carrying amount net of any. impairments. In the previous
financial statements the carrying amount was reported before any impairments. The comparative figures for 2013 were restated accordingly.

134
Allowances for loans and receivables to customers
Interest Recoveries
income from Exchange rate of amounts
impaired and other Amounts previously
in EUR million As of Allocations Use Releases loans changes (+/-) As of written off written off
Dec 13 Dec 14
Specific allowances -7,102 -3,522 2,101 1,439 202 160 -6,723 -220 196
Debt securities with customers -9 -11 4 0 0 3 -13 -14 11
General governments 0 0 0 0 0 0 0 0 0
Other financial corporations 0 0 0 0 0 0 0 0 0
Non-financial corporations -9 -11 4 0 0 3 -13 -14 11
Loans and advances to customers -7,092 -3,511 2,096 1,439 202 157 -6,710 -206 185
General governments -6 -6 3 3 1 -1 -6 0 1
Other financial corporations -183 -95 91 48 3 -5 -142 -2 2
Non-financial corporations -4,594 -2,274 1,431 837 109 357 -4,134 -163 149
Households -2,310 -1,137 572 551 90 -194 -2,428 -40 33
Collective allowances -651 -583 0 512 0 -47 -768 0 0
Debt securities with customers -2 0 0 0 0 0 -2 0 0
General governments 0 0 0 0 0 -1 -1 0 0
Other financial corporations 0 0 0 0 0 0 0 0 0
Non-financial corporations -2 0 0 0 0 2 -1 0 0
Loans and advances to customers -649 -583 0 512 0 -48 -766 0 0
General governments -11 -7 0 5 0 -1 -14 0 0
Other financial corporations -16 -27 0 21 0 -2 -25 0 0
Non-financial corporations -363 -310 0 237 0 -4 -440 0 0
Households -258 -239 0 250 0 -41 -287 0 0
Total -7,753 -4,105 2,101 1,951 202 112 -7,491 -220 196

Dec 12 Dec 13
Specific allowances -6,879 -2,975 1,153 1,355 270 -26 -7,102 -257 118
Debt securities with customers -3 -7 0 0 0 0 -9 0 0
General governments 0 0 0 0 0 0 0 0 0
Other financial corporations 0 0 0 0 0 0 0 0 0
Non-financial corporations -3 -7 0 0 0 0 -9 0 0
Loans and advances to customers -6,876 -2,968 1,153 1,355 270 -26 -7,092 -257 118
General governments -4 -7 1 4 0 0 -6 0 0
Other financial corporations -26 -88 13 3 1 -85 -183 -2 19
Non-financial corporations -4,528 -2,390 879 1,076 215 154 -4,594 -210 78
Households -2,319 -483 261 271 54 -94 -2,310 -44 21
Collective allowances -695 -326 0 356 0 14 -651 0 0
Debt securities with customers -2 0 0 0 0 0 -2 0 0
General governments 0 0 0 0 0 0 0 0 0
Other financial corporations 0 0 0 0 0 0 0 0 0
Non-financial corporations -2 0 0 0 0 0 -2 0 0
Loans and advances to customers -693 -326 0 356 0 14 -649 0 0
General governments -10 -2 0 3 0 -3 -11 0 0
Other financial corporations -4 -5 0 9 0 -16 -16 0 0
Non-financial corporations -451 -266 0 278 0 75 -363 0 0
Households -229 -52 0 66 0 -43 -258 0 0
Total -7,574 -3,301 1,153 1,711 270 -12 -7,753 -257 118

21. Impairment loss for financial instruments

in EUR million Dec 13 Dec 14 Position in statement of comprehensive income

Loans and advances to credit institutions 24 19 Net impairment loss on financial assets not measured at fair value through profit or loss*
Loans and advances to customers 3,553 4,325 Net impairment loss on financial assets not measured at fair value through profit or loss*
Financial assets - available for sale 54 53 Net impairment loss on financial assets not measured at fair value through profit or loss*
Financial assets - held to maturity 16 1 Net impairment loss on financial assets not measured at fair value through profit or loss*
Contingent credit risk liabilities 217 279 Sundry provisions (Note 34b)**

* Amounts presented under these items are not directly reconcilable with Note 8. Note 8 presents profit or loss impairment effects consisting of allocation, release of risk provisions, direct writte off expenses and income on loss
and advances written off. Note 21 discoloses effects on impairment loss consisting of only allocations of risk provisions and dirrect write offs..
** Amounts presented under this item are not directly reconcilable with Note 9. Under Note 21, only impairment loss is considered, unlike note 9 where also reversal of impairment is considered.

135
22. Derivatives – hedge accounting

As of 31 December 2013 As of 31 December 2014

Positive fair Negative fair Positive fair Negative fair
in EUR million Notional value value value Notional value value value
Fair value hedges 31,023 1,870 605 29,184 2,689 724
Interest rate 30,693 1,866 594 29,142 2,689 712
Equity 0 0 0 0 0 0
Foreign exchange 260 2 10 42 0 12
Credit 0 0 0 0 0 0
Commodity 0 0 0 0 0 0
Other 70 2 1 0 0 0
Cash flow hedges 5,328 74 40 4,327 183 2
Interest rate 4,866 73 32 3,760 181 1
Equity 0 0 0 0 0 0
Foreign exchange 443 1 7 567 2 1
Credit 0 0 0 0 0 0
Commodity 0 0 0 0 0 0
Other 20 1 1 0 0 0
Total 36,351 1,944 644 33,511 2,872 726

The nominal values as of 31 December 2013 for foreign exchange derivatives in fair value hedges were corrected.

23. Equity method investments

in EUR million Dec 13 Dec 14

Credit institutions 93 86
Financial institutions 3 45
Non-credit institutions 111 63
Total 208 195

The table below shows the aggregated financial information of companies accounted for using the equity method:

in EUR million Dec 13 Dec 14

Total assets 3,278 3,998
Total liabilities 2,716 3,499
Income 436 16
Profit/loss 60 -68

As of 31 December 2014 and 31 December 2013, none of Erste Group’s investments accounted for using the equity method published
price quotations.

136
Significant equity method investments were the Erste Group has strategic interest
VBV - Betriebliche Altersvorsorge
Prvá stavebná Let's Print Holding AG AG
in EUR million Dec 13 Dec 14 Dec 13 Dec 14 Dec 13 Dec 14
Country of Incorporation Slovakia Slovakia Austria Austria Austria Austria
Place of business Slovakia Slovakia Austria Austria Austria Austria
Financing building Financing building
Main business activity society society Printing Office Printing Office Insurance Insurance
Ownership% held 35% 35% 42% 42% 30% 30%
Voting rights held% 35% 35% 42% 42% 27% 27%
IFRS Classification (JV/A) Associate Associate Associate Associate Associate Associate
Reporting currency Euro Euro Euro Euro Euro Euro
Dividend income received 0 0 0 0 7 5
Impairment loss recognized (cumulative basis) 0 0 0 0 0 0
Impairment loss recognized (for the reporting year) 0 0 0 0 0 0
Loan commitments, financial guarantees and
other commitments given 0 0 0 0 0 0

Investee's financial information for the reporting year

Cash and cash balances 1 0 7 6 7 15
Other current assets 524 412 38 34 12 8
Non-current assets 1,831 2,160 97 96 39 38
Current liabilities 482 549 33 29 0 0
Non-current liabilities 1,626 1,782 81 78 4 7
Operating Income 81 74 245 237 2 2
Post-tax result from continuing operations 27 19 7 4 7 6
Post-tax result from discontinued operations 0 0 0 0 0 0
Other comprehensive income -1 3 0 0 0 0
Total comprehensive income 26 22 7 4 7 6
Depreciation and amortization -3 -3 -12 -8 0 0
Interest income 111 109 0 0 0 0
Interest expense -49 -53 -2 -3 0 0
Tax expense/income -9 -7 -1 -1 0 0

Reconciliation of investee's net assets against

equity investment's carrying amount
Net assets attributable to Erste Group 87 84 11 13 16 16
Carrying goodwill included in the cost of
investment 0 0 6 6 0 0
Impairments (cumulative basis) 0 0 0 0 0 0
Carrying amount 87 84 18 20 16 16

Insignificant equity method investments

Associates Joint Ventures
in EUR million Dec 13 Dec 14 Dec 13 Dec 14
Investees' aggregated key financial information
Post-tax result from continuing operations 19 20 0 0
Post-tax result from discontinued operations 0 0 0 0
Other comprehensive income 3 3 0 0
Total comprehensive income 22 23 0 0

Loan commitments, financial guarantees and other commitments given 0 0 0 0

Carrying amount 87 75 0 0

24. Unconsolidated structured entities

Erste Group is involved as an investor in a number of unconsolidated public or private investment funds registered in Austria, Central and
Eastern Europe or other foreign jurisdictions. A majority of these funds are managed by unrelated third parties, whilst the rest are retail
funds managed by asset management subsidiaries of the Group and in which the Group is not a significant investor. The interests of the
Group in these funds mostly take the form of redeemable fund unit investments measured at fair value on the Group’s balance-sheet, and
are classified as either available for sale or held for trading equity instruments. The Group is also customarily involved in trading deriva-
tive deals with own-managed unconsolidated funds. Also, for shorter or longer periods, some of the own-managed unconsolidated funds
may make placements in debt securities issued by Erste Group entities or in bank deposits held with Erste Group banks. In limited in-
stances, Erste Group Bank AG provides capital performance guarantees to unconsolidated own-managed funds.

137
Erste Group is also involved as an investor in a number of unconsolidated securitisation vehicles sponsored and managed by unrelated
third parties in foreign jurisdictions. The interests of the Group in these entities mostly take the form of bond investments, the majority of
which are classified as available for sale and therefore measured at fair value on the Group’s balance-sheet. Almost 95% of the exposure
on unconsolidated securitisations relates to bond investments maturing beyond 1 year. The bonds classified as Held to Maturity have legal
maturities (underlying pool-driven) ranging from 7 to 40 years with effect from 31 December 2014. The remaining weighted average life
until legal (underlying pool-driven) maturity of the Group’s bond investments in securitizations is around 12.5 years as at year-end. How-
ever, given the seniority ranking of the related debt tranches, the HtM investments in securitisations are expected to mature (be realized)
earlier.

To a lesser extent, Erste Group is also exposed (notably as lender) to unconsolidated structured entities having other business activities,
primarily real estate project-based.

As at 31 December 2014, the Group’s maximum exposure to losses from its interests in unconsolidated structured entities is equal to the total
fair value of its fund units, bond investments, trading derivative assets, provided loans and off-balance-sheet commitments and guarantees.

The table below summarises the Group’s interests in unconsolidated structured entities as at 31 December 2014 per asset/liability class,
business activity and business location. The summary includes the assets identified as impaired at year-end, as well as related net impair-
ment losses/gains incurred during the year 2014. The carrying amounts of the exposures summarized below are mostly referring to assets
already measured at fair value in the balance-sheet of the Group. The carrying amounts of the remaining exposures (notably HtM invest-
ments) are materially similar to their fair values.

Dec 14 Investment Funds Securitization vehicles

Own- Third-party Own- Third-party
in EUR million managed managed Total managed managed Total Other Total
Assets:
Equity instruments, thereof: 359 694 1,053 0 0 0 0 1,053
Available for sale 308 426 734 0 0 0 0 734
Fair value through profit or loss 51 268 319 0 0 0 0 319
Debt securities, thereof: 1 0 1 0 1,221 1,221 0 1,221
Available for sale 1 0 1 0 1,071 1,071 0 1,072
Fair value through profit or loss 0 0 0 0 38 38 0 38
Held to maturity 0 0 0 0 112 112 0 112
Loans and receivables 0 0 0 0 0 0 101 101
Trading derivatives 39 0 39 0 0 0 4 43
Non-current equities held for sale 0 53 53 0 0 0 0 53
Total assets 399 747 1,146 0 1,221 1,221 105 2,472
thereof impaired 12 20 32 0 51 51 0 83
Net Impairment (losses)/gains for the year -1 -2 -2 0 3 3 0 0

On-balance sheet exposure analysis

per jurisdiction
Austria 341 490 830 0 0 0 0 830
Central and Eastern Europe 58 30 88 0 0 0 105 193
Other jurisdictions 0 228 228 0 1,221 1,221 0 1,449
399 747 1,146 0 1,221 1,221 105 2,472

Liabilities
Debt securities issued 186 0 186 0 0 0 0 186
Deposits 308 0 308 0 0 0 14 322
Trading derivatives 6 0 6 0 0 0 0 6
Total liabilities 499 0 499 0 0 0 14 513

Off balance-sheet commitments 87 0 87 0 0 0 6 93

The magnitude of the Group’s equity interests in unconsolidated investment funds may vary in the future depending on the future perfor-
mance of their respective underlying assets, relevant market circumstances and opportunities, or regulatory requirements. During the year
2015, regulatory-driven divestitures in the amount of EUR 52.8 million are contemplated in respect of the Group’s interests in private
equity funds registered in foreign jurisdictions (please refer to Note 29 Assets held for sale and liabilities associated with assets held for
sale for further details). In the above summary, these interests are separately presented in the line “Non-current equities held for sale”.

Group’s bond interests in unconsolidated securitization vehicles, except some for those classified as held-to maturity, are expected to be
gradually disposed of throughout the next three years.

138
25. Non controlling interest

Dec 14 HV Savings Banks, thereof:

in EUR million Total ASK STMK KTN
Country of Incorporation Austria Austria Austria Austria
Place of business Austria Austria Austria Austria
Main business activity Banking Banking Banking Banking
Ownership% held by NCI 50.1%-100% 60% 75% 75%
Reporting currency Euro Euro Euro Euro
Dividends paid to equity holders of the parent 92 4 4 0
Net result attributable to non-controlling interests 179 17 42 12
Accumulated NCI 3,252 464 729 185

Subsidiary-level stand-alone key financial information

Current assets 18,060 4,624 1,285 440
Non-current assets 41,328 7,590 11,601 3,331
Current liabilities 28,735 8,090 2,111 776
Non-current liabilities 25,871 3,352 9,803 2,748
Operating income 1,482 271 314 94
Profit or loss from continuing operations 184 29 56 17
Total comprehensive income 88 22 72 20

Dec 13 HV Savings Banks, thereof:

in EUR million Total ASK STMK KTN
Country of Incorporation Austria Austria Austria Austria
Place of business Austria Austria Austria Austria
Main business activity Banking Banking Banking Banking
Ownership% held by NCI 50.1%-100% 70% 75% 75%
Reporting currency Euro Euro Euro Euro
Dividends paid to equity holders of the parent 30 7 5 0
Net result attributable to non-controlling interests 109 26 38 0
Accumulated NCI 3,094 530 732 171

Subsidiary-level stand-alone key financial information

Current assets 16,109 4,130 4,022 188
Non-current assets 41,647 8,305 8,910 3,556
Current liabilities 27,639 6,710 6,252 779
Non-current liabilities 25,555 4,970 5,704 2,737
Operating income 1,414 269 301 85
Profit or loss from continuing operations 156 37 50 0
Total comprehensive income 289 1 4 -6

139
26. Property, equipment and Investment properties

A) At cost
Property and equipment - Acquisition and production costs
Land and Office and plant
buildings (used equipment / other IT assets Movable other Property and Investment
in EUR million by the Group) fixed assets (hardware) property equipment properties
Balance as of 01.01.2013 2,863 1,199 704 321 5,087 1,510
Additions in current year (+) 133 62 54 175 424 42
Disposals (-) -156 -250 -96 -98 -600 -37
Acquisition of subsidiaries (+) 15 1 0 25 41 82
Disposal of subsidiaries (-) 0 0 -1 - -1 -100
Reclassification (+/-) 0 0 0 - 0 0
Assets held for sale (-) 0 0 0 - 0 0
Currency translation (+/-) -72 -21 -17 -4 -114 -53
Balance as of 31.12.2013 2,783 990 645 419 4,837 1,444
Additions (+) 135 48 42 130 355 91
Disposals (-) -24 -57 -54 -96 -232 -39
Acquisition of subsidiaries (+) 12 3 0 34 48 26
Disposal of subsidiaries (-) -1 0 0 -3 -4 -27
Reclassification (+/-) -95 1 2 49 -42 -41
Assets held for sale (-) -92 0 0 -10 -102 -17
Currency translation (+/-) -13 -4 -4 9 -12 -5
Balance as of 31.12.2014 2,704 982 632 532 4,849 1,432

B) Accumulated depreciation
Property and equipment - Accumulated depreciation
Land and Office and plant
buildings (used equipment / other IT assets Movable other Property and Investment
in EUR million by the Group) fixed assets (hardware) property equipment properties
Balance as of 01.01.2013 -1,063 -894 -581 -110 -2,648 -487
Amortisation and depreciation (-) -84 -69 -52 -73 -278 -27
Disposals (+) 78 181 86 48 393 32
Acquisition of subsidiaries (-) -6 -1 0 -19 -26 -38
Disposal of subsidiaries (+) 0 0 0 0 0 36
Impairment (-) -4 -1 -1 -3 -9 -26
Reversal of impairment (+) 0 0 0 0 0 1
Reclassification (+/-) 0 0 0 0 0 0
Assets held for sale (+) 0 0 0 0 0 0
Currency translation (+/-) 25 14 10 2 51 15
Balance as of 31.12.2013 -1,053 -769 -538 -156 -2,516 -494
Amortisation and depreciation (-) -79 -53 -46 -70 -248 -30
Disposals (+) 35 59 52 57 203 16
Acquisition of subsidiaries (-) -4 -2 0 -12 -18 -6
Disposal of subsidiaries (+) 1 1 0 3 4 4
Impairment (-) -13 0 -1 -1 -16 -13
Reversal of impairment (+) 2 0 0 1 3 4
Reclassification (+/-) 39 -17 0 -29 -7 34
Assets held for sale (+) 2 0 0 0 2 1
Currency translation (+/-) 5 3 4 -4 8 2
Balance as of 31.12.2014 -1,065 -779 -530 -211 -2,585 -481

C) Carrying amounts
Property and equipment – carrying amounts
Land and Office and plant
buildings (used equipment / other IT assets Movable other Property and Investment
in EUR million by the Group) fixed assets (hardware) property equipment properties
Balance as of 31.12.2013 1,729 221 107 263 2,319 951
Balance as of 31.12.2014 1,639 203 101 321 2,264 950

The carrying amount of investment properties includes investment properties under operating leases in the amount of EUR 198 million
(2013: EUR 184 million).

In the reporting period, borrowing costs of EUR 6.3 million (2013: EUR 3.6 million) were capitalised. The related interest rates ranged
from 0.5 % to 1.5 % (2013: 2.8%).

140
The carrying amount of expenditure recognised in the items fixed assets and investment properties during their construction is
EUR 42.9 million (2013: EUR 11.2 million). The contractual commitments for purchase of fixed assets and investment properties are
EUR 123.9 million (2013: EUR 301.3 million).

27. Intangible assets

A) At cost
Intangible assets - Acquisition and production costs
Self-constructed Others
Customer Software software within (licenses,
in EUR million Goodwill relationships Brand acquired the Group patents, etc.) Total
Balance as of 01.01.2013 3,950 772 291 1,317 273 518 7,120
Additions in current year (+) 0 3 0 128 64 13 208
Disposals (-) 0 0 0 -172 0 -97 -269
Acquisition of subsidiaries (+) 0 0 0 2 0 0 2
Disposal of subsidiaries (-) -21 0 0 0 0 0 -22
Reclassification (+/-) 0 0 0 0 0 0 0
Assets held for sale (-) 0 0 0 0 0 0 0
Currency translation (+/-) -4 -3 -2 -37 -5 -24 -75
Balance as of 31. 12. 2013 3,924 771 289 1,237 333 411 6,965
Additions (+) 0 0 0 133 50 6 189
Disposals (-) 0 0 0 -43 -20 -5 -69
Acquisition of subsidiaries (+) 0 0 0 2 0 0 2
Disposal of subsidiaries (-) 0 0 3 4 0 2 9
Reclassification (+/-) 0 0 0 -53 53 -3 -3
Assets held for sale (-) 0 0 0 0 0 0 0
Exchange-rate changes (+/-) 8 3 -1 -11 3 -3 -1
Balance as of 31.12.2014 3,932 774 291 1,268 419 408 7,092

B) Accumulated depreciation
Intangible assets - Accumulated depreciation
Self-constructed Others
Customer Software software within (licenses,
in EUR million Goodwill relationships Brand acquired the Group patents, etc.) Total
Balance as of 01.01.2013 -2,324 -412 0 -916 -229 -345 -4,226
Amortisation and depreciation (-) 0 -65 0 -115 -11 -21 -212
Disposals (+) 0 0 0 173 0 78 251
Acquisition of subsidiaries (-) 0 0 0 0 0 0 -1
Disposal of subsidiaries (+) 21 0 0 0 0 0 21
Impairment (-) -383 -3 0 -10 -2 0 -398
Reversal of impairment (+) 0 0 0 0 0 0 0
Reclassification (+/-) 0 0 0 0 0 0 0
Assets held for sale (+) 0 0 0 0 0 0 0
Currency translation (+/-) 0 0 0 20 -6 25 39
Balance as of 31.12.2013 -2,685 -480 0 -847 -248 -263 -4,525
Amortisation and depreciation (-) 0 -37 0 -103 -28 -18 -187
Disposals (+) 0 0 0 21 20 4 45
Acquisition of subsidiaries (-) 0 0 0 -1 0 0 -1
Disposal of subsidiaries (+) 0 0 -3 -3 0 -2 -8
Impairment (-) -475 -193 -291 -4 -6 -19 -988
Reversal of impairment (+) 0 0 0 0 0 0 0
Reclassification (+/-) 0 0 0 28 -44 19 2
Assets held for sale (+) 0 0 0 0 0 0 0
Currency translation (+/-) 0 -2 3 7 0 3 10
Balance as of 31.12.2014 -3,161 -712 -291 -904 -306 -276 -5,650

C) Carrying amounts
Intangible assets - carrying amounts
Self-constructed Others
Customer Software software within (licenses,
in EUR million Goodwill relationships Brand acquired the Group patents, etc.) Total
Balance as of 31.12.2013 1,239 291 289 390 85 147 2,441
Balance as of 31.12.2014 771 62 0 364 113 132 1,442

141
As of 31 December 2014, the customer relationship and distribution network of Erste Card Club d.d. Croatia in particular amounted to
EUR 1.2 million (2013: EUR 6.1 million), and the customer relationships of Ringturm Kapitalanlagegesellschaft m.b.H to EUR 57 million
(2013: EUR 61.1 million). The remaining amortisation period of customer relationships in Ringturm Kapitalanlagegesellschaft m.b.H is
13.8 years.

The customer relationship of Banca Comercială Română was fully impaired in 2014 and consequently amounted to EUR 0 million as of
31 December 2014 (2013: EUR 199.0 million).

The item ‘Brand’ of Banca Comercială Română was fully impaired in 2014 and consequently amounted to EUR 0 million as of
31 December 2014 (2013: EUR 288.8 million).

Development of goodwill
The changes in the carrying amount of goodwill, as well as gross amounts and accumulated impairment losses of goodwill, for the years
ended 31 December 2014 and 2013 are shown below by country of subsidiary:

Czech Other
in EUR million Romania Republic Slovakia Hungary Croatia Austria countries Total
Balance as of 1 Jan 2013 600 544 226 0 114 142 0 1,626
Acquisitions 0 0 0 0 0 0 0 0
Disposals 0 0 0 0 0 0 0 0
Impairment losses -283 0 0 0 -52 -48 0 -383
Exchange rate changes -4 0 0 0 0 0 0 -4
Balance as of 31 Dec 2013 313 544 226 0 61 94 0 1,239
Gross amount of goodwill 2,245 544 226 313 114 363 120 3,924
Cumulative impairment -1,932 0 0 -313 -52 -269 -120 -2,685

Balance as of 1 Jan 2014 313 544 226 0 61 94 0 1,239

Acquisitions 0 0 0 0 0 0 0 0
Disposals 0 0 0 0 0 0 0 0
Impairment losses -319 0 0 0 -61 -94 0 -475
Exchange rate changes 6 1 0 0 1 0 0 8
Balance as of 31 Dec 2014 0 545 226 0 0 0 0 771
Gross amount of goodwill 2,251 545 226 313 114 363 120 3,932
Cumulative impairment -2,251 0 0 -313 -114 -363 -120 -3,161

In the goodwill development summary presented above, all relevant entities (cash generating units) are grouped by country of domicile of
the relevant subsidiaries.

The gross amounts of the goodwill elements presented above are the amounts as determined at the time of the related acquisitions, less
accumulated amortisations up to 31 December 2004, including the effects of exchange rate changes.

The goodwill elements having non-nil carrying amounts as at 31 December 2013 have been assessed for impairment on a quarterly basis
throughout the year 2014. Thus, the goodwill impairment assessment for the year 2014 addressed the following subsidiaries (cash generat-
ing units):

_ Banca Comercială Română SA (‘BCR’)

_ Česká spořitelna a.s. (‘CSAS’)
_ Erste & Steiermarkische Bank d.d., Erste Bank Croatia (‘EBC’)
_ Slovenská sporiteľňa a.s. (‘SLSP’)
_ Steiermärkische Bank und Sparkassen Aktiengesellschaft (‘STMK’)
_ Erste Group Bank AG – Girocredit (‘GIRO’)

The analysis per subsidiary (cash generating unit) of both the carrying goodwill as at 31 December 2014 (1 January 2014) and of the
impairment losses recognised for the year 2014 (2013) is presented in the table below. The table also summarizes the key elements of the
approach taken in designing and performing the goodwill impairment test as at the end of 2014.

In respect of the assessed subsidiaries (cash generating units) BCR, EBC and STMK, the impairment losses presented below had already
been recognised as at 30 June 2014 based on the assessments performed at mid-year using the input parameters applicable at that time.

142
BCR CSAS EBC SLSP STMK GIRO
Carrying amount of goodwill
as of 1 January 2014 313 544 61 226 40 54
Effect of exchange rate changes
for the year 2014 6 1 1 0 0 0
Basis upon which recoverable amount has
been determined Value in Use (discounted cash flow model based)
Key input parameters into the discounted
cash flow model Risk Free Rate, Terminal Growth Rate, β Factor, Market Risk Premium
Description of approach to determining value Risk Free Rate has been set at 1.93% p.a. throughout relevant Group's CGUs based on relevant financial statistics
assigned to risk free rate published by Deutsche Bundesbank as at the reference date 14 November 2014
For Austrian CGUs: Terminal Growth Rate has been equated to 1.00% reflecting the expected Austrian annual average long-
term inflation rate
For non-Austrian (CEE) CGUs: Terminal Growth Rate has been equated to 3.00%, representing the recommended cap level
Description of approach to determining for the Terminal Growh Rate, as per the report ESMA/2013/2 "European Enforcers Review of Impairment of Goodwill and
values assigned to terminal growth rate Other Intangible Assets in the IFRS Financial Statements" published by the European Securities and Markets Authority (ESMA).
Description of approach to determining Set as the median value of a group of levered β factors attributable to a sample of ‘peer banks’ representative of the tested
values assigned to β factor banks (CGUs), as published by Bloomberg as of the reference date 14 November 2014.
Description of approach to determining Set at 6.25% throughout relevant Group's CGUs based on publicly available evaluations by the Austrian Chamber of
values assigned to market risk premium Commerce (Kammer der Wirtschaftstreuhänder).
Period of cash flow projection (years) 5 years (2015 -2019); extrapolation to perpetuity based on Terminal Growth Rate
Discount rate applied to cash flow projections
(pre-tax) 14.04% 12.17% 14.49% 12.91% 12.28% 15.30%
The value assigned to β Factor 1.121 1.121 1.121 1.121 1.379 1.033
Amount of goodwill impairment loss
recognised in profit or loss for the year 2014 -319 0 -61 0 -40 -54
Post-impairment carrying amount of goodwill
as of 31 December 2014 0 544 0 226 0 0

In respect of the assessed cash generating units located outside the eurozone, an inflation differential rate of 1% per annum has been
considered in the determination of the discount rates applicable to the related 2014-2018 cash flow projections.

The comparative subsidiary-level summary as at 31 December 2013 is presented below:

BCR CSAS EBC SLSP STMK GIRO

Carrying amount of goodwill
as of 1 January 2013 600 544 114 226 57 85
Effect of exchange rate changes
for the year 2013 -4 0 0 0 0 0
Basis upon which recoverable amount has
been determined Value in Use (discounted cash flow model based)
Key input parameters into the discounted
cash flow model Risk Free Rate, Terminal Growth Rate, β Factor, Market Risk Premium
Description of approach to determining value Risk Free Rate has been set at 2.73% p.a. throughout relevant Group's CGUs based on relevant financial statistics
assigned to risk free rate published by Deutsche Bundesbank as at the reference date 29 November 2013
For Austrian CGUs: Terminal Growth Rate has been equated to 1.00% reflecting expected the Austrian annual average
long-term inflation rate
For non-Austrian (CEE) CGUs: Terminal Growth Rate has been equated to 3.00%, representing the recommended cap level
Description of approach to determining for the Terminal Growh Rate, as per the report ESMA/2013/2 "European Enforcers Review of Impairment of Goodwill and
values assigned to terminal growth rate Other Intangible Assets in the IFRS Financial Statements" published by the European Securities and Markets Authority (ESMA).
Set as the median value of a set of levered β factors attributable to a representative sample of "peer banks" representative
Description of approach to determining for each tested bank (CGU), as published by Bloomberg as at the reference date 29 November 2013. Thus, the β values
values assigned to β factor used have been set at 1,223 for Austrian tested entities and 1,218 for non-Austrian (CEE) tested entities.
Description of approach to determining Set at 6.0% throughout relevant Group's CGUs based on publicly available evaluations by Austrian Chamber of Commerce
values assigned to market risk premium (Kammer der Wirtschaftstreuhänder).
Period of cash flow projection (years) 5 years (2014 -2018); extrapolation to perpetuity based on Terminal Growth Rate
Discount rate applied to cash flow projections
(pre-tax) 15.76% 13.96% 16.98% 14.67% 11.70% 15.30%
Amount of goodwill impairment loss
recognised in profit or loss for the year 2013 -283 0 -52 0 -17 -31
Post-impairment carrying amount of goodwill
as of 31 December 2013 313 544 61 226 40 54
Recoverable amount (value in use)
as of 31 December 2013 (100%) 2,516 5,680 1,037 2,099 1,227 54

In connection with those tested cash-generating units for which no goodwill impairment loss was determined as existing as of
31 December 2014, the table below summarises the outcome of the sensitivity analysis performed to determine by how much the key
input parameters into the applied discounted cash flow models would need to vary adversely in order to cause the unit’s calculated recov-
erable amount to decrease down to its related carrying amount:

143
Growth rates CSAS SLSP
Amount by which recoverable amount exceeds carrying amount 1,834 341
Risk free rate increase that would cause recoverable amount to equal carrying amount (basis points) 327 169
Terminal growth rate decrease that would cause recoverable amount to equal carrying amount (basis points) -1,445 -624
β factor increase that would cause recoverable amount to equal carrying amount (coefficient value) 0.524 0.271
Market risk premium increase that would cause recoverable amount to equal carrying amount (basis points) 292 151

As at 31 December 2013, the comparative sensitivity analysis figures were as follows:

Growth rates CSAS SLSP

Amount by which recoverable amount exceeds carrying amount 1,296 614
Risk free rate increase that would cause recoverable amount to equal carrying amount (basis points) 282 374
Terminal growth rate decrease that would cause recoverable amount to equal carrying amount (basis points) -1,122 -1,360
β factor increase that would cause recoverable amount to equal carrying amount (coefficient value) 0.471 0.623
Market risk premium increase that would cause recoverable amount to equal carrying amount (basis points) 232 307

28. Tax assets and liabilities

Net variance 2014

Through
other
Tax Tax Through compre-
Tax assets Tax assets liabilities liabilities profit or hensive
in EUR million 2014 2013 2014 2013 Total loss income
Temporary differences relate to the following items:
Loans and advances to credit institutions and customers 227 212 -24 -107 98 98 0
Financial assets - available for sale 2 62 -334 -169 -225 -44 -181
Property and equipment 25 17 -31 -24 0 0 0
(Amortisation of) investments in subsidiaries (tax-effective in
subsequent years) 46 217 0 0 -171 -171 0
Financial liabilities at amortized cost (deposits and bond
issues) 97 47 0 -2 52 52 0
Long-term employee provisions 117 88 -3 -9 34 -20 55
Sundry provisions 53 60 -7 -8 -6 -6 0
Carry forward of tax losses 104 202 0 0 -98 -98 0
Customer relationships, brands and other intangibles 3 11 -14 -103 81 81 0
Other 206 379 -261 -323 -111 -87 -17
Effect of netting gross deferred tax position -577 -576 577 576 0 0 0
Total deferred taxes 301 719 -99 -169 -347 -197 -143
Current taxes 107 100 -91 -85 0 -312 0
Total taxes 409 819 -190 -254 -347 -509 -143

Out of the total net amount of EUR 347 million representing the year-on-year adverse variance in Group's consolidated net deferred tax
position, an amount of EUR 197 million is reflected as net deferred tax expense in Group's income statement for the year 2014, whilst an
amount of EUR 143 million reflects as unfavorable impact in Group's other comprehensive income for the year. The remaining EUR 7
million are attributable to other categories of variances in the consolidated net deferred tax position, notably due to direct movements
through equity, foreign exchange differences, and changes in the consolidation scope.

The most significant non-recurring elements having contributed to the EUR 347 million net deferred tax position decrease for the year are
(a) a EUR 393 million unfavorable impact from one-off mid-year and year-end impairments of deferred tax assets of Erste's Austrian Tax
Group (mostly in connection with deferred tax assets previously recognized relating to the Austrian taxation rule that impairments of
investments in subsidiaries must be distributed evenly over seven years for tax deduction purposes) and (b) an EUR 80 million favorable
impact from the one-off release of group-level deferred tax liabilities, due to the mid-year full impairment of the related intangible assets
(BCR brand and customer relationships). Those factors were at the same time the main contributors to the significant increase in total tax
expense (2014: EUR 509 million, 2013: EUR 178,5 million). Further information on total tax expense is provided in Note 10.

Group's consolidated deferred tax asset position in amount of EUR 301 million as at 31 December 2014 is expected to be recoverable in
the foreseeable future. This expectation has resulted from year-end recoverability assessments undertaken by Group's entities, either at
individual level, or at relevant taxation sub-group level. Such assessments involved comparing net temporary deductible differences and
available fiscal losses at year-end versus fiscal profit forecasts for a group-wide unified time horizon of 5 years (end of 2013: 5 to 10
years depending on the fiscal jurisdiction and applicable facts and circumstances). Group's decision of applying a five year capping to the
fiscal forecasts used in the recoverabilty assessments performed starting with 2014 was taken in order to align them to the standard hori-

144
zon used for long-term budgeting throughout the Group ,as well as to consider an expected increase in future volatility and uncertainty in
legal/economic frameworks, although in most jurisdictions (notably Austria), accumulated tax losses continue to be available for carrying-
forward and future deductibility indefinitely.

The deferred tax positions presented above at the granularity level of their respective underlying sources (these are: temporary differences
between the accounting and the tax values of assets and liabilities, and accumulated tax losses) are measured prior to subsidiary-level
balance-sheet netting of attributable gross deferred tax assets and gross deferred tax liabilities. This netting effect is separately disclosed
in the last line of the summary presented above. Also, except for the deferred tax assets attributable to carried forward tax losses and to
amortization of investments in subsidiaries (tax-effective in subsequent years), to which the non-valuation impacts of the afore-described
recoverability assessments could be distinctly allocated, the amounts presented above are before those non-valuation impacts on the re-
spective potential deferred tax asset positions, which are calculated at subsidiary-level. Consistently with prior periods' presentation, the
remaining non-valued components, which could not be distinctly allocated, are included in "Other" and therefore reduce the deferred tax
asset amounts which are attributed to that position in the above summary.

In compliance with IAS 12.39, no deferred tax liabilities were recognised for temporary differences relating to investments in subsidiaries
in the amount of EUR 1,016 million (31 December 2013: EUR 1,179 million - prior year amount adjusted due to the availability of more
detailed data), as they are not expected to reverse in the foreseeable future. As at 31 December 2014, no deferred tax assets were recog-
nized for tax losses carried forward and deductible temporary differences in total amount of EUR 6,336 million, of which EUR 3,107
million related to tax losses carried forward (31 December 2013: EUR 4,377 million - prior year amount adjusted due to the availability
of more detailed data, of which EUR 2,414 million related to tax losses carried forward), as they are not expected to be realized in the
foreseeable future. The figure includes an amount of EUR 412 million (31 December 2013: EUR 1,065 million - prior year amount ad-
justed due to the availability of more detailed data) representing temporary differences in connection with investments in subsidiaries for
which no deferred tax assets have been recognised in accordance with IAS 12.44.

29. Assets held for sale and liabilities associated with assets held for sale

in EUR million Dec 13 Dec 14

Assets held for sale 75 291
Liabilities associated with assets held for sale 0 0

As of the end of 2014, ‘Assets held for sale’ include mainly land and buildings (EUR 169 million). Also, movable properties in the
amount of EUR 69 million are held for sale as of the end of 2014. Furthermore, the private equity portfolio of investments in the amount
of EUR 53 million is presented in this line item due to forthcoming regulatory driven divestiture. As of the end of 2014 there were no
liabilities associated with assets held for sale.

30. Other assets

in EUR million Dec 13 Dec 14

Prepayments and accrued income 296 218
Inventories 462 471
Sundry assets 1,713 934
Other assets 2,471 1,623

‘Sundry assets’ consist mainly of clearing items from the settlement of securities and payment transactions as well as advanced payments
for assets under construction.

31. Other trading liabilities

in EUR million Dec 13 Dec 14

Short positions 335 422
Equity instruments 201 139
Debt securities 134 283
Debt securities issued 52 47
Sundry trading liabilities 0 88
Other trading liabilities 388 558

145
32. Financial liabilities – at fair value through profit and loss

Delta between carrying amount

Carrying amount Amount repayable and amount repayable
in EUR million Dec 13 Dec 14 Dec 13 Dec 14 Dec 13 Dec 14
Financial liabilities -
at fair value through profit or loss 2,339 2,073 2,412 2,503 -73 -431
Deposits from banks 0 0 0 0 0 0
Deposits from customers 460 320 466 748 -6 -428
Debt securities issued 1,879 1,753 1,946 1,755 -67 -3
Other financial liabilities 0 0 0 0 0 0

Fair value changes that are attributable to changes in own credit risk
For reporting period Cumulative amount
in EUR million 1-12 13 1-12 14 Dec 13 Dec 14
Financial liabilities - at fair value through profit or loss -53.8 -3.1 -54.3 -53.2
Deposits from banks 0.0 0.0 0.0 0.0
Deposits from customers -3.3 -0.5 1.7 1.2
Debt securities issued -50.5 -2.7 -56.0 -54.4
Other financial liabilities 0.0 0.0 0.0 0.0

Debt securities issued

in EUR million Dec 13 Dec 14
Subordinated liabilities 275 276
Subordinated issues and deposits 275 276
Supplementary capital 0 0
Hybrid issues 0 0
Other debt securities issued 1,604 1,477
Bonds 1,206 1,086
Certificates of deposit 0 0
Other certificates of deposits/name certificates 71 77
Mortgage covered bonds 327 315
Public sector covered bonds 0 0
Other 0 0
Debt securities issued 1,879 1,753

33. Financial liabilities measured at amortised costs

Deposits from banks

Dec 13
in EUR million restated Dec 14
Overnight deposits 4,264 1,913
Term deposits 10,311 11,975
Repurchase agreements 2,724 914
Deposits from banks 17,299 14,803

146
Deposits from customers
Dec 13
in EUR million restated Dec 14
Overnight deposits 65,090 65,103
Savings deposits 21,192 17,314
General governments 0 0
Other financial corporations 194 165
Non-financial corporations 1,420 1,556
Households 19,578 15,592
Non-savings deposits 43,897 47,790
General governments 3,158 3,301
Other financial corporations 2,464 3,396
Non-financial corporations 14,427 14,576
Households 23,849 26,517
Term deposits 55,990 56,609
Deposits with agreed maturity 51,856 52,013
Savings deposits 33,283 35,725
General governments 0 0
Other financial corporations 861 1,221
Non-financial corporations 1,266 1,258
Households 31,155 33,246
Non-savings deposits 18,574 16,289
General governments 1,860 1,260
Other financial corporations 1,247 2,965
Non-financial corporations 5,725 3,930
Households 9,741 8,133
Deposits redeemable at notice 4,134 4,595
General governments 56 0
Other financial corporations 105 43
Non-financial corporations 493 108
Households 3,480 4,444
Repurchase agreements 876 550
General governments 706 290
Other financial corporations 0 213
Non-financial corporations 169 48
Households 0 0
Deposits from customers 121,955 122,263
General governments 5,780 4,851
Other financial corporations 4,871 8,003
Non-financial corporations 23,501 21,476
Households 87,803 87,933

Debt securities issued

in EUR million Dec 13 Dec 14
Subordinated liabilities 4,884 5,482
Subordinated issues and deposits 3,304 4,182
Supplementary capital 1,218 942
Hybrid issues 363 357
Other debt securities issued 26,361 23,905
Bonds 14,283 13,017
Certificates of deposit 811 281
Other certificates of deposits/name certificates 1,829 591
Mortgage covered bonds 7,055 6,911
Public sector covered bonds 2,116 2,838
Other 267 266
Debt securities issued 31,245 29,387

In 1998, Erste Group Bank AG launched a EUR 30,000,000,000 Debt Issuance Programme (DIP). The current DIP is a programme for
issuing debt instruments in various currencies and maturities with a limited range of interest rate structures. In 2014, 125 new bonds with
a total volume of approximately EUR 1.5 billion were issued under the DIP.

In July 2013 the Credit Linked Notes Programme was implemented. In 2014, 68 new bonds with a total volume of EUR 148.3 million
were issued. At the same time the Equity Linked Notes Programme was implemented, under which 107 new bonds with a total volume of
EUR 378.4 million were issued.

147
Furthermore, secured and senior unsecured registered notes (“Namenspfandbriefe” and “Namensschuldverschreibungen”), as well as
other bonds that were not part of the above mentioned programmes were issued with a volume of EUR 185.1 million.

The Euro Commercial Paper and Certificates of Deposit Programme has an overall volume of EUR 10 billion. In all, 15 issues amounting
to EUR 0.6 billion were placed in 2014. Issues totalling approximately EUR 0.6 billion were redeemed over the same period.

34. Provisions

in EUR million Dec 13 Dec 14

Long-term employee provisions 1,032 1,158
Pending legal issues and tax litigation 172 163
Commitments and guarantees given 218 241
Provisions for guarantees - off balance sheet (defaulted customers) 119 141
Provisions for guarantees - off balance sheet (non-defaulted customers) 99 99
Other provisions 25 91
Provisions for onerous contracts 0 5
Other 25 86
Provisions 1,448 1,653

a) Long-term employee provisions

Severance Jubilee
in EUR million Pensions payments payments Total
Present value of long-term employee benefit obligations, 31 Dec 2010 833 405 73 1,311
Present value of long-term employee benefit obligations, 31 Dec 2011 825 397 73 1,295
Present value of long-term employee benefit obligations, 31 Dec 2012 823 410 76 1,309
Increase from acquisition of subsidiaries 0 0 0 0
Decrease from disposal of subsidiaries 0 0 0 0
Settlements 0 0 0 0
Curtailments 0 -6 0 -6
Service cost -1 13 5 17
Interest cost 29 15 3 47
Payments -71 -38 -6 -115
Exchange rate difference 0 1 0 1
Components recognised in other comprehensive income (Remeasurements)
Actuarial gains/losses arising from changes in financial assumptions 0 0 0 0
Actuarial gains/losses arising from changes from experience assumptions 7 0 0 7
Actuarial gains/losses recognised in income 0 0 -2 -2
Present value of long-term employee benefit obligations, 31 Dec 2013 787 395 76 1,258
Obligations covered by plan assets 0 194 32 226
Obligations covered by provisions 0 201 44 245
Less fair value of plan assets 0 194 32 226
Provisions as of 31 Dec 2013 787 201 44 1,032

Present value of long-term employee benefit obligations, 31 Dec 2013 787 395 76 1,258
Increase from acquisition of subsidiaries 0 0 0 0
Decrease from disposal of subsidiaries 0 0 0 0
Settlements 0 0 0 0
Curtailments 0 -6 0 -6
Service cost 0 12 5 17
Interest cost 27 14 2 43
Payments -69 -26 -6 -101
Exchange rate difference 0 0 0 0
Components recognised in other comprehensive income (Remeasurements) 0 0 0 0
Actuarial gains/losses arising from changes in financial assumptions 114 75 0 189
Actuarial gains/losses arising from changes from experience assumptions -1 2 0 1
Actuarial gains/losses recognised in income 0 0 0 0
Actuarial gains/losses arising from changes in financial assumptions 0 0 11 11
Actuarial gains/losses arising from changes from experience assumptions 0 0 -1 -1
Present value of long-term employee benefit obligations, 31 Dec 2014 858 466 87 1,411
Obligations covered by plan assets 0 219 34 253
Obligations covered by provisions 0 247 53 300
Less fair value of plan assets 0 219 34 253
Provisions as of 31 Dec 2014 858 247 53 1,158

148
Actuarial assumptions
The actuarial calculation of pension obligations is based on the following assumptions:

in % Dec 13 Dec 14
Interest rate 3.65 2.0
Expected increase in retirement benefits 2.0 2.0

The expected retirement age for each employee was individually calculated on the basis of the changes set out in the Budget Implementa-
tion Act of 2003 (Austrian Federal Law Gazette Vol. I No. 71/2003) regarding the increase in the minimum retirement age. The currently
applicable legislation on the gradual raising of the retirement age for men and women to 65 was taken into consideration.

The actuarial calculation of severance payment and jubilee provisions is based on the following assumptions:

in % Dec 13 Dec 14
Interest rate 3.65 2.0
Average increase in salary (incl. career trend and collective agreement trend) 2.9 2.9

Obligations were calculated in accordance with the Pagler & Pagler mortality tables entitled ‘AVÖ 2008 P – Rechnungsgrundlagen für die
Pensionsversicherung’.The effects of CEE countries are insignificant compared to Austrian entities for which the data is in the table.
Interest rates in the following ranges were used for these countries 2.25% (previously: 2.72%) to 4.4% (previously: 5.75%).

The movement in plan assets during the reporting period was as follows:

Severance Jubilee
in EUR million payments payments Total
Fair value of plan assets as of 31 Dec 2012 184 29 213
Addition 13 3 16
Interest income on plan assets 7 1 8
Contributions by the employer 9 3 12
Benefits paid -19 -4 -23
Return on plan assets recognised in other comprehensive income
(excluding amounts already recognised in interest income) - remeasurements 0 0 0
Return on plan assets recognised in P&L 0 0 0
Fair value of plan assets as of 31 Dec 2013 194 32 226
Addition 0 0 0
Interest income on plan assets 7 1 8
Contributions by the employer 29 5 34
Benefits paid -15 -4 -19
Return on plan assets recognised in other comprehensive income
(excluding amounts already recognised in interest income) - remeasurements 4 0 4
Return on plan assets recognised in P&L 0 0 0
Fair value of plan assets as of 31 Dec 2014 219 34 253

In 2015, the expected contributions for the severance and jubilee benefit obligations will amount to EUR 10.3 million (2014:
EUR 10.9 million).

In 2014, the actual gain (loss) on plan assets amounted to EUR 12.0 million (2013: EUR 7.8 million).

Investment strategy
The primary investment strategy of Erste Group is the continuous optimization of plan assets and the effective coverage of existing enti-
tlements. The Group works with professional fund managers for the investment of plan assets. The Investment Fund Act applies as a
requirement with respect to specific investment guidelines relating to the investment of plan assets.

Additionally, the Investment Committee which is composed of senior staff in the financial sector and representatives of the S-
Versicherung and Erste Asset Management meets once a year.

Control and Risk

The effective allocation of plan assets is determined by the administering body including the relevant existing economic and market con-
ditions as well as considering specific risks of the individual asset classes and the risk profile.

149
Moreover the Investment Committee is responsible for monitoring the mandate guidelines and the investment structure, the supervision,
which may arise from regulatory or other legal requirements, as well as the monitoring of demographic changes. As an additional steering
tool the fund management generates a report, which is transmitted on a quarterly basis to the Group.

Overall, the Group tries to minimize the impact caused by market movements on the pension plans

Asset Allocation in the different asset classes

The following table presents the asset allocation of pension plans in the different asset classes.

Dec 13 Dec 14
Europe- Europe- Other Europe- Europe- Other
in EUR million EMU non EMU USA countries Total EMU non EMU USA countries Total
Cash and cash equivalents 0 0 0 0 12 0 0 0 0 13
Equity instruments 1 1 9 4 15 1 1 9 4 15
Investment-grade bonds1
Government 45 1 1 4 51 50 1 1 5 57
Non-government bonds 36 13 0 0 49 40 14 0 0 55
Non-investment-grade bonds
Government 0 0 0 0 0 0 0 0 0 0
Non-government bonds 58 15 4 0 78 65 17 5 0 87
Alternatives
Commodities 0 0 0 0 0 0 0 0 0 0
Other 0 1 0 9 10 0 1 0 10 12
Derivatives (Market risk)
Interest rate risk 0 0 0 0 0 0 0 0 0 0
Credit risk 0 0 0 0 0 0 0 0 0 0
Equity price risk 0 0 0 0 0 0 0 0 0 0
Foreign exchange risk 0 0 0 0 0 0 0 0 0 0
Other 0 0 0 0 11 0 0 0 0 14
Plan assets 31.12.2014 0 0 0 0 226 0 0 0 0 253

1) Investment-grade means BBB and above.

The following table presents profit or loss effects for post- employment defined- benefits plans (pensions and severance payments).

in EUR million Dec 13 Dec 14

Curtailments 6 6
Service cost -12 -17
Net interest -36 -35
Total -42 -46

Curtailments and service costs are included in the income statement under the line item ‘General administrative expenses’. Net interest is
included in the income statement under the line item ‘Net interest income’. In 2014 the cumulative amount of remeasurements recognised
in other comprehensive income was EUR -572.9 million (2013: EUR -388.6 million).

Sensitivity to Key Assumption

The following table presents, the sensitivity analysis for each significant actuarial assumption showing how the defined benefit obligation
would have been affected by changes in the relevant actuarial assumptions that were reasonably possible at the balance sheet date.

Severance
in EUR million Pensions payments Total
Change in discount rate + 1.0 % 779 395 1,174
Change in discount rate -1.0 % 936 500 1,436
Change in future salary increases + 0.5 % 851 470 1,321
Change in future salary increases -0.5 % 851 418 1,269
Change in future benefit increases + 0.5 % 920 443 1,363
Change in future benefit increases -0.5 % 787 443 1,230
Increase in survival rate by aprox. 10% 906 0 906

150
Impact on Cash Flows
The following table reflects the benefits expected to be paid by the defined benefit plans in each of the respective periods:

Severance
in EUR million Pensions payments Total
2015 66 12 78
2016 64 11 75
2017 61 17 78
2018 58 22 80
2019 55 32 87
2020-2024 23 213 236

Duration
The following table presents the weighted average duration of the defined-benefit obligations as of year-end 2014:

Severance
in years Pensions payments Total
Duration 8.89 11.46 9.77

b) Sundry provisions

Sundry provisions 2014

Interest income Exchange rate
As of from impaired and other As of
in EUR million Dec 13 Allocations Use Releases loans changes (+/-) Dec 14
Pending legal issues and tax litigation 172 32 -4 -28 0 -6 164
Commitments and guarantees given 218 279 -7 -263 1 11 240
Provisions for guarantees -
off balance sheet (defaulted customers) 119 140 -6 -122 1 9 141
Provisions for guarantees -
off balance sheet
(non-defaulted customers) 99 138 0 -140 0 2 99
Other provisions 25 62 -5 -8 0 9 83
Provisions for onerous contracts 0 5 0 0 0 0 5
Other 25 57 -5 -8 0 9 77
Provisions 415 372 -16 -299 1 14 488

Under position pending legal issues and tax litigations out of lending business, asset management or litigations with customer protection
association, which normally occur in banking business, are disclosed. Erste Group does not expect that these legal cases will have a mate-
rial impact on the Group’s financial position.

Except for onerous contracts, other provisions refer mostly to Hungarian provisions. For additional detail, please see note 9 Other operat-
ing result. The level of sundry provisions is the best possible estimate of expected outflow of economic benefits at the reporting date,
while taking into account the risks and uncertainties underlying the commitment to fulfill the obligation. Risks and uncertainties are taken
into account in the estimate.

Sundry provisions 2013

Interest income Exchange rate
As of from impaired and other As of
in EUR million Dec 12 Allocations Use Releases loans changes (+/-) Dec 13
Pending legal issues and tax litigation1 146 57 -7 -29 0 4 172
Commitments and guarantees given 186 217 -13 -180 1 8 218
Provisions for guarantees -
off balance sheet (defaulted customers) 107 112 -14 -96 1 9 119
Provisions for guarantees -
off balance sheet
(non-defaulted customers) 79 105 0 -84 0 -1 99
Other provisions 60 21 -21 -7 0 -28 25
Provisions for onerous contracts 0 0 0 0 0 0 0
Other 60 21 -21 -7 0 -29 25
Provisions 392 296 -41 -216 1 -17 415

1) For a more detailed presentation, provisions for legal proceedings and provisions for litigations were reclassified from other risk provisions and other provisions and constitute a separate item now.

151
35. Other liabilities

in EUR million Dec 13 Dec 14

Deferred income and accrued fee expenses 304 233
Sundry liabilities 2,350 2,076
Other liabilities 2,654 2,310

Sundry liabilities consist mainly of clearing items from the settlement of securities and payment transactions.

36. Total equity

Dec 13
in EUR million restated Dec 14
Subscribed capital 860 860
Share capital 860 860
Participation capital 0 0
Additional paid-in capital 7,037 1,478
Retained earnings 3,422 7,500
Owners of the parent 11,319 9,838
Non-controlling interests 3,466 3,605
Total1 14,785 13,444

1) Details on equity are provided in Section III, Statement of Changes in Total Equity.

As of 31 December 2014, subscribed capital (also known as registered capital) consists of 429,800,000 (2013: 429,800,000) voting bearer
shares (ordinary shares). The pro rata amount of registered capital, per no-par value share, was EUR 2.00. Additional paid-in capital (or
share premium) represents the amount by which the issue price of the shares exceeded their par value. Retained earnings and other re-
serves represent accumulated net profit brought forward, as well as income and expenses recognised in other comprehensive income.

Participation capital
In April 2009, Erste Group Bank AG issued participation capital for subscription. Within the context of this offer, Erste Group Bank AG
placed EUR 540 million of participation capital with private and institutional investors. In March 2009, the Republic of Austria subscribed to
EUR 1.0 billion of participation capital and in May 2009, another EUR 224 million of participation certificates. In total, the participation
capital issued in measures to strengthen the bank at that time amounted to EUR 1.76 billion. The participation capital securities are perpetual
and non-transferable. The notional amount of each participation capital security is EUR 1,000.00. Erste Group is entitled to repay the partici-
pation capital securities only if the repayment amount would not be below 100% (or 150% after 1 January 2019) of the nominal amount.
Participation capital participates in losses of Erste Group in the same manner as does share capital, but the holders of participation capital
have no voting rights. The participation capital securities confer no conversion right for ordinary shares of Erste Group. Dividend pay-
ments to holders of participation capital securities were made prior to distributions of dividends to shareholders of Erste Group.

Redemption of participation capital and implementation of a capital increase

The management and supervisory boards of Erste Group Bank AG resolved on 24 June 2013 to fully redeem the outstanding participation
capital of EUR 1.76 billion, of which EUR 1.205 billion was held by the Republic of Austria and EUR 559 million by private investors, in
the third quarter of 2013 The full redemption took place on 8 August 2013.

Against this backdrop, a capital increase against cash contributions was implemented with gross proceeds of approximately EUR 660.6
million. The capital increase was carried out by offering qualified institutional investors new shares by way of an accelerated bookbuild-
ing offer (‘pre-placement to institutional investors’) followed by a subscription offering to existing shareholders of Erste Group Bank AG
(‘subscription offering’).

On 2 July 2013, Erste Group Bank AG successfully placed 35.2 million new shares by way of an accelerated bookbuilding offering with
gross proceeds of EUR 660.6 million. On 2 July 2013, the management board, with the consent of the supervisory board, set the offer
price for the accelerated bookbuilding offering and the subscription price for the subsequent subscription offering at EUR 18.75 per share
and resolved to issue 35,231,353 new shares, to increase the share capital from EUR 789,137,294 by EUR 70,462,706 to
EUR 859,600,000 and to offer existing shareholders subscription rights at a ratio of 4 new shares for each 45 shares held. The supervisory
board also approved the amendments to the Articles of association resulting from the above resolutions. The capital increase and the
amendments to the articles of association were entered in the Companies Register on 4 July 2013.

