Current Status of the Bank System • Fibank and Bulgarian Banking System ... Sofia branch • Citi Bank Europe - Bulgaria branch • ING Bank N.V., Sofia branch

FIRST INVESTMENT BANK 2018

CONFIDENTIAL

2CONFIDENTIAL

Table of contents

Section 1 Macro environment 3

Section 2 Banking system overview 10

Section 3 Fibank profile 16

Section 4 2017 Q4 Results and profitability 28

Section 5 Management and corporate governance 37

Section 6 Capitalization & leverage 40

Section 7 Funding and liquidity 45

Section 8 Appendix 48

3

MACROENVIRONMENT

SECTION 1

4CONFIDENTIAL

Country profile

Source: National Statistical Institute, Bulgarian National Bank, Ministry of Finance

• Full name: Republic of Bulgaria• Memberships: European Union (since 2007),

NATO (since 2004)• Population: 7.2 M• Capital: Sofia• Area: 110,994 sq km (42,855 sq miles)• Official language: Bulgarian• Traditional religion: Orthodox Christianity• Monetary unit: Bulgarian Lev (plural: Levs,

code: BGN)• A currency board arrangement was established

in 1997 through the Bulgarian National Bank Act.• Fixed Exchange rate: EUR 1 = BGN 1.95583

(BGN 1 EUR 0.51)• Main tax rates:

• corporate tax rate of 10%;• personal income tax rate of 10%;• Value Added Tax Act (VAT) rate of 20%;

• Main exports: Ferrous and non-ferrousmetals, petrol products, foods and drinks,textiles, machines and equipment

• Payment Systems: RINGS, TARGET2 BNB, BISERA, BISERA7EUR, BORICA, SEPA, ESROT, CENTRAL DEPOSITARY

FRANCE

SPAIN

SWITZ.

ITALY

ANDORRA

PORTUGAL

MONACO

Madrid

Lisbon

Rabat

Gibraltar (U.K.)Algiers

Balearic

Islands

MOROCCO

TUNISIA

MALTATunis

Tripoli

Cairo

Valletta

LEBANON

ISRAEL

CYPRUS

IRAQ

SYRIANicosia

Beirut

Damascus

AmmanTel Aviv-Yafo

JORDAN

TURKEY

Crete

COMMONWEALTH OF

INDEPENDENT STATES

ROMANIA

BULGARIA

HUNGARY

Sofia

GREECE

AUSTRIA

ALB.

SLOVENIA

CROATIA

BOSNIA-

HERZEGOVINASERBIA

KOS.

MACE-DONIA

MONT.

Mediterranean Sea

ALGERIA

LIBYA EGYPT

SAUDI ARABIA

Red

Sea

BLACKSEA

Bulgarian economy had strong results over past few years with high growth and low unemployment

KEY DRIVERS OF THE BULGARIAN ECONOMY

• GDP growth in 2017 driven mainly by strong gross fixed capital formation and domestic demand (4.2% - 2017)

• The unemployment rate declined to 8.0% at the end of 2016, and 2017 expected at 6.9%, driven by employment in trade, agriculture, hospitality industry and education

• In 2017, the consolidatedbudget surplus increased to BGN2.5 B (2.5% of GDP) from BGN -2.5B (-2.8% of GDP) in 2015 due to the increased collectability of taxes and fees

• The current account remained positive, at the amount of BGN 2.6B, or 5.1% of GDP in 2017

INFLATION & UNEMPLOYMENT

DECREASED SINCE 2012

HICP & Unemployment(%, 2012-2017E)

BULGARIAN GDP GROWTH ABOVE EU AVERAGE

GDP real growth(%, 2012-2017E)

Source: International Monetary Fund; European Commission; Bulgarian Ministry of Finance; National Statistical Institute; Bulgarian National Bank

4CONFIDENTIAL

Going forward, the economy is expected to continue strong growth anywhere between ~3-4% p.a.

KEY DRIVERS OF THE BULGARIAN ECONOMY

• Future GDP growth is hovering around 3-4% being driven by strong net exports and private consumption. The positive outlook is also supported by expected acceleration of EU funds absorption

5

• Unemployment rate is expected to continue the decline from previous years, but at a lower pace. The trend is driven by the recovery in domestic demand

• The inflation rate is expected to gradually increase to 1.8% in 2021 due to strong domestic demand, higher prices for utilities and recovering energy prices

UNEMPLOYMENT EXPECTED TO FURTHER DECREASE & INFLATION TO INCREASE

HICP & Unemployment(%, 2012-2016)

GDP GROWTH EXPECTED TO CONTINUE AT

ATTRACTIVE LEVELS

GDP real growth(%, 2016-2021F)

Source: International Monetary Fund; European Commission; Economist Intelligence Unit; Bulgarian Ministry of Finance

CONFIDENTIAL

7CONFIDENTIAL

Bulgarian Economic Overview

Growth of Real GDP, Consumption and Investments

Macroeconomic indicators 2017 2016 2015 2014 2013

GDPEUR M 50, 429 48, 127 45, 285 42, 761 42, 010

Growth, % 4.0 3.9 3.6 1.3 0.9

Current accountEUR M 2,268.9 1,091.1 (16.9) 35.1 535.6

% of GDP 4.5 2.3 0.0 0.1 1.3

FDIEUR M 950 1 080 2 476 1 161 1 384

% of GDP 1.9 2.2 5.5 2.7 3.3

Budget deficit/ surplus % of GDP 0.9 0.2 (1.6) (5.5) (0.4)

Bulgaria Current Ratings

Date Outlook Rating

4 July 2017 Stable Baa1

2 Dec 2016 Stable BB+

4 July 2017 Stable BBB

Source: Bulgarian National Bank, National Statistical Institute, Ministry of Finance

0.0 0,91.3

3.6 3.9 4

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

-20

-10

0

10

20

30

40

50

2012 2013 2014 2015 2016 2017

Final consumption Net export Investments GDP

8CONFIDENTIAL

Macro environment: Key indicators historic development

Indicators 2017 2016 2015 2014 2013 2012

Gross domestic product (BGN million) 99, 624 94,130 88,571 83,634 82,166 82,040

Gross domestic product, real growth (%) 4.0 3.9 3.6 1.3 0.9 0.0

- Consumption, real growth (%) 4.3 3.3 3.8 2.2 (1.9) 2.0

- Gross fixed capital formation, real growth

(%)3.4 (6.6) 2.7 3.4 0.3 1.8

Export (% of GDP) 50.6 48.8 48.4 49.2 50.5 48.5

Inflation at period-end (%) 2.8 0.1 (0.4) (0.9) (1.6) 4.2

Average annual inflation (%) 1.1 (0.8) (0.1) (1.4) 0.9 3.0

Unemployment (%) 7.1 8.0 10.0 10.7 11.8 11.4

Current account (% of GDP) 3.9 5.3 0.4 0.1 1.3 (0.9)

Trade balance (% of GDP) (2.1) (2.0) (5.9) (6.5) (7.0) (9.5)

Foreign exchange reserves of BNB (EUR

million)23,662 23,899 20,285 16,534 14,426 15,553

Foreign direct investments (% of GDP) 1.8 1.5 5.5 2.7 3.3 3.1

Gross external debt (% of GDP) 64.4 73.9 75.3 92.0 87.9 89.9

Public debt (% of GDP) 25.1 29.7 26.3 27.2 18.1 17.9

Consolidated budget balance (% of GDP) 0.9 1.6 (2.8) (3.7) (1.8) (0.4)

Exchange rate of USD (BGN for USD 1) 1.63 1.86 1.79 1.61 1.42 1.48

Source: National Statistical Institute, Bulgarian National Bank, Ministry of Finance

