Presentation of Komercijalna Banka AD Skopje as at December 31 st 2011

Presentation of Komercijalna Banka AD Skopje as at December 31st 2011 Contents • • • • Komercijalna Banka Overview The Republic of Macedonia The Ma...
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Presentation of Komercijalna Banka AD Skopje as at December 31st 2011

Contents • • • •

Komercijalna Banka Overview The Republic of Macedonia The Macedonian Banking Sector Komercijalna Banka Financial Overview

3 9 11 19

Presentation of Komercijalna Banka AD Skopje Skopje, May 2012

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Komercijalna Banka Overview

Overview (I): A cornerstone of Macedonia’s financial sector... Leading Market Position •

Expected to keep market position as one of the leading banks in Macedonia with assets (EUR 1,303.3 m) and deposits from customers (EUR 1,073.9 m) and in terms of net loans to customers (EUR 698.7 m) as of December 31, 2011.

Customer Base • Leading corporate customer base (41,315 customers) • Second largest retail customer base (823,713 customers) One of Macedonia’s Most Prominent Financial Institutions • Long-standing history • Well-established customer relationships Strong Brand Recognition • Associated with quality, innovation and trustworthiness Modern Corporate Governance Structure • Privatisation completed with 98.15% private ownership (53.60 % foreign, as at December 2011) and about 2% held by the Public sector • Diversified ownership structure with one single shareholder owning 10% (East Capital Explorer Investments AB, Stockholm, Sweden) • EBRD active shareholder with Board representation (more than 5% participation) • Comprehensive, ‘best-practise’ corporate governance • Rigorous risk management and money laundering practices

Presentation of Komercijalna Banka AD Skopje Skopje, May 2012

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Overview (II):...with a track record of significant achievements... Experienced Team of Executives • Providing leading position in number of areas combined with maintaining stable market position • History of product innovation and investments in new technologies Well Invested Distribution channels • Very well presented branch network - over 70% of the current network newly opened or refurbished in the past five years • Rapidly developing multi channel distribution network comprising POS Terminals, ATM’s, Info kiosks, E-Banking (both retail & corporate, as well as f/x and in denars), Telephone banking Fully Integrated IT platform • State-of-the-art system • Fully protected and readily upgradeable Driver of Sector Innovation • First to issue credit cards (1996) • First to operate ATMs and POS terminals (1996) • First to establish a dedicated brokerage house (1997) • Founded one of the country’s two second pillar pension funds (2005) • Founded the investment fund KB Publikum Invest AD (2009) Profitable Operation with Sound Asset Quality • History of profitable operations • Adequately provisioned loan portfolio

Presentation of Komercijalna Banka AD Skopje Skopje, May 2012

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Overview (III):...a long-standing successful history... 1990

1973

1966

1963

1955 Established as Komunalna Banka under municipal ownership

Leading role in rebuilding the economy and housing after disastrous earthquake in Skopje

Name change to Komercijalno Investiciona banka Skopje and merger with 3 banks

Operating as Stopanska Banka, Skopje Branch as part of an integrated banking system

Incorporated as an open joint stock company Start of a significant expansion phase based on organic and acquisitive growth establishing nationwide coverage

Presentation of Komercijalna Banka AD Skopje Skopje, May 2012

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Overview (IV): ...the largest distribution network in the country... 64 branches including headquarters as at December, 2011

Branch Network

- Coverage of all major cities and economically significant regions - 53 city branches (36 in Skopje + HQ1 & HQ2) - 11 regional branches

Second largest ATM network in the country - 142 installed ATMs as at December 2011 (133 as at Dec 2010)

Fast expanding merchant network – Over 6,200 POS terminals installed as at December 2011(>5,700 as at Dec 2010) - Over 1,460 imprinters

State-of-the-art IT infrastructure – Fully integrated – Real time

Presentation of Komercijalna Banka AD Skopje Skopje, May 2012

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Overview (V): ...and an enviable market position Banking Awards

Market share as at December 31, 2011 Total assets Capital and reserves

24.2% 23.1%

Total deposits from non-financial sector

27.9%

Total net-loans to non-financial sector

23.6%

Total number of debit cards issued Total number of credit cards issued Total number of merchants in the country acquiring bank cards issued by KB Total number of POS and ATM acquiring cards Total value of realized domestic payment operations Total number of accounts opened to legal entities Total trading realized at the MSE Total number of transactions realized at the MSE

