Investor Presentaiton

D. Business Overview (continued) IFRS 17 IFRS 17, is effective from 1 January 2023, and impacts the phasing of profit recognition for insurance contracts. The Group's insurance-related retained earnings will be restated and the reporting of insurance new business revenue will be spread over time, as the Group provides service to its policyholders (versus recognised up-front under current accounting standards), with the quantum and timing of the impact dependent on, inter alia, the amount and mix of new business and extent of assumption changes in any given year following implementation. • • Under IFRS 17, there will be no present value of in-force life insurance contracts ('PVIF') asset recognised. Instead, the estimated future profit will be included in the measurement of the insurance contract liability as the contractual service margin ('CSM') and this will be gradually recognised in revenue as services are provided over the duration of the insurance contract. While the profit over the life of an individual contract will be unchanged, its emergence will be later under IFRS 17. IFRS 17 requires the increased use of current market values in the measurement of insurance assets and liabilities hence insurance liabilities and related assets will be adjusted to reflect IFRS 17 measurement requirements. In accordance with IFRS 17, directly attributable costs will be incorporated in the CSM and will be presented as a deduction to reported revenue. This will result in a reduction in operating expenses. The Group continues to make progress on the implementation of IFRS 17 and assessing the impact on the financial statements. On transition the following impact has been estimated: a) the removal of value in force from the life insurance business (including associated deferred tax liability) of c. €101 mn as per the Group's consolidated balance sheet as at 31 December 2022, which will reduce Group accounting equity by a respective amount (with no impact on the Group regulatory capital or tangible equity), and b) the remeasurement of insurance assets and liabilities and the creation of a contractual service margin (CSM) liability is estimated to result in an increase in the equity of the insurance business of the Group (predominantly relating to the life insurance business of the Group) in the range of €70-80 mn as at 1 January 2022, which is a consequence of life insurance products. The estimated effect on equity of the insurance business of the Group as at 1 January 2023 (roll forwarding the impact on 2022 profits and taking into consideration other movements in reserves in 2022) is an increase in the range of €50-60 mn, compared to the closing equity as at 31 December 2022 as reported under the previous accounting standard, IFRS4. As a result of the benefit arising from IFRS 17 on 1 January 2023 as referred to in (b) above, the life insurance subsidiary distributed €50 mn as dividend to the Bank in February 2023, which benefited Group regulatory capital by an equivalent amount on the same date, enhancing CET1 ratio by c.50 bps. The adoption of IFRS 17 is expected to result in a modest annual negative impact on the contribution to profits of the Group's insurance business in the near term. 31

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