Erste Bank : Management Report 2021

Management report

ECONOMIC ENVIRONMENT

The global economy experienced an exceptionally strong recovery in 2021, despite temporary pandemic-related lockdown measures imposed by most countries around the globe. This recovery was characterised by sharp rebounds of most of the major economies, most notably the United States, owing to substantial fiscal support. In many emerging markets and developing economies a slower pace of vaccination - often linked to later availability - and a par-tial withdrawal of macroeconomic support offset some of the ben-efits of strengthening external demand and elevated commodity prices. Among emerging and developing markets, China and India again outperformed other major economies. Most industries around the globe performed well, but the services sectors struggled to overcome headwinds from the pandemic-induced lockdown measures. Although labour markets recovered at a faster pace than during the global financial crisis, employment remained below its pre-pandemic level. The broad-based global GDP growth was mainly driven by recovering consumption and investments. Manu-facturing was constrained by supply chain disruptions, which were temporarily exacerbated by the blockage of the Suez Canal in March 2021 and by the closure of some of the major harbours in China. Supply chain disruptions were also a main driver of infla-tion in 2021. The sharp rise in consumer goods prices reflected a huge surge in demand, fuelled by stimulus measures, particularly in the United States. Commodity prices have seen a sharp rise with many well above their pre-pandemic levels. Oil demand continued to remain strong. Metal and agricultural prices increased substan-tially. Overall, global real GDP increased by 5.9%1

Among the world's major central banks only the Bank of England increased its policy rate in 2021. The Federal Reserve (Fed), the Bank of Japan and the European Central Bank (ECB) left their base rates unchanged throughout the year. While central banks contin-ued their pandemic-era bond buying programmes, both the Fed and the ECB indicated in the second half of the year plans to reduce the monthly asset purchases in the future.

The economic performance of the United States was strong in 2021. The US economy recovered quicker than most advanced econo-mies, supported by greater amounts of fiscal relief. Surging per-sonal income has boosted consumption. The unemployment rate declined significantly to 3.9%2. The American Rescue Act, signed in March 2021, offered USD 1.9 trillion in additional fiscal support, bringing the cumulative fiscal relief provided since the beginning of the pandemic to over one-quarter of GDP - an unprecedented level of support in peacetime. The Fed indicated that its expansive monetary policy since the beginning of the pandemic was coming to a close to respond to rising inflation. In December 2021, it an-nounced to end its pandemic-era bond purchases in March 2022,

paving the way for interest rate hikes, as policymakers voiced con-cerns over high inflation against the backdrop of a steady labour market recovery. By the end of 2021, the Fed had bought over USD 4 trillion worth of Treasuries and other securities. Real GDP in the US grew by 5.6%3 in 2021.

The euro area also rebounded with its real GDP growing by 5.2%4. France, Italy, and Spain outperformed Germany as the latter was significantly more impacted by shortages of raw materials, inter-mediate goods, semiconductors, in particular for the automotive in-dustry, but also lumber for the construction sector. Summer tourism was supported by less strict travel restrictions. Households re-sponded to the temporary relaxations of containment measures with spending sprees that propelled private consumption growth in the European Union. Overall, the rebound of economic activity was broad-based, with all components of domestic demand contrib-uting positively. Growth was also supported by improving labour markets. The Recovery and Resilience Facility of the European Commission, coupled with the NextGenerationEU, a fund created in 2020, is the largest stimulus package ever financed in Europe. Surging energy prices, most notably for natural gas and electricity led to higher inflation, prices for electricity and gas increased five-fold in the course of the year and reached new highs in December 2021. The ECB has maintained an accommodative monetary policy. It confirmed to continue its asset purchases under the Pandemic Emergency Purchase Programme (PEPP) until at least the end of March 2022, and net purchases under the asset purchase pro-gramme (APP) continued at a monthly pace of EUR 20 billion. Re-financing operations, notably the third series of the targeted longer-term refinancing operations (TLTRO III), continued to provide li-quidity to euro area banks to support the flow of credit to house-holds and enterprises. The ECB kept its discount rate at zero throughout 2021.

