JSC REGIONALA INVESTICIJU BANKA INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE 6 MONTH PERIOD ENDED 30 JUNE 2010

JSC REGIONALA INVESTICIJU BANKA

CONTENTS Report of the Management 3 The Supervisory Council and the Board of Directors of the Bank 4 Statement of Responsibility of the Management 5 Auditors Report 6 Financial Statements: Statement of Comprehensive income 7 Statement of Financial Position 8 Statement of Changes in Shareholders Equity 9 Statement of Cash flows 10 Notes to the Financial Statements 11-24 JSC Regionala Investiciju banka J. Alunana Street 2, Riga, LV 1010, Latvia Phone: (371) 67508989 Facsimile: (371) 67508988 Registration number: 4000 356 3375 2

REPORT OF THE MANAGEMENT JSC REGIONALA INVESTICIJU BANKA The first half of 2010 for JSC "Regional Investment Bank (hereinafter referred to as RIB or Bank) has been a phase of moderate growth. Despite the significant provisions for credit losses, in the last sixmonth period all the key financial indicators have increased and the Bank concluded the half year with profit of 445,702 lats. Performance of the Bank during the reporting period Compared with the end of the previous year the number of customers have increased by 14.3%, increasing the number of transactions and contributing to the sales and portfolio growth. Compared to 31 December 2009 deposits portfolio of RIB as at 30 June 2010 have increased by 13.6% or 14.9 million, RIB assets have grown by 13.7% or 17.3.million, while loan portfolio have increased by 2.9 million. The Bank has started more intensive lending in the Latvian market and has improved quality of the Trade financing service, which significantly increased customer interest in the use of this service. Also in this half year the number of issued payment cards has increased by 12.7% as well as number of transactions has increased significantly, the payment card turnover in the half year amounted 2.7 million. The volume of outgoing transfers have increased by 15% compared to same period last year. At the beginning of this year, a new USD currency correspondent account was opened in the U.S.A., which shows that the RIB has acquired a status of trusted partner and now the Bank is able to process customers' payments faster. From 1 April 2010 RIB has become a member of all NASDAQ OMX Baltic stock exchanges, thus improving transaction execution speed and quality of the financial instruments. At the end of the first half year 2010 the client portfolio of RIB amounted to 103.15 million and the Bank's securities portfolio amounted to 10.11 million. During the first half of the year, the Bank has hired six new employees and added a new structural unit to its organizational structure Department of Coordination of Branches. Many resources are contributed to development and improvement of the processes and procedures within the Bulgarian branch. As a result at the beginning of July, the Bulgarian branch is ready to lend to the first borrower, from May the branch offers to the clients use of the Internet bank. The branch has attracted new depositors and as at 30 June 2010 has created a portfolio of deposits amounted to BGN 1,529,892. Also in this half year the additions to the Internet bank system and the Bank's accounting program have been made. To improve and optimize the daily work of the Bank, new projects for improvement and implementation of other IT systems have been started. Plans and Prospects for the Second Half of 2010 In the second half of 2010 RIB will continue to work on the process of development of Bulgarian branch, will continue with intensive lending policy, thus setting the goal to substantially increase the loan portfolio. In the future, the intention is to improve the payment card products, offering the Customers higher level credit cards with various premium services. 3

THE SUPERVISORY COUNCIL AND THE BOARD OF DIRECTORS OF THE BANK As at 30 June 2010 and as at the date of signing the accounts: The Council Date of appointment Jurijs Rodins Marks Bekkers Dmitrijs Bekkers Vadims Morohovskis Arkādijs Fjodorovs Alla Vanecjancs The Board Haralds ĀboliĦš Oleksandr Kuperman Daiga Muravska Chairman of the Council Deputy Chairman of the Council Member of the Council Member of the Council Member of the Council Member of the Council Chairman of the Board and President Member of the Board Member of the Board Re-elected 31.08.2009 Re-elected 31.08.2009 Re-elected 31.08.2009 Re-elected 31.08.2009 Re-elected 31.08.2009 Re-elected 31.08.2009 Re-elected 31.08.2009 Re-elected 31.08.2009 Re-elected 31.08.2009 4

STATEMENT OF RESPONSIBILITY OF THE MANAGEMENT The Supervisory Council and the Board of Directors (hereinafter - the Management) of the Bank are responsible for the preparation of the financial statements of the Bank. The financial statements on pages 7 to 24 are prepared in accordance with the source documents and present fairly the financial position of the Bank as at 30 June 2010 and the results of its operations and cash flows for the 6 months period ended 30 June 2010. The financial statements are prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting on a going concern basis. Appropriate accounting policies have been applied on a consistent basis. Prudent and reasonable judgements and estimates have been made by the Management in the preparation of the financial statements. The Management of the Bank is responsible for the maintenance of proper accounting records, the safeguarding of the Bank s assets and the prevention and detection of fraud and other irregularities in the Bank. They are also responsible for operating the Bank in compliance with the Law on Credit Institutions, regulations of the Financial and Capital Market Commission, Bank of Latvia and other legislation of the Republic of Latvia applicable for credit institutions. 5

