Consolidated Condensed Interim Financial Statements and Report on Review

Consolidated Condensed Interim Financial Statements and Report on Review CONTENTS Report on Review Consolidated Condensed Interim Financial Statements Consolidated Condensed Interim Statement of Financial Position... 1 Consolidated Condensed Interim Income Statement... 2 Consolidated Condensed Interim Statement of Comprehensive Income... 3 Consolidated Condensed Interim Statement of Changes in Equity... 4 Consolidated Condensed Interim Statement of Cash Flows... 5 Selected Notes to the Consolidated Condensed Interim Financial Statements 1 Introduction... 6 2 Operating Environment of the Group... 7 3 Basis for preparation... 8 4 Accounting Policies, Critical Accounting Estimates and Judgments, Adoption of New or Revised Standards and Interpretations, and Changes in Presentation... 8 5 Loans and Advances to Customers... 11 6 Investment Securities Available-for-sale... 24 7 Other Assets... 25 8 Due to Banks... 25 9 Due to Individuals and Corporate Customers... 26 10 Other Liabilities... 27 11 Subordinated Debt... 27 12 Interest Income and Expense... 28 13 Fee and Commission Income and Expense... 29 14 Net Gains Arising from Trading in Foreign Currencies, Operations with Foreign Currency Derivatives and Foreign Exchange Translation Gains... 29 15 Operating Expenses... 30 16 Segment Analysis... 30 17 Financial Risk Management... 34 18 Credit Related Commitments... 40 19 Fair Value Measurement... 41 20 Related Party Transactions... 45 21 Capital Adequacy Ratio... 47 22 Subsequent Events... 48

Ernst & Young Audit Services LLC Khreschatyk Street, 19A Kyiv, 01001, Ukraine Tel: +380 (44) 490 3000 Fax: +380 (44) 490 3030 Ukrainian Chamber of Auditors Certificate: 3516 www.ey.com/ua ТОВ «Ернст енд Янг Аудиторськi послуги» Украïна, 01001, Киïв вул. Хрещатик, 19А Тел.: +380 (44) 490 3000 Факс: +380 (44) 490 3030 Свiдоцтво Аудиторськоï Палати Украïни: 3516 REPORTON REVIEW OF CONDENSED INTERIMCONSOLIDATED FINANCIAL STATEMENTS To the Shareholder and Management Board of SUBSIDIARY BANK SBERBANK OF RUSSIA PUBLIC JOINT-STOCK COMPANY Introduction We have reviewed the condensed interim consolidated financial statements of SUBSIDIARY BANK SBERBANK OF RUSSIA PUBLIC JOINT-STOCK COMPANY and its subsidiary (the Group ), comprising of the condensed interim consolidated statement of financial position as at and the related condensed interim consolidated statements of income, comprehensive income, of changes in equity and of cash flows for the three and six months then ended, and selected explanatory notes. Management of the Group is responsible for the preparation and presentation of these condensed interim consolidated financial statements in accordance with International Financial Reporting Standard IAS 34, Interim Financial Reporting ( IAS 34 ). Our responsibility is to express a conclusion on these condensed interim consolidated financial statements based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of condensed interim consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34. Emphasis of matter We draw attention to Note 2 to the condensed interim consolidated financial statements, which describes the political unrest that started in November 2013 and escalated in 2014 in Ukraine. The events referred to in Note 2 could adversely affect the Group s results and financial position in a manner not currently determinable. Our opinion is not qualified in respect of this matter. 26 August 2014 A member firm of Ernst & Young Global Limited

Consolidated Condensed Interim Statement of Comprehensive Income Six months ended 30 June (unaudited) Three months ended 30 June (unaudited) Note 2014 2013 2014 2013 Profit / (loss) for the reporting period recognised in the consolidated income statement 47 947 255 392 (21 568) 140 047 Components of other comprehensive income: Other comprehensive income to be reclassified to consolidated income statement in subsequent periods: Investment securities available-for-sale: - Net gains on revaluation of investment securities available-for-sale 12 541 18 296 21 224 19 609 - Accumulated losses transferred to Income statement upon disposal of securities available-for-sale 6 477 195 5 564 188 - Revaluation surplus on office premises 1 250-1 250 - Deferred income tax relating to components of other comprehensive income: - Investment securities available-for-sale (1 797) (1 908) (2 573) (2 221) - Office premises 283-283 - Net other comprehensive income to be reclassified to consolidated income statement in subsequent periods 18 754 16 583 25 748 17 576 Total components of other comprehensive income for the reporting period, net of tax 18 754 16 583 25 748 17 576 Total comprehensive income for the reporting period 66 701 271 975 4 180 157 623 Attributable to: - shareholder of the Bank 66 701 271 975 4 180 157 623 - non-controlling interest - - - - The notes are an integral part of these consolidated condensed interim financial statements. 3

Consolidated Condensed Interim Statement of Changes in Equity Attributable to the shareholder of the Bank Share capital Share premium Revaluation reserve for office premises Fair value reserve for investment securities available-forsale (Accumulated deficit) / Retained earnings Total Non-controlling interest Total equity Balance as at 1 January 2013 3 392 461 270 558 130 530 3 232 (248 383) 3 548 398 99 3 548 497 Changes in equity for six months ended 30 June 2013 (unaudited) Total comprehensive income recognised for the six months ended 30 June 2013 - - - 16 583 255 392 271 975-271 975 Amortisation of revaluation reserve for office premises - - (1 461) - 1 461 - - - Balance as at 30 June 2013 (unaudited) 3 392 461 270 558 129 069 19 815 8 470 3 820 373 99 3 820 472 Balance as at 1 January 2014 3 392 461 270 558 109 608 (12 675) 327 147 4 087 099 91 4 087 190 Changes in equity for six months ended 30 June 2014 (unaudited) Disposal of subsidiary - - - - 3 419 3 419 (91) 3 328 Total comprehensive income recognised for the six months ended - - 1 533 17 221 47 947 66 701-66 701 Amortisation of revaluation reserve for office premises - - (1 238) - 1 238 - - - Balance as at (unaudited) 3 392 461 270 558 109 903 4 546 379 751 4 157 219-4 157 219 The notes are an integral part of these consolidated condensed interim financial statements. 4

