Patria Bank : Preliminary 2023 results

PATRIA BANK SA - Preliminary Financial Results for year 2023

Report prepared according to the FSA Regulation no. 5/2018

Report date: 31.12.2023

Company name: PATRIA BANK S.A.

Registered office: Bucharest, District 2, 42 Pipera Road, Globalworth Plaza, floors 8 and 10

Phone/fax: [phone]

Tax identification number: RO 11447021

Trade Register number: J40/9252/2016

Issued and paid-in share capital: RON 327,881,437.60

Regulated market on which the issued shares are traded: Bucharest Stock Exchange - Premium

category

Main characteristics of the securities issued by the trading company: nominal value of RON 0.10

This version of the accompanying documents is a translation from the original, which was prepared in Romanian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views and opinions, the original language version of our report takes precedence over this translation.

Contents
1.	Disclosure requirements	3
2.	The Bank and the Shareholders	3
3.	Key Figures	4
4.	Shares and Bonds	4
5.	Macroeconomic and banking environment	6
6.	Commercial activity	8
7.	Financial Results and economic - financial ratios	13
8.	Conclusions	18
9.	Change of the consolidation perimeter	18
10.	Annexes	19

Patria Bank SA - Bucharest, District 2, Globalworth Plaza Building, Pipera no 42, floors 8 and 10 | Trade Registry number J40/9252/2016 | fiscal code RO 11447021 | RB-PJR-32-045/15.07.1999 | share capital: 327.881.437,60 lei | Patria Bank is registered by the National Supervisory Authority for Personal Data Processing (ANSPDCP) with notification number 753 | Phone [phone] |Fax [phone]| [e-mail] | www.patriabank.ro

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1. Disclosure requirements

This Report meets the disclosure requirements of Law no. 24/2017 on issuers of financial instruments and market operations, Regulation of the Financial Supervisory Authority (FSA) no. 5/2018 on issuers of financial instruments and market operations and the Bucharest Stock Exchange Code.

2. The Bank and the Shareholders

Patria Bank SA (hereinafter referred to as "the Bank") is a joint stock company using a one-tier corporate model, authorized as a credit institution for carrying out banking activities in Romania according to Emergency Ordinance of Government (EOG) no. 99/2006 on credit institutions and capital adequacy.

The Bank is the result of the merger through absorption between the former Banca Comerciala Carpatica SA, as an absorbing entity, and former Patria Bank SA (formerly Nextebank), as an absorbed entity, a process that closed on 01.05.2017. With the implementation of the merger the absorbing company, Banca Comerciala Carpatica SA, changed its name to Patria Bank SA and the ticker symbol on the Bucharest Stock Exchange was changed from BCC to PBK.

The Bank offers banking and other financial services to individuals and legal entities: opening of accounts and deposits, domestic and foreign payments, foreign exchange operations, financing for current activity, medium-term financing, issuing letters of guarantee, letters of credit etc.

Patria Bank Group

As at 31.12.2023 the Patria Bank Group includes:

• Patria Bank SA, a credit institution authorized to perform banking activities in Romania
• Patria Credit IFN SA, a non-banking financial institution authorized by the NBR to perform lending activities in Romania, registered in the General Register of Non-Banking Financial Institutions held by the NBR specialized in rural lending and microfinance. Patria Bank SA holds 99.99% of the share capital of Patria Credit IFN
• SAI Patria Asset Management SA and the six investment funds managed by it - Patria Obligatiuni Patria Global, Patria Stock, Patria Euro Obligatiuni, ETF BET Patria Tradeville and ETF Energie Patria - Tradeville. The company is authorized by the Financial Supervisory Authority of Romania (FSA) for the management of investment funds and is 99.99% under the control of Patria Bank SA.

Shareholders Structure

As at 31.12.2023 the share capital of Patria Bank SA amounted to RON 327,881,437.60, consisting of 3,278,814,376 ordinary nominative and dematerialized shares, each having a par value of RON 0.10/share.

