Addiko Bank : Corporate Governance Report 2023

There is no moving forward without looking back.

Consolidated

Corporate Governance

Report 2023

Table of Content

Corporate Governance Statement	4
Addiko's Declaration of Commitment	4
Deviations from the Code	4
CorporateStructure	5
General Meeting	6
Supervisory Board	7
Supervisory Board members on 31 December 2023	7
Members who left the Supervisory Board in 2023	7
State Commissioners as of 31 December 2023	7
Supervisory Board Mandates and comparable functions at other listed companies	8
Independence Criteria for Assessment of Independence of the Supervisory Board members	8
Independent members of the Supervisory Board members	8
Supervisory Board Activity Report	9
Committees of the Supervisory Board	10
Self-evaluation of the Supervisory Board Members	12
Management Board	14
Management Board members of Addiko Bank AG as of 31 December 2023 and allocation of
responsibilities	14
Committees of the Management Board	15
Information on the working procedures of the Management Board	16
Supervisory Board mandates and comparable functions outside the Group	16
Members of the Management Board and Supervisory Board of Addiko held mandates in following
subsidiaries of Addiko Group as per 31 December 2023	16

Measures taken to promote women on the Management Board, the Supervisory Board and in managerial

positions	17
Women in the Management Board, Supervisory Board, and managerial positions	17
Diversity Concept	18
Promoting Diversity and Inclusion	18
Diversity in the Supervisory Board	18
External Evaluation	19

Attachment 1: Transactions and measures exceeding the scope of section 95(5) Austrian Stock Corporation Act and, therefore, requiring the approval of Supervisory Board as of 31 December 2023

20

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Glossary of Key Terms

The table below sets out the most used terms contained within this handbook and Addiko Bank.

	Term			Definition
ABG		Addiko Group
ACGC		Austrian Corporate Governance Code
Addiko Bank or Addiko		Addiko Bank AG (Holding)
AGM		Annual General Meeting
AktG		Aktiengesetz (Stock Corporation Act)
AML/CFT		Anti-Money Laundering/Combating the Financing of Terrorism
BiH		Bosnia and Herzegovina
PBWG		Bankwesengesetz (Banking Act)
BGBL		Bundesgesetzblatt (Law Gazette)
CEO		Chief Executive Officer
CFO		Chief Financial Officer
CodeP		Austrian Code of Corporate Governance
CISO		Chief Information Security Officer
CMO/CIO		Chief Market/IT/Digitalization Officer
CRO		Chief Risk Officer
CRR		Capital Requirements Regulation
CSEE		Central and Southeastern Europe
D&O Insurance		Directors-and-Officers Insurance
EBA		European Banking Authority
ECB		European Central Bank
SPOC		Single Point of Contact
FMA		Finanzmarktaufsicht (Financial Market Authority)
FX		Foreign Exchange
GoB		Group of Borrowers
ICAAP		Internal Capital Adequacy Assessment Process
ICS		Internal Control System
ICV		Internal Collateral Value
NPE		Non-Performing Exposure
NPL		Non-Performing Loans
OPEX		Operational Expenditure
SME		Small and Medium-Sized Enterprises

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Corporate Governance Statement

Addiko's Declaration of Commitment

Addiko Group is a consumer, small and medium-sized enterprises (SME) specialist banking group in Central and Southeastern Europe (CSEE) and consists of Addiko Bank AG (hereinafter referred to as "Addiko" or "Bank"), a fully licensed Austrian parent bank registered in Vienna, Austria, supervised by the Austrian Financial Market Authority and by the European Central Bank, as well as six subsidiary banks, registered, licensed and operating in five CSEE countries: Croatia, Slovenia, Bosnia and Herzegovina (where it operates two banks), Serbia and Montenegro.

Through its six subsidiary banks Addiko Group services approximately 0.9 million customers in CSEE as of 31 December 2023, using a well-dispersed network of 154 branches and modern digital banking channels.

As a company listed on the Vienna Stock Exchange, Addiko attaches great importance to responsible and transparent corporate governance in order to maintain the understanding and trust of the various stakeholders. Therefore, Addiko is committed to complying with the Austrian Corporate Governance Code (ACGC, or "the Code") as amended in January 2024.