Consolidated Condensed Interim Statement of Cash Flows Six months ended 30 June (unaudited) 2014 2013 Cash flows from operating activities Interest received 2 133 961 1 514 357 Interest paid (851 239) (684 653) Expenses directly attributable to deposit insurance paid (69 083) (34 093) Fees and commissions received 255 895 169 714 Fees and commissions paid (90 032) (45 274) Net gains from trading securities - 9 890 Net gains from trading in foreign currencies and from operations with foreign currency derivatives 186 952 162 099 Other operating income received 12 274 4 979 Operating expenses paid (556 869) (436 757) Income tax paid (42 812) (54 403) Cash flows from operating activities before changes in operating assets and liabilities 979 047 605 859 Changes in operating assets and liabilities Net decrease/(increase) in mandatory cash balances with the National Bank of Ukraine 1 157 501 (252 002) Net increase in trading securities - (600 530) Net decrease in due from banks 1 076 689 183 392 Net decrease / (increase) in loans and advances to customers 1 027 648 (3146 264) Net decrease in securities pledged under repurchase agreements - 10 468 Net decrease/(increase) in other assets 33 844 (46 505) Net decrease in loans from the National Bank of Ukraine - (3 509) Net increase in due to banks 3 724 361 2 139 080 Net (decrease)/increase in due to individuals (6 276 256) 3 005 725 Net (decrease)/increase in due to corporate customers (2 272 176) 971 377 Net decrease in other liabilities (27 678) (1 799) Net cash (used in) / from operating activities (577 020) 2 865 292 Cash flows from investing activities Purchase of investment securities available-for-sale (25 540 428) (2495 765) Proceeds from disposal and redemption of investment securities available-for-sale 26 210 104 722 550 Purchase of premises, equipment and intangible assets (190 242) (158 430) Proceeds from disposal of premises, equipment and intangible assets 23 722 - Proceeds from disposal of subsidiaries 19 944 - Net cash from / (used in) investing activities 523 100 (1 931 645) Cash flows from financing activities Redemption of debt securities - (674 813) Repayment of interest on debt securities - (21 452) Other borrowed funds received 112 202 - Redemption of other borrowed funds (118 819) (477 765) Repayment of interest on other borrowed funds (16 121) (16 533) Repayment of interest on subordinated debt (39 030) (16 012) Net cash used in financing activities (61 768) (1 206 575) Effect of exchange rate changes on cash and cash equivalents 380 990 (9 528) Net increase /(decrease) in cash and cash equivalents 265 302 (282 456) Cash and cash equivalents at the beginning of the reporting period 2 477 058 2 012 400 Cash and cash equivalents as at the end of the reporting period 2 742 360 1 729 944 The notes are an integral part of these consoliated condensed financial statements. 5

1 Introduction These consolidated condensed interim financial statements of SUBSIDIARY BANK SBERBANK OF RUSSIA PUBLIC JOINT-STOCK COMPANY ( the Bank ) and its subsidiary (together referred to as the Group ) have been prepared in accordance with IAS 34 Interim Financial Reporting for the six months ended. Organisation and operations. The Bank was established as CLOSED JOINT-STOCK COMPANY COMMERCIAL BANK NRB-UKRAINE according to Ukrainian legislation and was registered by the National Bank of Ukraine (the NBU ) on 15 June 2001. In May 2008, the Bank was acquired by the Open Joint-Stock Company Sberbank of the Russia and changed its name to Closed Joint-Stock Company Subsidiary Bank Sberbank of Russia. In August 2009, the Bank was reorganised to a public joint-stock company. The Bank specialises in providing banking services to companies operating in various industries and individuals. These services include taking deposits and granting loans and advances, investing in securities, transferring payments in Ukraine and abroad, exchanging of currencies and other services. The Bank is 100% owned by Open Joint Stock Commercial Bank Sberbank of Russia (the Shareholder ). On 17 April 2014 Management of the Board of the Bank decided to cease participation in its subsidiary LLC Kiparis- 2. The Group s share in the subsidiary was sold on 24 April 2014. As at, the Group had 190 branches throughout Ukraine (31 December 2013: 210). The actual number of the Group s employees as at was 2 942 (31 December 2013: 3 136). Registered address and place of business. The Bank s head office is located at 46 Volodymyrska Str., Kyiv, Ukraine. Presentation currency. These consolidated condensed interim financial statements are presented in thousands of Ukrainian hryvnia ( UAH thousands ) unless otherwise stated. It is also the functional currency of the Group. UAH exchange rates established by the NBU and used in the preparation of the consolidated condensed interim financial statements are as follows: 31 December 2013 US Dollar 11.823346 7.993000 Euro 16.086845 11.041530 Russian Ruble 0.350310 0.244970 6

