#1牛 ARDAL Debt and Liquidity Management Agency SLOVAK REPUBLIC Investor Presentation October 2022#2Table of contents IV = ≥ Introduction II Economic Developments III Fiscal Policy p. 3 p. 11 p. 24 Debt Management p. 28 V Banking Sector p. 41 VI Contemplated Transaction p. 43#3Introduction ARDAL 3#4Slovakia - At a Glance Geographical Location Slovakia European Union (Euro Zone members) European Union (Non Euro Zone members) Key Facts ARDAL Ratings (Moody's/S&P/Fitch) GDP (2021) GNI per capita (2020) Population (2021) Real GDP growth (2021) Inflation (HICP-2021) Currency Key economic sectors Memberships Head of State Capital A2 (negative) / A+ (negative) / A (negative) € 87.995 billion € 20,759 5.5 million 3.0% 2.8% EUR Services, Manufacturing, Wholesale & Retail Trade, Construction OECD, EU, EMU, NATO, Schengen Area President Mrs. Zuzana Čaputová Bratislava Territory 49,034 km² Source: Eurostat, Ministry of Finance of the Slovak Republic (MoF), National Bank of Slovakia (NBS) 牛 4#5Slovakia - Credit Strengths ARDAL Strengths Credit キ Resilient Economic Growth Sound Fundamentals Fiscal Discipline Steady Debt Dynamics • • Strong track record of economic growth and high GDP per capita: compares well relative to EU peers Moderate economic downturn in pandemic: -4.4% in 2020 vs. -6.4% for euro area in real GDP terms and Solid post-pandemic growth prospects An export-oriented performer with balanced external accounts: moderate current account deficits explained by investment imports Well capitalized banking sector profitable with good asset quality COVID-19 pandemic crisis absorbed with lower fiscal costs compared to the other EU countries. Low volatility of revenues Reforms to the fiscal framework: including multi-annual expenditure ceilings covering 2022-25 will further help to reduce the debt burden Public debt still well below the Euro Area average High debt affordability: interest servicing costs are 2.7% of GDP for 2021 Export Oriented Competitive export sectors with high value niches in key industrial sectors (motor vehicles, machinery, equipment, metal products, electronics, etc.) Member of Key Political and Economic Organizations EU and Eurozone membership: supports Slovakia's institutional strength and credible macroeconomic policies 牛 5 Source: Moody's, IMF#6Ratings Reflect a Solid Profile in Turbulent Times A ARDAL Rating Trajectory Highlights and Key Topics • • Solid economic growth over recent years has facilitated the country income convergence to its EU peers while maintaining a relatively moderate debt burden and high debt affordability. Such characteristics together with Slovakia's historical financial stability and expected EU programmes funding have supported current credit rating, A/A2/A However, its high reliance on Russian energy imports is increasing the country vulnerability to geopolitical risk, which has driven to an outlook revision to negative in recent months. Slovakia's outlook could be upgraded to positive if the concerns over energy supply are alleviated. Slovakia's reform plans to diversify energy supply will help this Sovereign Ratings Trajectory 2016-22 (S&P, Moody's, Fitch) AA-/Aa3/AA- A+/A1/A+ A/A2/A A-/A2/A- BBB+/Baa1/BBB+ BBB/Baa2/BBB Fitch Moody's S&P BBB-/Baa3/BBB- 2016 2017 2018 2019 2020 2021 2022 Credit Rating Agency Views S&P Global Ratings Credit rating has remained stable between 2016 and 2022 о о Slovak Republic's Credit rating was reafirmed by the agency while its Outlook was revised to negative in May 2022 May - 2022: Slovakia path to fiscal consolidation after the Covid-19 pandemic could be diviated by the country high dependance on Russian oil and gas, which exposes the country to Energy supply risks Nevethelless, not only are Slovakia's debt levels considered manageable combined with historically low debt service costs, the country benefits from EU multianual financial framework MOODY'S Credit rating has remained stable between 2016 