As at 31.12.2023 the Bank was 84.0526% owned by EEAF FINANCIAL SERVICES BV ("EEAF"), a limited liability company registered in accordance with Dutch law, based in Basisweg 10, 1043AP, Amsterdam,

Patria Bank SA - Bucharest, District 2, Globalworth Plaza Building, Pipera no 42, floors 8 and 10 | Trade Registry number J40/9252/2016 | fiscal code RO 11447021 | RB-PJR-32-045/15.07.1999 | share capital: 327.881.437,60 lei | Patria Bank is registered by the National Supervisory Authority for Personal Data Processing (ANSPDCP) with notification number 753 | Phone [phone] |Fax [phone]| [e-mail] | www.patriabank.ro

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The Netherlands. EEAF FINANCIAL SERVICES BV is 100% owned by the EMERGING EUROPE ACCESSION FUND COOPERATIEF UA, a cooperative with the exclusion of liability set up in accordance with the Dutch legal framework, based in Basisweg 10, 1043AP, Amsterdam, The Netherlands. The EEAF Investment Fund is the third private equity fund whose investment consultant is Axxess Capital Partners and brings together, as major investors, important international financial such as:

• EBRD - European Bank for Reconstruction and Development
• EIF - European Investment Fund, part of European Investment Bank Group (EIB)
• BSTDB - Black Sea Trade and Development Bank
• DEG - Development Bank part of KFW Banking Group

The structure of the Bank's shareholders owning at least 10% of its share capital at 31.12.2023 is as follows:

Shareholder

EEAF FINANCIAL SERVICES BV, Amsterdam

Individual shareholders

Other shareholders - Legal entities

Total

	No. of shares		Percent (%)
	2,755,927,215	84,0526
	459,124,533	14,0028
	63,762,628	1,9447
	3,278,814,376	100,0000

3. Key Figures

Financial results

Loans and deposits

Capital adequacy

Network

Bank

Net banking income (Ths. RON) Operational expenses (Ths. RON) Net cost of risk (Ths. RON)

Net result (Ths. RON)

Cost / income ratio

ROE

Total net loans (Ths. RON)

Total deposits (Ths. RON)

Loans (gross value) / deposits ratio

Own Funds (Ths. RON)

Risk weighted assets (Ths. RON) Total own funds ratio Number of branches

12 months up to	12 months up to	Variation
31.dec.23	31.dec.22
197,387	194,295	1.6%
(142,425)	(138,665)	2.7%
(24,818)	(32,490)	-23.6%
23,154	20,247	14.4%
72.2%	71.4%	0.8 p.p.
6.2%	5.9%	0.3 p.p.
31.dec.23	31.dec.22	Variation
2,044,975	2,185,407	-6.4%
3,124,154	3,447,728	-9.4%
69.7%	68.3%	1.4 p.p.
31.dec.23	31.dec.22	Variation
443,335	405,644	9.3%
2,031,438	2,086,977	-2.7%
21.82%	20.08%	1.74 p.p.
45	45	-

4. Shares and Bonds

Patria Bank has three issues of financial instruments listed on the regulated market of the Bucharest Stock Exchange: The Bank's shares and two issues of subordinated bonds.

Patria Bank SA - Bucharest, District 2, Globalworth Plaza Building, Pipera no 42, floors 8 and 10 | Trade Registry number J40/9252/2016 | fiscal code RO 11447021 | RB-PJR-32-045/15.07.1999 | share capital: 327.881.437,60 lei | Patria Bank is registered by the National Supervisory Authority for Personal Data Processing (ANSPDCP) with notification number 753 | Phone [phone] |Fax [phone]| [e-mail] | www.patriabank.ro

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The Bank's shares are traded on the regulated market managed by the Bucharest Stock Exchange, in the Premium category, with the PBK ticker symbol. The issue's ISIN code is ROBACRACNOR6. The closing price for PBK shares at the end of 2023 was RON 0.0820/share, while the closing price at the end of 2022 was RON 0.0784/share. The evolution of Patria Bank's share price was relatively stable in 2023.

Patria Bank's subordinated bond issue issued in Euro on 20.09.2019, with a total value of EUR 5.0 million, a fixed interest rate of 6.50%/year and maturity on 20.09.2027, trades on the regulated market managed by the Bucharest Stock Exchange with the symbol PBK27E. The ISIN code of the issue is ROZN0PQQARR5. The closing price of PBK27E bonds at the end of 2023 was 97.80 compared with 99.14 at the end of 2022 (expressed as a percentage of the 500 Euro par value).