152
Changes in number of shares and participation capital securities
Dec 13
Shares in units restated Dec 14
Shares outstanding as of 1 January 375,715,367 415,076,934
Acquisition of treasury shares -13,131,830 -26,726,833
Disposal of treasury shares 17,262,044 21,590,534
Capital increases due to ESOP and MSOP 0 0
Capital increase 35,231,353 0
Shares outstanding as of 31 December 415,076,934 409,940,635
Treasury shares 14,723,066 19,859,365
Number of shares as of 31 December 429,800,000 429,800,000

Weighted average number of shares outstanding 411,553,048 427,533,286

Dilution due to MSOP/ESOP 0 0

Dilution due to options 0 0

Weighted average number of shares taking into account the effect of dilution 411,553,048 427,533,286

Dec 13
Participation capital securities in units restated Dec 14
Participation capital securities outstanding as of 1 January 1,763,694 0
Acquisition of own participation capital securities -1,768,437 0
Disposal of own participation capital securities 4,743 0
Participation capital securities outstanding as of 31 December 0 0
Participation capital securities 0 0
Number of participation capital securities as of 31 December 0 0

Transactions and shares held by the management board and supervisory board
Information on shares held and transactions in Erste Group Bank AG shares by members of the management board (in number of shares):

Managing board member Dec 13 Additions Disposals Dec 14

Andreas Treichl 164,640 0 0 164,640
Franz Hochstrasser 15,260 0 0 15,260
Herbert Juranek 656 0 0 656
Gernot Mittendorfer 2,100 7,900 0 10,000
Manfred Wimmer (until 8/2013) 0 0 0 0
Andreas Gottschling 0 0 0 0

Supervisory board members held the following numbers of Erste Group Bank AG shares as of the balance sheet date of 31 December 2014:

Supervisory board member Dec 13 Additions Disposals Dec 14

Friedrich Rödler 1,702 0 0 1,702
Georg Winckler 2,500 0 0 2,500
Jan Homan 4,400 0 0 4,400
Elisabeth Bleyleben Koren (from 21. Mai 2014) 0 10,140 0 10,140
Wilhelm Rasinger 15,303 3,000 0 18,303
John James Stack 32,761 0 0 32,761
Markus Haag 160 0 0 160
Andreas Lachs 52 0 0 52
Friedrich Lackner (until 11. December 2014) 500 0 500 0
Bertram Mach 95 0 0 95
Barbara Pichler 281 0 0 281
Karin Zeisel 35 0 0 35

The shares of supervisory board members, whose office term began or ended during the financial year, held as at the date of inception or
termination of their term in office were recognised as additions or disposals.

As of 31 December 2014, supervisory board members did not hold options in Erste Group Bank AG shares. Persons related to members
of the management board or supervisory board held 3,786 shares of Erste Group Bank AG as of 31 December 2014.

153
Remaining authorised and contingent capital as of 31 December 2014
Clause 5 of the articles of association authorises the management board until 21 May 2019, to increase the registered capital of the compa-
ny with the consent of the supervisory board - including in several tranches - by an amount of up to EUR 171,800,000 by issuing up to
85,900,000 voting no-par value bearer shares in return for contributions in cash and/or in kind, with the issue price and the issuing condi-
tions being determined by the management board with the consent of the Supervisory Board.

Furthermore, the management board is authorized to fully or partly exclude the statutory subscription right of the shareholders with the
consent of the supervisory board if the capital increase is in return for a cash contribution and the shares issued while excluding the sub-
scription right of the shareholders, taken together, do not exceed EUR 43,000,000 and/or if the capital increase is in return for contributions
in kind.

The measures in sections 5.1.1 (capital increase against cash contribution) to 5.1.2 (capital increase against contributions in kind) can also
be combined. The aggregate pro rata amount of registered capital represented by shares in respect of which the shareholders‘ subscription
rights are excluded under this authorisation in section 5.1 (authorised capital) together with the pro rata amount of registered capital at-
tributable to shares to which conversion or subscription rights or obligations relate under bonds that were issued and sold on the basis of the
authorisation in section 8.3, subject to an exclusion of subscription rights, on or after 21 May 2014 must not, however, exceed the amount of
EUR 171,800,000 .

Clause 6.3 of the articles of association states that conditional capital based on the resolutions of the management board in 2002 and 2010
with a nominal value of EUR 21,923,264 persists that can be consumed by issuing up to 10,961,632 ordinary bearer shares or ordinary
registered shares with an issue price of at least EUR 2.00 per share against cash contribution and by excluding the subscription rights of the
current shareholders. This conditional capital is used for granting options to staff, management and members of the management board of
the entity or of one of its related undertakings.

Under clause 6.4 of the articles of association, the company has conditional capital of EUR 124,700,000.00 available, which may be utilised
by issuing up to 62,350,000 bearer shares. This conditional capital can be used for granting conversion or subscription rights to holders of
convertible bonds. In case the terms and conditions of the convertible bonds provide for a mandatory conversion, it shall also serve to cover
the mandatory conversion .According to clause 7 of the articles of association, currently no authorized conditional capital exists.

37. Segment reporting

Erste Group’s segment reporting is based on IFRS 8 Operating Segments, which adopts the management approach. Accordingly, segment
information is prepared on the basis of internal management reporting that is regularly reviewed by the chief operating decision maker to
assess the performance of the segments and make decisions regarding the allocation of resources. Within Erste Group the function of the
chief operating decision maker is exercised by the management board.

Structural change
Following a strategic review, the segment structure as well as the methodology for capital allocation was changed. Erste Group therefore
introduced a new segment reporting, starting from 1 January 2014. It is based on the matrix organisation (business and geographical in-
formation) and provides comprehensive information to assess the performance of the business and geographical segments.
However, the segmentation criteria for corporate business were changed as well with no retrospective adjustments. The former local large
corporate business (included in the SME segment in 2013) was reallocated either to the Large Corporates segment or to the SME segment,
depending on annual turnover thresholds.

As a result of IFRS 10 application as of 1 January 2014, Erste Group started with consolidation of 18 investment funds. The consolidation
has been applied retrospectively, hence all affected 2013 comparative figures have been restated. Details are described in section B. “Sig-
nificant accounting policies”/(d) Significant accounting judgments, assumptions and estimates and (e) Application of amended and new
IFRS/IAS of the Notes to the Group Financial Statements.

154
Business segmentation
The segment reporting comprises nine business segments reflecting Erste Group’s management structure and its internal management
reporting in 2014.

Erste Group – business segments

Group
ALM & Savings Large Commercial Other Group Intragroup
Retail SME Corporate
Local CC Banks Corporates Real Estate Corporate Markets Elimination
Center

Retail
The Retail segment comprises the entire business with private individuals, free professionals and micros in the responsibility of account
managers in the retail network of the local banks cooperating with their specialized subsidiaries (such as factoring, leasing and asset man-
agement companies). Retail products and services including current and savings accounts, mortgage and consumer loans, investment
products, credit cards and cross selling products such as leasing, insurance, and building society products are offered via various distribu-
tion channels (branch networks and digital banking).

SME
The SME segment comprises the business with micros, small and medium-sized enterprises (SMEs), small public sector companies, and
small financial institutions (e.g. third party leasing companies) in the responsibility of local corporate account managers. Local banks
cooperate with specialized subsidiaries such as factoring and leasing companies. The turnover threshold for SMEs varies from country to
country within the range of EUR 0.7 million and EUR 75 million.

Asset/Liability Management & Local Corporate Center

The Asset/Liability Management & Local Corporate Center (ALM & LCC) segment includes all asset/liability management functions
(local and Erste Group Bank AG) as well as the local corporate centers which comprise internal service providers that operate on a non-
profit basis and reconciliation items to local entity results. The corporate center of Erste Group Bank AG is included in the Group Corpo-
rate Center segment.

Savings Banks
The Savings Banks segment includes the savings banks which are members of the Haftungsverbund (cross-guarantee system) of the Aus-
trian savings banks sector except for Erste Bank Oesterreich, Tiroler Sparkasse, Salzburger Sparkasse, Sparkasse Hainburg.

Large Corporates
The Large Corporates (LC) segment comprises the business with large corporate customers whose annual turnover exceeds a defined
threshold that starts from EUR 25 million and EUR 75 million respectively, depending on the country.

Commercial Real Estate

The Commercial Real Estate (CRE) segment covers the real estate value chain (lending, leasing, real estate investment, project develop-
ment and construction services as well as infrastructure business) for corporate clients, project developers, real estate investors, munici-
palities and other public sector agencies.

Other Corporate
The Other Corporate segment consists of two operating segments – International Business and Investment Banking – that are below the
threshold criteria defined by IFRS 8. International Business comprises all lending and investing activities outside Erste Group’s core
markets (including the branches in London, Hong Kong and New York) and is responsible for business development with and credit line
management for banks and non-banking financial institutions. Investment Banking covers equity-related business focusing mainly on
corporate finance, equity capital markets services, equity brokerage (institutional sales) and merchant banking.

Group Markets
The Group Markets (GM) segment comprises the divisionalised business units Group Treasury and Capital Markets (except Equity Capi-
tal Markets) and includes the treasury activities of Erste Group Bank AG, the CEE subsidiaries, foreign branch offices in Hong Kong,
New York, Berlin and Stuttgart as well as the business with institutional clients of Erste Asset Management. The focus is on client-

155
oriented business with institutional clients. Group Markets is the internal trading unit for all classic treasury (such as FX, commodities
and money market) and capital market products (such as bonds, interest rate derivatives, credit products).

Group Corporate Center

The Group Corporate Center (GCC) segment covers mainly centrally managed activities and items that are not directly allocated to other
segments. It comprises the corporate center of Erste Group Bank AG (and thus dividends and the refinancing costs from participations,
general administrative expenses), internal non-profit service providers (facility management, IT, procurement), amortisation of customer
relationships at Banca Comercială Română, Erste Card Club d.d. and Ringturm KAG, goodwill impairments, the banking tax of Erste
Group Bank AG, free capital of Erste Group (defined as the difference of the total average IFRS equity and the average economical equity
allocated to the segments) as well as the result of Erste Bank Ukraine which was sold in 2013.

In 2014 the write-down of the entire remaining value of customer relationships and brand in Romania totalled EUR 470.7 million. Good-
will impairments amounted to EUR 475.0 million (in 2013: EUR 380.8 million), whereby Romania accounted for EUR 319.1 million (in
2013: EUR 281.0 million), Croatia for EUR 61.4 million (in 2013: EUR 52.2 million) and Austrian participations for EUR 94.5 million
(in 2013: EUR 47.6 million).

Intragroup Elimination
Intragroup Elimination (IC) is not defined as a segment but is the reconciliation to the consolidated accounting result. It includes all in-
tragroup eliminations between participations of Erste Group (e.g. intragroup funding, internal cost charges). Intragroup eliminations with-
in partial groups are disclosed in the respective segments.

Geographical segmentation
For the purpose of segment reporting by geographical areas the information is presented based on the location of the booking entity (not
the country of risk). In case of information regarding a partial group, the allocation is based on the location of the respective parent entity.

Geographical areas are defined according to the country markets in which Erste Group operates. Based on the locations of the banking
and other financial institution participations, the geographical areas consist of two core markets, Austria and Central and Eastern Europe
and a residual market Other that comprises the remaining business activities of Erste Group outside its core markets as well as the recon-
ciliation to the consolidated accounting result.

Erste Group – geographical segmentation

Austria Central and Eastern Europe Other

EBOe & Savings Other Czech

Slovakia Romania Hungary Croatia Serbia
Subsidiaries Banks Austria Republic

The geographical area Austria consists of the following three segments:

The Erste Bank Oesterreich & Subsidiaries (EBOe & Subsidiaries) segment comprises Erste Bank der oesterreichischen Sparkassen
AG (Erste Bank Oesterreich) and its main subsidiaries (e.g. sBausparkasse, Salzburger Sparkasse, Tiroler Sparkasse, Sparkasse Hainburg).

The Savings banks segment is identical to the business segment Savings banks.

The Other Austria segment comprises Erste Group Bank AG (Holding) with its Large Corporates, Commercial Real Estate, Other Cor-
porate and Group Markets business, Erste Group Immorent AG and Erste Asset Management GmbH.

The geographical area Central and Eastern Europe (CEE) consists of six segments covering Erste Group’s banking subsidiaries located in
the respective CEE countries:

156
_ Czech Republic (comprising Česká spořitelna Group)
_ Slovakia (comprising Slovenská sporitel’ňa Group)
_ Romania (comprising Banca Comercială Română Group)
_ Hungary (comprising Erste Bank Hungary Group)
_ Croatia (comprising Erste Bank Croatia Group), and
_ Serbia (comprising Erste Bank Serbia Group).

The residual segment Other consists mainly of centralized service providers, the Group Asset/Liability Management and the Corporate
Center of Erste Group Bank AG as well as the reconciliation to the consolidated accounting result (e.g. intercompany elimination, divi-
dend elimination), goodwill impairments, amortisation of customer relationships and free capital.

Measurement
The profit and loss statement of the segment report is based on the measures reported to the Erste Group management board for the pur-
pose of allocating resources to the segments and assessing their performance.

Management reporting as well as the segment report for Erste Group, is based on IFRS. Accounting standards and methods as well as
measurements used in segment reporting are the same as for the consolidated financial statement of accounting.

Capital consumption per segment is regularly reviewed by the management of Erste Group to assess the performance of the segments.
The average allocated equity is determined by the credit risk, market risk and operational risk.

According to the regular internal reporting to Erste Group management board, total assets and total liabilities as well as risk weighted
assets and allocated equity are disclosed per segment.

For measuring and assessing the profitability of segments, Erste Group also uses the return on allocated equity defined as net result for the
period before minorities in relation to the average allocated equity of the respective segment. In addition the cost/income ratio is calculat-
ed for each segment as operating expenses (general administrative expenses) in relation to operating income (total of net interest income,
net fee and commission income, dividend income, net trading and fair value result, net result from equity method investments, rental
income from investment properties and other operating lease).

157
158

Business segments (1)

Retail SME ALM & LCC Savings Banks Large Corporates Commercial Real Estate
in EUR million 1-12 13* 1-12 14 1-12 13* 1-12 14 1-12 13* 1-12 14 1-12 13* 1-12 14 1-12 13* 1-12 14 1-12 13* 1-12 14
Net interest income 2,216.8 2,175.1 671.0 569.4 220.5 164.7 814.7 891.8 185.3 214.1 170.0 150.1
Net fee and commission income 1,053.4 1,050.3 231.2 198.4 -102.6 -65.3 396.4 419.3 86.0 99.2 14.3 15.8
Dividend income 2.1 0.5 2.7 2.5 17.6 22.4 43.6 24.7 0.0 0.0 2.3 5.1
Net trading and fair value result 62.2 59.8 29.1 31.9 -92.2 24.7 22.0 1.1 8.4 9.3 5.9 -6.2
Net result from equity method investments 11.3 8.2 0.0 0.0 4.5 3.1 0.0 0.0 0.0 0.0 -0.2 0.7
Rental income from investment properties & other operating
leases 15.2 23.5 3.9 30.4 38.9 35.0 27.8 42.0 0.0 0.0 84.2 40.3
General administrative expenses -1,839.2 -1,814.3 -288.0 -292.8 -120.6 -112.9 -926.5 -932.1 -67.7 -85.0 -134.0 -88.2
thereof depreciation and amortization -194.9 -191.1 -24.6 -40.8 -23.7 -22.9 -68.4 -75.9 -6.6 -6.0 -56.9 -19.7
Gains/losses from financial assets and liabilities not
measured at fair value through profit or loss, net 0.1 0.6 5.7 3.3 37.3 -16.4 24.3 27.7 -6.3 0.7 0.4 0.0
Net impairment loss on financial assets not measured at fair
value through profit or loss -466.0 -671.7 -455.0 -461.1 -5.0 1.2 -229.2 -199.4 -229.2 -386.2 -380.5 -364.3
Other operating result -93.1 -393.7 -39.9 -2.8 -122.4 -197.7 -28.0 -43.1 -28.2 14.1 -50.7 -45.9
Levies on banking activities -67.6 -59.1 -16.7 -10.6 -64.4 -64.2 -8.9 -15.9 -2.8 -3.2 -0.5 -0.4
Pre-tax result from continuing operations 962.7 438.2 160.8 79.4 -124.0 -141.2 145.1 232.0 -51.8 -133.9 -288.1 -292.7
Taxes on income -200.5 -158.0 -48.2 -33.2 136.8 -36.1 -53.9 -54.7 9.1 11.0 24.2 4.2
Net result for the period 762.2 280.2 112.6 46.2 12.8 -177.3 91.1 177.3 -42.7 -122.9 -263.9 -288.5
Net result attributable to non-controlling interests 23.2 8.5 2.7 -4.2 -7.9 -2.5 68.7 158.9 2.4 -9.8 -6.9 -8.9
Net result attributable to owners of the parent 739.0 271.7 109.9 50.4 20.8 -174.8 22.4 18.4 -45.1 -113.1 -257.0 -279.6

Operating income 3,361.0 3,317.4 937.9 832.7 86.7 184.6 1,304.5 1,379.0 279.6 322.5 276.7 205.7
Operating expenses -1,839.2 -1,814.3 -288.0 -292.8 -120.6 -112.9 -926.5 -932.1 -67.7 -85.0 -134.0 -88.2
Operating result 1,521.8 1,503.1 650.0 539.9 -33.9 71.8 378.0 446.9 211.9 237.5 142.7 117.5

Risk-weighted assets (credit risk, eop) 17,765 18,505 17,723 14,672 1,934 4,480 22,464 22,511 7,187 9,373 9,495 9,397
Average allocated capital 2,043 2,058 1,644 1,291 2,009 1,792 2,079 1,968 766 812 926 798

Cost/income ratio 54.7% 54.7% 30.7% 35.2% >100% 61.1% 71.0% 67.6% 24.2% 26.4% 48.4% 42.9%
Return on allocated capital 37.3% 13.6% 6.8% 3.6% 0.6% -9.9% 4.4% 9.0% -5.6% -15.1% -28.5% -36.1%

Total assets (eop) 52,882 51,438 24,192 22,143 52,751 51,497 56,205 56,704 7,494 9,470 10,908 10,164
Total liabilities excluding equity (eop) 69,245 69,227 14,267 12,977 58,547 54,011 52,458 52,684 3,807 4,988 5,207 4,668

Impairments and risk provisions -468.4 -697.3 -482.5 -473.1 -38.6 -45.1 -254.6 -221.3 -254.1 -374.6 -429.7 -466.2
Net impairment loss on loans and receivables from credit
institutions and customers -465.8 -671.6 -453.5 -460.3 9.2 -0.8 -220.4 -193.6 -214.6 -392.0 -379.9 -365.5
Net impairment loss on other financial assets not measured
at fair value through profit and loss -0.2 -0.1 -1.5 -0.8 -14.2 2.0 -8.9 -5.8 -14.7 5.8 -0.6 1.2
Allocation/release of provisions for contingent credit risk
liabilities 2.9 -4.1 -1.6 0.6 -4.9 0.9 -15.9 -18.3 -25.4 11.5 -0.7 -40.4
Impairments from Goodwills 0.0 0.0 0.0 0.0 -2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net impairment loss on other non financial assets -5.3 -21.5 -25.9 -12.6 -26.5 -47.2 -9.5 -3.6 0.5 0.0 -48.4 -61.5

*) figures reflect changed segment structure of Erste Group as of 1 January 2014 and the impact of IFRS 10 application as of 1 January 2014
Business segments (2)
Other Corporate Group Markets Group Corporate Center Intragroup Elimination Total group
in EUR million 1-12 13* 1-12 14 1-12 13* 1-12 14 1-12 13* 1-12 14 1-12 13* 1-12 14 1-12 13* 1-12 14
Net interest income 68.9 75.2 217.2 191.2 136.1 70.2 -15.5 -6.6 4,685.0 4,495.2
Net fee and commission income 27.7 18.9 104.9 102.9 137.6 69.1 -142.4 -38.8 1,806.5 1,869.8
Dividend income 0.0 0.5 0.5 2.4 20.7 16.4 0.0 -0.1 89.7 74.2
Net trading and fair value result 13.1 4.8 116.8 116.1 20.9 -11.3 32.7 12.0 218.8 242.3
Net result from equity method investments 0.0 0.0 0.0 0.0 6.2 3.9 0.0 0.0 21.8 15.8
Rental income from investment properties & other operating leases 0.0 0.1 0.0 0.0 40.3 35.1 -36.9 -25.7 173.3 180.6
General administrative expenses -50.9 -58.2 -188.1 -179.1 -669.0 -710.5 387.9 485.9 -3,896.1 -3,787.3
thereof depreciation and amortization -2.2 -2.0 -17.7 -17.7 -125.4 -90.0 2.6 0.0 -517.7 -466.1
Gains/losses from financial assets and liabilities not measured at fair value
through profit or loss, net 8.3 0.1 0.0 0.0 -7.5 -0.9 0.1 3.2 62.4 18.3
Net impairment loss on financial assets not measured at fair value through profit
or loss -6.2 -12.9 12.2 -0.1 -15.4 -64.7 0.0 0.0 -1,774.4 -2,159.2
Other operating result 0.4 1.5 -3.1 -0.7 -417.6 -654.7 -225.9 -429.9 -1,008.6 -1,752.9
Levies on banking activities 0.0 0.0 -2.5 -2.1 -147.6 -100.8 0.0 0.0 -311.0 -256.3
Pre-tax result from continuing operations 61.3 29.8 260.3 232.7 -747.8 -1,247.5 0.0 0.0 378.4 -803.2
Taxes on income -13.3 -6.9 -51.8 -43.9 19.1 -191.8 0.0 0.0 -178.5 -509.4
Net result for the period 47.9 22.9 208.5 188.8 -728.6 -1,439.4 0.0 0.0 199.9 -1,312.6
Net result attributable to non-controlling interests 0.0 -0.1 2.5 3.5 55.0 -16.2 0.0 0.0 139.6 129.4
Net result attributable to owners of the parent 47.9 22.9 206.0 185.3 -783.6 -1,423.1 0.0 0.0 60.3 -1,442.0

Operating income 109.7 99.4 439.3 412.6 361.8 183.3 -162.1 -59.3 6,995.1 6,877.9
Operating expenses -50.9 -58.2 -188.1 -179.1 -669.0 -710.5 387.9 485.9 -3,896.1 -3,787.3
Operating result 58.8 41.1 251.3 233.4 -307.2 -527.2 225.8 426.6 3,099.0 3,090.7

Risk-weighted assets (credit risk, eop) 3,335 2,672 1,782 2,756 3,173 2,739 0 0 84,858 87,105
Average allocated capital 332 209 460 493 5,745 5,010 0 0 16,004 14,431

Cost/income ratio 46.4% 58.6% 42.8% 43.4% >100% >100% >100% >100% 55.7% 55.1%
Return on allocated capital 14.4% 10.9% 45.3% 38.3% -12.7% -28.7% 1.2% -9.1%

Total assets (eop) 3,698 3,656 24,590 18,022 13,048 12,093 -45,649 -38,899 200,118 196,287
Total liabilities excluding equity (eop) 58 93 16,117 11,456 11,265 11,716 -45,638 -38,977 185,333 182,844

Impairments and risk provisions -6.2 -13.0 12.2 -0.1 -402.1 -991.0 0.0 0.0 -2,324.0 -3,281.7
Net impairment loss on loans and receivables from credit institutions and
customers 5.0 -17.7 12.3 -0.2 -18.8 -18.7 0.0 0.0 -1,726.5 -2,120.4
Net impairment loss on other financial assets not measured at fair value through
profit and loss -11.2 4.8 0.0 0.1 3.4 -46.0 0.0 0.0 -47.9 -38.8
Allocation/release of provisions for contingent credit risk liabilities 0.0 -0.1 -0.1 0.0 8.7 33.8 0.0 0.0 -36.9 -16.2
Impairments from Goodwills 0.0 0.0 0.0 0.0 -380.8 -475.0 0.0 0.0 -383.0 -475.0
Net impairment loss on other non financial assets 0.0 0.0 0.0 0.0 -14.7 -485.1 0.0 0.0 -129.7 -631.4

*) figures reflect changed segment structure of Erste Group as of 1 January 2014 and the impact of IFRS 10 application as of 1 January 2014
159
160

Geographical segmentation - overview

Central and Eastern
Austria Europe Other Total group
in EUR million 1-12 13* 1-12 14 1-12 13* 1-12 14 1-12 13* 1-12 14 1-12 13* 1-12 14
Net interest income 1,786.7 1,900.7 2,612.3 2,418.8 286.0 175.7 4,685.0 4,495.2
Net fee and commission income 908.8 948.2 939.2 926.6 -41.5 -4.9 1,806.5 1,869.8
Dividend income 63.9 54.6 5.1 3.4 20.7 16.2 89.7 74.2
Net trading and fair value result 68.2 13.0 218.2 239.6 -67.7 -10.3 218.8 242.3
Net result from equity method investments 4.5 2.7 11.1 9.2 6.2 3.9 21.8 15.8
Rental income from investment properties & other operating leases 130.4 101.5 39.5 69.7 3.4 9.4 173.3 180.6
General administrative expenses -1,898.5 -1,886.1 -1,700.4 -1,658.2 -297.2 -242.9 -3,896.1 -3,787.3
thereof depreciation and amortization -178.4 -150.5 -215.8 -223.2 -123.5 -92.4 -517.7 -466.1
Gains/losses from financial assets and liabilities not measured at fair value through profit or loss, net 34.2 27.7 13.7 4.5 14.5 -13.9 62.4 18.3
Net impairment loss on financial assets not measured at fair value through profit or loss -746.8 -573.1 -1,011.7 -1,509.0 -15.8 -77.1 -1,774.4 -2,159.2
Other operating result -99.7 -44.1 -265.8 -621.9 -643.1 -1,086.9 -1,008.6 -1,752.9
Levies on banking activities -19.0 -29.8 -144.5 -125.7 -147.6 -100.8 -311.0 -256.3
Pre-tax result from continuing operations 251.7 545.1 861.2 -117.3 -734.5 -1,231.0 378.4 -803.2
Taxes on income -119.9 -173.0 -77.1 -139.8 18.5 -196.6 -178.5 -509.4
Net result for the period 131.8 372.1 784.1 -257.1 -716.1 -1,427.6 199.9 -1,312.6
Net result attributable to non-controlling interests 70.1 170.2 14.5 -24.4 55.0 -16.4 139.6 129.4
Net result attributable to owners of the parent 61.8 201.9 769.6 -232.7 -771.1 -1,411.2 60.3 -1,442.0

Operating income 2,962.6 3,020.7 3,825.4 3,667.3 207.2 189.9 6,995.1 6,877.9
Operating expenses -1,898.5 -1,886.1 -1,700.4 -1,658.2 -297.2 -242.9 -3,896.1 -3,787.3
Operating result 1,064.1 1,134.6 2,125.0 2,009.1 -90.0 -53.0 3,099.0 3,090.7

Risk-weighted assets (credit risk, eop) 48,717 51,294 32,653 32,565 3,489 3,245 84,858 87,105
Average allocated capital 4,895 4,540 4,445 4,036 6,664 5,856 16,004 14,431

Cost/income ratio 64.1% 62.4% 44.4% 45.2% >100% >100% 55.7% 55.1%
Return on allocated capital 2.7% 8.2% 17.6% -6.4% -10.7% -24.4% 1.2% -9.1%

Total assets (eop) 133,170 131,916 79,324 75,181 -12,376 -10,810 200,118 196,287
Total liabilities excluding equity (eop) 110,895 108,069 70,884 67,132 3,553 7,643 185,333 182,844

Impairments and risk provisions -834.3 -668.8 -1,087.1 -1,607.6 -402.6 -1,005.4 -2,324.0 -3,281.7
Net impairment loss on loans and receivables from credit institutions and customers -705.3 -581.1 -1,002.0 -1,508.3 -19.2 -31.1 -1,726.5 -2,120.4
Net impairment loss on other financial assets not measured at fair value through profit and loss -41.5 8.0 -9.7 -0.7 3.4 -46.0 -47.9 -38.8
Allocation/release of provisions for contingent credit risk liabilities -14.9 -42.1 -30.8 -5.9 8.7 31.8 -36.9 -16.2
Impairments from Goodwills 0.0 0.0 -2.2 0.0 -380.8 -475.0 -383.0 -475.0
Net impairment loss on other non financial assets -72.6 -53.6 -42.4 -92.7 -14.7 -485.1 -129.7 -631.4

*) figures reflect changed segment structure of Erste Group as of 1 January 2014 and the impact of IFRS 10 application as of 1 January 2014
Geographical area - Austria
EBOe & Subsidiaries Savings Banks Other Austria Austria
in EUR million 1-12 13* 1-12 14 1-12 13* 1-12 14 1-12 13* 1-12 14 1-12 13* 1-12 14
Net interest income 559.6 613.5 814.7 891.8 412.4 395.4 1,786.7 1,900.7
Net fee and commission income 332.2 354.9 396.4 419.3 180.2 174.0 908.8 948.2
Dividend income 17.0 22.0 43.6 24.7 3.3 7.9 63.9 54.6
Net trading and fair value result 11.3 8.7 22.0 1.1 34.9 3.1 68.2 13.0
Net result from equity method investments 4.6 2.1 0.0 0.0 -0.2 0.7 4.5 2.7
Rental income from investment properties & other operating leases 18.4 19.2 27.8 42.0 84.2 40.4 130.4 101.5
General administrative expenses -606.9 -630.7 -926.5 -932.1 -365.1 -323.3 -1,898.5 -1,886.1
thereof depreciation and amortization -35.5 -38.2 -68.4 -75.9 -74.5 -36.3 -178.4 -150.5
Gains/losses from financial assets and liabilities not measured at fair value through profit or loss, net 1.1 -0.4 24.3 27.7 8.9 0.4 34.2 27.7
Net impairment loss on financial assets not measured at fair value through profit or loss -77.5 -104.5 -229.2 -199.4 -440.1 -269.2 -746.8 -573.1
Other operating result -35.4 6.7 -28.0 -43.1 -36.3 -7.6 -99.7 -44.1
Levies on banking activities -9.7 -13.8 -8.9 -15.9 -0.4 0.0 -19.0 -29.8
Pre-tax result from continuing operations 224.4 291.4 145.1 232.0 -117.7 21.7 251.7 545.1
Taxes on income -59.1 -65.1 -53.9 -54.7 -6.8 -53.2 -119.9 -173.0
Net result for the period 165.3 226.3 91.1 177.3 -124.5 -31.5 131.8 372.1
Net result attributable to non-controlling interests 4.8 11.8 68.7 158.9 -3.5 -0.5 70.1 170.2
Net result attributable to owners of the parent 160.5 214.5 22.4 18.4 -121.1 -31.0 61.8 201.9

Operating income 943.2 1,020.3 1,304.5 1,379.0 714.9 621.5 2,962.6 3,020.7
Operating expenses -606.9 -630.7 -926.5 -932.1 -365.1 -323.3 -1,898.5 -1,886.1
Operating result 336.3 389.6 378.0 446.9 349.8 298.1 1,064.1 1,134.6

Risk-weighted assets (credit risk, eop) 11,342 12,589 22,464 22,511 14,911 16,194 48,717 51,294
Average allocated capital 1,114 1,088 2,079 1,968 1,703 1,484 4,895 4,540

Cost/income ratio 64.3% 61.8% 71.0% 67.6% 51.1% 52.0% 64.1% 62.4%
Return on allocated capital 14.8% 20.8% 4.4% 9.0% -7.3% -2.1% 2.7% 8.2%

Total assets (eop) 42,162 43,106 56,205 56,704 34,803 32,106 133,170 131,916
Total liabilities excluding equity (eop) 40,034 40,728 52,458 52,684 18,403 14,657 110,895 108,069

Impairments and risk provisions -97.3 -106.7 -254.6 -221.3 -482.4 -340.7 -834.3 -668.8
Net impairment loss on loans and receivables from credit institutions and customers -71.3 -106.3 -220.4 -193.6 -413.6 -281.1 -705.3 -581.1
Net impairment loss on other financial assets not measured at fair value through profit and loss -6.2 1.9 -8.9 -5.8 -26.5 11.9 -41.5 8.0
Allocation/release of provisions for contingent credit risk liabilities 1.0 -0.9 -15.9 -18.3 0.0 -22.9 -14.9 -42.1
Impairments from Goodwills 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net impairment loss on other non financial assets -20.8 -1.4 -9.5 -3.6 -42.4 -48.6 -72.6 -53.6

*) figures reflect changed segment structure of Erste Group as of 1 January 2014 and the impact of IFRS 10 application as of 1 January 2014
161
162

Geographical area - Central and Eastern Europe

Central and Eastern
Czech Republic Romania Slovakia Hungary Croatia Serbia Europe
in EUR million 1-12 13* 1-12 14 1-12 13* 1-12 14 1-12 13* 1-12 14 1-12 13* 1-12 14 1-12 13* 1-12 14 1-12 13* 1-12 14 1-12 13* 1-12 14

Net interest income 999.4 924.0 610.1 484.7 431.2 451.0 298.7 263.4 240.5 261.2 32.5 34.4 2,612.3 2,418.8
Net fee and commission income 434.9 410.6 169.1 160.0 117.4 123.4 131.7 139.3 72.6 79.9 13.4 13.4 939.2 926.6
Dividend income 2.0 1.8 2.3 0.6 0.4 0.7 0.0 0.1 0.3 0.2 0.0 0.0 5.1 3.4
Net trading and fair value result 79.7 83.1 99.9 81.2 11.6 9.6 4.1 38.8 20.4 24.1 2.6 2.9 218.2 239.6
Net result from equity method investments 0.0 0.0 0.8 0.2 9.9 6.9 0.0 0.0 0.4 2.2 0.0 -0.2 11.1 9.2
Rental income from investment properties & other
operating leases 31.9 29.9 4.9 5.5 1.8 1.8 0.6 0.8 0.2 31.7 0.0 0.0 39.5 69.7
General administrative expenses -721.8 -662.2 -369.3 -331.9 -249.0 -266.2 -180.1 -175.8 -143.7 -183.5 -36.5 -38.6 -1,700.4 -1,658.2
thereof depreciation and amortization -88.0 -82.5 -49.5 -39.5 -47.0 -45.1 -19.3 -19.8 -9.8 -33.9 -2.2 -2.3 -215.8 -223.2
Gains/losses from financial assets and liabilities not
measured at fair value through profit or loss, net 8.2 5.3 3.2 -0.1 2.0 1.3 0.0 -3.6 0.2 1.5 0.0 0.0 13.7 4.5
Net impairment loss on financial assets not measured at
fair value through profit or loss -140.1 -135.4 -454.3 -999.1 -47.2 -51.4 -201.3 -152.2 -159.2 -155.3 -9.6 -15.7 -1,011.7 -1,509.0
Other operating result 1.5 -21.9 -70.3 -117.1 -47.1 -44.2 -136.7 -431.3 -13.2 -6.0 -0.1 -1.3 -265.8 -621.9
Levies on banking activities 0.0 0.0 0.0 0.0 -41.2 -31.5 -103.2 -94.2 0.0 0.0 0.0 0.0 -144.5 -125.7
Pre-tax result from continuing operations 695.8 635.1 -3.5 -715.9 231.1 233.0 -83.0 -320.6 18.6 56.2 2.2 -5.1 861.2 -117.3
Taxes on income -140.0 -124.1 123.4 59.7 -50.4 -54.2 -6.5 -10.0 -3.2 -8.9 -0.5 -2.3 -77.1 -139.8
Net result for the period 555.8 511.1 119.9 -656.2 180.8 178.7 -89.5 -330.6 15.4 47.3 1.8 -7.3 784.1 -257.1
Net result attributable to non-controlling interests 3.9 4.9 5.0 -42.1 0.0 0.0 0.0 0.0 5.3 14.7 0.3 -1.9 14.5 -24.4
Net result attributable to owners of the parent 551.9 506.2 114.9 -614.1 180.7 178.7 -89.5 -330.6 10.1 32.6 1.4 -5.4 769.6 -232.7

Operating income 1,547.9 1,449.4 887.1 732.2 572.3 593.5 435.1 442.3 334.5 399.3 48.5 50.5 3,825.4 3,667.3
Operating expenses -721.8 -662.2 -369.3 -331.9 -249.0 -266.2 -180.1 -175.8 -143.7 -183.5 -36.5 -38.6 -1,700.4 -1,658.2
Operating result 826.1 787.1 517.8 400.3 323.3 327.3 255.0 266.5 190.8 215.9 12.0 11.9 2,125.0 2,009.1

Risk-weighted assets (credit risk, eop) 13,934 13,745 6,850 5,676 3,878 4,416 3,926 3,409 3,505 4,664 560 655 32,653 32,565
Average allocated capital 1,593 1,429 1,387 1,089 506 512 502 490 395 443 62 72 4,445 4,036

Cost/income ratio 46.6% 45.7% 41.6% 45.3% 43.5% 44.9% 41.4% 39.7% 43.0% 45.9% 75.3% 76.4% 44.4% 45.2%
Return on allocated capital 34.9% 35.8% 8.6% -60.3% 35.7% 34.9% -17.8% -67.5% 3.9% 10.7% 2.8% -10.2% 17.6% -6.4%

Total assets (eop) 35,323 32,546 14,924 13,747 11,696 12,965 7,632 5,981 8,901 9,114 849 829 79,324 75,181
Total liabilities excluding equity (eop) 31,719 28,798 13,265 12,652 10,235 11,483 7,013 5,419 7,928 8,073 725 708 70,884 67,132

Impairments and risk provisions -159.1 -128.1 -487.6 -1,083.2 -48.7 -60.8 -224.3 -161.3 -157.8 -157.4 -9.7 -16.8 -1,087.1 -1,607.6
Net impairment loss on loans and receivables from credit
institutions and customers -131.3 -135.5 -454.3 -999.1 -46.9 -51.4 -201.1 -152.2 -158.7 -154.4 -9.6 -15.7 -1,002.0 -1,508.3
Net impairment loss on other financial assets not
measured at fair value through profit and loss -8.8 0.1 0.0 0.0 -0.3 0.0 -0.2 0.0 -0.5 -0.9 0.0 0.0 -9.7 -0.7
Allocation/release of provisions for contingent credit risk
liabilities 3.5 3.6 -28.2 -4.0 -2.2 -6.0 -5.9 1.3 1.8 -0.3 0.2 -0.5 -30.8 -5.9
Impairments from Goodwills 0.0 0.0 -2.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -2.2 0.0
Net impairment loss on other non financial assets -22.4 3.7 -2.9 -80.2 0.7 -3.5 -17.1 -10.4 -0.4 -1.8 -0.2 -0.6 -42.4 -92.7

*) figures reflect changed segment structure of Erste Group as of 1 January 2014 and the impact of IFRS 10 application as of 1 January 2014
38. Assets and liabilities denominated in foreign currencies and outside Austria and return on assets

Assets and liabilities not denominated in EUR were as follows:

Dec 13
in EUR million estated Dec14
Assets 75,072 65,673
Liabilities 61,545 51,031

The assets and liabilities outside Austria are given below:

Dec 13
in EUR million restated Dec 14
Assets 119,086 111,167
Liabilities 86,729 85,786

Return on assets:
Return on assets (net profit for the year divided by average total assets) was -0.33% at 31 December 2014 (0.10% in 31 December 2013
restated).

39. Leases

a) Finance leases
Finance leases receivables are included under the balance sheet item ‘Loans and advances to customers’.

Erste Group leases both movable property and real estate to other parties under finance lease arrangements. For the finance lease receiva-
bles included in this item, the reconciliation of the gross investment in leases to the present value of the minimum lease payments is as
follows:

Dec 13
in EUR million restated Dec 14
Outstanding minimum lease payments 4,175 3,530
Non-guaranteed residual values 1,066 824
Gross investment 5,241 4,354
Unrealised financial income 645 514
Net investment 4,596 3,840
Present value of non-guaranteed residual values 722 721
Present value of minimum lease payments 3,874 3,119

The maturity analysis of gross investment in leases and present values of minimum lease payments under non-cancellable leases is as
follows (residual maturities):

Present value of non-guaranteed

Gross investment residual values
in EUR million Dec 13 Dec 14 Dec 13 Dec 14
< 1 year 932 703 703 541
1 -5 years 2,389 1,887 1,861 1,485
> 5 years 1,920 1,764 1,311 1,093
Total 5,241 4,354 3,874 3,119

In the reporting period, the total amount of accumulated allow-ance for uncollectable minimum lease payments, presented as risk provi-
sions for loans and advances, was EUR 191 million (2013: EUR 291 million).

The total amount of contingent rents from finance leases recognised as income in the period was EUR 28 million (2013: EUR 33 million).

b) Operating leases
Under operating leases, Erste Group leases both real estate and movable property to other parties.

163
Operating leases from the view of Erste Group as lessor:
Minimum lease payments from non-cancellable operating leases were as follows:

in EUR million Dec 13 Dec 14

< 1 year 24 61
1 -5 years 89 151
> 5 years 71 43
Total 184 255

The total amount of contingent rents from operating leases recognised as income in the period was EUR 9 million (2013: EUR 4 million).

Operating leases from the view of Erste Group as lessee:

Minimum lease payments from non-cancellable operating leases were as follows:

in EUR million Dec 13 Dec 14

< 1 year 84 56
1 -5 years 124 126
> 5 years 35 73
Total 243 254

Lease payments from operating leases recognised as expense in the period amounted to EUR 88.1 million (2013: EUR 108.4 million).

40. Related-party transactions and principal shareholders

In addition to principal shareholders, Erste Group also defines as related parties subsidiaries that are not consolidated due to non-
materiality and associates that are included in the consolidated financial statements by the equity method. Furthermore related parties
consist of management and supervisory board members of Erste Group Bank AG. Moreover, Erste Group defines close family members
of management and supervisory board members of Erste Group Bank AG, as well as companies over which management and supervisory
board members of Erste Group Bank AG have control or significant influence, as other related parties.

Transactions between Erste Group Bank AG and fully consolidated companies are not recognised in the consolidated financial statements
as they have been eliminated.

Principal shareholders
As of 31 December 2014, the foundation DIE ERSTE oesterreichische Spar-Casse Privatstiftung (hereinafter referred to as the ‘Privatstif-
tung’) controlled a total of 30.04% interest in Erste Group Bank AG. 10.83% of the shares were held directly by the Privatstiftung. Indi-
rect participation of the Privatstiftung was at 9.29%, thereof 5.41% of the shares held by Sparkassen Beteiligungs GmbH & Co KG,
which is an affiliated undertaking of the Privatstiftung; 0.80% of the shares held by Austrian savings banks, which act together with the
Privatstiftung and are affiliated with Erste Group by virtue of the Haftungsverbund; and 3.08% of the shares held by other syndicate
members. 9.92% interest in Erste Group Bank AG was controlled by the Privatstiftung based on syndication agreement with Caixabank
S.A.. This makes the Privatstiftung the largest single investor in Erste Group Bank AG. Up to the repayment on 8 August 2013, the
Privatstiftung held participation capital with a notional value of EUR 18.1 million in Erste Group Bank AG.

In 2014 (for the financial year 2013), the Privatstiftung received a dividend of EUR 12.9 million (2013: 30.5 million) on its stake in Erste
Group Bank AG. Additionally, in 2014 (for the financial year 2013) the Privatstiftung received an aliquot dividend for participation capi-
tal of Erste Group Bank AG, which was repaid on 8 August 2013, in the amount of EUR 0.9 million (2013: EUR 1.4 million). The pur-
pose of the Privatstiftung, to be achieved notably by way of the participating interest in Erste Group Bank AG, is to support social, scien-
tific, cultural and charitable institutions as well as to generally promote the guiding principles of the savings bank philosophy. As of
31 December 2014, Theodora Eberle (chairwoman), Richard Wolf (vice chairman), Franz Karl Prüller and Bernhard Spalt were members
of the Privatstiftung management board. The supervisory board of the Privatstiftung had seven members at the end of 2014, one of whom
is also member of the supervisory board of Erste Group Bank AG.

Under article 15.1 of the articles of association, for the duration of its assumption of liability for all current and future debts in the event of
default on payment by the company, the Privatstiftung is entitled, pursuant to Section 92 (9) of the Austrian Banking Act, to delegate up to
one-third of the supervisory board members to be elected at the Annual General Meeting. Until now, the Privatstiftung has not exercised
this right.

164
As of 31 December 2014, Erste Group had in relation to the Privatstiftung accounts payable of EUR 262.6 million (2013:
EUR 49.9 million) and accounts receivable of EUR 26.5 million (2013: EUR 48.7 million). In addition, standard derivative transactions
for hedging purposes were in place between Erste Group and the Privatstiftung as of the end of 2014, namely interest rate swaps with caps
in the notional amount of EUR 282.0 million (2013: EUR 282.0 million). As of the end of 2014, the Privatstiftung held bonds issued by
Erste Group Bank AG in the amount of EUR 0.2 million (2013: EUR 5.2 million), and Erste Group held debt securities issued by the
Privatstiftung in the amount of EUR 3.7 million (2013: EUR 7.0 million).

In 2014, the interest income of Erste Group for the reporting period amounted to EUR 12.5 million (2013: EUR 13.2 million) while the
interest expenses amounted to EUR 8.6 million (2013: EUR 8.7 million), resulting from the said accounts receivable and accounts payable
as well as derivative transactions and debt securities.

As of 31 December 2014, Caixabank S.A., which is based in Barcelona, Spain, held a total of 42,634,248 (2013: 39,195,848) Erste Group
Bank AG shares, equivalent to 9.92% (2013: 9.12%) of the share capital of Erste Group Bank AG. Juan Maria Nin who resigned as depu-
ty chairman and CEO of Caixabank S.A. as of 30 June 2014 also stepped down as member of the Erste Group Bank AG Supervisory
Board on 11 December 2014. In his place, Antonio Massanell Lavilla (deputy chairman of Caixabank S.A.), was invited to join the super-
visory board of Erste Group Bank AG as guest member.

In addition, the shareholders' agreement between Caixabank S.A. and the Erste Foundation, which had been in effect since 2009, was
renewed in December 2014 (Preferred Partnership Agreement). On the basis of this agreement, Caixabank S.A. joined the ranks of the
core shareholders, which include Erste Foundation as well as the savings banks, their foundations as well as Wiener Städtische Wech-
selseitige Versicherungsverein – Vermögensverwaltung – Vienna Insurance Group. As member of this syndicate, Caixabank S.A. will
abide by the recommendations of the Erste Foundation when electing new supervisory board members. In addition, Caixabank S.A. is
granted the right to nominate a second Supervisory Board member at the 2015 Shareholders Meeting.

In 2014 (for the financial year 2013), Caixabank S.A received a dividend of EUR 7.8 million (2013: EUR 15.7 million) on its stake in
Erste Group Bank AG. Additionally, in 2014 (for the financial year 2013) Caixabank S.A. received an aliquot dividend for participation
capital of Erste Group Bank AG, which was repaid on 8 August 2013, in the amount of EUR 0.7 million (2013: EUR 1.2 million).

Balances and off-balance exposures with related parties

As of Dec 13 As of Dec 14
Investments in Investments in
Investments in associates and Investments in associates and
subsidaries - Investments in subsidaries - Investments in
not consolidated joint ventures not consolidated joint ventures
Selected financial assets 750 560 459 609
Equity instruments 171 12 128 11
Debt securities 0 39 0 40
Loans and advances 579 509 330 559
Loans and advances with credit institutions 578 504 32 98
Loans and advances with customers 1 4 298 461
of which: Impaired selected assets 15 13 9 0
Selected financial liabilities -109 -100 -42 -98
Deposits -109 -100 -42 -98
Deposits from banks -1 -6 -1 -7
Deposits from customers -107 -95 -41 -91
Debt securities issued 0 0 0 0
Loan commitments, financial guarantees and other commitments given [notional amount] 501 109 134 186
of which: defaulted 1 5 1 7
Loan commitments, financial guarantees and other commitments received 0 0 0 0
Derivatives [notional amount] 45 0 50 0
Allowances and provisions for impaired debt instruments, defaulted guarantees and
defaulted commitments 5 0 10 3

Transactions with related parties are done at arm’s length.

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Remuneration of management and supervisory board members
The remuneration paid to the management board in 2014 is as follows:

Fixed salaries
in EUR thousand 1-12 13 1-12 14
Andreas Treichl 1,262 1,334
Franz Hochstrasser 750 792
Herbert Juranek 631 667
Gernot Mittendorfer 633 633
Andreas Gottschling 211 633
Total 3,488 4,059

Since the financial year 2010, the variable part of the management board’s remuneration, including both cash payments and share-
equivalents, is distributed over five years in accordance with legal requirements and is paid out only under certain conditions. Share-
equivalents are not exchange-traded shares but phantom shares that are paid out in cash after a one-year vesting period based on defined
criteria.

In 2014, performance-linked remuneration and share-equivalents were paid out or vested for the financial year 2013 and previous years.

Performance-linked remuneration
1-12 13 1-12 14
for 2012 for previous years2 for 2013 for previous years2
share- share- share- share-
cash equivalents cash equivalents cash equivalents cash equivalents
in EUR thousand in units in EUR thousand in units in EUR thousand in units1 in EUR thousand in units1

Andreas Treichl 393 24,898 65 2,182 225 10,881 122 5,502

Franz Hochstrasser 203 12,449 43 1,423 167 6,918 71 3,083
Herbert Juranek 120 7,013 17 563 56 2,365 33 1,498
Gernot Mittendorfer 129 7,539 0 0 69 3,145 17 1,005
Andreas Gottschling 0 0 0 0 30 1,285 0 0
Total 845 51,899 125 4,168 548 24,594 243 11,088

1) Share-equivalents indicated here have been firmly awarded based on the previous year's result. Pay outs will be made in the year 2015 after the one-year vesting period. Share-equivalents were valued at the average
weighted daily share price of Erste Group Bank AG of the year 2014 in the amount of EUR 22.25 per share.
2) No performance-linked remuneration was paid out to members of the management board for the financial year 2011.

Long-Term Incentive-Programme
Currently, one long-term incentive programme (LTI), which is based on changes in the share price of Erste Group Bank AG versus a
group of peers and the Dow Jones Euro Stoxx Banks, is still active. It was started on 1 January 2010 but did not result in any payment in
2014.

The item ‘Other remuneration’ comprises pension fund contributions, contributions to employee provision funds (for new-type severance
payments) and remunerations in kind.

Other remuneration
in EUR thousand 1-12 13 1-12 14
Andreas Treichl 471 498
Franz Hochstrasser 177 260
Herbert Juranek 99 92
Gernot Mittendorfer 98 88
Andreas Gottschling 26 76
Total 871 1,015

The remuneration of the members of the management board represented 0.3% (2013: 0.3%) of the total personnel expenses of Erste
Group.

In 2014, EUR 2.1 million (2013: EUR 3.1 million) was paid in cash and 2,572 share-equivalents (2013: 1,066 share-equivalents) were
assigned to former members of the management bodies and their dependents.

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Principles governing the pension scheme for management board members
Members of the management board participate in the defined contribution pension plan of Erste Group on the basis of the same principles
as employees. For one member of the management board, compensatory payments have to be made to the pension fund in case the man-
agement board member's tenure ends before he reaches the age of 65 by no fault of the member.

Principles governing vested benefits and entitlements of management board members in case of termination of the position
Regarding vested benefits and entitlements of management board members in the event of termination of their position, the standard legal
severance benefit provisions of section 23 of the Austrian Salaried Employees Act (Angestelltengesetz) still apply to one member of the
management board. All other members of the management board are not entitled to receive any severance benefits.

The remuneration granted to the management board members complies with the banking rules on management remuneration.

Breakdown of supervisory board remuneration

in EUR thousand 1-12 13 1-12 14
Supervisory board compensation 638 537
Meeting fees 195 233
Total 833 770

In 2014, the members of the supervisory board of Erste Group Bank AG were paid EUR 770 thousand (2013: EUR 833 thousand) for their
board function. The following members of the supervisory board received the following remuneration for their board function in fully consol-
idated subsidiaries of Erste Group Bank AG: Friedrich Rödler EUR 13,750, Georg Winckler EUR 5,250, John James Stack EUR 40,000 and
Gunther Griss EUR 52,800.

No other legal transactions were concluded with members of the supervisory board.

Pursuant to the decision at the Annual General Meeting of 21 May 2014, the supervisory board adopted in its constituent meeting the follow-
ing remuneration structure for the financial year 2013:

Allowance Total
in EUR Number per person allowance
Chairman 1 100,000 100,000
Vice Chairmen 2 75,000 150,000
Members 7 50,000 350,000
Total 10 600,000

The supervisory board consists of at least three and a maximum of twelve members elected by the annual general meeting. Unless the
annual general meeting has determined a shorter term of office for individual, several or all supervisory board members on the occasion of
their appointment, the term of office of the members of the supervisory board ends at the close of the annual general meeting that resolves
on the approvals of their actions for the fourth business year following their election; re-election is permitted. In addition, membership of
the supervisory board ceases upon death, revocation, resignation or in the event of a defined impediment. Revocation requires a majority
of three quarter of valid votes cast and a majority of three quarters of the registered capital represented at the time of the resolution.

Banking transactions with key management employees and persons and companies related to key management
employees
As of the end of 2014, loans and advances granted to members of the management board and supervisory board totalled EUR 1,371 thou-
sand (2013: EUR 1,017 thousand). Deposits of members of the management board and supervisory board at Erste Group amounted to
EUR 7,287 thousand in total. As of 31 December 2014, members of the management and supervisory board held bonds issued by Erste
Group in the amount of EUR 377 thousand. Loan commitments and financial guarantees, issued in favour of members of the management
and supervisory board totalled EUR 1,398 thousand as of the end of 2014. From banking transactions with members of the management
board and supervisory board Erste Group received interest income and fee income of EUR 28 thousand in total, and paid interest expense
of EUR 28 thousand.

Loans and advances to close family members of key management employees and companies over which key management employees
have control or significant influence (hereinafter referred to “other related parties”) totalled EUR 782 thousand as of 31 December 2014.
As of the end of 2014, deposits of other related parties at Erste Group amounted to EUR 6,857 thousand in total. As of 31 December 2014
other related parties held bonds issued by companies of Erste Group in the total amount of EUR 8,825 thousand. Loan commitments and

167
financial guarantees, issued in favour of other related parties totalled EUR 154 thousand as of the end of 2014. From banking transactions
with other related parties Erste Group received interest income and fee income of EUR 22 thousand in total, and paid interest expense of
EUR 35 thousand.

The applicable interest rates and other terms (maturity dates and collateral) represent market conditions.

Other transactions with companies related to key management employees

Companies related to members of the supervisory board invoiced the following amounts from other transactions:

In the year 2014, Griss & Partner Rechtsanwälte, a law firm in which Gunter Griss is a senior partner, invoiced the companies of Erste
Group for a total of EUR 18 thousand for legal representation and consultancy contracts.

41. Collateral

The following assets were pledged as security for liabilities:

in EUR million Dec 13 Dec 14

Loans and advances to credit institutions 5 199
Loans and advances to customers 16,013 16,943
Trading assets 1,692 25
Financial assets - at fair value through profit or loss 51 12
Financial assets - available for sale 1,754 1,713
Financial assets - held to maturity 3,030 2,723
Total 22,545 21,614

The financial assets pledged as collateral consist of loan receivables, bonds and other interest-bearing securities.

Collaterals were pledged as a result of repo transactions, refinancing transactions with the European Central Bank, loans backing issued
mortgage bonds and other collateral arrangements.

The fair value of collateral received that may be repledged or resold even without the security provider’s default was EUR 1,371 million
(2013: EUR 3,708 million). Collateral with a fair value of EUR 180 million (2013: EUR 94 million) was resold. Collateral with fair value
of EUR 32 million was repledged. The bank is obliged to return the resold and repledged collateral.

42. Transfers of financial assets – repurchase transactions and securities lending

Dec 13 Dec 14
Carrying Carrying Carrying Carrying
amount of amount of amount of amount of
transferred associated transferred associated
in EUR million assets liabilities assets liabilities
Repurchase agreements
Loans and advances to credit institutions 0 0 0 0
Loans and advances to customers 0 0 0 0
Trading assets 871 875 5 5
Financial assets - at fair value through profit or loss 0 0 0 0
Financial assets - available for sale 1,372 1,367 1,285 1,025
Financial assets - held to maturity 1,326 1,358 424 434
Total - repurchase agreements 3,569 3,600 1,714 1,464

Securities lendings
Loans and advances to credit institutions 0 0 0 0
Loans and advances to customers 0 0 0 0
Trading assets 15 0 4 0
Financial assets - at fair value through profit or loss 0 0 0 0
Financial assets - available for sale 69 0 179 0
Financial assets - held to maturity 0 0 0 0
Total - securities lendings 84 0 182 0

Total 3,653 3,600 1,896 1,464

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The transferred financial instruments consist of bonds and other interest-bearing securities.

The total amount of EUR 1,896 million (2013: EUR 3,653 million) represents the carrying amount of financial assets in the respective
balance sheet positions for which the transferee has a right to sell or repledge. Liabilities from repo transaction in the amount of
EUR 1,464 million (2013: 3,600 million), which are measured at amortised cost, represent an obligation to repay the borrowed funds.

The following table shows the fair values of the transferred assets and associated liabilities that have recourse only to the transferred
assets. In the case of Erste Group these assets and liabilities relate to repo transactions.

