Investor Presentation November 2013 Investor Presentation. November 2013

I. Key Macroeconomic Indicators of

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Investor Presentation. November 2013

Key macroeconomic indicators (RUSSIA)

Progress in WB Doing Business rank over 3 years YTD currency dynamics vs. USD 40 improvement, rank 31 30 25 Mexico 20 Russia 9 11 10 Norway 0 1 0 Brazil -10 -4 -7 Australia -20 India -18 -17

-30

South Africa

India

Chile

Brazil

China

poland

Turkey Russia

Mexico -20% -15% -10% -5% 0%

South Af. South Indonesia

Cabinet controls expenditures growth CBR reserves and CPI growth 150 50% 600 25 $/bbl % y/y $ bn % y/y 500 120 109 110 110 40% 20 99 102 400 90 30% 15 300 62 60 20% 10 200 34 30 10% 100 5

0 0

0 0%

13

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

2007 2008 2009 2010 2011 2012

Oct 2013E Breakeven oil price, $/bbl (LHS) Expenditure growth, % y/y (RHS) CBR reserves, $bn, e.o.p. (LHS) CPI, % y/y, e.o.p. (RHS)

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Key macroeconomic indicators (RUSSIA)

Loan growth still strong lending is underpenetrated 120% % y/y Greece Austria 100% Latvia Italy 80% Retail Corporate Poland 60% Hungary 40% Slovenia Slovakia 20% Czech Rep. Bulgary Non-mortgage Mortgage 0% Romaina

-20%

Turkey

% GDP 13

- Russia

2004 2005 2006 2007 2008 2009 2010 2011 2012 2003 % GDP

Sep 0 10 20 30 40 50 60 CBR supports banking sector Capital adequacy and margins rather strong 5'000 14% RUB bn CBR loans % assets 22% Capital adequacy (LHS) Net interest margin (RHS) 6.0% 4'500 Minfin deposits 12% 4'000 20% 21% 5.5% State funding, % assets (RHS) 3'500 10% 4.96% 3'000 18% 5.0% 8% 4.64% 4.60% 2'500 4.41% 18% 6% 4.47% 2'000 16% 17% 4.5% 1'500 16% 3.99% 4.03% 4% 16% 1'000 14% 15% 4.0% 2% 15% 500 3.97% 14% 13%

0 0% 12% 3.5%

3.57%

10% 3.0%

01.12.08 01.03.09 01.06.09 01.09.09 01.12.09 01.03.10 01.06.10 01.09.10 01.12.10 01.03.11 01.06.11 01.09.11 01.12.11 01.03.12 01.06.12 01.09.12 01.12.12 01.03.13 01.06.13 01.09.13

2005 2006 2007 2008 2009 2010 2011 2012 1H13

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II. Alfa-Bank and Russian banking sector

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Alfa-Bank: the key banking asset of *

Alfa Group holds approximately US$ 82.6 bn in assets and US$ 28.6 bn in **

Investment and Banking asset management Listed on LSE

Alfa-Bank (Russia) Alfa Asset Management Each business is legally distinct Alfa-Bank (Ukraine) Alfa Capital Partners and run independently from ListedListed on on NYSE NYSE each other, all intra-group Alfa-Bank (Belarus) A1 Group Ltd. transactions are done on market ListedListed on on NYSE NYSE Alfa-Bank () terms

Alfa-Bank - Wide range of financial services, including corporate and SME banking, retail banking, investment banking, trade finance, structured finance, leasing. Alfa-Bank Russia (100.00%), Alfa-Bank Ukraine (100.00%), Alfa-Bank Belarus (98.96%), Alfa-Bank Kazakhstan (100.00%), Alfa Asset Management (100.00%) - The Group’s assets management arm. Clients include Russian as well as international institutional and private clients. Alfa Capital Partners (100.00%) - The Group’s private equity and real estate investment group. A1 Group Ltd. (100.00%) - Large-scale proprietary and for-client investment into Russia, the CIS as well as other emerging markets. OJSC AlfaStrakhovanie (85.46%) - One of the largest non obligatory insurance companies in Russia. Group (100%) - A leading private operator of water supply and sewage in the CIS. N.V. (47.86%) - X5 Retail Group N.V. holds the chains , Perekrestok, Karusel, and E5.RU. - Leading private equity group which is used by Alfa Group as its exclusive vehicle for making investments into telecommunications assets in Russia, the CIS and other promising markets: Vimpelcom (47.85%) and (13.22%).

