TSe

Ga

BcoesanEu

W(loPrarg

InslrereW

Thwaclo20exre

Ininstm

NSltopLost

I

SoRu

he figures in thee the final pa

GDP growthreas. Loan usiness cycle inoming out of stimate upwarnd leave it at 2uro Area GDP

We see CEE anower profile orogramme) andreas are also srowth, howeve

n the CIS Areaightly deeper eturning to a ecovery of the

We expect a pro

he lower thanwhile supportinccommodative

ong rates, afte016 in presenxpected narrowemaining broad

n the CIS counnflationary prestabilisation sho

money market i

ominal loans glovakia, Bosniao the contributick up in 2016oans-to-Depostructure of inte

ndustrial produ

ources: National Staussia and Ukraine da

his document age for importa

h revised udynamics

ndicators are srecession in 2

rds in 2015 (to2.4% in both growth rate in

nd SEE econoof oil price thd only marginastarting to taker, is still conta

, our June 201fall in Ukrainmodest positoil price cycle

ogressive acce

expected inflang a more flee tone of moner a possible pnce of cyclicawing of the rdly stable at cu

ntries, we see ssures and lessould also favointerest rates is

growth to thea, Romania andtion of except6 (still modestsits ratios are ernal funding c

uction % yoy

atistics Offices; note ata

have been updant information

upwards in still contai

supporting reco2015. Comparo 2.8% from 2

cases in 2016 the same year

mies benefittinhan previously ally affected bke advantage ined by the on

15 GDP forecane (-11% vs tive growth infrom recent lo

leration of GD

ation path in 2exible ECB Assetary policy in

partial correctiol recovery andrisk componenurrent levels in

money markes volatile curreour a narrowins also expected

e private sectod Serbia but retional factors itly, albeit with

likely to fall compared to fo

* weighted average

dated to 18 Sen.

2015 and cned by demovery in both ted to the June.7% in CEE an

6, notwithstandr to 1.7% from

ng from excepexpected and

y the slowdowof a recovery going delevera

asts are confirm-10% previou

n 2016, on thows and of a gP growth in Eg

2015 and 201set Purchase P the CEE/SEE con from the red inflation inc

nt. We forecas2015-2016.

t rates to fall ncies. Falling ing risk premiud in Egypt.

r in CEE/SEE cemain negativen these last ca positive valueannually in v

oreign liabilitie

Industri

e on Sources: NSlovakia, SlBosnia, Cro

eptember 2015

confirmed mand and sthe CEE and Se scenario, wend to 2.3% froding a slight d

m previous 1.8%

ptionally favoud more flexibwn of emergin

of domestic aging process in

med for Russiausly). We see he assumptiongradual easinggypt.

6 in a more uProgramme, iscountries. On ecent surge, mcrease in Eurost exchange ra

further in 201nflation and pum. Room for

countries shoue in Croatia, Slases. The trenes for all counvarious countries being rebala

ial production

National Statistics Ofovenia and Hungary

oatia, Romania and S

5.

in 2016 in supply factEE areas, with e revise our Gom 2.0% in thdownward revi%.

urable externalle, if necessarg countries. Cdemand, whon the private se

a (-3.5%) whilboth countri

ns of an at leg of geopolitic

uncertain globas sustaining a financial mark

moving upwarope, notwithstates in the CE

16 in the wakeprogress towarr a gradual re

ld be positive ovenia and Hud in loans is e

ntries). Loans-ties, with asse

anced.

Count

% yoy

fices; note * weighty data; ** weightedSerbia data

CEE/SEE tors. Serbia also DP growth e SEE area) sion of the

conditions ry, ECB QE EE and SEE

ose pace of ector.

e we see a es possibly east partial al tensions.

al scenario, prolonged

kets we see ds again in tanding an EE/SEE area

e of easing ds financial

eduction of

in 2015 in ungary, due expected to o-GDP and ts and the

Fries with

ted average on average on

Forecash ISP Sub

September

Quarterly n

Intesa San

InternationNetwork

st Notebsidiaries

2015

note

paolo

nal Research

e s

Forecast Note September 2015

Intesa Sanpaolo – Research Department 2

Contents

Cross-country Forecast 3

Recent developments 3

The International Outlook underlying the Scenario 5

Economic outlook 5

Country-Specific Forecasts 8

Albania 8

Bosnia and Herzegovina 9

Croatia 10

Egypt 11

Hungary 12

Romania 13

Russia 14

Serbia 15

Slovakia 16

Slovenia 17

Ukraine 18

Country Data: Economy, Markets and Banks - the economic cycle 19

Country Outlook 20 

This note has been coordinated by Gianluca Salsecci. The names of the authors are reported in the single sections.

The note considers the countries with Intesa Sanpaolo Subsidiaries and in particular: Slovakia, Slovenia and Hungary among CEE Countries, Albania, Bosnia, Croatia, Serbia and Romania among SEE Countries, Russia and Ukraine among CSI Countries and Egypt among MENA Countries

Forecast Note September 2015

Intesa Sanpaolo – Research Department 3

Cross-country Forecast

Recent developments

In the CEE/SEE countries with ISP Subsidiaries, GDP performance in 2Q15 consolidated the cyclical recovery overall. In the CEE area in 2Q15 GDP growth remained quite strong both in Hungary (+2.7% yoy) and Slovenia (2.6%), albeit slightly slower than in 1Q215 (3.5% and 2.8%, respectively). In Slovakia the 2Q15 GDP growth rate (3.2% yoy) remained in line with 1Q15 (3.1%). In the SEE countries, GDP accelerated in Croatia (1.2% yoy) after a positive but still weak figure in 1Q15 (0.5% yoy), and maintained a strong dynamic in Romania (3.2% yoy after 4.3% in the previous quarter); in Serbia in 2Q15 the GDP growth rate was in positive territory (1.0% yoy) after five quarters of decline.

The most recent high frequency data point to a stabilisation of the recovery cycle seen so far in the CEE and SEE countries. In July industrial production went up in Hungary (3.4% yoy) – below the average for 2Q15 (6.3%) but still healthy. In the same month, exports increased by 6.1% on an annual basis (with respect to an average of 8.1% in the second quarter). In Slovakia the Economic Sentiment Indicator (ESI) improved to 98.7 in August from 95.7 the previous month, and industrial production went up by 11.9% in July, broadly above the average for 2Q15. In July, exports improved in Slovenia (4.8% yoy), where in August the ESI reached its maximum of the last years at 112.5.

In April industrial production also increased in the SEE Area. In Croatia, the increase was 3.9% yoy and in Bosnia it was 2.4%. Industrial production growth in Romania (3.0% in June) was stronger than in 2Q15 (1.5%), but in August the ESI stayed close to the historical maximum. In July exports also generally recorded a positive trend in the area, with the only exception being Albania, where they fell by 2.6% yoy.

In all CEE/SEE countries, consumer price dynamics were below the targeted inflation rates of the Central Banks due to the hindering effect of weak wage performance and modest energy prices, as well as the absence of significant pressure on prices regarding both domestic and external demand. In July inflation was still negative in Slovakia, Slovenia, Bosnia and Croatia, with positive figures recorded in Serbia and in August, in Albania too. Consumer prices were stagnant in Hungary in August. Faced with weaker than expected inflation and easy monetary policy in the Euro area, the monetary policy stance has remained expansionary in CEE and SEE countries. In September, the Central Bank of Serbia lowered rates by 50 bps to 5.0%.

In Russia, the latest activity data showed that the economy continued to contract in 3Q. Industrial production fell by 4.6% yoy in July, slightly below that seen in 2Q (-4.8% yoy) even if, seasonally adjusted, it stalled with respect to the previous month. Retail sales also dropped in yoy terms (-9.2%) but not in seasonally adjusted terms. Fixed investment contracted, however, by 8.5% yoy in the same month. This was the sharpest drop in five years. Forward looking indicators such as the services PMI and the manufacturing PMI, equal to 49.1 and 47.9, respectively, in August, point to persisting weakness in the economy in 3Q.

With the conflict in the East lingering on and the fiscal adjustment measures agreed with the IMF taking their toll, the Ukraine economy remains extremely weak. Industrial production fell by 13.4% in July, following the 19.9% slide recorded in 2Q. Nominal exports tumbled by 35.4% in June and by 35.5% in 2Q. Meanwhile runaway inflation (the annual rate was 52.8% in August) continues to dent the purchasing power of households. Retail sales were down by 24.2% in July and by 25.7% in 2Q. The Ukraine government reached a preliminary agreement with creditors about the restructuring of its foreign debt. The deal includes a 20% haircut on USD18bn of government’s Eurobonds as well as maturity extension and a moratorium on principal repayments on this debt for four years. As compensation, creditors have been offered GDP-linked warrants, with coupons paid between 2021-2040 in years when annual (real) GDP growth exceeds 4%. Ukraine’s bond markets rallied at the news and at the end of August the Central bank cut its reference rate to 27%, from 30%.

