Capital Markets Overview

1. Capital MarketsOverview November 2006 Martin Vozar

2. Global Trends Commodities: • Crude oil traded little changed above $59 a barrel on higher demand for fuel in the U.S., the world’s biggest consumer, and as Middle Eastern producers trimmed shipments. Demand for gasoline and fuels increased to the highest since December 2005. U.S. crude inventories fell 3.21 million barrels in the last week in the biggest decline since October 2005.

3. Global Trends • Fixed income: • US: As expected, the FOMC heldpolicy rates unchanged at 5.25% on 25 October monetary policy meeting. New meeting is planed at 12/12/06. • “Readings on core inflation have been elevated, and the high levels of resource utilization has the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.” • 10/25/2006 FOMC Statement • Japan: The BoJ held its key interest rate at 0.25% on 13 October monetary policy meeting. • Europe:As expected, the ECB increased its key policy rate by 25bp to 3.25% on 5 October meeting.

4. US – Economy • Initial jobless claims for the week of 15 October declined more than investors expected to 299.000 from a 309.000 the week before 10/08 (10/1, 302,000). Four week avg. 307.250. • Existing home sales declining by –1.9% from august to an annual amount of 6.18 million. Sales of previously owned houses in the U.S. fell last month to the lowest level in almost three years. • Prices of single-family homes suffered in September their greatest annual decline since at least 1969 (-2.5% compare to September 2005). • • The University of Michigan’s preliminary index of consumer sentiment jumped more than expected as gasoline prices fell and stock rose. Index increased to 92.3 from 85,4 in September (average level from 1978 is at 88.3). • The U.S. unemployment rate is a five-year low in September 4.6% (August 4.7%) • • The national US Homebuilders survey for September dropped to a 15-year low this month as sales slowed and profits dropped. Index fell to 30 from 33 in August. It was the eight consecutive monthly drop in the index.

5. US – Economy • American CPI prices fell last month by the most since November. The CPI MoM dropped 0.5% in September following 0.2% increase in August. The Core CPI climbed 0.2% for a third consequently month a row. • Headline CPI prices rose 2.1 percent during the 12 months ended in September compared with 3.8% in the period ended in July and 4.1% in June. Core prices rose 2.9 percent from a year earlier, the biggest 12-month jump since February 1996 (August 2.8%). • Headline PPI fell in September by the most in more than three years and industrial production dropped, evidence that a slowing economy is starting to cool inflation. PPI decreased to -1.3% from +0.1% a month earlier. The PPI corejumped in September by 0.6% (MoM).

6. US – FX Market • The dollar slid to the lowest in almost three weeks against the euro on anticipation further evidence of a cooling housing market will validate the Federal Reserve’s decision to keep borrowing costs unchanged (The FED paused after a two-year series of rate increases in August).

7. Two-year T-bond yield (Reuters Poll) Q406 Q107 Q207 Median 5.00% 4.85% 4.73% Max 5.40% 5.75% 5.60% Min 4.10% 4.05% 3.80% US – Fed funds rate • Fed leave’s its benchmark interest rates at 5.25% on 25 October FOMC meeting. • Yield of the U.S. treasuries are increased from last month levels. Mainly on short and mid term maturity.

8. US – Money and Bond Markets

9. US - Yield Curve Changes

10. EU – Economy • Unemployment in Euro zone increased in August from a record low as signs of a slowdown in the global economy. The jobless rate rose for the first time since November 2003 increasing to 7.9 percent from 7.8 percent in July. • Inflation in EMU slowed to a 2 ½-year low in September as falling oil prices pushed the rate below the ECB’s target (2%). CPI rose 1.7 percent from a year earlier (expectations 1.8%), below the 2.3 percent gain in August. • M3 growth in Euro zone unexpectedly accelerated in September. Grew 8.5% from a year earlier after gaining an annual 8.2 percent in August. • In October, the German IFO survey regained some of the (little) ground lost in prior two months, moving from 104.9 in Sep to 105.3 in Oct. While slightly below the June peak, the index still at a very elevated level in historical comparison.

