TABLE OF CONTENTS CHAPTER 1 2 3 4 1

Gazprombank Group Annual Report Based on IFRS Consolidated Financial Statements 2 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 3 Table of Contents

Statement of the Chairman of the Board of Directors 4 Statement of the Chairman of the Management Board 6 Key Performance Indicators 9

MAIN RESULTS FOR THE YEAR AND BUSINESS DEVELOPMENT OBJECTIVES 11 External Environment in 2019 12 Financial Performance 15 Positioning 20 Ratings 21 Strategic Goals and Principal Vectors of the Bank’s Development 22 Development of IT and Digital Technology: 2019 Results 24 Corporate Business Customer Base 26 Commercial Lending 31 Trade, Structured and Syndicated Finance 34 Retail Business Retail Business. Key Results in 2019 36 Gazprombank Private Banking. 2019 Results 38 Investment Banking Project and Structured Finance 41 Main Project Finance Deals in 2019 43 Capital Market Operations 44 Asset Management 52 Engineering Assets: Core Business Operations and Key Projects 54 Sustainable Development Policy in the Area of Sustainable Development 57 Responsible Governance 58 HR Policy and Employee Incentives 59 Environmental Matters 62 Social Responsibility 65 Resource Base Development 68 Depository Operations, Specialized Depository Services 70 Risk Management 72 Information Security 81 Regional Network Map 82 Branch Network Operating Results 84 Marketing and Communication 85

CORPORATE GOVERNANCE 89 Bank GPB (JSC) Shareholders 90 Bank GPB (JSC) Board of Directors 91 Bank GPB (JSC) Management Board 94 Corporate Governance in the Bank 102 Bank GPB (JSC) Organizational Management Flowchart 103 Internal Control System 104

FINANCIAL STATEMENTS 107

REFERENCE INFORMATION 127 Branches of Bank GPB (JSC) 128 Representative Offices of Bank GPB (JSC) in Other Countries 130 Subsidiary Banks and Credit Institutions with an Ownership of More Than 5% 131 Bank GPB (JSC) Licenses 133 Contact Information and Bank Details 136 4 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 5 Statement of the Chairman of the Board of Directors

Dear Shareholders, of the project financing raised, the deal was one of the biggest in Europe in recent years. Gazprombank turns 30 this year. The Bank Supporting socially significant projects implemented celebrates this anniversary proudly, ranking third on the basis of public-private partnerships among the country’s financial institutions on all is another important area of activity for the Bank, key indicators — a reliable and efficient partner the primary focus being on the development for its customers and a profitable long-term asset of transport infrastructure in various regions of Russia. for its shareholders. In the Yamal-Nenets Autonomous Area, for example, Adhering to the strategy approved by its Board the Bank is providing financing for the construction of Directors, Gazprombank retains its financial of a road bridge across the Pur River. Once resilience and its ability to respond to global completed, the bridge will provide all-year-round economic events in a prompt and agile manner. uninterrupted transportation services for those living In the reporting year, it improved its operating in the settlement of Urengoy and several other local results, in particular, in terms of net profit, capital communities. and income from the core banking business. One of the Bank’s long-term development goals One of the priority areas of the Bank’s work is the digital transformation of business processes, is collaboration with companies in the real including the development of remote customer sector of the Russian economy. Among these, services. The Bank’s modern and convenient Gazprom Group entities occupy a special digital services are currently being used by over position. In particular, the Bank provides 40,000 companies every day, and there are plans centralized management of their cash flows to provide the Bank’s corporate customers with remote and participates in the financing of investment access to all its banking products. At the same time, projects and placement of securities on the capital Gazprombank is continuing to consolidate its position markets. in the retail sector — in 2019, the share of remote sales A landmark event in 2019 was the deal to raise to individual customers increased by 55%. project financing for the Gazprom Group The Board of Directors takes a positive view for the construction of the Amur Gas Processing Plant. of Gazprombank’s performance in the 2019 reporting Gazprombank was actively involved in structuring year. The Bank’s balanced strategy, its 30-year track the deal as financial advisor and became part record of success and its highly professional team of a consortium of 22 financial organizations underpin its continued confident development providing a EUR 11.4 billion loan. In terms on the Russian market.

Alexey B. Miller Chairman of the Board of Directors, Bank GPB (JSC), Chairman of the Management Committee, Gazprom 6 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 7 Statement of the Chairman of the Management Board

by 12.7%, from RUB 157.1 billion to RUB 177.0 billion. sector, to be a leader of the retail market as well. The Group’s aggregate net interest margin remained The reporting year was one of robust retail business at 2.8% in 2019, same as in 2018. growth for the Bank. In this business line, the Bank’s Traditionally, strategic partnerships with Russia’s largest loan portfolio amounted to RUB 564 billion companies, provision of a full range of state-of-the-art at the end of 2019 (a growth by RUB 105 billion). financial services to such largest accounts as well as Consumer loans were the key product, displaying all other corporate customers, has been a dominating growth at rates double the market average, which element in Gazprombank’s business. The Bank enabled Gazprombank to be the first in terms participates in the implementation of national projects of portfolio growth, making it into the TOP 5 Russian and other government-sponsored initiatives, often banks by portfolio volume. Active promotion pioneering provision of the most advanced services of bundled products resulted in a triple growth to those players in the key industries of the national of retail fee and commission income, which economy with whom it collaborates. amounted to more than a half of the Bank’s The Bank continuously enhances its aggregate fee and commission income. experience and track record on the project The retail bottom line doubled, reaching RUB 8.0 billion, and structured finance market. Participating almost one-fifth of the Group’s overall net profit. in the Project Finance Factory, implemented This spectacular outcome was achieved due to a 30% on VEB.RF platform, Gazprombank has led a syndicate growth in the active customer base, increased cross- for an aggregate loan of USD 1.79 billion, intended sales, and product range development. The 2019 for the development of the Udokan copper deposit, offerings include some truly unique products. ranking the largest in Russia and the third worldwide One of these is the Smart Card with a principally new among undeveloped copper deposits. The Bank cashback mechanism. This card not only became acted as the arranger, financial advisor and lender highly popular with customers, it was also rightfully with a commitment of up to USD 650 million. acclaimed by experts as an efficient loyalty program This deal was the largest one closed by the Factory tool. The Smart Card won Frank Banking Reward awards and was named the best deal on Russia’s syndications in two nominations. market in 2019 according to Cbonds. Construction The Bank’s ability to develop its products and services of a mining and metal plant with appropriate in accordance with customer needs enables infrastructure in the Trans-Baikal Territory will create it to thrive in the private banking sector as well. new jobs, reinforcing the region’s business potential In 2019, the Private Banking investment portfolio Dear shareholders, the biggest hazards have been left behind, we stood and positively affecting the economic development exceeded RUB 100 billion, having grown by 80% customers, and partners, up to the crisis and we won! At the same time, of the country as a whole. over two years. For the second consecutive year, this achievement was made possible not only Gazprombank has reinforced its leading positions Gazprombank Private Banking was named the It has become customary for us to finally sum up by the deep commitment demonstrated by our in the financing of infrastructure and PPP projects, industry’s best and won the Spear’s Russia Awards the preceding year at the General Shareholders team during the spring and summer months this primarily in the area of creating and rebuilding as the Best Russian Bank Providing Private Banking Meeting held in late June. This report on the Bank year, but also by the carefully chosen development roads and transport facilities. In the Moscow and HNWI Capital Management Services. operations in 2019 serves this same purpose. strategy that our Bank has now pursued for more Region, the Bank participates in the construction For the team of professionals who have kept However, the first half of 2020 was extraordinary than two years. It was during this period that we of the Central Ring Road (TsKAD) Phases Three Gazprombank among capital market leaders for many to the extent that our General Shareholders laid a solid foundation for the “bank of the future”, and Four. In 2019, financial closure was achieved years, the reporting year became yet another Meeting has been postponed until September, based on state-of-the-art IT technology, that boldly under the Vinogradovo — Boltino — Tarasovka auto one of new victories and landmark deals. On the and that any assessment of the reporting period’s outsteps the boundaries of traditional banking road construction project, with the lending volume local debt capital market, the Bank acted as the results would hardly be complete without business and, which turned out to be of special in excess of RUB 20 billion. One of the most notable arranger of 100 bond issuances for the aggregate regard to the specific nature of this year’s events. importance, is resilient to stresses and risks, even 2019 deals was the Lavna coal transshipment facility face value of RUB 1 trillion, representing 50 issuers, The COVID-19 pandemic that has swept across totally new and unexpected ones. The experience construction project at the Murmansk sea port. which became a record for the Bank over its entire the globe, brought abrupt and radical changes of the recent and still continuing crisis is yet Once at full capacity, the new terminal will allow history of operations. Gazprombank’s market share to virtually every aspect of our everyday lives. to be digested. This will become the theme of our for the transshipment of 18 million tons of coal, in initial offerings on the Russian local bond market It became the black swan, expected by nobody. future annual report. Already today, however, we thereby driving the development of the Northern Sea was 47.2%, that on the Eurobond market, 65%. There was no way one could have got ready for this look through the lens of past events to not only get Route. Jointly with VEB, financial closure was achieved The Bank successfully closed 24 major transactions state of emergency in advance. All Bank employees, a vision of our future prospects, but to rigorously via the Project Finance Factory in the first federal of RUB 15 billion or more for 16 corporate issuers, the management team and the bespoke Emergency assess our past year’s performance as well. PPP project, development of a digital ecosystem such as Gazprom, Rosneft, Russian Railways, Response Center had to make an enormous effort According to FY2019 results, the Gazprombank for countering illegal circulation of goods. Norilsk Nickel and other domestic business giants. to curb the blow, radically rethinking the workflows Group generated RUB 44.6 billion of net profit, Gazprombank’s status of a systemically important Another record of the past year was the aggregate of all units in a time-pressed environment, more than RUB 5 billion above the 2018 indicator bank on the national scale, together with the high amount of funds borrowed by the Moscow and making sure that the Bank operates normally (RUB 39.5 billion). Core banking income (net interest reputation and customer confidence allow it, while Region, RUB 51.5 billion, in three issues of regional under abnormal conditions. Now, hopefully, income and net fee and commission income) grew maintaining a strong foothold in the corporate bonds, with Gazprombank acting as the arranger 8 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 9 Key Performance Indicators

and the general agent. This amount became Even before that, remote services became widely Assets, Equity (capital), Loans provided to corporate the largest of all raised by Russian regions over popular among Bank customers. Over 2019, RUB billion RUB billion customers before deducting the last five years. 1.5 million customers got registered in our mobile loan loss provisions, The best (according to Cbonds) foreign bonds app and the Internet Bank. In the mobile app, 6532 6582 722 RUB billion 3985 offering on the Russian market, Series 03 and 04 we implemented such functions as no-visit lending, 3733 5534 617 3384 5122 577 3198 of the Republic of Belarus bonds, is worth money transfers using the rapid payment system, 4879 530 3175 495 to be specifically mentioned. This was not the only currency conversions. New product and service Gazprombank’s project with a foreign issuer. launches enabled us to achieve a triple growth Other successful deals include bond issuances in the number of monthly active users of our mobile of the Republic of Uzbekistan, of Eurotorg, Belarussian app and Internet Bank, so that we had more than largest retailer, and of KTZ, the Kazakh National one million active users in December. We have Railways. added the remote product application functionality 15 16 17 18 19 15 16 17 18 19 15 16 17 18 19 The Bank’s success in the accomplishment to the Gazprombank website, including consumer of a vast range of business objectives is largely and auto loans, debit cards, and courier card delivery underpinned by the technological transformation, service. In 2019, our website audience grew 4 times, Amounts owed to corporate Retail loans before Amounts owed kicked off at our Bank a couple of years ago and almost reaching 3 million visitors in December. customers, deducting loan to individuals, still ongoing. The continuous improvement of our Summing up the digitization topic, we may say that, RUB billion loss provisions, RUB billion 608 services, products, and internal business processes having gone digital well in advance, Gazprombank, 3823 3748 RUB billion 1220 on the basis of cutting-edge digital technologies, even though it did not prepare for the pandemic, still 507 the search for, development, and consistent turned out to be rather well prepared to face up to it. 3073 991 2623 2653 389 843 implementation of innovations have become As it transitioned to predominantly remote customer 314 329 659 678 an inseparable element of Gazprombank’s life. service, and migrated most of its staff to work-from- As part of this technological transformation, home arrangements, the Bank was able to fully retain we have created a fail-safe and scalable its functionality and effectiveness across all lines IT infrastructure which, in the tumultuous spring of its branchy, systemically important, and socially of 2020, allowed our Bank to seamlessly migrate significant business. 15 16 17 18 19 15 16 17 18 19 15 16 17 18 19 to hassle-free and effective work-from-home The hardships we’ve been through raise our morale arrangements. Every employee required to work and enrich our experience. This is how we perceive from home was provided with a fully functional the recent events. Gazprombank turns 30 this year. Net profit/(loss), Core banking income Tier 1 capital adequacy workplace with access to all necessary Bank We have every reason to believe that our Bank RUB billion (normalized), (Basel I, II), % systems both from corporate laptops, and from has met this anniversary proudly, in good spirits, RUB billion personal devices. cognizant of its strength, and confident of its future. 45 177 14.2 40 34 157 29 147 11.9 137 Andrey I. Akimov, 10.0 10.3 10.5 Chairman of the Management Board 112 15

16 17 18 19

15 16 17 18 19 15 16 17 18 19 –48

Capital adequacy Ratio of non-performing loans Ratio of loan loss provisions (Basel I, II), % to loan portfolio, % to loan portfolio, %

13.5 13.1 13.1 3.0 8.9 12.4 2.5 2.4 7.3 10.2 2.2 2.0 5.1 5.0 4.4

15 16 17 18 19 15 16 17 18 19 15 16 17 18 19 Main Results for the Year and Business Development Objectives

2019 6582 2018 6532 2017 5534 2016 4879 2015 5122 Assets, RUB billion 1 12 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 13 External Environment in 2019

Growth of corporate and retail loans and deposits volumes Banking system assets and capital, The past year was tarnished by (excl. currency revaluation, yoy), % as % of GDP a global economic slowdown due • Corporate loans • Assets • Retail loans • Capital to continuing trading disputes, • Non-credit institutions’ funds geopolitical conflicts and meager • Retail customers’ funds 50 98.3 99.9 93.5 92.8 economic growth in key emerging 90.2 88.3 40 markets. 78.5 30

20 10.8 11.0 10.2 9.7 10.0 9.8 10.0 According to preliminary estimates, the reference rate, bringing it down to 1.75% 10 global economic growth in 2019 by the year end. The ECB reduced the deposit rate to -0.5% and relaunched its asset bailout 0 was 2.9%, down from 3.6% in 2018. program. The ECB also experienced a change in its In the USA, growth slowed to 2.3%, management team, and the new head announced –10 the regulator’s plans to reconsider ECB goals a figure that matches the average in the monetary policy area. The central banks –20 annual GDP growth rate since of developing countries marched in lockstep with 12 13 14 15 16 17 18 19 20 13 14 15 16 17 18 19 the world’s largest CBs. the end of the 2008 crisis1. Monetary policy easements in the major countries resulted in declining yields on their treasury bonds, causing money market rates to drop. For example, Contributions to GDP dynamics by sectors, p.p. the year average yield on 10yr US Treasuries dropped from 2.9% in 2018 to 2.13% in 2019. 10yr Eurobond 2018 Other countries experienced even more pronounced yields fell from 0.46% to -0.21% on average over • 2019 reductions in their economic growth rate. Germany the year. In China, the year average money market • Delta was particularly heavily hit by the global trade rate, SHIBOR, declined to 2.83% from 3.75%. • decline, with its GDP growth rate down from 1.5% Notwithstanding rising protectionism, mild 0.72 2.54 to 0.6% in 2019. The Euro zone as a whole, too, faced monetary policy contributed to less pronounced 0.63 a slowdown in economic activity, aggravated by both risk perceptions worldwide. The volatility index (VIX) slackening trade and the uncertainty around Brexit remained relatively stable, with a FY2019 average of

terms. In the UK, however, GDP grew at the same rate 15.3p, compared to 16.6p in 2018. The MSCI Global 0.45 of 1.4% in 2019. Index grew by 25.2% in 2019, while MSCI Emerging 1.34 0.34 Japan’s 2019 results displayed modest GDP growth, Markets gained 15%. 0.31 0.32 notwithstanding a sales tax increase that caused th GDP to drop in the 4 quarter. In China, GDP Russia’s economic growth continued 0.20 0.22 0.17 growth slowed to 6.1% in 2019, as a result of its despite slowing consumer activity 0.14 0.14 0.13 prolonged trade dispute with the USA. The Chinese In 2019, the Russian economy grew by 1.3%, slightly 0.10 0.08 0.06 0.03 0.04 government consistently stimulated the economy less than in 2018 (+2.5%). Consumer demand 0.02 0.02 0.00 throughout the year. Another 2019 development remained the primary growth driver in 2019, albeit -0.01 was the monetary policy reform, which, as China’s at lower rates than in 2018, due to a slowdown -0.06 -0.10 -0.08 central bank anticipates, will allow it to increase in consumer lending growth. Economic growth -0.12 the transparency of its operations. was underpinned by extra government spending The ongoing US-China trade conflict caused on national projects.

a noticeable erosion of global trading activity. As the global economic environment stabilized -0.32 1 Data sources used in this According to IMF estimates, the global trade growth in 2019, FX interventions in accordance with chapter: FRS, ECB, BOE, BOC, rate declined from 3.7% to 0.9% in 2019. the budgetary rule, having been suspended -1.20 -0.78 IMF, BEA, BLS, Bloomberg, The developed countries switched to monetary in 2H2018, were resumed. The average Ruble Bank of Russia, and Federal GDP Agribusiness Production Manufacturing Construction Trade Real estate, Energy, Other services Other Statistics Service (Rosstat). policy easement. In the USA, the FRS started reducing exchange rate in 2019 (RUB 64.7/USD) was of minerals finance transport 14 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 15 Financial Performance

robust due to the inflow of non-residents’ funds Notwithstanding the slowdown in consumer into OFZ, the continued trade account surplus lending, banking sector earnings continued Gazprombank released its financial (USD +73.5 billion) and a transitory liquidity on their upward course shortage experienced by the banking system closer Banking system assets grew from RUB 94.1 results for 2019 with net income at to the year end. Foreign capital inflow became one to 96.6 trillion (+2.7%) in 2019. With FX revaluations of the drivers behind the growth in the Moscow and license revocations factored in, assets increased RUB 44.6 billion in accordance with Exchange Index (+16.1%) and the RTS FX Index by 5.2% (+6.9% in 2018) to reach 88% of GDP. (+8.1%). The share of the top five banks in banking system International Financial Reporting After the VAT increase in early 2019, there was assets remained largely unchanged despite the rapid a period of faster price growth, with inflation growth of second-tier banks. Standards. reaching its peak in March 2019 (5.3% YoY), before Banking system assets growth was underpinned turning downward to reach 3% YoY by the year by an increase in retail lending (RUB +2.7 trillion, end. Slowing price growth rates and reduced +18.6%; hereinafter, taking into account FX inflation expectations eventually caused the Bank revaluations and bank license revocations). Mortgage of Russia to switch to a milder monetary policy, loans grew by about RUB 1.1 trillion, and unsecured Alexander Sobol, Deputy Chairman Bank GPB (JSC) key financial indicators reducing the key rate by 1.5 p.p. in 2019 (from 7.75% consumer loans by RUB 1.5 trillion. The corporate of the Management Board, Bank GPB (JSC), for 2019 / as at 31 December 2019: to 6.25%). The Russian stock and debt markets loans portfolio grew at a moderate pace (4.5%). • Net income totaled RUB 44.6 billion compared remained attractive for foreign investors. The banking system maintained a significant liquidity notes: to RUB 39.5 billion in 2018. Activity levels remained high in the real sector surplus. The commercial banks’ net position with • Net commission income amounted of the economy throughout 2019. Industrial the Bank of Russia and the Ministry of Finance “Implementation of a strategy focused to RUB 34.2 billion against RUB 18.4 billion in 2018. output grew (+2.3%), underpinned by growth hovered around RUB 5–6 trillion throughout the year. on the priority development of the retail • Net interest margin remained at the 2018 level in the extracting sector (+2.6%) and manufacturing The cash surplus resulted in consistently low at 2.8%. industries (+2.5%). Among the manufacturing interbank market rates. business helped to maintain the Bank’s • Cost of risk comprised -0.1%, with due regard industries, the most impressive growth was The Bank of Russia persisted with its efforts aimed margin at the previous year’s level (2.8%) to the adjustment of loans accounted at fair value, in pharmaceuticals and materials (+22%), while at keeping the banking system stable. The number against 0.5% in 2018. among extracting industries, natural gas and of banks was reduced (from 484 to 442) through against the backdrop of significant interest • ROE and ROA stood at 6.3% and 0.7%, respectively, condensate production (+9.9%) performed best. license revocations. Starting from 1 October, rates decrease, and practically double compared to 6.8% and 0.6% in 2018. There was a high level of activity on the labor market. the Bank of Russia raised the risk ratios for unsecured • Cost-to-income ratio reached 65.1% compared Unemployment did not rise above 5% throughout consumer loans. Banks, in turn, improved their its fee-based income, thus improving to 57.5% at year-end 2018. the year, reaching a historical low of 4.3% in August balance sheet quality: both provisions for possible its performance stability in the period • Assets amounted to RUB 6,582.2 billion 2019. Growing real wages (+2.7%) pushed up real losses in lower-quality class loans and capital (RUB 6,532.1 billion as at 31 December 2018). household incomes (+1.5%) and retail sales (+1.6%) adequacy grew, while overdue debt in the loan of financial markets volatility”. • The total loan portfolio1 was RUB 4,593.3 billion against a backdrop of slightly reduced volumes portfolio remained below 5.5%. (RUB 4,239.9 billion as at 31 December 2018). of commercial public services (-0.9%). Record-setting banking sector earnings • Non-performing loans (NPL) (overdue 90+ days The federal budget surplus amounted to 1.8% (RUB 2 trillion) were largely due to a change and defaulted loans) in the total loan portfolio of GDP (2.7% of GDP in 2018). This reduction was in report presentation standards and one-off declined to 2.2% against 2.4% at the start of 2019. the result of incremental budget expenditure impacts. • The provisioning ratio comprised 4.4% compared on national projects. Gazprombank (Joint Stock Company) to 5.0% as at 31 December 2018. Export revenues drove an increase in the National (hereinafter, “Bank GPB (JSC)” or “the Bank”) • Customer accounts comprised RUB 4,968.5 billion Welfare Fund from RUB 4 to 7.7 trillion, equivalent published consolidated financial statements compared to RUB 4,813.5 billion at year-end 2018, to 6.9% of GDP and just below the level at which prepared in accordance with International while the loan-to-deposit ratio reached 92.4% some of the National Welfare Fund resources could Financial Reporting Standards (IFRS) for 2019 compared to 88.1% as at 31 December 2018. be reinvested in the economy. and as at 31 December 2019. • Basel I total capital comprised RUB 758.1 billion against RUB 676.4 billion as at 31 December 2018, the total capital adequacy ratio stood at 13.1% as at the reporting date, and the Tier 1 capital adequacy ratio comprised 11.9%.

1 Includes gross corporate and retail loans accounted at amortized cost before loan provisioning and also loans accounted at fair value. 16 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 17

Overview of key financial indicators,RUB billion: The Group’s comprehensive income totaled 31.12.2019 31.12.2018 Change RUB 39.0 billion, including foreign exchange Assets 6,582.2 6,532.1 +0.8% Shareholders’ equity (capital) 722.2 616.7 +17.1% gain/loss on the Group’s foreign investments. Cash and cash equivalents 739.0 1,049.3 -29.6% Loans to corporate customers 3,985.4 3,733.0 +6.8% Retail loans 608.0 506.9 +19.9% Securities and investments in associates2 647.7 754.6 -14.2% Financial results Comprehensive income from transactions in securities9 The Group successfully completed the year of 2019, in 2019 totaled RUB 35.5 billion against the income Corporate customer accounts 3,748.5 3,822.7 -1.9% earning RUB 44.6 billion of net profit while its of RUB 3.2 billion in 2018: mostly due to positive Retail customer accounts 1,220.0 990.8 +23.1% comprehensive income totaled RUB 39.0 billion, revaluation of investments and income from associates Capital market borrowings3 267.6 326.6 -18.1% including foreign exchange gain/loss on the Group’s as well as income from the disposal of subsidiaries. Subordinated debt 74.6 136.5 -45.3% foreign investments. By comparison, the Group’s net Non-banking segments ended 2019 with the operating profit and comprehensive income in 2018 amounted loss of RUB 13.0 billion against RUB 1.7 billion in 2018. to RUB 39.5 billion and RUB 43.0 billion, respectively. Impacted by the above factors, the Group’s operating 2019 2018 Change The Group’s ROE was down 0.5 p.p. to 6.3% in 2019 income (before loan loss and impairment of assets against 2018. ROA reached 0.7% — up 0.1 p.p. against provisions) reached RUB 185.5 billion in 2019 Net profit 44.6 39.5 +12.9% 0.6% at year-end 2018. compared to RUB 171.0 billion in 2018. Comprehensive income 39.0 43.0 -9.4% The Group’s net interest income in 2019 was up 2.9% Operating expenses reached RUB 120.8 billion against 2018 to RUB 142.8 billion, with interest income in 2019 compared to RUB 98.3 billion in 2018. Higher up 9.6% to RUB 409.5 billion and interest expenses expenses were due to the on-going implementation 31.12.2019 / 31.12.2018 / up 13.6% to RUB 266.7 billion. The net interest margin of technological transformation projects, including 12 months 12 months in 2019 remained intact at 2.8%. the retail business transformation. The cost-to-income of 2019 of 2018 Change The Group’s recurring core banking income, including ratio increased by 7.6 p.p. compared to year-end Total Capital Adequacy Ratio4 13.1% 12.4% +0.7 p.p. net interest income before loan loss provisions and 2018 — from с 57.5% to 65.1%. Tier 1 Capital Adequacy Ratio 11.9% 10.5% +1.4 p.p. net commission income increased by 12.7% in 2019 to RUB 177.0 billion compared to RUB 157.1 billion Non-performing loans5 (NPL), % of gross loans 2.2% 2.4% -0.2 p.p. in 2018, with net commission income in 2019 Ratio of loan loss provisions to gross loans accounted at amortized cost 4.4% 5.0% -0.6 p.p. (RUB 34.2 billion) up 1.9 times against 2018 Loan-to-deposit ratio 92.4% 88.1% +4.3 p.p. (RUB 18.4 billion). The active development of retail Group ROE 6.3% 6.8% -0.5 p.p. banking made a higher commission income possible: 2019 saw the launch of out-of-the box insurance Group ROA 0.7% 0.6% +0.1 p.p. and service offers, both for lending and investment 6 Net Interest Margin 2.8% 2.8% 0.0 p.p. products for individuals. Cost of risk7 -0.1% 0.5% -0.6 p.p. Recurring income accounted for 95.4% in the Group’s Cost-to-income ratio8 65.1% 57.5% +7.6 p.p. operating income in 2019 compared to 91.9% in 2018.

2 Including trading securities, investment securities, 6 The ratio of net interest income to the chronological mean 8 Operating expenses include salaries, other personnel and investments in associates. of quarter-end interest bearing assets for the reporting period. compensations and administrative expenses. Operating 3 Including bonds issued both on the domestic Interest-bearing assets include those due from financial income includes net interest income, non-interest income and international markets. institutions, loans to customers and debt securities (all before and non-banking operating profits. Operating income does 4 In accordance with Basel I Framework. loan loss provisions). not include provisions and profit/loss on loans accounted 5 Loans are deemed “non-performing” if their principal 7 Loan loss provision charges and profit/loss on loans at fair value. or interest is 90+ days overdue, as well as in the event accounted at fair value as of the reporting period 9 Combined income from transactions with securities includes both realized and unrealized gain from securities of counterparty default. to the chronological mean of quarter-end interest earning transactions and a change in the Group’s investments value, as well as net derivatives results, loss on financial liabilities assets for the reporting period. designated as at fair value through profit or loss, as well as gain from subsidiaries’ disposal. 18 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 19

Asset quality Business volumes Expenses from loan loss provisioning The Group’s total assets comprised RUB 6,582.2 billion An increase in the retail loan book brought reached RUB 10.5 billion in 2019 compared as at 31 December 2019 — up 0.8% against to RUB 6.8 billion in 2018. Positive fair value RUB 6,532.1 billion as at 31 December 2018. the share of retail loans within the total loan adjustment of loans and receivables amounted In particular, cash and cash equivalents were to RUB 14.5 billion in 2019 due to the recovery at RUB 739.0 billion as at 31 December 2019 compared portfolio to 13.2% as at 31 December 2019 — of impairment resulting from the repayment to RUB 1,049.3 billion as at 31 December 2018 of several loans accounted at fair value and also mostly due to the reduction in fixed-term deposits an increase of 1.3 p.p. compared to that as from the adjustment of loans to market value in the Bank of Russia. following the key interest rate cut. The loan book before loan loss provisions at 31 December 2018. The Group’s cost of risk (with due regard to the fair as at 31 December 2019 accounted for value adjustment of loans and receivables) was RUB 4,593.3 billion — up 8.3% compared -0.1% in 2019 against 0.5% at year-end 2018. to RUB 4,239.9 billion as at 31 December 2018. NPLs (non-performing loans) in the gross loan The loan book (net of loan loss provisions and profit/ book amounted to 2.2% in 2019 compared to 2.4% loss on loans accounted at fair value) in the Group’s compared to 11.6% at year-end 2018. The profile Capital adequacy in 2018. The provisioning ratio (total loan loss total assets accounted for 66.8% compared to 61.8% of the portfolio of securities and investments The Group’s Basel I total capital based on consolidated allowance to the portfolio of loans accounted at at the end of December 2018. in the Group’s associates mostly includes fixed IFRS financials comprised RUB 758.1 billion amortized cost) was 4.4% as at 31 December 2019 Corporate loans were up 6.8% in 2019 income instruments such as investments in Russian as at 31 December 2019 — up 12.1% in 2019 against 5.0% as at 31 December 2018. At the same to RUB 3,985.3 billion as at 31 December 2019 government debt, bonds and promissory notes compared to RUB 676.4 billion at year-end 2018. time, the loan loss allowance as at the reporting compared to RUB 3,733.0 billion at year-end 2018. of Russian issuers, with debt securities up 10.2 p.p. In January 2019, the Group obtained financing from date exceeded NPLs two times (at year-end 2018, Retail loans showed considerable growth of 19.9% in 2019 — from 70.4% to 80.6%. the Gazprom Group via the perpetual interest-free the coverage ratio was the same). in 2019 — from RUB 506.9 billion to RUB 608.0 billion Amounts due to banks fell by 21.3% in 2019 to subordinated loan of RUB 90,000 million. The loan as at 31 December 2019. RUB 319.4 billion (RUB 405.9 billion at year-end 2018). meets the criteria for it to be classified within Tier Mortgage loans form the bulk of the Group’s The share of amounts due to banks in total liabilities 1 Capital for calculating the capital adequacy ratio. retail loans, accounting for RUB 393.0 billion was down from 6.9% to 5.5% as at 31 December 2019. In February 2019, the Bank of Russia approved as at 31 December 2019 — up 8.5% compared Corporate and retail deposits grew to RUB 4,968.5 billion the inclusion of the perpetual and interest-free loan to RUB 362.2 billion as at 31 December 2018. as at 31 December 2019 compared to RUB 4,813.5 billion in the additional capital when calculating capital Mortgage loans in the retail loan book were as at 31 December 2018 (the overall increase of 3.2%). adequacy in accordance with the national rules. down 6.8 p.p. for 2019 — from 71.4% to 64.6%. At that, corporate deposits were down in the structure At the same time, upon receiving an official Consumer loans grew in 2019 from RUB 138.6 billion of raised funds — as at 31 December 2019 they authorization of the Bank of Russia, the Group to RUB 207.6 billion (up 49.8%). comprised RUB 3,748.5 billion — 1.9% lower than exercised a call-option on subordinated Eurobonds Consumer lending grew owing to the implementation at year-end 2018 (RUB 3,822.7 billion), whereas of CHF 350 million in the second quarter of 2019. of several transformation projects, which allowed private deposits were up 23.1% from RUB 990.8 billion The Group’s risk-weighted assets grew 5.4% in 2019 the Bank to show multiple expansion of the active to RUB 1,220.0 billion in 2019. Private deposits were to RUB 5,769.4 billion. user database in the new mobile bank (now up 4.0 p.p. in customer deposits from 20.6% at year-end All in all, the Group’s capital adequacy indicators 1.5 million users already); the Bank also started 2018 to 24.6% as at 31 December 2019. as at 31 December 2019 were as follows: the Group’s to process over 15 thousand loan applications a day. Customer deposits in Group liabilities accounted total capital adequacy ratio was 13.1% (12.4% In 2019, the Bank posted fourfold growth in consumer for 84.8% as at 31 December 2019 — up 3.4 p.p. at year-end 2018 — up by 0.7 p.p. for the year); loans’ disbursement a day and increased its sales (81.4% at year-end 2018). the Group’s Tier 1 capital adequacy ratio was 11.9% through digital channels to 55%. Capital market borrowings, including (against 10.5% at year-end 2018 — up 1.4 p.p. An increase in the retail loan book brought the share Eurobonds and local bonds declined for the year). of retail loans within the total loan portfolio to 13.2% as at 31 December 2019 to RUB 267.6 billion compared as at 31 December 2019 — an increase of 1.3 p.p. to RUB 326.6 billion at year-end 2018 (down 18.1% compared to that as at 31 December 2018. in 2019). The year of 2019 saw the redemption of local The portfolio of securities and investments bonds totaling RUB 22 billion, and also of Eurobonds in the Group’s associates comprised RUB 647.7 billion of USD 0.5 billion issued in 2017, Eurobonds as at 31 December 2019 — down by 14.2% (securities of EUR 1 billion and Eurobonds of USD 0.75 billion, stood at RUB 754.6 billion as at 31 December 2018). both issued in 2014. In 2019, placements included The share of securities and investments in the Group’s local bonds’ issues totaling RUB 92 billion with maturity associates in the total assets of the Group declined in 2021–2025. As a result, capital market borrowings by 1.8 p.p. in 2019 to 9.8% as of the reporting date in the resource base declined by 0.9 p.p. to 4.6%. 20 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 21 Positioning Ratings

Domestically, Bank GPB (JSC) The Bank`s current ratings are remains in the lead, reaffirming underpinned by its strong market its stable position as one of the top position and systemic importance. three banks in terms of key volume indicators1.