9CONFIDENTIAL

Mid-term macro forecast

Spring forecast 2017, Ministry of Finance 2017F 2018F 2019F

GDP real growth, % 3.0 3.1 3.2

- consumption 2.6 2.8 2.9

- investment 2.8 3.8 4.6

- exports 5.2 5.4 5.4

- imports 4.8 5.3 5.6

Unemployment, % 6.9 6.5 6.3

Average HICP, % 1.2 1.3 1.7

Current account, % of GDP 3.8 3.8 3.7

Trade balance, % of GDP -3.5 -3.2 -3.2

FDI, % of GDP 2.3 2.3 2.3

M3 aggregate 8.1 8.4 8.7

Loans to corporates 3.5 5.2 6.5

Loans to individuals 4.5 4.7 5.5

MACRO ASSUMPTIONS2017-2019F

FAVOURABLE MACRO ENVIRONMENT IN THE MID TERM (2017-2019F)

▪ Positive assumptions of the economic development during the period 2017-2019;

▪ Stable growth in GDP to slow down in 2017 & then to gradually increase exceeding 3% y/o/y;

▪ The consumption will accelerate its growth up to 2.9% y/o/y until 2019;

▪ The growth in exports will reach 5.4% y/o/y in 2019;

▪ FDI are expected to remain stable around 2.3% of GDP;

▪ Full production capacity in the business;

▪ Additional increase in the share of goods with a high value added;

▪ Recovery of the labour market;

▪ Reduction in unemployment rate down to 6.3% in 2019;

▪ Strong fiscal position;

▪ Increased activity on the real estate market of residential and office space;

▪ Augmentation of public investments;

▪ Acceleration in the absorption of EU funds;

▪ Expected completion of important infrastructure projects.

10

BANKING SECTOR OVERVIEW

SECTION 2

Healthy and Stable Banking Sector with Significant Growth Potential

Source: Bulgarian National Bank, SNL, EIU, ECB.

Notes: (1) Not comparable with previous years due to methodology change (CRD IV implementation). Several groups of factors impacted the capital position dynamics in 2014: different risk weights and manner of treatment due to the

implementation of the new EU regulatory framework, removal of specific provisions for credit risk and exclusion of KTB from the scope of data at the end of 2014.

(2) Calculated as the ratio between net interest income and financial assets.

22%

20%

9%

6%6% 5% 5%

7%8%

11%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

95%

117% 117%109%

98%92%

85%78%

70% 66%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

13.8%14.9%

17.0% 17.5% 17.5%16.7% 16.9%

21.9% 22.2% 22.2%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

95%

89%

85%

81%

75%

70%

68%

66%

63%

60%

59%

58%

57%

53%

49%

47%

41%

37%

36%

31%

Gre

ece

Esto

nia

Neth

erlands

Malta

Fin

lan

d

Po

rtuga

l

Cyp

rus

Be

lgiu

m

Cze

ch R

epublic

Sp

ain

Slo

venia

Bu

lga

ria

Rom

ania

Hungary

Po

lan

d

Fra

nce

Italy

United K

ingdom

Au

str

ia

Germ

any

261%

219%

213%

177%

148%

146%

119%

111%

111%

76%

75%

62%

61%

60%

59%

57%

49%

30%

Neth

erla

nds

Sp

ain

Au

str

ia

Fra

nce

Be

lgiu

m

Germ

any

United K

ingdom

Gre

ece

Italy

Sw

itzerlan

d

Cze

ch R

epublic

Bu

lga

ria

Hungary

Po

lan

d

Tu

rkey

Norw

ay

Russia

Rom

ania

4.3

%

3.8

%

3.6

%

2.8

%

2.5

%

2.5

%

2.2

%

1.9

%

1.7

%

1.5

%

1.5

%

1.5

%

1.2

%

1.2

%

Bu

lga

ria

Hungary

Rom

ania

Gre

ece

Slo

venia

Po

lan

d

Sp

ain

Au

str

ia

Po

rtuga

l

Italy

Irela

nd

Neth

erla

nds

Germ

any

Fra

nce

(1)

Robust Capital PositionTotal Capital Ratio

Improving ProfitabilityBulgarian Banking Sector RoAE

Decreasing Leverage (Net) Loans / Deposits Ratio

Relatively Low Loan PenetrationBanking Loans / GDP Ratio, 2015

Superior NIM Within EUNet Interest Margin(2), 2015

Fragmented Banking SectorShare of Assets of Five Largest Credit Institutions, 2015

7

0

200

400

600

800

1000

1200

1400

2015 2016 2017

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

2015 2016 2017

Business Retail

0

10 000

20 000

30 000

40 000

50 000

60 000

2015 2016 2017

Business Retail

12CONFIDENTIAL

Sector prospects: gradual increase in loan demand, on-going consolidation & new upward interest rate cycle.

BNB FORECAST 2017-18

Annual rate of change 2017f 2018f

Claims on non-government sector 3.0% 3.6%

- claims on non-financial corporations 2.9% 3.7%

- claims on households 3.0% 3.5%

Deposits of the non-government sector 6.4% 7.0%

▪ In the 2017–2018 period funds attracted from the non-government sector in the banking system are expected to grow further, though at lower than the average 2016 rates, driven by the projected acceleration of private consumption and, correspondingly, by a slight decrease in the savings rate, as well as by the expectations of comparatively strong demand for currency in circulation. The expectations of retaining deposit rates at the attained low levels will also contribute to the foreseen trends regarding funds attracted from corporations and households in the banking system.

▪ The recovery of private consumption and investment amid relatively low lending rates will be a factor stimulating demand for loans from the non-government sector. Progressively improving economic activity is also expected to be a factor behind banks’ increasing lending risk appetite. The expectations of gradually accelerating credit growth correspond to the assumption of retaining positive trends in new loans to the private sector which have occurred since the second quarter of 2016.

Source: BNB Economic Review 4/2016

NET PROFIT

TOTALDEPOSITS

TOTALLOANS

Loans,BGNb

52 52 53

+2%+0%

6974

78

Deposits,BGNb

+5%+7%

0.9

1.31.2

Net profit,BGNb

Net profit

+44% -8%

13CONFIDENTIAL

Current Status of the Bank System

Banking Sector as at 31 December 2017

у/oy 2017 2016 2015 2014 2013 2012

Bank system assets, BGN M 97 807 92 095 87 524 85 135 85 747 82 416

Growth of assets in the bank system,% 6.2 5.2 2.8 (0.7) 4.0 7.3

Bank system profit, BGN M 1 174.0 1 262.3 898.4 746.3 584.9 566.8

Profit growth, %, y/oy (7.0) 40.5 20.4 27.6 3.2 (3.3)

Bank system deposits, BGN M 78 405 74 129 69 276 63 710 62 230 57 256

Growth of deposits, % 5.8 7.0 8.7 2.4 8.7 8.4

Bank system loans, BGN M 53 553 52 442 52 256 54 158 57 376 56 847

Growth of loans, % 2.1 (1.8) (3.5) (5.6) 0.9 3.0

Capital adequacy, % - 22.15 22.18 21.95 16.85 16.7

Liquidity, % 38.97 38.24 36.71 30.12 27.1 26.0

In the period September 2017– December 2017,

the dynamics of processes in the banking system

was impacted by the increase in assets and

balance sheet capital.

The liquid assets ratio, as calculated under BNB

Ordinance No. 11, reached 38.97%.