The ACGC is publicly available on the website of the Austrian Working Group for Corporate Governance (www.corporate-governance.at).

The Code contains following rules:

• L rules based on compulsory legal requirements;
• C rules (comply or explain) that should be complied with and any deviations must be explained and justified in order for the company's conduct to conform with the Code;
• and R rules (recommendations) where non-compliance rules and have the characteristics of guidelines. R rules must not be disclosed or justified.

Certain legal provisions only apply to companies that are listed on the Vienna Stock Exchange.

Deviations from the Code

Addiko deviates from the C-Rules listed below, but acts in accordance with the Code based on the following explanations and justifications:

No.	Deviation	Comments
C-12	The materials and documents required for a	Documents of sensitive nature were - with the consent
	Supervisory Board meeting have not been	of the Supervisory Board - provided within a shorter
	made available at least one week before the	time frame. Delays in this matter were accepted by the
	respective meeting at each and every session.	Supervisory Board in the respective meeting.

C-45 Members of the supervisory board shall not have mandates in other companies which are in competition with the Company.

The member of the Supervisory Board, Mr. Pribil, took a mandate as supervisory board member with Deniz Bank AG, Austria. Before accepting the mandate, Mr. Pribil informed the Supervisory Board and Addiko. All regulatory required checks were performed by the compliance department. As to a potential conflict of interests it needs to be stated that Deniz Bank AG Austria operates in different markets than Addiko and therefore this was deemed negligible. In addition, Mr. Pribil was recommended to abstain from any voting or discussions in both banks regarding topics which can lead to conflicts of interests.

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Corporate Structure

Addiko is a stock corporation established according to Austrian law and consists of the Management Board and the Supervisory Board (two-tier-system).

The Management Board is responsible for the management of the company in accordance with the law, the Articles of Association of Addiko Bank AG, as well as considering the interests of shareholders and the company's employees, as well as public interest with the objective to create sustainable value in the interests of the company.

The Management Board decides on all matters prescribed by law, the by-laws, the Articles of Association, Rules of Procedures or guidance provided by the Supervisory Board and ensures compliance with the legal requirements and internal guidelines (compliance). It also takes the necessary measures to ensure that adequate internal guidelines are developed and implemented, such as Addiko's Code of Business Conduct and Ethics.

The Code of Business Conduct and Ethics is Addiko Group's guideline and tool for being a trusted partner and to promote responsible business conduct. It applies equally to all Addiko Group employees, including the members of the Management Board and the Supervisory Board. In addition to the Code of Business Conduct and Ethics, Addiko has also internal policies and processes in place to ensure compliant behavior.

The Management Board is also responsible to include - in particular - the bank's strategic management and direction, the allocation of resources, financial accounting, and reporting, control and risk management, as well as a properly functioning business organization and corporate control. The Management Board meets on a weekly basis or more frequently, if required.

The Management Board works closely together with the Supervisory Board in a cooperative relationship of trust and for the benefit of the company. The Management Board reports to the Supervisory Board at a minimum within the scope prescribed by law or administrative guidelines, on all issues with relevance for the Group concerning strategy, the intended business policy, planning, business development, risk situation, risk management, staff development, reputation, and compliance.

The Supervisory Board appoints the members of the Management Board, decides on the remuneration of the Management Board, regularly monitors their management activities, and advises on fundamental matters related to the company. It takes part in making decisions as provided by law, the Articles of Association and its Rules of Procedures. The Supervisory Board meetings are convened by the chairperson and are held at least once during each calendar quarter. Ad-hoc meetings can be requested if required.

Figure 1 Corporate Governance Structure of Addiko as of 31 December 2023

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General Meeting

The Annual General Meeting (AGM) as the highest-ranking body of Addiko consists of the shareholders of the company.

The share capital of Addiko amounts EUR 195,000,000 and is divided into 19,500,000 non-par value bearer shares which carry equal participation interest in the share capital.