AUDITORS REPORT 6

STATEMENT OF COMPREHENSIVE INCOME JSC REGIONALA INVESTICIJU BANKA Notes Six months ended 30 June 2010 Six months ended 30 June 2009 Interest income 4,646,888 4,686,302 Interest expense (2,825,484) (2,392,236) Net interest income 1,821,404 2,294,066 Provisions for loan impairment (977,446) (1,234,971) Net interest income after provision for loan impairment 843,958 1,059,095 Fee and commission income 1,282,003 999,797 Fee and commission expense (334,356) (204,028) Net fee and commission income 947,647 795,769 Profit /(loss) on securities trading, net 147 (23,020) Profit on revaluation of securities at fair value through profit or loss, net 96,693 65,891 Profit /(loss) on derivative financial instruments revaluation, net 8,502 (114,683) Profit on operation with foreign exchange, net 108,159 227,930 Profit from revaluation of foreign exchange, net 256,200 59,700 Other operating income 31,040 9,442 Administrative expense (1,623,036) (1,597,858) Amortisation and depreciation charge (144,943) (123,863) Other operating expense (30,232) (28,356) Profit before income tax 494,135 330,047 Income tax expense (48,433) (1,889) Profit for the period 445,702 328,158 Total comprehensive income for the period attributable to shareholders 445,702 328,158 The financial statements on pages 7 to 24 have been approved by the Supervisory Council and the Board of Directors of the Bank and signed on their behalf by: The accompanying notes on pages 11 to 24 are an integral part of these financial statements. 7

STATEMENT OF FINANCIAL POSITION JSC REGIONALA INVESTICIJU BANKA Notes 30.06.2010. 31.12.2009. Assets Cash and balances with the Bank of Latvia 11,383,036 6,665,204 Balances due from banks 3 48,837,583 40,265,263 Loans and advances to customers 4 70,537,498 67,548,207 Financial assets at fair value through profit or loss 5 10,110,430 10,138,920 Derivative financial instruments 58,633 31,768 Intangible assets 416,877 461,740 Property and equipment 403,865 478,310 Other assets 1,171,021 202,892 Deferred expenses 96,679 98,539 Corporate income tax 447,911 300,846 Total assets 143,463,533 126,191,689 Liabilities Balances due to banks 3,002,349 1,682,288 Due to customers 6 124,138,060 109,233,485 Derivative financial instruments 61,864 43,501 Other financial liabilities 1,023,057 265,427 Deferred income and accrued expenses 259,196 433,683 Deferred income tax liability 12,769 12,769 Total liabilities 128,497,295 111,671,153 Equity Share capital 10,200,000 10,200,000 Retained earnings 4,320,536 4,266,983 Comprehensive income for the period 445,702 53,553 Total equity 14,966,238 14,520,536 Total liabilities and equity 143,463,533 126,191,689 Commitments and contingent liabilities Contingent liabilities 161,145 537,955 Financial commitments 8,999,049 6,619,777 Funds under trust management - - The financial statements on pages 7 to 24 have been approved by the Supervisory Council and the Board of Directors of the Bank and signed on their behalf by: The accompanying notes on pages 11 to 24 are an integral part of these financial statements. 8

STATEMENT OF CHANGES IN SHAREHOLDER`S EQUITY Paid-in share capital Retained earnings Total Balance as at 31 December 2008 10,200,000 4,266,983 14,466,983 Comprehensive income for the period - 328,158 328,158 Balance as at 30 June 2009 10,200,000 4,595,141 14,795,141 Comprehensive loss for the period - (274,605) (274,605) Balance as at 31 December 2009 10,200,000 4,320,536 14,520,536 Comprehensive income for the period - 445,702 445,702 Balance as at 30 June 2010 10,200,000 4,766,238 14,966,238 The accompanying notes on pages 11 to 24 are an integral part of these financial statements. 9