Source: Bulgarian National Bank, December 2017

Loans and Deposits % of GDP

70.9 71.5 73.2

57.1 55.0 53.1

67.6 69.064.0

70.1 74.2 72.6

0

20

40

60

80

100

2012 2013 2014 2015 2016 2017

Credits Deposits

14CONFIDENTIAL

Fibank and the Bulgarian Banking System

Banking Sector as at 31 December 2017

Source: Bulgarian National Bank, September 2017 and December 2017;

in BGN MSeptember 2017

December 2017 Growth, %

ASSETSBanking system 95 112 97 807 2.8

Fibank 8 551 8 642 1.1

DEPOSITS (other than from credit institution)

Banking system 76 633 78 405 2.3

Fibank 7 359 7 411 0.7

DEPOSIT OF INDIVIDUALS AND HOUSEHOLDS

Banking system 48 019 49 455 3.0

Fibank 6 112 6 075 (0.6)

LOANS TO NON-BANKSBanking system 53 818 53 553 (0.5)

Fibank 5,483 5 509 0.5

CONSUMER LOANSBanking system 9 147 9 151 0.0

Fibank 866 889 2.6

MORTGAGE LOANSBanking system 9 203 9 460 2.8

Fibank 589 604 2.5

CORPORATE LOANSBanking system 33 464 33 160 (0.9)

Fibank 3 943 4 011 1.7

in BGN M December 2016 December 2017 Growth

PROFITBanking system 1 262.3 1174.0 (7.0)

Fibank 90.1 85.4 (5.3)

15CONFIDENTIAL

The banking sector: 27 banks & foreign branches operated in the country. Fibank in Top5 banks at December17.

TOTAL ASSETS(Q4’17, BGNm)

MARKET SHARE (Q4’17, %)

Citi Bank Europe- Bulgaria Branch

855 0.87

Paribas S.A., Sofia Branch 735 0.75

ING Bank N.V., Sofia Branch

671 0.69

T.C. Ziraat Bank, Sofia Branch

107 0.12

Isbank Gmbh-Sofia Branch 113 0.00

GROUP 3: FOREIGN BRANCHES

GROUP 2: OTHER BANKSGROUP 1: TOP 5 BANKS

TOTAL ASSETS(Q4’17, BGNm)

MARKET SHARE (Q4’17%)

Unicredit Bulbank 19,096 19.52

DSK Bank 12,150 12.42

First Investment Bank 8,642 8.84

Eurobank Bulgaria 7,421 7.59

United Bulgarian Bank 7,349 7.51

TOTAL ASSETS(Q4’17, BGNm)

MARKET SHARE (Q4’17, %)

Raiffeisenbank Bulgaria 6,997 7.15

SG Expressbank 6,430 6.57

Central Cooperative Bank 5,411 5.53

Cibank 3,619 3.70

Piraeus Bank 3,036 3.10

Allianz Bank 2,559 2.62

Bulgarian Development Bank2,471 2.53

Investbank 1,981 2.03

ProCredit Bank 1,964 2.01

Municipal Bank 1,510 1.54

International Asset Bank 1,372 1.40

BACB 1,240 1.27

D Commerce Bank 758 0.78

TBI Bank 686 0.70

Tokuda Bank 388 0.40

Texim Bank 220 0.22

Bank Victoria 122 0.13

▪ Fibank is the largest Bulgarian-owned bank ▪ Fibank is the third largest overall, systemically important

to the Bulgarian banking system

16

FIBANK PROFILE

SECTION 3

17CONFIDENTIAL

Fibank aspires to be one of the best banks in Bulgaria, recognized as innovative & customer-oriented bank

BUSINESS MODEL IN LINE WITH BANK MISSION

VISION AHEAD TO GROW FORWARD IN

RETAIL & SME

STRONG COMPETITIVE ADVANTAGES SUPPORTIVE

TO OUTPACE PEERS

First-class customer service

Flexibility in decision

making

Deep knowledge

of the market

Solid market

positions

Wide branch

network

High professional standards

Well recognized

brand

▪ Fibank aspires to be among the best banks in Bulgaria, recognized as a steadily growing, innovative, client-oriented bank, offering outstanding products and services.

▪ Fibank aims to ensure excellent careers for its employees & social contribution to the community.

▪ The Bank seeks to continue to develop high-technological solutions providing its customers with opportunities for banking from any place at any time.

▪ Emphasis on mortgage & consumer lending, the card business & innovative payment solutions in line with client needs & digital trends in banking business

RETAIL BANKING

▪ Strong focus on products & services to micro, small & medium enterprises (SME), with flexible approach and knowledge of the market & local specifics

COMMERCIAL BANKING

▪ Continue to develop model in line with the best corporate governance & risk mgmt. standards in banking industry

BEST STANDARDS

1

2

3

18CONFIDENTIAL

Top 3 Player: 25 years of stable development with focus on innovation and customer experience

2000Assets:

€173m

2005Assets:

€1.3bn

2010Assets:

€2.6bn

2012Assets:

€3.6bn

2016Assets:

€4.6bn

Fibank was established

1993 1997 1999 2000 2005 2007 2010 2013 2015

Fibank was established

EBRD became a shareholder in Fibank with 20% stake. Sold

its shares in 2005.

Fibank Albania established as a

branch. Grew into a separate 100%-

owned entity, licensed by BoA in 2007

Fibank started developing its retail banking. Retail deposits grew 2.3 fold.

Fibank issued EUR200m

Eurobonds. First in Bulgaria to

issue perpetual tier 2 bonds

Fibank realized

the biggest banking IPO in

Bulgaria.

1998-2008: Fibank attracted > EUR800m on

international debt markets

Fibank welcomed

its one millionth

client

2011-2013: First in

Bulgaria to issue Basel 3

compliant tier 1 bonds

totaling EUR100m

Fibank acquired MKB Unionbankin a EUR 24m, 0.25x P/B deal

Joint project with the IFC for

enhancing corporate governance & risk mgmt.

2016

1993

Fibank is among the first banks in Bulgaria to implement new chip

technology (EMV) in issuing debit & credit cards

Fibank was the first bank in Bulgaria to

offer contact-less payments

based on PayPass (NFC)

technology

Fibank first in Bulgaria and the Balkans

launched an innovative platform for digital

payments via mobile devices, with contactless (NFC) function and the

use of digital bank cards.

2017

Fibankengages Citigroup

Global Markets

Limited as a financial

adviser

Fibankcredit ratings were

upgraded by Fitch and

Moody's

3.16

3.37

5.40

6.44

6.87

7.42

7.40

9.61

12.64

20.22

3.10

3.70

5.53

6.57

7.15

7.51

7.59

8.84

12.42

19.52

Piraeus

Cibank

CCB

SGE

RZB

UBB

Eurobank

Fibank

DSK

UniCredit

2.93

2.94

6.01

6.51

6.41

7.51

7.52

10.38

13.20

20.09

2.90

2.92

6.20

6.68

6.88

7.52

7.76

9.45

13.13

19.80

Piraeus

Allianz

CCB

SGE

RZB

UBB

Eurobank

Fibank

DSK

UniCredit

2017 2016

3.39

3.26

4.08

8.28

6.88

7.41

8.72

10.49

13.51

18.67

2.94

3.49

4.22

7.13

7.18

7.87

9.59

10.29

13.72

16.99

Piraeus

Cibank

CCB

UBB

SGE

RZB

Eurobank

Fibank

DSK

UniCredit

19CONFIDENTIAL

Fibank is top 3 player in assets, loans and deposits at December 2017. Committed to innovation & product leadership

LOANS DEPOSITSTOTAL ASSETS

33

3

Market share (%, 2016 & 2017) Market share (%, 2016 & 2017) Market share (%, 2016 & 2017)

4.49

3.63

4.88

4.49

6.38

6.85

7.10

7.02

12.23

22.09

3.75

4.17

4.66

6.32

6.84

7.33

7.77

8.38

12.10

20.10

Piraeus

Procredit

CCB

UBB

SGE

RZB

DSK

Eurobank

Fibank

UniCredit

2017 2016

1.83

3.78

4.21

6.28

5.24

6.87

10.50

15.64

18.88

21.74

2.78

3.66

4.57

6.39

6.56

6.96

9.18

15.70

18.54

20.52

CCB

Allianz

Cibank

Fibank

SGE

RZB

UBB

Eurobank

UniCredit

DSK

2017 2016

4.04

3.68

2.83

3.87

10.57

9.66

8.78

10.04

11.40

29.10

2.83

3.72

3.82

4.68

8.93

9.25

9.72

10.36

12.15

28.22

UniCredit

Cibank

TBI

CCB

UBB

Eurobank

Fibank

SGE

RZB

DSK

2017 2016

2.62

3.19

5.77

6.67

7.19

8.13

8.65

13.51

15.92

16.25

2.55

2.98

6.10

6.77

7.26

8.07

8.51

12.28

16.35

16.90

Allianz

Piraeus

RZB

SGE

CCB

UBB

Eurobank

Fibank

UniCredit

DSK

2017 2016

20CONFIDENTIAL

Increased market shares in consumer loans & retail

deposits at December 2017 as part of long-term strategy.