2 Operating Environment of the Group The Ukrainian economy while deemed to be of market status continues to display certain characteristics consistent with that of an economy in transition. These characteristics include, but are not limited to, low levels of liquidity in the capital markets and the existence of currency controls which cause the national currency to be illiquid outside of Ukraine. The stability of the Ukrainian economy is significantly impacted by the government s policies and actions with regard to administrative, fiscal, legal, and economic reforms. As a result, operations in Ukraine involve risks that are not typical for developed markets. The Ukrainian economy is vulnerable to market downturns and economic slowdowns elsewhere in the world. In November 2013, the former Ukrainian government declined to sign the association agreement with the European Union. This event became a starting point in the escalation of the political situation in the country, which resulted in the dismissal of the president and the government by the parliament, secession of the Autonomous Republic of Crimea from Ukraine and armed confrontations in the Eastern regions of the country. The transitional Ukrainian government has initiated a set of anti-crisis measures, aimed at the stabilisation of the political situation, halting of the decline in domestic production, reducing the state budget deficit and deterioration of other macroeconomic indicators. In March 2014, the transitional Government signed a political association with the European Union, followed by the International Monetary Fund making available to Ukraine USD 3.2 billion loan from 17.01 billion two-year Stand-By Arrangement, and is further negotiating additional financial aid from other international financial sources. From 1 January 2014 to 19 August 2014, the Ukrainian Hryvnia has devaluated against major foreign currencies by approximately 62%, and the National Bank of Ukraine imposed certain restrictions on purchase of foreign currencies at the inter-bank market. The international rating agencies have downgraded sovereign debt ratings for Ukraine. The combination of the above events has resulted in the deterioration of liquidity, much tighter credit conditions where credit is available, inability of certain borrowers to service their debt and deposit outflow from the Ukrainian banking system. The economic effects of these factors on the results of the Group s operations, to the extent they are caused by the past events and are determinable and measurable, have been taken into account in preparing these consolidated interim condensed financial statements. Management is monitoring the current economic situation and is taking actions where appropriate. Ukraine claimed unlawful the actions of the Crimean authorities, which resulted in the secession of the Crimea followed by its accession to the Russian Federation and, during April-May 2014, introduced a number of legislative restrictions, effectively prohibiting the Ukrainian banks from conducting their operations in Crimea. As at, the carrying value of the Group s assets located in or otherwise associated with the Crimea is UAH 772 282 thousand (31 December 2013: UAH 1 311 162 thousand), out of which UAH 617 528 thousand secured by irrevocable guaranty (please refer to Note 5) and liabilities UAH 722 493 thousand (31 December 2013: UAH 1 482 439 thousand). Further, certain parts of Donetsk and Lugansk regions, including Donetsk city and Lugansk city themselves, are currently are in the zone of wide scale armed confrontations between Ukrainian military forces and separatists. This fact caused majority of the entities in the regions to suspend their production and commercial activities for uncertain time. Also, the war actions may affect physical conditions of the regions entities tangible assets and inventories. The Group considered the impact of loss event occurred to estimate allowance for impairment of loans to customers as of. Further negative developments, including the political unrest, could adversely affect the Group s results and financial position, including further deterioration in the quality of the loan portfolio, with increases in nonperforming loans and decreases in loan collateral values and losses on corporate bonds, in a manner not currently determinable. 7

3 Basis for preparation These consolidated condensed interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements of the Group for the year ended 31 December 2013 prepared in accordance with IFRS. These consolidated condensed interim financial statements do not contain all the explanatory notes as required for a full set of financial statements. 4 Accounting Policies, Critical Accounting Estimates and Judgments, Adoption of New or Revised Standards and Interpretations, and Changes in Presentation The accounting policies adopted in the preparation of the interim consolidated condensed financial statements are consistent with those followed in the preparation of the Group s annual consolidated financial statements for the year ended 31 December 2013, except for the adoption of new standards and interpretations as of 1 January 2014, noted below: IFRS 9 Financial Instruments. IFRS 9, as issued, reflects two of the three phases of the IASB project on replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities and hedge accounting. The standard has no mandatory effective date and may be applied voluntarily. The adoption of IFRS 9 will have an effect on the classification and measurement of the Group s financial assets, but will not have an impact on classification and measurements of the Group s financial liabilities. The Group will quantify the effect when the remaining part of the standard containing guidance on impairment of financial assets is issued. Investment Entities Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements. These amendments provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under IFRS 10. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. These amendments become effective for annual periods beginning on or after 1 January 2014 and did not have any impact on the Group s consolidated condensed interim financial statements. Offsetting Financial Assets and Financial liabilities Amendments to IAS 32 Financial Instruments: Presentation (issued in December 2011). These amendments clarify the meaning of currently has a legally enforceable right to set-off and also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. These amendments become effective for annual periods beginning on or after 1 January 2014 and did not have any impact on the Group s consolidated condensed interim financial statements. Novation of Derivatives and Continuation of Hedge Accounting Amendments to IAS 39 Financial Instrument: Recognition and Measurement. These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. These amendments are effective for annual periods beginning on or after 1 January 2014. These amendments did not have any impact on the Group s consolidated condensed interim financial statements as the Group does not apply hedge accounting according to IFRS. IFRIC 21 Levies (IFRIC 21). IFRIC 21 clarifies that an entity recognises a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached. IFRIC 21 becomes effective for annual periods beginning on or after 1 January 2014. This interpretation did not has any impact on the Group s consolidated condensed interim financial statements 8