* The stakes in the companies shown include effective minority stakes ** Source: Alfa Group audited report FY 2012 - 7 - Investor Presentation. November 2013

Alfa-Bank’s universal business franchise

Best bank in Russia – “Customer Experience 10.1 million retail clients and 111,900 corporate Index” research by PWC and Senteo* clients**

Retail Banking Corporate and Investment Banking

. Branch Banking • Current and savings accounts . Corporate Lending . Equity Brokerage • Debit and credit cards . SME Banking . Fixed Income Brokerage • Personal installment loans . Leasing . Research . Consumer Finance . Trade Finance . Debt and Equity Capital . Electronic Banking . Structured Finance Markets • Electronic distribution channels Mass Corporate . Mergers & Acquisitions • Internet acquiring Segment Banking . Factoring • B2B solutions . Cash Management . Structured Products and • GSM banking . Transaction Banking Derivatives . Mortgage Loans . FX Operations . Auto Finance Strategy

To maintain our status as the leading private bank in Russia, while enhancing our stability and profitability. To set the industry standards in key areas such as customer experience, technology, efficiency and teamwork. Focus on client Team and team work Technology, efficiency Broad product offering, Efficient cooperation among and within business units, Technological and process efficiency Customised approach to and Hiring and retaining best people, as a competitive advantage services for target client groups Tailored motivation systems * Source: PWC and Senteo, June 2012 ** as of October 1, 2013 - 8 - Investor Presentation. November 2013

Alfa-Bank: well recognised record of excellence

. Highest International Approval Rate, . Best Bank in Russia, 2009 Debit Consumer Issuer, 2011

. Best Service Company for . Best bank in the “Customer Experience Individual Investors, 2009 Index” research by PricewaterhouseCoopers and Senteo . Best analytics, 2010 2012, 2011, 2010, 2009

. Best bank in Russia, Best Creative Idea of the Year 2012, . Best Internet Bank in Russia, 2011, 2010 2011, 2010, 2009

. Best private bank in Russia by . Best Russian Bank, providing private Global Reputation Index (GRI) banking and wealth management research, 2010 services, 2012

- 9 - Alfa-Bank: well-known on International Capital Markets

 Alfa-Bank is one the biggest Russian issuers on international capital markets and currently has 6 outstanding medium term issues with a total nominal amount of US$ 4 bn.

 Since a Eurobond debut in 1997, Alfa-Bank has earned international investors’ confidence by complying with high standards of disclosure and though strong investor relations. In addition, its Eurobonds have tended to outperform on the secondary market.

 Alfa-Bank‘s investor base is well-diversified both geographically and by investor type, including private and investment banks, investment and mutual funds, insurance companies, and hedge funds. Investors are located in the United States, Western Europe and Asia.

 In 2011, Alfa-Bank was the first Russian private bank to issue a bond with a 10 year maturity. The US$ 1 bn benchmark issue was heavily oversubscribed.

 Alfa-Bank taps the international capital markets at least once a year to support its growing business. The latest issue of RUB 10 bn notes took place in April 2013, when Alfa-Bank became the first Russian private bank to issue Rouble denominated Eurobonds on the international capital markets.

 Alfa-Bank is also active on the local Russian bond market and currently has 6 issues outstanding with a total nominal value of RUB 35 bn (over US$ 1 bn)

 Alfa-Bank’s bonds trade at a significant premium to their par value:

Coupon per Price Issue date Amount issued, mln Type Maturity year (21 Nov 2013)

26 April 2013 8.625% RUB 10,000 LPN (Reg S, 144-A) 100.35 26 April 2016

26 September 2012 7.5% US$ 750 LPN (Reg S, 144-A) 106.44 26 September 2019

28 April 2011 7.75% US$ 1000 LPN (Reg S, 144-A) 107.83 28 April 2021

24 September 2010 7.875% US$ 1000 LPN (Reg S, 144-A) 111.42 25 September 2017

18 March 2010 8.0% US$ 600 LPN (Reg S) 107.08 18 March 2015

22 February 2007 6.3% US$ 300 LPN (Reg S) 104.12 22 February 2017

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Leading Russian private bank in most market segments

Top Russian banks by assets (US$, bn)* Market share in retail**

8% 483.5 7% State 7.0% 7.2% 7.1% 6% 6.8% 6.8% 6.7% 6.4% 6.4% 6.6% banks 5% 4% 218.2 3%

106.3 2% 2.5% 55.5 53.6 2.3% 2.4% 2.4% 2.4% 2.5% 45.9 25.4 24.5 23.5 23.5 1% 2.0% 1.9% 2.1% 0%

Retail demand accounts Retail loans (excl. mortgage loans)

Top Russian banks by equity (US$, bn)* Top Russian banks by loans (US$, bn)* 57.1 324.7

27.7 107.7 66.1 9.1 5.5 34.8 31.7 5.0 4.1 3.8 3.3 2.8 2.0 19.8 16.0 14.1 13.4 13.1