CONSUMERLOANS

MORTGAGELOANS

RETAILDEPOSITS

CORPORATE LOANS

3

4

7

2

Market share (%, 2016 & 2017) Market share (%, 2016 & 2017) Market share (%, 2016 & 2017) Market share (%, 2016 & 2017)

21CONFIDENTIAL

Fibank with diverse and stable business model. Business mix weighted towards traditional banking.

▪ Limited presence

▪ Traditional banking products and services

▪ Focus on retail & SME clients

BUSINESSMIX

RETAILBANKING

COMMERCIALBANKING

FOREIGNOPERATIONS

CYPRUS

ALBANIA

Mortgage lending

Card business

Consumer lending

Dep

osit

an

d s

avin

gs p

ro

du

cts

Paym

en

t servic

es,

е-b

an

kin

g

Priv

ate

ban

kin

g,

Go

ld &

co

ins

In

vestm

en

t &

dep

osit

ory s

ervic

es

Factoring

Microlending

Corporate lending

SME lending

Trade financing

Project financing

EU programs financing

▪ Retail banking

▪ Corporate banking

▪ SME lending

▪ Microlending

▪ Card payments

▪ E-banking

▪ Private banking

▪ Trade financing

▪ Project financing

▪ Factoring

▪ EU programs financing

▪ Deposit & savings

▪ Payment services

▪ Money and capital markets

▪ Foreign exchange

▪ Investment gold

▪ Package programs

UNIVERSAL & TRADITIONAL

BANKING

1.141

1.160

1.174

1.12

1.13

1.14

1.15

1.16

1.17

1.18

2015 2016 2017

Number of customers withloan products, thousands

Total number of customers,thousands

22CONFIDENTIAL

Fibank customer profile: 92% retail customers, 63% in 25-55 age group. Strong potential for cross selling

CUSTOMERS GREW 2% DURING 2016 TO

REACH ~1.16M

24% OF RETAIL CLIENTS WITH LOAN PRODUCTS. CROSS SALE POTENTIAL

YOUNG & WELL-BALANCED CUSTOMER

PROFILE

+2%

+1%

+1%

251

254

260

246

248

250

252

254

256

258

260

262

2015 2016 2017

+2%

DEPOSIT PRODUCTS

PAYMENT SERVICES

PACKAGE PROGRAMS

DEBIT & CREDIT CARDS

DINERS CLUB CARDS

MORTGAGE LOANS

CONSUMER LOANS

BUSINESS LOANS

TRADE FINANCING

PROJECT FINANCING

FACTORING

EU FINANCING

E-BANKING

INVESTMENT SERVICES

GOLD & COINS

23CONFIDENTIAL

Distribution platform: Country-wide branch network with 155 locations in Bulgaria & 11 abroad (Cyprus & Albania)

MAP OF BRANCHES

Q4 2017 Sofia Country Total

Branches 53 102 155

ATMs 155 486 641

POS 5 547 4 340 9 887

ATM&POS5 702 4 826

10 528

Grand total

5 755 4 92810

683

NETWORK IN BULGARIA

FULL RANGE OF SERVICES CYPRUS BRANCH

▪ Fibank Cyprus branch has operated since 1997, initially mainly in the area of corporate banking. Over the years, it systematically and consistently expanded its products and services.

▪ Currently, the branch offers standard credit and savings products, payment services and e-banking, with a strategic focus on retail & SMEs customers.

FIBANK ALBANIABRANCH NETWORK

Q4 2017 Total

Head Office 1

Branches 9

Total 10

ATMs 29

Grand total 39

▪ Much of the branch network operates with extended working hours, as well as at weekends.

RETAILCLIENTS

BUSINESS CLIENTS

24CONFIDENTIAL

Multi-channel distribution network with adequate balance between physical locations & remote banking channels

MULTI-CHANNEL DISTRIBUTION NETWORK

PHYSICAL DISTRIBUTION

CHANNELS

REMOTE DISTRIBUTION

CHANNELS

Branch network

Direct sales

Remote channels

Integrated platform for electronic banking

My Fibank

Physical channels

ATMnetwork

POSnetwork

Corporate blogContact

center

▪ Branch network is the main channel for distribution of bank products & services.

▪ Fibank maintains a country-wide branch network with 157 locations in Bulgaria & 11 abroad.

▪ Further focus on optimization & increase efficiency of the branch network.

▪ Strong network of ATM & POS devices places Fibank among the market leaders

▪ Direct sales to corp.& institutional clients

▪ New integrated e-platform for digital banking featuring:

➢ E-banking

➢ Mobile banking

➢ Utility payments

➢ E-statements

▪ New opportunity to apply for consumer loan via Contact center. In 2016, over 25 campaigns carried out; 150’000 outgoing calls with 75% respondents reached.

▪ Corporate blog functioning since 2008 to test client’s satisfaction on Bank products & services

Corporate website

Online store for gold products

25CONFIDENTIAL

Group structure: Clear strategic focus on business in Bulgaria

FIRST INVESTMENT BANK AD

Companies in the financial sector

• First Investment Bank – Albania Sh.a.

• Diners Club Bulgaria AD

• Fi Health Insurance AD

Ancillary services companies

• First Investment Finance B.V.

• Balkan Financial Services EAD

• Turnaround Management EOOD

• Creative Investment EOOD

• Lega Solutions EOOD

• AMC ImotiEOOD

• Debita OOD

• Realtor OOD

Subsidiary companies

Parent company

CORPORATE GROUP STRUCTURE

3 KEY SUBSIDIARIES IN FINANCIAL SECTOR

▪ Replication of the successful business model in Bulgaria & its adaptation to the Albanian banking market through a subsidiary bank in Albania with limited presence and focus on retail & SME business.

▪ Further develop the strategic focus on the card business through promoting and consistently increasing penetration of the Diners Club brand in the local market in Bulgaria by offering new services for cardholders, and expanding the network of POS terminals accepting payments with Diners Club cards.

▪ Offering of insurance products & services in line with license of FiHealth Insurance for attracting new customers in the retail & SME segments.

SHAREHOLDERS’ STRUCTURE

26CONFIDENTIAL

Key subsidiaries: Sound performance & results in 2016, growing contributors to Group profit

FIRST INVESTMENT BANK - ALBANIA

DINERS CLUB BULGARIA

FIHEALTHINSURANCE

BGNm 2017 2016 %

Total income 16 13.9 14%

Net profit 6 5.2 23%

Loans 140 102 37%

Total assets 309 272 14%

Deposits 255 233 9%

Equity 39 33.3 17%

BGNm 2017 2016 %

Total income 2.6 2.3 13%

Net profit 0.3 0.2 32%

Loans 10.5 9.1 15%

Total assets 12.1 11.2 8%

Overdraft 9.0 8.3 9%

Equity 2.4 2.1 14%

BGNm 2017 2016 %

Total income 4.0 3.4 18%

Net profit 0.1 0.3 (67%)

Finan.assets 4.9 4.5 9%

Receivables 2.4 2.0 20%

Total assets 8.7 7.8 12%

Equity 5.8 5.7 1.8%

▪ 47% growth in net profit in 2016 due to increasing operational income & further efforts for cost efficiency. ROE reached 17.6%.

