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6 Explanatory information to annual financial reporting of Sberbank of Russia for 2013 Prepared as required by Directive No U of the Bank of Russia On Disclosures by Lending Institutions Related to Their Operations dated 10/25/2013 Subject to approval within annual financial reporting by the General Shareholders' Meeting of Sberbank of Russia on

7 Table of Contents 1. Introduction Sberbank of Russia Banking Group Brief characteristics of operations of the lending institution Primary business areas of the Bank Main 2013 performance figures Economic environment. Events affecting the Bank Overview of the basics of preparation of annual reporting and main provisions of accounting policy of a lending institution Data Comparability in Disclosure Reporting Forms Principles and Methods of Valuation and Accounting of Individual Balance-Sheet Items List of Major Changes in the Accounting Policy Affecting the Comparability of the Bank s Individual Indicators Brief Information on Balance-Sheet Items Inventory Measures Related to Preparation to Draw Up Annual Reporting Information on Adjusting Events after the Reporting Date Non-Adjusting Events after the Reporting Date Information About Non-Application Of Accounting Regulations Changes of the Bank's Accounting Policies for Balance Sheet Accounts Accounts of report on financial results Capital adequacy Information about the risks taken by a credit institution, procedures for their assessment and management Integrated Risk Management Country Concentration of the Bank Assets and Liabilities Credit Risk Liquidity risk Financial market risks Interest rate and currency risks in the banking book Legal Risk Strategic Risk Operational Risk Risk of loss of goodwill Contingent liabilities, forward transactions and provision formed thereon Prospects of the Bank s development Information on transactions with the parties related to the Bank Information on remuneration for key management personnel Earnings per share Structure of the branch network of the Bank Members of the Bank s Supervisory Board and its changes in Information on the share/interests in the Bank held by the members of the Supervisory Board in Members of the Bank s Management Board. Information on the share/interests in the Bank held by the members of the Management Board in

8 1. Introduction Full business name of the Bank: Sberbank of Russia Open Joint Stock Company. Short business name of the Bank: Sberbank of Russia OJSC Legal address: 19 Vavilova St., Moscow , Russia. This explanatory information: has been prepared in accordance with the requirements of Directive No U of the Bank of Russia 1. The Bank has exercised the right accorded by clause 4.1 of the above document for publication of explanatory information for 2013 as stipulated by internal regulatory documents. is part of the 2013 annual financial reporting of 2 Sberbank of Russia 3 prepared pursuant to Russian Accounting Standards 4 and does not include data from consolidated statements of the Bank's Group; is based on published reporting forms prepared in accordance with BoR Directive No U 5 and the Bank's other reporting forms; takes into account events after the reporting date; is presented in millions of Russian rubles, unless otherwise specified; includes comparable figures for 2013 and Sberbank's annual financial reporting includes five published reporting forms and explanatory information (hereinafter annual reporting). In accordance with Russian laws 6, annual reporting is posted on Sberbank's website at and provided to natural persons and legal entities at service outlets. 2. Sberbank of Russia Banking Group The number of the Banking Group members did not change in 2013 and was 204 entities as of January 1, Out of these, the Bank has: direct control of 36 (37) 7 entities; indirect control of 165 (163) entities; indirect control of and direct interest in 3 (4) entities. The Bank draws up its consolidated statements in accordance with the Accounting Policy of Sberbank of Russia Banking Group. The consolidated reporting of Sberbank of Russia Group as of January 1, 2014 includes reporting of 106 (98) entities. Most significant entities are listed in the table below: 1 Directive No U of the Bank of Russia On Disclosures by Lending Institutions Related to Their Operations dated 10/25/2013 (complete with Explanatory Information to Annual Reporting). Hereinafter BoR Directive No U 2 Hereinafter the annual reporting 3 Hereinafter Sberbank of Russia, Sberbank, the Bank 4 Hereinafter RAS 5 Directive of the Bank of Russia No U (as revised on 12/3/2013) On Types, Forms, and Procedures for Compiling and Submitting Reporting Forms to the Central Bank of the Russian Federation by Lending Institutions dated 11/12/2009. Hereinafter BoR Directive No U 6 Pursuant to clause 3.2 of BoR Directive No U 7 The 2012 figures are provided for comparison here and later 8