Dec 13 Dec 14
Fair value of Fair value of Fair value of Fair value of
transferred associated transferred associated
in EUR million assets liabilities Net position assets liabilities Net position
Loans and advances to credit institutions 0 0 0 0 0 0
Loans and advances to customers 0 0 0 0 0 0
Trading assets 871 875 -4 5 5 0
Financial assets - at fair value through profit or loss 0 0 0 0 0 0
Financial assets - available for sale 1,372 1,367 5 1,305 955 350
Financial assets - held to maturity 1,355 1,358 -3 479 434 45
Total 3,598 3,600 -2 1,789 1,394 394

43. Offsetting

Financial assets subject to offsetting and potential offsetting agreements in 2014

Potential effects of netting agreements
not qualifying for balance sheet offsetting

Amounts set off Non-cash Net amount

Gross amounts against financial Net amounts in Financial Cash collateral financial collateral after potential
in EUR million in balance sheet liabilities balance sheet instruments received received offsetting
Derivatives 10,045 0 10,045 5,655 2,378 0 2,012
Reverse repurchase agreements 1,435 0 1,435 0 0 1,074 360
Total 11,480 0 11,480 5,655 2,378 1,074 2,373
Financial liabilities subject to offsetting and potential offsetting agreements in 2014
Potential effects of netting agreements
not qualifying for balance sheet offsetting

Amounts set off Non-cash Net amount

Gross amounts against financial Net amounts in Financial Cash collateral financial collateral after potential
in EUR million in balance sheet assets balance sheet instruments pledged pledged offsetting
Derivatives 7,914 0 7,914 5,655 605 0 1,655
Repurchase agreements 1,464 0 1,464 0 0 1,431 33
Total 9,379 0 9,379 5,655 605 1,431 1,688

Financial assets subject to offsetting and potential offsetting agreements in 2013 restated
Potential effects of netting agreements
not qualifying for balance sheet offsetting

Amounts set off Non-cash Net amount

Gross amounts against financial Net amounts in Financial Cash collateral financial collateral after potential
in EUR million in balance sheet liabilities balance sheet instruments received received offsetting
Derivatives 8,286 0 8,286 5,083 1,659 0 1,544
Reverse repurchase agreements 3,892 0 3,892 0 11 3,649 233
Total 12,178 0 12,178 5,083 1,670 3,649 1,776
Financial liabilities subject to offsetting and potential offsetting agreements in 2013 restated
Potential effects of netting agreements
not qualifying for balance sheet offsetting

Amounts set off Non-cash Net amount

Gross amounts against financial Net amounts in Financial Cash collateral financial collateral after potential
in EUR million in balance sheet assets balance sheet instruments pledged pledged offsetting
Derivatives 6,731 0 6,731 5,083 647 0 1,001
Repurchase agreements 3,600 0 3,600 0 0 3,591 8
Total 10,331 0 10,331 5,083 647 3,591 1,009

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Erste Group employs repurchase agreements and master netting agreements as a means of reducing credit risk of derivative and financing
transactions. They qualify as potential offsetting agreements.

Master netting agreements are relevant for counterparties with multiple derivative contracts. They provide for the net settlement of all the
contracts in the event of default of any counterparty. For derivatives transactions the values of assets and liabilities that would be set off as
a result of master netting agreements are presented in the column Financial instruments. If the net position is further secured by cash
collateral the effect is disclosed in the columns Cash collateral received/pledged respectively.

Repurchase agreements are primarily financing transactions. They are structured as a sale and subsequent repurchase of securities at a pre-
agreed price and time. This ensures that the securities remain in the hands of the lender as collateral in case the borrower defaults on
fulfilling any of its obligations. Offsetting effects from repurchase agreements are disclosed in the column Non-cash financial collateral
received / pledged respectively. Collateral is presented at the fair value of the transferred securities. However, if the fair value of collateral
exceeds the carrying amount of the receivable/liability from the repo transaction the value is capped at the level of the carrying amount.
Remaining position may be secured by cash collateral.

Cash and non-cash financial collateral involved in these transactions is restricted from being used it by the transferor during the time of
the pledge.

44. Risk management

44.1) Risk policy and strategy

It is a core function of every bank to take risks in a conscious and selective manner and to manage such risks professionally. Erste Group’s
proactive risk policy and strategy aims at achieving balanced risk and return in order to generate a sustainable and adequate return on
equity.

Erste Group uses a risk management and control system that is proactive and tailored to its business and risk profile. It is based on a clear
risk strategy that is consistent with the Group’s business strategy and focused on early identification and management of risks and trends.
In addition to meeting the internal goal of effective and efficient risk management, Erste Group’s risk management and control system has
been developed to fulfil external and, in particular, regulatory requirements.

Given Erste Group’s business strategy, the key risks for Erste Group are credit risk, market risk, liquidity risk, and operational risk. Erste
Group also focuses on managing macroeconomic risks as well as concentrations within and across risk types. In addition, Erste Group’s
control and risk management framework takes into account a range of other significant risks faced by the banking Group. The bank al-
ways seeks to enhance and complement existing methods and processes, in all areas of risk management.

The year 2014 was marked by the clear strategy of the management for the implementation of adequate measures to extensively clean up
the bank’s portfolio. These included higher risk provisions in Romania accompanied by an accelerated reduction of non-performing loans
as well as higher expenses disclosed under other operating result in Hungary as a result of the new consumer loan law. Furthermore, the
key focus was also on the Asset Quality Review and associated stress test carried out by the European Central Bank (ECB) and the Euro-
pean Banking Authority (EBA), which Erste Group has comfortably passed. In addition, emphasis was put on strengthening risk govern-
ance and ensuring compliance with new regulatory requirements.

Erste Group Bank AG uses the Internet as the medium for publishing disclosures of Erste Group under Article 434 Capital Requirements
Regulation (CRR). Details are available on the website of Erste Group at www.erstegroup.com/ir.

44.2) Risk management organisation

Risk monitoring and control is achieved through a clear organisational structure with defined roles and responsibilities, delegated authori-
ties and risk limits.

The following chart presents an overview of Erste Group’s risk management, risk governance and responsibilities.

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Risk management organisation

Erste Group Bank AG (Holding)

Enterprise-wide Group Credit & Group EGI Real Group Risk Group Operational Risk, Risk Methods Group Group Retail Group
Risk Market Risk Estate Risk Operating Workout Compliance and and Legal and SME Risk Validation
Management Management Management Office Security Models Management

Group CRO

Subsidiaries

Local CRO Local Boards and Committees

(e.g. Risikomanagementbeirat
in Austria)

Local Risk Management

Divisions

Overview of risk management structure

The management board, and in particular Erste Group’s chief risk officer (Group CRO), perform the oversight function within Erste
Group’s risk management structure. Risk control and risk steering within Erste Group are performed based on the business strategy and risk
appetite approved by the management board. The Group CRO, working together with the chief risk officers of the subsidiaries, is responsi-
ble for the implementation of and adherence to the risk control and risk management strategies across all risk types and business lines.

The management board and, in particular, the Group CRO ensure the availability of appropriate infrastructure and staff as well as meth-
ods, standards and processes to that effect; the actual identification, measurement, assessment, approval, monitoring, steering and limit
setting for the relevant risks are performed at the operating entity level within Erste Group.

At Group level, the management board is supported by several divisions established to perform operating risk control functions and exer-
cise strategic risk management responsibilities.

The following risk management functions report directly to the Group CRO:
_ Enterprise-wide Risk Management
_ Group Credit & Market Risk Management
_ Group EGI Real Estate Risk Management
_ Group Risk Operating Office
_ Group Workout
_ Operational Risk, Compliance and Security
_ Risk Methods and Models
_ Group Legal
_ Group Retail and SME Risk Management
_ Group Validation
_ Local Chief Risk Officers

Enterprise-wide Risk Management

Enterprise-wide Risk Management (ERM) has been established to enable an increased focus on holistic risk management and provide
comprehensive, cross-risk oversight to further enhance Group-wide risk portfolio steering.

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It drives key strategic cross-risk initiatives to establish greater cohesion between defining the risk strategy incl. risk appetite, limit steering
and implementing the risk strategy. ERM works with all risk functions and key divisions to strengthen risk oversight Group-wide, covering
credit, liquidity, market and business risk. This division is responsible for the Group’s Internal Capital Adequacy Assessment Process
(ICAAP) including internal and external stress testing, and furthermore for the proper risk-weighted assets (RWA) calculation, the Group-
wide risk portfolio steering in view of material risks, risk planning and risk input into capital planning, and risk appetite and limit manage-
ment.

Group Credit & Market Risk Management

Group Credit & Market Risk Management is the operative risk management function for medium-sized and large customers as well as for
institutional clients and counterparties. This division ensures that only credit and market risk in line with the risk appetite, the risk strategy
and pertinent limits set by ERM is taken onto the books of Erste Group. It consists of five departments: Group Corporate Analysis, Credit
Underwriting Corporates, Credit Underwriting Financial Institutions & Sovereigns, Corporate Portfolio Monitoring & Management, and
Market Risk Control & Infrastructure.

Group Corporate Analysis performs corporate analyses for Erste Holding and Erste Group Immorent (EGI) and is responsible for the
Group financial analysis tool SABINE. Credit Underwriting Corporates is responsible for the Group-wide underwriting of credit risks
associated with major corporate customers, and the management of credit applications and training activities. It is the first-line risk man-
agement unit for all corporate business booked in the Holding and the second-line risk management unit for corporate business booked in
Erste Group’s subsidiaries and the ‘Haftungsverbund’. Corporate Portfolio Monitoring & Management is responsible for corporate risk
policies and procedures along with the credit process and the operative monitoring of credit risk. Credit Underwriting Financial Institu-
tions & Sovereigns is responsible for ratings, analysis, all operative credit risk management responsibilities (risk assessments, approval of
transactions and limits, policies, watch lists and early warning systems) and the workout of financial institutions (banks, insurance com-
panies and funds), regional governments, sovereigns, countries and structured products. Market Risk Control & Infrastructure is responsi-
ble for the Group-wide risk and limit monitoring of all trading book positions, the end-of-day market data process that ensures validated
market data for the valuation of all capital market products, independent price verification, the market conformity check of new trades, as
well as the maintenance and support of all tools used by Market Risk Management.

Group EGI Real Estate Risk Management

The Group EGI Real Estate Risk Management department is responsible for risk management in the commercial real estate segment of
Erste Group and in Erste Group Immorent (EGI). The department is responsible for the real estate risk polices and operations, the contin-
uous advancement of real estate credit risk management in Erste Group and for the support of credit underwriting in operative activities,
specifically the development and optimisation of the credit application and approval process, the setup and implementation of appropriate
standards, and operating instructions across the Group.

Group Risk Operating Office

This function provides the infrastructure and general management across all functions within the risk organisation and is responsible for
the budget and staff of the entire CRO division.

In addition, the focus of the Group Risk Operating Office is on long-term infrastructure enhancements, project implementation, risk data
and reporting, and regulatory management.

In detail, the covered business areas comprise the following units: Risk Data and Reporting, including Credit Risk Reporting, Risk Infor-
mation Management and Market & Liquidity Risk Reporting, as well as Project Hub, Group Risk Regulatory Management and the Group
Risk Administration Office.

Group Workout
The Group Workout function has Group-wide responsibility for clients allocated to the business segments Large Corporates, Commercial
Real Estate and Other Corporate that are rated substandard or non-performing or are specifically defined as workout clients. It undertakes
the direct workout management function for corporate workout clients of Erste Holding and additionally performs the (second-line) risk
management function for corporate workout clients of the subsidiaries exceeding local management’s authorisation level.

Based on regulatory requirements, Group Workout is responsible for generating Group-wide workout policies, the designing of guidelines
for the preparation of local workout reports and the preparation of Holding workout reports. Additionally, the division organises expert
training programmes as well as workshops to ensure knowledge transfer across Erste Group entities.

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Another important task of the division is its responsibility for Group-wide collateral management. This includes the setup of standards for
collateral management, the framework for a Group collateral catalogue, and principles for collateral evaluation and revaluation.

Operational Risk, Compliance and Security

This division is responsible for the management of operational risks, compliance risks and security issues. The business area comprises
Group Operational Risk Management, Group Compliance and Group Security Management.

Compliance risks are those of legal or regulatory sanctions, material financial loss or loss of reputation that Erste Group might suffer as a
result of failure to comply with laws, regulations, rules and standards. Core competencies in the handling of compliance risks are exer-
cised by Group Compliance in the context of the Austrian Securities Supervision Act, the Austrian Stock Exchange Act and the Austrian
Banking Act, as well as the respective community law.

The Group Security Management unit protects and preserves the safety and security of bank personnel and assets (incl. information as-
sets). Group Security Management is responsible for the definition of security standards, quality assurance and the monitoring and further
development of security-related issues at Erste Group. Group Operational Risk Management acts as the central and independent risk
control department for identification, measurement and quantification of operational risk within Erste Group.

Risk Methods and Models

The Risk Methods and Models division is responsible for specific aspects of the management of credit, market and liquidity risk, especial-
ly the modelling aspects. This area provides adequate risk measurement methodologies and tools as well as an appropriate framework for
relevant risk policy and control.

The Credit Risk Methods and Models unit, which is structured on the basis of competence centers, covers the topics of rating models, risk
parameters and other credit risk methods.

The responsibilities covered by Market and Liquidity Risk Methods and Models are the development of risk models related to Basel 3
Pillar 1 (specifically the calculation of the regulatory capital requirements for market risk in the trading book) and Pillar 2 capital re-
quirements as well as other internal steering purposes.

Group Legal
Group Legal, with its two sub-units Banking & Corporate Legal and Markets Legal, acts as the central legal department of the Holding.
Group Legal provides legal support and counsel for the management board, the business units and the central functions, and mitigates
legal risk; it also attends to legal sourcing and to dispute resolution and litigation.

Legal support for the business activities of the banking subsidiaries in the respective jurisdictions in which they operate is performed by
separate locally established legal departments. While reporting to the local management, typically the local CRO, the heads of the local
legal department also report to the head of Group Legal in a functional dotted line matrix responsibility.

Group Retail and SME Risk Management

The core task of Group Retail and SME Risk Management is to ensure oversight and steering for the retail and SME loan portfolios across
the Group.

The Group Retail Risk Policy and Collections department defines the retail lending framework across the lending cycle including portfo-
lio management and early and late collection. This unit ensures implementation of these policies through a regular gap analysis process.
The department also reviews and assesses local entities’ new lending products and lending criteria changes to ensure that these are in line
with Group-wide retail lending policies. In addition, this department ensures know-how transfer on retail risk management issues across
Group countries.

The Group Retail Risk Analytics department defines standardised reporting requirements and ensures regular, consistent retail risk man-
agement information. Based on this information, the underlying retail lending portfolio dynamics are analysed and, if required, risk miti-
gation is identified. This department also provides in-depth, ad hoc analyses to support senior management in risk management decisions.
Group Retail and SME Risk Control is a newly established department that is currently extending the existing retail risk management
oversight and steering tools to the SME portfolio in local entities.

173
Group Validation
The objective of Group Validation is to comply with regulatory requirements regarding the performance of validations (initial and annual)
concerning all the models and methodologies (internal or from external vendors) for credit ratings, scorecards and parameters on the one
hand and concerning models and methodologies for derivatives, securities valuation, asset liability management (ALM), pricing and
internal steering in Erste Group on the other hand.

Within the structure, the Group Credit Risk Validation unit is responsible for the independent review of credit risk methods and models
developed internally by Erste Group as well as externally purchased ones. This unit validates all new models prior to initiation of the
internal approval process and supports the local banks by ensuring prudential validation of all models. It also performs all the annual
validations, ensuring that the decreed requirements for all the validations are met.

In addition to the risk management activities performed by Erste Group Bank AG in its role as the holding company, each subsidiary also
has risk control and management units, the responsibilities of which are tailored to the local requirements and which are headed by the
respective entity’s chief risk officer.

Group co-ordination of risk management activities

The management board deals regularly with risk issues of all risk types in its regular board meetings. Actions are discussed and taken
when needed.

Furthermore, certain cross-divisional committees were established with the purpose of carrying out risk management activities in Erste
Group. They are shown in the following diagram:

Risk Committee Supervisory Board

Management Board

GCC GREC ALCO

Group Credit Group Risk Group Asset Liability
Committee Executive Committee Committee

MARA OLC
ORCSC GERMC HMC
Market Risk Operational
OR/Comp./Sec. Group ERM Holding Model CRO Board
Committee Liquidity
Committee Committee Committee
Committee

Enforcement (local roll-out)

of global approved policies,
methods and models

The Risk Management Committee of the Supervisory Board is responsible for granting approval in all those cases in which loans
and exposures or large exposures reach an amount exceeding the approval authority of the management board according to the Credit
Risk Approval Authority Regulations. It is charged with granting approval to large exposures pursuant to Article 392 CRR, if such a claim
is equal to or exceeds 10% of the eligible capital of a credit institution. Within the competence assigned to it, the Committee may grant
advance approvals to the extent permitted by law.

In addition it is responsible for supervising the risk management of Erste Group Bank AG. The Risk Management Committee meets regu-
larly. As the central risk control body, the Risk Management Committee is regularly briefed on the risk status across all risk types.

The Group Credit Committee (GCC) is responsible for deciding on transactions according to the current credit risk approval regula-
tions. The GCC decides on credit risk exposures totalling up to EUR 300 million per group of connected clients. Exposures in excess of

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EUR 300 million must be decided on by the Risk Management Committee on the basis of a recommendation by the Group Credit Com-
mittee. The GCC is headed by the Group CRO. Further members are the board member responsible for Corporates & Markets, the head of
Group Credit & Market Risk Management, the head of Group Workout and the head of the requesting business line. Each local bank has
its local credit committee established along the same principles.

The Group Risk Executive Committee (GREC) is the central forum for all joint resolutions and acknowledgements in the Erste Group
Holding CRO division across all its departments and staff units. Its purpose is the division-wide co-ordination of all the holding’s risk
management functions. It discusses and decides on key risk management issues and topics, in particular it defines the division’s strategy
and ensures implementation of common risk management standards (e.g. pertaining to processes, systems, reporting and governance).

The CRO Board is responsible for the consistent co-ordination and implementation of risk management activities within Erste Group,
including the ‘Haftungsverbund’. The CRO Board is made up of the Group CRO and the chief risk officers of the subsidiaries within
Erste Group. Chaired by the Group CRO, the CRO Board has responsibility for Group-wide co-ordination of risk management and for
ensuring uniformity of risk management standards across Erste Group.

The Holding Model Committee (HMC) is the elementary steering and control body for the model development and validation process.
All new models and model changes and risk parameters in the Group, as well as Group-wide methodology standards, are reviewed by the
Holding Model Committee and require its approval.

The Group ERM Committee (GERMC) is the sole forum for all joint decisions and acknowledgements in the Enterprise-wide Risk
Management (ERM) area across all Erste Group entities and Erste Group Bank AG. Its purpose is the Group-wide co-ordination of the
ERM functions, in particular on ICAAP and economic capital, stress testing, RWA, risk appetite and limit steering. Furthermore, the
GERMC discusses other key ERM topics and ensures the Group-wide implementation of common ERM standards.

The objectives of the Operational Risk, Compliance and Security Committee (ORCSC) are to reduce operational risk at Group level
through decisions on risk mitigation measures and the monitoring of these risks, and to handle substantial operational risks within the
Group. The ORCSC has the authority to propose risk mitigation measures at Group level to the CRO Board and management board and
consists of the following permanent members: Group Head Operational Risk, Compliance and Security, Head Operational Risk Manage-
ment, Head Group Compliance and Head Group Security Management. The ORCSC chair (Group Head ORCS) regularly reports to the
management board and supervisory board.

The Market Risk Committee (MARA) is the main steering body for market risk of trading book related issues of Erste Group. The
Market Risk Committee meets quarterly, approves Group-wide market risk limits and elaborates on the current market situation. The
members of the MARA are the Group CRO, the board member heading the Group Corporates and Markets division and the Group CFO,
as well as the heads of the units Group Capital Markets, Group ALM, Group Credit & Market Risk Management, Risk Methods and
Models, Enterprise-wide Risk Management and Group Validation.

The Group Asset/Liability Committee (ALCO) manages the consolidated Group balance sheet, focusing on trade-offs between all
affected consolidated balance sheet risks (interest rate, exchange rate and liquidity risks), and takes care of the setting of Group standards
and limits for the members of Erste Group. In addition, it approves policies and strategies for controlling liquidity risk, interest rate risk
(net interest income), capital management of the banking book, as well as examining proposals, statements and opinions of ALM, risk
management, controlling and accounting functions. The approved investment strategy complies with the guidelines agreed with Risk
Management.

The Operational Liquidity Committee (OLC) is responsible for the day-to-day management of the global liquidity position of Erste
Group. It analyses the liquidity situation of Erste Group on a regular basis and reports directly to the ALCO.

It also proposes measures to the ALCO within the scope of the management policies and principles laid down in the Liquidity Risk Man-
agement Rule Book. Furthermore, members of the Group OLC are points of contact for other departments or Erste Group members for
liquidity-related matters. Each local bank has its own local operational liquidity committee.

In addition, committees are established at local level, such as the ‘Risikomanagementbeirat’ in Austria. This implements a common risk
approach within the Austrian members of Erste Group (i.e. Erste Bank Oesterreich and the savings banks).

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44.3) Regulatory topics

Regulatory scope of consolidation and institutional protection scheme

The consolidated regulatory capital and the consolidated regulatory capital requirements are calculated based on the scope of consolida-
tion stipulated in the Capital Requirements Regulation (CRR). Based on Article 4 (1) (3), (16) to (27) CRR in line with Articles 18 and 19
CRR, the scope consists of credit institutions, investment firms, financial institutions and ancillary service undertakings. This definition
differs from the Accounting scope of consolidation according to IFRS, which also includes insurance companies and other entities.

The Austrian savings banks are included as subsidiaries in Erste Group’s regulatory scope of consolidation based on the cross-guarantee
contracts of the ‘Haftungsverbund’. Furthermore, Erste Group Bank AG together with the savings banks forms an institutional protection
scheme (IPS) according to Article 113 (7) CRR. Disclosure requirements for the institutional protection scheme according to Article 113
(7) e CRR are met by the publication of the consolidated financial statements, which cover all entities included in the institutional protec-
tion scheme.

Regulatory capital
Since 1 January 2014, Erste Group has been calculating the regulatory capital and the regulatory capital requirements according to Basel
3. The requirements are implemented within the European Union via the Capital Requirements Directive (CRD IV) and the Capital Re-
quirements Regulation (CRR), as well as within the regulatory technical standards. Furthermore, the Austrian Banking Act applies in
connection with the CRR. Erste Group applies these rules and calculates the capital ratios according to Basel 3, taking into consideration
the Austrian transitional provisions which are laid down in the CRR ‘Begleitverordnung’, published by the Austrian regulator.

The disclosure requirements for the regulatory capital and regulatory capital requirements were published in the Official Journal of the
European Union on 20 December 2013. Erste Group has adapted the charts accordingly and publishes the details of the regulatory capital
and regulatory capital requirements in the Note 51. Positions that are not relevant for Erste Group or do not have any impact on the capital
ratios are not shown.

Own funds under Basel 3 consist of common equity tier 1 (CET1), additional tier 1 (AT1) and tier 2 (T2). In order to determine the capital
ratios, each respective capital component, after accounting for all the regulatory deductions and filters, is considered in relation to the total
risk.

According to the final rules the minimum ratio for CET1 amounts to 4.5%, which can be increased based on the buffer regime according
to CRD IV. The minimum capital requirement for tier 1 capital (CET1 plus AT1) and for total own funds are 6% and 8% respectively.
According to the Austrian transitional provisions the minimum ratios for 2014 amount to 4% for CET1, 5.5% for tier 1 and 8% for total
own funds. No additional capital buffers were required for the year-end 2014.

Leverage ratio
The leverage ratio represents the core capital (tier 1) in relation to the leverage exposure according to Article 429 CRR. Essentially, the
leverage exposure represents the unweighted on- and off-balance-sheet positions considering valuation adjustments and risk adjustments
as defined within the CRR.

In January 2014, the Basel Committee on Banking Supervision (BCBS) published the Basel 3 leverage ratio framework and disclosure
requirements, which is a revised version of the global guideline on calculation and disclosure requirements for the leverage ratio. Based
on this framework, the European Commission prepared a delegated regulation ((EU) 2015/62 of 10 October 2014), which was published
in the Official Journal of the European Union on 17 January 2015.

The implementation of the revised requirements for calculation and disclosure of the leverage ratio within the European Union will take
place in 2015. Erste Group will apply these regulations accordingly.

ECB Asset Quality Review and Stress Test

From 2013 to 2014 Erste Group participated in the Comprehensive Assessment of the European Central Bank ECB). The Comprehensive
Assessment was a financial health check of 130 banks in the euro area, covering approximately 82% of total bank assets. Erste Group
passed the asset quality review and the stress test carried out within the scope of the Comprehensive Assessment.

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Asset quality review
A phase-in CET1 ratio of 11.2% as at 31 December 2013 (Basel 3) was used as the reference point for the asset quality review. Aggregat-
ed adjustments due to the outcome of the AQR were mainly related to Romanian and Hungarian assets and amounted to 117 basis points,
resulting in an AQR-adjusted phase-in CET1 ratio as at 31 December 2013 of 10.0%. The impact of the AQR for Erste Group is outlined
in the chapter ‘Credit risk’ in section ‘Non-performing credit risk exposure and credit risk provisions’.

Stress test (adverse scenario)

An AQR-adjusted phase-in CET1 ratio of 10% as at 31 December 2013 was used as the reference point for the stress test. In spite of
severe macroeconomic stress test conditions the AQR and adverse scenario stress-test-adjusted CET1 ratio, according to the transitional
provisions of Basel 3, amounted to 7.6% (minimum ratio of 5.5%). Even without the application of transitional Basel 3 rules, the adverse
scenario stress-test-adjusted CET1 ratio (fully loaded CET1) was 6.8%.

AQR and stress test of Slovenská sporiteľňa

Erste Group’s Slovak subsidiary Slovenská sporiteľňa was subject to a separate AQR and stress test and also successfully completed and
passed the assessment: the AQR-adjusted phase-in CET1 ratio as at 31 December 2013: 19.5%, compared to a threshold of 8.0% the AQR
ratio and adverse scenario stress-test-adjusted phase-in CET1 ratio: 19.5% (threshold: 5.5%) as of 31 December 2013.

The complete detailed results of all participating banks, including Erste Group, are publicly available and can be accessed via the ECB
and EBA websites.

44.4) Group-wide risk and capital management

Overview
As in prior years, Erste Group’s risk management framework has been continuously strengthened. In particular, Enterprise-wide Risk
Management (ERM) has continued to strengthen its comprehensive framework. This includes as its fundamental pillar the Internal Capital
Adequacy Assessment Process (ICAAP), as required under Pillar 2 of the Basel framework.

The ERM framework is designed to support the bank’s management in managing the risk portfolios as well as the coverage potential to
assure at all times adequate capital reflecting the nature and magnitude of the bank’s risk profile. ERM is tailored to the Group’s business
and risk profile, and it reflects the strategic goal of protecting shareholders and senior debt holders while ensuring the sustainability of the
organisation.

ERM is a modular and comprehensive management and steering system within Erste Group and is an essential part of the overall steering
and management instruments. The ERM components necessary to ensure all aspects, in particular also to fulfil regulatory requirements,
and moreover to provide an internal value added, can be clustered as follows:
_ Risk appetite statement
_ Portfolio & risk analytics including
_ Risk materiality assessment
_ Concentration risk management
_ Stress testing
_ Risk-bearing capacity calculation
_ Risk planning & forecasting including
_ Risk-weighted asset management
_ Capital allocation
_ Recovery and resolution plans

In addition to the ICAAP’s ultimate goal of assuring capital adequacy and sustainability at all times, the ERM components serve to sup-
port the bank’s management in pursuing its strategy.

Risk appetite
Erste Group defines its risk strategy and Risk Appetite Statement (RAS) through the annual strategic planning process to ensure appropri-
ate alignment of risk, capital and performance targets. The Group RAS represents a strategic statement expressing the maximum level of
risk that Erste Group is prepared to accept in order to deliver its business objectives. It consists of a set of key risk appetite measures
providing quantitative direction for risk steering, from which a top-down boundary for target and limit setting is derived, creating a holis-

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tic perspective on capital, funding and risk-return trade-offs, and qualitative statements in the form of key risk principles that form part of
the strategic guidelines for managing risks. The key objective of RAS is to:
_ ensure that Erste Group has sufficient resources to support business at any given point in time and absorb stress market events
_ set boundaries of the Group’s risk-return target setting
_ preserve and promote the market’s perception of the Group’s financial strength and the robustness of its systems and controls

Key RAS measures include general indicators (i.e. capital, leverage, etc.) as well as indicators for credit (including FX lending), market
operational and liquidity risk. To ensure that the RAS is operationally efficient, the indicators are classified as either targets, limits or
principles, where the main differences are in the mechanisms triggered in case of a breach of the RAS.

Targets are in general derived as part of the planning process, where the final budget is aligned with the targets set. Trigger levels for RAS
limits are set taking into consideration regulatory requirements and general expectations of a sustainable financial profile, which can vary
over time driven by market conditions, peer profiles and shareholder perception. A significant deviation from a target or limit triggers
management action, and a ‘cure’ plan for the next 12 months must be formulated. Regular reviews are performed and management reports
are prepared in order to ensure effective RAS oversight and identify any excesses. Remediation measures must be taken to resolve any
limit breach exceptions as soon as possible. Principles include qualitative strategic statements and are applied ex ante and operationalised,
e.g. via strategies, guidelines and policies for managing risks.

In 2014, the RAS framework was further enhanced by broadening the scope to include additional risks (i.e. operational and reputational
risk, etc.) and increasing the level of granularity by adding additional risk measures. Tighter limits and targets were defined, which serve
capital and liquidity management in particular.

In 2014, the relevant RAS indicators developed within the tolerances defined in the Group RAS except for cost of risk and other operating
expenses, which were affected by the developments in Romania and Hungary as well as the targeted management efforts to address these
adverse developments, and a few breaches of the maximum lending limits for single-name concentrations, which were well covered by
the strategic buffer established at Group level.

Portfolio and risk analytics

Erste Group uses dedicated infrastructure, systems and processes to actively identify, control and manage risks within the scope of the
portfolio. Portfolio and risk analytics processes are designed to quantify, qualify and discuss risks in order to raise awareness to manage-
ment in a timely manner.

Risk materiality assessment

The risk materiality assessment is an annual process with the purpose of systematically identifying new and assessing existing material
risks for Erste Group. The process uses a combination of quantitative and qualitative factors in the assessment of each risk type.

This process represents the starting point of the ICAAP process, as identified material risk types need to be considered in the risk-bearing-
capacity calculation. Insights generated by the assessment are used to improve risk management practices and further mitigate risks within
the Group. The assessment also serves as an input for the design and definition of the Group’s Risk Strategy and Risk Appetite Statement.
Key outputs and recommendations of the risk materiality assessment are used in the scenario design and selection of the comprehensive
and reverse stress tests.

Risk concentration analysis

Erste Group has implemented a process to identify, measure, control and manage risk concentrations. This process is essential to ensure
the long-term viability of Erste Group, especially in times of adverse business environment and stressed economic conditions.

The risk concentration analysis at Erste Group covers credit risk, market risk, operational risk, liquidity risk and inter-risk concentrations.
Identified risk concentrations are considered in the scenario design of the comprehensive stress test and measured under stressed condi-
tions.

The output of the risk concentration analysis additionally contributes to the identification of material risks within the risk materiality
assessment as well as to the Risk Appetite Statement and to the setting/calibration of Erste Group’s limit system.

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Stress testing
Modelling sensitivities of the Group’s assets, liabilities and profit or loss provide management and steering impulses and help in optimis-
ing the Group’s risk-return profile. The additional dimension of stress tests should help to factor in severe but plausible scenarios and
provide further robustness to the measuring, steering and management system. Risk modelling and stress testing are vital forward-looking
elements of the ICAAP. Finally, sensitivities and stress scenarios are explicitly considered within the Group’s planning and budgeting
process as well as in the risk-bearing capacity calculation and the setting of the maximum risk exposure limit.

Erste Group’s most complex stress test is a scenario stress test that takes comprehensive account of the impact of various economic sce-
narios, including second-round effects on all risk types (credit, market, liquidity and operational) and in addition impacts on the associated
volumes of assets and liabilities as well as on profit and loss sensitivities.

Erste Group has developed specific tools to translate macroeconomic variables (e.g. GDP, unemployment rate development) into risk
parameters in order to support the stress testing process, which combines bottom–up and top–down approaches. In addition, Erste Group
leverages the intimate knowledge of its professionals located in the different regions to further calibrate the model-based stress parame-
ters. Special attention is given to take into account adequate granularity and special characteristics when defining the stress parameters
(e.g. the particular developments in the respective region, industry, product type or segment).

Results from all of Erste Group’s stress tests are assessed with regard to their explanatory power in order to decide on appropriate
measures. All stress tests performed in the reporting period clearly indicated sufficient capital adequacy.

Erste Group additionally participated in the stress test exercise carried out by the European Central Bank (ECB) and the European Bank-
ing Authority (EBA). The results of these stress tests showed that Erste Group’s regulatory capital was adequate.

Risk-bearing capacity calculation

The risk-bearing capacity calculation (RCC) defines the capital adequacy required by the ICAAP. Within the RCC, all material risks are
quantified, aggregated and compared to the coverage potential and the bank’s own funds. The integral forecast, risk appetite limit as well
as a traffic light system support management in its discussions and decision processes.

The traffic light system embedded in Erste Group’s RCC helps to alert the management in case there is a need to decide on, plan and
execute actions either to replenish the capital base or to take measures for reducing the risk.

The management board and risk management committees are briefed on a quarterly basis in relation to the results of the capital adequacy
calculation. The report includes movements in risks and available capital and coverage potential after consideration of potential losses in
stress situations, the degree of the risk limit’s utilisation and the overall status of capital adequacy according to the traffic light system.
The Group Risk Report also includes a comprehensive forecast of risk-weighted assets and capital adequacy.

Besides the Pillar 1 risk types (credit, market and operational risks), in the context of Pillar 2, interest rate risks in the banking book,
foreign exchange risks arising from equity investments, credit spread risks in the banking book, risks from foreign currency loans as well
as business and strategic risks are explicitly considered within the economic capital requirement via internal models. During 2014 the
utilisation of the economic capital was between 62% and 66%. The methodologies that are applied for the different risk types are diverse
and range from historic simulations and other value at risk approaches to the regulatory approach for residual portfolios. Moreover, calcu-
lations for portfolios under the standard regulatory approach are extended by risk parameters from the internal ratings-based approach in
order to give a better economic view.

In addition to the risk-bearing capacity calculation, liquidity, concentration and macroeconomic risks in particular are managed by means
of a proactive management framework that includes forward-looking scenarios, stress testing, trigger levels and traffic light systems.

Based on Erste Group’s business and risk profile, besides the three main types of banking risks – credit risk, market risk and operational
risk – also risks from foreign currency loans as well as business and strategic risks are considered directly in the risk-bearing capital cal-
culation Credit risk accounts for approximately 71% of the total economic capital requirement. Reflecting Erste Group’s conservative risk
management policy and strategy, the Group does not offset diversification effects between these three risk types. The economic capital
requirement for unexpected losses is computed on a one-year time horizon with a 99.95% confidence level, which reflects the implied
default risk consistent with a long-term credit rating of AA as well as Erste Group's conservative approach and high risk management
standards.

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The capital or coverage potential required to cover economic risks and unexpected losses is based on Basel 3 fully loaded regulatory own
funds adapted by held-to-maturity reserves and the year-to-date profit. The coverage potential must be sufficient to absorb unexpected
losses resulting from the Group’s operations at any point in time.

Risk planning and forecasting

The responsibility for risk management within the Group and each subsidiary includes ensuring sound risk planning and forecasting pro-
cesses. The forecasts determined by risk management are the result of close co-operation with all stakeholders in the Group’s overall
planning process, and in particular with Group Controlling, Asset Liability Management and the business lines. The risk planning and
forecasting process includes both a forward- and backward-looking component, focusing on both portfolio and economic environment
changes.

A particular role and forward-looking element is played by the rolling one-year forecast within the RCC which is vital in determining the
trigger level of the traffic light system.

Risk-weighted asset management

As risk-weighted assets (RWA) determine the actual regulatory capital requirement of a bank and influence the capital ratio as a key per-
formance indicator, particular emphasis is devoted to meeting targets and to the planning and forecasting capacity for this parameter.
Insights from monthly RWA analyses are used to improve the calculation infrastructure, the quality of input parameters and data as well as
the most efficient application of the Basel framework.

There is a process in place for tracking compliance with RWA targets, forecasting their future developments and thereby defining further
targets. Deviations are brought to the attention of the board within a short time frame. In addition to discussions in the steering committee,
the Group’s management board is regularly informed about the current status, and findings are taken into account in the context of Erste
Group’s regular steering process. Furthermore, RWA targets are included in the Risk Appetite Statement.

Capital allocation
An important task integral to the risk planning process is the allocation of capital to entities, business lines and segments. This is done
with close co-operation between Risk Management and Controlling. All insight from the ICAAP and controlling processes is used to
allocate capital with a view to risk-return considerations.

Recovery and resolution plans

In compliance with the Austrian Banking Intervention and Restructuring Law (Bankeninterventions- und Restrukturierungsgesetz –
BIRG) Erste Group is required to draw up recovery and resolution plans for potential crisis situations. In 2014, an updated Erste Group
Recovery Plan and a Group Resolution Plan were submitted to the regulators.

The Group Recovery Plan identifies options for restoring financial strength and viability if Erste Group comes under severe economic
stress. The plan specifies potential options for the replenishment of capital and liquidity resources of the bank in order to cope with a
range of scenarios including both idiosyncratic and market-wide stress.

The Group Resolution Plan outlines possible resolution scenarios for Erste Group under the regime of the Bank Recovery and Resolution
Directive (BRRD) approved by the European Parliament in April 2014.

As of 1 January 2015 the new Austrian Banking Recovery and Resolution Law (Bundesgesetz über die Sanierung und Abwicklung von
Banken – BSAG) enters into force transposing the BRRD. In 2015, Erste Group is required to submit an updated Group Recovery Plan
and to support the newly established resolution authorities in the drawing up of resolution plans.

Erste Group’s aggregate capital requirement by risk type

The following diagrams present the composition of the economic capital requirement according to type of risk as of 31 December 2013
and 31 December 2014 respectively:

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Economic capital allocation
in %, 31.12.2013

Market risk

Operational risk

17.6 8.8

73.6 Credit risk

Economic capital allocation

in %, 31.12.2014

Market risk

Operational risk

14.2 8.7 6.6 Other risks

70.5 Credit risk

Other risks include the risk from foreign currency loans and the business and strategic risk, which were taken into consideration for the first time as of 31 December 2014.

44.5) Credit risk

Definition and overview

Credit risk arises in Erste Group’s traditional lending and investment businesses. It involves losses incurred as a result of default by bor-
rowers and the need to set aside allowances as a result of the deteriorating credit quality of certain borrowers, as well as due to counter-
party risk from trading in instruments and derivatives bearing market risk. Country risk, too, is recognised in the calculation of credit risk.
Operative credit decisions are made locally by the credit risk management units in each of the banking subsidiaries, and by Group Credit
& Market Risk Management and Group EGI Real Estate Risk Management at Group level. A detailed explanation of the role and respon-
sibilities of Group Credit & Market Risk Management and Group EGI Real Estate Risk Management is covered in the section ‘Risk
management organisation’.

The central database used for credit risk management is the Group data pool. All data relevant to credit risk management, performance
management and determination of risk-weighted assets and the regulatory capital requirement is regularly input into this database. Rele-
vant subsidiaries not yet integrated into the Group data pool regularly deliver reporting packages.

The Group Risk Data and Reporting department uses the Group data pool for centralised credit risk reporting. This ensures centralised
analysis and application of ratios according to unified methods and segmentation across the Erste Group as a whole. The credit risk re-
porting comprises regular reports on Erste Group’s credit portfolio for external and internal recipients and permits continuous monitoring of
credit risk developments, thus enabling management to take control measures. In-house recipients of these reports include, above all, the
supervisory and management boards of Erste Group Bank AG, as well as the risk managers, business unit directors and internal audit staff.

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The Credit Limit System organisational unit, which is part of Group Credit & Market Risk Management, is in charge of the operation,
supervision and continuous technical improvement of a Group-wide online limit system for the control of counterparty risk arising from
treasury transactions, as well as for the monitoring of credit risk from exposure to clients that fall into the Financial Institutions, Sover-
eigns and Large Corporates asset segments.

Internal rating system

Overview
Erste Group has business and risk strategies in place that govern policies for lending and credit approval processes. These policies are
reviewed and adjusted regularly, at minimum on a yearly basis. They cover the entire lending business, taking into account the nature,
scope and risk level of the transactions and the counterparties involved. Credit approval considers individual information on the credit-
worthiness of the customer, the type of credit, collateral, covenant package and other risk mitigation factors involved.

The assessment of counterparty default risk within Erste Group is based on the customer’s probability of default (PD). For each credit
exposure and lending decision, Erste Group assigns an internal rating, which is a unique measure of the counterparty default risk. The
internal rating of each customer is updated at least on an annual basis (annual rating review). Ratings of customers in weaker rating clas-
ses are reviewed with higher frequency.

The main purpose of the internal ratings is to support the decision-making for lending and for the terms of credit facilities. Internal ratings
also determine the level of decision-making authority within Erste Group and the monitoring procedures for existing exposures. At a
quantitative level, internal ratings influence the level of required risk pricing, risk allowances and risk-weighted assets under Basel 3
Pillar 1 or 2.

For entities of Erste Group that use the internal ratings-based (IRB) approach, internal ratings are a key input measure for the risk-
weighted assets calculation. They are also used in the Group’s assessment of the economic capital requirement according to Basel 3 Pillar
2. For these purposes, a distinct PD value is assigned to each rating grade for its IRB portfolios within a calibration process that is per-
formed individually for each rating method. PD values reflect a 12-month probability of default based on long-term average default rates
per rating grade. The bank assigns margins of conservatism to the calculated PDs.

Internal ratings take into account all available significant information for the assessment of counterparty default risk. For non-retail borrow-
ers, internal ratings take into account the financial strength of the counterparty, the possibility of external support, flexibility in corporate
financing, general company information and external credit history information, where available. For retail clients, internal ratings are based
mainly on payment behaviour versus the bank and, where applicable, credit bureau information, supplemented with information provided
by the respective client and general demographic information. Rating ceiling rules on credit quality are applied based on membership in a
group of economically related entities and the country of main economic activity (applicable to cross-border financing facilities).

Internal specialist teams develop and improve internal rating models and risk parameters in cooperation with risk managers. Model devel-
opment follows an internal Group-wide methodological standard and utilises relevant data covering the respective market. In this way,
Erste Group ensures the availability of rating models with the best possible predictiveness across its core regions.

All rating models and their components (scorecards), whether retail or non-retail, are regularly validated by the central validation unit
based on a Group-wide standard methodology. Validation uses statistical techniques to evaluate the accuracy of default prediction, rating
stability, data quality, completeness and relevancy, and reviews the quality of documentation and degree of user acceptance. The results of
this validation process are reported to the management and regulatory bodies. In addition to the validation process, the Group applies a
regular monitoring process on the performance of rating tools, reflecting developments in new defaults and early delinquencies.

A Holding Model Committee is established as an elementary steering and control body for the model development and validation process.
The Holding Model Committee reports to the Group Risk Executive Committee (GREC). All new models, model changes and risk pa-
rameters in the Group, as well as Group-wide methodology standards, are reviewed by the Holding Model Committee and require its
approval. This ensures Group-wide integrity and consistency of models and methodologies. Besides its function for new or changed mod-
els and methodologies, the Holding Model Committee organises the Group-wide validation process, reviews validation results and ap-
proves remedial actions. All development and validation activities are coordinated by the Risk Methods and Models division with respon-
sibility for validation being in the independent Group Validaiton unit.

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Risk grades and categories
The classification of credit assets into risk grades is based on Erste Group’s internal ratings. Erste Group uses two internal risk scales for
risk classification: for customers that have not defaulted, a risk scale of 8 risk grades (for private clients) and 13 risk grades (for all other
segments) is used. Defaulted customers are classified into a separate risk grade.

For the purpose of external reporting, internal rating grades of Erste Group are grouped into the following four risk categories:

Low risk: Typically regional customers with well-established and rather long-standing relationships with Erste Group or large interna-
tionally recognised customers. A strong and good financial position and no foreseeable financial difficulties. Retail clients having long
relationships with the bank, or clients with a wide product pool use. No late payments currently or in the most recent 12 months. New
business is generally done with clients in this risk category.

Management attention: Vulnerable non-retail clients that may have overdue payments or defaults in their credit history or may encoun-
ter debt repayment difficulties in the medium term. Retail clients with limited savings or probable payment problems in the past triggering
early collection reminders. These clients typically have a good recent payment history.

Substandard: The borrower is vulnerable to negative financial and economic developments. Such loans are managed in specialised risk
management departments.

Non-performing: One or more of the default criteria under Basel 3 are met: full repayment unlikely, interest or principal payments on a
material exposure more than 90 days past due, restructuring resulting in a loss to the lender, realisation of a loan loss, or initiation of
bankruptcy proceedings. For purposes of analysing non-performing positions, Erste Group applies the customer view in Austria. Accord-
ingly, if an Austrian customer defaults on one product then all of that customer’s performing products are classified as non-performing.
For corporate borrowers in CEE, the customer view is also applied. However, in the retail and SME segment in some subsidiaries in CEE,
Erste Group uses the product view, so that only the product actually in default is counted as a non-performing exposure whereas the other
products of the same customer are considered performing.

Credit risk review and monitoring

In order to manage the credit risk for large corporates, banks, sovereigns and country risk, credit limits are established to reflect the max-
imum exposure that Erste Group is willing to have towards a particular customer or group of connected clients. All credit limits and the
transactions booked within the limits are reviewed at least once a year.

For smaller enterprises (micro) and retail customers, the monitoring and credit review are based on an automated early warning system. In
retail risk management the following early warning signals indicate potential adverse portfolio developments if left unaddressed:
_ deterioration of new business quality, and
_ decreasing collections efficiency.

The early warning signals are monitored at Group level by Group Retail and SME Risk Management and locally by local Retail
Risk/Collections Management. Adverse developments identified during the monitoring are discussed and the need for risk mitigation is
addressed jointly.

Credit portfolio reports for asset classes and business lines are prepared on a regular basis. Watch-list meetings and remedial committee
meetings are held on a regular basis to monitor customers with a poor credit standing and to discuss pre-emptive measures to help a par-
ticular debtor avoid default.

Credit risk exposure

Credit risk exposure relates to the following balance sheet items:
_ Cash and cash balances – other demand deposits,
_ Financial assets - held for trading (without equity instruments),
_ Financial assets - at fair value through profit or loss (without equity instruments),
_ Financial assets - available for sale (without equity instruments),
_ Financial assets - held to maturity,
_ Loans and Receivables,
_ Derivatives - hedge accounting, and
_ Off balance sheet credit risks (primarily financial guarantees and undrawn irrevocable credit commitments).

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The credit risk exposure comprises the gross carrying amount (or nominal value in the case of off-balance-sheet positions) without taking into
account loan loss allowances, provisions for guarantees, any collateral held (including risk transfer to guarantors), netting effects, other credit
enhancements or credit risk mitigating transactions. The figures as of 31 December 2013 that are mentioned in this chapter refer to values
after restatement of the consolidated financial statements 2013; this restatement is outlined in the note ‘Accounting and measurement meth-
ods’. Similarly, absolute and percentage differences between 31 December 2014 and 31 December 2013 correspond to values of the restated
balance sheet as of 31 December 2013. Due to this restatement the total credit risk exposure increased by EUR 889 million.

The gross carrying amount of the credit risk exposure of Erste Group increased by 0.3% or EUR 654 million from almost EUR 210.3
billion as of 31 December 2013 to approximately EUR 210.9 billion as of 31 December 2014.

The following table shows the reconciliation between the gross carrying amount and the carrying amount of the separate components of
the credit risk exposure as of 31 December 2014.

in EUR million Gross carrying amount1 Allowances1 Carrying amount1

As of 31 December 2014
Cash and cash balances – other demand deposits 859 0 859
Loans and receivables to credit institutions 7,461 18 7,442
Loans and receivables to customers 128,325 7,491 120,834
Financial assets – held to maturity 16,879 2 16,877
Financial assets – held for trading 3,173 0 3,173
Financial assets – at fair value through profit or loss 139 0 139
Financial assets – available for sale 21,102 0 21,102
Positive fair value of derivatives 10,045 0 10,045
Contingent liabilities1 22,963 241 -
Total 210,944 7,752 180,471

As of 31 December 2013
Cash and cash balances – other demand deposits2
Loans and receivables to credit institutions 9,062 55 9,007
Loans and receivables to customers 127,698 7,753 119,945
Financial assets – held to maturity 17,781 2 17,779
Financial assets – held for trading 5,668 0 5,668
Financial assets – at fair value through profit or loss 322 0 322
Financial assets – available for sale 19,442 0 19,442
Positive fair value of derivatives 8,286 0 8,286
Contingent liabilities1 22,033 218 -
Total 210,291 8,028 180,448

1) Concerning contingent liabilities the gross carrying amount refers to the nominal value, and allowances refer to provisions for guarantees. A carrying amount is not presented in the case of contingent liabilities.
2) Cash and cash balances – other demand deposits were included in the position ‘loans and receivables to credit institutions’ until the financial year 2013

Breakdown of credit risk exposure

The credit risk exposure is presented below divided into the following classes:
_ by Basel 3 exposure class and financial instrument,
_ by industry and financial instrument,
_ by risk category,
_ by industry and risk category,
_ by region and risk category,
_ by business segment and risk category, and
_ by geographical segment and risk category

Thereafter, a breakdown is presented of

_ contingent liabilities by region and risk category,
_ contingent liabilities by product,
_ credit risk exposure to sovereigns by region and financial instrument, and
_ credit risk exposure to institutions by region and financial instrument

This is followed by presentation of

_ non-performing credit risk exposure by business segment and credit risk allowances,
_ non-performing credit risk exposure by geographical segment and credit risk allowances,

184
_ the composition of allowances,
_ credit risk exposure by business segment and collateral,
_ credit risk exposure by geographical segment and collateral,
_ credit risk exposure by financial instrument and collateral, and
_ credit risk exposure past due and not covered by specific allowances by financial instruments and collateralisation

and a breakdown of
_ loans and receivables to customers by business segment and risk category,
_ loans and receivables to customers by geographical segment and risk category,
_ non-performing loans and receivables to customers by business segment and coverage by loan loss allowances and collateral,
_ non-performing loans and receivables to customers by geographical segment and coverage by loan loss allowances and collateral,
_ loans and receivables to customers by business segment and currency, and
_ loans and receivables to customers by geographical segment and currency

Credit risk exposure by Basel 3 exposure class and financial instrument

The following table presents Erste Group’s credit risk exposure broken down by Basel 3 exposure class and financial instrument as of 31
December 2014 and 31 December 2013 respectively. The assignment of obligors to Basel 3 exposure classes is based on legal regulations.
For reasons of clarity, individual Basel 3 exposure classes are presented in aggregated form in the table below and in other tables in the
section ‘Credit risk’. The aggregated exposure class ‘sovereigns’ also contains regional and local governments as well as public sector
entities in addition to central governments, central banks, international organisations and multinational development banks. Institutions
include banks and recognised investment firms.

Credit risk exposure by Basel 3 exposure class and financial instrument

Debt securities
Financial
assets – at
Cash and cash Loans and Loans and Financial Financial fair value Financial
balances – receivables receivables assets – assets – through assets – Positive fair Contingent
other demand to credit to held to held for profit or available value of credit risk Gross
deposits1 institutions customers maturity trading loss for sale derivatives liabilities exposure
in EUR million At amortised cost Fair value
As of
31 Dec 2014
Sovereigns 0 2,277 6,676 15,302 2,471 12 15,674 352 1,230 43,994
Institutions 848 5,164 78 1,041 391 79 2,983 9,040 366 19,989
Corporates 11 20 57,752 536 311 47 2,445 650 15,938 77,710
Retail 0 0 63,819 0 0 0 0 4 5,428 69,251
Total 859 7,461 128,325 16,879 3,173 139 21,102 10,045 22,963 210,944

As of
31 Dec 2013
Sovereigns 1,462 7,659 15,449 5,026 144 12,682 524 1,227 44,174
Institutions 7,585 57 1,476 384 112 4,033 7,184 420 21,250
Corporates 14 57,288 856 258 65 2,720 576 15,446 77,224
Retail 0 62,695 0 0 0 6 2 4,940 67,643
Total 9,062 127,698 17,781 5,668 322 19,442 8,286 22,033 210,291

1) Cash and cash balances – other demand deposits were included in the position ‘loans and receivables to credit institutions’ until the financial year 2013

185
186

Credit risk exposure by industry and financial instrument

The following table presents Erste Group’s credit risk exposure by industry, broken down by financial instruments, as of each reporting date indicated.

Credit risk exposure by industry and financial instrument

Debt securities
Financial
Cash and cash Loans and Financial Financial assets – at Financial
balances – receivables Loans and assets – assets – fair value assets – Positive fair Contingent
other demand to credit receivables held to held for through available for value of credit risk Gross
deposits1 institutions to customers maturity trading profit or loss sale derivatives liabilities exposure
in EUR million At amortised cost Fair value
As of 31 December 2014
Agriculture and forestry 0 0 2,121 0 0 0 1 5 207 2,333
Mining 0 0 362 0 0 0 21 3 155 541
Manufacturing 0 0 9,322 31 55 0 156 97 4,086 13,747
Energy and water supply 0 0 3,148 37 19 0 54 112 781 4,152
Construction 0 0 6,208 242 8 0 373 8 2,933 9,772
Development of building projects 0 0 3,305 87 2 0 81 7 555 4,038
Trade 0 0 7,903 0 4 0 14 17 2,405 10,343
Transport and communication 0 0 3,539 222 121 0 733 30 943 5,587
Hotels and restaurants 0 0 3,642 8 0 0 2 11 469 4,131
Financial and insurance services 859 7,461 5,888 1,517 539 132 5,598 9,392 2,434 33,820
Holding companies 0 0 3,511 45 64 0 239 47 1,828 5,735
Real estate and housing 0 0 20,558 5 14 0 176 133 2,087 22,974
Services 0 0 4,895 37 56 0 146 34 1,293 6,461
Public administration 0 0 6,127 14,772 2,352 5 13,385 177 858 37,676
Education, health and art 0 0 2,623 0 0 0 1 15 310 2,948
Private households 0 0 51,807 0 0 0 0 4 3,377 55,187
Other 0 0 181 8 5 1 444 6 626 1,270
Total 859 7,461 128,325 16,879 3,173 139 21,102 10,045 22,963 210,944

As of 31 December 2013
Agriculture and forestry 0 2,218 0 0 0 0 3 185 2,405
Mining 0 439 0 0 0 8 0 142 589
Manufacturing 0 9,316 44 6 1 129 93 3,701 13,290
Energy and water supply 0 2,797 39 28 0 65 41 978 3,948
Construction 0 6,743 292 43 0 317 10 2,952 10,358
Development of building projects 0 3,228 102 0 0 55 7 500 3,892
Trade 0 8,376 0 5 0 13 45 2,145 10,583
Transport and communication 0 3,516 187 48 0 583 21 1,079 5,434
Hotels and restaurants 0 3,822 9 0 0 2 30 457 4,320
Financial and insurance services 9,062 5,576 2,146 1,359 250 6,468 7,361 2,587 34,808
Holding companies 0 3,382 137 36 0 216 47 1,566 5,386
Real estate and housing 0 19,975 15 4 0 206 162 1,611 21,974
Services 0 4,743 24 49 0 109 32 1,255 6,213
Public administration 0 6,062 15,018 4,122 61 11,194 460 909 37,827
Education, health and art 0 2,646 0 0 0 1 12 282 2,941
Private households 0 51,266 0 0 0 0 1 3,166 54,434
Other 0 202 8 4 9 345 14 583 1,166
Total 9,062 127,698 17,781 5,668 322 19,442 8,286 22,033 210,291

1) Cash and cash balances – other demand deposits were included in the position ‘loans and receivables to credit institutions’ until the financial year 2013
Credit risk exposure by risk category
The following table presents the credit risk exposure of Erste Group divided by risk category as of 31 December 2014, compared with the
credit risk exposure as of 31 December 2013.

Credit risk exposure by risk category

Management
in EUR million Low risk attention Substandard Non-performing Gross exposure
Total exposure as of 31 Dec 2014 177,474 18,284 3,825 11,362 210,944
Share of credit risk exposure 84.13% 8.67% 1.81% 5.39%
Total exposure as of 31 Dec 2013 173,192 19,969 4,302 12,828 210,291
Share of credit risk exposure 82.36% 9.50% 2.05% 6.10%

Change in credit risk exposure in 2014 4,281 -1,685 -477 -1,465 654
Change 2.47% -8.44% -11.09% -11.42% 0.31%

From 31 December 2013 to 31 December 2014, only the share of credit risk exposure in the best category increased, while it decreased in
the remaining three categories. Non-performing claims as a percentage of total credit risk exposure (i.e. the non-performing exposure ratio,
NPE ratio) fell from 6.1% to 5.4%. Of Erste Group’s total credit risk exposure as of year-end 2014, more than 84% fell into the best risk
category and approximately 9% was in the management attention category. The combined proportion of the two weakest risk categories
declined by 95 basis points from nearly 8.2% to 7.2% of total credit risk exposure between 31 December 2013 and 31 December 2014.