Share of Bank GPB (JSC) in the key indicators of the Russian banking system (RAS) As of 31 December 2019, the following Gazprombank’s long-term foreign currency credit credit ratings were assigned ratings were one step lower than Russia’s rating assigned by S&P Global Ratings, Moody’s Investors Amounts owed to Gazprombank: Service and Fitch Ratings. Corporate to corporate Amounts owed On 8 February 2019, Moody’s Investors Service Assets Capital2 loans Retail loans customers3 to individuals upgraded the sovereign rating of the Russian As of 1 January 2019 6.9% 6.8% 10.9% 3.2% 12.7% 3.3% Federation to Baa3 with a stable outlook. Following this rating action, on 12 February 2019, Moody’s As of 1 January 2020 6.8% 6.8% 11.0% 3.3% 11.9% 3.8% Fitch Ratings Investors Service upgraded Gazprombank’s rating • BBB- (long-term foreign-currency issuer default to Ва1 with a stable outlook. rating) — stable outlook; On 25 June 2019, Expert RA rating agency affirmed Growth rates in 2019: Bank GPB (JSC) vs. the Russian banking system (RAS) Gazprombank’s credit rating at ruAA+ with a stable S&P Global Ratings outlook. • ВВ+ (long-term foreign-currency issuer rating) — On 25 July 2019, S&P Global Ratings affirmed Amounts owed stable outlook; Gazprombank’s rating at ВВ+ with a stable outlook. Corporate to corporate Amounts owed On 9 August 2019, Fitch Ratings upgraded Assets Capital2 loans Retail loans customers3 to individuals Moody’s Investors Service the sovereign rating of the Russian Federation Banking system 2.7% 6.9% 0.6% 18.5% 2.0% 7.3% • Ва1 (long-term bank deposit rating) — stable to ВВВ with a stable outlook. Following this, outlook; on 19 August 2019, the agency upgraded Bank GPB (JSC) 2.8% 7.4% 2.6% 19.9% -4.1% 22.6% Gazprombank’s rating to ВВВ- and changed Expert RA the outlook from positive to stable. • ruAA+ (national scale creditworthiness rating) — On 11 November 2019, Fitch Ratings affirmed stable outlook; Gazprombank’s rating at ВВВ- with a stable outlook. On 28 November 2019, ACRA upgraded the rating ACRA of Gazprombank to АА+(RU) and changed • АA+(RU) (credit rating) — stable outlook. the outlook from positive to stable. The Bank’s current ratings are traditionally underpinned by its strong position in the lending market, specifically due to loans to large corporations, the systemic importance of the Bank, high probability of receiving government support when necessary, low share of distressed assets compared to banking sector in general, adequate risk management system, and comfortable liquidity level adequate for debt servicing.

1 According to INTERFAX-100. Russian Banks, www.finmarket.ru/database/rankings/. 2 Regulatory capital (‘Total Capital (Equity)’ metric in the Capital Adequacy Report (Form 808)). 3 Including funds of individual entrepreneurs. 22 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 23 Strategic Goals and Principal Vectors of the Bank’s Development

Special attention is devoted Development of cross sales, particularly to the strategic goal of the Bank’s in relation to complex products, will support technological transformation generation of returns by the Bank’s corporate and digitization in an environment business. characterized by the growing importance of remote customer service and work-from-home arrangements.

The strategic priorities • diversifying the business and maintaining its key Gazprombank is endeavoring to actively develop Going forward, Gazprombank will enhance of the GPB Group were formulated positions in the banking services market, with its retail business as one of its most important its regional network, taking into account the needs performance improvements across all GPB Group strategic business areas, through: of its key customers and their partners. It is expected with reference to the development entities. • attracting new customers and implementing that incremental return on capital will be generated goals and current objectives outlined loyalty programs; through technological transformation of the business, Corporate customers will remain a priority • expanding the range of banking products and process improvements and migration of operations by the President and the Government for the Bank. Retaining its status as a systemically services offered, in particular, via remote channels; to remote channels. of the Russian Federation. important bank, Gazprombank will: • expanding and upgrading its service network. • actively participate in government programs In the challenging macroeconomic environment aimed at the recovery and subsequent sustainable The key objectives are as follows: of 2020, the majority of the above-mentioned goals growth of the Russian economy; • set up an efficient sales function, improve and objectives remain on the agenda, while their • provide Russian companies with project the functionality and user-friendliness of remote level of priority and the sequence in which they are and structured financing, focusing on industries banking; addressed may be adapted to the current situation. In an era of rapidly developing technology with growth potential in which the Bank has • expand the commission-based products line and changing consumer behaviors, the Gazprombank considerable experience (oil and gas production (packaged offerings, partner loan insurance strategy defines the key areas of the Bank’s operations and refining, agriculture, mining and metals, products, investment insurance instruments); based on current market prospects and capabilities, infrastructure, and transport); • stimulate cardholder transaction activity; building upon existing competitive advantages and • retain leadership in the financing of, and advising • optimize footprint and upgrade office layouts. accumulated competencies. on, PPP projects, in particular, in the regions. Achieving the Bank’s strategic goals in the development Bank GPB (JSC) channels its efforts towards achieving The Bank continuously monitors the status and outlook of the retail business will require a rigorous its key strategic objectives, which include: of those sectors of the Russian economy where transformation and ambitious technological • maintaining its status as a systemically important the Bank has developed servicing competences: advancement of its operations, including: bank, participating in government initiatives infrastructure and PPP projects, electricity generation, • integration of existing service channels into aimed at assuring sustainable economic export-oriented industries, technical and technological an all-encompassing system of continuous development; refurbishment projects, petroleum and gas chemistry, communication with the customer; • developing strategic partnerships with, and advanced import substitution. Development • enhancement of mobile and Internet banking; and providing the full range of financial services to, of cross sales, particularly in relation to complex • improved service channel accessibility; major Russian companies; products, will support the generation of returns • faster banking service and improved reliability by the Bank’s corporate business. of IT infrastructure. 24 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 25 Development of IT and Digital Technology: 2019 Results

Also, in 2019, the Bank launched pilot operation Throughout 2019, the mobile app and the Internet In 2019, Gazprombank continued of the key modules of our Omni-Channel Platform: bank were updated at least once a month. • unified authentication and authorization platform; New functions were added: transfers via the Fast working on its Transformation • info services; Payments System, transfers by telephone number • universal will declaration services. inside the Bank, information and advertising push Program, which comprises more than A prototype of the Omni-Channel Customer notifications, payment by QR code, loans without Service — the credit card application feature — was visit for salary customers, pre-approved loan offers, 2,000 tasks aimed at technological launched on the Bank’s website. currency exchange and current account opening The more a company knows about its customer in six currencies (ruble, euro, US dollar, pound sterling, upgrading and organizational and the faster it processes such data, the greater Swiss franc and Chinese yuan), partial and full loan its market competitiveness. In 2019, the Bank prepayment, repeated payments and transfers from transition from conventional to digital. started pilot operation of its Memory Caching transactions history, sending of receipts to the email component — a system designed to dramatically from transactions history, Your Success and For reduce the time a customer has to wait for data Savings deposits, brokerage account top-up, and auto to load. This solution will enable faster RAM data payments (via the Internet bank). interchange and an adaptive approach to data All these changes did not go unnoticed The past year’s key milestones Another 2019 development was the implementation management. on the Russian digital market. In September 2019, were the establishment of a new of Tessa, a Russian ECM platform, which served In the area of retail bad loan recovery process Telecard 2.0 won the “Fast Start” nomination as the basis for the Bank’s new uniform customer automation, a whole range of activities were in the Go Awards Banking rating as the best app failure-proof infrastructure designed file feature. Jointly with our ecosystem team, successfully completed in 2019. In particular, brought to market in 2018. It also made it into to overcome technological we implemented corporate customer onboarding search and collection services for contact information the TOP 5 highest-rated apps in the app store procedures, as well as an archive of retail customer in social media were implemented on the basis and the TOP 10 best promotion strategies. constraints, and the synchronization documents and integration with front-office systems. of Collection, the flagship automated banking As part of the New IT Infrastructure program of systems and processes In late 2019, Gazprombank, jointly with the FinTech system (ABS). Additional information is gathered implementation, projects to streamline Data Center Association and the Bank of Russia, became one through interaction with mobile operators’ services. operations and upgrade network infrastructure for continued business upscaling, of the first banks in Russia to launch a decentralized The integration of Collection ABS with the Unified were completed in 2019. To ensure prompt release digital channel development, depository system (DDS) for mortgage deed Federal Register of Bankruptcies takes debtor of IT resources and optimal use of server capabilities accounting using blockchain technology. interaction at the bankruptcy stage to a new level. through virtualization, a Private Cloud platform new banking products relaunch, At present, the DDS system is used to track Compliance with Federal Law No. 76 regarding was established and 66 automated systems customer base growth, electronic mortgage deeds, while continued the implementation of a mortgage holidays were migrated to it, followed by implementation development work will see its application expanded calculator on the basis of Collection ABS optimizes of automatic release of Private Cloud resources. and improvement in the stability to other kinds of securities as well. As data is stored Collection services, making them as convenient as A workplace virtualization program was undertaken and resilience of our banking systems. in a distributed ledger system, there is less risk possible for our customers. As Collection ABS is used (using Virtual Desktop Infrastructure (VDI) of fraud and the emergence of a gray market to monitor the Bank’s insurance functions, it is already technology) and over 10,000 workplaces in the head in mortgage deeds. The new technology reduces demonstrating an upward trend in outstanding office and across the branch network were migrated. transaction costs by 30% relative to traditional insurance debt recovery and generally optimizing The corporate mobility (MI) platform and a uniform securities accounting and storage processing the Bank’s spend on this functionality. communication system were implemented to enable technologies. The blockchain technology will Development of digital channels became one prompt remote access to the Bank’s corporate Based on the new Retail Loan Pipeline (RLP 2.0) significantly improve the stability and reliability of the Bank’s priority areas of activity. resources. implemented in late 2018, new loan products of data on electronic mortgage deeds, thereby In 2019, Gazprombank continued its course were taken to the market throughout 2019, while minimizing the risks of nonexistent pledges, towards digitization. The Telecard 2.0 mobile existing products were improved in new channels. and transactions will take less time to execute. app grew its audience three times over the year, Partner programs were actively developed: DDS development also facilitates the securitization reaching 1.5 million registered customers. Of these, the Bank implemented the option of applying of mortgage deeds. 1 million uses the app every month, generating for consumer loans via aggregators (Banki.ru, For the borrower, the system cuts the electronic over 4.6 million transactions. As of December 2019, Sravni.ru), and Home Credit Bank and MegaFon mortgage deed execution and registration time there were 1,083,253 active customers vs. 361,889 were connected via OpenAPI. There was from 9 days to 24 hours, while allowing the Bank in December 2018: thus, the remote banking a particular focus on improving the performance to gradually digitalize mortgage transactions customer base grew by 199% over the year, with and resilience of RLP 2.0: the pipeline processed and grow their volume. Customers also benefit penetration in the active card customer base up to 15,000 requests a day. from faster registration of real estate titles. reaching 50% at the end of 2019. Корпоративный бизнес

26 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 27 Customer Base

In the reporting year, the Bank reinforced its management of the Gazprom Group’s liquidity. In 2019, important steps were taken status as a leader in the provision of services As a result of this service implementation to ensure the legitimacy of spending by co-funded in 2019, the pooled cash balances on the ruble- to improve the competitiveness construction contractors, in accordance with denominated master account amounted the requirements of Federal Law No. 214-FZ dated to more than RUB 1.5 trillion, with pooled FX of the corporate customer relations 30 December 2014. The Bank also implemented balances of approximately USD 4.5 billion an electronic reporting feature on escrow accounts and EUR 440 million. management system. for developers. In addition, to develop the Corporation Settlement As part of our comprehensive financing product Center service for Gazprom subsidiaries development for real-estate developers, we and affiliates, integration with the Gazprom Budget implemented support of residential estate Management Automated System’s Settlement construction projects in connection with Management Subsystem was completed, Implementation of a customer loyalty will be monitored by Bank GPB (JSC) specialists. the provision of project financing. Given that and the process of connecting new participants and satisfaction improvement project In 2019, the first pilots were implemented residential construction market participants are still to the service was started in 2019. in Belarus and Serbia. This area is one of the most in the early stages of adapting to the new realities, The Bank continued providing its Integrated commenced: preliminary studies were promising for continued product development. control of the legitimacy of spending dramatically Solution for Direct Electronic Document Exchange undertaken and their results used The practice of providing banking support is also reduces the risk that developers will divert loan from Gazprom Accounting System (host-to-host): widely applied in proprietary procurement. proceeds to other projects. 98 subsidiaries and over 170 branches to refine banking products. In particular, banking support was provided Much attention is being paid to the development (924 accounts) were connected. In 2019, to major IT procurement and equipment supply of state-of-the-art electronic services, and banking the number of connected service participants operations to enable the functioning of the Bank’s support is no exception. In 2019, we completed grew by 30%. new office on Ozerkovskaya Embankment an ambitious Interactive Reporting Service The Bank implemented its customs duty payment in Moscow. development project that allows banking service using Round payment cards issued It should be noted that the contract banking In 2019, the service was popular among the Bank’s support results to be seen in real time, including by Multiservice Payment System LLC, the operator support service is developing at a lively pace. corporate lending units. In addition, there the list of counterparties involved in a project, of the Round customs payment system. The service Bank GPB (JSC) continued working actively were many more requests for this service from a database of evidences of title and analytics, was implemented with a view to satisfying to put in place project banking support services companies involved in projects co-financed as well as the ability to generate the necessary customer requirements for fast payment of customs for Russia’s largest oil and gas companies. by the government. reports. This system is unique and unmatched duties, levies and charges, and reducing funds At the same time, contract banking support The Bank continues to support major on the market. For the Gazprom Group’s diversion to a minimum. Customs inspectors can provided to industry customers is arranged infrastructure projects, including the construction needs, a personal account section for banking see payments made via Round cards in the Personal as an efficient comprehensive product, capable of a bypass road in Khabarovsk, construction support purposes has been developed and is Accounts system in real time, enabling prompt of supporting project implementation from of the Zvezda Shipbuilding Facility in the Far East, continuously updated on the GPB Electronic completion of the customs declaration investment idea to procurement procedures, and comprehensive development of the Murmansk Trading Platform. This provides an information and clearance process. financing and equipment manufacturing. transport hub. platform for interaction not only between Bank GPB (JSC) continued to be actively involved Interaction with oil and gas sector companies The diversity of approaches taken to support the Bank and the Gazprom Group, but also among in the activities of financial markets and financial in the area of contract banking support the control procedures allows Bank GPB (JSC) the Group’s structural units. institutions, enhancing its relevance and role in this is a strategic area of the Bank’s operations. In 2019, to tailor its support arrangements to suit In December 2019, Bank GPB (JSC) launched area. Work is underway with industry associations, banking support of oil and gas contracts became the needs of any customer. The Bank’s existing a tailored solution for energy sector companies, asset management market leaders and oversight one of the fastest developing areas of activity. software, hardware and human resources enable enabling centralized liquidity management (cash authorities to create a common information The total volume of contracts supported exceeded us to guarantee that contractors will be connected pooling) with an overdraft limit of RUB 15 billion, space for professional market participants, RUB 1.2 trillion as at 31 December 2019. to the system from anywhere in the Russian thereby confirming the Bank’s position as the leader such as management companies, specialized Special note should be made of a radically Federation, to ensure that payment requests are on the transaction products market. depositaries, and the Bank. new product offered by the Bank since reviewed as quickly as possible, and to accept We actively developed our relations with IT industry If all players use a common Client-Bank system, 2019 — Cross-Border Banking Support. for review and provide structured storage players, including major system integrators, this will achieve the aim of providing accurate This product helps to make maximum use of documents of any size and format via electronic software vendors and cloud service providers across information on movements (or absence of the best practices and experience acquired channels, while also guaranteeing that customers a wide range of products, from traditional loans of movements) in the customers’ current, brokerage by the Bank in the course of providing and investors have real-time access to payment- to specialized complex settlement solutions. Over and deposit accounts. The system will also banking support to projects within the Russian related information. the reporting year, we succeeded in reinforcing our alleviate the workload on corporate customers’ Federation. A particular feature of this banking Bank GPB (JSC) is involved in the implementation image as a contemporary Bank capable of satisfying operating units and back offices, and comply with support model is the involvement of a local of major government projects, successfully the needs of the most progressive sector the regulator’s requirements. partner bank in the country of project providing joint treasury and banking support. of the economy. In 2019, the Bank continued to actively develop its implementation and exchange of information, Last year, the Bank’s high standard of service By way of providing the cash balance pooling online collection service using automated deposit enabling the partner bank to act as an agent provision was confirmed by a three-year extension service on the basis of Bank GPB (JSC), 435 accounts machines, and remains the leader in this market for Bank GPB (JSC) for individual account opening of its support for one of the largest multi-home of subsidiaries and branches, including non- in its own right. The number of stores offering and servicing. Settlements via these accounts residential property capital repairs funds. residents, were connected to enable efficient this service doubled to 12,000 by the year end. 28 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 29

In 2019, Bank GPB (JSC) won the “Retail Partner Bank” nomination in the Retail Week Awards 2019, a professional industry contest.

In 2019, a number of pilot projects were launched In 2019, we continued to actively develop The Bank continued to work on hedging company at RUB 48 billion. At SPIEF 2019, the Bank in the promising new segment of pharmacy chains. cooperation with telecoms, IT, and media transactions for mining and metals sector entered into a strategic cooperation agreement with In 2019, the Bank actively developed its cooperation companies. The Bank remained the primary debt companies. It should be noted, in particular, that T Plus, making it the largest lender to that company with transport industry players — a service that market partner of major telecommunication for the first time on the Russian market, the Bank with a 46% share in its loan portfolio (RUB 54 billion). became one of its key growth points. Gazprombank companies, acting as the arranger of listed bond completed a price hedging transaction in respect In addition to the traditional forms of collaboration has continued this project with a focus on railway issues with a total value of RUB 97.5 billion. of iron ore stock with 65% iron content. in the areas of corporate lending, transaction transport entities. Despite the challenging situation in the oil, One of the key events was the syndicated loan banking and capital market transactions, this The scope of cooperation with government chemical and petrochemical industries, the Bank agreement signed between Bank GPB (JSC), VEB.RF collaboration expanded into new areas such investment funds was increased significantly. took part in arranging corporate bond issues and Operator-CRPT company as a Project Finance as projects implemented by ROSSETI within The Bank acts as a reliable business partner for oil and gas and chemical sector companies Factory project in December 2019, with a limit the Digital Transformation 2030 concept. taking into account the specific features of their for a total amount of more than RUB 150 billion. of RUB 24.2 billion, to finance a product marking A memorandum was signed with ROSSETI operations. Bank GPB (JSC) has traditionally been the main and traceability system project. Bank GPB (JSC) on cooperation in the digital transformation of its The Bank actively participated in a seamless partner of ROSSETI in arranging financing acted as the financing arranger. The project is being treasury function. The first joint project, successfully integration under a major M&A transaction on the Russian and international debt capital implemented using the public-private partnership launched in the summer of 2019, was a service for on the Russian insurance market, which built markets. In 2019, the Bank acted as the arranger (PPP) mechanism, via an agreement between automated processing of incoming ruble payments on existing technologies and services to allow of bond issues with a total value of RUB 20 billion Operator-CRPT and the Russian Ministry of Industry made by corporate entities and individuals in favor corporate and retail clients to access high-quality for the Group’s companies. In addition, the Bank and Trade. of MOESK (the brand operated by Rosseti Moscow insurance products as conveniently and promptly performed several successful transactions In 2019, the Bank started providing financing Region). Furthermore, at the Electricity Grids as possible. on the public capital market during the year, to a project in the Moscow Region to build four solid International Forum held in late 2019, the Bank, In 2019, Bank GPB (JSC) won the “Retail Partner placing three bond issues of the Moscow waste incineration plants using “waste to energy” jointly with the Digital Horizon Fund, introduced Bank” nomination in the Retail Week Awards Integrated Power Company (MIPC) for a total technology. They will be capable of processing the ROSSETI management team to the Edison smart 2019, a professional industry contest. The award amount of RUB 15 billion, and RusHydro Eurobonds 2.8 million tons of waste per year, with a total blockchain platform, developed for the energy ceremony took place at the 5th Russian Retail Week for a total amount of RUB 15 billion. installed capacity of 280 MW. The project budget and utility market. international business and government forum. In 2019, the Bank continued to expand the scope amounts to RUB 137 billion. The lenders are It is worth noting the growing scope of factoring Winning this distinguished award demonstrates of its collaboration with machine-building industry a banking syndicate comprising Bank GPB (JSC) operations (including agent factoring) in the the high repute in which the Bank is held companies through a number of projects, including: and VEB.RF. The project is being implemented limit set for key companies by industry. Factoring by the industry community and proves that • arranging a RUB 15 billion financing as part of the Russian Government’s Clean Country remains a popular settlement product among it is moving in the right direction, successfully on the Russian debt capital market; priority project within Russia’s Environment Russia’s largest media groups. For example, the Bank developing useful and innovative services for retail • hedging over EUR 100 million worth of FX risks. Protection 2012–2020 National Program. The project continued to provide TV series production financing companies. Besides the above-mentioned transactions, limit has been set at RUB 68 billion until 2035. through factoring transactions in 2019. In addition, To date, our collaboration with universities work was initiated jointly with Gazprombank The Bank continued growing its loan portfolio the financing of UEFA 2020 and Olympics 2020 has brought the number of campus projects (Switzerland) in 2019 to establish cooperation of enterprises implementing investment projects broadcasting rights was for the first time provided to 150, with over 400,000 campus cards issued with European TMH International on the provision in the area of conventional generation facility via factoring arrangements. and serviced, in particular, the co-branded card of financing to the company. construction, and remains the undisputed In 2019, the Bank continued to actively develop of the Bank and the Russian Union of Youth. Lending for current operations and financing leader in the financing of Russian “green” energy. all-encompassing cooperation with regional Bank GPB (JSC) remains a leader on the Russian of investment projects remained an important The aggregate amount of the limits set by the Bank administrations and their subordinate entities, bond market. In 2019, it focused on issuing bonds development vector in the Bank’s relations in 2019 for renewable energy projects exceeds in particular, by way of implementing major for developers, resulting in the receipt of a mandate with mining and metals sector companies: RUB 60 billion. investment projects in PPP or concession for the issuance of bonds worth RUB 15 billion a major loan transaction — the Udokan copper Working capital financing of electricity industry agreement formats, providing banking support for companies engaged in residential construction deposit development project financing — was companies was increased, with 48% volume of contracts and attracting government-funded pursuant to Federal Law 214-FZ. implemented via the Project Finance Factory growth during the year (from RUB 134 billion entities as Bank customers. In addition, in 2019, Bank GPB (JSC) became with the involvement of VEB.RF. The total project to RUB 199 billion). In a tightening competitive Developing new forms of collaboration with the leader among Russian banks in terms budget is approximately USD 2.9 billion, of which environment, the Bank continued collaborating with the Gazprom Group, the Bank in 2019 for the first of arranging Eurobond issues for companies up to USD 1.79 billion is being raised as a loan from the major energy companies, including ROSSETI, time provided funding to Gazprom export LLC in the mining and metals sector. a syndicate of banks for a period of up to 12 years. maintaining the amount of lending extended to that in the form of repo transactions with the natural gas 30 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 31 Commercial Lending

The Bank remained the primary debt market By the end of 2019, partner of major telecommunication companies, commercial lending was up 8%, acting as the arranger of listed bond issues to RUB 3,169 billion. with a total value of RUB 97.5 billion.

owned by Gazprom and stored in various facilities Agreements were made with the Ministry During the reporting period, During 2019, the Bank continued to actively develop throughout Europe. of Industry and Trade of the Russian Federation the Bank managed to maintain its collaboration with oil and oilfield service industry The Bank continued developing its collaboration and the Russian Export Center, providing for enterprises, including both vertically integrated with aircraft industry companies, substantially subsidized interest rates on export loans issued the optimal industrial structure majors (Rosneft Group, Tatneft Group, etc.), and large increasing its documentary business volumes, in accordance with Russian Government Resolution of its loan portfolio. Loans were and mid-sized independent regional oil producers / in particular. No. 191 dated 23 February 2019. The Bank will service providers. The Bank further developed its relationships with be compensated at 3% per annum under each mainly extended to the basic In 2019, the following pilot transactions were trading and pharmaceutical companies in the of the lending transactions. industries of the economy, completed in the oil industry: letter-of-credit business, achieving portfolio growth Thus, following the execution of these agreements, • The Bank provided working capital financing of over 40% in 2019. the Bank became a full member of the International such as metallurgy, power to one of Russia’s largest independent refineries, In accordance with the decision by the Bank’s Cooperation and Export National Project. generation, oil and gas production, KNGK-INPZ (Ilsky Oil Refinery). Management Board to develop a comprehensive • In a transaction to provide a counter guarantee product line for participants in co-funded multi- transportation and refining, on the obligations of Socar Construction dwelling residential construction projects, financing chemical and petrochemical (Belarus), the Bank, jointly with Belgazprombank, of large residential properties was arranged in 2019. implemented a cross-border banking support Throughout 2019, the Bank actively developed industries, minerals extraction, arrangement for the first time ever. its collaboration with infrastructure construction agribusiness, engineering, and trade. An important area of development was companies, providing USD 180.6 million worth the expansion of factoring operations, of banking guarantees to the Udokan mining The Bank is expanding cooperation as well as credit and leasing transactions and metal facility construction project. with prospective customers in various under the programs of the Russian Ministry Collaboration with agricultural enterprises is one of Industry and Trade and the Russian Export of the priority business development areas for sectors, at the same time maintaining Center (acting as the agent) to subsidize the Bank as a key partner for many companies relations with traditional creditworthy interest rates of pre-export and post- in that sector across the entire banking product export financing, as well as the program range. customers. of the Russian Ministry of Industry and Trade Active use of industry government support to subsidize part of the cost of purchasing mechanisms, including the Agribusiness innovative rolling stock. In particular, and Agricultural Industry Preferential Lending in December 2019, the Bank became the first Programs (Russian Government Resolutions among Russian banks to enter into a trilateral No. 1528 and No. 512), enabled the Bank to provide In 2019, the Bank continued dynamic collaboration agreement on subsidizing interest rates on its customers with loan resources to finance their with the Gazprom Group and was involved export loans and other financing instruments current operations and implement new investment in financing and servicing its subsidiaries, affiliates within the International Cooperation and Export projects, at rates not exceeding 5% per annum and contractors within the framework of the Group’s National Project, whereby the Bank will support in rubles for periods of up to 15 years. Based on its investment program. Besides existing customers, export deliveries of polyamide produced 2019 results, Bank GPB (JSC) confirmed its leading such as the Gazprom Neft Group and the Gazprom by KuibyshevAzot. position on the market. Avtomatizatsiya Group companies, the Bank started Further business development is pursued By the end of 2019, the overall value of loan providing loan products to the Gazprom Aktivy with enterprises of the ferrous and non-ferrous agreements executed by the Bank since the launch SPG Group, Gazprom Gazoraspredeleniye Group metal industry, as well as the pipe segment. of the preferential lending programs exceeded companies and contractor entities, such as MRTS, Among its customers, the Bank has Russia’s RUB 400 billion. The majority of these funds was RusGazDobycha, and RusGazShelf. major metallurgical holdings: UGMK Group, intended for the financing of new investment Another completed transaction involved the use EVRAZ Group, USMK Group, Russian Copper projects in cattle breeding, horticulture and deep of Round customs cards for the Bank to process Company Group, Metalloinvest Group, IMH Group, processing of agricultural produce. customs payments by Gazprom export LLC. PJSC MMC Norilsk Nickel, OJSC KUMZ. 32 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 33

Based on its 2019 results, the Bank The Bank actively supports foreign trade was among the TOP 31 banks providing activities of corporate customers, issuing agribusiness financing under preferential bank guarantees and letters of credit, lending programs, having re-asserted as well as providing settlement services its leading market position. Since the launch and trade finance services. of the preferential lending programs, the total amount of loans extended by the Bank has exceeded RUB 400 billion.

In 2019, the Bank increased its working capital Industry Preferential Lending Programs (Russian The Bank actively supports foreign trade activities with the total value exceeding RUB 8 billion were financing of electric power industry companies, Government Resolutions No. 1528 and No. 512), of corporate customers, issuing bank guarantees executed. generating volume growth of 48% over the year. enabled the Bank to provide its customers with and letters of credit, as well as providing The Bank cooperates with Russian exporters In a tightening competitive environment, loan resources to finance current operations settlement services and trade finance services within the framework of state financial (guarantee, the Bank continued collaborating with major and implement new investment projects, at rates (short, medium and long-term lending to foreign insurance) export support programs, as well energy companies, including the Rosseti Group, not exceeding 5% per annum in rubles for periods trade operations, including under the cover as through trade finance instruments, including and in particular: of up to 15 years. of export credit agencies). Documentary confirmation, post-financing and discounting • entered into a strategic collaboration Based on its 2019 results, the Bank was among products related to servicing current operations of export letters of credit, and also participates agreement with T Plus, making the Bank the TOP 31 banks providing agribusiness financing of customers within the country are becoming in a program for subsidizing interest rates on export its largest creditor; under preferential lending programs, having highly relevant, in particular, bank guarantees credits. • retained its role as a key partner of the Russian re-asserted its leading market position. Since and domestic ruble-denominated letters of credit, Utility Systems Group in working capital the launch of the preferential lending programs, including deferred payment refunds and early and investment lending; the total amount of loans extended by the Bank has repayment (discounting). New products were also • financed a project to create a general heat exceeded RUB 400 billion. introduced, such as electronic bank guarantees supplier for the city of Nizhnevartovsk In 2019, the Bank significantly increased trading in favor of the Russian Federal Tax Service, on the basis of Gorelektroset (the STS-ESE sector financing volumes both by increasing its which allow customers to secure obligations Group): the Bank provided working capital share with existing clients (Dixi, Golden Apple, to the tax authorities without paper workflow, and investment loans for construction of a boiler L’Etoile) and by acquiring new customers. More than and discounting of deferred payments under letters house and connections to newly developed 15 limits were set for the Bank’s new and existing of credit issued in favor of exporters. residential quarters. customers in various food and non-food retail The total volume of the Bank’s documentary portfolio The Bank also continued to provide support segments. The Bank implemented investment loans as at 1 January 2020 amounted to RUB 671 billion to a number of Russian regions. with the Magnit Group and several deals in the field (year-on-year growth of 24%). The total volume Gazprombank is working with aviation industry of e-commerce (Wildberries, Ozon). of guarantees issued in 2019 exceeded the figure companies among Russia’s TOP 5 carriers. In particular, In 2019, a credit risk limit was set for, and the first for 2018 and amounted to RUB 535 billion the Bank provided funding to Ural Airlines. It also transaction entered into with, the ILIM Group, (4,767 guarantees in total). The volume of open continued working within the fuel guarantee limit set a leading player in the pulp and paper industry both letters of credit on behalf of corporate customers for S7 Airlines. in Russia and globally. and counterparty banks increased by 91% Several major transactions were made with the State The Bank continued to hone its expertise and amounted to RUB 114 billion. In addition, 2019 Transport Leasing Company. in developing business with telecom, IT and media saw an increase in the value and number of trade Collaboration with agricultural sector companies companies: finance transactions executed on behalf of both 1 Within the framework is a priority area of business development for • launched the first telecommunication equipment corporate customers (year-on-year growth of 27% of the Russian Federation the Bank, which is a key partner for many companies leasing project for the Rostelecom Group; and in terms of value and 61% in terms of the number Government Resolution in the industry across the entire product line. • continued developing cooperation chains on of transactions) and counterparty banks, where No. 1528, according to the data provided by the Russian Ministry Active use of government support mechanisms, the basis of the Gazprom-Media Group for transactions with the Republic of Uzbekistan were of Agriculture. including the Agribusiness and Agricultural factoring products. the key growth factor as more than 150 transactions 34 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 35 Trade, Structured and Syndicated Finance

In 2019, the GPB Group reinforced The Bank is successfully developing its position on the trade, structured and implementing loan products in the field and syndicated finance market. of structured finance, which are innovative for the Russian market.