In line with the European development, Austria experienced an economic rebound in 2021. Due to the rapid recovery and progress towards normalisation in many sectors, the Austrian government started to adjust its Covid-support programmes from mid-2021 by reducing or withdrawing measures in sectors where conditions im-proved. In November 2021, however, due to the sharp increase of infection rates and medical capacity being stretched to its limits, the government imposed a new nationwide lockdown until mid-December. As this lockdown lasted only a few weeks it did not have a drastic impact on the overall economic performance. The easing of travel restrictions led to a recovery in the economically important tourism sector. After a very strong start of the year, the Austrian export industry faced headwinds from supply chain dis-ruptions but still contributed to growth. The economic rebound was also supported by private consumption and considerable increases

1 IMF: World Economic Outlook Update, January 2022: Rising Caseloads, A Disrupted Recovery, and Higher Inflation (imf.org) (Download on 16 February 2022)

2 Bureau of Labor Statistics: The Employment Situation - January 2022 (bls.gov), Household Data, p. 8 (Download on 16 February 2022)

3 IMF: World Economic Outlook Update, January 2022: Rising Caseloads, A Disrupted Recovery, and Higher Inflation (imf.org) (Download on 16 February 2022)

4 IMF: World Economic Outlook Update, January 2022: Rising Caseloads, A Disrupted Recovery, and Higher Inflation (imf.org) (Download on 16 February 2022)

in investments. Rising oil and gas prices drove the noticeable in-crease of inflation over the course of the year. Overall, average in-flation amounted to 2.8%5 in 2021. Short-time work schemes helped to mitigate the effect of the economic downturn on the la-bour market. The unemployment rate stood at 6.2%6. The Covid-19 crisis management fund set up in March 2020 continued to fi-nance temporary support measures such as fixed cost subsidies as well as various measures to compensate for losses or shortfalls in sales during the various lockdown periods. In 2021, the Austrian economy grew faster than expected and GDP per capita amounted to EUR 45,600 7at year-end.

Central and Eastern European economies performed well despite temporary lockdown measures. The fast recovery was mainly driven by household consumption and investments while supply chain dis-ruptions have impacted industrial output and exports. The supply bottlenecks particularly hit the Czech, Slovak and Hungarian auto-motive industries. The Croatian economy was strongly supported by a better than expected performance of the country's dominant tour-ism industry. In Romania, the country's important agricultural sector also supported economic growth. Government measures helped cushion the negative impact of the periodic restrictions on employ-ment and fiscal packages prevented household incomes to be dented. As a result, unemployment rates in CEE increased only modestly and remained low compared to many Western European countries. In most CEE countries, the total debt relative to the GDP stayed below its pre-crisis peak level. Many of the region's central banks increased their key rates in the course of the year. The interest rate hikes of the Czech National Bank were the most pronounced but Poland, Hungary and Romania also increased their policy rates numerous times in the second half of the year. Supply-side constraints, higher service and energy price pressures, together with food prices and some local factors such as imputed rents or tightness of the local labour markets contributed to inflationary pressure across the region. The Czech koruna was the only regional currency that appreciated against the euro in 2021, mainly due to monetary tightening of the Czech National Bank. Other CEE currencies, such as the Romanian leu, the Hungarian forint or the Polish zloty slightly depreciated against the euro. Overall, CEE economies developed positively with GDP growth rates ranging from 3.0%8 in Slovakia to a double-digit figure in Croatia9 in 2021.

Overall, the Covid-19 pandemic had no material impact on the eco-nomic recovery of Erste Group's markets in 2021. The banking sector in the region developed positively. This is reflected in net loan growth as well as in increased operating revenues. Erste Group is of the opinion that the moratoria introduced due to the Covid-19 pandemic in 2020 met the conditions as defined in the EBA guidelines published in the past two years 2020. The relief offered to borrowers therefore did not lead to a significant increase in credit risk.

