Rectors of AK BARS Bank, PJSC of ______, 2018 Protocol No

Joint-Stock Commercial Bank “AK BARS” (Public Joint-Stock Company) LOGO

APPROVED with a resolution of the Board of Di- rectors of AK BARS Bank, PJSC of ______, 2018 Protocol No. ______

Social Report AK BARS Bank – 2017

Kazan 2018 1

Table of Contents

1. Appeal on behalf of the Bank’s management ...... 3 2. General information on AK BARS Bank ...... 3 3. Principles and structure of the corporate governance ...... 4 4. The Bank’s personnel policy ...... 9 4.1. Socially responsible regulation of the issues of labor and employment ...... 10 4.1.1. The structure of personnel of AK BARS Bank ...... 10 4.1.2. Payment and incentive policy for the labor ...... 11 4.1.3. Intangible motivation of personnel ...... 12 4.1.4. Corporate values ...... 13 4.1.5. Employees’ labor and employment rights ...... 14 4.1.6. General and advanced professional training ...... 14 4.1.7. Social benefits of the Bank’s employees ...... 15 4.2. Quality of working conditions and life of the Bank’s employees ...... 16 4.2.1. Sport, recreation, cultural and recreational activities ...... 17 4.2.2. Support of the elderly and retired ...... 17 5. Work safety ...... 17 6. Socially responsible participation of the Bank in the daily life of the community ...... 18 6.1. Sponsorship and Charity Commission ...... 18 6.2. Assistance to educational institutions and the Banks education programs ...... 19 6.3. Assistance to children with disabilities and children finding themselves in difficult life situations ...... 20 6.4. Social protection for the elderly, assistance to socially vulnerable groups and people with disabilities ...... 21 6.5. Support of social and cultural programs ...... 21 6.6. Support of sports ...... 22 6.7. Environment protection ...... 23 Attachment: Report of the Charity Foundation “AK BARS SOZIDANIE” ...... 24

1. Appeal on behalf of the Bank’s management

Dear friends! I would like to present you with the tenth Social Report of AK BARS Bank and thus inform on large-scale activities of the credit institution in the field of corporate social responsibility and charity. 2017 has become one of the most active years for AK BARS Bank. Step by step, we ap- proached the aims set for the Development Strategy-2021 by striving to be closer to our customers, and not to just know, but to anticipate their needs and wishes. Development of financial technologies, creating new, more functional digital services for individuals and corporate enti- ties, improvement of work mechanisms based on studying big data as well as breakthrough projects in the blockchain technology and conversational banking play an important role in this process. We are convinced that advancing in the field of digitalization serves technological development of the society in general. Our results prove that the path taken by the Bank was correct: as an outcome of 2017, AK BARS Bank increased the net profit and enhanced key financial performances. The new quality level achieved by the Bank, in its turn, provides us with more opportunities to develop fields of the social policy which continuously remains an integral part of operations of the credit institution. In 2017, the Bank preserved all priority fields of the social activities, including acts of kindness in charity, support of talented children and youths, young scientists and developers, promotion of projects in the field of innovations, education, and sports, as well as promotion of the healthy lifestyle. Principles of social responsibility are reflected in the recruitment policy: the Bank ensures good salaries for specialists, social benefits, a quality level of labor organization. Last year, we began to convert labor payments to a grading system, the priority objective of which is to ensure transparency and to bring the salaries of the employees to a just level. We are grateful to the Bank’s employees who participate in charity activities every year, who transfer funds to support the needy on a regular basis, who are committed to a healthy lifestyle, and contribute, within their powers, to the development of the socially responsible business. Corporate social responsibility continuously remains a significant element of the Bank’s work. Every year, by continuing the scrupulous and systematic work in the social field, we contribute what we can to the development and prosperity of the society. Sincerely, Chairman of the Board of Directors of AK BARS Bank V.Yu. Sorokin Chairman of the Management Board of AK BARS Bank Z.F. Garaev

2. General information on AK BARS Bank Joint-Stock Commercial Bank “AK BARS” (Public Joint-Stock Company) was registered with the Central Bank of the Russian Federation and has been successfully working since 1993. AK BARS Bank is a sustainable and socially responsible financial institution. AK BARS Bank is among the largest Russian banks and provides more than 100 types of banking, financial, investment products and services both to corporate and to individual customers. According to the rating of Profile Magazine, as of January 1, 2018, the bank has occupied the 14th position in terms of the capital position, and the 24th position in terms of assets among all the Russian banks. In 2017, the Central Bank of the Russian Federation introduced AK BARS Bank in the list of significant credit institutions in the market of payment services of Russia. Priorities for the Bank are such fields of activities as retail, corporate, and investment business, digital banking, private banking. Among corporate customers, there are large companies of the oil, gas, and petrochemical sector, machine-building, telecommunications, electric power, construction, chemical, automobile transport companies, retail enterprises, agricultural companies, and other institutions. 3

3. Principles and structure of the corporate governance The corporate governance system of AK BARS Bank rests upon an efficient interaction between its management bodies: the General meeting of shareholders, the Board of Directors, the Management Board and the Chairman of the Management Board of the Bank, as well as Committees of the of various levels. The structure of the corporate governance system provides proper balance between all governing bodies, distributes duties, and determines the general oper- ating control performed by shareholders and the Board of Directors, as well as the bank management carried out by the Bank's executive bodies. Governed with interests of shareholders, creditors, customers, business partners, and counterparties, the Bank constantly monitors whether its activities comply with the provisions of the corporate governance code recommended as applicable by the Bank of Russia. At the mo- ment, the Bank is in compliance as significant part of the principles and recommendation of the said code. Thus, in order to determine the corporate governance quality, AK BARS Bank conducts an in-house assessment of the corporate management on an annual basis, which assessment is based on methods recommended by the Bank of Russia, it supervises the course of measures intended to remedy the identified deficiencies. According to results of the assessment held in 2017, the Board of Directors has assessed the corporate management system of the Bank as satis- factory to standards of the corporate governance. For their activities, the Bank also adheres to principles of the “Corporate Governance Code of AK BARS Bank” approved by the Board of Directors of the Bank in (as amended on November 13, 2015). The Corporate Governance Code is an internal regulatory document defin- ing the basic principles, rules and standards of the corporate governance the Bank relies on in the process of their activities, and also governs the following fields: defense of interests of shareholders of the Bank, arrangement of activities of the Board of Directors and executive bodies, exercise of the strategic management, coordination of the risk management, and arrangement of the internal control, prevention and settlement of clashes of interests, and disclosure of information. The process of development and improvement of the corporate governance in accordance with the Corporate Governance Code recommended as applicable by the Bank of Russia will further continue in AK BARS Bank too, and will include the outcomes of analysis of opportunities for application of new practices.

Shareholders, capital structure The General meeting of shareholders is the supreme management body of AK BARS Bank that makes decisions on major matters of its activities. The Bank ensures and equal and fair treatment for all shareholders when exercising their right to participate in the management. The owners of the Bank exercise their rights related to the banking management by means of making decisions in General meetings of shareholders. Holding the General meetings of shareholders provides the Bank with opportunities to inform the shareholders of its activities, achievements and plans not less than once a year, to invite them to discuss and to make decisions on critical matters of the activities. The Bank guarantees the right for a scheduled and timely delivery of the information on its activities for the shareholders in the scope sufficient for them to make knowledgeable and jus- tified decisions for disposal of their shares. In order to properly observe and protect such right, AK BARS Bank is committed to unconditionally abide by requirements for the disclosure of information established with the Russian law. Moreover, in order to inform the parties concerned of its activities in a more complete way, the Bank discloses additional information on its activities on a voluntary basis. In 2017, AK BARS Bank held three General meetings of shareholders (one annual meeting and two extraordinary meetings). At the meetings, matters were considered as related to an increase of the authorized capital of the Bank, approval of annual accounts, distribution of prof- 4 its, payment of dividends, approval of a new edition of the Articles of Association, introduction of amendments to internal documents of the Bank, etc. Additionally, the Auditor of the Bank was approved at the annual General meeting; a new Board of Directors and the Auditing Com- mission were elected. The observance of resolutions of the General meeting of shareholders was under a continuous supervision and was governed by executive bodies of the Bank. The relations between the Bank and its shareholders are based on principles of a direct constructive dialogue, based on an unconditional observance of the Russian law and the maximum compliance with international standards. The positions of owners of the Bank on all major matters of activities of the Bank are reconciled by means participation of their representative of the work of the Board of Directors and the General meetings of shareholders. As of December 31, 2017, the authorized capital of AK BARS Bank amounted to 48,015,396,326 Russian Rubles divided in 48,015,396,326 shares. All the shares of the Bank are ordinary registered shares issued in the book-entry form and having the par value of 1 (One) Russian Ruble each. All the shares have been placed. The authorized capital of the Bank has been paid in full. In accordance with the Articles of Association, the limit value of declared ordinary registered shares AK BARS Bank is authorized to place additionally to the shares already in circula- tion is 20,000,000, 000 shares with the nominal value of 1 (One) Russian Ruble each. As of 31 December 2017, AK BARS Bank has not placed any preferred shares. One of the significant corporate events in the activities of AK BARS Bank in 2017 was an increase of the authorized capital by means of placing additional registered ordinary shares in the book-entry form for the amount of 10 Billion Russian Rubles, due to which significant changes occurred in the composition of shareholders of the Bank: a share of the Public Joint- stock Company Tatneft n.a. D.V.Shahin appeared in the structure of the authorized capital of в Bank and amounted to 10.413% of the authorized capital; to add to the above, an additional package of shares was acquired by the Joint-stock Company Svyazinvestheftekhim, whose share amounted to 13.610% after the procedure of the increase of the authorized capital of the Bank. In accordance with the applicable Russian law, owners of the Bank exercised their right to freely dispose of the shares owned by them in 2017. The information on the owners of the Bank, as well as on the structure and degree of participation of the Bank’s shareholders holding no less than 1 per cent of its authorized capital can be found on the website of the Bank of Russia, as well as on the official website of AK BARS Bank on the Internet. The Bank’s ownership structure presented on these Internet sites as a diagram of interaction and the list of persons who can control or significantly influence the Bank contains the information on the largest shareholders owning the shares of the Bank and is accessible to an indefinite quantity of persons. The information on changes in the composition of shareholders owning 5 or more percent of voting shares of the Bank in published in the information resource updated in real time and delivered by Interfax information agency in the form of messages on significant facts and insider information.