and 2022 Credit rating of A2 was recently reafimed in August 2022 with its Outlook updated to negative Aug-2022: о The country public finances could be materially impacted by a permanent reduction on gas supply form Russia takes place Neverheless, Slovakia Credit rating reafirmation reflects the country solid economic strenght, solid fiscal metrics and relatively moderate exposure to evento risks о A clear and succesful energy supply diversification strategy would support an improvement on its Credit Rating Outlook Fitch Ratings Credit rating has been downgraded 1 time between 2016 and 2022 Credit rating of A+ was downgraded to A in May 2020 and recently reafirmed in August 2022 with a negative Outlook May 2020: One notch downgrade from A+ to A. Increasing economic uncertanty driven by the impact of the Covid-19 pandemic August 2022: Credit rating was reafirmed, but Outlook was revised to negative. Main driver for such revision was the foreseable adverse shock from energy supply challenges 6 Source: Moody's, S&P and Fitch#7Slovakia's credit ratings are amongst the highest in the region MOODY'S S&P Global Ratings A-/A3 A/A2 A+/A1 AA-/Aa3 ARDAL Fitch Ratings Czech Re. Macau Czech Re. Estonia Czech Re. Hong Kong Belgium Ireland ✡ Israel Ireland Estonia Belgium Qatar LUK Qatar Slovenia Qatar UK Japan Estonia China Slovakia China Malta China ✡ Israel Japan Latvia ✡ Israel Saudi Arabia Ireland Lithuania Kuwait Slovakia Iceland Chile Iceland Slovakia Iceland Lithuania Poland Spain Japan Slovenia Malta Lithuania Saudi Arabia Botswana EMalaysia Malta Malaysia Chile Latvia Latvia Slovenia Saudi Arabia Poland Spain Poland キ 7 Source: Moody's, S&P and Fitch#8Improving Energy Security ARDAL In the face of the Russia/Ukraine crisis Slovakia has been focused on reducing energy imports coming from Russia Slovakia has successfully increased gas reserves, reaching 83% of gas storage filling level as of September 2022 Diversification of energy sources remains the key priority and focus of the government Signed agreements with Norway and Qatar will allow to decrease supply from Russia by more than two-thirds by end of 2022 The government is developing a plan to reduce Slovakia's energy imports from Russia by 65% via substitution with LNG and gas supplied from Norway The mid-term plan covers considerable investment into renewables improvement in energy efficiency ✓ A new nuclear reactor in Slovakia that is due to start operating in early 2023 making Slovakia self-sufficient in electricity and contribute to energy security Energy Supply by Source, 2020 Coal 13.6% Natural gas 25.5% Renewables and biofuels 14.1% Oil 21.5% Nuclear 25.4% Share of Nuclear Energy in Electricity Generation, 2020 66.4% 53.9% 46.0% 38.7% 37.0% France Slovak Republic Hungary Belgium Slovenia キ 8 Source: International Energy Agency 2020, International Monetary Fund#9High Level of Gas Reserves Increases Energy Security ✓ As of September 16th 2022, Slovakia has reached gas storage filling level of 83% corresponding to 52% of total annual consumption. Share of consumption covered by current gas reserves is among the highest in the EU. LNG imports which begun in March contributed considerably to current high levels of gas storage. 100 90 80 70 60 50 40 95 30 20 10 0 Latvia ■ Gas reserves as a percentage of annual consumption ■Gas reserves as a percentage of total storage capacity Austria Slovakia Czech Republic Hungary Denmark Netherlands Ukraine France EU キ 9 Germany Italy Romania Poland Croatia Bulgaria Portugal Belgium Source: Ministry of Interior of the SR ARDAL#10Mitigating Impacts from the Energy Market Disruption Targeted Support Measures for Households ARDAL Inflation Aid Package Package introduced by the Ministry of Finance that result in 0.3% of GDP impact in 2022 and 1% of GDP in 2023 ✓ Includes one-time subsidy of €100 for every child Implements higher permanent child allowances and child tax credit The reform is estimated