4 Accounting Policies, Critical Accounting Estimates and Judgements, Adoption of New or Revised Standards and Interpretations, and Changes in Presentation (Continued) Recoverable Amount Disclosures for Non-Financial Assets Amendments to IAS 36. These amendments remove the unintended consequences of IFRS 13 Fair Value Measurement on the disclosures required under IAS 36 Impairment of Assets. In addition, these amendments require disclosure of the recoverable amounts for the assets or cash-generating units (CGUs) for which an impairment loss has been recognised or reversed during the period. These amendments had no impact on the Group s financial position or performance. Management s estimates and judgements. Judgements and critical estimates made by the Management in the process of applying the accounting policies were consistent with those disclosed in the annual consolidated financial statements for the year ended 31 December 2013. The Management has not identified new areas of judgment or critical estimates. Income tax expense is recognised in these consolidated condensed interim financial statements based on the Management s best estimates of the effective annual income tax rate expected for the full financial year. Costs that occur unevenly during the financial year are anticipated or deferred in the interim report only if it would also be appropriate to anticipate or defer such costs at the end of the financial year. Change in accounting estimates. During six months 2014 the Group has changed its accounting estimates used in estimation of the allowance for impairment of loans and advances to customers, specifically, due to extremely difficult situation in the Donetsk and Lugansk regions Group increased discount period for collateral in those regions from 1 to 4 years due to low liquidity of this property. Have not the Group implemented stated changes the loan loss allowance would have amounted to UAH 4 324 567 thousand (currently reported UAH 4 444 022 thousand). Changes in presentation. The Group has changed presentation of interest income on reverse REPO deals in the condensed interim consolidated income statement for the six months ended. The presentation of the comparative figures has been adjusted to be consistent with the new presentation. The effect of changes on the condensed interim consolidated income statement and related disclosures for the six months ended 30 June 2013 is as follows: Interest income As previously reported Change in presentation As changed Interest income 1 602 150 (13 553) 1 588 597 Net gains arising from trading securities (15 569) 13 368 (2 201) Net losses arising from investment securities available-for-sale (195) 185 (10) The effect of changes on the condensed interim consolidated income statement and related disclosures for the three months ended 30 June 2013 is as follows: Interest income As previously reported Change in presentation As changed Interest income 838 175 (14 363) 823 812 Net gains arising from trading securities (30 628) 14 178 (16 450) Net losses arising from investment securities available-for-sale (188) 185 (3) 9

4 Accounting Policies, Critical Accounting Estimates and Judgements, Adoption of New or Revised Standards and Interpretations, and Changes in Presentation (Continued) The effect of changes on related disclosure for the six months ended 30 June 2013 is as follows: As previously reported Change in presentation As changed Interest income Loans and advances to customers 1 416 409 5 694 1 422 103 Debt investment securities available-for-sale 64 584 (561) 64 023 Due from banks 922 18 534 19 456 Debt trading securities 115 079 (37 220) 77 859 Net gains arising from trading securities (15 569) 13 368 (2 201) Net losses arising from investment securities available-for-sale (195) 185 (10) The effect of changes on related disclosure for the three months ended 30 June 2013 is as follows: As previously reported Change in presentation As changed Interest income Loans and advances to customers 714 057 3 737 717 794 Debt investment securities available-for-sale 52 229 (561) 51 668 Due from banks 660 11 656 12 316 Debt trading securities 68 521 (29 195) 39 326 Net gains arising from trading securities (30 628) 14 178 (16 450) Net losses arising from investment securities available-for-sale (188) 185 (3) The Group has changed presentation of fee and commission in the notes to condensed interim consolidated condensed interim financial statements for the six months ended. The presentation of the comparative figures for the six months ended 30 June 2013 has been adjusted to be consistent with the new presentation. As previously reported Change in presentation As changed Fee and commission income Plastic card operation 24 695 36 908 61 603 Cash and settlements transactions with individuals 53 705 (21 306) 32 399 Cash and settlements transactions with legal entities 43 242 (15 602) 27 640 The effect of changes on related disclosure for the three months ended 30 June 2013 is as follows: As previously reported Change in presentation As changed Fee and commission income Plastic card operation 14 754 21 495 36 249 Cash and settlements transactions with individuals 29 792 (12 723) 17 069 Cash and settlements transactions with legal entities 23 534 (8 772) 14 762 10

5 Loans and Advances to Customers The tables below show credit quality of the Group s loan portfolio by loan classes as at and 31 December 2013. For the purposes of these consolidated condensed interim financial statements a loan is considered past due when the borrower fails to make any payment due under the loan agreement at the reporting date. In this case the aggregate amount of all amounts due from borrower under the respective loan agreement including accrued interest and commissions is recognised as past due. (unaudited): Not past due loans Past due loans Total Commercial loans to legal entities 22 489 683 10 866 919 33 356 602 Specialised loans to legal entities 3 245 469 302 668 3 548 137 Consumer and other loans to individuals 587 805 491 243 1 079 048 Mortgage loans to individuals 97 060 804 276 901 336 Credit cards and overdrafts 465 199 21 803 487 002 Car loans to individuals 8 895 5 606 14 501 Total loans and advances to customers before allowance for loan impairment 26 894 111 12 492 515 39 386 626 Less: Allowance for loan impairment (279 172) (4 164 850) (4 444 022) Total loans and advances to customers net of allowance for loan impairment 26 614 939 8 327 665 34 942 604 31 December 2013: Not past due loans Past due loans Total Commercial loans to legal entities 22 419 820 2 179 407 24 599 227 Specialised loans to legal entities 2 099 831 239 698 2 339 529 Consumer and other loans to individuals 762 633 277 228 1 039 861 Mortgage loans to individuals 115 641 614 764 730 405 Credit cards and overdrafts 328 657 16 024 344 681 Car loans to individuals 11 350 4 070 15 420 Total loans and advances to customers before allowance for loan impairment 25 737 932 3 331 191 29 069 123 Less: Allowance for loan impairment (445 091) (2 070 276) (2 515 367) Total loans and advances to customers net of allowance for loan impairment 25 292 841 1 260 915 26 553 756 11

5 Loans and Advances to Customers (Continued) Commercial lending to legal entities comprises corporate loans and loans to individual entrepreneurs. Loans are granted for current needs (working capital financing, acquisition of movable and immovable property, portfolio investments, expansion and consolidation of business, etc.). Majority of commercial loans are provided for periods of up to 5 years depending on the borrowers risk assessment. Commercial lending also includes overdraft lending and lending for export-import transactions. The repayment source is cash flow from current production and financial activities of the borrower. Specialised lending to legal entities includes investment and construction project financing and also developers financing. As a rule, loan terms are linked to payback periods of investment and construction projects, contract execution periods and exceed the terms of commercial loans to legal entities. The principal and interest may be repaid from cash flows generated by the investment project at the stage of its commercial operation. Consumer and other individual loans comprise loans to individuals other than housing acquisition, construction and repair of real estate as well as car loans and credit cards and overdrafts. These loans include loans for current needs. Mortgage loans to individuals include loans for acquisition, construction and reconstruction of real estate. These loans are mostly long-term and are collateralized by real estate. Credit cards and overdrafts are provided to individuals for periods of up to 2 years on average. Car loans to individuals include loans for purchasing a car or other vehicle. Car loans are provided for periods of up to 5 years. 12