Structure of the entity capital of AK BARS Bank upon results of 2017: Name of the shareholder Share in the authorized capital (%)

Non-profit organization “State housing foundation under the President of the Republic of Tatarstan” 20.410

Republic of Tatarstan represented by the Ministry of land and property relations of the Republic of Tatarstan 19.789

Joint-stock Company Svyazinvestneftekhim 13.610

Public Joint-stock Company Tatneft n.a. V.D. Shashin 10.413

OSMAND HOLDINGS LIMITED 6.823

Joint-stock Company YUL Company 6.778

Limited Liability Company “X-Ray” 6.406

Sinek Investment & Development Limited 5.414

Non-profit Organization Regional Foundation for Social and Economic Development TUGAN IL 5.262

Limited Liability Company “Eurobest” 3.598

Public Joint-stock Company Nizhnekamskneftekhim 1.458

Shareholders owning less than 1% of the authorized capital 0,039

Total: 100

Activities of the Board of Directors and its Committees

In May 2017, the Annual meeting of shareholders approved a new composition of the Board of Directors in the number of 12 persons. At their first meeting, they elected Valery Yurievich Sorokin as the Chairman of the Board of Directors. He is a representative of one of the Bank's largest shareholders – JSC “Svyazinvestneftekhim”.

The current composition of the Board of Directors is balanced in term of structure, which enables the Board members to carry out their duties efficiently. According to results of assessment of compliance of the members of the Board of Directors of AK BARS Bank with inde- pendence criteria, which assessment was held in July 2017, three persons from the elected composition of the Board of Directors are independent directors (N.G.Avanesyan, Yu.L.Levin, S.V.Shibayev) and heads of specialized Committees under the Board of Directors. All members of the Board of Directors comply with legal, personal and professional requirements established in legal acts of the Russian Federation, the Bank of Russia, the Articles of Association, and internal documents of the Bank, they possess sufficient knowledge and experience in the fields corresponding to major fields of activities of AK BARS Bank. Meeting of the Board of Directors during the reporting year were held in accordance with approved plans. All matters provided for with the plans were considered within the established time. During 2017, nine meetings of the Board of Directors in presentio and seven meetings in absentia were held, including one extraordinary meeting in presentio and three extraordinary

6 meetings in absentia not provided for with the work plan. In total, more than 100 matters were considered during the meetings. During the reporting period, the Board of Directors actively exercised their duties to re- solve matters of the business strategy and the risk and capital management strategy, financial stability and corporate governance, appointment and termination of authorities of members of the Managing Board, performed an efficient control over activities of executive bodies, took care of observance of interests of shareholders in the context of all operations of the Bank, etc. In December 2016, the Board of Directors approved the budget of AK BARS Bank for the year 2017, while during 2017, they regularly (on a quarterly basis) heard reports of the Manag- ing Board on the progress of its implementation. During meetings of the Board, reports of the Internal Audit Service and the Internal Control Service were also heard continuously regarding results of audits of the activities of the Bank, reports of the Inspector of AK BARS Bank as a professional player in the securities market on the work done. In December 2016, the Board of Directors approved a middle-term development strategy for AK BARS Bank for the years 2016 – 2021, and continuously supervised the progress of its implementation during the reporting year. Much attention was paid by the Board of Directors to improvement of internal documents of the Bank in the field of risk management and the employment policy during the reporting year. Support of legislative initiatives in the field of corporate governance is another integral part of work of the Board of Directors, who is constantly committed for continued improvement of the corporate governance practices, as they regarded the above approach as a foundation of future successes of the Bank in the increase of its internal efficiency and outside competitiveness. Thus, in 2017, the Board of Directors adopted amendments and approved new editions of the following provisions meeting advanced corporate governance practices: “On the General meeting of shareholders of the Joint-stock Commercial Bank AK BARS (Public Joint-stock Compa- ny)”, “On procedure for preparation and holding of meetings of the Board of Directors of the Joint-stock Commercial Bank AK BARS (Public Joint-stock Company)”, “On the Board of Di- rectors of the Public Joint-stock Company AK Bars Bank”, “On the Managing Board of the Pub- lic Joint-stock Company AK Bars Bank”, “On the procedure of distribution of profits of the Pub- lic Joint-stock Company AK Bars Bank”, “On the Audit Committee of the Board of Directors of the Public Joint-stock Company AK Bars Bank”.

Committees of the Board of Directors In 2017, specialized committees of the Board of Directors continued their active work, which committees interacted closely to managing and control bodies of the Bank, auditors and consultants within their competence.

 The Audit Committee Most attention of the Audit Committee was focused on implementation of the measures intended for a better efficiency of the internal control system, as well as on exercise of control for truthfulness and completeness of drawing the Bank’s financial statements. The Committee regularly reviewed the Bank's financial statements compiled in accordance with the Russian and international standards, analyzed the audit results and discussed activity plans on elimination of auditors’ remarks. The members of the Committee also discussed the traditional matter of organizing and holding a tender for choosing audit companies authorized to carry out an annual audit for the Bank in accordance with the Russian Accounting Standards and International Financial Report- ing Standards, and gave recommendations to the Board of Directors regarding the nominees for appointment as auditors of the Bank. A significant portion of issues considered at meetings during the reporting period was dedicated to improvement of the internal audit system and a better efficiency of operation of the Internal Audit Service of the Bank. 7

During the reporting period, the Audit Committee paid a special attention to the matter of introduction of the new International Financial Reporting Standards-9 in the Bank from 01.01.2018. As an outcome of 2017, the Audit Committee performed a self-assessment of its activities, in the course of which the following aspects were analyzed: exercise of the Committee’s functions, objectives, and purposes; work procedure for the Committee and activity of members during meetings; composition of the Committee and efficiency of its members. The members of the Committee are given recommendations and wishes regarding the better efficiency of the Committee’s work.

 The Committee for Personnel and Remuneration In 2017, the activities of the Committee for Personnel and Remuneration were focused on transforming the organizational structure of the Bank within the framework of applying complex measures to increase efficiency of activities of divisions, as well as on monitoring of an extraordinary staff turnover at the top management, higher and middle management levels. To add to the above, during the reporting period, the Committee supervised the progress of implementation of the Bank’s development strategy in terms of the labor compensation, the “Personnel Reserve” project, considered the information on outcomes of performance of the work plan for translation of corporate values of the Bank, on the performance of individual development plans for members of the Managing Board, and discussed key performances of their efficiency. In November 2017, upon an initiative of the Ministry of land and property relations of the Republic of Tatarstan, the Committee regarded the matter of increase of the labor efficiency and creation of high-performance jobs. The following were the results of the consideration: harmoni- zation and optimization of banking processes; centralization of operations and support functions; increase of the qualification level of employees; exchange of best practices and introduction of a corporate system for the work with innovations. At the end of the year, the members of the Committee considered proposition for generation of the budget for the personnel costs for 2018, which costs were recommended to be included in the budget of the Bank.

 The Risk Committee

During the reporting year, the Risk Committee focused on matters critical for the development of the Bank, which matters included analysis and control of risks, improvement of management systems for various types of banking risks, better quality and standards of the corporate management applicable to the risk management and mitigation of the general level of the banking risks.

