Banking in CEE Despite some headwinds, it is worthwhileBanking in CEE – Despite some headwinds, it...

Banking in CEE – Despite some headwinds, it is worthwhile

2015 Euromoney CEE Forum – Vienna, January 21st 2015

Gianni Franco Papa, Group Deputy General Manager, Head of CEE Division and CIB Division

Carmelina Carluzzo, Deputy Head of CEE Strategic Analysis

CEE Banking Outlook 2015

CEE remains a diverse Region. Cross-country differentiation is a key feature. This year, economic

growth in CESEE is likely to keep a similar pace as in 2014, at 2.5%, with CE outperforming SEE

(2.8% vs 1.6%). Taking CEE as a whole, GDP evolution will be affected by a contraction in Russia.

Cross-country differentiation is also observable in banking sector developments, with some

important positive features:

o While overall lending growth has remained weak, some countries showed

encouraging trends.

o Some of the past vulnerabilities are being addressed as external liabilities(1) in CESEE

have been replaced by domestic funding, mainly deposits and capital.

Looking forward, a slight acceleration in lending growth in CESEE is likely to be visible in

2015, mainly driven by corporate lending. For CEE as a whole, lending growth will be affected by

a significant deceleration in Russia. Differentiation across countries will remain a key feature.

With margins remaining under pressures, banks will increasingly look for wider range of

opportunities to improve their revenue generation capacity. Non-interest income - fees and

commissions - will therefore play a relevant role. Cost efficiency will remain important.

CEE banking sector in 2015 is expected to keep its profitability ratio – RoA – comparable to

2014, at around 1.0%, with NPL likely to remain a challenge. Geopolitical developments as well as

changes in the external environment represent a source of uncertainty for the overall outlook.

2

Note: CEE (Central Eastern Europe) includes Bosnia, Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, Russia, Serbia, Slovakia, Slovenia,

Turkey, Ukraine; CESEE (Central Europe and South Eastern Europe) is CEE excluding Russia, Turkey and Ukraine; CE includes Czech Republic,

Hungary, Slovakia, Slovenia, Poland; SEE includes Bosnia, Bulgaria, Croatia, Romania, Serbia.

(1) External liabilities correspond to financing from non-residents, mainly including parent banks‘ funding

3

Agenda

UniCredit - confirms commitment to CEE

CEE Banking Trends - some strengths under uncertainty

Country Cards

CEE Banking Outlook - it is worthwhile

CEE remains a diverse Region

Real GDP growth, % Real GDP growth by country, %

0.4

-2.1

-0.7

1.5

2.5

0.0

3.3

2.3

2.72.3

3.32.9

-3.4

-0.7

-0.2

1.82.0

2.32.42.52.5

3.33.4

1.5

UA

-4.6

-6.7

RU RS HR BG SI BH HU CZ RO SK PL TR

2015 F 2014 E

1.4

2.92.52.5

5.0

4.0

3.0

2.0

1.0

-1.0

-2.0

-3.0

-4.0

-5.0

-6.0

2016F

2.2

2015F

0.2

2014E 2013 2012 2011 2010 2009 2008

CESEE CEE

SOURCE: UniCredit Research, UniCredit CEE Strategic Analysis 4

Lending growth fatigue?

CEE - Total gross loans growth, % yoy (1)

11.3

2.1

-5

0

5

10

15

20

Dec-10 Dec-11 Dec-12 Dec-13

CEE CESEE

Oct-14

SOURCE: UniCredit CEE Strategic Analysis

(1) Local currency terms, FX end-2013 constant

5

Cross-countries picture shows differentiation, with a few nice spots

CEE Total lending growth by country (latest data Oct-14), % yoy (1)

TR and RU fast growth but

with decelerating trend

Some countries with

accelerating trend…

… while others still with loans

contracting

-10

-5

0

5

10

15

20

25

30

35

40


TR RU

-5

-3

-1

1

3

5

7

9

11

13

15

Dec-11 Dec-12 Dec-13

CZ SKRS BHBG PL

-25

-20

-15

-10

-5

0

5

10

15


HU SIRO HRUA


(1) FX loans are adjusted for movements in the exchange rate

6

Oct-14 Oct-14 Oct-14

While FX retail lending growth is negative in a few SEE countries, local

currency retail lending shows a positive dynamics

-4

-2

0

2

4

6

8

10

12

14

16

HR RO BG

-12

-10

-8

-6

-4

-2

0

2

4HR RO BG


LC retail loans growth, % yoy FX retail loans growth, % yoy

7

Other

9

Capital

56

External

liabilities

-34

Debt

issued

15

Deposits

167

Total

Assets

213 Change in 2014

Change 2008-2013

CESEE - Change in funding sources (1)

Funding model more sustainable

9698102107107105107

Sep-14 2013 2012 2011 2010 2009 2008

13.613.713.512.512.311.810.3

Sep-14 2013 2012 2011 2010 2009 2008

Loans/Deposits ratio, %

8

Change in funding sources, 2008-2014(2), EUR bn


(1) Local currency terms, FX end-2013 constant. Other include deposits from MFIs and other liabilities. BG as of Jun-14 for Sep-14; (2) Latest 2014 data as of

