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BUSINESS IN THREE DIMENSIONS

ANNUAL REPORT 2014

ANNUAL REPORT 2014

The BesT Russian BankExpobank has received the EMEA Finance Europe Banking Award, nominated as the Best Bank Operating in Russia, based on 2014 results.

eMea Finance Magazine is an internationally recognized financial publication telling of the most important events in the financial markets in europe, the Middle east and africa. every year the magazine gives out ‘europe Banking awards’ to the best banks. When deciding on the winners, eMea Finance experts rely on such criteria as the economic performance, increase in profits and international business expansion.

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ANNUAL REPORT

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General Information on the Report

Key Topics of the Report

The Report highlights performance indicators included in expobank’s 2015–2017 strategy.

Standards

The report has been prepared based on expobank 2014 iFRs statements.

Ratings

in May 2014 international Rating agency Fitch Ratings upgraded the Bank’s national Long-Term Rating to “BBB”, with its international Ratings affirmed at “B”. The ratings were affirmed in December 2014.

in november 2014 Russian Rating agency RusRating upgraded the Bank’s credit ratings to “BBB-” (international scale) and to “aa–” (national scale), Outlook stable

Core Business

Offering a whole range of banking services to corporate clients and affluent private customers are among the Bank’s priorities, as well as acquisition and consolidation of banking assets. The Bank operates under General License for Banking Operations no.2998 of 06 February 2012 (replacement of License no.2998 of 02 December 2008) issued by the Bank of Russia (CBR). The Bank participates in the government’s deposit insurance programme introduced by Federal Law no.177-FZ dated 23 December 2003 ‘On insurance of household Deposits with Russian Banks’.

Contact Details

29 kalanchevskaya street, bldg.2, Moscow, 107078

Tel: +7 (495) 228 31 31

email: [email protected]

24/7 information Centre:+7 (495) 231 11 11; +7 (800) 500 07 70

Website: www.expobank.ru

The Report has been prepared by Expobank Limited Liability Company (‘Expobank’). The consolidated data cover the period from 01 January to 31 December 2014.

CONTENTS

FINANCIAL STATEMENTS

GENERAL

independent auditor’s report 60

statement of financial position 62

statement of Comprehensive income 64

statement of changes in equity 66

statement of cash flows 67

addresses / Contacts 69

CORPORATE GOVERNANCE

accountability and efficiency 40

Risk management 42

information openness and transparency 48

social policy and hR management 49

SUMMARY

General information on the Report 3

assets and partner banks 6

Geography of operation 7

expo brand footprint globally and across Russia 8

history of the Bank 10

STARTEGIC REPORT

address of the Chairman of the Board of Directors 13

address of the Chairman of the Management Committee 15

strategy, Mission, Values 18

Our activities 19

key events in 2014 20

Financial results 21

Overview of Russian economy in 2014 24

strategic goals for 2015–2017 27

Private Banking / expobank Premier 30

Treasury 31

Corporate banking 36

M&a 38

Regional policy 39

INTERNATIONALITY

Business and finance have no borders. Despite differences in traditions and cultures businessmen from various countries are able to find common language. Expobank opens up the way to the European and world markets to its clients and is ready to be their guide in new directions and new opportunities. We are familiar with all subtleties and nuances of business cultures in various countries, and we are happy to share this experience. Everywhere, we speak one common language with business people — the language of growth and development.

MOSCOw, RUSSIA PRAGUE, ThE CzECh REPUBLIC

MOSKvA-CITY‘Moskva-City’ Moscow International Business Center is the biggest business area both in Moscow and Russia. The country’s highest skyscrapers — Mercury City Tower (338.8m), Eurasia Tower (308.9 m), Moscow Tower (301.8m) — have been and are still constructed.

PRAGUE STOCK ExChANGEis the second largest stock exchange in the CEE countries. Though the first commodities and stock exchange in the Czech capital was founded yet in 1861, the modern Prague Stock Exchange is relatively young: trading started on 6 April 1993.

RIGA, LATvIA

RIGA STOCK ExChANGEThe stock exchange is owned by Swedish-Finnish OMX Group which also operates exchanges in Helsinki and Stockholm. The neo renaissance stock exchange building was constructed in 1852–1855, designed by architect Harald Julius von Bosse.

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Surgut

KrasnoyarskLLC ‘SIBBUSINESSBANK’

COMMERCIAL BANK ‘STROMCOMBANK’ LIMITED

MoscowCOMMERCIAL BANK ‘MAK-BANK’ LLC

THE BANkS ARE REPRESENTED IN THREE REGIONS — RUSSIA, THE CzECH REPUBLIC AND LATvIA — AND OPERATE UNDER A SINGLE CORPORATE NAME OF EXPOBANk.

each of the credit institutions is controlled by igor kim and is a financial partner of the Russian credit institutions. This provides the clients of our bank in Russia with both prompt execution of transactions in Russia and with a whole range of opportunities in european countries and in hong kong.

The banks are focused on corporate banking, M&a deals and on servicing export and import transactions of companies including those promoting import substitution policies and development of joint businesses in the territories of the brand presence.

Assets and Partner Banks Geography of Operation

“Clients’ business value growth leads to the increase in the shareholder value of the Bank. That is why each of the credit institutions is result-oriented and focuses on offering the most advantageous opportunities. Partner banks form new access points for Russian clients to global financial centers, provide operational efficiency and consultancy expertise”.

Igor kim

Chairman of the Board of Directors, expobank LLC (Russia)

Chairman of the supervisory Board, expobank CZ (Czech Republic)

Chairman of the Board of Directors, as expobank (Latvia)

igor kim is an international strategic investor who has success-fully completed over 30 M&a deals both with Russian partners and global financial institutions.

Igor Kim

THE FOLLOWING ASSETS HAvE BEEN PURCHASED IN THE RUSSIAN

SECTOR RECENTLY:

LLC ‘SIBBUSINESSBANk’ (Surgut) Commercial Bank ‘STROMCOMBANk’ Limited (krasnoyarsk) Commercial Bank ‘MAk-Bank’ LLC (Moscow) from OJsC aLROsa Diamond Mining Company.

THE PURCHASED FINANCIAL INSTITUTIONS WERE MERGED INTO EXPOBANk LLC (RUSSIA)

AS ExPOBANK is one of the oldest banks in Latvia. it was founded in 1991. The Bank’s major task is to be a reliable and professional financial partner to its customers and clients, to provide them with top quality and speedy service, and to ensure security and stability. The service standards have already been appreciated by clients from Russia, Cis and europe operating in mining, manufacturing, finance, trade and other industries.

ExPOBANK Cz operates in the Czech banking market since 1991. The bank is focused on provision of complex prod-ucts and services. This covers corporate banking services incl. treasury services, real-estate financing and export and trade financing as well as a broad range of private and personal banking services. expobank CZ takes pride in being able to offer custom-made solutions and in its great care to detail when providing its clients with intellactual products and services.

ExPOBANK LLCis a dynamically developing bank that has been operating in the Russian banking market since 1994.

its priorities are offering a whole range of banking services to corporate clients and affluent private customers. The Bank focuses on providing banking services backed up by an extensive experience of successful deals involving funds raising, M&a’s and business restructuring for Russian and interna-tional companies. about 7.5 thousand companies and over 100 thousand individuals are among the Bank’s customers and clients.

Kirill Nifontov CEO, Russia

Māris Avotiņš CeO, the Czech Republic

Ilya Mitelman CEO, Latvia

IGOR kIM SUCCESSFULLY CLOSED OvER 30 M&A DEALS WITH GLOBAL

FINANCIAL INSTITUTIONS:

Barclays (Uk)Santander (Spain)Morgan Stanley (USA) West LB (Germany) vR Leasing (Germany) LBBW (Germany)

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Summary

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www.expobank.ru

Riga

RUSSIA

Saint Petersburg

Moscow

LATVIA

Novosibirsk

Kemerovo

Yekaterinburg

PermSurgut

Krasnoyarsk

Yakutsk

Prague

THE CZECH REPUBLIC

Krasnodar

Novokuznetsk

Expo Brand Footprint Globally and Across Russia

“The Bank’s team possesses qualitative expertise and competences in M&A deals. Ensuring development for the Bank, growth in its business volumes and profitability, and expansion of geographical footprint through M&A deals are our key business goals. The synergy effect from their implementation enables us to develop at the rate exceeding the market average”.

kirill Nifontov CeO of expobank LLC

“We see great potential for the development of the Bank’s and its clients’ businesses in the Asian market, namely in such segments as China, Malaysia, Indonesia. We think that the Bank’s products and services, especially highly efficient servicing of payments with a remote access option, will be in great demand”

Ilya MitelmanCeO of as expobank

“We provide our clients with top quality financial instruments and service. When performing export and import transactions between Russia and the Czech Republic, promptness and skilled support are among our competitive advantages”.

Māris Avotiņš CeO of expobank CZ

ExPOBANK Cz (CZeCh RePuBLiC)

equiTy OF euR 94 MLn, CaPiTaL aDequaCy RaTiO OF 24.8%

750 asseTs as OF 2014 yeaR-enDeuR MLn

AS ExPOBANK (LaTVia)

equiTy OF euR 68 MLn, CaPiTaL aDequaCy RaTiO OF 35.5%

490 asseTs as OF 2014 yeaR-enDeuR MLn HONG KONG

ThE REPRESENTATIVE OFFICE hAS BEEN OPENEd TO SUPPORT OUR CLIENTS INTERESTEd IN ExPANdING ThEIR BUSINESSES IN ASIA, ESPECIALLY IN ChINA.

Expobank LLC (Russia)

equiTy OF RuB 6.9 BLn, ReTuRn On equiTy OF 22.5%

51.9 asseTs as OF 2014 yeaR-enDRuB BLn

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Expobank 2014

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BANK wAS RENAMEd BACK TO ExPOBANK

AS ExPOBANK (LATvIA) wAS ACqUIREd

February 2012

March 2012

The Jubilee Year 2014 — 20 YEARS IN BANKING The Success Story ОКТЯБРЬ 2011

ExPOBANK wAS FOUNdEd

MERGER OF STROMCOMBANK TO ExPOBANK wAS COMPLETEd

MERGER OF SIBBUSINESSBANKTO ExPOBANK wAS COMPLETEd

RUSSIAN SUBSIdIARY OF GERMAN vR LEASINGhOLDING wAS ACqUIRED

ExPOBANK ACqUIREd LBBw BANK Cz FROM LANdESBANK BAdEN wüRTTEMBERG (LBBw)

ExPOBANK wAS ACqUIREd BY BARCLAYS

BANK wAS ACqUIREd BY PRIVATE INVESTORS hEAdEd BY IGOR KIM

1994

March 2013

June 2013

August 2013

September 2014

March 2008

October 2011

RUSSIA’S FIRST PROJECT ON FULL-SCALE TEChNOLOGY OUTSOURCING OF BANKING SYSTEMS wAS IMPLEMENT-Ed. ThE TRANSITION wAS RECOGNIzEd BY OUTSOUR-CING RUSSIA AwARd-2013 AS ThE BEST TEChNOLOGY OUTSOURCING SOLUTION IN RUSSIA IN 2012

2012

EMEA Finance recognized Expobank as the Best Russian Bank, based on 2014 results. The Bank received the EMEA Finance Europe Banking Award, nominated as the Best Bank Operating in Russia

2014

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Startegic Report

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Address of the Chairman of the Board of directors

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Dear shareholders, members of the Board, clients and partners,

The world economy in general and the banking sector in particu-lar are going through changes. Financial institutions are seeking efficient forms and means of being a success, with regulations tightened, costs increased and with a global tendency for transparency. The Russian banking sector is not an excep-tion. Professional market players are adapting to the updated geopolitical frame of reference taking into account risks and defining for themselves the most optimum business strategies.

