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 2 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 in- form on large-scale activities of the credit institution in the field of corporate social responsibil- ity 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 custom- ers, 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 pro- jects in the blockchain technology and conversational banking play an important role in this pro- cess. We are convinced that advancing in the field of digitalization serves technological devel- opment 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 institu- tion. 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 life- style, and contribute, within their powers, to the development of the socially responsible busi- ness. 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 con- tribute 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 custom- ers. 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 compa- nies 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 man- agement 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 con- ducts 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 share- holders of the Bank, arrangement of activities of the Board of Directors and executive bodies,