Gianluca Salsecci, Giancarlo Frigoli, Antonio Pesce and Davidia Zucchelli

Real cyclical indicators confirm the stabilisation of the economic cycle for CEE countries and a recovery in SEE countries

In

In20Dpedoslo

War-8anoffrpapa w

Indeof

InJu(+an

InfoSlhafofoa cofoth

E

So

ntesa Sanpao

n Egypt busines015. The PMI ecember last yersist through omestic orderowed to 7.9%pen the door f

With reference reas, in a cont8.3% in June) nd in Slovenia f public banks rom -0.6% in articularly strorivate sector elower rate in J

with an increase

n the CIS area,epreciation in f the exchange

n Ukraine, the une and NPLs i+1.4%) but nend lack of conf

n several cases oreign liabilitieslovenia -25.5%and, the trendoreign liabilitiesoreign liabilitiesdecrease of 3

ontributed to goreign liabilitieshe exchange ra

Economic Senti

ource: European Co

lo – Research

ss activity in thindex for the year. This stronH2. Much of

rs. Reflecting % in August, itfor a rate cut b

to banking aext which is stbecause of thby 11.4% in continued. In June). The gro

ong in Serbia qual to +4%. July (6.4% yoye of +7.9% yo

, positive chanthe exchange

e rate - is a mo

banking sectoincreased to 24et of depreciatfidence from s

the resilience s continued th

%) and in SEE cd of foreign lias signed a sligs increased nom4%. The decregenerating tens was buoyantate effect (appr

ment Indicator

ommission

h Department

he private sectonon-oil privateng reading sugthe improvem

the phasing os lowest level

by the Central

aggregates, loatill positive for he prolonged eJuly (from -11Croatia as we

owth of loans (+11.6% yoy Deposits were

y from 8.4% thoy).

nges in bankinrate. In Russia

ore modest figu

r is in consider4.3% putting tion this figuresavers. Further

of deposits phe declining trecountries (in Roabilities in Slovht, albeit slowminally (+16.6%ease in foreignnsions on the t in nominal teoximately -56%

r

t

or excluding oe sector rose toggests that thement was spurout of last yein more than tbank before th

ans continue tdeposits. In H

effect of the G.1% in June) wll, the fragile tin local currenin July) where

e resilient, in phe previous mo

g aggregates a, loans went ure of +1.4%,

rable difficultyfurther pressue fell considercapital injectio

partly offset theend, which waomania -15.3%vakia was parti

wer, increase (2%) even thoughn funding, comliquidity front

erms (22.5%), %).

oil grew in Augo 51.2 in Augue slowdown wrred by an incear’s cut in sutwo years. Eashe end of this

to be weak inHungary loans fGovernment’s where the reb

trend was confncy in the houe it led to an

particular in Seonth) and in B

were due to tup by approxi and negative

. Loans increasure on capital. rably due to aons could be n

e decrease in as still conside

% and in Albanicularly dynam

2.5% yoy fromh, net of the ex

mbined with win the system.but concealed

Econ

Sourc

gust at the fastust, its highest

witnessed in 1Hrease in outpuubsidies, annusing inflationaryear.

n both the CEfell by 8.4% inmeasures on

balancing of thfirmed in July (useholds sectoincrease in lo

rbia, even if thBosnia and Rom

the accountingmately 14%, win real terms.

sed nominally Deposits went

a decrease in recessary.

foreign fundinrable in CEE cnia -11.6%). O

mic (+13.3%). Im 6.1% in June

xchange rate ewithdrawals fro. In Ukraine, tha strong decr

nomic Sentime

ce: European Comm

test pace of t level since

H15 will not ut and new al inflation

ry pressures

EE and SEE n July (from mortgages,

he accounts -1.6% yoy,

or has been oans to the hey showed mania (both

g effects of which - net

by 5.9% in t up slightly remittances

ng. In June, ountries (in n the other n Hungary,

e). In Russia ffect, this is m deposits, he trend of ease net of

nt Indicator

ission

FS

orecast Noteptember 201

4

e 5

4

Forecast Note September 2015

Intesa Sanpaolo – Research Department 5

The International Outlook underlying the Scenario

Performance of major economies. Global GDP growth is expected to slow slightly in 2015 compared to last year and to post weaker than previously forecast acceleration in 2016, reflecting a more moderate cycle among BRICS countries and more generally among the emerging economies.

In Advanced countries growth is expected to increase both in the US and in the Euro Area. In the EA in particular the GDP growth rate is confirmed at 1.5% in 2015 and marginally cut to 1.7%, from previously forecast 1.8%, for 2016. The negative trade effect from the expected slowdown of emerging economies is seen to be partly offset by the boost to household disposable income coming from a lower oil price profile and by the ECB announcement of a more flexible Quantitative Easing Programme if necessary.

Monetary Policies of the major Central Banks. In the US the tightening of FED monetary policy is expected to take place by year end and continued in 2016. In Europe the lower than expected inflation dynamics and the announcement of a more flexible (if necessary) QE by the ECB is expected to keep money market rates at current lows for an extended period, beyond the forecast horizon of 2016.

Market and national banking system stability The main central banks (FED, ECB), the international authorities (G20, IMF and EU) and the leading financial institutions (EBRD, IEB, WB) contributed to overcoming the financial crisis in the peaks of 2008-2009 and 2011-2012 by acting to stabilise the markets along with foreign banks with a strategic presence in transition countries (Vienna Initiative). This Scenario assumes that the stability of the markets and banking systems remains a primary objective pursued by the international authorities.

Economic outlook

GDP Growth and Inflation

In the CEE area, thanks to a GDP profile that was above expectations in 2Q15, the GDP forecast has been revised slightly upwards for the year 2015 to 2.8% from 2.7% expected in June but left unchanged in 2016 at 2.4%. GDP in 1Q15 and 2Q15 continues to signal a progressive (even if lagging the CEE countries) recovery in the SEE area, where for 2015, in parallel to what happened in the CEE area, we revise our forecasts upwards (at 2.3% from the 2% in June), leaving them at 2.4% for 2016. In Serbia in 2Q15 the GDP growth came in positive territory (at 1.0% yoy above previous expectations). The GDP forecast has been revised upwards for 2015, now set at 0.5% yoy from -0.3% in June, but kept at 1.5% in 2016. Our forecasts have also been revised upwards in 2015 in Albania and Croatia (at 2.5 % and 0.9% respectively).

We expect the average inflation rate in 2015 to increase in CEE/SEE countries even if this is with a slightly lower profile with respect to June forecasts, in line with developments in the Euro area. Overall inflation in 2015 is seen to remain just around the lower limit of the target ranges set by the Central Banks. The rise in inflation in 2016 should bring price dynamics closer to or within the targets.

In the CIS Area, we confirm our previous 2015 GDP forecasts for Russia (-3.5%) while we expect a slightly deeper fall in Ukraine (-11% vs -10% previously). We see both countries possibly returning to a modest expansionary path in 2016, gaining more strength thereafter, on the assumption of an at least partial recovery of the oil price cycle from the lows recorded in the 3Q 2015 and of a gradual easing of geopolitical tensions.

As regards to Egypt, notwithstanding the recent positive news (announcement of ambitious investment projects, doubling of the Suez Canal, recent discoveries of gas reserves), we confirm our previous forecasts for the calendar years 2015 and 2016 at 4.3% and 4.5% respectively. Experience suggests that ambitious investment projects take some time to complete and show their full impact on the economy. We expect the GDP growth rate to accelerate, however, to 5% in the fiscal year 2016/2017.

In

Ininanexwexof

M

ExreoSlofbenesiex

LoSEprotucoinfo

InUpostram

Oexrewpsuim

5

So

ntesa Sanpao

n the CIS counnduced trade cnd Ukraine. Foxpect price pre

we cut our forexpected data. f the expected

Monetary Policy

xpansionary meduction in polr, in some caslovakia and Slof the ECB, in peyond the initecessary. Furthgnal an end toxpected inflatio

ong-term ratesEE countries, dremium on finobustness of eurmoil in Chinontinue to mon Europe and norecast to rema

n the CIS counkraine in the wossible subsidtabilisation shoates both in U

market interest

On the exchanxpected to moelatively high in

weeks we see rices and stabustain our viewmpact of highe

5y CDS spread (

ource: Bloomberg

lo – Research

ntries, the largconstraints havollowing the essures to easeecast for averaWe see inflatio

d gradual curre

and the Financ

monetary policilicy rates in sevses, fall slightlyovenia, but alsparticular the ial announcedher support coo the easing con in 2015 and

s, which fell codue to expectanancial marketeconomic growa. After a pos

ove upwards innotwithstandinain essentially

ntries, we seewake of the exing of geo-po

ould favour a nUkraine and Rrates, reflectin

ge rate markeove just along nflation rates. only slight re-

bilising financiaw of gradual deer inflation rate

(change in bps

h Department

ge currency deve led to a surgphasing out oe significantly ge inflation inon remaining

ency devaluatio

cial Markets

es are confirmveral countriesy on year averso indirectly foimplementatio horizon and imes from the cycle but not yd 2016.

onsiderably in 2ations of prolots, have recentwth of the massible partial con 2016 due tong a renewed nstable at curre

e money markxpected easingolitical tensionnarrowing of t

Russia. In Egypng a better tha

ets, in Ukrainea competitiveFor the Russia

-appreciation ial markets. Inepreciation of es with respect

s)

t

epreciation andge in inflation. of the boost tin the final mo2015 (to 10%

relatively high on and the com

med in CEE ans in 2015, we erage in 2016. r the other coon of the Quantensified in tlocal Central Byet the start o

2H14 and in thonged easing otly increased dain emerging orrection fromthe cyclical re

narrowing of tent levels in 20

ket rates falling of inflationarns. Falling inflthe risk premiupt, we see roon previously ex

e the hryvnia, ness-preservinn rouble, follon 2016 on thEgypt, the re

the Egyptian Pt to the main t

d, in the caseInflation has h

to prices due onths of 2015 % from 10.5%

in the mediummpletion of the

nd SEE countriexpect moneyOur forecast

untries) by thentitative Easin

terms of montBanks’ announof tightening in

he first few moof monetary podue to the uncountries and

m the recent suecovery and inthe risk compo

015-2016.

g further in 2ry pressures, lelation and prum leading to om for a gradxpected inflati

after the recg depreciating

owing the strohe ground of aecent statemePound in the mrade partners.