Russian Expobank has always demonstrated positive dynamics and every year it proves its competence and reliability building up long-term relationships of trust with its customers and clients.

The year 2014 was a jubilee year for the Bank. 20 years of suc-cessful operation are marked with a number of transformations, achievements, successes, with introduction of innovative and state-of-the art solutions. a team of responsible and profes-sional top managers was formed. Their work is aimed to ensure the clients’ business value growth, which leads to the increase in the shareholder value of the Bank.

Address of the Chairman of the Board of directors

expobank’s active interaction with the partner banks in the Czech Republic and Latvia secured operational efficiency, con-sultancy expertise and new access points for Russian clients to global financial centers. all three credit institutions operating under the single brand are result-oriented and focused on offer-ing the most advantageous opportunities. This is supported by a strong management and successful work of nonexecutive directors of world level.

in 2014 the work of the Board of Directors of exponank-Russia was focused on enhancement of decision-taking and strength-ening of control over adherence to the laws and recommenda-tions of CBR. With requirements to the banking sector tight-ened, the top management paid and continues to pay special attention to creditworthiness of corporate borrowers and to risk management matters. all taken measures were targeted at strategy implementation and creation of a robust platform for further business development.

On behalf of the Board of Directors i would like to thank the whole team of expobank in Russia and wish them successful implementation of the goals set.

Igor Kim

Chairman of the Board of Directors expobank LLC

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ANNUAL REPORT

Expobank 2014

Startegic Report

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Address of the Chairman of the Management Committee

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Dear shareholders, members of the Board, clients and partners,

success factor for the Bank today is quality of customer service based on reliability, skills of staff and on a high level of banking technologies. in 2014 our Bank earned comprehen-sive income of RuB 1.7 bln, which exceeds the 2013 results by 40.5%. equity made RuB 6.9 bln, return on equity equaled 22.5%.

Profits of the Bank have been growing for the third year running and even with the market environment changing Expobank demonstrates high rate of return while maintaining excess liquidity and capital adequacy.

One of the key elements for the year results was income from M&a’s. in september 2014 expobank successfully closed the deal on acquisition of 100% voting shares in Czech LBBW Bank CZ a.s. from Landesbank Baden-Württemberg. as a result of this acquisition expobank gained over 30 thousand active clients in europe, an opportunity to service export and import transactions between Russia and the Czech Republic, and also a competence in working with German companies. expobank CZ a.s. is characterized by a sound capital adequacy (CaR 24.75%), loan book quality, and also by a well-diversified asset structure and excess liquidity.

Address of the Chairman of the Management Committee

Our plans stand out by their reasonableness as the Bank’s team prefers steady development. We remain true to our cause, our values remain unaltered — integrity, efficiency, open-ness to change. These principles form basis for relationships with our clients, partners, team members and community. We develop; we improve customer service and do everything for you to feel comfortable and profitable to build up your relation-ships with the Bank.

i would like to thank all team members of the Bank for the professionalism and responsibility with which we get down to resolution of the most difficult tasks set by the present-day challenging environment in the financial markets. no doubt, the valuable experience we gained in the past year will be just another step to success, stable growth and prosperity of the Bank in future.

Kirill Nifontov

CeO, expobank LLC

Gulnisa UlanovaChief Accountant

Management Committee

Ernst Bekkerdeputy Chairman of the Management Committee

Olga Pugachevadeputy Chairman of the Management Committee

Dmitry Ganushkindeputy Chairman of the Management Committee

Kirill NifontovChairman of the Management Committee of Expobank LLC

Oleg Novolodskydeputy Chairman of the Management Committee

Alexey Fedotkindeputy Chairman of the Management Committee

Alexey Sannikovdeputy Chairman of the Management Committee

ANNUAL REPORT

Expobank 2014


ANNUAL REPORT

Expobank 2014

Startegic Report

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Our Activities

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Mission of the Bank:

We build the banking business designated to help clients to secure growth of their business value and to promote their financial soundness.

Strategy, Mission, Values Mission and vision

expobank LLC is a dynamically developing bank that has been operating in the Russian banking market since 1994.

The Bank is among top 30 biggest credit institutions in net profits*. it has high credit ratings from leading rating agen-cies. in December 2014 Fitch Ratings affirmed the Bank’s international Rating at ‘B’. in november 2014 RusRating upgraded the Bank’s credit ratings to “BBB-” (international scale) and to “aa-” (national scale), Outlook stable.

its priorities are offering a whole range of banking services to corporate clients and affluent private customers. The Bank focuses on providing banking services backed up by an exten-sive experience of successful deals involving funds raising, M&a’s and business restructuring for Russian and international companies.

About 7.5 thousand companies and over 100 thousand individuals are among the Bank’s customers and clients.

Our Activities

* according to the banks ranking made by the interfax-Center for economic analysis as of 01 January 2015

ENGAGEMENT OF EACh TEAM MEMBER, SINCERE INTEREST IN ThE RESULT AChIEVEMENT ThROUGh JOINT EFFORT. wILLINGNESS OF EVERY PERSON TO MAKE A VALUABLE CONTRIBUTION MAINTAIN-ING CONFIdENTIAL ANd RESPECTFUL RELATIONS

TEAMwORK

OPENNESS TO ChANGES ANd APPROPRIATE RESPONSE TO ThE NECESSITY OF INTROdUCING POSSIBLE ChANGES. ThE ABILITY TO ACCEPT VARIOUS POINTS OF VIEw ANd AdAPTABILITY TO A NEw ACTION PLAN APPROVEd

OPENNESS, READINESS TO ChANGE

FOCUS ON ThE BEST RESULT wITh ThE hELP OF ThE MOST SUITABLE METhOdS. CONSTANT SEARCh OF wAYS TO AChIEVE PROFESSIONAL IMPROVEMENT ANd dEVELOPMENT

EFFECTIvENESS, EFFICIENCY

LOYALTY TO EThICAL STANdARdS ANd PRINCIPLES. dEMONSTRATION OF ThE FIRM INTENTION TO ACT IN LINE wITh EThICAL PRINCIPLES, hONESTLY ANd dECENTLY ABIdING BY PROFESSIONAL COdE OF CONdUCT ANd SOCIAL STANdARdS

EThICS, hONESTY AND INTEGRITY

values of the Bank:

ExPOBANK IS AMONG TOP 30 BIGGEST CREDIT INSTITUTIONS IN NET PROFITS IN RUSSIA, BASEd ON ThE FY2014 RESULTS

TOP-30exCeeDs The 2013 ResuLT By 40.5%

COMPREhENSIVE INCOME OF 1.7

RuB BLn

CLienTs’ LiaBiLiTies GReW By 19.6%. inDiViDuaLs’ FunDs GReW By 43.0% TO RuB 18.7 BLn

CLIENTS’ LIABILITIES OF 31.3

RuB BLn

neT inTeResT inCOMe inCReaseD By 22.6%

NET INTEREST INCOME OF 2.6

RuB BLn

WhiCh is 21.4% LOWeR Than The VaLue OF 2013. The Bank’s COsT TO inCOMe RaTiO in 2014 ReDuCeD TO 41% as COMPaReD TO 47% in 2013.

OPERATIONAL COSTS dECREASEd BY 1.4

RuB BLn


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Expobank 2014

Startegic Report

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ReTuRn On equiTy OF 22.5%

BANK EqUITY OF

Financial Results

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Key Events in 2014 Financial Results

exPOBank suCCessFuLLy CLOseD The DeaL On aCquisiTiOn OF LBBw BANK Cz FROM LANDESBANK BADEN-wüRTTEMBERG (LBBw)

ACqUISITION OF LBBw BANK Cz

exPOBank is aCCReDiTeD WiTh DePOsiT insuRanCe aGenCy TO TAKE PART IN TENDERS heLD TO seLeCT aGenT Banks

BANK ACCREDITED wITh DIA

Key Events in 2014

Assets (bln RUB)

60.0

40.0

20.0

0

38.5 48.0 51.9

2012 2013 2014

Growth for 2014: 8%

Clients’ funds (bln RUB)

20.4 26.1 31.335.0

30.0

25.0

20.0

15.0

10.0

5.0

02012 2013 2014

Growth for 2014: 20%

2012 2013

Comprehensive income (bln RUB)

1.0 1.22

1

02014

1.7


Net loan portfolio less leasing (bln RUB)

30

20

10

0

16.7 27.8 26.5

2012 2013 2014

Growth for 2014: –5%

2012 2013

Liquid assets (bln RUB)

20

15

10

5

0

13.5 11.1 17.2

2014


DuRinG The yeaR, The Bank’s asseTs GReW By 8.1% TO RuB 51.9 BLn

8.1%shaRe OF LiquiD asseTs in The BaLanCe sTRuCTuRe GReW FROM 33.8% TO 44.1%

44.1%

6.9BLn RuB

PUNCTUALITY

Timeliness and efficiency are the two most important qualities of a successful business. 24/7 access to international financial markets and freedom to act in them provide for continuity and efficiency of the transactions and deals concluded. Expobank cuts out delays. We value every second of our clients’ time irrespective of the time zones that separate us.

RIGA, LATvIAMOSCOw, RUSSIAPRAGUE, ThE CzECh REPUBLIC

ThE LAIMA CLOCK (LAIMAS PULKSTENIS)is a pillar clock of an original tower-type design mounted in the center of Riga at the beginning of XX century. The name “Laima” and its art deco design were passed down to the clock from the confectionary factory to advertise whose produce it was used. In 1999, in commemoration of the 800th anniversary of Riga, the clock gained back its historical look. Today this clock is considered to be the most accurate clock in Riga as, twice a day, its rate is verified against satellite data.

ThE KREMLIN CLOCKThe chiming clock mounted on the Spasskaya Tower of the Moscow kremlin dates back to the 16th century. The famous melody of its chime marking every hour and quarter-hour was not composed on purpose — it was conditioned solely by the structure of the bell tower itself. At noon, midnight, 6 a.m. and 6 p.m. the National An-them of the Russian Federation is played, while at 3 a.m., 9 a.m., 3 p.m. and 9 p.m. it is the melody of the “Glory” chorus from Mikhail Glinka’s opera “A Life for the Tsar”.

ThE PRAGUE ChIMING CLOCK (PRAžSKý ORLOj)is a medieval astronomical clock mounted on the south-ern wall of Old Town City Hall in the Old Town Square in Prague. The oldest parts of the clock date back to 1410. The clock shows the year, month, day and hour, time of the rise and setting of the Sun and the Moon, and also the position of the zodiac signs. The full hour chime is accom-panied by a short show in the traditions of the medieval toy theatre performed by moving mechanical figures.