▪ Stable growth in both loans & deposits resp. by 15% & 11% with a focus on retail & SME segments.

▪ Portfolio of FIs grew in line with market & the strong liquidity.

▪ Equity grew 28% to BGN 33m.

▪ 145% growth in net profit in 2016 supported by operational income & cost optimization in the general & financial expenses.

▪ Sustainable growth in loans & receivables due to growing card business to retail customers.

▪ The used amount of bank overdraft increased to BGN 8.3m to copy with lending demand & new customers.

▪ 106% growth in net profit in 2016 due to increased net premiums, which incl. illness & accident insurances.

▪ Total assets grew 5% supported by increase in financial assets to BGN 4.5m, which include bank deposits & Bulgarian government bonds.

▪ Equity reached BGN 5.7m or 5% more y/o/y.

27CONFIDENTIAL

Recent awards confirmed Fibank’s successful development & strong focus on innovation & digitalization

STP AWARDS FROM KBC &

COMMERZBANK2 AWARDS ON

DIGITAL CARDSCARDS FOR CHILDREN

ONLINE APPLICATION

CONSUMER LOANS

▪ Fibank received an STP award 2016 from Comerzbank for excellent quality in the delivery of commercial payments and financial institution transfers.

▪ Another STP award was received from KBC, thus confirming Fibank’s consistent approach in delivering high-class of customer service.

PRODUCTS OF THE YEAR 2016:

▪ In April 2017 Fibank was awarded three prizes for innovations in the consumer’s sector on “Product of the year”.

▪ Fibank received the first award for its digital cards, enabling clients to pay easy, secure and fast through their NFC phone.

▪ A Second award on digital cards was received on the Webitinnovation & technology festival, organized in Sofia in 2017.

▪ Fibank received another award for its debit cards for kids & teenagers during the competition “Product of the year”.

▪ With this product the Bank gives young people a modern solution for management of their funds and at the same time developing their financial culture.

▪ The third award of Fibank on “Product of the year” was for its “Online application form for consumer loans”.

▪ Fibank has the right to use the red logo of the competition “Product of the year” during 1 year as a symbol for customers’ satisfaction and gratitude for its work.

28

RESULTS & PROFITABILITY

SECTION 4

29CONFIDENTIAL

Fibank with BGN 92m net profit in 2017, used as a strong tool for internal capital generation.

FINANCIAL HIGHLIGHTS 2016/2015Income statement, BGNth 2017 2016 2015

Net interest income 260,926 319,179 263,546

Net fee & commission income 102,146 91,486 84,217

Net trading income 15,326 13,937 11,017

Other operating income 28,191 40,115 62,802

Total operating income 406,589 464,717 421,582

Administrative expenses 204,698 (192,307) (180,827)

Impairment 78,850 (156,120) (329,137)

Other income/(expenses), net 20,431 (6,177) 108,734

Group profit after tax 92,210 98,811 17,851

Balance-sheet indicators, BGNth

2017 2016 2015

Cash & balances with central banks 1,478,594 1,639,888 1,522,374

Portfolio of financial instruments 803,999 891,835 679,545

Loans & advances to customers 5,162,90 5,044,850 5,221,360

Repossessed assets 984,448 1,034,501 931,555

Investment property 218,212 222,267 206,244

Total assets 8,921,18 9,089,855 8,885,364

Customer deposits 7,583,81 7,911,911 7,203,969

Ministry of Finance deposit - - 450,922

Other borrowed funds 127,493 70,367 135,726

Perpetual debt - - 44,663

Hybrid debt 208,786 208,740 202,044

Total Group equity 947,315 856,836 749,846

1

2

3

4

5

6

7

8

9

▪ Net interest income grew 21% due mainly to interest expense optimization down by 45% in 2016.

▪ Net F&C income remained strong contributor to the top line with 20% share of total income.

▪ Other operated income reinforced with BGN 25m gain from acquisition deal of Visa Europe by Visa Inc.

▪ Administrative expenses up to BGN 192m due to AQR-related consultancy one-offs. Cost optimisation furthered with cost/income ratio down to 41%.

▪ More conservative provisioning in 2015 continued in 2016 with BGN 263m additional write-downs, incl. on AQR-related exposures. Strong reversals reported at BGN 107m supporting CoR ratio down to 2.7%.

▪ In 2015, BGN 112m one-off income reported on revaluation of a new class of assets – investment property, that includes land & buildings, for generating rentals & capital appreciation.

▪ Portfolio of FIs grew 31% due to increase in HTM portfolio & new USA government debt investments.

▪ Loan portfolio down 3% as part of de-risking & diversification actions undertaken.

▪ Deposits grew 10% (outpacing system averages), thus further supporting liquidity.

▪ Full state aid repayment in May’16 & EUR 21m perpetual debt further reduced interest expenses.

1

2

3

4

5

6

7

9

8

30CONFIDENTIAL

Fibank with sound financial indicators. Improved profitability & coverage ratios due to conservative policy

FINANCIAL HIGHLIGHTS 2016/2015Key ratios, % 2017 2016 2015

CET1 ratio 15.89 12.01 11.28

T1 capital ratio 15.87 15.10 14.23

Total Capital adequacy ratio 12.87 15.13 14.72

Leverage ratio 11.28 10.11 10.11

Group equity/total assets 10.62 9.43 8.44

Liquid assets ratio 25.07 28.12 25.37

Liquid assets/customer deposits

26.21 29.12 28.32

LCR 334.85 327.37 325.61

NSFR 136.43 137.61 132.25

Net loan/deposit ratio 68.08 63.76 72.48

Earnings per share (in BGN) 0.84 0.90 0.16

ROE (after tax) 10.24 12.17 2.43

ROA (after tax) 1.03 1.12 0.20

Income diversity ratio 64.17 68.68 62.51

Cost/income ratio (CIR) 50.35 41.38 42.89

Net interest margin 4.14 5.04 3.88

Operating profit/RWAs 7.03 7.52 6.63

Cost of risk (CoR) 1.37 2.66 5.53

NPL90+ ratio 17.48 17.51 14.80

Provisioning coverage ratio 10.44 14.19 12.32

NPL90+ coverage ratio 59.74 67.82 53.69

▪ T1 capital ratio up to 15.10% at YE16 due to retain earnings & de-risking exercise. Total RWAs were down 3%, while those related to credit risk down to 4%. Fibank well-above min. requirements.

▪ Strong liquidity ratios reported with liquid assets to total borrowings ratio at 28.12%, while liquid assets to customer deposits ratio at 29.12%, well above BNB prescribed minimum of 20%.

▪ Loan/deposit ratio down further to 63.76% showing the Bank’s conservative approach & high criteria in assessing credit risk.

▪ ROE up to 12.17% supported by strong net profit & displayed ability for internal capital generation.

▪ Cost optimization furthered on with CIR ratio down to 41.38% vs. 42.89% y/o/y.

▪ Net interest margin stayed solid at 5.04%, while income diversity ratio reached 68.68% indicating interest income as the major source of income.

▪ Cost of risk was down to 2.66% due to strong reversals & deleveraging efforts.

▪ Conservative provisioning continued with loan portfolio coverage ratio up to 14.19% & NPL90+ coverage ratio up to 67.82%. Unreserved NPL90+ down to 35.4% at YE16 vs. 43.6% y/o/y.

1

2

3

4

5

6

7

1

2

3

4

5

6

7

Cap

ital

Liq

uid

ity

Pro

fita

bilit

yA

sset quality

31 32 3441

5041 39

41

19

18 18

17

9 91

0

20

40

60

80

100

120

2014 2015 2016 2017

OtherCredit cardsMortgage loansConsumer loans

31CONFIDENTIAL

Retail business: Retail loans well-balanced in terms of products & FX. Growing share of consumer loans.