STATEMENT OF CASH FLOWS JSC REGIONALA INVESTICIJU BANKA Notes Six months ended 30 June 2010 Six months ended 30 June 2009 Cash flows from operating activities Interest received 3,096,743 3,749,004 Interest paid (3,434,539) (1,903,390) Fees and commission received 1,282,003 999,797 Fees and commission paid (334,356) (204,028) Income on securities trading 147 (45,515) Income on foreign exchange 108,159 457,296 Other operating income 31,040 9,442 Personnel expenses paid (962,773) (935,277) Administrative and other operating expenses paid (690,497) (690,937) Income tax paid (195,498) (315,579) Cash flows from operating activities before changes in operating assets and liabilities (1,099,571) 1,120,813 Changes in operating assets and liabilities Net decrease of securities at fair value through profit or loss 422,177 757,680 Net (increase) / decrease of balances due from banks (1,539,035) 14,720,123 Net decrease of loans and advances to customers 4,314,860 6,206,553 Net increase of other assets (966,269) (144,936) Net increase of balances due to customers 3,140,828 9,934,924 Net increase / (decrease) in other liabilities 583,143 (111,552) Net cash and cash equivalents from operating activities 4,856,133 32,483,605 Cash flows from investing activities Purchase of intangible assets (20,711) (22,716) Purchase of fixed assets (4,924) (41,415) Net cash and cash equivalents used in investing activities (25,635) (64,131) Effect of exchange rates on cash and cash equivalents 4,756,933 (1,839,603) Net increase in cash and cash equivalents 9,587,431 30,579,871 Cash and cash equivalents at the beginning of the period 40,748,861 13,851,246 Cash and cash equivalents at the end of the period 50,336,292 44,431,117 The accompanying notes on pages 11 to 24 are an integral part of these financial statements. 10

NOTES TO THE FINANCIAL STATEMENTS JSC REGIONALA INVESTICIJU BANKA 1 INCORPORATION AND PRINCIPAL ACTIVITIES A/S Reăionālā Investīciju banka (hereinafter the Bank) provides financial services to corporate clients and individuals. The Bank established its representative office in Odessa, Ukraine in 2005, representative office in Dnepropetrovsk, Ukraine in 2007 and Kiev, Ukraine in 2009 and branch in Varna, Bulgaria in 2009. The Bank has no subsidiaries and branches apart from those mentioned above. The Bank is a joint-stock company incorporated and domiciled in Riga, Republic of Latvia. It was registered within the Commercial Register on 28 September 2001. The legal and actual address of the Bank is: J. Alunana Street 2, LV-1010, Riga, Latvia These financial statements have been approved for issue by the Supervisory Council and the Board of Directors on July 2010. 2 MAIN ACCOUNTING POLICIES A summary of the significant accounting policies, all of which have been applied consistently throughout the years 2010 and 2009, are set out below: (a) Reporting currency The financial statements are reported in Latvian lats (), unless otherwise stated. (b) Basis of preparation These interim condensed financial statements for the 6 month period ended 30 June 2010 are prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting. These interim condensed financial statements should be read in conjunction with the 2009 full annual financial statements prepared in accordance with International Financial Reporting Standards (IFRS) endorsed in the European Union. The preparation of interim financial statements in accordance with IAS 34 requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on Management s best knowledge of current events and actions, actual results ultimately may differ from those estimates. Recent volatility in the global and Latvian financial markets As the result of fiscal policy in stimulating economic activity implemented by developed countries, economic recovery during 2010 was faster than initially forecasted. Currently, dynamics of future growth of economy can not be reliably determined due to differences in fiscal policies applied by central governments. The debt of central governments has been increased significantly, for some it attains critical level. High level of government debt in Greece represents important threats to the future development of the whole euro zone. The situation in banking sector continues to improve. Provisions for loan impairment are lower than initially forecasted, however, they remain at significant level. Due to this, significant number of banks were forced to increase their share capital or suffer from the negative impact on profitability and profit figures. The Bank activities are affected by the developments in the Ukrainian market. During 2010, after elections of the president in Ukraine, economic situation in the country became more stable. The discussions about the financing of Ukraine as part of program Stand-Bay were relaunched with International Monetary Fund. General growth of economy which implies the increase in GBP by 3.7% was forecasted by the government of Ukraine for the year 2010. International experts assessed these forecasts as being too optimistic. Forecasted growth of Ukrainian economy for 2010 by international experts is 2.5%. 11