Stoc

Source

e of Russia, thhowever peaketo devaluationand thereafte

%) after recent m term as a coe subsidy refor

es. Following market rates tis supported (

e monetary devg, likely to behly absolute pcements, whicn presence of

onths of 2015 olicies and a recertainties rela

d to the finanurge, they are nflation increasonent. Exchang

2016 both in ess volatile curogress towardlower long-te

dual reductionon scenario.

cent large devg path in the png depreciatioa (partial) reconts by the Ce

medium term to

ck market indic

e: Thomson Reuters

e sanction-ed in Russia n, we now er. In Egypt, lower than

onsequence m.

the further to be stable (directly for velopments prolonged

urchases, if ch generally lower than

in CEE and educed risk ated to the cial market forecast to

se expected ge rates are

Russia and rencies and ds financial erm interest of money

aluation, is presence of n of recent

overy of oil entral bank o offset the

ces (% change)

s (*) 3Q15 up to Sep

FS

ptember 9

orecast Noteptember 201

6

e 5

6

In

A

ThpoCcacowyepoinanfaca

Inthtoseaf20nopb

Infelo20th

DexLothre

C

So

ntesa Sanpao

ggregates and

he nominal peositive in 201roatia, Slovenases. In Croatonversion of h

when the loansear. The trend ositive for all

nvestments andnd on the supactors, for examase of Hungary

n Slovenia, theheir loan portfoo the transfer ettling is expecfter an expecte015, if bank aon-performingrocess and creid/offer spread

n the CIS Area,ell considerablyoans for 2015, 016 (approximhe following ye

eposits are exxception beingoans-to-GDP ahe de-leveraginebalancing bet

Cross-border ex

ource: Intesa Sanpa

lo – Research

Bank Rates

erformance of 5 in Slovakia, ia, and Hungtia taking inthouseholds loas were approvof loans is expcountries). T

d consumer sppply side, by tmple in the cay, ad hoc meas

e largest (publiolios. After a dof non-perforcted in 2015 (ed drop in loaassets are restg loans are redit value adjuds deemed unf

, net of the excy in Ukraine. Walready negat

mately +15%), ears.

xpected to slog Slovakia), wand Loans-to-dng process ofween assets a

xposure of BRI

olo processing of Ba

h Department

loans to the pAlbania, Bos

ary, due to tho account a ans denominaed, the loan ppected to pickThe trend of pending as wethe impact of ase of Sloveniasures establish

c) banks are sdecline in loan ming loans fro(-4%) followedns of nearly 20tructured (posseduced, alongstments as a c

fair and the un

change rate efWe expect a futive in Russia. Ibut the trend

ow in 2015 iwith a higher pdeposits ratios f the private snd banks' inte

banks (yoy %

ank for Internationa

t

private sectornia, and Serbihe contributiorecent new ted in Swiss f

portfolio is estik up in 2016 (s

loans is affecell as the delenon-performin and Hungaryed by the Auth

still dealing witvolumes by 17

om the largestd by a weak r0% in 2012-20sibly through tg with the mconsequence oilateral increas

ffect, the trendrther worseninIn Egypt, a nomof loans shoul

n various couprofile compar

to decline fursector and, onrnal and extern

change)

l Settlements’ data.

in CEE/SEE coia and to rem

on of exceptioGovernmentalfrancs into Euimated to decstill modest ovcted, on the

everaging procng loans on a, the creation horities.

th the delicate7.4% in 2013 t banks to BAMrecovery in 20014, we forecthe establishm

mortgage loanof the recent (ses in interest r

d of loans slowng in the nomminal recoveryld continue in

untries with ISred to loans. Wrther, as a resn the other, onal funding so

Loca

Source

ountries is expemain negative onal factors inl measure im

uro at the raterease by arounerall, althoughdemand side

cess in the privassets, as well of bad banks

e process of reand 13.4% in

MC, a further 16 (+0.5%). Iast a decrease

ment of a bad ns prolonged retroactive) prrates.

wed in 2014 in inal growth ray is forecast foline with nom

SP subsidiariesWe therefore sult, on the onof the current ources.

al claims expos

e: Intesa Sanpaolo p

ected to be in Albania, these last posing the e prevailing nd 3% this h values are , by weak vate sector,

as specific and, in the

estructuring 2014, due substantial n Hungary, of 10% in bank) and conversion ovisions on

Russia and tes of bank r 2015 and inal GDP in

s (the only expect the

ne hand, of process of

ure of BRI bank

processing of Bank f

FS

ks (yoy % chan

for International Set

Aggregates inexpected to re

orecast Noteptember 201

7

nge)

tlements’ data.

n the CIS area emain weak

e 5

7

In

C

A

R

20acQefesHsiThb

Aag20coth

F

ThExyipoh

B

Indgasth00

F RCEESSLBB

S

ntesa Sanpao

Country-S

Albania

Real Econo

015 should pctivity in Q1 g

Q2. The secondffects from destimated to reowever, the atuation. The Ahe banking ausiness climate

Annual inflationgricultural prod015, inflation ontinue to risehe end of 2017

inancial M

he second quxpectations foelds. Participaositive differenigher preferen

Banking Se

n June 2015 leriven by the grrew 0.2% YoYs a result of bhe second half.9% and FCY .6%, of which

Forecasts

Real GDP yoy CPI avg Euro Exchnage raEuro Exchange raShort term rate (Short term rate (L/T bond yields (aBank Loans yoy (Bank Deposits yo

Source: Intesa Sanpa

lo – Research

Specific F

my

roduce higherrew 2.8% in a

d half of the yvelopments ineduce the ecoagreement reaAlbanian econond private sece are expected

n averaged 1.8duction rose. Fshould averag

e over the nex7.

Markets

arter of 2015or lower goveration in auctionce of yields oce for long-ter

ector

ending to privarowth of LCY Y, in June 201anks reducing

f. Total depositdeposits saw

h the corporate

ate avg ate (end of perio(avg.) (end of period) avg.) (end of period) oy (end of period

aolo Research Depar

h Department

Forecasts

r growth thanannual terms.

year should see Greece. Dece

onomic growtched in July 2omy is projectctor balance s to improve ov

8% in the secFor this reasonge around 1.6

xt two years an

was characternment demanons was geneon securities wrm instruments

ate resident selending. Lendi5. In the first NPL through ts expanded b2.6% growth

e deposit contr

2014 2.1 1.6

140.4 od) 140.1

3.0 2.8 n.a. 2.2

d) 2.9

rtment forecasts

t

s

the previous The new data

e slower groweleration of exph for the yea

2015 is a startted to see fastsheets, externver this period.

cond quarter. n, we see this 6%. CB projecnd will see a s

erised by downd for financinerally high, al

with the interes.

ector grew by ing to Househhalf of 2015, write offs, a py 1.7% YOY i

h. However in racted by -3.1%

2015F 202.5 1.6

141.0 14141.8 14

2.5 2.4 n.a. -1.0 0.5

year. Accordas point to sim

wth rates, due ports and remar by around ting point for ter growth pacnal economic .

Inflation fell infactor as havinctions suggestsustained retur

wn-trending yieng generated lso driven by st on term de

0.8% YoY. Aolds grew 2.5loan portfolio

process that isn June 2015 wH1, 2015 tot

%.

Expor16F2.61.7

42.142.3

2.42.3n.a.3.02.0

Source:

ing to INSTATmilar growth ra

to the potentimittances from

0.25 percentathe normalisace in the next environment a

n the summer ng a transitoryt that inflationrn towards 3%

elds across all downward prhousehold d

eposits drove h

nnual Credit g% while loan

o shrank by 1.4s expected to where LCY deptal deposits dr

rt and Inflation

National Statistics O

T economic ates for the al negative Greece are age points. tion of the two years.

and overall

months as y effect. For n rates will

% target by

maturities. ressures on emand.The

households’

growth was to business 4%, mainly continue in posits grew opped by -

n

Office

FS

Kledi Gjorden

orecast Noteptember 201

8

i

e 5

8

In

B

R

Reinimfrgsimcosugp

Thdeexrem

B

A1tococo(+

Ag(+

F ReCEuEuShShL/BaBa

So

ntesa Sanpao

Bosnia and

Real Econo

eal sector indindustrial produmproved its surom 2.7% yoyrew by 2.4% xth consecutiv

months. Cumuoverage increaupported by srowth to speerivate consump

he deflation pecline of the laxpected recoveemain low at -

more favourable

Banking Se

According to th.1% yoy (sameo decline withompared to abontinued to gr+4.5%) rise.

According to ourowth in depo+2.5%) in 201

Forecasts

eal GDP yoy PI avg uro Exchnage raturo Exchange rathort term rate (ahort term rate (e/T bond yields (avank Loans yoy (eank Deposits yoy

ource: Intesa Sanpao

lo – Research

Herzegov

my

icators suggesuction acceleraupport to 10.6y. Positive highand retail saleve month, whlative trade dased to 56.9stable househod up slightly inption support.

ath strengthenast eight montery in price lev-0.4% yoy. In e labour marke

ector

he latest availabe as in June) buh -2.3% yoy bove 5% growrow by a high

ur forecast, 20osits. Amid bett6, while growt

te avg te (end of period

avg.) end of period) vg.)

end of period) y (end of period)

olo Research Depart

h Department

vina

t more robustated to an ave6% growth (frh frequency daes by 9.1% yohile imports redeficit in the 9% (+1.8 p.pold consumptn 2016 to 2.2

ned in July andths, pushing tvels and the d2016 slightly set developmen

ble data, loansut declined onprint, while lo

wth in the first 8% yoy, owin

015 should mater economic pth in deposits s

2014 1.1

-0.9 1.96

d) 1.96 n.a. n.a. n.a. 1.9

) 6.4

ment forecasts

t

t growth in 2Qerage 5.2% gom 7.0% in 1ata readings coy. Exports of ecorded 4.3%Jan-July perio

p.). Thus the ion and impro% amid bette

d the CPI indehe 12-month

declining price stronger demants should shift

s to the private a monthly levoans to houssix months. Atg to both hou

ark a solid 2.0%prospects we eshould continu

2015F 21.8

-0.41.961.96n.a.n.a.n.a.2.05.2

Q2015 comparowth (from a1q) while expocontinued in Jgoods increas

% growth, the od declined by

2015 outloooved export pr a investment

ex declined by average to -0.of oil we exp

and side pressut inflation to 1

e sector in July vel by 0.3%. Ceholds slowedt the same timseholds (+9.2%

% growth in loexpect slightly ue around a 5%

Indu2016F

2.21.4

1.961.96n.a.n.a.n.a.2.55.4

Source

ared to 1Q201a flattish 1q), orts accelerateuly. Industrial sed by 2.4% y

highest of thy 3.4% yoy ak remains enperformance. ts outlook and

1.1% yoy, th5%. Amid a s

pect 2015 averures, low base.4% yoy.