Sept-14; (3) External liabilities correspond to financing from non-residents, mainly including parent banks’ funding

Ext. Liabilities/Tot. Assets ratio, %

13.514.014.917.718.618.821.0

Sep-14 2013 2012 2011 2010 2009 2008

Equity/Tot. Assets ratio, %

(3)

(2)

9

Agenda



Country Cards


Gross loans growth, % yoy (1)

14.1

3.42.6

-5

0

5

10

15

20

2015F 2014E 2013 2012 2011 2010

9.3

Slight acceleration in lending growth ahead in CESEE…

3.3

4.13.9

-5

0

5

10

15

20

2015F 2014E 2013 2012 2011 2010

5.4

9.7

Total Loans Corporate Loans

18.2

3.5

0.5

-5

0

5

10

15

20

2015F 2014E 2013 2012 2011 2010

12.4

Retail Loans

CESEE HU adj.**

CESEE

CEE


(1) Local currency terms, FX end-2013 constant; (2) CESEE HU adj. excludes the estimated impact of the conversion scheme

(2)

10

Loans growth, % yoy (1)

…with differentiation across countries

2.6

14.1

-0.7-3.6

15.5

0.8

-1.5

-9.3

3.52.85.66.36.1

22.2

16.1

3.4

9.3

-5.0

0.10.70.81.02.02.83.73.94.06.5

10.9

16.7

CESEE CEE HU RO UA BG HR SI BH CZ SK RS PL RU TR

2015F 2014E

5.3

9.6

2.93.00.2

5.62.2

10.4

6.13.03.6

6.28.0

14.4

9.1

4.2

9.1

0.83.0

0.22.21.51.4

3.93.23.14.9

6.9

11.2

15.0

CESEE CEE HU RO UA BG HR SI BH CZ SK RS PL RU TR

2015F 2014E

Deposits growth, % yoy (1)

120 113 104 135 91 69 111 101 116 88 158 94 97

xxx L/D ratio 2015F, %


(1) Local currency terms, FX end-2013 constant

11

Corporate lending accelerating overall faster than retail lending

0.5

18.2

-5.6

0.9

-0.5

17.1

0.50.8

-15.0

-0.2-0.5-1.8

7.6

26.020.6

3.5

12.4

-0.8

0.50.71.01.81.92.02.03.03.18.0

14.518.9

CESEE CEE RO BG SK UA HU BH SI HR CZ RS PL RU TR

2015F 2014E

3.9

9.7

-2.1

0.3

11.411.0

-2.7

5.5

-1.8-0.8

3.97.35.9

18.0

7.03.3

5.41.01.3

6.9

0.0

-13.6

3.62.0

-0.4

4.54.86.05.0

12.5

CESEE CEE RO BG SK UA HU BH SI HR CZ RS PL RU TR

2015F 2014E

(1) Local currency terms, FX end-2013 constant; (2) CESEE HU adj. excludes the estimated impact of the conversion scheme

Corporate loans growth, % yoy (1)

Retail loans growth, % yoy (1)

12

4.1(2)


Revenues margins are expected to remain under pressure. Non-NII

revenues therefore to be a key profitability driver

Share of non-interest revenues, 2015F % (1)

5.3

3.63.7

1.91.8

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

2012 2011 2010 2009 2008 2015F 2014E 2013

4.7

Revenues / Avg. Assets, % (1)

13

69.3%

30.7%

NII

Non-NII

CEE

65.6%

34.4%

CESEE

61.2%

38.8%

AT, DE, IT(2)

(1) Revenues exclude all one-off effects in Hungary. AT, DE and IT revenue share as per 2013; (2) Austria (AT), Germany (DE) and Italy (IT)

SOURCE: UniCredit Group Strategic Planning, UniCredit CEE Strategic Analysis

CEE AT, DE, IT CESEE (2)

Cost efficiency will continue to be an important contributor to

profitability…


47.7

52.651.9

60.4

62.3

40

50

60

70

2015F 2014E

47.6

2013 2012 2011 2010 2009 2008

14

Costs / Income ratio, % Costs / Avg. Assets, %

CEE

AT, DE, IT

CESEE

2.52

1.881.93

1.121.12

1.0

1.5

2.0

2.5

3.0

3.5

2.26

2009 2013 2015F 2010 2008 2014E 2012 2011

Country 2013 2014 E 2015 F

Ukraine 23.5% 30.0% 34.0%

Serbia 20.7% 24.0% 23.0%

Russia 12.7% 18.0% 21.0%

Bulgaria 16.9% 18.9% 20.7%

Hungary 21.2% 20.5% 19.5%

Croatia 15.6% 18.0% 18.9%

Slovenia 19.9% 20.6% 18.9%

Bosnia-H. 15.1% 17.0% 17.5%

Romania 32.1% 14.4% 11.4%

Poland 7.6% 7.3% 6.9%

Czech R. 6.1% 6.3% 6.1%

Slovakia 5.3% 5.4% 5.3%

Turkey 2.6% 3.0% 3.2%

CEE 11.2% 12.3% 13.7%

CESEE 10.8% 10.9% 10.5%

15

…while NPLs likely to remain a challenge

Non Performing Loans ratio, % (1)