Trade finance Syndicated lending market Being a leading player on the Russian syndicated Loan products in the field In 2019, a number of advance financing transactions In 2019, the Bank was active as an arranger lending market, the Bank is actively involved of structured finance were entered into in connection with commercial of syndicated and club deal loans involving Russian in the development of the syndicated lending In 2019, the Bank structured and closed, for the first contracts for export deliveries of oil, oil products, and international banks. In particular, the Bank acted and securitization market in the Russian time on the Russian banking market, a deliverable and metal products. The total value of trade as one of the arrangers of financing for Eurotorg, Federation, and in particular, helps to improve repo transaction in relation to an exchange- finance transactions entered into in 2019 exceeded the largest grocery store chain in Belarus, in the form the legislative and regulatory framework in this traded commodity for an amount of ca. USD 2.5 billion. New Bank transactions worth noting of a RUB 5 billion syndicated loan under Russian area. More specifically, the Bank played a key USD 1 billion via a platform of overseas subsidiary include the opening of advance financing facilities law. The Bank acted as the documentation agent role in the drafting and adoption of the Federal banks and companies. for several independent refineries, such as Slavyansk in the transaction. This loan is the first arm’s-length Law “On Syndicated Credit (Loan)” in late 2017, In 2019, the GPB Group and Gazprom export LLC ECO Refinery and Ilsky Oil Refinery, for a total syndicated loan for a private corporate borrower and of amendments to that law in 2019. The law successfully closed a repo transaction for the total amount in excess of USD 100 million, whereby from Belarus. lent fresh impetus to the market’s development of 7.6 bcm of natural gas. As a result of a series the Bank assumes the risk of both the production The Bank maintains partner relations with leading and laid the foundations of syndication of transactions, the customer received financing assets as such and of the first-class international Russian banks and is developing interbank infrastructure under Russian law. of EUR 916.4 million. traders that are the end buyers of the export cooperation in lending to corporate customers products. via sales of participation shares in loans originally Furthermore, in 2019, the Bank continued working issued by the Bank. For example, in 2019, several on full-cycle trade finance transactions: from deals to sell loans on the secondary syndicated vendor/manufacturer to buyer, with appropriate lending market were closed for a total equivalent pledge of the product financed at various of ca. RUB 50 billion. Through such loan assignments, product movement stages. Building on the work the Bank remains flexible in managing its loan performed last year, a USD 40 million credit portfolio, can minimize the load on capital and, facility was signed in February 2020 between provided that a loan is sold at a premium to its face the GPB Group and an international trader value, earns commission income. The bank buying for the financing of European aluminum deliveries the asset, in turn, has the opportunity to acquire under a commercial contract with the RUSAL a high-quality and well-structured loan asset Group. The first drawdown on this facility was at minimal cost in terms of time and resources. made in March 2020. >2500 50 916.4 million US dollars billion rubles million euros

Total amount Total amount Funds raised in a repo of trade finance of loan sales on transaction for natural transactions the secondary market gas with Gazprom entered into in 2019 for syndicated lending export LLC Розничный бизнес

36 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 37 Retail Business. Key Results in 2019

The growing quality of the Bank’s product line, High-quality service In 2019, one of the Bank’s key areas efficient advertisement campaigns, and continuing and plans for the future product digitalization have increased the deposit High-quality service is an important aspect for development was its retail portfolio to RUB 659 billion (+RUB 182 billion). of competition for the retail customer. Gazprombank is endeavoring to save as much of its customers’ business, in which it implemented Partner channels development time as possible by introducing new remote service and commission income growth formats. Today, it interacts with more than 30% of its a radically new and high-quality To achieve the objective of improving performance, retail customers via remote channels, and every Gazprombank is developing its partnership programs third cash loan is originated exclusively online with approach to customer service. by offering interesting and lucrative products, no branch visit. thereby compensating for the fall in customer In 2019, Gazprombank was named one of the best demand for classical deposits that have ceased banks on the market in terms of customers’ to be a capital gain instrument in a declining willingness to recommend1. One crucial parameter, key rate environment. In 2019, 20% of aggregate queue waiting time, was reduced by almost 30% Thanks to the strategy chosen, Strategy adaptation to market deposits taken were composite deposits combining to 8 minutes. the retail business financial outcome specifics and flagship products the advantages of a term deposit and the extra A country-wide advertisement campaign launched As Gazprombank’s retail product lines adapt returns of investment solutions. in 2019 on television, in the streets and on doubled in 2019, reaching RUB 8 billion. to customer expectations and needs, some By developing partnerships with leading the Internet, contributed strongly to retail business interesting and even unique service packages have insurance companies, the Bank was able growth, taking the active retail customer base evolved. The Smart Card — the only offer in its to improve its return on operations through up to 3 million people (+30%). segment with a personalized cashback feature — active cross sales of commission-based products. As the Bank overcomes technological barriers has become a flagship product for growing Insurance product penetration in the loan and continues on its path toward digital The Bank’s key achievements the Bank’s active customer base. Gazprombank and deposit bases was 70% (TOP 3 on the Russian breakthrough, its brand strength, intrinsic innovation in 2019 has been highly acclaimed among the expert market) and 5% (TOP 7 on the Russian market), culture and experienced team provide grounds In the reporting year, Gazprombank was highly community for this unique product, receiving, respectively. Commission income from insurance for forecasting continued retail business growth. successful in developing its retail business. amongst other awards, the Frank Banking Award policy sales grew by 11 times over the reporting It is expected that business volumes will grow In a tightening competitive environment, the Bank for the “Most Beneficial Premium Segment Debit period, contributing significantly to the Bank’s by 1.7 times on average by 2023. On a general implemented its earlier plans to reinforce its market Card with Cashback Feature” and the “Most overall financial result. note, retail earnings should more than double position, upgrade product technologies and improve Beneficial Premium Segment Card for Travelers”. 1 Customer loyalty assessment The net commission income in retail was to RUB 18 billion from RUB 8 billion in 2019. among banks participating customer service quality. Another innovative product on the market was in the Syndicated NPS project. RUB 16 billion (+RUB 10 billion) in 2019, up by more Thanks to the strategy chosen, the retail business the Bank’s co-branded virtual Motorist Сard, issued Ipsos. 4Q2019. than 2.5 times from the 2018 level. financial outcome doubled in the reporting year, jointly with the Gazpromneft retail fuel network via reaching RUB 8 billion. the partner’s mobile app. In 2019, Gazprombank outpaced the market’s Success in these new products is evidenced growth rate. The Bank’s retail loan portfolio grew by the numbers, with 400,000 virtual cards having by 1.2 times in 2019, reaching RUB 564 billion been issued over the 5 months since the program (+RUB 105 billion). Consumer loans were the key launch and applications for Smart Card service growth factor. Gazprombank succeeded in growing packages now at 100,000 per month. All this its consumer lending business twice as fast helped to drive a 1.3-fold increase in bank card Key metrics of Gazprombank’s retail business in 2019 as the market average, becoming No. 1 among turnover. the TOP 5 in terms of portfolio growth and No. 5 Customer acquisition in the online environment Loans, RUB billion Liabilities, RUB billion Financial result, RUB billion on the market in terms of portfolio volume, which is one of the key retail business priorities was 2 p.p. up on the 2018 result. and Gazprombank is actively developing its digital 564 659 8.0 A change in the portfolio structure towards high- service channels. In 2019, the Bank took first place margin consumer loans helped to boost return per in the Go Awards Banking ranking in the “Fast Start” 459 +20% +40% +100% customer by almost 50 percent, making the Bank nomination with its award-winning Telecard 2.0 477 the market’s No. 3 on this indicator. customer mobile app. Portfolio growth Portfolio growth 5.78,0 Financial result plan The Bank’s share of digital sales increased by 55% in 2019 in 2019 4.0 growth in 2019 in 2019. By saving time for its operating personnel, the Bank is able to offer better prices to its customers. In particular, with the launch of the Your Success monthly capitalization deposits, Gazprombank has +10% +100% 10% remained the absolute leader in terms of deposit growth among all Russian banks for several months Originations volume growth Deposits volume growth Non-operating expense in a row. 18 19 in 2019 18 19 in 2019 18 19 savings in 2019 38 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 39 Gazprombank Private Banking. 2019 Results

Gazprombank Private Banking was named the best Russian bank 14% 42% >100 2 13 providing private banking services billion rubles jurisdictions were added growth is the size Russia regions of presence for the second year in a row, to the assets of the investment of the investment and Luxembourg1 in Russia managed by portfolio portfolio according to Spear’s. Gazprombank managed managed Private Banking by Gazprombank by Gazprombank Private Banking Private Banking 22 юрисдикции jurisdictions RussiaРоссия and и ЛюксембургLuxembourg1 In 2019, assets under the management of Gazprombank Private Banking added 14%. The average customer’s 1313 регионов regions ofприсутствия presence in Russia в РФ account size grew 12%. The achievement was made possible through improvement of the product line and introduction of a new managers incentive program.

St. Petersburg Notwithstanding the overall downward trend diseases. A good level of protection is afforded in term deposit rates and the aggressive rate through the high insurance limit, with the entire policies pursued by competitors, Gazprombank amount of premiums paid being refunded in full Private Banking not only preserved its asset at the end of the insurance period. The solutions portfolio but also succeeded in growing implemented in 2019 secured high insurance policy LuxembourgЛюксембург it by 10%, by offering efficient capital preservation renewal rates. The amount of cash in investment and accretion solutions, as well as flexible and universal life insurance products amounted Moscow solutions for liquidity management and placement to RUB 4.7 billion. Tula Nizhny Novgorod of temporarily free cash. In line with market trends, customer interest The customer investment portfolio grew by 42% in lending has grown. The Bank introduced to more than RUB 100 billion. The product line a multicurrency deposit-backed lending option, was expanded through the addition of popular improved its credit cards line, optimized business investment solutions earning income on a wide processes, and closed a number of deals jointly with Rostov-on-Don range of asset classes, as well as parity investment GPB International S.A. instruments in credit assets, matched by the Bank. In early 2019, Gazprombank Private Banking Krasnodar Saratov The range of securities offered to customers by way launched a new service package, centered around Surgut Yekaterinburg of investment advice was also expanded. the first-on-the-market co-branded card combining Ufa In 2019, the Private Banking division, jointly with the unique offerings of the Bank, Mastercard, Gazprombank — Asset Management, expanded and PRIME loyalty program privileges. Orenburg the range of solutions it offers, including structured The Heirs program, launched as part of the total notes and instruments enabling investment family asset management approach, won in alternative asset types. the Frank Private Banking Award 2019. The flagship Insurance solutions also remain popular with product of this program was a kids’ card with 15% Private Banking customers. In 2019, the product cashback (iTunes, books, souvenir shops, theaters, range was expanded by adding tailored rental cinemas, museums). The Heirs Project magazine income solutions, as well as insurance products issued as part of this program was produced with Novosibirsk enabling customers to receive treatment at the best contributions from participants in the financial 1 Services are provided Kemerovo by the Luxembourg-based Russian and international clinics in any life situation, literacy schools that operated for a third consecutive subsidiary bank from out-patient services to treatment of critical year. Last year, 30 classes were delivered. Инвестиционно-банковский бизнес

40 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 41 Project and Structured Finance

2019 AWARDS Over 2019, Gazprombank reinforced its leading positions on the domestic and international project finance markets.

Russian Private Bank of the Year, Best Program Spear’s Russia Wealth Management Awards for Heirs of Wealth in the Russian Private Banking Market, Frank Private Banking Award

2019 saw a radical change in the Private Banking Art Banking The Bank draws on its competitive chemical production facility construction projects regional block’s performance. Implementation For many years, Gazprombank has provided advantages, in particular, for Kuibyshevazot, with a budget of RUB 6.3 billion, of a vertical hierarchy of functions in regional sales its Private Banking customers with services in the art and Shchekinoazot, with a budget of EUR 310 million. management helped the Bank to achieve an 86% market, with activities that range from servicing its considerable experience In July 2019, Gazprombank, in a syndicate with VEB.RF increase in the regional block’s investment portfolio, investments in works of art and sought-after of financing projects with complex and Sberbank, signed a syndicated loan agreement while expanding the investment customer base collector’s items to specially designed programs that with the Baikal Mining Company (the USM Group) by 36%. The regional footprint of Gazprombank allow them to keep abreast of the main global events structures in the service of key for the development of the Udokan copper Private Banking was expanded. as well as the domestic art scene. sectors of the economy. The most deposit (the deposit is located in the Trans-Baikal Developing its Lifestyle Management business, Gazprombank’s corporate collection has been Territory and is the largest undeveloped copper the Bank held approximately 70 events in Russia the first and to date the only corporate collection ambitious and high-profile deals deposit in Russia and the third largest in the world). and internationally during 2019. with a focus on contemporary Russian art. Works of 2019 were predominantly The project provides for Phase 1 construction The Bank continued with its personnel development from the Bank’s collection are sought after of a mining and metal plant, with associated efforts, using in-class and remote learning formats by curators of museum and other exhibition in the oil and gas refining, mining infrastructure. The total budget is USD 2.9 billion, in its employee training programs. projects in Russia and abroad, including exhibitions and metals, chemical, energy including a loan facility of up to USD 1.79 billion In 2020, Gazprombank Private Banking intends in the State Tretyakov Gallery, the National Centre for up to 12 years. Gazprombank is acting to maintain its development vector, while focusing on for Contemporary Arts, the Moscow Museum and residential construction sectors. as the arranger of the financing, financial the expansion of its investment offer and continuing of Modern Art, the Multimedia Art Museum, advisor and creditor with a commitment to invest in infrastructure development, achieving the Garage Museum of Contemporary Art, of up to USD 650 million. The Udokan project impeccable service standards, raising the level of staff the Albertina Museum (Austria), Bologna Museums is the largest deal ever closed by the Project Finance professionalism, and doing everything possible Association (Italy), projects of the Moscow, Venice, Factory. to make the discerning Private Banking customer feel Liverpool, and Ljubljana Biennial, the Thessaloniki In December 2019, as part of a consortium One important factor and development trend as comfortable as possible. Biennial and many others. of 22 international and Russian banks, Gazprombank in the reporting year’s project financing business In 2019, as part of the annual LOOP video art festival signed the financial documentation extending a loan was the replacement of co-investors’ funds in Barcelona (Spain), an exhibition of selected works for the Amur Gas Processing Plant construction in residential construction projects with bank project from the Bank’s collection was placed on display project. This multicurrency loan with a value financing, made available to developers via escrow in Casa de Rusia as yet further evidence of evolving equivalent to EUR 11.4 billion is the largest ever arrangements. An agreement on Gazprombank’s international cultural relationships and interest project finance transaction for the Gazprom largest loan under these new rules was signed in Russia’s contemporary art. Group and a landmark deal for the Russian market. in September 2019 with Glavstroy St. Petersburg The project is an important link in the process chain for RUB 30 billion, intended for the financing of two of the Power of Siberia gas pipeline. Gazprombank’s residential quarters in St. Petersburg. share of financing is RUB 60 billion for a period Energy sector financing remains a substantial area of 15 years. of business, with a primary focus on renewable The Project Finance Factory, created as an arm energy projects. The Bank is supporting projects of state-owned VEB.RF corporation, began to play by Fortum and ROSNANO for the construction a notable role in the evolution of the Russian of wind generation plants in Kalmykia investment projects market in 2019. Its first deals and the Ulyanovsk Region with 250 MW of aggregate were closed in the mineral fertilizer segment: installed capacity, and a RUB 6.6 billion wind 42 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 43 Main Project Finance Deals in 2019

generation farm expansion project by VetroSGC Private-Public Partnership (PPP) (the Rosatom Group). In solar energy, the Bank Gazprombank’s 2019 results show growth in key provided RUB 30 billion of financing to power plant financial metrics relating to transactions in the construction projects with a capacity of 329 MW. infrastructure and PPP fields. The projects implemented in the reporting year Gazprombank succeeded in significantly increasing Construction Construction Amur GPP construction Udokan copper deposit resulted in Gazprombank’s specialized lending its loan portfolio through the financing of concession- of a methanol of a sulphuric acid and oleum financing development portfolio reaching RUB 693 billion (IFRS-based) based projects providing for the construction of two production unit production unit in 2019. toll segments of the Central Ring Road (TsKAD), (M-500) Based on the 2019 results, Gazprombank Phases Three and Four. was No. 1 mandated lead arranger in Russia In 2019, financial closure was achieved on the 16 km and the CIS according to Bloomberg, and also Vinogradovo — Boltino — Tarasovka auto road No. 5 on the EMEA markets and No. 12 globally construction project in the Moscow Region. EUR 310 million RUB 6.3 billion EUR 11.4 billion USD 2.9 billion according to Project Finance International. In the The facility cost exceeds RUB 36 billion. Lender, financial advisor, coordinator of Russian banks, Financial advisor, arranger, Project Finance & Infrastructure Journal rankings, Opening of financing for the construction of a road Lender Lender th SMLA, agent for EXIAR, onshore lender Bank GPB (JSC) is ranked 7 in Europe among bridge across the Pur River in the Yamal-Nenets account holder bank project finance arrangers, and 10th among financial Autonomous Area became a significant driver advisors to infrastructure financing projects in Asia of Gazprombank’s portfolio growth. The project, Pacific. The Bank also holds second place in the once completed, will provide the local community “Best Russian Bank on CIS Syndications Market” with year-round road access. The project budget nomination according to Loans Cbonds Awards. is RUB 9.6 billion. Market expertise and positive market feedback in the In 2019, financial closure was achieved on the first ВОСТОК form of recognized leading positioning, awards federal PPP project, i.e. creation of a digital ecosystem Railway rolling stock Construction Financing of the 50 MW Financing and good customer relations developed over years for countering illegal circulation of goods. With acquisition financing of wind generation Ulyanovsk wind generation of acquisition of last and tested in successful joint projects, together the help of the “Chestny ZNAK” (Honest Mark) national farm extensions power plant No. 2 resort supplier status with a professional team and business scale, mean electronic marking system, each piece of any product in the Chelyabinsk Region that Gazprombank is well positioned for continued sold is tracked from the factory or the national border confident progress in the field of project finance. to the individual buyer. The system is expected to cost over RUB 24 billion. Gazprombank provides financing to this project in a consortium with VEB.RF RUB 25 billion RUB 6.6 billion RUB 4.4 billion RUB 3.8 billion through the Project Finance Factory. A consortium of Gazprombank and BaltNedvizhServis Lender Lender Lender Lender entered into a concession agreement with St. Petersburg in relation to laying and operating a tram network on the Kupchino Underground Station — Shushary settlement — Slavyanka route in October 2019. On the basis of the 2019 results, the National Association of Concessioners and Long-Term Infrastructure Investors named Gazprombank Financing of the development Escrow-based Re-development Financing of coal deposits the best infrastructure investor in credit financing. of the Topolikha area project financing of the former “Rassvet” development in Yakutia of the Soyuznoye graphite of two residential quarters machine-building (GOK Ingalinskiy) deposit in the Jewish in St. Petersburg plant site Autonomous Region

RUB 8 billion RUB 30 billion RUB 6 billion RUB 48.6 billion

Lender Lender Lender Lender 44 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 45 Capital Market Operations

Gazprombank maintains leading 2019 milestone transactions on the Russian debt market positions in capital markets offering

a full range of debt and equity The Republic of Belarus The Moscow Region Gazprom Neft RUSAL Bratsk Retail Bel Finance VEB.RF raising services. 2 ISSUES 3 ISSUES 1 ISSUE 4 ISSUES 2 ISSUES 98 ISSUES

RUB 10 billion RUB 51.5 billion RUB 20 billion RUB 60 billion RUB 10 billion RUB 511.4 billion

3 years 3.3–5 years 10 years 3–3.5 years 5 years 14–28 days

Arranging transactions 2019 achievements • The offering of Belarus sovereign ruble- Steady growth of Gazprombank’s on the local debt capital market According to the results of Cbonds Awards voting denominated bonds became a benchmark market positions, RUB trillion Over the last five years (2015–2019), Gazprombank at the 17th Annual Russian Bond Congress — on the Russian market both for subsequent has reasserted its leading and strengthening positions the largest event on the debt securities market offerings of Belarus bonds and for potential bond Gazprombank’s transactions volume on the local bond issuance market; the Bank’s market in Russia and the CIS — Gazprombank won nine offerings of other foreign sovereign and corporate • Total market volume share grew from 26% in 2015 to 40% in 2018 and 43% awards, of which five were in team categories issuers, including Belarusian borrowers. • in 2019. and four were based on the results of transactions 1.6 The overall result of these most recent five years executed. Moscow Region 26% is that the Gazprombank team retains leadership Five team awards in prestigious categories include: • Minimum coupon rate among market offerings 0.4 in the market ranking of bond issue arrangers • Best Investment Bank — Arranger for Tier I of Russian regions since 2011 (6.55% p.a.). 2015 st on the Russian debt capital market (Cbonds). Issuers — 1 place • Record annual volume of bond placements among 48 issues In 2019, Gazprombank acted as the arranger • Best Investment Bank — Arranger for Non- Russian regions since 2014 (in 2019, this issuer of 100 bond issuances on the local debt capital Financial Institutions — 1st place placed three bond issues worth RUB 51.5 billion). 1.8 st market with an aggregate face value of RUB 1 trillion, • Best Bond Market Sales Team — 1 place 35% representing 50 issuers and setting a new record • Best Bond Market Research Team — 2nd place Gazprom Neft 0.6 for the Bank over its entire history of operations • Best Investment Bank in the Eurobond Market — • Minimum coupon rate (7.15% p.a.) and maximum 2016 nd on the local debt market. 2 place offering volume (RUB 20 billion) of 10-year bonds 62 issues 2019 was also a record-breaking year for the majority Separately noted unique transactions arranged over the entire history of market placements of Gazprombank customers, many of which by Gazprombank: on the Russian market. 1.9 secured, at the individual issuer or sector levels, • Best Foreign Issuer Deal in the Russian Bond 38%

or for the Russian market as a whole, minimum Market — Belarus, 03 and 04 RUSAL Bratsk 0.7 coupon rates (over 20 records), maximum placement • Best Primary Subfederal/Municipal Bond Deal — • Raised the equivalent of USD 1 billion 2017 volumes (over 5 records), and maximum financing Moscow Region, 34012 on the Russian bond market (in 2019, this issuer 72 issues tenors (over 5 records). • Best Primary Corporate Bond Deal — RUSAL Bratsk, raised RUB 60 billion through the placement In 2019, Gazprombank customers on the Russian BO-001P-01 of four issues of 3-3.5-year bonds). 1.5 debt market represented the oil and gas, extracting, • Debut of the Year — Retail Bel Finance, 01 (Belarus) 40% chemical, metallurgy, retail, infrastructure Euroopt 0.6 and transport, construction, telecommunications Landmark 2019 deals • The first placement of this Belarusian 2018 and financial sectors, development institutions on the Russian debt market corporate issuer’s bonds on the Russian market 52 issues and sub-federal borrowers, as well as foreign (RUB 5 billion), with a subsequent placement corporate and sovereign borrowers. Republic of Belarus of an additional issue (another RUB 5 billion). 2.2 • First bond offering on the Russian market after 43% the advent of foreign depositaries. VEB.RF 1.0 • Extremely high levels of interest in the issue from • Placement of RUB 0.5 trillion of short-term bonds 2019 investors (demand exceeded RUB 45 billion). (arranged 98 issues for periods of 14–28 days). 93 issues

The market share was calculated on the basis of the nominal amount of issues. All statistical data exclude mortgage and structured products. Source: Cbonds 46 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 47

Arrangers rating at year end 2019 (bonds). Market issues Arrangers rating at year end 2019 (Eurobonds). Issues of CIS-based issuers

Arranger Share, % Amount, RUB mln Arranger Share, % Amount, USD bn 1) Gazprombank 16.1% 325,158 1) Gazprombank 16.6% 5.0 2) Sberbank CIB 13.9% 279,726 2) VTB Capital Plc 16.5% 5.0 3) REGION BC 11.5% 231,281 3) J.P. Morgan 14.2% 4.3 4) CREDIT BANK OF MOSCOW 11.4% 229,475 4) Citi 11.6% 3.5 5) Sovcombank 10.2% 206,356 5) Societe Generale 5.2% 1.6 Others 36.9% 744,359 Others 35.9% 10.8 Source: Source: Cbonds as at 31 December 2019 Total 100.0% 2,016,355 Bloomberg as at 31 December 2019 Total 100.0% 30.2

Cbonds Awards 2019 2019 milestone deals on international debt markets Team awards Dublin 21 March 2019 Dublin 21 March 2019 London 13 February 2019 London 13 February 2019 Dublin 21 March 2019

CBONDS CBONDS CBONDS CBONDS CBONDS Ministry of Finance Ministry of Finance Ministry of Finance Ministry of Finance I I I II II of the Russian Federation of the Russian Federation of the Republic of Uzbekistan of the Republic of Uzbekistan Best Investment Bank — Russia-2035 Tap issue of Russia-2025 Uzbekistan-2024 Uzbekistan-2029 Tap issue of KTZKZ-2023 Best Investment Bank — Best Bond Market Best Russian Investment Bank Best Bond Market Arranger for Non-Financial Arranger for Tier I Issuers Sales Team in the Eurobond Market Research Team Eurobonds Eurobonds. Eurobonds Eurobonds Eurobonds. Institutions Yield: 2.375% per annum Yield: 2.25% per annum

2019 2019 2019 2019 2019 USD 3 billion EUR 750 million USD 500 million USD 500 million CHF 80 million

Maturity: 16 years, Maturity date: 2025 Maturity: 5 years Maturity: 10 years Maturity date: 2023 5.100% annual coupon. with a 2.875% annual coupon. with a 4.750% annual coupon. with a 5.375% annual coupon. with a 3.25% annual coupon. Best deals Listing: Euronext Dublin, Listing: Euronext Dublin, Listing: London SE, Listing: London SE, Listing: SIX Swiss Exchange, Res S /144A Res S /144A Res S /144A Res S /144A AIX Res S

CBONDS CBONDS CBONDS CBONDS 2019 2019 2019 2019 Lead manager and book-runner Lead manager and book-runner Lead manager and book-runner Lead manager and book-runner Lead manager and book-runner

Best Foreign Issuer Deal Best Primary Subfederal / Best Primary Debut of the Year in the Russian Bond Market Municipal Bond Deal Corporate Bond Deal

Source: Cbonds

Arranging transactions in various currencies, including the US dollar, the euro, Several landmark deals in a syndicate of arrangers and acted as the rating on international debt the Swiss franc and the Russian ruble. were completed in 2019: advisor to the Republic. capital markets The Bank was placed at the top of rankings • Russian Ministry of Finance — the Bank acted • Kazakhstan Temir Zholy National company Gazprombank is a leader among arrangers of underwriters of Eurobond issuers in 2019: as the book-runner and settlement agent for two (Kazakhstan Railways) — the Bank’s first and underwriters of debt instruments issued • 1st place in the ranking of Eurobond issues Eurobond issues of USD 3 billion and EUR 750 million; international deal for this issuer from the Republic by Russian issuers in international capital markets. of CIS-based issuers in total there were four placements for an aggregate of Kazakhstan, arranging an additional Eurobond In 2019, the Bank was book-runner and underwriter • 1st place in the ranking of Eurobond issues amount equivalent to more than USD 6 billion. offering in Swiss francs. of 21 international issuances of issuers from the Russian of Russian oil and gas industry issuers • Republic of Uzbekistan — arranged a debut Federation and other CIS countries; the total amount • 2nd place in the ranking of Eurobond issues Eurobond offering on the international market, exceeded (the equivalent of) USD 14.4 billion of issuers based in Russia where the Bank was the only Russian bank 48 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 49

Selected Gazprombank deals in 2019 In 2019, the Bank acted as the arranger of some of the largest deals on the Russian

Gazprom PIK Group Gazprom Petropavlovsk Polyus stock market, for an aggregate amount in excess of USD 5.7 billion. USD 2,932 million USD 75 million USD 2,203 million USD 125 million USD 390 million

ABB ABB ABB Convertible bonds offering ABB 2019 2019 2019 2019 2019

Arranger and broker Joint book-runner Arranger and broker Joint lead manager Joint coordinator / book-runner

Operations on stock markets Selected Gazprombank Debt securities trading Analytical support Compared to 2018, 2019 was a successful year deals in 2019 and institutional sales In 2019, the format of analytical reports for the Russian stock market, both in the number Gazprombank acted as the global co-coordinator On the back of its operations in 2019, the Bank and presentations was significantly improved and the volume of transactions. and book-runner of an accelerated offering of Polyus is among the debt securities market leaders, and collaboration with European and Asian investors Gazprombank is actively expanding its stock market shares for a total amount of USD 390 million. and, in particular, it is listed among: was revitalized (trips, thematic reports, calls, footprint. In 2019, the Bank acted as the arranger This offering was the third joint transaction after • TOP 3 of the largest dealers in corporate bonds subscriptions for analytics). The result was more new of some of the largest deals on the Russian the company’s re-IPO in 2017 and its convertible in the Russian local market; customers involved in trading operations. stock market, for an aggregate amount in excess bond issue in 2018. • TOP 3 of the largest dealers in terms of OFZ trading New workshop formats and topics were prepared of USD 5.7 billion. A secondary offering of shares in the PIK Group at the Moscow Exchange; for local and international investors (workshops were Gazprombank is the corporate broker for Gazprom of Companies with a value of USD 75 million became • TOP 5 of liquidity providers in terms of order held in Moscow, London and Zurich), and trips were and Transneft. It provides a range of consulting Gazprombank’s debut deal in the real estate sector. execution (according to 2019 Bloomberg data). arranged to Kazakhstan and Uzbekistan. services aimed at strengthening Russian Gazprombank acted as the exclusive arranger In 2019, the Bank received a prize in one of the As part of the Bank’s Russian economy and financial companies’ positions on global stock markets, of Gazprom’s two quasi-treasury stock offerings for Cbonds Awards key nominations: the “Best Sales market analysis, detailed reviews of the Bank enhancing investment attractiveness, providing a total amount of USD 5.1 billion. The second offering Team in the Bond Market” (1st place for the 3rd year of Russia’s monetary policy, the budget rule, and ruble recommendations on interaction with the investment was the largest on the Russian market since 2007. in a row). performance over time were issued. community, and arranging management road shows The USD 125 million Petropavlovsk convertible Thanks to active fostering of relations with a global Gazprombank analysts were the first to provide and investor days, as well as maintaining company bonds offering became the only convertible bond pool of investors, successful placements of 100 local permanent coverage of major foreign high-yield stock in key stock indices. transaction among Russian issuers in 2019. bond issues and 21 Eurobond issues were completed. markets, starting with bonds issued by Chinese In 2019, active work continued to expand the developers. These initiatives helped to expand geography of investors. Dialog was established the trading operations toolkit and customer base. with high-profile investors from the UK, the EU, With the purpose of developing the Bank’s capital South Korea, Singapore, China and the Middle market operations, it provided analytical coverage East. The international sales team arranged a series of CIS economies and financial instruments (reports of landmark events (roadshows, investor days with investment recommendations on Uzbekistan and round-table discussions) for leading Russian and Kazakhstan). issuers. The Bank launched an analytical portal that has become its primary customer communication tool. The analytics profile was further raised by participating in conferences and holding media workshops — the Bank’s media citation rate increased by 2.5 times. On many occasions the Bank’s analysts made their expertise available for its capital market transactions. These efforts were acknowledged in the Cbonds 50 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 51

In 2019, the average financing volume provided In terms of purchases of precious metals to various enterprises of the industry exceeded from mining and processing enterprises, RUB 102 billion. Loans were extended Gazprombank is one of the leaders in the to gold-mining and processing businesses Russian market of precious metals. Last year, to finance their operating and investment needs. purchases exceeded the record 70 tons in gold equivalent.