9 Company Share of control the Group has in the member's authorized capital, % Bank's direct interest 1 Sberbank Leasing Closed Joint-Stock Company % 2 Sberbank Capital Limited Liability Company % 3 Subsidiary Bank Sberbank of Russia Open Joint-Stock Company % 4 PUBLIC JOINT-STOCK COMPANY SUBSIDIARY BANK OF SBERBANK OF RUSSIA % (group of companies)* 5 Sberbank Investments Limited Liability Company % 6 Sberbank Automated Trading System Closed Joint-Stock Company % 7 BPS-Sberbank Open Joint Stock Company (group of companies)* % 8 Promising Investments Limited Liability Company (group of companies)* % 9 SB International S.a.r.l. (group of companies)* % 10 Sberbank Europe AG (group of companies)* % 11 Sberbank Finance Company Limited Liability Company % 12 Setelem Bank Limited Liability Company % 13 DENIZBANK ANONIM SIRKETI (group of companies)* % 14 Auktsion Limited Liability Company % 15 TRANSPORT AMD-2 LIMITED % Bank s indirect interest 1 Krasnaya Polyana Open Joint-Stock Company % 2 Sherigo Resources Limited % 3 Crystal Towers Limited Liability Company % 4 DerWays Automobile Company Limited Liability Company % 5 KIPARISIANA INVESTMENT LTD % 6 Mosstroyvozrozhdeniye Open Joint-Stock Company % 7 SBK Holding Limited Liability Company % 8 Manzherok Ski Resort Closed Joint-Stock Company % * Companies that submit reporting by subgroups (subgroups include an aggregate of 89 (83) companies, including parent companies). The remaining 98 (106) entities have an insignificant effect on the Bank's financial indicators. The Bank is present in other markets through a chain of subsidiary banks and financial companies within the Group of Sberbank. Subsidiary banks operate in the Republic of Kazakhstan, Ukraine, the Republic of Belarus, Switzerland, Austria, the Czech Republic, Slovakia, Hungary, Croatia, Serbia, Slovenia, Bosnia and Herzegovina, Banja Luka within Bosnia and Herzegovina, Turkey, Germany and Bahrain. Within their regions of presence, subsidiary banks offer a wide range of banking services to retail and corporate customers, perform operations in financial markets. All operations are made under licenses obtained from national regulators. Financial companies provide services within their respective specialization in the territory of such countries as the Republic of Kazakhstan, Ukraine, Ireland, the United States of America, Great Britain and Cyprus. This explanatory information is part of Sberbank of Russia 2013 annual RAS reporting and does not include consolidated reporting data from the Sberbank of Russia Group and data on members of the Sberbank of Russia Banking Group. 9

10 3. Brief characteristics of operations of the lending institution 3.1. Primary business areas of the Bank Sberbank;s core business is banking operations: Operations with corporate customers: maintaining settlement and current accounts, opening deposits, offering financing, granting guarantees, supporting export and import operations, cash collection, conversion services, money transfers to corporate customers etc. Operations with retail customers: accepting funds as deposits and investments into the Bank's securities, lending, supporting bank cards, operations with precious metals, buying and selling foreign currencies, payments, money transfers, custody of valuables etc. Operations on financial markets: with securities, derivative financial instruments, foreign currency; investment and raising of funds on the interbank market and capital markets, etc. The Bank operates under General License No for Banking Operations in Rubles and Foreign Currencies issued by the Bank of Russia. In addition, the Bank has individual licenses for banking operations with precious metals, licenses of a professional member of the securities market for broking, dealing, depositary activities, and portfolio management, a license to execute contracts with an exchange intermediary in exchange trading. Sberbank has been a member of the deposit insurance system since January 11, Pursuant to Russian laws, the Bank makes quarterly insurance payments to the Fund of Mandatory Deposit Insurance. In 2013, the Bank incurred 26.6 bn. rubles of expenses for deductions to this Fund, which exceeded the 2012 figure by 15.3% due to a higher volume of funds raised from natural persons Main 2013 performance figures 2013 was completed by Sberbank with the following economic figures 8 : million rubles Change, % Assets 16,275,097 13,581, % Earnings before tax 502, , % Earnings after tax 377, , % Capital 9 1,987,748 1,679, % In 2013, the Bank's assets mainly grew due to credits to legal entities and natural persons. Capital grew through net earnings entered in the capital (345.4 bn. rubles) and issued subordinated bonds worth 1 bn. US dollars. At the same time, the capital decreased during the year by the 2012 amount of dividends (58.7 bn. rubles) and additional investments in subsidiaries, for example, Sberbank Europe AG (13.7 bn. rubles or 330 mln. Euro) Setelem Bank LLC (2.5 bn. rubles) and Sberbank Capital LLC (13.8 bn. rubles). Capital adequacy (N1 ratio) changed from 12.6% to 12.9% during the year. Sberbank's end of 2013 ratings assigned by international agencies: Fitch Ratings Moody s Long-term foreign currency rating: Sberbank BBB Baa1 8 Hereinafter, figures represented in tables may different from estimates as a result of rounded data 9 In accordance with Regulation No. 215-P of the Bank of Russia On Defining Proprietary Funds (Capital) of Lending Institutions dated 02/10/2003 (as revised on 10/25/2013). Hereinafter BoR Regulation No. 215-P 10

11 Russian Federation BBB Baa1 Rating of international obligations Loan participation notes issued as part of Sberbank's MTN program BBB Baa1 Eurobonds of the Russian Federation BBB Baa1 Based on the Dividend Policy adopted by the Supervisory Board, Sberbank intends, subsequently in three years starting with the 2011 distribution, to increase dividend payments to 20% of net earnings due to shareholders and determined on the basis of IFRS annual consolidated financial statements 10. Below see the history of distributions for Sberbank shares over the past two years: Year the dividends are for Percentage of distribution the Bank's net earnings under IFRS Share of the Bank's net earnings under RAS earmarked for payment of dividends Dividends per 1 common share, rubles Dividends per 1 preferred share, rubles Amount of dividends per all common and preferred shares, million rubles Date of the General Shareholders Meeting that makes a resolution on distribution for % 15.3% ,491 6/1/2012 for % 17.0% ,678 5/31/2013 During a meeting in April 2014, the Bank's Supervisory Board will consider a distribution based on 2013 outcomes. Then, the total amount of profit to be distributed and the amount of dividend per 1 share of each category will be recommended to the General Shareholders Meeting for approval. Notice of this will be posted in accordance with Russian laws on Sberbank's website at 10 IFRS International Financial Reporting Standards 11