Patria Bank's subordinated bond issue issued in Euro on 05.10.2020, with a total value of EUR 8.2 million, a fixed interest rate of 6.50%/year and maturity on 05.10.2028, trades on the regulated market managed by the Bucharest Stock Exchange with the symbol PBK28E. The ISIN code of the issue is ROWRHZRZD4L3. The closing price of PBK28E bonds at the end of 2023 was 97.23 compared to 98.80 at the end of 2022 (expressed as a percentage of the 500 Euro par value).

Patria Bank SA - Bucharest, District 2, Globalworth Plaza Building, Pipera no 42, floors 8 and 10 | Trade Registry number J40/9252/2016 | fiscal code RO 11447021 | RB-PJR-32-045/15.07.1999 | share capital: 327.881.437,60 lei | Patria Bank is registered by the National Supervisory Authority for Personal Data Processing (ANSPDCP) with notification number 753 | Phone [phone] |Fax [phone]| [e-mail] | www.patriabank.ro

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5. Macroeconomic and banking environment

The GDP level in Q4 2023 was 0.4% lower, in real terms, than the level recorded in Q3 2023. Compared to Q4 2022, the GDP level in Q4 2023 registered an increase of 2.9% on a gross series basis and by 1% on a seasonally adjusted series. In 2023 the GDP level increased by 2% compared to 2022. In 2023, the growth rate halved compared to 2022, when the local economy grew by 4.1%, after increasing by 5.7% in 2021.

The public budget deficit reached a high level of RON 89.9 billion in 2023, equivalent to 5.7% of GDP, a

level similar to that of 2022. Domestic public revenues increased by 10.2%, but their weight in GDP decreased (from 29.2% to 28.7%). Public expenditure financed from domestic sources increased by 10.2%, but their weight in GDP also decreased (from 34.8% to 33.7%). The public budget deficit in December 2023 stood at RON 16.4 billion, below the monthly average of the year (RON 7.8 billion). This reflects the Government's decision to cap public spending at the end of the year. Capital expenditures were significantly reduced (by 46.5%) compared to December 2022.

Public investment registered a significant increase (38.8%) in 2023, reaching 6.4% of GDP. There was also an important increase in public investment expenditure financed from non-reimbursable EU funds (+93.4%). The government plans to reduce the public deficit to 5% of GDP in 2024.

Patria Bank SA - Bucharest, District 2, Globalworth Plaza Building, Pipera no 42, floors 8 and 10 | Trade Registry number J40/9252/2016 | fiscal code RO 11447021 | RB-PJR-32-045/15.07.1999 | share capital: 327.881.437,60 lei | Patria Bank is registered by the National Supervisory Authority for Personal Data Processing (ANSPDCP) with notification number 753 | Phone [phone] |Fax [phone]| [e-mail] | www.patriabank.ro

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The year 2023 ended with an annual inflation rate of 6.6%, a figure lower than the initial forecasts

and expectations of economists. According to the NBR, inflation will follow an upward trend in the first part of 2024, reaching a peak of 7.7% at the end of the first quarter. Afterwards, a slight decrease is anticipated, with the inflation rate stabilizing at 6.8% at the end of the second quarter. This increase will be determined by the growth in indirect taxes and the elimination of the capping of the markup to certain food categories. However, NBR's forecasts place the inflation rate at 4.8% at the end of 2024.

The Ministry of Finance (MF) estimates that the gross financing needs of the government sector will

amount to RON 181 billion in 2024. This level is slightly lower than that of 2023, which was estimated at approximately RON 185 billion.

The gross financing needs of RON 181 billion for 2024 is determined by the forecasted level of the budget deficit (5% of GDP, representing approximately RON 86.6 billion) and the volume of Government debt to be refinanced (approximately RON 94.4 billion). MF aims to cover 65.5% of the gross financing needs of the Government sector in 2024, the equivalent of RON 118.5 billion, through loans contracted on the domestic market (Tezaur and Fidelis programs). In order to cover the country's financing needs, the Romanian Government has also planned to contract a series of loans from foreign markets, being structured as follows: Eurobond issues (EUR 9 billion), loans from the European Commission within the PNRR (EUR 2 billion) and loans from International Financial Institutions (EUR 1.5 billion). It is estimated that approximately EUR 12.5 billion will be obtained from these sources, representing 34.5% of the total financing required.

During the first quarter of the year, the Ministry of Finance aims to obtain financing of RON 18-20 billion. This amount will be raised through the issuance of government bonds on the domestic interbank market.