marked a groorporate loansd slightly to +

me, private sect%) and corpor

oans followed stronger grow

%growth path

ustrial Producti

e: National Statistics

5. Namely, retail trade

ed to 6.1% production

yoy, for the he last five and import ncouraging, We expect

d continued

e strongest slower than rage CPI to effect and

wth rate of s continued +4.9% yoy tor deposits ate deposit

with 5.2% wth in loans

.

on and Inflatio

s Office

FS

Ivana Jovic

on

orecast Noteptember 201

9

e 5

9

In

C

R

Gwfususureco1Q10

Losibyto0(gadsesu

F

Ththsuuel

B

Dofhocrmra

F ReCEuEuShShL/BaBa

So

ntesa Sanpao

Croatia

Real Econo

GDP growth picwas 0.7%) andurther strengthurprise (0.8% upported by eneal net wagesonsumption coQ2015) path. 0.2% export g

ooking forwargnals robust ry 3.9% and 4ourist season s.3% to 0.9%general electiodopted CHF-inector, could imubdued econo

inancial M

he summer mohe highest levupported by hnder the influlevated interes

Banking Se

eposit growthf loan declineousehold loanredit activity (1

mark a decline ate valid at the

Forecasts

eal GDP yoy PI avg uro Exchnage raturo Exchange rathort term rate (ahort term rate (e/T bond yields (avank Loans yoy (eank Deposits yoy

ource: Intesa Sanpao

lo – Research

my

cked up to 1.2d recording thhening on the

yoy, first pond-2014 changs by 3.5% yoontinued on aNet exports de

growth and off

rd, we see cureal sector dev4.5% yoy, resstrengthening

%, leaving 201ns due in Novndexed loans mpose negativmic growth ev

Markets

onths brought vel in 2015. Ahigh tourist-relaence of the C

st rates and mo

ector

in July was 1.e accelerated s. We expect c1% ca.) basedowing to a CH

e time loans we

te avg te (end of period

avg.) end of period) vg.)

end of period) y (end of period)

olo Research Depart

h Department

% yoy in 2Q20he strongest pe domestic demositive since 3ges in personaoy in 1H2015a positive althelivered a 1.1pfsetting a 6.9%

rrent growth melopments witpectively. Goooverall. Thus, 6 unchangedember imply pconversion sc

ve risks on lenven more pron

liquidity declinAugust averagated fx inflow

CHF-indexed loore volatile fx m

.9% yoy, with to -1.6% yo

continued growd on an expecHF indexed-loaere approved (

2014 -0.4 -0.2 7.63

d) 7.67 0.7 0.8 4.4

-2.0 ) 2.3

ment forecasts

t

015, overshooperformance smand side, wi3q2013). Housal income tax a. Contrary to

hough slightly pp contribution% increase in im

momentum lath industrial prods exports shwe have upgrat 1.5%, ow

preliminary finaheme which iding activity, ounced.

ne, with the 3Me exchange ra

w. Financial maoans conversiomarket.

households hoy, amid a 3.wth in depositcted recovery. ans conversion30% ca. lowe

2015F 20.9

-0.17.617.61

1.21.53.7

-3.21.5

oting all expectsince 3Q2008ith positive invsehold consumand declining io EDP-linked e

lower 0.4% n to headline mports.

argely continuiroduction and hould remain sraded our GDwing to an unancing for 1Qimplies EUR 1which makes

M rate increasate fell slightlarkets developn thus we exp

olding on to 25% decline ints in 2016 (2%However, end to EUR-indexer than the curr

Indu2016F

1.51.0

7.627.63

1.51.54.01.22.0

Source

tations (market8. The structurvestments as tmption (0.6%nflation, whic

expectations gyoy growth (vgrowth, reflec

ng in 2H2015real retail trad

supportive witP forecast for ncertain budg2016). Howev billion loss fnegative risk

ing to 1.5% ey to 7.56, -0ments in 4q20pect continued

2% ca. yoy raten corporate a

% ca.), and mildd-2015 loans aed loans at therent market fx

ustrial Producti

e: National Statistics

t consensus re revealed the biggest

% yoy) was h increased

government vs 0.6% in cting robust

5. July data de growing th a record 2015 from et position er, recently or banking on already

nd-August, .3% mom, 015 will be d period of

e. The pace and flattish d growth in are seen to e exchange rate).

on and Inflatio

s Office

FS

on

Ivana Jovic

orecast Noteptember 201

10

e 5

0

In

E

G

Gdanimaffo20vast

A8la

F

Thwco

ThoJuef

B

Ba2of20re

F ReCUUEuEuShShL/BaBa

So

ntesa Sanpao

Egypt

Growth and

GDP recorded 4uring the samnd the reviva

mprovement infter a period oorecast GDP t016/2017 drivarious projectstart-up of the s

Annual headlin.4% in Jly on t

ast year’s fiscal

inancial M

he EGP/USD exwhile the EGP dompared to EG

he CBE maintperation unchuly 2015. Morefforts to boost

Banking Se

ank deposits 1.4% comparef 81.6% of to015 recordingepresented the

Forecasts

eal GDP yoy PI avg SD exchange ratSD exchange raturo Exchange raturo Exchange rathort term rate (ahort term rate (e/T bond yields (avank Loans yoy (eank Deposits yoy

ource: Intesa Sanpao

lo – Research

d Inflation

4.7% growth e period of thl of the Egyp

n the manufactof decline, beso grow at 4.ven by rising s concerning second phase o

e inflation regthe back of a consolidation

Markets

xchange rate sdepreciated byGP 8.56 at the

ained its overanged at 8.75e cuts in intere the economy

ector

have seen sused to June 20otal deposits. Tg an annual ine highest share

te (avg.) te (end of periodte avg te (end of period

avg.) end of period) vg.)

end of period) y (end of period)

olo Research Depart

h Department

n

during the fihe previous yeptian economyturing sector inides the launc5% in the caFDI inflows, tnew energy, of the Suez Ca

gistered its lowfavourable bameasures fade

settled at EGP y 3.3% againsend of July.

rnight deposit 5%, 9.75% aest rates are exand stimulate

stained growth014, whereas pTotal bank loanncrease of 22

e of 65% of to

2014 2.2

10.1 7.1

d) 7.2 9.4

d) 8.9 11.2 11.3 n.a.

12.7 ) 16.6

ment forecasts

t

rst nine montear, reflecting ty. The performn addition to hh of mega pro

alendar year 2he recovery oinfrastructure

anal developm

west level in 2se effect fromed away.

7.83 at the enst the EUR reco

rate, lending nd 9.25%, rexpected in theinvestments.

h during the yprivate sector dns continued t2.2% at the etal loans.

2015F 24.3

10.07.77.88.58.4

11.211.0n.a.

16.016.0

ths of FY2014the steadinessmance was pohigh growth raojects such as2016 and reacof tourism and

and agricultuent project.

2015 of 7.9% the previous

nd of August 2ording EGP 8.

rate, and theespectively, due near future,

year ending Jdeposits repreto increase durend of June 2

Indu2016F

4.59.57.98.08.99.4

10.810.5n.a.

15.013.0

Source

4/15, compares in the politicositively affect

ates in the tourthe new Suez

ch 5% in the d the implemeural reclamatio

% in August, dyear, while the

2015 compared84 at the end

e rate of the Cring its latest supporting go

une 2015, incesented the higring the year e2015 as corpo

ustrial Producti

e: National Statistics

d to 1.6% al situation ted by the rism sector, Canal. We fiscal year

entation of on and the

down from e impact of

d with July, d of August

CBE’s main meeting in vernmental

creasing by ghest share ending June orate loans

on and Inflatio

s Office

FS

on

Emil Eskander

orecast Noteptember 201

11

r

e 5

1

In

H

R

Hshcopav2cothcomal

FoStefthW

F

ThJudoexthlofa

B

Inofleof

F ReCEuEuShShL/BaBa

So

ntesa Sanpao

Hungary

Real Econo

ungary’s GDPhowed widely onsensus. Baseroject a slowdverage annual .8%). The deontribution cohe export peonsumption gr

manufacturing lso maintain a

ollowing a halftill, we do not ffect makes ushe last two mo

We expect to se

inancial M

he National Bauly 2015 at 1.ownward presxpected forthche current rateow inflation levactors. The EUR

Banking Se

n the banking f loan market,

ending for growf the NHP, we

Forecasts

eal GDP yoy PI avg uro Exchnage raturo Exchange rathort term rate (ahort term rate (e/T bond yields (avank Loans yoy (eank Deposits yoy

ource: Intesa Sanpao

lo – Research

my

growth was expected dec

ed on the detaown in H2 angrowth rate c

etailed Q1 GDmpared to pre

erformance ofrew at 3.0%, is set to remaistrong surplus

f-year period oexpect negati

s maintaining onths of 2015.ee further rise

Markets

ank of Hungary35%. Accordi

ssure of items coming Fed hike to be maintavel, a supportivR/HUF also sho

ector

sector develop while credit swth programmexpect ongoin

te avg te (end of period

avg.) end of period) vg.)

