SEE Weekly

Analyst: Tajana Striga Sentiment indicators staying strong [email protected]

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SEE yields higher

Notwithstanding generally supportive external environment with sentiment indicators on multi-year high, both and recorded strong yield increase in past week while Serbian yields stayed rather unchanged. As for Slovenia, the average 10bp increase in euro yields has been driven by recent supply increase as Slovenia sold EUR1bn of 10Y Eurobonds and increased August 2045 maturity by EUR300m in mid-January. However, Croatia has faced an average 9bp and 27bp yield increase on euro and dollar bonds respectively in the past week in line with our expectations given the sovereign’s high gross funding needs of as much as 20%/of GDP in 2017 and approaching EUR2.2 bond supply in 1Q17. However, by mid-Q2 when uncertainty has gone, we’d stick to our constructive medium-term view on Croatian bonds on the back of stronger GDP outlook and reform momentum, accommodative ECB and the genuine CNB’s incentives to hold state bonds. Furthermore, we see Croatia exiting EDP as soon as this spring given the expected sub 2% of GDP budget deficit decline that will likely lead to the rating upgrades. However, we must note that while government expects to see further deficit decline to 1.6% of GDP in 2017 we see deficit re-widening to 2.5% of GDP on public wage hike and other potential spending overruns such as healthcare arrears, war veteran transfers and lower CIT. Meanwhile, investors are staying focused on further information on the expected domestic bond issuance that should be realized not latter then February 8. Given the high liquidity excess of more than HRK17bn we think that MinFin might decide to issue more than HRK5.5bn of maturities In order to partially finance dollar issuance of USD1.5bn that matures in April. Finally, in its latest Public debt management strategy for the 2017-2019 period the MinFin stated that it plans to issue HRK14bn of bonds on domestic market and HRK11.4bn on foreign market. Foreign market is planned to be tapped in first quarter, while bonds on domestic market are planned to be issued in first, second and last quarter of the year while all maturities of T-bills are planned to be rolled.

CHART OF THE WEEK: YIELD CHANGE, (average) wow, bp 30

25 Source: Bloomberg, Addiko research 20

15

10

5

0 EUR USD EUR USD USD SLO CRO SRB

Kuna appreciated, EUR/RSD stable

Croatian MinFin issued HRK928m in 1Y T-bills, thus surpassing the plan (HRK700m) and overall maturity of HRK668m and EUR2m, resulting with HRK260m higher stock of short-term kuna debt. Furthermore, in line with our expectations the 1Y yield fell further by 4bps to 0.6% amid bid-to-cover ratio of 1.2x. Meanwhile, kuna strongly appreciated during this week with EUR/HRK pair currently trading below 7.50. Namely, kuna is staying supported with solid growth rates, strong fiscal consolidation, high positive ’s net foreign asset, increasingly important kuna lending and unusually high inflow of tourist recipes for this time of the year. However, we do not exclude the possibility of temporary depreciation pressures in the near term bearing in mind the significant decline in EUR/HRK pair in the recent period as well as the risks arising from worsened goods trade trends and record excess of kuna liquidity in the system.

The EUR/RSD traded range bound this week, just inch below 124 with the NBS selling EUR45m in order to curb dinar depreciation. That said, we expect dinar to stay stable in the near term on the back of the stronger macro picture and risk profile after credit rating upgrades, improvement in ’ net foreign asset, lower internal and external imbalances and general NBS’ intolerance of the weak dinar as one third of Serbian external debt is in USD and is un-hedged. Furthermore, lower inflation target set by NBS implies once the mid-term inflation target is reached, depreciation pressures are naturally less wanted. All in all, we see the dinar around 124 and the NBS fully aware of external risks and stronger inflation outlook. *SEE Weekly editorial deadline: 4pm Thursday SEE Weekly Economic Highlights