2 MAIN ACCOUNTING POLICIES (continued) (b) Basis of preparation (continued) At the beginning of 2010, the situation in Ukrainian banking sector was tense. Since March 2010, with the increase of deposits in national currency, the situation improved. Besides, deposit levels for households are increasing more rapidly than for non-finance institutions (accordingly, in March 49% and 20%). There is an opposite trend for lending market. In March, 95% from loans issued by banks were to nonfinance institutions. Compared to the IV quarter 2009 during the I quarter 2010, GDP in Latvia has increased by 0.3%. There was positive growth in industries and export, decrease in consumption was lower and budget receipts higher than forecasted. Unemployment is gradually decreasing. Although, if compared to the previous year, economy is still at negative point, tendencies show that economic recovery might be faster than expected. There are two factors favorable to the fast recovery of economy: positive export balances and base effect due to rapid economy downturn during previous year. Management is unable to reliably estimate the effects on the Bank s financial position of any further deterioration in the liquidity of the financial markets and the increased volatility in the currency and equity markets. Nevertheless, the management draws attention that the Bank does not speculate with foreign currency market fluctuations, as well as does not conclude speculative deals at the money market. Management believes it is taking all the necessary measures to support the sustainability and growth of the Bank s business in the current circumstances. Impact on liquidity: In 2010, interbank market continues to improve, however, placements of interbank deposits are prudent and mainly made in banks with high credit ratings. With economic recovery and the increase in interest rates this situation might improve and the Bank would be able to raise funds by aid of interbank loans. Recently interbank lending has reduced to a minimum, which may significantly influence Bank's capacity to receive new loans and refinance existing liabilities on the same terms and conditions as before. We draw your attention that 'freeze' in the interbank lending market will not reduce Bank's liquidity as does not have any interbank loans. Impact on borrowers: Debt servicing capacity of Bank's borrowers may reduce as a result of liquidity decrease. Deterioration in the business environment for borrowers may influence management's cash flow forecasts and estimates on the impairment in the value of financial and non-financial assets. Management has derived its opinion on recoverable value of assets from available information and reflected updated cash flow forecasts in asset impairment evaluation, however forecasts may differ from actual results. Impact on collateral: Level of provisions for non-performing loans is based on management's assessment of assets as of the balance sheet date, considering cash flows from the disposal of collateral as reduced by the cost of takeover and sale. For a number of collateral categories, especially Latvian real estate, market is significantly influenced by downturn in the local economy, reducing liquidity for these assets. As a result actual sales value of collateral may differ from the value used in cash flow projections underlying estimate for impairment provisions even if sales value of collateral has been determined on prudent basis. The accounting policies used in the preparation of these interim condensed financial statements are consistent with those used in the annual financial statements for the year ended 31 December 2009, except for the changes in accounting policies as a result of new and amended International Financial Reporting Standards (IFRS) that are effective for the accounting periods beginning on or after 1 January 2010 and are relevant to the Bank. 12

2 MAIN ACCOUNTING POLICIES (continued) (c) Adoption of new or revised standards and interpretations Certain new standards and interpretations have been published that become effective for the accounting periods beginning on or after 1 July 2009 or later periods and which are not relevant to the Bank operations: IAS 27, 'Consolidated and separate financial statements' (effective for annual periods beginning on or after 1 July 2009). The standard is not relevant to the Bank s operations as the Bank has no subsidiaries or associated companies. Amendments to IFRS 1 and IAS 27, (effective for annual periods beginning on or after 1 July 2009). The amendments clarify accounting of subsidiaries and associate companies when IFRS are adopted by the Group for the first time. The amendments are not relevant to the Bank s operations as the Bank has no subsidiaries or associated companies. Amendment to IAS 39, Financial Instruments: Recognition and Measurement (effective with retrospective application for annual periods beginning on or after 1 July 2009). The amendment clarifies how the principles that determine whether hedged risk or portion of cash flows is eligible for designation should be applied in particular situation. Amendment has no impact on the Bank's financial statements since the Bank does not apply risk hedge accounting. IFRS 1 First time adoption of IFRS (effective for annual periods beginning on or after 1 July 2009 if the IFRS statements are being prepared for the first time). The revised standard does not have any effect on the Banks financial statements. IFRS 3, Business combinations (effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009). IFRS 3 is not relevant to the Bank as it is not planning to perform business combinations. IFRIC 12, Service concession arrangements (effective for annual periods beginning on or after 30 March 2009). This interpretation applies to contractual arrangements whereby a private sector operator participates in the development financing, operation and maintenance of infrastructure for public sector services, for example, under private finance initiative contracts (PFI) contracts. IFRIC 12 does not have significant effect on the Banks financial statements. IFRIC 17, Distribution of Non-Cash Assets to Owners (effective for annual periods beginning on or after 1 July 2009). The interpretation clarifies when and how distribution of non-cash assets as dividends to the owners should be recognised. IFRIC 17 is not relevant to the Bank s operations because it does not distribute non-cash assets to the owners. IFRIC 18, Transfers of Assets from Customers (effective for annual periods beginning on or after 1 July 2009). The interpretation clarifies the accounting for transfers of assets from customers, namely, the circumstances in which the definition of an asset is met; the recognition of the asset and the measurement of its cost on initial recognition; the identification of the separately identifiable services (one or more services in exchange for the transferred asset); the recognition of revenue, and the accounting for transfers of cash from customers. IFRIC 18 has no significant impact on the Bank s financial statements. The International Financial Reporting Standard for Small and Medium-sized Entities is a selfcontained standard, tailored to the needs and capabilities of smaller businesses. Many of the principles of full IFRS for recognising and measuring assets, liabilities, income and expense have been simplified, and the number of required disclosures have been simplified and significantly reduced. 13