11. ECB Refi Rates (Reuters Poll) Two-year schatz yeld (Reuters Poll) 4Q 06 Q406 1Q 07 Q107 Q37 2Q 07 Median Median 3.78% 3.50% 3.50% 3.75% 3.75% 3.75% Max Max 3.50% 4.10% 4.00% 4.25% 4.00% 4.25% Min Min 3.50% 3.25% 3.25% 3.50% 3.20% 3.50% ECB • As expected, the ECB changed basic rate by 25bpto 3.25% on 5 October meeting.

12. EU – Bond Market

13. EU - Yield Curve Changes

14. US vs. EU Yield Curve Changes

15. US vs. EU Spread Changes

16. Slovak MM, Fixed income and FX • September PPI decreased to 7.5 % from August’s level 8.8% YoY. The monthly PPI decreased by –0.7% (+0.6% in August). • September CPI decreased to 4.6 % from August’s level 5.1% YoY. The monthly CPI decreased by –0.3% (0.0% in August). • Budget balance in September was better than previous month. –5.1 bill. from -5.7 bill in August (YoY). • Unemployment rate fall under 10%, 9.9% in August, 10.2% in July.

17. Slovak MM, Fixed income and FX • Slovak koruna may extend gains from a record against the euro on speculation the central bank will increase its main interest rate for a fifth time this month to rein in inflation and because of the euro adoption timetable.

18. Slovak MM, Fixed income and FX

19. Slovak MM, Fixed income and FX

20. CEE Central Banks from CEE region, interest rates: • SKK changed 5.00 % (+0.25bp, new meeting 11/28/2006) • HUF changed8.00% (+0.25bp, new meeting 11/20/2006) • PLN unchanged 4%(new meeting 11/29/2006) • CZK unchanged 2.50%(new meeting 11/30/2006)

21. CEE Yield curves comparison

22. Credit Markets Overview

23. Credit trends Moody’s Speculative Grade Default rate • The default rate fell below 1.5% in September from 1.6% in August, as the substantial decline isprimarily due to several very large defaults in September 2005 August: 2 corporate defaults • Radnor Holdings Corp. $135mil. • Atlantic Mutual Insurance Company $100mil.

24. Credit trends • Credit has traded well in range and slightly tighter in October, helped by strong equities and solid corporate earnings – Q3 results are coming above expectations • Elevated shareholder friendly activity is putting pressure on leverage and credit spreads but this is offset by strong profit growth. This trend will most probably continue to year-end • Declining default rates and reduced positions by credit investors are supportive of further spread tightening to year-end.

25. Credit trends Europe US

26. Investment portfolio managementContacts:Jan Pataky Head of Investment portfolio management (+421 2) 5850 5463 pataky.jan@slsp.sk Andrea Osuchova Portfolio Manager (+421 2) 5850 5392 osuchova.andrea@slsp.skLubomir Golany Portfolio Manager (+421 2) 5850 5412 golany.lubomir@slsp.sk Alena Teplicanova Quant Analyst (+421 2) 5850 5382 teplicanova.alena@slsp.skMartin Vozar Research (+421 2) 5850 5388 vozar.martin@slsp.skMichal Klestinec Research (+421 2) 5850 5403 klestinec.michal@slsp.sk

27. Disclaimer:This report is meant as supplementary economic information for our clients and is based on information available on the date of printing. Our analysis and conclusions are of a general nature and do not take into account the individual circumstances or needs of investors such as income potential, tax situation or the level of risk he or she is prepared to undertake. Information about previous performance does not guarantee future performance. Although we judge our sources to be reliable, we do not accept any responsibility for the completeness and accuracy of our information. This report is neither an offer to sell nor an offer to buy any securities. Erste Bank der oesterreichischen Sparkassen AG confirms that it has approved any investment advertisements contained in this material. Erste Bank der oesterreichischen Sparkassen AG is regulated by the Financial Securities Authority for the conduct of investment business in the UK.