Slovenia

• Sentiment better, problems over? Sentiment indicators in Slovenia have got off to a good start of the year signalling the solid economic growth in the first quarter. The January seasonally-adjusted manufacturing confidence rose further to a current level of 9 points, in particular supported by the export and overall orders that reached the highest post-crisis level implying steady and above potential growth in the euro zone additionally helped by weaker euro, but also from stronger internal demand underpinned by looser fiscal policy and stronger investments. Such performance is largely in line with the euro zone PMI movement for the same period as euro zone continues to benefit from more sound global economy which is expected to see a decent growth in the first quarter, although very cold weather in some parts of the continent will probably have some negative impact on GDP. However, it should be noted that the euro zone manufacturing growth is aminly boosted by Germany, while other countries on average even recorded a minor decline. Meanwhile, consumer sentiment reached record-high level in January, underpinned by better general economic situation and promising outlook as well as present major purchases. All in all, while one swallow doesn’t make a summer, sentiment indicators are consistent with our 2.7% yoy GDP growth in 2017 as slower spending and subdued investments will be cushioned by stronger net exports and additionally underpinned by fiscal loosening and stronger investments on supportive financial conditions, stronger EU funding and against high capacity utilization. However, main risk to our baseline forecasts are driven by the difficult-to-quantify political uncertainty, which tends to be negatively correlated with business investment spending and the overall euro zone's import demand.

• Looking ahead, next week we will receive December’s real retail trade data. That said, after real retail trade surged 11.3% yoy in November we expect to see high single digit growth in December on the back of low base, 18.8 yoy stronger sales of new cars, usually increased X-mass spending and consumer confidence staying on high levels.

Croatia

• Hard indicators staying on strong footing in the December… Next week brings us industrial production and retail trade data for December. As for the first, we expect to see 1%-alike decline on a monthly level given several stronger increases in previous months, while on a yearly level we see 7%-alike yoy gain (prev. +7.2%yoy) on the back of improved external conditions and growing euro area sentiment indicators in the same period. Moreover, growth will be supported with previous year low base, decline in growth of stocks of finished goods in recent period stronger domestic investments and consumption as well as higher number of working days in December. As for retail sales data, following a 2.7% yoy increase in November we see real retail trade increasing in 4.0% region given usually increased X-mass spending additionally underpinned by domestic demand recovery, unusually strong inflow of tourist for winter period, ongoing increase in employment and real wages, lower savings ration, resurgent consumer credit, X-mass bonuses in public sector and spending frontloading given the PIT relief since January.

• Meanwhile, Ministry of finance is offering HRK600m of 1Y treasury bill next week, while HRK626 matures. Given high liquidity kuna excess of roughly 5% of GDP we expect to see solid demand and further yield decline. SEE Weekly Economic Highlights

Serbia

• getting ready to issue new eurobond? Meanwhile, Serbian MinFin Dušan Vujović stated in an interview on ’s Euromoney conference last week that Serbia plans to borrow EUR6.8bn this year out of which EUR600m is expected to be sufficient to finance budget deficit (in line with target deficit of 1.7% of GDP agreed with IMF) while the rest will be used to refinance outstanding debt (and in our view as possible prefunding for 2018). Out of the total amount EUR3.5bn worth of dinar-denominated securities and EUR1.6 debt instruments denominated in euros is expected to be raised on domestic market and the rest of EUR1.7bn on the foreign market with currency of the latter yet to be known. That being said, Serbian spreads have fallen sharply last year only to increase in the aftermath of US Trump election victory and stronger Fed’s rate hike outlook for 2017, when the markets briefly entered risk-off mode. However, the peak spreads have not only been reversed but have recently declined to new lows, narrowing roughly 35bp only through the course of January. In such circumstances we expect to see solid interest on both domestic and foreign market for the newly issued debt with yields declining to the new lows.