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Overview of Russian Economy in 2014

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Throughout 2014 Russian GDP was gradually slowing down. After a slight increase of 0.7% in Q3 (as compared to the same period a year earlier) caused, mainly, by a good harvest, in Q4 this indicator fell into the red zone making -0.2%. As of year-end, GDP grew by 0.6%. Thus, the Russian economy did manage to preserve its growth as the year-end results show, with a rising impact of external shocks in place.

nevertheless, the key factor for further growth of the Russian economy is the level of oil prices which experienced a dramatic decline in september to December 2014. such drop had a great impact on the exchange rate of the Russian currency, which lead to significant inflation consequences.

Overview of Russian Economy in 2014

5%

4%

3%

2%

1%

0%

GdP dynamics*

h1, 2010 2010 h1, 2011 2011 h1, 2012 2012 h1, 2013 2013 h1, 2014 2014

4.5% 4.5% 3.3% 4.3% 4.6% 3.4% 0.9% 1.3% 1.0% 0.6%

* half-year data are presented annualized and are compared to the same values of the previous year.

ThUS, ThE RUSSIAN ECONOMY dId MANAGE TO PRESERVE ITS GROwTh AS OF YEAR-ENd, wITh A RISING IMPACT OF ExTERNAL ShOCKS IN PLACE

0.6% AS PER FY2014 RESULTS

RUSSIAN GDP GROwTh OF

Besides, high geopolitical uncertainty related to the conflict in the Ukraine and maintained throughout 2014 continued to have its negative effect on the economic performance. Apart from political and economic sanctions, the existing situation resulted in the dramatic weakening of economic confidence.

accelerating inflation had a negative impact on the stability of the current economic growth. as of 2014 year end, the inflation rate grew to its maximum of 11.4%, first registered in 2008. This was caused, primarily, by two factors: devalua-tion of the national currency due to a cut in energy commodity prices, and also by introduction of food sanctions against the eu countries.

in 2014 the Central Bank of Russia pursued a policy to target inflation, one of the tools of which was increase of key inter-est rates. With sharp devaluation of the national currency in place, CBR had to increase the key rate to 17%, it having grown by 11.5 percentage points since the beginning of the year. nevertheless, those measures had no due effect on prices because of the drop in oil-price hikes and weakening of the national currency exchange rate; but they lead to resource appreciation for the banking sector and, as a consequence, for the real sector. Combined with absence of opportunities to attract external borrowings, the cost of funds changed drastically.

The Bank assumes that the current inertial trends, complicated geopolitical environment, oil prices at usD 50-60 per barrel (urals) will persist in 2015, while GDP continues to slide down. such forecast is confirmed by GDP reduction dynamics in q1 2015 which, according to the Ministry of economic Development of the Russian Federation, made –2.2%.

in late 2015 the slide in GDP may slow down but as of the year-end this indicator will still be in the negative zone. its dynamics will still depend greatly on energy commodity prices.

Apart from that, in midterm, the economy will be stressed by a number of internal factors:

A drop in consumer demand whose major phase will be in 2015, to be followed either by stagnation or moderate growth;

having affected all sectors of the consumer market, the prices growth will continue well into 2015. In q1 2015 annual inflation rate was 16.9%. In h2 2015 inflation factors are likely to grow less strong due to a reduced demand.

weak internal investment activity which, nonetheless, may recover in 2016–2017 due to import substitution;

Limited opportunities to attract external borrowings and, consequently, high cost of funding for the real sector. The Bank does not expect the environment to improve in 2015 but a gradual restoration of confidence to Russia may lead to positive changes;

Pressure on the banking sector as a result of asset quality deterioration. In 2015 high risk of banking crisis will maintain, further stabilization of the environment will be possible in case a consistent and predictable CBR policy is implemented and general economic situation is normalized.


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Strategic Goals for 2015–2017

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as a result of the above trends development, the Bank expects high cost of funding to maintain in midterm, with it gradu-ally decreasing as inflation slows down. Due to high rates on attracted funds banks will face a reduction of interest margin.

apart from that, costly funding together with a drop in house-hold real earnings and reduction of consumer activity will lead to reductions in retail lending. in 2015, the volume of retail loans is likely to remain at the 2014 level. Corporate lending will be influenced by a mix of such factors as contraction of produc-tion and low investment activity, and necessity to substitute foreign funding.

as a whole, with the economic environment deteriorating, the Bank expects growth of the Russian banking sector to be slowed down both in lending and in attracting deposits.

negative economic conditions will put strong pressure on asset quality, which will lead to the necessity to raise sizeable provi-sions. The latter will have a strong effect on the financial results of the banking sector in 2015.

in light of the listed above, pressure on the capital of Russian banks will increase dramatically, which will inevitably lead to a demand for additional capital to be raised either through the existing shareholders, or through recruiting new investors, or through government support. sector low profitability will impede recruitment of external investors while general decel-eration of the real sector will reduce opportunities for Russian banks of capital top-ups from the existing owners. Government support will be available to a limited number of market players, which will lead to strengthening of big players, mainly of those partially owned by the government.

The factors described above will inevitably lead to augmenta-tion of the trend on consolidation of the banking sector which will be supported by the regulator in order to minimize Dia insurance payments.

Thus, to preserve capital and take a rightful place in this coun-try’s banking market, an ongoing search for new opportunities to gain profits with the market environment deteriorating is required.

In order to preserve capital and take a rightful place in the Russian banking market, an ongoing search for new opportunities to gain profits with the market environment deteriorating is required.

Strategic Goals for 2015–2017

2015–2017 Strategy is a continuation and development of the implemented 2012–2014 Strategy

The major task for the said period is providing our Clients with first class financial services and gaining stable income in any market environment through the high professionalism of our team and financial advantages of the Bank.

The Bank consistently cuts down on the product-based busi-ness model in favour of the customer-focused model centered on building-up of long-term relationships with households and companies. The Bank is regarded as a ‘service company’ for its corporate clients and private customers.

The Bank is focused on the key regions of its presence that enable it to successfully implement the strategic goals. Moscow, novosibirsk, saint Petersburg, yekaterinburg, surgut, krasnoyarsk, kemerovo, and Perm are defined as priority regions for the Bank’s operation.

Focus on the complex servicing of corporate clients and affluent private customers through corporate sales channels enables the Bank, without increasing general and administrative expenses, to efficiently increase non-interest income and maintain the Bank’s resistance to external impacts through:

maintaining a flexible product line (development of niche products, transaction and fee services);

focus on cross-selling;

implementation of a service model targeted at the highest service quality, close integration with the investment and retail businesses.

The Bank is planning to concentrate on the relationships with corporate clients operating in the sectors most resistant to economic crises. along with classical banking products, expobank is planning to assist its clients in increasing their businesses value through offering complex individually struc-tured products (M&a’s, MBO’s), restructuring and optimization of debt burden of companies, financial consulting, etc.

effort focused on private banking development enables the Bank to form a stable resource base for further development and creates a sustainable source of fee income.

The Bank has expertise and competence in acquisition of stand-ardized retail portfolios and loan portfolios extended to small and medium enterprises and formed by professional players in the relevant segments of the banking market. Purchase of port-folios planned by the Bank will enable it to form highly marginal loan portfolios with minimum loss.

The economic situation makes it possible for the Bank, in mid-term, to make high-yield transactions in the financial markets. The Bank is planning to convert its extensive liquidity cushion into top-up margin as funds are scarce in the market.

along with organic growth, the Bank strives to increase the volume of its business through M&a’s with other credit institutions, the synergy effect of which will enable the Bank to develop at the rate exceeding the market average. a combi-nation of organic growth with M&a deals will enable expobank to expand its geographical footprint and offer its clients yet more financial opportunities.

TRADITIONS

To create innovations and successfully develop, traditions have to be known and venerated. Analysis of the previous experience ensures reliability and soundness of all new solutions and beginnings. To Expobank, it means primarily a deep understanding of nation-specific practices in the financial markets of various countries. Respect for traditions makes our business universal, global and really stable.

RIGA, LATvIA

hOUSE OF ThE BLACKhEADSThis most beautiful building was erected in the center of Riga in 1334, in the times of the Livonian Order, as a gathering place for townsfolk to meet and hold feasts. At the end of the 16th century the House was leased to the Brotherhood of Blackheads. This association of foreign merchants had existed in Livonia since the mid 14th century. The name “Blackheads” is linked to the patron saint of the Brotherhood — the black Saint Mauritius.

MOSCOw, RUSSIA

STATE hISTORICAL MUSEUMThe main historical museum in Russia was officially established in 1872 by a personal decree of Emperor Alexander II. The Museum’s building was constructed in 1881, following the design of architect vladimir Shervud. Its exterior, styled in conformance with the 16th century Russian architectural traditions, harmoniously fitted into the architectural ensemble of Red Square. At present, its collection boasts of almost 4.5 million exhibits telling about Russian history from the earliest times down to our days.

PRAGUE, ThE CzECh REPUBLIC

NATIONAL MUSEUMSince its foundation in 1818, the National Museum in Prague has accumulated a richest collection of exhibits. Several million items are displayed in the main building and at other exhibition sites. The Museum’s main building inaugurated on 18 May 1891 is the gem of Wenceslas Square.


ANNUAL REPORT

Expobank 2014

Startegic Report

2

Treasury

2

Private banking and development of the Premier operation are a strategic line of the Bank’s business.

Over 2014 the amount of the funds placed in retail deposits grew up to RuB 16 bln. in 2014, the Bank outpaced the market due to the updated deposit product line, introduction of lending to ViP-clients on special terms and conditions. Due to cross-sales to/from its Corporate Business the Bank was able to attract new clients.

During 2014 the volume of funds attracted from the existing cli-ents was increased substantially due to the individual approach to servicing. average amount placed by a ViP-client grew from $250 thousand to $350–500 thousand, which indicates their greater confidence in the Bank.

The package of services offered by as expobank expanded.

The Bank has created and successfully operates a system of private banking ‘Expobank Premier’. The customers are offered:

services provided in comfortable VIP branches (there are servicing sites in Moscow: Business Center ‘Malaya dmitrovka’ Office, as well as in Novosibirsk, a key operations area)

Private Banking / Expobank PremierRoyal Service. we have Common Goals with Our Clients

dUE TO CROSS-SALES TO/FROM ITS CORPORATE BUSINESS ThE BANK wAS ABLE TO ATTRACT NEw CLIENTS

FUNDS PLACED IN RETAIL DEPOSITS AMOUNT TO

services of the personal relationship manager acting as a personal banker

special conditions applied to the Bank’s products

membership in the VIP Privilege Club — special servicing conditions, participation in closed events of the Bank’s partners

Our team members maintain relations with the customers not only to do business but also to socialize and attend to the interests and hobbies of each of them, organizing and holding joint events. For example, at the end of 2014 there took place “The Royal Pheasant hunt”.

hunting took place in the pheasantry and keeping station ‘Vltava a Borek’ located in a scenic landscape of southern Bohemia adjacent the town hluboká nad Vltavou.