12 3.3. Economic environment. Events affecting the Bank The economic slow-down is the most important domestic economic trend. Based on a preestimate from the Ministry of Economic development of the Russian Federation, GDP grew 1.3% 11 YoY in Investments in fixed capital lost 0.3% YoY. The growth of industrial production fluctuated around zero. In 2013, capital outflow from developing markets, including Russia, was significant. The Russian ruble lost 7.8% over the year against the dollar and 11.8% against the Euro. The inflation rate was 6.5% YoY, which is higher than the Bank of Russia's target of 5-6%. A number of factors caused the target to be exceeded, including the growth of food prices. The situation with liquidity in the banking sector remained tense in The Bank of Russia continued actively providing liquidity to the banking system, including through new instruments. By end of 2013, debt of the banking system to the Bank of Russia was 4.4 trillion rubles, after 1.7 trillion rubles were added in one year. Interbank market rates remained high (Mosprime 3M was between 6.8% and 7.2% in 2013). Sberbank also used funds borrowed from the Bank of Russia (against securities as collateral under direct repurchase operations and non-market assets and surety as collateral under RF CB Regulation No. 312-P 12 ) and the Federal Treasury (deposits of the Federal Treasury) to support the development rates of its asset operations, mainly customer lending. In the second half-year, after replacement of the Bank of Russia's management, its activities focused on strengthening banking supervision. Apart from the policy to restrict the growth of high-risk unsecured consumer loans, the regulator initiated a campaign to discover banks involved in money laundering and cashing out. Non-compliant banks had their licenses actively recalled (33 licenses in 2013). This slowed down the influx of funds from natural persons to the banking system (+8.5% in the 2nd half of 2013 against +11% in the 2nd half of 2012) and their redistribution in favor om more reliable players. On the contrary, natural persons' deposits grew faster in the 2nd half of 2013 in Sberbank by +13.5% against +7.7% in the 2nd half of YoY the reporting year's figure is compared to the previous year's figure (here and later) 12 Regulation No. 312-P of the Bank of Russia On the Bank of Russia's Procedure of Granting Loans Secured by Assets or Surety to Lending Institutions dated 11/12/2007. Hereinafter BoR Regulation No. 312-P 12

13 4. Overview of the basics of preparation of annual reporting and main provisions of accounting policy of a lending institution 4.1. Data Comparability in Disclosure Reporting Forms Reporting of January 1, 2014 (for 2013) has been drawn up pursuant to BoR Directive No U as amended as of the date of the reporting date. The 2012 and 2013 data is comparable Principles and Methods of Valuation and Accounting of Individual Balance-Sheet Items According to the Regulation of the Bank of Russia No. 385-P 13, the assets and liabilities shall be accounted at their initial value as of the date of their acquisition or incurrence. The initial cost does not change until write-off, sale or repurchase thereof, unless otherwise stipulated by the laws of the Russian Federation and the regulations of the Bank of Russia. In this process: the assets and liabilities in foreign currency (save for the amounts of received and issued advances and advance payments for the goods, work and services delivered, which are recognized on the balance-sheet accounts of settlements with nonresident organizations for business transactions) and precious metals are revaluated as the exchange rate and the metal price change subject to the regulations of the Bank of Russia; the assets, claims and liabilities, the specific value (cost) of which is determined using non-detachable embedded derivatives (NDED) are revaluated (recalculated) on a daily basis with recognition of the resulting differences for the respective income/expenditure items from the date of the transfer of ownership of the asset delivered (the date of work acceptance or service provision) to the actual payment date; the cost of fixed assets changes in the event of further construction, additional equipment, modernization, reconstruction, revaluation or partial liquidation of the respective assets in accordance with the regulatory documents of the Bank of Russia. In particular, according to BoR Regulation No. 385-P, the bank shall revalue the group of homogeneous fixed asset items at their current (replacement) cost. Moreover, fixed assets are regularly revaluated, so that the cost under which they appear in the accounting records and financial statements would not differ materially from the current (replacement) cost. the immovable property temporarily unused in core activities, after its initial recognition, shall be valued at its current (fair) value. The items of the immovable property temporarily unused in core activities are revaluated at their current (fair) value on a quarterly basis. securities are accounted according to the actual costs for their acquisition. The actual acquisition costs for the interest bearing (coupon) securities include, besides the cost of the security at the acquisition price determined under the contract (deal), the interest (coupon) income paid upon its acquisition. If securities are acquired under a contract that is a derivative financial instrument (DFI), the cost of securities is determined subject to the DFI cost. After the initial recognition, the cost of debt obligations changes subject to interest incomes charged and received from the date of the initial recognition of the debt obligations. Interest (coupon) income is charged and reflected in the accounting records on a daily basis. Securities are reflected on the respective balance-sheet accounts of security investments, depending on the purpose of their acquisition. 13 Regulation of the Bank of Russia No. 385-P On the rules of accounting by credit organizations located within the Russian Federation dated 7/16/2012. Hereinafter BoR Regulation No. 385-P 13

