BACB INVESTOR PRESENTATION August, 2009 WorldReginfo - - - PDF document

BACB INVESTOR PRESENTATION August, 2009

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BACB SHARES

Issuer Bulgarian American Credit Bank AD (BSE Ticker: 5BN, previously BACB) Contact Information Veneta Ilieva T (Direct): +359 2 9658 389 Investor Relations Officer T (Main): +359 2 9658 390 16 Krakra Str.

F: +359 2 9445 010

Sofia, 1510 E: vpilieva@bacb.bg www.bacb.bg/en/investors.php Listing Bulgarian Stock Exchange (Sofia), since April 4, 2006

ISIN BG1100098059 Codes BACB.BB (Reuters); BACB BU (Bloomberg) Credit Ratings BB-/Negative/B by S&P # of Shares 12,624,725 Share Ownership 49.99% - Allied Irish Banks; 30.9% - GEMF, 17.5% - institutional; 1.6% - retail Analyst Coverage Marfin Analysis, Member of ESN; FFBH; http://research.ca-ib.com

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Achieve sustainable growth in assets and profitability:

• Focus on providing secured finance to SMEs
• Maintain low operating costs
• Diversify sources of funding
• Stay ahead of the pack through innovation
• Gain advantage through staff education, experience and motivation
• Weigh risk against reward … and negotiate

BACB STRATEGY

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2.3% 2.1% 2.9% 3.3% 2.7% 4.0% 3.3% 2.9% 2.2% 2.5% 2.9% 5.6% 4.1% 5.3% 5.1%4.1% 6.0% 5.8% 6.4% 6.9% 8.0% 6.2% 5.2% 5.5% 6.5% 6.8% 7.2% 4.8%

5.0% 5.1% 4.5% 4.4% 5.4% 5.9% 6.6% 2003 2004 2005 2006 2007 2008 H1'2009

Deposits from banks Deposits from clients Other borrowed funds Debt securities outstanding Average cost of funds

Source: BACB N.B. Average interest rates are calculated on the basis of management accounts, using monthly balances

First mortgage bond (2001): approx. 330 bps over 3 year swap in 2001 Last mortgage bond (July, 2008) – 3 years: approx. 220 bps over 3 year swap Last corporate bond (July, 2008) – 2 years: approx. 190 bps over 6 month LIBOR

COST OF FUNDING

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LOAN PORTFOLIO: BREAKDOWNS AT JUNE 30, 2009

6 to 12 mos 14.9% 1 to 3 yrs 22.8% 3 to 5 yrs 8.4% 5+ yrs 15.5% 1 to 6 mos 24.6% Matured on June 30, 2009 10.2% Up to 1 month 3.6%

BACB Portfolio Only

Portfolio breakdown by maturity Portfolio breakdown by maturity

Garments and textiles 2% Real estate construction 21% Real estate investment & Land Development 21% Hotels 14% Entertainment and Recreation 4% Primary agriculture & Farming 2% Retail Trade 2% Mortgage Loans - Commercial 13% Mortgage Loans - Residential 8% Other 8% Other light industry 4%

BACB Portfolio Only

Portfolio breakdown by industry Portfolio breakdown by industry

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ASSET QUALITY AND RISK MANAGEMENT

High collateral coverage

• Over 90% of the loan portfolio value secured by real estate

Loans in arrears of

• ver 90 days
• €35.5 million at June 30, 2009
• Loans in arrears of over 90 days/Total Loans: 9.4%

Conservative provisioning policies

• Provisions for impairment at June 30, 2009:

€28.2 million 7.5% of gross loan portfolio

• Provisions: in the range of 4.5% - 7.5% of gross loan portfolio for the last three years

Write-offs

• Write-offs for H1’2009: €0.2 million (2008 - € 0.24 million)

Large exposures

• Largest exposure to a single client group:

€14.2 million (including €0.8 million off-balance sheet commitments) 15.4% of capital base (not including current year profit)

• Aggregate of the five largest exposures:

€55.5 million (including €5.9 million off-balance sheet commitments) 56.0% of capital base (not including current year profit)

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87,376 109,337 153,092 194,903 248,520 357,756 418,580 404,129 2002 2003 2004 2005 2006 2007 2008 H1'2009

Total assets Total assets

CAGR (2001 – 2008) 31% Source: BACB’s Consolidated Financial Statements EUR ‘000

72,183 94,519 122,170 157,604 206,182 317,420 368,803 377,866 2002 2003 2004 2005 2006 2007 2008 H1'2009

Loan portfolio, gross Loan portfolio, gross

CAGR (2001 – 2008) 29% Source: BACB’s Consolidated Financial Statements EUR ‘000

9.2% 10.5% 11.3% 11.4% 11.3% 12.4% 10.7% 10.6% 2002 2003 2004 2005 2006 2007 2008 H1'2009

Net Interest Margin Net Interest Margin

Source: BACB’s Consolidated Financial Statements

SUMMARIZED FINANCIAL PERFORMANCE

Net interest margin remains high Net income decreased 23.4% (June’09 – June’08)

3,545 4,645 7,209 12,341 17,455 27,157 26,462 12,128 2002 2003 2004 2005 2006 2007 2008 H1'2009

Net income Net income

Source: BACB’s Consolidated Financial Statements EUR ‘000 CAGR (2001 – 2008) 50%

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In EUR ‘000 June 2009 2008 June 2008 Change (June’09 – June’08) Interest Income 29,033 56,534 27,389 6.0% Interest Expense (7,603) (15,794) (6,722) 13.1% Net Interest Income 21,430 40,740 20,667 3.7% Net fee & commission income 279 1,949 1,297

