FREEDOM TO ACHIEVE MORE ANNUAL REPORT CONTENTS 3 Message from Management 62 Bank Development Results 4 Message from Ruben Vardanian 63 Key Growth Indicators 6 Message from Artak Hanesyan 67 Assets 8 Major Achievements in 2013 70 Liabilities 12 About Ameria Group 73 Development of Management Systems, 13 Ameria Group of Companies Technologies and Infrastructure 16 Historic Milestones of Development 75 Clients and New Products 20 Global Partners 76 Corporate Banking 22 Philosophy and Values 79 Business Lending 23 Mission and Philosophy 82 Finance Lease 25 Our Values 83 Factoring 25 Strategy 85 Trade Finance 26 Corporate Social Responsibility 86 Retail Banking 28 Corporate Governance and Risk Management 89 Retail Lending 29 Ameriabank Shareholders 94 Payment Cards 29 Ameriabank Management 97 Salary Projects 32 Core Management Principles 97 Money Transfers 33 Organizational Chart of the Bank 98 Investment Banking 35 Corporate Governance and Risk Management and Trading Operations 37 HR Management 99 Financial Institutions 39 Client Relationship Management 99 Corporate Finance 40 Risk Management 101 Capital Markets 44 External Environment 103 Mergers and Acquisitions 45 Macroeconomic Prerequisites 105 Trading 51 Legal Framework, Government Regulations, 106 Ameriabank Strategic Goals and Plans for 2014 Financial Infrastructure 110 Financial Statements 54 Banking Sector of Armenia and Independent Auditors Report 58 Position of Ameriabank in the Banking Sector of Armenia 118 Useful Information about the Bank 2 ANNUAL REPORT 2013 обращение руководства MESSAGE FROM MANAGEMENT Message from Ruben Vardanian Dear Ladies and Gentlemen I am happy to announce that due to trust for the 4th consecutive year has undertaken the Board by engaging independent board members and loyalty of our clients, proficiency of our organization of Christmas charity auction aimed and following corporate governance codes and management team and Board members, as well at medical treatment of 17 kids with various policies. In this regard, Ameriabank board has as benevolence of our shareholders, Ameriabank oncological and other life-threatening diseases. As welcomed Robert von Rekowsky as independent again had another year of success and quality a result of the auction we raised AMD 30,573,000 board member acquiring a highly valuable growth in 2013. (USD 75,600), whereas this amount was doubled and representative experience in emerging The year was rich in a number of tangible by Ameria Group to reach AMD 61,146,000 (USD markets portfolio management from Fidelity qualitative and quantitative achievements. 151,200). Investments for over 23 years now. In addition, We have reached new benchmarks of market Throughout 2013, we were focused on increasing started from 2013 year-end Ameria Group positioning by becoming 1st bank out of 21 efficiency and we will continue to do so in 2014. CEO and one of the Group’s founders Andrew operating banks by assets, liabilities and customer One of main strategic goals for 2014 will be our Mkrtchyan continued to serve as Chairman deposits, 2nd bank by loan portfolio and 3rd bank focus on retail and SME lending growth through of the Board by bringing his impeccable by net profit. enlarged branch network, new products offerings, management proficiency to the Board. Ameriabank was named The Best Bank of the distribution channels and new IT systems. Heading into 2014, we will make our best efforts Year 2013 in Armenia by The Banker Magazine, As an absolute champion in the market by that our core citizens —our shareholders, our Financial Times for the second time. Global Finance assets and liabilities, we now undertake a strong clients, and our people — remain pleased and and Commerzbank recognized Ameriabank as the challenge of enhancing all our capacities so to loyal to Ameriabank. Finally, I would like to Best Trade Finance Bank in 2013. become an absolute champion by net profit, RoE take the honor to express my appreciation to We were honored to announce the acquisition and efficiency among peers. We will continue to our professional board and management team, of Cascade Investments, one of the oldest asset be focused on growth opportunities ahead and as well as to the whole team of committed and management companies in the Republic of by doing so we expect to create substantially innovatively like-minded people. Their strong Armenia by Ameria Asset Management. This more value for our shareholders. We may also sense of initiative, their solidarity and cohesion remarkable transaction in the investment consider further non-organic growth to reach our has given the Bank the ability to face any management and the advisory services sector of ambitious long-term goals. challenge rising and create opportunities for the Armenia is yet another vivid example of Ameria Benchmarking best international practices, further growth of Ameriabank. Group’s commitment towards establishing one of Ameriabank is firmly focused on constant the leading and most dynamic financial services improvement of the Bank corporate governance Sincerely, groups in the Caucasus