Ukraine Update: April 2015Challenges faced, progress made and what must come next

C.I.S. Bankers T10 Forum April 24, 2015

Ukraine Macroeconomic events timeline

● March 2015: IMF approved new EFF program of $17.5bn on March 11th. First disbursement of $5bn was received March 13th. Sovereign FCY debt restructuring exercise commenced on March 16th. Hryvnia currently at 23.3-23.5 per dollar.

● March 2-3, 2015: Ukraine’s parliament approves an austerity package needed to qualify for the IMF loan. Ukraine’s central bank raises its benchmark interest rate to 30 percent, the highest since 2000. Hryvnia strengthens to 24.25 per dollar, a three-week high; 2017 bonds gain to 44.1 cents on the dollar.

● Feb. 25-6, 2015: National Bank of Ukraine implements additional foreign-currency market restrictions but then modifies them the next day. UAH weakens to record 33.75/$ on Feb. 27; bonds drop to all-time low of 41.35 cents on the dollar on Feb. 23

● Feb. 12, 2015: Ukraine reaches staff-level agreement with IMF on bailout package totaling $40 billion after allowing the hryvnia to weaken 31% on Feb. 5. Russian President Vladimir Putin and Ukraine’s Petro Poroshenko broker cease-fire agreement in Minsk, Belarus. UAH at 26.7/$; bonds at 56.65 cents; country’s currency reserves drop to record $6.4 billion in January, while the country faces $5.4 billion in foreign debt payments in 2015, according to Finance Ministry data.

● Dec. 11, 2014: Prime Minster Arseniy Yatsenyuk calls for international donor conference to avoid possible default, which hasn’t been held to date. He also requests talks on expansion of IMF loan agreed last March. FX reserves drop to $7.53 billion in Dec.; UAH ends year at 15.82/$, weakening 48% from 2013; bonds finish at 60 cents, giving a yield of 33.85%.

● Nov. 27, 2014: Ukraine’s parliament confirms new government, led by Yatsenyuk, after pro-EU parties dominate Oct. elections. FX reserves drop to $9.97 billion in Nov.; UAH at 15.02/$; bonds at 78.53 cents.

● Sept. 5, 2014: Ukraine and the separatists agree on a cease-fire in Minsk, Belarus. The truce is repeatedly broken in the months to come. FX reserves rise to $16.4 billion in Sept. after $1.38 billion disbursement from IMF, the last to date; UAH at 12.95/$; bonds at 87.64 cents.

● July 17, 2014: Malaysia Air flight MH17 is shot down in the Donetsk region, prompting international outcry. FX reserves drop to $16.1 billion in July; UAH at 12.28/$; bonds peak at 103.25 cents on July 11.

● May 25, 2014: Billionaire businessman Petro Poroshenko wins Ukrainian presidency. FX reserves rise to $17.9 billion in May after receiving $3.2 billion from IMF; UAH at 11.80/$; bonds at 98.59 cents.

● March 27, 2014: Ukraine agrees on $17 billion loan from IMF, part of a $27 billion bailout. Six days earlier Russia annexed Ukraine’s Crimean peninsula, sparking U.S. and EU sanctions. FX reserves drop to $15.1 billion in March; UAH at 11.12/$; bonds at 97.81 cents.

● Feb. 22, 2014: After mass-protests in central Kiev turn deadly, President Viktor Yanukovych flees Kiev, eventually arriving in Russia, and law makers in Kiev decide to hold a presidential election in May. FX reserves at $15.5 billion in Feb.; UAH at 9.95/$, bonds at 93.19 cents.

● Dec. 17, 2013: Ukraine receives $3 billion bailout bond from Russia, the first in what Russia said would be a $15 billion package. FX reserves rise to $20.4 billion on Dec. 31, to date the highest level since Maidan protests began; UAH at 8.24/$; bonds at 98.94 cents.

● Nov. 21, 2013: Former President Yanukovych backs out of a trade accord with the EU in favor of stronger ties with Russia, triggering protests in Kiev and across Ukraine. FX reserves stood at $18.8 billion at end-November; UAH at 8.23/$; bonds at 92.69 cents.

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Ukraine crisis overview*

*This slide and its figures and data is from the Ukraine Ministry of Finance Investor presentation dated March 13, 2015

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Ukraine: 2014 start of reforms implementation*

*This slide and its figures and data is from the Ukraine Ministry of Finance Investor presentation dated March 13, 2015

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Ukraine revised reform program: IMF $17.5 EFFOn 11 March 2015, the IMF approved a US$17.5 billion Extended Fund Facility Program to address Ukraine’s more protracted BOP needs and deeper structural problems. The first disbursement of $5bn was effected on March 13th.

