Q3 2020 Business Update amid Covid-19

The monetary policy reaction - A combination of rate cuts and quantitative easing Type of measures ECB (as part of the euro zone, actions applicable in AT & SK) cut its key rate to 0% in 2016; cut the deposit rate by 10 bps to -0.5% in 2019 ECB lowered financing costs for banks (TLTRO 3, PELTRO) In addition to the EUR 20bn monthly purchases (+120bn by eoy), the ECB introduced the Pandemic Emergency Purchasing Programmme in the amount of EUR 1,350bn, providing flexibility for asset purchases over time, issuers and asset classes CNB cut its key rate in three steps by 200bps to 0.25% in H1 2020 QE included in law, but has not yet been launched; only temporary measures expected MNB cut its key policy rate in two steps to 0.60% in June & July 2020 MNB raised the 1-week deposit interest rate by 15bps to 0.75% in September 2020 MNB confirmed that QE will be extended from the EUR 1.2bn programme NBR cut its key rate in three steps by 100bps to 1.50%; narrowed facility corridor to ±50bps (from ±100bps) NBR has purchased RON denominated Romanian government bonds in secondary market • ERSTEŚ HNB lowered 1Y and 5Y repo rates to 0.05% and 0.25% respectively HNB has introduced QE with a direct bond purchases close to HRK 20bn - approx. 5% of GDP CNB secured swap line with ECB in the size of EUR 2bn Croatia joined the ERM II on July 10th - central parity set at 7.5345 - ECB took over banking sector supervision from October 2020 NBS cut the key rate from 2.25% to 1.25% (50bps in 1Q20 and another 50bps in 2Q20); deposit facility rate at 0.75%, lending at 2.75% NBS supported liquidity of the banking system through repo and FX swap auctions; typical QE has not been introduced NBS might accept corporate bonds as collateral in monetary operations, with possibility of purchases on the secondary market NBS offers remuneration of 10+50bps paid on obligatory reserve to lenders who cut lending rates by 50bps in government guarantee scheme Page 63 Group

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