annual investor survey, which named the Bank’s In January 2019, for the first time in its history, NOVATEK (Yamal LNG), LUKOIL, Krastsvetmet, analytics team as the second best in Russia. the Gazprombank banking group successfully and Surgutneftegas (KINEF). The subsidiary launched an important project to buy Doré bars, is the operator (arranger) of the precious metals Transactions in precious metals transport them and sell them to a foreign end circulation system at Gazprom Neft, the official dealer The Bank actively pursues financing and purchase purchaser (ICBC Standard Bank London). of Axens, a subsidiary of Institut Francais du Pétrole transactions involving precious metals with the top The basic infrastructure required for regular et Energies Nouvelles (IFPEN), has dealership status leaders of the gold-mining industry. The customers transactions with Doré bars has now been created, in supplying catalysts produced by Shell Global of Bank GPB (JSC) include Polymetal International Plc. and the transactions have been made regular Solutions (Eastern Europe) B.V. companies, PJSC Polyus, Millhouse Capital UK Ltd., as part of a 2-year package of contracts between In 2019, GPB-Metallinvest as the sole supplier NORILSK NICKEL, Petropavlovsk PLC, Yuzhuralzoloto Bank GPB International S.A., GeoProMining Gold of Chevron (USA) catalysts for hydrocracking, (UGC), UMMC, Russian Copper Company, Highland (Armenia) and ICBC Standard Bank London. Among hydrotreating, hydrogen production and isodewaxing Gold Mining Ltd., Russian Platinum, JSC Pavlik, other things, these contracts provide an opportunity to Rosneft’s refineries successfully delivered first Geopromining, refineries of JSC Uralelectromed, OJSC to pay for deliveries in advance with the help batches of the said catalysts to RN-Komsomolsky Krastsvetmet, JSC Prioksky Non-Ferrous Metals Plant, of a credit facility opened by Bank GPB International S.A. Refinery LLC and JSC Achinsk Oil Refinery VNK. and JSC Shchelkovo Precious Metals Recycling Plant. The result is an example of efficient use In 2019, the volume of supplies of chemical products In 2019, the average financing volume provided of the strengths of the Gazprombank Group to companies of the gas and petrochemical industries to various enterprises of the industry exceeded international network and an important stage in Russia grew steadily. The first framework contract RUB 102 billion. Loans were extended to gold- in the expansion of cross-border interaction between was made with SIBUR Holding for the supply mining and processing businesses to finance Gazprombank Group units. of Shell catalysts for ethylene oxide production their operating and investment needs. During In terms of purchases of precious metals from mining in 2020–2022. Scheduled delivery of Deh-16 the reporting period, the Bank prepared a transaction and processing enterprises, Gazprombank is one propane dehydrogenation catalyst and adsorbents of industry-wide significance, involving financing of the leaders in the Russian market of precious manufactured by UOP (USA) to SIBUR Holding was and complete support of Uzhuralzoloto’s acquisition metals. Last year, purchases exceeded the record successfully implemented. of 28% of Petropavlovsk Plc shares and convertible 70 tons in gold equivalent. Besides, the Bank is one The revenue of GPB-Metallinvest amounted bonds. Both companies are among the TOP 10 of the major counterparties of the Central Bank to RUB 10.3 billion in 2019. Russian gold mining groups and the transaction of Russia in terms of gold bars sale and purchase. had a value of USD 270 million. DVP settlements Long-established exports to key global centers on UK papers in Euroclear, and all subsequent of spot trade in precious metals — London, transactions in relation to the transfer of shares Zurich, Hong Kong, Dubai, Singapore and Delhi — to the depository of Bank GPB (JSC) were performed continued. Own export operations and exports under by Bank GPB International S.A. The transaction was commission agency agreements equaled 34 tons completed in 2020. in gold equivalent. Enlargement of the operations spectrum A separate area of business in commodity markets and improvement of their efficiency were given a lot is development of the service segment to supply of attention. In the area of narrow-scoped industry gas and petrochemical companies with high- products, which have become widely popular, tech catalytic systems and equipment provided we could cite futher development of short-term by the Bank’s 100% subsidiary, GPB-Metallinvest. and mid-term prepaid supplies of precious metals The strategic partners of GPB-Metallinvest are within the framework of trade agreements. Gazprom, Rosneft, Gazprom Neft, SIBUR Holding, 52 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 53 Asset Management

NGPF asset management, Closed-end unit investment Based on its 2019 results, RUB billion funds, RUB billion the Gazprombank Group asset 71 495 management business almost + 403% + 81%

doubled in size, having increased 273 its aggregate assets under management by 93%. 14

18 19 18 19

In late 2019, the Group had assets under management exceeded RUB 6.9 billion, Retail customers High Net Worth Individuals more than RUB 644 billion worth up 18% on the previous year. The Gazprombank Group’s retail business likewise The HNWI asset management business offers wealthy The Group currently manages the assets of 87 corporate recorded healthy growth, with the number individual customers a wide range of investment of assets under management. customers, including major non-governmental pension of individual customers placing assets under solutions tailored to their financial objectives, The Gazprombank Group is a market funds, insurance company reserves, endowment fund management reaching 55,000. At the same time, investment horizons and scopes. The product assets and self-regulated companies. assets of individual investors in open-end unit line comprises strategies with various risk-return leader in the management of private Seeking to expand the range of institutional investors’ investment funds (OEIF) and those held in individual ratios. High net worth individual investors have and institutional investors’ assets. investment capabilities in the longer term, GPB–AM investment accounts (IIA) increased by RUB 5.7 billion access to ruble and FX bonds, stocks, structured in 2019 proposed a unique product to the market over the year, exceeding RUB 34.7 billion in total. deposits and notes, and leveraged strategies, as well that fully complies with the regulations on NGPF fund The average open-end fund account size grew as alternative investment class solutions. investment. The Company brought two exchange- by 20% to RUB 660,000. The online business In 2019, the Group’s HNWI asset management traded unit investment funds to the market: of GPB–AM also performed positively in 2019. business expanded its customer base. The amount Gazprombank — Corporate Bonds (2 Years) In particular, the number of retail customers opening of assets brought in by high net worth individual Joint Stock Company Gazprombank — Asset and Gazprombank — Corporate Bonds (4 Years), online accounts using the Personal Account feature investors grew by 88% to reach RUB 20.5 billion. Management (GPB–AM) is part of the Gazprombank in conjunction with their corresponding benchmarks increased 8 times as compared to the end of 2018, In 2019, the Group expanded its interval unit Group’s asset management business and ranks 5th (indicators) calculated by the Moscow Exchange. complemented by multifold growth in the amount investment funds line. Qualified investors now have among Russian management companies in terms of funds invested via the remote channel. According access to a new specialized leveraged fund called of customer assets under management. In 2019, Closed-end unit investment funds to the Moscow Exchange, the company is among Gazprombank — Eurobonds plus EURO. Expert RA rating agency confirmed the company’s The Gazprombank Group is the undisputed leader the Russian market’s TOP 5 by the number of IIAs. high service reliability and quality rating of A++. in the closed-end unit investment funds (CEIF) In 2019, retail customers were offered two new market. GPB–AM manages 23 funds. For the third products: the FX Bonds IIA, which enables investment Managing institutional investors’ consecutive year, the company was rated No.1 in foreign currency-denominated instruments; assets by Expert RA agency in terms of customer assets and the Gazprombank Plus IIA, aimed at promoting In the non-governmental pension funds segment, in CEIF, which grew by 81% in 2019 to reach investment in the ruble bonds of Bank GPB (JSC), the Group’s business demonstrated multifold RUB 495 billion. which combine attractive returns with high reliability. growth. Active expansion in the customer segment This vehicle allows investors to structure complex in 2019 led to growth of 403% in NGPF assets investment deals and do project financing, direct under the Group management to RUB 71.2 billion. and venture investments. The opportunities provided Based on its 2019 results, Gazprombank once again by closed-end investment funds are popular among reasserted its leading position on the Russian wealthy individual customers, too, as they are useful endowments market, having accumulated in addressing a wide range of tasks, from property the largest number of endowments under and securities management to financing of various management: 64 endowments (57 unique investment projects. customers). At the same time, the Group business ranks 2nd on the Russian market in terms of endowment fund assets volume, according to Expert RA. The total value of endowment fund 54 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 55 Engineering Assets: Core Business Operations and Key Projects

Air separation and LNG: In the field of new product In 2019, the machine engineering • Three major investment projects by the OMZ Group capture: were completed, bringing air separation units • A contract was signed for the manufacture assets of the Gazprombank for the supply of process gases to anchor customers and supply of a production well drilling on stream: in Tula, for a new state-of-the-art and workover plant for the ICP “A” ice-resistant Group continued their successful metallurgical facility at Tulachermet-Steel; stationary platform at the Kamennomysskoye-Sea in Tobolsk, for ZapSibNeftekhim, Russia’s largest field. development. modern petrochemical facility (SIBUR Holding); • A manifold test piece and grid mat with and in Kirovo-Chepetsk, for the mineral fertilizer integrated safety equipment was manufactured production business of the URALCHEM Group. and successfully tested for use in production • By way of developing cooperation with the Republic of lifting facilities of domestic origin, to be of Uzbekistan, a project is underway for the supply developed in accordance with a program The machine engineering assets of the Gazprombank Group provide of two extra-large cryogenic air separation units sponsored by the Russian Ministry of Industry strategically important sectors of the Russian economy with integrated for a synthetic liquid fuel plant at the Shurtan Gas and Trade. Chemical Complex (Uzbekistan GTL). • Manufacturing of heavy forged support rolls solutions and unique domestic-made technological equipment. of 60 tons or heavier for the metallurgical industry For the space industry: was set up. • Large-dimension storage system equipment was • As part of the construction project to build manufactured and delivered for the Vostochny a natural gas liquefaction facility capable Cosmodrome space launch facility. of producing up to 1 million tons of LNG The highlights of 2019 are as follows: In the petrochemical and oil • Liquid oxygen and nitrogen vessels were a year in the settlement of Sabetta, ordered and gas refining industries: manufactured for semi-cryogenic fuel-fired rocket by NOVATEC, the primary cryogenic spiral-wound In the nuclear energy sector: • A contract was signed for engineering design, propulsion units and rocket stage testing beds, heat exchanger and nitrogen turbo-expanding • A contract was signed for the manufacture supply, designer oversight and startup ordered by the Indian Space Research Organization assemblies were manufactured and shipped. of equipment and embedded items and commissioning services for a low-temperature (the ISRO Propulsion Complex project). • The first mine hoisting engine of domestic origin for inspection cavities at Kudankulam NPP (India), separation unit within the Novy Port project was set in operation at the Gaiskiy GOK (UMMC). Power Units No. 5, 6. Equipment was shipped (Novoportovskoye oil and gas condensate field, Export expansion: • An import substitution program in relation to mills for Power Unit No. 4. Gazprom Neft PJSC). • Manufacturing of 16 EKG-20 open-pit excavators of 4.5*6 m, 7*3 m, 3.6*4.5 m is underway. • A contract was signed for the manufacture • A contract was signed for the manufacture and 20 crushing machines has started for • Production of new crushing facilities was started and delivery of the Upper Unit for Ruppur NPP of a hydrotreatment plant and hydro cracking the Almalyk Mining and Metallurgical Complex with a view to replacing imported equipment (Bangladesh), Power Unit No. 2. Equipment was reactors R-101, R-102 for the Moscow Refinery (Republic of Uzbekistan). for the Severstal Group (Karelsky Okatysh) delivered under a previous order. (Gazprom Neft PJSC). • Two EKG-12 open-pit excavators were supplied and the EVRAZ Group (Kachkanar GOK): two • A contract was signed for the manufacture of pre- • An order was secured for the supply of reactors, and commissioned at Erdenet Mining Corporation commissioned, two shipped and two currently formed passive reactor core impoundment vessel separators, columns and absorbers for the Omsk SOE (Mongolia). being manufactured. bottoms for Power Unit No. 2 at Akkuyu NPP Lubricants Plant (Gazpromneft-Lubricants Ltd.). (Turkey). • A tender for the manufacture of an isodewaxing • Equipment was delivered for the second plant for SMU No. 7 (PJSC Tatneft) was won. power unit of Leningrad NPP-2: upper unit lid • A contract was signed for the manufacture and in-vessel internals. and supply of equipment for gas treatment • Development and pilot manufacturing were unit UKPG-31 (in the vicinity of UKPG-6 within continued in relation to vacuum test bed the Achimov deposit of the Urengoy oil and gas components as part of the International condensate field, AO Achimgaz). Thermonuclear Experimental Reactor (ITER) • A contract was signed for the supply of S-2, 3, 4 construction project. separator units for Gazprom Dobycha Yamburg LLC, to be used at the Kamennomysskoye-Sea gas field. • A contract was signed for the supply of column equipment for a new anhydride production facility launched on a site in Tobolsk for SIBUR Holding. • A contract was signed with NOVATEC-Murmansk (NOVATEC Group) for the manufacture, supply, designer oversight, startup and commissioning of 64 cranes of various capacity, from 10 to 300 tons. 56 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 57 Sustainable Development Policy in the Area The ground-setting document that mobilizes the international of Sustainable business community to handle global issues, is the Global Accord styled “Transforming our world: the 2030 Agenda for Sustainable Development”, Development approved by heads of states and governments at the UN Sustainable Development Summit in New York on 25 September 2015. This Accord sets forth 17 sustainable development goals aimed at improving the global well-being and protecting our planet. The concept of sustainable development underpinned Gazprombank’s values and business processes long before it became widely spoken of in the financial sector. 1 No poverty 2 Zero 3 Good health and 4 Quality hunger well-being for people education

Throughout our almost 30 years of history, we have always demonstrated our whole-hearted commitment to the principles of responsible and honest business conduct and adherence to corporate ethics. 5 Gender 6 Clean water 7 Affordable 8 Decent work equality and sanitation and clean energy and economic growth

In recent years, social and environmental criteria We pay special attention to environmental matters, have become integral components of partnership in particular, by reducing the environmental impact and project investment. The Bank actively interacts of the Bank’s business processes and by making with all stakeholders and makes its annual financial efficient use of energy and other resources, largely 9 Industry, innovation 10 Reducing 11 Sustainable cities 12 Responsible statements and non-financial operating results freely through better management of consumables. and infrastructure inequalities and communities consumption accessible to the general public. Notwithstanding The Bank places ever-higher priority on employee and production our openness, information safety and customer data education and embedment of a corporate culture protection are our overarching priorities. that facilitates the proliferation of sustainable We understand the responsibility we owe to our development principles both inside and outside people and endeavor to do everything we can the Bank. for their well-being, health, safety, and security. The transition from a conventional model of doing The Bank is committed to rigorous observance business to a sustainable one is a complex, long, of the human rights and equal treatment of all and tedious process for entities in any sector employees regardless of their sex, age, or beliefs. of economy. Gazprombank has already embarked upon this course of change, setting new sustainable 13 Climate 14 Life below 15 Life 16 Peace, justice development goals every year and doing everything action water on land and strong possible to achieve them. institutions

A new model of the global economy within the sustainable development framework will only take shape if all economy sectors transform themselves in favor of the global agenda. Russian business gets ever more and ever deeper 17 Partnerships involved in this transformation, with business leaders for sustainable acknowledging the significance of the UN goals and their development role in accomplishing them. 58 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 59 Responsible HR Policy Governance and Employee Incentives

Gazprombank always keeps Gazprombank engages talent abreast of the times; with that said, regardless of sex, age, religion, our key values, such as responsible national or racial identity, or political governance, remain unchanged. beliefs. This sociocultural and ethnic By governing its own affairs diversity enables the Bank to employ responsibly, for the benefit of both a truly brilliant team and is the driving the company and society as a whole, force behind our successes. the Bank is building much needed capital of trust and fairness.

In its activities, the Bank follows The internal audit function, performed at the Bank In an environment characterized and quality of the HR services it provides. Priority the principles of good corporate by the Internal Audit Department, is an important by growing competition among is placed on searching the market for qualified element of assuring effective functioning specialists, helping personnel to adapt, improving governance recommended of the Bank’s internal control system. leading banks and technology the levels of employee qualification and training by the Bank of Russia and the Basel The Internal Audit Department is part companies, together with tightening in breakthrough technology areas, and developing of the Bank’s system of internal control bodies target-setting, motivation and retention Committee on Banking Supervision. and is an independent structural unit reporting banking regulations, the Bank mechanisms for key specialists. and directly accountable to the Bank’s Board continued to pursue its Technological Given the Bank management’s strategic focus of Directors. on the prioritized development of individual The Internal Audit Department assists the Bank’s Transformation and Retail Business areas of activity, in 2019 it became obvious that governance bodies in the assurance of efficient Development Strategy in 2019. the institution of HR business partners needed The Bank has adopted a Corporate Governance functioning of the Bank and Bank Group to be established for the retail business, as well Code and enforces it to ensure that the Bank’s companies, guided by the principles of going as for the IT support and digital technology activities conform to international and Russian concern, independence, fairness, and professional areas. HR business partners directly interact principles of corporate governance, promoting the competence. on a day-to-day basis with HR service customers risk and capital management system effectiveness at various levels, helping to build a deeper on the Bank and the Group level, information Our digital solutions are changing and reformatting understanding of the business’s current and longer- transparency, management responsibility the services to which our customers and employees term needs in the area of personnel management. and accountability. are accustomed. The continued growth Work is currently ongoing to transform several The Bank’s governance bodies are improving and diversification of our customer base, as well functional areas associated with the relocation the decision-making system and corporate control as digital infrastructure upgrades with concurrent and centralization of support functions on the basis tools used to manage Bank assets. In accordance improvements in reliability and functionality of regions with optimal labor costs, and to build with the Bank of Russia recommendations and the necessitate the recruitment of highly qualified a service organization toolkit. Cutting support applicable Code, a review of the status of the Bank’s IT specialists and customer relationship managers. function costs, reducing operational risk levels, corporate governance system was undertaken Banking support of contracts for Russia’s largest and improving the quality and speed of the in 2019. Another such review will be undertaken oil and gas companies and lending to small services provided, as well as internal customer in the 1st quarter of 2021. and mid-sized businesses have also become priority satisfaction levels, help to free up HR resources areas of business that require HR reinforcement. for redeployment to other areas of the banking Building upon personnel management business with higher priority or better margins. experience accumulated in the corporate In 2019, the Bank’s headcount grew segment, Gazprombank applies innovative by approximately 3,000 people, mainly retail approaches to HR processes setup, continuously business staff and IT specialists. While net new endeavoring to improve the convenience, speed hires grew by 50% from 2018, personnel turnover 60 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 61

in 2019 remained below the minimum market and earn a good reputation during their capabilities on the basis of modular programs The Bank HR team’s merits have been acclaimed level for the banking segment, which is explained traineeships are offered employment with the Bank. and comprehensive training in professional by the professional community for several years by the Bank’s stability and reliability, intelligent In particular, the Bank’s sponsored chair at MGIMO topics, while regular sales and service training now. In 2019, the Bank was ranked third among recruitment, adaptation and training system, University, which has existed for the past 8 years, is provided for the Bank’s front office staff. In 2019, Russia’s best employers according to Forbes, having mature system of social benefits and guarantees, has already trained five cohorts, most of whom an open-ended hiring program format was significantly outpaced not only its colleagues non-governmental pension schemes and voluntary are now employed by the Bank. A front-end launched in the Bank’s head office that allows any in the financial sector, but also the largest industrial health insurance, in addition to a corporate culture development trainee school for third-party students employee to complete a training course of interest and high-tech companies. According to Forbes in which Bank personnel are perceived as the most has operated at the Bank for two years. The training to develop individual competences. Woman, Gazprombank was among Russia’s TOP 10 valuable strategic asset. program, developed jointly with a leading vendor, The Bank has implemented a comprehensive employers for female careers, making its working In its activities, Gazprombank traditionally not only helps to establish close cooperation approach to remote employee training (by year environments as comfortable for female employees endeavors to create optimal conditions for its with the country’s key technical and economic end, more than 18,000 people had been trained). as possible. The Bank implements voluntary health personnel to act in an optimal manner, assisting universities, but also to train an external HR standby During 2019, the Bank’s training programs insurance programs providing full coverage them in unlocking their potential and fostering pool for the implementation of major IT projects portfolio expanded to include 22 new training throughout pregnancy up to and including birth, in each employee the ambition to be creative within the Technological Transformation Strategy. courses and more than 100 e-courses. They grants financial aid to multi-child parents, single and useful for the Bank. Significant growth in headcount and mass currently offer 94 in-class and mixed training parents and parents supporting disabled children, Over 1,100 of the Bank’s employees are qualified hiring of different generations of talent, as well programs and 479 active e-courses. Online training and allows young mothers to choose flexible financial market professionals, approximately as representatives of different corporate cultures formats are evolving, helping to expand training working arrangements. Previously, Gazprombank 50 hold MBA certificates, and over 100 have have prioritized issues around personnel geographies and audiences. won the Randstad Award in the “Most Attractive a Candidate of Science or Doctor of Science degree. onboarding, comprehensive integration of new Much has been done to automate the Bank’s Employer in Financial Services” nomination for three Over several years, the Bank has relied on in-house hires into the Gazprombank corporate culture, HR services over recent years. In late 2019, a group years on end. personnel selection competences and, alongside increased levels of engagement, creation of forward-looking initiatives in the personnel recruitment via traditional channels, has of a process of prompt feedback analysis, development and management area was developed new mechanisms of horizontal rotation. and implementation of new HR tools and incorporated into the Human Capital Management In particular, this means that freed up personnel procedures. comprehensive program, aimed at building from units involved in the support function Welcome Days are held for head office new hires the Bank’s image as a contemporary and high-tech transformation programs can be redeployed on a weekly basis, providing them with all the financial institution, improving performance through to other business areas and apply their long- information they need on the Bank, its strategy correct target-setting, supporting the feedback standing experience and qualifications with and goals, key banking units and services, and rules culture, attracting, retaining and developing talent, minimum onboarding periods. of behavior in extreme situations, as well as on their and providing customer-oriented HR services. The Bank welcomes the use of in-house expertise training, development and self-improvement A survey of internal customer satisfaction with in the search for qualified personnel, and in late capabilities. In addition to all the required materials, service quality, conducted for the second 2019 it launched REFriending, a federal program new hires receive assistance from an onboarding consecutive year, is helping to optimize processes, that allows Bank employees to nominate chat bot. In 2019, an updated automated promptly amend the Bank’s internal regulations, acquaintances and ex-colleagues on a competitive Onboarding Program was launched for retail and shift management’s focus to personnel basis. business new hires across the entire country. management bottlenecks. In 2019, a country-wide The GPB Space digital portal implemented in 2019, From 2019, open meetings between senior pilot was undertaken with a view to assessing intended for the presentation of the Bank’s events management team members and head office whether the most numerous category of Bank and activities in the information technology sphere, and branch network management became personnel, the retail business front office staff, as well as specialized developer conferences a regular feature at the Bank. More than are satisfied with their work for the Bank. Based held regularly in Bank forums, also helps the Bank 400 managers have participated in these events on the project outcomes, changes were made to recruit unique specialists with new skill sets so far, including via online channels. to personnel training and motivation programs, and to exchange experience. Company-wide and sports events held jointly information support processes associated with To reduce labor input and optimize the timings for with relevant units, as well as meetings with the Bank’s programs and products, and logistical hiring mass trade employees (sales office personnel, interesting personalities and motivational speakers support of operations, interaction and subordination underwriters, regional network relations managers, have become regular events, helping to increase procedures were optimized, and feedback was given field sales staff, secretaries and personal assistants, personnel engagement, develop horizontal to the respondents. etc.), Gazprombank has for several years employed relationships and implement the Gazprombank For several years, the Bank has been the assessment center technology. motto: “One Bank — One Team”. a co-organizer and active participant of one The Bank has a strong focus on engaging talented Personnel development is traditionally a strong of the most authoritative forums for the exchange young specialists. Students of financial and focus area. In 2019, the number of employees of opinions on relevant personnel management economic institutes in Moscow, St. Petersburg completing in-class training more than tripled matters, the Human as Capital International and other cities are offered traineeships to over 9,000 people. Training programs Interbank Conference. In 2019, presentations in the Bank’s head office and branches and receive are intended to support the development were mainly focused on the most pressing trends scholarships from the Bank. Graduates who of contemporary skills and improve head in the HRM technology market in a digitizing successfully complete their theoretical course office and branch managers’ leadership economy. 62 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 63 Environmental Matters

Renewable energy Technology and innovations Sustainable development nurtures The development of renewable energy is one Technologies aimed at preserving our planet’s of the most important trends in the Russian electric ecological resources are acquiring paramount a special attitude towards the world power industry and one of the fastest developing importance for the sustainable development sectors in the global economy. It represents a step of the global economy. All innovations that reduce around us, demonstrating that forward in terms of technology, digitization, waste, cut emissions of pollutants, and help switch and environmental standards. to more environmentally friendly materials enable ignoring ecological needs will result At present, over 60% of domestic projects companies to take a step towards responsible in the renewable energy field are implemented with business conduct. in degradation of the environment credit support from Gazprombank, which confirms In 2019, Gazprombank continued on its path the Bank’s strong interest in green energy projects. towards digitalization, enabling, among other and endanger the very existence The Bank team completed the industry’s first solar things, a big reduction in paper documentation power plant construction financing deal back flows. In particular, towards the end of the year, of the mankind. in 2015, and Gazprombank sees good prospects Gazprombank, jointly with the FinTech Association for the financing of more renewable energy projects. and the Bank of Russia, became one of the first In November 2019, Gazprombank and the portfolio Russian banks to launch a decentralized depository company of the Wind Energy Development Fund system (DDS) for mortgage deed accounting using (a joint investment fund established by Fortum blockchain technology. DDS enables the Bank to start Environmental protection In 2019, the Bank invested in Gazprom — Gas-Engine and the ROSNANO Group on a parity basis) signed gradually migrating mortgage deals to the digital is the dominant strand in the ESG Fuel LLC, a company engaged in the establishment a loan agreement for the purposes of financing channel and eliminate the need to use large amounts of infrastructure for the development of the gas the construction of the 50.4 MW wind power plant of paper. Application of this technology will also (Environmental. Social. Governance) engine fuel market in the Russian Federation. No. 2 in Ulyanovsk and two wind generation plants significantly improve the stability and reliability concept, and a company’s On average throughout the country, automobile with a total capacity of 200 MW in the Republic of electronic deeds data, reduce execution times, transport is responsible for approximately 44% of Kalmykia. The wind generation farms will start eradicate the risk of fraud and the emergence activities cannot be viewed of overall pollution, reaching as high as 93% in major supplying electricity to the wholesale electricity of a gray mortgage deeds market, and minimize as “sustainable” unless they include cities such as Moscow and St. Petersburg. Natural and capacity market (WECM) in the fourth quarter the risks of non-existent pledges. gas is a cleaner type of fuel compared to gasoline of 2020. As part of the Bank’s New IT Infrastructure program, nature conservation measures, or diesel. a Private Cloud platform was created in 2019, primarily those aimed at reducing In the course of 2019, 28 new gas motor fuel to which 66 automated systems were migrated, infrastructure facilities were built or purchased. followed by implementation of automated release the consumption of resources The transition to gas motor fuel will reduce the level of resources in the Private Cloud. A workplace and generation of harmful emissions of harmful atmospheric pollutants generated virtualization program was undertaken (using by the transport sector and thus allow city dwellers the Virtual Desktop Infrastructure (VDI) technology) polluting our planet’s atmosphere to breathe cleaner air. The company structure and over 9,800 workplaces in the head office and water bodies. envisages further expansion of the fueling station and across the branch network were migrated network to make gas motor fuel more accessible to that technology. Over 850 employees registered for consumers. on the corporate mobility (MI) platform, and over 300 mobile clients of the uniform communication system were installed, enabling prompt remote access to the Bank’s corporate resources and remote As its responsible investment concept, aimed performance of certain tasks. This helped to reduce primarily at creating positive social change both employee time and other non-renewable and reducing negative environmental impact, takes resources spent on traveling to the office. shape, Gazprombank has come to pay more attention The Boardmaps automated system was brought into to investment in, and lending to, “green” projects. day-to-day use, enabling electronic circulation of pre- read materials for meetings of the Bank’s collegiate bodies and, ultimately, creating a paper-free office environment. Thirty-two collective advisory bodies are now connected to the system and over 80 meetings have been held to date. 64 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 65 Social Responsibility

Sorting of waste and recyclable items Protection of endangered fauna species in Bank offices Preservation of our planet’s biodiversity is one While being vastly experienced This year, the Bank started migrating to the concept of the most significant aspects of sustainable of “green” office, i.e. an office where consumption development, as the problem of species extinction in the areas of economics of resources is rational and sparing, and employees becomes more and more urgent with every passing are actively involved in waste collection and recycling year. and finance management, programs. In 2014, Gazprombank committed to an unusual In the second half of 2019, containers were installed pet: Berry, a female Far Eastern leopard that lives Gazprombank has always paid in three Moscow offices to collect batteries, plastic in the Land of the Leopard reserve in the Primorye cups and plastic lids in an initiative that is to be Territory. In the 20th century, forest fires, poaching as much attention to the social rolled out at all Bank sites. Batteries and plastics and extermination, not so much of the leopard itself will continue to be collected in 2020 and will as of its traditional quarry, have put this carnivore aspect of its activities. be handed over for recycling as sufficient volumes on the brink of extinction. In the 1990s, no more are accumulated. than 30 of these animals remained, but today their In addition, starting from this year, all documents number has increased to about 70, offering hope destroyed in the Bank’s Central Archives Store have that this rare species can be preserved. Ninety been handed over for recycling (production of table percent of the Far Eastern leopard population dwells Every year, we implement over 300 charity Another Gazprombank’s priority area of cooperation napkins, toilet tissue, etc.). By the end of 2019, over in the Land of the Leopard reserve. and sponsor projects aimed at supporting is contemporary Russian art. The Bank’s collection, 76 tons of scrap paper were collected, which helped In June 2015, Gazprombank started issuing its launched in 2012, has become the first and, to save about 760 trees, each of which produces Leopardess Berry Cards featuring this remarkable low-income groups, cultural, academic, to this date, the only corporate collection devoted enough oxygen for at least three people. animal. The Bank transfers 1% of every purchase arts and educational establishments, public exclusively to Russian art from the beginning made using the Leopardess Berry Visa Card to the of the 1990s to the present. Social Responsibility Charity Fund, for subsequent organizations, sports teams and clubs, From the very start, the collection was meant spending on Berry’s sustenance. The primary goal applied science forums and conferences. as a way to support contemporary Russian of this program is to preserve the population art and artists. Its main purpose is to create of the Far Eastern leopard and help create conditions a cross-section of the time and give future in which it can thrive. By year end, 2,284 cards generations a better understanding of our “today”. in support of Berry the Leopardess had been issued. Buying art, Gazprombank is determined to adhere In 2019, Gazprombank made another annual to the initial concept and integrity of the collection, donation to the Land of the Leopard Fund as a way Supporting culture and the arts giving preference to well-rounded projects rather of supporting its environmental protection efforts. Culture is both a stimulus and a vehicle than individual pieces. Besides, the Bank commissions of sustainable development, as it is closely new works to artists specifically for the collection. connected with such crucial spheres of mankind’s The Bank’s collection is sought after by curators harmonious development as economics of museum and other exhibition projects in Russia and education. In a globalized environment where and abroad. Works from the collection were exhibited numerous communities are both interconnected in the State Tretyakov Gallery, the National Centre and exposed, it is culture that helps to preserve the for Contemporary Arts, the Moscow Museum immanent values, historical experience and traditions of Modern Art, the Multimedia Art Museum, the Garage of each individual country. Museum of Contemporary Art, the Albertina Museum For this reason, Gazprombank considers it its duty (Austria), Bologna Museums Association (Italy), projects to support projects in the sphere of arts and culture, of the Moscow, Venice, Liverpool, and Ljubljana Biennial, as well as to promote mutual cultural enrichment the Thessaloniki Biennial and many others. between Russia and other countries. In 2019, as part of the annual LOOP video art festival One particular focus of the Bank’s culture and arts in Barcelona (Spain), an exhibition of selected works support program is cooperation with the Igor from the Bank’s collection was placed on display Moiseyev State Academic Ensemble of Popular in Casa de Rusia as yet further evidence of evolving Dance. This ensemble, whose repertoire includes international cultural relationships and interest dances from all over the world, combines the classical in Russia’s contemporary art. ballet school and popular dancing traditions. In addition to supporting contemporary art, Gazprombank is a long-standing strategic partner Gazprombank assists in the implementation of this glorious company, supporting its active of relevant projects by leading Russian museums, touring activity. including the Tretyakov Gallery, the Pushkin State Museum of Fine Arts, and the Moscow Kremlin Museums. 66 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 67

The Bank is a traditional partner of the Viennese Supporting disadvantaged groups Ball in Moscow, an annual charity event Assistance to disadvantaged groups, such Sustainable Development Performance on an international scale. All funds raised are donated as veterans’ organizations, orphanages and boarding to support children’s organizations and foundations. schools, occupies a prominent place in the Bank’s in 2019 social program. Support for orphans is one of the International cultural cooperation most important aspects in this area. For many The Bank invariably supports the international years, the Bank has made donations to Children’s cultural cooperation agenda. In Verona, in the fall Villages — SOS, an interregional non-governmental of 2019, the Tchaikovsky Symphony Orchestra, charity. This is a unique alternative to orphanages — Search for young talent directed by maestro Vladimir Fedoseyev, gave a free a model as close to a normal home as possible, concert. Arranged by Gazprombank, the concert where children live as in a regular family. There was a landmark event in Russian-Italian cooperation are currently six SOS villages in Russia: in Tomilino, in the humanitarian sphere. Lavrovo, Pushkin, Kandalaksha, Vologda, and Pskov. There are also six Youth Centers (2 in St. Petersburg, Supporting sport 2 in Oryol, 1 in Lyubertsy and 1 in Murmansk). By way of making a contribution to the promotion In total, there are more than 400 children living of healthy lifestyles, the Bank provides sponsorship in Children’s Villages — SOS homes. The Bank to organizations involved in the development is involved in the construction of family houses of sports such as football, hockey, rowing, tennis, for children’s accommodation and provides financial Traineeships with Bank-sponsored personal Bank’s sponsored chair A front-end handball, dancing sport, acrobatic rock and roll, assistance on an annual basis. Bank headquarters scholarships at MGIMO University development trainee and others, especially in relation to children We regularly allocate funds for the provision and branches school for third-party and young people. of targeted charitable aid to critically ill children students We have been partners of the Zenit football club and entire medical establishments, and also procure for many years. With the help of the Gazprombank — medicines and special equipment, including Zenit FC co-branded card, a charity program ambulances. Environmental initiatives has been set up, to which the Bank will make Since 2009, we have run a traditional “I Believe donations from its funds in favor of Zenit FC Junior in Father Frost” New Year Eve charity campaign Sports School to train young footballers. The Bank for the benefit of orphaned children. On New is also the general partner of SKA hockey club Year’s Eve, Gazprombank employees start in the CHL championship. As part of its cooperation performing small miracles. Every child residing with the Russian Football Union, Gazprombank in an orphanage supported by the Bank is given is the official Bank partner of the Russian national the opportunity to share their most heartfelt wish. football team for the 2020–2021 season. Envelopes containing letters from the children 2284 Gazprombank has for a long time supported appear on Christmas trees at several Bank sites. competitions in various dancing sports arranged by To join the “Father Frost Team”, employees merely Three offices in Moscow 2,284 cards issued in support the Russian Dancing Union and the Russian National have to take an envelope and make the child’s started transition to the of Berry the leopardess Federation of Dancing Sports and Acrobatic Rock dream come true. As many years of practice have “green office” practices and Roll. Every year, championships and festivals shown, our colleagues are not afraid of addressing held according to the Latin American and European the children’s most challenging wishes, some programs, as well as domestic and international of which require formidable commitment in terms acrobatic rock and roll competitions, attract the best of time and search abilities. During this campaign, sportsmen from all continents. Since the end of 2015, Gazprombank staff have provided invaluable aid Employer rating corporate acrobatic rock and roll clubs have been not only in procuring New Year presents, but also set up in 22 Russian cities, where anyone of any age in purchasing specialized medical equipment, or physical status can give this dynamic sport a try. children’s furniture, and sports equipment. ₽ ₽ 3

Third place Russia’s TOP 10 Three consecutive in the Russia’s best employers for female Randstad Awards in the employers rating careers according “Most Attractive Employer according to Forbes to Forbes Woman in Financial Services” ₽ nomination 68 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 69 Resource Base Development

In 2019, the time pattern of Bank In 2019, the share of the capital market funding volumes and structure borrowings portfolio declined by 2.0 p.p. changed somewhat, impacted relative to the end of 2018, whereas that by the retail business development of customer account balances in liabilities strategy and scheduled repayment grew by 3.4 p.p. of several borrowings on international capital markets.