Key Reform Components:Monetary/ NBU Reform • Flexible Exchange Rate • Restructure of National

Bank of Ukraine • Future adoption of Inflation

targeting • Rebuild of FX reserves

Fiscal Reform • Reduction of subsidies

to SOEs, including zero Naftogaz deficit by 2017

• Healthcare reform (open for private sector financing), pension and education reforms

• Reduction of civil service workforce

• Improve Revenue administration and public finance

Energy Sector and Naftogaz • Increase of tariffs (gas for

population by 240%, heating prices by 80% in 2015, further hikes in 2016 and 2017)

• Increase Naftogaz efficiency and governance

• Energy subsidies to be substituted by compensation schemes

• Improve collection rates

Governance / Transparency • Anti-corruption and

transparency of Government operations

• Enhancement of anti-money laundering

• Streamline of regulatory framework

Reviews • June 15, 2015 • September 15, 2015 • December 15, 2015 • Quarterly thereafter with

scheduled on December 15, 2018.

15 March 2017

15 March 2016

Source: IMF Report, public information.

IMF Review and Disbursement Schedule

Amount of Purchase, Million US$

5,000

15 December 2015

15 September 2015

15 June 2015

15 June 2016

15 December 2016

15 September 2016

1,666.7 1,666.7 1,666.7 621.9 621.9 621.9 621.9 626.3

1 2 3 1 2

March 11-13 2015

Banking Sector • Unwinding of related party

lending • Resolution of banks failing

to comply with recap plans • Strengthening capacity of

banks to resolve bad loans • Supervision upgrade

Disbursements starting March 2016 are quarterly and amount to $620-630 Million

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Ukraine: IMF base case projections2013 2014 2015 2016 2017 2018 2019 2020

(percent change, unless otherwise indicated)* Est. Prog. Prog. Prog. Prog. Proj. Proj.Nominal GDP (billions of Ukrainian hryvnias) 1.466 1.535 1.85 2.087 2.356 2.626 2.896 3.194Real GDP 0.2 -6.9 -5.5 2 3.5 4 4 4Nominal GDP (billions of USD ) 178.78 127.92 85.25 92.76 101.99 111.74 122.71 134.77Contributions:

Domestic demand 1.1 -12.4 -7.7 2.6 4.1 4.5 4.8 5.2Private consumption 5.3 -5.8 -5.2 2 2.8 3 3.2 3.2Public consumption -0.5 -0.5 -0.2 -0.9 0.5 0.5 0.3 0.3

Investment -3.7 -6.1 -2.3 1.4 0.8 1 1.3 1.8Net exports -0.8 5.5 2.2 -0.6 -0.6 -0.5 -0.8 -1.2

GDP deflator 4.1 12.5 27.6 10.6 9 7.2 6 6Unemployment rate (ILO definition; percent) 7.3 10.5 11.5 11 9.6 8.6 8.1 8Consumer prices (period average) -0.3 12.1 33.5 10.6 8 6.2 5 5Consumer prices (end of period) 0.5 24.9 26.7 8.7 7.2 5 5 5Nominal monthly w ages (average) 8.2 5.9 14.5 10.6 11.8 10.2 9.2 9.3Real monthly w ages (average) 8.5 -5.5 -14.2 0 3.5 3.8 4 4Savings (percent of GDP) 9.6 8.8 10 11.8 12.5 13.2 13.9 14.7Investment (percent of GDP) 18.8 13.6 11.4 13.1 13.6 14.4 15.5 17Public finance (percent of GDP)Overall balance (including Naftogaz operational deficit) -6.7 -10.3 -7.4 -3.9 -3.1 -2.6 -2.4 -2.2

Public and Publicly Guaranteed Debt 40.6 72.7 94.1 92.6 88.9 83.3 77.3 71Money (end of period, percent change)

Base money 20.3 8.5 27.3 11.3 11 9.7 9.1 8.5Broad money 17.6 5.3 19.1 15.4 15.4 14.4 12.5 12

Balance of payments (percent of GDP)Current account balance -9.2 -4.8 -1.4 -1.3 -1.1 -1.2 -1.6 -2.3Foreign direct investment 1.8 0.3 1.4 1.9 2.1 2.1 2.1 2.1

Gross reserves (e-o-p, billions of U.S. dollars) 20.4 7.5 18.3 22.3 28.5 35.2 38.4 38.7Months of next year's imports of goods and services 3.3 1.5 3.3 3.7 4.5 5.2 5.2 4.9

Percent of short-term debt (remaining maturity) 33.2 17.4 43.7 57.4 69 82.9 84.1 78.4Goods exports (annual volume change in percent) -6.4 -11.1 -4.2 5.1 5.8 6.1 6.5 6.5Goods imports (annual volume change in percent) -5.3 -26.9 -11.9 5.7 6 6.2 7.3 7.9Goods terms of trade (percent change) -1.1 -2.8 0.4 -0.7 0 -0.1 0.1 0.3Hryvnia per U.S. dollar (end of period) 8.3 15.8 22 22.7 23.4 23.5 23.6 23.8Hryvnia per U.S. dollar (period average) 8.2 12 21.7 22.5 23.1 23.5 23.6 23.7Real effective rate (CPI-based, 2010=100) 106.8 82.5 68.6 70.5 71.7 72.2 72.9 73.3* Source IMF Country report March 20156

2015 IMF program: Prior actions and benchmarks

Source: IMF Report, public information.