to affect more than 1.1 million dependent children under the age of 25 and reduce the risk of poverty by 1.8 percentage points on average Provides one-off support of selected vulnerable groups Measure Implementation Timeline Budgetary Cost (%GDP) Reduced electricity distribution fee Nov'21 0.1 for the unregulated market Reduced electricity system operation tariff for the regulated market Nov'21 0.04 Agreement with the main power utility provider to freeze regulated electricity prices for households until 2024 Feb'22 Advancing the payment of the 13th pension from November to July Jul'22 Inflation aid package (child benefits and one-off support to Jun'22 0.3 selected groups) Inflation aid package (child Jan'23 1.0 benefits) キ 10 10 Source: International Monetary Fund Country Report No. 22/202; Stability Programme of the Slovak Republic for 2022 to 2025#11II Economic developments ARDAL 11#12Transformation Success Story ✓ Sustainable and robust GDP growth Commitment to fiscal discipline ✓ High share of investment to GDP ✓ Export-oriented economy ARDAL SLOVAKIA Real GDP Growth (in %) Private Consumption Public Consumption Gross fixed capital formation 2016 2017 2018 2019 2020 2021 2022e 1.9 3.0 3.8 2.6 (4.4) 3.0 1.9 3.9 4.6 4.1 2.7 (1.3) 1.2 4.6 1.9 1.1 (0.1) 4.6 0.9 1.9 (1.5) (9.2) 2.9 2.8 6.7 (11.6) 0.6 5.4 Exports (goods and services) 5.0 3.7 5.1 0.8 (7.3) 10.2 (1.6) Imports (goods and services) 4.8 4.0 4.8 2.1 (8.2) 11.2 (0.9) GNI (real growth p.c. in %, adjusted by GDP deflator) 3.8 3.8 4.3 2.2 (3.8) 3.0 2.3 Employment Growth (% p.a.) 2.4 2.2 2.0 1.0 (1.9) (0.6) 1.9 Unemployment rate (% of labour Force) 9.6 8.1 6.6 5.8 6.7 6.8 6.1 Inflation (HICP) (% p.a.) (0.5) 1.4 2.5 2.8 2.0 2.8 11.6 General government balance (% of GDP) (2.6) (1.0) (1.0) (1.3) (5.5) (6.2) (5.1)* * General government balance estimate from Stability Programme of the S R for 2022-2025 (April 2022). Note: Ministry of Finance's Report on Estimate for 2022 published in August 2022 expects deficit of general government to be slightly lower in 2022, while higher expenditures stemming from inflation to affect deficit in following years. Sources: Eurostat, SO SR, MoF September forecast, EC for GNI in current prices per head of population. キ 12#13Slovakia - A Solid Performer among Eurozone Countries ARDAL Slovakia's economic performance declined in 2020 due to coronavirus - less than in the euro area ✓ The war in Ukraine and the energy crisis is a headwind but competitive external sector, resilient labour market and industrial production supported by drawing from EU funds and RRP suggest a solid growth potential Convergence is almost complete for the unemployment and inflation rates Slovakia's Public Debt to GDP is among the lower levels in the Euro Area, at around 63% compared to 97% Euro Area average (2021) Real GDP growth (%) Inflation- HICP (%) Unemployment rate (%) Current Account Balance (% of GDP) Budget Balance (% of GDP) Structural Budget Balance (% of pot. GDP) General Government Gross Debt (% of GDP) Slovakia 2020 2021 Belgium Finland 2020 2021 2020 2021 Eurozone 2020 2021 (4.4) 3.0 (5.7) 6.2 (2.2) 3.0 (6.1) 5.2 2.0 2.8 0.4 3.2 0.4 2.1 0.3 2.6 6.7 6.8 5.8 6.3 7.7 7.7 8.0 7.7 0.4 (2.0) 0.8 (0.4) 0.6 0.9 1.8 2.4 (5.5) (6.2) (9.0) (5.5) (5.5) (2.6) (7.1) (5.1) (4.5) (5.7) (5.8) (4.6) (3.7) (2.0) (3.6) (4.0) 59.7 63.1 112.8 108.2 69.0 65.8 97.2 95.6 Source: Eurostat ㄝ 13#14135 130 125 120 115 110 105 100 95 90 Strong Productivity and GDP Growth 2010-100 ARDAL Slovakia's real labour productivity and GDP per capita have consistently grown faster compared to peers Real labor productivity per hour worked GDP per capita (chain-linked volumes) 2007 2008 Slovakia 2009 2010 2011 2012 2013 2014 Belgium 2015 Finland * Data for 2021 for Belgium is not available 2016 2017 Euro area 19 countries 2018 2019 2020 2021 キ 14 130 125 120 ༈ ཎྜ £ ༔ ྂ 8 115 110 105 100 2010=100 2007 2008 2009 Slovakia 2010 2011 Finland 2012 2013 2014 Belgium 2015 2016 2017 Euro area (19 countries) 2018 2019 2020 Source: Eurostat#15Ongoing Economic Convergence to EU28 GDP per capita in PPS EU28=100 (2021) 140.0 Nations that converged closer to EU ARDAL NL DAT DK Successful transformation to market economy Fast speed of convergence: 28% in 25 years Current level: 73% of the EU27 GDP per capita (2021) 120.0 BE MT UK FR 100.0 EU LT EE IT CY Slovakia SI CZ ཀླ༣ ES 80.0 PL HU PT LV RO HR EL 60.0 40.0 20.0 20.0 40.0 BG 60.0 80.0 100.0 120.0 140.0 GDP per capita in PPS EU28=100 (1995) キ 15 Source: IMF#1618.