The Banking system

The solvency ratios remained significantly above the applicable prudential requirements, reaching a level of 22.3%, higher than the European average of 19.9% (recorded in September 2023). This performance shows the solidity of the Romanian banking sector and its ability to absorb external shocks. Romania recorded one of the sharpest decreases in the rate of non-performing loans among European

Patria Bank SA - Bucharest, District 2, Globalworth Plaza Building, Pipera no 42, floors 8 and 10 | Trade Registry number J40/9252/2016 | fiscal code RO 11447021 | RB-PJR-32-045/15.07.1999 | share capital: 327.881.437,60 lei | Patria Bank is registered by the National Supervisory Authority for Personal Data Processing (ANSPDCP) with notification number 753 | Phone [phone] |Fax [phone]| [e-mail] | www.patriabank.ro

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countries. This rate experienced a constant decrease over 9 consecutive years. From 3.35% at the end of 2021, the rate of non-performingloans fell to 2.3% at the end of 2023. This favourable evolution reflects a better management of credit risk by banks and an improvement in financial discipline among borrowers.

6. Commercial activity

Commercial activity related to individual customers

Patria Bank focused in 2023 mainly on financing the consumer needs of individual customers, promoting especially consumer loans without real estate collateral (unsecured loans) and, within them, especially those with fixed interest rates. The Bank supported the retail commercial activity by launching campaigns and promoting consumer loans without real estate mortgage, with fixed interest, but also by optimizing internal workflows that led to providing faster response time to customers.

Outstanding loans (Th. RON equivalent)			2021			2022	2023
Secured					339,028			405,817	365,305
Unsecured					147,307			145,668	152,635
Total					486,335			551,484	517,940
		New loans sales			2021			2022			2023
		(Th. RON equivalent)
		Secured	98,467		120,900		38,973
		Unsecured	95,508		79,033		95,958
		Total	193,976		199,934	134,931

In the general context of uncertainty that governed 2023, both from macroeconomic as well as from geopolitical point of view, the demand for new real estate loans was affected by the postponement of customers' decisions for the acquisitions of residential housing through bank loans. This situation led to the change of banking competition from the new loan segment to the refinancing segment, respectively to the emergence of very aggressive refinancing offers from most competing banks, which triggered the loss of competitiveness of Patria Bank's guaranteed lending offer, and thus the refinancing of some exposures, but also the decrease in sales of new secured loans in 2023 compared to the previous year.

In this specific context, the Bank recorded a higher level of early mortgage loans repayments in 2023 compared with the previous years which, combined with the low volume of new sales in a context governed by a refinancing market, generated a decrease in outstanding loans compared to 2022.

In 2023 the Bank better exploited the opportunities in the area of consumer loan needs without real estate mortgage and with fixed interest, by conducting lending campaigns under very attractive conditions, which generated an increase in outstanding unsecured loans at the end of 2023, of 21% compared to the end of 2022.

Patria Bank SA - Bucharest, District 2, Globalworth Plaza Building, Pipera no 42, floors 8 and 10 | Trade Registry number J40/9252/2016 | fiscal code RO 11447021 | RB-PJR-32-045/15.07.1999 | share capital: 327.881.437,60 lei | Patria Bank is registered by the National Supervisory Authority for Personal Data Processing (ANSPDCP) with notification number 753 | Phone [phone] |Fax [phone]| [e-mail] | www.patriabank.ro

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The bank continued the intensive promotion of the new Patria de Oriunde distribution channel by maintaining competitive interest rates for client's term deposits, both in RON and in EUR. Approximately 23% of new deposits coming from new customers are made through this channel.

The strategy of increasing client term deposits as well as current account continued in 2023. Only in Q4 2023, the volume of new amounts attracted in term deposits from new customers was RON 57.25 million, in line with the Bank's interest in attracting new sources, especially in EUR.

Marketing initiatives to increase the visibility of the Bank's offers unfolded throughout the year, both at the Bank's locations and online or through radio campaigns.

The evolution of current accounts and term deposits shows an annual growth of 2.2%.