5 Loans and Advances to Customers (Continued) The table below shows the analysis of loans and allowance for loan impairment as at (unaudited): Gross loans Allowance for impairment Net loans Allowance for impairment to gross loans Commercial loans to legal entities Collectively assessed Not past due 21 705 786 (97 239) 21 608 547 0.4% Loans up to 30 days overdue 252 202 (20 836) 231 366 8.3% Loans 31 to 60 days overdue 85 193 (16 809) 68 384 19.7% Loans 61 to 90 days overdue 25 957 (7 895) 18 062 30.4% Loans 91 to 180 days overdue 42 592 (27 252) 15 340 64.0% Loans over 180 days overdue 363 597 (363 597) - 100.0% Total collectively assessed loans 22 475 327 (533 628) 21 941 699 2.4% Individually impaired Not past due 783 897 (155 619) 628 278 19.9% Loans up to 30 days overdue 3 934 964 (421 726) 3 513 238 10.7% Loans 31 to 60 days overdue 1 748 954 (192 425) 1 556 529 11.0% Loans 61 to 90 days overdue 636 842 (68 180) 568 662 10.7% Loans 91 to 180 days overdue 1 725 473 (221 821) 1 503 652 12.9% Loans over 180 days overdue 2 051 145 (1 659 624) 391 521 80.9% Total individually impaired loans 10 881 275 (2 719 395) 8 161 880 25.0% Total commercial loans to legal entities 33 356 602 (3 253 023) 30 103 579 9.8% Specialised loans to legal entities Collectively assessed Not past due 3 245 469 (14 593) 3 230 876 0.4% Loans up to 30 days overdue 1 921 (159) 1 762 8.3% Loans 31 to 60 days overdue - - - - Loans 61 to 90 days overdue - - - - Loans 91 to 180 days overdue 50 182 (14 886) 35 296 29.7% Loans over 180 days overdue 34 334 (34 218) 116 99.7% Total collectively assessed loans 3 331 906 (63 856) 3 268 050 1.9% Individually impaired Not past due - - - - Loans up to 30 days overdue - - - - Loans 31 to 60 days overdue - - - - Loans 61 to 90 days overdue - - - - Loans 91 to 180 days overdue - - - - Loans over 180 days overdue 216 231 (146 982) 69 249 68.0% Total individually impaired loans 216 231 (146 982) 69 249 68.0% Total specialised loans to legal entities 3 548 137 (210 838) 3 337 299 5.9% Total loans to legal entities 36 904 739 (3 463 861) 33 440 878 9.4% 13

5 Loans and Advances to Customers (Continued) Gross loans Allowance for impairment Net loans Allowance for impairment to gross loans Consumer and other loans to individuals Collectively assessed Not past due 587 805 (5 813) 581 992 1.0% Loans up to 30 days overdue 67 289 (10 671) 56 618 15.9% Loans 31 to 60 days overdue 44 386 (19 289) 25 097 43.5% Loans 61 to 90 days overdue 26 707 (15 489) 11 218 58.0% Loans 91 to 180 days overdue 39 730 (28 814) 10 916 72.5% Loans over 180 days overdue 256 914 (256 914) - 100.0% Total collectively assessed loans 1 022 831 (336 990) 685 841 32.9% Individually impaired Not past due - - - - Loans up to 30 days overdue - - - - Loans 31 to 60 days overdue - - - - Loans 61 to 90 days overdue - - - - Loans 91 to 180 days overdue - - - - Loans over 180 days overdue 56 217 (32 129) 24 088 57.2% Total individually impaired loans 56 217 (32 129) 24 088 57.2% Total consumer and other loans to individuals 1 079 048 (369 119) 709 929 34.2% Mortgage loans to individuals Collectively assessed Not past due 96 144 (89) 96 055 0.1% Loans up to 30 days overdue 2 461 (90) 2 371 3.7% Loans 31 to 60 days overdue 2 586 (259) 2 327 10.0% Loans 61 to 90 days overdue - - - - Loans 91 to 180 days overdue 13 682 (2 769) 10 913 20.2% Loans over 180 days overdue 63 346 (63 346) - 100.0% Total collectively assessed loans 178 219 (66 553) 111 666 37.3% Individually impaired Not past due 916 (380) 536 41.5% Loans up to 30 days overdue - - - - Loans 31 to 60 days overdue - - - - Loans 61 to 90 days overdue - - - - Loans 91 to 180 days overdue - - - - Loans over 180 days overdue 722 201 (522 565) 199 636 72.4% Total individually impaired loans 723 117 (522 945) 200 172 72.3% Total mortgage loans to individuals 901 336 (589 498) 311 838 65.4% 14

5 Loans and Advances to Customers (Continued) Gross loans Allowance for impairment Net loans Allowance for impairment to gross loans Credit cards and overdrafts Collectively assessed Not past due 465 199 (5 409) 459 790 1.2% Loans up to 30 days overdue 7 545 (1 399) 6 146 18.5% Loans 31 to 60 days overdue 5 625 (2 881) 2 744 51.2% Loans 61 to 90 days overdue 3 556 (2 455) 1 101 69.0% Loans 91 to 180 days overdue 3 285 (2 821) 464 85.9% Loans over 180 days overdue 1 792 (1 792) - 100.0% Total credit cards and overdrafts 487 002 (16 757) 470 245 3.4% Car loans to individuals Collectively assessed Not past due 8 895 (31) 8 864 0.3% Loans up to 30 days overdue 436 (35) 401 8.0% Loans 31 to 60 days overdue 231 (41) 190 17.7% Loans 61 to 90 days overdue 86 (23) 63 26.7% Loans 91 to 180 days overdue 506 (311) 195 61.5% Loans over 180 days overdue 4 347 (4 347) - 100.0% Total car loans to individuals 14 501 (4 787) 9 714 33.0% Total loans to individuals 2 481 887 (980 161) 1 501 726 39.5% Total loans and advances to customers as at 39 386 626 (4 444 022) 34 942 604 11.3% 15