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2005 Resilient Unemployment Rate ✓ The unemployment rate reached out historical minimum in 2019 However, the pandemic caused an increase in unemployment, in line with euro area peers Unemployment Evolution versus Peers 2006 2007 2008 2009 2010 2011 Belgium Slovakia 2012 2013 2014 2015 Euro area - 19 countries (from 2015) H 16 2016 2017 Finland 2018 2019 2020 2021 Source: Eurostat 7.7 6.3 6.8 ARDAL#17War refugees can support the Slovak labor market ARDAL ✓ Since the beginning of the war, 92,000 Ukrainian refugees, mostly women and children, have applied for temporary refugee status in Slovakia. ✓ So far, 20 % of 18-64 year olds have found a job. Refugees mainly occupy low-skilled positions in manufacturing and services, and their inclusion represents a positive risk for the Slovak labour market. Age distribution of Ukrainian refugees 97 90 30 24 18 12 2 6 5 9 2 0 22260 84 78 72 66 60 54 48 42 36 2000 1500 1000 500 0 500 1000 1500 2000 Women Men キ 17 Source: Ministry of Interior of the SR#18Key Trading Partners in 2021 2% 3% 3% Imports By Geography (%) 19% 24% 6% 5% 6% 5% Germany Czechia China Exports By Geography (%) 15% ARDAL 22% 12% Germany Czechia Poland Hungary France Austria Italy United Kingdom United States China Romania Spain Netherlands Russia Switzerland Other Russia Poland 2% Korea 2% Viet Nam 2% 2% 10% Hungary 3% France 3% Italy 7% 4% Austria Romania Spain 5% 8% 6% 7% 6% United Kingdom Netherlands Other キ 18 Source: Statistical Office of the Slovak Republic#19Key Export and Import Products in 2021 3% 6% 6% 10% 9% 10% Imports by Product (%) Machinery, electrical equipment Vehicles Base metals and articles of base metal Mineral products 33% 3% Products of the chemical 3% industries Plastics and articles thereof 6% Miscellaneous 11% manufactured articles Prepared foodstuffs; 15% beverages; tobacco Textiles and textile articles ■Optical Other キ 19 7% Exports by Product (%) ARDAL 29% 33% Vehicles Machinery, electrical equipment Base metals and articles of base metal Plastics and articles thereof Mineral products Miscellaneous manufactured articles Products of the chemical industries Textiles and textile articles Prepared foodstuffs; beverages; tobacco Paper, cellulose Other Source: Statistical Office of the Slovak Republic#20Institutional Framework and Governance ✓ Slovakia has demonstrated improvement of World Governance Indicators in recent years Voice and Accountability 76.8 75.4 64.3 63.8 56.5 The country is well positioned compared to regional peers with the institutional strength is supported by EU and eurozone membership ✓ The country's political institutions have been continuously evolving over time Institutional reforms make up the core part of Slovakia's Recovery and Resilience Plan (RRP) introduced post-pandemic ✓ Slovakia has committed to further enhancement of the institutional framework and strengthen governance by implementing reforms in judiciary system improving public procurement and investment efficiency Slovak Republic Latvia Romania Poland Bulgaria Rule of Law Converging to Peers A=8.0 A=3.3 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Slovak Republic S&P A+/A/A- Median Political Stability and Absence of Violence 63.7 63.7 62.3 61.3 59.0 + 20 20 Slovak Republic S&P A+/A/A- Median Romania Poland Bulgaria Source: World Governance Indicators 