PERFORMANCE IN 2021

P&L data of 2021 is compared with data of 2020, balance sheet data as of 31 December 2021 is compared to data as of 31 Decem-ber 2020.

Acquisitions and disposals in Erste Group in 2021 did not have any significant impact and therefore had no effect on the rates of change stated below.

Overview

Net interest income increased to EUR 4,975.7 million (+4.2%; EUR 4,774.8 million), primarily due to rate hikes in the Czech Re-public and in Hungary, strong volume growth in all markets and a positive one-off effect resulting from TLTRO III take-up in Austria and Slovakia. Net fee and commission income rose to

EUR 2,303.7 million (+16.5%; EUR 1,976.8 million) supported by a strong economic recovery and rising equity markets. Increases were posted across all key fee and commission categories and core markets - most notably Austria, with significant growth seen in particular in payment services and in asset management. Net trading result declined to EUR 58.6 million (EUR 137.6 million);

the line item gains/losses from financial instruments measured at fair value through profit or loss rose to EUR 173.2 million (EUR 62.0 million). The development of these two line items was driven mostly by valuation effects, apart from a rise in income from the foreign exchange business in net trading result. Operating income increased to EUR 7,742.0 million (+8.2%; EUR 7,155.1 million).

General administrative expenses were up at EUR 4,306.5 mil-lion (+2.0%; EUR 4,220.5 million), personnel expenses rose to EUR 2,578.1 million (+2.3%; EUR 2,520.7 million). Other admin-istrative expenses increased to EUR 1,180.3 million (+1.9%; EUR 1,158.9 million). Payments into deposit insurance schemes included in other administrative expenses decreased to EUR 122.4 million (EUR 132.2 million). Deprecia-tion and amortisation rose to EUR 548.0 (+1.3%; EUR 540.9 mil-lion). The operating result was up markedly at EUR 3,435.5 million (+17.1%; EUR 2,934.6 million) and the cost/income ratio (see glossary for definition) improved significantly to 55.6% (59.0%).

Due to net allocations, the impairment result from financial instruments amounted to EUR -158.8 million or 9 basis points of average gross customers loans (EUR -1,294.8 million or 78 basis points). Net allocations to provisions for loans and advances as well as for commitments and guarantees given were posted in the Czech Republic, Romania, Croatia, Serbia and Hungary, but generally re-mained at a very low level. A positive contribution came from in-come from the recovery of loans already written off as well as from

5 Statistik Austria:http://www.statistik.at/web_de/statistiken/wirtschaft/preise/verbraucherpreisindex_vpi_hvpi/022835.html(Download on 16 February 2022)

• 6 Statistik Austria): Arbeitslose (internationale Definition) - Monatsschätzer (statistik.at) (Download on 16 February 2022)

• 7 Statistik Austria:https://pic.statistik.at/web_de/statistiken/wirtschaft/volkswirtschaftliche_gesamtrechnungen/index.html

(Download on 16 February 2022), 2020 data amended by GDP growth

8 European Commission:https://ec.europa.eu/info/business-economy-euro/economic-performance-and-forecasts/economic-performance-country/slovakia/economic-forecast-slovakia_en (Download on 18 February 2022)

9 European Commission:https://ec.europa.eu/info/business-economy-euro/economic-performance-and-forecasts/economic-performance-country/slovakia/economic-forecast-slovakia_en (Download on 18 February 2022)

releases, most notably in Austria (in the Savings Banks segment). In the comparative period, updated risk parameters with forward look-ing information related to Covid-19 had resulted in high net alloca-tions to provisions for loans and advances as well as for commitments and guarantees given. The NPL ratio (see glossary for definition) based on gross customer loans improved to a historic low at 2.4% (2.7%). The NPL coverage ratio (see glossary for def-inition) (excluding collateral) increased to 90.9% (88.6%).