The following issues constituted the agenda of meeting of the Risk Committee: capital ad- equacy, including development of ICAAP system. One of the priority fields of work of the Risk Committee in 2017 was the issue of the approach to building the aggregate risk appetite based on the economic capital. The Risk Committee paid much attention to the matter of implementation of Instructions of the Central Bank of the Russian Federation No. 3624-U of 15.04.2015 “On requirements for the management system for risks and capital of the credit institution and the banking group” in the Bank’s operations. Thus, as a part of the implementation of the regulator’s demands, the Committee provided consultancy assistance for development of the application form for risk ap- petites and reports according to ICAAP.

Moreover, the Committee delivered a weighty contribution in the work for improvement of the Bank’s internal documents governing requirements for the management system for risks and capital of the Bank and the banking group. Such documents were recommended by the Committee to be approved, and were actually approved later by the Board of Directors. In terms of implementation of recommendations of the Corporate Governance Code, the Risk Committee performed a self-assessment for its activities based on the outcomes of 2017. In the course of such self-assessment, recommendations and wishes were stated for a better efficiency of the work of the Committee.

 The Strategy Committee During the reporting period, the focus of attention of the members of the Strategy Com- mittee was on the process of transformation of the Bank intended for a successful implementation of the adopted middle-term Development Strategy of AK BARS Bank for the years 2016 – 2021, where the key development vector of the Bank is stated – to become an advanced, digital, customer-oriented, profitable, and partner-like financial institution. The Strategy Committee supervised the progress of implementations of initiatives under the priority fields of business set for 2017 – corporate, retail, and investment business units. To add to the above, members of strategic sessions discussed the status of implemented projects and problems arising in the course of the implementation of the strategy, they considered proposals for reconsideration of composition of the strategic initiatives and correction of the adopted development strategy. The members of the Committee continued to monitor the implementation of the major fields of development of AK BARS Bank on a quarterly basis based on financial results of the activities, they listened to a comparative analysis of the operation efficiency of the Bank compared to competing banks several times. At the end of the year, the members of the Committee considered the budget of AK BARS Bank for 2018 and recommended the same to be approved by the Board of Directors. The Committee also approved of the key objectives and measures for development of the retail, corporate, and investment business units, they considered the issue development of the digital banking platform in AK BARS Bank. The following issues were also included in the agenda: on key objectives of structural divisions supervised by each of the members of the Man- aging Board; on trends in the monetary policy of the Central Bank of the Russian Federation; on recommendations for the amount of dividends on shares of the Bank, and the procedure for their payment, etc. In 2017, the Strategy Committee performed a self-assessment of their activities. The following were analyzed in the course of such self-assessment: work efficiency, fulfilment of aims and objectives set and governed with regulatory documents of the Russian Federation and the Bank’s internal documents.

4. The Bank’s personnel policy The structure and quality of human resources, qualification and professionalism of employees have a decisive influence on the Bank's effectiveness and efficiency. The main effort in the personnel policy is aimed at recruitment and development of the staff, the increase in the staff’s interest in results of work through effective systems of individual motivation. The main mission of the corporate culture is to turn employees into a team of like-minded fellows. It is the corporate culture that turns a collective into a team, unites with common values and goals, and promotes mutual assistance and support. Involvement of employees is one of the main evidences of a successful corporate culture. An involved employee does not stay away from processes taking place in the organization, they are willing to be initiative and to suggest new solutions. The interest in the work is increased due to opportunities of self-actualization, comfortable working conditions, incentives for ideas proposed. It is important to continuously translate the collective mission and values of the organization. 9

AK BARS Bank is undergoing a process of transformation of the corporate culture. In May 2017, ECOPSY Consulting company performed an assessment of involvement of employees in activities of the Bank as the employer. In 2018, a goal is set to increase the involvement performance of employees by 10%.

4.1. Socially responsible regulation of issues of labor and employment The Bank considers the system of payment for its employees as one of the basic elements of the proactive personnel policy targeted at supporting the realization of the Bank’s strategic and business aims. The Bank tends to realize a fair and transparent system of labor compensation which: – rewards and encourages the employees for their labor in accordance with their skills, efforts and time spent; – objective and clear for the employees of the Bank; – provides the Bank’s employee with the harmony of ethical and material values; – motivates each employee to reach high personal goals and effective teamwork; – provides a compliance of the amount of remuneration of the Bank’s employees with the position occupied, the level and composition of risks assumed, efficiency performances of the activities, and financial outcome of activities of the Bank. In the normative document “Remuneration system policy for the employees of the Joint- Stock Commercial Bank “AK BARS”, the main principles and components of the remuneration system are determined. AK BARS Bank takes care of the well-being and social security of the employees and their families. In the system of socially responsible regulations of labor-related questions and employment, the Bank is led by its experience as well as by international standards in the field of corporate social responsibility. The social policy of AK BARS Bank is executed in accordance with the approved regulatory document – Regulations for social support of the Public Joint-stock Company AK BARS Bank, where the order and amount of financial aid and social support payments are stipulated.

4.1.1. The structure of personnel of AK BARS Bank The average headcount of the Bank’s staff as of 01.01.2018 constituted 5,292 people, at that, the share of workers of the territorial network was 53.10%, 12.68% for the Shared Service Center, and 34.22% for the Head Office.

The Bank conducts the policy of hiring young professionals and graduates, collaborating with relevant institutions throughout Russia, and this is reflected in the age composition of the staff. In 2017, the number of employees under 29 years was 37% of the total number of the Bank’s employees. The people aged under 39 years constitute 35% of the personnel of the Bank.

Under 29 30 to 39 40 to 49 50 to 59 Over 60 years years years years years

The gender composition of the staff remained unchanged, and its main share of employees is represented by females (77%).

Distribution of the Bank’s staff by gender

males females

4.1.2. Payment and incentive policy for the labor The Bank employs an incentive system based on individual performance of the employee and/or results of the structural division. The work performance of the employees is measured with key indices of efficiency or points in accordance with Calculation methods for bonus payments for outcomes of activities. In 2017, the list of bonus payments was expanded, and the following items were added:  bonus for performing critical or especially complicated tasks;  bonus for project activities;  bonus for business initiatives (“Bank of Ideas”);  bonus for referral recruitment. 4.1.3. Intangible motivation of personnel

The intangible motivation of personnel is a powerful incentive to work effectively and one of the key components of the corporate culture. Corporate events held in the framework of the development and maintenance of the corporate culture, unite the staff, help to create a positive atmosphere in the company and strengthen the team spirit. They turn a collective into a team, unite with common values and promote mutual assistance and support. One of the major factors of non-material motivation in the Bank is the promotion and appreciation of employees’ merits. In 2017, 90 employees of the Head Office and the branch network were rewarded for long-term and fruitful work, as well as for their contribution to the solution of professional tasks. In order to arrange a uniformly efficient interaction with all the collective, a unified information environment was created, a range of tools was implemented. The Bank questioned the employees on what information, and through which communication channels, they would like to receive. Upon the results of the questionnaire, the employees have received weekly news and information bulletins via the corporate mail. The news are also available through the mobile application AkBars Life developed in 2017. In the application, one can read the latest news regarding the life of the Bank, receive information of training programs, learn about corporate benefits or bonuses. In October 2017, the session “Future begins today” took place, where the management and the Chairman of the Managing Board of AK BARS Bank discussed the Development Strate- gy of the Bank till 2021. Later, heads of departments, directorates and divisions met their employees and told them of the Strategy. As a result of the Session, a book was published compiled of the best essays of its participants - “The changing world: Strategy of AK BARS Bank. Writ- ing. Telling. Implementing.». The book included about 60 essays, while about 100 works had been submitted. Twelve teams from territorial divisions of the Bank participated in the all-bank environmental even “Make the planet better!”. Thirty-one employees took part in the “Immortal Regi- ment” event. Along with their families, the employees marched the main streets of Kazan carry- ing portraits of their veterans. As a part of the “Relay of Kindness”, employees of territorial divisions of the Bank committed good deeds by providing assistance and support to children and elderly people. By the Bank’s birthday, the first issues of the corporate newspaper “Changing World” were published. The newspaper was published electronically in the corporate web-portal and was sent as hardcopy to territorial divisions. A library of ready solutions for involvement was developed for managers. In November 2017, the first “Call-in Show” featuring the Chairman of the Managing Board of the Bank Zufar Garaev took place. Employees of the Bank got an opportunity to ask their questions both personally and in writing. The event was broadcasted all over the Bank. The Bank paid its share of attention to professional skill contests too. In 2017, contests for the best branch, the best division, the best corporate customer manager, the best small business development manager were held. The contests “Valuable Fellow”, “Breakthrough in Credit- ing” were organized for employees of the retail unit of the branch network. To add to the above, contests for the best manager of the sales office, the best employee in the customers’ opinion were held. The Bank carried out the photography project “Present-day Hero”, where short stories of outstanding qualities of men, achievements, or every-day feats of employees of the Bank in Ta- tarstan and in other regions of Russia were featured. The photography contest “I’m a Woman, I’m a Goddess” was dedicated to the 8th of March. As a part of the event “Hero of the Week”, interviews with employees of the Bank were published in the corporate web-portal of the Bank on a weekly basis, which employees reposted official pages of AK BARS Bank in social net- works the most. The event “See Who We Are!” continued: employees told of their collectives and of how their motto finds its way to their every-day activities.