2021; S&P Sovereign Credit Ratings as of July 11, 2022#21EU Recovery and Resilience Plan (RRP) Kicks in RRP contributions to Slovakia's expected GDP growth 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% 2022 2023 2024 2025 2026 2027 other factors ■RRP contribution GDP growth rate ARDAL RRP is expected to boost the economy mainly in 2023 and 2024 Slovakia will be a key beneficiary of the Recovery and Resilience Facility, boosting its productivity and accelerate the green and digital transformation. Public investment funded by the RRP will support the output by approx. EUR 1.3 bn in 2023 as well in 2024 キ 21 Source: MoF#22Structural Reforms for Long-Term Development ARDAL The Slovak government remains committed and continues to implement structural reforms to boost competitiveness and quality of life for the country. EU Recovery and Resilience Plan Investment plans from 2021-2026 in Slovakia will focus on the following 5 key structural areas: Better education Healthy life Effective public administration and digitalization Green economy Competitive and innovative economy Slovakia is the fifth EU member state to be granted approval by the EC for its Recovery and Resilience Plan. Improving Tax Collection and Combating Tax Evasion VAT gap has decreased from 37% in 2012 to 12 % in 2021 The decrease is primarily due to measures that increased tax collection: In 2020, online cash registers were introduced to tackle evasion in sectors with the largest VAT gap such as retail, hotels and restaurants In addition, electronic invoicing is expected to be introduced in following years Value for Money (VfM) Initiative Government initiative to raise public spending efficiency (started in 2016) Compulsory spending reviews of at least 50% of government expenditures within the electoral cycle Reinforced the Ministry of Finance mandate in 2020: Strengthening the role of the VfM Unit in the investment process and managing the investment centralized budget Efficiency check of investment projects exceeding € 1mn Strengthened fiscal framework Multi-annual expenditure ceilings as a new operational fiscal rule (adopted in March 2022) Refinements of Constitutional Act on Fiscal Responsibility (under political discussion) • • Recalibrations of debt thresholds, escape clauses, and respective sanctions Net debt basis to provide flexible liquidity management Stronger emphasis on analytical input into the budgetary process (under discussion) キ 22 122#238% 7% 6% 5% 4% 3% 2% 1% 0% Ireland Portugal Malta Spain 10% %6 Economic Outlook - Outlook for the next years favourable ✓ The expected growth of Slovakia's real GDP is a result of ambitious investments and reforms in RRP As a result the outlook for 2022-2023 is better than the EU and euro area average ARDAL ✓ The forecast assumes the all EU countries will overcome the energy crisis by joint actions and shared responsibility Expected Real GDP Growth cumulative in 2022-2023 Slovenia Poland Greece Croatia Hungary Romania Slovakia Cyprus Austria Bulgaria EU27 Euro area. Luxembourg Latvia France Netherlands 23 H Czechia Denmark Italy Lithuania Germany Belgium Sweden Estonia Finland Source: European Commission Summer 2022 Forecast#24III Fiscal Policy ARDAL 24#25Prudent Fiscal Policy to be Reintroduced in 2023 ARDAL Between 2009 and 2019 Slovakia successfully reduced the government deficit by over 6% of GDP COVID-19 pandemic deteriorated public finance (higher deficits 2020 - 2022 reflected particularly economic downturn and fiscal stimulus of around 6% of GDP) ✓ the Government is introducing expenditure ceilings in 2023 expecting headline deficit to return closer to 3% of GDP % of GDP 0.0 General Government balance -1.0 -2.0 -3.0 EU Government budget deficit rule (-3% of GDP) -4.0 -5.0 -6.0 -7.0 -8.0 -9.0 -10.0 2009 2010 2011 2012 2013 2014 ■Slovakia ■Belgium 2015 2016 2017 2018 2019 2020 2021 2022F 2023F Euro Area Finland 25 Source: Eurostat, EC Spring forecast 