end of period) y (end of period)

olo Research Depart

h Department

2.7% yoy in celeration fromailed GDP figud for overall Glose to, but pr

DP data confieceding years.f car manufafaster than inn a major drivs this year.

of positive, butve inflation toour forecast o

. The annual ain CPI in 2016

y announced tingly the mainout of the scokes and externined for severave inflation outowed relative s

pments in the upply remaine

me (NHP+). Wing weakness fr

2014 3.6

-0.2 308.6

d) 310.8 2.4 2.1 4.8

-0.3 ) 1.3

ment forecasts

t

Q2 as a resulm Q1 (3.6%), re and the sub

GDP growth foobably slightlyrmed the ongNet exports a

acturing reman any quarter er of economi

t moderate inflreturn while d

of an acceleraverage CPI ma, but still below

the conclusion n policy rate wope of monetarnal (geopoliticaal quarters, potlook and ongstability within

real economy ed boosted by ith slower GDProm the deman

2015F 22.80.1

311.0312.0

1.71.43.6

-10.0-1.0

lt of 0.8% qowith the yoy

bsequent monor 2015 (also fy lower than 3%going shift inare not the soained of keysince the 200c growth and

lation, CPI drodemand factortion of inflatioay arrive withinw the central b

of its easing cwas left on hory policy (inclual) risks warranotentially throuoing ECB QE amostly the 30

lent some supthe second phP growth and nd side of the

Indu2016F

2.22.3

311.5311.0

1.61.84.10.01.0

Source

oq growth. Thrate even bel

nthly data we cfor 2016), resu% (our currentn the structurole growth drivy importance.8 start of the the trade bala

opped to 0.0%rs and especiaon this year, en the range ofbank’s target (

cycle with a 15ld in August.

uding fuels andnt caution, butghout 2016. A

are among the5-315 range.

pport to the dehase of the centhe expected corporate cred

ustrial Producti

e: National Statistics

ese figures ow market continue to ulting in an t forecast is e of GDP-ver, though Domestic crisis. Still,

ance should

in August. lly the base

especially in f 0.0-0.5%. 3%).

5-bps cut in The strong

d food), the t we expect A persistent supportive

emand side ntral bank’s elimination dit market.

on and Inflatio

s Office

FS

on

Mariann Tripp

orecast Noteptember 201

12

pon

e 5

2

In

R

R

RoPrshin(+(+imsh

Ainfo20

F

Thtesuwpoea

B

Aofyerapdeyo

F ReCEuEuShShL/BaBa

So

ntesa Sanpao

Romania

Real Econo

omania’s econrivate demandhowed significndicators sugge+3.8% yoy July+7.6 yoy July), mpact in Q3 rhould remain r

August CPI camnflation in negor 2016 (includ016 average a

inancial M

he NBR kept thepid economic urrounding Ch

well as domestolicy mix. The asing is consid

Banking Se

Aggregate loanf FX loans conear (policy rateatios and adeqrivate sector (+ecreased to 52oy in 2015 and

Forecasts

eal GDP yoy PI avg uro Exchnage raturo Exchange rathort term rate (ahort term rate (e/T bond yields (avank Loans yoy (eank Deposits yoy

ource: Intesa Sanpao

lo – Research

my

nomic growth d and investmcant contractiest positive dyy Industrial oulow inflation a

results (given robust at 3.2%

me in at -1.9%ative teritory fding VAT rate t 0.5% yoy.

Markets

he monetary p recovery and

hina, the divergic imbalances,central bank

ered pro-cyclic

ector

ns to the privatntinued. The gre cuts, narrowuate liquidity m+13% yoy in J2% in July (frod 3% in 2016

te avg te (end of period

avg.) end of period) vg.)

end of period) y (end of period)

olo Research Depart

h Department

slowed in Qments continuon while netnamics of priv

utput; +9.6% yand lower inte2015 draught

% in 2015 and

% yoy (negativefor the next thcut from 24%

policy rate at 1heightened vo

ging monetary, are all puttinreiterated the

cal, warning in

te sector contrradual ease of

wing of the symmanagement) July 2015). Thom top 64% idue to RON cr

2014 2.8 1.1 4.4

d) 4.5 2.3 1.4 4.6

-3.7 ) 8.9

ment forecasts

t

2 2015 to 3.2ed to be thet exports hadate consumptiyoy July Retail erest rates. Agrt conditions a3% in 2016.

e inflation for three quarters

% to 20%). W

.75% p.a. (histolatility in deve

policy stancesng pressure one importance oflationary pres

racted by -0.8 the monetary

mmetrical corricontinued the

he FX loans shn mid-2012). Aredit growth.

2015F 23.2

-0.54.44.41.21.13.70.52.0

2% yoy from e main driversd a negative ion and investSales), suppo

riculture is expnd 2014 elev

the third conseas more fiscal

We estimate 20

torical low) at eloped marketss of the world’n the NBR to of adopting a ssures might a

% yoy in July y policy mix ovdor of interest

e positive dynaare of total loAggregate loa

Indu2016F

3.00.54.44.41.11.04.13.03.5

Source

4.3% yoy ins of growth. contribution. ments will be rted also by ri

pected to haveated base). G

ecutive month easing measu15 CPI at -0.5

the August ms, economic un’s major centrareconsider theprudent stanc

rise).

as the reductiver the course t rates, reduct

amics of RON looans to the prians are expecte

ustrial Producti

e: National Statistics

Q1 2015. Inventories Short-term maintained sing wages a negative DP growth

). NBR sees ures are set % yoy and

eeting. The ncertainties al banks, as e economic ce (as fiscal

on in stock of the past ion in MRR oans to the vate sector ed at 0.5%

on and Inflatio

s Office

FS

on

Ancuta Covac

orecast Noteptember 201

13

ci

e 5

3

In

R

R

Aredyanredeea

OFuinpein

F

Ththththmra

B

Inby0poaninDanex

F ReCUUEuEuShShL/BaBa

So

ntesa Sanpao

Russia

Real Econo

After several mecorded a +0.1ynamics in thend water, andesult in five yeemand. In 201ase, we expect

On September urther decisionn July amounteeak. If the CBR

n key interest ra

inancial M

he oil market he ruble exchahe year and dehe oil industry

monetary policyate increase by

Banking Se

n July banking y 2.3% up to .1%). Interbanortfolio increasnd funds depo

ndividuals by 2eposits of Fednd the Centrxtension of con

Forecasts

eal GDP yoy PI avg SD exchange ratSD exchange raturo Exchnage raturo Exchange rathort term rate (ahort term rate (e/T bond yields (avank Loans yoy (eank Deposits yoy

ource: Intesa Sanpao

lo – Research

my

months of neg1% (seasonallye mining indusd retail trade. ears reflecting16, provided at GDP to grow

11 CBR decidns will depend ed to 15.6% aR proceeds witates, then ave

Markets

has been extrnge rate. Curr

ecreasing pricey for most of y are among ty the FRS would

ector

sector assets gRUB 41trn (lo

nk lending to rsed by 5.2%, osited in accou2.6% up to RUderal Treasury al Bank annontingency mea

te (avg.) te (end of periodte avg te (end of period

avg.) end of period) vg.)

end of period) y (end of period)

olo Research Depart

h Department

gative values, y adjusted) wistry, manufactFixed capital

g limited funda recovery in o

w by 0.5%.

ded to leave ton the balanc

and in August th a relatively rage inflation i

emely volatile rent excessive s will likely chathe producers

the main risks d have a negat

grew by 1.8%oans to non-firesident bankswith debt secuunts of organiUB 20trn. Borrwith credit or

ounced their asures, includin

2014 0.6 7.8

38.6 d) 57.5

51.3 d) 70.7

10.6 19.9

9.1 25.4

) 27.9

ment forecasts

t

GDP growth th respect to tturing, producinvestment stiing sources fo

oil price occur a

the policy ratece of inflation a

increased to 1moderate monin 2016 should

recently and toil supply fromange directions. Turbulent Cfor the Russiative impact on

%, up to RUB 7nancial organis grew by 5.0%urities (80% osations grew b

rowing from thganisations incintention to

ng a preferenti

2015F 2-3.515.557.065.063.370.214.211.511.5-3.0-2.0

in July while the previous m

ction and distrll saw a drop or the compaand sanction i

e at the curreand economic 15.8% (YoY), netary policy, wd fall to 9.5%.

the future devm OPEC mightn. This will be dChinese markean financial ma the Russian n

75trn. Total voisations by 3.1%, to non-resi

of portfolio) groby 1.3% up tohe Bank of Rucreased by 1.4support the ial dollar rate f

Indu2016F

0.59.5

64.063.072.374.310.5

9.510.5

2.03.0

Source

still falling bymonth, thanks ibution of elecof 8.5% yoy,

nies and weainduced trade

ent level of 11slowdown riskconsidered howithout a shar

velopmetns wit be limited by due to low proets and tightearkets. A highational currenc

lume of credit1% and to indident by 4.2%owing by 6.2%o RUB 23trn,

ussia decreased4 times. The gbanking sectofor calculating

ustrial Producti

e: National Statistics

4.6% yoy to positive

ctricity, gas , the worst k domestic constraints

1.00% p.a. ks. Inflation owever as a rp decrease

ll influence the end of

ofitability of ning of US ly probable cy rate.

ts increased dividuals by

%. Securities %. Deposits deposits of d by 3.4%. government or and the standards.

on and Inflatio

s Office

FS

on

Anna Mokina

orecast Noteptember 201

14

e 5

4

In

S

R

SeexyostpcoInlo(4

F

Thinamkemanbyrem

B

Thmbaladthreinrelo

F ReCEuEuShShL/BaBa

So

ntesa Sanpao

Serbia

Real Econo

erbia’s economxpansion (of 1oy supported btronger recoverojected to exonsumption isnflation remainower bound of4±1.5%) in late

inancial M

he key policy nflationary premounts to 5%ey policy rate r

monetary policynd progress iny a favourableeviews of the

movements in t

Banking Se

he NBS has dmonths, while anks will boost

atest bank lenriven by comphe collection oesolving NPL wncluding improeporting standoan collateral.