2 MAIN ACCOUNTING POLICIES (continued) (c) Adoption of new or revised standards and interpretations (continued) Certain new standards and interpretations have been published that become effective for the accounting periods beginning on or after 1 January 2010 or later periods and which have no significant impact to the Bank. Classification of Rights Issues - Amendment to IAS 32 (effective for annual periods beginning on or after 1 February 2010). The amendment exempts certain rights issues of shares with proceeds denominated in foreign currencies from classification as financial derivatives. IFRS 2, Share-based payment (effective for annual periods beginning on or after 1 January 2010). The amendment provides a clear basis to determine the classification of share-based payment awards in both consolidated and separate financial statements. The amendment incorporates into the standard the guidance in IFRIC 8 and IFRIC 11, which are withdrawn. Improvements to International Financial Reporting Standards for 2009 (effective for annual periods beginning on or after 1 January 2010). The improvements consist of a mixture of substantive changes and clarifications in the 12 standards and interpretations and they are a part of annual amendments of IFRS. IFRIC 15, Agreements for construction of real estate. The interpretation applies to the accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors, and provides guidance for determining whether agreements for the construction of real estate are within the scope of IAS 11 or IAS 18. Certain new standards and interpretations have been published that become effective for the accounting periods beginning on or after 1 July 2010 or later periods and which have no significant impact to the Bank and which have not yet been endorsed by the EU: IFRS 1, First-time Adoption of International Financial Reporting Standards (effective for annual periods beginning on or after 1 January 2010). IFRIC 9, Re-assessment of embedded derivatives Part 1: Classification and Measurement. IFRS 9 was issued in November 2009 and replaces those parts of IAS 39 relating to the classification and measurement of financial assets. The standard requires that financial assets are classified into two measurement categories: those to be measured at fair value, and those to be measured at amortised cost. The classification depends on the entity s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. While adoption of IFRS 9 is mandatory from 1 January 2013, earlier adoption is permitted. The Bank is considering the implications of the standard on its financial statements. Amendment to IAS 24, Related Party Disclosures (issued in November 2009 and effective for annual periods beginning on or after 1 January 2011). IAS 24 was revised in 2009 by: (a) simplifying the definition of a related party, clarifying its intended meaning and eliminating inconsistencies; and by (b) providing a partial exemption from the disclosure requirements for government-related entities. Amendment to IFRIC 14, Payments of a minimum funding requirement (effective for annual periods beginning on or after 1 January 2011). This amendment will have a limited impact as it applies only to companies that are required to make minimum funding contributions to a defined benefit pension plan. IFRIC 19, Extinguishing financial liabilities with equity instruments (effective for annual periods beginning on or after 1 July 2010). This interpretation clarifies the accounting when an entity renegotiates the terms of its debt with the result that the liability is extinguished through the debtor issuing its own equity instruments to the creditor. A gain or loss is recognised in the profit and loss account based on the fair value of the equity instruments compared to the carrying amount of the debt. IFRIC 19 is not relevant to the Bank s operations. 14

2 MAIN ACCOUNTING POLICIES (continued) (c) Adoption of new or revised standards and interpretations (continued) Improvements to International Financial Reporting Standards for 2010 (effective for annual periods beginning on or after 1 January 2011). The improvements consist of a mixture of substantive changes and clarifications in the standards and interpretations and they are a part of annual amendments of IFRS. (d) Income tax expenses Income tax expense is recognised in each interim period based on the best estimate of the weighted average effective annual income tax rate expected for the full financial year. Amounts accrued for income tax expense in one interim period may have to be adjusted in a subsequent interim period of that financial year if the estimate of the weighted average effective annual income tax rate changes. Interim period income tax expense is accrued using the tax rate that would be applicable to expected total annual earnings, that is, the estimated average annual effective income tax rate is applied to the pre-tax income of the interim period. 15