13.7

12.3

10.510.9

2.42.9

1.21.3

2015F 2014E 2013 2012 2011 2010 2009

CESEE - CoR CESEE - NPLs

CEE - CoR CEE - NPLs

NPL ratio by country, % (1)


(1) NPL definition varies across countries. In this slide CEE/CESEE aggregates exclude also Romania because of methodological changes in the NPL

calculation in 2014; (2) Romania NPL ratio time series not consistent between 2013 and 2014 because of a methodological change in the calculation of NPL in

2014; (3) Provisions exclude all one-off effects in Hungary

(2)

(3)

(3)

Return on Assets (RoA) (1), % Return on Assets (RoA) (1) by country, %

-1.2

-0.5

0.1

-0.6

0.50.60.6

1.0

1.31.31.3

1.8

-1.0

0.00.1

0.30.4

0.60.60.6

0.9

1.1

1.31.3

1.8

UA SI RS RO HU

-1.8

HR BH BG RU PL CZ SK TR

2015 F 2014 E

1.04

0.90

0.44

0.33

2.0

1.8

1.6

1.4

1.2

1.0

0.8

0.6

0.4

0.2

2015F 2014E 2013 2012 2011 2010 2009 2008

0.88

0.59

0.98

AT, DE, IT CESEE

CESEE HU adj. CEE

16

Overall, RoA comparable to 2014 in most of the countries with Romanian,

Slovenian and Hungarian banking systems turning back to profit

(2)

(1) RoA is calculated as Profit before Tax divided by average Assets; (2) RoA excluding all one-off effects in Hungary


Downside Risks

Increase of geopolitical tensions

Deterioration of the economic growth

outlook for the euro area

Lower oil prices for Russia

Upside Risks

Lower oil prices to boost households

and companies spending power

More accommodative monetary policies

Efforts towards a greater harmonization

of financial services regulations

CEE Banking Sector Outlook – downside/upside risks

17

18

Agenda



Country Cards


UniCredit is a rock-solid European commercial bank

Strong positioning in CEE2:

#1 in CEE Region in terms network – over 68,000 employees and more than 3,400 branches –

and expertise

Strong contribution to Group profitability – Operating income in CEE: EUR 4,313 mn;

Operating profit in CEE: EUR 2,481 mn

Ranked among the top five banks in 9 CEE3 countries

Total Customers loans in CEE ~ EUR 85 bn; Total Customers deposits in CEE ~ EUR 80 bn

1. Data as at September 30, 2014. Number of employees counted for the rate of presence. Figures include employees of Koç Financial Group calculated at 100%.

2. Including direct and indirect presence in the following countries, excluding representative offices: The figures include: Azerbaijan, Bosnia & Herzegovina, Bulgaria, Czech Republic, Croatia,

Hungary, Poland, Romania, Russia, Serbia, Slovenia, Slovakia, Turkey, Ukraine

3. Market share in terms of total assets 2Q 2014.

Source: company data

19

International network in approx. 50 countries, with around 8,600 branches and more than

148,000 employees1

Operating income: EUR 16,863 mn; Operating profit: EUR 6,531 mn

Common Equity Tier I ratio at 10.73%

Comprehensive Assessment results proved UniCredit's solid capital position. 2016 CET1 under

the stress test adverse scenario is 6.8%.

Data as of YTD 9M '14

20

UniCredit maintains a leadership position in CEE…

Countries of

presence (3)

Total Assets (1)

EUR bn Number of

Branches

116 1,299 3,927 19

6

4

11

9

15

19

14

1,475

991

2,494

1,843

2,920

2,488

Data as of

1H 2014

CEE, % share in

Group revenues

n.m.

10

14

55

84

25

OTP 33

ISP 37

KBC 57

SocGen 73

Erste 77

RBI 80

UniCredit 142

(5)

81

-480

173

353

199

380

902

Net Profit (2)

EUR mn

(6) (7) (7)

Note: (1) 100% of total assets for controlled companies (stake > 50%) and pro rata for non- controlled companies (stake < 50%), except for OTP; (2) After tax and before minorities; (3)

Including direct and indirect presence in the 25 CEE countries, excluding representative offices; (4) including branches in Turkey at 100%; (5) Results of RBI exclude group corporate,

markets and corporate center segments; (6) BG, HR, MG, MD and MC as of FY2013 since 1H 2014 data not available; (7) Excluding BG, HR, MG, MD and MC since 1H 2014 data not

available. (8) As of FY2013


1,475

991

771

2,494

1,843

2,920

3,495

28 (8)

(4)

Poland

10.5% market share

1,001 branches #2

Baltics

Leasing

Russia

1.5% market share

108 branches #9

Azerbaijan

16 branches

Ukraine

3.6% market share

309 branches #6

Bulgaria

15.2% market share

202 branches #1

Turkey

9.1% market share

978 branches #5

Czech Republic

8.7% market share

106 branches #4

Slovakia

6.5% market share

78 branches #6

Hungary

6.4% market share

85 branches #6

Slovenia

7% market share

33 branches #5

Croatia

26.6% market share

137 branches #1

Bosnia and Herzegovina

21.5% market share

122 branches #1

Romania

7.2% market share

185 branches #5

Serbia

9.1% market share

73 branches #3

Rep. Office in

FYR Macedonia

and

Montenegro

Market shares in terms of total assets 2Q 2014, according to local accounting standard, unconsolidated figures (Bosnia & Herzegovina, Bulgaria, Czech Republic, Hungary, Russia,

Serbia, Turkey, Ukraine) local accounting standard, consolidated figures (Croatia), IFRS (Poland, Romania, Slovakia, Slovenia). Croatia and Hungary includes mortgage bank.