Forecasts

eal GDP yoy PI avg uro Exchnage raturo Exchange rathort term rate (ahort term rate (e/T bond yields (avank Loans yoy (eank Deposits yoy

ource: Intesa Sanpao

lo – Research

my

my improved %) since 4Q 2

by faster growtery is currentxpand by 1.5% likely to contns low, amouf the target be 2015 or early

Markets

rate has been ssures, low in

%, its lowest leresulted in a fay easing will d fiscal consolide balance of arrangement

he country’s ri

ector

ecided to lowleaving the mt their lending ding survey, t

petition and chf receivables a

which should eovement of badards and supp

te avg te (end of period

avg.) end of period) vg.)

end of period) y (end of period)

olo Research Depart

h Department

markedly in s2013. IMF andth of industrialy postponed

% in 2016, ledtinue contractnting to 2.1%

band (2.5%) iny 2016 and tre

cut by 300bpflation abroad

evel since the all in interest radepend on infdation. The dinpayments andwith IMF, af

isk premium.

wer its mandatmandatory dina

activity and lothe relaxation heaper sourcesand collateral. nsure a more eanking superviport for the a

2014 -1.8 2.1

117.3 d) 121.6

8.8 8.0 n.a. 4.4

) 9.7

ment forecasts

t

second quarted NBS upgradel production, iby ongoing

d by investmeting due to fu

% in August, an the coming ending closer t

ps since the bed and stable cinflation targeates in the inteflation expectanar is projectedd fiscal trendsffirmation of t

tory FX reservear reserve rateower the rates of corporate

s of funding dIn addition, thefficient debt sion, implemedequate valua

2015F 20.51.5

121.3121.0

6.45.0n.a.0.54.0

er of 2015, reed the GDP fonvestments anfiscal consolid

ent and net exurther reductioand we projemonths, retur

to the 4% targ

eginning of thcurrency. Curreeting regime werbank money ations, externad to remain res, as confirmethe country’s

e rate by 1ppes unchanged,on new loans.credit standar

despite continue governmentresolution systentation of IFRation of immov

Indu2016F

1.52.5

121.3121.5

4.94.8n.a.2.54.2

Source

ecording the forecast for 201nd external demdation. The exports while gon of the budct it moving arning to the t

get from mid-2

he year supporently, the key was adopted. Cand loan mark

al financing eelatively stable,d by the twocredit rating

p in each of t, in the expec. At the same trds was reportuing risks asso adopted the stem, with the RS by local bavable assets fu

ustrial Producti

e: National Statistics

first annual 5 to 0.5%

mand while economy is government get deficit. around the arget band 016.

rted by low policy rate

Cuts in the ket. Further nvironment , supported

o successful and stable

he next six ctation that time, in the ted, mainly ciated with strategy for key aspects nks, better urnished as

on and Inflatio

s Office

FS

on

Marija Arsic

orecast Noteptember 201

15

e 5

5

In

S

R

Slhasuthabpne

Menleresu3to

F

Thgtofa

B

Ahare

Vsobythreca

Fo ReCPShShL/TBaBa

Sou

ntesa Sanpao

Slovakia

Real Econo

lovakia continualf of 2015 froupported by EUhis year end. Nbout half of throgramming pext year seems

Meanwhile, fasnjoying two ye

evels, while unelatively modesupressed energ%yoy in 2Q. To increase their

inancial M

he Slovak boniven the shalloo QE-driven boar from the all-

Banking Se

Alongside the tave bottomedefinancing the

olume-wise, inome payback iy central bankhe corporate loesident non-finautious 2%yoy

orecasts

eal GDP yoy PI avg hort term rate (avhort term rate (enT bond yields (avank Loans yoy (eank Deposits yoy

urce: Intesa Sanpao

lo – Research

my

ues to do well om 2.4% in 20U-funded projNote that pubhe overal GDP period has bares likely.

st domestic deears of uninteemployment dst, at 2.3%yoygy and food This has allower saving rate to

Markets

d market has ow local markeond purchases.-time lows pos

ector

turnaround in in the summold loan stock

n retail lendinn 2Q for the a

k regulation, aioan market, hnancial compay at the start o

vg.) nd of period) vg.) nd of period)

y (end of period)

lo Research Departm

h Department

in terms of gr014. The caveaects from the lic investmentgrowth of 3.2

ely started, som

emand growtherrupted job crdeclined to a py, yet with conprices, househed households o new 15-year

continued to et and scarcity . Slovak long-tsted in mid-Ap

the bond yiemer, which couk will remain co

ng, strong, doanticipated demming to progr

hitherto broadlanies finally beof 3Q.

2014 2.4

-0.1 0.2 0.1 2.0 6.4 3.8

ment forecasts

t

owth, which hat of current f2006-13 progshot up to 8

2%. As drawinme payback in

h continues toreation. In 2Q,post-crisis low onsumer prices hold real dispo

not only to comaximum.

follow developof available boterm yields areril.

ld environmenuld alleviate thostly for banks

ouble-digit gromand in the prressively tightey stagnant, thegan to increa

2015F 23.1

-0.2 0.0 0.0 1.2 6.0 5.5

has acceleratedfaster than expgramming perio80%yoy growtng on funds frpublic spendin

o support the , employmentof 11.2%. Wastill below yea

osable incomeonsume more

pments elsewhonds, local yiele thus lower no

nt, rates on mhe pressure ons.

owth continuerevious two qun credit condit

he new develoase from year

Indu2016F

2.80.8

-0.1-0.11.76.24.5

Source

d to above 3%pected growthod, which will h in 2Q and c

rom the new 2ng and GDP g

labour markefinally reache

age growth haar-earlier level

e has grown b– up 2.3%yoy

here in the Euds remain oveow than in Au

mortgage loansn NII going for

s, albeit thereuarters (which tions to retail

opment is thatr-earlier levels,

strial Productio

e: National Statistics

in the first is that it is run out by

contributed 2014-20 EU rowth itself

et, which is ed pre-crisis s remained s thanks to by a sound y – but also

rozone, yet rly sensitive stria, albeit

s appear to rward. Still,

e has been was driven clients). On lending to

if only by

on and Inflatio

Office

FS

Zdenko Štefan

on

orecast Noteptember 201

16

nides

e 5

6

In

S

R

Ecgcosipede

Inininex

F

Fr10MthoOsuthpbe

B

EvCAthes4frra

F ReCShShL/BaBa

So

ntesa Sanpao

Slovenia

Real Econo

conomic activirowth being onsumption inde that had aerformance inecelerating slig

n August 2015nfluenced by lnflation rate bxpected gradu

inancial M

rom mid-June 0Y-yield curre

Ministry of Finahree auctions riginally matur

On the second aucceeded in isshe internationrefinance the een covered by

Banking Se

vidence of coommission ha

Apollo, a US prihe acquisition specially prono.0% yoy in Derom the privatates. Growth in

Forecasts

eal GDP yoy PI avg hort term rate (ahort term rate (e/T bond yields (avank Loans yoy (eank Deposits yoy

ource:: Intesa Sanpa

lo – Research

my

ty in Slovenia mainly attrib

ncreased as wea negative imn the first twoghtly in 2016.

5 inflation (HICower prices o

below zero in al recovery in d

Markets

2015, Sloveniantly moves aro

ance took advafor bonds: on

ring in Februarauction a newsuing a 30-yeaal debt markedebt that willy a EUR 1 billio

ector

onsolidation is approved thivate equity fu

of Hypo. Meounced in len

ecember while te sector contin deposit volum

avg.) end of period) vg.)

end of period) y (end of period)

olo Research Depart

h Department

continued to utable to an ell, while invespact on the eo quarters, w

CP measure) wof petroleum

2015. Prices domestic dem

an governmenound 1,8%. Tantage of impn the first onery 2016, with

w 10-year bondar bond, whichets. The procl mature in 20on euro bond i

is emerging e acquisition ond. Advent Inteanwhile the ding to corpowe forecast a nued to rise imes should co

2014 3.0 0.4 0.2 0.1 3.3

-13.4 ) 6.6

tment forecasts

t

recover in 2Q2increase in

stment was theconomic active forecast GD

was -0.6%. A products, whiare forecast

and and some

t bond yields hhe situation inroved market e it made a pthe bond RS7 was issued anh is the longeseeds of both 016, since theissued in Marc

in the Slovenof the second-ternational hasdecline in len

orate clients. Tmodest recoven 2Q2015 desntinue over th

2015F 22.4

-0.40.00.01.8

-4.03.5

2015. GDP incexports. Hous

he only compovity in 2Q201DP to grow b

lower inflatioch are expectto start incre

ewhat higher e

have been gradn Greece calmconditions an

partial replacem2, which will

nd on the thirdst maturity bonewly issued

e budget needch.

nian banking -largest bank is entered the Snding continuTotal loans areery for 2016. Cspite the low e following mo

Indu2016F

2.11.2

-0.1-0.12.40.53.8

Source

creased by 2.6sehold and g

onent on the e5. Considerin

by 2.4% in 20

n rate this yeated to keep tasing in 2016nergy prices.

dually decreasied down and d successfully ment of the bmature in Oct

d auction the gond issued by Sd bonds will bds for 2015 ha

system. Then the country,Slovenian marked in 2Q2015e expected to Conversely, totlevels of depoonths as well a

ustrial Producti

e: National Statistic

% yoy, the government expenditure g the solid 015 before

ar is mainly he average 6, with the

ing and the in July the carried out

bond RS59, ober 2017.

government Slovenia on be used to ave already

European NKBM, by

ket through 5 and was decline by

tal deposits osit interest as in 2016.