Hunting excitement, company, competing in the number of hunting trophies made this event an unforgettable one.

2014 was marked by new challenges to the Russian banking system in view of its financial sustainability and stability.

along with the ongoing strengthening of prudential supervision on the part of the regulator in 2014, external macroeconomic factors started to produce an adverse impact both on the finan-cial system of Russia as a whole and on the banking system in particular.

Due to the imposition of sector sanctions by the usa and the eu countries since March 2014, external markets have been actually closed for attracting liquidity, there has been a mass exit of foreign investors from securities issued by the Russian Federation and Russian companies.

Both these external and internal factors set forward the effi-ciency of liquidity management as the priority area for Treasury.

Throughout 2014 the Bank kept on with the strategy of main-taining liquid assets at a level exceeding 30% of the total assets. Compared to the beginning of 2014, the share of liquid assets as of 01 January 2015 grew by 10 percentage points and made 44% in the Bank’s total assets.

One of the tools of efficient liquidity management in 2014 remained investment of funds in debt securities of the issuers of high credit quality and included into the Lombard List of the Bank of Russia.

as of 01 January 2015, the volume of the issuable securities portfolio increased by 42% against the similar data of the previous period and made RuB 11.8 bln.

Treasury

COMPAREd TO EARLY 2014, ThE ShARE OF LIqUId ASSETS AS OF 01 JANUARY 2015 GREw BY 10 PERCENTAGE POINTS ANd MAdE 44% IN ThE BANK’S TOTAL ASSETS

44%ShARE OF LIqUID ASSETS AS OF 01 jANUARY 2015

AS OF 01 JANUARY 2015, ThE VOLUME OF ThE ISSUABLE SECURITIES PORTFOLIO INCREASEd BY 42% AGAINST ThE SIMILAR dATA OF ThE PREVIOUS PERIOd ANd MAdE RUB 11.8 BLN

ISSUABLE SECURITIES PORTFOLIO OF 11.8

RuB BLn

RuB BLn16


ANNUAL REPORT

Expobank 2014

Startegic Report

2

Treasury

2

Securities Portfolio Split-Up by Issuer Rating (%)

from ВВВ– 34%from ВВ– to ВВ+ 60%from В– to В+ 6%

Due from other banksCash and cash equivalents

Marketable securitiesLiquid assets share

h1, 2014 2014

44%44%34%34%48%44%

2.92,9

2.92.9

2.9

11.811,8

11.811.8

11.8

11.88.2

8,28.2

8.2

8.2

8.2

30

20

10

0h1, 2012 2012 h1, 2013 2013

Despite the adverse market environment, in July 2014 expobank successfully passed the offer as part of its liquidity manage-ment framework and implementing its strategy on diversifica-tion of funding sources.

almost all of the bonds in the amount of RuB 1,174.5 mln bought out under the offer were placed during July 2014 with a rate of return of 11.5% per annum.

in 2014 expobank significantly increased its income from securities business. in 2014, net profits from such transactions amounted to RuB 983 mln vs RuB 7.4 mln in 2013.

Securities Portfolio Split-Up by Maturity (%)up to 90 days 15%

91–180 days 13%

181–365 days 24%

1 to 2 years 16%

2 to 3 years 9%

Over 3 years 23%

IN 2014, NET PROFITS FROM SUCh TRANSACTIONS AMOUNTEd TO RUB 983 MLN VS RUB 7.4 MLN IN 2013

983 NET PROFITS FROM SECURITIES TRANSACTIONS IN 2014

RuB MLn

SPEED

Time is money. Today, speed of banking transactions has increased to such an extent that some do not even notice it. But we, as market professionals, know it for sure that the limit is not achieved yet. We improve our technologies and gain momentum for our clients to be faster, to make it earlier, to be ahead of their competitors, and to make it first.

DomoDEDovo, RuSSia

moScow DomoDEDovo aiRPoRtis the largest airport in Russia in terms of passenger traffic and is among the 20 busiest air hubs in Europe. The first passenger flight from Domodedovo was made on 25 March 1964. Now, 82 airlines operate their flights from the airport to 247 destinations worldwide. In 2011, World Airport Awards recognized Domodedovo as the best airport in the Eastern Europe.

māRuPE municiPality, latvia

Riga intERnational aiRPoRt is the largest airport in the Baltic states in passenger and cargo traffic. It was built in the Riga region, next to the settlement of Skulte in 1973. By 2001, when Riga celebrated its 800th anniversary, the airport was fully renovated. Today, regular flights are operated from Riga Airport to 31 countries.

PRaguE, thE czEch REPublic

václav havEl aiRPoRt PRaguEThe airport, formerly Prague Rusynĕ International Airport, began its operations on 5 April 1937. In the same year the technical conception of the airport received Diploma and Gold Medal of the World Exposition in Paris. Now, the airport processes regular flights to 132 destinations. Annual passenger traffic here exceeds 10 million people. Since 2012, the airport in Prague has been named after Václav Havel.


ANNUAL REPORT

Expobank 2014

Startegic Report

2

Corporate Banking

2

Corporate Banking

Throughout 2014 the Bank continued to develop the corporate transaction model focused on generation of fee income from implementation of complex structured transactions for medium and large businesses. specific features of this model made it possible for the Bank to preserve a conservative approach in risk assessment.

The Bank also kept on with its consistent work on enhancement of its positions in such strategic industries as development of residential and income generating property.

To develop its activities in the eastern europe and implement import substitution programs, the Bank built up financial rela-tionships with one of the biggest players in the machine-tool industry, joint Czech and Russian Company ‘MTe kovosvit Mas’. implementation of this project enabled the Bank together with colleagues from expobank CZ to provide the client with the full range of banking services — from support of financial trans-actions in the Czech Republic to issue of bank guarantees and funding to secure contract obligations in Russia.

Due to the corporate team’s expansion and appearance in q4 2014 of a new department headed by Mr. a.V. Fedotkin, corpo-rate business gained additional momentum by the year end.

Assumptions arose to expand the list of strategic industries and add to it new priority sectors:

food processing industry / agricultural processing industry

retail trade

oil and gas industry

A strategic resolution has been taken that in 2015 one of the goals for the Bank will be to attract large corporate clients: holdings and industry leaders including those with revenues exceeding RUB 15 bln a year.

The Bank’s strategy in Corporate Banking is focused on the development of long-term relationships with the clients that have an experience of cooperation throughout crises times and whose businesses are resistant to uncertainties and stresses, and with the shareholders that have an impeccable reputation and are ready to be materially liable for their business.

Residential construction 27.6% Commercial property 19.5% Production 16.6% Wholesale trade 9.4% Finance 9.1% Oil and gas industry 7.3% services 3.5% Other 7.0%

Structure of Corporate Credit Portfolio, by industry (%)

The Bank has two key competitive advantages in active operations:

1) A flexible approach and an opportunity to get approvals for deals, which enables the Bank to timely approve and implement non-standard projects.

2) Due to high capital adequacy and a liquidity cushion as compared to the deficit experienced by the sector in general the Bank is capable of funding quality assets with the margin exceeding the market average.


ANNUAL REPORT

Expobank 2014

Startegic Report

2

Regional Policy

2

in september 2014 expobank successfully closed the deal on acquisition of 100% shares in Czech LBBW Bank CZ a.s. from Landesbank Baden-Württemberg. in 2014 rebranding of the acquired entity was completed, with the name changed to expobank CZ a.s. expobank LLC owns 19.8% of the voting shares in expobank CZ a.s.

expobank CZ a.s. is focused on lending to medium corporate clients, offering banking services to German companies in the Czech Republic, export financing and servicing affluent private customers. as a result of this acquisition expobank gained over 30 thousand active clients in europe, an opportunity to ser-vice export and import transactions between Russia and the Czech Republic, and also a competence in working with German companies.

expobank CZ a.s. is characterized by high capital adequacy (CaR 24.8%), good loan book quality (share of impaired loans in the portfolio is 3%), and also by a well-diversified asset structure and excess liquidity (share of liquid assets is 28%). assets of expobank CZ a.s. are equal to euR 750 mln, capital — to euR 94 mln, its credit portfolio — euR 510 mln.

Development through M&a’s is an important part of the Bank’s strategy. expobank’s team is excellent at implementing such projects and monitors the market both in Russia and in other regions; while the Bank’s strong financial position and high prof-itability ensure its readiness to such transactions any time.

M&A

ASSETS OF ExPOBANK Cz A.S. MAKE EUR 750 MLN, CAPITAL — TO EUR 94 MLN, ITS CREdIT PORTFOLIO — EUR 510 MLN. ExPOBANK LLC OwNS 19.8% OF ThE VOTING ShARES IN ThIS BANK.

ASSETS OF ExPOBANK Cz A.S. OF

750euR MLn

In September 2014 Expobank successfully closed the deal on acquisition of 100% shares in Czech LBBW Bank Cz a.s. from Landesbank Baden-Württemberg. In 2014 rebranding of the acquired entity was completed, with the new name of Expobank Cz a.s. Expobank LLC owns 19.8% of the voting shares in Expobank Cz a.s.

The Bank successfully develops within its strategic business model and creates optimal conditions for its clients in response to the market challenges.

For example, there are ‘expobank Premier’ format offices in Moscow and novosibirsk focused on ViP-clients who can avail of premium services.

universal Bank branches offer to private and corporate custom-ers and clients a competitive product line that meets market needs in all regions where the Bank is present.

Regional Policy

As of 31 December 2015, the Bank is represented in:

In 2014, the Bank’s main task with regard to its implementation of the regional network development strategy was expansion of the territories where Expobank operates and en-hancement of the branch network efficiency.

2014 Assets Liabilities

Central FD (without centralized business) 81% 65%

siberian FD 17% 24%

northwestern FD 1% 2%

ural FD 1% 7%

Volga FD 0% 2%

CENTRAL FdSIBERIAN FdNORThwESTERN FdVOLGA FdURAL Fd

5 FEdERAL dISTRICTS

MoscowSaint PetersburgNovosibirskKemerovoKrasnoyarskPermYekaterinburgSurgut

8 CITIES (4 BRANChES ANd 13 OFFICES):


ANNUAL REPORT

Expobank 2014

directors:

Igor Kim Chairman of the Board of directors

Alexey Andreev Member of the Board of directors

John McNaughton Member of the Board of directors

Kirill Nifontov Member of the Board of directors

German Tsoy Member of the Board of directors

Frank wilhelm Schauff Member of the Board of directors

Committees of the Board of Directors

To ensure efficient performance of the tasks set for the Bank, the Board of Directors has, by its resolution, set up audit Committee of the Board of Directors.

Audit Committee

Frank wilhelm Schauff — Chairman of the Committee;

John McNaughton

The Audit Committee is a consultative and advisory body of the Board of directors providing for presentation to the Board of directors of the objective information on the following matters:

completeness and reliability of the Bank’s financial statements;

qualifications and independence of the external auditor, quality of its services;

reliability and efficiency of the internal control system of the Bank;

compliance with laws and regulations.