The intangible motivation is also represented as a system of compensations and benefits. Among the possible formats, there is a system of discounts for purchase of certain goods or services (for instance, training, mobile communications, parking, services by counterparties of the company), as well as certificates of coupons. In December 2017, the poll “What the people want?” was arranged at the corporate web-portal for employees of the Bank. Employees of three offices – at 1 Dekabristov St., 11 Chistopolskaya St., and 22a Orenburgsky Trakt St., reported what services that would like to receive at their workstations. A free dress-code is introduced at the Bank. If an employee is not contacting with customers or is not at an official event, they can dress casually for work. Children of the Bank’s employees get their good share of attention too. In November, results of the children’s creative competition “Our home is planet Earth” were finalized. In total the competition was attended by 256 employees’ children aged 4 to 12 years. All the participants were awarded. For many years, the Bank participated in various charity events. In 2017, employees participated in events by the charity foundation AK BARS SOZIDANIE to support little patients.

4.1.4. Corporate values The mission of AK BARS Bank is defined as follows: “Today and always, we create opportunities for achieving our customers’ and partners’ goals”. The contents of the mission reflect the proactivity of the Bank and provision of various opportunities for the business development and multiplication of capitals of our partners and customers. The vision of the Bank: “The bank that continuously strives for the better along with customers and partners”. Such formula demonstrates the Bank’s willingness to make the cooperation with customers valuable for both parties. Values of the Bank for employees: the courage to do something new, responsibility for the result and quality, customer-orientation, team spirit. Values of the Bank for customers: innovativeness, beauty and simplicity of solutions, friendliness. The customer is one of the most important elements of the strategy. Understanding the customer’s needs is the base of operation of any contemporary bank. Common corporate values are something that creates trust and unites the organization as one. The Bank has developed a model of Corporate Competences. A team of the youth movement developed a design and mottos to support the corporate values. The contest “The Bank’s values in my work” was held for employees of AK BARS Bank. In their essays, the employees described how the Bank’s values manifest in their work, help to develop, and serve as landmarks. In total, more than 100 works were submitted for the contest. Publications were prepared at the corporate web-portal regarding the corporate competences, social benefits for the employees, initiation of a voluntary medical insurance program, discounts available with partners of the Bank.

4.1.5. Employees’ labor and employment rights The Bank's activities are aimed at ensuring equality of rights and opportunities for all workers in the workplace and at prevention of any forms of discrimination and forced labor, promote professional and personal development for its employees. These principles are reflected

13 in the local regulations of the Bank in the sphere of personnel management, which shall be adopted in accordance with the requirements of international and Russian legislation. In accordance with the Regulation on personnel recruitment the Bank complies with equal rights and opportunities for job candidates when considering applications and when hiring them. Other local regulations are responsible for the equality of labor rights and freedoms of the individual during the procedure of evaluation, promotion, remuneration and training of employees.

4.1.6. General and advanced professional training In this field, a comprehensive training plan encompassing all categories of the personnel and containing adaptive training, advanced training programs, development of business qualities, corporate and managerial competences, as well as training for standards of customer servicing are carried out on an annual basis. In 2017, the new software for the Bank – WebTutor – was implemented. In order to implement the Bank’s Strategy and to improve the qualification level of employees in accordance with current and future demands of the business, the Bank has developed a continuous training system for constant update of theoretical and practical knowledge of managers and entry-level employees alike. The training system includes the following:  participation of employees of the Head Office and the Shared Service Center (SSC) in external training: professional programs, seminars (webinars), forums, conferences;  internal training of employees of the Head Office, SSC, and the branch network in skill- and product-oriented training by efforts of business trainers of the Training Center;  training of employees of the territorial network as a part of strategic sessions (involving external education service providers in the corporate format);  internal training in the format of the knowledge translation from experts of divisions of the Bank to other employees of the Head Office, SSC, and the territorial network;  remote training and testing of employees within the remote training system.

The fields of training and the advisability of the training programs are selected and defined in accordance with the following: • the syllabus for the employees of the Bank for 2017 that is approved by the corresponding departments; • training matrices for mass positions and the Catalogue of programs for mass positions; • amendments in the legislative acts, the Bank's internal business processes and products; • demands of business units of the Bank in accordance with strategic goals of the units. The training and personal development programs in 2017 encompassed all structural divisions of the Bank: employees of the territorial network, SSC, and the Head Office. During the year 2017, more than 9,000 people were trained, out of which, as a part of training of the branch network, the adaptive training was delivered to 301 newly-enrolled employees, personal training (skill-based, product-based, regulative, ABS training) was delivered to 4,647 employees, webi- nar training (product-based, regulative, ABS training) involved 4,593 employees. As a part of training of employees of the Head Office and SSC, Welcome-trainings were delivered to 460 newly-enrolled employees, training was arranged under the program “School for the Underwriter”, and “School for the Verifier” for 35 new employees; trainings took place held by external providers and by efforts of the HR Department, which trainings were attended by 769 employees.

Training Center of the Bank The main change in 2017, in terms of the internal training, was implementation of a new training system based on mandatory training matrices for employees of mass positions – the list

14 of training programs envisaged for a particular position of the employee generated based on the profile of the position and the Catalogue of training programs. In total, there are more than 30 programs contained in the Catalogue of internal programs that aim on a comprehensive development of employees, including development of soft skills, managerial competences, and active sales skills, and each program is also intended for development of corporate competences with employees of the Bank. As a part of the new training form “Opened trainings”, employees of the Head Office and SSC got an opportunity to participate in any training of their interest: “Emotional intellect”, “Serotonin. The leader’s hormone”, “The time of the first. Introduction. Business simulation”, “Tasty sales”, etc. Within the 4 quarters of 2017 only, the trainings were attended by 1,013 employees of the Head Office and SSC. The main technical innovation was implementation of the new remote training portal my.akbars.ru. The portal features many capabilities compared to the earlier version, a contemporary interface in style of the Bank’s BrandBook, it has convenient tools for the information search, distributions of notifications to employees, and other useful services. All employees of the Bank got an opportunity to download the Application AK BARS Life to their mobile phones, which application enables newly enrolled employees to obtain information on a timely basis, to familiarize themselves with the Catalogue of training programs, as well as with the training schedule in the Bank’s Training Center. In 2017, the HR partnership has continued to develop, which helps the business to fulfil objectives by developing the personnel. The functionality of the position of the HR partner includes participation in all meetings of the branch, assistance for selection of personnel, assistance for development and control of fulfilment of the plan of measures aimed for achieving key performances for efficiency of the retail or corporate business, etc.

Innovative technologies in training Due to an increased scope of personal training in Q4 of 2017, an assessment of the training efficiency was implemented, which includes the following:  assessment of the training system as a whole;  assessment of proficiency business coaches of the Training Center of the Bank;  assessment of efficiency of certain programs. In order to improve the efficiency of the delivered training programs, managers of all structural divisions of the Bank maintain conditions so that the knowledge and skills obtained by the employee in the course of the training are demanded and applicable at their jobs.

Engagement of young specialists In 2017, the Personal assessment and development department actively worked with higher education institutions as a part of generation of the “External personnel pool”. The target audience for generating the Personnel pool was students of the final years of the higher education institutions of Kazan. The “External personnel pool” included students that have been invited and successfully passed the internship in divisions of the Bank. The students, the most efficient upon results of the internship, were given proposals for employment.

4.1.7. Social benefits for the Bank’s employees The most important part of the social policies of the Bank is the support that is given to employees. Social benefits are applicable to all the employees of the head office and regional affiliates of the bank, regardless of the position that they occupy the status and work experience. The corporate social benefits for the bank employees are divided into social packages and business benefits.