5 Loans and Advances to Customers (Continued) The table below shows the analysis of loans and allowances for loan impairment as at 31 December 2013: Gross loans Allowance for impairment Net loans Allowance for impairment to gross loans Commercial loans to legal entities Collectively assessed Not past due 20 965 452 (271 353) 20 694 099 1.3% Loans up to 30 days overdue 125 717 (8 449) 117 268 6.7% Loans 31 to 60 days overdue 29 456 (5 002) 24 454 17.0% Loans 61 to 90 days overdue 298 706 (80 067) 218 639 26.8% Loans 91 to 180 days overdue 73 290 (31 729) 41 561 43.3% Loans over 180 days overdue 310 959 (310 959) - 100.0% Total collectively assessed loans 21 803 580 (707 559) 21 096 021 3.2% Individually impaired Not past due 1 454 368 (144 587) 1 309 781 9.9% Loans up to 30 days overdue 53 268 (19) 53 249 0.0% Loans 31 to 60 days overdue 238 503 (43 551) 194 952 18.3% Loans 61 to 90 days overdue 479 836 (197 831) 282 005 41.2% Loans 91 to 180 days overdue - - - - Loans over 180 days overdue 569 672 (510 158) 59 514 89.6% Total individually impaired loans 2 795 647 (896 146) 1 899 501 32.1% Total commercial loans to legal entities 24 599 227 (1 603 705) 22 995 522 6.5% Specialised loans to legal entities Collectively assessed Not past due 2 099 831 (21 422) 2 078 409 1.0% Loans up to 30 days overdue 34 447 (2 311) 32 136 6.7% Loans 31 to 60 days overdue - - - - Loans 61 to 90 days overdue - - - - Loans 91 to 180 days overdue - - - - Loans over 180 days overdue 50 999 (50 999) - 100.0% Total collectively assessed loans 2 185 277 (74 732) 2 110 545 3.4% Individually impaired Not past due - - - - Loans up to 30 days overdue 45 539 (16) 45 523 0.0% Loans 31 to 60 days overdue - - - - Loans 61 to 90 days overdue - - - - Loans 91 to 180 days overdue - - - - Loans over 180 days overdue 108 713 (96 716) 11 997 89.0% Total individually impaired loans 154 252 (96 732) 57 520 62.7% Total specialised loans to legal entities 2 339 529 (171 464) 2 168 065 7.3% Total loans to legal entities 26 938 756 (1 775 169) 25 163 587 6.6% 16

5 Loans and Advances to Customers (Continued) Gross loans Allowance for impairment Net loans Allowance for impairment to gross loans Consumer and other loans to individuals Collectively assessed Not past due 762 633 (5 120) 757 513 0.7% Loans up to 30 days overdue 27 470 (3 214) 24 256 11.7% Loans 31 to 60 days overdue 6 926 (2 787) 4 139 40.2% Loans 61 to 90 days overdue 3 666 (2 190) 1 476 59.7% Loans 91 to 180 days overdue 9 553 (7 339) 2 214 76.8% Loans over 180 days overdue 215 843 (215 843) - 100.0% Total collectively assessed loans 1 026 091 (236 493) 789 598 23.0% Individually impaired Not past due - - - - Loans up to 30 days overdue - - - - Loans 31 to 60 days overdue - - - - Loans 61 to 90 days overdue - - - - Loans 91 to 180 days overdue - - - - Loans over 180 days overdue 13 770 (7 039) 6 731 51.1% Total individually impaired loans 13 770 (7 039) 6 731 51.1% Total consumer and other loans to individuals 1 039 861 (243 532) 796 329 23.4% Mortgage loans to individuals Collectively assessed Not past due 115 641 (33) 115 608 0.0% Loans up to 30 days overdue 524 (9) 515 1.7% Loans 31 to 60 days overdue - - - - Loans 61 to 90 days overdue 633 (52) 581 8.2% Loans 91 to 180 days overdue 889 (408) 481 45.9% Loans over 180 days overdue 98 940 (98 940) - 100.0% Total collectively assessed loans 216 627 (99 442) 117 185 45.9% Individually impaired Not past due - - - - Loans up to 30 days overdue - - - - Loans 31 to 60 days overdue - - - - Loans 61 to 90 days overdue 635 (635) - 100.0% Loans 91 to 180 days overdue - - - - Loans over 180 days overdue 513 143 (381 421) 131 722 74.3% Total individually impaired loans 513 778 (382 056) 131 722 74.4% Total mortgage loans to individuals 730 405 (481 498) 248 907 65.9% 17

5 Loans and Advances to Customers (Continued) Gross loans Allowance for impairment Net loans Allowance for impairment to gross loans Credit cards and overdrafts Collectively assessed Not past due 328 657 (2 447) 326 210 0.7% Loans up to 30 days overdue 5 866 (861) 5 005 14.7% Loans 31 to 60 days overdue 2 563 (1 234) 1 329 48.1% Loans 61 to 90 days overdue 1 514 (1 083) 431 71.5% Loans 91 to 180 days overdue 3 003 (2 788) 215 92.8% Loans over 180 days overdue 3 078 (3 078) - 100.0% Total credit cards and overdrafts 344 681 (11 491) 333 190 3.3% Car loans to individuals Collectively assessed Not past due 11 350 (129) 11 221 1.1% Loans up to 30 days overdue 316 (20) 296 6.3% Loans 31 to 60 days overdue 219 (36) 183 16.4% Loans 61 to 90 days overdue 55 (12) 43 21.8% Loans 91 to 180 days overdue 64 (64) - 100.0% Loans over 180 days overdue 3 416 (3 416) - 100.0% Total car loans to individuals 15 420 (3 677) 11 743 23.8% Total loans to individuals 2 130 367 (740 198) 1 390 169 34.7% Total loans and advances to customers as at 31 December 2013 29 069 123 (2 515 367) 26 553 756 8.7% 18