Other operating result amounted to EUR -310.5 million (EUR - 278.3 million). This deterioration was attributable to valuation ef-fects and higher expenses for the annual contributions to resolution funds; the latter rose - most strongly in Austria and Romania - to EUR 108.6 million (EUR 93.5 million). Banking levies declined to EUR 73.5 million (EUR 117.7 million), primarily due to the aboli-tion of banking tax in Slovakia and lower levies in Austria. At pre-sent, banking levies are payable in two core markets: in Hungary, banking tax amounted to EUR 15.0 million (EUR 14.5 million) and transaction tax to another EUR 48.0 million (EUR 44.0 mil-lion). In Austria, banking tax equalled EUR 10.5 million (EUR 25.5 million).

Taxes on income rose to EUR 525.2 million (EUR 342.5 million). The minority charge increased to a record EUR 484.8 million (EUR 242.3 million) due to significantly higher earnings contribu-tions of the savings banks. The net result attributable to owners of the parent rose to EUR 1,923.4 million (EUR 783.1 million) on the back of the strong operating result and low risk costs.

Cash earnings per share (see glossary for definition) amounted to EUR 4.18 (reported EPS: EUR 4.17) versus EUR 1.59 (reported EPS: 1.57) in the previous year.

Cash return on equity (see glossary for definition), i.e. return on equity adjusted for non-cash expenses such as goodwill impair-ment and straight-line amortisation of customer relationships, stood at 11.7% (reported ROE: 11.6%) versus 4.7% (reported ROE: 4.7%) in the previous year.

Total assets increased to EUR 307.4 billion (+10.8%; EUR 277.4 billion). On the asset side, cash and cash balances increased, pri-marily in Austria, to EUR 45.5 billion (EUR 35.8 billion), loans and advances to banks declined to EUR 21.0 billion (EUR 21.5 bil-lion). Loans and advances to customers (net) rose to

EUR 180.3 billion (+8.6%; EUR 166.1 billion). On the liability side, deposits from banks grew significantly to EUR 31.9 billion (EUR 24.8 billion) as a result of increased ECB refinancing (TLTRO III). Customer deposits rose in all core markets - most strongly in Austria and the Czech Republic - to EUR 210.5 billion (+10.2%; EUR 191.1 billion). The loan-to-deposit ratio (see glossary for definition) declined to 85.6% (86.9%).

The common equity tier 1 ratio (CET 1, CRR final, see glossary for definition) stood at 14.5% (14.2%), the total capital ratio (see glossary for definition) at 19.1% (19.7%).

OUTLOOK

Erste Group's goal for 2022 is to again achieve a double-digit re-turn on tangible equity (ROTE). Among the factors that will sup-port achievement of this goal is the continued strong economic performance of all core markets - Austria, Czech Republic, Slo-vakia, Hungary, Romania, Croatia and Serbia - and, on this basis, an improvement in the operating result and a continued benign risk environment. A continuation or further escalation of Covid-19 measures by governments as well as potential - and as yet unquan-tifiable - (geo-)political, regulatory or economic risks may render meeting these goals more challenging.

Erste Group's core markets are expected to post real GDP growth in the order of 3-5% in 2022. Inflation is set to remain a key theme throughout the year but at the same time is expected to remain broadly stable at elevated 2021 levels. In line with the strong eco-nomic outlook unemployment rates are expected to decline from already low levels in all markets. In most countries, sustained com-petitiveness should again result in sustainable current account bal-ances. The fiscal situation should likewise improve again after significant budget deficits in 2021. Public debt to GDP is projected to improve across the board, albeit from elevated levels.