3 BALANCES DUE FROM BANKS 30.06.2010 31.12.2009 Due from Republic of Latvia credit institutions 2,079,427 734,517 Due from non-oecd credit institutions 10,927,624 16,840,076 Due from OECD credit institutions 35,830,532 22,690,670 48,837,583 40,265,263 The following table discloses balances due from banks between demand and term deposits: On demand 24,771,141 28,453,524 Balances with maturity of three months or less 17,184,464 7,312,421 Other balances due from banks 6,881,978 4,499,318 48,837,583 40,265,263 4 LOANS AND ADVANCES TO CUSTOMERS Analysis of loans by client and loan types: 30.06.2010 31.12.2009 Loans to legal entities 69,504,007 66,006,319 Loans to private individuals, except for mortgages 2,476,366 2,042,927 Loans to private individuals private enterprises 68,455 60,817 Mortgages 2,702,535 2,564,843 Loans and advances to customers before provisions for loan impairment 74,751,363 70,674,906 Less: provisions for loan impairment (4,213,865) (3,126,699) Total loans and advances to customers 70,537,498 67,548,207 The following table discloses changes in provisions for loan impairment during the 6 months of 2010: Loans to legal entities Loans to private individuals, except for mortgages Mortgages Total Provisions for loan impairment as at 1 January 2010 2,936,320 144,395 45,984 3,126,699 Increase in provisions for loan impairment for the period 860,463 68,463 31,940 960,866 Effect on currency revaluation 126,300 - - 126,300 Provisions for loan impairment as at 30 June 2010 3,923,083 212,858 77,924 4,213,865 16

4 LOANS AND ADVANCES TO CUSTOMERS (continued) The following table discloses changes in provisions for loan impairment during 2009: Loans to legal entities Loans to private individuals, except for mortgages Mortgages Total Provisions for loan impairment as at 1 January 2009 1,151,410 124-1,151,534 Increase in provisions for loan impairment for the year 2,072,591 144,270 45,984 2,262,846 Write off (290,138) - - (290,138) Effect on currency revaluation 2,457 - - 2,457 Provisions for loan impairment as at 31 December 2009 2,936,320 144,395 45,984 3,126,699 The industry concentration of risks in the credit portfolio is as follows: 30.06.2010. 31.12.2009. % % Trade and commercial activities 27,082,468 36,23 25,561,149 36,17 Private individuals 5,178,901 6,93 4,668,588 6,60 Agriculture and food industry 2,189,902 2,93 1,980,103 2,80 Construction and operations with real estate 13,672,791 18,29 10,334,419 14,62 Transport and communication 8,137,367 10,89 7,100,390 10,05 Production 618,756 0,83 540,781 0,77 Tourism and hotel services, restaurant business 3,273,857 4,38 3,271,383 4,63 Other 7,532,101 10,07 6,915,974 9,79 Finance and investment 7,065,220 9,45 10,302,119 14,57 Loans and advances to customers (before provisions for impairment) 74,751,363 100.00 70,674,906 100.00 17

4 LOANS AND ADVANCES TO CUSTOMERS (continued) The following table shows the loans outstanding as at 30 June 2010 by credit quality. Loans to legal entities Loans to private individuals, except for mortgages Loans to private individuals private enterprises Mortgages Total Neither past due nor impaired - Loans to big size entities 573,717 - - - 573,717 - Loans to medium size entities 4,741,249 - - - 4,741,249 - Loans to small size entities 40,999,510-68,455-41,067,965 - Loans to private individuals - 907,378-2,162,171 3,069,549 Total neither past due nor impaired 46,314,476 907,378 68,455 2,162,171 49,452,480 Past due but not impaired - past due up to 30 days 9,589,863 - - - 9,589,863 - past due over 360 days 364 - - - 364 Total past due, but not impaired 9,590,227 - - - 9,590,227 Individually impaired loans (total amount) - not past due 5,588,594 1,299,782-466,088 7,354,464 - past due up to 30 days 261,712 - - - 261,712 - past due 31 90 days 20,888 237,590-44,871 303,349 - past due 91 180 days 2,077,090 16,448 - - 2,093,538 - past due 181 360 days 114,308 775 - - 115,083 - past due over 360 days 5,536,712 14,392-29,406 5,580,510 Total individually impaired loans (total amount) 13,599,304 1,568,987-540,365 15,708,656 Less: provisions for loan impairment (3,923,083) (212,858) - (77,924) (4,213,865) Total loans and advances to customers 65,580,924 2,263,507 68,455 2,624,612 70,537,498 18