• Average GDP growth in 2016 set to increase by 2.8%... Next week we will receive 4Q GDP data whereas we expect to see 2.8% yoy increase for a 2.8% average growth in 2016. Indeed, available hard indicators suggest Serbian economy continued to stand on strong footing in Q4 as industrial output continued to benefit from investments in tradable sectors, overhauls in a number of electric energy plants and improved euro zone growth prospects. In addition, private consumption prospered from ongoing private employment gains, moderate wage hikes, cheaper debt service and lower citizens’ savings rate. Moreover, government consumption is expected to continue solid growth on the back of capital expenditures outlays that have increase by as much as 18.7% in the October-November period. However, given still relatively high import intensive domestic demand net export will likely have a minor negative contribution to the GDP growth, notwithstanding export stellar performance.

• No way to stop the growth… Beside GDP data, next week we get external goods trade, retail traded an industrial output data for December. That said, given high base effect, we see industrial output growth in a 2% yoy region on the back of both external demand as well as solid internal demand given the ongoing infrastructure projects. When it comes to foreign demand, the recent growth of euro zone’s manufacturing PMIs combined with strong investments into tradable sectors suggests strong export performance is set to go forth. Meanwhile, import is expected to profit from ongoing domestic demand recovery, private employment gains, moderate wage hikes, cheaper debt service and recent retail lending acceleration, resulting in flattish goods trade deficit. Bearing the latter in mind, we see real retail trade supported for the time being but not increasing more than low single digits in December given high base effect. SEE## Weekly Key FI, FX & MM data

BONDS SPREADS Coupon ASK YTM 1W Δ (bp) 1M Δ (bp) YTD Δ (bp)* Level 1W Δ (bp) 1M Δ (bp) YTD Δ (bp)* SLOREP 25/03/2022 2,250% 0,064% -1 -2 4 -26 -10 -22 -16 SLOREP 09/09/2024 4,625% 0,614% 3 13 13 32 -9 -13 -16 EUR SLOREP 28/07/2025 2,125% 0,956% 0 47 47 75 -9 30 28 SLOREP 30/03/2026 5,125% 1,021% -1 22 21 90 -9 2 1 SLOREP 25/03/2035 1,500% 2,101% 50 50 50 128 41 26 23 SLOVEN 10/05/2018 4,750% 1,819% -1 5 9 85 2 12 12 SLOVENIA SLOVEN 18/02/2019 4,125% 2,179% 4 11 11 94 5 13 11 USD SLOVEN 26/10/2022 5,500% 3,247% 7 -18 -14 112 1 -17 -14 SLOVEN 10/05/2023 5,850% 3,402% 7 -13 -9 119 0 -13 -11 SLOVEN 18/02/2024 5,250% 3,499% 9 -15 -6 119 1 -16 -10 CROATI 09/07/2018 5,875% 0,049% 4 -3 -14 76 -2 -20 -24 EUR CROATI 30/05/2022 3,875% 2,192% 14 1 -8 246 5 -17 -25 CROATI 11/3/2025 3,000% 2,782% 9 7 3 266 0 -12 -17 CROATI 27/04/2017 6,250% 1,006% 40 -5 -5 45 41 2 -1 CROATI 05/11/2019 6,750% 3,241% 15 -16 -14 170 13 -15 -15 CROATI 14/07/2020 6,625% 3,593% 20 -9 -15 198 19 -8 -17 CROATIA** USD CROATI 24/03/2021 6,375% 3,649% 22 -17 -15 176 18 -16 -16 CROATI 04/04/2023 5,500% 4,210% 26 -6 -4 200 20 -6 -6 CROATI 26/01/2024 6,000% 4,312% 37 4 6 200 15 -10 -15 SERBIA 21/11/2017 5,250% 1,731% -22 -35 -40 98 -21 -26 -32 SERBIA 03/12/2018 2,875% 2,856% 5 -32 -30 169 6 -28 -29 USD SERBIA 25/02/2020 4,875% 3,749% 5 -40 -37 223 5 -37 -37 SERBIA SERBIA 28/09/2021 7,250% 4,036% 16 -35 -36 195 10 -34 -37 Source: Bloomberg, ** Addiko Fixing * or since date of issuance