Customer funds remain the primary and funds of the Bank’s corporate and retail Debt capital markets Resource base structure source of funding for Gazprombank’s customers, so that the share of capital The fundraising portfolio in capital markets as at 31 December 2019, % market borrowings declined by 2.0 p.p. from constitutes a stable long-term funding base lending and investment business, the end of 2018, whereas that of customer account for the Bank and plays an important role • Amounts owed to corporate accounting for 85% of the Bank’s balances in liabilities increased by 3.4 p.p. in maintaining the net stable funding standard. customers As the borrowings focus shifted towards local As of end 2019, the portfolio amounted • Amounts owed to individuals liabilities at the end of 2019. funding sources, including retail customers, this to RUB 342 billion (5.8% of the Bank’s liabilities). • Senior debt, borrowed from capital The Bank’s reputation as a reliable was reflected in the currency structure of liabilities: Most of it was raised by placing ruble-denominated markets the share of ruble-denominated funding grew bonds in the Russian market, the volume of such • Amounts owed to banks borrower and a competitive pricing to 70% from 59% over 2019. bonds grew 35% to RUB 268 billion in 2019. The loan • Subordinated debt policy have enabled it to retain portfolio is characterized by a smooth repayment Amounts owed to the Bank of Russia Customer funds schedule. • Other liabilities a strong position on the corporate Funds of corporate and private customers are In 2019, the Bank actively developed its bond • a key component of the Bank’s resource base. products offer for individuals. In particular, 0.6 borrowing market, while active 3.9 The experience of many years of successful the amount of outstanding additional bond issues 1.3 4.9 promotion of its settlement cooperation with major Russian companies placed predominantly among individuals reached 64.0 and deposit products, coupled with and comprehensive servicing of their employees RUB 6.5 billion. As additional issues are placed, bids 4.6 has allowed the Bank to expand its product are executed in real time, while secondary market customer service improvements, offerings for current customers and attract new liquidity is achieved through market-making. have helped reinforce its position customers, thereby maintaining steady organic In addition, the Bank has been offering index bonds growth of corporate customers’ balances. to its retail customers since 2018. This product in the retail segment. At the same time, the Bank continued combines the features of a borrowing instrument to implement the strategy for developing its retail and a derivative financial instrument, affording 20.8 business. The development of the retail deposit 100% capital protection and an opportunity to earn product line in accordance with seasonality incremental income. The scope of index bond trends in the customer base and the price placements more than doubled in 2019, reaching Capital market borrowings, including bond environment in the market, along with vigorous RUB 3.3 billion. placements and subordinated debt, account marketing activities, providing convenient services for a further 5.8% of the resource base. In 2019, to customers, and developing the omni-channel the Bank made scheduled repayments of several customer service platform, allowed the Bank foreign currency-denominated debts, partly to boost its retail account balances by 23% replacing them with new issues of local bonds to RUB 1,220 billion. 70 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 71 Depository Operations, Specialized Depository Services In 2019, the Bank’s specialized depository once again won the tender of the State Space Corporation ROSCOSMOS.

The Bank’s depository is assigned for the implementation of the Decentralized In 2019, the Bank completed a transformation the AAA reliability rating according Depository System (DDS) developed of the customer depository service model, aimed on the Masterchain platform. The Bank has accepted at improving the quality and service provided to the national depository reliability the DDS for pilot operation, with the first issue to depository customers. As a result of the action rating scale, and is ranked first among of electronic mortgage deeds scheduled for early 2020. taken, over 70 Bank offices in a number of different To upgrade the depository’s software and hardware country regions were designated to provide services the TOP 30 biggest depositories facilities, and to expedite the automation to individual depositors. In regional service locations, in terms of the market value of its operations, the Bank in 2019 launched a project depository customers can receive qualified advice for the design, development and implementation on the procedure for conducting depository of deposited securities1. of a new automated depository system for issue- operations, submit depository orders and obtain grade securities. statements and transaction completion reports. In 2019, the Bank depository implemented a project The Bank engages in depository operations featuring electronic document exchange with on the securities market in strict accordance with corporate customers via the Remote Banking the law, the Bank of Russia regulations and basic At the end of 2019, the Bank depository was serving and Corporate Settlement Center system. This helped standards, with a view to satisfying customer over 430,000 depo accounts and maintaining to improve the quality and convenience of using needs as fully as possible, including development securities registers for more than 1,200 issuers. depository services and made it possible to initiate of the product range of services and instruments, In the course of the year, more than 1,250,000 execution of depository operations without having optimization of business processes and tariff policy, depository transactions were carried out, securities to visit to a Bank service location. and implementation of new service technologies. income was distributed on more than 4,000 issuers’ The Bank’s specialized depository was ranked The model of the depository business adopted corporate actions, and over 460,000 notifications among the TOP 10 of the national rating by the Bank will enable it to benefit from its of more than 9,200 issuers’ corporate actions were of specialized depositories on the back of its competitive advantages — an extensive customer emailed to depositors. performance in 1H2019, and was in the nineth base, a strong brand, and a wide service network — The Bank depository acts as the custodian in relation line on the TOP 10 list of specialized depositories as much as possible. to storage and recording of the underlying asset in terms of assets in custody as of 30 June 2019. for the issuance and redemption of ADRs on Gazprom The value of assets held in custody was over shares. RUB 135 billion as of 30 June 2019. In 2019, the Bank continued its collaboration with The Bank’s specialized depository supervises asset DOM.RF as the depository providing mortgage deed management of its customers, which include, accounting and custody services. At the end of 2019, in particular, mortgage bond issuers, mortgage pool the Bank depository had approximately managers, and state-owned corporations and funds 135,000 mortgage deeds in custody, with the total established by the Russian Federation. amount of the mortgage-secured obligations In 2019, the Bank’s specialized depository in excess of RUB 200 billion. once again won the tender of the State Space For the purposes of implementing its electronic Corporation ROSCOSMOS; as a result it concluded mortgage deed depository accounting project, a 2-years specialized depository services the Bank actively participated in the FinTech agreement for additional monitoring of investment Development Association (FTDA) Task Force of the coropartion’s idle cash.

1 The ratings were released by the Foundation for Development of Financial Institutions — Infrastructural Institute (INFI), in cooperation with the Professional Association of Registrars, Transfer-Agents, and Depositories (PARTAD) on the official website: www.safedepo.ru, based on the performance in the first 6 months of 2019. 72 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 73 Risk Management

The Group has an integrated risk management • improvement of the system for early identification The Bank focuses on improving its risk system, which enables it to: of counterparties with a higher risk level; • use unified risk management approaches within improvement of mechanisms helping work out and capital management system the Group; early response measures and strategies of work • control risk management activities in Group with respective counterparties; in accordance with the requirements companies; • further development of a methodology • align the overall Group / Group company risk for quantitative evaluation of credit exposure; of the Bank of Russia. profile with the Group’s strategic objectives • implementation, with effect from 1 January 2019, and make informed decisions at the Group level. of the new Bank of Russia requirements The Group’s risk management system is underpinned on the recognition of estimated provisions by advanced standards, models and practices for anticipated credit losses (in accordance with accepted by banking groups. the principles set out in International Financial The Bank continues refining and developing The mandate of the Compensation Committee In 2019, the Bank was focused on the following Reporting Standard (IFRS) 9 “Financial Instruments”) a new pipeline of technologies, launching of the Board of Directors includes preliminary review aspects of risk management: using adjustment accounts; of matters coming within the terms of reference • improvement of risk and capital management • implementation of risk management process further process automation projects, of the Board of Directors and related to establishment system in line with the requirements set forth automation projects (in credit analysis, the financial as well as developing a portfolio limitation and functioning of an effective remuneration system by the Bank of Russia Ordinance No. 3624-U statements storage and processing system, subject to accepted risks. “On the Requirements to the Risk and Capital and the limit-setting system); methodology, synchronizing financial b) Within the risk and capital management strategy Management System of a Credit Institution • development of the portfolio limits methodology; planning and risk budgeting processes, adopted by the Board of Directors, the Management or a Banking Group” (hereinafter referred • synchronization of the financial planning and risk Board provides overall risk management for to as “Ordinance No. 3624-U”) at the level budgeting processes. and building a business continuity system. the Group’s operations and regularly monitors actual of the Bank and the Group; risk levels to see how they conform to the approved • implementation of new risk characteristics Key risks in 2019 risk appetite level. for retail credits (loans) in accordance with c) Dedicated committees and commissions the requirements of the Bank of Russia Ordinance 1. Credit risk reporting to the Chairman of the Management Board No. 4892-U “On Types and Characteristics of Assets The Group is exposed to the risk of financial losses Risk management system and the Management Board of Bank GPB (JSC) (Credit for Which Risk-Based Capital Buffers Are Set occurring due to a borrower or counterparty defaulting The Board of Directors annually approves Committee, Assets and Liabilities Management and on the Methodology for Applying These Buffers on their obligation to the Group (credit risk). the Risk Appetite Statement, which includes both Committee (ALM Committee), Transformation to the Said Types of Assets for Credit Institutions Credit risk is managed in accordance with quantitative and qualitative indicators designed Committee, Financial Markets Committee, ICAAP to Calculate Their Capital Adequacy Ratios”; the regulations of the Bank of Russia, Basel to provide high-level guidelines on the structure and Operational Risks Commission, Corporate • improvement of the authority delegation system Committee principles and guidelines concerning and values of risks and capital that the Bank Governance and Compensations Committee, Assets and system of limits for lending and financial banking supervision, and internal documents and the Group are willing to take in pursuit Restructuring Committee, and Retail Business markets transactions, optimization of the portfolio developed to incorporate such principles. of their strategic goals. The Bank and the Group Committee) are designed to address issues relating limit setting process; The main objectives of credit risk management then use the approved risk appetite parameters to individual risk types. Members of the committees • introduction of new lending products, adapting include but are not limited to: and operationalize them to the level of limits are appointed by the Chairman of the Management the lending process tools to efficiently work with • maintaining an acceptable level of credit risk for separate risks and positions. Board. retail customers, small and medium-size businesses; exposure for the Bank and the Group to achieve The following key principles guide the Bank’s d) Units of the Risk Management Service (RMS) are • improvement of the Bank and Group financial their strategic goals; approach to risk management: independent from business units, whose functions recovery system in accordance with the Bank • optimal combination of profitability and credit a) The Board of Directors adopts the general risk envisage risk-taking, and are supervised by the Head of Russia requirements; risk level, compliance of the credit risk profile with and capital management policy and determines of the Risk Management Service reporting directly • improvement of the system for the management the risk appetite and the capital budget. the level of risk acceptability (risk appetite), strategic to the Chairman of the Management Board. of risks in Gazprombank’s payment system Credit risk management is based on uniform goals, fundamental risk management policies e) Risk management is applied in an integrated in accordance with the requirements methodological approaches and procedures within and the stress-testing scenarios. manner at all operational levels, considering of the Bank of Russia Regulation No. 607-P the framework of an integrated system of risk analysis, For the purpose of in-depth and all-around the relationships and cross impact of various risks. “On the Requirements for the Procedure Ensuring management and control. Credit risk management review of matters, the Audit Committee The Bank’s RMS performs the function of managing Smooth Functioning of the Payment System, is performed at all stages of the credit process, from and the Compensation Committee operate under Group risks. Indicators of Payment System Smooth Operation the review of a customer’s loan application to the full the Board of Directors. f) At the Group level, the Bank has adopted a Group and Methodologies Used to Analyze Payment settlement of all liabilities. The Audit Committee’s mandate includes preliminary Risk and Capital Management Strategy which defines System Risks, Including Risk Profiles”; The credit risk management process includes review of matters related to internal and external the roles and objectives of the management bodies • development and optimization of the Bank’s the following key elements: audit, and matters of risk and capital management of the Group companies, including those of local business continuity and recovery system; • risk identification, quantitative and qualitative coming within the terms of reference of the Board Risk Management Services (if any), as they pertain • formulation of requirements as part assessment of risk; of Directors. to identification, assessment, monitoring and control of the implementation of a new optimized version • risk limitation and mitigation measures (including of risks assumed by the Group companies. of the automated operational risk management setting limits, taking security, management system; of distressed assets); 74 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 75

The Group performs stress tests of credit exposure on a regular basis (at least once a year), in order to evaluate potential changes in the quality of the loan portfolio in the event of unfavorable changes in the economic situation.

• risk monitoring and control (including control and conditions of deals against the approved limits. In the event of risks going above the prescribed • credit scoring; of set limits), both with respect to individual Development and improvement of the credit risk alarm or critical values, decisions are made to address • independent counterparty and collateral (if any) borrowers and at the general portfolio level; limits system is a priority line of work for the Group. the situation by mitigating accepted risk, increasing assessment by the relevant expert teams. • building loan loss provisions; The key credit risk monitoring tools applied by the amount of available capital for risk coverage, Following the above procedures, the decision • planning credit risk levels; the Bank and the Group are: or by redistributing pre-set limits among divisions on the counterparty’s loan application is made • informing the management bodies about the level • monitoring of loan/deal servicing; and individual types of risk. automatically (without the expert team involvement) of risk exposure and limits compliance on a regular • monitoring of the financial standing of borrowers; Where negative trends are identified in the activities and with due account of the motivated judgment basis (reporting). • monitoring of security (including assets under of counterparties that are legal entities, they are based on the independent expert review completed Qualitative assessment of credit risk is designed construction); included in the relevant section of the Watch by the expert team. for a comprehensive analysis of deals with credit • control over conditions precedent List Register information resource adopted by Qualitative risk assessment also applies to partners risk exposure taking into account non-quantifiable and supplementary clauses of deals; the Bank with the following status: Troubled who are legal entities, if they are involved in retail factors, which takes the form of conclusive expert • control against preset limits, indicators and other Counterparties, Potentially Troubled Counterparties, customers lending programs implementation, opinions on acceptability of the requested deal restrictions related to credit risk; and Watched Counterparties. Information to decide on potential cooperation with a partner parameters, identified risk factors and measures • control over the level of risk of the loan is included into the Watch List Register depending or define the terms of such cooperation. required to minimize credit risks taken in that portfolio, creditworthiness of counterparties, on the selected strategy of further work with regard. and concentration risk; the assets and mechanisms that impose restrictions 2. Concentration risk Quantitative assessment of credit risk provides • identification of potentially non-performing on transactions with counterparties. Concentration risk arises in connection with a quantification of the credit risk taken, which is then and non-performing loan signals based The Group performs stress tests of credit exposure the Group’s exposure to big risks, which may cause used in the Bank’s and the Group’s internal processes. on the early warning system indicators. on a regular basis (at least once a year), in order significant losses with a potential to jeopardize Quantitative credit risk assessment is exercised The outcomes of these monitoring and control to evaluate potential changes in the quality of the loan the paying capacity of the Bank and the Group in accordance with the Group’s models based procedures are integrated with the provisions portfolio in the event of unfavorable changes entities and their ability to continue operations. on the classification of credit claims: creation system (RAS/IFRS) and procedures in the economic situation. Stress testing includes The Group performs on a regular basis: • claims against corporate customers (including for identification of, and working with, potentially scenario analysis, which assesses the effect of changes • analysis of the Group’s exposure to each form specialized lending deals); distressed and distressed assets of the Bank in a relevant set of macro factors, and sensitivity of concentration risk (identifies concentration risk); • claims against financial institutions; and the Group. analysis, which evaluates the influence of distinct • monitoring of the level of acceptability • claims against retail customers; Alongside credit exposure control at the level (discreet) events on the quality of the loan portfolio of concentration risk and estimates acceptability • claims against sovereigns; of individual operations (transactions) and customers, or the status of transactions with counterparties. of concentration risk with respect to its every form • participation. the actual exposure is continuously monitored based As long as credit risk management in retail lending for which no limits are set. Counterparties are assigned internal ratings on the cumulative debt in the portfolio of lending is concerned, analysis of the borrower’s credit risk The Group stress tests concentration risk regularly based on the approved models for estimating operations. The degree of the actual utilization and security analysis are of importance. in order to evaluate potential losses in the event the probability of borrower default. Internal of the credit exposure portfolio limits is assessed Transaction analysis and decision-making process of adverse changes in the economic situation as part credit ratings are used to take lending decisions compared to their critical and alarm levels designated includes application of the following procedures: of the integration stress testing. The result of stress- and calculate expected losses, define price by the authorized bodies. • counterparty identification; testing is presented in the form of evaluation terms of deals and create provisions, conduct The results of the monitoring of compliance • visual examination of the counterparty and their of the impact of negative scenarios on quantitative risk-weighted analysis of the loan portfolio with credit exposure portfolio limits are included documents; metrics of concentration risk, capital adequacy, and financial planning. Target credit risk levels are in the regular reports submitted to the Board • counterparty screening against the minimum and actions aimed at minimization of expected set in accordance with risk appetite. The Group of Directors, the Management Board, the Chairman requirements of the Bank and the Group; losses. sets ultimate risk limits for every borrower or of the Management Board, the Head of the Risk • comprehensive review of the loan application To limit the risk of concentration of financial claims, a group of borrowers. Compliance with (and use Management Service, heads of Risk Management using data from internal and external information the Group has adopted limits per country, industry, of) credit risk limits is monitored on an ongoing Service divisions, members of the Bank’s relevant sources, including application of the modelling region, per borrower (group of related borrowers), per basis and takes the form of checking the terms Committees and Commissions. approach; one person affiliated with the Bank (group of persons 76 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 77

The Bank’s liquidity management system is an integrated solution of risk identification, evaluation and control across the Group’s banking segment.

affiliated with the Bank), per a fixed number of major of country risks and calculation of limits. The risk Liquidity risk management methods 5. Market risk counterparties (groups of counterparties), and limits value depends on the country’s economy parameters The liquidity risk management system is integrated Managing market risk includes limitation for operations in financial markets. (GDP level) and sovereign rating. into the transaction planning processes in order and monitoring of market risks that affect the Group’s Limits of concentration risk are set and revised by to determine the required funding sources in normal banking business. Responsibility for the decision- the authorized body on a regular basis with due 4. Liquidity risk and stressful situations. The Group applies limits making process regarding acceptable market risk account of the appetite for risk and capital budget. The Group manages its liquidity to ensure on the following liquidity risk indicators to mitigate it: levels is vested in dedicated bodies: ALM Committee, Simultaneously with the setting / revision of limits that sufficient liquidity is available to meet its • period of solvency without external support; Financial Markets Committee and the Chairman of concentration risk for each type of the above commitments to customers, creditors and note • short-term liquidity (STL) ratio; of the Management Board. The market risk limits, the following parameters are determined holders, and to fulfill its business plans for active • net stable funding ratio (NSFR); management function is assigned to the Risk at the discretion of the authorized body: banking operations at all times. • liquidity gaps for realistic (business as usual) Management Service. • signal values warning of an approach to set limits The Bank’s liquidity management system and liquidity stress scenarios in terms of maturity The Bank’s existing market risk management system of concentration; is an integrated solution of risk identification, and key currencies; is based on: • the procedure for the monitoring of the limits, evaluation and control across the Group’s banking • minimum level of liquidity buffer. • a system of limits ensuring that the volume including actions in the event of identified over- segment. It is an essential part of the assets Alarm risk levels are established in addition to critical of risks corresponds to the adopted risk appetite limit in a completed deal; and liability management (ALM) system at the Group ones. When an alarm risk level is achieved (which and the amount of economic capital distributed • methodological peculiarities of estimation level, including the head office and regional branches. signals a high level of risk), escalation procedures among business lines concerned; of a respective limit, and, if possible, The liquidity management system consists of two are initiated to develop and implement mitigation • qualitative and quantitative market risk assessment the information system is identified which will take main components: measures. with the use of value-at-risk (VaR) methodology, account of and monitor respective limits; • instant (short-term) liquidity management Gap analysis estimates the forecast excess or stress testing, scenario analysis and sensitivity • the procedure of documenting the outcomes implemented by the Treasury on a regular basis; shortfall of cash inflows over outflows grouped analysis. of limits monitoring. • medium-term and long-term liquidity by maturity and currencies and thus allows The RMS supports the market risk management Monitoring of the credit concentration risk management performed by the ALM Committee identification and management of open liquidity system on a regular basis, and, in particular: starts as soon as a credit limit is imposed and the Internal Treasury Department as part exposures. Gap analysis is supported by scenario • monitors pre-set risk limits; in relation to a counterparty and continues of the ALM function, ultimately for the purpose analysis, which includes a realistic scenario • builds reports to be submitted to authorized until the counterparty discharges all obligations of setting an effective risk-return ratio. (business as usual) and liquidity stress scenarios. bodies and senior executives; to the Bank and the Group. The action plan aimed The liquidity management policy is subject Scenario analysis is performed as part of regular risk • revises values of risk limits in accordance with to mitigate concentration risk (setting risk limits, to approval by the Board of Directors upon evaluation: the Bank’s plans and appetite for risk; transfer to a third party, securitization, etc.) is defined submission by the Management Board. • Realistic scenario: shows the average expected • establishes alarm levels for the key risk limits (VaR, on the basis of the accepted exposure level. At the executive level, liquidity risk is managed liquidity level. stop-loss), which initiate risk mitigation actions by the ALM Committee. The ALM Committee • Stress scenario: shows stress tolerance when achieved; 3. Country risk determines the policy for asset and liability and the ability to maintain sufficient liquidity • takes part in working out measures for Country risk is a risk of financial losses due to foreign management that aims to build up a liquidity gap without implying restrictions on assets-related the optimization of the use of risk limits subject counterparties defaulting on their obligations control framework considering maturity profiles banking transactions. to business efficiency, including with due account to the Group for economic, political or social reasons, for assets and liabilities. It also helps to provide effective As part of the liquidity risk management system, of stress-test results. or as a result of a limited access to the counterparty’s diversification of funding sources and availability the Bank has a Contingency Funding Plan (CFP) committed amounts denominated in foreign of sufficient funding in stressed conditions. that sets out the strategies for addressing liquidity Interest rate risk currency because of national legislation (irrespective The Risk Management Service monitors liquidity shortfalls in emergency situations. The CFP Interest rate risk in the trading book comes from of the counterparty’s creditworthiness). risks and reports on the status regularly to the ALM is updated on an annual basis and outlines the bonds and derivatives present in the Bank’s The Group manages this risk as part of the overall Committee, the Management Board and the RMS Head. policies to manage a range of stress scenarios, trading portfolio. Interest rate risk in the banking credit risk management system in accordance Risk reporting includes qualitative and quantitative and establishes lines of responsibility, including book arises when there is a mismatch between with the Bank’s Country Risk Policy, which lays out risk estimations, stress testing results, and evaluation proactive emergency monitoring and CFP the maturity profiles of rate-sensitive assets and rate- the key principles and approaches to the evaluation of additional liquidity sources (liquidity buffer). activation procedures. sensitive liabilities. 78 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 79

The Bank has investments primarily in sovereign securities and bonds of high-quality major Russian issuers.

The bank uses the following parameters to assess of its subsidiaries, etc.). For trading portfolios, 6. Operational risk operational risk management purposes. Special interest rate risks: maximum losses are also limited (stop-loss). Separate Operational risk is associated with the probability attention is paid to a systemic approach to regular • sensitivity of net interest income changes limits apply to operations involving derivatives. of direct and/or indirect losses arising as a result of: operational risk monitoring and reporting in the trading and bank books; The Bank’s currency risk exposure limits comply with • a mismatch between the internal rules and significant risks of loss from materialization • sensitivity of net present value changes the minimum requirements of the Bank of Russia. and procedures of banking operations and other of the Bank’s and the Group’s operational risks. in the trading and the bank books; The Bank assesses the value at risk and sensitivity dealings, on the one hand, and the nature • sensitivity of trading bond portfolio value of profit to foreign exchange rate fluctuations and scope of operations and/or the requirements Group member subsidiary banks follow the approaches, to interest rate fluctuations; as part of a stress scenario. Stress testing provides of the law, on the other; principles and recommendations developed by • gaps between the cost (interest rate) revision dates conservative scenarios for fluctuations of currencies • employees and/or other persons being in violation the Bank in relation to the set-up of the Operational Risk of financial instruments; and precious metals against the ruble. of the requirements of any rules, norms Management System generally, as well as the individual • stress-test results. and standards of banking operations and other tools and elements of that system. The Bank’s policy with respect to the interest rate risk Equity risk dealings (as a result of inadvertent or deliberate exposure is reviewed on a regular basis and approved The Bank has investments primarily in sovereign acts or omissions); The Bank and Group members will apply by the Board of Directors. The RMS prepares regular securities and bonds of high-quality major Russian • incongruence (inadequacy) of the functionality the following key principles in the aims of preventing reports on the interest rate revision gaps, value issuers. The Bank also assumes risks from non- (characteristics) of existing information, all types of operational risks and mitigating potential at risk and scenario analysis (including interest risk market financial instruments (strategic and direct technology, and other systems and/or their failures financial losses: stress-testing) for the Bank’s management bodies investments). These risks, however, are specific, due (malfunctioning); • Integration of the operational risk management and the ALM Committee. to the fact that no revaluation is required for this • external impacts. system into risk management system In accordance with the Bank’s appetite for risk, type of assets and the investments are long-term, The existing operational risk management of the Bank and the Group. Operational risk the ALM Committee and the Financial Markets which makes it possible to gain profit from projects methodology framework lays the foundation management is performed in coordination Committee have set the following indicators once the economic environment becomes favorable. for implementing the operational risk proactive with the management of other risks, in order of interest rate risk: Derivatives are used for risk hedging. management strategy, enabling integrated to mitigate the cumulative negative effect of risks • sensitivity of the net present value of assets The VaR methodology is only applied to quoted management of operational risks and control on operations. and liabilities; instruments. Non-quoted instruments are not procedures. • Risk appetite. The Bank defines the planned • gaps in the Bank’s claims and commitments included in the traditional VaR model, and a separate The operational risk management system (target) risk levels, including the size of the risk in terms of time pools and currency groups; model is used to calculate the capital value for these is described in the Bank and Bank Group Operational appetite for the Bank and the Group as a whole, • sensitivity of the net interest income; instruments. Therefore, the Bank does not exercise Risk Management Policy and includes the following the system of limits at the Bank and Group • sensitivity of the financial outcome (so far real-time monitoring of risks relating to these assets. key elements: level, and approaches to setting up the system as revaluation of financial instruments is concerned) The main tool for managing this risk is allocating • operational risk management methodology; of limits for each Group member subsidiary bank, to the changes in the interest rate curve. capital to cover the risk of depreciation over • gathering and registration of data on risk events and monitors compliance therewith. Risk appetite the horizon of financial planning (one year). and their consequences; at the level of the Bank and the Group as a whole, Currency risk The Bank also assesses the sensitivity to securities • maintenance of an operational risks register; as well as thresholds set for operational risks The principal sources of currency risk include price changes as part of a systemic stress scenario. • self-assessment of risks and control procedures; are subject to revision upon a material change investment in foreign companies and banks, as well Stress testing includes analysis of conservative • integrated assessment of the Bank’s operational risk; in the operational risk source factors (in particular, as the position arising from creation of provisions scenarios, where the stress level assumes a decrease • operational risks scenario analysis; upon a change in external conditions, the scale on currency assets that is subject to timely hedging. in quotes for equities and an increase in YTM for debt • business continuity and (or) recovery assurance or nature of the Bank/Group members’ operations, The Bank is free of significant currency positions securities. in non-standard or extraordinary situations; system of control procedures, major losses arising opened for the purpose of speculative gains. According to the Bank’s risk appetite, the Financial • system of operating risk level monitoring, from the materialization of operational risks, etc.). Currency risks arising from transactions with Markets Committee sets market risk limits (VaR limits, in particular, with the help of Key Risk Indicators; • Economic feasibility of operational risks customers are hedged by counter transactions with limits for sensitivity to interest rate fluctuations), • system of reporting on the Bank’s operating risk management. Any definition of measures aimed highly reliable counterparties. limits for maximum losses (stop-loss), limits for level and capital allocation for operational risk; at keeping operational risks at an acceptable The Financial Markets Committee sets limits on VaR exposure level (nominal limits, structural limits). • automated operational risk management system. level should be economically efficient in terms and risk exposure on the Group level as well The Committees also make decisions on the risk These components, taken together, enable prompt of the ratio of risk mitigation measures to control as on currency risk exposure for each portfolio concentration limits for each issuer/financial identification and rectification of deficiencies procedures implementation expenditure (trading, investment, that of the Bank and each instrument. in policies, processes and procedures for the effective and the size of potential losses. 80 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 81 Information Security

Group member subsidiary banks follow Gazprombank consistently the approaches, principles and recommendations transforms its internal processes developed by the Bank in relation to the set-up and defense systems, paying special of the Operational Risk Management System attention to the information security generally, as well as the individual tools of proprietary assets and customer and elements of that system. assets.

