FIRST INVESTMENT BANK 2018 CONFIDENTIAL Table of contents Section 1 Macro environment 3 Section 2 Banking system overview 10 Section 3 Fibank profile 15 Section 4 2018 Q3 Results and profitability 27 Section 5 Management and corporate governance 36 Section 6 Capitalization & leverage 39 Section 7 Funding and liquidity 44 Section 8 Appendix 47 CONFIDENTIAL 2 SECTION 1 MACRO ENVIRONMENT 3 Country profile • Full name: Republic of Bulgaria • Memberships: European Union (since 2007), NATO (since 2004) AUSTRIA • Population: 7.2 M HUNGARY • CapitalSWITZ.: Sofia • Area: 110,994 sq km (42,855 sq miles) • Official language: Bulgarian SLOVENIA FRANCE • Traditional religion: Orthodox ChristianityCROATIA ROMANIA • Monetary unit: Bulgarian Lev (plural: Levs, code: BGN) COMMONWEALTH OF • A currency board arrangement was establishedBOSNIA- INDEPENDENT STATES in 1997 through the Bulgarian National Bank HERZEGOVINAAct. • Fixed Exchange rate: EUR 1 = BGN 1.95583 SERBIA (BGN 1 EUR 0.51) MONACO• Main tax rates: BULGARIA • corporate tax rate of 10%; MONT. KOS. BLACK • personal income tax rateITALYof 10%; Sofia SEA • Value Added Tax Act (VAT) rate of 20%; MACE- • Main exports: Ferrous and non-ferrous ANDORRA DONIA metals, petrol products, foods and drinks, textiles, machines and equipment • Payment Systems: RINGS, TARGET2 BNB, ALB. Madrid BISERA, BISERA7EUR, BORICA, SEPA, ESROT, CENTRAL DEPOSITARY GREECE TURKEY Balearic Lisbon SPAIN Source: National Statistical Institute, Bulgarian National Bank, Ministry of Finance Islands CONFIDENTIAL 4 PORTUGAL Algiers Tunis MALTA Gibraltar (U.K.) Valletta Nicosia SYRIA Crete CYPRUS Mediterranean Sea Beirut Rabat Damascus LEBANON IRAQ TUNISIA ISRAEL MOROCCO Tripoli Tel Aviv-Yafo Amman JORDAN Cairo ALGERIA SAUDI ARABIA LIBYA EGYPT Red Sea Bulgarian economy had strong results over past few years with high growth and low unemployment INFLATION & KEY DRIVERS OF THE BULGARIAN GDP GROWTH UNEMPLOYMENT BULGARIAN ECONOMY ABOVE EU AVERAGE DECREASED SINCE 2012 GDP real growth HICP & Unemployment • In September 2018, the country's (%, 2012-2017E) (%, 2012-2017E) economy reported a real annual growth rate of 3% for the period (2017: 3.6%), influenced by the improving external environment on a global scale, as well as the growing economic activity in the countries of the European Union. The main driver of the economy was private consumption growing by 6.9% for Q3 (2017: 4.8%), due to higher internal demand and positive dynamics in the labor market; Unemployment • The unemployment rate declined to 5% at the end of September 2018, driven by employment in trade, agriculture, hospitality industry and education; • The current account remained positive, at the amount of BGN 2.1 B, or 4% of GDP in Q3/2018. Source: International Monetary Fund; European Commission; Bulgarian Ministry of Finance; National Statistical Institute; Bulgarian National Bank CONFIDENTIAL 5 Going forward, the economy is expected to continue strong growth anywhere between ~3-4% p.a. GDP GROWTH EXPECTED UNEMPLOYMENT EXPECTED TO CONTINUE AT TO FURTHER DECREASE & KEY DRIVERS OF THE ATTRACTIVE LEVELS INFLATION TO INCREASE BULGARIAN ECONOMY GDP real growth HICP & Unemployment (%, 2016-2021F) (%, 