Management Committee:

Kirill Nifontov Chairman of the Management Committee

Ernst Bekker deputy Chairman of the Management Committee

dmitry Ganushkin deputy Chairman of the Management Committee

Oleg Novolodsky deputy Chairman of the Management Committee

Olga Pugacheva deputy Chairman of the Management Committee

Alexey Sannikov deputy Chairman of the Management Committee

Alexey Fedotkin deputy Chairman of the Management Committee

Corporate GovernanceAccountability and Efficiency

3

The underlying principles and procedures for the Bank cor-porate governance are stipulated by the Charter and Code of Corporate Conduct of the Bank. The current corporate governance system of the Bank includes various elements and mechanisms used to have shareholders’ rights exercised, to perform efficient internal control, and carry out interaction among the Bank’s managers, shareholders, Board of Directors and other stakeholders.

The corporate governance system

Corporate GovernanceAccountability and Efficiency

One of the underlying principles of building an efficient corporate governance system is distinct allocation of competences among corporate governance bodies, with due control exercised.

Shareholders of the Bank:

Igor Kim 66.64 %

German Tsoy 17.63%

OJSC ‘AUTOBANN’ RBC 8.76%

Kirill Nifontov 2.65%

MORELAM hOLdINGS LIMITEd 1.82%

Yuri Koropachinsky 1.14%

Oleg Kirillov 1.14%

dmitry Ganushkin 0.02%

Alexander Proshin 0.2%

Board of Directors

The Board of Directors of the Bank consists of 6 members. Each member of the Board of Directors of the Bank has experience, knowledge, qualification and enjoys impeccable reputation required for performance of duties of a Board of Directors member and for organization of efficient operations of the whole Board of Directors to the benefit of the Bank and its shareholders.

of the Bank includes:

General Shareholders’ Meeting;

Board of directors;

Collective executive body — Management Committee;

Sole executive body — Chairman of the Management Committee.


ANNUAL REPORT

Expobank 2014

Corporate GovernanceRisk Management

3

Credit Risk Analysis

The major part of the credit portfolio of the Bank has been formed as the result of corporate lending transactions and purchase of retail credit portfolios.

in 2014, the volume of the acquired claims to individuals increased from RuB 12.1 to 12.9 bln. Throughout the report-ing period the Bank has maintained the share of nPL’s in the purchased portfolios at zero level due to application of risk mitigation instruments provided for in the course of structuring portfolio purchase transactions.

high assets quality is of top priority for the Bank. Thus lending in a volatile economic environment is done with the use of con-servative criteria. The corporate credit portfolio of the Bank shrank by 22.5% over the reporting period (from RuB 15.0 bln to RuB 11.6 bln). Despite reductions in the credit portfolio the volume of impaired corporate loans in it, as of 2014 year-end, decreased by RuB 306 mln, or by 32,8% (from 6.2% of the corporate credit book to 5.4%).

Risk Management

Credit Risk

Credit risk means the probability of incurring by the Bank of financial losses resulting from the failure to perform, late performance or incomplete performance by counterparties of their obligations to the Bank.

The Bank accepts credit risk in connection with lending transac-tions, as well as with other transactions characterized by credit risk.

The Bank manages its credit risk individually in relation to each client group (corporate clients, small and medium businesses, individuals, financial institutions).

The upper level limits (risk appetite of the Bank) are set according to the risk management strategy and credit pol-icies approved by the Board of Directors and Management Committee. Limits for individual counterparties and groups of related counterparties, concentration limits, etc. are set depending on the amount and type of the limit by resolutions of the collective bodies (Board of Directors, Management Committee, credit committees) or authorized officials of the Bank.

statements on the risk level of the credit portfolio are regularly prepared by employees of Risk Management and are promptly communicated to the business units and Management of the Bank.

Risk acceptance is the essence of the financial business, and exposure to risk is a key condition of working in this area. The Bank’s Executive Team considers an efficient risk management system a basis of the Bank financial stability and key factor of its competitiveness determining the level of its profitability and shareholder value. The main objective of risk management is maximization of the long-term shareholder value of the Bank.

The main risks accepted by the Bank when performing transactions are credit risk, market risk, liquidity risk, operational risk, legal risk and reputational risk.

IN 2014, ThE VOLUME OF ThE ACqUIREd CLAIMS TO INdIVIdUALS INCREASEd FROM RUB 12.1 TO 12.9 BLN. LOSS ON ThE PORTFOLIO IS EqUAL TO zERO

ACqUIRED CLAIMS TO INDIvIDUALS OF

12.9RuB BLn

Main Operating results for 2014

In 2014, to bring the risks management system in line with the statutory instruments of the Bank of Russia, Risks Management Strategy was approved in the Bank, changes were made to its organizational structure: Risks Management Service was set up, and its head was appointed. As part of ongoing activities on enhancement of risk management processes the following measures were implemented during the reporting period:

testing of ‘Action Plan Ensuring Business Continuity and/or Business Recovery in Expobank LLC in Case of Abnormal Situations and Emergencies’ and its subsequent update and fine-tuning;

validation of the applied risk level assessment models (rating models, VaR models);

updating of the risk management methodology;

testing of the Bank employees’ skills related to the risk management methodology.

Credit Policy of the Bank

Credit policy of the Bank is aimed at creating a high quality credit portfolio and keeping bad debt at the level close to zero. The following key principles help to achieve this objective:

The Bank extends credits only to those clients whose business it understands clearly and who have stable initial sources for credit repayment.

The Bank does not lend to clients with excessive debt load and high risk exposure.

When taking a decision on the credit issue the Bank establishes personal liability for its repayment.

The Bank has approved credit policies on each type of lend-ing: corporate business, small and medium enterprises, retail lending, financial markets. These policies define the priority client groups, product line, requirements to the lending process organization, and the total of the restrictions applied and credit risk limits.


ANNUAL REPORT

Expobank 2014

Corporate GovernanceRisk Management

3

Market Risk

Market risk means the probability of incurring by the Bank of financial losses due to changes in market prices for finan-cial instruments, including exchange rates and interest rates. Market risk comprises pricing, currency and interest risks.

Market risks arises on open positions related to equity, debt, currency and interest financial instruments exposed to influence of general and specific changes in the market environment.

The Bank manages its market risk on the centralized basis:

risk identification, assessment and control are effected by employees of Risk Management;

decisions in market risk management, including setting risk limits, are taken by the Assets and Liabilities Committee;

management of open positions in financial instruments exposed to market risk is effected by Treasury.

The Bank opens positions in the financial markets to develop its client business and to manage liquidity. The Bank does not open own speculative positions in the financial markets without consent of the Board of Directors.

Liquidity Risk

Liquidity risk means the probability of incurring by the Bank of financial losses due to its inability to secure timely perfor-mance of its financial obligations in full and with minimum expenses.

The liquidity risk arises from mismatch of asset and liability maturities.

The Bank manages its liquidity risk on the centralized basis:

strategic management is effected by the Assets and Liabilities Committee;

operational management is effected by Treasury.

The Bank uses the following instruments for liquidity risk management:

maintenance of the assets and liabilities structure balanced in terms of their maturity;

diversification of the financing sources, focus on the stable client liabilities;

creation of the liquidity cushion consisting of highly liquid financial instruments with low credit risk;

stress testing of the liquidity risk and development of action plans in case of the liquidity crisis occurrence;

forecasting of receipts and payments, keeping a payment position.

Operational Risk

Operational risk means a probability of incurring by the Bank of direct and indirect financial losses due to:

any inconsistency between the internal business processes and nature and scale of the Bank activity;

violation by Bank employees or any other persons of the internal regulations of the Bank and laws of the Russian Federation (due to the lack of competence, unintentional or intentional actions or omissions);

disproportion (inadequacy) of functional capabilities (characteristics) of the information, technological and other systems applied by the Bank or their failure (malfunction);

impact of external factors;

influence of the legal risk factors.

The process of the Bank’s operating risk management includes the following stages:

risk identification;

risk assessment;

risk monitoring;

reduction of the risk exposure.

The Bank uses the following means of identification and assessment of its operational risks:

identification of operational risks in the process of development/modification of the Bank’s products and processes;

analysis of data on the losses incurred by the Bank as the result of the operational risk occurrence;

independent assessment of operational risks by the Bank units.

The Bank applies the following methods to reduce its exposure to operational risks:

regulation, standardization and improvement of the Bank business processes;

automation of bank technologies and information protection;

organization of the internal control system;

insurance of losses caused by operational risks occurrence.

The Bank engages employees of all units of the Bank to manage its operational risk; operational risk management is coordinated by Risk Management.

TIMELINESS

Not to set oneself above everyone, but to be useful and loyal is a genuine goal worthy of any effort. To do good, become part of people’s life, that of a city and country — these are the values Expobank has always sought to share. In order to remain up to the mark, every day we have to offer to the business and private customers what they expect from a modern dynamic bank: cutting edge technologies, up-to-date tariffs, prompt service. To work in tune with the pace of today’s world, never growing complacent, and to move ahead — these are the tasks crucial to us at all times.

RIGA, LATvIA

RIGA RADIO AND Tv TOwERBeing 368.5 m tall, it is the tallest Tv tower in the European Union. Its construction and assembly continued from 1979 to 1986. The tower is built on zaķusala island in the middle of the Daugava river. There is an observation platform at 99 meters from which most of the city and surroundings and the Gulf of Riga can be seen in good weather.

MOSCOw, RUSSIA

OSTANKINO TOwERStanding 540 meters tall, it is the fourth tallest television tower in the world and the tallest free standing structure in Europe. It was under construction between 1960 and 1967. Ostankino Tower is one of the main architectural symbols of Moscow. Today, Ostankino’s broadcast Tv and radio transmitters cover a territory inhabited by over 15 million people.

PRAGUE, ThE CzECh REPUBLIC

žIžKOv TELEvISION TOwERSpringing up above the ground 216 meters, Žižkov Tower is a member of the World Federation of Great Towers. It was built between 1985 and 1992. Apart from radio broadcasting equipment, the tower houses a meteorological station, a restaurant, a café and three viewing platforms. In 2000, in commemoration of Prague being announced the European Capital of Culture, sculpturer David Černý decorated the tower with cast-iron figures of crawling babies.


ANNUAL REPORT

Expobank 2014

Corporate GovernanceInformation Openness and Transparency

3

The Management of the Bank sticks to the principle that the Bank’s success depends entirely on the people work-ing for it. Our employees are the ‘human capital’ due to which, to a great extent, efficiency and shareholder value of expobank grow. it is the Bank team members who create additional shareholder value for the Bank’s business by their efficient and creative work.

employees’ high professional skills, opportunities for revealing their talents and capabilities, an ability to use them for the benefit of the bank and the employees themselves — these are the key factors to the Bank’s success in social policy and human resources management. The Bank is characterized by stability of its staff composition while the attrition rate is low (5%). headcount as of 31 December 2014 was 482 people.

Social Policy and hR Management

Information Openness and Transparency

Communication policy of the Bank is part and parcel of doing modern and successful business. This activity is aimed at creating a positive image of the Bank in the eyes of society. We are sure that — especially in contemporary environment — this key intangible asset is the linchpin of trust of our clients and partners.