FX MARKETS MONEY MARKETS LEVEL 1W Δ 1M Δ YTD Δ EURIBOR O/N 1W 1M 3M 12M SLOVENIA Level -0,35 -0,38 -0,37 -0,33 -0,10 EUR/USD 1,0683 0,4% 2,3% 2,3% 1W Δ (bp) 0 0 0 0 0 EUR/CHF 1,0677 -0,4% -0,6% -0,6% 1M Δ (bp) 0 -1 0 -1 -2

CROATIA ZIBOR O/N 1W 1M 3M 12M EUR/HRK 7,4825 -0,6% -0,8% -0,8% Level 0,55 0,60 0,65 0,80 1,25 CHF/HRK 7,0081 -0,2% -0,2% -0,2% 1W Δ (bp) 0 0 0 0 0 USD/HRK 7,0044 -1,0% -3,0% -3,0% 1M Δ (bp) -5 -5 -5 -5 -5

SERBIA BELIBOR EUR/RSD 123,9234 0,0% 0,3% 2,5% Level 2,81 3,00 3,36 3,49 3,67 CHF/RSD 115,3098 -0,3% 0,2% 14,7% 1W Δ (bp) 7 1 2 3 -1 USD/RSD 115,2883 -1,0% -2,4% 15,9% 1M Δ (bp) -12 -2 2 3 2 Source: Reuters, Bloomberg, Hypo Fixing Source: Reuters, Bloomberg, Addiko Fixing

TREASURY BILLS

SLOVENIA 3M 6M 12M 18M Last yield -0,26% -0,22% -0,25% -0,19%

CROATIA 3M 6M 12M 3M EUR, FX-linked 12M EUR, FX-linked Last yield 0,20% 0,28% 0,60% 0,20% 0,05%

SERBIA 3M 6M 53W 2Y 3Y 53W, EUR 2Y, EUR 3Y, EUR 5Y, EUR Last yield 2,75% 2,65% 3,57% 4,74% 4,74% 0,78% 1,07% 1,65% 2,90%

Source: respective MinFin SEE###### Weekly

Charts of the Week

EUR/HRK and EUR/RSD 1M movements Croatia T-bill yields

8,0% 91 days 7,575 124,0 182 days 7,0% 364 days 7,560 123,8 6,0% 91 days (FX-link) 364 days (FX-link) 5,0% 7,545 123,7 4,0%

7,530 123,5 3,0%

2,0% EUR/HRK (lhs) 7,515 123,4 EUR/RSD (rhs) 1,0%

7,500 123,2 0,0% 27-Dec-16 5-Jan-17 14-Jan-17 23-Jan-17 Feb-07 Jan-09 Dec-10 Nov-12 Oct-14 Sep-16

SRB: Merchandise import cover (%, 3mma) SLO: Business sentiment

40 79

25 77

10 75 -5 73 -20 Manufacturing

Retail trade 71 -35 Services

Construction 69 -50 2014 2015 2016F

67 -65 jan feb mar apr may jun jul aug sep oct nov dec Jan-05 May-07 Sep-09 Jan-12 May-14 Sep-16

CRO: Industrial production yoy% Croatia: Retail sales and consumer expectations Original data Retail sales wda, YoY, % 10 Seasonally adjusted 10 10 Consumer expectations, rhs 0

5 5 -10

0 0 -4 -20

-5 -5 -30

-10 -10 -40

-15 -15 -50 Jan-06 Mar-08 May-10 Jul-12 Sep-14 Nov-16 Jan-06 Feb-08 Apr-10 May-12 Jul-14 Sep-16

Source: respective statistical offices, MinFins, central banks; Bloomberg; Eurostat; ECB, HAAB research SEE###### Weekly