14 The securities "at fair value through profit or loss" and the securities "available for sale" shall be subject to daily revaluation at the current (fair) value of securities. derivative financial instruments are valuated at fair value from the initial recognition date. Revaluation of derivative financial instruments is carried out on a daily basis, including on the date of derecognition of a derivative financial instrument List of Major Changes in the Accounting Policy Affecting the Comparability of the Bank s Individual Indicators The changes made to the Accounting Policy for 2013: The Accounting Policy determines that if the property, accounted on the balance sheet without value added tax, is later sold prior to its use for banking transactions, for the lease or prior to its commissioning, the amount of value added tax, allocated to balance sheet account 60310, shall be included in the cost of the sold property prior to recognizing the transaction upon its disposal. a category such as a building (part of a building) with no definite intended purpose is included in real estate that is temporarily out of use in core business; it has been established that when transferring the properties of the housing stock, land improvement facilities into the immovable properties, temporarily unused in core activities and recorded at current (fair) value, the amount of their accrued depreciation shall be written from the off-balance sheet account No the materiality criterion has been defined for reflection of non-credit contingencies in accounts; the amounts of non-credit contingencies exceeding 30 million rubles or 1 million U.S. dollars or 1 million Euros shall be recognized as material to reflect them in off-balance sheet account for non-credit contingencies. Accounting of non-credit contingencies is performed in accordance with BoR Regulation No. 385-P. VAT adjustments under operations with related parties are included to adjustment EARDs in accordance with the Bank's regulatory documents. In this case, after the EARD period introduced for the Bank's branches is completed the VAT adjustments under operations with related parties are reflected in the balance sheet of the Headquarters during January 28 of the new year to February 5 of the new year. 14

15 4.4. Brief Information on Balance-Sheet Items Inventory For the purpose of preparing annual reporting, the Bank has made an inventory as of November 1 or December 1, 2013, of fixed assets, intangible assets, stocks, settlements under demands and liabilities within banking operations and transactions, settlements with debtors and creditors under other operations, and the inventory of cash and valuables, including a check of cash as of January 1, Based on the inventory of assets, measures were taken to eliminate the identified discrepancies between actual availability and accounting data Measures Related to Preparation to Draw Up Annual Reporting In accordance with Directive No U 14 of the Bank of Russia, analytical recordkeeping data was checked in the end of the reporting year: in Account No Settlements with employees related to reportable amounts, in order to find out the duration of accounting of cash to be accounted for and shortages of cash and other valuables resulting from cash miscalculations, embezzlement and other abuse. Measures were taken for persons in charge to repay cash; the debtor and creditor settlement accounts, for the purpose of finding out any income or expense recognized as accounts receivable or payable, any situations in which the limitation period is missed for recovery of accounts receivable as set forth in laws of the Russian Federation. No facts of recognition of income/expenses as accounts receivable or payable or amounts with an expired limitation period have been found out; in Account No. 607 Investments in building (construction), creation (fabrication) and acquisition of fixed assets and intangible assets, for the purpose of finding out items of fixed assets and intangible assets that have been actually commissioned, including when there are maintenance costs involved in the reporting year. No violations have been discovered as a result of the audit. In order to fully reflect results of the Bank's financing activities over the reporting period in the balance sheet, an audit has been made in respect of analytical accounting data and complete reflection in accounts of liabilities and demands posted in the Card of Accounts Chapter D accounts and accounts receivable and payable entered in Accounts No. 474 Settlements under individual operations and No. 603 Settlements with debtors and creditors. The accounts receivable from, and the accounts payable to, the suppliers, contractors, buyers and counterparties were reconciled and bilateral reconciliation statements were sent to them. The required measures were taken to settle and minimize the amounts on the accounts until clarification. 14 Directive of the Bank of Russia No U of 9/4/2013, On procedures for preparing annual financial reporting of lending institutions Hereinafter BoR Directive No U 15