STRUCTURE OF RETAIL LOANS

KEY HIGHLIGHTS & COMMENTS

RETAIL LOANS BY PRODUCT

▪ Retail portfolio reached BGN 1,454m or 25% of gross loans, at levels close to YE15 figures, reflecting Bank’s aim of stronger growth in this segment in 2017.

▪ Portfolio well diversified across various products with mortgage loans forming 39% & consumer 34% of total retail lending. Retail loans well-balanced in terms of FX structure.

▪ High quality of mortgage portfolio with LTV+100% comprising only 12% of the portfolio at YE16.

▪ Fibank ranked sixth in terms of mortgage & consumer loans among banks in Bulgaria with a market shares of 6.3% & 8.8% respectively at end-2016.

▪ In 2016 a new lending program was developed for students and postgraduates.

▪ Fibank enabled fully online application for consumer loans at its www.credit.fibank.bg

1,313

1,4971,454

1,507

-3%Retail portfolio,BGNm

Retail portfolio,%

0

200 000

400 000

600 000

800 000

1 000 000

1 200 000

1 400 000

1 600 000

2014 2015 2016 2017

Consumer loans Mortgage loans

Credit cards Other

+4%

By product By currency

50 50 51

67

49 49 48

31

2014 2015 2016 2017

BGN EUR Other

89

102 109

121

-

20

40

60

80

100

120

140

2014 2015 2016 2017

Microlending portfolio BGNm

32CONFIDENTIAL

Retail business: Growing focus & share of Microlendingportfolio. Gross amount reached BGN 121m at YE17.

GROWING SHARE OF MICROLENDING

KEY HIGHLIGHTS & COMMENTS

MICROLENDINGPORTFOLIO

▪ Microlending portfolio grew 6%to reach BGN 109m at YE16. For the 2014-16 period it grew at a CAGR of 10% further diversifying corporate portfolio.

▪ Share of loans to micro companies increased their share to 2.5% of all business loans or 1.9% of Bank gross portfolio at end-2016 as part of long-term strategy to grow this segment & further diversify corporate loans.

▪ Fibank has developed specialisedmicrolending program since 2005, taking into account the financing needs of merchants, manufacturers, farmers, professionals and freelancers, including start-ups and companies with limited market experience.

▪ Microlending is part of the retail lending department, as per Fibank’s internal organization structure.

+6%

+11%

1.4

1.7

1.9

2.1

1.8

2.3

2.5

2.9

0

0.5

1

1.5

2

2.5

3

3.5

2014 2015 2016 2017

Microlending portfolio in %

% of gross loan portfolio % of business loans

48 50 51 55

42 40 39 35

10 10 10 10

-

20

40

60

80

100

120

2014 2015 2016 2017

Retail deposits by currency, %

BGN EUR Other

0

1 000 000

2 000 000

3 000 000

4 000 000

5 000 000

6 000 000

7 000 000

2014 2015 2016 2017

Deposits to individuals, BGNm

Term and savings accounts

Current accounts

33CONFIDENTIAL

Retail business: Stable & granular retail deposit base, >80% covered by deposit guarantee scheme

RETAIL DEPOSITS BY CURRENCY

KEY HIGHLIGHTS & COMMENTS

RETAIL DEPOSITS BY PRODUCT

▪ Bank’s policy is to build a sticky & granular deposit base by offering various and flexible deposit products, adapted to the market conditions and clients’ needs. >80% of retail deposits covered by Deposit Guarantee Scheme.

▪ Retail deposits grew 7% with increase both in current accounts & terms deposits which remained structure-determined with 87% share at end-2016.

▪ Retail deposits well-diversified in terms of FX with BGN forming 51.2% of total retail deposit base.

▪ Fibank ranked third in terms of retail deposits among banks in Bulgaria with increased market share of 13.5% at end-2016.

▪ In 2016, Fibank continued to optimize the conditions of deposit products, and developed new ones, offering competitive conditions in accordance with the market environment.

+7%

5,729

6,146

6,5946,305

100% 100% 100% 100%

-4%

34

Leading in Commercial Lending With Top 2 Position

Fibank’s loan book is predominantly commercial focused…Loan Portfolio by Type, Q4 2017(1)

Source: Company disclosure, Bulgarian National Bank.Notes:(1) As per EC Definition (SME: <250 employees AND ≤€50mn turnover OR ≤€43mn total assets; Business: >250 employees AND >€50mn turnover OR >€43mn total assets). Breakdown as per Fibank’s internal definition would be: 10% SME, 63% Business, 2% Microlending, 25% Retail. (2) Includes loans to general governments, other financial corporations and non-financial corporations. (3) Excludes credit cards and unsecured loans.

…with a leading position in the Bulgarian sector…Corporate Loans(2) Market Share, Q4 2017

…and diversified loan portfolioLoan Portfolio by Sectors of Economy(3), Q4 2017

Fibank’s main competitive advantages in the commercial banking market are its:• Focus on quality of service (consistently ranked as the bank with

the best service standards in Bulgaria)• Deep understanding of the Bulgarian market• Wide distribution network

• Product offering includes term loans, investment loans,working capital loans, overdrafts, guarantees and businesscredit cards

• Active participation (almost full take-up) supportingbeneficiary companies under the programs related to the EUstructural and cohesion funds (JEREMIE initiative)

• Limited exposure to construction and real estate as Fibank did not participate in the boom for these sectors during 2007/2008

• Low portion of the book is uncollateralised (85% of total loan book is collateralised(3))

9

Loan portfolio by business lines

20.10%

12.10%

8.38% 7.77% 7.33% 6.84% 6.32%4.66% 4.17% 3.75%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

UniCredit Eurobank DSK RZB SGE UBB CCB ProCredit Piraeus

Other; 3.42%

Communication; 0.81%

Agriculture; 3.68%

Finance; 1.90%

Tourist services; 3.02%

Construction; 3.54%

Transport; 5.61%

Infrastructure; 8.11%

Services; 10.94%

Private individuals;

26.36%

Trade; 17.66% Industry; 14.95%

41.30%

26.30%

26.00%

6.40%

SME, EU Retail Business Microlending

0

200 000

400 000

600 000

800 000

1 000 000

1 200 000

1 400 000

2014 2015 2016 2017

Corporate deposits by product, BGNm

Current accounts Term accounts

50.90%

22.10%

27.00%

BGN EUR Other

35CONFIDENTIAL

Commercial business: Deposits from corporates grew 25% in 2016 outpacing banking system averages.

CORPORATE DEPOSITS BY CURRENCY

KEY HIGHLIGHTS & COMMENTS

CORPORATE DEPOSITS BY PRODUCT

▪ Corporate deposits grew 25% in 2016 outpacing banking system averages, with increasing share of current accounts which formed 70% of all funds due from corporates.

▪ Term deposits reached BGN 391m at YE16 or 4% more y/o/y, forming a 30% share of all retail deposits.

▪ Corporate deposits well-diversified in terms of FX with BGN forming 50.9% & EUR 22.1% of total corporate deposit base.

▪ Fibank’s market share in terms of deposits from corporates increased to 4.9% at end-2016 (YE15: 4.3%).

▪ As at YE16 funds attracted by the thirty biggest non-banking clients represented a small 5.88% of the total customer deposits.

▪ In 2016, Fibank continued to optimize the conditions of deposit products, and developed new ones, offering competitive conditions in accordance with the market environment.

2016

Corporate deposits by currency, %+25%

2017

971

1,058

1,318 1,278

60.00%27.00%

13.00%

BGN EUR Other

-3%

104110

121

128

0

20

40

60

80

100

120

140

2014 2015 2016 2017

5.7

5.9

6.3

5.5

6.0

5.6

5

5.2

5.4

5.6

5.8

6

6.2

6.4

2015 2016 2017

Market share outgoing

Market share incoming

3.4533.592

4.013

4.611

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

2014 2015 2016 2017

36CONFIDENTIAL

Payment services: Registered growth in fund transfers in both BGN & FX. Well-established market position.