Prior actions Status Completion date

Parliament will approve legislation that introduces unlimited liability of bank owners on losses arising from loans granted directly or indirectly to the benefit of bank shareholders holding 10 percent or more of total voting shares as of end-2014 ( Completed March 2015

The energy regulator will adopt and officially publish a decision to raise household gas prices to UAH 3600/tcm for consumption in Tier 1 and UAH 7187/tcm for consumption in Tier 2, effective April 1, 2015 Completed February 2015The energy regulator will adopt and officially publish a decision to raise household heating prices to UAH 625/gcal on average, effective April 1, 2015 Completed February 2016

The Cabinet will submit to Parliament legislative amendments to improve Naftogaz collections. These amendments should include (i) lifting two longlasting moratoria (Law 2711-IV/2005 and Law 2864-III/2001) that protect energy and other companies from enforcement proceedings; and (ii) disconnecting noncompliant customers from the gas supply grid Completed March 2015

Parliament will approve a 2015 supplementary state budget law and a package of tax and expenditure legislation consistent with the program deficit ceiling of UAH 78 billion for the general government Completed March 2015Government will hire financial and legal advisors to facilitate consultations with holders of public sector debt with a view to improving medium-term debt sustainability Completed February 2015

Parliament will approve legal amendments to ensure that the NAB (National Anti-ciorruption Bureau) is subject to a robust external oversight process, can investigate former Presidents, can access all relevant information for its investigations, and that appropriate mechanisms are in place to ensure hiring of staff with high integrity Completed February 2015

Financial Sector

Energy Sector

Fiscal Policy

Governance

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2015 IMF program: Prior actions and benchmarks

Source: IMF Report, public information.

Structural benchmarks Status Target date

Parliament will approve amendments to the NBU Law to strengthen the governance and autonomy framework of the NBU Not completed End-April 2015

NBU will notify banks of any identified discrepancies in the related party exposure reports Not completed End-July 2015

Parliament will approve a law on a selective increase of court fees, aiming to double court fee revenue in real terms within 12 months Not completed End-May 2015Parliament will approve a law which strengthens the provisions in the Code of Civil Procedure on Order for Payment for domestic transactions and on garnishment of bank accounts Not completed End-August 2015

Government will prepare a revenue administration reform plan in order to overhaul the state fiscal service: measures to implement governance and institutional reforms that clarify the tax agency’s reporting to the Minister of Finance; removal of large numbers of underperforming officials Not completed End-April 2015The State Fiscal Service will transfer all taxpayers meeting large taxpayer criteria to the LTO Not completed End-December 2015The State Fiscal Service will implement its new arrangements as specifiedunder the revenue administration reform plan Not completed End-December 2015

The Ministry of Economy in cooperation with the Ministry of Finance willprepare a statement of fiscal risks emanating from SOEs Not completed End-April 2015The government will adopt a broad-based strategy to reform the SOE sector, including measures needed to improve budgetary oversight, develop a comprehensive ownership policy, strengthen corporate governance, prioritize which enterprises should be made subject to restructuring, and examine options for improving management of other state assets. Not completed End-May 2015

Take necessary measures to establish the National Anti-corruption Bureau Not completed End-April 2015Strengthen the implementation of the AML framework: (i) proper implementation of the legal requirements related to domestic politically exposed persons (PEPs); (ii) the Financial Intelligence Unit (FIU) will develop a system to assist financial institutions in identifying domestic PEPs; and (iii) proper arrangements will be put in place to facilitate cooperation between the NBU, FIU and NAB Not completed End-June 2015

Parliament will approve legislative amendments to improve Naftogaz collections. These amendments should include (i) lifting two long-lasting moratoria that protect energy and other companies from enforcement proceedings; and (ii) disconnecting noncompliant customers from the gas supply grid Not completed End-March 2015Parliament will approve a new gas market law Not completed End-April 2015Undertake an independent audit of all Naftogaz receivables Not completed End-June 2015

Judiciary/Enforcement

Fiscal Policy

State-Owned Enterprises

Governance

Energy Sector

NBU and Financial Sector

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Return of FDI: Issues to resolve

De-escalation and resolution of the military conflict and political situation with Russia✓

Significant and fast implementation of reforms (anti-corruption, bureaucracy reduction, reform of legal system, etc.) ✓

Boost of market confidence [emergency funding from international community of $10-15bn on top of existing support]✓

Progressive implementation of IMF benchmarks including negotiate of a future gas deal with Russia and reform of state owned Naftogas✓

Successful and timely process of “Restructuring” of the Sovereign FCY Debt Obligations is now underway✓

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# Concerns

1 Current restrictive administrative measures restricting the FX market and adversely impacting int’l trade activity.

2 Current capital controls and visibility of timeline when they may be cancelled

3 FX rate devaluation pressure and effect on banking system balance sheets

4 Significant GDP drops in 2014 and 2015, Donbas assets destruction, and adverse trade actions from Russia increase banks’ NPL levels significantly.

