Q3, 2019 FIRST INVESTMENT BANK CONFIDENTIAL
Table of contents Section 1 Country Profile and Bulgarian Economic Overview 3 Section 2 Fibank and the Bulgarian Banking System 9 Section 3 Fibank at a Glance 17 Section 4 Key Figures and Loan Portfolio 20 Section 5 Company Profile 25 CONFIDENTIAL 2
SECTION 1 COUNTRY PROFILE AND BULGARIAN ECONOMIC OVERVIEW 3
Country profile • Full name: Republic of Bulgaria • Memberships: European Union (since 2007), NATO (since 2004) • Population: 7.2 M • Capital: Sofia Area: 110,994 sq km (42,855 sq miles) • • Official language: Bulgarian • Traditional religion: Orthodox Christianity ROMANIA • Monetary unit: Bulgarian Lev (BGN) • A currency board arrangement was established in 1997 through the Bulgarian National Bank Act. • Fixed Exchange rate: EUR 1 = BGN 1.95583 SERBIA (BGN 1 EUR 0.51) • Main tax rates: BULGARIA • corporate tax rate of 10%; • personal income tax rate of 10%; BLACK KOS. Sofia • Value Added Tax Act (VAT) rate of 20%; SEA • Main exports: Ferrous and non-ferrous MACE- metals, petrol products, foods and drinks, DONIA textiles, machines and equipment • Payment Systems: RINGS, TARGET2 BNB, ALB. BISERA, BISERA7EUR, BORICA, SEPA, ESROT, CENTRAL DEPOSITARY GREECE TURKEY Source: National Statistical Institute, Bulgarian National Bank, Ministry of Finance CONFIDENTIAL 4
Bulgarian economy had strong results over past few years with high growth and low unemployment INFLATION & KEY DRIVERS OF BULGARIAN GDP UNEMPLOYMENT THE BULGARIAN GROWTH ABOVE EU DECREASED SINCE 2012 ECONOMY AVERAGE In q3, 2019, the country's economy • HICP & Unemployment GDP real growth (%, 2012-2018) reported a real annual growth rate of 3.7% (%, 2012-2018) for the period (2011: 3.1%), influenced by the improving external environment on a global scale, as well as the growing economic activity in the countries of the European Union. The main driver of the economy was private consumption growing by 5.7% for Q3 (2018: 6.9%), due to higher internal demand and positive 3.7 3.1 dynamics in the labor market; The unemployment rate declined to • 3.7% at the end of q3 2019, driven by employment in trade, agriculture, 2.5% hospitality industry and education; 2.3% • The current account remained positive, at the amount of BGN 4 862 М , or 8,2% of GDP in q3, 2019. 2018 q3, 2019 q3, 2019 2018 Source: International Monetary Fund; European Commission; Bulgarian Ministry of Finance; National Statistical Institute; Bulgarian National Bank 5 CONFIDENTIAL
Bulgarian Economic Overview Macroeconomic indicators 2013 2014 2015 2016 2017 2018 q3, 2019 EUR M 42, 010 42, 824 45, 288 48, 128 51, 662 55, 181 14, 882 GDP Growth, % 0.9 1.8 3.5 3.9 3.8 3.1 3.7 EUR M 535.6 530.6 (15.4) 1,244.0 1, 578,2 2,547.5 1, 758.6 Current account % of GDP 1.3 0.1 0.0 2.6 3.1 4.6 3.0 EUR M 1, 384 347 2, 399 1, 003 2, 314 1, 744 457.1 FDI % of GDP 3.3 0.8 5.3 2.1 4.5 3.2 0.8 Budget deficit/ surplus % of GDP (0.4) (5.4) (1.7) 0.2 1.1 1.0 1.2 Growth of Real GDP, Consumption and Investments Bulgaria Current Ratings Date Outlook Rating Positive Baa2 30 August 2019 Positive BBB- 31 May 2019 Positive BBB 28 August 2019 Source: Bulgarian National Bank, National Statistical Institute, Ministry of Finance CONFIDENTIAL 6
Macro environment: Key indicators historic development Indicators 2013 2014 2015 2016 2017 2018 q3, 2019 Gross domestic product (BGN million) 107, 925 31,485 82,166 83,634 88,571 94,130 98,361 Gross domestic product, real growth (%) 3.9 3.6 3.1 0.9 1.3 3.6 3.7 - Consumption, real growth (%) (1.9) 2.2 3.8 3.3 4.5 5.0 4.9 - Gross fixed capital formation, real 0.3 3.4 2.7 (6.6) 3.8 10.2 2.2 growth (%) Export (% of GDP) 48.0 52.2 49.6 35.9 50.5 49.2 48.4 Inflation at period-end (%) 0.1 2.8 2.7 (1.6) (0.9) (0.4) 1.7 Average annual inflation (%) (0.8) 2.1 2.8 0.9 (1.4) (0.1) 3.1 Unemployment (%) 8.0 7.1 6.1 11.8 10.7 10.0 3.7 Current account (% of GDP) 1.3 1.2 0.0 2.6 6.7 4.6 8.2 Trade balance (% of GDP) (2.0) (1.5) (4.1) (0.5) (7.0) (6.5) (5.8) Foreign exchange reserves of BNB (EUR 23,899 23,662 23,510 14,426 16,534 20,285 25,027 million) Foreign direct investments (% of GDP) 2.1 4.5 3.2 3.3 0.8 5.3 1.2 Gross external debt (% of GDP) 87.9 91.9 74.0 71.1 65.5 60.4 57.5 Public debt (% of GDP) 15.0 12.3 11.1 10.2 9.7 15.3 13.2 - Consolidated budget balance (% of GDP) 1.6 0.8 (1.8) (3.7) (2.8) 2.9 Exchange rate of USD (BGN for USD 1) 1.42 1.61 1.79 1.86 1.63 1.71 1.78 Source: National Statistical Institute, Bulgarian National Bank, Ministry of Finance CONFIDENTIAL CONFIDENTIAL 7