* Source: bankir.ru/rating/ Figures as of October, 2013 Figures are based on non-consolidated RAS financial statements (Alfa-Bank only) ** Source: CBR, Alfa-Bank’s management report August, 2013 - 11 - Investor Presentation. November 2013

Financial highlights 1H 2013

. Net at US$ 479 mln (1H 2012: US$ 544 mln) . Allocated segment profit before tax and provisioning: Statement of . Corporate and Investment banking – US$ 420 mln (1H 2012: US$ 305 mln) Income . Retail banking – US$ 359 mln (1H 2012: US$ 206 mln) . Cost to income at 42.0% (1H 2012: 47.6%) . Return on equity at 22.1% (1H 2012: 29.7%)

. Total assets decreased 1.1% from US$ 45.9 bn at FY 2012 to US$ 45.4 bn . Gross loans increased 3.7% from US$ 31.8 bn at FY 2012 to US$ 33.0 bn Financial Position . Loans to corporate customers – US$ 27.9 bn (2012: US$ 27.2 bn) . Loans to individuals – US$ 5.1 bn (2012: US$ 4.6 bn) . Provisions remained stable at US$ 1.3 bn or 3.9% of loan portfolio . Total equity up 8.6% from US$ 4.2 bn at FY 2012 to US$ 4.5 bn

Source: IFRS audited financial results, 6m 2013 reviewed by auditors IFRS results - 12 - Investor Presentation. November 2013

Income well above pre-crisis levels

Operating profit before provisioning (in US$, mln) Net interest income (in US$, mln)*

CAGR: +13.3% CAGR: +17.4% 1455 6.4% 1500 5.4% 5.1% 5.2% 5.1% 6%

997 1016 43.2% 1074 853 763 1000 787 4% 660 719 36.5% 571 500 2%

0 0% 1H 2009 1H 2010 1H 2011 1H 2012 1H 2013 1H 2009 1H 2010 1H 2011 1H 2012 1H 2013 net interest margin

Cost to Income ratio, % Net fee and commission income (in US$, mln) CAGR: +40.6% 400 30% 357 51.6 25% 24% 51.3 25% 46.3 300 44.3 25% 42.0 247 20% 14% 13% 211 44.5% 200 15% 109 127 10% 100 5% 0 0% 2009 2010 2011 2012 1H 2013 1H 2009 1H 2010 1H 2011 1H 2012 1H 2013 commission income share in operating profit

Source: IFRS audited financial results, 6m 2013 reviewed by auditors IFRS results * Net interest margin is calculated as Net interest income / Average interest earning assets - 13 - Investor Presentation. November 2013

Loan portfolio quality

. Overdue loans slightly increased in 1H 2013 due to Overdue loans and advances 1+ days* expansion of retail lending, although they are excessively Total gross loans Overdue loans and advances / Total loans provisioned 35 31.8 33.0 25% 21.2% 30 . Retail loan provisioning ratio increased to 4.3% from 2.9% 20% 25 23.2 at FY 2012, corporate provisions slightly decreased due to 20 18.2 15% 15.0 US$ 20 mln write-offs and negative FX translation effect of 15 10% $52 mln 10 2.6% 1.6% 2.0% 5% 5 4.7% . Provisions coverage of 1+ day overdue loans amounted to 0 0% 196% at 1H 2013 which is well above market averages 2009 2010 2011 2012 1H 2013 and loss expectations Overdue loans structure (US$, mln) Provision for loan impairment (US$, mln)

Provision for retail loan impairment Provision for corporate loan impairment Corporate past due loans Retail past due loans total past due loans Total provisions / total loans 1500 1 504 15% 1 162 1500 1 360 1 368 1 112 1 261 1 277 1000 1000 10% 10.1% 526 5.9% 430 7.6% 4.0% 3.9% 500 324 351 500 5% 175 50 106 0 0 0% 2011 2012 1H 2013 2009 2010 2011 2012 1H 2013 Source: IFRS audited financial results, 6m 2013 reviewed by auditors IFRS results * Overdue loans and advances include both past due instalments and the remaining non-overdue portion of the loan - 14 - Investor Presentation. November 2013

High capital adequacy level maintained

Capital adequacy ratio (in % of risk-weighted assets)*

18.2 . Capital adequacy ratio increased to 16.3% as of 16.7 15.6 16.3 5.6 1H 2013 from 15.6% as of YE 2012 mostly due 4.8 5.4 5.1 to organic profit generation resulting in the