FUND TRANSFERS IN FX CURRENCY

SOLID MARKET SHARES

FUND TRANSFERS IN BGN

BISERA6 & RINGSPAYMENT SYSTEMS

Correspondent banking (SWIFT), TARGET2 & BISERA7-EUR

(SEPA compliant)

+12%

Outgoing transfersin BGN, (000’ numbers)

Outgoing transfersin FX, (000’ numbers)

+10%

Market share offund transfers in BGN, %

+0.2 ppt

+15% +0.4 ppt+6%

37

MANAGEMENT & CORPORATE GOVERNANCE

SECTION 5

Cooperation with the IFC: Successful CG & RM enhancement project during 2015

38

IFC COOPERATION MILESTONES

▪ In 2010, Fibank asked the IFC to prepare a diagnostic assessment of the Bank’s corporate governance & risk management. As a result, changes were implemented to the organizational structure and in 2012, ahead of its peers new committees to the SB were created in line with EBA latest guidelines.

▪ In 2014, at the initiative of Fibank and as a follow-up project, another independent review was performed. IFC’s recommendations were included as part of the Bank’s Restructuring Plan, committed to the European Commission.

▪ In 2015, the joint CG & RM implementation project was launched with detailed plan adopted and deliverables identified. Both Fibank & IFC teams worked together side-by-side with multiple on-site workshops delivered and off-line exchange of information. A steering committee was assigned to track implementation progress.

CORP.GOVERNANCE DELIVERABLES

RISK MANAGEMENT DELIVERABLES

✓Fibank introduced full CCO function in line with the latest Basel Committee principles on CG in banks.

✓A new independent member to the SB was elected with strong expertise and >20 years experience within the IFC.

✓A full CG Code & Disclosure policy were adopted in compliance with the latest best standards in this sphere.

✓The role of the Audit Committee was strengthened with new independent member elected and regular quarterly meetings with IA introduced.

✓Steps to strengthen the dialogue with minority shareholders were undertaken, e.g. a new Investor Club created and new initiative for regular meetings with minority shareholders.

✓Organizational changes were made, incl. full CEO, CRO & CCO functions being introduced. CFO was added as member of the MB.

✓Fibank introduced full CRO function based on the “three lines of defense” principle.

✓A new pricing policy was implemented for the setting of individual product price.

✓A new profitability tool was launched to better monitor the profitability per client, business line, portfolio.

✓RCSA methodology was enhanced to better assess operational risks at the process level, before & after controls.

✓A new rules for using KRIs in OP risk framework were adopted for improving processes for escalating & tracking tolerance limits.

✓Risk strategy was enhanced with risk appetite statement introduced and full risk map of the organization defined.

✓ALCO work was strengthen, i.e. a full fledged info pack in place for enhanced activity.

2015 Implementation Project

39CONFIDENTIAL

Organizational structure ensures effective running of key functions & clear separation of duties.

SUPERVISORY BOARD

(Chair: Evgeni Lukanov, Deputy Chair: Maya Georgieva, Members: Georgi Mutafchiev, Radka Mineva, Jordan Skortchev, Jyrki Koskelo)

NOMINATION COMMITTEE

Chair: Georgi Mutafchiev

REMUNERATION COMMITTEE

Chair: Jordan Skortchev

RISK COMMITTEE

Chair: Evgeni Lukanov

PRESIDING COMMITTEE

Chair: Maya Georgieva

AUDIT COMMITTEE

Chair: Radina Beneva

INTERNAL AUDIT

(Ralitsa Bogoeva)

MANAGING BOARD

(Chair: Nedelcho Nedelchev, Members: Sevdalina Vassileva, Chavdar Zlatev, Svetozar Popov, Jivko Todorov, Nadia Koshinska)

ALCOCREDIT

COUNCILRESTRUCTURING

COMMITTEEOPERATIONAL RISK

COMMITTEE

BUSINESS UNITS SUPPORTING UNITS

40

CAPITALIZATION & LEVERAGE

SECTION 6

41CONFIDENTIAL

Regulatory capital well in line with CRD IV (Basel III). Profit retention following GMS in May’17 to support CET1.

REGULATORY CAPITAL

OWN FUNDS CALCULATIONS

REGULATORY REQUIREMENTS

Own funds calculations, BGNth

YE2016 YE2017

Paid up capital instruments 110,000 110,000

(-) Indirect shareholding in CET1 capital instruments

(93) -185

Premium reserves 97,000 97,000

Other reserves 523,627 609,109

Minority interests 2,355 -

Accumulated other comprehensive income

25,043 25,931

Deductions from CET1 capital:

(-) Intangible assets (10,186) -6,885

Adjustments of CET1 capital (5,944) -3,809

Common Equity Tier 1 capital 741,802 831,161

Additional Tier 1 capital

Hybrid debt 195,583 195,583

Tier 1 capital deductions:

Transitional adjustments of Additional Tier 1 capital

(4,290) -1,439

Tier 1 capital 933,095 1,025,305

Tier 2 capital

Perpetual debt -

Adjustments of Tier 2 capital 1,800 900

Total own funds 934,895 1,026,205

▪ Since 1 January 2014, the provisions of the CRD IV package have been in force, transposing into European law the provisions of the Basel III capital standards for banks.

▪ CET1: a) issued and paid up capital instruments (ordinary shares); b) share premium from issuance of ordinary shares; c) audited retained earnings; d) accumulated other comprehensive income, including revaluation reserves; e) other reserves; f) minority interests. Deductions includes intangible assets.

▪ AT1: instruments include hybrid debt. Deductions include regulatory adjustments relating to items that are included in the capital or the assets of the Group, but are treated differently for capital adequacy regulation.

▪ Tier 2 capital: T2 capital consists of perpetual debt and regulatory adjustments related to revaluation reserve on land & buildings.

GMS in May’17 voted to capitalize the net profit for 2016, thus

ensuring strong internal capital generation with focus on CET1 In 2016 the Bank repaid perpetual debt

(T2 capital) with principal EUR 21M

1,026936

935939

0% +10%

0

200000

400000

600000

800000

1000000

1200000

2014 2015 2016 2017

Regulatory capital, BGN,m

CET1 Additional tier 1 capital Tier 2 capital

42CONFIDENTIAL

Fibank to maintain capital buffers in line with CRD IV. New O-SII capital buffer applicable since 2018.

CAPITAL BUFFERS COMMENTS

▪ In addition to the capital requirements, Fibank maintains capital buffers in compliance with the requirements of Ordinance No8 of the BNB on capital buffers.

▪ Capital conservation buffer, comprised of common equity tier 1 capital equal to 2,5% of the total risk exposure of the Bank

▪ Buffer for systemic risk amounting to 3% of the Bank’s total risk exposures in Bulgaria, which is covered by common equity tier 1 capital.

▪ Countercyclical capital buffer, applicable to credit risk exposures in the Republic of Bulgaria, the level of which is determined by the Bulgarian National Bank each quarter. During the whole of 2016 and for the first quarter of 2017, it was defined at 0%

▪ Buffer for O-SII on an individual and consolidated basis, determined as a share of the total value of the risk exposures, is in the amount of 0% for 2017 and it will gradually grow from 0.5% in 2018 to 1% in 2020.

0.0 0.00

Capital buffer for other systemically important institution

Pursuant to decision of MB of BNB / 2017

With a decision dated 10 November 2016, the BNB determined ten banks in Bulgaria as other systematically important institutions (O-SII), among which is First Investment Bank AD.

43CONFIDENTIAL

Capital indicators exceeds minimum requirements. Ratio calculations consistent with CRD IV.