187
Credit risk exposure by industry and risk category
The following table presents the credit risk exposure of Erste Group broken down by industry and risk category as of 31 December 2014
and 31 December 2013 respectively.

Credit risk exposure by industry and risk category

Management
in EUR million Low risk attention Substandard Non-performing Gross exposure
As of 31 December 2014
Agriculture and forestry 1,596 429 46 262 2,333
Mining 435 63 5 38 541
Manufacturing 10,283 1,559 282 1,623 13,747
Energy and water supply 3,442 435 79 196 4,152
Construction 6,856 1,367 133 1,416 9,772
Development of building projects 3,003 472 35 527 4,038
Trade 7,340 1,605 174 1,224 10,343
Transport and communication 4,785 450 69 283 5,587
Hotels and restaurants 2,230 967 208 726 4,131
Financial and insurance services 32,370 855 107 488 33,820
Holding companies 5,226 126 50 333 5,735
Real estate and housing 18,422 2,778 510 1,264 22,974
Services 4,933 976 133 420 6,461
Public administration 37,148 487 14 27 37,676
Education, health and art 2,129 453 43 323 2,948
Private households 45,024 5,849 1,265 3,049 55,187
Other 482 10 755 24 1,270
Total 177,474 18,284 3,825 11,362 210,944

As of 31 December 2013
Agriculture and forestry 1,580 471 84 270 2,405
Mining 390 131 5 63 589
Manufacturing 9,373 1,763 451 1,702 13,290
Energy and water supply 3,225 410 96 217 3,948
Construction 6,878 1,471 198 1,811 10,358
Development of building projects 2,858 385 48 600 3,892
Trade 7,139 1,597 310 1,536 10,583
Transport and communication 4,438 588 73 335 5,434
Hotels and restaurants 2,318 908 230 864 4,320
Financial and insurance services 32,569 1,694 49 497 34,808
Holding companies 4,722 329 23 311 5,386
Real estate and housing 17,454 2,720 556 1,244 21,974
Services 4,684 895 170 464 6,213
Public administration 37,224 548 32 22 37,827
Education, health and art 2,065 449 62 365 2,941
Private households 43,383 6,281 1,362 3,408 54,434
Other 472 42 623 29 1,166
Total 173,192 19,969 4,302 12,828 210,291

188
Credit risk exposure by region and risk category
The geographic analysis of credit exposure is based on the country of risk of borrowers and counterparties and also includes obligors domi-
ciled in other countries if the economic risk exists in the respective country of risk. Accordingly, the distribution by regions differs from the
composition of the credit risk exposure by geographical segments of Erste Group.

The following table presents the credit risk exposure of Erste Group divided by region as of 31 December 2014 and 31 December 2013
respectively.

Credit risk exposure by region and risk category

Management
in EUR million Low risk attention Substandard Non-performing Gross exposure
As of 31 December 2014
Core markets 145,678 16,445 3,358 10,148 175,629
Austria 78,523 8,542 1,554 3,121 91,741
Croatia 6,889 1,234 339 1,584 10,045
Romania 11,234 1,960 465 2,309 15,967
Serbia 706 313 81 175 1,275
Slovakia 14,838 775 242 581 16,436
Czech Republic 28,309 2,562 426 1,025 32,322
Hungary 5,180 1,059 252 1,352 7,843
Other EU 24,954 1,262 376 695 27,287
Other industrialised countries 3,928 92 17 80 4,117
Emerging markets 2,914 485 74 439 3,911
South-Eastern Europe/CIS 1,340 394 73 407 2,214
Asia 1,068 32 1 14 1,115
Latin America 102 21 0 4 127
Middle East/Africa 404 38 0 13 455
Total 177,474 18,284 3,825 11,362 210,944

As of 31 December 2013
Core markets 144,071 17,981 3,918 11,591 177,560
Austria 75,710 8,225 1,599 3,289 88,824
Croatia 6,448 1,440 476 1,538 9,902
Romania 10,729 3,080 704 3,346 17,860
Serbia 731 327 45 139 1,242
Slovakia 13,640 879 269 509 15,299
Czech Republic 29,635 2,695 532 1,098 33,959
Hungary 7,177 1,334 292 1,671 10,474
Other EU 23,681 1,195 296 865 26,037
Other industrialised countries 2,867 153 30 132 3,182
Emerging markets 2,574 641 57 240 3,511
South-Eastern Europe/CIS 1,442 596 57 205 2,300
Asia 675 12 0 17 704
Latin America 67 2 0 3 72
Middle East/Africa 389 30 0 15 435
Total 173,192 19,969 4,302 12,828 210,291

Between 31 December 2013 and 31 December 2014, the credit risk exposure increased by EUR 654 million to approximately EUR 210.9
billion. While a growth of EUR 2.9 billion, or 3.3%, was experienced in Austria, it decreased by more than EUR 4.8 billion, or almost
5.5% in the CEE core markets. In the other EU member states (EU 28 excluding core markets), the credit risk exposure grew by
EUR 1,250 million, or 4.8%, from EUR 26.0 billion to EUR 27.3 billion between the two balance sheet dates. An increase could be ob-
served as well in other industrialised countries (+ EUR 935 million) and in emerging markets (+ EUR 400 million). In total, the countries
of Erste Group’s core market and the EU accounted for more than 96% of credit risk exposure as of 31 December 2014. At less than 1.9%,
the share of emerging markets remained of minor importance.

Russia and Ukraine do not belong to the core markets of Erste Group and, as part of emerging markets, are included in the region ‘South-
Eastern Europe/CIS’. Due to the deteriorating fundamentals the credit risk exposure was reduced in both markets during the year 2014.

In Ukraine the credit risk volume decreased from EUR 470 million in December 2013 to EUR 404 million in December 2014. Corporate
and commercial real estate customers accounted for the bulk of the exposure. There was no exposure to the central government. The
allowances for credit losses were raised from EUR 62 million to EUR 151 million during 2014. Of the total credit risk exposure as of
year-end 2014, borrowers resident in Ukraine accounted for EUR 150 million (2013: EUR 217 million) and Ukrainian debtors domiciled

189
outside of Ukraine accounted for EUR 254 million (2013: EUR 253 million). Of the claims on borrowers in Ukraine, EUR 0.8 million
(2013: EUR 1.6 million) were secured by guarantees issued by foreign guarantors. Taking into consideration these adjustments, the net
exposure towards obligors in Ukraine decreased from EUR 216 million to EUR 148 million during the year 2014.

In Russia, the credit risk exposure declined from EUR 225 million as of 31 December 2013 to EUR 178 million as of 31 December 2014.
The majority of the credit risks consisted of claims on big commercial banks. As of year-end 2014, the allowances for credit risks
amounted to EUR 16 million (2013: EUR 4 million). Of the total credit risk exposure, Russian borrowers domiciled outside Russia ac-
counted for EUR 15 million (2013: EUR 25 million), and receivables of EUR 64 million (2013: EUR 72 million) was covered by guaran-
tees issued by foreign guarantors. Taking into consideration these adjustments, the net exposure towards obligors in Russia decreased by
EUR 29 million to EUR 99 million during the year 2014.

As of year-end 2014, the credit risk exposure to Greek borrowers, including the Greek government, amounted to EUR 21 million (2013: EUR 4
million).

190
Credit risk exposure by reporting segment and risk category
The segment reporting of Erste Group is based on the matrix organisation by business segment as well as by geographical segment. The
geographical segmentation follows the country markets in which Erste Group operates and the locations of the banking and other financial
institutions participations. The following tables show the credit risk exposure of Erste Group broken down by reporting segments and risk
category as of 31 December 2014 and 31 December 2013 respectively.

Credit risk exposure by business segment and risk category

Management
in EUR million Low risk attention Substandard Non-performing Gross exposure
As of 31 December 2014
Retail 42,679 4,853 1,178 2,963 51,674
Small and Medium-sized Enterprises 20,176 2,908 402 2,341 25,826
Asset/Liability Management and Local Corporate Center 29,072 226 219 67 29,585
Savings Banks 43,570 6,806 974 2,530 53,879
Large Corporates 14,860 1,253 108 1,352 17,573
Commercial Real Estate 5,861 1,546 464 2,001 9,872
Other Corporate 2,947 283 37 87 3,355
Group Markets 16,935 320 25 3 17,282
Group Corporate Center 1,375 88 417 18 1,899
Total 177,474 18,284 3,825 11,362 210,944

As of 31 December 2013
Retail 41,264 4,994 1,244 3,487 50,989
Small and Medium-sized Enterprises 22,620 3,845 639 3,553 30,657
Asset/Liability Management and Local Corporate Center 27,428 429 126 30 28,013
Savings Banks 42,451 6,670 1,022 2,681 52,824
Large Corporates 10,826 896 266 653 12,642
Commercial Real Estate 6,309 1,780 580 2,210 10,879
Other Corporate 3,232 455 78 189 3,955
Group Markets 17,864 279 30 3 18,176
Group Corporate Center 1,197 620 317 22 2,156
Total 173,192 19,969 4,302 12,828 210,291

Credit risk exposure by geographical segment and risk category

Management
in EUR million Low risk attention Substandard Non-performing Gross exposure
As of 31 December 2014
Austria 105,421 11,355 1,893 5,238 123,908
Erste Bank Oesterreich & Subsidiaries 32,588 2,817 449 1,115 36,970
Savings Banks 43,570 6,806 974 2,530 53,879
Other Austria 29,264 1,732 469 1,593 33,059
Central and Eastern Europe 62,702 6,757 1,515 6,064 77,037
Czech Republic 28,811 2,173 393 843 32,220
Romania 9,833 1,837 408 2,210 14,288
Slovakia 12,403 577 218 489 13,687
Hungary 4,171 784 194 1,161 6,310
Croatia 6,926 1,156 294 1,279 9,653
Serbia 559 230 7 83 879
Other 9,350 172 417 60 9,999
Total 177,474 18,284 3,825 11,362 210,944

As of 31 December 2013
Austria 102,356 10,902 2,015 5,603 120,876
Erste Bank Oesterreich & Subsidiaries 31,423 2,447 400 1,143 35,413
Savings Banks 42,451 6,670 1,022 2,681 52,824
Other Austria 28,482 1,785 593 1,778 32,638
Central and Eastern Europe 62,162 8,355 1,969 7,202 79,688
Czech Republic 30,174 2,353 464 874 33,865
Romania 8,979 2,624 659 3,168 15,431
Slovakia 11,015 661 245 453 12,374
Hungary 5,064 1,111 235 1,425 7,834
Croatia 6,402 1,365 357 1,195 9,319
Serbia 528 241 10 86 865
Other 8,675 712 318 22 9,727
Total 173,192 19,969 4,302 12,828 210,291

191
Contingent liabilities by region and risk category
The following table presents the credit risk exposure of Erste Group’s off-balance-sheet items broken down by region and risk category, as
well as by product, as of 31 December 2014 and 31 December 2013 respectively.

As of 31 December 2013
Core markets 16,590 2,109 650 411 19,760
Austria 10,704 751 546 197 12,199
Croatia 539 98 27 26 690
Romania 889 858 13 106 1,866
Serbia 98 8 0 0 107
Slovakia 1,196 34 12 52 1,294
Czech Republic 2,772 308 50 23 3,152
Hungary 392 52 1 7 452
Other EU 1,419 160 12 35 1,626
Other industrialised countries 169 4 1 0 174
Emerging markets 330 133 3 7 473
South-Eastern Europe/CIS 226 131 3 7 367
Asia 18 1 0 0 19
Latin America 15 0 0 0 15
Middle East/Africa 71 0 0 0 72
Total 18,507 2,406 666 453 22,033

in EUR million Dec 2013 Dec 2014

Financial guarantees 6,887 6,862
Irrevocable commitments 15,146 16,101
Total 22,033 22,963

192
Credit risk exposure to sovereigns by region and financial instrument
The following table shows Erste Group’s credit risk exposure to sovereigns broken down by region and financial instrument as of 31 December 2014 and 31 December 2013 respective-
ly. The assignment of obligors to sovereigns is based on Basel 3 exposure classes.

Credit risk exposure to sovereigns by region and financial instrument

Debt securities
Cash and cash Loans and Financial assets
balances – receivables to Loans and Financial assets Financial assets – at fair value Financial assets Positive fair Contingent
other demand credit receivables to – held to – held for through – available for value of credit risk
deposits1 institutions customers maturity trading profit or loss sale derivatives liabilities Gross exposure
in EUR million At amortised cost Fair value
As of
31 December 2014
Core markets 0 1,501 6,291 14,361 2,289 12 12,412 261 1,187 38,315
Austria 0 0 3,748 3,313 187 1 4,986 27 857 13,119
Croatia 0 597 1,279 183 266 0 571 0 15 2,910
Romania 0 1 25 1,941 852 0 1,412 0 126 4,358
Serbia 0 0 17 64 88 0 23 0 6 197
Slovakia 0 0 254 3,524 203 0 2,016 17 8 6,022
Czech Republic 0 0 637 4,627 312 12 3,340 193 172 9,292
Hungary 0 904 332 709 382 0 64 24 2 2,417
Other EU 0 28 58 914 135 0 2,715 90 3 3,945
Other industrialised
countries 0 740 0 0 9 0 392 0 0 1,141
Emerging markets 0 8 327 27 37 0 154 0 40 594
South-Eastern
Europe/CIS 0 0 193 24 23 0 149 0 40 430
Asia 0 0 127 3 0 0 0 0 0 130
Latin America 0 3 0 0 0 0 2 0 0 5
Middle East/Africa 0 5 7 0 14 0 3 0 0 29
Total 0 2,277 6,676 15,302 2,471 12 15,674 352 1,230 43,994

As of
31 December 2013
Core markets 804 7,307 14,643 4,821 139 10,116 522 1,125 39,476
Austria 48 3,419 3,077 3 1 4,541 100 720 11,909
Croatia 690 1,185 94 200 0 496 0 15 2,680
Romania 0 1,226 2,351 976 5 1,166 0 225 5,949
Serbia 65 31 53 28 0 15 0 1 193
Slovakia 0 357 3,656 297 28 1,645 16 6 6,006
Czech Republic 0 610 4,576 1,344 105 2,017 406 151 9,209
Hungary 0 478 835 1,974 0 236 0 7 3,530
Other EU 0 38 788 189 6 2,220 0 2 3,242
Other industrialised
countries 650 0 0 0 0 196 0 0 845
Emerging markets 9 314 18 16 0 151 1 101 610
South-Eastern
Europe/CIS 0 196 18 8 0 146 0 101 469
Asia 0 109 0 0 0 2 0 0 111
Latin America 3 0 0 0 0 0 0 0 4
Middle East/Africa 6 9 0 8 0 3 1 0 27
Total 1,462 7,659 15,449 5,026 144 12,682 524 1,227 44,174
193

1) Cash and cash balances – other demand deposits were included in the position ‘loans and receivables to credit institutions’ until the financial year 2013
194

Credit risk exposure to institutions by region and financial instrument

The following table presents Erste Group’s credit risk exposure to institutions broken down by region and financial instrument as of 31 December 2014 and 31 December 2013 respec-
tively. The assignment of obligors to institutions is based on Basel 3 exposure classes.

Credit risk exposure to institutions by region and financial instrument

Debt securities
Cash and cash Loans and Financial assets
balances – other receivables to Loans and Financial assets Financial assets – at fair value Financial assets Positive fair Contingent
demand credit receivables to – held to – held for through – available for value of credit risk
deposits1 institutions customers maturity trading profit or loss sale derivatives liabilities Gross exposure
in EUR million At amortised cost Fair value
As of
31 December 2014
Core markets 320 1,173 58 503 238 31 789 636 177 3,927
Austria 237 611 28 130 222 29 486 473 134 2,351
Croatia 2 79 4 0 0 0 0 0 0 86
Romania 37 67 0 240 0 0 223 1 0 569
Serbia 4 1 0 0 0 0 0 0 0 5
Slovakia 0 109 0 19 0 0 43 8 26 206
Czech Republic 40 234 0 114 12 1 37 123 15 576
Hungary 0 72 26 0 4 0 0 32 2 135
Other EU 235 2,856 0 454 141 42 1,997 8,149 95 13,968
Other industrialised
countries 261 105 15 84 11 7 196 253 6 938
Emerging markets 32 1,031 4 0 0 0 1 1 88 1,156
South-Eastern
Europe/CIS 1 45 4 0 0 0 0 0 25 75
Asia 29 716 0 0 0 0 0 1 27 773
Latin America 2 50 0 0 0 0 1 0 0 52
Middle East/Africa 1 220 0 0 0 0 1 0 36 257
Total 848 5,164 78 1,041 391 79 2,983 9,040 366 19,989

As of
31 December 2013
Core markets 2,791 52 745 218 38 1,536 492 277 6,148
Austria 579 29 238 217 36 805 344 191 2,439
Croatia 90 9 0 0 0 0 1 11 111
Romania 248 0 3 0 0 0 8 58 316
Serbia 0 0 0 0 0 0 0 0 0
Slovakia 97 0 19 0 0 67 11 2 197
Czech Republic 1,098 0 485 0 2 664 125 14 2,387
Hungary 679 13 0 0 0 0 3 2 698
Other EU 3,822 0 640 139 54 2,296 6,403 56 13,410
Other industrialised
countries 272 0 81 27 20 192 287 16 896
Emerging markets 700 4 10 0 0 10 2 70 796
South-Eastern
Europe/CIS 73 4 0 0 0 1 0 22 100
Asia 454 0 10 0 0 0 2 18 484
Latin America 1 0 0 0 0 0 0 0 1
Middle East/Africa 172 0 0 0 0 9 0 30 211
Total 7,585 57 1,476 384 112 4,033 7,184 420 21,250

1) Cash and cash balances – other demand deposits were included in the position ‘loans and receivables to credit institutions’ until the financial year 2013
Non-performing credit risk exposure and credit risk provisions
For the definition of credit risk exposure classified as non-performing, please refer to the description of risk categories in the subsection
‘Internal rating system’. Credit risk provisions include specific and collective allowances and provisions for guarantees.

Credit risk allowances (specific and collective allowances) and provisions for guarantees covered 68.2% of the reported non-performing
credit risk exposure as of 31 December 2014. For the portion of the non-performing credit risk exposure that is not covered by allowanc-
es, Erste Group assumes there are sufficient levels of collateral and expected other recoveries.

In the 12 months ended 31 December 2014, the non-performing credit risk exposure decreased by EUR 1,465 million, or greater than
11.4%, from more than EUR 12.8 billion as of 31 December 2013 to less than EUR 11.4 billion as of 31 December 2014. The reduction in
credit risk provisions was significantly smaller: the credit risk allowances and provisions for guarantees decreased by EUR 277 million, or
3.5%, from more than EUR 8.0 billion as of 31 December 2013 to almost EUR 7.8 billion as of 31 December 2014. These movements
resulted in an increase by 5.6 percentage points, from 62.6% to 68.2%, in the coverage of the non-performing credit risk exposure by credit
risk provisions.

The following tables show the coverage of the non-performing credit risk exposure across the reporting segments by credit risk provisions
(without taking into consideration collateral) as of 31 December 2014 and 31 December 2013 respectively. The differences in provision-
ing levels for the segments result from the risk situation in the respective markets, different levels of collateralisation, as well as the local
legal environment and regulatory requirements.

The non-performing exposure ratio (NPE ratio) is calculated by dividing non-performing credit risk exposure by total credit risk exposure.
The non-performing exposure coverage ratio (NPE coverage ratio) is calculated by dividing the credit risk provisions by non-performing
credit risk exposure. Collateral or other recoveries are not taken into account.

Non-performing credit risk exposure by business segment and credit risk provisions
Gross exposure
Total credit risk NPE coverage
in EUR million Non-performing Gross exposure provisions NPE ratio (excl. collateral)
As of 31 December 2014
Retail 2,963 51,674 2,378 5.7% 80.3%
Small and Medium-sized Enterprises 2,341 25,826 1,508 9.1% 64.4%
Asset/Liability Management and Local Corporate Center 67 29,585 26 0.2% 38.3%
Savings Banks 2,530 53,879 1,644 4.7% 65.0%
Large Corporates 1,352 17,573 970 7.7% 71.8%
Commercial Real Estate 2,001 9,872 1,156 20.3% 57.8%
Other Corporate 87 3,355 46 2.6% 52.6%
Group Markets 3 17,282 1 0.0% 35.2%
Group Corporate Center 18 1,899 23 1.0% 125.5%
Total 11,362 210,944 7,752 5.4% 68.2%

As of 31 December 2013
Retail 3,487 50,989 2,376 6.8% 68.2%
Small and Medium-sized Enterprises 3,553 30,657 2,190 11.6% 61.6%
Asset/Liability Management and Local Corporate Center 30 28,013 18 0.1% 61.4%
Savings Banks 2,681 52,824 1,614 5.1% 60.2%
Large Corporates 653 12,642 476 5.2% 72.9%
Commercial Real Estate 2,210 10,879 1,217 20.3% 55.1%
Other Corporate 189 3,955 129 4.8% 68.4%
Group Markets 3 18,176 1 0.0% 18.2%
Group Corporate Center 22 2,156 8 1.0% 33.8%
Total 12,828 210,291 8,028 6.1% 62.6%

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Non-performing credit risk exposure by geographical segment and credit risk provisions
Gross exposure
Total credit risk NPE coverage
in EUR million Non-performing Gross exposure provisions NPE ratio (excl. collateral)
As of 31 December 2014
Austria 5,238 123,908 3,276 4.2% 62.5%
Erste Bank Oesterreich & Subsidiaries 1,115 36,970 736 3.0% 66.0%
Savings Banks 2,530 53,879 1,644 4.7% 65.0%
Other Austria 1,593 33,059 896 4.8% 56.2%
Central and Eastern Europe 6,064 77,037 4,415 7.9% 72.8%
Czech Republic 843 32,220 664 2.6% 78.8%
Romania 2,210 14,288 1,803 15.5% 81.6%
Slovakia 489 13,687 367 3.6% 75.0%
Hungary 1,161 6,310 744 18.4% 64.1%
Croatia 1,279 9,653 773 13.2% 60.4%
Serbia 83 879 64 9.4% 77.9%
Other 60 9,999 61 0.6% 102.8%
Total 11,362 210,944 7,752 5.4% 68.2%

As of 31 December 2013
Austria 5,603 120,876 3,294 4.6% 58.8%
Erste Bank Oesterreich & Subsidiaries 1,143 35,413 719 3.2% 62.9%
Savings Banks 2,681 52,824 1,614 5.1% 60.2%
Other Austria 1,778 32,638 961 5.4% 54.0%
Central and Eastern Europe 7,202 79,688 4,727 9.0% 65.6%
Czech Republic 874 33,865 681 2.6% 77.9%
Romania 3,168 15,431 2,079 20.5% 65.6%
Slovakia 453 12,374 365 3.7% 80.4%
Hungary 1,425 7,834 890 18.2% 62.5%
Croatia 1,195 9,319 644 12.8% 53.9%
Serbia 86 865 67 10.0% 77.9%
Other 22 9,727 8 0.2% 35.9%
Total 12,828 210,291 8,028 6.1% 62.6%

The general principles and standards for credit risk provisions within Erste Group are described in internal policies.

The bank evaluates the need for credit risk provisions in line with regulatory and accounting standards and allocates them accordingly.
Credit risk provisions are calculated
_ for financial assets carried at amortised cost (loans and receivables, financial assets held to maturity) in accordance with IAS 39, and
_ for contingent liabilities (financial guarantees, loan commitments) in accordance with IAS 37.

Credit risk provisions are created in a process performed on customer level. The process includes the identification of default and impair-
ment and the type of assessment (individual or collective) to be applied. ‘On customer level’ means in this context that if one of the cus-
tomer’s exposures is classified as defaulted then typically all of this customer’s exposures are classified as defaulted. Depending on the
characteristics of the exposure and the respective expected cash flows (e.g. considering collateral), some exposures may not be impaired.
The bank distinguishes between
_ specific allowances calculated for exposures to defaulted customers that are deemed to be impaired, and
_ collective allowances (allowances for incurred but not reported losses) calculated for exposures to non-defaulted customers or de-
faulted customers that are not deemed to be impaired.

For the calculation of specific allowances, the discounted cash flow method is applied. This means that a difference between carrying
amount and net present value (NPV) of the expected cash flows leads to an impairment and defines the amount of any allowance require-
ment. All estimated interest and redemption payments as well as estimated collateral recoveries and costs for selling and obtaining collat-
eral are considered as expected cash flows. The effective interest rate is used as the discount rate in the calculation of the NPV of the
expected cash flows.

The calculation of specific allowances is performed either on an individual basis or as a collective assessment (rule-based approach). In
case of significant customers, expected cash flows are estimated individually by workout or risk managers. A customer is considered as
significant if the total exposure defined as the sum of all on- and off-balance-sheet exposures exceeds a defined materiality limit. Other-
wise, the customer is considered as insignificant and a rule-based approach is used for the calculation of the specific allowance. Under

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this approach, specific allowances are calculated as the product of carrying amount and loss given default (LGD), where LGD depends on
relevant characteristics such as time in default or the stage of the workout process.

Collective allowances are calculated on on- and off-balance-sheet exposures to non-defaulted customers for which a default has not been
detected or reported. The level of collective allowances depends on the carrying amount, the probability of default (PD), the loss given
default (LGD), the credit conversion factors (CCF) in case of off-balance-sheet exposures, and the loss identification period (LIP). The
LIP corresponds to the average period between the occurrence and the detection of the loss and ranges from four months to one year. The
result of discounting future cash flows to their present values is taken into consideration in the LGD calculation.

Generally, risk parameters used in the calculation of collective allowances may be different to the Basel 3 Pillar 1 or Pillar 2 risk parame-
ters if the properties of the respective portfolio in combination with accounting rules necessitate this.

Collective allowances are also calculated in case of exposures to defaulted customers that are not identified as impaired. For these cus-
tomers, no specific allowances are allocated. Collective allowances are calculated based on the historical loss experience for the relevant
customer segment.

Erste Group regularly reviews its specific and collective allowances. These exercises comprise the parameters and methodologies used in
its provision calculation. Adjustments can take place in the context of specific reviews (in view of specific allowances), routine mainte-
nance of parameters (such as regular calibration) or in the case of specific events (e.g. improved knowledge about recovery behaviour,
back-testing results).

Due to such activities which have been taking place on a regular basis for many years, Erste Group made adjustments to specific and
collective allowances during 2014. These adjustments took place distributed over the year, the major part prior to disclosure of the results
of the ECB Asset Quality Review (AQR), and are hence to be seen independently of any considerations related to the AQR methodology.
Some of these adjustments resemble elements of the AQR methodology, others do not.

With respect to collective allowances these adjustments are particularly the following:
_ Adjustments in Banca Comercială Română: Adjustment of LIP factors from 0.5 to 0.75 for all segments other than SME for which it
remains unchanged at 1.0, changes to the assessment of future recovery prospects depending on collateral values, the time in default
or the nature of the default event. The impact of these measures significantly exceeds the requirements for collective allowances iden-
tified according to AQR methodology.
_ Adjustments in Erste Bank Hungary. In addition, changes to the Expected Loss Best Estimate Model (ELBE Model) for the retail cus-
tomer segment were implemented.
_ Adjustments in Austria (Erste Group Bank, Erste Bank Oesterreich, savings banks) for certain portfolio segments in particular due to
results from regular re-estimation of individual parameters, introduction of new models, and the backtesting of aggregate provisions
against actual losses.

The following table shows the credit risk allowances divided into specific and collective allowances and provisions for guarantees as of
31 December 2014 and 31 December 2013 respectively.

in EUR million Dec 13 Dec 14

Specific allowances 7,156 6,737
Collective allowances1 654 774
Provisions for guarantees 218 241
Total 8,028 7,752

1) The term ‘collective allowances’, which is based on definitions in accounting rules and disclosures, should not to be confused with the AQR work block on ‘collective provisions review’. Collective allowances are a narrower
term, covering allowances for losses incurred but not reported, whereas the AQR review of collec-tive provisions covered in addition specific allowances on exposures collectively assessed. In our figures these are included
in specific allowances.

Restructuring, renegotiation and forbearance

Restructuring means contractual modification of any of the customer’s loan repayment conditions including tenor, interest rate, fees,
principle amount due or a combination thereof. Restructuring can be business restructuring (in retail) and commercial renegotiation (in
corporate) or forbearance in line with EBA requirements in both segments.

197
Business restructuring and renegotiation
Restructuring as business restructuring in the retail segment or as commercial renegotiation in the corporate segment is a potential and
effective customer retention tool involving re-pricing or the offering of an additional loan or both in order to maintain the bank’s valuable,
good clientele.

Forbearance
The definition of ‘forbearance’ is included in Regulation (EU) 2015/227. A restructuring is considered ‘forbearance’ if it entails a conces-
sion towards a customer facing or about to face financial difficulties in meeting their contractual financial commitments. A borrower is in
financial difficulties if any of the following conditions are met:
_ the customer was more than 30 days past due in the past 3 months or
_ the customer would be 30 days past due or more without receiving forbearance or
_ the customer is in default or
_ the modified contract was classified as non-performing or would be non-performing without forbearance or
_ the contract modification involves total or partial cancellation by write-off of the debt on any of the customer’s credit obligations
while at customer level open credit exposure still remains.

Forborne exposure is assessed at loan contract level and means only the exposure to which forbearance measures have been extended and
excludes any other exposure the customer may have, as long as no forbearance was extended to these.
Concession means that any of the following conditions are met:
_ Modification/refinancing of the contract would not have been granted, had the customer not been in financial difficulty;
_ There is a difference in favour of the customer between the modified/refinanced terms of the contract and the previous terms of the
contract
_ The modified/refinanced contract includes more favourable terms than other customers with a similar risk profile would have obtained
from the same institution.

Forbearance can be initiated by the bank or by the customer (on account of loss of employment, illness etc.). Components of forbearance
can be instalment reduction, tenor extension, interest reduction or forgiveness, principal reduction or forgiveness, revolving exposure
change to instalment and/or others.

Forbearance measures are divided and reported as:

_ Performing forbearance (incl. performing forbearance under probation that was upgraded from non-performing forbearance)
_ Non-performing forbearance (incl. non-performing forbearance and defaulted/impaired forbearance)

Forborne exposures are considered performing when

_ the exposure did not have non-performing status at the time the extension of or application for forbearance was approved and
_ granting the forbearance has not led to classifying the exposure as non-performing or default

Performing forborne exposures become non-performing when during the monitoring period of a minimum of 2 years following forbear-
ance classification
_ an additional forbearance measure is extended and in the past the customer was in the non-performing forbearance category or
_ the customer becomes more than 30 days past due on forborne exposure and in the past the customer was in the non-performing for-
bearance category or
_ the customer meets any of the default event criteria defined in Erste Group’s internal default definition

The performing forbearance classification can be discontinued and the account can become a non-forborne account when all of the fol-
lowing conditions are met:
_ a minimum of 2 years have passed from the date of classifying the exposure as performing forbearance (probation period);
_ under the forborne payment plan, at least 50% of the original (pre-forbearance) instalment has been regularly repaid at least during
half of the probation period (in the case of retail customers) or
_ regular repayments in a significant amount during at least half of the probation period have been made (in the case of corporate cus-
tomers);
_ none of the exposure of the customer is more than 30 days past due at the end of the probation period.

The non-performing forbearance classification can be discontinued and reclassified as performing under probation when all of the follow-
ing conditions are met:

198
_ One year has passed from the date of classifying the exposure as non-performing forbearance
_ The forbearance has not led the exposure to be classified as non-performing
_ Retail customers: the customer has demonstrated the ability to comply with the post-forbearance conditions by either of the following
_ The customer has never been more than 30 days past due during the last 6 months and there is no delinquent amount or
_ The customer has repaid the full past due amount or the written-off amount (if there was any)
_ Corporate customers: analysis of the financial development, which leaves no concern about future compliance with post-forbearance
terms and conditions. Furthermore, the customer has never been more than 30 days past due during the monitoring period and there is
no delinquent amount.

The above rules and definitions were defined in Erste Group in Q3 2014 and are in the implementation phase in the group’s local banks.

The following table includes the forborne exposures of Erste Group as of 31 December 2014.

in EUR million Gross exposure Performing Non-performing

As of 31 December 2014
Loans and advances other than HfT 3,632 1,034 2,598
Debt instruments other than HfT 1 1 0
Loan committments 67 29 38
Total 3,699 1,063 2,636

Collateral
Recognition of collateral
The Collateral Management department is a staff unit within the Group Workout division. The Group Collateral Management Policy
defines, among other things, uniform valuation standards for credit collateral across the entire Group. It ensures that the credit risk deci-
sion processes are standardised with respect to accepted collateral values.

All the collateral types acceptable within the Group are given in an exhaustive list in the Group Collateral Catalogue. Locally permitted
collateral is defined by the respective bank in accordance with applicable national legal provisions. The valuation and revaluation of
collateral is done according to the principles defined in the Group Collateral Catalogue broken down by class and based on the internal
work instructions in accordance with the individual supervisory requirements. Whether a type of security or a specific collateral asset is
accepted for credit risk mitigation is decided by strategic risk management after determining if the applicable regulatory capital require-
ments are met. Adherence to the standard work processes stipulated for assigning the acceptable collateral assets to the categories availa-
ble is monitored by operative risk management.

Main types of collateral

The following types of collateral are the most frequently accepted:
_ Real estate: This includes both private and commercial real estate.
_ Financial collateral: This category primarily includes securities portfolios and cash deposits as well as life insurance policies.
_ Guarantees: Guarantees are provided mainly by governments, banks and corporates. All guarantors must have a minimum credit rat-
ing, which is reviewed annually.

Other types of collateral, such as real collateral in the form of movable property or the assignment of receivables, are accepted less fre-
quently. Protection by credit default swaps is only marginally used in the banking book.

Collateral valuation and management

Collateral valuation is based on current market prices while taking into account an amount that can be recovered within a reasonable
period. The valuation processes are defined and its their IT-supported technical application is performed by Collateral Management at
Group level and by authorised staff in each country with the assistance of software applications. The allocated collateral values are capped
by the amount of the secured transaction; imputed excess values of collateral values are therefore not possible. Only independent apprais-
ers not involved in the lending decision process are permitted to conduct real estate valuations, and the valuation methods to be applied
are defined. For quality assurance purposes, the real estate valuations are validated on an ongoing basis.

The methods and discounts used for valuations are based on empirical data representing past experience of the workout departments and
on the collected data on loss recovery from realising collateral. The valuation methods are adjusted regularly – at least once a year – to
reflect current recoveries. Financial collateral assets are recognised at market value.

199
The revaluation of collateral is done periodically and is automated as far as possible. In the case of external data sources, the appropriate
interfaces are used. The maximum periods for the revaluation of individual collateral assets are predefined and compliance is monitored
by risk management using software applications. Apart from periodic revaluations, collateral is assessed when information becomes avail-
able that indicates a decrease in the value of the collateral for exceptional reasons.

Concentration risks resulting from credit risk mitigation techniques may affect a single customer, but also a portfolio defined by region,
industry or type of security. Erste Group is a retail bank, and, due to its customer structure and the markets in which it does business, it
does not have any concentrations with respect to collateral from customers. Concerning other areas of a potentially detrimental correlation
of risks, the collateral portfolios are analysed using statistical evaluations for, among other things, regional or industry-specific concentra-
tions within the scope of portfolio monitoring. The response to those risks identified includes, above all, the adjustment of volume targets,
setting of corresponding limits and modification of the staff’s discretionary limits for lending.

Collateral obtained in foreclosure proceedings is made available for sale in an orderly fashion, with the proceeds used to reduce or repay
the outstanding claim. Generally, Erste Group does not occupy repossessed properties for its own business use. The main part of assets
taken onto its own books is commercial land and buildings. In addition, residential real estate properties and transport vehicles are taken
into Erste Group’s possession. As of 31 December 2014, the carrying value of these assets amounted to EUR 86 million (2013:
EUR 507 million).

The following tables compare the credit risk exposure broken down by business and geographical segments as of 31 December 2014 and
31 December 2013 respectively to the collateral received.

Credit risk exposure by business segment and collateral

Collateralised by
Credit risk
exposure
in EUR million Gross exposure Collateral total Guarantees Real estate Other net of collateral
As of 31 December 2014
Retail 51,674 30,547 1,138 26,843 2,566 21,126
Small and Medium-sized Enterprises 25,826 11,411 2,142 6,855 2,414 14,415
Asset/Liability Management and Local
Corporate Center 29,585 1,201 720 5 475 28,384
Savings Banks 53,879 24,397 1,569 19,070 3,758 29,482
Large Corporates 17,573 3,543 1,973 779 791 14,031
Commercial Real Estate 9,872 5,696 345 4,566 786 4,176
Other Corporate 3,355 430 336 4 90 2,924
Group Markets 17,282 3,458 189 0 3,270 13,824
Group Corporate Center 1,899 108 80 15 13 1,791
Total 210,944 80,791 8,491 58,137 14,163 130,153

As of 31 December 2013
Retail 50,989 30,711 1,051 26,955 2,706 20,278
Small and Medium-sized Enterprises 30,657 12,179 2,174 7,698 2,307 18,478
Asset/Liability Management and Local
Corporate Center 28,013 1,005 690 1 314 27,007
Savings Banks 52,824 23,813 1,694 18,354 3,766 29,011
Large Corporates 12,642 2,450 1,418 527 505 10,192
Commercial Real Estate 10,879 7,015 438 6,230 347 3,863
Other Corporate 3,955 575 341 46 188 3,380
Group Markets 18,176 4,640 156 0 4,484 13,536
Group Corporate Center 2,156 170 27 97 46 1,986
Total 210,291 82,560 7,988 59,908 14,663 127,731

200
Credit risk exposure by geographical segment and collateral
Collateralised by
Credit risk
exposure
in EUR million Gross exposure Collateral total Guarantees Real estate Other net of collateral
As of 31 December 2014
Austria 123,908 54,592 5,211 38,784 10,597 69,316
Erste Bank Oesterreich & Subsidiaries 36,970 21,033 1,970 16,423 2,641 15,936
Savings Banks 53,879 24,397 1,569 19,070 3,758 29,482
Other Austria 33,059 9,161 1,673 3,291 4,198 23,898
Central and Eastern Europe 77,037 25,254 2,837 19,339 3,079 51,783
Czech Republic 32,220 9,526 943 7,636 947 22,694
Romania 14,288 4,861 1,015 2,602 1,244 9,427
Slovakia 13,687 5,169 71 4,907 191 8,518
Hungary 6,310 2,166 33 1,834 298 4,144
Croatia 9,653 3,292 739 2,221 333 6,361
Serbia 879 241 36 139 66 638
Other 9,999 945 443 15 487 9,054
Total 210,944 80,791 8,491 58,137 14,163 130,153

As of 31 December 2013
Austria 120,876 56,456 5,134 39,474 11,847 64,420
Erste Bank Oesterreich & Subsidiaries 35,413 21,329 1,925 16,353 3,051 14,084
Savings Banks 52,824 23,813 1,694 18,354 3,766 29,011
Other Austria 32,638 11,314 1,516 4,768 5,030 21,325
Central and Eastern Europe 79,688 25,312 2,520 20,337 2,456 54,375
Czech Republic 33,865 9,332 853 7,443 1,036 24,533
Romania 15,431 5,315 876 3,926 512 10,116
Slovakia 12,374 4,504 57 4,267 180 7,869
Hungary 7,834 2,721 20 2,306 395 5,113
Croatia 9,319 3,241 669 2,271 301 6,077
Serbia 865 199 44 124 31 666
Other 9,727 791 334 97 360 8,936
Total 210,291 82,560 7,988 59,908 14,663 127,731

201
202

The following table compares the credit risk exposure broken down by financial instrument and the received collateral as of 31 December 2014 and 31 December 2013 respectively.

Credit risk exposure by financial instrument and collateral

Collateralised by
Credit risk Neither past
Credit risk exposure due nor Past due but
in EUR million exposure Collateral total Guarantees Real estate Other net of collateral impaired not impaired Impaired
As of 31 December 2014
Cash and cash balances – other demand deposits 859 0 0 0 0 859 859 0 0
Loans and receivables to credit institutions 7,461 1,405 131 0 1,273 6,056 7,435 3 23
Loans and receivables to customers 128,325 71,814 6,227 56,104 9,483 56,510 113,056 4,302 10,967
Financial assets – held to maturity 16,879 363 359 4 0 16,516 16,878 1 0
Financial assets – held for trading 3,173 170 159 0 12 3,002 3,173 0 0
Financial assets – at fair value through profit or loss 139 0 0 0 0 139 139 0 0
Financial assets – available for sale 21,102 962 952 0 10 20,139 21,089 2 12
Positive fair value of derivatives 10,045 2,548 0 0 2,548 7,497 10,045 0 0
Contingent liabilities1 22,963 3,528 663 2,029 836 19,435 22,963 0 0
Total 210,944 80,791 8,491 58,137 14,163 130,153 195,636 4,306 11,002

As of 31 December 2013
Cash and cash balances – other demand deposits1
Loans and receivables to credit institutions 9,062 3,039 128 0 2,912 6,022 8,976 21 65
Loans and receivables to customers 127,698 72,901 5,816 57,897 9,188 54,797 110,944 4,737 12,016
Financial assets – held to maturity 17,781 412 383 30 0 17,369 17,771 1 9
Financial assets – held for trading 5,668 147 147 0 0 5,521 5,668 0 0
Financial assets – at fair value through profit or loss 322 0 0 0 0 322 322 0 0
Financial assets – available for sale 19,442 974 974 0 0 18,467 19,351 1 89
Positive fair value of derivatives 8,286 1,740 4 0 1,736 6,545 8,286 0 0
Contingent liabilities1 22,033 3,346 536 1,982 828 18,686 22,033 0 0
Total 210,291 82,560 7,988 59,908 14,663 127,731 193,351 4,760 12,180

1) Cash and cash balances – other demand deposits were included in the position ‘loans and receivables to credit institutions’ until the financial year 2013
The following table shows the credit risk exposure that was past due but for which specific allowances had not been established as of 31 December 2014 and 31 December 2013 respectively.

Credit risk exposure past due and not covered by specific allowances by Basel 3 exposure class and collateralisation
Gross exposure Thereof collateralised
Thereof Thereof
Thereof Thereof Thereof Thereof 91- more than Thereof Thereof Thereof Thereof 91- more than
1-30 days 31-60 days 61-90 days 180 days 180 days 1-30 days 31-60 days 61-90 days 180 days 180 days
in EUR million Total past due past due past due past due past due Total past due past due past due past due past due
As of 31 December 2014
Cash and cash balances – other demand
deposits 0 0 0 0 0 0 0 0 0 0 0 0
Loans and receivables to credit institutions 3 2 0 0 0 0 0 0 0 0 0 0
Loans and receivables to customers 4,302 2,772 739 376 168 246 2,124 1,234 436 228 128 99
Financial assets – held to maturity 1 0 0 0 0 1 0 0 0 0 0 0
Financial assets – held for trading 0 0 0 0 0 0 0 0 0 0 0 0
Financial assets – at fair value through profit or
loss 0 0 0 0 0 0 0 0 0 0 0 0
Financial assets – available for sale 2 0 0 0 0 2 0 0 0 0 0 0
Positive fair value of derivatives 0 0 0 0 0 0 0 0 0 0 0 0
Contingent liabilities1 0 0 0 0 0 0 0 0 0 0 0 0
Total 4,306 2,774 739 376 169 249 2,124 1,234 436 228 128 99

As of 31 December 2013
Cash and cash balances – other demand
deposits1
Loans and receivables to credit institutions 21 12 0 0 9 0 9 0 0 0 9 0
Loans and receivables to customers 4,737 2,783 942 529 178 305 2,623 1,419 562 350 108 184
Financial assets – held to maturity 1 0 0 0 0 1 0 0 0 0 0 0
Financial assets – held for trading 0 0 0 0 0 0 0 0 0 0 0 0
Financial assets – at fair value through profit or
loss 0 0 0 0 0 0 0 0 0 0 0 0
Financial assets – available for sale 1 0 0 0 0 1 0 0 0 0 0 0
Positive fair value of derivatives 0 0 0 0 0 0 0 0 0 0 0 0
Contingent liabilities1 0 0 0 0 0 0 0 0 0 0 0 0
Total 4,760 2,796 942 529 187 307 2,632 1,419 562 350 117 184

1) Cash and cash balances – other demand deposits were included in the position ‘loans and receivables to credit institutions’ until the financial year 2013

All claims presented in the table above were classified as non-performing if they were more than 90 days past due. Allowances are, as a rule, established for assets that are more than 90
days past due. However, specific allowances are not established if the loans and other receivables are covered by adequate collateral.
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Loans and receivables to customers
The following tables present the customer loan book as of 31 December 2014 and 31 December 2013 respectively, excluding loans to
financial institutions and commitments, broken down by reporting segment and risk category.

Loans and receivables to customers by business segment and risk category

Management Gross customer
in EUR million Low risk attention Substandard Non-performing loans
As of 31 December 2014
Retail 38,417 4,537 1,152 2,938 47,044
Small and Medium-sized Enterprises 16,123 2,457 358 2,275 21,213
Asset/Liability Management and Local Corporate Center 68 16 56 21 162
Savings Banks 29,325 5,986 816 2,441 38,568
Large Corporates 7,835 889 57 1,170 9,952
Commercial Real Estate 5,499 1,409 422 1,942 9,271
Other Corporate 1,417 201 31 72 1,721
Group Markets 85 19 0 0 104
Group Corporate Center 159 39 74 18 290
Total 98,928 15,552 2,967 10,878 128,325

As of 31 December 2013
Retail 37,190 4,704 1,215 3,466 46,576
Small and Medium-sized Enterprises 16,523 3,134 568 3,413 23,638
Asset/Liability Management and Local Corporate Center 127 9 6 17 159
Savings Banks 28,566 5,898 880 2,571 37,915
Large Corporates 5,362 698 239 535 6,834
Commercial Real Estate 5,747 1,699 565 2,146 10,157
Other Corporate 1,331 322 59 126 1,838
Group Markets 207 30 0 0 238
Group Corporate Center 208 87 25 22 343
Total 95,263 16,582 3,557 12,296 127,698

Loans and receivables to customers by geographical segment and risk category

Management Gross customer
in EUR million Low risk attention Substandard Non-performing loans
As of 31 December 2014
Austria 63,779 9,895 1,507 4,936 80,117
Erste Bank Oesterreich & Subsidiaries 25,219 2,442 291 1,012 28,963
Savings Banks 29,325 5,986 816 2,441 38,568
Other Austria 9,235 1,468 400 1,483 12,585
Central and Eastern Europe 34,966 5,581 1,385 5,883 47,815
Czech Republic 15,798 1,693 365 821 18,676
Romania 4,982 1,544 343 2,138 9,007
Slovakia 7,212 545 203 422 8,383
Hungary 2,278 681 194 1,157 4,308
Croatia 4,286 1,032 273 1,262 6,853
Serbia 412 87 7 83 588
Other 184 75 74 60 392
Total 98,928 15,552 2,967 10,878 128,325

As of 31 December 2013
Austria 61,666 9,596 1,666 5,280 78,207
Erste Bank Oesterreich & Subsidiaries 24,586 2,145 247 1,070 28,049
Savings Banks 28,566 5,898 880 2,571 37,915
Other Austria 8,514 1,552 539 1,638 12,243
Central and Eastern Europe 33,388 6,881 1,866 6,994 49,130
Czech Republic 15,360 1,875 410 850 18,495
Romania 4,652 2,103 645 3,052 10,453
Slovakia 6,204 624 234 407 7,469
Hungary 2,741 984 234 1,421 5,380
Croatia 4,048 1,210 333 1,179 6,771
Serbia 383 84 10 86 562
Other 208 105 25 22 361
Total 95,263 16,582 3,557 12,296 127,698

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In the tables below, the non-performing loans and receivables to customers subdivided by reporting segment are contrasted with allow-
ances for customer loans (specific and collective allowances) and the collateral for non-performing loans (NPL) as of 31 December 2014
and 31 December 2013 respectively. The NPL ratio, the NPL coverage ratio and the NPL total coverage ratio are also included. The NPL
total coverage ratio specifies the coverage of non-performing loans by specific and collective allowances as well as by collateral for non-
performing loans.

Non-performing loans and receivables to customers by business segment and coverage by loan loss allowances
and collateral
Non- Gross Allowances for NPL coverage Collateral NPL total
in EUR million performing customer loans customer loans NPL ratio (excl. collateral) for NPL coverage
As of 31 December 2014
Retail 2,938 47,044 2,360 6.2% 80.3% 995 114.2%
Small and Medium-sized
Enterprises 2,275 21,213 1,462 10.7% 64.3% 772 98.2%
Asset/Liability Management and
Local Corporate Center 21 162 24 13.1% 113.2% 0 115.2%
Savings Banks 2,441 38,568 1,561 6.3% 64.0% 1,056 107.2%
Large Corporates 1,170 9,952 898 11.8% 76.7% 296 102.0%
Commercial Real Estate 1,942 9,271 1,135 20.9% 58.4% 805 99.9%
Other Corporate 72 1,721 43 4.2% 59.4% 29 100.3%
Group Markets 0 104 1 0.1% 814.7% 0 814.7%
Group Corporate Center 18 290 7 6.2% 38.2% 0 38.2%
Total 10,878 128,325 7,491 8.5% 68.9% 3,954 105.2%

As of 31 December 2013
Retail 3,466 46,576 2,361 7.4% 68.1% 1,603 114.4%
Small and Medium-sized
Enterprises 3,413 23,638 2,124 14.4% 62.2% 1,328 101.1%
Asset/Liability Management and
Local Corporate Center 17 159 14 10.6% 83.2% 0 85.7%
Savings Banks 2,571 37,915 1,551 6.8% 60.3% 1,093 102.9%
Large Corporates 535 6,834 415 7.8% 77.7% 125 101.0%
Commercial Real Estate 2,146 10,157 1,210 21.1% 56.4% 1,016 103.8%
Other Corporate 126 1,838 73 6.8% 58.1% 19 72.9%
Group Markets 0 238 0 0.0% 432.0% 0 432.0%
Group Corporate Center 22 343 4 6.5% 20.0% 13 75.9%
Total 12,296 127,698 7,753 9.6% 63.1% 5,197 105.3%

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Non-performing loans and receivables to customers by geographical segment and coverage by loan loss
allowances and collateral
Non- Gross Allowances for NPL coverage Collateral NPL total
in EUR million performing customer loans customer loans NPL ratio (excl. collateral) for NPL coverage
As of 31 December 2014
Austria 4,936 80,117 3,120 6.2% 63.2% 2,011 104.0%
Erste Bank Oesterreich &
Subsidiaries 1,012 28,963 697 3.5% 68.9% 340 102.5%
Savings Banks 2,441 38,568 1,561 6.3% 64.0% 1,056 107.2%
Other Austria 1,483 12,585 862 11.8% 58.1% 614 99.5%
Central and Eastern Europe 5,883 47,815 4,325 12.3% 73.5% 1,925 106.2%
Czech Republic 821 18,676 654 4.4% 79.7% 316 118.2%
Romania 2,138 9,007 1,758 23.7% 82.2% 386 100.3%
Slovakia 422 8,383 348 5.0% 82.4% 203 130.4%
Hungary 1,157 4,308 740 26.8% 64.0% 454 103.2%
Croatia 1,262 6,853 762 18.4% 60.4% 542 103.3%
Serbia 83 588 63 14.1% 75.8% 25 106.0%
Other 60 392 45 15.2% 75.6% 18 106.6%
Total 10,878 128,325 7,491 8.5% 68.9% 3,954 105.2%

As of 31 December 2013
Austria 5,280 78,207 3,102 6.8% 58.7% 2,236 101.1%
Erste Bank Oesterreich &
Subsidiaries 1,070 28,049 682 3.8% 63.7% 370 98.3%
Savings Banks 2,571 37,915 1,551 6.8% 60.3% 1,093 102.9%
Other Austria 1,638 12,243 868 13.4% 53.0% 773 100.2%
Central and Eastern Europe 6,994 49,130 4,647 14.2% 66.4% 2,948 108.6%
Czech Republic 850 18,495 667 4.6% 78.4% 296 113.2%
Romania 3,052 10,453 2,043 29.2% 66.9% 1,361 111.6%
Slovakia 407 7,469 352 5.4% 86.4% 167 127.5%
Hungary 1,421 5,380 884 26.4% 62.2% 563 101.9%
Croatia 1,179 6,771 635 17.4% 53.9% 545 100.1%
Serbia 86 562 66 15.3% 76.6% 16 95.3%
Other 22 361 5 6.2% 20.6% 13 76.4%
Total 12,296 127,698 7,753 9.6% 63.1% 5,197 105.3%

The ‘NPL ratio’ in this section (loans and receivables to customers) is calculated by dividing non-performing loans and receivables by
total loans and receivables to customers. Hence, it differs from the ‘NPE ratio’ in the section ‘Credit risk exposure’.

The loan loss allowances that are shown in the tables above in the amount of EUR 7,491 million as of 31 December 2014 (2013:
EUR 7,753 million) are composed of specific provisions amounting to EUR 6,723 million (2013: EUR 7,102 million) and portfolio provi-
sions amounting to EUR 768 million (2013: EUR 651 million). Collateral for non-performing loans mainly consists of real estate.

The following tables show the loans and receivables to customers broken down by reporting segment and currency as of 31 December
2014 and 31 December 2013 respectively.

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Loans and receivables to customers by business segment and currency
CEE-local Gross customer
in EUR million EUR currencies CHF USD Other loans
As of 31 December 2014
Retail 27,149 15,377 4,357 24 137 47,044
Small and Medium-sized Enterprises 14,239 6,300 472 156 46 21,213
Asset/Liability Management and Local
Corporate Center 128 32 0 1 1 162
Savings Banks 33,819 0 3,929 99 721 38,568
Large Corporates 7,722 1,552 32 307 338 9,952
Commercial Real Estate 8,033 443 322 93 379 9,271
Other Corporate 245 0 3 1,403 69 1,721
Group Markets 12 54 0 37 0 104
Group Corporate Center 218 15 4 54 0 290
Total 91,566 23,774 9,119 2,174 1,692 128,325

As of 31 December 2013
Retail 26,240 14,994 5,120 33 189 46,576
Small and Medium-sized Enterprises 15,533 7,337 570 146 51 23,638
Asset/Liability Management and Local
Corporate Center 130 28 0 0 1 159
Savings Banks 32,536 0 4,594 96 690 37,915
Large Corporates 5,383 1,093 11 263 84 6,834
Commercial Real Estate 8,645 588 363 89 473 10,157
Other Corporate 688 0 9 952 188 1,838
Group Markets 165 44 0 21 8 238
Group Corporate Center 291 0 5 47 0 343
Total 89,610 24,084 10,673 1,647 1,685 127,698

Loans and receivables to customers by geographical segment and currency

CEE-local Gross customer
in EUR million EUR currencies CHF USD Other loans
As of 31 December 2014
Austria 70,136 0 6,565 1,788 1,628 80,117
Erste Bank Oesterreich & Subsidiaries 26,309 0 2,421 63 170 28,963
Savings Banks 33,819 0 3,929 99 721 38,568
Other Austria 10,007 0 216 1,626 736 12,585
Central and Eastern Europe 21,110 23,759 2,549 332 64 47,815
Czech Republic 1,584 16,996 4 65 27 18,676
Romania 5,263 3,578 0 158 7 9,007
Slovakia 8,334 0 0 22 26 8,383
Hungary 894 1,425 1,972 17 0 4,308
Croatia 4,615 1,612 557 64 4 6,853
Serbia 419 148 16 5 0 588
Other 320 15 4 54 0 392
Total 91,566 23,774 9,119 2,174 1,692 128,325

As of 31 December 2013
Austria 67,764 0 7,515 1,287 1,642 78,207
Erste Bank Oesterreich & Subsidiaries 25,065 0 2,718 42 225 28,049
Savings Banks 32,536 0 4,594 96 690 37,915
Other Austria 10,163 0 203 1,150 727 12,243
Central and Eastern Europe 21,537 24,084 3,154 312 43 49,130
Czech Republic 1,498 16,920 5 56 17 18,495
Romania 6,398 3,862 0 184 8 10,453
Slovakia 7,450 0 0 6 13 7,469
Hungary 1,192 1,648 2,538 2 0 5,380
Croatia 4,584 1,526 594 61 5 6,771
Serbia 415 127 16 4 0 562
Other 309 0 5 47 0 361
Total 89,610 24,084 10,673 1,647 1,685 127,698

In the geographical segment Hungary, loans and receivables denominated in Euro and Swiss francs amounting to EUR 301 million and
EUR 1,341 million respectively as of 31 December 2014 are subject to a government-induced currency conversion of private mortgage
loans into Hungarian forints. The settlement at favourable rates for the borrowers will take place in the first quarter of 2015.

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Securitisations
As of 31 December 2014, Erste Group held a conservative portfolio of securitisations; there were no new investments undertaken and all
repayments were made as scheduled in 2014.