16 4.6. Information on Adjusting Events after the Reporting Date The Bank draws up its annual reporting subject to events after the reporting date ( EARD ) which occur between the reporting date and the date of signing the annual reporting and affect or might affect the Bank's financial standing. Adjusting EARD are recognized in the accounting records. Adjusting EARDs are events confirming, as of the reporting date, the existence of the conditions in which the Bank has operated. The total volume and composition of EARD for 2013 are reflected in the consolidated turnover statement in the form of Appendix 13 to BoR Regulation No. 385-P. According to BoR Directive No U and the Bank s Accounting Policy, the accounting records contain, in particular, the following adjusting EARD: carryover of the balances from the profit and loss accounts of the accounting year to the profit and loss accounts of the previous year, namely: 9,560,946.8 million rubles from the profit accounts; 9,168,311.8 million rubles from the expense accounts; adjustments for taxes and duties payable by the Bank in the amount of 1,321.5 million rubles (increase by 1,565.0 million rubles, decrease by million rubles); adjustment of loss provisions (including for contingent credit-related liabilities) created as of the reporting date, subject to information on the conditions prevailing as of the reporting date received when drawing up the annual reporting, in the amount of 7,536.0 million rubles (increase by 7,782.4 million rubles, decrease by million rubles); receipt after the reporting date of source documents confirming the transactions performed before the reporting date and/or determining (specifying) the cost of the work, services and assets for such transactions and specifying the income and expenditure reflected in the accounting records for the amount of 6,128.2 million rubles (increase in income by 1,179.3 million rubles, increase in expenses by 7,307.5 million rubles); 4.7. Non-Adjusting Events after the Reporting Date In February 2014, the Group made its seventeenth issue of loan participation notes within the MTN borrowing program worth 1 billion US dollars or its ruble equivalent of 35.8 bn. rubles as of the date funds were raised. These notes are issued in accordance with requirements of Regulation No of the Bank of Russia and this financing has been approved by the Bank of Russia for inclusion by the Bank into sources of supplementary capital. The maturity of these notes is in February 2024 (provided that certain conditions are met the Bank may repay these notes in February 2019), the contract fixed rate is 5.5% per annum. In March 2014, the Bank made a private placement of its eighteenth and nineteenth issues of loan participation notes within the MTN borrowing program worth 500 mln. US dollars and 500 mln Euro, respectively, with a fixed rate of 4.15% for the USD issue and 3.08% for the Euro issue and maturity in March From January 1 to the issue date of this annual reporting, the situation with economic and political uncertainty in Ukraine has aggravated. This in turn resulted in the removal of the Ukrainian President and the government by the Ukrainian Parliament and appointment of the acting Ukrainian government. The Crimean referendum on the status of Crimea was held on March 16, The official outcomes of the referendum are not known as of the issue date of this annual reporting. 15 Regulation No. 395-P of the Bank of Russia On Defining Proprietary Funds (Capital) of Lending Institutions dated 12/28/2012 (Basel III) (as revised on 10/25/2013). Hereinafter BoR Regulation No. 395-P 16

17 In addition, the Ukrainian Hryvna lost 17% against leading foreign currencies from January 1 to March 12, The National Bank of Ukraine restricted the volume of purchase of foreign currencies in the interbank market. International rating agencies downgraded the sovereign debt rating of Ukraine. All above events resulted in a significant increase in volatility of international markets of loan capital. The effect that these and further potential negative events in Ukraine can have on results of the financing activities and position of the Bank itself and the group of Sberbank of Russia cannot be reliably evaluated as of now Information About Non-Application Of Accounting Regulations Branches and the central office of the Bank confirm the compliance of banking operations, recorded in the accounting reports, accounts description provided in Regulations of the Bank of Russia 385-P. No facts of non-application of accounting regulations are detected Changes of the Bank's Accounting Policies for 2014 For the purpose of accounting the Accounting Policies for 2014 include the following main changes: The main changes are due to the entry into force of the Directive of the Bank of Russia No.3106-U 16 and No U 17 from January 1, In particular, in accordance with the Directives mentioned above, Section 3.12 "Accounting considerations for derivative financial instruments" is added with accounting considerations for contracts subject to the Regulations of the Bank of Russia No. 372-P 18. The fair value of such contracts is subject to daily determination. Section "Accounting of interbank claims and liabilities" is amended. Changes are due to transition to a separate accounting procedure for interbank claims and liabilities on clients transfers and insider distribution (redistribution) transactions of assets, liabilities, equity (capital) and property. The procedure of creating a provision for future expenses is defined - a reserve will form for the payment of quarterly bonus, remuneration for annual performance and pensions of employees within the scope of the Bank's corporate pension programme. Section 3.9 "Accounting of securities transactions" defines the reclassification terms of "held until redemption" debts into "available for sale". Reclassification is subject to one of the following conditions: as a result of an event occurred due to no fault of the Bank (extraordinary event that could not have been reasonably predicted by the Bank); for the purpose of disposal in less than 3 months to maturity; for the purpose of disposal in an amount not exceeding 10% of the total value of the "held until redemption" portfolio. When transfer the securities from "held until redemption" portfolio to "available for sale" portfolio and non-compliance with one of the conditions mentioned above, all the securities in "held until redemption" portfolio are subject to transfer to "available for 16 Directive of the Bank of Russia "On Amendment of Regulations of the Bank of Russia "On the accounting procedure for derivative financial instruments", No. 372-P dated 7/4/2011" No.3106-U, dated 06/11/ Directive of the Bank of Russia "On Amendment of Regulations of the Bank of Russia No. 385-P "On the rules of accounting by credit institutions located within the Russian Federation", dated 7/16/2012" No U, dated 06/11/ Regulations of the Bank of Russia "On the accounting procedure for derivative financial instruments", No. 372-P, dated 04/07/11 (version dated 06/11/2013) 17