5 Pace and scope of economic stabilization measures

6 Pace and scope of reform measures.

7 IMF $17.5B EFF program’s next disbursements and implementation of IMF structural benchmarks

8 Creditor test cases of concern to the sector (e.g. Mriya , VAB Bank, others)

9 NBU support of banking system needs (e.g. regulatory ratio modifications)

10 Banking sector clean up and post-stress test bank recapitalizations.

11 Overall investor confidence and effects on financing activities and FDI

12 The conclusion and ultimate form of the sovereign FCY debt restructuring

The Return of Lending: Ukraine Financial Sector Concerns

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CB FX reserves

0.00

10,000.00

20,000.00

30,000.00

40,000.00

1/1/113/1/115/1/117/1/119/1/1111/1/111/1/123/1/125/1/127/1/129/1/1211/1/121/1/133/1/135/1/137/1/139/1/1311/1/131/1/143/1/145/1/147/1/149/1/1411/1/141/1/153/1/15

FX reserves, $bn

Central Bank FX reserves, US$ bn

February 2015, CB reserves cover only 6

weeks of import

March 16, 2015, US$2.5 bn from IMF tranche sent to replenish CB FX reserves

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FX reserves vs. rate

(US$bn)

Trading volume: last 12-month and 5-year periods (left and right respectively)

Spot market rates USD/UAH: last 12-month and 5-year periods (UAH per USD, left and right respectively)

Capital flight

Dividends payments

Regulatory restrictions

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UA EurobondsUkraine 2017 Eurobond price

Ukraine 2023 Eurobond price

KievPrime Dynamics

Source: Bloomberg

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Banks Nostro accounts

Source: NBU

Ukrainian banking liquidity

0

12500

25000

37500

50000

1/3/12 3/2/12 5/7/12 7/9/12 9/6/12 11/5/12 1/3/13 3/5/13 5/13/13 7/10/13 9/9/13 11/6/13 1/3/14 3/6/14 5/12/14 7/11/14 9/10/14 11/7/14 1/9/15 3/10/15

UAH, MM

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2014-2015 Ukrainian Banking System Diagnostics & Capital plans

NBU has committed, under the IMF program, to strengthen stability of the banking sector, to work on improvement of regulation, clean the system through stress-tests and provide ongoing liquidity support and assurance that the banks are well capitalized.

February 2015

Diagnostic studies

Completed diagnostic

studies for Top-15

Fully completed diagnostic studies; Submitted plans by

Top-15

Submitted plans by Top-35 banks

Capital targets compliance for

Top-15

Deadlines for recapitalization

targets for 2nd group of 20 banks

Stress-tests timeline

Banking Sector Stress-Tests were Conducted as Part of NBU Commitments Under IMF Program

NBU Instructed the largest 35 banks to launch diagnostic studies • The studies assessed capital adequacy to

meet Tier 1 capital target under different IMF proposed scenarios

• Banks were required to submit business plans to NBU with the view on maintaining capital requirements

Diagnostic studies completed by end-July for Group I banks • Diagnostic studies were fully completed

by end-September

• Banks with problems were required to submit recapitalization and restructuring plans by end-September for Group I banks and by end-November for Group II banks

Banks must be compliant with the T1 capital targets of 7% under the baseline scenario and 4.5% under the adverse scenario through 2016 • Deadlines for compliance are end-

December for Group I banks and end-February 2015 for Group II banks

• Any shortfall should be covered by owners’ cash

• Criteria have been softened further negative UAH devaluation dynamics in February 2015

December 2014

November 2014September 2014July 2014April 2014

Official Diagnostics results are not disclosed to-dateSource: IMF report

Deadlines for recapitalization

targets compliance for 9 largest banks

June 2015

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Banking system reform: unwinding related party Lending

Source: IMF report

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2014 Ukrainian Banking System Diagnostics

Diagnostics of 35 largest Ukrainian banks in 2014PrivatBank Savings Bank of Ukraine Ukreximbank Delta Bank Raiffeisen Bank Aval Ukrsotsbank (UniCredit) Prominvestbank (VEB) Sberbank of Russia FUIB Nadra Bank Alfa-Bank Finance and Credit Bank VTB Bank UkrSibbank (BNP Paribas) Ukrgasbank