Data as of June 30th, 2014, except Hungary (FY2013) and Romania (1Q14)

Branches: data as at 30 September 2014. Bosnia & Herzegovina includes UniCredit Bank Banja Luka. Azerbaijan includes Yapi Kredi branches.

Source: UniCredit CEE Strategic Analysis

… with a strong footprint in the Region

21

UniCredit has a strong focus on customer proximity

Corporate and

Investment

Banking

Retail Banking

Private Banking

International clients: more than 20,000 international clients

operating in CEE supported by UniCredit International

Centers Network

EU Subsidized Finance: leadership in EU Funds business

Global Investment Strategy (GIS): a unique global

independent investment philosophy

Preferred Partners (PP): selection of best-in-class

Investment Funds

Alternative channels: cutting edge banking applications and

internet banking platform

Innovation: enhance digital banking and platform for

consumer finance (mobile payments, touchless biometric

payments, etc.) and enlarge market potential

22

Latest Awards acknowledge our consistent performance

Euromoney - Award for Excellence

•Best Bank in Bosnia & Herzegovina 2013

•Best Cash Management House in CEE 2013

•Best Project Finance House in CEE 2013

Global Finance

•Best Overall Bank for Cash Management in CEE

2013, 2014 & 2015

•Best Bank for Payments & Collections in CEE 2013

•Best Bank for Liquidity Management in CEE

•Best Bank in Bulgaria 2013

Global Finance

•Best Trade Finance Bank CEE 2013, 2014 & 2015

•Best Trade Finance Bank in Bulgaria in 2013, 2014&

2015, in Croatia in 2015, in Czech Republic in 2013, 2014 &

2015, Russia in 2013, in Ukraine in 2013, 2014 & 2015

•Best Supply Chain Finance Provider in CEE 2013 &

2014

Trade & Forfaiting Review

•Best Trade Bank in CEE 2013

Global Finance

•Best Sub-Custodian Bank in CEE 2013 & 2014

•Best Sub-Custodian Bank in Bulgaria in 2014, in

Croatia in 2013, in Czech Republic in 2013 & 2014, in

Hungary in 2013 & 2014, in Poland in 2013 & 2014, in

Slovakia in 2013, in Slovenia in 2014, and Ukraine in

2013 & 2014

emeafinance

•Best Project Finance Adviser in CEE 2013

EuroWeek

•Best Sub-Custodian Bank in Croatia, Czech

Republic, Hungary, Poland, Slovakia and

Ukraine in 2013

Best Cash Management House in

Bosnia Herzegovina, Croatia, Czech Republic,

Poland, Romania, Serbia and Slovenia in 2013

tmi

•Best Bank in Trade Finance in Eastern

Europe 2013

•Best Bank for Financial Supply Chain

Management – Central and Eastern Europe

2014

Euromoney - PB Survey

• Best Range of Investment Products

Czech Republic 2014

• Best Corporate Advisory for PB Clients

Hungary 2014

• Best PB Services Overall 2014

Financial Times and Merger market

M&A Awards

Financial Advisor of the Year in CEE 2013

•Best Trade Finance Provider in CEE

•Best Trade Finance Provide in Bosnia

Herzegovina, Bulgaria, Croatia, Czech Republic,

Hungary, Poland, Romania, Russia, Serbia,

Slovakia, Turkey in 2015

23

Eastern Europe Syndicated Loans EUR-Den. (All Asset Classes)

Pos Bookrunner Deal Value

(EUR mn)

No. Share*

%

1 ING 1,238 18 5.4

2 UniCredit 1,037 14 4.5

3 Citi 836 12 3.7

4 Deutsche Bank 813 10 3.6

5 Société Générale CIB 698 8 3.1

6 RBS 593 4 2.6

7 Standard Chartered Bank 417 13 1.8

8 Commerzbank Group 407 11 1.8

9 HSBC 399 10 1.7

10 Wells Fargo Securities 350 9 1.5

Total 22,910 84 100.0

Period: 1 Jan – 31 Dec 2014; Source: Dealogic Loanware, per 7 Jan 2015

* Bookrunner market share is a proportion of bookrunner-led loan volume only

24

Project Finance in Eastern Europe

Pos Mandated Arranger Deal Value

(EUR mn)