The social packages are related to the kind of benefits that help the employee save personal means, time, and efforts. The senior managers of the bank care about its employees and provide support to their families giving the employee a social package. In 2017 the bank employees were given the following types of social packages: material assistance and social support: • to people lawfully married for the first time; • to people giving birth to (adopting) children; • monthly payments to mothers on maternity leaves – employees of the Bank having children aged 1.5 to 3 years; • to those whose close relatives (parents, children, spouses) have passed away; • to those who have an anniversary; • to those who retire due to old age; • upon a decision of the committee for social matters; • material assistance to relatives of an employee in case of their death; • fee reimbursement for tickets to children’s summer camps; • fee reimbursement for “Mother and Child” tickets. Discount programs mean provision of the Bank’s employees with preferential conditions for use of products or services of the Bank or partner companies of the Bank. Provision of the discount programs enables the Bank’s employees to use the Bank’s products and services, or those of partner companies, on favorable terms. The Bank’s loyalty programs constantly develop and are provided by the Bank on the most demanded types of banking services: crediting (mortgage lending, consumer lending, car purchase lending, crediting on accounts of banking cards), teller services, other products and services. The loyalty programs by the Bank’s partner companies enable the Bank’s employees to purchase their products and services on beneficial terms. Business benefits are the kind of benefits that are granted to certain categories of bank employees and when and where appropriate. This kind of benefits includes the following: • centralized provision of a company vehicle and reimbursement of taxi fees for those who work at night; • reimbursement of cell phone expenses; • the organization of trainings, professional trainings, and advanced professional trainings, including external education (seminars, courses, conferences, educational programs, intern- ships, President's educational program, MBA) and internal education of the Bank. Thus, well planned and correctly organized social system lets easily regulate the questions of employees' labor and employees' life. Another purpose is to create high-quality and loyal personnel.

4.2. Quality of working conditions and life of the Bank’s employees In order to create high-quality labor conditions, the conditions under which each of the employees works should be perfect and meet the needs of employees. A modernized and comfortable working place increases performance and develops the potential of each employee. The Bank meets all the requirements to the working place, including when a new point of presence is opened. Moreover, the Bank works out the internal work regulations that must be followed at work by the personnel. They determine the process of hiring and elimination of the employee, main rights and responsibilities, work schedule, break schedule, bonus and penalty system, and other questions regulating work relations.

4.2.1. Sport, recreation, cultural and recreational activities One of the key to the company’s success is well-organized corporate leisure-time activities. Holidays spent together help to bring staff together, provide personnel with an opportunity 16 to get to know each other better, find common interests and sometimes to show themselves in unusual situations. This is an excellent way to create favorable environment within the team, to help staff to reduce stress and relax. AK BARS Bank welcomes team sports. It holds tournaments in such types of sport as volleyball and football, which especially help to unite the members of the team, teach them to act together. The employees are also provided with opportunities to acquire season passes for fitness centers with a discount. In 2017, the team of AK BARS Bank participated in the Kazan Marathon-2017, the Ka- zan National Half-marathon, the Kama Half-marathon, in the “Night-time Kazan” race. Throughout the year, teams of the Bank participated in sports events, for instance, “Rus- sian Ski Run”, and “Cross of Nations”. In December 2017, the family sports event “AK BARS go ahead in the New Year!” in Gorki-Ometyevo Woods, where employees of the Bank and their family members participated.

4.2.2. Support of the elderly and retired AK BARS Bank, as a socially responsible organization, takes into account the socially vulnerable position of non-working pensioners and pursues a policy of social support for its re- tirees by implementing a systematic program of assistance. As a gratitude for their work our pensioners have been receiving special payments from the Bank during the entire 2017 to key anni- versaries and to the occasion of retirement. On the Day for the Elderly non-working pensioners met as a part of the long tradition at a gala event with a tea reception and the presentation of gifts.

5. Work safety Labor conditions produce a great effect on the effectiveness and economic results of the work of organizations of any form of ownership. The personnel's health as the main productive force, their level of life and their personal development depend on how the work safety policy is organized. The Joint-stock company AK BARS Bank sets its goals in the area of work safety that are crucial for the personnel's health and lifestyle. To continuously improve the work safety, the AK BARS Bank seeks to meet international standards: of OHSAS 18001: 2007 "Management Systems of Health and Safety of Labor. Re- quirements”, OHSAS 18002: 2008 "Management Systems of Health and Safety of Labor. Guid- ance on the application of OHSAS 18001: 2007, the requirements of the federal laws of the Rus- sian Federation and other normative legal acts. Local documents of the Bank regulate many processes and measures for the work safety, such as provision of safety of employees in the course of operation of buildings and structures, training and tests of knowledge in the field of the work safety of the employees, the procedure of holding medical examinations of the employees, provision with special clothes, special footwear, and other individual protective equipment, as well as washing and/or antiseptic substances free for all the personnel. Annually, the Bank conducts planning and financing of the events in work safety. The labor inspections are conducted, and inspectors check if sanitary regulations are followed, and if anti-epidemic (preventive) measures are taken, and special assessment of the working conditions are performed. Thus, a special assessment of the working conditions was held in more than 700 workstations. The Bank has signed an agreement with “AK BARS MEDICINE” so that a health center was available in the head office of the Bank. The health center provides emergency health care, examination and consultancy, and some medical procedures. Every day, drivers can have depar- ture and arrival checks. In 2017, 206 people underwent regular check-ups. Sanitary points at the health centre serve as emergency points so that employees can be helped on time. These activities let the doctors evaluate the employees' health state and give a diagnosis on time.

All employees of the Bank receive training in work safety and an examination in requirements to work safety in due time and in accordance with the procedure determined by the corresponding legislation of the Russian Federation. All newly-enrolled employees, irrespective of their education, work experience in a particular job or position, receive introductory briefings using the training film “Introductory briefing for the work safety”. Effectiveness of these events in the prevention of traumas at work was proved by the fact that no accidents took place at the workplaces during the reporting period.

6. Socially responsible participation of the Bank in the daily life of the community AK BARS Bank is active in terms of charity activities on a large scale. There is a Spon- sorship and Charity Committee created in the Bank, which committee provides material assistance along with the Charity Foundation AK BARS SOZIDANIE to the people in need of help: orphans and children without the parent’s support, poor and many-child families, war and labor veterans, pensioners. The charity projects of the Bank are targeted.

6.1. Sponsorship and Charity Committee The Sponsorship and Charity Committee of AK BARS Bank (hereinafter – Committee) was created 15 years ago for efficient and systematic charity activities. In 2017, the Bank received thousands of letters requesting support, both from Tatarstan and from other parts of Rus- sia. Decisions on providing the material assistance is a complicated moral dilemma calling for a collective consideration and a quorum of a majority of votes of the Committee members present at meetings of the Committee. The meetings are convened not less than once a month, the obser- vation of the decisions made is supervised by the secretary of the Committee who does not participate in the voting. Activities of the Committee are based on understanding of principles of the social responsibility that the business faces, which is an integral part of the corporate culture of AK BARS Bank. The moral duty to the older generation, to war veterans, responsibility for the younger generation – children and youths, compassion to people being in a difficult situation are the elements that underlie the regular work in the field of charity. The Committee is composed of the Head of Corporate Communications Directorate – Communications Director of the Directorate of Strategic Development and Corporate Communi- cations, Head of the Department of Regional Development of the Directorate of the regional business and legal support of the branch network. The Chairman of the Committee is the Deputy Chairman of the Managing Board of AK BARS Bank I.E.Gubaidullin. In 2017, the Bank considered 577 applications from organizations and individuals from various regions of Russia, 96 of them received a positive response (17%).

6.2. Assistance to the educational institutions and education programs of the Bank Traditionally, one of the most important fields of the charity activities of AK BARS Bank are various educational programs.

In cooperation with the Nizhnekamsk branch of AK BARS Bank, funds were allocated for purchase of special equipment for the music class in the State Budgetary Educational Institu- tion “Nizhnekamsk Boarding School for Children with Disabilities”. In 2017, the Bank, as usual, supported the Foundation for development of legal education in the Kazan (Volga Region) Federal University by compensating a portion of expenses for holding the International Research-to-practice Conference and arrangement of a trip of students – winners of international contests for the legal consultation to Great Britain. 18

Assistance was provided to Karatun High School in Apastovsky District of Tatarstan for purchase of equipment, to the kindergarten No. 164 for purchase of educating toys for its boarders. During the reporting period, as a part of the project “Young talents”, the Foundation AK BARS SOZIDANIE assisted students of the Municipal Budgetary Educational Institution “Ly- ceum No. 177” in Novo-Savinovsky District of Kazan. Thanks to the help from AK BARS Bank, the students of the educational institution participated in the All-Russia Festival of Crea- tive Discoveries and Initiatives “Leonardo” (Moscow). Each of the children was an author of a project or research work in various fields of science. The children did not only present their scientific works well, but also became winners in several units. AK BARS Bank has traditionally supported the long-term innovative educational program – the contest “50 best innovative ideas of the Republic of Tatarstan” that was held in the Republic for the 13th time. In 2017, the sponsorship enabled 10 young scientists who presented their cutting-edge works in the field of development of science and technics to allocate the monetary bonuses granted by the Bank for development of their own scientific projects.

