RESULTS 2015 1 Operating environment The Bank of Russia continued - PowerPoint PPT Presentation

RESULTS 2015 1

Operating environment The Bank of Russia continued the process of active recovery of In this regard, there is an outflow of customer accounts from small the banking system in 2015. As a result there were revoked the banks to large private and public credit institutions and the licenses of the banks that did not meet the regulatory requirements restructuring of the banking industry as a whole. (53% of the total number of revoked licenses in 2013 -2015 due to In 2015 the Russian economy was forced to operate in the loss of capital) and violated the anti-money laundering conditions of geopolitical tensions and financial instability with legislation. limited access to international capital markets and high cost of borrowings in the domestic market. 252 banks were Banks from TOP Historic minimum of ‘sanitized’ or deprived of -50 accumulate 85% of assets GDP decline for the past 7 exchange rate - 72,8827 their licenses over the of the Russian banking quarters P/$ at the year-end 2015 past 3 years system (- 10,9% in Q4 ) 64.3 bn rubles were paid from ROE for the banking sector Decline in oil prices (below $40) decreased by 10 times over the Drop in consumer demand vs relatively comfortable $60-65 the Deposit Insurance Agency per barrel of Brent to the depositors of past 2 years (excl. the owners’ "Intercommerz Bank » support) Investment decline in fixed Decline in export revenue capital 187,4 bn rubles amounted to The amount of suspicious the size of ‘financial hole’ of transactions aimed to money Migration to a floating exchange Volatility in stock and debt "Vneshprombank" vs assets in withdrawal abroad decreased by 70 rate and devaluation of the markets, growth of currency amount of 275 bn rubles national currency by 43% times (from $38.8 bn to $ 558 m) risks and borrowing rates in reported by the bank domestic market starting in Q4 2014 M&A activity decline - 13 M&A 60 % of the Russian banks transactions for the banking sector are unprofitable over the 1H of 2015 2

Banking sector in 2015: dynamics of development Financial result in the banking sector 2015 reflects an support for the banking industry. adequate ability of banks to adapt the deterioration of operating However, the deterioration in the macro economy in 2016, environment. may require an additional support to certain banks and /or system Anti-crisis measures package and fine-tuning financial measures to support the industry. instruments implemented by the Bank of Russia and the Government of the Russian Federation have provided a substantial Indicator Annual change, % 2015 vs 2014 (bn. rubles) +6,9 (-1,6%)* 83 000 / 77 653 Assets +7,6 (+0,1%) 43 985 / 40 866 Aggregate loans to economy +12,7 (+2,5%) 33 301 / 29 536 Loans to non-financial organizations -5,7 (-6,3%) 10 684 / 11 330 Loans to individuals -67,4 192 / 589 Profit +25,2 (+16,8%) 23 219 / 18 553 Individual deposits 15,6 (+2,7%) 27 064 / 23 419 Customer accounts and deposits (excl. individuals) -42,3 5 363 / 9 287 Due to the Bank of Russia Provisions for possible losses (share in liabilities) +33,4 Source: http://www.cbr.ru/analytics/ (* - amendment for currency revaluation) 3

Profile NK Bank (License № 2755 ) is a private commercial Bank, established in 1993 and registered by The Bank of Russia in 1994, organized as a joint stock company under the laws of the Russian Federation, and focused on services for corporate business and private customers. In spite of its business concentration in Moscow and Moscow region, the Bank using its more than 20 years long experience, provides services for the clientele within the regions of Russia. NK Bank does not participate in a bank group (bank holding). - JSC “NK Bank” traditionally demonstrates the positive dynamics of the key financial indicators. - Bank’s financial reliability and health is supported by the following ratings assigned by Moody’s : B3/NP and Counterparty risk - B2(cr)/NP(cr). - The reputation of a reliable financial partner which properly fulfills its obligations to customers, counterparties and investors, provides the Bank's successful cooperation with partners in domestic and international markets. Clear-cut strategy, client-focused operational and robust business models allow to develop the new mixed and tailor-made products for our customers with the help of the modern financial instruments that leads to more effective and comfortable cooperation. We highly appreciate transparency and confidentiality, individual approach and loyalty in relations with our customers and partners. Strategic Lines Private Banking Corporate Retail SME’s programs business unique services for classic banking HNWI and very HNWI in participation with Loans and (FO/MFO ) SME Bank (OJSC) investments 4

