Company Presentation

Belgrade, May, 2014

Basic data:

Name: Agroindustrijsko komercijalna banka “Aik Banka” ad Niš

Adress: Nikole Pašića 42,

18000 Niš,

Republika Srbija

Web: www.aikbanka.rs

Legal form: Public Shareholding Company

Legal status: Active business company

ID: 06876366

Tax No. 100618836

Business Account: Central bank of Serbia - 908000000001050197

Date of establishment: 10.08.1993.

Business companies registry No. 2946/2005 from March 01st, 2005

Code of conduct: 6419 – Other monetary intermediary

Phone: 00 381 11 31 22 051

Fax: 00 381 11 202 9086

e-mail: aikbgd@aikbanka.rs; kabinet@aikbanka.rs

CEO: Vladimir Čupić

Listing on Stock Exchange: Belgrade Stock Exchange, www.belex.rs

Shares are registered and

shareholders list is available:

Central securities depository and clearing house of Serbia ,www.crhov.rs

Auditor: KPMG doo Beograd, Kraljice Natalije 11, Belgrade, www.kpmg.com

Market share

No. Bank Total Assets

(in 000 RSD) Market

Share

1. Banca Intesa a.d. Beograd 427.241.355 15,01%

2. Komercijalna banka a.d. Beograd 363.654.367 12,78%

3. Unicredit Bank Srbija a.d. Beograd 251.953.242 8,85%

4. Société Générale banka Srbija a.d. Beograd 220.913.478 7,76%

5. Raiffeisen banka a.d. Beograd 205.492.743 7,22%

6. Eurobank ad Beograd 158.041.420 5,55%

7. AIK banka a.d. Niš 152.401.643 5,35%

8. Hypo Alpe-Adria-Bank a.d. Beograd 125.394.026 4,41%

9. Vojvođanska banka a.d. Novi Sad 108.860.402 3,82%

10. Banka Poštanska štedionica a.d. Beograd 99.559.603 3,50%

11. Remaining 21 Bank 732.712.168 25,74%

TOTAL: 2.846.224.447 100,00%

Source: National Bank of Serbia

Ranking

Market share – Total Assets (as of December 31st, 2013)

Rank by

31.12.2013 31.12.2012

Rank Market

Share

Amount in EUR

million Rank Market Share

Amount in EUR

million

Total Assets 7 5,4% 1.329 8 5,4% 1.357

Gross loans 8 4,6% 716 8 4,3% 713

Net loans 9 4,1% 577 9 3,9% 600

Deposits 7 5,7% 841 6 5,8% 858

Profit 8 n/a 11 5 15,3% 35

AIK Banka is belongs to top 10

banks on Serbian market

according to all parameters.

Main strategic goal is to achieve

long term rate of return on

assets higher than 2%.

Benchmarking and Ratio Analysis - 2013

Ratio AIK Peer* Sector Profit/ Average Equity ("ROAE") 2.5% 5.2% -0.1%

Profit/ Average Assets ("ROAA") 0.8% 1.1% 0.0%

Interest Margin / Average Assets 4.3% 4.3% 4.2%

Interest revenue/ Average assets 7.6% 6.8% 6.9%

Interest expense/ Average assets 3.3% 2.5% 2.7%

Loan loss provisions/ Average Assets 2.6% 1.8% 2.1%

Interest expense/ Average interest liabilities 4.9% 3.2% 3.4%

Commissions Margin / Average Assets 0.4% 1.2% 1.2%

Commissions revenue / Average Assets 0.5% 1.6% 1.7%

Profit / Total Revenue ("Profit Margin") 9.3% 12.4% -0.2%

Profit before provisions/ Average assets 3.4% 2.9% 2.0%

Total revenue / Average assets 8.7% 8.9% 9.2%

Operating expense / Average assets 1.9% 3.1% 3.8%

Operating expense /Operating Income (Cost/income ratio)

35.6% 51.6% 64.9%

Operating expense/ (Interest revenue+ Commission revenue)