Citibank VAB OTP Bank Credit Agricole Financial Initiative Bank Fidobank Pivdenniy Bank Imexbank Platinum Bank ING Bank Ukraine Rodovid Bank Khreschatyk Bank Kyivska Rus” Bank Zlatobank Pivdenkombank Universal Bank Ukrainian Bank of Development BTA Bank Ukrinbank Credit Dnepr Bank

Group II (20)

Strengthening banking system

Capital adequacy and required recapitalization

Assets quality assessment

Protection of creditors’ and depositors’ rights

Purpose of banking system diagnostics as declared by National Bank of Ukraine

Group I (15)

Source: National Bank of Ukraine official website www.bank.gov.ua, Public internet sites

Total cost of banks restructuring are estimated at 9.5% GDP over 2014-2015*

*IMF estimate

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Ukrainian Banking System SnapshotNumber of banks

Number of banks in dynamics

Liquidated banks

1. AKB-Kyiv bank 2. Standard bank 3. Zlatobank 4. Energobank 5. Nadra bank 6. Imexbank 7. Ukoopspilka 8. Profinbank 9. Ukrbusiness bank 10. Cambio bank 11. VBR bank 12. BG bank 13. Legbank 14. VAB bank 15. CityCommerce bank 16. Melior bank 17. Intercreditbank 18. Aksioma bank 19. Prime bank 20. Porto-Franko 21. Demark bank 22. Expobank 23. Green bank 24. Akrabank 25. Actyv bank 26. Terra bank 27. UFS bank 28. Zoloty Vorota 29. Eurogazbank 30. Finrostbank 31. Starokyivskiy 32. AKB bank 33. Zahidinkombank 34. Pivdenkombank 35. Promekonombank 36. Interbank 37. Forum 38. Merkury 39. Brokbusiness bank 40. Real bank 41. Daniel 42. Tavrika 43. Erde bank 44. Basis 45. Innovatsiyno-Promysolviy 46. Stolytsya 47. Deltabank 48. Kreditprombank 49. Omegabank

Banks with temporary administration and in liquidation 2015YTD

2012 (4)

• National standard bank • European Bank • European Bank for Development and Savings • Slavic Bank

2013 (3)

• Ipobank • Odessa Bank • ARMA Bank

2014 (10)

• East European Bank • Ukrainian Financial Group Bank • Transbank • Regional Development Bank • Zamal’nyi Bank • Ukrainian Industrial Bank • BIG Energy Bank • Dnister Bank • Dialogue Bank • Synther Bank

Source: NBU; Deposit Guarantee Fund official website19

Date 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 01.12.14 01.01.15 01.04.2015

Number of banks 76 133 211 228 230 229 227 214 203 195 189 182 179 181 186 193 196 198 197 194 198 180 165 158 151

Systemically Important Banks by NBU (as of 01.12.2014)

Source: National Bank of Ukraine official website www.bank.gov.ua

• Privatbank

• Oschadbank

• Ukreximbank

• Delta Bank*

• Raiffeisen Bank Aval

• Ukrsotsbank (UniCredit)

• Prominvestbank

• Sberbank of Russia

On December 25, 2014, the National Bank of Ukraine has issued NBU Board Resolution No 863 “On Approval of the Procedure for determination of systemically important banks” adopting the methodology for determining systemically important banks.

Systemically important banks will be designated annually using multivariable mathematical model based on the systemic importance criteria. The main systemic importance criteria are total volume of assets, liabilities of legal entities and individuals, interconnectedness (volume of interbank lending) and the volume of lending to key sectors of the economy.

The Resolution is aimed to set the methodology for determination of systemically important banks that affect the banking system stability.

In the near future the National Bank of Ukraine will develop the regulations on supervision of systemically important banks setting, among others, additional capital requirements for them. The National Bank of Ukraine plans to gradually introduce new regulatory requirements for systemically important banks to allow their shareholders to take necessary measures. This will contribute to the soundness of those banks and banking system in general.