on and Inflatio

cs Office

FS

on

Nastja Benčič

orecast Noteptember 201

17

e 5

7

In

U

R

GadexthfrpoIM

F

Forefiis faboexin

B

Inreanal40coAarstexJunoto

RCUESLBB

S

ntesa Sanpao

Ukraine

Real Econo

GDP fell by 14djusted terms,xpect less negahe 11% plungrom next yearolitical solution

MF and the inte

inancial M

ollowing montestructuring denancial marketexpected to

avouring the eond yields ovexpect more co

nflation and to

Banking Se

n Ukraine the ecession. Nomnd -0.9% for lso showed a s0%) net of thonfidence from

An additional sround 600% latill buoyant in xchange rate eune (-86.6% aominal terms io support bank

Forecasts

Real GDP yoy CPI avg USD exchange raEuro Exchnage rShort term rate aL/T bond yields aBank lending Bank deposits

Source: Intesa Sanpa

lo – Research

my

4.7% yoy in 2 real GDP easeative GDP numge we forecastr and gaining n of the confliernational com

Markets

ths of difficuleal with its crets after the turcontinue, also

easing of moner the forecasontained depre

defend the co

ector

performance oinal loan growhouseholds); nslight nominal he exchange m savers. NPLssource of conast June (from nominal termeffect (approxiand 6.1%, ren 2015 (+2%

king aggregate

ate avg rate avg avg. avg.

aolo Research Depa

h Department

2Q after the ed by 0.9% in

mbers, mainly dt for this yearmore strengtct in the East

mmunity which

t negotiationsditors. The dearmoil seen lasto helped by sunetary conditiot period. For

eciation over thountry’s compe

of banking agwth was 5.9%net of the excincrease (1.4%

rate, due to ps remained ovencern is “the 250% in Dec

ms (22.5% in imately -56%)spectively). Loand -0.5%, re

es, albeit still w

2014 -6.7 12.2 12.0 15.9 17.9 14.0 10.9 -1.8

rtment forecasts

t

17.2% annuan 2Q compareddue to a favou, we see the eh in subsequeand advances

h have provided

s Ukraine has al is a new stet year and earlyubsiding politions and a gradthe currency, he forecast peetitive position

gregates cont in June (fromhange rate eff% yoy in June)plummeting reer 24% in Junlarge exposurember). In UkrJune), but co. ROE and ROA

oans and depoespectively). W

weak in nomina

2015F -11.0 45.0 21.6 24.0 25.8 15.8

2.2 -0.5

al drop recordd to 1Q. Over rable base effeeconomy retuent years. Ouin the reform

d financial sup

finally managp towards they this year. In cal tensions adual drop in after the rece

eriod to partial.

tinued to be am 2.8% in Mafect it saw a d), but declinedemittances frone, putting furres to capitalraine, the tren

oncealed a stroA continued tosits are expe

We expect a sligal terms.

Ind2016F

1.025.022.525.421.514.0

4.03.0

Sour

ed in 1Q. In the coming q

ect, started its rning to a recr forecast is b process agree

pport to the co

ged to agree stabilisation oour scenario, t

and advances money marketent large devaly offset highe

affected by they), +8.0% for decline of 34%d sharply (approm Russia andrther pressure ” ratio, whichd in foreign liaong decrease o be strongly

ected to remaght GDP recove

dustrial Product

rce: National Statisti

seasonally-uarters, we slide. After

covery path based on a ed with the untry.

on a debt of Ukraine’s this process in reforms, t rates and

aluation we er domestic

e economic businesses

%. Deposits roximately -d a lack of on capital.

h remained abilities was net of the negative in in weak in ery in 2016

tion and Inflati

cs Office

FS

Giancarlo Frig

Davidia Zucch

ion

orecast Noteptember 201

18

oli

elli

e 5

8

Forecast Note September 2015

Intesa Sanpaolo – Research Department 19

Country Data: Economy, Markets and Banks - the economic cycle Economy

GDP %chg yoy* Ind. Prod. chg yoy Export* nom. chg yoy Inflation %chg yoy Reserve Chg. Euro** mln

CA bal. Euro ** mln

2Q15 1Q15 2014 Last mth 2Q15 Last mth 2Q15 Last mth 2Q15 2014 2Q15 1Q15 2014 2Q15 1Q15CEE Slovakia 3.2 3.1 2.4 11.9 Jul 3.6 8.3 Jul 4.2 -0.2 Aug -0.1 -0.1 ns ns ns -239 321Slovenia 2.6 2.8 3.1 6.8 Jun 3.9 4.8 Jul 6.2 -0.6 Aug -0.8 0.4 ns ns ns 806 451Hungary 2.7 3.6 3.6 3.4 Jul 6.3 6.1 Jul 8.1 0.0 Aug 0.3 -0.2 -770 -2157 -7638 NA 1981SEE Albania NA 2.8 2.1 NA NA NA -2.6 Jul -2.0 1.9 Aug 1.8 1.6 44 -125 -149 NA -230Bosnia H. NA 2.1 1.1 2.4 Jul 5.2 2.4 Jul 6.1 -1.1 Jul -0.5 -0.9 59 -15 387 NA -197Croatia 1.2 0.5 -0.4 3.9 Jul 2.4 19.3 Jun 14.6 -0.4 Jul 0.0 -0.2 1470 572 -220 NA -1296Romania 3.2 4.3 2.8 3.8 Jul 1.5 6.7 Jul 7.2 -1.9 Aug 0.1 1.1 799 -5625 -7737 -809 524Serbia 1.0 -2.0 -1.8 13.0 Jul 12.1 1.4 Jul 5.1 2.1 Aug 1.7 2.1 -192 526 -460 -208 -520CIS MENA Russia -4.6 -2.2 0.6 -4.6 Jul -4.8 -25.6 Jun -29.8 15.8 Aug 15.8 7.8 4063 -29062 -129935 28947 15389Ukraine -14.7 -17.2 -6.7 -13.4 Jul -19.9 -35.3 Jun -35.4 52.8 Aug 58.9 12.4 298 2434 -12141 -473 -1540Egypt NA 3.0 4.3 -12.4 Jun -4.8 -25.8 Jun -21.5 7.9 Aug 12.3 10.1 5213 -30 -1113 -4081 -2857m.i. A.E. 1.5 1.0 0.9 1.2 Jun 1.2 12.3 Jun 7.8 0.2 Aug 0.2 0.4

*2Q 2015 GDP is flash estimate; **USD for Russia, Egypt and Ukraine;

Markets and Ratings S/T rates* L/T rates** Foreign exchange (***) Stock market CDS spread Rating 09.09.15 %chg 3M 09.09.15 %chg 3M 09.09.15 %chg 3M %chg1Y %chg 3M %chg 1 09.09.2015 09.06.2015 S&P CEE Vs. EUR Slovakia 0.0 0.0 1.0 -0.4 Euro Euro Euro 3,7 17,0 43 42 A Slovenia 0.0 0.0 1.8 -0.4 Euro Euro Euro -6,7 7,3 104 106 A- Hungary 1.4 -0.1 4.0 0.6 313.2 0.1 1.8 13,3 29,9 137 125 BB+ SEE Albania 2.8 -0.3 n.a. n.a. 139.7 -1.0 0.1 Na Na n.a. n.a. B Bosnia H. n.a. n.a. n.a. n.a. 2.0 Board Board Na Na n.a. n.a. B Croatia 1.2 0.5 4.0 0.7 7.6 0.0 0.0 1,6 -1,2 261 258 BB Romania 1.2 0.2 3.8 -0.2 4.4 -1.1 2.0 5,2 16,9 109 95 BBB-Serbia 5.5 -1.0 n.d. n.d. 120.2 -0.3 4.6 3,0 -19,8 234 230 BB- CSI MENA Vs USD Russia 11,8 -2,1 11,7 1,0 68,8 23,0 58,7 3,4 18,0 328 373 BB+/NUkraine 26,3 -3,1 10,1 -5,1 22,1 4,8 83,2 -3,1 49,2 13957 14259 CCC-Egypt 11,3 0,4 15,4 0,9 7,8 2,6 6,7 -7,1 14,0 312 319 B-m.i. A. E. 0,0 0,0 0,7 -0,3 1,12 -1,2 -16,1 -3,1 18,9 8 8

(*) For Albania, the figure refers to June 2015 and the difference compared to March; (**)For Ukraine, the long-term rate refers to a government issue in dollars; (***) The (-) sign indicates appreciation. Sources: Thomson Reuters-Datastream, Bloomberg

Aggregates and bank rates for the private sector Loans NPL/Loans Foreign Liab. Deposits Loans rate1-NewB. DepositsRate1-NewB. Loans/Dep Rating Chg yoy % % Chg yoy % Chg yoy % % % Sector % % Sector (%) Moody’s 12/14 7/15 12/13 7/15 12/14 7/15 12/14 7/15 12/14 7/15 12/14 7/15 12/14 7/15 BFSR*CEE Slovakia 5.8 6.8 4.9 5.6 42.5 13.3 3.8 8.9 2.91 2.78 Corporates3 1.70 1.38 Househ.3 91 90 C-Slovenia -13.4 -11.4 13.4 11.66 -10.9 -25.5 6.6 4.0 4.99 4.01 Corporates3 0.66 0.31 Househ.3 99 95 EHungary -0.3 -8.4 18.4 15.64 -1.3 2.5 1.3 4.0 4.97 4.11 Corporates 1.64 0.92 Corporates 111 103 D-SEE Albania 2.2 0.86 24.2 20,96 -10.8 -11.66 2.9 1.76 8.19 9.286 All 1.51 1.456 All 56 566 E+Bosnia H. 1.9 1.1 15.1 14,16 -9.1 -6.5 6.4 8.7 5.80 5.84 Corporates 1.26 1.23 Househ. 124 121 NaCroatia -2 -1.6 15.7 17,36 -10.6 -6.3 2.3 1.9 8.38 8.08 Priv.Sect. 2.07 1.75 Priv.Sect. 95 94 NaRomania -3.7 -0.8 21.9 12,8 -14.2 -15.3 8.9 7.9 6.46 5.93 All 1.72 1.13 All 95 97 E+Serbia 4.4 4.0 21.4 22,86 -16.5 -7.8 9.7 6.4 12.6 13.18 Priv.Sect. 6.8 4.84 Priv.Sect. 116 115 NaCIS & MENA Russia 25.4 147 6.0 6.79 38.4 10.77,2 27.9 19.27 18.31 16.027 Corporates 12.29 9.817 Househ. 119 1187 RUkraine 10.9 5.96 12.9 24.36 31.3 22.56 -1.8 1.46 17.38 22.66 Residents5 10.44 15.36 Resid.5 154 1596 EEgypt 12.7 18.07 9.3 8.39 5.0 64.67 16.6 17.17 11.8 11.67 Corporates 7.2 6.87 Househ. 40 41.27 E