12.6 increase of Tier 1 capital in 1H 2013 11.9 10.2 11.2

. Total RWA increased by 1.7%: 2010 2011 2012 1H 2013 Tier 2 Tier 1 • Banking book grew by 1.5% CAR summary (US$, mln)* 30.06.2013 Diff 31.12.2012 • Trading book grew by 6.3% Capital adequacy Tier 1 4 428 433 3 995 Tier 2 2 034 -57 2 091 Total capital 6 462 376 6 086 Banking book 37 770 544 37 226 Trading book 1 883 112 1 771 Total risk weighted assets 39 654 656 38 998 Tier 1 ratio 11.2% 0.9% 10.2% Total capital ratio 16.3% 0.7% 15.6%

* CAR ratios calculated in accordance with Basel I standards (management computation) - 15 - Investor Presentation. November 2013

Forecast 2013

Total Assets Growth ~ 5%

Loan Portfolio Corporate loans: growth ~ 10 – 15% Retail loans: growth ~ 25 – 30%

Cost to Income Ratio < 50%

Return on Equity > 20%

CAR ~ 14 – 16%

As compared to FY 2012 - 16 - Investor Presentation. November 2013

III. STRUCTURED DEPOSITS

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Structured deposits at Alfa-Bank

 Have the main advantages of standard bank deposits (no capital at risk)

 Benefit from a high Alfa-Bank rate

 Permit combining high rates in RUB with hedging strategies

 Allow customization of the hedging Strategy (including revising hedges at any date within the life of deposit)

 Available for Corporate or Institutional accounts only

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Proposed strategy 1: Invest in RUB deposit with protection against RUB depreciation + limited upside from RUB appreciation

Carry trade on RUB vs. EUR Interest rates in RUB are ~ 5% higher than EUR

Despite relatively high credit quality AB pays high High credit spread vs. credit quality credit spread

In EUR terms the proposed structure is capital Protection against RUB depreciation guaranteed

Total Interest + Principal 108% (EUR terms, 2 yrs)

106%

104%

102% EUR/RUB 100% 40р. 42р. 44р. 46р. 48р. 50р. 52р.

! Client’s return is maximized if RUB remains stable or appreciates against EUR

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Proposed strategy 1

To capture high RUB rates Alfa-Bank pays 6,6% - 7,15% on 1-3yr RUB deposits

To protect against RUB depreciation BUY protection against weaker RUB

To boost the yield by limiting SELL potential gain from stronger RUB potential RUB gain

1 yr 2 yr 3 yr

Alfa-Bank's term deposit* 6.6% 6.90% 7.15% Hedging cost to ensure capital protection in EUR** -5.5% -3.95% -3.00% (annualized) Limiting the gain from stronger RUB** 1.15% 0.6% 0.40% (annualized) RESULTING YIELD in RUB 2.25% 3.55% 4.55%

RESULTING YIELD in EUR 0.1% - 2.25% 0.1% - 3.55% 0.1% - 4.55%

• * Rates are relevant for 11/11/2013 and need to be confirmed before the transaction • ** Relevant for current EUR/RUB of 44 and volatility as of 11/11/2013 - 20 - Investor Presentation. November 2013

Practical steps (execution)

Step 1. Preliminary phase . KYC . Signing Master Agreement on Structured Deposits

Step 2. Transacting . Terms of particular deposit to be approved and confirmed . Deposit account for Client is opened by the Bank . Money transfer by Investor

Step 3. Further steps (optional) . The strategy of Deposit can be changed upon mutual agreement (rate, level of protection)

Step 4. Repayment . At Maturity Alfa Bank pays back the Principal of Deposit in a relevant currency + Interest.

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EUR/RUB market overview

 Currently EUR is trading close to historical maximum against RUB

 Market participants do not expect RUB to weaken against EUR (Average forecast for EUR/RUB 2015 is 42.24)

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Proposed strategy 2: Dual currency deposit in RUB (repayable in EUR at the option of the Bank)

120% Total Interest + Principal Main difference from the Strategy 1 (EUR terms), 2yrs 115%

110%  The Strategy does not protect from RUB devaluation 105% EUR/RUB  But its Yield in EUR is 2,5 times higher 100% 40р. 42р. 44р. 46р. 48р. 50р. 52р. 54р. (subject to stable RUB) 95%

6 mon 1 yr 1,5 yr

Alfa-Bank's term deposit* 6.1% 6.6% 6.75% Limiting the gain from stronger RUB** 1.80% 1.2% 0.80% (annualized) RESULTING YIELD in RUB 7.90% 7.80% 7.55%

RESULTING YIELD in EUR Up to 7,9% Up to 7,8% Up to 7,55%

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Thank you for your attention!

For questions about Alfa-Bank, please contact our Investor Relations:

Alfa-Bank, Investor Relations 7, Mashi Poryvaevoy street , 107078, Russia tel.: +7 (495) 795 37 11 email: [email protected] Visit us at: www.alfabank.com/investor

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