Forecasts, Calendar, Publications

SELECTED ECONOMIC FORECASTS

Export of goods EUR/local Real GDP Unemployment CPI inflation Budget balance Public debt Import of goods & External debt & services C/A (%/GDP) currency (yoy, %) rate (ILO, %) (avg, yoy, %) (%/GDP) (%/GDP) services (EURbn) (%/GDP) (EURbn) (avg)*

2015 2,3 9,0 -0,5 -2,7 83,2 30,1 26,5 5,2 116,6 1,11 2016F 2,7 8,0 -0,1 -2,3 80,4 31,9 28,0 7,0 110,8 1,10 2017F 2,7 7,6 1,4 -2,2 78,3 33,6 29,7 6,5 106,8 1,06

SLOVENIA 2018F 2,6 7,2 1,8 -1,8 76,2 35,3 31,4 5,9 103,5 1,00

2015 1,6 16,3 -0,5 -3,2 86,7 22,0 20,8 5,2 103,7 7,61 2016F 3,0 13,5 -1,1 -1,9 85,6 23,1 21,4 3,3 93,0 7,53 2017F 3,5 11,8 1,6 -2,5 83,8 24,3 22,7 2,7 90,2 7,51 CROATIA 2018F 2,9 10,7 1,8 -2,0 82,1 25,0 23,8 2,2 88,5 7,48

2015 0,7 17,7 1,4 -3,7 76,0 15,6 18,9 -4,9 80,4 121,5 2016F 2,8 17,9 1,1 -2,0 74,2 16,8 19,8 -3,9 75,4 123,1 2017F 3,2 17,7 2,1 -2,0 72,7 17,8 20,7 -4,0 71,3 123,6 SERBIA 2018F 3,0 17,1 3,0 -2,2 73,3 18,7 21,8 -4,1 70,9 124,5

2015 3,2 27,7 -1,0 0,7 44,7 5,0 -7,8 -5,8 60,0 1,96 2016F 2,4 26,3 -1,0 -0,7 44,5 5,2 -7,9 -5,4 60,7 1,96 2017F 3,2 25,7 1,6 -0,7 43,2 5,4 -8,3 -6,0 62,0 1,96 2018F 3,5 24,9 2,1 -1,3 42,6 5,7 -8,7 -6,4 58,3 1,96

2015 3,2 17,9 1,4 -8,5 66,4 1,5 -2,2 -13,6 152,1 1,11 2016F 2,6 17,7 0,1 -3,3 69,2 1,6 -2,4 -15,2 154,6 1,10 2017F 3,2 17,3 1,8 -7,1 74,6 1,7 -2,5 -16,7 161,2 1,04 2018F 3,2 16,9 2,0 -6,4 78,9 1,8 -2,7 -17,0 164,1 1,07

Source: Addiko research, as of 18 January 2017 * for Slovenia and Montenegro EUR/USD

KEY EVENTS IN THE NEXT TWO WEEKS Date Release Period Units Previous SLOVENIA 31-Jan-17 Retail trade December mom/yoy 1.4%/11.3%

CROATIA 30-Jan-17 Industrial production December mom/yoy 3.7%/7.1% 31-Jan-17 Net wages November mom/yoy 0.3%/0.2% 2-Feb-17 Retail trade December mom/yoy -1.2%/2.7% SERBIA 31-Jan-17 Trade balance December EURm -297 31-Jan-17 Industrial production December yoy 1.3% 31-Jan-17 GDP Q1 yoy 2.6%