As at year-end 2014, the carrying amount of Erste Group’s securitisation portfolio totalled EUR 1.09 billion, which was EUR 0.2 billion
lower than at the year-end 2013. Changes in the carrying amount were due to repayments, currency effects, changes in prices and dispos-
als of assets. 97% of the securitisation portfolio was rated investment grade at the year-end 2014

As of 31 December 2014 and 31 December 2013 respectively, the composition of the total portfolio of securitisations according to prod-
ucts and balance sheet line items was as follows:

Composition of the total portfolio of securitisations

Financial
assets – Financial Financial
at fair value assets – assets –
Loans and receivables to Financial assets – through available held for
credit institutions held to maturity profit or loss for sale trading Total
Carrying Carrying Carrying
1) 1) 1)
in EUR million amount Fair value amount Fair value Fair value Fair value Fair value amount Fair value
As of
31 Dec 2014
Prime RMBS 0 0 146 142 2 78 20 245 241
CMBS 0 0 24 23 1 28 0 53 52
SME ABS 0 0 5 5 0 19 2 26 26
Leasing ABS 0 0 2 2 0 1 0 3 3
Other ABS 0 0 0 0 1 3 0 4 4
CLOs 0 0 0 0 32 602 6 640 640
Other CDOs 0 0 0 0 0 0 0 0 0
Other RMBS 0 0 0 0 2 17 5 24 24
Total ABS / CDO 0 0 176 172 37 748 33 995 990
Student Loans 0 0 0 0 1 98 0 99 99
Total
securitisations2) 0 0 176 172 38 846 33 1,094 1,089

As of
31 Dec 2013
Prime RMBS 0 0 177 167 1 105 27 311 301
CMBS 0 0 31 29 1 53 3 88 86
SME ABS 0 0 5 4 0 21 0 27 26
Leasing ABS 0 0 4 4 0 1 1 6 6
Other ABS 0 0 0 0 1 6 0 8 8
CLOs 0 0 0 0 43 664 0 706 706
Other CDOs 0 0 0 0 0 0 0 0 0
Other RMBS 0 0 0 0 1 15 6 22 22
Total ABS / CDO 0 0 217 204 48 866 37 1,168 1,155
Student Loans 0 0 0 0 1 105 0 106 106
Total
securitisations2) 0 0 217 204 49 972 37 1,275 1,262

1) Carrying amount is equal to fair value.

2) Including cash from funds.

European prime residential mortgage backed securities (Prime RMBS)

Prime RMBSs are backed by mortgages on residential real estate. Erste Group is primarily invested in British transactions in this asset
class.

Commercial mortgage backed securities (CMBS)

CMBs are secured by mortgages on commercial property (i.e. offices, retail outlets, etc).

Collateralised loan obligations (CLOs)

CLOs are securitisations backed by pools of corporate loans. Erste Group is invested in European and US CLOs.

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Other securitisations
Erste Group holds securitisations of loans to small and medium-sized enterprises (SME ABS), lease receivables (Leasing ABS), credit
card receivables (Other ABS) and other collateralised debt obligations (Other CDOs).

Erste Group is further invested in securitisations of US student loans, all of which are triple-A-rated securities. These securitisations carry
the guarantee of the US Department of Education for 97% of their value while the remaining 3% is covered by subordination. Their asso-
ciated credit risk is therefore considered very low.

44.6) Market risk

Definition and overview

Market risk is the risk of loss that may arise due to adverse changes in market prices and to the parameters derived therefrom. These
market value changes might appear in the profit and loss account, in the statement of comprehensive income or in hidden reserves. At
Erste Group, market risk is divided into interest rate risk, credit spread risk, currency risk, equity risk, commodity risk and volatility risk.
This concerns both trading and bank book positions.

Methods and instruments employed

At Erste Group, potential losses that may arise from market movements are assessed using the value at risk (VaR). The calculation is done
according to the method of historic simulation with a one-sided confidence level of 99%, a holding period of one day and a simulation
period of two years. The VaR describes what level of losses may be expected as a maximum at a defined probability – the confidence
level – within a certain holding period of the positions under historically observed market conditions.

Back-testing is used to constantly monitor the validity of the statistical methods. This process is conducted with a one-day delay to moni-
tor if the model projections regarding losses have actually materialised. At a confidence level of 99%, the actual loss on a single day
should exceed the VaR statistically only two to three times a year (1% of around 250 workdays).

This shows one of the limits of the VaR approach: On the one hand, the confidence level is limited to 99%, and on the other hand, the
model takes into account only those market scenarios observed in each case within the simulation period of two years, and calculates the
VaR for the current position of the bank on this basis. In order to investigate any extreme market situations beyond this, stress tests are
conducted at Erste Group. These events include mainly market movements of low probability.

The stress tests are carried out according to several methods: Stressed VaR is derived from the normal VaR calculation. But instead of
simulating only over the two most recent years, an analysis of a much longer period is carried out in order to identify a one-year period
that constitutes a relevant period of stress for the current portfolio mix. According to the legal framework, that one-year period is used to
calculate a VaR with a 99% confidence level. This enables Erste Group on the one hand to hold sufficient own funds available for the
trading book even in periods of elevated market volatility, while on the other hand also enabling it to incorporate these resulting effects
into the management of trading positions.

In the extreme value theory, a Pareto distribution is adjusted to the extreme end of the loss distribution. In this manner, a continuous func-
tion is created from which extreme confidence levels such as 99.95% can be evaluated. Furthermore, standard scenarios are calculated in
which the individual market factors are exposed to extreme movements. Such scenarios are calculated at Erste Group for interest rates,
stock prices, exchange rates and volatilities. Historic scenarios are a modification of the concept of standard scenarios. In this case, risk
factor movements after certain events such as ‘9/11’or the ‘Lehman bankruptcy’ form the basis of the stress calculation. In order to calcu-
late historical probabilistic scenarios, the most significant risk factors for the current portfolio are determined and their most adverse
movement during the last years is applied. For the probabilistic scenarios shifts of important market factors are determined for various
quantiles of their distributions, and these values are then used to calculate stress results. These analyses are made available to the man-
agement board and the supervisory board within the scope of the monthly market risk reports.

The VaR model was approved by the Financial Market Authority (FMA) as an internal market risk model to determine the capital re-
quirements of Erste Group pursuant to the Austrian Banking Act.

Methods and instruments of risk mitigation

At Erste Group, market risks are controlled in the trading book by setting several layers of limits. The overall limit on the basis of VaR for
the trading book is decided by the management board while taking into account the risk-bearing capacity and projected earnings. A further
breakdown is done by the Market Risk Committee on the basis of a proposal from the Market Risk Control & Infrastructure unit.

209
All market risk activities of the trading book are assigned risk limits that are statistically consistent in their entirety with the VaR overall
limit. The VaR limit is assigned in a topdown procedure to the individual trading units. This is done down to the level of the individual
trading groups or departments. Additionally, in a bottomup procedure, sensitivity limits are assigned to even smaller units all the way
down to the individual traders. These are then aggregated upwards and applied as a second limit layer to the VaR limits.

Limit compliance is verified at two levels: by the appropriate local decentralised risk management unit and by the Market Risk Control &
Infrastructure unit. The monitoring of the limits is done within the course of the trading day based on sensitivities. This can also be carried
out by individual traders or chief traders on an ad hoc basis.

The VaR is calculated every day at Group level and made available to the individual trading units as well as to the superior management
levels all the way up to the management board.

Banking book positions are subjected to a monthly VaR analysis. In this manner, the total VaR is determined with exactly the same meth-
odology as for the trading book. In addition to VaR, a long-horizon risk measure is used to gauge the interest rate risk, credit spread risk of
the banking book, as well as foreign exchange risk of equity participations. For this purpose, a historical simulation approach looking
back five years and with a one-year holding period was chosen. The result of these calculations is presented in the monthly market risk
report that is made available to the management and supervisory boards.

Analysis of market risk

Value at Risk of banking book and trading book
The following tables show the VaR amounts as of 31 December 2014 and 31 December 2013 respectively at the 99% confidence level
using equally weighted market data and with a holding period of one day:

Value at Risk of banking book and trading book

in EUR thousand Total Interest Currency Shares Commodity Volatility
As of 31 December 2014
Erste Group 17,574 15,582 733 2,439 217 302
Core Group 20,639 19,038 733 2,439 217 302
Banking book 17,579 17,708 265 2 0 1
Trading book 4,035 1,881 887 2,440 217 302

As of 31 December 2013
Erste Group 51,806 51,026 1,070 2,667 261 538
Core Group 49,689 47,657 1,070 2,667 261 538
Banking book 47,034 46,758 998 1 0 15
Trading book 3,885 2,224 921 2,667 261 538

In the above table, ‘Erste Group’ comprises the entire Group, and ‘Core Group’ comprises all units that are directly or indirectly majority-
owned by Erste Group Bank AG. The method used is subject to limitations that may result in the information not fully reflecting the fair
value of the assets and liabilities involved. This restriction applies to the inclusion of credit spreads in the calculation of the VaR. Credit
spreads are only applied to sovereign issuers. For all other positions, only the general market risk is considered.

Interest rate risk of banking book

Interest rate risk is the risk of an adverse change in the fair value of financial instruments caused by a movement in market interest rates.
This type of risk arises when mismatches exist between assets and liabilities, including derivatives, in respect of their maturities or of the
timing of interest rate adjustments.

In order to identify interest rate risk, all financial instruments, including transactions not recognised on the balance sheet, are grouped into
maturity bands based on their remaining terms to maturity or terms to an interest rate adjustment. Positions without a fixed maturity (e.g.
demand deposits) are included on the basis of modeled deposit rates that are determined by means of statistical methods.

The following tables list the open fixed-income positions held by Erste Group in the four currencies that carry a significant interest rate
risk – EUR, CZK, HUF and RON – as of 31 December 2014 and 31 December 2013.

Only the open fixed-income positions that are not allocated to the trading book are presented. Positive values indicate fixed-income risks
on the asset side, i.e. a surplus of asset items; negative values represent a surplus on the liability side.

210
Open fixed-income positions not assigned to the trading book
in EUR million 1-3 years 3-5 years 5-7 years 7-10 years Over 10 years
As of 31 December 2014
Fixed-interest gap in EUR positions -2,841.1 869.2 1,638.5 1,648.0 1,791.9
Fixed-interest gap in CZK positions 666.5 1,539.7 -1,703.5 -1,758.9 242.8
Fixed-interest gap in HUF positions 196.5 4.7 -173.9 -225.8 0.0
Fixed-interest gap in RON positions 1,000.8 288.0 50.2 -273.7 0.9

As of 31 December 2013
Fixed-interest gap in EUR positions -3,828.5 1,247.5 2,765.6 2,807.3 1,749.5
Fixed-interest gap in CZK positions -469.3 708.5 -569.6 -1,645.0 796.2
Fixed-interest gap in HUF positions 256.9 -57.3 -127.3 -179.5 0.0
Fixed-interest gap in RON positions 638.0 536.9 -28.0 -203.3 1.8

Credit spread risk

Credit spread risk is the risk of an adverse movement in the fair value of financial instruments caused by a change in the creditworthiness
of an issuer perceived by the market. Erste Group is exposed to credit spread risk with respect to its securities portfolio, both in the trading
as well as in the banking book.

In order to identify credit spread risk, all securities are grouped into maturity bands based on their remaining terms to maturity or terms to
an expected call date on one hand, while they are assigned to risk factors reflecting the riskiness of their issuer on the other hand.

Exchange rate risk

The bank is exposed to several types of risks related to exchange rates. These concern risks from open foreign exchange positions and
others.

Risk from open foreign exchange positions is the risk related to exchange rates that derives from the mismatch between assets and liabili-
ties, or from currency-related financial derivatives. These risks might originate from customer-related operations or proprietary trading
and are monitored and managed on a daily basis. Foreign currency exposure is subject to regulatory and internal limits. The internal limits
are set by the Market Risk Committee.

Erste Group separately measures and manages other types of risks relating to the Group’s balance sheet and earnings structure. The trans-
lation risk related to the valuation of the balance sheet items, earnings, dividends and participations/net investments in local currency or
foreign exchange has an impact on consolidated earnings and consolidated capital. Erste Group is also reducing the negative impact relat-
ed to volatility of foreign exchange rates on asset performance (for example as a result of foreign exchange lending in the CEE countries
that was stopped for clients not having sufficient regular income in the respective loan currency).

In order to manage its multi-currency earnings structure, Erste Group regularly discusses hedging opportunities and takes decisions in the
Group Asset Liability Committee (ALCO). Asset Liability Management (ALM) uses as the usual source of information the current finan-
cial results and the financial budget prepared for the upcoming period to obtain as much information as possible on the future foreign cash
flows. The proposal, which mainly includes the volume, hedging level, hedge ratio and timeline of the hedging, is submitted by ALM to
ALCO. The impact of translation on consolidated capital is monitored and reported to ALCO. The ALCO decisions are then implemented
by ALM and the implementation status is reported on a monthly basis to ALCO.

The following table shows the largest open exchange rate positions of Erste Group per year-end 2014 as of 31 December 2014 and the
corresponding open positions of these currencies as of 31 December 2013 respectively (excluding foreign exchange positions arising from
equity participation).

211
Open exchange rate positions
in EUR thousand Dec 13 Dec 14
Swiss franc (CHF) -20,052 -54,188
Polish zloty (PLN) -5,031 41,628
Croatian kuna (HRK) 714 23,327
Romanian lei (RON) 5,774 22,126
Czech koruna (CZK) 17,877 -19,314
Hungarian forint (HUF) -49,506 -8,979
US dollar (USD) -18,677 -7,349
British pound (GBP) -909 5,081

Hedging
Banking book market risk management consists of optimising Erste Group’s risk position by finding the proper trade-off between the
economic value of the balance sheet and forecasted earnings. Decisions are based on the balance sheet development, economic environ-
ment, competitive landscape, fair value of risk, effect on net interest income and appropriate liquidity position. The steering body respon-
sible for interest rate risk management is ALCO. ALM submits proposals for actions to steer the interest rate risk to ALCO and imple-
ments ALCO’s decisions.

In order to achieve the goals of risk management, hedging activities focus on the two main control variables: net interest income and
market value of equity risk. In a broader sense, hedging refers to an economic activity that mitigates risk but does not necessarily qualify
for hedge accounting under IFRS rules. IFRS hedge accounting is applied, if possible, to avoid accounting mismatches due to hedging
activity. Within the scope of IFRS-compliant hedge accounting, cash flow hedges and fair value hedges are used. If IFRS-compliant hedge
accounting is not possible, the fair value option is applied, where appropriate, for the hedging of market values. Most of the hedging
within Erste Group concerns hedging of interest rate risk. The remainder is hedging of foreign exchange rate risk.

44.7) Liquidity risk

Definition and overview

The liquidity risk is defined in Erste Group in line with the principles set out by the Basel Committee on Banking Supervision and the
Austrian regulators (Kreditinstitute-Risikomanagement-Verordnung – KI-RMV). Accordingly, a distinction is made between market
liquidity risk, which is the risk that the Group entities cannot easily offset or close a position at the market price because of inadequate
market depth or market disruption, and funding liquidity risk, which is the risk that the banks in the Group will not be able to meet effi-
ciently both expected and unexpected current and future cash flow and collateral needs without affecting either daily operations or the
financial condition of the Group members.

Funding liquidity risk is further divided into insolvency risk and structural liquidity risk. The former is the short-term risk that current or
future payment obligations cannot be met in full and on time in an economically justified manner, while structural liquidity risk is the
long-term risk of losses due to a change in the Group’s own refinancing cost or spread.

Liquidity strategy
Erste Group’s liquidity strategy for 2014 was implemented successfully. The issuance plan of EUR 1.75 billion was exceeded to reach
over EUR 2.13 billion in order to compensate for the impact of buy-backs. The realised issuance structure has a higher weight of subordi-
nated (EUR 975 million – including a USD 500 million benchmark) and senior unsecured (EUR 1,002 million) bonds than originally
planned; the volume of covered bonds (EUR 157 million) issued was lower than planned due to the historically low interest rates.

In 2014, the ECB decided to support bank lending to the euro-zone non-financial sector through a series of targeted longer-term refinanc-
ing operations (TLTROs) with a maturity of up to four years and an early repayment option. At Group level, a total of EUR 1.78 billion
was taken out as part of the ECB’s TLTRO in September and December. With this, Erste Group was able to secure cheap long-term fund-
ing at reasonable spread levels utilising lower-quality collateral in order to foster loan growth in the upcoming years. Additionally, the
2018 maturity fits Erste Group’s maturity profile for issues well.

Methods and instruments employed

Short-term insolvency risk is monitored by calculating the survival period for each currency on both entity and Group levels. This analy-
sis determines the maximum period during which the entity can survive a severe combined market and idiosyncratic crisis while relying
on its pool of liquid assets. The monitored worst-case scenario simulates very limited money market and capital market access and at the
same time significant client deposit outflow. Furthermore, the simulation assumes increased drawdown on guarantees and loan commit-

212
ments dependent on the type of the customer, as well as the potential outflows from collateralised derivative transactions estimating the
effect of collateral outflows in the case of adverse market movements. To reflect the reputational risk from callable own issues, the princi-
pal outflows from these liabilities are modelled to the next call date in all stress scenarios.

After the QIS monitoring phase according to BCBS guidelines in 2014, Erste Group successfully switched to the Liquidity Coverage Ratio
(LCR) and Net Stable Funding Ratio (NSFR) according to CRR. Internally, the ratios are monitored at both entity and Group level, and
from 2014 LCR is part of the internal Risk Appetite Statement, targeting to be above 100% at Group level ahead of the regulatory require-
ment.

Legal lending limits (LLLs) exist in all CEE countries where Erste Group is represented. They restrict liquidity flows between Erste
Group’s subsidiaries in different countries. LLLs set limits on a bank’s claims against a group of related companies. The limits refer to the
bank’s own funds and typical amounts are up to 25%. This restriction is taken into account for assessment of liquidity risk in the survival
period model as well as in the calculation of the Group Liquidity Coverage Ratio.

Additionally, the traditional liquidity gaps (depicting the going concern maturity mismatches) of the subsidiaries and the Group as a whole
are reported and monitored regularly. Funding concentration risk is continuously analysed in respect to counterparties. Erste Group’s fund
transfer pricing (FTP) system has also proven to be an efficient tool for structural liquidity risk management.

Erste Group is continuing its ongoing project activities to improve the framework for Group-wide liquidity risk reporting and liquidity
risk measurement. Aside from the adoption of changed and additional regulatory reporting requirements, current projects are aimed at
continuously improving the internal stress testing methodology and the data quality used in the internal and regulatory risk measurement.

Methods and instruments of risk mitigation

Short-term liquidity risk is managed by limits resulting from the survival period model, internal stress testing and by internal LCR targets
at both entity and Group level. Limit breaches are reported to the Group Asset Liability Committee (ALCO). Another important instur-
ment for managing the liquidity risk within Erste Group Bank AG and in relation to its subsidiaries is the FTP system. As the process of
planning funding needs provides important data for liquidity management, a detailed overview of funding needs is prepared on a quarterly
basis for the planning horizon across Erste Group.

The Comprehensive Contingency Plan of the Group ensures the necessary co-ordination of all parties involved in the liquidity manage-
ment process in case of crisis and is reviewed on a regular basis. The contingency plans of the subsidiaries are co-ordinated as part of the
plan for Erste Group Bank AG.

Analysis of liquidity risk

Liquidity gap
The long-term liquidity position is managed using liquidity gaps on the basis of expected cash flows. This liquidity position is calculated
for each materially relevant currency and based on the assumption of ordinary business activity.

Expected cash flows are broken down by contractual maturities in accordance with the amortisation schedule and arranged in maturity
ranges. All products without contractual maturities (such as demand deposits and overdrafts) are shown in the first time bucket, irrespec-
tive of the statistically observed client behaviour.

The following table shows the liquidity gaps as of 31 December 2014 and 31 December 2013:

< 1 month 1-12 months 1-5 years > 5 years

in EUR million Dec 13 Dec 14 Dec 13 Dec 14 Dec 13 Dec 14 Dec 13 Dec 14
Liquidity gap -4,123 -7,590 -28,819 -21,032 4,150 -2,486 28,792 31,109

An excess of assets over liabilities is indicated by a positive value, while an excess of liabilities over assets is indicated by a negative
value. The callable own issues are modelled to their next call dates. The cash inflows from liquid securities amounting to EUR 33.5 bil-
lion (2013: EUR 32.710 billion), which are accepted as collateral by the central banks to which the Group has access, are taken into ac-
count in the first time bucket rather than considering them at their contractual maturity.

213
Counterbalancing capacity
Erste Group regularly monitors its counterbalancing capacity, which consists of cash, excess minimum reserve at the central banks as well
as unencumbered central bank eligible assets and other liquid securities, including changes from repos, reverse repos and securities lend-
ing transactions. These assets can be mobilised in the short term to offset potential cash outflows in a crisis situation. The term structure of
the Group’s counterbalancing capacity as of year-end 2014 and year-end 2013 are shown in the tables below:

Term structure of counterbalancing capacity

in EUR million < 1 week 1 week-1 month 1-3 months 3-6 months 6-12 months
As of 31 December 2014
Cash, excess reserve 3,998 -156 0 0 0
Liquid assets 31,730 439 73 136 1,092
Other central bank eligible assets 7,090 98 247 -5 -9
Thereof retained covered bonds 4,353 0 0 0 0
Thereof credit claims 2,737 98 247 -5 -9
Counterbalancing capacity 42,819 382 320 131 1,082

As of 31 December 2013
Cash, excess reserve 6,174 -631 0 0 0
Liquid assets 33,713 -392 288 249 561
Other central bank eligible assets 0 1,609 0 0 0
Thereof retained covered bonds 0 1,234 0 0 0
Thereof credit claims 0 375 0 0 0
Counterbalancing capacity 39,887 586 288 249 561

The figures above show the total amount of potential liquidity available for the Group in a going concern situation, taking into account the
applicable central bank haircuts. In a crisis situation adverse market movements and legal transfer restrictions among Group members can
decrease this amount. Taking into account these effects, the initial counterbalancing capacity available at Group level is reduced by addi-
tional haircuts and liquidity transfer constraints (e.g. legal lending limits). Negative figures are maturing positions of the counterbalancing
capacity. Positive figures after 1 week are positions not immediately available as counterbalancing capacity.

Financial liabilities
Maturities of contractual undiscounted cash flows from financial liabilities as of 31 December 2014 and 31 December 2013 respectively,
were as follows:

Financial liabilities
Carrying Contractual
in EUR million amounts cash flows < 1 month 1-12 months 1-5 years > 5 years
As of 31 December 2014
Non-derivative liabilities 168,225 173,996 65,122 42,372 40,467 26,035
Deposits by banks 14,803 15,127 5,929 2,720 3,825 2,654
Customer deposits 122,263 123,803 58,793 33,755 21,915 9,340
Debt securities in issue 25,402 28,027 388 5,614 12,923 9,102
Subordinated liabilities 5,758 7,038 12 283 1,804 4,939
Derivative liabilities 7,914 7,964 484 1,724 3,982 1,775
Contingent liabilities 0 22,963 22,963 0 0 0
Financial guarantees 0 6,862 6,862 0 0 0
Irrevocable commitments 0 16,101 16,101 0 0 0
Total 176,140 204,923 88,569 44,096 44,449 27,809

As of 31 December 2013
Non-derivative liabilities 172,509 179,767 77,602 43,897 36,403 21,864
Deposits by banks 17,299 18,062 10,214 2,794 2,062 2,992
Customer deposits 121,982 123,432 66,132 35,896 16,498 4,905
Debt securities in issue 27,894 31,731 956 4,803 15,098 10,875
Subordinated liabilities 5,333 6,542 300 404 2,746 3,092
Derivative liabilities 6,731 7,043 399 1,981 3,410 1,253
Contingent liabilities 0 22,033 22,033 0 0 0
Financial guarantees 0 6,887 6,887 0 0 0
Irrevocable commitments 0 15,146 15,146 0 0 0
Total 179,240 208,843 100,035 45,878 39,814 23,117

As of year-end 2014, the currency composition of the non-derivative liabilities consisted of approximately 74% EUR, 15% CZK, 4%
RON, 3% USD and the rest 4% in other currencies.

214
Besides the contingent liabilities from unused credit lines and guarantees, material potential cash outflow is estimated from the collateral-
ised derivative transactions for the stress testing, which amounted to EUR 338.6 million in the worst-case scenario as of 31 December
2014 (2013: EUR 621.3 million).

As of 31 December 2014, the volume of customer deposits due on demand amounted to EUR 50.6 billion (2013: EUR 52.1 billion). Ob-
servation of customer behaviour has shown that 95% of this volume is stable during the ordinary course of business. This means that only
a minor part of the on-demand portfolio is withdrawn by the customer, whereas the major part generally remains in the bank.

According to customer segments, the customer deposits are composed as follows: 69% private individuals, 14% large corporates, 8%
small and medium-sized enterprises, 5% non-banking financial institutions and 4% public sector The deposits by banks include the top
five providers of funds.

44.8) Operational risk

Definition and overview

In line with Article 4 Section 52 regulation (EU) 575/2013 (CRR), Erste Group defines operational risk as the risk of loss resulting from
inadequate or failed internal processes, people and systems, or from external events, including legal risks. Both quantitative and qualita-
tive methods are used to identify operational risks. Consistent with international practice, the responsibility for managing operational risk
rests with the line management.

Methods and instruments employed

The quantitative measurement methods are based on internal loss experience data, which is collected across Erste Group using a standard
methodology and entered into a central data pool. Additionally, in order to be able to model losses that have not occurred in the past but
are nonetheless possible, scenarios and external data are also used. Erste Group sources external data from a leading non-profit risk-loss
data consortium.

Erste Group received regulatory approval for the Advanced Measurement Approach (AMA) in 2009. AMA is a sophisticated approach to
measuring operational risk. Pursuant to AMA, the required capital is calculated using an internal VaR model, taking into account internal
data, external data, scenario analysis, business environment and internal risk control factors. In 2012, Erste Group received approval to
use insurance contracts for mitigation within the AMA pursuant to Section 22l of the Austrian Banking Act.

Methods and instruments of risk mitigation

In addition to quantitative methods, qualitative methods are also used to determine operational risk, such as risk assessment surveys (risk
and control self-assessments). The results of and suggestions for risk control in these surveys, which are conducted by experts, are report-
ed to the line management and thus help to reduce operational risks. Erste Group also reviews certain key indicators periodically to ensure
early detection of changes in risk potential that may lead to losses.

Erste Group uses a Group-wide insurance programme, which, since its establishment in 2004, has reduced the cost of meeting Erste
Group’s traditional property insurance needs and made it possible to buy additional insurance for previously uninsured bank-specific
risks. This programme uses a captive reinsurance entity as a vehicle to share losses within the Group and access the external market.

The quantitative and qualitative methods used, together with the insurance strategy and the modelling approaches described above, form
the operational risk framework of Erste Group. Information on operational risk is periodically communicated to the management board
via various reports, including the quarterly top management report, which describes the recent loss history, loss development, qualitative
information from risk assessments and key risk indicators as well as the operational VaR for Erste Group.

Distribution of operational risk events

Detailed below is the percentage composition by type of event of operational risk sources as defined by the Basel 3 Capital Accord. The
observation period is from 1 January 2010 to 31 December 2014.

The event type categories are as follows:

_ Internal fraud:Losses due to acts of a type intended to defraud, misappropriate property or circumvent regulations, the law or compa-
ny policy, excluding diversity or discrimination events that involve at least one internal party.
_ External fraud: Losses due to acts by a third party of a type intended to defraud, misappropriate property or circumvent the law.

215
_ Employment practices and workplace safety: Losses arising from acts inconsistent with employment, health or safety laws or agree-
ments, from payment of personal injury claims, or from diversity or discrimination events.
_ Clients, products and business practices: Losses arising from unintentional or negligent failure to meet a professional obligation to
specific clients (including fiduciary and suitability requirements) or from the nature or design of a product.
_ Damage to physical assets:Losses arising from loss of or damage to physical assets caused by natural disaster or other events.
_ Business disruption and system failures:Losses arising from disruption of business or system failures.
_ Execution, delivery and process management:Losses from failed transaction processing or process management. Losses pertaining to
relationships with trading counterparties and vendors or suppliers.

Event type categories (in %)

Execution, delivery and process management

Internal fraud

25.9 2.0

50.3 External fraud

1.2 Employment practices and workplace safety

2.0 15.2 3.5 Clients, products and business practices

Damage to physical assets

Business disruption and system failures

45. Hedge accounting

The interest rate risk of the banking book is managed by Group ALM. Preference in managing interest rate risk is given to using bonds,
loans or derivatives, with hedge accounting for derivatives usually applied in accordance with IFRS. The main guideline for interest rate
risk positioning is the Group Interest Rate Risk Strategy that is approved by the Group ALCO for the relevant time period.

Fair value hedges are employed to reduce interest rate risk of issued bonds, purchased securities, loans or deposits on the Erste Group
balance sheet. In general, the Erste Group policy is to swap all substantial fixed or structured issued bonds to floating items and as such to
manage the targeted interest rate risk profile by other balance sheet items. Interest rate swaps are the most common instruments used for
fair value hedges. As far as loans, purchased securities and securities in issuance are concerned, the fair value is also hedged by means of
cross-currency swaps, swaptions, caps, floors and other types of derivative instruments.

Cash flow hedges are used to eliminate uncertainty in future cash flows in order to stabilise net interest income. The most common such
hedge in Erste Group consists of interest rate swaps hedging variable cash flows of floating assets into fixed cash flows. Floors or caps are
used to secure the targeted level of interest income in a changing interest rate environment.

In the reporting period, EUR 51.5 million (2013: EUR 0.4 million) was taken from the cash flow hedge reserve and recognised as income
in the consolidated income statement (2013: as expense); while EUR 224.3 million (2013: EUR -72 million) was recognised directly in
other comprehensive income. The majority of the hedged cash flows are likely to occur within the next five years and will then be recog-
nised in the consolidated income statement. Ineffectiveness from cash flow hedges amounting to EUR -0.2 million (2013: EUR -
0.5 million) is reported in the net trading result.

216
Fair value hedges in 2014 resulted in gains of EUR 497.4 million (2013: loss of EUR 408.6 million) on hedging instruments and losses of
EUR 466.4 million on hedged items (2013: gain of EUR 416.5 million).

Fair values of hedging instruments are disclosed in the following table:

Dec 13 Dec 14
Positive Negative Positive Negative
in EUR million fair value fair value fair value fair value
Hedging instrument - fair value hedge 1,870 605 2,689 724
Hedging instrument - cash flow hedge 74 40 183 2

46. Fair value of assets and liabilities

The best indication of fair value is quoted market prices in an active market. Where such prices are available, they are used to measure the
fair value (Level 1 of the fair value hierarchy).

Where a market quote is used for valuation but due to restricted liquidity the market does not qualify as active (derived from available
market liquidity indicators) the instrument is classified as Level 2. If no market prices are available the fair value is measured by using
valuation models based on observable market data. If all the significant inputs in the valuation model are observable the instrument is
classified as Level 2 of the fair value hierarchy. Yield curves, credit spreads and implied volatilities are typically used as observable mar-
ket parameters for Level 2 valuations.

In some cases, the fair value cannot be determined on the basis of sufficiently frequent quoted market prices or of valuation models that
rely entirely on observable market data. In these cases individual valuation parameters not observable in the market are estimated on the
basis of reasonable assumptions. If any unobservable input in the valuation model is significant or the price quote used is updated infre-
quently, the instrument is classified as Level 3 of the fair value hierarchy. Besides observable parameters, Level 3 valuations typically use
credit spreads derived from internally calculated historical probability of default (PD) and loss given default (LGD) measures, as unob-
servable parameters.

Fair values of financial instruments

All financial instruments are measured at fair value on recurring basis.

Financial instruments measured at fair value on the balance sheet

The measurement of fair value at Erste Group is based primarily on external sources of data (stock market prices or broker quotes in
highly liquid market segments). Financial instruments for which the fair value is determined on the basis of quoted market prices are
mainly listed securities and derivatives as well as liquid OTC bonds.

Description of the valuation models and inputs

Erste Group uses valuation models that have been tested internally and for which the valuation parameters (such as interest rates, ex-
change rates, volatilities and credit spreads) have been determined independently.

Securities
For plain vanilla (fixed and floating) debt securities the fair value is calculated by discounting the future cash-flows using a discounting
curve depending on the interest rate for the respective issuance currency and a spread adjustment. The spread adjustment is usually de-
rived from the credit spread curve of the issuer. If no issuer curve is available the spread is derived from a proxy instrument and adjusted
for differences in the risk profile of the instruments. If no close proxy is available, the spread adjustment is estimated using other infor-
mation, including estimation of the credit spread based on internal ratings and PDs or management judgment. For more complex debt
securities (e.g. including option-like features such as callable, cap/floor, index-linked) the fair value is determined using combinations of
discounted cash-flow models and more sophisticated modeling techniques including methods described for OTC-derivatives. The fair
value of financial liabilities designated at Fair Value through Profit and Loss under the fair value option is determined in consistency with
similar instruments held as assets. The spread adjustment for Erste Group’s own credit risk is derived from buy-back levels of own issu-
ances. Techniques for equity securities may also include models based on earnings multiples.

217
OTC-derivative financial instruments
Derivative instruments traded in liquid markets (e.g. interest rate swaps and options, foreign exchange forward and options, options on
listed securities and indices, credit default swaps and commodity swaps) are valued by using standard valuation models. These models
include discounting cash flow models, option models of the Black-Scholes- and Hull-White-type as well as hazard rate models. Models
are calibrated on quoted market data (including implied volatilities). Valuation models for more complex instruments also use Monte-
Carlo-techniques. For instruments in less liquid markets, data obtained from less frequent transactions or extrapolation techniques are used.

Erste Group values derivatives at mid-market levels. To reflect the potential bid-ask-spread of the relevant positions an adjustment based
on market liquidity is performed. The adjustment parameters depend on product type, currency, maturity and notional size. Parameters are
reviewed on a regular basis or in case of significant market moves. Netting is not applied when determining the bid-ask-spread adjustments.

Credit value adjustments (CVA) for counterparty risk and debt value adjustments (DVA) for the own default credit risk are applied to
OTC derivatives. For the CVA the adjustment is driven by the expected positive exposure of all derivatives and the credit quality of the
counterparty. DVA is driven by the expected negative exposure and Erste Group’s credit quality. Erste Group has implemented an ap-
proach, where the modeling of the expected exposure is based on option replication strategies. For products where an option replication is
not feasible the exposure is computed with Monte-Carlo simulation techniques. One of the two modeling approaches is considered for the
most relevant portfolios and products. The methodology for the remaining entities and products is determined by market value plus add-
on considerations. The probability of default by counterparties that are not traded in an active market is determined from internal PDs
mapped to a basket of liquid titles present in the central European market. Market based valuation concepts are incorporated for this.
Counterparties with liquid bond or CDS markets are valued by the respective single-name market based PD derived from the prices. Erste
Group’s probability of default has been derived from the buy-back levels of Erste Group’s issuances. Netting has only been considered for
a few counterparties where the impact was material. In these cases, netting has been applied for both CVA and DVA.

For collateralised derivatives the effect of collateral received is considered and reduces the amount of CVA accordingly. For counterpar-
ties with CSA-agreements in place no CVA was taken into account for all cases with immaterial threshold amounts.

According to the described methodology the cumulative CVA-adjustments amounts to EUR -52.8 million and the total DVA-adjustment
amounts to EUR 12.7 million.

Description of the valuation process for fair value measurements categorised as Level 3
A level 3 position involves one or more significant inputs that are not directly observable on the market. Additional price verification steps
need to be done. These may include reviewing relevant historical data and benchmarking for similar transactions, among others. This
involves estimation and expert judgment.

The responsibility for valuation of a position measured at fair value is independent of the trading units. In addition Erste Group has im-
plemented an independent validation function in order to ensure separation between units responsible for model development, fair value
determination and validation. The aim of independent model validation is to evaluate model risks arising from the models’ theoretical
foundation, the appropriateness of input data (market data) and model calibration.

218
Fair value hierarchy
The table below details the methods used to determine the fair value with respect to levels of fair value hierarchy.

Quoted market prices in Marked to model based on Marked to model based on

active markets observable market data non-observable inputs
Level 1 Level 2 Level 3 Total
Dec 13 Dec 13 Dec 13 Dec 13
in EUR million restated Dec 14 restated Dec 14 restated Dec 14 restated Dec 14
Assets
Financial assets - held for trading 1,981 2,363 10,205 8,038 96 130 12,283 10,531
Derivatives 15 1 6,231 7,048 96 124 6,342 7,173
Other trading assets 1,966 2,361 3,975 990 0 6 5,941 3,357
Financial assets designated at fair
value through profit or loss 233 52 240 258 56 39 529 350
Financial assets - available for sale 14,601 16,915 5,632 4,963 248 428 20,481 22,306
Derivatives Hedge Accounting 0*) 0 1,944*) 2,866 0 6 1,944 2,872
Assets held for sale 0 0 0 53 0 0 0 53
Total assets 16,815 19,330 18,021 16,178 401 603 35,237 36,111

Liabilities
Financial liabilities held for trading 348 339 6,127 7,407 0 0 6,475 7,746
Derivatives 12 4 6,075 7,184 0 0 6,087 7,188
Other trading liabilities 336 336 52 222 0 0 388 558
Financial liabilities designated at
fair value through profit or loss 0 0 2,339 2,073 0 0 2,339 2,073
Deposits from customers 0 0 460 320 0 0 460 320
Debt securities issued 0 0 1,879 1,753 0 0 1,879 1,753
Other financial liabilities 0 0 0 0 0 0 0 0
Derivatives Hedge Accounting 0*) 0 644*) 726 0 0 644 726
Total liabilities 348 339 9,111 10,206 0 0 9,458 10,545

*)Correction due to erroneous statement of Derivatives Hedge Accounting in 2013 in Level 1 instead of Level 2.

The chosen method for the allocation of positions to levels is the following: all the levels and level changes are reflected at the end of the
reporting period, which in this case lies between year-end 2013 and 2014.

Changes in volumes of Level 1 and Level 2

This paragraph describes the changes in volumes of Level 1 and Level 2 of financial instruments measured at fair value in the balance sheet.

Movements on asset side between Level 1 and Level 2

2013 2014
in EUR million Level 1 Level 2 Level 1 Level 2
Securities
Net transfer from Level 1 0 -281 0 -416
Net transfer from Level 2 281 0 416 0
Net transfer from Level 3 -14 -91 64 -152
Purchases/Sales/Expiries/Changes in Fair Value -1,184 178 2,049 -3,015
Changes in derivatives 14 -4,974 -14 1,740
Total year-to-date change -903 -5,168 2,515 -1,843

In 2014 the total amount of Level 1 financial assets increased by EUR 2,515 million. The change in volume of Level 1 securities (increase
by EUR 2,529 million) was determined on the one hand by matured or sold assets in the amount of EUR 1.9 billion and on the other hand
by new investments in the amount of EUR 2.4 billion. The increase in volume for securities that were allocated to Level 1 at both report-
ing dates (2013 and 2014) amounted to EUR 2.2 billion (due to partial purchases and sales and fair value changes caused by market
movements). Due to improved market liquidity, assets in the amount of EUR 1.1 billion could be reclassified from Level 2 to Level 1.
This applied mainly to securities issued by governments (2014: EUR 525 million; 2013: EUR 609 million), but also to securities issued
by financial institutions (2014: EUR 470 million; 2013: EUR 168 million) and other corporates (2014: EUR 127 million; 2013: EUR 194
million). Due to lower market activity and change to modelled fair value, securities in total of EUR 0.7 billion have been moved from
Level 1 to Level 2. This applies mainly to securities issued by financial institutions (2014: EUR 496 million; 2013: EUR 458 million) and
other corporates (2014: EUR 167 million; 2013: EUR 158 million) as well as securities issued by governments (2014: EUR 43 million;
2013: EUR 74 million). The remaining decrease in the amount of EUR 0.6 billion was due to partial sales and fair value changes of re-
classified instruments.

219
The reclassifications between Level 1 and Level 2, broken down to assets categories and instruments, are shown below:

From Level 1 to From Level 1 to

in EUR million Level 2 in 2013 Level 2 in 2014
Financial assets - available for sale 641 588
Bonds 583 71
Funds 0 481
Other 44 10
Stocks 14 26
Financial assets - at fair value through profit or loss 10 82
Funds 0 82
Bonds 10 0
Financial assets - held for trading 38 36
Bonds 34 8
Funds 0 18
Other 4 2
Stocks 0 8
Total 690 706

From Level 2 to From Level 2 to

in EUR million Level 1 in 2013 Level 1 in 2014
Financial assets - available for sale 861 962
Bonds 856 945
Funds 5 0
Other 0 17
Financial assets designated at fair value through profit or loss 0 30
Bonds 0 30
Financial assets - held for trading 110 130
Bonds 109 125
Funds 1 0
Other 1 4
Total 971 1,122

The decrease on the asset side in derivatives in Level 1 by EUR 14 million represented only a very small contribution to the overall
changes.

The total value of Level 2 financial assets decreased between 2013 and 2014 by EUR 1,843 million. The Level 2 securities fair value
change (down by EUR 3,631 million) can be explained for the most part by matured or sold positions in the amount of EUR 5.2 billion
and new investments in the amount of EUR 2.3 billion. The reduction in volume for securities that have been allocated to Level 2 at both
reporting dates 2013 and 2014 amounted to EUR 70 million (due to partial sales and purchases and fair value changes caused by market
movements).

Due to reduced market depth a total volume of EUR 0.7 billion was reclassified from Level 1 to Level 2 in 2014. As previously outlined,
this applies mainly to bonds issued by financial institutions and other corporates. Securities in the amount of EUR 1.1 billion were reclas-
sified from Level 2 to Level 1 for the reporting date. Due to the use of significant non-observable valuation parameters a total volume of
EUR 0.2 billion was reclassified from Level 2 to Level 3. This applies mainly to securitizations and securities issued by financial institu-
tions. Due to a change to valuation models with significant observable parameters a total volume of EUR 0.1 billion was reclassified from
Level 3 to Level 2. The remaining decrease in the amount of EUR 0.2 billion was due to partial sales and fair value changes of reclassi-
fied instruments.

On the liability side, as far as securities are concerned, there were no movements between the levels. Changes in the amounts were caused
either by purchases, sales or changes in market value. The changes of derivatives were mainly caused by changes in the market value.

220
Movements in Level 3 of financial instruments measured at fair value
The following tables show the development of fair value of securities for which valuation models are based on non-observable inputs:

Gain/loss
in other
Gain/loss compre- Additions Disposals Transfers Transfers
in profit hensive Sales/ to the out of the into out of Currency
in EUR million As of or loss income Purchases settlements group group Level 3 Level 3 translation As of
Dec 13
restated Dec 14
Assets
Financial assets - held for trading 96 15 0 8 -5 0 0 57 -41 0 130
Derivatives 96 17 0 0 -1 0 0 52 -41 0 124
Other trading assets 0 -2 0 8 -5 0 0 5 0 0 6
Financial assets -
at fair value through profit or loss 56 -3 0 1 -6 0 0 10 -19 0 39
Financial assets -
available-for-sale 248 3 3 13 -49 0 0 297 -88 1 428
Derivatives - hedge accounting 0 0 0 0 0 0 0 6 0 0 6
Total assets 401 14 3 22 -60 0 0 369 -148 1 603

Dec 12 Dec 13
restated restated
Assets
Financial assets - held for trading 148 -59 0 0 -12 0 0 21 -1 0 96
Derivatives 139 -61 0 0 -3 0 0 21 0 0 96
Other trading assets 9 2 0 0 -9 0 0 0 -1 0 0
Financial assets -
at fair value through profit or loss 24 -2 0 0 -2 0 0 37 0 0 56
Financial assets -
available-for-sale 189 -2 0 4 -30 19 0 68 0 0 248
Derivatives - hedge accounting 0 0 0 0 0 0 0 0 0 0 0
Total assets 360 -63 0 4 -43 19 0 126 -1 0 401

The reclassification of securities to Level 3 was caused by a decrease in market liquidity and was based on an in-depth analysis of broker
quotes. In addition to the assessment of the parameters used for the fair value determination, securitisations were subject to a market
liquidity analysis based on market data provider scoring. The issues with insufficient score were moved from Level 2 to Level 3. The
move to Level 3 mainly affects securitizations (2014: EUR 146 million; 2013: EUR 43 million), where significant valuation parameters
were no longer observable, as well as issues from financial institutions (2014: EUR 42 million; 2013: EUR 3 million).

In contrast, the reclassification of securities from Level 3 to Level 2 in 2014 was mainly due to a change to modelled prices with observa-
ble input parameters.

An amount of EUR 117 million shown within „Transfers into Level 3“ is related to investments in equity instruments which have been
measured at cost according to IAS 39.46 (c) in the past. In 2014 these investments have been measured at fair value for the first time and
have therefore been added to the category “Available for Sale”.

Gains or losses on Level 3 instruments held at the reporting period’s end and which are included in profit or loss are as follow:

Gain/loss in profit or loss

in EUR million Dec 13 Dec 14
Assets
Financial assets - held for trading -60.1 -14.5
Derivatives -60.1 -13.8
Other trading assets 0.0 -0.7
Financial assets designated at fair value through profit or loss -1.3 0.9
Derivatives hedge accounting 0.0 0.0
Total -61.4 -13.6

The volume of Level 3 financial assets can be allocated to the following two categories:
_ Market values of derivatives where the credit value adjustment (CVA) has a material impact and is calculated based on unobservable
parameters (i.e. internal estimates of PDs and LGDs).
_ Illiquid bonds, shares and funds not quoted in an active market where either valuation models with non-observable parameters have
been used (e.g. credit spreads) or broker quotes have been used that cannot be allocated to Level 1 or Level 2.

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Unobservable inputs and sensitivity analysis for Level 3 measurements
The range of unobservable valuation parameters used in Level 3 measurements is shown in the following table:

Range of
Fair value Significant unobservable inputs
Financial assets Type of instrument in EUR million Valuation technique unobservable inputs (weighted average)
As of 31 December 2014
Discounted cash flow and 1.21% -100%
option models with CVA PD (15.5%)
adjustment based on
Positive fair value of derivatives Forwards, swaps, options 129.5 potential future exposure LGD 60%
Financial assets - at fair value 0.1% -7.5%
through profit or loss Fixed and variable coupon bonds 11.9 Discounted cash flow Credit spread (0.7%)
0.1% -9.9%
Financial assets - available for sale Fixed and variable coupon bonds 291.3 Discounted cash flow Credit spread (1.5%)

As of 31 December 2013
Discounted cash flow and 0.23% -100%
option models with CVA PD (17.8%)
adjustment based on
Positive fair value of derivatives Forwards, swaps, options 96.0 potential future exposure LGD 60% *)
Financial assets - at fair value 2.1%-12%
through profit or loss Fixed and variable coupon bonds 6.8 Discounted cash flow Credit spread (3.3%)
0.5% -4.5%
Financial assets - available for sale Fixed and variable coupon bonds 156.3 Discounted cash flow Credit spread (2.0%)

*) Value amended due to inadvertently disclosing of the recovery rate instead of LGD

If the value of financial instruments is dependent on unobservable input parameters, the precise Level for these parameters could be
drawn from a range of reasonably possible alternatives. In preparing the financial statements, Levels for the parameters are chosen from
these ranges using judgment consistent with prevailing market evidence.

The following table shows the sensitivity analysis using reasonably possible alternatives per product type:

Positive fair value changes when Negative fair value changes when
applying alternative valuation applying alternative valuation
parameters parameters
in EUR million Dec 13 Dec 14 Dec 13 Dec 14
Derivatives 41.5 10.2 -31.0 -11.5
Income statement - 10.2 - -11.5
Other comprehensive income - 0.0 - 0.0
Debt securities 12.9 23.3 -17.2 -31.1
Income statement - 0.9 - -1.2
Other comprehensive income - 22.4 - -29.9
Equity instruments 2.4 1.3 -4.7 -2.7
Income statement - 0.4 - -0.8
Other comprehensive income - 0.9 - -1.9
Total 56.7 34.8 -52.9 -45.3
Income statement - 11.5 - -13.5
Other comprehensive income - 23.3 - -31.8

In estimating these impacts, mainly changes in credit spreads (for bonds), PDs, LGDs (for CVA of derivatives) and market values of
comparable equities were considered. An increase (decrease) of spreads, PDs and LGDs result in a decrease (increase) of the correspond-
ing market values. Positive correlation effects between PDs and LGDs were not taken into account in the sensitivity analysis.

The following ranges of reasonably possible alternatives of the unobservable inputs were considered in the sensitivity analysis table:
_ for debt securities range of credit spreads between +100 basis points and -75 basis points,
_ for equity related instruments the price range between -10% and +5%,
_ for CVA on derivatives PDs rating upgrade/downgrade by one notch, as well as the change of LGD by -5% and +10%.

222
Financial instruments whose fair value is disclosed in the notes
The following table shows fair values and fair value hierarchy of financial instruments whose fair value is disclosed in the notes for the
year-end 2014.

2014
Marked to Marked to
Quoted market model based on model based on
prices in active observable non-observable
markets market data inputs
in EUR million Carrying amount Fair value Level 1 Level 2 Level 3
Assets
Cash and cash balances 7,835 7,835 6,976 0 859
Financial assets - held to maturity 16,877 18,876 17,542 1,255 79
Loans and receivables to credit institutions 7,442 7,974 0 266 7,707
Loans and receivables to customers 120,834 124,560 0 199 124,361

Liabilities
Financial liabilities measured at amortised costs 166,921 166,976 6,461 17,989 142,526
Deposits from banks 14,803 15,035 0 0 15,035
Deposits from customers 122,263 122,087 0 0 122,087
Debt securities issued 29,387 29,372 6,461 17,989 4,922
Other financial liabilities 469 482 0 0 482

Financial guarantees and commitments

Financial guarantees n/a -346 0 0 -346
Irrevocable commitments n/a -155 0 0 -155

2013
Marked to model Marked to model
Quoted market based on based on
prices in active observable non-observable
markets market data inputs
in EUR million Carrying amount Fair value Level 1 Level 2 Level 3
Assets
Cash and cash balances 9,301 9,301 8,670 0 630
Financial assets - held to maturity 17,779 18,919 15,383 3,378 158
Loans and receivables to credit institutions 8,377 8,209 0 0 8,209
Loans and receivables to customers 119,945 118,177 0 470 117,707

Liabilities
Financial liabilities measured at amortised costs 170,786 170,563 7,351 19,297 143,915
Deposits from banks 17,299 16,987 0 0 16,987
Deposits from customers 121,955 120,181 0 0 120,181
Debt securities issued 31,245 33,109 7,351 19,297 6,461
Other financial liabilities 286 286 0 0 286

Financial guarantees and commitments

Financial guarantees n/a -223 0 0 -223
Irrevocable commitments n/a 466 0 0 466

The fair value of loans and advances to customers and credit institutions has been calculated by discounting future cash flows while tak-
ing into consideration interest and credit spread effects. The interest rate impact is based on the movements of market rates, while credit
spread changes are derived from PDs and LGDs used for internal risk calculations. For the calculation of fair value loans and advances
were grouped into homogeneous portfolios based on rating method, rating grade, maturity and the country where they were granted.

The fair values of financial assets held to maturity are either taken directly from the market or they are determined by directly observable
input parameters (i.e. yield curves).

For liabilities without contractual maturities (e.g. demand deposits), the carrying amount represents the minimum of their fair value.

The fair value of issued securities and subordinated liabilities measured at amortized cost is based on market prices or on observable
market parameters, if these are available, otherwise it is estimated by taking into consideration the actual interest rate environment and in
this case they are allocated to Level 3.

223
The fair value of other liabilities measured at amortized cost is estimated by taking into consideration the actual interest rate environment
and own credit spreads, and these are allocated to Level 3.

The fair value of off-balance sheet liabilities (i.e. financial guarantees and unused loan commitments) is estimated with the help of regula-
tory credit conversion factors. The resulting loan equivalents are treated like other on-balance sheet assets. The difference between the
calculated market value and the notional amount of the hypothetical loan equivalents represents the fair value of these contingent liabilities.

Fair values of non-financial assets

The following table shows fair values and fair value hierarchy of non-financial instruments at the year-end 2014:

2014
Marked to model Marked to model
Quoted market based on based on
prices in active observable non-observable
markets market data inputs
in EUR million Carrying amount Fair value Level 1 Level 2 Level 3
Assets whose Fair Value is disclosed in the notes
Investment property 950 988 0 461 528
Assets whose Fair Value is presented in the Balance sheet
Assets held for sale (IFRS 5) 1 1 0 0 1

2013
Marked to model Marked to model
Quoted market based on based on
prices in active observable non-observable
markets market data inputs
in EUR million Carrying amount Fair value Level 1 Level 2 Level 3
Assets whose Fair Value is disclosed in the notes
Investment property 951 989 0 306 683
Assets whose Fair Value is presented in the Balance sheet
Assets held for sale (IFRS 5) 20 20 0 0 20

Investment property is measured at fair value on recurring basis. Assets held for sale are measured at fair value on non-recurring basis
when their carrying amount is impaired down to fair value less costs to sell.

The fair values of non-financial assets are determined by experts with recognised and relevant professional qualification.

Fair values of non-financial assets owned by Erste Group through Austrian companies which are located in developed and active real
estate markets such as Austria, Czech Republic and Slovakia are based on valuation reports relying essentially on observable market
inputs (such as selling price per square meter charged in recent market observable transactions for similar assets). Such measurements are
disclosed as Level 2 of the fair value hierarchy. If fair values of non-financial assets result from valuation models using expected future
rental income method they are presented in Level 3 of the fair value hierarchy.

For non-financial assets owned by Erste Group through subsidiaries located in CEE countries the valuations are carried out mainly using
the comparative and investment methods. Assessment is made on the basis of a comparison and analysis of appropriate comparable in-
vestment and rental transactions, together with evidence of demand within the vicinity of the relevant property. The characteristics of such
similar transactions are then applied to the asset, taking into account size, location, terms, covenant and other material factors. Such
measurements are presented in Level 3 of the fair value hierarchy.

224
47. Financial instruments per category according to IAS 39

As of 31 December 2014
Category of financial instruments
Financial Derivatives Finance
liabilities Other designated lease
Loans and Held to Designated Available at amortised financial as hedging according to
in EUR million receivables maturity Trading at fair value for sale cost assets instruments IAS 17 Total
ASSETS
Cash and cash
lances 5,368 0 0 0 0 0 2,467 0 0 7,835
Loans and receivables
to credit institutions 7,442 0 0 0 0 0 0 0 0 7,442
Loans and receivables
to customers 117,185 0 0 0 0 0 0 0 3,649 120,834
Derivatives -
dge accounting 0 0 0 0 0 0 0 2,872 0 2,872
Financial assets -
held for trading 0 0 10,531 0 0 0 0 0 0 10,531
Financial assets -
at fair value through
profit or loss 0 0 0 350 0 0 0 0 0 350
Financial assets -
available for sale 0 0 0 0 22,373 0 0 0 0 22,373
Financial assets -
held to maturity 0 16,877 0 0 0 0 0 0 0 16,877
Total financial assets 129,996 16,877 10,531 350 22,373 0 2,467 2,872 3,649 189,115

Net gains / losses

recognized through
profit or loss1 -2,120 4 182 9 7 0 0 31 -1,888
Net gains / losses
recognized through
OCI 0 0 0 0 581 0 0 0 581

LIABILITIES
Financial liabilities -
held for trading 0 0 -7,746 0 0 0 0 0 0 -7,746
Financial liabilities -
at fair value through
profit or loss 0 0 0 -2,073 0 0 0 0 0 -2,073
Financial liabilities
measured at amortised
cost 0 0 0 0 0 -166,921 0 0 0 -166,921
Derivatives -
hedge accounting 0 0 0 0 0 0 0 -726 0 -726
Total financial
liabilities 0 0 -7,746 -2,073 0 -166,921 0 -726 0 -177,466

Net gains / losses

recognized through
profit or loss1 0 0 -32 -81 0 -17 0 0 0 -130

1) Including impairments

225
As of 31 December 2013 restated
Loans and receivables
Financial Derivatives Finance
liabilities Other designated lease
Loans and Held to Designated Available at amortised financial as hedging according
in EUR million receivables maturity Trading at fair value for sale cost assets instruments to IAS 17 Total
ASSETS
Cash and cash balances 6,973 2,327 9,301
Loans and receivables
to credit institutions 8,377 8,377
Loans and receivables
to customers 115,640 4,305 119,945
Derivatives -
hedge accounting 0 1,944 1,944
Financial assets -
held for trading 0 12,283 12,283
Financial assets -
at fair value through
profit or loss 0 529 529
Financial assets -
available for sale 0 20,678 20,678
Financial assets - held
to maturity 0 17,779 17,779
Total financial assets 130,990 17,779 12,283 529 20,678 0 2,327 1,944 4,305 190,835

Net gains / losses

recognized through
profit or loss1) -1,726 -1 28 11 -7 -1,696
Net gains / losses
recognized through OCI 0 -113 -113

LIABILITIES
Financial liabilities -
held for trading 0 -6,475 -6,475
Financial liabilities -
at fair value through
profit or loss 0 -2,339 -2,339
Financial liabilities
measured at amortised
cost 0 -170,786 -170,786
Derivatives -
hedge accounting 0 -644 -644
Total financial
liabilities 0 0 -6,475 -2,339 0 -170,786 0 -644 0 -180,244

Net gains / losses

recognized through
profit or loss 0 -6 24 -5 12

226
48. Audit fees and tax consultancy fees

The following table contains fundamental audit fees and tax fees charged by the auditors (of Erste Group Bank AG and subsidiaries; the
auditors primarily being Sparkassen-Prüfungsverband, Ernst & Young and Deloitte) in the financial years 2014 and 2013:

in EUR million Dec 13 Dec 14

Audit fees 13.8 13.8
Other services involving the issuance of a report 5.8 4.5
Tax consultancy fees 3.4 3.7
Other services 4.3 5.8
Total 27.2 27.7

For auditing services provided by the Group’s auditors EUR 8.9 million (2013: EUR 9.6 million) was paid by Erste Group. The Group’s
auditors also performed tax consultancy for Erste Group with a value of EUR 0 million (2013: EUR 0.5 million).