No. Share

%

1 UniCredit 672 11 12.0

2 ING Groep NV 644 8 11.5

3 Société Générale CIB 349 4 6.2

4 Crédit Agricole SA 345 4 6.2

5 Sberbank of Russia OAO 293 2 5.2

6 BNP Paribas SA 261 5 4.7

7 Citigroup Inc 248 2 4.4

8 Raiffeisen Zentralbank Oesterreich AG 243 3 4.3

9 Bank of China Ltd 198 1 3.5

9 Royal Bank of Scotland Group plc 198 1 3.5

9 VTB Bank OAO 198 1 3.5

Total 5,593 22 100.0

Period: 1 Jan – 31 Dec 2014; Source: Dealogic ProjectWare, per 7 Jan 2015

All Eastern European Bonds in EUR

Pos Bookrunner Deal Value

(EUR mn)

No. Share

%

1 Société Générale CIB 3,314 13 11.2

2 JPMorgan 3,025 12 10.2

3 UniCredit 2,938 16 9.9

4 Citi 2,780 15 9.4

5 Deutsche Bank 2,362 12 8.0

6 HSBC 2,234 8 7.5

7 Barclays 1,872 9 6.3

8 BNP Paribas 1,706 11 5.8

9 Erste Group Bank AG 1,028 6 3.5

10 Commerzbank Group 931 7 3.1

Total 29,636 47 100.0

Period: 1 Jan – 31 Dec 2014; Source: Dealogic Analytics, per 5 Jan 2015

Financial Advisors to CEE* M&A by No. of Deals

Pos Financial Advisors Deal Value

(EUR mn)

No.

1 KPMG 1,422 25

2 Deloitte 588 17

3 UniCredit 2,674 16

4 Citi 5,087 14

4 PwC 642 14

4 EY 521 14

7 Sberbank CIB 10,373 13

8 VTB Capital ZAO 5,892 12

8 Rothschild 2,027 12

10 3 Seas Capital Partners 10 11

Period: 1 Jan – 31 Dec 2014; Source: Mergermarket, per 7 Jan 2015

* incl. Russia, Turkey, Poland

For some businesses we are among top players in the Region

25

Going forward – Focus on customer and business development

Building on our achievements, we aim to further strengthen our position in the CEE Region

also scouting for selected inorganic opportunities, keeping our strong focus on

customer proximity and leveraging on our strong geographical footprint and expertise.

Taking into consideration today's demanding and rapidly changing economic environment,

since July 2013 the Group - within the framework of 2013-2018 Strategic Plan - has launched

CEE2020, the Program aimed at developing new ways to generate growth and value creation.

The objective is to create the proper environment for a healthier CEE Division that will

continue to deliver sustainable results well into the future.

Strategic initiatives include:

Retail: Product and process simplification, alternative channels enhancement

CIB: Capital light model, International clients ad hoc offering and SME's value

proposition

PB: Need Based Advisory and Investment Advisory 2.0

26

Agenda



Country Cards


27 SOURCE: UniCredit Research, UniCredit CEE Strategic Analysis, UniCredit CEE Banking Network

CEE Country Data – 1/7

Bosnia-H. 2011 2012 2013 2014E 2015F Bulgaria 2011 2012 2013 2014E 2015F

Real GDP, % yoy 1.0 -1.2 2.1 0.0 2.0 Real GDP, % yoy 2.0 0.5 1.1 1.5 1.5

Inflation, % avg 3.7 2.1 -0.1 -0.8 1.6 Inflation, % avg 4.2 3.0 0.9 -1.4 -0.5

1M Euribor 1.02 0.11 0.22 0.02 0.02 Reference rate, eop (%) - - - - -

Loans (yoy %) 5.3 4.1 2.9 3.5 2.8 Loans (yoy %) 3.4 2.3 0.1 0.8 0.8

Loans ( % GDP) 59.4 61.9 62.4 65.0 64.5 Loans ( % GDP) 71.4 70.5 70.5 71.1 69.9

Deposits (yoy %) 3.8 2.4 7.0 6.1 3.9 Deposits (yoy %) 12.4 7.6 8.9 5.6 2.2

Deposits ( % GDP) 50.3 51.6 54.2 57.8 58.0 Deposits ( % GDP) 66.9 69.4 75.6 79.8 79.5

Loans to Deposits Ratio (%) 118.0 119.9 115.2 112.4 111.3 Loans to Deposits Ratio (%) 106.8 101.6 93.3 89.1 87.9

External Liabilities (% of total liabilities) 19.1 17.7 16.6 13.8 13.1 External Liabilities (% of total liabilities) 16.4 16.6 14.1 12.8 12.2

Cost to Income Ratio (%) 67.6 67.4 71.7 67.9 67.6 Cost to Income Ratio (%) 50.0 52.0 53.5 49.7 47.6

Revenues/avg. Volumes (%) 4.4 4.2 4.0 3.9 3.8 Revenues/avg. Volumes (%) 3.9 3.6 3.3 3.5 3.5

Return on Assets (%) 0.8 0.7 -0.1 0.6 0.6 Return on Assets (%) 0.9 0.8 0.8 0.6 0.6

Impaired loans ratio (% gross loans) 11.8 13.5 15.1 17.0 17.5 Impaired loans ratio (% gross loans) 14.9 16.6 16.9 18.9 20.7