Note:1monthly average 2ISP calculations on IMF data 3lending rate on current account overdraft; on deposits up to 1 year 4March 5does not include banks 6June 7May 8loans over EUR 1M 9December *Bank Financial Strength Ratings ranging from E (lowest) to A (highest). NewB.=NewBusiness. Source: Central Banks, IMF, Moody’s

Forecast Note September 2015

Intesa Sanpaolo – Research Department 20

Country Outlook The economy

2012 2013 2014 2015F 2016F 2012 2013 2014 2015F 2016FGDP (% yoy) Inflation (average) CEE CEE Slovakia 1.6 1.4 2.4 3.1 2.8 Slovakia 3.8 1.5 -0.1 -0.2 0.8Slovenia -2.7 -1.1 3.0 2.4 2.1 Slovenia 2.8 1.9 0.4 -0.4 1.2Hungary -1.5 1.5 3.6 2.8 2.2 Hungary 5.7 1.7 -0.2 0.1 2.3Average -0.7 1.1 3.1 2.8 2.4 SEE SEE Albania 2.0 1.9 1.6 1.6 1.7Albania 1.4 1.1 2.1 2.5 2.6 Bosnia Herzegovina 2.1 0.0 -0.9 -0.4 1.4Bosnia Herzegovina -0.9 2.4 1.1 1.8 2.2 Croatia 3.4 2.2 -0.2 -0.1 1.0Croatia -2.2 -1.1 -0.4 0.9 1.5 Romania 3.3 4.0 1.1 -0.5 0.5Romania 0.6 3.4 2.8 3.2 3.0 Serbia 7.3 7.9 2.1 1.5 2.5Serbia -1.0 2.6 -1.8 0.5 1.5 CIS e MENA Average -0.2 2.4 1.4 2.3 2.4 Russia 5.1 6.7 7.8 15.5 9.5CIS Ukraine 0.6 -0.3 12.2 45.0 25.0Russia 3.4 1.3 0.6 -3.5 0.5 Egypt 7.2 9.5 10.1 10.5 9.5Ukraine 0.2 0.0 -6.7 -11.0 1.0 Average 3.0 1.1 -0.3 -4.5 0.6 MENA Egypt 3.2 1.6 4.3 4.0 4.7 Average ISP Subsidiaries 2.3 1.3 0.7 -2.0 1.4

Market

2012 2013 2014 2015F 2016F 2012 2013 2014 2015F 2016FExchange rate (average) Interest rate (average)

CEE CEE Slovakia Slovakia 0.6 0.2 0.2 0.0 -0.1Slovenia Slovenia 0.6 0.2 0.2 0.0 -0.1Hungary 289.3 297.0 308.6 311.0 311.5 Hungary 7.0 4.3 2.4 1.7 1.6SEE SEE Albania 139.1 140.0 140.4 141.0 142.1 Albania 5.2 4.3 3.0 2.5 2.4Bosnia Herzegovina 1.96 1.96 1.96 1.96 1.96 Bosnia Herzegovina n.a. n.a. n.a. n.a. n.a.Croatia 7.52 7.57 7.63 7.61 7.62 Croatia 3.1 1.3 0.7 1.2 1.5Romania 4.45 4.42 4.44 4.44 4.42 Romania 5.1 4.0 2.3 1.2 1.1Serbia 113.1 113.1 117.3 121.3 121.3 Serbia 10.1 11.1 8.8 6.4 4.9CSI MENA CIS MENA Russia (USD) 31.1 31.8 38.6 57.0 64.0 Russia 7.1 7.0 10.6 14.2 10.5Ukraine (USD) 8.1 8.2 12.0 21.6 22.5 Ukraine 20.4 11.4 17.9 25.8 21.5Egypt (USD) 6.1 6.9 7.1 7.7 7.9 Egypt 13.6 12.3 11.2 11.2 10.8

Bank

2012 2013 2014 2015F 2016F 2012 2013 2014 2015F 2016FLoans to private sector (% change yoy) Deposit by private sector (% change yoy) CEE CEE Slovakia 2.7 5.7 6.4 6.0 6.2 Slovakia 6.0 4.3 3.8 5.5 4.5Slovenia -5.5 -17.4 -13.4 -4.0 0.5 Slovenia -1.2 0.0 6.6 3.5 3.8Hungary -12.8 -4.4 -0.3 -10.0 0.0 Hungary -0.9 -1.0 1.3 -1.0 1.0SEE SEE Albania 2.4 -1.2 2.2 -1.0 3.0 Albania 6.3 2.1 2.9 0.5 2.0Bosnia Herzegovina 2.9 2.6 1.9 2.0 2.5 Bosnia Herzegovina 4.4 8.9 6.4 5.2 5.4Croatia -6.9 -1.5 -2.0 -3.2 1.2 Croatia 2.3 4.9 2.3 1.5 2.0Romania 1.6 -3.4 -3.7 0.5 3.0 Romania 4.7 9.3 8.9 2.0 3.5Serbia 9.4 -4.9 4.4 0.5 2.5 Serbia 11.1 3.3 9.7 4.0 4.2CIS CIS Russia 19.6 17.4 25.4 -3.0 2.0 Russia 17.9 16.4 27.9 -2.0 3.0Ukraine 2.2 13.5 10.9 2.2 4.0 Ukraine 15.7 18.5 -1.8 -0.5 3.0MENA MENA Egypt 6.9 7.1 12.7 16.0 15.0 Egypt 12.1 18.3 16.6 16.0 13.0

Source: Intesa Sanpaolo Research Department forecasts

Forecast Note September 2015

Intesa Sanpaolo – Research Department 21

Intesa Sanpaolo Research Department – Head of Research Gregorio De Felice International Research Network Coordination e-mail addressGianluca Salsecci (Head) gianluca.salsecci@intesasanpaolo.com ISP - Research Department (Milan)

Giancarlo Frigoli (CIS, MENA and Lat. Am. Countries) giancarlo.frigoli@intesasanpaolo.comSilvia Guizzo (Emerging Asia) silvia.guizzo@intesasanpaolo.comAntonio Pesce (CEE and SEE Countries) antonio.pesce@intesasanpaolo.comWilma Vergi (Trade and Industry) wilma.vergi@intesasanpaolo.comDavidia Zucchelli (Banks and Financial Markets) davidia.zucchelli@intesasanpaolo.com International Subsidiaries’ Research Departments:

VUB (Slovakia) Zdenko Štefanides (Head) zstefanides@vub.skAndrej Arady aarady@vub.skPBZ (Croatia) and ISP Banka (Bosnia I Hercegovina) Ivana Jovic (Head) ivana.jovic@pbz.hrAna Lokin ana.lokin@pbz.hrCIB (Hungary) Mariann Trippon (Head) trippon.mariann@cib.huSandor Jobbagy jobbagy.sandor@cib.huBanca Intesa (Serbia) Marija Arsic (Head) marija.arsic@bancaintesa.rsGoran Poznanovic goran.poznanovic@bancaintesa.rsAlexbank (Egypt) Emil Eskander (Head) emil.eskander@alexbank.comOmar Mostafa Ismaeil omar.ismaiel@alexbank.comSamer Samy Halim samer.halim@alexbank.com International Subsidiaries’ Research Contacts:

Banka Koper (Slovenia) Nastja Benčič nastja.bencic@banka-koper.siBanca Intesa (Russia) Anna Mokina anna.mokina@bancaintesa.ruIntesa Sanpaolo Bank (Romania) Ancuta Covaci ancuta.covaci@intesasanpaolo.roIntesa Sanpaolo Bank (Albania) Kledi Gjordeni kledi.gjordeni@intesasanpaolobank.al

Analyst Certification and Other Important Information

The financial analysts drafting this report state that the opinions, forecasts, and estimates contained herein are the result of independent and subjective evaluation of the data and information obtained and no part of their compensation has been, is, or will be directly or indirectly linked to the investment strategy recommended or proposed in this report.

This report has been produced by Intesa Sanpaolo S.p.A. The information contained herein has been obtained from sources that Intesa Sanpaolo S.p.A. believes to be reliable, but it is not necessarily complete and its accuracy can in no way be guaranteed. This report has been prepared solely for information and illustrative purposes and is not intended in any way as an offer to enter into a contract or solicit the purchase or sale of any financial product. This report may only be reproduced in whole or in part citing the name Intesa Sanpaolo S.p.A.

This report is not meant as a substitute for the personal judgment of the parties to whom it is addressed. Intesa Sanpaolo S.p.A., its subsidiaries, and/or any other party affiliated with it may act upon or make use of any of the foregoing material and/or any of the information upon which it is based prior to its publication and release to its customers. Intesa Sanpaolo S.p.A., its subsidiaries and/or any party affiliated with it, may from time to time have a long or short position in the aforementioned financial products.