18 sale" portfolio. In this case, the Bank is not permitted to create "held until redemption" portfolio for a period of two years following the year of such transfer. Procedure of costs accounting for reconstruction of units transferred to the category of real estate temporarily unused in operating activities is defined - it will be recorded on the balance sheet account "Investments in construction (building) of real estate units temporarily unused in operating activities." In the case of reconstruction of the real estate unit, part of which is transferred into the real estate temporarily unused in the operating activities, and the other part is accounted in the fixed assets, costs accounting for reconstruction of such objects is recorded on the balance sheet account "Construction capital costs". Upon completion of work the accumulated reconstruction costs for the real estate unit are distributed between its parts proportionally to the area of the relevant parts of the unit and accounted for increase of the value of the fixed asset and real estate temporarily unused in the operating activities. Due to publication of Directive of the Bank of Russia No U Section 5 "Preparation of Annual Report" is amended in terms of providing references to the regulations in line with current legislation. The terms and dates of reflecting EARD by divisions of the Bank are also clarified. 18

19 5. Balance Sheet Accounts Cash and cash equivalents million rubles 1 Jan'14 1 Jan'13 Petty cash Cash on accounts of the Bank of Russia Funds on correspondent accounts of credit institutions of the Russian Federation Funds on correspondent accounts in foreign banks Funds in credit institutions with risk of loss Cash and cash equivalents, total Structure of loan debt and its equivalents (prior to deduction of created provisions for possible losses) million rubles 1 Jan'14 relative share, % 1 Jan'13 relative share, % Deposits with the Bank of Russia % % Interbank loans and other loan debts of banks % % Funding of subsidiary bank % % Sberbank Europe AG Loan debt and its equivalents of legal entities, % % including: Loans to legal entities - residents % % Loans to legal entities - non-residents % % Loans to government organizations % % Claims for the debts incurred as a result of the Bank entrance into cession agreements with deferred payment % % Claims for return of funds provided for transactions conducted with securities repayable without recognition of the securities received % % Other claims % % Loan debt and its equivalents of individuals, % % including: Loans to individuals % % Claims for the debts incurred as a result of the % % Bank entrance into cession agreements with deferred payment: Loan debt, total % % Structure of loan debt and its equivalents in terms of currencies (prior to deduction of created provisions for possible losses) million rubles 1 Jan'14 relative share, % 1 Jan'13 relative share, % RUB % % USD % % EURO % % Other currencies % % Loan debt, total % % 19

20 Structure of the loan portfolio of individuals* million rubles 1 Jan'14 relative share, % 1 Jan'13 relative share, % Residential loans, total % % incl. mortgage loans % % Car Loans % % Other consumer loans % % Loans to individuals, total % % * According to Form "Information about credit institution's assets" The Bank's loan portfolio growth for individuals is provided by residential loans (48%) and consumer loans (52%). Structure of financial assets assessed at their fair value through profit or loss: million rubles 1 Jan'14 1 Jan'13 Russian bonds Subfederation bonds Bonds of banks Corporate bonds Bonds of foreign governments Shares Derivative financial instruments Financial assets assessed at their fair value through profit or loss, total Structure of net investments in securities and other financial assets available for sale: million rubles 1 Jan'14 1 Jan'13 Russian bonds Subfederation bonds Bonds of banks Corporate bonds Bonds of foreign governments Shares Investments in subsidiaries and affiliates Other interest Net investments in securities and other financial assets available for sale, total Net investments in securities held until redemption: million rubles 1 Jan'14 1 Jan'13 Russian bonds Subfederation bonds Corporate bonds Net investments in securities held until redemption, total Funds from customers other than credit institutions: 20

21 million rubles 1 Jan'14 1 Jan'13 Funds of individuals at call fixed term Funds of legal entities current / settlement fixed term Funds in precious metals and others funds of individuals funds of legal entities Funds of individuals and legal entities, total Debt securities issued: million rubles 1 Jan'14 1 Jan'13 Savings Certificates Bills Certificates of Deposit Debt securities issued, total: Other borrowed funds: million rubles 1 Jan'14 1 Jan'13 accounted in the balance sheet* Loan participation notes issued under the MTN program (except line 13 for subordinated) Notes issued under the ECP program line 13 Syndicated loans line 12 Banking trade finance transactions line 12 Subordinated loans, total: loans from the Bank of Russia line 11 loans under the MTN program line 13 Other borrowed funds, total: *This column shows the lines of Form in which these borrowed funds are accounted in accordance with the type of financial liability 19 Program for issuance of euro commercial securities 21