2012-2016) • Future GDP growth is hovering around 3-4% being driven by strong net exports and private consumption. The positive outlook is also supported by expected acceleration of EU funds absorption • Unemployment rate is expected to continue the decline from previous years, but at a lower pace. The trend is driven by the recovery in domestic demand • The inflation rate is expected to gradually increase to 1.8% in 2021 due to strong domestic demand, higher prices for utilities and recovering energy prices Source: International Monetary Fund; European Commission; Economist Intelligence Unit; Bulgarian Ministry of Finance CONFIDENTIAL 6 Bulgarian Economic Overview Macroeconomic indicators 2013 2014 2015 2016 2017 Q3/2018 EUR M 42, 010 42, 761 45, 285 48, 127 50, 291 29,001 GDP Growth, % 0.9 1.3 3.6 3.9 3.6 3 EUR M 535.6 530.6 (15.4) 1,244.0 3,367.9 2,116.1 Current account % of GDP 1.3 0.1 0.0 2.3 4.5 4,0 EUR M 1 384 1 161 2 476 1 080 950 826 FDI % of GDP 3.3 2.7 5.5 2.2 1.9 1.6 Budget deficit/ surplus % of GDP (0.4) (5.5) (1.6) 0.2 0.9 1.1 Growth of Real GDP, Consumption and Investments Bulgaria Current Ratings Date Outlook Rating 26 May 2017 Stable Baa2 1 June 2018 Positive BBB- 1 June 2018 Stable BBB Source: Bulgarian National Bank, National Statistical Institute, Ministry of Finance CONFIDENTIAL 7 Macro environment: Key indicators historic development Indicators 2013 2014 2015 2016 2017 Q3/2018 Gross domestic product (BGN million) 82,166 83,634 88,571 94,130 98,361 77,293 Gross domestic product, real growth (%) 0.9 1.3 3.6 3.9 3.6 3.0 - Consumption, real growth (%) (1.9) 2.2 3.8 3.3 4.5 6.9 - Gross fixed capital formation, real growth (6.6) 3.8 6.2 (%) 0.3 3.4 2.7 Export (% of GDP) 50.5 49.2 48.4 48.0 53.4 37.4 Inflation at period-end (%) (1.6) (0.9) (0.4) 0.1 2.8 2.8 Average annual inflation (%) 0.9 (1.4) (0.1) (0.8) 2.1 2.8 Unemployment (%) 11.8 10.7 10.0 8.0 7.1 5.0 Current account (% of GDP) 1.3 1.2 0.0 2.6 6.7 4.0 Trade balance (% of GDP) (7.0) (6.5) (5.8) (2.0) (1.5) (3.8) Foreign exchange reserves of BNB (EUR 23,899 23,662 24,539.9 million) 14,426 16,534 20,285 Foreign direct investments (% of GDP) 3.3 2.7 5.5 2.2 1.9 1.6 Gross external debt (% of GDP) 87.9 92.0 74.0 71.1 66.2 63.9 Public debt (% of GDP) 9.7 15.3 13.2 15.0 12.5 11.6 Consolidated budget balance (% of GDP) (1.8) (3.7) (2.8) 1.6 0.8 1,0 Exchange rate of USD (BGN for USD 1) 1.42 1.61 1.79 1.86 1.63 1.69 Source: National Statistical Institute, Bulgarian National Bank, Ministry of Finance CONFIDENTIAL 8 Mid-term macro forecast MACRO ASSUMPTIONS FAVOURABLE MACRO ENVIRONMENT 2017-2019F IN THE MID TERM (2017-2020F) Spring forecast ▪ Positive assumptions of the economic development during 2018, Ministry of 2017 2018F 2019F 2020F Finance the period 2018-2020; ▪ Stable growth in GDP to slow down in 2018 & then to GDP real growth, % 3.6 3.4 3.9 3.9 gradually increase exceeding 3% y/o/y; - consumption 4.3 4.7 4.3 4.0 ▪ The consumption will accelerate its growth up to 4.0% y/o/y until 2020; - investment 3.4 4.3 4.9 5.9 ▪ The growth in exports will reach 6.0% y/o/y in 2020; - exports 6.1 5.9 5.9 6.0 ▪ FDI are expected to remain stable around 2.2% of GDP; - imports 6.5 7.1 6.8 6.9 ▪ Full production capacity