23.2% 37.1% 43.8%

Personnel expense/Average assets 0.5% 1.2% 1.5%

Interest revenue/ Total revenue 88.0% 76.4% 75.6%

Commission revenue/Total revenue 5.9% 17.6% 18.2%

Profitability & Efficiency Ratios - end of 2013

Ratio AIK Peer Sector

Net loans in net assets 43.4% 58.9% 56.8%

Loans reserves/ Gross loans ("Asset quality")

19.4% 8.6% 10.6%

Cash and cash equivalents and Deposits whit NBS / Net Assets (Liquidity")

22.2% 23.0% 23.8%

Deposits whit NBS/Net assets 14.5% 14.1% 14.3%

Capital/Net assets 33.8% 21.3% 20.9%

Deposits/ Net assets (Primary funds") 63.2% 57.7% 60.5%

Net Loans/ Deposits 68.7% 102.1% 93.9%

Transaction deposits/ Deposits 9.2% 31.5% 28.8%

Balance Sheet Ratios – end of 2013

• ROE is on Sector Average (High capital base)

• ROA is above average

• Interest income is the generator of the revenues

• Fee and Commission income are source of huge potential

for future business development

• High Interest expense led to the change in pricing policy

• Low level of operating costs and personnel costs are the

comparative advantage of Aik Banka

• Strong capital base (above average Capital/Net Assets)

• Loan reserves are providing additional strength to the

Bank

• Loan to Deposit ratio is one of the lowest on the Market

* The Peer group comprises: Intesa, Komercijalna banka, Unicredit, Raiffeisenbank, Societe General, Eurobank, Hypo, Erste, Sberbank

Main changes (2013 & 2014)

• Management During 2013 new Executive Board was appointed. Mr. Čupić Vladimir was elected as the CEO, Mr. Siniša

Mihajlović was appointed as the CFO, Ms. Ana Marković as the CRO of the Bank and Ms. Branka Damnjanović

as the CORO.

• Ownership During February 2014 Sunoko doo Novi Sad published Takeover Bid to all shareholders on . The offer for

taking over of shares was opened on 4 February 2014 and lasted 21 days. The bidder has acquired together

with the controlled companies 4,556,494 ordinary shares with voting rights or 50.37% of the total number of

issued shares with voting rights.

• Organization New business model was introduced in 2013 putting more focus on Risk Management, clear client

segmentation and planning and cost controlling. PR and IR are established. Prart of back office functions

were centralized. All this led to the changes in Organization and Job description.

• Financials • Asset Structure

Major changes happened in structure of liquid assets. The excess liquidity was invested in T-bills and Bonds

and Securities increased for EUR 43 million. There was slight decrease in total loans invested for and at the

end of 2013 they amounted EUR 653 mil.

• Liabilities & Capital

Bank has stable and strong deposit base of cca EUR 850 mil. Capital is providing additional stablitity to the

bank. CAR is the highest on market and amounts to 38,05%.

• Income Statement

Bank realized profit of EUR 10,7 mil. in 2013, despite the negative overall business result of the banking

sector.

Financials 2013

Description 31.12.13 31.12.12 31.12.11 Index

1 2 3 4=1/2 5=2/3 7=1/3

Income Statement (in 000 RSD)

Net Interest income 6,736,173 7,540,896 6,351,357 89.33 118.73 106.06

Net fees and commissions income 657,119 782,771 932,961 83.95 83.90 70.43

Other non interest income 826,12 1,847,207 1,122,211 44.72 164.60 73.62

Total Revenues 8,219,411 10,170,874 8,406,529 80.81 120.99 97.77

Salary Costs -784,869 -715,639 -671,177 109.67 106.62 116.94

Amortization -264,391 -243,158 -190,416 108.73 127.70 138.85

Other operative Costs -1,879,935 -1,747,690 -1,602,322 107.57 109.07 117.33

Total Operative Costs -2,929,194 -2,706,487 -2,463,916 108.23 109.84 118.88

Profit before provisions 5,290,217 7,464,387 5,942,613 70.87 125.61 89.02

Net effect from provisioning -4,035,607 -3,454,559 -2,628,712 116.82 131.42 153.52