Mid-term macro forecast MACRO ASSUMPTIONS FAVOURABLE MACRO ENVIRONMENT 2018-2021F IN THE MID TERM (2018-2020F) Spring forecast ▪ Positive assumptions of the economic development during the 2019, Ministry of 2018 2019F 2020F 2021F period 2018-2021; Finance ▪ Stable growth in GDP to slow down in 2018 & then to gradually increase exceeding 3.4% y/o/y; GDP real growth, % 3.1 3.4 3.3 3.3 ▪ The consumption will accelerate its growth up to 5.7% y/o/y - consumption 4.6 5.7 5.2 4.5 until 2020; - investment 5.4 1.9 3.9 3.7 ▪ The growth will slow down to 3.7% y/o/y in 2021; - exports 1.7 -0.4 3.9 3.7 ▪ FDI are expected to remain stable around 2.4% of GDP; ▪ Full production capacity in the business; - imports 5.7 0.2 4.9 4.2 ▪ Additional increase in the share of goods with a high value Unemployment, % 5.2 4.4 4.1 4.0 added; Average HICP, % 2.6 2.5 2.1 2.2 ▪ Recovery of the labour market; Current account, % ▪ Reduction in unemployment rate down to 4.0% in 2021; 5.4 5.2 4.1 3.2 of GDP ▪ Strong fiscal position; Trade balance, % ▪ Increased activity on the real estate market of residential and -3.3 -2.7 -3.5 -4.2 of GDP office space; FDI, % of GDP 1.9 2.4 2.6 2.6 ▪ Augmentation of public investments; M3 aggregate 6.5 6.6 6.8 6.8 ▪ Acceleration in the absorption of EU funds; ▪ Expected completion of important infrastructure projects. Loans to corporates 7.7 5.9 6.8 8.1 Loans to individuals 11.2 9.8 8.8 8.4 CONFIDENTIAL CONFIDENTIAL 8
SECTION 2 FIBANK AND THE BULGARIAN BANKING SYSTEM 9
The banking sector: 25 banks & foreign branches operated in the country. Fibank in Top5 banks at September 2019. GROUP 1: TOP 5 BANKS GROUP 2: OTHER BANKS TOTAL ASSETS MARKET SHARE TOTAL ASSETS MARKET SHARE (Q3 ’19, BGNm) (Q3 ’19%) (Q3’19, BGNm) (Q3’19%) UniCredit Bulbank Raiffeisenbank 8,518 7.6% 20,475 18.4% DSK Bank (OTP) Expressbank 6,340 5.7% 15,922 14.3% United Bulgarian Bank (KBC) 11,643 10.4% Central Cooperative Bank 5,867 5.3% First Investment Bank 9,626 8.6% Allianz Bank 2,932 2.6% Eurobank Bulgaria 9,217 8.3% Piraeus Bank 2,786 2.5% GROUP 3: FOREIGN BRANCHES Bulgarian Development Bank 2,722 2.4% Procredit Bank 2,365 2.1% Municipal Bank 2,014 1.8% TOTAL ASSETS MARKET SHARE (Q3 ’19, BGNm) (Q3 ’19%) Investbank 1,929 1.7% International Asset Bank 1,550 1.4% Citi Bank Europe - Bulgaria 962.7 0.86% Branch Bulgarian-American Credit Bank 1,544 1.4% ING Bank N.V. - Sofia Branch 932.4 0.84% D Commerce Bank 992 0.9% BNP Paribas S.A. - Sofia TBI Bank 831 0.7% 807.1 0.72% Branch Tokuda Bank 384 0.3% BNP Paribas Personal finance 680.7 0.61% T.C. Ziraat Bankasi - Sofia Texim Bank 345 0.3% 125.1 0.11% Branch Fibank is the fourth largest overall, systemically important ▪ Fibank is the largest Bulgarian-owned bank ▪ to the Bulgarian banking system CONFIDENTIAL 10 10
Current Status of the Bank System Banking Sector as at 30 September 2019 у /oy 2013 2014 2015 2016 2017 2018 q3, 2019 Bank system assets, BGN M 85 747 85 135 87 524 92 095 97 807 105 557 111 509 Growth of assets in the bank system,% 4.0 (0.7) 2.8 5.2 6.2 7.9 8.1 Bank system profit, BGN M 584.9 746.3 898.4 1 262.3 1 174.0 1 678 1 270 Profit growth, %, y/oy 3.2 27.6 20.4 40.5 (7.0) 42.9 4.2 88 808 Bank system deposits, BGN M 62 230 63 710 69 276 74 129 78 405 84 571 Growth of deposits, % 8.7 2.4 8.7 7.0 5.8 7.9 6.7 Bank system loans, BGN M 57 376 54 158 52 256 52 442 53 553 57 688 60 919 Growth of loans, % 0.9 (5.6) (3.5) (1.8) 2.1 7.7 6.5 Capital adequacy, % 16.85 21.95 22.18 22.15 22.08 20.01 20.38 Liquidity, % 27.1 30.12 36.71 38.24 38.97 - - In the period June 2019 – September 2019, the dynamics of processes in the banking system was impacted by the increase in assets, deposits and loans. Source: Bulgarian National Bank, September 2019 CONFIDENTIAL 11 11
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