Cost of Risk (%) 1.5 1.5 2.2 1.5 1.5 Cost of Risk (%) 2.5 2.2 2.0 2.7 2.9

28


SOURCE: UniCredit Research, UniCredit CEE Strategic Analysis, UniCredit CEE Banking Network

Croatia 2011 2012 2013 2014E 2015F Czech Republic 2011 2012 2013 2014E 2015F

Real GDP, % yoy -0.3 -2.2 -0.9 -0.7 -0.2 Real GDP, % yoy 2.0 -0.7 -0.7 2.3 2.4

Inflation, % avg 2.3 3.4 2.2 0.0 0.7 Inflation, % avg 1.9 3.3 1.4 0.4 1.2

1W money market rate eop 1.18 0.74 0.53 0.60 0.90 Reference rate, eop (%) 0.75 0.05 0.05 0.05 0.05

Loans (yoy %) 6.0 -2.4 0.8 -1.5 1.0 Loans (yoy %) 5.3 2.4 3.5 2.8 3.7








Return on Assets (%) 1.1 0.9 0.3 0.5 0.6 Return on Assets (%) 1.4 1.6 1.5 1.3 1.3





Hungary 2011 2012 2013 2014E 2015F Poland 2011 2012 2013 2014E 2015F

Real GDP, % yoy 1.6 -1.7 1.5 3.3 2.3 Real GDP, % yoy 4.8 1.8 1.7 3.3 3.3


Reference rate, eop (%) 7.00 5.75 3.00 2.10 2.10 Reference rate, eop (%) 4.50 4.25 2.50 2.00 1.75

Loans (yoy %) -0.1 -13.2 -4.2 -0.7 -5.0 Loans (yoy %) 14.8 1.7 3.7 6.1 6.5


Deposits (yoy %) 5.3 -0.9 2.4 2.9 0.8 Deposits (yoy %) 10.1 6.0 5.7 8.0 6.9






Return on Assets (%) -0.4 -0.1 -0.1 -1.8 0.4 Return on Assets (%) 1.5 1.4 1.3 1.3 1.1





Romania 2011 2012 2013 2014E 2015F Russia 2011 2012 2013 2014E 2015F

Real GDP, % yoy 1.1 0.6 3.5 2.7 2.5 Real GDP, % yoy 4.3 3.4 1.3 0.4 -3.4


Reference rate, eop (%) 6.00 5.25 4.00 2.75 2.50 Reference rate, eop (%) 5.25 5.50 5.50 17.00 8.50

Loans (yoy %) 6.0 0.8 -3.1 -3.6 0.1 Loans (yoy %) 27.4 21.4 18.3 22.2 10.9













Serbia 2011 2012 2013 2014E 2015F Slovakia 2011 2012 2013 2014E 2015F

Real GDP, % yoy 1.6 -1.5 2.5 -2.1 -0.7 Real GDP, % yoy 2.7 1.6 1.4 2.3 2.5

Inflation, % avg 11.6 7.3 7.9 2.1 3.6 Inflation, % avg 3.9 3.6 1.4 -0.1 0.4

Reference rate, eop (%) 9.75 11.25 9.50 8.00 6.75 Reference rate, eop (%) EUR EUR EUR EUR EUR

Loans (yoy %) 7.5 13.2 -1.9 6.3 4.0 Loans (yoy %) 8.6 2.2 5.7 5.6 3.9








Return on Assets (%) 0.0 0.4 -0.1 0.1 0.1 Return on Assets (%) 1.4 1.0 1.2 1.3 1.3





Slovenia 2011 2012 2013 2014E 2015F Turkey 2011 2012 2013 2014E 2015F

Real GDP, % yoy 0.6 -2.6 -1.0 2.5 1.8 Real GDP, % yoy 8.8 2.1 4.1 2.9 3.4


Reference rate, eop (%) EUR EUR EUR EUR EUR Reference rate, eop (%) 5.75 5.50 4.50 8.25 7.25