2022#26Government's Objective to Stabilize Post-Pandemic Debt ARDAL Public debt on a declining trajectory since 2014, with cumulative decrease of almost 7%. of GDP up to 2019 ✓ Outbreak of COVID-19 in 2020 elevated public debt by almost 12% of GDP (however one of the main driver was temporary accumulation of cash buffer due to uncertainty) ✓ The medium-term consolidation strategy reflecting expenditure ceilings and higher nominal GDP will lead to stabilisation of the debt level below 60% GDP and well below peer countries 120 100 % of GDP 80 0 60 60 40 40 20 20 0 Public Debt-to-GDP Ratio Finland 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F 2023F Slovakia Euro Area キ 26 - Belgium Source: Eurostat, EC Spring forecast 2022#27The Main Fiscal Reform of Managing Public Finance ARDAL In 2022 the Parliament approved introducing of ceilings on public expenditures (ordinary law) The ceilings as a main operation tool to achieve long-term fiscal sustainability will be implemented already in general government budget for 2023 and thereafter for whole election period since 2024 ✓ Calculation of expenditure limits based on risks of long-term sustainability indicator and executed and updated by independent Council for Budget Responsibility ✓ Required structural consolidation of 0.5 pp. of GDP in case of high/medium risks and 0.25 in case of low risks Expenditure ceilings incorporate escape clauses that can be triggered by government after Fiscal council opinion in case of: ✓ Economic downturn of 0 % or -3% ✓ One-off measures related to extraordinary events (war, natural disaster, etc.) キ 27#28IV Debt Management ARDAL 28#29Debt Management in 2022 ARDAL Gross issuance originally planned at EUR 6.0 billion Positive development in State budget deficit mostly due to elevated revenues from inflation - actual deficit probably lower than budgeted EUR 5.5 billion Gross issuance expected to be at original amount or lower Substantial cash buffer Issued EUR 3.3 billion bonds No syndication so far EUR 3.3 billion via regular auctions Loans received in amount of EUR 0.1 billion ✓ One tranche of EIB loan Issuance plan till the end of 2022 EUR 1.0-2.0 billion - syndicated deal EUR 0.6 1.0 billion - auctions in October and November キ Source: Ardal as of September 2022 29 29#30Debt Management in 2022 (cont'd) Total redemptions EUR 1.3 billion equivalent EUR 1.16 billion equivalent bond matured in May 2022 (USD 1.5 billion) EUR 0.14 billion equivalent bond matured in April 2022 (CHF 0.175 billion) Bond auctions stable on third Monday of each month except July, August & December ✓ Four bonds offered in all auctions ✓ Special auction of 2068 bond with remuneration in June - followed investor demand Financing still relatively cheap Weighted average yield at 1.71% p.a. (new issuance); weighted average maturity 14.8 years (new issuance) Strong presence of ECB ECB holds more than 45% of issued government bonds ✓ Continuing reinvestments - no timeline specified when ECB will stop reinvestments キ 30 ARDAL Source: Ardal as of September 2022#31Debt Management Outlook in 2023 Total redemptions EUR 4.6 billion equivalent EUR 3.0 billion - bond maturing in February EUR 1.5 billion - bond maturing in November EUR 0.14 billion equivalent - CHF 0.175 billion bond maturing October Uncertainty about state budget cash deficit ✓ Cash deficit of state budget around EUR 4.2 billion (estimate as of July 2022) ARDAL Total gross financing needs of EUR 8.8 billion will be covered mostly by issuance EUR 4.0-5.0 billion can be issued via regular monthly auctions EUR 3.0 4.0 billion can be issued via syndications No T-bills No specific loans planned but could be arranged based on market conditions ✓ Total issuance planned at EUR 8.0 billion - the rest can be covered by State Treasury funds development + liquidity buffer optimization Foreign currency issuances are less likely + Source: Ardal 31#32Interest Payments Development ARDAL