In 2017, AK BARS Bank, as a part of holding the all-republic event “Helping to prepare for the school”, provided a financial assistance to Apastovsky Municipal District of the Republic of Tatarstan. Moreover, as a part of this event, the Bank, along with the Charity Foundation AK BARS SOZIDANIE, arranged an educational trip for orphans brought up by elderly foster parents to the village of Kyrlai (Arsky Municipal District of the Republic of Tatarstan), where the Tatar poet Gabdulla Tukay spent his childhood. In total, there were 60 invited children and their foster parents. At the end of the event, the future first-graders received fully packed school-bags as gifts. During the reporting year, AK BARS Bank supported the initiative of the public organization of the Kazan center “Achievements of the Young” by providing a financial support for implementation of the program “School Companies”, under which school-students undergo training for entrepreneurship skills and obtain practical knowledge of the economy. At the expense of the Bank, the winning company managed to participate in the international stage of the contest that took place in Zurich. Representatives of the Bank actively supported the participants of the program at all stages of the contest, they shared their experience, and were present at the opening of the children’s co-working. By supporting young specialists and scientists, the Bank invests in their own business, as they provide the company with professional staff. The Bank also provides opportunities for the present and future consumers to get acquainted with cutting-age technologies from their young age.

"Gift to the first- grader" In 2017, AK BARS Bank performed the annual event "Gift to the first-grader", by pre- paring school aids – a book and a multimedia disk for studying the two state languages of the Republic of Tatarstan (Russian and Tatar), as well as for expansion of the children’s outlook and knowledge in various fields, to children entering the first grade at school. The event encompassed tens of thousands of first-graders in Tatarstan and in other regions of Russia with a large share of Tatar-speaking population, who got the educational kit on the 1st of September at their schools. The multimedia disk and the book in 2017 had the name “Barsik’s Adventures in the Is- land of Digitopolis” and were dedicated to contemporary digital technologies and scientific achievements in the field of automation and robotics. Every year, the educational kit is developed by leading methodologists, artists and animators of Kazan and Russia, and voice-acting is done by actual artists of theaters of the Republic of Tatarstan. The aid does not duplicate the cur- riculum but helps the child to immerse in the exiting world of knowledge.

AK BARS Bank allocated funds for purchase of school-bags with the first-graders’ kits for school-students of Apastovsky Municipal District as a part of the all-republic event “Helping to prepare for school”.

6.3. Assistance to children with disabilities and children finding themselves in difficult life situations Improvement of the life quality is one of the key elements of the of the corporate social responsibility of AK BARS Bank that is not only aimed for improvement of the material position of the needy, but also for creating conditions for their rehabilitation, leading a healthy and active life. In 2017, with the financial support of AK BARS Bank, a tourist trip to Crimea was arranged for children from poor, multi-child families, for orphans and children left without the parents’ care of Apastovsky Municipal District. Apart from delivery of the target assistance, the Bank, along with the Charity Foundation AK BARS SOZIDANIE continuously works on the socialization of children with disabilities. Thus, funds were also allocated for arrangement of the Festival for deaf children “Theater of Equal Opportunities”, and implementation of the social project “When the grand-mother becomes the mother” aimed for assisting elderly foster parents taking care of underage children with disabilities. As a part of the project, 30 children and their foster parents got opportunities to participate in recreation activities and to learn to swim. The Foundation provided support to three families bringing up talented children with disabilities at the expense of funds allocated by AK BARS Bank and arranged a trip to participate in the Tenth International Creative Festival “Step to meet!” (Saint-Petersburg), where talented performers with disabilities from Russia, former Soviet Union, and foreign countries participated. For several years, the orphanage of Yelabuzhsky Municipal District of the Republic of Tatarstan has been under the patronage of AK BARS Bank and the Charity Foundation AK BARS SOZIDANIE. As of February 1, 2018, 26 children have stayed in the orphanage. All necessary conditions are created there, creative workshops are arranged that promote free fantasy, creativity, and increase of the social competence. As a part of the project “Each Child Matters for Russia”, the Bank, in association with the Foundation, arranged an enlightenment trip to Yekaterinburg for graduates of the Yelabga orphanage, and on the eve of the new academic year, a sightseeing tour was held for its boarder in Kazan, where the main sights of the city were included. In the early November 2017, the Charity Foundation AK BARS SOZIDANIE arranged a solemn ceremony for award of winners of the X district contest for applicable arts “We live as a family on the banks of Volga…” among boarders of orphanages of the Volga Federal District. AK BARS Bank performed the General Partner of the contest. This year, more the 300 works were submitted for the contest, and 72 of them, executed using various techniques, were awarded. In 2017, the Bank provided financial support to Nizhnekamsk boarding school for children with disabilities for purchase of materials and special equipment for the music classroom, to kindergartens for purchase of educational toys for the children, it supported materially individuals applying to the Bank for help by allocating funds for them to undergo a rehabilitation or to purchase the necessary medical rehabilitation equipment. The main idea of these projects is that by gradually improving the children’s life, the Bank brings kindness to the society which does not only concern certain children but also gives hope, warmth and joy to people around.

6.4. Social protection for the elderly, assistance to socially vulnerable groups and people with disabilities Since 2008, AK BARS Bank has supervised the Arsk nursery home for the elderly and the disabled, where 56 lonely citizens of the Republic of Tatarstan stay. The Bank, in association with the Charity Foundation AK BARS SOZIDANIE, has continued to provide support for arranging the stay and care conditions, as well as social and medical servicing of the elderly living in the fostered social institution. On the eve of the Day for the Elderly, the Foundation, with the financial support of AK BARS Bank, invited 15 elderly foster parents taking care of orphan children or children left without the parents’ care to a cultural and enlightenment excursion to the Museum of the Kazan Millennium. In order to celebrate the International Day for the Elderly, funds were allocated to the Nizhnekamsk branch of AK BARS Bank to purchase food package for sponsored institutions.

Along with the Russian Public Organization “Association of veterans of wars from law- enforcement agencies and interior troops of the Republic of Tatarstan”, targeted assistance was delivered to families of veterans and to families of perished officers of the interior of the Repub- lic of Tatarstan.

Victory Day AK BARS Bank has allocated funds on an annual basis for support of celebration of the Victory Day in the Great Patriotic War, for honoring war and labor veteran throughout Tatarstan and in various regions of Russia. Districts of the Republic of Tatarstan and regions of presence of AK BARS Bank in the Russian Federation received a material support on the eve of the holiday. The allocated funds were applied to holding solemn ceremonies, charity dinners and concerts, as well as to arranging festival fireworks. Employees of AK BARS Bank, as usual, took active part in the program “The Immortal Regiment” on May 9 in Kazan.

6.5. Support of social and cultural programs AK BARS Bank has sponsored large-scale cultural and charity events of both regional and federal level by allocating funds for celebrating the New Year, the Victory Day, and Saban- tuy in the Republic of Tatarstan and in regions of Russia from its budget on an annual basis. As usual, the public organization of the Kryashens received funds for holding the national holiday Pitrau during the reporting year. In 2017, the Bank provided assistance for holding mass events, including arrangement of concerts by Ilnar Saifiev and the People’s Artist of the Republic of Tatarstan Gabdelfat Safin. Funds were allocated for arrangement of the exhibition in Apastovo local history museum, for presentation of the book and disk “Tapshyrylgan hatlar” by the Merited Artist of the Republic of Tatarstan A.Sh.Barieva, for purchase of music equipment for the countryside club of the village of Ayukudergan of Apastovsky District, and for installation of the monument to Heroes of the Socialist Labor in Apastovsky District. AK BARS Bank supported the implementation of the social and cultural project, as a part of which the puppet performance “Album for the Daughter” was staged, and provided assistance to the Printing House. Last year, with the financial support of the Bank, films “Mullah” (Tatarkino), and about the outstanding mathematician, principal of the Kazan University N.I.Lobachevsky. For the purpose of aesthetic education and generation of the population’s culture, AK BARS Bank sponsored the organization of the contest of female beauty, maternity and family “Nechkebil”. Throughout the year, the Bank provided sponsorship for children's play park "Kid-

Space" in Kazan and in Naberezhnye Chelny. In those children’s parks, there are mini- prototypes of AK BARS Bank. Guided tours are arranged at the Head Office of the Bank located at 1 Dekabristov St. for the children – “residents” of “KidSpace”, once a month.

In May 2017, the Charity Foundation AK BARS SOZIDANIE sent children from the Studio theater “Little Stars from beyond the River” at the expense of the funds allocated by the Bank to Cheboksary to participate in the VIII International Television Contest “The National Endow 2017”, where the children became winners in several nominations, in particular, in the discipline of “Art of Declamation”. The solemn award ceremony for participants and winners of the IV Republican Contest of information and social videos “The child in the world of rights” – “Bala hokuk dairasende” took place in the Hotel and Entertainment Shopping Mall “Korston”. In 2017, the contest, where the main objective is to draw broad public attention to the subject of rights and interests of children, was dedicated to the celebration of the 100th anniversary of creation of juvenile affairs commissions and for protection of their rights. At the contest, 736 works were presented from all districts and regions of the Republic, more than 3,000 kids participated. AK BARS Bank awarded seven laureate contestants with valuable prizes. In 2017, the Bank provided financial assistance to the Foundation for support of culture and sports. For the purpose of maintaining the values of motherhood and childhood, AK BARS Bank provides a regular sponsorship for the arrangement of the contest of female beauty, maternity and family “Nechkebil”.