In 2023, the General Meeting convened one ordinary meeting on 21 April 2023.

Figure 2

Shareholder structure as of 31 December 2023 (c. 52.9% free float)

Contains own shares acquired by Addiko Bank AG through share buybacks. The current share buyback programme is expected to expire until 29 March 2024 at the longest. As of 31 December 2023, the company held 166,884 own shares in total.

The illustration above is based on the most recent Major Holdings and Directors Dealings notifications and on sources that the bank considers reliable. Holdings below 4% of the shares are presented in a summarized form. Addiko Bank AG does not guarantee the accuracy or completeness of the text and graph. Latest status published on https://www.addiko.com/shareholder-structure/

Figure 3

Ownership structure as of 31 December 2023

Shareholder

Addiko Bank AG

Austria

100100100%99.9999.88

Addiko Bank d.d.		Addiko Bank d.d.		Addiko Bank a.d.		Addiko Bank d.d.		Addiko Bank a.d.
			Sarajevo		Banja Luka
Ljubljana		Zagreb		Beograd
			(Bosnia &		(Bosnia &
(Slovenia)		(Croatia)		(Serbia)
			Herzegovina)		Herzegovina)

100%

Addiko Bank AD

Podgorica

(Montenegro)

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Supervisory Board

Supervisory Board members on 31 December 2023

[C-58]

The following changes were made during the financial year 2023:

On 21 April 2023, the Annual General Meeting reelected Dr. Kurt Pribil as a member of the Supervisory Board with effect as of the end of this Annual General Meeting until the end of the Annual General Meeting voting on his discharge for the business year 2025.

Following the Annual General Meeting, the Supervisory Board elected on 21 April 2023 Dr. Kurt Pribil as Chair of the Supervisory Board and Mr. Proksch as Deputy Chair of the Supervisory Board with effective date 1 June 2023.

By year end 2023 the Supervisory Board comprised of five shareholder representatives and two members delegated by the Works Council:

Name	Position	Year of birth	Initial appointment	End of term
Kurt Pribil	Chair	1957	10.07.2020	AGM 2026
Johannes Proksch	Deputy - since	1969	14.04.2022	AGM 2025
01.06.2023
Sava Ivanov Dalbokov	Deputy - until	1973	14.04.2022	AGM 2025
31.05.2023
Monika Wildner	Member	1971	10.07.2020	AGM 2025
Frank Schwab	Member	1969	27.11.2020	AGM 2025
Christian Lobner	Member / Works Council	1978	22.09.2015	until further
notice
Thomas Wieser	Member / Works Council	1980	29.07.2019	until further
notice

Members who left the Supervisory Board in 2023

[C-58]

No member has left the Supervisory Board in 2023.

State Commissioners as of 31 December 2023

Name	Position	Year of birth	Initial appointment	End of term
Vanessa Koch	State Commissioner	1989	01.03.2019	29.02.2024
Lisa Marie Haas	Deputy State	1989	01.03.2019	29.02.2024
Commissioner

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Supervisory Board Mandates and comparable functions at other listed companies

[C-58]

No Member of the Supervisory Board holds further Supervisory Board mandates or performs a comparable function at a listed company.

Independence Criteria for Assessment of Independence of the Supervisory Board members

[C-53]

The Supervisory Board of Addiko Bank AG, in accordance with and taking into consideration Rule C-53 and Appendix 1 of the ACGC, has specified that a member of the Supervisory Board shall be considered as independent if no private or other relationship with the company or its Management Board exists, which would cause a conflict of interest.