Interest payments are at historical lows as a percentage of GDP and have been declining since 2014 even in nominal terms In 2022 interest payments expected at similar level to 2021 in nominal terms and with further drop as a % of GDP ECB's PSPP helped in decreasing interest payments Interest Payment Dynamics for Slovakia (accrual) 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2013 2014 2015 2016 2.00% 1.50% 1.00% 0.50% 0.00% 2017 2018 2019 2020 2021 2022 Interest payments in % of GDP (rhs) Interest payments in EUR bn (Ihs) キ Source: ARDAL, data as of August 2022; 2022 is estimate for whole year 32#33Net Funding Development Increased issuance after the COVID outbreak ✓ Low redemptions between 2019-2022 Net funding volume expected to decrease in line with fiscal consolidation Issuance and Redemptions 12.0 10.0 8.0 6.0 4.0 2.0 ARDAL 0.0 2015 2016 2017 2018 2019 2020 2021 2022 Issuance Redemptions Net funding volume H Source: ARDAL, 2022 expected amount for whole year 33#34Bond Redemption Profile ✓ Smooth redemption profile not exceeding EUR 6 billion redemption in any single year ✓ No remaining redemptions in 2022 EUR bln 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Slovakia Bond Redemptions ARDAL 2067 2065 2063 2053 2051 2049 2047 2045 2043 2041 2039 Available additional amount to be sold through auctions and syndicate + 34 2061 2059 2057 2055 Source: ARDAL, data as of September 2022 2037 2035 2033 2031 2029 2027 2025 Maturing bonds 2023#35Government Bond Portfolio Metrics ARDAL ✓ Average maturity increased steadily since 2012 - maintained above 8 years since 2018 At the same time average YTM was reduced significantly Increase in yields in 2022 in line with overall development in euro area + long issuance in 2022 (average time to maturity 14.8 years for bonds sold in auctions) Average Maturity and Yield Metrics for Slovakia 9 4,5% 4,0% 8 3,5% 7 3,0% 6 2,5% 5 2,0% 1,5% 4 1,0% 3 0,5% 2 0,0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Avg. Maturity (years, lhs) Avg. YTM (new issuance, rhs) ㄝ 35 Source: ARDAL, data as of September 2022#36Risk Indicators Comparison ARDAL As of 30 June 2022 Slovakia Belgium France Slovenia Latvia Germany Austria Euro Area Average Life of Debt (years) 8.61 10.03 8.54 10.29 8.13 7.59 10.76 16 8 8.59 Refinancing Risk 1Y (% of total debt) 5.34 16.77 13.76 10.80 10.11 17.70 16.79 14.08 Refinancing Risk 5Y (% of total debt) 40.44 40.00 45.30 36.20 49.68 48.90 50.92 45.69 Refixing Risk 1Y (% of total debt) 5.35 17.22 24.69 11.21 16.47 21.00 17.34 21.78 Refixing Risk 5Y (% of total debt) 40.44 40.44 53.12 36.28 55.12 54.54 51.49 50.46 Foreign Debt to Total Debt (before derivatives) % 0.91 0.84 0.00 2.75 3.91 0.00 3.33 0.60 Foreign Debt to Total Debt (after derivatives) % 0.02 0.00 0.00 0.08 3.91 0.00 0.00 0.04 Prudent risk management ✓ Average debt maturity of Slovakia at Euro Area level and comparable with higher rated issuers ✓ Sufficient space for short term financing and shock absorption ㄝ 36 Source: ESDM, data as of June 30, 2022#37Low Currency Risk and Diversified Investor Base ARDAL ✓ Almost no foreign currency debt The only USD bond matured in 2022 Currency Breakdown (%) ✓ Increasing portfolio holdings of residents due to PSPP and PEPP Investor Type Breakdown (%)* 0.03% 0.3% 0.7% EUR ■ NOK 43.6% ■ CHF 99.0% 52.9% ■ JPY 3.5% ■Resident - Banks ■Resident - other institutions ■Resident - retail ■Non-residents キ 37 *Bonds held in Slovak Central Securities Depository Source: ARDAL, data as of June 2022#38MTS Slovakia Introduction of MTS Slovakia in February 2018 ✓ Quoting obligation for Primary Dealers ✓ Average monthly trading volume EUR 105 million since inception Slovak PDs Secondary Market (EMAR) EUR mln 3 500 158 3 000 2 500 ARDAL 80 2000 1 500 14 1 000 26 3 204 56 2 327 678 4 500 152 1281 292 544 538 321 0 Feb-20 Jan-20 Feb-21 Jan-21 Dec-20 Nov-20 Oct-20 Sep-20 Jul-20 Aug-20 Jun-20 May-20 Apr-20 Mar-20 106 70 140 80 24 157 96 816 