Profit before tax 1,254,611 4,009,827 3,313,901 31.29 121.00 37.86

Assets and Liabilities (in 000 RSD)

Loans and placement with banks 634,184 4,421,349 6,415,508 14.34 68.92 9.89

Loans and placement with clients 74,291,658 77,362,198 73,382,906 96.03 105.42 101.24

Securities 33,988,821 20,835,176 8,100,645 163.13 257.20 419.58

Other Assets 43,486,978 51,733,620 55,294,480 84.06 93.56 78.65

Total Assets 152,401,642 154,352,343 143,193,539 98.74 107.79 106.43

Deposits and Loan from Banks 1,292,730 4,202,665 4,253,359 30.76 98.81 30.39

Other Deposits 95,285,111 95,696,104 87,448,322 99.57 109.43 108.96

Other Liabilities 4,330,107 4,191,561 4,661,555 103.31 89.92 92.89

Capital 26,920,470 26,517,651 26,210,090 101.52 101.17 102.71

Total Capital 51,493,695 50,262,013 46,830,303 102.45 107.33 109.96

New Strategy - 7 Pillar Model

ORGANISATION

Creation of Internationally recognizable

system

PRICING

Risk based pricing

COST CONTROL

Centralisation and Budget Limits

RISK MANAGEMENT

Managing – not avoiding risk

FUNDING

Diversification&

New funding sources

PORTFOLIO

Diversification & New client tagets

SALES

Based on new sales function

System of values:

1. Safe

2. Efficient

3. Proffitable

4. Sustainable

5. Reliable

Strategic goals 1/2

• Internationally recognizable system of:

• Organization - Divided functions such as sales and administration of

loans, financial and risk controlling, management and monitoring of

credit risk .

• Functioning model - Divided functions such as: sales and

administration of loans, financial and risk controlling, management and

monitoring of credit risk, Centralization of Cost Management.

• Policies and procedures - Improved system of sales and risk

management: Dividing SALES into Corporate, Public , Retail, Treasury;

Separating Credit Risk Management from Risk Controlling:

Centralization of the NPL MANAGEMENT; Decentralization of the

approval of retail loans below defined limit; Centralization of the

opening accounts and processing retail applications above defined

limit.

• Flexibility:

• Mass operations (retail and SME) - Standard processes and

procedures of the loans and contracts approval, controlling the use of

funds, validity and enforceability of collaterals, payments control; Risk

return principle; Limited number of variables that quantify risk;

Defined cap of risk acceptability; Delegation of decision-making rights

within the zone of risk acceptability; Adequate technical and IT

solutions for mass operations; Developed system of internal control and

control of fraudulent activities; Permanent monitoring of the quality of

portfolio; Permanent control of profitability and price alterations

(interests and fees) and model of risk acceptability; Centralized system

of debt collection, restructuring and bad loans workout

• Operations with big clients - Include corporate, public sector

and retail; Standardized processes and procedures; Risk return

principle: A number of standard variables that define the risk with

comprehensive analysis - primary criteria is a cash flow capacity,

secondary one is collateral; Church tower principle; Client personality

assessment; “Case by case” decision making principle; Limited time

frame of analysis, decision making and processing of loan proposal

(limited T2Yes and T2Cash).

• Sales management:

• High standards of risk management: • Key principle: MANAGING, not AVOIDING risk

• Developed process of monitoring of potential bad loans (Watch loan)

• A decision on restructuring or workout must be based on the

calculation of present value of future cash inflows either from client or

collateral, where the effective interest rate would be used as a

discount rate.

• Bearing in mind the amount of bad loans and foreclosed assets,

personnel and technical capacity of this department must be at the

highest level.

• Diversified funding sources: • Primary funds -Basic source of funds are retail savings and deposits

of corporate and public institutions; The price must be appropriate for

real needs and possibilities of placement these funds; Savings is

strategically important for the value of the company as an indicator of

capacity for generating liquidity from regular activity;

• Loans from international financial institutions - Basic goal:

reducing the funds price; Precondition: understandable business plan

with recognizable organization and functional models; Secondary goal:

business internationalization, value for shareholders through expected

growth of value of shares due to diversification of risk of sources

concentration and recognition at international market; Improvement of

maturity structure of sources.