• Segregation of authorities. The Bank and Group For the purposes of mitigating the negative impact In 2019, the Bank launched a multi-stage • automation of information security incident members avoid any combination of functions that of individual types of operational risks, the Bank has Cybersecurity Program, aimed at selecting lifecycle stages; may give rise to a conflict of interest. The Bank in place a comprehensive insurance program, which • consistent import substitution in relation segregates the authorities of units and their includes: and implementing means of information to application-level perimeter safeguards employees executing banking transactions • a “BankersBlanketBond” (“BBB”) blanket property protection that are commensurate and the open keys infrastructure management and the functions of their accounting recognition, insurance contract with a 2019–2020 liability limit system; execution, support and control, and will avoid of RUB 5.97 billion; with contemporary threats. • authentication center infrastructure upgrade: combinations of any other functions that may give • property insurance, including insurance of self- 102,000 electronic signature authentication key rise to a conflict of interest. service devices; certificates were issued and 12,000 secure key • Escalation of operational risk management • voluntary health insurance of employees. media were handed out. authorities. Depending on the level In the first half of 2019, two comprehensive regulator of the operational risk identified and the extent The information security threats landscape changed reviews were successfully passed, both of which of its impact on the likelihood of other risks in 2019. This was due to the impact of the following touched upon information security aspects: becoming materialized, decisions on methods factors: sweeping development of the retail business, • 2nd quarter: Federal Service for Supervision of management will be made at different levels the creation of new online services, the engagement of Communications, Information Technology of management. of external contractors with unique competences, and Mass Media (Roskomnadzor), “Personal Data • Identification and optimization of the operational and the application of new customer acquisition Processing and Protection Setup”; risk level for new products and processes. It is not and service channels. • 2nd and 3rd quarters: the Bank of Russia, permitted to perform any new transactions Previously, banks as a rule tried to foresee potential “Comprehensive Review of Cash Transfer or make changes to an approved transaction damage and prevent incidents. Today, Gazprombank Processes”. procedure unless there are internal regulatory has migrated to a risk-oriented approach based Following the reviews, the regulators assessed documents and (or) decisions of collective on the degree of protection analysis of the target Gazprombank’s information security level as high bodies regulating the manner in which these system. This has helped to cut costs and reduce in the financial industry context. are to be performed. Any new business process the time to market of popular banking products. and product must pass an expert review by In 2019, the following projects were implemented an independent risk management unit with in the information protection area: a view to analyzing and optimizing the level • security as an element of the product release of operational risks inherent therein. issuance process (the DevSecOps pipeline): 40 tests • The Bank and Group members hold tenders were undertaken in the enterprise environment for the procurement of equipment providing and 378 vulnerable components were blocked; security of banking operations, operating systems, • Identity Management; software products, equipment for electronic • analysis of abnormal traffic in the internal (wired) communication systems, ATMs, etc. and guest (wireless) network segments; • Disclosure of information on the operational • active countering of fraud in remote banking risks management system. The Bank and Group channels: over 2,000 compromised bank members disclose information on the operational cards were blocked, and RUB 126 million risk management system, making sure that and RUB 48 million was saved in the accounts the disclosure granularity level matches the nature of individuals and legal entities, respectively, and scope of operations. impacted by cybercrime; 82 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 83 Regional Network Map

Kaliningrad

St. Petersburg

Krasnogorsk Moscow Tula

Nizhny Novgorod Novy Urengoy Voronezh

Kazan Perm

Samara Surgut Krasnodar Ufa Yekaterinburg

Stavropol

Tomsk

Novosibirsk Krasnoyarsk Kemerovo

Geographic location of the branches across principal regions where the Bank has a foothold as of 6 April 2020:

Number Regions of branches Locations Central Federal District 3 Krasnogorsk (Moscow Region), Tula, Voronezh Northwestern Federal District 2 St. Petersburg, Kaliningrad Southern Federal District 1 Krasnodar North Caucasian Federal District 1 Stavropol Vladivostok Volga Federal District 5 Nizhny Novgorod, Ufa, Perm, Samara, Kazan Ural Federal District 3 Yekaterinburg, Surgut, Novy Urengoy Siberian Federal District 4 Tomsk, Novosibirsk, Krasnoyarsk, Kemerovo Far Eastern Federal District 1 Vladivostok Headquarters Total 20 • Branches 84 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 85 Branch Network Marketing Operating Results and Communication

The Bank’s branch network In its interactions with various target is present in 66 regions of Russia, audiences, Gazprombank endeavors whose aggregate GRP (gross to follow best international regional product) accounts for 96% practices, employ the considerable of the country’s GRP (excluding experience it has accumulated over Moscow). its 30-year history, and address current challenges.

359 sales offices are located in 223 cities and towns, Number of offices opened in 2019 Perception of the financial institution’s Bank representatives were also closely involved including 148 (66%) in cities with a population visual image and values by different target in various discussions on the development in excess of 500,000. Branch New offices of the banking sector, infrastructure projects, To improve the Bank’s availability and customer Mid-Russian Branch 2 audiences is one of the key success factors financial markets, state-of-the-art financial service quality, 20 new officers were opened in 2019 technologies, corporate financing, and other topics. Southern Branch 1 in customer interaction. as part of the Sales Office Network Transformation The Bank consistently occupies leading positions program. Northwestern Branch 3 in the rankings of Russia’s credit institutions enjoying In 2019, the Bank embarked on a branch network Ural Branch 2 the widest media coverage. In 2019, according management model transformation project, aimed Central Branch 2 to the Interfax News Agency’s SCAN system, 99% at improving its performance. West Siberian Branch 1 of references to the Bank were either positive In 2019, Gazprombank significantly transformed or neutral. Povolzhskiy Branch 3 its principles and approaches to publicity, The extremely harsh competition for customers Far Eastern Branch 2 consistently moving towards greater openness in the banking sector requires prompt responses Surgut 1 and activity as regards Russian and international to any changes in the media market. Every Central Black Earth Branch 3 media relations. The Bank’s public relations year, Gazprombank formulates an up-to-date specialists, with support from the Bank’s strategy for the promotion of all its retail products Total branch network 20 experts, analysts, and top officials, processed and its Private Banking segment. To promote Moscow 6 and provided information and authoritative flagship products (deposits, loans, cards), federal Total branch network + 26 opinions in response to over 500 media inquiries, advertisement campaigns are held on television, Moscow branch offices while managers of various Bank business lines in the streets and via digital channels. The scale gave 17 full-feature interviews for the Russian of these campaigns is sufficient to capture and international media. the attention of up to 87% of the target audience. Six press tours were arranged for the benefit Furthermore, to improve Gazprombank brand of Gazprombank’s industrial assets. The press recognition and memorability, a rebranding was tours took place in Russia and abroad at industrial undertaken in the summer of 2019 and a contract facilities where equipment manufactured was signed with media personality Pavel Volya at Group facilities successfully operates: on his participation in advertising campaigns during the Vostochny Cosmodrome space launch facility, the fall to promote retail loan and deposit products. the Kirovo-Chepetsk Chemical Plant, the Metafrax By September, the first advertising campaigns facility in the Perm Region, the Sakhalin-2 featuring Pavel Volya were launched in relation project, and a phosphorus plant in Kazakhstan. to the rebranded Easy Loan and Your Success In total, journalists from 32 Russian federal deposit products. It was to a large extent due and regional media (including nine TV channels) to these new and memorable advertising and two Kazakhstan-based publications campaigns that the Bank ranked first in retail participated in the press tours. The tours resulted cash loan market share in October, and became in dozens of articles in the Russian and foreign the leader in term deposit market share growth media. in 4Q2019. 86 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 87

The Bank consistently occupies leading positions in the rankings of Russia’s credit institutions >500 87% 76% 200% 250% enjoying the widest media coverage. media inquiries of target audience Provided information Federal advertising Gazprombank brand Growth in the number Growth in the number In 2019, according to the Interfax News Agency’s and authoritative campaign coverage awareness of Yandex searches for of gazprombank.ru opinions in terms of television, in December 2019 Gazprombank website visits SCAN system, 99% of references to the Bank street advertisement, were either positive or neutral. and digital channels

In addition, the results for 2019 show that Suite”, “Kids’ Bank” and “Lecture Center” were built the Bank. New tools were launched: regular mail events — informal meetings with interesting Gazprombank brand awareness grew by 10 p.p. in the Gazprom-Arena stadium. The stadium also campaigns, corporate TV at key sites outside personalities from the worlds of science, culture to reach a record level of 76% in December 2019; features Russia’s first augmented reality zone, where the head office for which almost 200 videos were and arts, business and sports. advertising awareness grew to 12% from 7%, also all fans can take selfies with football players. produced, and an Instagram account covering This was a truly breakthrough year for the internal reaching a record level by the end of 2019. In terms Another important event in 2019 was the start the Bank’s internal corporate life, @gpb_life, communication function, with both the relaunch of individual products, year-end advertising of cooperation between Gazprombank which had over 4,000 followers by year end. of a number of existing projects and the kick-off recognition grew 2–3 times. All of these factors are and the Football Union of Russia, with the Russian Based on its 2019 results, Gazprombank was of new initiatives, primarily designed to develop having a positive impact on the acquisition of new national team holding three match-days1 named “Leader Company: Best Corporate Media the corporate culture and build a positive attitude customers for all the Bank’s retail products. in Kaliningrad, Moscow, and St. Petersburg. Communication System” at the Silver Threads towards the transformational changes taking place Gazprombank’s brand recognition On the launch day of the Chempionskiy deposit annual national corporate media resources contest. in the Bank. and memorability are being significantly improved advertisement campaign, the Russian team played The “Gazprombank. Heroes in Person” video project, by broadcasting its special projects on television, Scotland in the Luzhniki arena. in which the Bank’s senior executives talk about radio and social media. The implementation This systemic approach to sponsorship projects their careers, hobbies, and working principles, of a series of such projects resulted in multifold is helping to address not only the marketing was received with much interest on the part growth in the number of subscribers to the Bank’s tasks of interaction with sports organizations but of employees. social media pages: its VK group grew from also the key business objective of acquiring new Over 1,000 employees participated in the projects 17,000 to 264,000, while the Instagram follower customers as efficiently as possible. of GPB Transform, the Employee Holistic Personal base grew from 10,000 to 33,000. On Facebook, Gazprombank’s marketing system was reinvented Development Platform. The essence of the platform organic audience growth over the most during the reporting year. To accomplish is best described by its slogan: “Improve yourself, recent year exceeded 5,500 people, reaching the outstanding tasks, a strong team was improve your Bank”. The project aims to involve 11,000 subscribers. established to take care of all advertising activities employees in the Bank’s corporate life, enable The number of Yandex searches for “Gazprombank” and partner programs, studies and product networking with colleagues from different units doubled in 2019, from 600,000 to 1.2 million marketing, and a creative development system was and cities, promote healthy lifestyles, and broaden a month. set up. Work in the area of internal communications outlooks. The Transformation of Power. Pushing The number of visits to the gazprombank.ru and event management is also being approached the Boundaries (sports competition among website grew 2.5 times in 2019 vs. 2018, from in a new way, both for the Bank’s employees and for employee teams trained by professional coaches) 12 million to 30 million. external partners and customers. and Transformation of Spirit (a course for creative There were also sponsor projects aimed at fostering In 2019, regional marketing efforts were employees in three categories — Dancing, Acting Gazprombank’s positive image. considerably reinforced and systematized, Technique, and Photo) projects were for the first In 2019, a number of marketing options designed in particular, uniform merchandising standards time held with the participation of colleagues from to achieve image and marketing objectives were were developed and implemented. The project’s branches. The Bank team again won the Banking included in the contract with Zenit football club, primary objective is to make offices convenient Championship in the Heroes Race project a long-standing partner of the Bank. In particular, and understandable for customers, and to define and participated in the world and European OCR 1 A range of entertainment Artem Dzyuba, captain of Zenit and the Russian the overall rules of information posting inside (Obstacle Course Race) championships. One new and promo events held national football team became the brand offices. element of the Platform was the Transformation at or around the stadium on days when the team plays ambassador for the Chempionskiy (Champion’s) Much was also done in the reporting year of Mind, which became a forum for the GPB QUIZ at home. deposit. In addition, promo zones named “Entry to develop internal communications within championship and 12 GPBIntellectorium Corporate Governance

2019 722 2018 617 2017 577 2016 495 2015 530 Equity, RUB billion 2 90 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 91 Bank GPB (JSC) Bank GPB (JSC) Shareholders Board of Directors

As of 1 January 2020

As of 1 January 2019 As of 1 January 2020 Chairman of the Management Committee, Gazprom Alexey B. Miller Chairman of the Board of Directors Share Share Share Share Andrey I. Akimov Chairman of the Management Board, Gazprombank (Joint Stock Company) Share in Type A in Type B in Type A in Type B Deputy Chairman of the Board of Directors in common preferred preferred Share preferred preferred stock stock (of the stock (of the in common stock (of the stock (of the Mikhail L. Sereda Deputy Chairman of the Management Committee, Head of the Administration (of the total total number total number stock (of the total number total number of the Management Committee, Gazprom number of Type A of Type B total number of Type A of Type B Deputy Chairman of the Board of Directors of common preferred preferred of common preferred preferred Yury N. Shamalov President, Non-State Pension Fund GAZFOND Full name of the shareholder shares), % shares), % shares), % shares), % shares), % shares), % Deputy Chairman of the Board of Directors Public Joint Stock Company Gazprom 29.7640 0 0 29.7640 0 0 Elena A. Vasilieva Deputy Chairwoman of the Management Committee — Chief Accountant, Gazprom Joint Stock Company Gazprom Gazoraspredelenie 16.2555 0 0 16.2555 0 0 Anatoly A. Gavrilenko General Director, CJSC Leader (as of 1 January 2020 — Limited Liability Company “Gazprom capital”) Yuriy G. Gazaryan Deputy Chairman, State Development Corporation VEB.RF Non-State Pension Fund GAZFOND* 5.0915 0 0 5.0915 0 0 Vladimir A. Dmitriev Vice President, Chamber of Commerce and Industry of the Russian Federation Public Joint-stock Company GAZ-Tek* 9.3061 0 0 9.3061 0 0 Kirill A. Dmitriev Chief Executive Officer, Joint Stock Company Management Company of Russian Direct Investment Fund Public Joint-stock Company GAZ-service* 13.5853 0 0 13.5853 0 0 Ilya V. Eliseev Deputy Chairman of the Management Board, Gazprombank (Joint Stock Company) Public Joint-Stock Company Gazkon* 13.5931 0 0 13.5931 0 0 Sergey S. Ivanov Chief Executive Officer — Chairman of the Executive Committee, Closed Joint-Stock Company Leader (pension fund 0.2960 0 0 0.2960 0 0 Public Joint Stock Company ALROSA asset management company), Trust Management Famil K. Sadygov Deputy Chairman of the Management Committee, Gazprom Closed Joint-Stock Company Leader (pension fund 0.0003 0 0 0.0003 0 0 asset management company) Vyacheslav A. Tyurin Director General, Gazprom Invest State Development Corporation VEB.RF 8.5341 0 0 8.5341 0 0 The Russian Federation represented by the Ministry 0 100 0 0 100 0 of Finance of the Russian Federation State Corporation Deposit Insurance Agency 0 0 100 0 0 100 Limited liability company New Financial 3.5618 3.5618 Technologies Individuals 0.0123 0 0 0.0123 0 0 Total 100 100 100 100 100 100

* Non-State Pension Fund GAZFOND controls 41.58% of the voting shares of Bank GPB (JSC), out of which: • 5.09% are held directly by Non-State Pension Fund GAZFOND; • 36.49% are controlled through the following shareholders of the Bank: • 13.59% are held by PJSC “GAZ-service”; • 13.59% are held by PJSC Gazkon; • 9.31% are held by PJSC GAZ-Tek. 92 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 93

Alexey B. Miller Elena A. Vasilieva Vladimir A. Dmitriev Sergey S. Ivanov Year of birth: 1962. Year of birth: 1959 Year of birth: 1953 Year of birth: 1980 Educational background: Graduated from Educational background: Graduated from Educational background: Graduated from the Educational background: Graduated from Moscow N.V. Voznesensky Leningrad Institute of Finance N.V. Voznesensky Leningrad Institute of Finance Moscow Institute of Finance in 1975; starting State Institute (University) of International Relations and Economics in 1984. Candidate of Sciences and Economics in 1986; graduated from International from 2004 he has been Corresponding Member (MGIMO University) in 2002. Candidate of Sciences (Economics). Management Institute St. Petersburg (IMISP) in 2008 of the Russian Academy of Natural Sciences. (Economics). (Master of Business Administration). Doctor of Sciences (Economics). Job titles in the past three years: From June 2001 Job titles in the past three years: From March 2017 to date — Chairman of the Management Committee, Job titles in the past three years: From September 2001 Job titles in the past three years: From June 2007 to January 2018 — President — Chairman Gazprom. to date — Deputy Chairwoman of the Management to February 2016 — Chairman, State Corporation of the Executive Committee, Public Joint Stock Committee — Chief Accountant, Gazprom. Bank for Development and Foreign Economic Affairs Company ALROSA; from January 2018 to date — (Vnesheconombank); from April 2016 to date — Chief Executive Officer — Chairman of the Executive Andrey I. Akimov Vice President, Chamber of Commerce and Industry Committee, Public Joint Stock Company ALROSA. Anatoly A. Gavrilenko Year of birth: 1953 of the Russian Federation. Year of birth: 1972 Educational background: Graduated from the Moscow Famil K. Sadygov Institute of Finance in 1975. Educational background: Graduated from Kirill A. Dmitriev Year of birth: 1968 M.V. Lomonosov Moscow State University in 1995 Job titles in the past three years: From January 2003 Year of birth: 1975 and 2001. Educational background: Graduated from to date — Chairman of the Management Board, Educational background: Graduated from Stanford S. Ordzhonikidze State Academy of Management Bank GPB (JSC). Job titles in the past three years: From May 2004 University in 1996; graduated from Harvard University in 1993. Candidate of Sciences (Economics). to date — General Director, CJSC Leader (pension in 2000. fund asset management company). Job titles in the past three years: From February Mikhail L. Sereda Job titles in the past three years: From February 2009 to April 2019 — Deputy Chairman Year of birth: 1970. 2012 to date — Chief Executive Officer, Joint Stock of the Management Board, Bank GPB (JSC); Yuriy G. Gazaryan Company Management Company of Russian Direct from April 2019 to date — Deputy Chairman Educational background: Graduated from Year of birth: 1974 Investment Fund. of the Management Committee, Gazprom. St. Petersburg State University of Economics and Finance in 1997; graduated from International Educational background: Graduated from the Financial Management Institute St. Petersburg (IMISP) in 2008 Academy under the Government of the Russian Ilya V. Eliseev Vyacheslav A. Tyurin (Master of Business Administration). Federation in 1996. Year of birth: 1965 Year of birth: 1960 Job titles in the past three years: From September 2004 Job titles in the past three years: From April 2013 Educational background: Graduated from Educational background: Graduated from Kirov to date — Deputy Chairman of the Management to May 2018 — Deputy Head of the Secretariat A.A. Zhdanov Leningrad State University in 1987. Ural Polytechnic Institute in 1982. Committee, Head of the Administration of First Deputy Prime Minister of the Russian Candidate of Sciences (Law). of the Management Committee, Gazprom. Federation; from June 2018 to date — Deputy Job titles in the past three years: From Chairman, State Development Corporation VEB.RF. Job titles in the past three years: From August 2005 July 2002 to March 2019 — Director General, to date — Deputy Chairman of the Management Gazpromtrans; from March 2019 to date — Yury N. Shamalov Board, Bank GPB (JSC). Director General, Gazprom Invest; from Year of birth: 1970 June 2018 to date — Vice President, Bank GPB (JSC) (concurrently). Educational background: Graduated from the Higher Naval Engineering School in 1992; graduated from the Russian Foreign Trade Academy (Ministry of External Economic Relations of the Russian Federation) in 1996. Candidate of Sciences (Economics). Job titles in the past three years: From August 2003 to date — President of Non-State Pension Fund GAZFOND. 94 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 95 Bank GPB (JSC) Management Board

As of 1 January 2020

1. Andrey I. Akimov Department; in March 2004, he was transferred to the position of Deputy Director of the Project Born in 1953. Finance Department, and in July 2007, to the position Education: higher; a graduate of Moscow Financial of Director of the Project and Export Finance Directorate Institute (1975) majoring in Economics. of the Project and Structured Finance Department. Full name of the member In January 2009, he was appointed Deputy Head of the Management Board Position in Bank GPB (JSC) Career: From October 1974 to November 1990 of the Project and Structured Finance Department; Mr. Akimov was an employee of Vneshtorgbank Andrey I. Akimov Chairman of the Management Board in July 2009, Head of the Project and Structured Finance in the positions of Credit Inspector, Head of Foreign Alexey P. Belous Deputy Chairman of the Management Board Department; and in April 2013, Vice President — Exchange Department, Deputy General Manager Department Head, Project and Structured Finance Elena A. Borisenko Deputy Chairwoman of the Management Board of the bank’s office in Zurich, and Chairman Department. From February 2014 to April 2016, he held Ilya V. Eliseev Deputy Chairman of the Management Board of the Management Board in Donau Bank. From the office of Executive Vice President — Department February 1991 to January 2003, he held the position Dmitry V. Zauers Deputy Chairman of the Management Board Head, Project and Structured Finance Department; of Managing Director at IМAG Investment Viktor A. Komanov Deputy Chairman of the Management Board from April 2016 to September 2017, that of First Vice Management & Advisory Group AG (Austria). President — Department Head, Project and Structured Alexey A. Matveev Deputy Chairman of the Management Board Chairman of Bank GPB (JSC) Management Board since Finance Department of Bank GPB (JSC). In August 2017, Alexander Y. Muranov Deputy Chairman of the Management Board January 2003. Mr. Belous was elected as Member of the Management Igor V. Rusanov Deputy Chairman of the Management Board Board of Bank GPB (JSC); since September 2017, he has Vladimir M. Ryskin Deputy Chairman of the Management Board 2. Alexey P. Belous been Deputy Chairman of the Management Board of Bank GPB (JSC) Alexander I. Sobol Deputy Chairman of the Management Board Born in 1969. Alexander M. Stepanov Deputy Chairman of the Management Board Education: higher; in 1992, he graduated from Tigran G. Khachaturov Deputy Chairman of the Management Board the Ordzhonikidze Moscow Aviation Institute, 3. Elena A. Borisenko Vladimir N. Vinokurov First Vice President, Member of the Management Board majoring in Electrical Engineering; and in 1997, Born in 1978. Denis V. Kamyshev First Vice President, Member of the Management Board from the Financial Academy of the Government of the Russian Federation, majoring in Economics. Education: higher; a graduate of St. Petersburg State Irina A. Kaplunnik First Vice President, Member of the Management Board In 2000, he was awarded the degree of Candidate University (2000), majoring in Law. Alexey V. Popovich First Vice President, Member of the Management Board of Sciences (Economics). Career: Elena started her career in May 1999 as Career: Mr. Belous began his career at the Moscow a Legal Adviser at CJSC Plaza Firm. From August Experimental Design Bureau MARS, where he worked as to November 2000, she was the Head of the Law Engineer from April 1992 to June 1993. From June 1993 Group at CJSC Plaza Plus. From December 2000 to August 1996, he was employed at the Main to November 2008, she worked at OJSC Jewelry Directorate of the State Marine Emergency Rescue Trade of North-West, first as a Legal Adviser, then Service of Russia, where he first held the position as the Head of the Law Section in the Executive of a Lead Specialist of the Commercial Department Office. From November 2008 to September 2009, and then that of a Chief Specialist of the Foreign she was an Adviser to the Head of the Federal Trade and Contract Administration Department. Service for State Registration, Cadastral Records From August 1996 to October 1999, he worked and Cartography. In September 2009, she for Commercial Bank SBS-AGRO and the Managing joined the Ministry of Justice of the Russian Company of SBS-AGRO Banking Group, where Federation as an Adviser to the Minister he served in turn as Expert, Head of the Banks and in February 2010 she was appointed and Investment Funds Department of the Investment as the Director of the Department of Legal Resource Market Research Division, Deputy Head Aid and Interaction with the Judicial System and then Head of the International Resources Division of the Ministry of Justice of the Russian Federation, of the International Banking Operations Center. and in March 2011, as an Adviser to the Minister From October 1999 to April 2000, he held the office of Justice of the Russian Federation. From June 2012 of Head of the Project Financial Support Department to July 2015, she was Deputy Minister of Justice in CJSC STB-Card; from May 2000 to March 2001, of the Russian Federation. In September 2015, the position of Senior Advisor of the Financial Ms. Borisenko joined Bank GPB (JSC) Solutions Department in CJSC NCR; from June 2001 as First Vice President. In September 2015, she was to May 2002, the position of Head of the Economic elected as Member of the Management Board Projects Department at Gaztechleasing. In June 2002, of Bank GPB (JSC). Since September 2017, Elena he joined Bank GPB (JSC) as Head of the Long-Term has been Deputy Chairwoman of the Management Foreign Trade Finance Section at the Project Finance Board of Bank GPB (JSC). 96 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 97

4. Vladimir N. Vinokurov 6. Dmitry V. Zauers 7. Irina A. Kaplunnik 8. Denis V. Kamyshev Born in 1959. Born in 1979. Born in 1969. Born in 1975. Education: higher; graduated from F. E. Dzerzhinsky Education: higher; graduated from Tomsk State Education: higher; graduated from G. V. Plekhanov Education: higher; in 1999, he graduated from Tambov Higher Military Aviation Engineering University with a degree in Management (2001). Russian Academy of Economics (1990) as a highly the Moscow State Institute of Steel and Alloys School in 1981 with a degree in Radio Engineering; qualified goods manager. (Technology University), majoring in Mathematics Career: Dmitry started his career in August 2001 a graduate of the Higher School of the KGB qualified and Engineering. with Gazprombank. Through June 2003, he held Career: She started her career in August 1990 as an officer with a degree in higher professional the positions of Specialist and Lead Specialist in the Dzerzhinsk branch of Zhilsotsbank Career: He started his career in February 1998 education in 1991; a graduate of the Russian of the Lending Department with the Bank’s branch as a Category 2 Economist. From December 1990 at SI-Leader LLC as a System Administrator. Academy of Public Administration with a degree in Tomsk; from June 2003 to May 2011 he worked to July 1996, she worked at Business Commercial From April 1999 to April 2002, he was in Social Sciences in 1994. in the Bank’s Regional Business Development Bank, where she consecutively held the positions a postgraduate student at the V.A. Trapeznikov Career: Vladimir did military service with the USSR Department and held the position of Chief of Category 1 Economist in the Government Institute of Control Sciences. From November Ministry of Defense from July 1981 to September 1983 Specialist of the Network Management Section until Enterprises and Organizations Lending Department, 2002 to January 2003, he worked for OJSC Russian and with KGB/FSB counterintelligence offices March 2006; from March 2006 to September 2007 Lead Economist in the Short-Term and Long-Term Aluminum Management as Chief Specialist (staff records and fieldwork) from September 1983 he was Deputy Head of the Network Coordination Lending Department, branch Chief Economist, of the Corporate Risk Division of the Finance to December 1998. From December 1998 Division and Head of the Network Management and Chief Expert in the Lending Division. From Directorate. From January 2003 to September 2006, to March 2014, he served in the FSB Center for Special Section; from September 2007 to February 2010 August 1996 to November 1996, she worked he was employed at RUSAL-Managing Company Assignments, holding the position of Chief Deputy he served as Head of the Network Coordination at International Commercial Bank in the position LLC, where he was a Manager at the Risk Section and Chief Personnel Officer to June 2003, Chief Division and from February 2010 to May 2011 of Lead Economist in the Customer Lending of the Finance Directorate, Head of the Corporate Deputy and Chief Officer of Unit A from June 2003 as Deputy Head of the Department. In May 2011, Department. In November 1996, she was employed Risk Evaluation Section of the Risk Department, to March 2014. Employed by Bank GPB (JSC) since he was appointed Vice President and then First by Business Joint-Stock Commercial Bank and Director of the Risk Department. From March 2014 in the positions of First Vice President Vice President of the Bank in September 2012. in the capacity of the Chief Expert in the Credit October 2006 to August 2008, he held the position and Member of the Management Board. He has been a Member of the Management Resources Taking and Deployment Department; of Senior Manager of the Business Performance Board since February 2013 and Deputy Chairman in April 1997, she was appointed to the position Management Section at the Business Consulting of the Management Board since November 2014. of Deputy Head of Commission Operations Division, Division in PricewaterhouseCoopers Russia 5. Ilya V. Eliseev and in May 1998, to the position of the Head B.V. From August 2008 to June 2013, he was Born in 1965. of Securities Division. From January 2001 the Director of the Business Risk Service Section to April 2002, she occupied the position of First of the Business Consulting Department, and then Education: higher; a degree in Law from A. A. Zhdanov Deputy Director of Bank St. Petersburg branch a Partner at Ernst & Young (CIS) B.V. in Moscow. Leningrad State University (1987). Awarded a degree in Moscow. She has been with Bank GPB (JSC) In June 2013, he joined Bank GPB (JSC) in the capacity of Candidate of Sciences in Law in 2001. since April 2002. Was initially appointed Head of First Vice President. In July 2017, he was Career: From January 1991 to March 2003 of the Customer Cash Management Service elected as Member of the Management Board Mr. Eliseev worked at St. Petersburg State University Department. In April 2004, she was redeployed of Bank GPB (JSC). in the Department of Law (Civil Law). From May 2003 as Head of the Banking Operations Accounting, to July 2005, he held the position of Vice President Documenting and Execution Department. and President of the Law Center Association In December 2006, she was appointed to the position in St. Petersburg. He has worked for Bank GPB (JSC) of Deputy Chief Accountant of the Bank — Head in the position of Deputy Chairman of the Banking Operations Accounting, Documenting of the Management Board since August 2005. and Execution Department, and in October 2007, to the position of Deputy Chief Accountant of the Bank. In April 2012, she was redeployed to the position of First Vice President — Deputy Chief Accountant of the Bank. Since July 2016, she has held the position of First Vice President. In August 2019, she was elected as Member of the Management Board. 98 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 99

9. Viktor A. Komanov (a joint venture). From February 1993 to July 1995, 12. Alexey V. Popovich In July 2014, he joined Otkritie Bank in the capacity he held the positions of Director for External Loans, of Senior Vice President — Director, Pledge-Backed Born in 1973. Born in 1987. Member of the Management Board, and Executive Lending; in October 2014, he was appointed Education: higher; a graduate of G. V. Plekhanov Vice President of Inter-Sectoral Commercial Education: higher; in 2008, he graduated from to the position of Senior Vice President — Director, Russian Academy of Economics majoring Bank for Wholesale Development. In July 1995, the Budget and Treasury Academy of the Ministry Pledge-Backed Lending and Premium Banking in Economics (1995) and the London School he joined JSC Bank Credit Suisse (Moscow) where of Finance of the Russian Federation as a qualified Development; from August 2016 to November 2017, of Economics and Political Science (1997). he worked as Head of the Securities Management economist; in 2018, he completed an MBA course he worked as Senior Vice President — Director, Department and Vice President until June 1998. at the SKOLKOVO Moscow School of Management. Retail Sales. From November 2017 to February 2018, Career: Viktor started his career in September 1990 During 1999, Alexey was Advisor to the Chairman he held the position of Senior Vice President, and from with commercial banks Stroycredit and Moscovia. Career: He started his career in July 2006 in the Account of the Management Board in Eastern European February to July 2018, the position of Member Then until March 1996 he worked as a Lead Opening Section of the Moscow Representative Office Investment Bank. From June 1999 to March 2001, of the Management Board at Bank Rossiyskiy Economist at commercial banks YALOSBANK, National of MANPOWER Inc. From January to March 2007, he held the position of Head of the Investment Capital (Joint stock company). In August 2018, Credit and Gagarinsky. From 1996 to 1997, he served he worked at Moscow Credit Bank (Open Joint- Banking Department in Fleming USB (CJSC). From he joined Bank GPB (JSC). From August 2018 as Head of the New Product Development Sector Stock Company) in the capacity of Car Dealership May 2001 to February 2003, he was Managing to February 2019, he held the position of Vice of the Corporate Services Division at Menatep Front Office Group Manager in the Retail Lending Director in Investment Company Troika Dialog (CJSC). President, and in February 2019 was appointed First Bank. From December 1997 to November 1998 Department’s Auto Lending Division’s Administration He joined Bank GPB (JSC) in February 2003, working Vice President. In September 2019, he was elected Viktor was an Analyst with the Corporate Section. From March to June 2007, he held as Advisor to the Chairman of the Management as Member of the Management Board. Finance Department of Fleming USB (CJSC). the position of Auto Lending Section Manager Board from February to July 2003, and was appointed Up to February 2001, he held the position of Deputy at Spets-finans LLC. From July 2007 to June 2008, Deputy Chairman of the Management Board Head of the Investment Banking Department he worked as an underwriter and senior underwriter in July 2003. 13. Igor V. Rusanov of Fleming USB (CJSC). Up to March 2002, he was in the Analytical Section of Bank DeltaCredit’s Deputy Head of the Corporate Client Banking Credit Department. In June 2008, he was employed Born in 1970. and Capital Markets Department at J. P. Morgan Bank by EVROFINANCE MOSNARBANK (Open Joint- 11. Alexander Y. Muranov Education: higher; a graduate of Moscow Institute International LLC. From April 2002 to October 2003 Stock Company) in the capacity of Deputy Head of Physics and Technology with a degree Viktor worked in the Moscow office of Lukoil Born in 1958. of the Mortgage Lending Section in the Retail in Engineering Mathematics (1993). Overseas Service LTD in the positions of Section Lending Division; in July 2009, he was appointed Education: higher; a graduate of Leninsky Komsomol Head of the M&A Department and later Section Head of the Retail Lending Section of the Lending Career: Igor’s career started with the Institute of Design Lviv Polytechnic Institute majoring in Electronic Head of the International Business Development Division. From December 2010 to July 2014, he worked Automation under the USSR Academy of Sciences, Engineering (1980). Department. Joined Bank GPB (JSC) in October 2003. at Raiffeisenbank. He was initially deployed to the Retail where he worked as an Engineer from April 1990 From October 2003 to February 2004, he acted Career: Alexander’s career started in November Service Directorate’s Mortgage Lending Development to November 1993. From June 1994 to July 1997, as Advisor to the Management Board and Director 1980 with Elektroizmeritel Plant named after Department’s Regional Sales Development Team he was employed by Neftekhimbank, where he held in the Corporate Finance Department; from the 50th Anniversary of the USSR in Zhytomyr, in the position of Team Leader. In April 2012, he was the positions of Specialist and Chief Specialist February 2004 to November 2007, he was where he worked as an Engineer, Laboratory redeployed to the Retail Service Directorate’s of the Securities Department until May 1996 and Deputy Head of the Corporate Finance Department; Chief and Deputy Head of R&D until August 1994. Mortgage Lending Development Division’s Mortgage Head of the Dealing Department from June 1996 from November 2007 to July 2010 served From 1995 to 1998, he held the positions Product Sales Development Section in the position to July 1997. In July 1997, he was appointed Acting Head as First Vice President. He was elected as Member of Economist, Head of the Correspondent Relations of Section Head; in October 2012, he was redeployed of Treasury. In August 1997 he joined Bank GPB (JSC) of the Management Board in April 2007 Department, Deputy Chairman of the Management to the Retail and Small Business Service Directorate’s where he worked as Head of the Promissory Notes and appointed Deputy Chairman of the Management Board and First Deputy Chairman of the Management Mortgage Lending Development Division’s Mortgage and Bonds Section and Deputy Head of Securities Board in July 2010. Board in Unibest (a commercial bank). From October Product Sales Section in the position of Section Division until February 1999, Deputy Head of Treasury, 1998 to February 2005, his career continued with Head; in December 2012, to the Retail and Small Deputy Head of Treasury — Head of Liquidity Control Rosprombank in the positions of Vice President, Business Service Directorate’s Mortgage Lending and Analysis, and Deputy Head of Treasury — Head 10. Alexey A. Matveev First Vice President, and President of the Bank. Development Division’s Mortgage Product Sales of Cash Flow Management from February 1999 Born in 1963. He joined Bank GPB (JSC) in February 2005 and has Section as Deputy Division Head and Directorate to December 2003; Head of Structured and Syndicated been acting as Deputy Chairman of the Management Head; in March 2013, to the Retail and Small Business Finance Department from December 2003 Education: higher; a degree in Economics from Board since then. Service Directorate’s Mortgage Lending Development to September 2004; Vice President —­ Head of the Debt Moscow Financial Institute (1986). Division, in the position of Deputy Division Head; Capital Markets Department from September 2004 Career: Alexey started his career in January 1986 in August 2013, to the Retail and Small Business Service to January 2006; Vice President — Head of the Capital with VTB’s Soyuzraschetexport, where he worked Directorate’s Pledge-Backed Lending Development Markets Department from January 2006 as an Inspector and an Economist until December Division’s Secured Loan Sales Development to September 2007; Vice President — Head of Structured 1987. From January 1988 to June 1989, he worked Section as Deputy Division Head and Directorate and Syndicated Financing and Corporate Solutions as an Economist in Vnesheconombank of the USSR. Head; in November 2013, to the Retail and Small Department from September 2007 to January 2011. Then Alexey joined International Moscow Bank where Business Service Directorate’s Pledge-Backed He was appointed First Vice President in January 2011 he was Head of the Financial Credits Department until Lending Development Division’s Secured Loan Sales and elected as Member of the Management Board January 1992. During the following year he worked Development Section in the position of Deputy in February 2013. Mr. Rusanov has been Deputy as Foreign Affairs Consultant with Servis-Globus Division Head, Directorate Head and Director. Chairman of the Management Board since May 2019. 100 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 101