* - under temporary administration since 03,03.2015

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Banks’ Capital

Source: NBU

Profit/Loss

No Bank 01.01.2015 01.01.2014 01.01.2015 01.01.2014 01.01.2015

1 Oshchadbank 22 749 157 20 455 511 128 103 752 103 568 090 -8 564 446 2 Privatbank 22 696 359 20 311 621 204 585 003 214 490 857 749 0363 Ukreximbank 13 536 221 18 083 276 125 999 827 94 349 057 -9 805 548 4 Ukrsotsbank (UniCredit) 6 238 628 8 667 738 48 258 327 43 056 668 -2 662 247 5 Raiffeisen Bank Aval 6 148 300 7 236 738 46 859 432 43 460 101 -1 367 334 6 Prominvestbank 6 075 543 5 384 190 52 656 224 39 737 492 -3 453 846 7 VTB bank 5 087 654 3 206 944 36 502 261 25 285 690 642 7958 Delta bank 4 749 714 3 325 344 60 303 279 55 298 418 46 2789 Sberbank of Russia 3 904 103 3 666 785 46 740 331 35 094 686 108 04910 Alfa bank 3 509 689 4 198 756 36 693 914 29 293 387 -744 050 11 Finance & Credit 2 649 050 2 108 622 34 202 971 25 722 051 -215 674 12 ING bank* 1 873 465 1 644 585 12 097 591 9 665 451 228 88013 Citibank* 1 800 058 936 727 10 545 173 6 012 520 1 379 83114 Ukrsibbank (BNP Paribas) 1 780 587 2 650 275 26 336 775 24 111 742 -870 138 15 Ukrgazbank 1 570 507 4 522 482 21 027 912 23 793 944 -2 801 124 16 Credit Agricole 1 413 659 1 665 664 21 079 321 14 142 893 90 41617 OTP bank 1 374 817 3 359 401 21 505 504 18 722 348 -1 999 097 18 Piraeus bank 528 073 410 403 3 228 079 2 517 559 -323 827 19 SEB Corporate bank* 306 806 276 036 1 475 469 921 715 30 77020 Deutsche bank* 246 939 218 799 862 534 1 849 616 27 931

Total 20 banks 108 239 329 112 329 898 939 063 676 811 094 285 29 503 346 - Total Banking System 148 062 606 192 598 964 1 316 717 870 1 277 508 651 52 475 706 -

* - banks w ithout retail branch netw ork

Capital Assets

In M UAH, 1$ = 23 UAH

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Banks’ Financial ResultsIn M UAH, 1$ = 23 UAH

ROAA (return on Assets)

ROAE (return on equity)

No Bank 01.01.2015 01.10.2014 01.07.2014 01.04.2014 01.01.2014

1 Citibank 1 379 830.83 1 106 819.82 803 624.81 619 181.54 483 373.88 16.7% 100.84%2 Privatbank 749 036.10 426 956.54 387 230.37 293 763.91 1 873 391.70 0.4% 3.48%3 VTB bank 642 795.07 745 614.97 1 026 119.51 1 255 456.93 -194 041.75 2.1% 15.50%4 ING bank 228 880.19 -174 191.66 358 669.07 130 655.86 76 121.69 2.1% 13.01%5 Sberbank of Russia 108 048.92 104 175.68 115 583.76 103 649.52 572 788.09 0.3% 2.85%6 Credit Agricole 90 415.55 383 061.58 472 860.01 273 632.50 368 745.41 0.5% 5.87%7 SEB Corporate bank 30 770.19 26 628.46 16 443.44 6 623.22 12 033.98 2.6% 10.56%8 Delta bank 46 277.81 228 116.37 192 862.89 72 565.80 302 701.02 0.1% 1.15%9 Deutsche bank 27 930.67 20 029.78 11 429.05 5 127.22 22 441.21 2.1% 11.99%10 Finance & Credit -215 673.98 -48 591.25 -51 440.33 -54 745.93 6 256.01 -0.7% -9.07%11 Piraeus bank -323 826.96 -188 142.77 -101 733.48 -40 809.15 -173 007.22 -11.3% -69.01%12 Alfa bank -744 049.83 979.49 3 900.08 2 372.97 13 079.77 -2.3% -19.30%13 Ukrsibbank (BNP Paribas) -870 137.83 -732 150.06 -437 589.66 -273 189.76 24 503.08 -3.4% -39.28%14 Raiffeisen Bank Aval -1 367 334.23 -1 368 650.61 -1 002 742.92 -943 068.55 730 045.45 -3.0% -20.43%15 OTP bank -1 999 096.67 -1 311 126.47 -995 311.15 -678 446.80 117 292.69 -9.9% -84.45%16 Ukrsotsbank (UniCredit) -2 662 246.89 -1 547 309.97 13 098.38 23 229.13 10 987.89 -5.8% -35.72%17 Ukrgazbank -2 801 124.04 6 875.50 67 730.52 64 534.11 1 001 972.53 -12.5% -91.95%18 Prominvestbank -3 453 846.29 1 076 832.76 874 621.40 549 580.03 -2 575 268.61 -7.5% -60.28%19 Oshchadbank -8 564 446.19 550 899.28 340 009.83 155 775.04 678 784.33 -7.4% -39.65%20 Ukreximbank -9 805 548.50 -3 951 042.63 109 480.81 63 774.61 198 615.56 -8.9% -62.02%

Total 20 banks 29 503 346.08 - 4 644 215.19 - 2 204 846.38 1 629 662.20 3 550 816.70

Profit / Loss

01.01.2015

Source: NBU

22

Banks’ Financial Results (cont.)