19.5% 19.1% 38.7% 22.8% 23.5% 22.0% 48.1% 21.7%

- Bank of the Year for 2001, 2002, 2004 , 2005, 2010 and 2011 - The Best Bank for 2002, 2003 & 2004 - The Best Bank by Assets Strength for 2005, 2006 & 2007 - The Best Bank by Capital Strength for 2005 - The Best Bank by Gross Profit for 2005 & 2007 - The Best Bank by ROE for 2007 -The Best Bank in Macedonia for 2004, 2005, 2006, 2007, 2008 2009 , 2010 and 2011 - Best Developing Trade Financier for 2003, 2004, 2008 -Most active issuing bank In Macedonia in 2009

The most transparent company for 2008 & 2009

2007 Participant in the best financial deal

2007 EUR STP Excellence Award 2009 EUR STP Excellence Award 2010 EUR STP Excellence Award - Super brand in Macedonia for 2009

Non government organization – Transparency zero corruption - Prize for best corporate governance

- National prize for the social responsibility practice of companies in RM for 2008 & 2009

price for Corporate Social Responsibility Integrated Approach for 2009 and 2010

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The Republic of Macedonia

The Republic of Macedonia - Macroeconomic Environment: Key economic indicators (1)

2009

2010

Population (000's)

2,053

2,057

/

/

GDP per capita (in EUR)

3,251

/

/

/

Real GDP growth (%)

-0.9

1.8

3.5(2)

2.4

Central Government Budget surplus/deficit (% of GDP)

-2.7

-2.5

/

/

Inflation (CPI%) av.

-0.8

1.6

3.9

2.0

Current Account Bal.(EUR'm)

-457.1

-150.4

-251.1

/

Gross External Debt (EUR'm)

3,780

4,134

4,647(3)

/

FX Reserves (EUR'm)

1,598

1,714

2,069

/

Foreign direct invest.(EUR'm) Unemployment Rate (%)

181.0

/

/

/

32.2

32.1

31.2(4)

/

61.3

61.5

61.5

61.5

MKD/EUR year end. (1) (2) (3) (4)

2011 Est.2012

Source: Ministry of Finance, State Statistical office, NBRM Estimation NBRM As at 30.06.2011 As at 30.09.2011

The Fitch agency affirmed Macedonia’s foreign currency rating at “BB+”, the short-term foreign currency rating at “B” and the Country Ceiling at “BBB-“. On October 27, 2010 the Agency revised the Outlook on the Rating from negative to stable and on October 2011 confirmed the stable credit rating On Aug. 24, 2011,the Standard & Poor’s Agency lowered its long-term local currency sovereign credit rating on the Republic of Macedonia to 'BB‘ from 'BB+' and affirmed its long-term foreign currency sovereign credit rating at 'BB'. It also affirmed the 'B‘ short-term ratings on Macedonia. The outlook is stable. Transfer and convertibility assessment for Macedonia remains 'BB+'.

Presentation of Komercijalna Banka AD Skopje Skopje, May 2012

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The Macedonian Banking Sector

Macedonian Banking Sector (I): The structure and the characteristics Structure • 17 active banks (3 large, 8 medium and 6 small) • 8 saving houses Characteristics • High concentration with three large banks • low level of financial intermediation Significant growth prospects • Continuous growth of the level of privatization • Continuous growth of the participation of the foreign capital • Improvement of the ownership structure • Increased network • Increased total assets • Growth in loans and deposits • Increased banking capital • Constant increase in profitability and efficiency

Presentation of Komercijalna Banka AD Skopje Skopje, May 2012

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Macedonian Banking Sector (II)

...assets...

Total assets (EUR'm) 6,000 5,000 4,000 3,000 2,000 1,000 0

4,390

2009

4,964

2010

5,385

2011

Total assets

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Macedonian Banking Sector (III)

...and placements to non-financial entities... Placements to non-financial entities (net) (EUR'm) 3,500 3,000 2,500 2,000 1,500 1,000 500 0

2,569

2,737

2009

2010

2,943

2011

Placements to non-financial entities (net)

Presentation of Komercijalna Banka AD Skopje Skopje, May 2012

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Macedonian Banking Sector (IV)

...and deposits from non-financial entities... Deposits from non-financial entities (EUR'm) 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0

3,071

2009

3,468

2010

3,807

2011

Deposits from non-financial entities

Presentation of Komercijalna Banka AD Skopje Skopje, May 2012

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Macedonian Banking Sector (V) ...and capital & reserves... Capital & reserves (EUR'm) 700 600 500 400 300 200 100 0

595 500

524

2009

2010

2011

Capital & reserves Presentation of Komercijalna Banka AD Skopje Skopje, May 2012

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Macedonian Banking Sector (VI)

...and financial results influenced by

the crisis... Net profit (EUR'm) 40 35 30 25 20 15 10 5 0

38 27 19

2009

2010

2011

Net profit Presentation of Komercijalna Banka AD Skopje Skopje, May 2012

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Macedonian Banking Sector (VII)