REPUTATION OF ThE BANK IS ThE KEY INTANGIBLE ASSET whICh IS ThE LINChPIN OF TRUST OF OUR CLIENTS ANd PARTNERS. ThE BANK IS ChARACTERIzEd BY STABILITY

OF ITS STAFF COMPOSITION ANd LOw ATTRI-TION RATE

5%ATTRITION RATE OF

IN 2014

ThE KEY FACTORS TO ThE BANK’S SUCCESS IN SOCIAL POLICY ARE EMPLOYEES’ hIGh PROFESSIONAL SKILLS, OPPORTUNITIES FOR REVEALING ThEIR TALENTS ANd CAPABILITIES

482 IN ThE BANK AS OF 31 DECEMBER 2014

PeOPLe WeRe eMPLOyeDInformation Openness

Committed to the principles of information transparency, the Bank is always open to active dialogue with mass media.

Throughout the year we promptly provided journalists with the most updated information about the Bank’s activities and answered questions posed to us. speakers of the Bank covered the topics related to the banking market, shared their expert and analytical commentary, did their best in explaining to the audiences of newspapers, magazines, radio and TV programs all subtleties and specific features of the banking services market, and also the challenging environment in the financial markets and banking sector.

Regional network Parent bank

400

350

300

250

200

150

100

50

0

headcount dynamics in 2012–2014 (people)

2011 2012 2013 2014

206 151 168 154358 276 306 328


ANNUAL REPORT

Expobank 2014


3

in a accordance with this approach, during 2014 the Bank recruited high-skilled team members.

expobank has been developing an active cooperation with Russian institutions of higher learning that train professionals in banking and finance. The major goal of cooperation with universities and colleges is to form with the potential candi-dates a concept of the Bank as of one of the best employers and of a company that is ready to engage graduates and build up long-term partner relations with them. The number of stu-dents who had a professional placement in 2014 (as compared to 2013) increased by 41.4% and made 70 people, out of which 20 were later employed by expobank LLC.

The Bank has introduced a flat organizational structure that enables it to resolve all operational matters of daily activities at the horizontal level.

Personnel Selection and Adaptation

active development of the Bank, growth of volumes and diver-sification of businesses require a regular influx of highly-skilled professionals to the Company who bring in new experience, state-of-the art knowledge, advanced technologies. Banking business, principally, is an intellectual business. That is why it is the development of the company’s intellect that comes first today, while the value of any company is its people.

450

400

350

300

250

200

150

100

50

0

headcount Structure in 2014 (people)

2014201320122011

MALE FEMALEMALE FEMALEMALE FEMALEMALE FEMALE

396626

396231

498265

366249

49196106

58176108

3010497

55191171

45 y.o. and older 30–45 y.o. under 30 y.o.

Vacancy Closure Structure (%)

Line positions 9%key positions 60%students 31%

ThE NUMBER OF STUdENTS whO hAd A PROFESSIONAL PLACEMENT IN 2014 (AS COMPAREd TO 2013) INCREASEd BY 41.4%

70 hAD A PROFESSIONAL PLACEMENT IN ExPOBANK IN 2014

sTuDenTs

To create a team of high profile and professional fellow-thinkers ready to solve any challenging tasks, able to take advantage of the market environment, the Bank implements a complex approach to recruitment of skilled employees:

planning of staff selection, with strategic goals and operational tasks taken into account;

recruitment of candidates meeting the requirements of the Bank and position;

creating and maintaining an image of an attractive employer bank;

organization of professional placements for students of field-specific institutions of higher learning.


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Expobank 2014


3

Training and Development

The bank implements programs on the employees’ develop-ment, their advanced training, expansion of their professional horizons on the regular basis. Development of intellectual envi-ronment is among top priorities in the Bank’s strategy.

as part of the implemented complex program on personnel training and development for 2014, 178 employees (40%) successfully completed their training, with over 100 various courses, seminars, trainings organized for the team members contributing to the process. also, to meet the regulator’s requirements, skills enhancement training was organized for 20 employees of the Bank.

Following the strategic priorities implementation plan, ‘english Language school’ was opened for our employees to improve their english skills.

in 2014 a system of distance learning began its operations in the Bank. This made possible to conduct wide-scale dis-tance learning and staff assessment. since the launch of DLs 348 people have already had their skills assessed.

The Bank is focused on long-term partner relationships between the Bank and its team. Preparation of the managerial back-up out of the employees is based on a two-level model of formation of a talent pipeline, which contributes to the improvement of interaction within the team, to professional development and personal fulfillment of promising team members and promotes innovation.

Remuneration and Employee Incentives

Today the Bank applies a competitive remuneration system con-sisting of the fixed and variable components. The amount of the fixed component is determined on the basis of the labor market analysis for the region where the Bank operates whose results are used for regular employee-by-employee review of their income levels. The variable component is represented by the incentive system aimed at enhancement of performance results, focused on achievement of both individual and collective results, strengthening of material motivation of the Bank employees. The variable component depends on the performance efficiency of each employee, the level of accepted responsibility, the level of risks the Bank is exposed to as the result of their activities.

apart from material incentives, the Bank consistently develops a system of non-material incentives for individual and team performance results.

as part of the corporate competition system implementation process, at the end of 2014, 58 most efficient employees were awarded for their high performance. Of them 12 employees and 3 subdivisions with the highest results received awards on the stage during the ceremony dedicated to the main corporate event of the year.

AS PART OF ThE CORPORATE COMPETITION SYSTEM IMPLEMENTATION PROCESS, AT ThE ENd OF 2014, 58 MOST EFFICIENT EMPLOYEES wERE AwARdEd FOR ThEIR hIGh PERFORMANCE

58 EMPLOYEES OF ThE BANK wERE AwARDED IN 2014

The motivation system in the Bank is transparent and easily understandable to each employee. It stipulates clear and transparent principles for setting target amounts of bonuses and calculation of their actual values based on kPI’s.


ANNUAL REPORT

Expobank 2014


3

Corporate Culture

One of the important tasks of HR management policies in 2014 was enhancement and promotion of corporate culture. Corporate culture manifests itself in a positive image of the Bank within the team, in the high level of employee loyalty, in the unified employees and in the strong team spirit.

in 2014 the Bank continued developing channels of interac-tion with its team members. The key information channels for employees were email newsletters containing the news of the Bank and banking sector, information about events held in the Bank, about achievements of our team members and successes of our football team.

in 2014, the Bank launched its corporate newsletter ‘express’, whose every issue contains both businesses’ news, official information and articles and notes on various creative pro-jects, about the life of the Bank team members outside office and other interesting facts.

Labor Safety

expobank LLC takes a responsible approach in carrying out its duties on labor safety, considering this process not as employ-er’s additional expenses but as investment in human capital. undoubtedly, value of human factor, of human resources is an important element of modern business. That is why labor safety and health protection of its team members is one of top priorities for the Bank in the organization of work processes. activities of the Bank in labor safety are comprised of special assessments of working conditions, provision of individual employee categories with personal protective clothing and equipment and overalls, personnel health and safety trainings and trainings on safe working procedures, organization of med-ical examinations for employees at hiring stage and further throughout their work activities.

In 2014 Expobank completed the pro-ject on special assessment of working conditions. During this assessment hazardous working conditions at work places were not identified.

IN 2014, OVER RUB 2,300,000 OF VARIOUS SOCIAL BENEFITS wERE PAId TO ThE BANK EMPLOYEES

2,300,000

сотрудников Банка Были отмечены в 2014 году

Social Policy

a number of measures have been introduced in the Bank aimed at health promotion and ensuring proper rest and recreation of the employees, at support of parenthood and family, at pro-tection against the risks of unfavorable events occurrence.

The Bank does not only take care of its employees but also gives support to their families providing social benefits and guarantees. In 2014, over RUB 2,300,000 of the following social benefits were paid to the Bank employees:

Birth of a child in an employee’s family

First official marriage

Employee’s coming of retirement age

death of an employee’s close relative

Support for the employees parenting a disabled child

Challenging life circumstances of an employee

Besides, in addition to the existing elements of the intracorpor-ate employee social protection in 2014, those employees who had worked in the Bank for at least 1 year had an opportunity to choose a specific social benefit: either a private health insurance policy or a compensation for a fitness center season pass.


ANNUAL REPORT

Expobank 2014


3

To assess the level of employee loyalty and satisfaction, the Bank regularly (every six months) holds employee opinion surveys via its intranet portal to obtain feedback from its team members. survey results prove that employee loyalty and sat-isfaction are quite high. This signifies that all events organized and held by the employer to improve employee loyalty are efficient and yield planned results.

Corporate events, as a common cause, bring people together. They provide a unique opportunity to meet colleagues again, to see them in a casual environment. That is why organization of corporate festivals, football tournaments and creativity contests for Expobank employees has grown into a good tradition.

in 2014 expobank celebrated its 20th anniversary. The jubilee festive events were held in a sports manner, in the open air, and included team events and creativity competitions.

undoubtedly, the most important corporate event for the Bank team members in 2014 was a jointly organized new year Party in Riga attended by employees of expobank and its partner banks from Latvia and the Czech Republic.

Tasks for 2015

Formation of favorable business environment, incentives to enhance performance, investment in people — these matters have always been of primary importance for the Bank. For 2015, improvements in adaption processes for newcomers are planned, as well as enhancement of corporate culture in the Bank, to implement which the following tasks are set:

Internal communication rules to be formulated;

Code of Corporate Conduct to be introduced;

Effort on cascading corporate values through line managers to be intensified;

Corporate traditions within subdivisions to be developed.

Charity

expobank, as a socially responsible company, has a proac-tive attitude and takes part in the development and support of charity programs. it is this way that we can contribute to and have a positive impact on the resolution of the key social issues of our society.

In 2014 Charity Committee was set up in the Bank.

Two major lines in charity work of the Bank in 2014 were:

Assistance to the children’s home in the settlement of Baryshevo (Novosibirsk region)

Support to the children’s football team ‘Metallist’ in the town of Korolev (Moscow region).

in 2014, expobank renovated the gymnasium of the children’s home in Baryshevo which earlier could not be used because of exceptionally neglected condition.

in 2014, expobank gave new training uniforms and backpacks to young footballers from korolev.

Charity aid of Expobank is targeted and socially focused. The principles of our activities are tangible results, propaganda and promotion of healthy lifestyles. The Bank welcomes readiness of its team members to use their personal time and their skills for participation in the charity events on a voluntary basis.

SIGULDA, LATvIA

TURAIDA CASTLETuraida Cstle was founded in 1214 and for five centuries it had been a residence of Riga bishops and an estate of the Baltic nobility. After the fire of 1776 the castle grew dilapidated but its romantic ruins still attracted travelers for quite a long time. Reconstruction of the monument began only in 1953. At present, the castle is open to the public but archeological studies and restoration works still continue.

MOSCOw, RUSSIA

KOLOMENSKOYE PALACEA magnificent wooden palace with emerald-green domes and turrets was constructed in the 17th century at the order of the Tsar Alexey Mikhailovich. The glorious interior décor of the country palace unfailingly was admired by foreign guests. But in the second half of the 18th century the wooden structure fell into disrepair and was de-molished. In 2010 the kolomenskoye Palace was rebuilt according to the preserved model.

