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June 200 8. VAB Bank. Overview. Short name VAB Bank (formerly known as VABank) Established 2nd July 1992, Kyiv Member of VAB Group Auditor Ernst &Young Ratings Moody’s Local Currency Deposits: B2 Foreign Currency Deposits: B2 Outlook Stable Fitch Foreign Currency:

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June 200 8

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June 200 8

June 2008


Vab bank overview

VAB Bank. Overview

  • Short name VAB Bank (formerly known as VABank)

  • Established2nd July 1992, Kyiv

  • Member ofVAB Group

  • AuditorErnst&Young

  • Ratings

    • Moody’sLocal Currency Deposits: B2

      Foreign Currency Deposits: B2

      Outlook Stable

    • Fitch Foreign Currency:

      Long-Term Issuer Default Rating: B–

      Short-Term Rating: B

      Outlook Stable


Shareholders

Kardan N.V.

Kardan Financial Services B.V.

TBIHFinancial Services Group N.V.

Shareholders

  • 50/50 strategic partnership between international institutional investor and local business

  • Kardan N.V. (part of Kardan Group) is an international investment company based in the Netherlands with total assets of US$6.65 bn as of 2007YE and listing on Euronext Amsterdam and Tel-Aviv Stock Exchange

  • In December 2007 Israel Discount Bank purchased 11% of Kardan Financial Services B.V. It is envisaged that Discount Bank will provide KFS with over USD 300 million of credit facilities.

  • TBIF Financial Services is a subsidiary of Kardan N.V. focusing on retail and SME banking, consumer finance, leasing, mortgages and asset management.

  • Vienna Insurance Group (Wiener Stadtische) is the #1 insurer in Austria and #1foreign insurer in the CEE region as of YE2007

    Currently operating in 20 countries, incl. in Ukraine where it is a partner in VAB insurance and pension business through TBIH Financial Services Group N.V.

  • Mr. Sergey Maksimov is a local entrepreneur and the main shareholder of the Bank since 1995 with excellent local market knowledge and proven track record

60%

11%

80%

40%

90.4%

MAKSIMOV FAMILY

48,8%

48,8%


Vab group

VAB Group

  • VAB Express.Provision of consumer loans (est. 2006)

  • VAB Leasing.Provision of leasing services (est. 2005)

  • VAB Pension.Administration of private pension funds (est. 2004)

  • VAB Insurance.Provision of insurance services (est.2002)

  • VAB Life.Provision of life insurance services (est. 2004)

  • VAB Re.Provision of reinsurance services to insurance companies (est. 2004)

  • VAB Asset Management.Provision of asset management services (est. 2006)

  • VAB Capital.Professional activities in the capital market, including brokerage, dealing, underwriting and portfolio management services (est. 2006)


Vab bank strategic goals

VAB Bank. Strategic Goals

  • To develop VAB as a full-service bank with strong franchise in retail and SME

  • To have strong distribution:

    • to strengthen front office (sales)

    • to grow the network to 250 branches and outlets by YE2010

    • to diversify sales channels

  • To continue to develop both the Bank's human resources and information technology systems

Key Financial Targets

P - planned


Distribution network

Branches and ATMs

| Number|

Sales Points

Distribution Network

  • Network coverage in all regional centers of Ukraine

  • Rebranding and new sales orientated concept introduced in 2006 ensuring competitive benefits for VAB Bank

    • Facilitates cross-selling

    • Cost and capital effectiveness

    • Higher sales per square meter

2000

1191


Assets and capital dynamics

Assets, YE

Total Capital, YE

| in US$ millions |

| in US$ millions |

Growth Dynamics

Growth Dynamics

YoY

YoY

YoY

YoY

YoY

YoY

+58%

+61%

+40%

+41%

+51%

+66%

Assets and Capital Dynamics

  • 2007 capital growth was fueled by shareholders’ injection of almost US$20m and US$20m subordinated loan from FMO (The Netherlands)

  • Basel Total Capital Adequacy Ratio stood at 15%as of 31 Dec 2007

  • Registration of additional US$50m to the shareholders’ equity planned by the end of 1H2008

  • The shareholders are committed to maintain CAR at the level of minimum 12% and to participate in increases of capital up to US$300m by YE2009

P - planned


June 200 8

Loan Portfolio, YE

Portfolio by Industries

Breakdown by Customer Segments

| in US$ millions |

| YE 2007|

| YE 2007|

Growth Dynamics

Total Loan Portfolio

Total Loan Portfolio

YoY

YoY

YoY

+59%

+111%

+77%

Loan Portfolio

  • Small and medium enterprises dominate in the loan portfolio and account for 60% of the total loans