Recent Economic Publications Report Date SEE OUTLOOK PRESENTATION: ENJOYING THE GROWTH PICK UP 24-Jan-17 Slovenia issues EUR1bn and EUR300m at 63bp and 112bp over MS, respectively 19-Jan-17 SEE OUTLOOK: ENJOYING THE GROWTH PICK UP 18-Jan-17 Croatia: Yearly inflation enters positive territory 16-Jan-17 S&P upgrades Serbian 'BB-/B' rating outlook to positive 19-Dec-16 S&P softens tone and upgrades Croatian 'BB/B' rating outlook to stable 19-Dec-16 SEE Weekly: Defying Italian concerns? 9-Dec-16 Serbia: NBS staying on hold 8-Dec-16 SEE Weekly: Q3 GDP growth above expectations 2-Dec-16 Croatia: Net bank's foreign asset at record high 1-Dec-16 Slovenia: Q3 GDP growth tops expectations, we are upgrading 2017 outlook 30-Nov-16 Croatia: Q3 GDP meets expectations, we upgrade 2017 outlook 30-Nov-16 SEE Weekly: Is the external demand moving up a gear? 25-Nov-16 SEE Weekly: What to expect from Q3 GDP data? 18-Nov-16 SEE Weekly: European Commision upgrading SEE growth 11-Nov-16 Croatia: 3Q16 trade deficit decreased by 10.6% yoy 9-Nov-16 SEE Weekly: Tax reforms and IMF in spotlight 4-Nov-16 26-Jan-17

SEE Weekly

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HT 6; Viadukt 6; Tehnika 6; Belje 6; Atlantic Grupa 8; Ericsson Nikola Tesla 8; Podravka 8; Valamar Riviera 8

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26-Jan-17

SEE Weekly

EQUITY RECOMMENDATION DEFINITIONS, VALUATION METHODS AND PRINCIPLES Readers may find the history of changes to recommendation definitions on our website: https://www.addiko.hr/ under the heading 'Economic Research / Disclaimer'. We currently use a five-tier recommendation system for the stocks in our formal coverage: Buy, Add, Hold, Reduce or Sell (see definitions below): Buy: Expected total return (including dividends) of at least 20% over a 12-month period; Add: Expected total return (including dividends) of 10% to 20% over a 12-month period; Hold: Expected total return (including dividends) of -10% to 10% over a 12-month period; Reduce: Expected total return (including dividends) of -20% to -10% over a 12-month period; Sell: Expected total return (including dividends) of -20% or worse over a 12-month period;

Research published prior to 31/12/2008 were based on the following three-tier recommendation system: Buy: Expected total return (including dividends) of 15% or more over a 12-month period; Hold: Expected total return (including dividends) between -15% and 15% over a 12-month period; Sell: Expected total return (including dividends) of -15% or worse over a 12-month period.

We use two other categorizations for stocks in our coverage: Restricted: The coverage of the company has been suspended temporarily due to market events that make coverage impracticable or to comply with applicable regulations and/or firm policies in certain circumstances including where Addiko Bank is acting as an advisor in a merger or strategic transaction involving the company.

Under review: Financial forecasts and/or target are not disclosed owing to circumstances such as changes in the research team and other market events that require additional efforts to determine the value of the company based on the used valuation methods.

Our company valuations are based on but not limited to the following valuation methods: Multiple-based models (P/E, P/cash flow, EV/sales, EV/EBIT, EV/EBITA, EV/EBITDA, etc.), peer-group comparisons, historical valuation approaches (e.g acquisition multiple comparisons), discount models (DCF, DVMA, DDM), break-up value approaches or asset-based evaluation methods. Furthermore, recommendations may be also based on the Economic profit approach. Although the definition and application of these methods are based on generally accepted industry practices and models developed in the financial economics literature, please note that there is a range of reasonable variations within these models. Valuation models are dependent on macroeconomic factors, such as interest rates, exchange rates, commodities, and on assumptions about the economy that are subject to uncertainty and also may change over time. Any valuation is dependent upon inputs that are based on the subjective opinion of the analysts carrying out this valuation. Investors and other recipients of this research may request further information and details with respect to the valuation models or assumptions applied to the models. Furthermore, market sentiment and the overall liquidity situation affect the valuation of companies. The valuation is also based on expectations that might change rapidly and without notice, depending on industry-specific developments. Our recommendations and target prices derived from the models might consequently change accordingly. Recommendations generally relate to a 12-month horizon. They are, however, also subject to market conditions and can only represent a snapshot. The ratings may in fact be achieved more quickly or slowly than expected, or need to be revised upward or downward. This report may include research based on technical analysis. Technical analysis is generally based on the study of trading volumes and price movements in an attempt to identify and project price trends. Technical analysis does not consider the fundamentals of the underlying issuer or instrument and may offer an investment opinion that conflict with other research generated by Addiko Bank. Investors may consider technical research as one input in formulating an investment opinion. Additional inputs should include, but are not limited to, a review of the fundamentals of the underlying issuer/security/instrument.