Against this backdrop, Erste Group expects net loan growth in the mid-single digits. This performance as well as interest rate tail-winds should lead to an at least mid-single-digit increase in net in-terest income despite negative policy rates in the euro zone. The second most important income component - net fee and commis-sion income is expected to rise in the low to mid-single digits, fol-lowing the exceptional performance in 2021. As in 2021, positive momentum should again come from asset management and securi-ties business, assuming a continued constructive capital markets environment. Insurance brokerage as well as payment services fees are also expected to contribute. The net trading and fair value result is expected to come in at a similar level as in the previous year. This, however, will depend substantially on the financial market environment. The remaining income components are forecast to re-main, by and large, stable. Overall, operating income should in-crease in 2022. Operating expenses are expected to rise at a lower level than operating income, thus resulting in a cost income ratio of below 55% in 2022, significantly earlier than planned (2024). In addition, Erste Group will continue to invest in IT in 2022 and thus strengthen its competitive position, with a focus on progressive IT modernisation, back office digitalisation and further development of the digital platform George.

Based on the robust macro outlook described above, risks costs should remain at a low level in 2022. While precise forecasting is hard at current low risk cost levels, Erste Group believes that in 2022 risk costs will be below 20 basis points of average gross cus-tomer loans. The NPL ratio is expected below 3.0%.

Other operating result is expected to remain unchanged in the ab-sence of significant one-off effects. Assuming a low effective

group tax rate of about 19% and similar minority charges as in 2021, Erste Group aims to achieve a double-digit ROTE. Erste Group's CET1 ratio is expected to remain strong. Consequently, Erste Group will propose a dividend of EUR 1.6 per share for the 2021 fiscal year to the 2022 AGM.

Potential risks to the guidance include (geo)political and economic (including monetary and fiscal policy impacts) developments, reg-ulatory measures as well as global health risks and changes to the competitive environment. In addition, given the Covid-19 govern-mental measures and their impact on the economic development, financial forecasts are still subject to an elevated level of uncer-tainty. The evolving Russia-Ukraine situation does not impact Erste Group directly, as it has no operating presence in those coun-tries; exposures to both countries are negligible and no additional risk provisioning is currently required in this context. Indirect ef-fects, such as financial market volatility or sanctions-related knock-on effects on some of our customers cannot be ruled out, though. Further geopolitical developments might lead to economic difficulties and failure of banks based in EU Member States. As a consequence, the possible activation of national or European de-posit insurance and resolution systems might have financial im-pacts on member banks of Erste Group. Any resulting financial effects cannot be assessed at the current point in time. Erste Group is moreover exposed to non-financial and legal risks that may ma-terialise regardless of the economic environment. Worse than ex-pected economic development may put goodwill at risk.

ANALYSIS OF PERFORMANCE

Net interest income

Net interest income rose to EUR 4,975.7 million (EUR 4,774.8 million). The benign interest rate environment in the Czech Repub-lic and in Hungary, strong volume growth in all markets and espe-cially in the housing loan segment, and a one-off effect from the take-up of TLTRO III funds in Austria and in Slovakia in the amount of EUR 93.0 million (EUR 8.0 million) were among the key growth drivers. A decline in modification losses from lending, which are reported in net interest income, also had a positive effect. The net interest margin (calculated as the annualised sum of net interest income, dividend income and net result from equity method investments over average interest-bearing assets) stood at 2.05% (2.08%).

Net fee and commission income

Net fee and commission income increased to EUR 2,303.7 million (EUR 1,976.8 million). Significant growth was recorded across all fee and commission categories and all core markets. The most marked rises were seen in payment services and asset management (most notably in Austria). The latter benefitted from strongly per-forming equity markets. Income from the custody business and brokerage commissions was likewise up substantially.

Net trading result & gains/losses from financial instruments measured at fair value through profit or loss

Valuation effects have a substantial impact on the net trading result as well as the line item gains/losses from financial instruments measured at fair value through profit or loss. Debt securities issued measured at FV through profit or loss have a significant impact on these line items as related valuation results are shown in the line item gains/losses from financial instruments measured at fair value through profit or loss, while the valuation results of corresponding hedges are shown in net trading result - as are financial assets in the fair value and trading portfolios.