in the business; Unemployment, % 6.5 6.2 5.9 5.6 ▪ Additional increase in the share of goods with a high value added; Average HICP, % 1.1 1.4 1.7 1.8 ▪ Recovery of the labour market; Current account, % 4.8 4.4 4.2 4.1 of GDP ▪ Reduction in unemployment rate down to 5.6% in 2020; Trade balance, % of ▪ Strong fiscal position; -2.1 -2.4 -2.8 -3.0 GDP ▪ Increased activity on the real estate market of residential FDI, % of GDP 2.1 2.1 2.1 2.2 and office space; ▪ Augmentation of public investments; M3 aggregate 6.3 6.5 6.6 6.8 ▪ Acceleration in the absorption of EU funds; Loans to corporates 3.8 5.5 6.9 6.9 ▪ Expected completion of important infrastructure projects. Loans to individuals 6.3 5.7 5.8 6.1 CONFIDENTIAL 9 SECTION 2 BANKING SECTOR OVERVIEW 10 Sector prospects: gradual increase in loan demand, on- going consolidation & new upward interest rate cycle. BNB FORECAST 2017-18 TOTAL TOTAL NET Annual rate of change 2017 2018f LOANS DEPOSITS PROFIT Claims on non-government sector 3.0% 3.6% Deposits, Net profit, Loans, - claims on non-financial corporations 2.9% 3.7% BGNb BGNb BGNb -7% +5.5% +5.3% +3,9% - claims on households 3.0% 3.5% +3.5% +7.4% 1.3 1.2 Deposits of the non-government sector 6.4% 7.0% 56 78 1.2 54 74 52 69 ▪ In the 2017–2018 period funds attracted from the non- government sector in the banking system are expected to grow further, though at lower than the average 2016 rates, driven by the projected acceleration of private consumption and, correspondingly, by a slight decrease in the savings rate, as well as by the expectations of comparatively strong demand for currency in circulation. The expectations of retaining deposit rates at the attained low levels will also contribute to the foreseen trends regarding funds attracted from corporations and households in the banking system. ▪ The recovery of private consumption and investment amid relatively low lending rates will be a factor stimulating demand for loans from the non-government sector. Progressively improving economic activity is also expected to be a factor behind banks’ increasing lending risk appetite. The expectations of gradually accelerating credit growth correspond to the assumption of retaining Net profit positive trends in new loans to the private sector which have occurred since the second quarter of 2016. Source: BNB Economic Review 4/2017 CONFIDENTIAL 11 Current Status of the Bank System Banking Sector as at 30 September 2018 у/oy 2013 2014 2015 2016 2017 Q3/18 Bank system assets, BGN M 85 747 85 135 87 524 92 095 97 807 103 191 Growth of assets in the bank system,% 4.0 (0.7) 2.8 5.2 6.2 8.5 Bank system profit, BGN M 584.9 746.3 898.4 1 262.3 1 174.0 1 220 Profit growth, %, y/oy 3.2 27.6 20.4 40.5 (7.0) 39.9 Bank system deposits, BGN M 62 230 63 710 69 276 74 129 78 405 83 236 Growth of deposits, % 8.7 2.4 8.7 7.0 5.8 8.6 Bank system loans, BGN M 57 376 54 158 52 256 52 442 53 553 57 201 Growth of loans, % 0.9 (5.6) (3.5) (1.8) 2.1 6.3 Capital adequacy, % 16.85 21.95 22.18 22.15 22.08 20.82* Liquidity, % 27.1 30.12 36.71 38.24 38.97 38.97 In the period June 2018 – September 2018, the dynamics of processes in the banking system was impacted by the increase in assets, deposits and loans.