  • VAB Bank’s share in the lending market stood at 1.2% as of YE2007

  • Share of loans to individuals grew from 20% as of YE2006 to 27% as of YE2007

  • Lending policy: conservative risk assessment, but fast decision making

SME

60%

P – planned


Loan portfolio

Asset Quality, YE

Share of Top 10 Borrowers

Breakdown of Overdue Loans

| in US$ million |

|percent|

|percent|

Overdue Loans

Concentration

Loan Loss Reserves vs Impaired Loans

Loan Portfolio

  • High quality of loan portfolio: share of impaired loans remains modest at 1.7% as of YE2007

  • Impaired loans are covered by loan loss reserves in the amount of USD 17.9 million

  • Corporate loans are 100% collateralized by property, equipment, raw materials, semi-finished or finished products, contractual rights, securities, deposit accounts or precious metals

  • Continuously decreasing concentration


Loan portfolio1

Loans to individuals, YE

| in US$ millions |

Portfolio by Products

Corporate Loans, YE

|YE 2007|

| in US$ millions |

Loans Growth Rates vs Market in 2007

| percent|

Private Customers

Private Customers

Corporate Customers

Private Customers

YoY

YoY

YoY

YoY

YoY

YoY

+100%

+61%

+44%

+146%

+257%

+92%

Loan Portfolio

P – planned


Funding

Funding Composition

Customer Deposit Portfolio

Maturity Composition

| in US$ millions|

| percent|

| percent|

Funding

Total Funding

2008 Non-Deposit Funding

YoY

YoY

YoY

+40%

+50%

+86%

1030

738

492

264

Funding

| in US$ millions |


Funding capital market loans

  • Amount: US$30,000,000

  • Tenor: 7 years

  • Facility Date: Dec 2006

  • Lenders

  • Amount: US$51,000,000

  • Tenor: 1year

  • Facility Date: Apr 2007

  • Mandated Lead Arrangers

  • Amount: US$15,000,000

  • Tenor: 14 months

  • Facility Date: Feb 2006

  • Mandated Lead Arranger

  • Amount: US$10,000,000

  • Tenor: 11 months

  • Facility Date: Jun 2006

  • Mandated Lead Arranger

  • Amount: US$20,000,000

  • Tenor: 10 years

  • Margin: LIBOR + 4.5%

  • Facility Date: Oct 2007

  • Lender

Bilateral Loan

Syndicated Loan

Syndicated Loan

Subordinated Loan

Syndicated Loan

Funding. Capital Market Loans


Funding eurobonds debut issue

  • Amount: US$125,000,000

  • Tenor: 3 years ▲

  • Coupon: 10.125%

  • Format: Reg S

  • Issue Date: June 2007

  • Lead Managers

Breakdown by Geography

Breakdown by Investor Type

| percent|

| percent|

Investor Base

Investor Base

Eurobonds Issue

Funding. Eurobonds Debut Issue

“…Bookrunners’ comment: …In all the time I’ve been doing emerging markets bonds, I’ve not seen a book like this for a credit of this type…”

“…Reactions had been very positive, with investors impressed by both strong management team and the bank’s strategy…”

“…Spencer Maclean (Deutsche Bank) stressed the high participation rate of investment grade and crossover accounts in the book, in addition to the traditional high-yield and dedicated EM funds...”


Credit ratings

Credit Ratings

  • VAB Bank cooperates with Moody’s and Fitch since 2003 and 2006 respectively

  • In May 2007 Fitch affirmed VAB Bank’s rating and outlook at B- (stable)

  • In June 2008 Moody's confirmed the bank’s B2 long-term local and foreign currency deposit and debt ratings and assigned the stable outlook

“…The rating derives from the bank’s current market standing, relatively advanced for Ukrainian bank corporate governance and risk management practices and the expected strengthening of the bank’s retail franchise following the execution of the strategy, supported by expansion of the branch network together with enhancing the infrastructure and IT systems...”

“…The bank’s further franchise expansion, accompanied by declining business concentrations, may put upward pressure on the ratings. Funding base diversification and a strengthening of liquidity should be also positive for the bank’s financial standing…“


Summary

Summary

  • Strong, supportive, long-term strategic investor with sufficient financial resources and experience to ensure success

  • Top quality senior management team with extensive international experience

  • Strong and expanding branch network coverage

  • Unique customer service approach and well-developed brand. Brand awareness increased from18% in 2006 to 47% in 2007

  • High capitalization level with 15%Basel Capital Adequacy Ratio as of 31 Dec 2007 and shareholders’ commitment to increase capital further

  • International standard risk management systems with proven capability to manage rapid growth

  • High standards of corporate governance and transparency: ranking among Top-5 most transparent banks in Ukraine according to Standard & Poor's survey for the second consecutive year (recent survey in Dec 2007)


Contact details

Contact Details

5 Zoolohichna Street, Kyiv 04119, Ukraine

Tel.: (38 044) 481-33-48

Fax: (38 044) 481-33-49

e-mail: [email protected]

http://www.vab.ua

http://www.vabbank.com.ua

Telex: 631048 VABNK UX

S.W.I.F.T. BIC: VABA UA UK

REUTERS: VABK

01.09.2014


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