PREMIUM FEEL

Modern banking is affordable by nature: an ideal bank should make it comfortable for each client including the most demanding ones, because an ideal bank should think of the needs of everyone. Expobank creates prod-ucts affordable to all and at the same time develops premium banking programs. Expoabnk Premier means premium products and services and also a unique privileges program for clients. Royal service remains in demand at all times.

28 KM FROM PRAGUE, ThE CzECh REPUBLIC

KARLšTEjN CASTLEThe castle was founded in 1348 by Charles Iv, Holy Roman Emperor-elect and king of Bohemia, as his sum-mer residence and a place for safekeeping the Imperial Regalia. The castle was constructed following the design of Matthias of Arras as a gothic fortress but in the 16th century the royal apartments were renovated in the Renaissance style. The castle was erected on the slopes of a 72-meter limestone cliff above the Berounka river.

2014 §


ANNUAL REPORT

Expobank

Financial StatementsIndependent Auditors’ Report

4

To the shareholders and Board of Directors of expobank LLC

Report on the financial statements

We have audited the accompanying financial statements of expobank LLC (the Bank), which comprise the statement of financial position as at 31 December 2014, and the state-ment of comprehensive income, statement of changes in equity and cash flow statement for the year then ended, and a sum-mary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements

The Bank’s management is responsible for the preparation and fair presentation of these financial statements in accord-ance with international Financial Reporting standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.

We have conducted our audit in accordance with the Federal standards on auditing effective in the Russian Federation and international standards on auditing. These standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

an audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. in making those risk assessments, the auditor con-siders internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effective-ness of the entity’s internal control. an audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the man-agement, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is suffi-cient and appropriate to provide a basis for our audit opinion.

Opinion

in our opinion, the financial statements present fairly, in all material respects, the financial position of the Bank as at 31 December 2014, and its financial performance and its cash flows for the year then ended in accordance with international Financial Reporting standards.

About the audited entity

Name: expobank LLC

an entry to unified state Register of Legal entities was made on 5 november 2002, with Principal

state Registration number 1027739504760 assigned.

Located at: 29 kalanchevskaya street, bldg 2, Moscow, Russia 107078

About the auditor

Name: ernst and young LLC

an entry to unified state Register of Legal entities was made on 5 December 2002, with Principal

state Registration number 1027739707203 assigned.

Located at: 77 sadovnicheskaya embankment, bldg 1, Moscow, Russia 115035

ernst and young LLC is a Member of self-Regulated auditors’ Organization nonprofit Partnership ‘auditors Chamber of Russia’ (sRO nP aCR).

ernst and young LLC is included in the check copy of the auditors and audit Organizations

Register under the entry main registration number 10201017420.

Financial Statements Independent Auditors’ Report

ernst & young LLCsadovnicheskaya nab., 77, bld. 1Moscow, 115035, Russia

Tel: +7 (495) 705 9700, +7 (495) 755 9700Fax: +7 (495) 755 9701www.ey.com/ru

a member firm of ernst & young Global Limited.

A.v. Sorokin Partnerernst and young LLC

29 april 2014

2014 §


ANNUAL REPORT

Expobank

Financial StatementsStatement of Financial Position

4

(in thousands of Russian rubles) notes 31 December2014

31 December2013

LIABILITIES

amounts due to other banks 16 11,780,109 11,102,390

amounts due to customers 17 31,259,071 26,135,998

Debt securities issued 19 1,601,904 2,290,773

Deferred tax liabilities 25 19,172 —

Other liabilities 18 333,247 306,744

TOTAL LIABILITIES 44,993,503 39,835,905

EqUITY

share capital 20 10,413,412 10,413,412

share premium 548,256 548,256

accumulated loss (1,649,137) (3,204,088)

Dividends paid 20 (2,950,000) —

unrealized gains on revaluation of available-for-sale financial assets 117,805 —

Revaluation reserve for property and equipment 454,299 424,490

TOTAL EqUITY 6,934,635 8,182,070

TOTAL LIABILITIES ANd EqUITY 51,928,138 48,017,975

Statement of Financial Position

(in thousands of Russian rubles) notes 31 December2014

31 December2013

ASSETS

Cash and cash equivalents 7 8,173,843 6,808,070

Obligatory reserve with the CBR 320,511 248,140

Trading securities, including: 8 6,993,522 8,065,424

— non-pledged trading securities 4,702,545 3,107,958

— pledged trading securities sold under direct repurchase agreements 2,290,977 4,957,466

amounts due from other banks 9 2,884,343 1,085,545

Loans to customers 10 26,472,193 27,803,096

Finance lease receivables 11 400,932 1,443,367

investment securities available for sale, including: 12 1,070,779 288,865

— non-pledged available-for-sale securities 1,070,779 106,958

— pledged available-for-sale securities sold under direct repurchase agreements — 181,907

investment securities held to maturity, including: 12 3,764,762 —

— non-pledged held-to-maturity securities 326,834 —

— pledged held-to-maturity securities sold under direct repurchase agreements 3,437,928 —

Prepayment for current income tax liabilities 2,435 20,482

Deferred tax assets 25 — 419,195

intangible assets 14 40,573 81,584

Property and equipment 13 1,618,220 1,638,582

Other assets 15 186,025 115,625

TOTAL ASSETS 51,928,138 48,017,975

signed on behalf of the Management Committee on 29 april 2015

k.V. nifontov G.M. ulanova Chairman of the Management Committee Chief accountant

2014 §


ANNUAL REPORT

Expobank

Financial StatementsStatement of Comprehensive Income

4

Statement of Comprehensive Income

(in thousands of Russian rubles) notes 2014 2013

interest income 21 5,183,600 4,130,556*

interest expense 21 (2,539,681) (1,973,219)*

NET INTEREST INCOME 2,643,919 2,157,337

allowance for impairment of loans to customers and finance lease receivables 10, 11 (66,871) (633,059)

NET INTEREST INCOME AFTER ALLOwANCE FOR LOAN IMPAIRMENT 2,577,048 1,524,278

Fee and commission income 22 385,240 614,449

Fee and commission expense 22 (84,056) (159,040)

Losses net of gains from trading securities (319,402) (289)

Losses net of gains from derivative financial instruments (61,301) (782)

Gains less losses from foreign currencies 734,033 15,943

(Losses net of gains) / gains less losses from foreign currency translation 33 (1,423,275) 228,922

Losses on sale of loans and advances to customers and other banks 10, 11 — (22,204)

Gains less losses on sale of investment securities available for sale 33 1,302,886 7,647

Other operating income 23 159,591 1,255,523

Other impairment and provisions 15, 18 (39,613) (61,920)

administrative and other operating expenses 24 (1,510,522) (1,921,547)

excess of acquirees' net assets over cost of investments 33 874,824 —

Disposal of subsidiaries 33 (555,971) —


PROFIT BEFORE TAx 2,039,482 1,480,980

(income tax) / income tax benefit 25 (435,044) (364,705)

NET PROFIT AFTER TAx 1,604,438 1,116,275

Loss on discontinued operations, net of income tax 33 (49,487) —

PROFIT FOR ThE YEAR 1,554,951 1,116,275

OThER COMPREhENSIVE (LOSS)/INCOME:

Other comprehensive income to be reclassified to profit or loss in subsequent periods:

unrealized gains on investment securities available for sale, net of tax 117,805 1,039

Other comprehensive income not to be reclassified to profit or loss in subsequent periods:

Revaluation of property and equipment 13 37,261 118,459

income tax recognized directly in other comprehensive income 25 (7,452) (23,692)

OThER COMPREhENSIVE INCOME FOR ThE YEAR 147,614 95,806

TOTAL COMPREhENSIVE INCOME FOR ThE YEAR 1,702,565 1,212,081

2014 §


ANNUAL REPORT

Expobank

Financial StatementsStatement of Cash Flows

4

Statement of Changes in Equity

(in thousands of Russian rubles)

Note

s

Shar

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l

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ets

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Accu

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Non-

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BALANCE AT 1 JANUARY 2013 10,319,835 407,623 (1,039) 329,723(4,320,363) — 6,735,779 234,210 6,969,989

Profit for the year — — — — 1,116,275 — 1,116,275 — 1,116,275

Other comprehen-sive income for the year

1,039 94,767 — — 95,806 — 95,806

Total comprehensive in-come for the year

— — 1,039 94,767 1,116,275 — 1,212,081 — 1,212,081

Merger of a subsidiary 20 93,577 140,633 — — — — 234,210 (234,210) —

BALANCE AT 31 dECEM-BER 2013 10,413,412 548,256 — 424,490(3,204,088) — 8,182,070 — 8,182,070

Profit for the year — — — — 1,554,951 — 1,554,951 — 1,554,951

Other comprehen-sive income for the year

117,805 29,809 — — 147,614 — 147,614

TOTAL COMPRE-hENSIVE INCOME FOR ThE YEAR

— — 117,805 29,809 1,554,951 — 1,702,565 — 1,702,565

Dividends to shareholders of the Bank

20 — — — — — (2,950,000) (2,950,000) — (2,950,000)

BALANCE AT 31 dECEMBER 2014 10,413,412 548,256 117,805 454,299(1,649,137) (2,950,000) 6,934,635 — 6,934,635


CASh FLOwS FROM OPERATING ACTIVITIES

interest received 5,248,345 4,080,595

interest paid (2,594,084) (2,239,641)

Fees and commissions received 385,240 798,938

Fees and commissions paid (84,056) (159,040)

Losses from trading securities (319,402) (289)

Gains from dealing in foreign currencies 734,033 15,943

Proceeds from sale of loans to customers and finance lease receivables 55,101 887,631

Other operating income received 96,500 1,268,314

administrative and other operating expenses paid (1,417,406) (1,635,523)

income tax paid (15,533) (21,221)

CASh FLOwS FROM OPERATING ACTIVITIES BEFORE ChANGES IN OPERATING ASSETS ANd LIABILITIES 2,088,738 2,995,707

net (increase)/decrease in mandatory cash balances with central banks (72,371) 49,474

net decrease/(increase) in trading securities 1,099,346 (2,809,589)

net decrease/(increase) in amounts due from other banks 3,397,280 (199,374)

net decrease/(increase) in loans and advances to customers 3,145,409 (13,934,205)

net (increase)/decrease in other financial and non-financial assets (18,262) 366,888

net increase/(decrease) in amounts due to other banks (3,148,396) 1,085,085

net increase/(decrease) in amounts due to customers 228,086 5,241,113

net (decrease)/increase in debt securities issued (1,388,624) 486,144

net (decrease)/increase in other financial and non-financial liabilities (257,272) (726,097)

NET CASh FROM / (USEd IN) OPERATING ACTIVITIES 5,073,934 (7,444,854)

Statement of Cash Flows

69www.expobank.ru

GeneralAddresses / Contacts

5

68

ANNUAL REPORT

ExpobankЭкспобанк 2014


CASh FLOwS FROM INVESTING ACTIVITIES

acquisition of subsidiaries, net of cash acquired 33 3,553,798 128,312

Proceeds from disposal of a subsidiary, net of cash disposed 33 (8,181,488) —

Purchase of investment securities available for sale (3,124,657) (101,819)