22 6. Accounts of report on financial results Bank's transactions with the greatest impact on the change in the financial result. Operating income before creating provisions 20 earned by the Bank in 2013 amounted to billion rubles against billion rubles for Net interest income and net commission income are also higher than the indicators of the previous year (16.9% and 18.3%, respectively). Interest income by type of assets: million rubles NOSTRO accounts Funds with the Bank of Russia Loans to banks Loans to legal entitites Loans to individuals Income for previous years, fines and penalties Proceeds from sales of insurance products to individuals Securities assessed through profit or loss Securities available for sale Securities held until redemption Interest income, total Interest income on loans to customers includes commission income on credit transactions. More than a half of the Bank's interest income is received on loans to legal entities which balance increased by 15.1% for a year 21. Increase in interest income from loans to individuals is mainly due to volume growth in retail lending. Balance of individuals loan portfolio for 2013 increased by 31.8%. Most significant growth both in absolute and relative terms was noticed for residential loans: by 384 billion rubles or 38.4%. Income for previous years, fines and penalties are received by the Bank from the clients under working with distressed assets. Proceeds from the sale of insurance products increased due to development of this business by the Bank, including promotion of long-term types of life insurance and life insurance with an investment component. 22 Interest income from investments in securities increased, primarily due to available for sale portfolio. The main factor was acquisition of the Russian Federation government bonds and corporate bonds with investment grade rating during the year. These investments are due to, primarily, the Bank's desire not to reduce the share of securities being liquid assets in the total assets structure in terms of their continued growth. The increase in interest income from interbank investment of funds is primarily due to the growth of interbank loans, including loans to subsidiary banks. Interest costs by types of the funds borrowed: million rubles Operating income before creating provisions is calcualted based on Form as follows: line 18 minus line 4 minus line 14 minus line 15 minus line Portfolio growth is shown before provisions deduction 22 This is income reflected on symbol "Income from consulting and information services" in terms of individuals. Other income from similar activities, including proceeds from sale of mandatory pension insurance agreements are recognized on symbol "Commissions from agent services on brokerage and similar agreements" and according to the regulations for the Form are accounted in the article "Commission income". When selling insurance products Sberbank does not act as an insurer. The total proceeds from sales of insurance products in 2013 amounted to 25 billion rubles. 22

23 LORO correspondent accounts Deposits of the Bank of Russia Term deposits of banks Current accounts of legal entities Term deposits of legal entities On call accounts of individuals Term deposits of individuals Costs for previous years, fines and penalties Bonds Subordinated loan Promissory notes, savings and deposit certificates Interest costs, total The trend of interest costs reflects the fact that in 2013 to maintain high asset growth Sberbank used repos with the Bank of Russia and deposits of the Federal Treasury. In addition, the Bank diversified the passive base by issuing Eurobonds and subordinated bonds, as well as by raising funds under the ECP program. Subordinated loan was obtained from the Bank of Russia in late During 2013 its balance didn't change and amounted to 300 billion rubles. Interest costs on the funds of individuals increased due to the growth of deposits. Debt securities issued include promissory notes and deposit certificates of legal entities, promissory notes and savings certificates of individuals. Interest costs on issued debt obligations increased due to the funds raised in the savings certificates by Sberbank. Commission income and expenses: million rubles Banking cards transactions and acquiring Payment transactions Cash Transactions Account management Bank Guarantees Currency control Foreign currency transactions Trade Finance Transactions Budget funds service Safe deposit box leasing services Securities trading Agency and other services Others Commission income, total Banking cards transactions Payment transactions Cash Collection Service Others Commission expenses, total Net commission income The main growth was secured by commissions on banking cards transactions and acquiring operations. The key factor is the growth of cards issued and the number of acquiring service customers. Commission expenses increased due to growth in banking card transactions volume. In particular, the volume of payments by payment systems increased. 23

24 Factors affecting the trend of provisions for possible loan losses: The Bank created / added provisions as a result of: 100% 100% 1. loans issued 40% 42% 2. changes in loan quality 53% 50% 3. other reasons 7% 8% The Bank restored / reduced provisions as a result of: 100% 100% 1. repayment of loans 63% 72% 2. changes in loan quality 16% 12% 3. other reasons, incl. fluctuations of foreign exchange rate 3% 6% to ruble determined by the Bank of Russia 4. write-off of bad loans 18% 10% These changes in provisions (excluding write-offs of bad loans) are reflected in the Report on financial results. As a result for 2013 the Bank's expenses for creating the provisions on loans 23 amounted to 39.7 billion rubles, in 2012 this indicator was 2.9 billion rubles. Operating expenses: million rubles Personnel upkeep expenditure Administrative expenses, depreciation Expenses from sales of own receivables Contributions to the Mandatory Deposit Insurance Fund Others Operating expenses, total Bank slowed down the growth of operating expenses compared to 2012 due to the Bank's program of costs optimization. Sberbank's profit in 2013 is higher than the result in Before-tax profit amounted to billion rubles. (in 2012: billion rubles). Profit after tax amounted to billion rubles. (in 2012: billion rubles). 23 Line 4 of Form

