Mordovia with capital city of Mordovia with capital city of Saransk is located in the Saransk is located in the center of the European part center of the European part of Russiaof Russia

Mordovia’s largest Mordovia’s largest regional bankregional bank

Branch NetworkBranch Network

43 43 branches in Mordoviabranches in Mordovia 3 branches in Penza 3 branches in Penza

(neighboring region)(neighboring region)

ATMs and Financial ATMs and Financial Services KiosksServices Kiosks

54 54 ATMsATMs105105 financial financial services kiosksservices kiosks

Functions:Functions:Paying routine Paying routine bills, fees and bills, fees and taxes (utilities, taxes (utilities, phone, Internet, phone, Internet, legal fees, taxes legal fees, taxes etc.)etc.)

Up-to-day ‘Gorod’ Transaction System for utilities’ Up-to-day ‘Gorod’ Transaction System for utilities’ payments processingpayments processing..Utilities’ payments market share in Saransk: Utilities’ payments market share in Saransk: 80+%80+%

Utilities’ PaymentsUtilities’ Payments

Welfare AccountsWelfare Accounts

KS BANK holds 230K+ special subsidizing welfare accounts

“Mobile Bank" system is a brand

new service for card accounts’

management

Mobile Bank Mobile Bank

School CardSchool Card

3. School canteen checkout

2. Crediting personal account using financial services kiosk

1. Issue of a “school card”

Investments in Investments in Energy ConservationEnergy Conservation

KS BANK takes part KS BANK takes part in utility in utility submetering submetering investment program investment program (as a loan granter) (as a loan granter) which provides for which provides for energy efficient energy efficient water and gas water and gas meters installation in meters installation in apartmentsapartments

Risks Control Risks Control Structure Structure

Board of Directors

Executive BoardPresident (CEO)

Credit CommitteesLiquidity Committee

Limiting Committee

Assets and Liabilities’ Management Committee

Security and Operational Risks’ Committee

ADMINISTRATION FOR ECONOMIC ANALYSIS AND RISK ASSESSMENT

Risk Assessment Dept.Financial Analysis Dept.

Shaareholders’ General Meeting

Setting up credit risk limits; Setting up credit risk limits; ССredit securing redit securing ((collaterals, warranties and collaterals, warranties and

guaranteesguarantees); ); Preliminary Preliminary ((before loan grantingbefore loan granting) ) appraisal of a appraisal of a

borrower’s creditworthiness: analysis of financial borrower’s creditworthiness: analysis of financial accountsaccounts, , documentsdocuments, , shareholders structureshareholders structure, , credit credit historyhistory, , borrower’s business and industry riskborrower’s business and industry risk; ;

Collective decision on loan grantingCollective decision on loan granting; ; Loan loss reservesLoan loss reserves; ; Monitoring of financial status of a borrower, Monitoring of financial status of a borrower,

performance of loan liabilities and other credit risk performance of loan liabilities and other credit risk factors within the period of loanfactors within the period of loan; ;

Monitoring of loan’s securing.Monitoring of loan’s securing.

Methods for Credit Risk Methods for Credit Risk Management Management

Using databases:Using databases: Own database of Own database of

utilities’ servicesutilities’ services Database of The

National Credit Reference Bureau

Credit Risk Credit Risk Management / Private Management / Private LoansLoans

As of January 1As of January 1stst, , 2012 2012 problem loans of the Bank was 16,1 million RUR problem loans of the Bank was 16,1 million RUR

(approx. 0.5 million USD), which amounts to(approx. 0.5 million USD), which amounts to 0 0..3% 3% of the Bank’s loan of the Bank’s loan portfolioportfolio..

Credit Risk Credit Risk ManagementManagement

KS BANK Loan PortfolioKS BANK Loan Portfolio

Liquidity risk – Liquidity Committee Interest rate risk – Executive Board Operational risk –Heads of

departments. Information security risk – IT

Security Dept.

Market and Market and Operational Risk Operational Risk Management Management

Partnership with IFCPartnership with IFC

• KS BANK is a partner in a joint program with International Finance Corporation (IFC) and Russian Regional Banks Association.

• IFC deals with process, methods and risk management evaluation of the Bank before granting funds.

• KS BANK’s risk management system considered adequate and sufficient by IFC professionals.