49. Contingent liabilities

To meet the financial needs of customers, the bank enters into various irrevocable commitments and contingent liabilities. Even though
these obligations may not be recognised on the balance sheet, they do involve credit risk and are therefore part of the overall risk of the
Bank (see Note 44.5 Credit risk).

Legal proceedings
Erste Group Bank AG and some of its subsidiaries are involved in legal disputes, most of which have arisen in the course of ordinary
banking business. These proceedings are not expected to have a significant negative impact on the financial position or profitability of
Erste Group or Erste Group Bank AG. Erste Group is also subject to the following ongoing proceedings:

Hungarian Holocaust litigation

In 2010, a group of plaintiffs filed a putative class action complaint, in a federal court in Chicago, on behalf of alleged victims of the
Holocaust or their heirs, alleging that several Hungarian banks improperly benefited from the seizure of assets of Jewish customers during
World War II. The assets claimed total $2 billion in 1944 dollars. Although Erste Group Bank AG is not alleged to have participated in the
alleged misappropriation of Jewish assets, it is nevertheless named as a defendant in the litigation, as plaintiffs allege that Erste Group
Bank AG is the legal successor to a number of banks that were active during that time in Greater Hungary. Erste Group Bank AG has
denied all of the material allegations against it, including, but not limited to, allegations of successorship. In January 2014 the Federal
District Court entered judgment in favor of Erste Group Bank AG, dismissing the claims on forum non conveniens grounds. In Janu-
ary 2015 the United States Court of Appeals for the Seventh Circuit decided on the appeal filed by plaintiffs and affirmed the judgement
of the District Court.

Consumer protection claims

Several banking subsidiaries of Erste Group in CEE have been named in their respective jurisdictions as defendants in a number of law-
suits and in regulatory proceedings, filed by individual customers, regulatory authorities or consumer protection agencies and associa-
tions. Some of the lawsuits are class actions. The lawsuits mainly relate to allegations that certain contractual provisions, particularly in
respect of consumer loans, violate mandatory consumer protection laws and regulations and that certain fees charged to customers in the
past must be repaid. The allegations relate to the enforceability of certain fees as well as of contractual provisions for the adjustment of
interest rates and currencies.

Corporate Bond investors`s prospectus claims

In 2014 a number of investors in corporate bonds, issued by a large Austrian construction group in the years 2010, 2011 and 2012, filed
claims with courts in Vienna against Austrian banks, among them Erste Group Bank AG, requesting compensation for their losses as
bond-holders following the bankruptcy of the issuer in 2013. The plaintiffs argue in essence that the defendant banks, which acted as
joint-lead managers in the issuing of the respective bond, already knew of the insolvency status of the issuer at such time and should be
liable for the failure of the issuing prospectus to state this. Erste Group Bank AG, together with a second Austrian bank, acted as joint-lead
manager of the bond issuance in 2011. Erste Group Bank AG rejects the claims.

227
50. Analysis of remaining maturities

Dec 13 restated Dec 14

in EUR million < 1 year > 1 year < 1 year > 1 year
Cash and cash balances 9,301 0 7,835 0
Financial assets - held for trading 5,560 6,723 2,491 8,039
Derivatives 1,495 4,847 1,240 5,933
Other trading assets 4,065 1,876 1,251 2,107
Financial assets - designated at fair value through profit or loss 116 413 178 172
Financial assets - available-for-sale 3,523 17,155 4,500 17,873
Financial assets - held to maturity 2,171 15,608 2,103 14,774
Loans and receivables to credit institutions 6,241 2,136 7,052 391
Loans and receivables to customers 24,283 95,661 29,249 91,585
Derivatives - hedge accounting 183 1,761 363 2,509
Property and equipment 0 2,320 0 2,264
Investment properties 0 951 0 950
Intangible assets 0 2,429 0 1,441
Investments in associates and joint ventures 0 208 0 305
Current tax assets 100 0 107 0
Deferred tax assets 0 719 0 301
Assets held for sale 75 0 291 0
Other assets 2,388 94 1,294 219
TOTAL ASSETS 53,941 146,177 55,465 140,823
Finanacial liabilities - held for trading 1,550 4,924 1,446 6,300
Derivatives 1,522 4,564 1,315 5,874
Other trading liabilities 28 360 131 427
Financial liabilities designated at fair value through profit or loss 285 2,059 242 1,831
Deposits from banks 0 0 0 0
Deposits from customers 246 218 197 123
Debt securities issued 39 1,840 44 1,708
Other financial liabilities 0 0 0 0
Financial liabilities measured at amortised cost 86,160 84,620 91,363 75,558
Deposits from banks 12,917 4,383 11,001 3,862
Deposits from customers 67,870 54,080 75,459 46,499
Debt securities issued 5,373 25,871 4,440 25,173
Other financial liabilities 0 286 463 25
Derivatives - hedge accounting 32 612 33 693
Changes in fair value of portfolio hedged items 26 708 138 1,088
Provisions 80 1,367 210 1,336
Current tax liabilities 85 0 91 0
Deferred tax liabilities 0 169 0 99
Liabilities associated with assets held for sale 0 0 0 0
Other liabilities 2,207 447 2,000 417
TOTAL LIABILITIES 90,425 94,906 95,522 87,322

51. Own funds and capital requirements

Erste Group as a group of credit institutions is subject to EU directive 575/2013 (CRR) and must comply with the capital requirements set
out therein.

The items of own funds as disclosed below are also used for internal capital management purposes. Erste Group fulfilled the capital re-
quirements.

228
Capital structure according to the EU directive 575/2013 (CRR)
Dec 13 Dec 14
Basel 2.5 Basel 3
in EUR million Article pursuant to CRR Phased-in Final
Common equity tier 1 capital (CET1)
Capital instruments eligible as CET1 26 (1) (a) (b), 27 to 30, 36 (1) (f), 42 0 2,336 2,336
Own CET1 instruments 36 (1) (f), 42 0 -82 -82
Retained earnings 26 (1) (c), 26 (2) 0 8,130 8,130
Interim loss 36 (1) (a) 0 0 0
Accumulated other comprehensive income 4 (1) (100), 26 (1) (d) 0 -325 -325
Minority interest recognised in CET1 4 (1) (120) 84 0 3,078 3,078
Transitional adjustments due to additional minority interests 479, 480 0 102 0
Prudential filter: cash flow hedge reserve 33 (1) (a) 0 -118 -118
Prudential filter: cumulative gains and losses due to changes in own
credit risk on fair valued liabilities 33 (1) (b) 0 -54 -54
Prudential filter: fair value gains and losses arising from the institution's
own credit risk related to derivative liabilities 33 (1) (c), 33 (2) 0 -16 -16
Value adjustments due to the requirements for prudent valuation 34, 105 0 -113 -113
Regulatory adjustments relating to unrealised gains and losses 467, 468 0 -992 -248
Goodwill 4 (1) (113), 36 (1) (b), 37 0 -771 -771
Other intangible assets 4 (1) (115), 36 (1) (b), 37 (a) 0 -654 -654
Deferred tax assets that rely on future profitability and do not arise from
temporary differences net of associated tax liabilities 36 (1) (c), 38 0 -103 -103
IRB shortfall of credit risk adjustments to expected losses 36 (1) (d), 40, 158, 159 0 -249 -249
Other transitional adjustments CET1 469 to 472, 478, 481 0 1,398 0
Interim loss (80%) 0 0 0
Goodwill (80%) 0 617 0
Other intangibles (80%) 0 523 0
IRB shortfall of provisions to expected losses (80%) 0 199 0
Deferred tax assets that rely on future profitability and do not arise
from temporary differences net of associated tax liabilities (100%) 0 58 0
Excess of deduction from AT1 items over AT1 36 (1) (j) 0 -944 0
Common equity tier 1 capital (CET1) 50 11,199 10,623 10,811
Additional tier 1 capital (AT1)
Capital instruments eligible as AT1 51 (a), 52 to 54, 56 (a), 57 0 0 0
Own AT1 instruments 52 (1) (b), 56 (a), 57 0 -4 0
Instruments issued by subsidiaries that are given recognition in AT1 85, 86 0 0 0
Transitional adjustments due to grandfathered AT1 instruments 483 (4) (5), 484 to 487, 489, 491 0 300 0
AT1 instruments of financial sector entities where the institution has a
significant investment 4 (1) (27), 56 (d), 59, 79 0 0 0
Other transitional adjustments AT1 474, 475, 478, 481 0 -1,240 0
Interim loss (80%) 0 0 0
Goodwill (80%) 0 -617 0
Other intangibles (80%) 0 -523 0
IRB shortfall of provisions to expected losses (40%) 0 -100 0
Excess of deduction from AT1 items over AT1 36 (1) (j) 0 944 0
Additional tier 1 capital (AT1) 61 361 0 0
Tier 1 capital - total amount of common equity tier 1 (CET1) and
additional tier 1 (AT1) 25 11,560 10,623 10,811

The table is continued on the next page.

229
Continuation of the table:
Dec 13 Dec 14
Basel 2.5 Basel 3
in EUR million Article pursuant to CRR Phased-in Final
Tier 1 capital - total amount of common equity tier 1 (CET1) and
additional tier 1 (AT1) 25 11,560 10,623 10,811
Tier 2 capital (T2)
Capital instruments and subordinated loans eligible as T2 62 (a), 63 to 65, 66 (a), 67 0 4,197 4,197
Own T2 instruments 63 (b) (i), 66 (a), 67 0 -71 -71
Instruments issued by subsidiaries recognised in T2 87, 88 0 332 332
Transitional adjustments due to additional recognition in T2 of
instruments issued by subsidiaries 480 0 227 0
Transitional adjustments due to grandfathered T2 instruments and
subordinated loans 483 (6) (7), 484, 486, 488, 490, 491 0 47 0
IRB excess of provisions over expected losses eligible 62 (d) 0 410 410
Standardised approach general credit risk adjustments 62 (c) 0 175 175
Other transitional adjustments to tier 2 capital 476, 477, 478, 481 0 -99 0
IRB shortfall of provisions to expected losses (40%) 0 -100 0
T2 instruments of financial sector entities where the institution has a
significant investment 4 (1) (27), 66 (d), 68, 69, 79 0 0 0
Tier 2 capital (T2) 71 4,206 5,216 5,042
Short-term subordinated capital (tier-3) 228 - -
Total own funds 4 (1) (118) and 72 15,994 15,839 15,853
Capital requirement 92 (3), 95, 96, 98 7,832 8,047 8,150
CET1 capital ratio 92 (2) (a) 11.4% 10.6% 10.6%
Tier 1 capital ratio 92 (2) (b) 11.8% 10.6% 10.6%
Total capital ratio 92 (2) (c) 16.3% 15.7% 15.6%

The capital structure table above is based on EBA´s final draft for implementing technical standards on disclosure for own funds pub-
lished in the Official Journal of the European Union on 20 December 2013. Positions not relevant for Erste Group are not shown. Basel 3
final figures (fully loaded) are calculated based on the current requirements according to CRR. Changes are possible due to final Regula-
tory Technical Standards (RTS), that are not yet available.

The Basel 2.5 comparison is limited to sum-positions as the composition according to Basel 3 materially deviates from the composition
according to Basel 2.5.

The consolidated financial statements have not been reviewed and noticed by the Supervisory Board and the financial statements of Erste
Group Bank AG have not been approved by the Supervisory Board yet.

Likewise financial statements of single entities within the group have not been noticed by their Supervisory Board yet.
In addition, no resolution on the appropriation of the profit has yet been made by the general meetings of the single entities.

230
Risk structure according to EU directive 575/2013 (CRR)
Dec 13 Dec 14
Calculation
Calculation base / Capital
base / Capital total risk requirement
in EUR million Article pursuant to CRR total risk requirement (phased-in) (phased-in)
Total Risk Exposure Amount 92 (3), 95, 96, 98 97,901 7,832 100,590 8,047
Risk weighted assets (credit risk) 92 (3) (a) (f) 84,857 6,789 85,556 6,845
Standardised approach 19,590 1,567 17,244 1,379
IRB approach 65,267 5,221 68,313 5,465
Settlement Risk 92 (3) (c) (ii), 92 (4) (b) 0 0 0 0
92 (3) (b) (i) and (c) (i) and (iii),
Trading book, foreign FX risk and commodity risk 92 (4) (b) 2,852 228 3,209 257
Operational Risk 92 (3) (e), 92 (4) (b) 10,192 815 10,277 822
Exposure for CVA 92 (3) (d) 0 0 1,548 124
Other exposure amounts incl. Basel 1 floor 3, 458, 459, 500 0 0 0 0

Dec 13 Dec 14
Calculation Calculation Capital
base / Capital base / requirement
in EUR million Article pursuant to CRR total risk requirement total risk (final) (final)
Total Risk Exposure Amount 92 (3), 95, 96, 98 97,901 7,832 101,870 8,150
Risk weighted assets (credit risk) 92 (3) (a) (f) 84,857 6,789 86,836 6,947
Standardised approach 19,590 1,567 17,244 1,379
IRB approach 65,267 5,221 69,593 5,567
Settlement Risk 92 (3) (c) (ii), 92 (4) (b) 0 0 0 0
92 (3) (b) (i) and (c) (i) and (iii), 92
Trading book, foreign FX risk and commodity risk (4) (b) 2,852 228 3,209 257
Operational Risk 92 (3) (e), 92 (4) (b) 10,192 815 10,277 822
Exposure for CVA 92 (3) (d) 0 0 1,548 124
Other exposure amounts incl. Basel 1 floor 3, 458, 459, 500 0 0 0 0

52. Events after the balance sheet date

On 15 January 2015, the Swiss National Bank decided to discontinue the minimum exchange rate of CHF against EUR. This announce-
ment resulted in significant appreciation of CHF against all major currencies including the currencies of CEE countries. The impact on
Erste Group arose primarily in relation to borrowers who have taken out CHF-denominated loans in the past and are now adversely af-
fected in terms of repayment ability. Preliminary sensitivity analysis performed indicate a moderate impact in terms of higher risk costs
and increase of credit RWAs (10 bps CET1 loss in the case of EUR/CHF parity prevailing for a longer period of time). Please note that the
actual impact is contingent on future exchange rate developments.

On 26 January 2015, following a proposal of the Croatian government, the Croatian parliament approved a change in the Consumer Pro-
tection Act, by fixing payments of future monthly annuities in 2015 for CHF/HRK exchange rate at 6.39 for customers who have CHF-
denominated loans. This change became effective as of 27 January 2015. Erste Group expects that this will have a moderate effect via
foreign exchange losses on profit and loss in 2015.

On 9 February 2015, the Government of Hungary and the European Bank for Reconstruction and Development ("EBRD") sealed an
agreement (the "Memorandum of Understanding") aiming at strengthening Hungary’s financial sector and boosting the flow of bank
credits to Hungary’s private corporations and citizens. In this context, Erste Group announced that it has invited the Government of Hun-
gary and the European Bank for Reconstruction and Development ("EBRD") to invest in Erste Bank Hungary by acquiring a minority
stake of up to 15 per cent each. Negotiations are in progress and the completion of the transaction is expected within the next six months,
after implementation of a new Hungarian banking tax law, as set out in the Memorandum of Understanding. The purchase price will be
negotiated between Erste Group and the two parties based on market valuation methods after conduct of a due diligence. The EBRD's
investment is expected to be structured with a pre-agreed exit to Erste Group after an agreed period of time. The transaction is subject to
all necessary approvals required from Hungarian or European banking supervisory and competition authorities.

231
53. Country by country reporting

Starting with 2014 Erste Group publishes information about Group’s country by country activities as required by Article 89 of the EU
Capital Requirements Directive IV, as follows:

2014
Pre-tax result
Operating from continuing Taxes on
In EUR million income operations income Taxes paid
Austria 2,662 -125 -414 -33
Croatia 467 28 -11 -14
Czech Republic 1,440 643 -139 -156
Hungary 482 -279 -14 -19
Romania 830 -1,422 134 -3
Serbia 66 7 1 0
Slovakia 703 327 -64 -42
Other locations 227 17 -2 -1
Total 6,878 -803 -509 -267

2013
Pre-tax result
Operating from continuing Taxes on
In EUR million income operations income Taxes paid
Austria 2,611 -343 -80 -27
Croatia 456 45 -10 -55
Czech Republic 1,559 645 -143 -141
Hungary 442 -91 -13 -15
Romania 990 -233 129 58
Serbia 75 24 -2 0
Slovakia 621 266 -53 -21
Other locations 241 66 -7 -7
Total 6,995 378 -179 -209

Further details about the content of each country category could be found in Note 54 Details of the companies wholly or partly owned by
Erste Group as of 31 December 2014, where the information about the relevant country of residence of each fully consolidated entity is
presented.

For the reported periods above, Erste Group hasn’t been subject to any kind of public or state subsidies.

Information about the geographical split of the average number of headcounts employed in Erste Group throughout 2014 is disclosed in
the Note 6 General administrative expenses.

232
54. Details of the companies wholly or partly owned by Erste Group as of 31 December 2014

The table below present material, fully consolidated subsidiaries, investments in associates accounted for at equity and other investments.

Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
Fully consolidated subsidiaries
Credit institutions
Allgemeine Sparkasse Oberösterreich Bankaktiengesellschaft Linz 29.8 39.8
Banca Comerciala Romana Chisinau S.A. Chişinău 93.6 93.6
Banca Comerciala Romana SA Bucharest 93.6 93.6
Banka Sparkasse d.d. Ljubljana 28.0 28.0
Bankhaus Krentschker & Co. Aktiengesellschaft Graz 25.0 25.0
Bausparkasse der österreichischen Sparkassen Aktiengesellschaft Vienna 95.0 95.0
BCR Banca pentru Locuinte SA Bucharest 93.9 93.9
Ceska sporitelna, a.s. Prague 99.0 99.0
Die Zweite Wiener Vereins-Sparcasse Vienna 0.0 0.0
Dornbirner Sparkasse Bank AG Dornbirn 0.0 0.0
Erste & Steiermärkische Bank d.d. Rijeka 69.3 69.3
ERSTE BANK AD NOVI SAD Novi Sad 80.5 80.5
ERSTE BANK AD PODGORICA Podgorica 69.3 69.3
Erste Bank der oesterreichischen Sparkassen AG Vienna 100.0 100.0
Erste Bank Hungary Zrt Budapest 100.0 100.0
Erste Group Bank AG Vienna 0.0 0.0
Erste Lakas-Takarekpenztar Zartkoruen Mukodo Reszvenytarsasag Budapest 100.0 100.0
Kärntner Sparkasse Aktiengesellschaft Klagenfurt 25.0 25.0
KREMSER BANK UND SPARKASSEN AKTIENGESELLSCHAFT Krems an der Donau 0.0 0.0
Lienzer Sparkasse AG Lienz 0.0 0.0
s Wohnbaubank AG Vienna 90.8 90.8
Salzburger Sparkasse Bank Aktiengesellschaft Salzburg 98.7 98.7
Slovenska sporitelna, a. s. Bratislava 100.0 100.0
Sparkasse Baden Baden 0.0 0.0
Sparkasse Bank dd Bosna i Hercegovina Sarajevo 24.3 24.3
SPARKASSE BANK MAKEDONIJA AD SKOPJE Skopje 24.9 24.9
Sparkasse Bank Malta Public Limited Company Sliema 0.0 0.0
Sparkasse Bludenz Bank AG Bludenz 0.0 0.0
Sparkasse Bregenz Bank Aktiengesellschaft Bregenz 0.0 0.0
Sparkasse der Gemeinde Egg Egg 0.0 0.0
Sparkasse der Stadt Amstetten AG Amstetten 0.0 0.0
Sparkasse der Stadt Feldkirch Feldkirch 0.0 0.0
Sparkasse der Stadt Kitzbühel Kitzbühel 0.0 0.0
Sparkasse Eferding-Peuerbach-Waizenkirchen Eferding 0.0 0.0
Sparkasse Feldkirchen/Kärnten Feldkirchen in Kärnten 0.0 0.0
SPARKASSE FRANKENMARKT AKTIENGESELLSCHAFT Frankenmarkt 0.0 0.0
Sparkasse Hainburg-Bruck-Neusiedl Aktiengesellschaft Hainburg an der Donau 75.0 75.0
Sparkasse Haugsdorf Haugsdorf 0.0 0.0
Sparkasse Herzogenburg-Neulengbach Bank Aktiengesellschaft Herzogenburg 0.0 0.0
Sparkasse Horn-Ravelsbach-Kirchberg Aktiengesellschaft Horn 0.0 0.0
Sparkasse Imst AG Imst 0.0 0.0
Sparkasse Korneuburg AG Korneuburg 0.0 0.0
Sparkasse Kufstein, Tiroler Sparkasse von 1877 Kufstein 0.0 0.0
Sparkasse Lambach Bank Aktiengesellschaft Lambach 0.0 0.0
Sparkasse Langenlois Langenlois 0.0 0.0
Sparkasse Mittersill Bank AG Mittersill 0.0 0.0
Sparkasse Mühlviertel-West Bank Aktiengesellschaft Rohrbach 40.0 40.0
Sparkasse Mürzzuschlag Aktiengesellschaft Mürzzuschlag 0.0 0.0
Sparkasse Neuhofen Bank Aktiengesellschaft Neuhofen an der Krems 0.0 0.0
Sparkasse Neunkirchen Neunkirchen 0.0 0.0
SPARKASSE NIEDERÖSTERREICH MITTE WEST AKTIENGESELLSCHAFT St. Pölten 0.0 0.0
Sparkasse Pöllau AG Pöllau bei Hartberg 0.0 0.0
Sparkasse Pottenstein N.Ö. Pottenstein, Triesting 0.0 0.0
Sparkasse Poysdorf AG Poysdorf 0.0 0.0
Sparkasse Pregarten - Unterweißenbach AG Pregarten 0.0 0.0
Sparkasse Rattenberg Bank AG Rattenberg, Inn 0.0 0.0
Sparkasse Reutte AG Reutte 0.0 0.0
Sparkasse Ried im Innkreis-Haag am Hausruck Ried im Innkreis 0.0 0.0
Sparkasse Salzkammergut AG Bad Ischl 0.0 0.0
Sparkasse Scheibbs AG Scheibbs 0.0 0.0
Sparkasse Schwaz AG Schwaz 0.0 0.0
Sparkasse Voitsberg-Köflach Bankaktiengesellschaft Voitsberg 5.0 5.0
Stavebni sporitelna Ceske sporitelny, a.s. Prague 98.8 99.0
Steiermärkische Bank und Sparkassen Aktiengesellschaft Graz 25.0 25.0
Tiroler Sparkasse Bankaktiengesellschaft Innsbruck Innsbruck 75.0 75.0
Waldviertler Sparkasse Bank AG Zwettl 0.0 0.0
Wiener Neustädter Sparkasse Wiener Neustadt 0.0 0.0

233
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14

Other financial institutions

"DIE EVA" Grundstückverwaltungsgesellschaft m.b.H. Vienna 100.0 100.0
"Die Kärntner" Trust- Vermögensverwaltungsgesellschaft m.b.H. & Co KG Klagenfurt 25.0 25.0
"Die Kärntner" Trust-Vermögensverwaltungsgesellschaft m.b.H. Klagenfurt 25.0 25.0
"Nare" Grundstücksverwertungs-Gesellschaft m.b.H. Vienna 100.0 100.0
"SELIMMO" - Sparkasse Mühlviertel-West - DIE ERSTE Leasing - Immobilienvermietung GmbH Rohrbach 69.4 69.4
5 HOTEL Ingatlanhasznosító Korlátolt Felelösségü Társaság Budapest 100.0 100.0
Alea-Grundstückverwaltung Gesellschaft m.b.H. Vienna 100.0 100.0
Altstadt Hotelbetriebs GmbH Vienna 100.0 100.0
Anlagen Leasing Gesellschaft m.b.H. Vienna 100.0 100.0
AS-Alpha Grundstücksverwaltung Gesellschaft m.b.H. Vienna 29.8 39.8
Asset Management Slovenskej sporitelne, správ. spol., a. s. Bratislava 100.0 100.0
Augarten - Hotel - Errichtungsgesellschaft m.b.H. Vienna 100.0 100.0
AVION-Grundverwertungsgesellschaft m.b.H. Vienna 50.0 51.0
AVS Beteiligungsgesellschaft m.b.H. Innsbruck 75.0 75.0
AWEKA - Kapitalverwaltungsgesellschaft m.b.H. Graz 25.0 25.0
BCR Leasing IFN SA Bucharest 93.5 93.5
BCR Payments Services SRL Sibiu 93.6 93.6
BCR PENSII, SOCIETATE DE ADMINISTRARE A FONDURILOR DE PENSII PRIVATE SA Bucharest 93.6 93.6
BOOTES-Immorent Grundverwertungs-Gesellschaft m.b.H. Vienna 100.0 100.0
BTV-Beteiligungs-, Treuhand-, Vermögens-Verwaltungsgesellschaft m.b.H. Klagenfurt 25.0 25.0
Business Center Marchfeld Betriebsgesellschaft m.b.H. Vienna 100.0 100.0
CEE Property Development Portfolio 2 a.s. Amsterdam 99.0 99.0
CEE Property Development Portfolio B.V. Amsterdam 19.8 19.8
Cinci-Immorent Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
CS Investment Limited St Peter Port 99.0 99.0
CS Property Investment Limited Nicosia 99.0 99.0
Czech and Slovak Property Fund B.V. Amsterdam 19.8 19.8
Czech TOP Venture Fund B.V. Groesbeek 83.1 83.1
DENAR-Immorent Grundverwertungsgesellschaft m.b.H. Vienna 62.5 62.5
Derop B.V. Amsterdam 100.0 100.0
DIE ERSTE Leasing Grundaufschließungs- und Immobilienvermietungsgesellschaft m.b.H. Vienna 100.0 100.0
DIE ERSTE Leasing Grundbesitzgesellschaft m.b.H. Vienna 100.0 100.0
DIE ERSTE Leasing Grundstückverwaltungsgesellschaft m.b.H. Vienna 100.0 100.0
DIE ERSTE Leasing Immobilien Vermietungsgesellschaft m.b.H. Vienna 100.0 100.0
DIE ERSTE Leasing Immobilienbesitzgesellschaft m.b.H. Vienna 100.0 100.0
DIE ERSTE Leasing Immobilienverwaltungs- und -vermietungsgesellschaft m.b.H. Vienna 100.0 100.0
DIE ERSTE Leasing Realitätenverwaltungsgesellschaft m.b.H. Vienna 100.0 100.0
DIE EVA - Liegenschaftsverwaltunggesellschaft m.b.H. Vienna 100.0 100.0
DIE EVA-Gebäudeleasinggesellschaft m.b.H. Vienna 100.0 100.0
DIE EVA-Immobilienleasing und -erwerb Gesellschaft m.b.H. Vienna 100.0 100.0
Drustvo za lizing nekretnina, vozila, plovila i masina "S-Leasing" doo Podgorica Podgorica 62.5 62.5
EB Erste Bank Internationale Beteiligungen GmbH Vienna 100.0 100.0
EB-Malta-Beteiligungen Gesellschaft m.b.H. Vienna 100.0 100.0
EBV - Leasing Gesellschaft m.b.H. & Co. KG. Vienna 100.0 100.0
EKZ-Immorent Vermietung GmbH Vienna 100.0 100.0
Epsilon Immorent s.r.o. Prague 100.0 100.0
Erste & Steiermärkische S-Leasing drustvo s ogranicenom odgovornoscu za leasing vozila i strojeva Zagreb 59.4 47.1
Erste Asset Management d.o.o. Zagreb 100.0 100.0
Erste Asset Management Ltd. (vm Erste Alapkezelo Zrt.) Budapest 100.0 100.0
Erste Bank Beteiligungen GmbH Vienna 100.0 100.0
Erste Bank und Sparkassen Leasing GmbH Vienna 100.0 100.0
ERSTE CARD CLUB d.o.o. Zagreb 69.3 69.3
ERSTE CARD poslovanje s kreditnimi karticami, d.o.o. Ljubljana 69.3 69.3
ERSTE FACTORING d.o.o. Zagreb 76.9 76.9
Erste Group Immorent AG Vienna 100.0 100.0
ERSTE GROUP IMMORENT BULGARIA EOOD Sofia 100.0 100.0
Erste Group Immorent CR s.r.o. Prague 100.0 100.0
Erste Group Immorent International Holding GmbH Vienna 100.0 100.0
Erste Group Immorent Korlátolt Felelösségü Társaság Budapest 100.0 100.0
ERSTE GROUP IMMORENT LEASING drustvo s ogranicenom odgovornoscu Zagreb 92.5 92.5
Erste Group Immorent Lízing Zártkörüen Müködö Részvénytársaság Budapest 100.0 100.0
ERSTE GROUP IMMORENT POLSKA SPOLKA Z OGRANICZONA ODPOWIEDZIALNOSCIA Warsaw 100.0 100.0
ERSTE GROUP IMMORENT ROMANIA IFN S.A. Bucharest 100.0 100.0
Erste Group Immorent Slovensko s.r.o. Bratislava 100.0 100.0
ERSTE GROUP IMMORENT SME financne storitve d.o.o. Ljubljana 100.0 100.0
ERSTE GROUP IMMORENT SRL Bucharest 100.0 100.0
Erste Group Services GmbH Vienna 100.0 100.0
Erste Lakaslizing Zrt. Budapest 100 100
Erste Leasing, a.s. Znojmo 99.0 99.0
EVA-Immobilienvermietungs- und -verwertungsgesellschaft m.b.H. Vienna 100.0 100.0
Eva-Immobilienverwaltungsgesellschaft m.b.H. Vienna 100.0 100.0
Eva-Realitätenverwaltungsgesellschaft m.b.H. Vienna 100.0 100.0

234
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
EXTRON-Immorent Immobilienleasing GmbH Vienna 100.0 100.0
F & S Leasing GmbH Klagenfurt 100.0 100.0
Factoring Ceske sporitelny a.s. Prague 99.0 99.0
Financiara SA Bucharest 91.2 91.2
Gémeskút Ingatlanforgalmazó és Beruházó Kft. Budapest 100.0 100.0
GIROLEASING-Mobilienvermietungsgesellschaft m.b.H. Vienna 62.5 62.5
Gladiator Leasing Limited (vm. Erste Bank (Malta) Limited) Pieta 100.0 100.0
GLL 29235 LIMITED Pieta 99.9 100.0
GLL A330 Limited Dublin 2 100.0 100.0
GLL MSN 038 / 043 LIMITED Pieta 99.9 100.0
good.bee credit IFN S.A. Bucharest 60.0 60.0
good.bee Holding GmbH Vienna 60.0 60.0
Grand Hotel Marienbad s.r.o. Prague 100.0 100.0
HORIZON YACHTING LIMITED Gibraltar 100.0 100.0
Hotel- und Sportstätten Beteiligungs-, Errichtungs- und Betriebsgesellschaft m.b.H. Leasing KG St. Pölten 54.5 54.5
Hotel- und Sportstätten-Beteiligungs-, Errichtungs- und Betriebsgesellschaft m.b.H. Vienna 38.0 38.0
ILGES - Immobilien- und Leasing - Gesellschaft m.b.H. Rohrbach 40.0 40.0
ILION-IMMORENT Grundverwertungsgesellschaft m.b.H. Vienna 28.8 28.8
IMMORENT - ANDROMEDA Grundverwertungsgesellschaft m.b.H. Vienna 41.9 41.9
Immorent - Immobilienleasing Gesellschaft m.b.H. Vienna 96.3 96.3
Immorent - Kagraner Grundstücksverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
Immorent - Kappa Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
Immorent - Süd Gesellschaft m.b.H., S - Leasing KG Graz 46.4 46.4
Immorent - Weiko Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
Immorent - Wörgler Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT ALFA leasing druzba, d.o.o. Ljubljana 50.0 50.0
Immorent Beta s.r.o. Bratislava 100.0 100.0
IMMORENT BETA, leasing druzba, d.o.o. Ljubljana 62.5 62.5
IMMORENT Brno Retail s.r.o. Prague 100.0 100.0
IMMORENT Cheb s.r.o. Prague 100.0 100.0
IMMORENT DELTA, leasing druzba, d.o.o. Ljubljana 50.0 50.0
ImmoRent Einkaufszentren Verwaltungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT EPSILON, leasing druzba, d.o.o. Ljubljana 50.0 50.0
IMMORENT ETA, leasing druzba, d.o.o. Ljubljana 100.0 100.0
Immorent Hotel- und Resortvermietung Katschberg GmbH & Co OG Vienna 100.0 100.0
IMMORENT INPROX Budweis s.r.o. Prague 100.0 100.0
IMMORENT leasing nepremicnin d.o.o. Ljubljana 44.9 47.5
Immorent Lehrbauhöfeerrichtungsgesellschaft m.b.H. Vienna 100.0 100.0
Immorent Oktatási Ingatlanhasznosító és Szolgáltató Kft. Budapest 56.0 56.0
Immorent Orange Ostrava s.r.o. Prague 100.0 100.0
Immorent Orange s.r.o. Prague 100.0 100.0
IMMORENT PPP Ingatlanhasznosító és Szolgáltató Korlátolt Felelösségü Társaság Budapest 100.0 100.0
IMMORENT Project Development Holding GmbH Vienna 100.0 100.0
IMMORENT PTC s.r.o. Prague 100.0 100.0
IMMORENT RIED GmbH Vienna 100.0 100.0
IMMORENT SPARKASSE ST.PÖLTEN Leasinggesellschaft m.b.H. St. Pölten 50.0 50.0
IMMORENT Térinvest Ingatlanhasznosító és Szolgáltató Korlátolt Felelösségü Társaság Budapest 100.0 100.0
IMMORENT TMIS s.r.o. (vorm. TMIS ALFA s.r.o.) Prague 100.0 100.0
IMMORENT West Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-ANUBIS Grundverwertungsgesellschaft m.b.H. Vienna 95.0 95.0
IMMORENT-ASTRA Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-BRAUGEBÄUDE-Leasinggesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-CHEMILEN Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
Immorent-Clio-Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-DOMUS Grundverwertungsgesellschaft m.b.H. Vienna 92.5 92.5
Immorent-Einrichtungshauserrichtungs- und Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
Immorent-Gamma-Grundstücksverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
Immorent-Gebäudeleasinggesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-GREKO Grundverwertungsgesellschaft m.b.H. Vienna 93.8 93.8
Immorent-Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-JULIA Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-JURA Grundverwertungsgesellschaft m.b.H. Graz 32.5 25.0
IMMORENT-KRABA Grundverwertungsgesellschaft m.b.H. Vienna 90.0 90.0
Immorent-Lamda Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-LEANDER Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
Immorent-Lispa Grundverwertungsgesellschaft m.b.H. Innsbruck 51.0 51.0
IMMORENT-MARCO Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-MOMO Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-MÖRE Grundverwertungsgesellschaft m.b.H. Vienna 64.7 69.8
Immorent-Mytho Grundverwertungsgesellschaft m.b.H. Innsbruck 50.0 50.0
IMMORENT-NERO Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-Objektvermietungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-OSIRIS Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0

235
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
IMMORENT-PAN Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-RAFI Grundverwertungsgesellschaft m.b.H. Vienna 62.5 62.5
IMMORENT-Raiffeisen Fachhochschule Errichtungs- und BetriebsgmbH (ehem. ERIS-Immorent Vienna 55.0 55.0
Errichtungs GmbH)
IMMORENT-RAMON Grundverwertungsgesellschaft m.b.H. Vienna 62.5 62.5
IMMORENT-RASTA Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-REMUS Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-RIALTO Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-RIO Grundverwertungsgesellschaft m.b.H. Vienna 55.0 55.0
IMMORENT-RIWA Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-ROMULUS Grundverwertungsgesellschaft m.b.H. Vienna 90.0 90.0
IMMORENT-RONDO Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-RUBIN Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-SALVA Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-SARI Grundverwertungsgesellschaft m.b.H. Vienna 95.0 100.0
Immorent-Scala Grundverwertungsgesellschaft m.b.H. Vienna 64.7 69.8
Immorent-Sigma-Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
Immorent-Sigre Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
Immorent-Smaragd Grundverwertungsgesellschaft m.b.H. Schwaz 0.0 0.0
IMMORENT-SOBEK Grundverwertungsgesellschaft m.b.H. Vienna 93.8 93.8
Immorent-Steiko Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
Immorent-Süd Gesellschaft m.b.H. Graz 51.3 51.3
Immorent-Theta-Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-TOPAS Grundverwertungsgesellschaft m.b.H. Vienna 62.5 62.5
IMMORENT-TRIAS Grundverwertungsgesellschaft m.b.H. Vienna 62.5 62.5
IMMORENT-UTO Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
Immorent-WBV Grundverwertungsgesellschaft m.b.H. Innsbruck 50.0 50.0
IMMORENT-WEBA Grundverwertungsgesellschaft m.b.H. Vienna 75.0 75.0
IMNA-Immorent Immobilienleasing GmbH Vienna 100.0 100.0
Imobilia Kik s.r.o. Prague 0.0 100.0
IMV 2004 Ingatlankezelö Korlátolt Felelösségü Társaság Budapest 100.0 100.0
Intermarket Bank AG Vienna 84.3 84.9
Investicni spolecnost Ceske sporitelny, a.s. Prague 100.0 100.0
IR Beteiligungsverwaltungsgesellschaft mbH Vienna 100.0 100.0
IR Domestic Project Development Holding GmbH Vienna 100.0 100.0
IR-PRIAMOS Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IR-Sparkasse Wels Leasinggesellschaft m.b.H. in Liqu. Vienna 49.4 56.6
ISATIS-Immorent Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
Jersey Holding (Malta) Limited Pieta 0.0 100.0
Kärntner Sparkasse Vermögensverwaltungsgesellschaft m.b.H. Klagenfurt 25.0 25.0
KS-Beteiligungs- und Vermögens-Verwaltungsgesellschaft m.b.H. Klagenfurt 25.0 25.0
LAMBDA IMMORENT s.r.o. Prague 100.0 100.0
Lassallestraße 7b Immobilienverwaltung GmbH Vienna 100.0 100.0
LBL-Immorent Leasinggesellschaft m.b.H. Vienna 100.0 100.0
Leasing Slovenskej sporitelne, a.s. Bratislava 100.0 100.0
Liba Grundstücksverwaltungs-Gesellschaft m.b.H. Vienna 100.0 100.0
Lighthouse 449 Limited Pieta 99.9 100.0
LogCap CR s.r.o. Prague 51.0 51.0
LogCap Immorent Uno s.r.o. Bratislava 51.0 51.0
LogCap-IR Grundverwertungsgesellschaft m.b.H. Vienna 51.0 51.0
Mala Stepanska 17 s.r.o. Prague 100.0 100.0
MEKLA Leasing Gesellschaft m.b.H. Vienna 100.0 100.0
MOPET CZ a.s. Prague 90.0 92.9
NAXOS-Immorent Immobilienleasing GmbH Vienna 100.0 100.0
NÖ-Sparkassen Beteiligungsgesellschaft m.b.H. Vienna 2.5 2.5
Ölim-Grundverwertungsgesellschaft m.b.H. Graz 25.0 25.0
Omega Immorent s.r.o. Prague 100.0 100.0
OREST-Immorent Leasing GmbH Vienna 100.0 100.0
PAROS-Immorent Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
Pischeldorfer Straße 221 Liegenschaftsverwertungs GmbH Vienna 100.0 100.0
PONOS-Immorent Immobilienleasing GmbH (vormals Technologiepark Niklasdorf) Graz 62.5 62.5
PREDUZECE ZA FINANSIJSKI LIZING S-LEASING DOO, BEOGRAD Belgrade 62.5 66.6
RHEA-Immorent Holding GmbH Vienna 100.0 100.0
RUTAR INTERNATIONAL trgovinska d.o.o. Ljubljana 62.5 62.5
s Autoleasing a.s. Prague 99.0 99.0
s Autoleasing SK, s.r.o. Bratislava 99.0 99.0
S IMMORENT GAMMA drustvo s ogranicenom odgovornoscu za poslovanje nekretninama Zagreb 62.5 62.5
S IMMORENT KAPPA drustvo s ogranicenom odgovornoscu za poslovanje nekretninama Zagreb 100.0 100.0
S IMMORENT OMIKRON drustvo s ogranicenom odgovornoscu za poslovanje nekretninama Zagreb 100.0 100.0
S Slovensko, spol. s r.o. Bratislava 100.0 100.0
SAI Erste Asset Management S.A. Bucharest 100.0 100.0
SAL Liegenschaftsverwaltungsgesellschaft m.b.H. Vienna 64.2 69.3
Salzburger Sparkasse Leasing Gesellschaft m.b.H. Vienna 99.0 99.0

236
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
SCIENTIA Immorent GmbH Vienna 100.0 100.0
SERPENS-Immorent Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
S-Factoring, faktoring druzba d.d. Ljubljana 28.0 28.0
Sieben-Tiroler-Sparkassen Beteiligungsgesellschaft m.b.H. Kufstein 0.0 0.0
S-IMMORENT nepremicnine d.o.o. Ljubljana 50.0 50.0
S-Leasing d.o.o., Sarajevo Sarajevo 24.6 24.6
S-Leasing d.o.o., Skopje Skopje 25.0 25.0
S-Leasing Gesellschaft m.b.H. Kirchdorf an der Krems 64.9 69.9
S-Leasing Immobilienvermietungsgesellschaft m.b.H. Wr. Neustadt 33.3 33.3
SOLIS-CIVITAS-IMMORENT GmbH Vienna 100.0 100.0
SPARKASSE IMMORENT Grundverwertungsgesellschaft m.b.H. Vienna 99.0 99.0
Sparkasse Leasing S,družba za financiranje d.o.o. Ljubljana 28.0 28.0
Sparkasse Mühlviertel-West Holding GmbH Rohrbach 40.0 40.0
Sparkasse (Holdings) Malta Ltd. Sliema 0.0 0.0
Sparkassen IT Holding AG Vienna 29.7 29.7
SPARKASSEN LEASING druzba za financiranje d.o.o. Ljubljana 50.0 50.0
Sparkassenbeteiligungs und Service AG für Oberösterreich und Salzburg Linz 69.3 69.3
SPK - Immobilien- und Vermögensverwaltungs GmbH Graz 25.0 25.0
S-RENT DOO BEOGRAD Belgrade 62.5 35.5
Strabag Oktatási PPP Ingatlanhasznosító és Szolgáltató Korlátolt Felelösségü Társaság Budapest 70.0 70.0
Subholding Immorent GmbH Vienna 100.0 100.0
SVJETILJKA drustvo s ogranicenom odgovornoscu za trgovinu i promet nekretninama Zagreb 100.0 100.0
TAURIS-Immorent Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
Tempo Projekt Ingatlanhasznosító Korlátolt Felelösségü Társaság Budapest 100.0 100.0
Theta Immorent s.r.o. Prague 100.0 100.0
Theuthras-Immorent Grundverwertungsgesellschaft m.b.H. Graz 62.5 62.5
THOR-Immorent Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
TIPAL Immobilien GmbH in Liquidation Bozen 92.5 92.5
VIA Immobilien Errichtungsgesellschaft m.b.H. Vienna 100.0 100.0
Vorarlberger Sparkassen Beteiligungs GmbH Dornbirn 0.0 0.0
WIESTA-Immorent Immobilienleasing GmbH Vienna 100.0 100.0
XENIA-Immorent Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
Zeta Immorent s.r.o. Prague 100.0 100.0
Other
"SGL" Grundstücksverwaltungs- und Leasing Gesellschaft m.b.H. Vienna 100.0 100.0
"Sparkassen-Haftungs Aktiengesellschaft" Vienna 43.2 43.2
"Z Projekt 2000" Ingatlanforgalmazó Befektetö Korlátolt Felelösségü Társaság Budapest 100.0 100.0
ALPHA IMMORENT DRUSTVO SA OGRANICENOM ODGOVORNOSCU BEOGRAD Beograd 100.0 100.0
AMICUS Immorent Kommunalleasing GmbH Graz 63.3 63.3
Bee First Finance S.A. acting for and on behalf of its compartment Edelweiss 2013-1 Luxembourg 0.0 0.0
BCR Fleet Management SRL Bucharest 93.5 93.5
BCR Procesare SRL Bucharest 93.6 93.6
BCR Real Estate Management SRL Bucharest 93.6 93.6
BECON s.r.o. Prague 19.8 19.8
Beta-Immobilienvermietung GmbH Vienna 100.0 100.0
BGA Czech, s.r.o. Prague 19.8 19.8
brokerjet Ceske sporitelny, a.s. Prague 99.5 99.0
BRS Büroreinigungsgesellschaft der Steiermärkischen Bank und Sparkassen Aktiengesellschaft Graz 25.0 25.0
Gesellschaft m.b.H.
Campus Park a.s. Prague 99.0 99.0
Capexit Beteiligungs Invest GmbH Vienna 100.0 100.0
Capexit Private Equity Invest GmbH Vienna 100.0 100.0
Ceska sporitelna - penzijni spolecnost, a.s. Prague 99.0 99.0
Collat-real Korlátolt Felelösségü Társaság Budapest 0.0 100.0
CP Praha s.r.o. Prague 19.8 19.8
CPDP 2003 s.r.o. Prague 99.0 99.0
CPDP Logistics Park Kladno I a.s. Prague 99.0 99.0
CPDP Logistics Park Kladno II a.s. Prague 99.0 99.0
CPDP Prievozska a.s. Bratislava 99.0 99.0
CPDP Shopping Mall Kladno, a.s. Prague 99.0 99.0
CPP Lux S. 'ar.l. Luxembourg 19.8 19.8
CS DO DOMU, A.S. Prague 99.0 99.0
DIE ERSTE Immobilienvermietungsgesellschaft m.b.H. Vienna 100.0 100.0
DIE ERSTE Vermietungs GmbH Vienna 100.0 100.0
Dienstleistungszentrum Leoben GmbH Graz 51.0 51.0
EBB Beteiligungen GmbH Vienna 100.0 100.0
EB-Beteiligungsservice GmbH Vienna 99.9 100.0
EB-Grundstücksbeteiligungen GmbH Vienna 100.0 100.0
EB-Restaurantsbetriebe Ges.m.b.H. Vienna 100.0 100.0
EGB Capital Invest GmbH Vienna 100.0 100.0
EGB Ceps AUT Holding GmbH (vm. Erste Corporate Finance GmbH) Vienna 100.0 100.0
Erste Asset Management GmbH Vienna 100.0 100.0
Erste Befektetesi Zrt. Budapest 100.0 100.0

237
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
ERSTE CAMPUS Immobilien GmbH & Co KG Vienna 100.0 100.0
Erste Campus Mobilien GmbH & Co KG Vienna 100.0 100.0
Erste Capital Finance (Jersey) PCC St. Helier 100.0 100.0
ERSTE DELTA DRUSTVO S OGRANICENOM ODGOVORNOSCU ZA POSLOVANJE NEKRETNINAMA Zagreb 69.3 69.3
Erste Energy Services, a.s. Prague 99.0 99.0
Erste Finance (Delaware) LLC Wilmington 100.0 100.0
Erste Finance (Jersey) (6) Limited St. Helier 100.0 100.0
Erste Finance (Jersey) Limited IV St. Helier 100.0 100.0
Erste GCIB Finance I B.V. Amsterdam 100.0 100.0
Erste Grantika Advisory, a.s. Brno 99.0 99.0
Erste Group Card Processor d.o.o. (vm.MBU) Zagreb 100.0 100.0
ERSTE GROUP IMMORENT HRVATSKA drustvo s ogranicenom odgovornoscu za upravljanje Zagreb 100.0 100.0
ERSTE GROUP IMMORENT LJUBLJANA, financne storitve, d.o.o. Ljubljana 100.0 100.0
ERSTE GROUP IMMORENT SERBIA DOO BEOGRAD Beograd 100.0 100.0
Erste Group IT International, spol. s.r.o. Bratislava 100.0 100.0
Erste Group IT SK, spol. s r.o. Bratislava 100.0 100.0
Erste Group Shared Services (EGSS), s.r.o. Hodonin 99.6 99.6
ERSTE Immobilien Kapitalanlagegesellschaft m.b.H. Vienna 74.2 74.2
ERSTE IN-FORG Korlatolt felelossegu tarsasag Budapest 100.0 100.0
Erste Ingatlan Fejleszto, Hasznosito es Mernoki Kft. (vm. PB Risk Befektetesi es Szolgaltato Kft). Budapest 100.0 100.0
Erste Leasing Berlet Szolgaltato Kft. (vm. Erste Leasing Szolgaltato Kft.) Budapest 100.0 100.0
ERSTE NEKRETNINE d.o.o. za poslovanje nekretninama Zagreb 69.3 69.3
Erste Private Equity Limited London 100.0 100.0
Erste Reinsurance S.A. Luxembourg 100.0 100.0
Erste Securities Istanbul Menkul Degerler AS Istanbul 100.0 100.0
Erste Securities Polska S.A. Warsaw 100.0 100.0
ERSTE-SPARINVEST Kapitalanlagegesellschaft m.b.H. Vienna 86.5 86.5
Euro Dotacie, a.s. Žilina 65.3 65.3
Flottenmanagement GmbH Vienna 51.0 51.0
FUKO-Immorent Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
Gallery MYSAK a.s. Prague 99.0 99.0
Haftungsverbund GmbH Vienna 63.9 63.9
Hauptbahnhof Zwei Holding GmbH Vienna 0.0 100.0
HBF Eins Holding GmbH Vienna 100.0 100.0
HBF Fünf Epsilon Projektentwicklungs GmbH Vienna 0.0 100.0
HBF Sechs Gamma Projektentwicklungs GmbH Vienna 0.0 100.0
HBM Immobilien Kamp GmbH Vienna 100.0 100.0
HEKET Immobilien GmbH Vienna 100.0 100.0
HP Immobilien Psi GmbH Vienna 100.0 100.0
HT Immobilien Tau GmbH Vienna 100.0 100.0
HT Immobilien Theta GmbH Vienna 100.0 100.0
HV Immobilien Hohenems GmbH Vienna 100.0 100.0
IBF-Anlagenleasing 95 Gesellschaft m.b.H. Vienna 100.0 100.0
IGP Industrie und Gewerbepark Wörgl Gesellschaft m.b.H. Innsbruck 56.2 56.2
Immobilienverwertungsgesellschaft m.b.H. Klagenfurt 25.0 25.0
IMMOBUL BETA EOOD Sofia 100.0 100.0
IMMOKOR BUZIN drustvo s ogranicenom odgovornoscu za poslovanje nekretninama Zagreb 84.9 84.9
IMMORENT Alpha Ingatlanbérbeadó és Üzemeltetö Karlátolt Felelösségü Társaság Budapest 100.0 100.0
Immorent City Kft. Budapest 100.0 100.0
IMMORENT GAMA, leasing druzba, d.o.o. Ljubljana 50.0 50.0
IMMORENT Jilska s.r.o. Prague 100.0 100.0
IMMORENT LINE BULGARIA EOOD Sofia 100.0 100.0
Immorent Omega d.o.o. Zagreb 100.0 100.0
IMMORENT Orion s.r.o. Prague 100.0 100.0
IMMORENT Österreich GmbH Vienna 100.0 100.0
Immorent Park Kft. Budapest 100.0 100.0
IMMORENT Plzen s.r.o. Prague 100.0 100.0
Immorent razvoj projektov d.o.o. Ljubljana 100.0 100.0
Immorent Severna vrata d.o.o. Ljubljana 100.0 100.0
IMMORENT SIGMA drustvo s ogranicenom odgovornoscu za poslovanje nekretninama Zagreb 62.5 62.5
Immorent Singidunum d.o.o. Novi Beograd 100.0 100.0
IMMORENT STROY EOOD Sofia 100.0 100.0
IMMORENT Treuhand- und Vermögensverwaltunggesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT Vega s.r.o. Prague 100.0 100.0
IMMORENT-HATHOR Grundverwertungsgesellschaft m.b.H Vienna 62.5 62.5
Immorent-Mobilienvermietungs-Gesellschaft m.b.H., Liegenschaftsverwaltung Penzing & Co KG Vienna 100.0 100.0
IMMORENT-PIA Grundverwertungsgesellschaft m.b.H. Vienna 100.0 100.0
IMMORENT-Sparkasse St. Pölten II Grundverwertungsgesellschaft m.b.H. Vienna 51.0 51.0
IMMORENT-STIKÖ Leasinggesellschaft m.b.H. Vienna 100.0 100.0
Innovationspark Graz-Puchstraße GmbH Graz 51.0 51.0
Invalidovna centrum a.s. Prague 100.0 100.0
IPS Fonds Gesellschaft bürgerlichen Rechts Vienna 0.0 64.7
IR Bevásárló Udvar Ingatlanhasznosító Kft. Budapest 100.0 100.0

238
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
IR CEE Project Development Holding GmbH Vienna 100.0 100.0
IR Piramis Kft Budapest 100.0 100.0
IR Sor 90 Kft. Budapest 100.0 100.0
K1A Kft Budapest 100.0 100.0
KS - Dienstleistungsgesellschaft m.b.H. Klagenfurt 25.0 25.0
LANED a.s. Bratislava 100.0 100.0
LBG 61 LiegenschaftsverwaltungsgmbH Vienna 100.0 100.0
LEDA-Immorent Grundverwertungsgesellschaft m.b.H. Vienna 64.9 69.9
LEGU-Immorent Leasing GmbH Vienna 75.0 75.0
LIEGESA Immobilienvermietung GmbH Nfg OG Graz 25.0 25.0
MCS 14 Projektentwicklung GmbH & Co KG Vienna 100.0 100.0
Nove Butovice Development s.r.o. Prague 19.8 19.8
ÖCI-Unternehmensbeteiligungsgesellschaft.m.b.H. Vienna 99.6 99.6
OM Objektmanagement GmbH Vienna 100.0 100.0
Portfolio Kereskedelmi, Szolgaltato es Szamitastechnikai Kft. Budapest 100.0 100.0
Procurement Services CZ s.r.o. Prague 99.5 99.5
Procurement Services GmbH Vienna 99.9 99.9
Procurement Services HR d.o.o. Zagreb 99.9 99.9
Procurement Services HU Kft. Budapest 99.9 99.9
Procurement Services RO srl Bucharest 99.9 99.9
Procurement Services SK, s.r.o. Bratislava 99.9 99.9
Project Development Vest s.r.l Bucharest 0.0 100.0
Proxima IMMORENT s.r.o. Prague 100.0 100.0
QBC Immobilien GmbH Vienna 68.8 68.8
QBC Immobilien GmbH & Co Alpha KG Vienna 68.8 68.8
QBC Immobilien GmbH & Co Beta KG Vienna 68.8 68.8
QBC Immobilien GmbH & Co Delta KG Vienna 68.8 68.8
QBC Immobilien GmbH & Co Epsilon KG Vienna 68.8 68.8
QBC Immobilien GmbH & Co Gamma KG Vienna 68.8 68.8
QBC Management und Beteiligungen GmbH Vienna 68.8 68.8
QBC Management und Beteiligungen GmbH & Co KG Vienna 68.8 68.8
Realia Consult Magyarország Beruházás Szervezési KFT Budapest 100.0 100.0
Realitna spolocnost Slovenskej sporitelne, a.s. Bratislava 100.0 100.0
Real-Service für oberösterreichische Sparkassen Realitätenvermittlungsgesellschaft m.b.H. Linz 62.6 62.6
Real-Service für steirische Sparkassen, Realitätenvermittlungsgesellschaft m.b.H. Graz 59.8 59.8
REICO investicni spolecnost Ceske sporitelny, a.s. Prague 99.0 99.0
RINGTURM Kapitalanlagegesellschaft m.b.H. Vienna 95.0 95.0
s ASG Sparkassen Abwicklungs- und Servicegesellschaft mbH Graz 25.0 25.0
S IMMORENT LAMBDA drustvo s ogranicenom odgovornoscu za poslovanje nekretninama Zagreb 70.0 70.0
S IMMORENT ZETA drustvo s ogranicenom odgovornoscu za poslovanje nekretninama Zagreb 84.9 84.9
s IT Solutions AT Spardat GmbH Vienna 82.2 82.2
s IT Solutions CZ, s.r.o. Prague 99.6 99.6
s IT Solutions Holding GmbH Vienna 100.0 100.0
s IT Solutions HR drustvo s ogranicenom odgovornoscu za usluge informacijskih tehnologija Bjelovar 93.9 93.9
s IT Solutions SK, spol. s r.o. Bratislava 99.8 99.8
s REAL Immobilienvermittlung GmbH Vienna 96.1 96.1
s ServiceCenter GmbH (vm. CSSC) Vienna 57.3 58.4
S Tourismus Services GmbH Vienna 100.0 100.0
s Wohnbauträger GmbH Vienna 90.8 90.8
s Wohnfinanzierung Beratungs GmbH Vienna 75.4 75.4
sBAU Holding GmbH Vienna 95.0 95.0
SC Bucharest Financial Plazza SRL Bucharest 93.6 93.6
Schauersberg Immobilien Gesellschaft m.b.H. Graz 25.0 25.0
sDG Dienstleistungsgesellschaft mbH (vm. Sparkassen Zahlungsverkehrsabwicklungs GmbH) Linz, Donau 57.8 57.8
SILO II LBG 57 -59 Liegenschaftsverwertung GmbH & Co KG Vienna 0.0 100.0
S-Immobilien Weinviertler Sparkasse GmbH Vienna 100.0 100.0
S-Invest Beteiligungsgesellschaft m.b.H. Vienna 70.0 70.0
Sio Ingatlan Invest Kft. Budapest 100.0 100.0
SK - Immobiliengesellschaft m.b.H. Krems an der Donau 0.0 0.0
SK Immobilien Epsilon GmbH Vienna 100.0 100.0
Smichov Real Estate, a.s. Prague 19.8 19.8
Solaris City Kft. Budapest 100.0 100.0
Solaris Park Kft. Budapest 100.0 100.0
SPARDAT - Bürohauserrichtungs- und Vermietungsgesellschaft m.b.H. Vienna 100.0 100.0
Sparfinanz-, Vermögens-, Verwaltungs- und Beratungs- Gesellschaft m.b.H. Wiener Neustadt 0.0 0.0
Sparkasse Kufstein Immobilien GmbH & Co KG Kufstein 0.0 0.0
Sparkasse Oberösterreich Kapitalanlagegesellschaft m.b.H. Linz 29.6 38.1
Sparkasse S d.o.o. Ljubljana 25.0 25.0
Sparkassen Real Vorarlberg Immobilienvermittlung GmbH Dornbirn 48.1 48.1
Sparkassen-Real-Service für Kärnten und Osttirol Realitätenvermittlungs-Gesellschaft m.b.H. Klagenfurt 55.6 55.6
Sparkassen-Real-Service -Tirol Realitätenvermittlungs-Gesellschaft m.b.H. Innsbruck 66.8 66.8
SPV - Druck Gesellschaft m.b.H Vienna 99.9 99.9
S-Real, Realitätenvermittlungs- und -verwaltungs Gesellschaft m.b.H. Wiener Neustadt 0.0 0.0