CAPITAL INDICATORS

CAPITAL ADEQUACY RATIO CALCULATIONS

▪ Common Equity Tier 1 capital ratio is the Common Equity Tier 1 capital of the institution expressed as a percentage of the total risk exposure amount;

▪ Tier 1 capital ratio is the Tier 1 capital of the institution expressed as a percentage of the total risk exposure amount;

▪ Total capital ratio is the own funds of the institution expressed as a percentage of the total risk exposure amount.

▪ The total risk exposure amount is calculated as the sum of the risk-weighted assets for credit, market, and operational risk.

▪ The Group calculates the credit risk requirements for the exposures in its banking and trading portfolios based on the standardised approach. Exposures are taken into account at their book value. Off-balance sheet commitments are taken into account by applying conversion factors for the purpose of their approximation to book values. Positions are weighted for risk using different percentages depending on the class of exposure and its credit rating. A variety of techniques are used to reduce credit risk, such as collaterals and guarantees. For derivative instruments, such as forwards and options, the counterparty credit risk is estimated.

▪ The Group also calculates capital requirements for market risk for foreign exchange and commodity instruments in the trading and banking books.

▪ The Group calculates capital requirements for operational risk using the basic indicator approach. The capital requirement is equal to the average gross annual income over the last three years multiplied by a fixed percentage (15%). The respective risk weighted assets are calculated by further multiplication by 12.5.

0

2

4

6

8

10

12

14

16

18

CET1 ratio Tier 1 capital

ratio

Total capital

adequacy ratio

Capital adequacy indicators for 2016/ 2017, %

2016 2017

1213

1516

1516

14.9

14.7

15.1

15.9

14.0

14.2

14.4

14.6

14.8

15.0

15.2

15.4

15.6

15.8

16.0

2014 2015 2016 2017

TCA ratio, %

13.6

14.2

15.1

15.9

12

12.5

13

13.5

14

14.5

15

15.5

16

16.5

2014 2015 2016 2017

Tier 1 capital ratio, %

10.811.3

12.0

12.9

15.3

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

2014 2015 2016 2017 Target

2019f

CET1 ratio, %

44CONFIDENTIAL

Capital indicators improved due to de-leverage measures. Hybrid capital fully compliant to absorb losses.

CET1 RATIO

T1 RATIO

TCA RATIO

AT1:HYBRID CAPITAL

▪ As at YE16, Fibank had issued two hybrid instruments (bond issues) with original principal on the amount of EUR 40M and EUR 60M (ISIN: BG2100008114 & BG2100022123), which fully comply with the requirements of Regulation (EU) No 575/2013 and are included in the additional tier 1 capital.

▪ The bonds are registered, dematerialized, interest-bearing, perpetual, unsecured, freely transferable, non-convertible, deeply subordinated and without incentive to redeem.

▪ Both hybrid bond issues are admitted to trade on a regulated market at the Luxembourg Stock Exchange.

+0.7ppt +0.9ppt

+0.4ppt

+0.9ppt

+0.8ppt +0.8ppt

45

FUNDING & LIQUIDITY

SECTION 7

0

20

40

60

80

100

120

2014 2015 2016 2017

Structure of liabilities, %

Other Hybrid & Perpetual debt

Other borrowed funds Deposit MF

Customer deposits

86.7

72.5

63.868.08

0

10

20

30

40

50

60

70

80

90

100

2014 2015 2016 2017

Net loan/deposit ratio, in %

0.000

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

Customer deposits, BGNm

Retail Business

46CONFIDENTIAL

Customer deposits main source of funding with 89% of liabilities. Stable growth covered state aid repayment.

DEPOSITS: MAIN FUNDING SOURCE

STABLE GROWTH TO ADDRESS AID REPAYMENT

LDR SUPPORTING LIQUIDITY

7,5847,912

7,204

6,700

+10%

+13%

8,100 8,135 8,233 7,974 +8.7ppt +4.3ppt

-4%

YE14 YE15 YE16 YE17

26.325.4

28.1

25.1

27.028.3

29.1

26.2

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

2014 2015 2016 2017

Liquidity indicators, %

Liquid assets ratio

Liquid assets/customer deposits

350

326 327335

119132 138 136

0

50

100

150

200

250

300

350

400

2014 2015 2016 2017

LCR & NSFR indicators %

LCR NSFR

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

2014 2015 2016 2017

Liquid assets, BGNm

Debt securities and gold

Current accounts and amounts with banks

Central banks

47CONFIDENTIAL

Strong liquidity in line with market. Liquidity ratios well above minimum required levels.

LCR & NSFR WELL ABOVE MIN LEVELS

LIQUID ASSETS GREW DESPITE SA REPAYMENT

STRONG LIQUIDITY RATIOS

2,0402,120

2,304

1,986

+13%

Minlevel

Minlevel

-14%

48

APPENDIX

SECTION 8

49CONFIDENTIAL

Awards

Best Bank in Bulgaria

Bank of the year by market share, by Bank of the year association

201020112012

Bank of the year by Bank of the year association

200120112012

20012011

Mrs. Maya Georgieva Banker of the year, by financial magazine Banker

2012 Mr. Vasil Christov Banker of the year, by financial magazine Banker

Management

Best Bank in Bulgaria by the financial magazine Euromoney

2011

Quality of Service

2012 Bank of the Client by Bank of the year association

Mystery Client by Bank of the year association2012

2011STP Award, Excellent quality , Commerzbank

20102009

2013

2009

20102011

Straight-Through Processing (STP) Excellence Award, Deutsche Bank

Bank of the Customer,by the influential Bulgarian daily “Pari” (“Money”)

20022003200620082009

The best customers service of the year by International Finance Exhibition “Banks, Investments, Money”

2007

For achieving a Straight Through Processing Rate in excess of 97% for US Dollar payments sent to Citibank New York

2009

Best Retail Bank in Bulgaria by Global banking & Finance

2014

Innovation in Retail Banking Bulgaria and Best Private Bank Of The Year by Finance publishing

2014

Mr. Matthew Mateev Banker of the year

2005

20142016

50CONFIDENTIAL

Awards

Brand/ Products/ Web/Other awards

Fibank is the strongest brand in Bulgarian market by the Superbrands

201220142016

Golden Martenitsa by Made in Bulgaria union2012

Best brand in financial institutions by My love marks2012

2017

2011

OSCARD for innovative co-branded credit card Fibank-Vivatel

2008

Financial product of the year, by International Finance Exhibition “Banks, Investments, Money”

2004200520062007

Three awards for charity at the Fifth Annual Donors' Conference organized by the Bulgarian Donors' Forum

2009

VISA International Certificate

for VISA Cards Retail Sales Volume

The Bank’s corporate site won category “Business” by Bulgarian Web Awards 2009

2014

2009

2006

Most Innovative Banking Product (Credit and Debit Card) by Global banking & Finance

The best corporate blogs in Bulgaria by Nova Vizia2009

First prize for best corporate BG Site2009

2012

2014 Best maturity deposits by Handelsblattnewspaper

2014 Developing card payments and bringing innovations by MasterCard

20072008

Best public company on the Bulgarian Stock Exchange, by "Dnevnik" newspaper

2015 Card Product of the Customers by b2b magazine

2015 Best marketing team by Baawards

2016

2016

2016

Annual awards for charity and CSR“Golden heart” by “Business Lady”magazine

Investment in a digital and civilliterate society by Digital Kids

National charity campaign “Easter for everyone”.

2016 “Product of the Year”

51CONFIDENTIAL

Awards

Brand/ Products/ Web/Other awards

2017 “Product of the Year”

Debit card for children and teenagers - category “Bank cards”Consumer credit online - category “Consumer credit”Digital card - category “Mobile financial services”

Webit awards:Mobile Digital Card – “Best digital payment solution” 2017

2017

2017

2017“Best consumer banking brand”

“GBM – Best SME banking brand”

2017 “Superbrands”

2017 “Golden Heart”