Loans (yoy %) -2.3 -3.9 -16.8 -9.3 2.0 Loans (yoy %) 29.8 15.4 32.5 16.1 16.7


Deposits (yoy %) 3.0 -3.6 -7.0 10.4 1.4 Deposits (yoy %) 12.4 10.6 23.4 9.1 15.0











Ukraine 2011 2012 2013 2014E 2015F

Real GDP, % yoy 5.2 0.3 0.2 -6.7 -4.6

Inflation, % avg 8.0 0.6 -0.3 12.0 20.8

Reference rate, eop (%) 7.75 7.50 6.50 14.00 11.50

Loans (yoy %) 9.4 1.7 11.7 15.5 0.7

Loans ( % GDP) 61.6 57.8 62.8 67.9 59.1

Deposits (yoy %) 18.0 16.4 17.1 0.2 0.2

Deposits ( % GDP) 37.8 40.6 46.2 43.4 37.5

Loans to Deposits Ratio (%) 163.1 142.4 135.9 156.7 157.5

External Liabilities (% of total liabilities) 15.7 13.7 12.7 14.2 15.6

Cost to Income Ratio (%) 63.1 64.9 65.3 43.5 44.0

Revenues/avg. Volumes (%) 6.5 5.7 5.4 6.0 5.1

Return on Assets (%) -0.6 0.4 0.2 -1.2 -1.0

Impaired loans ratio (% gross loans) 37.7 26.7 23.5 30.0 34.0

Cost of Risk (%) 4.7 2.7 2.9 7.4 6.2

34

Contacts – 1/2

This is a product of UniCredit CEE Strategic Analysis

Andrea Lacalamita, Head of Group Strategic Planning and CEE Strategic Analysis

Carmelina Carluzzo, Deputy Head of CEE Strategic Analysis

Mauro Giorgio Marrano, Milen Kassabov, Kamen Kazankin, Olga Solomatina

Kristian Laedre, Carlo Moretto, Lilit Sargsyan

Closing date: January 9th, 2015

35

Contacts – 2/2

UniCredit Bank (Bosnia and Herzegovina)

Jelena Juric

UniCredit Bulbank (Bulgaria)

Kristofor Pavlov

Zagrebacka Banka (Croatia)

Hrvoje Dolenec

UniCredit Bank Czech Republic and Slovakia (Czech Republic and Slovakia)

Pavel Sobisek

Ľubomír Koršňák

UniCredit Bank Hungary (Hungary) Tamas Nagy

Bank Pekao (Poland)

Marcin Mrowiec

UniCredit Tiriac Bank (Romania)

Catalina Molnar

UniCredit Bank (Russia)

Artem Arkhipov

Yapı ve Kredi Bankası (Turkey)

Asli Anginbas

A special thanks to UniCredit Researc

h, UniCredit Group Strategic Planning

36

Disclaimer

Our recommendations are based on information obtained from, or are based upon public information sources that we consider to be reliable but for the completeness and accuracy of which we assume no liability. All estimates and opinions included in the report represent the independent judgment of the analysts as of the date of the issue. We reserve the right to modify the views expressed herein at any time without notice. Moreover, we reserve the right not to update this information or to discontinue it altogether without notice. This analysis is for information purposes only and (i) does not constitute or form part of any offer for sale or subscription of or solicitation of any offer to buy or subscribe for any financial, money market or investment instrument or any security, (ii) is neither intended as such an offer for sale or subscription of or solicitation of an offer to buy or subscribe for any financial, money market or investment instrument or any security nor (iii) as an advertisement thereof. The investment possibilities discussed in this report may not be suitable for certain investors depending on their specific investment objectives and time horizon or in the context of their overall financial situation. The investments discussed may fluctuate in price or value. Investors may get back less than they invested. Changes in rates of exchange may have an adverse effect on the value of investments. Furthermore, past performance is not necessarily indicative of future results. In particular, the risks associated with an investment in the financial, money market or investment instrument or security under discussion are not explained in their entirety. This information is given without any warranty on an "as is" basis and should not be regarded as a substitute for obtaining individual advice. Investors must make their own determination of the appropriateness of an investment in any instruments referred to herein based on the merits and risks involved, their own investment strategy and their legal, fiscal and financial position. As this document does not qualify as an investment recommendation or as a direct investment recommendation, neither this document nor any part of it shall form the basis of, or be relied on in connection with or act as an inducement to enter into, any contract or commitment whatsoever. Investors are urged to contact their bank's investment advisor for individual explanations and advice. Neither UniCredit Bank, UniCredit Bank London, UniCredit Bank Milan, UniCredit Bank Vienna, UniCredit Romania, UniCredit Bulbank, Zagrebačka banka, UniCredit Bank Czechia, Bank Pekao, UniCredit Russia, UniCredit Slovakia, UniCredit Tiriac, ATF Bank nor any of their respective directors, officers or employees nor any other person accepts any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection therewith. This analysis is being distributed by electronic and ordinary mail to professional investors, who are expected to make their own investment decisions without undue reliance on this publication, and may not be redistributed, reproduced or published in whole or in part for any purpose. Responsibility for the content of this publication lies with: a) UniCredit Bank AG (UniCredit Bank), Am Tucherpark 16, 80538 Munich, Germany, (also responsible for the distribution pursuant to §34b WpHG). The company belongs to UniCredit Group. Regulatory authority: “BaFin“ – Bundesanstalt für Finanzdienstleistungsaufsicht, Lurgiallee 12, 60439 Frankfurt, Germany.