648 868 941 908 756 312 441 217 578 168 124 621 640 _ 661 025 86 20 351 326 508 Mar-21 H 38 Jul-22 Jun-22 May-22 Apr-22 Mar-22 Feb-22 Jan-22 Dec-21 Nov-21 Source: ARDAL, data as of July 2022 Oct-21 Sep-21 Aug-21 Jul-21 May-21 Apr-21 ■EMAR without MTS MTS Jun-21 176 114 88 38 52 122 36 994 630 648 695 122 389 791 712 505 52 277#39Government Bond Yields 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% Jan-15 Jul-15 Jan-16 Jul-16 -10y-Slovakia Slovakia 10Y Government Bond versus Peers ARDAL Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 -10y-Germany -10y-France キ 39 10y-Belgium 10y-Finland 10y-Slovenia Jul-22 Source: Macrobond, NBS, Deutsche Bundesbank, as of September 2022#40Auction Calendar 2022 - Bonds Auction Date 17 January 21 February Government Bonds Settlement Date 19 January 23 February 23 March Offered Bonds 2024, 2032, 2036, 2047 2025, 2030, 2036, 2047 2024, 2030, 2036, 2051 2068 21 March 4 April 6 April 19 April 21 April 16 May 18 May 20 June 22 June 19 September 21 September 17 October 19 October 21 November 23 November 2025, 2030, 2036, 2051 2025, 2032, 2036, 2047 2025, 2027, 2030, 2051 2024, 2030, 2036, 2051 to be decided to be decided ARDAL Auctions on the third Monday of the month - no auction during July, August and in December ✓ Settlement T+2 (Wednesday) ✓ ✓ Non-competitive part of the auction usually on the next day (Tuesday) with settlement T+1 (Wednesday) Possibility to include additional auctions based on the funding requirements and market conditions キ 40 Source: ARDAL#41V ✓ Banking Sector ARDAL 41#42Fundamentally Robust and Well-capitalised Banking System ARDAL 4.0 3.0 2.0 1.0 Asset Quality 0.0 2017 2018 2019 2020 2021 INPLS (LHS) NPLs Net of Provisions as % of Capital (RHS) Capital Adequacy 8 122 % 6420 14 21.0 20.0 10 19.0 18.0 17.0 16.0 15.0 2017 2018 2019 2020 2021 -Tier 1 capital to RWA Capital to RWA Supported by measures extended by the National Bank of Slovakia, together with the ECB and European Banking Authorities, the banking sector is well capitalized, liquid, and profitable ✓ Non-performing loans are on a downwards trend ✓ Large capital buffers This gives banking system sufficient capital buffers to withstand a wide range of shocks 42 Source: IMF IV#43VI Contemplated Transaction ARDAL 43#44Transaction Term Sheet Issuer: Ratings: Status: Format: Currency: Tenors: Size: The Slovak Republic acting through the Ministry of Finance and the Agency A2 (negative) by Moody's / A+ (negative) by S&P / A (negative) by Fitch Senior Unsecured Regulation S only Euro 10-year ARDAL Maturity: Coupon: Denominations: Governing Law / Listing Use of Proceeds: Joint Bookrunners: Target Market: Benchmark [ ] October 2032 Fixed (Annual, ACT/ACT, ICMA) EUR 1 × EUR 1 Slovak Republic Law / Bratislava Stock Exchange (Main Market) The net proceeds of issue of the Notes will be used for funding of the state debt of the Slovak Republic. Citi, J.P. Morgan, Slovenska sporitelna (Erste Group) and Tatra Banka (Raiffeisen Bank) EU MiFID II - Eligible counterparties, Professional and Retail Clients (all distribution channels) キ 44#45Primary Dealers of the Slovak Republic Barclays Bank Ireland PLC ✓ Citibank Europe PLC ✓ Československá obchodná banka, a.s. (KBC Group) Deutsche Bank AG HSBC Continental Europe S.A. J.P. Morgan AG NATIXIS Slovenská sporiteľňa, a.s. (Erste Group) ✓ Tatra banka, a.s. (RBI Group) ✓ Všeobecná úverová banka, a.s. (Intesa Sanpaolo Group) キ 45 ARDAL#46Contacts Debt and Liquidity Management Agency Agentúra pre riadenie dlhu a likvidity - ARDAL Radlinského 32 813 19 Bratislava Slovak Republic Daniel Bytčánek Managing Director www.ardal.sk Reuters/Bloomberg: DLMA [email protected] Peter Šoltys Head of Debt Management Department [email protected] G TÜV SÜD ISO 9001 キ 46 TÜV SÜD ISO 27001 ARDAL#47Disclaimer ARDAL THIS PRESENTATION IS NOT AN OFFER OR SOLICITATION OF AN OFFER TO BUY OR SELL SECURITIES. 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