The majority of the members of the Supervisory Board appointed by the General Meeting or delegated according to the articles of association shall be considered as independent. Every member of the Supervisory Board shall be responsible to declare their independence. Furthermore, the following guidelines according to Appendix 1 of the ACGC shall be considered for the assessment of the independence of a member of the Supervisory Board:

• The Supervisory Board member shall not have served as a member of the Management Board or as a management level employee of the company or one of its subsidiaries in the past five years.
• The Supervisory Board member shall not maintain or have maintained in the past year any business relations with the company or one of its subsidiaries to an extent of significance for the member of the Supervisory Board. This shall also apply to relationships with companies in which a member of the Supervisory Board has a considerable economic interest, but not for exercising functions in the bodies of the group. The approval of individual transactions by the Supervisory Board pursuant to L-Rule 48 does not automatically mean the person is qualified as not independent.
• The Supervisory Board member shall not have acted as auditor of the company or have owned a share in the auditing company or have worked there as an employee in the past three years.
• The Supervisory Board member shall not be a member of the Management Board of another company in which a member of the Management Board of the company is a Supervisory Board member.
• A Supervisory Board member may not remain on the Supervisory Board for more than 15 years. This shall not apply to Supervisory Board members who are shareholders with a direct investment in the company or who represent the interests of such a shareholder.
• The Supervisory Board member shall not be a closely related (direct offspring, spouses, life partners, parents, uncles, aunts, sisters, nieces, nephews) of a member of the Management Board or of persons having one of the aforementioned relations.

According to the criteria listed above for the independence of Supervisory Board members, the following Supervisory Board members of Addiko Bank AG within the business year 2023 can be classified as independent:

Name	Position	Year of birth	Initial appointment	End of term
Kurt Pribil	Chair	1957	10.07.2020	AGM 2026
Sava Ivanov Dalbokov	Deputy	1973	14.04.2022	AGM 2025
Monika Wildner	Member	1971	10.07.2020	AGM 2025
Frank Schwab	Member	1969	27.11.2020	AGM 2025

Independent members of the Supervisory Board members

[C-54]

In the case of companies with a free float of more than 20%, the members of the Supervisory Board elected by the General Meeting or delegated by shareholders in accordance with the articles of incorporation shall include at least one independent member pursuant to Rule C-54 who is not a shareholder with a stake of more than 10% or who represents such a shareholder's interests.

In the case of companies with a free float of over 50%, at least two members of the Supervisory Board must meet these criteria.

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At Addiko, the following members of the Supervisory Board can be classified as independent members under Rule R-

54 in this matter:

Name	Position	Year of birth	Initial appointment	End of term
Kurt Pribil	Chair	1957	10.07.2020	AGM 2026
Sava Ivanov Dalbokov	Deputy	1973	14.04.2022	AGM 2025
Monika Wildner	Member	1971	10.07.2020	AGM 2025
Frank Schwab	Member	1969	27.11.2020	AGM 2025

Supervisory Board Activity Report

[C-36,C-58]

In the reporting period the Supervisory Board held eight meetings and adopted six decisions via circular resolution. The Supervisory Board members attended the meetings of the Supervisory Board as shown below:

Name	Position	Meetings attended / out of	Excused
Kurt Pribil	Chair	8/8	0
Johannes Proksch	Deputy since 01.06.2023	8/8	0
Sava Ivanov Dalbokov	Deputy until 31.05.2023	8/8	0
Monika Wildner	Member	8/8	0
Frank Schwab	Member	8/8	0
Christian Lobner	Member / Works Council	8/8	0
Thomas Wieser	Member / Works Council	8/8	0

Within the scope of its responsibilities and based on the requirements of the law, the Articles of Association and Rules of Procedures the Supervisory Board of Addiko Bank AG appoints, supervises and advises the Management Board and is directly involved in decisions of fundamental importance to the bank. It closely works together with the Management Board in a cooperative relationship of trust and for the benefit of the company. The Supervisory Board decides on the appointment and dismissal of members of the Management Board including long-term succession planning for the Management Board based on proposals of the Committee for Management Board Matters, further considering recommendations of the Nomination and Remuneration Committee. Based on proposals of the Nomination and Remuneration Committee, the Supervisory Board determines the total remuneration of the individual members of the Management Board, resolves on the remuneration system for the Management Board and reviews it regularly.

Based on the reports on risks arising from banking business, the Supervisory Board discussed the adequacy of capital and liquidity with the Management Board. The Management Board regularly informed the Supervisory Board about regulatory developments and the resulting measures.