Source: NBU

23

Bank’s Clients’ Assets and LiabilitiesJanuary 1, 2015 In M UAH, 1$ = 23 UAH

No Bank Total UAHForeign

CCY

Reserves as % of total

Loans

Reserves as % of Oct 1,

2014 Total UAHForeign

CCY Total UAH Foreign CCY

1 Privatbank 161 338 726 69% 31% 15% 15% 141 338 369 46% 54% 88% 58% 152%2 Oshchadbank 69 271 838 64% 36% 37% 23% 55 368 183 69% 31% 80% 86% 70%3 Ukreximbank 52 093 575 33% 67% 47% 33% 60 125 796 34% 66% 115% 118% 114%4 Delta bank 44 784 754 65% 35% 9% 8% 35 627 854 53% 47% 80% 64% 108%5 Prominvestbank 38 500 679 23% 77% 15% 4% 13 682 619 50% 50% 36% 77% 23%6 Sberbank of Russia 37 692 112 11% 89% 11% 9% 14 934 713 26% 74% 40% 95% 33%7 Ukrsotsbank (UniCredit) 32 490 498 34% 66% 38% 34% 22 500 826 56% 44% 69% 116% 45%8 Finance & Credit 29 864 425 62% 38% 7% 8% 22 040 922 44% 56% 74% 53% 108%9 Raiffeisen Bank Aval 29 705 240 58% 42% 47% 48% 28 800 408 66% 34% 97% 111% 78%10 VTB bank 29 285 964 18% 82% 11% 14% 7 900 171 59% 41% 27% 89% 13%11 Alfa bank 25 609 183 43% 57% 15% 13% 18 060 830 45% 55% 71% 74% 68%12 OTP bank 16 017 576 41% 59% 29% 28% 14 003 139 49% 51% 87% 105% 75%13 Ukrsibbank (BNP Paribas) 14 904 777 49% 51% 14% 13% 17 424 364 57% 43% 117% 138% 97%14 Credit Agricole 14 529 800 57% 43% 12% 7% 17 625 200 62% 38% 121% 131% 109%15 Ukrgazbank 10 034 858 72% 28% 75% 45% 12 368 091 54% 46% 123% 93% 201%16 ING bank* 9 172 119 16% 84% 3% 8% 2 461 915 51% 49% 27% 84% 16%17 Citibank* 2 550 039 93% 7% 4% 3% 7 223 239 78% 22% 283% 237% 948%18 Piraeus bank 1 320 903 21% 79% 10% 17% 1 215 339 52% 48% 92% 230% 55%19 SEB Corporate bank* 1 173 942 33% 67% 0% 0% 222 455 80% 20% 19% 46% 6%20 Deutsche bank* 241 852 100% 0% 0% 0% 403 700 80% 20% 167% 133% 0%

Total 20 banks 620 582 860 493 328 134

* - banks w ithout retail branch netw ork

Client's Loans Clients' Funds / LiquidityLiquidity Ratios (Clients' Funds /

Clients; Loans)

Source: NBU

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Foreign Banks in Ukraine – March, 2015

Source: NBU, Public internet sites

International Banks (15) Russian Banks (8)

OTP Bank Hungary

Since 2006

ProCredit Bank Germany

Since 2001

ING Bank Ukraine Netherlands

Since 1994 – RO; 1997 – Subsidiary

Citibank Ukraine USA

Since 1997

BM Bank

Since 2006

Sberbank of Russia

Since 2007

Alfa-bank

Since 1993

Forward Bank

Since 2006

Petrocommerce Bank-Ukraine

Since 1996

VS Bank Sberbank of Russia

Since 2012

VTB Bank

Since 1992

Prominvestbank Vnesheconombank

Since 1992

Banks with foreign investors (4)

Piraeus Bank Piraeus Bank S.A.

Greece Since 2007

Raiffeisen Bank Aval Raiffeisen Bank International

Austria Since 2005

Ukrsibbank BNP Paribas S.A. France

Since 2006

BTA Bank BTA Bank

Kazakhstan

Since 1992

Idea Bank Getin Holding S.A.

Poland Since 1991

Credit Agricole Credit Agricole S.A.

France

Since 2011

Marfin Bank Cyprus Popular Bank Co Ltd

Cyprus Since 2007

Universal Bank Eurobank Ergasias S.A.

Greece Since 1994

Ukrsotsbank UniCredit S.p.A.

Italy Since 1991

Deutsche Bank Germany

Since 1993 – RO; 2009 – Subsidiary

Credit Europe Bank Turkey

Since 2007

Creditwest Bank Turkey

Since 2007

SEB Corporate Bank Sweden

Since 2012

Pravex Bank Italy

Since 2008

KredoBank PKO Bank Polski

Poland Since 1992

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Foreign Banks in Numbers – 2015 vs 2008

Source: NBU, Public internet sites

January 2008 January 2015

64 45 # of foreign banks in Ukraine

47 26 # of banks with foreign capital less than 100%

17 19 # of banks with 100% foreign investments

35% 32,5%(1) Foreign capital's share in banking system capital

Banks with foreign capital in Ukraine (by number of banks)(1)

Capital ownership structure of the banking system in Ukraine(1)