• Credit lines from commercial institutions - Activity that

follows the establishment of institutional relations with IFI’s; The basic

goal is business expansion and inclusion into international flows; Classic

credit lines, collateralized credit lines, bond issue, subordinated loans,

mezzanine financing etc.

Sales targets

business segments, organizational units, sales

staff

Performance indicators

Reward system

Strategic goals 2/2

• Diversified loan structure • Diversification strategy must include: Sectional diversification

(corporate, retail, public sector);Diversification by the loan size

(concentration); Divisional diversification; Currently there is a

diversification by maturity and currency

• High level of concentration in corporate and public

sector: De-concentration must be based on a credit risk assessment

for each group of clients (amount of NPL and provisions), interest rate

and exchange rate risk; De-concentration measures involve: 1. Defining

the limit of exposure towards groups of individuals, 2. Development of

sales strategy - mid market and SME-u and 3. Increase the number of

clients in retail

• Divisional diversification - Moving from activities with no

perspective to activities that are expected to contribute to GDP the

most; Macro-economical and divisional analysis as a base for

diversification of loans by divisions.

• Diversification by maturity - Maturity structure of loans must

comply with maturity structure of sources; A base for definition of

maturity structure of loans is analysis of sources in terms of stability,

possibility of renewing and definition of limits; Oobtaining fund sources

from IFI’s and commercial institutions presents a leverage for

extending assets maturity, which increases market competitiveness.

• Strict cost control • Centralisation of the cost controllong should enable business

efficiency and flexibility. Main mechanism should rely on predefined

procurement procedure with respect to the budget limits of the

organisational parts.

• Full regulatory compliance and zero

tolerance for corruption • Establishment of COMPLIANCE DIVISION with full scope of work:

Regulatory compliance and Anti Money Laundering; Providing adequate

personnel, technical and IT support to Compliance division.

• Initial control of politics, contracts, documents, processes and

procedures in terms of regulatory compliance.

• Personnel training inside the Compliance division and all employees in

terms of their rights and obligations regarding regulatory compliance

• Centralization of communication, collecting and analyzing documents

and submission of documents to judicial and security authorities RS and

other regulatory institutions.

• Establishment of anti money laundering department and financing of

terrorism (AML/CFT) inside the Compliance Division.

• Technical and IT support for AML/CFT Defining annual plans, reporting

system, control system

• Comprehensive system of training of employees (AML/CFT)

• Employees contracts alteration so responsibilities for AML/CFT can be

defined for everybody

• Special team to prevent internal and external frauds

High brand recognition and positive image • Market research as a regular annual activity in order to determine the

value of the brand and image of the Bank and as a control mechanism.

• Defining the PR and marketing strategy, which supports mission, vision

and goals. Communication strategy must include all external and

internal communication of the Bank

• PR and Marketing budget adoption. Monitoring of the budget

realization and effects achieved. Marketing campaigns – as a support

both to sales growth and Bank’s basic values and public reputation

• CSR (corporate social responsibility) adoption with selected group of

goals and areas of public and humanitarian acts supported and

promoted by the Bank

• Creation of the Investor Relation Center which will enable transparent

communication toward stakeholders.

• Centralization and controll of Regulatory Reporting and Communication

with Regulator

Financial Plan for 2014

Income Amount in RSD

bill

Change (%)

2014/2013

Net Interest income 7.425 +10,2%

Net fees and commission income 827 +25,9%

Other non interest income 1.033 +25,0%

Operative Expenses -5.781 -20,0%

Profit before tax 3.503 279,2%

Assets / Liabilities Amount in RSD

bill

Change (%)