The Supervisory Board regularly received reports by Internal Audit, Compliance and AML, Internal Control System (ICS) and Risk functions and examined those in detail. The Management Board discussed strategies and major specific measures in detail with the Supervisory Board. Legal transactions requiring approval were submitted to the Supervisory Board, and the Supervisory Board was given opportunity to thoroughly examine any reports and resolutions proposed by the Management Board.

The Supervisory Board reviewed the annual financial statement, the consolidated financial statement and the consolidated Non-Financial Report, the Management Board Report and Corporate Governance Report, the Report of the Supervisory Board, as well as the proposal on the allocation of the annual profit.

In addition, the Supervisory Board decided - among other topics - on the Budget 2024, the Recovery Plan 2023, the amendments of the Organizational Chart, the amendments of the Business, Risk and ESG Strategy, the Internal Audit

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Charter and Internal Audit Plan, the Group AML/CTF Policy and the Group Risk Appetite Statement, the Remuneration Policy as well as on the Fit and Proper Assessment of the Supervisory Board and Management Board.

The Chairman of the Supervisory Board and - within their respective functional responsibility - the Chairpersons of the Supervisory Board Committees are informed without delay by the Chairman of the Management Board or by the respectively responsible Management Board member about important events of material significance for the assessment of the situation, development, and management of Addiko Bank AG and/or the Group. The Chairman of the Supervisory Board engages in discussions with investors on Supervisory Board - related topics when necessary and regularly informs the Supervisory Board of the substance of such discussions.

Furthermore, the Supervisory Board took decisions on several transactions requiring approval according to the Rules of Procedures of the Management Board and Supervisory Board.

Committees of the Supervisory Board

[C-34,C-39]

The Supervisory Board has allocated particular tasks to five standing committees, i.e., the Credit and Risk Committee, the Audit, Compliance and AML Committee, the Nomination and Remuneration Committee, the Digitalization and IT Committee and the Committee for Management Board Matters. To the extent required, the committees coordinate their work and consult each other on an ad-hocbasis. The respective committee chairperson reports regularly to the Supervisory Board on the work of the committees.

The establishment of these committees and their decision-making powers are defined in the applicable Rules of Procedures of the Supervisory Board of Addiko, the Austrian Banking Act (Bankwesengesetz, "BWG") and EBA/GL/2017/11.

The delegation of members to the committees from the Works Council is done in accordance with the provisions of the Austrian Labor Act (Arbeitsverfassungsgesetz).

Credit and Risk Committee
Name	Position	Comment
Sava Ivanov Dalbokov	Chair	appointed 26.04.2022
Johannes Proksch	Deputy	appointed 26.04.2022
Kurt Pribil	Member	appointed 26.04.2022
Frank Schwab	Member	appointed 26.04.2022
Christian Lobner	Member	appointed 26.04.2022

The Credit and Risk Committee has held five meetings and approved two circular decisions.

The Credit and Risk Committee is an advisory committee to the Supervisory Board and in accordance with the Rules of Procedures of the Supervisory Board the highest credit decision making committee. It is responsible to grant loans and credits to customers or to a group of affiliated customers in accordance with the Rules of Procedures of the Supervisory Board. The credit authority levels refer to credit decisions for "Group of Borrowers" (GoB) in Group competence, e.g., with a gross exposure exceeding the credit authorities of subsidiaries. Furthermore, any intragroup limit to any subsidiary within Addiko Group referring to any kind of exposure/investment must be approved by the Credit and Risk Committee of Supervisory Board.

The Committee advises the Management Board on the current and future risk tolerance and risk strategy of Addiko, monitors the implementation of its risk strategy in connection with the control, monitoring and limitation of risks in accordance with § 39 (2b) (1) to (14) BWG and monitoring capital adequacy and liquidity. In addition, it reviews whether the pricing of the services and products offered by the credit institution adequately take into account its business model and risk strategy. In addition, the Credit and Risk Committee recommends the Recovery Plan of the group for decision-making to the Supervisory Board.

The Committee collaborates with other committees whose activities may have an impact on the risk strategy (e.g., Audit, Compliance and AML Committee) and regularly communicates with Addiko's internal control functions, in particular the risk management function.

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