region. principles and quality. The latter also include Ruben Vardanian, Remaining committed to our socially responsible rotation of the Chairman of the Board once in Chairman of the and sustainable corporate values, Ameria Group five to seven years, as well as enriching the Management Board 4 ANNUAL REPORT 2013 Ruben Vardanian, Member of the Board of Directors I started reflecting on freedom and its meaning for the first time in 1987 after reading George Orwell’s “1984”. For me, freedom comprises two components: inner freedom and outer freedom. The inner freedom is very much associated with withdrawal from external limitations and stereo- types. This is the type of freedom the Buddhist monks aspire for. Just think, the state of nirvana means liberation from the worldly hindrances. The outer freedom means a person’s ability to make a free choice. Actually, freedom is a great deal of luxury. In real life, whenever you make a choice, you have to consider responsibility you have to your family, work, friends… This is why I don’t believe in ultimate freedom. But I do think that you should always strive to be yourself rather than adapt to the influence and opinion of the other people. MESSAGE FROM MANAGEMENT Message from Artak Hanesyan Dear Shareholders, Clients and Partners I am glad to present to you our achievements as we also focused our efforts on boosting of our certificate issued by TÜV Rheinland Germany well as the challenges Ameriabank experienced retail banking unit. starting from 2009. In 2013 we introduced a during the year 2013. Our total attracted funds from International number of innovative services adding value to Financial Institutions (IFIs) and non-resident our clients such as “Ameria Partner” which is an Highlights of 2013 partner banks have reached USD 145 million unprecedentedly exclusive benefit package for The year 2013 was remarkable by the fulfillment and indicate a long-term solid partnership and our current and potential HNWI clients, partners, of our strategic goals and key performance trust between our Bank and IFIs. It is worth including Visa Infinite card and a huge number of indicators helping us to retain our solid growth mentioning that this is an unprecedented various benefits; we also introduced E-commerce, rates, position ourselves as an absolute champion amount issued to a single bank operating in new cards, SME and energy efficiency lending by assets, liabilities and customers deposits and Armenia. In 2013, we have signed several products, Ameria Deposit, etc. rank 2nd by loan portfolio. notable loan facility agreements including According to our strategic goals, we were one with European Bank for Reconstruction Appreciation committed to developing our retail banking and and Development (EBRD) for USD 12 million, The cornerstone of our success is surely our SME lending. For that purpose we developed our Development Bank of Austria OeEB for USD 15 team. As we look forward to our longer-term online and offline infrastructures, reinforced our million and Development Financial Institution strategies, we have a comfort and confidence that team of professionals and improved our business from France Proparco for USD 15 million. our talented managers and Board of Directors processes. In 2013, the Bank secured annual net growth rates will firmly continue generating value for all Ameriabank launched a new Sayat-Nova branch of 28.6% by assets, 20.5% by lending (including our stakeholders. We are committed to working in the center of Yerevan which is a top-notch leasing and factoring), 32.7% by liabilities and with the same sense of urgency, loyalty and quality branch aimed also at servicing our 34.6% by clients’ deposits, significantly surpassing determination in order to reach our annual premium class clients. We have also reopened our the market average annual growth rates which strategic plans for the coming year. Stepanakert branch in a newly built building that were 11% for assets, 10% for lending, 13% for I am much honored to extend my word of will provide full-scale services package for our liabilities and 17% for clients’ deposits. appreciation to our team that consists of true Artsakh clients. I would also like to highlight the main financial professionals and consistently self-developing 2013 was yet another year when Ameriabank indicators of our Bank in the local market. We individuals. Yet again, let me also deliver my was awarded with several honorable awards, ranked the 1st by assets, liabilities and clients’ gratitude to all our clients, partners, suppliers and such as 2013 Best Bank in Armenia by The deposits, 2nd by loan portfolio and 3rd by net profit. all other stakeholders for their trust and loyalty Banker/FT, Commerzbank and Global Finance. leading to our Bank’s consistent improvement New Products & Innovations and leadership in the market. We are thankful Financials of the Bank We in Ameriabank always focus on using the for the continuing support, encouragement and During the reporting year we continued most innovative and cutting-edge technologies goodwill of all our shareholders and the Board.