25 7. Capital adequacy Information on equity (capital) in million rubles 1 Jan'14 1 Jan'13 Share capital (ordinary shares) Paid-in capital Reserve fund Profit for the year (audited) Profit for previous years (audited) Intangible assets Investments in stocks (shares) of subsidiaries / subsidiary banks Fixed capital Increase in value of assets due to revaluation Profit for the year (not audited) Subordinated loan Share capital (due to the revaluation of fixed assets) Share capital (preference shares) Additional capital Equity (capital) Sberbank's equity (capital) is calculated in accordance with the Regulations of the Bank of Russia No. 215-P. Net profit for the 1h 2013 is included in the calculation of the fixed capital as of 01/01/2014 based on the audit of statements as of 01/07/2013. Sources of capital growth in 2013 include net profit and invested subordinated bonds in the amount of 1 billion USD. Information about capital instruments Shares million rubles 1 Jan'14 Ordinary shares Nominal price in terms of the funds received in payment for shares Nominal price in terms of capitalisation of fixed assets revaluation Paid-in capital Preference shares Nominal price in terms of the funds received in payment for shares 50 Nominal price in terms of capitalisation of fixed assets revaluation Paid-in capital - 25

26 Subordinated loans as of January 1, 2014 Subordinated loan from the Bank of Russia Subordinated loan from the Bank of Russia Subordinated bonds Subordinated bonds currency amount raising date redemption date rate note RUB % Granted in accordance with the Federal Law No. 173-FZ, subject to gradual exclusion from the capital calculation from 01/01/2018 acc. to the Regulation No. 395-P RUB % Granted in accordance with the Federal Law No. 173-FZ, subject to gradual exclusion from the capital calculation from 01/01/2018 acc. to the Regulation No. 395-P USD % Subject to gradual exclusion from the capital calculation from 01/01/2014 acc. to the Regulation No. 395-P USD % Meets all the requirements of the Regulation No. 395-P Information about the risk-weighted assets million rubles 1 Jan'14 1 Jan'13 Credit Risk Market Risk Operational Risk Risk-weighted assets, total Risk-weighted assets are calculated in accordance with the Instruction of the Bank of Russia No.139-I 24, the Regulations of the Bank of Russia No. 313-П 25 (for statements as of 01/01/2013), the Regulations of the Bank of Russia No.387-П 26 (for statements as of 01/01/2014), the Regulations of the Bank of Russia No.346-П 27. Reduced marketing risk is due to the entry into force of the Regulations of the Bank of Russia No. 387-P, according to which marketing risk for securities available for sale in Sberbank's portfolio is not calculated. Overall growth in risk-weighted assets is due to the growth of Sberbank's assets in Information about the capital adequacy ratio 1 Jan'14 1 Jan'13 Capital adequacy ratio (Н1) 12.9% 12.6% Capital adequacy ratio (Н1) of Sberbank in 2013 was above the minimum acceptable value of 10%. 24 the Instruction of the Bank of Russia "On prudential supervision ratios for banks" dated 03/12/2012 No.139-I (version dated 25/10/2013) 25 Regulations of the Bank of Russia "On the procedure of marketing risk calculation by credit institutions", No. 313-P, dated 14/11/2007 (version dated 28/04/2012) 26 Regulations of the Bank of Russia "On the procedure of marketing risk calculation by credit institutions", No. 387-P, dated 28/09/2012 (version dated 25/10/2013) 27 Regulations of the Bank of Russia "On the procedure of operation risk calculation", No. 346-P, dated 03/11/2009 (version dated 03/07/2012) 26

27 8. Information about the risks taken by a credit institution, procedures for their assessment and management Since Sberbank of Russia is a parent company of the consolidated Group, whereby the risk management is mostly carried out on the Group level, some descriptive information about the risk management approaches is presented in relation to the Group Integrated Risk Management The Group constantly improves the system of risk management, ensuring compliance with the best practices, guidelines of regulatory authorities, and the principles and rules stated in the Basel Accord. Key decisions on the development of the Group's risk management system are made by: Resolution of the Management Board of the Bank "On establishment of integrated risk management for Sberbank of Russia Group, based on the principles of the Basel Accord" dated 30/05/2011; Order of CEO, Chairman of the Management Board of the Bank "On arrangement of works to create an integrated risk management of Sberbank of Russia Group based on the principles of the Basel Accord" dated 06/12/2011. As part of these solutions during it is assumed a consistent implementation of methods and procedures for risk management at the integrated level and at the level of management system for individual types of risks. In particular, Development Strategy for the period up to 2018 provides further implementation of the "advanced" approaches to risk management in the Bank and the Group (including new entrants), increased use of risk tools and models for quantitative risk assessment in business processes, development of performance assessment taking into account risk, increased risk culture level at all levels. Integrated Group risk management system is determined by the Policy for Integrated Risk Management. 28 According to the provisions of this document, Group Risk Management is a three-level process: The first level of management is carried out by the Management Board and the Group Risk Committee of Sberbank of Russia OJSC - overall risk management of the Group. The result of this procedure includes but not limited to creation of requirements and limitations to processes of control over individual risk groups, to processes of risk management in the Group members, and also definition of collegial bodies and structural subdivisions of the Group members, responsible for managing the allocated risk groups. The second level of management is carried out by the Bank Committees and managers of individual Group risk groups - individual Group risk groups management within the limitations and requirements set forth at the first level of management. The third level of management is carried out by collegial bodies and structural subdivisions of the Group members - individual risk groups management in the Group members within the requirements and restrictions set forth at the first and second level of management. 28 Policy for Integrated Risk Management of Sberbank of Russia OJSC approved by the Bank's Management Board on 29/02/