2014/2013

Net Loans 72.720 +7,1%

Total Deposits 96.448 +1,2%

Equity 58.315 +6,3%

Total Assets 156.340 +2,6%

Indicator Amount in RSD bill

ROE 6,6%

ROA 2,3%

Commisssion Income/Average Assets 0,6%

Cost/Income Ratio 34,3%

Commisssion Income/Total Income 7,4%

Net loans / Total Deposits 68,5%

• Optimisation of foreign currency

liquidity

• Increase in loan activity in segment

of SME, Public and Retail

• Deconcetration of loan portfolio

(from large corporate clients to

SME)

• Introduction of new client segments

with lower interest costs

• Securities portfolio optimisation

according to the liquidity needs

• Focus on commission income

• Increase of transaction deposits

• Cost centralisation

• IT investments

Current Organisational structure

Assembly

Board of Directors

Executive board

CRO

Credit risk management - corporate and public

Credit risk management - Retail

Credit administration

Risk controlling

Workout

Monitoring and Support

CFO

Treasury

Accounting and Reporting

Financial Planning and Controlling

CEO

Corporate

Public

Legal

HR

Marketing and Comunication

Securitity and Fraud prevention

CORO

Retail and SME

Operation, Organization and IT

Purchasing, Asset and Office Management

Subidiaries

Branches

Counters

Board Assitance

Internal Audit

Compliance

Management

Member Function

Miodrag Kostić President of the Board of the Directors

Ljubiša Jovanović Member of the Board of the Directors

Aleksandar Surla Member of the Board of the Directors

Djordje Djukić Member of the Board of the Directors

Nikola Litvinenko Member of the Board of the Directors

Board of directors:

Executive board:

Member Function

Vladimir Čupić CEO

Ana Marković CRO

Siniša Mihajlović CFO

Branka Damnjanović CMO

Member Function

Vladimir Čupić President

Siniša Mihajlović Member

Bojan Topalović Member

Aleksandra Babić Member

Ana Marković Deputy

Branka Damnjanović Deputy

Nenad Marković Deputy

ALCO

Audit Committe

Member Function

Đorđe Đukić President

Nikola Litvinenko Member

Aleksandar Surla Member

Network

Subsidiaries

Branches

Counters

Organization of the Bank Network:

Organizational Structure

as of March, 31st, 2013 No.

Subsidiaries 20

Branches 37

Counters 8

Total 65

Overview of AIK Banka's distribution footprint:

Employees

High school; 25,86%

Higher education; 15,19%

University; 58,95%

Educational structure end of 2013

Our goal is to have employees with personnel

potential at the highest level, permanently

developed and goal oriented.

The investment in the human capital base was one

of the objectives in 2013. The Bank increased the

number of employees for 10%.

¾ of the total employees are highly educated and

professionally specialized for their scope of work.

2/3 of the employees are younger than 40.

<30 19%

30-40 52%

40-50 13%

50-60 14%

>60 2%

EMPLOYEES - AGE STRUCTURE AS OF MARCH 31ST, 2014

576 553 505 514

478

Q1 2014 31.12.2013 31.12.2012 31.12.2011 31.12.2010

# of employees evolution

Shares and trading

52 weeks Max Min

1.689 1.221

26.02.2013. 03.07.2013.

Hystorical

Max Min

15.829 1.150

27.04.2007. 12.03.2009.

Annual Statistics

Average Turnover (RSD) 10.362.707

Average No. of

transactions 6

Source: Belgrade Stock Exchange

Description Ordinary shares Preferred convertible shares Preferred Cumulative Shares

ISIN RSAIKBE79302 RSAIKBE15363 RSAIKBE36633

CFI kod ESVUFR EFNXNR EPNXQR

Ticker AIKB AIKBPC AIKBPB

Currency RSD RSD RSD

Nominal value od Share 1.900 1.900 1.900

No od Shares issued 9.045.756 40.989 1.314.595

Total nominal value 17.186.936.400 + 77.879.100

= 19.762.546.000

+ 2.497.730.500

Traded: BSE BSE BSE

Market Open Market MTP MTP

Method: Continues trading Prevailing price (Auction) Continuous trading

Ownership Structure Centralni registar, depo i kliring hartija od vrednosti: www.crhov.rs

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AIKB shares vs Index Belex 15 2013 - 2014

Thanks !!!