239
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
Steiermärkische Verwaltungssparkasse Immobilien & Co KG Graz 25.0 25.0
S-Tourismusfonds Management Aktiengesellschaft Vienna 100.0 100.0
SUPORT COLECT SRL Bucharest 93.6 93.6
SVD-Sparkassen-Versicherungsdienst Versicherungsbörse Nachfolge GmbH & Co. KG Innsbruck 75.0 75.0
TER INVEST Ingatlanhasznosito Korlatolt Felelössegü Tarsasag Budapest 100.0 100.0
Tirolinvest Kapitalanlagegesellschaft m.b.H. Innsbruck 77.9 77.9
Trencin Retail Park a.s. Bratislava 19.8 19.8
VERNOSTNI PROGRAM IBOD, a.s. Prague 99.0 99.0
VIDAR Handels GmbH in Liqu. Vienna 100.0 100.0
Wallgasse 15+17 Projektentwicklungs GmbH Vienna 100.0 100.0
Wirtschaftspark Siebenhirten Entwicklungs- und Errichtungs GmbH Vienna 60.0 60.0
ZWETTLER LEASING Gesellschaft m.b.H. Zwettl 0.0 0.0
Funds
SPARKASSEN 8 Vienna 0.0 0.0
ESPA BOND DURATION SHIELD Vienna 0.0 1.2
SPARKASSEN 5 Vienna 0.0 0.0
SPARKASSE 9 Vienna 0.0 0.0
PRO INVEST PLUS Vienna 0.0 0.0
SPARKASSEN 21 Vienna 0.0 0.0
ESPA ASSET-BACKED Vienna 0.0 0.0
s RegionenFonds Linz 0.0 0.0
SPARKASSEN 17 Vienna 0.0 0.0
SPARKASSEN 19 Vienna 0.0 0.0
S CASHRESERVE Linz 0.0 0.0
SPARKASSEN 2 Vienna 0.0 0.0
SPARKASSEN 26 Vienna 0.0 0.0
SPARKASSEN 4 Vienna 0.0 0.0
SPARRENT Vienna 0.0 0.0
Equity method investments
Credit institutions
Prva stavebna sporitelna, a.s. Bratislava 35.0 35.0
SPAR-FINANZ BANK AG Salzburg 50.0 50.0
Other financial institutions
Adoria Grundstückvermietungs Gesellschaft m.b.H. Vienna 24.5 24.5
Aventin Grundstücksverwaltungs Gesellschaft m.b.H. Horn 24.5 24.5
CALDO Grundstücksverwertungsgesellschaft m.b.H. Vienna 31.2 31.2
DIE ERSTE Leasing & VKB Immobilien Vermietungsgesellschaft m.b.H. Vienna 50.0 50.0
Epsilon - Grundverwertungsgesellschaft m.b.H. Vienna 50.0 50.0
Esquilin Grundstücksverwaltungs Gesellschaft m.b.H. Vienna 24.5 24.5
Fondul de Garantare a Creditului Rural IFN SA Bucharest 31.2 31.2
FORIS Grundstückvermietungs Gesellschaft m.b.H. Vienna 24.5 24.5
HOSPES-Grundstückverwaltungs Gesellschaft m.b.H. St. Pölten 33.33 33.33
Immorent-Hypo-Rent Grundverwertungsgesellschaft m.b.H. Innsbruck 50.0 50.0
LITUS Grundstückvermietungs Gesellschaft m.b.H. St. Pölten 24.5 24.5
MELIKERTES Raiffeisen-Mobilien-Leasing Gesellschaft m.b.H. Vienna 20.0 20.0
N.Ö. Gemeindegebäudeleasing Gesellschaft m.b.H. Vienna 33.4 33.4
N.Ö. Kommunalgebäudeleasing Gesellschaft m.b.H. Vienna 28.4 28.4
NÖ Bürgschaften und Beteiligungen GmbH Vienna 24.1 24.1
NÖ-KL Kommunalgebäudeleasing Gesellschaft m.b.H. Vienna 28.4 28.4
O.Ö. Gemeindegebäude-Leasing Gesellschaft m.b.H. Linz 50.0 50.0
O.Ö. Kommunalgebäude-Leasing Gesellschaft m.b.H. Linz 40.0 40.0
Quirinal Grundstücksverwaltungs Gesellschaft m.b.H. Vienna 33.3 33.3
Rembra Leasing Gesellschaft m.b.H. Vienna 50.0 50.0
RL DANTE Mobilien-Leasing GmbH Vienna 20.0 20.0
Schulerrichtungsgesellschaft m.b.H. Vienna 46.3 46.3
Steirische Gemeindegebäude Leasing Gesellschaft m.b.H. Graz 50.0 50.0
Steirische Kommunalgebäudeleasing Gesellschaft m.b.H. Graz 50.0 50.0
Steirische Leasing für Gebietskörperschaften Gesellschaft m.b.H. Graz 50.0 50.0
Steirische Leasing für öffentliche Bauten Gesellschaft m.b.H. Graz 50.0 50.0
SUPRIA Raiffeisen-Immobilien-Leasing Gesellschaft m.b.H. Vienna 50.0 50.0
SWO Kommunalgebäudeleasing Gesellschaft m.b.H. Vienna 50.0 50.0
TKL V Grundverwertungsgesellschaft m.b.H. Innsbruck 33.3 33.3
TKL VIII Grundverwertungsgesellschaft m.b.H. Innsbruck 33.3 33.3
TRABITUS Grundstückvermietungs Gesellschaft m.b.H. Vienna 25.0 25.0
UNIQA Immobilien-Projekterrichtungs GmbH Vienna 33.3 33.3
VALET-Grundstückverwaltungs Gesellschaft m.b.H. St. Pölten 24.5 24.5
VBV - Betriebliche Altersvorsorge AG Vienna 26.9 26.9
Viminal Grundstücksverwaltungs Gesellschaft m.b.H. Vienna 25.0 25.0
VKL II Grundverwertungsgesellschaft m.b.H. Dornbirn 33.3 33.3
VKL III Gebäudeleasing-Gesellschaft m.b.H. Dornbirn 33.3 33.3
VOLUNTAS Grundstückvermietungs Gesellschaft m.b.H. St. Pölten 35.0 35.0
Vorarlberger Kommunalgebäudeleasing Gesellschaft m.b.H. Dornbirn 33.3 33.3

240
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14

Other
APHRODITE Bauträger Aktiengesellschaft Vienna 45.4 45.4
Bio-Wärme Scheifling GmbH Scheifling 49.0 49.0
Budapark Estate 2005 Kft. Budaörs 42.0 42.0
CII Central Investments Imobiliare SRL Bucharest 52.0 52.0
EBB-Gamma Holding GmbH Vienna 49.0 49.0
ERSTE d.o.o. Zagreb 41.7 45.2
Erste ÖSW Wohnbauträger GmbH Vienna 45.7 45.7
Garage Eisenstadt Betriebsgesellschaft m.b.H. Vienna 50.0 50.0
Gelup GesmbH Vienna 31.7 31.7
Gemdat Niederösterreichische Gemeinde-Datenservice Gesellschaft m. b. H. Korneuburg 0.8 0.8
Hochkönig Bergbahnen GmbH Mühlbach am Hochkönig 45.3 45.3
Immobilien West GmbH Salzburg 49.3 49.3
KWC Campus Errichtungsgesellschaft m.b.H. Klagenfurt 12.5 12.5
Let's Print Holding AG Graz 42.0 42.0
LTB Beteiligungs GmbH Vienna 25.0 25.0
RSV Beteiligungs GmbH Vienna 33.3 33.3
Slovak Banking Credit Bureau, s.r.o. Bratislava 33.3 33.3
STRAULESTI PROPERTY DEVELOPMENT SRL Bucharest 50.0 50.0
TRGOVINSKI CENTAR ZADAR - FAZA 2 d.o.o. Zadar 50.0 50.0
WASHINGTON PROEKT OOD Sofia 55.4 55,4
Other investments
Credit institutions
EUROAXIS BANK AD Moskva Moscow 0.0 0.0
Gorenjska Banka d.d. Kranj 2.3 2.3
JUBMES BANKA AD BEOGRAD Belgrade 0.0 0.0
Oesterreichische Kontrollbank Aktiengesellschaft Vienna 12.9 12.9
Open Joint Stock Company Commercial Bank "Center Invest" Rostov-on-Don 9.8 9.8
Swedbank AB Stockholm 0.1 0.1
Waldviertler Volksbank Horn registrierte Genossenschaft mit beschränkter Haftung Horn 0.0 0.0
Other financial institutions
"Wohnungseigentum", Tiroler gemeinnützige Wohnbaugesellschaft m.b.H. Innsbruck 19.1 19.1
"Wohnungseigentümer" Gemeinnützige Wohnbaugesellschaft m.b.H. Mödling 12.9 12.9
AB Banka, a.s. v likvidaci Mlada Boleslav 4.4 4.4
ARWAG Holding-Aktiengesellschaft Vienna 19.2 19.2
AS-WECO 4 Grundstückverwaltung Gesellschaft m.b.H. Salzburg 30.0 30.0
Bank Austria Leasing - IMMORENT Immobilienleasing GmbH Vienna 50.0 50.0
BRB Burgenländische Risikokapital Beteiligungen AG Eisenstadt 6.4 6.4
C+R Projekt s r.o. Prague 100.0 100.0
CaixaBank Electronic Money E.D.E., S.L. Barcelona 0.0 10.0
Casa de Compensare Bucuresti SA Bucharest 0.3 0.3
Casa Romana de Compensatie Sibiu Sibiu 0.4 0.4
CONATUS Grundstückvermietungs Gesellschaft m.b.H. St. Pölten 24.5 24.5
CTP Herspicka spol. s.r.o. Prague 100.0 100.0
CULINA Grundstücksvermietungs Gesellschaft m.b.H. St. Pölten 25.0 25.0
Diners Club BH d.o.o. Sarajevo Sarajevo 69.3 69.3
Diners Club Bulgaria AD Sofia 3.6 3.6
Diners Club Russia Moscow 11.0 11.0
DINESIA a.s. Prague 99.0 99.0
DRUŠTVO ZA KONSALTING I MENADŽMENT POSLOVE TRŽIŠTE NOVCA A.D. BEOGRAD (SAVSKI VENAC) Beograd 0.8 0.8
EBB-Epsilon Holding GmbH Vienna 100.0 100.0
EBV-Leasing Gesellschaft m.b.H. Vienna 51.0 51.0
EFH-Beteiligungsgesellschaft m.b.H. Vienna 50.0 50.0
European Directories Parent S.A. Luxembourg 4.0 4.0
EWU Wohnbau Unternehmensbeteiligungs-Aktiengesellschaft St. Pölten 12.8 12.8
FINANSIJSKI BERZANSKI POSREDNIK BEOGRADSKI ESKONTNI CENTAR AKCIONARSKO Beograd 0.0 0.0
DRUŠTVO, BEOGRAD (STARI GRAD) - U STECAJU
Fondul Roman de Garantare a Creditelor pentru Intreprinzatorii privati SA Bucharest 8.9 8.9
Garantiqa Hitelgarancia Zrt. Budapest 2.2 2.2
GEBAU-NIOBAU Gemeinnützige Baugesellschaft m.b.H. Maria Enzersdorf 12.2 12.2
Gemeinnützige Bau- und Siedlungsgenossenschaft "Waldviertel" registrierte Genossenschaft mit Raabs an der Thaya 0.0 0.0
beschränkter Haftung
Gemeinnützige Bau- und Siedlungsgesellschaft MIGRA Gesellschaft m.b.H. Vienna 19.8 19.8
Gemeinnützige Baugenossenschaft in Feldkirch, registrierte Genossenschaft mit beschränkter Haftung Feldkirch 0.0 0.0
Gemeinnützige Wohnungsgesellschaft "Austria" Aktiengesellschaft Mödling 12.7 12.7
German Property Invest Immobilien GmbH Vienna 10.8 10.7
GLL CLASSIC 400 LIMITED Pieta 0.0 100.0
GLL MSN 2118 LIMITED Dublin 0.0 100.0
GWG - Gemeinnützige Wohnungsgesellschaft der Stadt Linz GmbH Linz 5.0 5.0
GWS Gemeinnützige Alpenländische Gesellschaft für Wohnungsbau und Siedlungswesen m.b.H. Graz 7.5 7.5
I+R Projekt Fejlesztési Korlátolt Felelösségü Társaság Budapest 100.0 100.0
Immorent-VBV Grundverwertungsgesellschaft m.b.H. Vienna 0.0 0.0
K+R Projekt s.r.o. Prague 100.0 100.0

241
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
KERES-Immorent Immobilienleasing GmbH Vienna 25.0 25.0
LBH Liegenschafts- und Beteiligungsholding GmbH Innsbruck 75.0 75.0
MONTENEGRO BERZA AD Podgorica Podgorica 0.1 0.1
NATA Immobilien-Leasing Gesellschaft m.b.H. Vienna 10.0 10.0
O.Ö. Kommunal-Immobilienleasing GmbH Linz 40.0 40.0
O.Ö. Leasing für Gebietskörperschaften Ges.m.b.H. Linz 33.3 33.3
O.Ö. Leasing für öffentliche Bauten Gesellschaft m.b.H. Linz 33.3 33.3
Oberösterreichische Kreditgarantiegesellschaft m.b.H. Linz 4.5 4.5
Oberösterreichische Unternehmensbeteiligungsgesellschaft m.b.H. Linz 4.5 4.5
Objekt-Lease Grundstücksverwaltungs-Gesellschaft m.b.H. Vienna 50.0 50.0
Österreichische Hotel- und Tourismusbank Gesellschaft m.b.H. Vienna 18.8 18.8
ÖSW Wohnbauvereinigung Gemeinnützige Gesellschaft m.b.H. Salzburg 15.4 15.4
Otkupen Centar d.o.o. Strumica 0.0 25.0
ÖWB Gemeinnützige Wohnungsaktiengesellschaft Salzburg 25.1 25.1
ÖWGES Gemeinnützige Wohnbaugesellschaft m.b.H. Graz 2.5 2.5
REWE Magyarország Ingatlankezelö és - forgalmazó Korlátolt Felelössegü Társaság Budapest 100.0 100.0
S IMMOKO Holding GesmbH Korneuburg 0.0 0.0
S IMMOKO Leasing GesmbH Korneuburg 0.0 0.0
S Servis, s.r.o. Znojmo 99.0 99.0
Salzburger Kreditgarantiegesellschaft m.b.H. (vm. Bürgschaftsbank Salzburg GmbH) Salzburg 18.0 18.0
Sapor Beteiligungsverwaltungs GmbH Vienna 100.0 100.0
Seilbahnleasing GmbH Innsbruck 33.3 33.3
Societatea de Transfer de Fonduri si Decontari TransFonD SA Bucharest 3.0 3.0
SPARKASSE Bauholding Gesellschaft m.b.H. Salzburg 98.7 98.7
Sparkasse Bauholding Leasing I GmbH Salzburg 98.7 98.7
Sparkasse Kufstein Immobilien GmbH Kufstein 0.0 0.0
STUWO Gemeinnützige Studentenwohnbau Aktiengesellschaft Vienna 50.3 50.3
T+R Projekt Fejelsztési Korlátolt Felelösségü Társaság Budapest 100.0 100.0
Tiroler Kommunalgebäudeleasing Gesellschaft m.b.H. Innsbruck 33.3 33.3
Tiroler Landesprojekte Grundverwertungs GmbH Innsbruck 33.3 33.3
TKL II. Grundverwertungsgesellschaft m.b.H. Innsbruck 33.3 33.3
TKL III Grundverwertungsgesellschaft m.b.H. Innsbruck 33.3 33.3
TKL VI Grundverwertungsgesellschaft m.b.H. Innsbruck 28.2 28.2
TKL VII Grundverwertungsgesellschaft m.b.H. Innsbruck 28.4 28.4
Trziste novca d.d. Zagreb 8.6 8.6
UNDA Grundstückvermietungs Gesellschaft m.b.H. St. Pölten 25.0 25.0
VBV - Vorsorgekasse AG Vienna 24.5 24.5
VKL IV Leasinggesellschaft mbH Dornbirn 23.3 23.3
VKL V Immobilien Leasinggesellschaft m.b.H. Dornbirn 23.3 23.3
WKBG Wiener Kreditbürgschafts- und Beteiligungsbank AG (vorm.Kapital-Beteiligungs Vienna 15.6 15.1
Aktiengesellschaft)
WNI Wiener Neustädter Immobilienleasing Ges.m.b.H. Wiener Neustadt 0.0 0.0
Z Leasing METIS Immobilien Leasing Gesellschaft m.b.H. Vienna 50.0 50.0
Other investments
Other
"Die Kärntner - Förderungs- und Beteiligungsgesellschaft für die Stadt Friesach Gesellschaft m.b.H. Friesach 25.0 25.0
"Die Kärntner" - Förderungsgesellschaft für das Gurktal Gesellschaft m.b.H. Gurk 25.0 25.0
"Die Kärntner"-BTWF-Beteiligungs- und Wirtschaftsförderungsgesellschaft für die Stadt St. Veit/Glan St. Veit an der Glan 25.0 25.0
Gesellschaft m.b.H.
"Die Kärntner"-Förderungs- und Beteiligungsgesellschaft für den Bezirk Wolfsberg Gesellschaft m.b.H. Wolfsberg 25.0 25.0
"Gasthof Löwen" Liegenschaftsverwaltung GmbH & Co., KG Feldkirch 0.0 0.0
"Immo - Rent" Liegenschaftsanlage und Verwaltung Gesellschaft m.b.H. & Co.KG. Vienna 87.9 87.9
"Photovoltaik-Gemeinschaftsanlage" der Marktgemeinde Wolfurt Wolfurt 0.0 0.0
"SIMM" Liegenschaftsverwertungsgesellschaft m.b.H. Graz 25.0 25.0
"S-PREMIUM" Drustvo sa ogranicenom odgovornoscu za posredovanje i zastupanje u osiguranju d.o.o. Novo Sarajevo 24.5 24.5
Sarajevo
"TBG" Thermenzentrum Geinberg Betriebsgesellschaft m.b.H. Geinberg 1.1 1.1
"THG" Thermenzentrum Geinberg Errichtungs-GmbH Linz 1.1 1.1
"TROPS" Beteiligungsgesellschaft m.b.H St. Martin im Mühlkreis 5.0 5.0
1776 CLO I., LTD_106781 Vienna 0.0 0.0
A.D.I. Immobilien Beteiligungs GmbH Vienna 10.8 10.7
ACA CLO, Ltd._23697 Vienna 0.0 0.0
Achenseebahn-Aktiengesellschaft Jenbach 0.0 0.0
AD SPORTSKO POSLOVNI CENTAR MILLENNIUM VRŠAC Vršac 0.2 0.2
Agrargemeinschaft Kirchschlag Kirchschlag 0.0 0.0
AGRI-BUSINESS Kft. (in Konkurs) Hegyeshalom 100.0 100.0
AKCIONARSKO DRUŠTVO DUNAV ZA PROIZVODNJU TEKSTILNIH I AMBALAŽNIH PROIZVODA Celarevo 4.7 4.7
CELAREVO - U STECAJU
AKCIONARSKO DRUŠTVO PETAR DRAPŠIN NOVI SAD - U RESTRUKTURIRANJU Novi Sad 1.1 1.1
AKCIONARSKO DRUŠTVO ZA PROIZVODNJU DELOVA ZA MOTORE GARANT, FUTOG Futog 6.2 6.2
AKCIONARSKO DRUŠTVO ZA PROIZVODNJU KABLOVA I PROVODNIKA NOVOSADSKA FABRIKA Novi Sad 1.1 1.1
KABELA NOVI SAD
AKIM Beteiligungen GmbH Vienna 10.8 10.7
Alpbacher Bergbahn Gesellschaft m.b.H. Alpbach 0.0 0.0

242
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
Alpendorf Bergbahnen AG St. Johann im Pongau 0.0 0.0
APIDOS CDO V_23788 Vienna 0.0 0.0
APIDOS QUATTRO CDO_107847 Vienna 0.0 0.0
aptus Immobilien GmbH Berlin 10.8 10.7
AREALIS Liegenschaftsmanagement GmbH Vienna 50.0 50.0
Argentum Immobilienverwertungs Ges.m.b.H. Linz 28.3 29.8
AS LEASING Gesellschaft m.b.H. Linz 29.8 29.8
ASTRA BANKA AKCIONARSKO DRUŠTVO BEOGRAD - U STECAJU Beograd 0.0 0.0
AS-WECO Grundstückverwaltung Gesellschaft m.b.H. Linz 28.3 29.8
AUBURN0441_403250 Vienna 0.0 0.0
Austrian Reporting Services GmbH Vienna 16.8 16.8
AU-VISION Entwicklungs-GmbH Leoben 24.9 24.9
AVOCA 0724_414332 Vienna 0.0 0.0
AVOCA04/20_403394 Vienna 0.0 0.0
AVOCA05/21_404723 Vienna 0.0 0.0
AWEKA-Beteiligungsgesellschaft m.b.H. Vienna 25.0 25.0
BABSON MIDMARKET_108225 Vienna 0.0 0.0
BABSON0620_408715 Vienna 0.0 0.0
Bad Leonfelden Hotelbetriebs Gesellschaft mbH Bad Leonfelden 63.4 63.4
Bad Tatzmannsdorf - Thermal- und Freizeitzentrum Gesellschaft mit beschränkter Haftung & Co KG Bad Tatzmannsdorf 0.9 0.9
Bäder - Betriebs - Gesellschaft m.b.H. der Stadt Schladming & Co Kommanditgesellschaft Schladming 0.0 0.0
Balance Resort GmbH (vm. Wellness Hotel Stegersbach) Stegersbach 100.0 100.0
Balder Handels GmbH in Liqu. Vienna 100.0 100.0
Bank-garázs Ingatlanfejlesztési és Vagyonhasznosító Kft. Budapest 10.8 10.7
Bäuerliches Blockheizkraftwerk reg. Gen.m.b.H. Kautzen 0.0 0.0
BBH Hotelbetriebs GmbH Vienna 69.0 69.0
BCR Asigurari de Viata Vienna Insurance Group SA Bucharest 5.1 5.1
BeeOne GmbH Vienna 100.0 100.0
Beogradska Berza, Akcionarsko Drustvo Beograd Belgrade 12.6 12.6
Berg- und Schilift Schwaz-Pill Gesellschaft m.b.H. Schwaz 0.0 0.0
Bergbahn Aktiengesellschaft Kitzbühel Kitzbühel 0.0 0.0
Bergbahn Lofer Ges.m.b.H. Lofer 7.8 7.8
Bergbahn- und Skiliftgesellschaft St. Jakob i.D. GmbH in Liqu. St. Jakob in Defereggen 0.0 0.0
Bergbahnen Oetz Gesellschaft m.b.H. Oetz 0.0 0.0
Bergbahnen Westendorf Gesellschaft m.b.H. Westendorf 0.0 0.0
Betriebliche Altersvorsorge - Software Engineering GmbH Vienna 24.2 24.2
BGM - IMMORENT Aktiengesellschaft & Co KG Vienna 2.4 2.4
Biogenrohstoffgenossenschaft Kamptal und Umgebung registrierte Genossenschaft mit beschränkter Haftung Gars am Kamp 0.0 0.0
Biomasse Heizwerk Zürs GmbH Zürs 0.0 0.0
Biroul de credit SA Bucharest 17.8 17.8
Biroul de Credit SRL Chişinău 6.3 6.3
BL Hotel Beteiligungs GmbH Rohrbach 69.4 69.4
BlackRock Senior Income Series Corp. IV_23754 Vienna 0.0 0.0
BlackRock Senior Income Series Corp. V_24091 Vienna 0.0 0.0
Brauerei Murau eGen Murau 0.6 0.6
Bregenz Tourismus & Stadtmarketing GmbH Bregenz 0.0 0.0
Bridgeport CLO II, Ltd._24083 Vienna 0.0 0.0
BRIDGEPORT CLO LTD_106948 Vienna 0.0 0.0
BSV Mountain Immobilieninvest GmbH Klosterneuburg 0.0 0.0
Buda Kereskedelmi Kozpont Kft Budapest 10.8 10.7
Bursa Romana de Marfuri SA Bucharest 2.4 2.4
Burza cennych papierov v Bratislave, a.s. Bratislava 3.9 3.9
BVP-Pensionsvorsorge-Consult G.m.b.H. Vienna 26.9 26.9
C.I.M. Beteiligungen 1998 GmbH Vienna 41.1 41.1
C.I.M. Unternehmensbeteiligungs- und Anlagenvermietungs GmbH in Liqu. Vienna 33.3 33.3
C.I.M. Verwaltung und Beteiligungen 1999 GmbH Vienna 26.7 26.7
Callidus Debt Partners CDO Fund, Ltd._23630 Vienna 0.0 0.0
Camelot Informatik und Consulting Gesellschaft.m.b.H. Villach 4.1 4.1
Camping- und Freizeitanlagen Betriebsgesellschaft m.b.H. St. Pölten 0.0 0.0
CAMPUS 02 Fachhochschule der Wirtschaft GmbH Graz 3.8 3.8
CANARY0737_611150 Vienna 0.0 0.0
Cargo-Center-Graz Betriebsgesellschaft m.b.H. Kalsdorf bei Graz 1.6 1.6
Cargo-Center-Graz Betriebsgesellschaft m.b.H. & Co KG Graz-St. Peter 1.6 1.6
CARLYLE ARNAGE_108233 Vienna 0.0 0.0
CARLYLE DAYTONA_107474 Vienna 0.0 0.0
Carlyle Europe Partners,L.P. (in Liquidation) Vale 0.6 0.6
Carlyle High Yield Partners X, Ltd._23838 Vienna 0.0 0.0
CARLYLE MCLAREN CLO LTD_107904 Vienna 0.0 0.0
CBCB-Czech Banking Credit Bureau, a.s. Prague 19.8 19.8
CEE Beteiligungen GmbH Vienna 10.8 10.7
CEE CZ Immobilien GmbH Vienna 10.8 10.7
CEE Immobilien GmbH Vienna 10.8 10.7
CEE PROPERTY BULGARIA EOOD Sofia 10.8 10.7

243
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
CEE PROPERTY INVEST ROMANIA SRL Bucharest 10.8 10.7
CEE Property-Invest Hungary 2003 Ingatlan Kft Budapest 10.8 10.7
CEE PROPERTY-INVEST Immobilien GmbH Vienna 10.8 10.7
CEE Property-Invest Ingatlan Kft. Budapest 10.8 10.7
CEE Property-Invest Office 2004 Kft Budapest 10.8 10.7
CEESEG Aktiengesellschaft Vienna 12.6 12.6
CELF05/21_404240 Vienna 0.0 0.0
CELF0723_414813 Vienna 0.0 0.0
CITY REAL Immobilienbeteiligungs- und Verwaltungsgesellschaft mbH Graz 25.0 25.0
CITY REAL Immobilienbeteiligungs- und Verwaltungsgesellschaft mbH & Co KG Graz 25.8 25.8
COLUMBUS NOVA CLO LTD._107797 Vienna 0.0 0.0
CORNERSTONE CLO_108118 Vienna 0.0 0.0
CTP Property N.V. Amsterdam 1.0 1.0
Dachstein Tourismus AG Gosau 0.0 0.0
DC TRAVEL d.o.o. putnicka agancija Zagreb 69.3 69.3
Debt securities OF AfS HW_402045 Vienna 0.0 0.0
Debt securities OF AfS HW_403602 Vienna 0.0 0.0
Debt securities OF AfS HW_405667 Vienna 0.0 0.0
Debt securities OF AfS HW_414753 Vienna 0.0 0.0
Die Kärntner Sparkasse - Förderungsgesellschaft für den Bezirk Hermagor Gesellschaft m.b.H. Hermagor 25.0 25.0
Dolomitencenter Verwaltungs GmbH Lienz 50.0 50.0
Dolomitengolf Osttirol GmbH Lavant 0.0 0.0
DONAU Versicherung AG Vienna Insurance Group Vienna 0.8 0.8
Dornbirner Seilbahn GmbH Dornbirn 0.0 0.0
DRYDEN XVI CDO_107409 Vienna 0.0 0.0
DUAL Construct Invest S.R.L. Bucharest 10.1 10.1
Duna Szalloda Zrt. Budapest 10.8 10.7
E.I.A. eins Immobilieninvestitionsgesellschaft m.b.H. Vienna 10.8 10.7
E.V.I. Immobilienbeteiligungs GmbH Vienna 10.8 10.7
EASTLAND CLO, LTD_107714 Vienna 0.0 0.0
Eaton Vance CDO IX Ltd._23853 Vienna 0.0 0.0
EBB-Delta Holding GmbH Vienna 100.0 100.0
EBB-Zeta Holding GmbH (vorm.Erste Bank - Wiener Stadthalle Marketing GmbH) Vienna 100.0 100.0
EBG Europay Beteiligungs-GmbH Vienna 22.4 62.9
EBSPK-Handelsgesellschaft m.b.H. Vienna 29.7 29.7
EC Energie Center Lipizzanerheimat GmbH Bärnbach 0.1 0.1
Egg Investment GmbH Egg 0.0 0.0
E-H Liegenschaftsverwaltungs-GmbH Etsdorf am Kamp 0.0 0.0
EH-Gamma Holding GmbH Vienna 100.0 100.0
Einkaufs-Center Sofia G.m.b.H. & Co KG Hamburg 10.7 10.7
Einkaufs-Center Sofia Verwaltungs G.m.b.H. Hamburg 7.0 7.0
Einlagensicherung der Banken und Bankiers GmbH Vienna 0.3 0.3
ELAG Immobilien AG Linz 1.6 1.6
ELTIMA PROPERTY COMPANY s.r.o. Prague 10.8 10.7
Energie AG Oberösterreich Linz 0.2 0.2
Erste alpenländische Volksbrauerei Schladming registrierte Genossenschaft mit beschränkter Haftung Schladming 0.1 0.1
Erste Asset Management Deutschland Ges.m.b.H. Zorneding 100.0 100.0
Erste Campus Mobilien GmbH Vienna 100.0 100.0
Erste Corporate Finance, a.s. Prague 99.0 99.0
ERSTE EURO SAVJETOVANJE D.O.O. ZA USLUGE Zagreb 0.0 69.3
Erste Group Beteiligungen GmbH Vienna 100.0 100.0
ERSTE Immobilien Aspernbrückengasse 2 GmbH & Co KG Vienna 0.1 0.1
ERSTE OSIGURANJE VIENNA INSURANCE GROUP D.D. Zagreb 3.5 3.5
ERSTE Vienna Insurance Group Biztosito Zrt. Budapest 5.0 5.0
ESB Holding GmbH Vienna 69.3 69.3
EUROCENTER d.o.o. Zagreb 10.8 10.7
EUROPEAN INVESTMENT FUND Luxembourg 0.1 0.1
F&S Finance and Service Leasing GmbH Fellbach-Schmiden 90.0 90.0
FAIRWAY LOAN FUNDING_106997 Vienna 0.0 0.0
FDO 02/33_400139 Vienna 0.0 0.0
Federal Home Loan Mortgage Corp_18739 Vienna 0.0 0.0
Federal National Mortgage Association_16485 Vienna 0.0 0.0
Fejer- Kondor Immobilienverwaltungsgesellschaft m.b.H. Budapest 4.6 4.6
Fender KG, Hotel Hochfirst (vm.Gstrein & Fender KG) Obergurgl 0.0 0.0
FINAG D.D. INDUSTRIJA GRADJEVNOG MATERIJALA Garesnica 0.0 18.2
Finanzpartner GmbH Vienna 50.0 50.0
FINTEC-Finanzierungsberatungs- und Handelsgesellschaft m.b.H. Vienna 25.0 25.0
Flagship CLO VI_23952 Vienna 0.0 0.0
FMTG Development GmbH Vienna 0.0 0.0
FOOTHILL CLO I, LTD_107425 Vienna 0.0 0.0
For Best Students AkademikerförderungsGmbH (vorm. LINEA Beteiligungs-Gesellschaft m.b.H.) Vienna 100.0 100.0
FOTEC Forschungs- und Technologietransfer GmbH Wiener Neustadt 0.0 0.0
FRANKLIN CLO V_106831 Vienna 0.0 0.0

244
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
FRANKLIN CLO VI B NOTES_107995 Vienna 0.0 0.0
Freizeitanlage St. Martin i.M. Nachfolge GmbH & Co KG St. Martin im Mühlkreis 5.0 5.0
Freizeitpark Zell GmbH Zell am Ziller 0.0 0.0
Freizeitzentrum Zillertal GmbH Fügen 0.0 0.0
Fügen-Bergbahn Ges.m.b.H. & Co.KG Fügen 0.0 0.0
FWG-Fernwärmeversorgung Engelbrechts registrierte Genossenschaft mit beschränkter Haftung Kautzen 0.0 0.0
FWG-Fernwärmeversorgung Raabs a.d. Thaya registrierte Genossenschaft mit beschränkter Haftung Raabs an der Thaya 0.0 0.0
GALAXY VII CLO LTD_107086 Vienna 0.0 0.0
Galaxy VIII CLO, Ltd._23770 Vienna 0.0 0.0
GALAXY0719_414221 Vienna 0.0 0.0
Galsterbergalm Bahnen Gesellschaft m.b.H. & Co KG Pruggern 0.4 0.4
GALVÁNIHO 2, s.r.o. Bratislava 10.8 10.7
GALVÁNIHO 4, s.r.o. Bratislava 10.8 10.7
Galvaniho Business Centrum, s.r.o. Bratislava 10.8 10.7
Gastberger Hotelbetriebe GmbH & Co KG St. Wolfgang 0.0 0.0
Gasteiner Bergbahnen Aktiengesellschaft Bad Hofgastein 13.2 13.2
Gasthof Mitterwirt Ulrike Ottino-Haider Dienten am Hochkönig 0.0 0.0
GELDSERVICE AUSTRIA Logistik für Wertgestionierung und Transportkoordination G.m.b.H. Vienna 0.9 0.9
GEMDAT Oberösterreichische Gemeinde-Datenservice Gesellschaft m.b.H. Linz 8.5 8.5
GEMDAT Oberösterreichische Gemeinde-Datenservice Gesellschaft m.b.H. & Co.KG Linz 9.5 9.5
Gerlitzen - Kanzelbahn - Touristik Gesellschaft m.b.H.&Co KG Sattendorf 0.0 0.0
GERMAN PROPERTY INVESTMENT I APS (GPI I APS) Arhus C 10.7 10.7
GERMAN PROPERTY INVESTMENT II APS (GPI II APS) Arhus C 0.6 0.6
GERMAN PROPERTY INVESTMENT III APS (GPI III APS) Arhus C 10.7 10.7
Gewerbe- und Dienstleistungspark der Gemeinden Bad Radkersburg und Radkersburg Umgebung Bad Radkersburg 4.6 12.5
Kommanditgesellschaft
Goldegger-Skilifte Gesellschaft m.b.H. & Co. KG Goldegg, Pongau 8.9 8.9
Golf Ressort Kremstal GmbH Kematen an der Krems 0.0 0.0
Golf Ressort Kremstal GmbH & Co. KG. Kematen an der Krems 0.0 0.0
Golfclub Bludenz-Braz GmbH Bludenz 0.0 0.0
Golfclub Brand GmbH Brand bei Bludenz 0.0 0.0
Golfclub Pfarrkirchen im Mühlviertel GesmbH Pfarrkirchen im Mühlkreis 0.2 0.2
GOLF-CLUB Schärding/Pramtal GMBH & CO KG Taufkirchen a. d. Pram 0.1 0.1
Golfplatz Hohe Salve - Brixental Errichtergesellschaft m.b.H. & Co KG Westendorf 0.0 0.0
Golfresort Haugschlag GmbH & Co KG Haugschlag 0.0 0.0
Grant Grove CLO, Ltd._23747 Vienna 0.0 0.0
GREAT 0638_409365 Vienna 0.0 0.0
GREENS CREEK FUNDING_107896 Vienna 0.0 0.0
Grema - Grundstückverwaltung Gesellschaft m.b.H. Innsbruck 75.0 75.0
Großarler Bergbahnen Gesellschaft mit beschränkter Haftung & Co. KG. Großarl 0.5 0.5
GW St. Pölten Integrative Betriebe GmbH St.Pölten-Hart 0.0 0.0
GXT Vermögensverwaltung GmbH & Co KG Vienna 0.0 0.0
GZ-Finanz Leasing Gesellschaft m.b.H. Vienna 100.0 100.0
H.S.E. Immobilienbeteiligungs GmbH Vienna 10.8 10.7
H.W.I. I APS Arhus C 10.7 10.7
H.W.I. IV APS Arhus C 10.7 10.7
HALCYON STRUCTURED_107953 Vienna 0.0 0.0
Hansa Immobilien OOD Sofia 10.8 10.7
HAPIMAG Verwaltungs- und Vertriebsgesellschaft Havag AG Baar 0.0 0.0
HARBOURM22_409077 Vienna 0.0 0.0
Harkin Limited Dublin 100.0 100.0
Harrys Hotel Home Wien Millenium GmbH Innsbruck 0.0 0.0
HARV.0621_406284 Vienna 0.0 0.0
Hauser Kaibling Seilbahn- und Liftgesellschaft m.b.H. & Co. KG. Haus im Ennstal 0.4 0.4
Health and Fitness International Holdings N.V. Willemstad 3.5 3.5
Heiltherme Bad Waltersdorf GmbH Bad Waltersdorf 4.5 4.5
Heiltherme Bad Waltersdorf GmbH & Co KG Bad Waltersdorf 4.1 4.1
HEWETTS 18_409389 Vienna 0.0 0.0
Hinterstoder-Wurzeralm Bergbahnen Aktiengesellschaft Hinterstoder 0.3 0.3
HOLDING RUDARSKO METALURŠKO HEMIJSKI KOMBINAT TREPCA AD ZVECAN - U Zvecan 0.0 0.0
RESTRUKTUIRANJU
Hollawind - Windkraftanlagenerrichtungs- und Betreibergesellschaft mit beschränkter Haftung Göllersdorf 25.0 25.0
Hotel Chesa Monte GmbH Fiss 0.0 0.0
Hotel Corvinus Gesellschaft m.b.H. & Co KG Vienna 100.0 100.0
Hotel DUNA Beteiligungs Gesellschaft m.b.H. Vienna 10.8 10.7
HPBM Unternehmensberatung GmbH (vm. H & H Catering GmbH) Vienna 0.0 0.0
Hrvatski olimpijski centar Bjelolosica d.o.o. (Kroatisches Olympiazentrum) Jesenak 1.2 1.2
Hrvatski registar obveza po kreditima d.o.o. (HROK) Zagreb 7.3 7.3
HV-Veranstaltungsservice GmbH Stotzing 100.0 100.0
Ikaruspark GmbH Berlin 10.8 10.7
ILGES - Liegenschaftsverwaltung G.m.b.H. Rohrbach 40.0 40.0
IMMO Primum GmbH St. Pölten 0.0 0.0
Immorent Beteiligungs- und Mobilienleasing GmbH Vienna 100.0 100.0
IMMORENT S-Immobilienmanagement GesmbH Vienna 100.0 100.0

245
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
Immorent-Hackinger Grundverwertungsgesellschaft m.b.H. Vienna 10.0 10.0
IMS Nanofabrication AG Vienna 0.0 0.0
Informativni centar Bjelovar d.o.o. Bjelovar 1.4 1.4
Innovationszentrum Reutte GmbH Reutte/Pflach 0.0 0.0
Innovationszentrum Reutte GmbH & CO KG Reutte/Pflach 0.0 0.0
International Factors Group Scrl Kraainem 0.0 0.6
Investicniweb s.r.o. Prague 99.5 99.0
IPD - International Property Development, s.r.o. Bratislava I 10.8 10.7
JADRAN dionicko drustvo za hotelijerstvo i turizam Crikvenica 0.0 3.4
JASPER CLO LTD_107813 Vienna 0.0 0.0
JAVNO SKLADIŠTE SLOBODNA CARINSKA ZONA NOVI SAD AD NOVI SAD Novi Sad 5.2 5.2
JUBILEE24_414544 Vienna 0.0 0.0
JUGOALAT-JAL - U STECAJU Novi Sad 5.0 5.0
Kapruner Freizeitzentrum Betriebs GmbH Kaprun 0.0 0.0
Kapruner Promotion und Lifte GmbH Kaprun 6.4 6.4
Kisvallalkozas-fejlesztö Penzügyi Zrt. Budapest 1.1 1.1
Kitzbüheler Anzeiger Gesellschaft m.b.H. Kitzbühel 0.0 0.0
Kleinkraftwerke-Betriebsgesellschaft m.b.H. Vienna 100.0 100.0
Kommanditgesellschaft MS "SANTA LORENA" Offen Reederei GmbH & Co. Hamburg 0.0 0.0
Kommanditgesellschaft MS "SANTA LUCIANA" Offen Reederei GmbH & Co. Hamburg 0.0 0.0
Kraftwerksmanagement GmbH Vienna 100.0 100.0
Kreco Realitäten Aktiengesellschaft Vienna 19.7 19.7
Kreditni Biro Sisbon d.o.o. Ljubljana 1.6 1.6
KULSKI ŠTOFOVI' FABRIKA ZA PROIZVODNJU VUNENIH TKANINA I PREDIVA AKCIONARSKO Kula 6.1 6.1
DRUŠTVO IZ KULE - U
Kurzentrum "Landsknechte" Bad Schönau Gesellschaft m.b.H. Bad Schönau 0.0 0.0
ländleticket marketing gmbh Bregenz 0.0 0.0
Landmark IX CDO, Ltd._23903 Vienna 0.0 0.0
LANDMARK VIII CLO LTD_108142 Vienna 0.0 0.0
Landzeit Restaurant Angath GmbH St. Valentin 0.0 0.0
Langenloiser Liegenschaftsverwaltungs-Gesellschaft m.b.H. Langenlois 0.0 0.0
Lantech Innovationszentrum GesmbH Landeck 0.0 0.0
Latifundium Holding Gesellschaft m.b.H. Vienna 100.0 100.0
LATITUDE CLO I LTD_108217 Vienna 0.0 0.0
LATITUDE CLO II LTD_108035 Vienna 0.0 0.0
Lebens.Resort & Gesundheitszentrum GmbH Ottenschlag 0.0 0.0
Lebensquell Bad Zell Gesundheits- und Wellnesszentrum GmbH & Co KG Bad Zell 0.0 0.0
LEEK06-37_406292 Vienna 0.0 0.0
LEOP.07/23_414780 Vienna 0.0 0.0
Lienzer-Bergbahnen-Aktiengesellschaft Gaimberg 0.0 0.0
Liezener Bezirksnachrichten Gesellschaft m.b.H. Liezen 1.1 1.1
LIGHTPOINT CLO LTD.SERIES 2006-5A_107748 Vienna 0.0 0.0
LOCO 597 Investment GmbH Egg 0.0 0.0
Logistik Center Leoben GmbH Leoben 14.0 14.0
Luitpoldpark-Hotel Betriebs- und Vermietungsgesellschaft mbH Füssen 75.0 75.0
Lützow-Center GmbH Berlin 10.8 10.7
LV Holding GmbH Linz 28.5 28.5
Lyon Capital Management V Ltd._23812 Vienna 0.0 0.0
Lyon Capital Management VI Ltd._24018 Vienna 0.0 0.0
M Schön Wohnen Immorent GmbH Vienna 100.0 100.0
MAGELLAN36_826641 Vienna 0.0 0.0
Maior Domus Hausverwaltung GmbH Berlin 10.8 10.7
Maiskogel Betriebs AG Kaprun 0.6 0.6
Maissauer Amethyst GmbH Maissau 0.0 0.0
MAJEVICA HOLDING AKCIONARSKO DRUŠTVO, BACKA PALANKA - U RESTRUKTURIRANJU Backa Palanka 5.2 5.2
MALIN07/23_414922 Vienna 0.0 0.0
Mariazeller Schwebebahnen Gesellschaft m. b. H. Mariazell 1.3 1.3
Markt Carree Halle Immobilien GmbH Berlin 10.8 10.7
Marktgemeinde Bad Mitterndorf Thermalquelle Erschließungsges. m.b.H. Bad Mitterndorf 0.6 0.6
Maros utca Kft. Budapest 10.8 10.7
MasterCard Incorporated Purchase 0.0 0.0
Mayer Property Alpha d.o.o. Zagreb 0.0 100.0
Mayer Property Beta d.o.o. Zagreb 0.0 100.0
MAYPORT CLO LTD_107268 Vienna 0.0 0.0
Mayrhofner Bergbahnen Aktiengesellschaft Mayrhofen 0.0 0.0
MCG Graz e.gen. Graz 1.4 1.4
Medimurske novine d.o.o., Cakovec nema fin. Izvjesca Cakovec 4.9 4.9
MEG-Liegenschaftsverwaltungsgesellschaft m.b.H. Vienna 100.0 100.0
Mittersiller Golf- und Freizeitanlagen Gesellschaft m.b.H. Mittersill 0.0 0.0
Montana Tech Components AG Menziken 1.5 1.5
Multifin B.V. Amsterdam 1.0 1.0
MUNDO FM & S GmbH Vienna 100.0 100.0
Murauer WM Halle Betriebsgesellschaft m.b.H. Murau 3.1 3.1

246
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
Musikkonservatoriumserrichtungs- und vermietungsgesellschaft m.b.H. St. Pölten 0.0 0.0
Nagymezo utcai Projektfejlesztesi Kft Budapest 10.8 10.7
Natursee und Freizeitpark Wechselland GmbH Pinggau 0.4 0.4
Natursee und Freizeitpark Wechselland GmbH & Co KG in Liqu. Pinggau 0.1 0.1
NAUTIQUE FUNDING_106724 Vienna 0.0 0.0
Neubruck Immobilien GmbH St. Anton an der Jeßnitz 0.0 0.0
Neuhofner Bauträger GmbH Neuhofen an der Krems 0.0 0.0
Neutorgasse 2-8 Projektverwertungs GmbH Vienna 10.8 10.7
Newstin, a.s. Prague 17.6 17.6
NÖ. HYPO LEASING - Sparkasse Region St. Pölten Grundstücksvermietungs Gesellschaft m.b.H. St. Pölten 0.0 0.0
NORTHWOODS CAPITAL VI_106658 Vienna 0.0 0.0
Oberpinzgauer Fremdenverkehrsförderungs- und Bergbahnen AG Neukirchen 0.0 0.0
Obertilliacher Bergbahnen-Gesellschaft m.b.H. Obertilliach 0.0 0.0
Ocean Trails CLO_23648 Vienna 0.0 0.0
Öhlknecht-Hof Errichtungs- und Verwaltungsgesellschaft m.b.H. Horn 0.0 0.0
ÖKO-Heizkraftwerk GmbH Pöllau 0.0 0.0
ÖKO-Heizkraftwerk GmbH & Co KG Pöllau 0.0 0.0
Omniasig Vienna Insurance Group SA Bucharest 0.1 0.1
OÖ HightechFonds GmbH Linz 6.1 6.1
OÖ Science-Center Wels Errichtungs-GmbH Wels 0.7 0.7
Ortswärme Fügen GmbH Fügen 0.0 0.0
Österreichische Wertpapierdaten Service GmbH Vienna 32.7 32.5
Osttiroler Wirtschaftspark GesmbH Lienz 0.0 0.0
ÖVW Bauträger GmbH Vienna 100.0 100.0
PANORAMABAHN KITZBÜHELER-ALPEN GMBH Hollersbach 0.0 0.0
PARA07-39_414601 Vienna 0.0 0.0
PARAGON41_406190 Vienna 0.0 0.0
PCC- Hotelerrichtungs- und Betriebsgesellschaft m.b.H. & Co. KG Vienna 7.6 7.9
PCC-Hotelerrichtungs- und Betriebsgesellschaft m.b.H. Vienna 10.8 10.7
PERP07-38_409794 Vienna 0.0 0.0
Pistotnik Irodahaz es Ingatlankezelö Korlatolt Felelössegü Tarsasag Budapest 0.0 100.0
PK Irodahaz Ingatlankezelö Korlatolt Felelössegü Tarsasag Budapest 0.0 100.0
Planai - Hochwurzen - Bahnen Gesellschaft m.b.H. Schladming 0.7 0.7
Planung und Errichtung von Kleinkraftwerken Aktiengesellschaft Vienna 82.7 82.7
Poistovna Slovenskej sporitelne, a.s. Vienna Insurance Group Bratislava 5.0 5.0
Pojistovna Ceske sporitelny, a.s., Vienna Insurance Group Pardubice 4.9 4.9
POSLOVNO UDRUŽENJE DAVAOCA LIZINGA "ALCS" BEOGRAD Beograd 0.0 8.3
PREDUZECE ZA PRUŽANJE CONSULTING USLUGA BANCOR CONSULTING GROUP DOO NOVI SAD Novi Sad 2.6 2.6
PRIVREDNO DRUŠTVO ZA PROIZVODNJU I PRERADU CELIKA ŽELEZARA SMEDEREVO DOO Smederevo 0.0 0.0
SMEDEREVO
Prvni certifikacni autorita, a.s. Prague 23.0 23.0
PSA Payment Services Austria GmbH Vienna 18.2 19.5
Radio Osttirol GesmbH Lienz 0.0 0.0
RADIO VRŠAC DRUŠTVO SA OGRANICENOM ODGOVORNOŠCU U MEŠOVITOJ SVOJINI, Vršac 6.4 6.4
VRŠAC - U STECAJU
Rätikon-Center Errichtungs- und Betriebsgesellschaft m.b.H. Bludenz 0.0 0.0
Realitäten und Wohnungsservice Gesellschaft m.b.H. Köflach 4.8 4.8
Realitni spolecnost Ceske sporitelny, a.s. Prague 99.0 99.0
REGA Property Invest s.r.o. Prague 10.8 10.7
Regionale Entwicklungs GmbH - Vöcklatal Frankenburg 0.0 0.0
REGIONALNA AGENCIJA ZA RAZVOJ MALIH I SREDNJIH PREDUZECA ALMA MONS D.O.O. Novi Sad 3.3 3.3
RegioZ Regionale Zukunftsmanagement und Projektentwicklung Ausseerland Salzkammergut GmbH & Bad Aussee 3.1 3.1
Co KG in Liqu.
RegioZ Regionale Zukunftsmanagement und Projektentwicklung Ausseerland Salzkammergut GmbH in Liqu. Bad Aussee 5.0 5.0
Reuttener Seilbahnen GmbH Höfen 0.0 0.0
Reuttener Seilbahnen GmbH & Co KG Höfen 0.0 0.0
RIBA D.D. Garesnica 0.0 17.1
Riesneralm - Bergbahnen Gesellschaft m.b.H. & Co. KG. Donnersbach 0.0 0.0
ROTER INVESTITII IMOBILIARE S.R.L. Bucharest 10.8 10.7
RTG Tiefgaragenerrichtungs und -vermietungs GmbH Graz 25.0 25.0
RVG Czech, s.r.o. Prague 19.8 19.8
RVS, a.s. Bratislava 0.0 0.0
S - Leasing und Vermögensverwaltung - Gesellschaft m.b.H. Peuerbach 0.0 0.0
S IMMO AG Vienna 10.8 10.7
S IMMO Germany GmbH Berlin 10.8 10.7
S Immo Geschäftsimmobilien GmbH Berlin 10.8 10.7
S IMMO Hungary Kft. Budapest 10.8 10.7
S Immo Immobilien Investitions GmbH Vienna 10.8 10.7
S IMMO Property Invest GmbH Vienna 10.8 10.7
S Immo Wohn Verwaltungs GmbH Berlin 10.8 10.7
S Immo Wohnimmobilien GmbH Berlin 10.8 10.7
SAGR05-56_412016 Vienna 0.0 0.0
SALIX-Grundstückserwerbs Ges.m.b.H. Eisenstadt 50.0 50.0
SALZBURG INNENSTADT, Vereinigung zur Förderung selbständiger Unternehmer der Salzburger Salzburg 2.0 2.0

