> Retail Banking in Central Europe

> Erste Bank Group Approach

> Sava Dalbokov, Member of the Management BoardErste Bank Croatia

2CMD Vienna17 September 2003

> Where are we now?

Our strategy

» Retail bank primarily oriented towards private customers and SMEs

» Positioning as best financial services provider – differentiation throughservice and product quality

» Offering a range of distribution channels and 24 hour access to EBCroatia’s vast range of services.

» Build client relationships with strong advisory role

» Knowledge sharing and cross-selling with other EB Group companies

3CMD Vienna17 September 2003

Erste Bank Croatia after the merger

> Where are we now?

» On 1 August 2003 Rijecka banka and Erste & Steiermarkische Bankmerged into Erste Bank Croatia

» New bank has 10% overall market share

» Domiciled in Rijeka, head office in Zagreb.

» The group employs roughly 1,400 people and has a customer base ofabout 600,000

» 550,000 retail and more than 30,000 corporate

» Total assets at 30 June 2003 of HRK 15.8 billion (EUR 2.1 billion).

» 116 branches and 200 cash dispensers» mainly located in the densely populated regions of Istria and around Rijeka and

Zagreb.

4CMD Vienna17 September 2003

Retail business

> Where are we now?

» 5 regions» 116 branches» 0.55 million clients of total bankable clients» 15% market share» retail loan portfolio 0.6 bn EUR» retail deposit portfolio 0.91 bn EUR

EB Croatia Retail Business

5CMD Vienna17 September 2003

> Where are we going?

Customer potential in Croatia

310,000

1,661,000

120,000210,000

1,010,000

89,000

students

employees

smallentrepreneus

farmers

not in theworking process

Unemployed

Bankable People Target Clients3,400,000 630,000

1)

1) Bankable people: age 15 - 64 years

130.000

500.000

» The retail customer base is segmented into standard clients andpremium clients (with above-average income)

» Premium clients (lawyers, doctors, small entrepreneurs, etc.) are to be servicedpro-actively (relationship approach) -- this segment will be strongly targeted byEB Croatia. 15-20% of total customers should be advisory.

» Standard clients (employees, students) should receive standardised (pre-packaged) products combined with quick and friendly service.

not looking foremployment

Premium clients

Standard clients

6CMD Vienna17 September 2003

> Croatian Banking Trends?

Growth rates 2000 – 2005e

» Goal: to beat market growth rates by 2-3%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

2000 2001 2002 2003e 2004e 2005e

Consumer LoansMortgage LoansConsumer Deposits

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

2000 2001 2002 2003e 2004e 2005e

SME LoansLarge Corporate LoansSME DepositsLarge Corporate Deposits

-10.0%0.0%

10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%

2000 2001 2002 2003e 2004e 2005e

Municipality FinancingState Financing

7CMD Vienna17 September 2003

Banks in Croatia and market shares by total assets

> Where are we going?

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Zagrebacka bankad.d.

Privredna bankaZagreb

Erste Bank Croatiad.d.

Raif feisenbankAustria d.d.

Splitska banka d.d. Hypo Alpe AdriaBank d.d.

Nova banka d.d.(w ith Dubrovacka)

8CMD Vienna17 September 2003

> Where are we going?

Market share – retail loans

Erste Bank Croatia market share in loans

0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

7,00%

8,00%

9,00%

10,00%

30.09.2000. 31.12.2000. 31.03.2001. 30.06.2001. 30.09.2001. 31.12.2001. 30.06.2002. 31.12.2002. 31.05.2003.

9CMD Vienna17 September 2003

> Where are we going?

Market share – retail deposits

Erste Bank Croatia market share in savings

0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

7,00%

8,00%

9,00%

10,00%

30.09.2000. 31.12.2000. 31.03.2001. 30.06.2001. 30.09.2001. 31.12.2001. 30.06.2002. 31.12.2002. 31.05.2003.

10CMD Vienna17 September 2003

> Where are we going?

Interest and non-interest income

» The ratio in 2002: 77% vs 23%» The plan for 2005: 75% vs 25%» The main driver for change: direct channels

0%10%20%30%40%50%60%70%80%90%

100%

2002 2005e

Non-interestInterest

11CMD Vienna17 September 2003

> Where we are going?

Number of transactions / Channel development scenario

Channel

Branch

ATM & POS

Call Center

Internet

SMS

12.2m

2002transactions

1

4

3

2

5

13m

12.5m 20.1m

6K with 0,5minteractions 0.7m

0.2m 1.3m

(0.5minteractions) 0.3m

2005Etransactions

Total 24.9m 35.4m

12CMD Vienna17 September 2003

MCM focus – core areas

> Where are we going?

» Netbanking» Work on increase of overall Internet penetration in our customer base» Increase netbanking penetration in our customer base» Develop and introduce new services on Internet

» Card Business» Introduction of card product for savings accounts (both foreign and domestic

currency)» Issuing more card products to one client, but retain the level of usage» Introduction of premium products» Expand the ATM and POS network

» Call centre» Focus on substitution effect (emphasise convenience of phone banking)» Move standard payment and money transfer transactions to call center» Develop call centre as front-office for client information purposes