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Romania f) UniCredit Bulbank, Sveta Nedelya Sq. 7, BG-1000 Sofia, Bulgaria Regulatory authority: Financial Supervision Commission (FSC), 33 Shar Planina str.,1303 Sofia, Bulgaria g) Zagrebačka banka, Paromlinska 2, HR-10000 Zagreb, Croatia

Regulatory authority: Croatian Agency for Supervision of Financial Services, Miramarska 24B, 10000 Zagreb, Croatia h) UniCredit Bank Czech Republic (UniCredit Bank Czechia), Na Príkope 858/20, CZ-11121 Prague, Czech Republic Regulatory

authority: CNB Czech National Bank, Na Příkopě 28, 115 03 Praha 1, Czech Republic i) Bank Pekao, ul. Grzybowska 53/57, PL-00-950 Warsaw, Poland Regulatory authority: Polish Financial Supervision Authority, Plac Powstańców Warszawy 1, 00-950

Warsaw, Poland j) ZAO UniCredit Bank Russia (UniCredit Russia), Prechistenskaya emb. 9, RF-19034 Moscow, Russia Regulatory authority: Federal Service on Financial Markets, 9 Leninsky prospekt, Moscow 119991, Russia k) UniCredit Bank

Slovakia a.s. (UniCredit Slovakia), Šancova 1/A, SK-813 33 Bratislava, Slovakia Regulatory authority: National Bank of Slovakia, Imricha Karvaša 1, 813 25 Bratislava, Slovakia l) UniCredit Tiriac Bank (UniCredit Tiriac), Bucharest 1F Expozitiei

Boulevard, RO-012101 Bucharest 1, Romania

Regulatory authority: CNVM, Romanian National Securities Commission, Foişorului street, no.2, sector 3, Bucharest, Romania m) ATF Bank, 100 Furmanov Str., KZ-050000 Almaty, Kazakhstan Agency of the Republic of Kazakhstan on the state

regulation and supervision of financial market and financial organisations, 050000, Almaty, 67 Aiteke Bi str., Kazakhstan

POTENTIAL CONFLICTS OF INTEREST

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participate with continuity and efficiency to the governments' securities auctions, to contribute to the efficiency of the secondary market through market making activity and

quoting requirements and to contribute to the management of public debt and to the debt issuance policy choices, also through advisory and research activities.

ANALYST DECLARATION

The author’s remuneration has not been, and will not be, geared to the recommendations or views expressed in this study, neither directly nor indirectly.

ORGANIZATIONAL AND ADMINISTRATIVE ARRANGEMENTS TO AVOID AND PREVENT CONFLICTS OF INTEREST

To prevent or remedy conflicts of interest, UniCredit Bank, UniCredit Bank London, UniCredit Bank Milan, UniCredit Bank Vienna, UniCredit Romania, UniCredit Bulbank,

Zagrebačka banka, UniCredit Bank Czechia, Bank Pekao, UniCredit Russia, UniCredit Slovakia, UniCredit Tiriac, and ATF Bank have established the organizational

arrangements required from a legal and supervisory aspect, adherence to which is monitored by its compliance department. Conflicts of interest arising are managed by legal

and physical and non-physical barriers (collectively referred to as “Chinese Walls”) designed to restrict the flow of information between one area/department of UniCredit Bank, UniCredit Bank London, UniCredit Bank Milan, UniCredit Bank Vienna,

UniCredit Romania, UniCredit Bulbank, Zagrebačka banka, UniCredit Bank Czechia, Bank Pekao, UniCredit Russia, UniCredit Slovakia, UniCredit Tiriac, ATF Bank and another. In particular, Investment Banking units, including corporate finance, capital

market activities, financial advisory and other capital raising activities, are segregated by physical and non-physical boundaries from Markets Units, as well as the research department. In the case of equities execution by UniCredit Bank AG Milan

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Notice to Australian investors

This publication is intended for wholesale clients in Australia subject to the following: UniCredit Bank AG and its branches do not hold an Australian Financial Services license but are exempt from the requirement to hold a license under the Act in respect

of the financial services to wholesale clients. UniCredit Bank AG and its branches are regulated by BaFin under German laws, which differ from Australian laws. This document is only for distribution to wholesale clients as defined in Section 761G of the

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37

Disclaimer (cont.)

Notice to Austrian investors

This document does not constitute or form part of any offer for sale or subscription of or solicitation of any offer to buy or subscribe for any securities and neither this document nor any part of it shall form the basis of, or be relied on in connection with or

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This report is intended for clients of UniCredit Bank, UniCredit Bank London, UniCredit Bank Milan, UniCredit Bank Vienna, UniCredit Romania, UniCredit Bulbank, Zagrebačka banka, UniCredit Bank Czechia, Bank Pekao, UniCredit Russia, UniCredit

Slovakia, UniCredit Tiriac, ATF Bank in the Czech Republic and may not be used or relied upon by any other person for any purpose.

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This document is not for distribution to retail clients as defined in article 26, paragraph 1(e) of Regulation n. 16190 approved by CONSOB on October 29, 2007. In the case of a short note, we invite the investors to read the related company report that

can be found on UniCredit Research website www.research.unicreditgroup.eu.

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This document does not constitute or form part of any offer for sale or subscription for or solicitation of any offer to buy or subscribe for any securities and neither this document nor any part of it shall form the basis of, or be relied on in connection with or

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This document is intended solely for professional clients as defined in Art. 3 39b of the Trading in Financial Instruments Act of 29 July 2005.The publisher and distributor of the recommendation certifies that it has acted with due care and diligence in

preparing the recommendation, however, assumes no liability for its completeness and accuracy.

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As far as we are aware, not all of the financial instruments referred to in this analysis have been registered under the federal law of the Russian Federation "On the Securities Market" dated 22 April 1996, as amended (the "Law"), and are not being

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