5 Loans and Advances to Customers (Continued) As defined by the Group for the purposes of internal credit risk assessment, loans fall into the non-performing category when a principal and/or interest payment becomes more than 90 days overdue. As at, the outstanding non-performing loans were as follows (unaudited): Gross loans Allowance for impairment Net loans Allowance for impairment to gross loans Commercial loans to legal entities 4 182 807 (2 272 294) 1 910 513 54.3% Specialised loans to legal entities 300 747 (196 086) 104 661 65.2% Сonsumer and other loans to individuals 352 861 (317 857) 35 004 90.1% Mortgage loans to individuals 799 229 (588 680) 210 549 73.7% Credit cards and overdrafts 5 077 (4 613) 464 90.9% Car loans to individuals 4 853 (4 658) 195 96.0% Total non-performing loans and advances to customers as at 5 645 574 (3 384 188) 2 261 386 59.9% As at 31 December 2013, the outstanding non-performing loans were as follows: Gross loans Allowance for impairment Net loans Allowance for impairment to gross loans Commercial loans to legal entities 953 921 (852 846) 101 075 89.4% Specialised loans to legal entities 159 712 (147 715) 11 997 92.5% Сonsumer and other loans to individuals 239 166 (230 221) 8 945 96.3% Mortgage loans to individuals 612 972 (480 769) 132 203 78.4% Credit cards and overdrafts 6 081 (5 866) 215 96.5% Car loans to individuals 3 480 (3 480) - 100.0% Total non-performing loans and advances to customers as at 31 December 2013 1 975 332 (1 720 897) 254 435 87.1% 19

5 Loans and Advances to Customers (Continued) Allowances for Loan Impairment. The analysis of changes in allowances for loan impairment for the six months ended is presented in the table below (unaudited): Commercial loans to legal entities Specialised loans to legal entities Сonsumer and other loans to individuals Mortgage loans to individuals Credit cards and overdrafts Car loans to individuals Total Allowance for loan impairment as at 1 January 2014 (1 603 705) (171 464) (243 532) (481 498) (11 491) (3 677) (2 515 367) Net allowance charge to allowance for loan impairment during the reporting period (1 656 143) (39 374) (141 242) (109 357) (5 736) (1 110) (1 952 962) Loans and advances written off during the reporting period 6 825-15 655 1 357 470-24 307 Allowance for loan impairment as at (3 253 023) (210 838) (369 119) (589 498) (16 757) (4 787) (4 444 022) The analysis of changes in allowances for loan impairment for the six months ended 30 June 2013 is presented in the table below (unaudited): Commercial loans to legal entities Specialised loans to legal entities Сonsumer and other loans to individuals Mortgage loans to individuals Credit cards and overdrafts Car loans to individuals Total Allowance for loan impairment as at 1 January 2013 (1 206 787) (260 528) (203 772) (568 191) (1 765) (3 816) (2 244 859) (Net allowance charge to) / net recovery of allowance for loan impairment during the reporting period (217 509) 1 088 (15 572) 49 131 (3 917) 560 (186 219) Loans and advances written off during the reporting period - - - - - - - Allowance for loan impairment as at 30 June 2013 (1 424 296) (259 440) (219 344) (519 060) (5 682) (3 256) (2 431 078) 20

5 Loans and Advances to Customers (Continued) Allowances for Loan Impairment. The analysis of changes in allowances for loan impairment for three months ended is presented in the table below (unaudited): Commercial loans to legal entities Specialised loans to legal entities Сonsumer and other loans to individuals Mortgage loans to individuals Credit cards and overdrafts Car loans to individuals Total Allowance for loan impairment as at 1 April 2014 (2 385 524) (191 075) (313 108) (631 730) (19 499) (3 593) (3 544 529) (Net allowance chargeto allowance for loan impairment during the reporting period (868 569) (19 763) (70 016) 40 875 2 742 (1 194) (915 925) Loans and advances written off during the reporting period 1 070-14 005 1 357 - - 16 432 Allowance for loan impairment as at (3 253 023) (210 838) (369 119) (589 498) (16 757) (4 787) (4 444 022) The analysis of changes in allowances for loan impairment for three months ended 30 June 2013 is presented in the table below (unaudited): Commercial loans to legal entities Specialised loans to legal entities Сonsumer and other loans to individuals Mortgage loans to individuals Credit cards and overdrafts Car loans to individuals Total Allowance for loan impairment as at 1 April 2013 (1 332 263) (252 089) (239 029) (545 626) (3 367) (3 751) (2 376 125) (Net allowance charge to) / net recovery of allowance for loan impairment during the reporting period (92 033) (7 351) 19 685 26 566 (2 315) 495 (54 953) Loans and advances written off during the reporting period - - - - - - - Allowance for loan impairment as at 30 June 2013 (1 424 296) (259 440) (219 344) (519 060) (5 682) (3 256) (2 431 078) 21