...and drop of profitability from 2009... Profitability indicators (EUR'm and %) 176.0 175.0 174.0 173.0 172.0 171.0 170.0 169.0 168.0 167.0 166.0

8.0% 7.3%

7.0% 6.0%

175.0 5.6%

5.0% 4.0% 3.4% 169.0

0.6%

0.8%

3.0% 2.0%

124.0 0.4%

1.0% 0.0%

2009

2010

2011

NII ROAA ROAE Presentation of Komercijalna Banka AD Skopje Skopje, May 2012

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Komercijalna Banka Financial Overview

Financial Performance (I): Highlights Key Performance Indicators Key Performance Indicators Net Interest margin Net Interest margin Net fees and Commission / Income Net fees and Commission / Income Cost/Income Cost / Income NPLs / Total Loans NPLs / Total Exposure NPL Coverage NetNet Loans / Deposits (Customers) Loans / Deposits (Customers) (1) ROE ROE (1)

ROA (1) Capital adequacy (1) After taxation

2009 2005

54.5%

2006 3.5% 3.8% 20.4% 24.8% 53.0% 56.6%

9.1%

8% 6.9 %

5.3% 23.0%

2010

2011

2007

2008 3.4% 3.9% 4.1% 21.9% 24.5% 20.3% 52.0% 45.8% 45.8% 5.2%

8.1% 5.4%

3.4% 3.5% 22.7% 47.8% 53.0% 9.6% 6.2%

89.8% 72.6% 72.6% 81.2 %

83.9% 92.6% 79.0%

87.3% 89.9%

42.4%

47.478.1% %

54.3% 70.4% 76.6%

78.1% 65.1%

8.9%

16.615.5% %

19.2% 17.9% 22.0%

15.5% 11.4%

1.0%

1.7 % 1.8%

1.9%

2.5% 2.0%

14.8%

11.8 %(2) 10.6%

10.5%

9.9% 11.1%

1.8% 1.4% 10.6% 13.5%

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Financial Performance (II): Financial indicators Financial indicators

2009

2010

2011

Earnings per share (EPS)

8.8

11.6

7.8

Book value (BV)

56.5

64.6

68.0

Average market price per share

43.4

50.3

54.8

6.39%

5.48%

5.93%

4.94

4.36

7.06

0.77

0.78

0.81

0.088

0.088

0.096

87.3

101.3

125.0

Dividend Yield Price/Earnings (P/E) (1) Price/Book value (P/B)

(1)

(1)

Price/Total assets (P/A) Average market capitalization (in million EUR)

Presentation of Komercijalna Banka AD Skopje 1)Calculation according data in MKD

Skopje, May 2012

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Financial Performance (III):Income statement (IFRS) in million EUR

2009

2010

2011

Index 10/09

Index 11/10

Net interest income

39.1

40.4

43.5

103.3

107.7

Net fee & commission income Other income Total income

11.2 4.7 55.0

12.6 4.9 57.9

13.9 3.9 61.3

112.5 95.7 104.5

110.3 86.7 106.6

Operating expenses Impairment losses Operating profit

-29.3 -8.4 17.3

-30.3 -4.5 23.1

-29.4 -14.4 17.5

103.8 48.8 132.9

96.7 351.2 76.1

Share of loss from associate Profit before tax

0.3 17.6

0.3 23.4

0.3 17.8

100.0 132.4

100.0 76.4

Taxation Profit after tax

0.0 17.6

-0.1 23.3

-0.1 17.7

132.4

100.0 76.0

Presentation of Komercijalna Banka AD Skopje Skopje, May 2012 22

Financial Performance (IV): Balance sheet (IFRS) in million EUR 2009

2010

2011

Index 10/09

Index 11/10

Cash and cash equivalents Customer loans

144.0 635.1

383.1 663.9

479.2 698.7

132.1 104.5

125.1 105.2

Bank placements and loans

149.0

17.1

22.1

140.9

129.2

Total loans and placements Other assets Total assets

928.1 64.4 992.5

1,064.1 87.6 1,151.7

1,200.0 103.3 1,303.3

114.7 136.0 116.0

112.8 117.9 113.2

Liabilities Total deposits

843.5

971.9

1,091.8

115.2

112.3

Borrowings & other liabilities Total liabilities

35.3 878.8

49.6 1,021.5

56.6 1,148.4

140.5 116.2

114.1 112.4

Shareholders funds Share capital Share premium Treasury shares Reserves Retained earnings Shareholders funds