Distribution of recommendations Number of recommendations from Addiko Bank, Economic Research Department, at 31.03.2016 Broken down by categories 2 (25%) Buy / Add 1 (13%) Hold 0 (0%) Sell / Reduce 6 (63%) Under review 0 (0%) Restriction

There of recommendations for companies to which investment banking services were provided during the preceding twelve months - Buy / Add - Hold - Sell / Reduce

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Frequency of reports and updates

Although it has not been determined in advance whether and in what intervals this report will be updated, if the publication is a fundamental research report, it is our intention that each of these companies are covered at least once a year, in the event of key operations and/or changes in the recommendation, subject to applicable quiet periods and capacity constraints.

SIGNIFICANT FINANCIAL INTEREST: Addiko Bank and/or affiliate (pursuant to relevant domestic law) regularly trade shares of the analyzed company(ies). Addiko Bank and/or affiliate (pursuant to relevant domestic law) acts as a market maker in government bonds issued by the Croatian Ministry of Finance (Treasury).

ANALYST CERTIFICATION The author of fundamental analyses in this report is Ines Antic. Ines Antic is employed in Addiko Bank registered in Zagreb, Slavonska Avenija 6 as junior analyst.

The research analyst(s) or analysts who prepared this report (see the first page) hereby certifies that: (1) the views expressed in this report accurately reflect their personal views about the subject securities or issuers and/or other subject matter as appropriate; and, (2) no part of his or her compensation was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this report. On a general basis, the efficacy of recommendations and clients' feedback are factors in the performance appraisals of analysts. ORGANIZATIONAL AND ADMINISTRATIVE ARRANGEMENTS TO AVOID AND PREVENT CONFLICTS OF INTEREST To prevent or remedy conflicts of interest arising as a result of the preparation and publication of research, Addiko Bank has established the organizational arrangements required from a legal and supervisory aspect, adherence to which is monitored by Addiko Bank Legal and Compliance. Department Conflicts of interest arising as a result of the preparation and publication of research are managed through its use of internal databases, notifications by the relevant employees as well as legal and physical and non-physical barriers (collectively referred to as 'Chinese Walls') designed to restrict the flow of information between one area/department of Addiko Bank and another. In particular, Investment Banking units, including corporate finance, capital market activities, financial advisory and other capital raising activities, are segregated by physical and non-physical boundaries from Markets Units, as well as the research department. For further details see our Policy for managing conflicts of interest in connection with investment research at http://www.addiko.com/bank/dokumenti/Politika_sukob_interesa.pdf Addiko Bank d.d. is regulated by the Croatian Financial Services Supervisory Agency (HANFA) for the conduct of designated investment business in Croatia.

26-Jan-17

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Addiko Economic Research Contacts

Name Coverage Telephone Email

Hrvoje Stojic, Economic Research Director +385-1-603-0509 [email protected]

Tajana Striga, Analyst +385-1-603-3522 [email protected]

Ines Antic, Junior Analyst +385-1-603-3657 [email protected]

Addiko Bank d.d. Slavonska avenija 6, 10000 Zagreb [email protected] phone: +385-1-603-3522 fax: +385-1-604-6306