5 Loans and Advances to Customers (Continued) Renegotiated loans. Information on loans whose terms have been renegotiated, as at and 31 December 2013 is presented in the table below. It shows the carrying amount for renegotiated loans by class. Commercial loans to legal entities Specialised loans to legal entities Consumer and other loans to individuals Mortgage loans to individuals Credit cards and overdrafts Car loans to individuals Total : Not past due collectively assessed loans 2 862 671 155 481 19 257 26 918 25 913 3 065 265 Renegotiated loans up to 90 days overdue 1 952 197 1 921 6 395 2 164 266 224 1 963 167 Renegotiated loans more than 90 days overdue 1 337 801 69 607 144 766 522 893 340 2 626 2 078 033 Total renegotiated loans before allowance for loan impairment 6 152 669 227 009 170 418 551 975 631 3 763 7 106 465 31 December 2013: Not past due collectively assessed loans 602 227 31 540 17 960 36 379 259 1 552 689 917 Renegotiated loans up to 90 days overdue 301 519-156 - - 184 301 859 Renegotiated loans more than 90 days overdue 229 973 57 575 109 868 392 765 254 2 206 792 641 Total renegotiated loans before allowance for loan impairment 1 133 719 89 115 127 984 429 144 513 3 942 1 784 417 22

5 Loans and Advances to Customers (Continued) Economic sector risk concentration. Economic sector risk concentrations within the customer loan portfolio as at and 31 December 2013 are as follows: 31 December 2013 (unaudited) Amount % Amount % Transport, aviation, space industry 7 067 182 17.9% 4 857 406 16.7% Energy 5 417 969 13.8% 4 552 892 15.7% Machine building 5 437 009 13.8% 3 648 612 12.6% Food and agriculture 4 321 185 11.0% 3 246 904 11.2% Services 3 606 025 9.2% 2 592 493 8.9% Oil and gas 2 858 347 7.3% 2 052 754 7.1% Individuals 2 481 887 6.3% 2 130 367 7.3% Metallurgy 2 262 709 5.7% 1 589 042 5.5% Chemical industry 2 241 831 5.7% 1 595 287 5.5% Trade 2 201 893 5.6% 1 660 823 5.7% Telecommunications 808 440 2.1% 636 154 2.2% Construction 508 318 1.3% 388 969 1.3% Timber industry 54 529 0.1% 44 084 0.2% Other 119 302 0.2% 73 336 0.4% Total loans and advances to customers before allowance for loan impairment 39 386 626 100.0% 29 069 123 100.0% As at, the Group had 20 largest corporate borrowers with aggregated loan amounts due from each of these borrowers exceeding UAH 592 700 thousand (31 December 2013: 20 largest borrowers with loan amounts due from each of these borrowers exceeding UAH 412 196 thousand). The total aggregate amount of these loans was UAH 16 742 222 thousand or 42.5% of the total gross loan portfolio of the Group (31 December 2013: UAH 11 680 627 thousand or 40.2%). In July 2014 the Group obtained an irrevocable guarantee from the Bank s Shareholder amounting to USD 72 200 thousand (UAH 853 634 thousand) to secure its loans and advances. Carrying value of secured loans amounted to UAH 617 528 thousand, maturing in August November 2014. Would borrowers overstay repayment, exposure will be settled in full by the Shareholder. 23

6 Investment Securities Available-for-sale 31 December (unaudited) 2013 Government bonds issued by the Ministry of Finance of Ukraine 2 022 013 1 644 455 Deposit certificates issued by the National Bank of Ukraine 450 022 399 802 Corporate bonds 4 511 270 552 Total debt investment securities available-for-sale 2 476 546 2 314 809 Corporate shares 110 110 Total investment securities available-for-sale 2 476 656 2 314 919 Government bonds issued by the Ministry of Finance of Ukraine are interest-bearing securities denominated in UAH and USD (Note 17). These bonds have maturity dates from July 2014 to August 2015 (31 December 2013: from January 2014 to August 2015), coupon rates from 5.5% p.a. to 9.5% p.a. (31 December 2013: 5.5% p.a. to 15.0% p.a.) and yield to maturity from 1.9% p.a. to 14.1% p.a. (31 December 2013: 7.3% p.a. to 13.6% p.a.), depending on the series of the bond issued. Investment securities available-for-sale are carried at fair value which also reflects credit risk related write downs. Fair value of investment securities available-for-sale is based on their market quotations and valuation models with data use of both observable and not observable on the open market. Unrealised gains/(losses) on revaluation of investment securities available-for-sale other than impairment losses are recognised in other comprehensive income and presented in equity as fair value reserve for investment securities available-for-sale as at in the cumulative gain of UAH 4 546 thousand (31 December 2013: loss of UAH 12 675 thousand). As at, included in investment securities available-for-sale are Government bonds issued by the Ministry of Finance of Ukraine with a nominal value of UAH 189 908 thousands and a fair value of UAH 194 061 thousand (31 December 2013: nominal value of UAH 199 314 thousand and a fair value of UAH 205 245 thousand) were used to cover the Bank s NBU mandatory reserve requirements. As at, included in investment securities available-for-sale are past due fully impaired corporate bonds with a nominal value of UAH 18 259 thousand (31 December 2013: UAH 18 826 thousand). None of the investment securities available-for-sale was renegotiated. 24

7 Other Assets 31 December (unaudited) 2013 Other financial assets Funds in settlement 1 048 1 043 Derivative financial instruments 55 3 462 Allowance for impairment of other financial assets (225) (6) Total other financial assets 878 4 499 Other non-financial assets Prepaid expenses 32 372 34 929 Precious metals 49 946 17 996 Prepayments for premises and other assets 8 609 4 233 Non-current assets repossessed from debtors 3 151 3 151 Inventory 3 417 1 719 Tax settlements (other than on income tax) 133 53 Other non-financial assets 6 242 6 178 Allowance for impairment of other non-financial assets (10 754) (12 837) Total other non-financial assets 93 116 55 422 Total other assets 93 994 59 921 8 Due to Banks 31 December (unaudited) 2013 Term placements of banks 17 162 776 9 137 121 Correspondent accounts and overnight placements of banks 2 377 915 1 231 876 Total due to banks 19 540 691 10 368 997 25