Due to valuation effects in the derivatives business resulting from interest rate developments, net trading result declined to EUR 58.6 million (EUR 137.6 million) despite continued strong foreign ex-change trading. Gains/losses from financial instruments measured at fair value through profit or loss rose to EUR 173.2 million (EUR 62.0 million). Due to the rise in long-term interest rates, lower income from the valuation of the securities portfolio in Aus-tria and losses from the valuation of the loan portfolio measured at fair value in Hungary were offset by significantly higher gains from the valuation of debt securities in issue.

General administrative expenses

General administrative expenses rose to EUR 4,306.5 million (EUR 4,220.5 million). Personnel expenses increased to EUR 2,578.1 million (EUR 2,520.7 million), most notably in the Czech Republic, but also in Hungary and Croatia. On the back of lower average headcounts, cost reductions were achieved primarily in Austria, Romania and Slovakia. Other administrative ex-penses were higher at EUR 1,180.3 million (EUR 1,158.9 mil-lion), with marketing and IT expenses up most markedly. Contributions to deposit insurance systems declined to EUR 122.4 million (EUR 132.2 million). In Austria they decreased to EUR 85.5 million (EUR 95.0 million) after a one-off effect in the previous year. No contributions are currently payable in Croatia. In Slovakia, contributions rose to EUR 9.4 million (EUR 1.1 million).

Depreciation and amortisation amounted to EUR 548.0 million

(EUR 540.9 million).

Operating result

Operating income increased to EUR 7,742.0 million (+8.2%; EUR 7,155.1 million), with a marked rise in the key income com-ponents, most notably net fee and commission income but also net interest income, and a strong net trading and fair value result. Gen-eral administrative expenses rose to EUR 4,306.5 million (+2.0%; EUR 4,220.5 million). The operating result rose to EUR 3,435.5 million (+17.1%; EUR 2,934.6 million). The cost/income ratio im-proved to 55.6% (59.0%).

Gains/losses from derecognition of financial instruments not measured at fair value through profit or loss

Losses from derecognition of financial instruments not measured at fair value through profit or loss amounted to EUR 32.8 million (EUR 6.5 million). This line item includes primarily one-off losses

from derecognition of liabilities and negative results from the sale of securities in the Czech Republic and Austria.

accounted for. In 2021 the current tax loss carried forward decreased accordingly.

The impairment result from financial instruments amounted to EUR -158.8 million (EUR -1,294.8 million). Net allocations to provisions for loans and advances declined to EUR 119.1 million (EUR 1,231.0 million), those for commitments and guarantees given to EUR 104.8 million (EUR 159.2 million). Positive contri-butions came from the release of provisions for loans in Austria (Savings Banks segment) as well as from income from the recovery of loans already written off in all segments in the amount of EUR 90.8 million (EUR 145.0 million). In the comparative period, updated risk parameters with forward-looking information as well as stage overlays related to the Covid-19 pandemic had led to a significant rise in allocations to provisions.

Impairment result from financial instruments

Other operating result

Other operating result came in at EUR -310.5 million (EUR -278.3 million). The deterioration was primarily due to valuation effects. Levies on banking activities declined to EUR 73.5 million (EUR 117.7 million). This decline is attributable to the abolition of banking levies in Slovakia, which had amounted to EUR 33.8 mil-lion in the comparative period. Banking levies payable in Austria decreased to EUR 10.5 million (EUR 25.5 million) on the back of significantly lower levies payable by the Holding. Hungarian bank-ing tax rose slightly to EUR 15.0 million (EUR 14.5 million). To-gether with the financial transaction tax of EUR 48.0 million (EUR 44.0 million), banking levies in Hungary totalled EUR 63.0 million (EUR 58.5 million).