32.9 1.8 0.0 61.5 17.5 113.7

32.8 1.8 0.0 72.4 23.2 130.2

37.1 12.5 0.0 87.6 17.7 154.9

*99.7 100.0 0.0 117.7 132.6 114.5

113.1 694.4 0.0 121.0 76.3 119.0

992.5

1,151.7

1,303.3

116.0

113.2

Assets

Total liabilities and shareholders funds

* The decrease is a result of changing the course of the denar against the euro

Presentation of Komercijalna Banka AD Skopje Skopje, May 2012 23

Financial Performance (V): Total Assets Total assets (1) (in million EUR)

1,400

1,303 1,152

1,200 1,000

993

6% 15% 64% 15%

800 600

8%

8%

33% 58%

37% 53%

1%

2%

400 200 0 2009 Placements to banks

2010 Loans to customers

2011 Cash and equivalents

Other assets

(1) Total balance sheet assets (based on net loans after provisions)

Presentation of Komercijalna Banka AD Skopje Skopje, May 2012

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Financial Performance (VI): Gross Loans to Customers Total Loans - Corporate vs. Retail (EUR'm) 707.9

738.6

130.3

132.8

787.0 129.2

18%

18%

16%

82%

82%

84%

577.6

605.8

657.8

2009

2010

2011

Corporate loans

Retail loans

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Financial Performance (VII): Liabilities

Total Liabilities (EUR'm) 1,148 1,022

879

5% 5%

4%

95%

95%

96%

2009 Total deposits

2010

2011

Borrowed funds & other liabilities

(1) Total deposits include deposits from banks which represent less than 2% within total liabilities

Presentation of Komercijalna Banka AD Skopje Skopje, May 2012

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Financial Performance (VIII): Deposits – Customer Breakdown Deposits by customer category (EUR'm) 1,091.8 971.9

843.5 241.6

287.3 29%

269.1

28%

26% 74%

72%

71% 702.8

601.9

2009

2010 Retail deposits

804.5

2011 Corporate deposits

Presentation of Komercijalna Banka AD Skopje (1) Corporate deposits include deposits from banks which represent 1.6% within total deposits

Skopje, May 2012

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Financial Performance (IX):Shareholders Equity and Capital Adequacy Shareholders Equity and Capital Adequacy (EUR'm) 154.9 113.7

10.6%

130.2

11.1%

11%

18%

14% 12% 10%

15% 57%

8% 6%

55%

54%

13.5%

4%

31%

32%

27%

2% 0%

2009

2010

2011

Share capital incl.share premium

Reserves

Retained earnings

Capital adequacy

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Financial Performance (X): Income Breakdown Income (EUR'm) 61.3

57.5

55.0

43.5

40.4

39.1

4.7

4.5

2009 Total income

13.9

12.6

11.2

2010 Net interest income

Fee and commission income

3.9

2011 Other income

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Financial Performance (XI): Expenses Breakdown Operating expenses (EUR'm) 30.3

29.3 12% 13% 11% 16% 48%

2009

29.4 10% 15%

8%

11%

10%

15%

16%

49%

48%

2010

Wages, salaries and other employees' costs Depreciation and amortization Other expenses

18%

2011 Materials and services Insurance

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Financial Performance (XII): Efficiency Total income and efficiency (million EUR and %) 62.0 61.0 60.0 59.0 58.0 57.0 56.0 55.0 54.0 53.0 52.0 51.0

52.0%

53.0%

61.3 57.9

55.0 2009

2010 Total income

54.0% 53.0% 52.0% 51.0% 50.0% 49.0% 48.0% 47.8% 47.0% 46.0% 45.0%

2011 Cost/Income

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Financial Performance (XIII): Non-Performing Loans Total loans (1) vs. Non-Performing Loans (EUR'm) 900.0

707.9

800.0

787.0

738.6

700.0 600.0 500.0 400.0 300.0 200.0

8%

89.8%

100.0

55.9

50.2

0.0

14% 84%

8.0% 10%89.8% 78.8%

8.1%

59.9 7% 83.8%

2009 Total loans

NPLs

92.6%

55.5

8.1% 92.6% 8.1 8% 89.8%

2010 NPL provisions

(1) Gross corporate and retail loans excluding bank placements

% NPLs/Total loans

8.1% 92.6

9.6%

87.3%

75.6

66.0

9.6%

87.3%87.3% 9.6%

2011 % NPL provisions/NPLs

Presentation of Komercijalna Banka AD Skopje Skopje, May 2012

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Financial Performance (XIV): Asset Quality Asset Risk Categories (%) 100% 90% 80% 70%

4.8%

4.4%

5.0%

0.6%

1.6%

0.6%

2.1%

2.0%

2.0%

60%

4.6%

50%

88.0%

40%

3.2%

4.5%

88.7%

87.9%

30% 20% 10% 0%

2009

2010 A

B

C

2011 D

E

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