6.6. Support of sports Realizing the main role of patroonship and sponsorship for the promotion of culture and sport under the conditions of market economy, AK BARS Bank provides financial support to a number of organizations. In 2017, the Bank traditionally served as a sponsor of the children and youth sports school “Volna”, a finance partner of the ice-hockey club “Ak Bars” and “Neftekhimik”, basket- ball club “UNICS”, and football club “Rubin”. Besides, a new sponsorship projects was initiated with the Tennis Federation of the Republic of Tatarstan. The ping-pong sports group “Young Spartakovets” received help from the Bank for the group members to participate in off-site competitions. The Sports martial arts and judo club of the Republic of Tatarstan were also sponsored. On May 31, in Kazan, on the basis of the Kazan Innovative University named after V.G.Timiryasov, the all-Republic sports competitions took place among trainees of institutions for children with disabilities. The competitions were arranged with the support of AK BARS Bank and the Charity Foundation AK BARS SOZIDANIE. The competitions were attended by more than 80 children form Government-owned institutions from districts and towns of the Re- public that were defined as a result of regional stages for the ping-pong, futsal, arm-wrestling. In 2017, AK BARS Bank performed as the Prime sponsor for the series of races Tatar run. They were not only attended by professional athletes, but also by ordinary devotees of the healthy lifestyle. The running competition took place in all large cities of the Republic of Ta- tarstan and gathered more than 12,000 participants.

6.7. Environment protection

AK BARS Bank strives to be an example for drawing attention of the business and the public to problems of the environment, therefore, the support of the environmental programs is one of the Bank's charity initiatives. In order to display and to manage snow leopards (irbis), the Bank has provided charity-based financial assistance to the Municipal Cultural Institution “Ka- zan zoological and botanic garden” for many years. In 2017, two species of white rhinoceroses were purchased for the Kazan zoological and botanic garden at the expense of the Bank. 22

Conclusion The Social Report of AK BARS Bank for the year 2017 was the outcome of focused efforts for implementation of measures as a part of the corporate social responsibility describing the principles and commitments the Bank is governed with when fulfilling its mission. An important aspect is the integration of the social mission of the Bank with purposes and objectives stipulated with the Development Strategy of AK BARS Bank till 2021. The image of a socially responsible company is a significant competitive advantage and, at the same time, one of the factors of achieving employees’ loyalty. The Bank’s social policy is based on a caring attitude to problems and needs of both individuals and organizations, and the society as a whole. The Bank is committed to continue their work in the field of the corporate social responsibility by striving to achieve higher goals in this field every year.

Attachment

Report of the Charity Foundation "AK BARS SOZIDANIE" Charity Foundation "AK BARS SOZIDANIE" is a non-profit organization registered on October 17, 2006. The main directions of activities of the Fund are the socialization of children with disabilities and children in difficult life situations; preservation, restoration and strengthen- ing of health of the younger generation; support of the gifted and talented young people; social protection of the elderly living alone. Since 2007, the Foundation has been actively cooperating with the Republican Council on charitable activities, where the chairman is the President of the Republic of Tatarstan R.N.Minnikhanov. Every day, the Council receives updated information on the funds received, and delivers statistical and analytical reports on a monthly basis. In 2017, the account of the Foundation was cashed with funds amounting to 36,215,046.95 Rubles from AK BARS Bank, including 5,618,012 Rubles for administrative activities, as a part of the following social projects:

"DO GOOD" (provision of targeted assistance to seriously ill children, support of social agencies working with disabled children) The main activity of the Charity Foundation "AK BARS SOZIDANIE" is to help seriously ill children within the framework of the project "Do Good". During 2017, the Foundation provided assistance to 39 seriously ill individuals at the expense of the Bank for purchase of medicines and means of rehabilitation, undergoing of treatment courses, surgery interventions in leading Russian and foreign rehabilitation centers and medical institutions. Besides providing targeted assistance, the Foundations, in association with the Bank, has continuously worked on socialization of children with disabilities. Thus, funds were allocated for arrangement of the Festival for deaf children “Theater of Equal Opportunities” and for implementation of the social project “When the grandmother becomes the mother” intended for support of elderly foster parents bringing up underage children with disabilities. As a part of the project, 30 children and their foster parents received an opportunity to participate in recreational activities and to learn to swim. The Foundation also provided support to three families bringing up talented children with disabilities at the expense of funds allocated by AK BARS Bank and arranged a trip to participate in the Tenth International Creative Festival “Step to meet!” (Saint-Petersburg), where talented performers with disabilities from Russia, former Soviet Union, and foreign countries participated; they purchased medical equipment for the State Autonomous Healthcare Institution Central District Hospital of Pestretsy, State Autonomous Healthcare Institution Central District Hospital of Apastovo, State Budgetary Institution “Nizhnekamsk boarding school for children with disabilities”, and specialized nutrition for boarders of the State Autonomous General Edu- cation Institution “Derbyshki children’s boarding school for mentally challenged children”; they participated in implementation of the social and cultural project “Album for the Daughter” for 194 children with health limitations, and arrangement of New Year events for families bringing up children with disabilities.

“We are together!” (Socialization of children in difficult life situations) For several years, an orphanage in the Yelabuga municipal district of the Republic of Ta- tarstan has been under the patronage of AK BARS BANK and the Charity Foundation AK BARS SOZIDANIE. The fund actively supports orphaned children and helps to solve the problems of the orphanage. As on 01.01.2018, the orphanage is home to 26 children. All necessary conditions are created here for the living, and creative workshops are arranged to promote a free fantasy and creativity, increase of the social competence. 24

As a part of the project “Each Child Matters for Russia”, the Bank, in association with the Foundation, arranged an enlightenment trip to Yekaterinburg for graduates of the Yelabga orphanage, and on the eve of the new academic year, a sightseeing tour was held for its boarder in Kazan, where the main sights of the city were included. To add to the above, the Foundation cooperates closely with the post-graduate supervision service for graduates of the orphanage and for foster parents in order to help the new graduates to solve various problems, both household and personality-related ones. The Foundation continues to work with graduates and pedagogic collectives of other orphanages in the Volga Federal District. During the spring school holidays, the Foundation, in association with the School of Creativity “Master Class” (Moscow), invited boarders of the State Budgetary Institution “Leninogorsky Orphanage” (Republic of Tatarstan), State Budgetary Edu- cational Institution of Saratov Region “Boarding School for Trainees under Adaptive Education Programs of the village of Shirokiy Buerak of Volsky District” (Saratov Region), State Budget- ary Institution of the Republic of Mari El “Lulpan Center for Orphans and Children Left without Parents’ Care” (Republic of Mari El), State Public Institution of Perm Territories “Center for As- sistance to Children Left without the Parents’ Care” of Kudymkar (Perm Territories), and the State Budgetary Educational Institution of Penza Region “Neverkino Boarding School for Chil- dren Educated under Adaptive Educational Programs” (Penza Region) from among winners of the regional contest “We live as a family on the banks of Volga…” to Moscow to study decorative and applicable arts. In November 2017, the Charity Foundation AK BARS SOZIDANIE, supported by the Administration of the Authorized Representative of the President of the Russian Federation in the Volga Federal District, the Republican Council for Charity of the Republic of Tatarstan, and the Public Chamber of the Republic of Tatarstan, arranged a solemn award ceremony for winners of the X regional contest of decorative and applied arts “We live as a family on the banks of Volga…” among boarders of orphanages of the Volga Federal District in AMAKS Safar Hotel. The General Sponsor of the event was AK BARS Bank. This year, more the 300 works were submitted for the contest, and 72 of them, executed using various techniques, were awarded. The project is implemented by the Foundation for the purpose of identification of talented children among boarders of orphanages in the Volga Federal District that demonstrate their interest in creative works as a part of the district-wide project “Re- turn the Childhood”, and the Party-run project “Each Child Matters for Russia”. Therefore, the Foundation attempts to prepare children left without the parents’ care for the independent life and for assuming liabilities for solving their own problems through the Foundation’s educational and creative programs.

“Healthy Lifestyle Planet” (Popularization of sport and promotion of the healthy lifestyles) The Charity Foundation AK BARS SOZIDANIE takes an active part in the promotion of healthy lifestyles, therefore, many sports events involve the Foundation. On May 31, in Kazan, on the basis of the Kazan Innovative University named after V.G.Timiryasov, the all-Republic sports competitions took place among trainees of institutions for children with disabilities. The competitions were arranged with the support of the Charity Foundation AK BARS SOZIDANIE. The competitions were attended by more than 80 children form Government-owned institutions from districts and towns of the Republic that were defined as a result of regional stages for the ping-pong, futsal, arm-wrestling. The Foundation also supported young ping-pong players – trainees of the Regional Public Organization “Moscow municipal physical culture and sports association Spartak” – with arrangement of their further participation in all-Russia and international competition in these sports.