247
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
Innenstadt, registrierte Genossenschaft mit beschränkter Haftung
Salzburger Unternehmensbeteiligungsgesellschaft mbH Salzburg 18.8 18.8
SAN GABRIEL CLO I_107664 Vienna 0.0 0.0
SATURN CLO, LTD Class A2_107755 Vienna 0.0 0.0
SC World Trade Center Bucuresti SA Bucharest 7.2 7.2
Schiliftbetriebe Gemeinden Weer, Kolsassberg, Kolsass KEG Kolsassberg 0.0 0.0
Schweighofer Gesellschaft m.b.H. & Co KG Friedersbach 0.0 0.0
S-City Center Wirtschaftsgütervermietungsgesellschaft m.b.H. Wiener Neustadt 0.0 0.0
S-Commerz Beratungs- und Handelsgesesellschaft m.b.H. Neunkirchen 0.0 0.0
S-Commerz Liegenschaftsentwicklungs GmbH Neunkirchen 0.0 0.0
S-Commerz Rent GmbH Neunkirchen 0.0 0.0
Seniorenresidenz "Am Steinberg" GmbH Graz 25.0 25.0
Senningerfeld Projektenwicklungs und Verwertungs GmbH Bramberg am Wildkogel 0.0 0.0
S-Finanzservice Gesellschaft m.b.H. Baden 0.0 0.0
SHASTA CLO I LTD_107383 Vienna 0.0 0.0
S-Haugsdorf s.r.o. Hodonice 0.0 0.0
SIAG Berlin Wohnimmobilien GmbH Vienna 10.7 10.7
SIAG Deutschland Beteiligungs GmbH & Co. KG Berlin 10.2 10.2
SIAG Deutschland Beteiligungs-Verwaltungs GmbH Berlin 10.8 10.7
SIAG Fachmarktzentren, s.r.o. Bratislava 10.8 10.7
SIAG FINANCING LIMITED Nicosia 10.8 10.7
SIAG Hotel Bratislava, s.r.o. Bratislava 10.8 10.7
SIAG Leipzig Wohnimmobilien GmbH Berlin 10.7 10.7
SIAG Multipurpose Center, s.r.o. Bratislava 10.8 10.7
SIAG Property I GmbH Berlin 10.8 10.7
SIAG Property II GmbH Berlin 10.8 10.7
SILVERADO CLO 2006-II, LTD_23606 Vienna 0.0 0.0
Silvrettaseilbahn Aktiengesellschaft Ischgl 0.0 0.0
Skilifte Unken - Heutal Gesellschaft m.b.H. & Co, KG Unken 0.0 0.0
Skilifte Unken Heutal Gesellschaft m.b.H. Unken 2.2 2.2
SLM Student Loan Trust_25197 Vienna 0.0 0.0
SLM Student Loan Trust_25205 Vienna 0.0 0.0
SLM Student Loan Trust_25213 Vienna 0.0 0.0
SLM Student Loan Trust_25221 Vienna 0.0 0.0
SM-Immobiliengesellschaft m.b.H. Melk 0.0 0.0
SN Immobilienprojekt GmbH St.Pölten 0.0 0.0
SO Immobilienbeteiligungs GmbH Vienna 10.8 10.7
Societate Dezvoltare Comercial Sudului (SDCS) S.R.L. Bucharest 10.8 10.7
Society for Worldwide Interbank Financial Telecommunication scrl La Hulpe 0.3 0.3
SPAKO Holding GmbH Innsbruck 75.0 75.0
Sparkasse Amstetten Service- und Verwaltungsgesellschaft m. b. H. Amstetten 0.0 0.0
Sparkasse Bludenz Beteiligungsgesellschaft mbH Bludenz 0.0 0.0
Sparkasse Bludenz Immoblienverwaltungsgesellschaft mbH Bludenz 0.0 0.0
Sparkasse Imst Immobilienverwaltung GmbH Imst 0.0 0.0
Sparkasse Imst Immobilienverwaltung GmbH & Co KG Imst 0.0 0.0
Sparkasse Lambach Versicherungsmakler GmbH Lambach 0.0 0.0
Sparkasse Nekretnine d.o.o. Sarajevo 26.4 26.4
Sparkasse Niederösterreich Mitte West Beteiligungsgesellschaft m.b.H. St. Pölten 0.0 0.0
Sparkasse Niederösterreich Mitte West Immobilien GmbH St.Pölten 0.0 0.0
Sparkasse Niederösterreich Mitte West Stadtentwicklungs GmbH St. Pölten 0.0 0.0
Sparkasse Reutte Liegenschaftsverwertungs GmbH Reutte 0.0 0.0
Sparkassen - Betriebsgesellschaft mbH. Linz 29.8 29.8
Sparkassen Bankbeteiligungs GmbH Dornbirn 0.0 0.0
Sparkassen Beteiligungs GmbH & Co KG Vienna 13.1 13.1
Sparkassen Facility Management GmbH Innsbruck 75.0 75.0
Sparkassen Versicherung AG Vienna Insurance Group Vienna 5.0 5.0
SPES Bildungs- u. Studiengesellschaft m.b.H.& Co KG Schlierbach 0.0 0.0
SPKB Beteiligungs- und Verwaltungsgesellschaft m.b.H. Bregenz 0.0 0.0
Sport- und Freizeitanlagen Gesellschaft m.b.H. Schwanenstadt 9.8 9.8
SREDISNJE KLIRINSKO DEPOZITARNO DRUSTVO D.D.(CENTRAL DEPOZITORY & CLEARING COMPANY Inc.) Zagreb 0.2 0.2
Stadtgemeinde Weiz - Wirtschaftsentwicklung KG Weiz 0.5 0.5
Stadtmarketing-Ternitz Gmbh Ternitz 0.0 0.0
Sternstein Sessellift Gesellschaft m.b.H. Bad Leonfelden 7.6 7.2
Stoderzinken - Liftgesellschaft m.b.H. & Co. KG. Gröbming 0.4 0.4
STONE TOWER CLO_107771 Vienna 0.0 0.0
Stoney Lane Funding Ltd._23846 Vienna 0.0 0.0
Studiengesellschaft für Zusammenarbeit im Zahlungsverkehr (STUZZA) G.m.b.H. Vienna 10.7 10.7
Szegedi út Ingatlankezelö Korlátolt Felelöségü Társaság Budapest 10.8 10.7
SZG-Dienstleistungsgesellschaft m.b.H. Salzburg 98.7 98.7
Tannheimer Bergbahnen GmbH & Co KG Tannheim 0.0 0.0
Tauern SPA World Betriebs- Gmbh & Co KG Kaprun 9.8 9.8
Tauern SPA World Betriebs-GmbH Kaprun 12.0 12.0
Tauern SPA World Errichtungs- Gmbh & Co KG Kaprun 9.8 9.8

248
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
Tauern SPA World Errichtungs-GmbH Kaprun 12.0 12.0
TDZ Technologie- und Dienstleistungszentrum Donau-Böhmerwald Bezirk Rohrbach GmbH. Neufelden 1.0 1.0
TECH21 Bürohaus und Gewerbehof Errichtungs- und Betriebsgesellschaft mbH & Co KG Vienna 0.1 0.1
Technologie- und Dienstleistungszentrum Ennstal GmbH Reichraming 0.0 0.0
TECHNOLOGIE- und GRÜNDERPARK ROSENTAL GmbH Rosental an der Kainach 0.3 0.3
Technologie- und Innovationszentrum Kirchdorf GmbH Schlierbach 0.0 0.0
Technologie- und Marketing Center Frohnleiten GmbH Frohnleiten 2.5 2.5
Technologiezentrum Deutschlandsberg GmbH Deutschlandsberg 7.3 7.3
Technologiezentrum Freistadt-Mühlviertel-Errichtungs- und Betriebsgesellschaft m.b.H. Freistadt 1.2 1.2
Technologiezentrum Inneres Salzkammergut GmbH Bad Ischl 0.0 0.0
Technologiezentrum Kapfenberg Vermietungs-GmbH Kapfenberg 6.0 6.0
Technologiezentrum Perg GmbH Perg 1.1 1.1
Technologiezentrum Salzkammergut GmbH Gmunden 0.5 0.5
Technologiezentrum Salzkammergut-Bezirk Vöcklabruck GmbH Attnang-Puchheim 0.0 0.0
Techno-Z Ried Technologiezentrum GmbH Ried im Innkreis 0.0 0.0
Tekanawa Ingatlanforgalmazasi Korlatolt Felelössegü Tarsasag Budapest 0.0 100.0
TELEPARK BÄRNBACH Errichtungs- und Betriebsges.m.b.H. in Liqu. Bärnbach 0.2 0.2
Tennis-Center Hofkirchen i. M. GmbH Hofkirchen im Mühlkreis 7.3 7.3
TGZ Technologie- und Gründerzentrum Schärding GmbH Schärding 3.0 3.0
Thermalquelle Loipersdorf Gesellschaft m.b.H. & Co KG Loipersdorf 0.0 0.0
Therme Wien Ges.m.b.H. Vienna 15.0 15.0
Therme Wien GmbH & Co KG Vienna 15.0 15.0
Tiefgarage Anger, Gesellschaft m.b.H. & Co. KG. Lech 0.0 0.0
TIRO Bauträger GmbH Innsbruck 75.0 75.0
Tispa Liegenschaftsverwaltungsgesellschaft mbH Füssen 75.0 75.0
TIZ Landl - Grieskirchen GmbH Grieskirchen 0.0 0.0
Tolleson a.s. Prague 10.8 10.7
Tölz Immobilien GmbH Berlin 10.7 10.7
TONDACH GLEINSTÄTTEN AG Gleinstätten 0.0 9.6
Toplice Sveti Martin d.d. Saint Martin 0.0 57.5
Tourismus- u. Freizeitanlagen GmbH Hinterstoder 0.0 0.0
TPK-18 Sp. z o.o. Warsaw 0.0 100.0
Transformovany fond penzijniho pripojisteni se statnim prispevkem Ceska sporitelna - penzijni spolecnost, a.s. Prague 0.0 0.0
Trencin Retail Park 1 a.s. Bratislava 19.8 19.8
Trencin Retail Park 2 a.s. Bratislava 19.8 19.8
Triglav d.d. Rijeka 0.1 0.1
TRIMARAN CLO V_108159 Vienna 0.0 0.0
Trionis S.C.R.L. Brüssel 1.2 1.2
Tuxer Bergbahnen Aktiengesellschaft Tux, Tirol 0.0 0.0
Unzmarkter Kleinkraftwerk-Aktiengesellschaft Vienna 81.4 81.4
Valtecia Achizitii S.R.L. Voluntari 100.0 100.0
Vasudvar Hotel Kft. Budapest 100.0 100.0
Vaudeville Ingatlanberuhazo Korlatolt Felelössegü Tarsasag Budapest 0.0 100.0
VBV - Beratungs- und Service GmbH Vienna 26.9 26.9
VBV - Pensionsservice-Center GmbH Vienna 26.9 26.9
VBV-Pensionskasse Aktiengesellschaft Vienna 26.9 26.9
VENTURE VIII CDO, LIMITED_107862 Vienna 0.0 0.0
VERMREAL Liegenschaftserwerbs- und -betriebs GmbH Vienna 25.6 25.6
VICTORIEI BUSINESS PLAZZA S.R.L. Bucharest 10.8 10.7
Viertel Zwei Hoch GmbH & Co KG Vienna 10.8 10.7
Viertel Zwei Hotel GmbH & Co KG Vienna 10.8 10.7
Viertel Zwei Plus GmbH & Co KG Vienna 10.8 10.7
VINIS Gesellschaft für nachhaltigen Vermögensaufbau und Innovation m.b.H. Vienna 26.9 26.9
Visa Europe Limited London 0.0 0.0
VISA INC. Wilmington 0.0 0.0
VITESSE CLO LTD._106898 Vienna 0.0 0.0
VMG Versicherungsmakler GmbH Vienna 5.0 5.0
VOYA Investment Management IV_24042 Vienna 0.0 0.0
W.E.I.Z. Immobilien GmbH Weiz 6.0 0.0
Waldviertel-Incoming Fremdenverkehrsförderungs- und Betriebsgesellschaft m.b.H. Weitra 0.0 0.0
Waldviertler Leasing s.r.o. Jindrichuv Hradec 0.0 0.0
Wärmeversorgungsgenossenschaft Tamsweg registrierte Genossenschaft mit beschränkter Haftung Tamsweg 0.3 0.3
Wassergenossenschaft Mayrhofen Mayrhofen 0.0 0.0
WBV Beteiligungs- und Vermögensverwaltungsgesellschaft m.b.H. Feldkirch 0.0 0.0
WEB Windenergie AG Pfaffenschlag 0.0 0.0
WECO Treuhandverwaltung Gesellschaft m.b.H. Salzburg 49.3 49.3
WED Holding Gesellschaft m b H Vienna 19.2 19.2
WED Wiener Entwicklungsgesellschaft für den Donauraum Aktiengesellschaft Vienna 11.9 11.9
Weißsee-Gletscherwelt GmbH Uttendorf 0.0 0.0
WEST CONSULT Bauten- und Beteiligungsverwaltung GmbH Salzburg 49.3 49.3
Westbrook CLO, Ltd._23671 Vienna 0.0 0.0
Westchester CLO, Ltd._23960 Vienna 0.0 0.0
WEVA - Veranlagungs- und Beteiligungsgesellschaft m.b.H. Linz 28.3 29.8

249
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
Wien 3420 Aspern Development AG Vienna 23.2 23.2
WIEPA-Vermögensverwaltungsgesellschaft m.b.H. Dornbirn 0.0 0.0
Wirtschaftspark Kleinregion Fehring Errichtungs- und Betriebsgesellschaft m.b.H. Fehring 2.0 2.0
WORLD TRADE HOTEL SA Bucharest 7.2 7.2
Zagreb Stock Exchange, Inc. Zagreb 2.3 2.3
Zelina Centar d.o.o. Saint Helena 0.0 100.0
Funds
ACCESSION MEZZANINE CAPITAL II LP Vienna 0.0 0.0
Achtundsechzigste Sachwert Rendite-Fonds Holland GmbH & Co KG Hamburg 0.0 0.0
Akciovy Mix FF Prague 0.0 0.0
AM SLSP Active portfolio Bratislava 0.0 0.0
AM SLSP Euro bond fund Bratislava 0.0 0.0
AM SLSP Euro Plus Fund Bratislava 0.0 0.0
AM SLSP Private fund of regular revenues Bratislava 0.0 0.0
AM SLSP Private money market fund Bratislava 0.0 0.0
AM SLSP Real estate fund Bratislava 0.0 0.0
AM SLSP SIP Clasik Bratislava 0.0 0.0
ARGUS CAPITAL PARTNERS II Vienna 0.0 0.0
AUSTROMUENDELRENT Linz 0.0 0.0
AUSTRORENT Linz 0.0 0.0
aws Gründerfonds Equity Invest GmbH & Co KG Vienna 0.0 49.0
AXA Vienna 0.0 0.0
AXA IM-US Vienna 0.0 0.0
B COMBIREN Vienna 0.0 0.0
B DANUBIA Vienna 0.0 0.0
B EM-MARKE Vienna 0.0 0.0
B EUR-RENT Vienna 0.0 0.0
B MORTGAGE Vienna 0.0 0.0
B MUENDELR Vienna 0.0 0.0
B US-CORPO Vienna 0.0 0.0
BARRESERVE Linz 0.0 0.0
BD EURO-TR Vienna 0.0 0.0
Business Capital for Romania - Opportunity Fund Coöperatief UA Amsterdam 78.0 77.4
CIS FUND Vienna 0.0 0.0
CS NEMOVITOSTNÍ FOND Vienna 0.0 0.0
DAXEX Vienna 0.0 0.0
DELPHIN TREND GLOBAL Vienna 0.0 0.0
Discovery Fund Vienna 0.0 0.0
Dynamicky Mix FF Prague 0.0 0.0
E4 Vienna 0.0 0.0
E.ALTERNAT Vienna 0.0 0.0
Erste ADRATIC EQUITY Zagreb 0.0 0.0
Erste ADRIATIC BOND Zagreb 0.0 0.0
Erste Bond Flexible RON Bucharest 0.0 0.0
Erste ELITE Zagreb 0.0 0.0
Erste EURO-MONEY Zagreb 0.0 0.0
Erste EXCLUSIVE Zagreb 0.0 0.0
Erste MONEY Zagreb 0.0 0.0
Erste Money Market RON Bucharest 0.0 0.0
ERSTE RESPONSIBLE BOND Vienna 0.0 0.0
ERSTE RESPONSIBLE BOND EURO CORPORATE Vienna 0.0 0.0
ERSTE RESPONSIBLE STOCK AMERICA Vienna 0.0 0.0
ESPA BEST OF WORLD Vienna 0.0 0.0
ESPA BOND COMBIRENT Vienna 0.0 0.0
ESPA BOND CORPORATE BB Vienna 0.0 0.0
ESPA BOND DANUBIA Vienna 0.0 0.0
ESPA BOND DOLLAR Vienna 0.0 0.0
ESPA BOND EMERGING MARKETS CORPORATE Vienna 0.0 0.0
ESPA BOND EMERGING MARKETS CORPORATE IG (EUR) Vienna 0.0 0.0
ESPA BOND EMERGING-MARKETS Vienna 0.0 0.0
ESPA BOND EURO-CORPORATE Vienna 0.0 0.0
ESPA BOND EURO-MIDTERM Vienna 0.0 0.0
ESPA BOND EURO-MÜNDELRENT Vienna 0.0 0.0
ESPA BOND EUROPE-HIGH YIELD Vienna 0.0 0.0
ESPA BOND EURO-RENT Vienna 0.0 0.0
ESPA BOND EURO-RESERVA Vienna 0.0 0.0
ESPA BOND EURO-TREND Vienna 0.0 0.0
ESPA BOND INFLATION-LINKED Vienna 0.0 0.0
ESPA BOND INTERNATIONAL Vienna 0.0 0.0
ESPA BOND LOCAL EMERGING Vienna 0.0 0.0
ESPA BOND MORTGAGE Vienna 0.0 0.0
ESPA BOND RISING MARKETS Vienna 0.0 0.0
ESPA BOND USA-CORPORATE Vienna 0.0 0.0

250
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
ESPA BOND USA-HIGH YIELD Vienna 0.0 0.0
ESPA CORPORATE PLUS BASKET 2016 Vienna 0.0 0.0
ESPA CORPORATE PLUS BASKET 2017 II Vienna 0.0 0.0
ESPA D-A-CH Fonds Vienna 0.0 0.0
ESPA HIGH COUPON BASKET 2015 Vienna 0.0 0.0
ESPA NEW EUROPE BASKET 2014 Vienna 0.0 0.0
ESPA PORTFOLIO BALANCED 30 Vienna 0.0 0.0
ESPA PORTFOLIO BOND EUROPE Vienna 0.0 0.0
ESPA PORTFOLIO TARGET Vienna 0.0 0.0
ESPA RESERVE CORPORATE Vienna 0.0 0.0
ESPA RESERVE EURO Vienna 0.0 0.0
ESPA RESERVE EURO MÜNDEL Vienna 0.0 0.0
ESPA RESERVE EURO PLUS Vienna 0.0 0.0
ESPA RISING CORPORATE BOND BASKET 2017 Vienna 0.0 0.0
ESPA SELECT BOND Vienna 0.0 0.0
ESPA SELECT BOND DYNAMIC Vienna 0.0 0.0
ESPA SELECT MED Vienna 0.0 0.0
ESPA SHORT TERM EMERGING MARKETS Vienna 0.0 0.0
ESPA STOCK COMMODITIES Vienna 0.0 0.0
ESPA STOCK EUROPE Vienna 0.0 0.0
ESPA STOCK EUROPE-EMERGING Vienna 0.0 0.0
ESPA STOCK EUROPE-PROPERTY Vienna 0.0 0.0
ESPA STOCK GLOBAL Vienna 0.0 0.0
ESPA STOCK JAPAN Vienna 0.0 0.0
ESPA STOCK VIENNA Vienna 0.0 0.0
Fond 2005 Prague 0.0 0.0
Fond rizenych vynosu Prague 0.0 0.0
Franklin Templeton International Services S.A. Vienna 0.0 0.0
FTC GIDEON I Vienna 0.0 0.0
G.SACHS Vienna 0.0 0.0
GLO.GROWTH Vienna 0.0 0.0
Goldman Sachs Asset Management International Vienna 0.0 0.0
HENDEPF Vienna 0.0 0.0
INNOVA/4 LP Vienna 0.0 0.0
ISCS MPF 10 Prague 0.0 0.0
ISCS MPF 30 Prague 0.0 0.0
ISHARES Vienna 0.0 0.0
MPC Rendite-Fonds Leben plus spezial III GmbH & Co KG Quickborn 0.0 0.0
MQ MS EM. Vienna 0.0 0.0
MUTUAL FUND Vienna 0.0 0.0
N/A (1003 Holding - NY) Vienna 0.0 0.0
N/A (1221 SPK Kirchberg) Vienna 0.0 0.0
N/A (1227 SPK Korneuburg) Vienna 0.0 0.0
N/A (1502 SPK Imst) Vienna 0.0 0.0
N/A (2416 AVS B) Vienna 0.0 0.0
N/A (3422 ERSA1) Vienna 0.0 0.0
N/A (3422 ERSA2) Vienna 0.0 0.0
N/A (3422 ERSA3) Vienna 0.0 0.0
N/A (3422 ERSA4) Vienna 0.0 0.0
PF BOND A Vienna 0.0 0.0
PI TOPRENT Vienna 0.0 0.0
PIZ BUIN GLOBAL Vienna 0.0 0.0
PLUS OPF Vienna 0.0 0.0
PLUS otevreny podilovy fond Prague 0.0 0.0
PRB-VM Vienna 0.0 0.0
Privatni portfolio AR AKCIE Prague 0.0 0.0
PRO INVEST AKTIV Vienna 0.0 0.0
QIMCO BALKAN EQUITY Vienna 0.0 0.0
ROMANIAN EQUITY PARTNERS COÖPERATIEF U.A. Amsterdam 66.7 77.4
RT ACT.GLOBAL TREND Vienna 0.0 0.0
S DOUBLESTOCK Linz 0.0 0.0
S EMERGING Linz 0.0 0.0
S GENERATION Linz 0.0 0.0
SALZBURGER SPARKASSE BOND EUROLAND Vienna 0.0 0.0
SALZBURGER SPARKASSE SELECT TREND Vienna 0.0 0.0
SAM A1 Linz 0.0 0.0
SAM-PF 1 Vienna 0.0 0.0
SAM-PF 2 Vienna 0.0 0.0
SAM-PF 3 Vienna 0.0 0.0
SEL.BOND T Vienna 0.0 0.0
Smiseny fond Prague 0.0 0.0
smn Investment Services Ltd. Vienna 0.0 0.0
S-PENSIONSVORSORGE-OOE Linz 0.0 0.0

251
Interest of
Erste Group in %
Company name, registered office Dec 13 Dec 14
SWALDVIERTEL BD T Vienna 0.0 0.0
TIROLEFFEKT Innsbruck 0.0 0.0
TIROLKAPITAL Innsbruck 0.0 0.0
TIROLRENT Innsbruck 0.0 0.0
TIROLRESERVE Vienna 0.0 0.0
TOP STRATEGIE dynamic Vienna 0.0 0.0
VIENNASTOCK Linz 0.0 0.0
WE TOP DYNAMIC Vienna 0.0 0.0
YOU INVEST active Prague 0.0 0.0
YOU INVEST Active EUR Bucharest 0.0 0.0
YOU INVEST Active RON Bucharest 0.0 0.0
YOU INVEST Balanced EUR Bucharest 0.0 0.0
YOU INVEST Balanced RON Bucharest 0.0 0.0
YOU INVEST Solid EUR Bucharest 0.0 0.0
Zweite Beteiligungsgesellschaft Reefer-Flottenfonds mbH & Co KG Hamburg 0.0 0.0

Vienna, 27 February 2015

The Management Board

Andreas Treichl mp Peter Bosek mp

Chairman Member

Andreas Gottschling mp Gernot Mittendorfer mp

Member Member

Jozef Síkela mp
Member

252
AUDITORS REPORT
(REPORT OF THE INDEPENDENT AUDITORS) 1
REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
Sparkassen-Prüfungsverband and Ernst & Young Wirtschaftsprüfungsgesellschaft m.b.H., Vienna, have audited the accompanying consol-
idated financial statements of Erste Group Bank AG, Vienna, for the fiscal year from January 1, 2014 to December 31, 2014. These con-
solidated financial statements comprise the consolidated balance sheet as of December 31, 2014, the consolidated statement of compre-
hensive income, the consolidated cash flow statement and the consolidated statement of changes in total equity for the fiscal year ended
December 31, 2014, and the notes.

Management’s Responsibility for the Consolidated Financial Statements and for the Accounting System
The management of Erste Group Bank AG is responsible for the group accounting system and for the preparation and fair presentation of
the consolidated financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU, and
the additional requirements under Section 245a UGB. This responsibility includes: designing, implementing and maintaining internal
control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error; selecting and applying appropriate accounting policies; making accounting estimates that are reasonable in
the circumstances.

Auditors’ Responsibility and Description of Type and Scope of the Statutory Audit
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in ac-
cordance with laws and regulations applicable in Austria and Austrian Standards on Auditing, as well as in accordance with International
Standards on Auditing (ISAs) issued by the International Auditing and Assurance Standards Board (IAASB) of the International Federa-
tion of Accountants (IFAC). Those standards require that we comply with professional guidelines and that we plan and perform the audit
to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial state-
ments. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the Group’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our audit opinion.

Opinion
Our audit did not give rise to any objections. In our opinion, which is based on the results of our audit, the consolidated financial state-
ments comply with legal requirements and give a true and fair view of the financial position of the Group as of December 31, 2014 and of
its financial performance and its cash flows for the fiscal year from January 1, 2014 to December 31, 2014 in accordance with Interna-
tional Financial Reporting Standards (IFRSs) as adopted by the EU.

253
Comments on the Management Report for the Group
Pursuant to statutory provisions, the management report for the Group is to be audited as to whether it is consistent with the consolidated
financial statements and as to whether the other disclosures are not misleading with respect to the Company’s position. The auditor’s
report also has to contain a statement as to whether the management report for the Group is consistent with the consolidated financial
statements and whether the disclosures pursuant to Section 243a UGB (Austrian Commercial Code) are appropriate.

In our opinion, the management report for the Group is consistent with the consolidated financial statements. The disclosures pursuant to
Section 243a UGB (Austrian Commercial Code) are appropriate.

Vienna, 27 February 2015

(Austrian Savings Bank Auditing Association)

(Audit Agency)

(Bankprüfer)

Friedrich O. Hief Stephan Lugitsch

Certified Accountant Certified Accountant

Ernst & Young

Wirtschaftsprüfungsgesellschaft m.b.H.

Ernst Schönhuber Andrea Stippl

Certified Accountant Certified Accountant

1) The report (in the German language, or translations into another language, including shortened or amended versions) may not be made public or used by third parties, when reference is made in whole or in part to the
auditors’ report, without the express written consent of the auditors.
This report has been translated from German into English for reference purposes only. Please refer to the official legally binding version as written and signed in German. Only the German version is definitive.

254
STATEMENT OF ALL MEMBERS OF THE MANAGEMENT BOARD
We confirm that to the best of our knowledge the consolidated financial statements give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Group as required by the applicable accounting standards and that the Group management
report gives a true and fair view of the development and performance of the business and the position of the Group, together with a de-
scription of the principal risks and uncertainties to which the Group is exposed.

Vienna, 27 February 2015

The Management Board

Andreas Treichl mp
Chairman Peter Bosek mp
Member

Andreas Gottschling mp
Member Gernot Mittendorfer mp
Member

Jozef Síkela mp
Member

255
To the Board of Erste Group Bank AG ► The scope of our review procedures at operational level was limited to a
sample of site visits in Vienna and Prague.
Independent Assurance Report ► Limited assurance over prospective information was not subject to our
Limited assurance over disclosures and data of sustainability reporting in the engagement.
Annual Report 2014 of Erste Group Bank AG
Attention: This letter has been translated from German to English for referencing
purposes only. Please refer to the officially legally binding version as written and Criteria
signed in German. Only the German version is the legally binding version.
The information included in the Report was based on the criteria applicable in the
year 2014 (“The Criteria”), consisting of:
Engagement
► GRI Sustainability Reporting Guidelines G42
We were requested to perform a limited assurance engagement related to disclo-
sures and data in the integrated “Annual Report 2014” (hereafter “Report”) We assessed the information in the Report against these criteria. We believe that
according to the GRI G4 CORE Option of Erste Group Bank AG.
these criteria are suitable for our assurance engagement.
Our review covered the following chapters of the Report:
► Commitment to society Management responsibilities
► Customers and suppliers
► Employees Erste Group Bank AG’s management is responsible for the preparation of the
► Environment Report in accordance with the criteria mentioned above. This responsibility
► Additional Corporate governance principles includes designing, implementing and maintaining internal control. Those are
► G4 index pursuant to the guidelines of the Global Reporting Initiative relevant to the preparation of the Report to eliminate material misstatements.

In the GRI Index 2014 we reviewed the stated disclosures and data as well as
references. In case that the reviewed pages contain links to other pages, we point
out that we did not review the content of the other pages. Our responsibilities
Our procedures have been designed to obtain a limited level of assurance on It is our responsibility to express a conclusion on the information included in the
which to base our conclusions. The extent of evidence gathering procedures Report on the basis of the limited assurance engagement.
performed is less than for that of a reasonable assurance engagement (such as a
financial audit) and therefore a lower level of assurance is provided.
Our assurance engagement has been planned and performed in accordance with
The “General Conditions of Contract for the Public Accounting Professions”1, are
the International Federation of Accountants’ ISAE30003 and the Code of Ethics for
binding for this engagement. According to that, our liability is limited and an
Professional Accountants, issued by the International Federation of Accountants
accountant is only liable for violating intentionally or by gross negligence the
(IFAC), which includes requirements in relation to our independence.
contractual duties and obligations entered into. In cases of gross negligence the
maximum liability towards Erste Group Bank AG and any third party together is
EUR 726,730 in the aggregate.
What we did to form our conclusion
We have performed all the procedures deemed necessary to obtain the evidence
Limitations to our Review that is sufficient and appropriate to provide a basis for our conclusions. The
assurance engagement was conducted at the Clients head quarter in Vienna. Our
► The boundaries for the report of Erste Group Bank AG and our limited
main procedures were:
assurance were defined as the scope of consolidated entities with the fol-
lowing exceptions. Not included were savings banks, which are consolidat-
► Obtained an overview over the industry as well as the characteristics and
ed via the so called Haftungsverbund (joint liability). Furthermore environ-
governance of the organisation;
mental data was not collected for subsidiaries outside Austria, Czech Re-
public, Slovakia, Hungary, Croatia, Serbia and Romania. ► Interviewed a selection of Group and functional senior managers and
► Our limited assurance engagement did not include the chapter “Konzern- executives to understand key expectations and identify systems, process
abschluss”. and internal controls processes to support them;

► We did not perform any further assurance procedures on data, which were ► Reviewed Group level, Board and Executive documents to assess
subject of the annual financial audit as well as the corporate governance awareness and priority and to understand how progress is tracked;
report. We merely checked that data was presented in accordance with the
GRI Guidelines. ► Examined risk management and governance processes related to
sustainability and critical evaluation of the representation in the report;
► We have not tested comparative data, derived from the Sustainability
Reports from previous years. ► Performed analytical procedures at Group level;

► We did not test data derived from external surveys, we only verified that ► Performed site visits in Prague to review progress and obtain evidence of
relevant disclosures and data are correctly quoted in the Report. performance. In addition we reviewed data samples at site level for
completeness, reliability, accuracy and timeliness;

1version 2https://www.globalreporting.org/reporting/g4/Pages/default.aspx
of February 21th 2011 (AAB 2011) issued by the Chamber of Public Accountants
and Tax Advisors, section 8 3International
Federation of Accountants’ International Standard for Assurance Engagements
http://www.kwt.or.at/de/PortalData/2/Resources/downloads/downloadcenter/AAB_2011_en Other than Audits or reviews of Historical Financial Information (ISAE3000), effective for
glische_Fassung.pdf assurance statements dated after January 1, 2005.

256
► Reviewed data and processes on a sample basis to test whether they had Our Conclusion
been collected, consolidated and reported appropriately at Group level.
This included reviewing data samples to test whether the data had been Based on the scope of our review nothing has come to our attention that causes
reported in an accurate, reliable and complete manner; us to believe that the disclosures and data in the Report were not prepared, in
accordance with the criteria identified above.
► Reviewed the coverage of material issues against the key issues raised in
the stakeholder dialogues, areas of performance covered in external Recommendation
media reports and the environmental and social reports of Erste Group
Bank AG’s peers; Without restriction the above stated conclusion, we express the following recom-
mendations to improve your sustainability management and reporting process:
► Challenged a sample of statements and claims in the Report against our
worksteps and the GRI G4 principles and
► Reviewed whether the GRI G4 Guidelines were consistently applied for ► Expansion of report boundaries to all consolidated entities to ensure
the CORE Option. consistent reporting;

► Inclusion of these entities in a consistent and integrated management and

reporting system and

► Strengthening of governance structures for integrated sustainability man-

agement.

Vienna, March 25th 2015

ERNST & YOUNG Wirtschaftsprüfungsgesellschaft m.b.H

Brigitte Frey ppa. Christine Jasch

257
G4 index pursuant to the guidelines of the Global Reporting Initiative
Pursuant to the criteria of the Global Reporting Initiative („Core“), the general standard disclosures and the specific standard disclosures
for all aspects of relevance according to the materiality analysis are described in this report on the basis of the G4 indicators. Moreover,
additional indicators are described.

The index lists the G4 indicators, a short description of the respective indicators and a reference, where the information is to be found
(annual report or website of Erste Group Bank AG).

GENERAL STANDARD DISCLOSURES

Strategy und analysis

G4 1 Statement from the most senior decision-maker of the organisation AR14 Strategy p. 12 et seqq.
G4 2 Description of key impacts, risks and opportunities AR14 Strategy p. 12 et seqq.
G4 3 Name of the organisation Erste Group Bank AG
G4 4 Primary brands, products and services AR14 Cover, strategy p. 13, segments p. 30 et seqq.
G4 5 Location of the organisation's headquarter Vienna
G4 6 Number of countries where the organisation operates, and names of countries AR14 Cover, strategy p. 12 et seqq.
where either the organisation has significant operations or that are specifically
relevant to the sustainability topics covered in the report
G4 7 Nature of ownership and legal form AR14 Cover (shareholder structure, imprint)
G4 8 Markets served (including geographic breakdown, sectors served, and types of AR14 Cover, strategy p. 13, segments p. 30 et seqq.
customers and beneficiaries)
G4 9 Scale of the organisation AR14 Cover (employees and branches), headcount p. 20, segments p. 30 et
seqq.
G4 10 Total number of employees by employment contract and gender AR14 p. 20, systems don't allow further breakdown
G4 11 Percentage of total employees covered by collective bargaining agreements 100%, as collective bargaining agreements at all locations
G4 12 Description of the organisation's supply chain AR14 Customers and suppliers p. 64 et seq.
G4 13 Significant changes during the reporting period regarding the organisation’s No significant changes
size, structure, ownership, or its supply chain
G4 14 Report whether and how the precautionary approach or principle is addressed AR14 Environment p. 72
by the organisation
G4 15 Externally developed economic, environmental and social charters, principles, Carbon Disclosure Project since 2010; UN PRI since 2012; GRI since 2012;
or other initiatives to which the organisation subscribes or which it endorses diversity charta since 2014; UN Global Compact planned for 2015
G4 16 Memberships of associations (such as industry associations) and national or See http://www.erstegroup.com/en/About-us/CorporateGovernance
international advocacy organisations
Identified material aspects and boundaries
G4 17 All entities included in the organisation’s consolidated financial statements or All companies of Erste Group Bank AG to be consolidated except savings
equivalent documents. Report whether any entity included in the organisation’s banks within Haftungsverbund; dissenting from the above definition: from
consolidated financial statements or equivalent documents is not covered by following organisational units no environmental data are available: all
the report locations of Erste Group outside Austria, Czech Republic, Slovakia, Hungary,
Croatia, Romania (e.g. the offices in London and New York)
G4 18 Process for defining the report content and the aspect boundaries See analysis of materiality (http://www.erstegroup.com/en/Investors/Reports)
Reports 2014
G4 19 List of material aspects See analysis of materiality (http://www.erstegroup.com/en/Investors/Reports)
Reports 2014
G4 20 For each material aspect, report the aspect boundary within the organisation See analysis of materiality (http://www.erstegroup.com/en/Investors/Reports)
Reports 2014
With the exemption of the KPIs shown under G4 21 all other material KPIs are
within the organisation.
G4 21 For each material aspect, report the aspect boundary outside the organisation HR4, HR5, HR6
G4 22 Effect of any restatements of information provided in previous reports, and the No restatements
reasons for such restatements
G4 23 Significant changes from previous reporting periods in the scope and aspect HR figures are reported also for companies controlled by subsidiaries
boundaries
Stakeholder engagement
G4 24 List of stakeholder groups engaged by the organisation See analysis of materiality (http://www.erstegroup.com/en/Investors/Reports)
Reports 2014, and AR14 p. 57 et seqq.
G4 25 Basis for identification and selection of stakeholders See analysis of materiality (http://www.erstegroup.com/en/Investors/Reports)
Reports 2014
G4 26 Approach to stakeholder engagement, including frequency of engagement by See analysis of materiality (http://www.erstegroup.com/en/Investors/Reports)
type and by stakeholder group Reports 2014
G4 27 Key topics and concerns that have been raised through stakeholder See analysis of materiality (http://www.erstegroup.com/en/Investors/Reports)
engagement and how the organisation has responded to those key topics and Reports 2014
concerns

258
Report profile
G4 28 Reporting period (such as fiscal or calendar year) for information provided Fiscal year 2014
G4 29 Date of most recent previous report Fiscal year 2013
G4 30 Reporting cycle (such as annual, biennial) Annual
G4 31 Contact point for questions regarding the report or its content http://www.erstegroup.com/en/Investors/Investor-Relations-Team
G4 32 GRI Content Index In accordance with "CORE", AR14 p. 258 et seqq. and
http://www.erstegroup.com/en/Investors/Reports, Reports 2014
G4 33 The organisation’s policy and current practice with regard to seeking external AR14 p. 256 et seq.
assurance for the report
Corporate governance
G4 34 -41 Governance structure and composition AR14 Corporate governance p. 76 et seqq.
G4 42 Highest governance body's role in setting purpose, values and strategy AR14 Corporate governance p. 76 et seqq.
G4 43 -44 Highest governance body's competencies and performance evaluation AR14 Corporate governance p. 76 et seqq.
G4 45 -47 Highest governance body's role in risk management AR14 Corporate governance p. 80
G4 48 Highest governance body's role in sustainable reporting Members of holding board evaluating sustainable parts of annual report
G4 49-50 Highest governance body's role in evaluating economic, environmental and AR14 Corporate governance p. 76 et seqq.
social performance
G4 51 Remuneration policies for the highest governance body and senior executives AR14 Corporate governance p. 84 et seqq.
G4 52 Process for determining remuneration AR14 Corporate governance p. 84 et seqq.
G4 53 How stakeholders’ views are sought and taken into account regarding AR14 Corporate governance p. 81, 86
remuneration
G4 54 The ratio of the annual total compensation for the organisation’s highest-paid Not reported because sensitive
individual in each country of significant operations to the median annual total
compensation for all employees (excluding the highest-paid individual) in the
same country
G4 55 The ratio of percentage increase in annual total compensation for the Not reported because sensitive
organisation’s highest-paid individual in each country of significant operations
to the median percentage increase in annual total compensation for all
employees (excluding the highest-paid individual) in the same country
Ethics and integrity
G4 56 Organisation’s values, principles, standards and norms of behaviour such as See: https://brandcentre.erstegroup.com/en-GB/Our-Brand/Universe-of-our-
codes of conduct and codes of ethics values and code of conduct planned for 2015
G4 57 Internal and external mechanisms for seeking advice on ethical and lawful AR14 Corporate governance p. 87 et seq.
behaviour, and matters related to organisational integrity, such as helplines or
advice lines
G4 58 Internal and external mechanisms for reporting concerns about unethical or AR14 Corporate governance p. 87 et seq.
unlawful behaviour
SPECIFIC STANDARD DISCLOSURES

Management approach (DMA)

DMA EC Economic EC
Overall AR14 Commitment to society p. 57 et seqq. and customers and suppliers p. 61
et seqq.
DMA EN Environmental EN
Overall AR14 Environment p. 72 et seqq. and http://www.erstegroup.com/en/About-us/
Environment and AR14 Customers and suppliers p. 61 et seqq. and
http://www.erstegroupprocurement.com/en/services/Procurement/Suppy-
Chain-and-Supplier-Code-of-Conduct
DMA LA Labour practices and decent work LA
Overall AR14 Employees p. 66 et seqq. and customers and suppliers p. 61 et seqq.
and http://www.erstegroupprocurement.com/en/services/Procurement/Suppy-
Chain-and-Supplier-Code-of-Conduct
DMA HR Human rights HR
Overall AR14 Customers and suppliers p. 61 et seqq. and
http://www.erstegroupprocurement.com/en/services/Procurement/Suppy-Chain-
and-Supplier-Code-of-Conduct and http://www.erste-am.de/en/
institutional_investors/core_competencies/responsible_investments/responsible
_investment_approacch and http://www.erstegroup.com/en/About-us/
CorporateGovernance (aspects of responsible conduct) and AR14 Employees
p. 69 et seq.
DMA SO Society SO
Overall AR14 Corporate governance (compliance) p. 87 et seq. and
http://www.erstegroupprocurement.com/en/services/Procurement/Suppy-
Chain-and-Supplier-Code-of-Conduct

http://www.erstegroupprocurement.com/en/Downloads/b43acc97-e606-4510-
85d8-54c5cf268199/mc-code-of-conduct-for-suppliers.pdf

DMA PR Product responsibility PR

Overall AR14 Customers and suppliers p. 61 et seqq.

259
Economic
Economic performance
EC1 Direct economic value generated and distributed AR14 Group financial statements, segment reporting note 37
This indicator can only be presented with certain limiations by banks.
EC3 Coverage of the organisation's defined benefit plan obligations AR14 Group consolidated financial statements, provisions note 34
EC4 Financial assistance received from government In first quarter 2014 the last government guarenteed bond was redeemed.
There is no other financial assistance from the government.
Indirect economic impacts
EC8 Significant indirect economic impacts, including the extent of impacts AR14 Commitment to society p. 57 et seqq. and customers and suppliers
(financial inclusion) p. 63 et seq.
Procurement practices
EC9 Proportion of spending on local suppliers at significant locations of operation AR14 Customers and suppliers p.61 et seqq.
Environmental
Materials
EN1 Materials used by weight or volume AR14 Environment p. 75
Energy
EN3 Energy consumption within the organisation AR14 Environment p. 75
EN5 Energy intensity AR14 Environment p. 75
EN6 Reduction of energy consumption AR14 Environment p. 72, 75
Emissions
EN15 Direct greenhouse gas (ghg) emissions (scope 1) AR14 Environment p. 75 and http://www.erstegroup.com/en/About-
us/Environment
EN16 Energy indirect greenhouse gas (ghg) emissions (scope 2) AR14 Environment p. 75 and http://www.erstegroup.com/en/About-
us/Environment
EN18 Greenhouse gas (ghg) emissions intensity AR14 Environment p. 75
EN19 Reduction of greenhouse gas (ghg) emissions AR14 Environment p. 72, 75
Effluents and waste
EN23 Total weight of waste by type and disposal method AR14 Environment p. 74 et seq. For all locations, where - because of technical
reasons - the relevant waste figures couldn’t be measured, estimates based on
average consumption from similar locations were used; especially for ”residual-
waste data” - were only publicly available average figures about the weight of
waste per dust-bin are used. In some locations in Austria we weighted the
„content of the dust bins of one week and took these data basis for calculation
of other locations
Compliance
EN29 Monetary value of significant fines and total number of non-monetary sanctions Neither fines nor sanctions
for non-compliance with environmental laws and regulations
Social: labour practices and decent work
Supplier environmental assessment
EN32 Percentage of new suppliers that were screened using environmental criteria AR14 Customers and suppliers p. 65
EN33 Significant actual and potential negative environmental impacts in the supply No negative impacts and no actions taken; and AR14 Customers and suppliers
chain and p. 64 et seq.
actions taken
Social
Labour practices and decent work
Employment
LA1 Total number and rates of new employee hires and employee turnover by age AR14 Employees p. 70 et seq.; systems don't allow a breakdown by age group,
group, gender and region gender and region
LA2 Benefits provided to full-time employees that are not provided to temporary or Full-time and part-time employees get the same benefits
part-time employees, by significant locations of operation
LA3 Return to work and retention rates after parental leave, by gender Return to work rate female: 56%, return to work rate male: 27%; systems don't
provide retention rates after parental leave
Occupational health and safety
LA6 Type of injury and rates of injury, occupational diseases, lost days, and AR14 Employees p. 70 et seq.; systems don't allow a breakdown by gender
absenteeism, and total number of work-related fatalities, by region and by
gender
Training and education
LA9 Average hours of training per year per employee by gender, and by employee AR14 Employees p. 68; systems don't allow a breakdown by employee
category category
LA10 Programmes for skills management and lifelong learning that support the AR14 Employees p. 68; systems don't allow a breakdown by employee
continued employability of employees and assist them in managing career category
endings
LA11 Percentage of employees receiving regular performance and career 100%
development reviews, by gender and by employee category
Diversity and equal opportunity
LA12 Composition of governance bodies and breakdown of employees per AR14 Employees p. 70 et seq. and corporate governance p. 83 et seq.
employee category according to gender, age group, minority group
membership, and other indicators of diversity
Equal remuneration for women and men
LA13 Ratio of basic salary and remuneration of women to men by employee Not reported because sensitive
category, by significant locations of operation

260
Supplier assessment for labour practices
LA14 Percentage of new suppliers that were screened using labour practices criteria AR14 Customers and suppliers p. 65
LA15 Significant actual and potential negative impacts for labour practices in the No negative impacts and no actions taken; and AR14 Customers and suppliers
supply chain and actions taken p. 64 et seq.
Human rights
Non-discrimination
HR3 Total number of incidents of discrimination and corrective actions taken No incidents and therefore no actions
Freedom of association and collective bargaining
HR4 Operations and suppliers identified in which the right to exercise freedom of No measures necessary for our operations nor for suppliers
association and collective bargaining may be violated or at significant risk, and
measures taken to support these rights
Child labour
HR5 Operations and suppliers identified as having significant risk for incidents of child No measures necessary for our operations nor for suppliers
labor, and measures taken to contribute to the effective abolition of child labour
Forced or compulsory labour
HR6 Operations and suppliers identified as having significant risk for incidents of No measures necessary for our operations nor for suppliers
forced or compulsory labor, and measures to contribute to the elimination of all
forms of forced or compulsory labour
Supplier human rights assessment
HR10 Percentage of new suppliers that were screened using human rights criteria AR14 Customers and suppliers p. 65
HR11 Significant actual and potential negative human rights impacts in the supply No negative impacts and no actions taken; and AR14 Customers and suppliers
chain and actions taken p. 64 et seq.
Society
Anti-corruption
SO3 Total number and percentage of operations assessed for risks related to AR14 Corporate governance p. 87; Erste Group regularly assesses operational
corruption and the significant risks identified risks and effectiveness of controls. Highest risk found with customer-events,
therefore regular contact between compliance department and event-
department is organised.
SO4 Communication and training on anti-corruption policies and procedures AR14 Corporate governance p. 87 et seq.
SO5 Confirmed incidents of corruption and actions taken AR14 Corporate governance p. 87
Supplier assessment for impacts on society
SO9 Percentage of new suppliers that were screened using criteria for impacts on AR14 Customers and suppliers p. 65
society
SO10 Significant actual and potential negative impacts on society in the supply chain No negative impacts and no actions taken; and AR14 Customers and suppliers
and actions taken p. 64 et seq.
Product responsibility
Product and service labeling
PR5 Results of surveys measuring customer satisfaction AR14 Customers and suppliers p. 62
former Policies with specific environmental and social components applied to http://www.erstegroup.com/en/About-us/CorporateGovernance (aspects of
FS1 business lines responsible conduct) and http://www.erste-am.de/en/institutional_investors/
core_competencies/responsible_investments/responsible_investment_approac
ch and http://www.erstegroupprocurement.com/en/services/Procurement/
Suppy-Chain-and-Supplier-Code-of-Conduct
former Procedures for assessing and screening environmental and social risks in http://www.erstegroupprocurement.com/en/services/Procurement/Suppy-Chain-and-
FS2 business lines Supplier-Code-of-Conduct and http://www.erste-am.de/en/institutional_investors/
core_competencies/responsible_investments/responsible_investment_approacch
former Processes for monitoring clients' implementation of and compliance with No processes
FS3 environmental and social requirements included in agreements or transactions
former Process(es) for improving staff competency to implement the environmental New employees get lectures
FS4 and social policies and procedures as applied to business lines
former Interactions with clients/investees/business partners regarding environmental http://www.erste-am.de/en/institutional_investors/core_competencies/
FS5 and social risks and opportunities responsible_investments/research_and_cooperations and
AR14 Customers and suppliers p. 61 et seqq.
FS6 Percentage of the portfolio for business lines by specific region, size (e.g. AR14 Segments p. 30 et seqq.
micro/SME/large) and by sector
FS7 Monetary value of products and services designed to deliver a specific social AR14 Customers and suppliers p. 61 et seqq.
benefit for each business line broken down by purpose
FS8 Monetary value of products and services designed to deliver a specific AR14 Environment p. 72 et seqq.; only qualitative presentation
environmental benefit for each business line broken down by purpose
former Coverage and frequency of audits to assess implementation of environmental Currently no audits
FS9 and social policies and risk assessment procedures
FS10 Percentage and number of companies held in the institution's portfolio with which Engagement und voting activities: internal 5% / 50 corporates; external10% /
the reporting organisation has interacted on environmental or social issues 100 corporates
FS11 Percentage of assets subject to positive and negative environmental or social AR14 Customers and suppliers p. 62 et seq.; whereby arms-screening makes
screening 47% and sustainable screening 7% of total managed assets of EUR 53,8
billion and http://www.erste-am.at/en/about_us/company/
corporate_governance/banned_weapons/
former Voting polic(ies) applied to environmental or social issues for shares over which http://vds-staging.issproxy.com/SearchPage.php?CustomerID=4284&
FS12 the reporting organisation holds the right to vote shares or advises on voting StagingPassword=GTpRenpXpo
FS14 Initiatives to improve access to financial services for disadvantaged people AR14 Commitment to society p. 57 et seqq. and Customers and suppliers p.
61 et seq.
former Policies for the fair design and sale of financial products and services AR14 Customers and suppliers p. 61 et seqq.
FS15
former Initiatives to enhance financial literacy by type of beneficiary AR14 Commitment to society p. 63 et seq.
FS16

261
Glossary
Book value per share
Total equity attributable to owners of the parent of a public company, excluding participation capital, divided by the number of shares
outstanding (excluding treasury shares).

Cash return on equity

Also referred to as cash ROE. Calculated as return on equity, but excluding the impact of non-cash items on net profit/loss for the year
attributable to owners of the parent such as goodwill impairment and amortisation of customer relationships.

Cash earnings per share

Calculated as earnings per share based on net profit/loss for the year attributable to owners of the parent, adjusted for dividends on partic-
ipation capital, excluding goodwill impairments and amortisation of customer relationships.

CEE (Central and Eastern Europe)

Encompasses the new member states of the EU that joined in 2004 and 2007, the CIS countries, states that evolved from the former Yugo-
slavia, as well as Albania.

Common Equity Ratio (CET 1 ratio)

Common equity tier 1 capital (CET1) according to article 50 CRR of the institution expressed as a percentage of the total risk amount
according to Art. 92 (3) CRR

Cost/income ratio
General administrative expenses as a percentage of operating income.

Dividend yield
Dividend payment of the financial year as a percentage of the year-end closing price or the most recent price of the share.

Earnings per share

Net profit for the year attributable to owners of the parent adjusted for dividends of participation capital, divided by average shares outstanding.

Equity Ratio (T 1 ratio)

Tier 1 capital according to article 25 CRR of the institution expressed as a percentage of the total risk amount according to Art. 92 (3) CRR.

Interest-bearing assets
Total assets less cash, derivative financial instruments, tangible and intangible assets, tax assets, assets held for sale and other assets.

Net interest margin

Net interest income as a percentage of average interest-bearing assets, calculated on a monthly basis.

Operating income
Consists of net interest income, net commission income and trading result.

Operating result
Operating income less operating expenses (i.e. general administrative expenses).

Price/earnings ratio
Closing share price of the financial year divided by earnings per share. Usually used for valuation comparisons.

Market capitalisation
Overall value of a company calculated by multiplying the share price by the number of shares outstanding.

Non-performing exposure (NPE) coverage ratio

Risk provisions for the credit risk exposure as a percentage of the non-performing credit risk exposure.

Non-performing exposure (NPE) ratio

Non-performing credit risk exposure as a percentage of total credit risk exposure.

262
Non-performing loans (NPL) coverage ratio
Risk provisions for loans and advances to customers as a percentage of non-performing loans and advances to customers.

Non-performing loans (NPL) ratio

Non-performing loans and advances to customers as a percentage of total loans and advances to customers.

Non-performing loans (NPL) total coverage ratio

Risk provisions and collateral for non-performing loans and advances to customers as a percentage of non-performing loans and advances
to customers.

Return on equity
Also referred to as ROE. Net profit/loss for the year attributable to owners of the parent, as a percentage of average equity. The average
equity is calculated based upon the equity outstanding as of the close of each of the 12 months during the year.

Risk categories
Risk categories are based on internal customer ratings and are used for classification of the bank’s assets and contingent credit liabilities.
Erste Group applies internal rating systems, which for private individuals comprise eight rating grades for non-defaulted customers and
one rating grade for customers in default. For all other customer segments, the Group uses thirteen rating grades for non-defaulted cus-
tomers and one rating grade for defaulted customers.

Risk category – low risk

Typically regional customers with well-established and rather long-standing relationships with Erste Group or large, internationally rec-
ognised customers. Strong and good financial positions and no foreseeable financial difficulties. Retail clients with long relationships with
the bank, or clients with wide product pool use. No late payments currently or in the most recent 12 months. New business is generally
done with clients in this risk category.

Risk category – management attention

Vulnerable non-retail clients, that may have overdue payments or defaults in their credit history or may encounter debt repayment
difficulties in the medium term. Retail clients with limited savings or possible payment problems in the past triggering early collection
reminders. These clients typically have good recent histories and no current delinquencies.

Risk category – substandard

The borrower is vulnerable to negative financial and economic developments. Such loans are managed in specialised risk management
departments.

Risk category – non-performing

One or more of the default criteria under Basel II are met: full repayment unlikely, interest or principal payments on a material exposure
more than 90 days past due, restructuring resulting in a loss to the lender, realisation of a loan loss, or initiation of bankruptcy proceedings.

Share capital
Total equity attributable to owners of the parent of a company, subscribed to by the shareholders at par.

Solvency ratio
The ratio of the sum of tier-1, tier-2 and tier-3 capital, after regulatory deductions, to the calculation basis for the capital requirement
pursuant to Section 22 (1) of the Austrian Banking Act.

Tax rate
Taxes on income/loss as a percentage of pre-tax profit from continuing operations.

Total Capital Ratio

Total own funds according to article 72 CRR of the institution expressed as a percentage of the total risk amount according to Art. 92 (3) CRR.

Total shareholder return

Annual performance of an investment in Erste Group Bank AG shares including all income streams (e.g. dividend for the year plus or
minus gain or loss in the share price from the beginning to the end of the year).

263
Important adresses

ERSTE GROUP BANK AG HUNGARY

Graben 21 Erste Bank Hungary Zrt.
A-1010 Vienna Népfürdő ut 24-26
Phone: +43 (0) 50100 10100 H-1138 Budapest
Fax: +43 (0) 50100 910100 Phone: +36 12980221
SWIFT/BIC: GIBAATWG Fax: +36 13732499
Website: www.erstegroup.com SWIFT/BIC: GIBAHUHB
Email: [email protected]
Website: www.erstebank.hu
AUSTRIA
Erste Bank der oesterreichischen Sparkasse AG
(Erste Bank Oesterreich) CROATIA
Graben 21 Erste&Steiermärkische Bank d.d.
A-1010 Vienna (Erste Bank Croatia)
Phone: +43 (0) 50100 10100 Jadranski trg 3a
Fax: +43 (0) 50100 910100 HR-51000 Rijeka
SWIFT/BIC: GIBAATWW Phone: +385 62375000
Website: www.erstebank.at Fax: +385 62376000
SWIFT/BIC: ESBCHR22
Email: [email protected]
CZECH REPUBLIC Website: www.erstebank.hr
Česká spořitelna, a.s.
Olbrachtova 1929/62
CZ-140 00 Prague 4 SERBIA
Phone: +420 26107 1111 Erste Bank a.d. Novi Sad
Fax: +420 26107 3006 (Erste Bank Serbia)
SWIFT/BIC: GIBACZPX Bulevar Oslobodjenja 5
Email: [email protected] SRB-21000 Novi Sad
Website: www.csas.cz Phone: +381 21 487 3510
Fax: +381 21 480 9700
SWIFT/BIC: GIBARS22
SLOVAKIA Email: [email protected]
Slovenská sporiteľňa, a.s. Website: www.erstebank.rs
Tomášikova 48
SK-832 37 Bratislava
Phone: +421 248 621111
Fax: +421 248 627000
SWIFT/BIC: GIBASKBX
Email: [email protected]
Website: www.slsp.sk

ROMANIA
Banca Comercială Română S.A.
5, Regina Elisabeta Blvd
RO-030016 Bucharest 3
Phone: +402 13131246
SWIFT/BIC: RNCBROBU
Email: [email protected]
Website: www.bcr.ro

264
Imprint
Publisher and copyright owner:
Erste Group Bank AG, Graben 21, A-1010 Wien

Editor:
Investor Relations & Accounting-Teams, Erste Group

Production:
Erste Group with the assistance of FIRE.sys (Konrad GmbH)

Photography (board members):

www.danielaberanek.com

Illustration:
www.grafikwerkstatt.at

Photography:
Toni Rappersberger

Printer:
„agensketterl“ Druckerei GmbH
Kreuzbrunn 19, 3001 Mauerbach

Contact:
Erste Group Bank AG,
Milchgasse 1, A-1010 Vienna
Phone: +43 (0)5 0100 - 17693
Fax: +43 (0)5 0100 - 913112
Email: [email protected]
Internet: www.erstegroup.com/investorrelations

Thomas Sommerauer
Phone: +43 (0)5 0100 - 17326
Email: [email protected]
Peter Makray
Phone: +43 (0)5 0100 - 16878
Email: [email protected]
Simone Pilz
Phone: +43 (0)5 0100 - 13036
Email: [email protected]
Gerald Krames
Phone: +43 (0)5 0100 - 12751
Email: [email protected]

IR-App:
iPad iPhone Android Social Media

To read the QR codes you need a smartphone or a tablet equipped with a camera and a QR code app (free to download).
Line up your device with the QR code until the app recognises the code.

IMPORTANT INFORMATION:
We have prepared this annual report with the greatest possible care and have thoroughly checked the data presented in it. However, we cannot rule out errors
associated with rounding, transmission, typesetting or printing. The English version of the annual report is a translation.

This report contains forward-looking statements. These statements are based on current estimates, assumptions and projections of Erste Group Bank AG
and currently available public information. They are not guarantees of future performance and involve certain known and yet unknown risks and uncertainties
and are based upon assumptions as to future events that may not prove to be accurate. Many factors could cause the actual results or performance to be
materially different from those that may be expressed or implied by such statements. Erste Group Bank AG does not assume any obligation to update the
forward-looking statements contained in this report.
GB Englisch E189024
Austria (Erste Bank)

Czech Republic (Česká spořitelna)

Slovakia (Slovenská sporiteľňa)

Hungary (Erste Bank Hungary)

Croatia ( Erste Bank Croatia)

Serbia (Erste Bank Serbia)

Romania (Banca Comercială Română)

www.erstegroup.com

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