Foreign banks in dynamics

(1) As of December 2014

100%

100%

0

18

35

53

70

Foreign banks in Ukraine Banks with 100% foreign investments

20082015

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Foreign Banks Leaving Ukraine: 2009-2014

Source: Public internet sites

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Currency Regulatory Controls – Ukraine (as of Mar, 12, 2015)Inflows ● 75% obligatory sale of all FCY incomings into the country (incl export proceeds, x-border loans, investments) *

● Stringent documentation requirements for x-border FTs (documents to be submitted by clients to processing bank for validation)

● Export of goods/services - payment should arrive to Ukraine within 90 days ● X-border loans require registration with National Bank of Ukraine (NBU) prior to drawdown ● Transactions in FCY between two Ukrainian residents are prohibited ● Offsetting of mutual monetary receivables/payables in FCY is banned for export operations *

Outflows ● Stringent documentation requirements for x-border FTs (documents to be submitted by clients to processing bank for validation). Each FCY FTs can be processed only after receiving approval from NBU on T+3 basis, subject to provision of tax certificate and some other docs in some cases. T+3 for FCY FTs is not applicable if the FCY was previously purchased with NBU confirmation.

● Restriction for FCY prepayment: - For prepayments under contract or for cumulative monthly prepayments values of several contracts with

single non-resident with amount above $ 50 k and up to $ 500 k is subject to confirmation from NBU and is executed on T+3 basis after respective FX perchance confirmed. One transaction per day, per one non-resident is allowed.

- For prepayments under contract or for cumulative monthly prepayments values of several contracts with single non-resident with amount above $ 500 k are possible only if made under Letter of Credit confirmed by bank with investment rating (by Fitch Ratings, Standard & Poor’s, Moody’s). (except “Critical Import” **)

- For contracts (i) with no contract amount defined – starting Feb, 24 bank will apply the above rules once accumulated payment amounts reaches $ 50 k or $ 500 k threshold; (ii) with defined contract amount - factual residual unpaid amount as of Feb, 24 will be taken into consideration for applicability of above rules.

- FX purchases of prepayments under contracts exceeding $ 500 k are allowed: (i) for providing cash collateral to make payments under Letters of Credit; (ii) payments to non-resident banks for services under Letters of * - restriction/limitation is valid till June, 3, 2015 inclusive

** - exception for “Critical Import” is valid till April 03, 2015. Critical Import list is set out in Article 5 of the Law of Ukraine "On measures to stabilize the balance of payments of Ukraine in accordance with Article XII of the General Agreement on Tariffs and Trade 1994"

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Currency Regulatory Controls – Ukraine (as of Mar, 12, 2015)

Corporate Foreign Exchange Transactions

● LCY loans/overdrafts are prohibited for FX purchase transactions ● LCY loans/overdrafts are prohibited if FCY balances/deposits held with the bank are used as collateral* ● FX purchase is prohibited if Client’s accumulative FCY balances on current/deposit accounts (in all the banks where

accounts are held) exceed $ 10 k **. Written confirmation from Client is required. ● FX purchases (prepayments only) under contracts exceeding $ 500 k are allowed: (i) for providing cash collateral to

make payments under Letters of Credit; (ii) payments to banks under Letters of Credit ● FX can be done only with Ukrainian resident bank ● FX purchase is effected at T+3 basis (LCY should be supplied to internal bank's account at T+0) and subject to

reporting to NBU * ● Stringent documentation requirements for FX purchase. Each FCY purchase exceeding $ 50 k can be processed

only after receiving approval from NBU and supported with Tax Office Certificate of absence of debt. LCY/FCY Deposits Onshore

● Cash withdrawal from FCY accounts/TDs upon maturity is allowed in UAH 15 k equivalent (approx. $ 0.6 k) per day* ● Cash withdrawal from LCY accounts/TDs upon maturity is allowed in UAH 150 k (approx. $ 6 k equivalent) per day* ● Funds from TDs in LCY can be withdrawn prior to maturity based on contractual conditions of TD ● Funds from TDs in FCY prior to maturity can be repaid by the bank in LCY *

LCY/FCY Deposits Offshore

● Ukrainian resident companies can open accounts off-shore with Central bank license ● UAH/USD FX transaction can not be done offshore (UAH is not freely convertible currency)

Intercompany Lending between Resident and Non-resident

● X-border loans require registration with NBU prior to drawdown ● Prepayment of x-border loans is not allowed, except for prepayment of existing loans using proceeds of a new cross

border loan with longer tenor*

* - restriction/limitation is valid till June, 3, 2015 inclusive ** - Exceptions: deposits placed before March 4, 2015; FCY are pledged; balances are held with ‘insolvent category banks’ or with ‘Temporally Administration’ or ‘Under liquidation’

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Military Conflict in Ukraine*

*This slide and its figures and data is from the Ukraine Ministry of Finance Investor presentation dated March 13, 201530

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