4 LOANS AND ADVANCES TO CUSTOMERS (continued) The following table shows the loans outstanding as at 31 December 2009 by credit quality. Loans to legal entities Loans to private individuals, except for mortgages Loans to private individuals private enterprises Mortgages Total Neither past due nor impaired - Loans to big size entities 489,206 - - - 489,206 - Loans to medium size entities 5,319,736 - - - 5,319,736 - Loans to small size entities 49,412,290-60,817-49,473,107 - Loans to private individuals - 864,152-2,025,494 2,889,646 Total neither past due nor impaired 55,221,232 864,152 60,817 2,025,494 58,171,695 Past due but not impaired - past due 30 90 days 1,296,924 249,096-318,506 1,864,526 - past due over 360 days 328 - - - 328 Total past due, but not impaired 1,297,252 249,096-318,506 1,864,854 Individually impaired loans (total amount) - not past due 3,851,351 915,092-138,597 4,905,040 - past due up to 30 days 177,231 - - 45,904 223,135 - past due 31 90 days 12,362 - - - 12,362 - past due 91 180 days 14,308 195 - - 14,503 - past due 181 360 days 81,847 14,392 - - 96,239 - past due over 360 days 5,350,735 - - 36,343 5,387,078 Total individually impaired loans (total amount) 9,487,834 929,679-220,844 10,638,357 Less: provisions for loan impairment (2,936,320) (144,395) - (45,984) (3,126,699) Total loans and advances to customers 63,069,998 1,898,532 60,817 2,518,860 67,548,207 The fair value of collateral in respect of loans past due but not impaired and in respect of loans individually determined to be impaired as at 30 June 2010 was as follows: Loans to legal entities Fair value of collateral - loans past due but not impaired - residential real estate 490,358 - other real estate 6,177,250 - other assets 6,552,896 - deposits 5,323,765 Fair value of collateral - individually impaired loans - residential real estate 3,137,207 - other real estate 21,657,652 - other assets 6,601,426 Total 49,940,554 19

4 LOANS AND ADVANCES TO CUSTOMERS (continued) The fair value of collateral in respect of loans past due but not impaired and in respect of loans individually determined to be impaired as at 31 December 2009 was as follows: Fair value of collateral - loans past due but not impaired Loans to legal entities - residential real estate 292,574 - other real estate 1,029,700 - other assets 2,869,787 Fair value of collateral - individually impaired loans - residential real estate 1,092,911 - other real estate 16,959,042 - other assets 4,366,047 Total 26,610,061 The balance sheet value of the each category of loans and advances to clients equals to its fair value as at 30 June 2010 and 31 December 2009. 5 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 30.06.2010 31.12.2009 Latvian government securities 6,183,334 6,455,228 Non-OECD region corporate debt securities 1,271,378 1,032,302 Latvian corporate debt securities 461,847 792,693 Shares unlisted in stock market 2,193,871 1,858,697 10,110,430 10,138,920 Financial assets at fair value through profit or loss are accounted at fair value that also reflects the impairment loss related to credit risk. As the financial assets are accounted at fair value based on the market prices, the Bank does not analyse and follow any impairment indicators. 20

6 DUE TO CUSTOMERS Analysis of groups by customers 30.06.2010 31.12.2009 Legal entities - current/ settlement accounts 91,532,747 81,629,319 - term deposits 18,913,655 18,597,348 Private individuals - current/settlement accounts 3,934,134 3,398,845 - term deposits 9,757,524 5,607,973 Total customer accounts: 124,138,060 109,233,485 Sector profile: Private companies 103,800,058 94,719,573 Private individuals 13,691,660 9,006,818 Financial institutions 6,593,044 5,493,446 Non-profit institutions 30,819 9,918 Central government 22,479 3,730 Total customer accounts: 124,138,060 109,233,485 Analysis by place of residence Residents 17,456,469 13,368,820 Non-residents 106,681,591 95,864,665 Total customer accounts: 124,138,060 109,233,485 Economic sector concentration within customer accounts is as follows: 30.06.2010 31.12.2009 % % Manufacturing 2,434,321 1.96 1,017,596 0.93 Building and real estate 2,041,174 1.64 4,610,230 4.22 Trade and commercial activities 51,349,116 41.36 41,386,853 37.89 Financial and insurance services 23,900,129 19.25 24,360,190 22.30 Transport and communications 23,803,550 19.18 23,696,605 21.69 Agriculture and food industries 1,279,154 1.03 261,193 0.24 Private individuals 13,691,660 11.03 9,006,818 8.25 Other 5,638,956 4.55 4,894,000 4.48 Total customer accounts 124,138,060 100.0 109,233,485 100.0 21

7 RELATED PARTY TRANSACTIONS Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions. Related parties are defined as shareholders, members of the Council and the Board, key management personnel, their close relatives and companies in which they have a controlling interest as well as associated companies. The balances in respect of operations with related parties are as follows as at 30 June 2010: Enterprises under the control of beneficiaries Other related parties Undrawn credit lines 57 20,000 Total amounts of loan commitments issued to and repaid by related parties during the 6 month period end 2010 are as follows: Shareholders with Enterprises under the significant control control of beneficiaries Other related parties Issued to related parties 449,853,039-4,100 Repaid by related parties 457,532,065 4,880 1,404 Balances with the related parties were as follows as at 30 June 2010: Shareholders with significant control Enterprises under the control of beneficiaries Other related parties Total loans and advances (interest rate on agreement: 5.5 24%) 10,314,385 1,057,825 19,893 Investment securities for trading purposes 536,142 - - Correspondent account 260,334 - - Due to customers (interest rate: 7.0 7.4%) - 73,734 45,401 Vostro account 3,440 - - Income and expense from operations with related parties during the 6 months of year 2010 were as follows: Shareholders with Enterprises under the significant control control of beneficiaries Other related parties Interest income 780,205 26,287 657 Interest expenses - 1,817 1,018 Fee and commission income - 1,539 289 Fee and commission expense 3,430 - - Profit from revaluation of financial assets at fair value through profit and loss 1,077 - - Administrative and other operating expenses 3,725 - - 22