Proceeds from sale of investment securities available for sale 33 4,001,788 784,277

Proceeds from redemption of investment securities available for sale 106,958 —

Purchase of property and equipment 13 (30,483) (17,778)

Proceeds from sale of property and equipment 17,370 22,706

Purchase of intangible assets 14 (8,980) (14,522)

NET CASh (USEd IN) / FROM INVESTING ACTIVITIES (3,665,694) 801,176

CASh FLOwS FROM FINANCING ACTIVITIES

Dividends paid to shareholders of the Bank 20 (2,950,000) —

Bonds issued that were purchased by the Bank for subsequent resale 19 (223,095) —

Proceeds from bonds issued in the domestic market — 1,500,000

NET CASh (USEd IN) / FROM FINANCING ACTIVITIES (3,173,095) 1,500,000

net (decrease)/increase in cash and cash equivalents 1,365,773 (4,579,220)

Cash and cash equivalents, beginning 7 6,808,070 11,387,290

Cash and cash equivalents, ending 7 8,173,843 6,808,070

1| Moscow “Business Center “kalanchevsky” Subsidiary Office

Branch Manager: elena Pokidysheva

Address: Moscow, ul. kalanchevskaya, 29, blg. 2

Working hours:

Individuals:Monday — Friday: 09:00 — 20:00Lunch break: none saturday, sunday: closed

Legal entities:Monday — Thursday: 09:30 — 16:00Friday: 09:30 — 16:45Lunch break: none saturday, sunday: closed

Cash service for Legal entities:Monday — Thursday: 09:30 — 17:00Friday: 09:30 — 16:00Lunch break: none saturday, sunday: closed

Cash service for Individuals:Monday — Friday: 09:00 — 20:00Lunch break: none saturday, sunday: closed

Telephones:Legal entities: +7(495) 231-22-83, 8 (800) 500-07-70, 8 (495) 231-11-11 8 (495) 228-31-31, ext. 1010


2| Moscow “Business Center “Malay Dmitrovka” Subsidiary Office

Branch Manager: Vera ermakova

Address: 127006, Moscow, ul. Malaya Dmitrovka, 20

Working hours:Private banking — expobank Premier:Monday — Thursday: 09:30 — 19:00Friday: 9:30 — 18:00Lunch break: nonesaturday, sunday: closed

Cash service for Individuals:Monday — Thursday: 10:00 — 19:00Friday: 10:00 — 18:00Lunch break: none saturday, sunday: closed


Cash service for Legal entities:Monday — Thursday: 09:30 — 17:00Friday: 09:30 — 16:00Lunch break: nonesaturday, sunday: closed

Telephones:+7 (495) 231-11-59

3| Moscow “Na valovoy” Subsidiary Office

Branch Manager: Maxim. khudyakov

Address:115054, Moscow, ul. Valovaya, 6

Working hours:

Individuals:Monday — Friday: 09:00 — 18:00saturday, sunday: closed

Legal entities:Monday — Friday: 09:00 — 18:00saturday, sunday: closed

Cash service for Legal entities:Monday — Friday: 09:00 — 18:00Lunch break: 14:15 — 15:00 saturday, sunday: closed

Cash service for Individuals:Monday — Friday: 09:00 — 18:00Lunch break: 14:15 — 15:00 saturday, sunday: closed

Telephones:8 (800) 500-07-70, +7 (495) 231-11-11 +7 (495) 228-31-31, ext. 1020

4| Moscow “Na Bolshoy Yakimanke” Subsidiary Office

Branch Manager: Dmitry Zagorsky

Address: 119180, Moscow, ul. Bolshaya yakimanka, 23

Working hours:

Individuals and Legal entities:Monday — Friday: 09:00 — 18:00Lunch break: 13:00-14:00saturday, sunday: closed

Cash service:Monday — Friday: 09:00 — 17:30Lunch break: 13:00-14:00saturday, sunday: closed

Telephones:+7 (495) 213-19-94


ANNUAL REPORT

Expobank 2014


5

5| Branch Yekaterinburg

Branch Manager: Vadim Golofast

Address: 620026, sverdlovsk region, yekaterinburg, ul. Rozy Luxemburg, 49

Working hours:

Individuals:Monday — Thursday: 09:00 — 18:00Friday: 09:00 — 16:45Lunch break: none saturday, sunday: closed


Cash service:Monday — Thursday: 09:00 — 18:00Friday: 09:00 — 16:45Lunch break: 12:45 — 13:30 saturday, sunday: closed

Telephones:8 (800) 500-07-70, +7 (495) 231-11-11 +7 (495) 228-31-31, ext. 3010

6| Surgut “Surgutsky” Operational Office

Branch Manager: svetlana ivanova

Address: 628403, Tyumen region, khanty-Mansiisk autonomous District — yugra, surgut, district 33, ul. 30 let Pobedy, 41

Working hours:

Individuals:Monday — Thursday: 09:00 — 18:00Friday: 09:00 — 16:45 Lunch break: nonesaturday, sunday: closed


Cash service:Monday — Thursday: 09:00 — 18:00Friday: 09:00 — 16:45Lunch break: none saturday, sunday: closed

Telephones:8 (800) 500-07-70, +7 (495) 231-11-11 +7 (495) 228-31-31, ext. 1080

7| Surgut “Na Lenina” Operational Office

Branch Manager: elizaveta nikolaeva

Address: 628426, Tyumen region, khanty-Mansiisk autonomous District — yugra, surgut, pr. Lenina, 66

Working hours:

Individuals:Monday — Thursday: 09:00 — 18:00Friday: 09:00 — 16:45Lunch break: 13:00 — 13:45 saturday, sunday: closed

Telephones:8 (800) 500-07-70, +7 (495) 231-11-11 +7 (495) 228-31-31, ext. 1090

8| Branch in Saint Petersburg

Branch Manager: Pavel Galan

Address: 196084, saint Petersburg, Moskovsky prospect, 74, bldg. a, office 3h

Working hours:



Cash service:Monday — Friday: 09:00 — 18:00Lunch break: nonesaturday, sunday: closed

Telephones:8 (800) 500-07-70, +7 (495) 231-11-11 +7 (495) 228-31-31, ext. 1050

9| Branch in Perm

Branch Manager: natalia Melnik

Address: 614000, Perm, ul. Pushkina, 84

Working hours:

Individuals:Monday — Friday: 09:00 — 18:00Lunch break: nonesaturday, sunday: closed

Legal entities:Monday — Friday: 09:00 — 18:00Lunch break: nonesaturday, sunday: closed

Cash service:Monday — Friday: 09:00 — 18:00Lunch break: 13:00 — 13:45saturday, sunday: closed

Telephones:8 (800) 500-07-70, +7 (495) 231-11-11 +7 (495) 228-31-31, ext. 2010

10| Branch in Novosibirsk

Branch Manager: anna Bogdanova

Address: 630099, novosibirsk, krasny prospect, 25

Working hours:




Telephones:8 (800) 500-07-70, +7 (495) 231-11-11 +7 (495) 228-31-31, ext. 2030

Telephones:8 (800) 500-07-70, +7 (495) 231-11-11 +7 (495) 228-31-31, ext. 2070

15| krasnoyarsk “Na Parizhskoy kommuny” Operational Office

Branch Manager: ekaterina Vlassova

Address: 660049, krasnoyarsk, ul. Parizhskoy kommuny, 33

Working hours:


Legal entities:Monday — Friday: 09:00 — 18:00Lunch break: none saturday, sunday: closed

Cash service:Monday — Friday: 09:00 — 18:00Lunch break: 14:00 — 14:30 saturday, sunday: closed

Telephones:8 (800) 500-07-70, +7 (495) 231-11-11 +7 (495) 228-31-31, ext. 2050

16| krasnoyarsk “Na vzletke” Operational Office

Branch Manager: kseniya Vekovenko

Address: 660077, krasnoyarsk, ul. 78 Dobrovolcheskoy brigady, 14, bldg. a

Working hours:



11| Novosibirsk “Akademichesky” Subsidiary Office

Branch Manager: Larisa Deeva

Address: 630090, novosibirsk, pr-kt akademika koptyuga, 15

Working hours:




Telephones:8 (800) 500-07-70, +7 (495) 231-11-11 +7(495) 228-31-31, ext. 2020

12| kemerovo “kuzbassky” Operational Office

Branch Manager: andrey Morozov

Address: 650000, kemerovo, Central district, ul. krasnaya, 4, office 48

Working hours:



Cash service:Monday — Friday: 09:00 — 18:00Lunch break: none saturday, sunday: closed

Telephones:8 (800) 500-07-70, +7 (495) 231-11-11 +7 (495) 228-31-31, ext. 1070

13| krasnoyarsk “Tsentralny” Operational Office

Branch Manager: andrey Pushkarev

Address: 660021, krasnoyarsk, ul. Gorkogo, 3k

Working hours:




Telephones:8 (800) 500-07-70, +7 (495) 231-11-11 +7 (495) 228-31-31, ext. 2040

14| krasnoyarsk “Na Svobodnom” Operational Office

Branch Manager: natalia khromova

Address: 660028, krasnoyarsk, ul. novosibirskaya, 48

Working hours:




72

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Expobank 2014


Telephones:8 (800) 500-07-70, +7 (495) 231-11-11 +7 (495) 228-31-31, ext. 2080

17| Novokuznetsk “Novokuznetsk” Operational Office

Branch Manager: Lyudmila Chernyak

Address: 654007, kemerovo region, novokuznetsk, Central District, prosp. n.s. ermakova, 9a

Working hours:




Telephones:+7 (3843) 91-09-23

18| Branch in krasnodar

Branch Manager: alexander Tolpygin

Address: 350001, krasnoвфк, karasunsky District, ul. shevchenko, 134/1

Working hours:

Individuals:Monday — Thursday: 09:00 — 18:00Friday: 09:00-16:45Lunch break: none saturday, sunday: closed

Legal entities:Monday — Thursday: 09:00 — 18:00Friday: 09:00-16:45Lunch break: none saturday, sunday: closed

Cash service:Monday — Thursday: 09:00 — 17:30Friday: 09:00-16:15Lunch break: 12:45 — 13:30 saturday, sunday: closed

Telephones:+7 (861) 214-32-77

19| Branch in Yakutsk

Branch Manager: evgeny Menyaylov

Address: 677999, the sakha (yakutia) Republic, yakutsk, prosp. Lenina, 24

Working hours:

Individuals:Monday — Thursday: 09:00 — 17:00Friday: 09:00-16:45Lunch break: none saturday, sunday: closed


Cash service for Individuals:Monday — Thursday: 09:15 — 17:00Friday: 09:00 — 16:45Lunch break: none saturday, sunday: closedv

Cash service for Legal entities:Monday — Friday: 09:00 — 16:00Lunch break: none saturday, sunday: closed

Telephones:+7 (4112) 23-40-04

Data as of 01 July 2015 ©D

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BUSINESS IN THREE DIMENSIONS

ANNUAL REPORT 2014

BUSINESS IN THREE DIMENSIONS - Expobank · eMea Finance Magazine is an internationally recognized financial publication telling of the most important events in the financial markets

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