14. Vladimir M. Ryskin 15. Alexander I. Sobol 16. Alexander M. Stepanov 17. Tigran G. Khachaturov Born in 1961. Born in 1969. Born in 1976. Born in 1979. Education: higher; in 1983, he graduated from Education: higher; a graduate of S. Ordzhonikidze Education: higher; a bachelor’s degree from Education: higher; in 2000, he graduated from the Moscow Financial Institute, majoring Moscow Aviation Institute majoring in Engineering Moscow State Institute (University) of International the G.V. Plekhanov Russian Academy of Economics, in Economics. Economics (1991). Awarded a degree of Candidate Relations (MGIMO) in Management with a minor majoring in Economics. of Sciences in Economics in 2003. in a foreign language (1997); a master’s degree from Career: He started his professional career Career: Mr. Khachaturov embarked on his G. V. Plekhanov Russian Academy of Economics at Vnesheconombank of the USSR in August 1983, Career: Alexander started his career in February 1989 professional career in September 2000 in Economics (1999). Awarded a degree of Candidate where he successively held positions of Inspector in S. Ordzhonikidze Moscow Aviation Institute, at the Enterprise for Product Supplies of Sciences in Economics in 2000. of the Commercial Operations Division, Senior where he worked as a Technician and an Engineer of the Administrative Department of the President Economist of the Economic Situation Analysis until September 1993. In September 1993 Career: Mr. Stepanov started his career in April 1994 of the Russian Federation, a federal state unitary Section of the Commercial Operations Division, he joined Russian National Commercial Bank with Sozidanie LLP as a Computer Operator. From enterprise, as Head of the Financial Analysis Section, Senior Economist of the Precious Metals Section (RNCB) and worked there until November 1998 February 1997 to December 1999 he worked then held positions of Head of the Financial Analysis of the Precious Metals Division, Chief Economist in the positions of Economist, Head of the Financial as a Consultant at Monitor Eurasia Africa Ltd. and then and Planning Section, Acting Head of the Financial of the Precious Metals Section of the International Resources Department, Deputy Head and Head as a Consultant in the Moscow Representative and Economic Division. From April 2002 Currency Exchange Transactions Division. From of the Consolidated Analysis Department, Vice Office of A.T. Kearney GmbH from January 2000 to August 2007, he worked for Techsnabexport, January 1989 to September 1990, he worked President of the Bank, Vice President and Head to April 2001. From April 2001 to October 2004, a joint stock foreign trade company, as Director at the International Economic Cooperation Bank, of the Compliance Control Service, and Deputy he held the position of Analyst, Deputy Director of the Internal Control and Audit Department, where he first was Senior Assistant in the Arbitration Chairman of the Management Board and Head of Transportation Projects, and Investment Director Director of the Financial Department, Deputy Section of the Freely Convertible Currency Operations of the Compliance Control Service. Alexander in Finartis LLC. In October 2004, Alexander joined General Director (Finance), First Deputy General Division, and then Chief Economist of the Lending joined Bank GPB (JSC) in November 1998 Gazprombank as Director of the Project Finance Director. From August 2007 to May 2013, he was Operations and Securities Section of the Freely and held the positions of Advisor to the Chairman Department until October 2006 and Advisor employed at OJSC Atomredmetzoloto, holding Convertible Currency Operations Division. From of the Management Board from November 1998 to the Chairman of the Management Board from the position of First Deputy General Director September to December 1990, he was employed to February 1999 and Deputy Head of Strategic October 2006 to February 2011. From February 2011 and then of Acting General Director. From June 2013 by Zhilsotsbank of the USSR, in the capacity of Aide Development and Resource Planning and Advisor to September 2017, he was First Vice President — to July 2014, he was First Executive Vice President, to the Chairman of the Management Board. to the Chairman of the Management Board from Head of the Strategic Industrial Assets Department. Head of the Representative Office of Uranium From November 1992 to July 1994, he worked February 1999 to November 1999. He has been Elected as Member of the Management Board One Holding N.V. (Netherlands) in Moscow. for Mosbiznesbank as Head of the Currency Deputy Chairman of the Management Board in November 2014. He has been Deputy Chairman From July to December 2014, he was employed Exchange Section of the Currency Exchange of Bank GPB (JSC) since November 1999. of the Management Board since September 2017. as Advisor to Director of JSC Atomic Energy Power and International Settlements Division, and then, Corporation (Atomenergoprom). In April 2015, Deputy Director of the Currency Exchange he joined Bank GPB (JSC) as Advisor to the Chairman and International Settlements Division — Head of the Management Board, and in August 2016, of the Currency Exchange Section. From July 1994 he was appointed to the position of Head to November 2000, he was an employee of OJSC of the Bank’s Restructured Assets Management. Onexim Bank, holding positions of Deputy Chairman In September 2017, he was elected as Member of the Management Board, First Deputy Chairman of the Management Board of Bank GPB (JSC). He has of the Management Board, First Vice President. been Deputy Chairman of the Management Board From May to July 2001, he was First Executive Vice since August 2019. President of Commercial Joint Stock Bank Rosbank. From November 2001 to July 2002, he moved to OJSC Avtobank, a commercial bank, and was Deputy Chairman and then Chairman of that bank. From June 2003 to August 2007, he worked for OJSC Bank Uralsib, in the position of Chief Executive Officer, Chairman of the Management Board, First Deputy Chairman of the Management Board. In October 2009, he joined Bank GPB (JSC) as First Vice President. In February 2017, he was elected as Member of the Management Board of Bank GPB (JSC). Mr. Ryskin has been Deputy Chairman of the Management Board since May 2019. 102 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 103 Corporate Bank GPB (JSC) Governance Organizational in the Bank Management Flowchart

As of 1 January 2020

The Bank is managed in compliance SHAREHOLDERS MEETING AUDITOR OF THE BANK REVISION COMMISSION with the legislation of the Russian BOARD OF DIRECTORS

Federation and the Bank’s Articles Compensation Committee Audit Committee MANAGEMENT BOARD of the Board of Directors of Association. of the Board of Directors Chairman of the Management Board

Internal Audit Service First Vice Presidents, Executive Vice Presidents, Vice Presidents, Advisors to the Chairman According to the Bank’s Articles of Association, of the Management Board The Bank’s Committees and Consultants to the Management Board the Bank’s management bodies are: the General Shareholders Meeting, the Board Deputy Chairman of the Management Board Deputy Chairman of the Management Board of Directors and two executive bodies that Project and investment loans, investments in PPP projects Strategic development and financial planning, equity capital, rating advisory, manage the Bank’s day-to-day operations: budgeting and management accounting, IFRS, the sole one (Chairman of the Management Board) Deputy Chairman of the Management Board accounting and reporting, tax records and reports, Legal protection of the Bank’s interests, collateral management, subsidiary banks and the collective one (the Management Board). transactions control

Deputy Chairman of the Management Board Deputy Chairman of the Management Board Compliance control Strategic industrial assets, special investment projects The Bank’s supreme management body of Bank’s Board of Directors and Revision Deputy Chairman of the Management Board is the General Shareholders Meeting. The Bank’s Commission; the meeting also heard other matters Administration, HR management and organizational Board of Directors is in charge of the general included in the agenda of the Bank’s annual General development, IT development, project management, Deputy Chairman of the Management Board Distressed corporate assets, procurement management of the Bank’s operations, except Shareholders Meeting. regional network, digital assets management, for matters reserved for the General Shareholders In its activities and operations, the Bank adheres corporate communications Meeting in accordance with the laws of the Russian to the principles of corporate governance, First Vice President, Member of the Management Board Federation and the Bank’s Articles of Association. which were recommended for use by the Bank Deputy Chairman of the Management Board Security, cash collection The Bank’s day-to-day operations are managed of Russia and the Basel Committee on Banking Private equity, corporate finance by its executive bodies. Supervision. For that purpose, the Bank The Bank’s Articles of Association authorize the maintains the Corporate Governance Code First Vice President, Member of the Management Board Deputy Chairman of the Management Board Retail business Bank’s management bodies to delegate some (hereinafter, “the Code”) and monitors compliance CFC segment customer relations, corporate lending, of their powers to collective bodies which they of the Bank’s activities and operations with international business, financial and capital market transactions may set up. Thus, members of the Bank’s Board international and Russian principles of corporate First Vice President, Member of the Management Board of Directors comprise the Audit Committee governance, efficiency of the risk and capital International projects and representative offices, and the Compensation Committee. Members management system functioning at the Bank Deputy Chairman of the Management Board customer base development of the Bank’s Management Board participate and across the Gazprombank Group, transparency VIP customers, transaction banking products, in committees and advisory bodies set of information, responsibility and accountability financial monitoring, information security up by the Management Board and the Chairman of the management. First Vice President, Member of the Management Board of the Management Board to jointly review key The Bank’s management bodies continuously Deputy Chairman of the Management Board Operations Assets and liabilities management, liquidity management, issues related to the Bank’s activities. Committees improve the decision-making system and corporate borrowings, sales of treasury products, meet on a regular basis. controls to ensure efficient management of the Bank. depository operations First Vice President In the reporting year, the Bank’s annual General In accordance with the recommendations Prospective Commodity Assets Shareholders Meeting was held, which approved of the Bank of Russia and the Code, a review Deputy Chairman of the Management Board the Bank’s 2018 annual report and annual of the Bank’s corporate governance system was Private Banking, portfolio investments, accounting (financial) statements, payment of 2018 performed in 2019. The next such review will take asset management, the Bank’s interactions First Vice President year-end dividend as well as the relevant record place in the first quarter of 2021. with counterparties in financial markets Risk Management Service date, the Bank’s auditor, and the composition 104 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 105 Internal Control System

An efficient internal control system is essential for the steady development of Gazprombank.

A well-functioning system ensures • Chief Accountant and Deputy Chief Accountants The CCS submits regular reports to the Bank’s Board of the Bank’s structural units, or of each kind timely response to current challenges, of the Bank; of Directors and the Management Board on its work of operations and transactions, at least once every • Branch Manager and Chief Accountant of a branch and identified compliance risks. three years. On the basis of the findings of such changes in the competitive and their deputies; CCS officers are members of the Compliance Risk audits, Bank units take action aimed at improving and regulatory environment, which • business units and employees of the Bank and AML/CFT Committee of the Association “Russia” their internal control systems. The Internal Audit in charge of internal control by their authority and the AML/CFT, Internal Control and Regulatory Department exercises permanent oversight over allows the Bank to achieve strategic as stated in the Bank’s internal regulations. (Compliance) Risk Committee of the National the effectiveness of actions taken by the Bank’s goals it has in view. Financial Market Council (NFMC), and play an active units and governance bodies on the basis of audit The Internal Audit and Internal role in the task forces of the National Association findings. Control Services are an integral of Securities Market Participants (NAUFOR), The Head of the Internal Audit Department reports part of the internal control system. National Finance Association (NFA) and NFMC to the Bank’s Board of Directors at least once every looking at matters related to insider information, six months on progress against the Internal Audit Compliance control FATCA, internal control and compliance. They Department Work Plan, providing information The Bank makes every effort to adopt an efficient One of the integral parts of the internal control are also members of the task force working on actions taken on the basis of audit findings internal control system as an element of its system is compliance control. on the development of a global compliance control in the respective reporting period. competitive edge. The core of the compliance risk management system concept for finance institutions. The internal control system affects all managerial is the Compliance Control Service (CCS). levels, all areas of operations, all branches The CCS exercises compliance control in the following Internal audit and divisions of the Bank. areas: The Internal Audit Service is an important element Efficiency criteria of the Bank’s system of internal • compliance with the applicable rules, regulations of assuring the effective functioning of the Bank’s controls include uninterrupted functioning of all and standards by the Bank; internal control system; its function is exercised its components and minimization of all significant • prevention and detection of competing interests at the Bank by the Internal Audit Department. risks. The Bank has put in place procedures of regular that may arise in the course of the Bank’s activity The Internal Audit Department is part of the Bank’s monitoring of the internal control system. and conflicts of interest involving the Bank’s system of internal control bodies and is an Internal controls at the Bank are designed employees; independent structural unit reporting and directly in a package, with the application of both • performing the functions of a controller accountable to the Bank’s Board of Directors. regulatory requirements and generally accepted of the professional stock market operator; The Internal Audit Department assists the Bank’s international practices, including the Three • performing the functions of a controller governance bodies in assuring the efficient Lines of Defense Model. That approach provides of the Bank’s specialized depository; functioning of the Bank and Bank Group the Bank’s management bodies with the required • internal control aimed at prevention of illegal use companies, guided by the principles of going level of assurance that the internal control system of insider information and market manipulation, concern, independence, fairness, and professional functions properly. including compliance with the EU Market Abuse competence. Setting up the system of effective internal controls Regulation (MAR); The Bank takes all necessary action to provide and getting it to function is a mission that falls • internal control aimed at compliance with an environment that enables the Internal Audit within the authority of the Bank’s Board of Directors. the US Foreign Account Tax Compliance Act Department to perform its functions without The Bank’s internal control system includes: (FATCA), the Common Reporting Standard (CRS), impediment and in an effective manner. • management bodies responsible for building and any applicable Russian laws by the Bank and all The Internal Audit Department is guided by best the corporate control culture in the Bank entities of the Gazprombank Group; internal audit practice, including the international to emphasize and demonstrate the significance • internal control aimed at compliance with the principles underlying professional internal audit of internal control and audit to personnel at all EU General Data Protection Regulation (GDPR); practices, and by the requirements of the law. levels; • development of unified approaches to internal The Internal Audit Department performs • the Revision Commission of the Bank; control for all entities within the Group. comprehensive audits of the operations of each Summary Consolidated Financial Statements Derived from the Audited Consolidated Financial Statements for the year Ended 31 December 2019

2019 3985 2018 3733 2017 3384 2016 3175 2015 3198 Loans provided to corporate customers before loan loss provisions, RUB billion 3 108 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 109 Independent Auditors’ Report on the Summary Consolidated Financial Statements

To the Shareholders and Board of Directors of Gazprombank (Joint Stock Company)

Audited entity: Independent auditor: Opinion The Audited Consolidated Gazprombank (Joint Stock Company). JSC “KPMG”, a company incorporated under The summary consolidated financial Financial Statements the Laws of the Russian Federation, a member firm statements, which comprise the summary and Our Report Thereon Registration number in the Unified State Register of the KPMG network of independent member consolidated statement of financial position We expressed an unmodified audit opinion of Legal Entities 1027700167110. firms affiliated with KPMG International Cooperative as at 31 December 2019, the summary consolidated on the audited consolidated financial statements (“KPMG International”), a Swiss entity. statements of profit or loss and other comprehensive in our report dated 24 March 2020. That report also Moscow, Russian Federation. income, changes in equity and cash flows for the year includes the communication of key audit matters. Registration number in the Unified State Register then ended, and related notes, are derived from Key audit matters are those matters that in our of Legal Entities 1027700125628. the audited consolidated financial statements professional judgement, were of most significance of Gazprombank (Joint Stock Company) (the “Bank“) in our audit of the consolidated financial statements Member of the Self-regulatory Organization and its subsidiaries (the “Group“) for the year ended for the current period. of Auditors Association “Sodruzhestvo” (SRO AAS). 31 December 2019. The Principal Registration Number of the Entry In our opinion, the accompanying summary Management’s Responsibility in the Register of Auditors and Audit Organisations: consolidated financial statements are consistent, for the Summary Consolidated No. 12006020351. in all material respects, with the audited consolidated Financial Statements financial statements, in accordance with the basis Management is responsible for the preparation described in Note 2. of the summary consolidated financial statements in accordance with the basis described in Note 2. Summary Consolidated Financial Statements Auditors’ Responsibility The summary consolidated financial statements Our responsibility is to express an opinion on whether do not contain all the disclosures required the summary consolidated financial statements are by International Financial Reporting Standards. consistent, in all material respects, with the audited Reading the summary consolidated financial consolidated financial statements based on our statements and our report thereon, therefore, procedures, which were conducted in accordance is not a substitute for reading the audited with International Standard on Auditing (ISA) 810 consolidated financial statements and our report (Revised), “Engagements to Report on Summary thereon. The summary consolidated financial Financial Statements”. statements and the audited consolidated financial statements do not reflect the effects of events that occurred subsequent to that date of our report on the audited consolidated financial statements.

Kolosov A.E. JSC “KPMG” Moscow, Russian Federation 14 May 2020 110 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 111

Gazprombank Group Summary Consolidated Statement of Profit or Loss and Other Comprehensive Income for 2019

(in millions of Russian rubles unless otherwise stated)

2019 2018 Change, % 2019 2018 Change, % Interest income calculated using the effective interest rate method 377,982 348,358 Other comprehensive (loss) income, net of tax Other interest income 31,477 25,124 Items that are or may be reclassified to profit or loss in subsequent periods: Interest expense (266,705) (234,801) Exchange differences on translation of foreign operations (6,088) 3,315 Net interest income 142,754 138,681 3% Movements in other comprehensive income of associates 474 181 Total other comprehensive (loss) income, net of tax (5,614) 3,496 Provision charge for credit losses on interest earning assets (10,478) (6,758) Net interest income after provision charge for credit losses on interest earning assets 132,276 131,923 0% Total comprehensive income for the year 38,971 43,035 -9%

Fee and commission income 50,728 31,774 Profit (loss) for the year attributable to: Fee and commission expense (16,489) (13,366) Bank’s shareholders 45,359 41,086 10% Net fee and commission income 34,239 18,408 86% Non-controlling interests (774) (1,547) -50% 44,585 39,539 13% Net gain (loss) from trading operations 7,202 (17,521) Net gain (loss) from loans and other financial instruments at fair value 28,800 (3,846) Total comprehensive income (loss) for the year attributable to: Income from equity method investments in associates 7,817 7,712 Bank’s shareholders 39,745 44,582 -11% Net (loss) gain from trading in foreign currencies, operations with foreign currency derivatives (23,496) 2,088 Non-controlling interests (774) (1,547) -50% and foreign exchange translation 38,971 43,035 -9% Income from sale of subsidiaries 7,750 1,197 Net other operating income 7,918 8,992 Other non-interest income (loss) 35,991 (1,378)

Non-banking operating revenues 270,566 287,415 The summary consolidated financial statements were derived from the consolidated Non-banking operating expenses (283,608) (289,073) financial statements of Gazprombank Group, which were approved for issue Non-banking operating loss (13,042) (1,658) by the Management Board of Gazprombank (Joint Stock Company) and signed on its behalf on 24 March 2020. Banking salaries and employment benefits (61,810) (50,719) Banking administrative expenses (58,987) (47,611) (Provision charge for) recovery of credit losses on non-interest earning financial instruments (2,334) 584 (Charge for) recovery of impairment on non-financial assets and provision for other risks (6,319) 4,107 Impairment of goodwill - (596) Non-interest expense (129,450) (94,235) 37%

Profit before profit tax 60,014 53,060 13%

Profit tax expense (15,429) (13,521) Profit for the year 44,585 39,539 13%

Signed on behalf of the Management Board:

The summary consolidated Andrey I. Akimov Alexander I. Sobol financial statements should Chairman of the Management Board Deputy Chairman be read in conjunction with of the Management Board the consolidated financial statements of the Gazprombank Group from which they were derived. 14 May 2020 112 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 113

Gazprombank Group Summary Consolidated Statement of Financial Position as at 31 December 2019

(in millions of Russian rubles unless otherwise stated)

31 December 31 December 31 December 31 December 2019 2018* Change, % 2019 2018* Change, % Assets Equity Cash and cash equivalents 739,024 1,049,343 -30% Share capital 206,834 206,834 - Obligatory reserve with the Central Bank of the Russian Federation 51,709 47,972 8% Additional paid-in capital 166,037 166,037 - Due from financial institutions 214,699 97,192 121% Treasury shares (9,756) (9,756) - Financial assets held for trading 161,076 134,755 20% Perpetual debts issued 206,906 124,469 66% of which pledged under repo agreements 5,759 2,207 161% Foreign currency translation reserve 5,797 11,885 -51% Loans to customers 4,394,994 4,035,079 9% Retained earnings 144,708 127,143 14% Investment financial assets 474,999 561,997 -15% Equity attributable to the Bank’s shareholders 720,526 626,612 15% of which pledged under repo agreements 9,007 53,707 -83% Investments in associates 43,688 81,787 -47% Non-controlling interests 1,646 (9,864) -117% Receivables and prepayments 116,993 158,361 -26% Total equity 722,172 616,748 17% Inventories 47,459 58,852 -19% Rights for audio-visual products 40,151 41,730 -4% Total liabilities and equity 6,582,198 6,532,091 1% Profit tax assets 39,433 43,949 -10% Property, plant and equipment and right-of-use assets 148,513 125,622 18% Intangibles 24,470 22,934 7% Assets held for sale 37,880 16,986 123% Goodwill 25,873 25,873 - Other assets 21,237 29,659 -28% Total assets 6,582,198 6,532,091 1%

Liabilities Financial liabilities held for trading 39,675 42,897 -8% Financial liabilities designated as at FVTPL 48,154 49,593 -3% Amounts owed to financial institutions 319,402 405,919 -21% Amounts owed to customers 4,968,481 4,813,464 3% Bonds issued 267,617 326,596 -18% Profit tax liabilities 8,975 5,902 52% Subordinated debts 74,555 136,519 -45% Other liabilities 133,167 134,453 -1% Total liabilities 5,860,026 5,915,343 -1%

Signed on behalf of the Management Board:

The summary consolidated Andrey I. Akimov Alexander I. Sobol financial statements should Chairman of the Management Board Deputy Chairman be read in conjunction with of the Management Board * The presentation of comparative the consolidated financial statements information was changed of the Gazprombank Group from (Note 2 (g). which they were derived. 14 May 2020 114 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 115

Gazprombank Group Summary Consolidated Statement of Changes in Equity for 2019

(in millions of Russian rubles unless otherwise stated)

Equity Foreign currency attributable Additional Perpetual translation Retained to Bank’s Non-controlling Share capital paid-in capital Treasury shares debts issued reserve Fair value reserve earnings shareholders interests Total equity 31 December 2017 206,834 166,037 (9,756) 67,057 8,570 572 144,230 583,544 (6,735) 576,809 Impact of adopting IFRS 9 - - - - - (572) (23,588) (24,160) - (24,160) Impact of adopting IFRS 15 ------40 40 - 40 1 January 2018 206,834 166,037 (9,756) 67,057 8,570 - 120,682 559,424 (6,735) 552,689

Profit (loss) for the year ------41,086 41,086 (1,547) 39,539 Items that are or may be reclassified to profit or loss in subsequent periods: Exchange differences on translation of foreign operations - - - - 3,315 - - 3,315 - 3,315 Movements in other comprehensive income of associates ------181 181 - 181 Total items that are or may be reclassified to profit or loss in subsequent periods - - - - 3,315 - 181 3,496 - 3,496 Total comprehensive income (loss) for the year - - - - 3,315 - 41,267 44,582 (1,547) 43,035

Perpetual debts issued - - - 45,542 - - - 45,542 - 45,542 Accruals of interest on perpetual debts issued ------(5,450) (5,450) - (5,450) Foreign exchange translation on perpetual debts issued - - - 11,870 - - (11,870) - - - Tax effect on perpetual debts issued ------3,464 3,464 - 3,464 Acquisition and disposal of non-controlling interests in subsidiaries ------(473) (473) 251 (222) Disposal of subsidiaries ------(759) (759) Dividends declared ------(21,008) (21,008) (1,040) (22,048) Other movements ------531 531 (34) 497 31 December 2018 206,834 166,037 (9,756) 124,469 11,885 - 127,143 626,612 (9,864) 616,748

The summary consolidated financial statements should be read in conjunction with the consolidated financial statements of the Gazprombank Group from which they were derived. 116 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 117

Gazprombank Group Summary Consolidated Statement of Changes in Equity for 2019

(in millions of Russian rubles unless otherwise stated)

Equity Foreign currency attributable Additional Perpetual translation Retained to Bank’s Non-controlling Share capital paid-in capital Treasury shares debts issued reserve Fair value reserve earnings shareholders interests Total equity 31 December 2018 206,834 166,037 (9,756) 124,469 11,885 - 127,143 626,612 (9,864) 616,748 Profit (loss) for the year ------45,359 45,359 (774) 44,585 Items that are or may be reclassified to profit or loss in subsequent periods: Exchange differences on translation of foreign operations - - - - (6,088) - - (6,088) - (6,088) Movements in other comprehensive income of associates ------474 474 - 474 Total items that are or may be reclassified to profit or loss in subsequent periods - - - - (6,088) - 474 (5,614) - (5,614) Total comprehensive (loss) income for the year - - - - (6,088) - 45,833 39,745 (774) 38,971

Perpetual debts issued - - - 90,000 - - - 90,000 - 90,000 Accruals of interest on perpetual debts issued ------(8,028) (8,028) - (8,028) Foreign exchange translation on perpetual debts issued - - - (7,563) - - 7,563 - - - Tax effect on perpetual debts issued ------93 93 - 93 Acquisition and disposal of non-controlling interests in subsidiaries ------63 63 Disposal of subsidiaries ------12,343 12,343 Dividends declared ------(18,106) (18,106) (122) (18,228) Other distributions to shareholders ------(10,397) (10,397) - (10,397) Other movements ------607 607 - 607 31 December 2019 206,834 166,037 (9,756) 206,906 5,797 - 144,708 720,526 1,646 722,172

Signed on behalf of the Management Board:

The summary consolidated Andrey I. Akimov Alexander I. Sobol financial statements should Chairman of the Management Board Deputy Chairman be read in conjunction with of the Management Board the consolidated financial statements of the Gazprombank Group from which they were derived. 14 May 2020 118 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 119

Gazprombank Group Summary Consolidated Statement of Cash Flows for 2019

(in millions of Russian rubles unless otherwise stated)

2019 2018 2019 2018 Cash flows from operating activities Cash flows from investing activities Interest received 402,896 344,021 Property, plant and equipment, intangibles and rights for audio-visual products purchased (80,265) (70,647) Fee and commission received 50,068 32,827 Property, plant and equipment, intangibles and rights for audio-visual products sold 8,600 2,648 Interest paid (266,924) (227,141) Disposal of subsidiaries, net of cash disposed 3,275 1,537 Fee and commission paid (16,243) (13,376) Investment financial assets purchased (78,135) (123,215) Non-interest receipts from financial assets and liabilities held for trading 6,725 2,717 Investment financial assets sold and redeemed 147,818 56,451 (Payments on) receipts from derivative contracts with foreign currency and from foreign exchange operations (48,099) 60,074 Acquisition and contribution to share capital of associates (2,770) (14,286) Media business operating receipts 100,396 96,818 Disposal of associates 11,698 2,204 Media business operating payments (59,978) (66,335) Dividends received from associates 10,126 5,530 Machinery business operating receipts 81,493 75,506 Dividends received 2,140 2,506 Machinery business operating payments (73,112) (85,791) Net cash flows from (used in) investing activities 22,487 (137,272) Other segment operating receipts 100,899 92,217 Other segment operating payments (95,951) (96,043) Cash flows from financing activities Other operating receipts 5,633 6,404 Bonds issued and sold from earlier repurchased 95,245 57,406 Banking salaries and employment benefit payments (59,580) (48,283) Bonds redeemed or repurchased (149,962) (99,120) Banking administrative expenses and other operating payments (51,871) (41,622) Perpetual debts issued 90,000 45,542 Cash flows from operating activities before changes in operating assets and liabilities 76,352 131,993 Interest оn perpetual debts paid (7,870) (5,644) Subordinated debts redeemed or repurchased (63,061) (54,039) (Increase) decrease in operating assets Acquisition of non-controlling interests in subsidiaries - (222) Obligatory reserve with the Central Bank of the Russian Federation (3,737) (9,523) Financing of non-banking activities received 5,177 5,032 Due from financial institutions (124,408) (2,614) Financing of non-banking activities redeemed (7,631) (4,965) Financial assets held for trading (19,734) 32,742 Dividends paid (18,208) (22,045) Loans to customers (447,918) (271,444) Other distributions to shareholders (10,397) - Other operating assets 5,932 (15,664) Lease liabilities redeemed (6,965) - Net cash used in financing activities (73,672) (78,055) Increase (decrease) in operating liabilities Financial liabilities held for trading 4,547 (8,699) Effect of changes in exchange rates on cash and cash equivalents (45,429) 64,123 Financial liabilities designated as at FVTPL (5,263) 9,019 Change in cash and cash equivalents (310,417) 400,221 Amounts owed to financial institutions (49,295) 55,452 Amounts owed to customers 359,309 640,133 Effect of changes in allowance for credit losses on cash and cash equivalents 98 (306) Other operating liabilities (5,012) 13,908 Cash and cash equivalents, beginning of the year 1,049,343 649,428 Net cash flows (used in) from operating activities before profit tax (209,227) 575,303 Cash and cash equivalents, end of the year 739,024 1,049,343 Profit tax paid (4,576) (23,878) Net cash flows (used in) from operating activities (213,803) 551,425

Signed on behalf of the Management Board:

The summary consolidated Andrey I. Akimov Alexander I. Sobol financial statements should Chairman of the Management Board Deputy Chairman be read in conjunction with of the Management Board the consolidated financial statements of the Gazprombank Group from which they were derived. 14 May 2020 120 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 121