7 RELATED PARTY TRANSACTIONS (continued) The balances in respect of operations with related parties are as follows as at 31 December 2009: Other related parties Undrawn credit lines 22,277 Total amounts of loan commitments issued to and repaid by related parties during 6 months of year 2009 are as follows: Shareholders with Enterprises under the significant control control of beneficiaries Other related parties Issued to related parties 2,468,436,784-2,689 Repaid by related parties 2,469,308,316 10,010 11,854 Balances with the related parties were as follows as at 31 December 2009: Shareholders with Enterprises under the significant control control of beneficiaries Other related parties Total loans and advances (interest rate on agreement: 5.5-18%) 16,227,628 903,018 17,196 Investment securities for trading purposes 427,838 - - Correspondent account 33,369 - - Due to customers (interest rate: 6.25 7.7%) - 55,764 84,738 Vostro account 12,440 - - Income and expense from operations with related parties during the 6 month period end 2009 were as follows: Shareholders with Enterprises under the significant control control of beneficiaries Other related parties Interest income 1,498,650 25,150 735 Interest expenses 23,468-454 Fee and commission income - - 471 Fee and commission expense 2,765 - - Administrative and other operating expenses 2,384 - - Remuneration to key management personnel is disclosed below: 6 months of year 2010 6 months of year 2009 Short-term benefits: - Salaries 97,785 116,541 Pension benefits: - Expenses to the State Pension Insurance 23,429 26,506 Total 121,214 143,047 23

Assets JSC REGIONALA INVESTICIJU BANKA 8 LIQUIDITY RISK AND ANALYSIS OF ASSETS AND LIABILITIES BY MATURITY PROFILE The table below allocates the Bank s assets and liabilities to maturity groupings as at 30 June 2010 based on the time remaining from the balance sheet date to the contractual maturity dates. Overdue Within 1 month 1 3 3 6 6 12 1 5 Over months months months years 5 years and undated Total Cash and balances with the Bank of Latvia - 11,383,036 - - - - - 11,383,036 Balances due from banks - 41,955,604 2,864,714 3,982,885-34,380-48,837,583 Loans and advances to customers 4,129,849 4,335,956 15,348,723 13,044,754 11,170,001 20,713,585 1,794,630 70,537,498 Financial assets at fair value through profit or loss - 7,916,559 - - - - 2,193,871 10,110,430 Intangible assets - - - - - 416,877-416,877 Property and equipment - - - - - - 403,865 403,865 Derivative financial instruments - 58,633 - - - - - 58,633 Deferred expenses - - - - 96,679 - - 96,679 Income tax - - 447,911 - - - - 447,911 Other assets - 1,171,021 - - - - - 1,171,021 Total assets 4,129,849 66,820,809 18,661,348 17,027,639 11,266,680 21,164,842 4,392,366 143,463,533 Liabilities and equity Balances due to banks - 1,521,463 1,480,886 - - - - 3,002,349 Due to customers - 94,339,054 9,074,733 12,739,180 6,216,560 1,768,533-124,138,060 Derivative financial instruments - 61,864 - - - - - 61,864 Deferred income and accrued expenses - - - - 259,196 - - 259,196 Other liabilities - 1,023,057 - - - - - 1,023,057 Deferred income tax liability - - - - 12,769 - - 12,769 Equity - - - - - - 14,966,238 14,966,238 Total liabilities and equity - 96,945,438 10,555,619 12,739,180 6,488,525 1,768,533 14,966,238 143,463,533 Net liquidity 4,129,849 (30,124,629) 8,105,729 4,288,459 4,778,155 19,396,309 (10,573,872) - As at 31 December 2009 Total assets 3,467,371 51,390,239 12,037,029 14,389,527 23,244,803 17,310,355 4,422,240 126,261,564 Total liabilities and equity - 76,941,898 12,087,476 4,311,491 9,833,769 8,566,394 14,520,536 126,261,564 Net liquidity 3,467,371 (25,551,659) (50,447) 10,078,036 13,411,034 8,743,961 (10,098,296) 24