“Young talents” (identifying and stimulating abilities of gifted children and talented youth, assisting to educational institutions with experience of working with young talents) During the reporting period, as a part of the project, the Foundation assisted students of the Municipal Budgetary Educational Institution “Lyceum No. 177” in Novo-Savinovsky Dis- trict of Kazan. Thanks to the help from AK BARS SOZIDANIE, the students of the educational institution participated in the All-Russia Festival of Creative Discoveries and Initiatives “Leo- nardo” (Moscow). Each of the children was an author of a project or research work in various fields of science. The children did not only present their scientific works well, but also became winners in several units. In May, the Foundation sent children from the Studio theater “Little Stars from beyond the River” to Cheboksary to participate in the VIII International Television Contest “The Na- tional Endow 2017”, where the children became winners in several nominations, in particular, in the discipline of “Art of Declamation”. Traditionally, at the end of the academic year, a solemn ceremony took place for honoring young prize winners and awardees of various Olympiads, contests, and competitions, as well as for their pedagogues and trainers. The ceremony is named “Star Circle” and held in Sovetsky District in Kazan, in “Saidash” culture center. Once again, the Foundation took an active part in arranging the event and awarded the best of the best. The solemn award ceremony for participants and winners of the IV Republican Contest of information and social videos “The child in the world of rights” – “Bala hokuk dairasende” took place in the Hotel and Entertainment Shopping Mall “Korston”. During the current year, the contest, where the main objective is to draw broad public attention to the subject of rights and interests of children, was dedicated to the celebration of the 100th anniversary of creation of juvenile affairs commissions and for protection of their rights. The contest was held from Septem- ber 10 to November 17, 736 works were presented from all districts and regions of the Republic, more than 3,000 kids participated. The Foundation took an active part in arranging the event and awarded seven laureate contestants with valuable prizes. Moreover, thanks to the support by AK BARS Bank, during the reporting period, assistance was provided to winners and laureates of international, all-Russia, and Republic-wide subject Olympiads, international and all-Russia creative contests, sports competitions as a part of the project. Countryside schools of Apastosky Municipal District were supplied with necessary equipment.

“In a big family” (Popularization of the institution of the family, targeted support for low-income families with many children) In order to promote the institute of the family, the Foundation conducts activities as a part of the project “In a big family”. A special attention is paid to single mother bringing up children with disabilities. A disabled child is a terrible sentence for the parents for whom it is rather hard to put up with such situation. It is even harder to bring up such children as they need several times more care, attention and emotional warmth, if the woman is left alone. The Foundation conducts free consultations by psychologists, pedagogues, medics, arranges various events, it provides comprehensive support to such mothers. Moreover, families with elderly foster parents and adopting families are under the patronage of the Foundation. It is a good tradition for AK BARS Bank to provide financial support to municipal districts of the republic for holding the national festivals “Sabantuy”, during which grounds operate to support children from poor and multi-children families of the district. The purpose of such events is to inoculate positive life values to children facing difficult situations in life, and to promote development of spirituality and morals. In April 2017, the third forum of active citizens “Community” took place in Kazan, which forum was arranged by the Public Chamber of the Russian Federation for the purpose of identification of the development condition of the non-profit sector if regions of Russia, discus- 26 sion of existing problems and possible means of their resolution, as well as support of the most efficient practices civil activities. As a part of the Forum, the Foundation supported the following practices: – inclusive studio “E-motion” of the Regional Public Organization “Pearl of Tatarstan”, whose activities are aimed at involvement of children with disabilities and their families in creative activities and theatrical arts; – social house “Cradle” of the Center for protection of the family, motherhood and childhood “Tenderness”, whose activities are aimed at support of single pregnant women and young mothers; – “Integra-Tour” of the Regional Society of Disabled People “Integration” in the Repub- lic of Tatarstan, where the purpose is to set up public ties for people with disabilities. As a part of the Republic-wide event “Helping to prepare for the school”, the Foundation arranged an educational trip for orphans brought up by elderly foster parents to the village of Kyrlai (Arsky Municipal District of the Republic of Tatarstan), where the Tatar poet Gabdulla Tukay spent his childhood. At present, a memorial complex has been established in the grounds, that got the young travelers familiar with secrets of the poet’s life: with lifetime publications of G.Tukay, personal belongings of his friends and relatives, furniture from the Kazan hotel “Bul- gar” where the last works of the classic author of the Tatar literature were created. In total, there were 60 invited children and their foster parents. At the end of the event, the future first-graders received fully packed school-bags as gifts. As a part of the Autumn Week of Kindness, the Charity Foundation AK BARS SOZIDANIE arranged “Lessons of kindness. Getting familiar with the diary of good deeds” for first-graders of the Municipal Budgetary Education Institutions “Gymnasium No. 7 with the education in the Tatar language” of Vakhitovsky District of Kazan. At the end of the lesson, each pupil received the Diary of Good Deeds – a gift for the beginning of the academic year from the Mayor of Kazan Ilsur Metshin, where the pupils would note their good deeds. The children promised they would make entries in the Diary every day, as it is just as important a document for them as the other diary where their marks are recorded. On top of that, funds were allocated for arranging children’s grounds for holding the Day of the City and New Year events in municipal districts of the Republic.

"The sun shines for everyone!" (Assistance to single elderly citizens) Socialization of single elderly people is one of the major fields of activities for the Chari- ty Foundation AK BARS SOZIDANIE. Since 2008, the Foundation and AK BARS Bank have supervised the Arsk nursery home for the elderly and the disabled, where 56 lonely citizens of the Republic of Tatarstan stay. The Foundation has continued to provide support for arranging the stay and care conditions, as well as social and medical servicing of the elderly living in the fostered social institution. Every year, as a part of celebration of the Victory Day in the Great Patriotic War, the Foundation, in association with AK BARS Bank, has supported veterans from municipal districts of the Republic of Tatarstan and for holding events dedicated to the 72nd anniversary of the Vic- tory. On the eve of the Day for the Elderly, the Foundation invited 15 elderly foster parents taking care of orphan children or children left without the parents’ care to a cultural and enlightenment excursion to the Museum of the Kazan Millennium. The attending grandmothers re- marked that visiting museums with their grandchildren is one of the most useful events for the whole family that helps to expand the world outlook, teaches to understand and to value art. At the end of the excursion, the elderly foster children received food baskets from the Foundation. To add to the above, similar food baskets were delivered to single people staying in fostered institutions of the “Nizhnekamsk” additional office of AK BARS Bank during the celebration of the Day of the Elderly and the decade of the disabled.

Other projects In order to display and to manage snow leopards (irbis), the Foundation has provided charity-based financial assistance to the Municipal Cultural Institution “Kazan zoological and botanic garden” for many years. During 2017, the Foundation also provided assistance to the following: – presentation of the book and disk “Tapshyrylgan hatlar”; – building of the diorama and the additional exhibition in the Local History Museum of Apastovsky Municiapl District of the Republic of Tatarstan; – purchase of two species of white rhinoceroses for creating the unique collection of the Kazan Zoological and Botanical Garden “Africa. River of Zambezi”; – erection of the monument to Social Labor Heroes in the village of Apastovo.

Outcomes of activities of the Charity Foundation AK BARS SOZIDANIE Achievement of the Charity Foundation AK BARS SOZIDANIE has been awarded with the following:  3rd degree diploma of the All-Russia Contest of Social Projects and Programs “Social Innovations” arranged by the Federation Council of the Federal Assembly of the Russian Federation, the Ministry of labor and social development of the Russian Federa- tion, the Charity Foundation of Elena and Gennady Timchenko, the Council of vice- principals for moral building of educational institutions for the higher education of Russia for the project “When the Grandmother Becomes the Mother”;  laureate diploma of the VIII All-Russia festival of social Internet resources “The World of Equal Opportunities” under the nomination of “Kindness is the Base of Piece” for the project aimed at support of children with disabilities from among orphans or children left without the parents’ care. The Festival was arranged by the Foundation of support of the disabled “United Country” and the All-Russia Public Organization “All- Russia Association of the Disabled”;  diploma of the Republic-wide contest “Philanthropist of the Year”;  letter of gratitude from the Councilor of State of the Republic of Tatarstan M.Sh.Saymiev. The Foundation was listed in volume VII of the Book of Philanthropists who have donated to the Republican Foundation for Renaissance of Monuments of Histo- ry and Culture of Tatarstan;  gratitude for assistance with holding the Forum of Active Citizens “Community” arranged by the Public Chamber of the Russian Federation in Kazan;  diploma of the winner in the VIII Contest of social and cultural projects of LU- KOIL Public Joint-stock Company in the Republic of Tatarstan;  award from the President of the Republic of Tatarstan for contribution in development of institutes of the civil society in Tatarstan;  letter of gratitude from the Mayor’s Office of Kazan for a large contribution in development of the charity culture.