The balance of allocations/releases of other provisions improved to EUR 5.1 million (EUR -18.4 million). Other operating result also reflects the annual contributions to resolution funds in the amount of EUR 108.6 million (EUR 93.5 million). Increases were recorded above all in Austria to EUR 51.5 million (EUR 43.6 million) and in Romania to EUR 11.4 million (EUR 7.7 million).

Profit/loss for the year

The pre-tax result from continuing operations amounted to EUR 2,933.4 million (EUR 1,368.0 million). Taxes on income rose to EUR 525.2 million (EUR 342.5 million). The minority charge increased to EUR 484.8 million (EUR 242.3 million) due to higher earnings contributions of savings banks resulting primarily from a significant improvement in the impairment result from financial in-struments. The net result attributable to owners of the parent rose to EUR 1,923.4 million (EUR 783.1 million).

Tax situation

Pursuant to section 9 of the Austrian Corporate Tax Act (KStG), Erste Group Bank AG and its main domestic subsidiaries constitute a tax group. As opposed to previous periods, in 2021 a significant taxable profit was accounted for. According to the applicable legal regulations, 75 per cent of the taxable profit was offset with tax loss carryforward, for the remaining 25 per cent current income tax was

Taxes on income are made up of current taxes on income calculated in each of the Group companies based on the results reported for tax purposes, corrections to taxes on income for previous years, and the change in deferred taxes. The reported total income tax expense amounted to EUR 525.2 million (EUR 342.5 million).

Balance sheet development

The rise in cash and cash balances to EUR 45.5 billion (EUR 35.8 billion) was primarily due to rising cash balances held at central banks, not least as a result of increased TLTRO III funds.

Trading and investment securities held in various categories of financial assets increased to EUR 53.2 billion (EUR 46.8 billion).

Loans and advances to credit institutions (net), including de-mand deposits other than overnight deposits, declined slightly to EUR 21.0 billion (EUR 21.5 billion). Loans and advances to customers (net) rose - most notably in Austria and the Czech Re-public - to EUR 180.3 billion (EUR 166.1 billion) driven by retail and corporate loan growth.

Loan loss allowances for loans to customers amounted to

EUR 3.9 billion (EUR 4.0 billion). The NPL ratio - non-perform-ing loans as a percentage of gross customer loans - improved to 2.4% (2.7%), the NPL coverage ratio (based on gross customer loans) rose to 90.9% (88.6%)

Intangible assets were stable at EUR 1.4 billion (EUR 1.4 bil-lion). Miscellaneous assets amounted to EUR 6.1 billion (EUR 5.8 billion).

Financial liabilities - held for trading declined to EUR 2.5 bil-lion (EUR 2.6 billion). Deposits from banks, primarily in the form of term deposits, rose to EUR 31.9 billion (EUR 24.8 billion), including TLTRO III funds with a carrying amount of EUR 20.9 billion (EUR 14.1 billion); deposits from customers increased to EUR 210.5 billion (EUR 191.1 billion) due to strong growth in overnight deposits (leasing liabilities of EUR 0.6 billion are not in-cluded in this position). The loan-to-deposit ratio declined to 85.6% (86.9%). Debt securities in issue increased to EUR 32.1 billion (EUR 30.7 billion). Miscellaneous liabilities amounted to EUR 6.9 billion (EUR 5.8 billion).

Total assets rose to EUR 307.4 billion (EUR 277.4 billion). Total equity increased to EUR 23.5 billion (EUR 22.4 billion). This in-cludes AT1 instruments in the amount of EUR 2.2 billion from four issuances (April 2017, March 2019, January 2020 and November 2020). After regulatory deductions and filtering according to the Capital Requirements Regulation (CRR) common equity tier 1 capital (CET1, CRR final) rose to EUR 18.8 billion (EUR 17.1 billion) as were total own funds (CRR final) to EUR 24.8 billion (EUR 23.6 billion). Total risk - risk-weighted assets including