Note 2. • estimation of allowance for credit losses Basis of preparation on financial instruments. The amount of allowance Notes for credit losses on financial instruments equals (а) Overview to either 12-month expected credit losses (ECL) to the Summary These summary consolidated financial or the lifetime ECLs depending on whether statements, which comprise the summary the significant increase in credit risk (SICR) occurred Consolidated consolidated statement of financial position since initial recognition. Models for measurement as at 31 December 2019, the summary consolidated of ECL imply incorporation of forward looking Financial Statements statements of profit or loss and other comprehensive information income, changes in equity and cash flows for 2019, • valuation of complex and illiquid financial for 2019 and related notes are derived from the audited instruments. This involves professional judgement, consolidated financial statements of the Group, including use of valuation models. In the absence except that substantially all note disclosures are of an active market, management uses omitted. assumptions for certain valuation models’ inputs, The consolidated financial statements were which may not be based on an observable market authorised for issue by the Management Board data of the Bank on 24 March 2020. The summary • estimation of fair values of identifiable assets Note 1. management, capital markets transactions, consolidated financial statements do not reflect and liabilities acquired in business combinations. Principal activities asset management, brokerage, corporate the effects of events that occurred subsequent This involves professional judgement, including and organization finance and mergers and acquisitions advisory, to the issue date of the consolidated financial use of valuation models, which, among others, and depositary and custodian services. The Bank statements. comprise assumptions about future business The Gazprombank Group (the Group) primarily is also involved in private equity transactions, foreign Consolidated financial statements are prepared performance and cash flows and appropriate consists of: exchange and securities trading, and operations in accordance with International Financial Reporting discount rates • Gazprombank (Joint Stock Company), which with precious metals. Standards (IFRS). This is the first set of the Group’s • estimation of allowance for impairment is the parent company The Bank provides a range of services to private annual financial statements in which IFRS 16 «Leases» on non-financial assets (including goodwill). • subsidiary banks and financial companies, individuals, including employees of its corporate has been applied. This involves professional judgement, including including Gazprombank (Switzerland) Ltd., Bank clients. Retail services include: lending, deposit Management is responsible for the preparation use of valuation models, which, among others, GPB International S.A., Gazprombank Leasing JSC, taking, debit and credit card services, brokerage, asset of the summary consolidated financial statements comprise assumptions about future business and a number of other financial companies, that management and a range of other services. in accordance with IFRS. performance and cash flows of assets, being tested support the banking business The Bank has controlling stakes in several non- The preparation of consolidated financial for impairment, and appropriate discount rates • several large non-banking companies. banking entities, which are consolidated in these statements in accordance with IFRS requires • assessment of whether the Group has control • Gazprombank (Joint Stock Company) (the Bank) summary consolidated financial statements and are management to make estimates and assumptions or significant influence over investments where was established in 1990. The Bank has a general presented as separate segments, including: that affect the reported amounts of assets control or significant influence is determined banking license and a license for operations • JSC Gazprom-Media Holding and its subsidiaries and liabilities and disclosed contingent by contractual arrangements or other factors other with precious metals from the Central Bank (the Media segment) is a Russian media group assets and liabilities at the reporting date than voting rights held by the Group of the Russian Federation of companies, which principal activities are TV in the consolidated financial statements • estimation of the recoverable amount of deferred (the CBR), and licenses for securities operations and radio broadcasting, advertising, publishing, and the reported amounts of income and expense tax assets. This involves the assessment of future and custody services from the Federal Financial film production and distribution primarily for the reporting period. Actual results could differ taxable profits available to utilise tax losses Markets Service of the Russian Federation, which undertaken in the Russian Federation from those estimates. Key areas of judgements carryforward. in 2013 became a part of the CBR. Its subsidiary banks • PJSC OMZ and its subsidiaries (the OMZ Group) and key assumptions concerning the future and companies also have general banking licenses and a number of other industrial assets (together and other key sources of estimation uncertainty for operations in Switzerland and Luxembourg - the Machinery segment). OMZ Group produces at the reporting date, that may lead to material and investment, brokerage and asset management nuclear power plant equipment, specialty steels, adjustments to the carrying amounts of assets licenses for operations in Cyprus, Luxembourg machinery equipment, manufacturing and mining and liabilities within the next financial year, include: and Hong Kong. equipment. The OMZ Group manufacturing • classification of financial assets. Classification The Bank is the third largest bank in the Russian facilities are based in the Russian Federation of financial assets and their basis for measurement Federation in terms of assets and equity, and the Czech Republic. depend on business model within which and it provides a broad range of commercial The legal address of the Bank is: Bld.1, 16 the assets are held and assessment of whether and investment banking services to many of Russia’s Nametkina St., Moscow, 117420, Russian Federation. the contractual terms of the financial asset leading corporations, including, among others, The consolidated financial statements are published are solely payments of principal and interest PJSC Gazprom and its related parties (the Gazprom at the Bank’s website www.gazprombank.ru. The summary consolidated on the principal amount outstanding Group). The principal corporate banking services These summary consolidated financial statements financial statements should include: commercial lending, project and acquisition are authorised for issue by the Management Board be read in conjunction with the consolidated financial statements finance, trade finance, financial and operating of the Bank on 14 May 2020. of the Gazprombank Group from leasing, deposit taking, settlements and cash which they were derived. 122 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 123

(b) Russian economic environment However, the first months of 2020 have seen (e) Changes in accounting policies On initial recognition lease liability is measured The Group’s operations are primarily located significant global market turmoil triggered The Group has initially adopted IFRS 16 “Leases” from at the present value of the future lease payments in the Russian Federation. The Russian Federation by the outbreak of the coronavirus. Together with 1 January 2019. at the date discounted for a lease term using displays certain characteristics of emerging other factors, this has resulted in a sharp decrease A number of other new standards are also effective the interest rate implicit in the lease, if that rate markets. The legal, tax and regulatory frameworks in the oil price and the stock market indices, as well from 1 January 2019 and do not have a material can be readily determined, or, if that rate cannot continue to develop and are subject to frequent as a depreciation of the Russian Rouble. These effect on the Group’s summary consolidated financial be readily determined, the lessee’s incremental changes and varying interpretations. Management developments are further increasing the level statements. borrowing rate. Subsequently the lease liability of the Group believes that it is taking all necessary of uncertainty in the Russian business environment. is measured at amortised cost using the effective efforts to support the economic stability of the Group It is not possible to evaluate the economic effect IFRS 16 “Leases” interest rate method. in the current environment. of the ongoing situation at the moment of the issue The Group applied IFRS 16 using the modified On initial recognition right-of-use asset is measured Since 2014, the Group operates under coordinated of the summary consolidated financial report. retrospective approach. This approach implies at cost, which comprises the amount of the initial sectoral sanctions against some of the Russian Deterioration in credit quality of corporate borrowers recognition of the cumulative effect of adopting measurement of the lease liability adjusted banks and corporations, including the Bank, in particular industries and creditworthiness IFRS 16 as an adjustment to the opening balance by any lease payments made at or before and some of the Russian officials and businessmen. of population will be observed. of retained earnings as at 1 January 2019, with the commencement date, less any lease incentives The sanctions prohibit the U.S. and EU citizens The CBR takes measures to support the banking no restatement of comparative information. received, by any initial direct costs incurred or entities operating on the territory of the U.S. system which will additionally help to meet all IFRS 16 replaces existing leases guidance, including and by an estimate of costs to be incurred and EU transacting in, providing financing for, regulatory requirements. IAS 17 “Leases”, IFRIC 4 “Determining whether by the Group in dismantling and removing or otherwise dealing in the debt instruments The consolidated financial statements reflect an Arrangement contains a Lease”, SIC-15 “Operating the underlying asset, restoring the site on which of the Group with a maturity of longer than 14 days management’s assessment of the impact Leases — Incentives” and SIC-27 “Evaluating it is located or restoring the underlying asset (for U.S. sanctions) and 30 days (for EU sanctions). of the Russian business environment the Substance of Transactions Involving the Legal to the condition required by the terms and conditions In addition, since 2017, the U.S. introduced on the operations and the financial position Form of a Lease”. of lease. Subsequently the right-of-use asset restrictions on financing of certain Russian oil projects of the Group. The future business environment may is depreciated on a straight-line basis. The right-of-use and the defense industry. differ from the management’s assessment. (i) Description and accounting for the Group’s leasing asset is depreciated from the commencement In 2018, the U.S. Congress issued a Report regarding activities date to the earlier of the end of the useful life senior political figures and oligarchs in the Russian (c) Basis of measurement The Group leases various office premises, production of the right-of-use asset or the end of the lease term. Federation and Russian parastatal entities. The report The consolidated financial statements are prepared premises, cars and other assets. Lease terms are The Group does not recognise the right-of-use asset does not impose any additional risks for the Group on the historical cost basis except for financial negotiated on an individual basis and contain a wide and the lease liability for short-term leases and for as it does not prohibit any relationships of American instruments at FVTPL and at FVOCI. range of different terms and conditions. The lease leases for which the underlying asset is of low value. and foreign figures with the figures from the Report, agreements do not impose any covenants, but leased Lease expenses are recongised on a straight-line basis assets of the figures mentioned in the Report are not (d) Functional and presentation currency assets may not be pledged under borrowings. over the term of the lease for such agreements. blocked and the U.S. sanctions are not implemented The functional currency of the Bank and the majority Until 1 January 2019, the Group classified lease against them. of its subsidiaries is the Russian ruble (the RUB) as, agreements, where it acted as a lessee, as either In addition, 26 Russian citizens and 15 Russian being the national currency of the Russian Federation, operating or finance leases. The Group recognised companies were included in the sanctions list, their it reflects the economic conditions of the majority operating lease expense on a straight-line basis assets on the U.S. territory are subject to immediate of underlying events and circumstances relevant over the term of the lease, and recognised assets blocking, US companies and their partners are to them. and liabilities only to the extent that there was prohibited from any relationships with these persons Some of the Group’s principal subsidiaries have a timing difference between actual lease payments or companies. functional currency different from the Russian ruble: and the expense recognised. In 2019, economic conditions remains stable, despite From 1 January 2019 a single, on-balance sheet lease a number of short-term shocks in commodity accounting model for lessees is introduced. Based markets. Slowing growth of the global economy Name Functional currency on this model the Group recognises a right-of-use and rising oil supply in the world market led Gazprombank (Switzerland) Ltd. Swiss franc asset representing its right to use the underlying to a decrease in the price of Urals crude oil from Bank GPB International S.A. Euro asset and a lease liability representing its obligation 70 US dollars per barrel in 2018 to 63.6 US dollars to make lease payments. Besides, the type per barrel in 2019. The average ruble exchange rate ŠKODA JS a.s. Czech crown of expenses associated with the lease agreements in 2019 (64.7 rubles for 1 US dollar) was strong due Centrex Europe Energy & Gas AG Euro has changed: in accordance with IFRS 16 the Group to the influx of non-residents’ funds into federal recognises depreciation charge for right-of-use loan bonds, the preservation of the trade surplus The summary consolidated financial statements are assets and interest expense on lease liabilities instead and a local liquidity deficit in the banking system presented in millions of RUB, unless otherwise stated. of rent expenses, evenly recognised during the term at the end of 2019. The GDP for 2019 increased of the agreement. by 1.3%. The inflation slowdown and a decrease The summary consolidated in inflationary expectations led the CBR to switch financial statements should to easing its monetary policy by lowering its key rate be read in conjunction with the consolidated financial statements in 2019 from 7.75% to 6.25%. of the Gazprombank Group from which they were derived. 124 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 125

(ii) Practical expedients applied (f) Transition to IFRS 16 The Group applied the practical expedient On adoption of IFRS 16 as at 1 January 1 January 2019 to grandfather the definition of a lease on transition. 2019 the Group recognised lease liabilities Operating lease commitment as at 31 December 2018 as disclosed in the consolidated financial statements 35,528 This means that the Group applied IFRS 16 to all in the amount of RUB 24 337 million within “Other Recognition practical exemption for: contracts entered into before 1 January 2019 liabilities” and right-of-use assets in the amount – short-term leases (1,439) and identified as leases in accordance with IAS 17 of RUB 24 103 million within “Property, plant and IFRIC 4. and equipment and right-of-use assets”. The Group – leases of low-value assets (670) Moreover, the Group has used the following practical measured the right-of-use assets at the amount – other operating lease commitments (3,051) expedients on transition: equal to the lease liability (adjusted by the amount Operating lease commitment as at 31 December 2018 as disclosed in the consolidated financial statements excluding those 30,368 • the use of a single discount rate to a portfolio of any prepaid lease payments as at 1 January 2019 for which recognition exemption is applied of leases with reasonably similar characteristics and other balance adjustments), so there is no Discounted lease liabilities recognised as at 1 January 2019 24,337 • reliance on previous assessments on whether adjustment to the retained earnings opening balance. leases are onerous in accordance with IAS 37 Financial expenses are reported as “Interest «Provisions, Contingent Liabilities and Contingent expenses” in the statement of profit or loss and other Assets» comprehensive income. Depreciation of right-of-use (g) Change in presentation of financial position as at 31 December 2018 • the accounting for operating leases with assets is reported as “Banking administrative of comparative information to conform with the changes in presentation a remaining lease term of less than 12 months expenses” and “Non-banking operating expenses” The table below shows the reclassifications in the summary consolidated financial statement as at 1 January 2019 as short-term leases in the statement of profit or loss and other made in the summary consolidated statement as at 31 December 2019. • the exclusion of initial direct costs comprehensive income. The total cash outflow for the measurement of the right-of-use asset from finance lease obligations is reported as “Lease at the date of initial application, and liabilities redeemed” in the statement of cash flows. Summary consolidated statement of financial position Summary consolidated statement of financial position • the use of hindsight in determining the lease term The weighted average discount rate applied before reclassification after reclassification Amount where the contract contains options to extend by the Group when measuring the lease liabilities or terminate the lease. as at 1 January 2019 equals to 7.7%. Intangibles Rights for audio-visual products 41,730 Intangibles Intangibles 22,934 Total intangibles 64,664

Other assets Other assets 29,659 Other assets Assets held for sale 16,986 Total other assets 46,645

In 2019, the Group changed the presentation income for the Group and are relatively liquid, since of rights for audio-visual products and presented they have a market for sale. them separately in the summary consolidated Assets held for sale are presented as separate caption statement of financial position, since, unlike other in the summary consolidated statement of financial types of intangible assets, rights for audio-visual position due to their growth in 2019. products are production assets that can generate

Signed on behalf of the Management Board:

The summary consolidated Andrey I. Akimov Alexander I. Sobol financial statements should Chairman of the Management Board Deputy Chairman be read in conjunction with of the Management Board the consolidated financial statements of the Gazprombank Group from which they were derived. 14 May 2020 Reference Information

2019 3748 2018 3823 2017 3073 2016 2653 2015 2623 Amounts owed to corporate customers, RUB billion 4 128 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 129 Branches of Bank GPB (JSC)

As of 6 April 2020

Regis- Branch Branch Regis- Branch Branch Branch name tration Date of Manager’s Manager’s Phone Branch name tration Date of Manager’s Manager’s Phone (short name) number registration title name number Address (short name) number registration title name number Address Far Eastern Branch 354/42 19.03.2009 Vice President — Dmitry V. (423) 240-45-55 109A Svetlanskaya St., West Ural Branch 354/32 09.10.2002 Vice President — Alexander N. (342) 219-00-50 77A Maxima Gorkogo St., of Bank GPB (JSC) Branch Manager Gutnikov Vladivostok, of Bank GPB (JSC) Branch Manager Zarubey Sverdlovsky District, Primorye Territory, Perm, 690091 Perm Territory, 614007 Central Black Earth Branch 354/49 26.06.2013 Vice President — Gennady N. (473) 200-81-55 11 Kirova St., of Bank GPB (JSC) Branch Manager Koptyaev Voronezh, Povolzhskiy Branch 354/37 09.03.2007 Vice President — Vladimir V. (846) 212-35-35 106A Novo-Sadovaya St., Voronezh Region, of Bank GPB (JSC) Branch Manager Agafonov bldg 1, 394018 Oktyabrsky District, Samara, Samara Region, Ural Branch 354/26 24.01.2000 Branch Manager Alexey V. (343) 355-58-00 134V Lunacharskogo St., 443068 of Bank GPB (JSC) Vazhenin Yekaterinburg, 620075 Northwestern Branch 354/13 13.12.1993 Executive Olga V. (812) 301-99-99 3 Lafonskaya St., Lit. A, of Bank GPB (JSC) Vice President — Drago- St. Petersburg, Branch of Bank GPB (JSC) 354/47 09.02.2010 Vice President — Marat F. (843) 221-73-01 32 Levo-Bulachnaya St., Branch Manager miretskaya 191124 in Kazan Branch Manager Mukhametshin Kazan, Republic of Tatarstan, North Caucasian Branch 354/24 26.12.1997 Branch Manager Alexander G. (8652) 56-67-83 429B Lenina St., 420111 of Bank GPB (JSC) Kuritsyn Stavropol, Stavropol Territory, Branch of Bank GPB (JSC) 354/38 02.08.2007 Branch Manager Olga V. (4012) 30-52-00 5 Leninsky Ave., Kaliningrad, 355029 in Kaliningrad Bolshakova Kaliningrad Region, 236039 Branch of Bank GPB (JSC) 354/48 14.07.2010 Branch Manager Oleg F. Myzgin (3462) 24-49-80 12 Svobody Blvd, Surgut, in Surgut Khanty-Mansiysk Branch of Bank GPB (JSC) 354/36 27.02.2007 Branch Manager Pavel Yu. (3842) 34-50-90 32 Sovetsky Ave., Office 7, Autonomous Area — Yugra, in Kemerovo Scherbakov Kemerovo, Tyumen Region, Kemerovo Urban District, 628417 Kemerovo Region, 650000 Branch of Bank GPB (JSC) 354/12 19.10.1993 Vice President — Dmitry N. (3822) 61-00-63 7 1905 Goda Lane, in Tomsk Branch Manager Litvinenko Tomsk, Southern Branch 354/2 03.11.1992 Branch Manager Sergey V. (861) 210-48-00 11 Dmitrievskaya Damba St., Tomsk Region, of Bank GPB (JSC) Selyutin Krasnodar, 634009 Krasnodar Territory, 350033 Mid-Russian Branch 354/3 04.02.1993 Vice President — Natalya A. (4872) 50-05-55 106 Lenina Ave., of Bank GPB (JSC) Branch Manager Antonova Tula, East Siberian Branch 354/34 25.01.2006 Vice President — Pavel G. (391) 274-58-00 10 Maerchaka St., 300026 of Bank GPB (JSC) Branch Manager Avdeev Offices 4-14, Krasnoyarsk, Branch of Bank GPB (JSC) 354/25 03.02.1999 Branch Manager Roza N. (347) 256-67-80 138 Mendeleeva St., Krasnoyarsk Territory, in Ufa Urazgildeeva Ufa, 660075 Republic of Bashkortostan, 450022 Privolzhskiy Branch 354/4 04.02.1993 Vice President — Evgeny A. (831) 422-18-11 65B Maxima Gorkogo St., of Bank GPB (JSC) Branch Manager Kogan Nizhny Novgorod, Central Branch 354/28 23.06.2000 Branch Manager Evgeny A. (495) 276-31-00 Riga Land Business Center, 603000 of Bank GPB (JSC), Guzeev bldg A, B2, 26th km of the Moscow region Baltic Road, West Siberian Branch 354/29 05.02.2001 Vice President — Namzhil N. (383) 200-10-00 2 Kavaleriyskaya St., Ilyinskoye Rural Settlement, of Bank GPB (JSC) Branch Manager Urbanaev Novosibirsk, Krasnogorsk Municipal 630105 District, Branch of Bank GPB (JSC) 354/6 04.02.1993 Branch Manager Andrey S. (3494) 93-53-81 4 26 Syezda KPSS St., Moscow Region, in Novy Urengoy Bykov Novy Urengoy, 143421 Tyumen Region, 629300 130 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 131 Representative Subsidiary Banks Offices and Credit Institutions of Bank GPB (JSC) with an Ownership in Other Countries of More Than 5%

As of 1 January 2020 As of 1 March 2020

Gazprombank pays close attention The key objectives of the Bank’s foreign Gazprombank has interests in a number Gazprombank Group Banks to business development abroad. representative offices include: of credit institutions in Russia, CIS In 2019, the regional network of Bank GPB (JSC) • representing the Bank and expanding the scope included three subsidiary banks: Currently, representative offices of its business operations in the local banking and Western Europe. Credit Ural Bank Joint Stock Company, Gazprombank of Bank GPB (JSC) are operating in Beijing, markets; (Switzerland) Ltd (Switzerland), • maintaining relationships with the local Bank GPB International S.A. (the Grand Duchy Ulaanbaatar, New Delhi and Nur-Sultan. governmental authorities and credit institutions; of Luxembourg) and two affiliated banks, i. e., • assisting in the promotion of Gazprombank brand Russian-Venezuelan JOINT-STOCK COMMERCIAL BANK and products in financial markets; EVROFINANCE MOSNARBANK (Joint-Stock Company) • supporting business development and Belorussian-Russian Belgazprombank Joint-Stock and implementing specific projects of the Bank’s Company (the Republic of Belarus). strategic customers and partners. On 28 August 2019, Gazprombank ceased to be a shareholder of JOINT-STOCK COMMERCIAL BANK EVROFINANCE MOSNARBANK (Joint-Stock Company).

Office Opening date Head of the office Location Name of the bank CEO Contacts Representative Office of Gazprombank 30.08.2006 Averkiy M. Savostianov Central International trade Center, CUB JSC Chairperson of the 17 Gagarina St., Magnitogorsk, Chelyabinsk Region, (Joint Stock Company) in Beijing Suite No. 1205 in Tower C, No 6 A Jianguomenwai Avenue, Management Board 455044, Russia (China) Chaoyang District, Beijing, China 100022 Svetlana V. Yeremina Phone: +7 (3519) 248-910 (+8610) 65-63-05-16 Fax: +7 (3519) 248-930 Representative Office of Gazprombank 14.02.2008 Valery A. Kislov 6, Prospect Mira, Ulaanbaatar, Mongolia, E-mail: [email protected] (Joint Stock Company) in Ulaanbaatar 14250 Gazprombank (Switzerland) Ltd Chairman of the Zollikerstrasse 183, CH-8032 Zurich, Switzerland (Mongolia) (+976) 99-10-99-02 Management Board +41-44-386-86-86 Representative Office of Gazprombank 25.05.2010 Sergey F. Mitreykin 10/48 Malcha Marg, Diplomatic Enclave, Chanakyapuri, Roman R. Abdulin E-mail: [email protected] (Joint Stock Company) in New Delhi New Delhi — 110021, Delhi, India Bank GPB International S.A. Chairman of the 15 rue Bender, L-1229, Luxembourg (India) (+9111) 24-10-86-48 Management Board +352-26-29-751 Representative Office of Gazprombank 28.08.2014 Askar S. Aspandiyarov 15 A, block A, Business Center “Q”, 6th floor, Dmitry N. Derkach E-mail: [email protected] (Joint Stock Company) in Nur-Sultan Kabanbay Batyr avenue, “Esil” district, Nur-Sultan, Belgazprombank OJSC Chairman of the 60/2 Pritytskogo St., Minsk, 220121, Republic of Belarus (Republic of Kazakhstan) The Republic of Kazakhstan, 010000 Management Board Phone: +375 17 218-36-90 (+7701) 514-04-40 Viktor D. Babariko Fax: +375 17 369-45-25 E-mail: [email protected] 132 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 133 Bank GPB (JSC) Licenses

Credit Ural Bank Bank GPB International S.A. License type (licensed activities): General Banking License type (licensed activities): Professional Joint Stock Company Bank GPB International S.A. focuses on providing License securities market player license for depository Credit Ural Bank Joint Stock Company services to corporate customers and individuals License (permit) or activity-specific permitting activities is a universal credit institution with many years and developing financial and investment document number: 354 License (permit) or activity-specific permitting of experience, providing a full range of banking banking services of the Gazprombank Group License (authorization, permit) date of issue: document number: 177-04464-000100 services in Magnitogorsk, as well as payment in the EU countries and in global financial 29.12.2014 License (authorization, permit) date of issue: services to a wide range of customers based markets. In February 2019, the authorized capital Issuing authority: The Bank of Russia 10.01.2001 on digital banking platforms. The reliability of Bank GPB International S.A. was increased Validity: Without limitation Issuing authority: Federal Securities Commission and sterling reputation of CUB JSC was confirmed by EUR 50 million as a development measure. of Russia (The Bank of Russia) by the Expert RA rating agency at ruA+ — The bank acts, and with success, as a platform License type (licensed activities): Professional Validity: Without limitation “moderately high level of creditworthiness”, with that offers structured products to customers securities market player license for securities a stable rating outlook. Thanks to the high quality of the private banking business of the Gazprombank management activities License type (licensed activities): License of the bank’s mortgage loan portfolio, it holds first Group, and effectively continues to expand its loan License (permit) or activity-specific permitting for banking operations (with precious metals) place in the TOP 20 Russian banks with the lowest portfolio and promote structured trade finance document number: 177-04329-001000 License (permit) or activity-specific permitting share of overdue debt in the mortgage loan business in Europe. In December 2019, the bank’s License (authorization, permit) date of issue: document number: 354 portfolio, according to a survey by banki.ru. In line BB+ rating with stable outlook was confirmed 27.12.2000 License (authorization, permit) date of issue: with its stated policy of digital development, by S&P. Issuing authority: Federal Securities Commission 29.12.2014 CUB (JSC) has partnered with promising fintech of Russia (The Bank of Russia) Issuing authority: The Bank of Russia companies with the aim of providing small Belgazprombank OJSC Validity: Without limitation Validity: Without limitation businesses with banking service via remote Belgazprombank OJSC is a universal bank channels. with a focus on servicing the subsidiaries License type (licensed activities): Activity License type (licensed activities): General license/ of Gazprom, the fuel and energy complex of specialized depository of investment funds, mutual export (other raw silver in bars with a purity value Gazprombank (Switzerland) Ltd and SMEs in the Republic of Belarus. In June 2019, investment funds and private pension funds of no less than 999 parts of silver per 1000 parts Gazprombank (Switzerland) Ltd assists Fitch Ratings confirmed Belgazprombank’s long- License (permit) or activity-specific permitting of alloy) in the expansion of the Gazprombank Group term issuer default rating (IDR) at B with a stable document number: 22-000-0-00021 License (permit) or activity-specific permitting presence in global financial markets, and provides outlook. The sustainability rating of “b”, which License (authorization, permit) date of issue: document number: 092RU20002002119 financial and banking support to the commercial was also confirmed, reflects Belgazprombank’s 13.12.2000 License (authorization, permit) date of issue: and investment business of its customers. In 2019, stable financial performance indicators, its stable Issuing authority: Federal Securities Commission 11.03.2020 the Bank celebrated its 10th anniversary of successful and adequate level of capital, and higher credit of Russia (The Bank of Russia) Issuing authority: Ministry of Industry and Trade operation within the Gazprombank Group, quality level compared to competitors. Ranking 3rd Validity: Without limitation of the Russian Federation continuing to develop its traditional business in the banking system in terms of charter Validity: From 11.03.2020 to 09.03.2021 lines (commodity, trade and export finance) capital and regulatory capital, Belgazprombank License type (licensed activities): Professional while expanding into new niches (crypto assets is the largest non-state bank in the Republic securities market player license for dealer activities License type (licensed activities): Single-use operations) and new regions (a representative of Belarus. License (permit) or activity-specific permitting license/export (raw or powdered palladium in bars office was opened in Dubai, UAE). Gazprombank document number: 177-04280-010000 with a purity value of no less than 999.5 parts (Switzerland) Ltd has a buffer in terms of its capital License (authorization, permit) date of issue: of palladium per 1000 parts of alloy) adequacy ratio and demonstrates stable profitability 27.12.2000 License (permit) or activity-specific permitting and good future development prospects. Issuing authority: Federal Securities Commission document number: 093RU19002011758 In August 2019, Fitch Ratings upgraded the Bank’s of Russia (The Bank of Russia) License (authorization, permit) date of issue: rating to BBB- (stable). The S&P rating was confirmed Validity: Without limitation 26.12.2019 at BB+ (stable). Issuing authority: Ministry of Industry and Trade License type (licensed activities): Professional of the Russian Federation securities market player license for brokerage Validity: From 26.12.2019 to 25.12.2020 activities License (permit) or activity-specific permitting document number: 177-04229-100000 License (authorization, permit) date of issue: 27.12.2000 Issuing authority: Federal Securities Commission of Russia (The Bank of Russia) Validity: Without limitation 134 GAZPROMBANK ANNUAL REPORT 2019 TABLE OF CONTENTS CHAPTER 1 2 3 4 135

License type (licensed activities): General license License type (licensed activities): Technical License type (licensed activities): Notice for export (of other raw gold not used for minting protection of confidential information of registration with the tax authority as a major coins in bars with a purity value of no less than License (permit) or activity-specific permitting taxpayer 995 parts of gold per 1000 parts of alloy) document number: 0860 License (permit) or activity-specific permitting License (permit) or activity-specific permitting License (authorization, permit) date of issue: document number: letter No. 245927939 document number: 092RU19002010991 03.08.2009 License (authorization, permit) date of issue: Date License (authorization, permit) date of issue: Issuing authority: Federal Service for Technical of the letter: 10.11.2015. Registered on: 17.11.2006. 11.12.2019 and Export Control Issuing authority: Interdistrict Inspectorate Issuing authority: Ministry of Industry and Trade Validity: Without limitation of the Federal Tax Service for Major Taxpayers No. 9. of the Russian Federation Validity: Without limitation Validity: From 11.12.2019 to 10.12.2020 License type (licensed activities): Certificate of state registration of a credit institution (with a note License type (licensed activities): License of Moscow Main Territorial Directorate of the Bank License type (licensed activities): Certificate authorizing the use of information constituting state of Russia regarding change of form of incorporation of inclusion of the Bank in the Register of the Deposit secrets from CJSC to OJSC as of 27 September 2007) Insurance System Member Banks License (permit) or activity-specific permitting (with a note of the Bank of Russia regarding License (permit) or activity-specific permitting document number: 6034 change of form of incorporation from OJSC to JSC document number: 629 License (authorization, permit) date of issue: as of 30 December 2014) License (authorization, permit) date of issue: 16.05.2018 License (permit) or activity-specific permitting 10.02.2005 Issuing authority: Center for Licensing, Certification document number: 354 Issuing authority: State Corporation Deposit and Protection of State Secrets of the Federal Security License (authorization, permit) date of issue: Insurance Agency Service of Russia 13.11.2001 Validity: Without limitation Validity: Until 22.11.2022 Issuing authority: The Bank of Russia Validity: Without limitation License type (licensed activities): Certificate License type (licensed activities): License of registration of a member of the National Securities of the Center for Licensing, Certification Market Association and Protection of State Secrets of the Federal Security License type (licensed activities): Certificate License (permit) or activity-specific permitting Service of Russia authorizing the development, of registration of a Russian organization with the tax document number: 045 manufacture and distribution of cryptographic authority at its registered address License (authorization, permit) date of issue: equipment, information and telecommunications License (permit) or activity-specific permitting 28.02.2001 systems protected with the use of cryptographic document number: Without number Issuing authority: The National Securities Market equipment, performance of work and provision License (authorization, permit) date of issue: Association of services in the field of data encryption, 06.01.2017 Validity: Without limitation maintenance of cryptographic equipment, Issuing authority: Inspectorate of the Federal Tax information and telecommunications systems Service No. 28 in the city of Moscow License type (licensed activities): Certificate protected with the use of cryptographic equipment Validity: Without limitation of registration of a member of the Self-regulatory (except when such maintenance of cryptographic Organization National Finance Association with equipment, information and telecommunications License type (licensed activities): Certificate respect to professional depository activities systems protected with the use of cryptographic of entering information about a legal entity, License (permit) or activity-specific permitting equipment is performed for meeting own needs incorporated prior to 1 July 2002 into the Unified document number: 11 of the legal entity or an individual entrepreneur). State Register of Legal Entities License (authorization, permit) date of issue: License (permit) or activity-specific permitting License (permit) or activity-specific permitting 13.04.2020 document number: 17076 Н document number: 77 № 004890355 Issuing authority: Self-regulatory Organization License (authorization, permit) date of issue: License (authorization, permit) date of issue: National Finance Association 05.02.2019 28.08.2002 Validity: Without limitation Issuing authority: Center for Licensing, Certification Issuing authority: Administration of the Ministry and Protection of State Secrets of the Federal Security of the Russian Federation for Taxes and Levies Service of Russia for the city of Moscow Validity: Without limitation Validity: Without limitation 136 GAZPROMBANK ANNUAL REPORT 2019 Contact Information and Bank Details

Full name Gazprombank (Joint Stock Company) Abbreviated name Bank GPB (JSC) Start of business operations 31 July 1990 Address of management bodies 16 Nametkina St., bldg 1, 117420, Moscow Place of business 63 Novocheremushkinskaya St., 117418, Moscow Single Help Desk +7 (495) 913-74-74 Fax +7 (495) 913-73-19 Telex 412027 GAZ RU Website www.gazprombank.ru E-mail [email protected] SWIFT code GAZPRUMM Reuters Dealing code GZPM Correspondent account 30101810200000000823 with the Main Branch of the Central Bank of the Russian Federation for the Central Federal District, Moscow INN 7744001497 KPP 997950001 BIC 044525823 OKPO 09807684 OKVED 64.19 OGRN 1027700167110 dated 28 August 2002