Liabilities outstanding (Th. RON equiv.)	2021			2022		2023
Term deposits	1,656,029			1,722,063		1,782,915
Current accounts	336,656			304,817		287,904
Total	1,992,685			2,026,879		2,070,819
		Digital Onboarding "Patria de oriunde"			Q4 2021 - Q4 2023
				No. of clients	Total volume (Th RON)
		New term deposits
			1,125			172,742

Commercial activity related to legal entity customers

Outstanding loans

As a result of the economic context, the level of outstanding loans granted to companies decreased by approximately 6.6% compared to December 2022. However, the Agro business line recorded a positive evolution compared to December 2022, the agriculture segment continuing to be one of the priority segments for the lending activity.

Outstanding loans in 1&2 stages (RON Th. equiv.)	2021	2022	2023
Agro	174,319	174,560	195,708
Micro	426,455	430,587	401,249
SME&Corporate	892,269	1,041,367	940,620
Total	1,493,044	1,646,514	1,537,577

New loan sales

In 2023, new loans to legal entities recorded a decrease of approximately 13% compared to the same period of 2022, with the exception of the Agro business line that recorded an increase of the volume of new sales by approx. 23%.

Patria Bank SA - Bucharest, District 2, Globalworth Plaza Building, Pipera no 42, floors 8 and 10 | Trade Registry number J40/9252/2016 | fiscal code RO 11447021 | RB-PJR-32-045/15.07.1999 | share capital: 327.881.437,60 lei | Patria Bank is registered by the National Supervisory Authority for Personal Data Processing (ANSPDCP) with notification number 753 | Phone [phone] |Fax [phone]| [e-mail] | www.patriabank.ro

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Compared to the results of 2022, in 2023 the Agro segment recorded a loan portfolio growth of 10% (total portfolio) respectively 12% (stage 1 and 2 loans). The volume of loans registered in stage 3 was decreased by 60% (RON 14.5 million in 2023 compared to RON 24.5 million in 2022). Although the volume of loans granted in 2023 for the APIA subsidy registered a decrease of approximately 38% compared to 2022 (RON 18 million in 2023 compared to RON 29 million in 2022), the total volume of new loans granted in 2023 compared to 2022 increased by 22%, mainly due to the 75% increase in the volume of investment loans (RON 84 million in 2023 compared to RON 48 million in 2022). Also, in 2023, the average value granted for investment loans increased by 60% (RON 1,008 thousand in 2023 compared to RON 632 thousand in 2022).

The Microenterprise business line continued its mission of offering financial products and services for small and small businesses (agro and non-agro), the engine of the Romanian economy. The year 2023 ended with a 5% advance in the revenue area, generated by both lending and operational activity. The Bank also continued its partnership with the European Investment Fund (EIF) under the InvestEU Programme (successor to EASI) and ensured, with the support of partners, the financing of small businesses, with limited access to financing. The new volumes granted under the new program exceeded RON 120 mill.

In 2023, the bank's strategy for the SME & Corporate segment was oriented towards a better diversification of risk in terms of the level of the average ticket and the sectors approached for financing, decreasing the percentage of large tickets in the real estate sector. A new sector approached by the bank was the financing of renewable energy production capacities, a sector of national strategic importance. Also, unlike previous years, in order to improve profitability, less financing was granted through the SME Invest Programme. As a result of higher benchmark interest rates and high liquidity in the market, the level of early repayments was significantly higher than the previous years' average.

New loan sales (RON Th. equiv.)	2021	2022	2023
Agro	110,274	95,075	116,543
Micro	273,752	249,372	187,210
SME&Corporate	508,684	424,011	365,369
Total	892,710	768,457	669,121

Liabilities outstanding

The level of the balance of the sources recorded a decrease of approximately 26% compared to December 2022.

Liabilities outstanding (Th. RON equiv.)	2021	2022	2023
Total	923,738	1,417,144	1,051,374

At operational level, Patria Bank continued the innovation process by developing and implementing new products and technologies, thus ensuring a continuous improvement of the organization's

Patria Bank SA - Bucharest, District 2, Globalworth Plaza Building, Pipera no 42, floors 8 and 10 | Trade Registry number J40/9252/2016 | fiscal code RO 11447021 | RB-PJR-32-045/15.07.1999 | share capital: 327.881.437,60 lei | Patria Bank is registered by the National Supervisory Authority for Personal Data Processing (ANSPDCP) with notification number 753 | Phone [phone] |Fax [phone]| [e-mail] | www.patriabank.ro

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