Profile Licenses, permissions and participation: Moscow Exchange, Moscow Internal Visa MasterCard Business National Association of Regional JSC «MICEX - RTS», JSC Currency International Worldwide SWIFT Association Banks of Russia Association «Stock Market MICEX» Association for Banking Information SRO National Finance Info system RVS – Bills Bloomberg Reuters Security Standards Association Participation in Business Deposit Extensive Individual concentration Positive credit Insurance experience in business in Moscow records System since banking approach region 1994 5

Business activity The Bank provides banking products and high quality services to Corporate accounts is a significant part of the Bank’s credit corporate and private clients, cooperates with credit institutions, investors portfolio. The corporate line is expected to prevail in the structure of the and issuers. Bank's business in the foreseeable future. The Bank’s primary business consists of commercial banking, The Bank's Retail business focuses on originating consumer loans to trading with securities and foreign currencies, originating loans and private customers with relatively low credit risk, with particular emphasis guarantees. on cross-sales of retail products to employees and customers. The Deposit portfolio of the Bank has traditionally comprised of the private deposits in significant part. Priorities Practical steps Targets  Gradual increase in the share of highly profitable services  Extension of transactions focused on generating fee income Business stabilization in Maintaining its niche in key business  Service extension for SMEs and further using of investment the current environment segments advantages  Development of tiered risk management system Saving the risk value within the limits  Adoption of Basel 3 Asset quality and risk not exceeding the market management  Tightening of collateral requirements average  Sale of non-core assets  Reducing operating costs and improving the efficiency of Comfortable ratio of costs to income Efficiency at the level of 2014 operations 6

Shareholders Smirnov S. Grigoryev Viktor 10,0% More than 25 years of successful business experience as a Grigoryev.V Head, Chairman and a Member of the Board of Directors 90,0% of industrial enterprises and holdings. President of JSC "NK Bank" since 2011. Smirnov Sergey Business activity: industrial, oil and gas, energy and other assets in economy More than 20 years of successful business key sectors. In 2008 - 2015 the main shareholder have used the following forms of experience in the Russian banking system as a investments in Bank’s development, incl.: Director (CEO) and a Member of the Board of Directors in commercial banks.  Additional share issue – 55.5 m rubles in 2009  Subordinated debt in the amounts of: Professional corporate management skills and personal  Free of charge financing: 148.5 m rubles in 2009 leadership qualities have defined the Bank’s success in overcoming - 150 m rubles in 2013 economic crisis in 2008 – 2010. - - 324 m rubles in 2014. 200 m rubles in 2014 - 15 m rubles in 2015. Chairman of the Board (CEO) of JSC "NK Bank" since 2005. - High Shareholders’ interest in development of the Bank helps to : Attract financially stable partners and Organic business development and Participate in financially stable and long term new customers extension of the Bank's activities projects 7

Mission and goals Balanced business growth of the Bank, included in the Top-150 largest Russian banks as universal and dynamically developing financial institution, aimed to provide mutually beneficial financial solutions, products and services for key and potential and customers in private and corporate sectors. Improvement the competitiveness Sustainable growth of the Rapid response to market changes of products and services shareholder value of the Bank Effectiveness of the Growth of the liquid securities Optimal ratio of profit to risks borrowings portfolio Increase of the loan portfolio, focused Highly-balanced structure of assets Moderate appetite for speculative on SME segment and liabilities markets activity Increase the level of financial, Increased attention to the quality of structural and qualitative the loan portfolio: concentration decrease Software renewal + reducing the share of problem loans indicators 8