• 78.5%

Other operating income, net 343 291 443

• 22.6%

Operating Income 22,052 42,980 22,407

• 1.6%

Operating Expenses (3,274) (6,005) (3,101) 5.6% Operating Profit 18,778 36,975 19,306

• 2.7%

Impairment of financial assets (5,321) (7,590) (1,577) 237.4% Income before taxation 13,457 29,385 17,792

• 24.4%

Net Profit 12,128 26,462 15,832

• 23.4%

Total Assets 404,129 418,580 398,863 1.3% Loans and advances to customers, net 349,660 345,763 333,505 4.8% Shareholder’s Equity 108,037 96,097 85,711 26.05% ROAE 23.8% 30.1% 38.3% ROAA 5.9% 6.8% 8.4% Cost to Income 14.9% 14.0% 13.8% Tier I Capital Ratio 22.2% 16.9% 17.6% Rating BB-/Negative/B BB+/Negative/B BB/Positive/B Shares Outstanding 12,624,725 12,624,725 12,624,725 EPS (Euro per share) 0.96 2.10 1.25

SUMMARIZED FINANCIAL PERFORMANCE (CONT’D)

Source: BACB’s Consolidated Financial Statements,

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SUPPORTING MATERIALS

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BAEF-AIB Transaction

2008 2008 2006 2006

OVERVIEW AND CORPORATE HISTORY

2004 2004

• Substantially full banking license
• Bulgaria’s first mortgage bond issue

2002 2002

• Construction lending program launched
• Mobile lending launched
• Bulgaria’s first loan securitization

Background:

Established by the BAEF, December 1996 Limited purpose license: allowed to grant credits

• nly from shareholder funds

SME and Tourist Lending Programs launched as

extensions of BAEF’s operations

2001 2001 1999 1999 1998 1998 1996 1996

• Mortgage lending program launched
• First IFI financing
• Listing on the BSE; Public Offering

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DISTRIBUTION CHANNELS

Head office in Sofia Larger or specialized loans Credit risk management Expertise sharing Four other offices in major

Bulgarian cities

Mobile lending Network covering 15 cities Small business and mortgage

loans

Maintain low operating costs

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BB-/B BB/B BB-/B B+/B B+/B B+/B BB/B BB/B BB+/B 2000 2002 2004 2006 2008 2010 Year of Announcement S & P C r e d i t R a t i n g

Source: S&P, BACB

RATING HISTORY

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COST EFFICIENCY AND PRODUCTIVITY

Cost to income ratio (%) Cost to income ratio (%)

Low cost to income ratio

32 25 23 19 16 14 58 55 56 49 50 62 2003 2004 2005 2006 2007 2008 BACB Banking system

Source: BNB data - unaudited financial statements of commercial banks in Bulgaria Source: BNB reports, BACB calculations, 2004 data

Net income, assets and loans per employee benchmarks (Dec. 2008) Net income, assets and loans per employee benchmarks (Dec. 2008)

And high productivity

8.5 x 2.6 x 3.2 x 1 x 1 x 1 x BACB Banking system set to 1

Source: BNB data - unaudited financial statements of commercial banks in Bulgaria BACB compared to the banking system averages BACB employees at December 31, 2007 – 146; Banking System Employees 31,000

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MANAGED COSTS

3.50% 3.10% 2.90% 2.41% 2.04% 1.57% 5.20% 4.90% 4.40% 3.56% 3.00% 2.88% 2003 2004 2005 2006 2007 2008 BACB Banking system

Operating expenses / average earning assets*: BACB vs Banking system Operating expenses / average earning assets*: BACB vs Banking system

Source: BNB reports and BACB’s own calculations *Earning assets include loans and advances to customers, interest-earning securities, held with other financial institutions and investments in securities

Increasing operating leverage

Interest expenses / average interest bearing liabilities*: BACB vs Banking system Interest expenses / average interest bearing liabilities*: BACB vs Banking system

6.33% 5.70% 5.49% 4.33% 4.33% 5.27% 1.98% 2.08% 2.38% 2.51% 2.77% 3.76% 2003 2004 2005 2006 2007 2008 BACB Banking system

Source: BNB reports and BACB’s own calculations *Interest bearing liabilities includes deposits, debt securities and other borrowed funds. Based on beginning and ending balance of interest bearing liabilities as published by BNB

Stable funding cost

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14 26 30 37 36 40 31 18 17 15 21 22 20 2003 2004 2005 2006 2007 2008 BACB Banking System

Source: BNB data - unaudited financial statements of commercial banks in Bulgaria Source: BNB data - unaudited financial statements of commercial banks in Bulgaria

ROAA: BACB vs Banking system (%) ROAA: BACB vs Banking system (%)

5 6 7 8 9 7 2 2 2 2 2 2 2003 2004 2005 2006 2007 2008 BACB Banking System

GROWTH WITH SUSTAINED PROFITABILITY

ROAE: BACB vs Banking system (%) ROAE: BACB vs Banking system (%)

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BULGARIA’S BANKING SECTOR – OVERVIEW

Source: Bulgarian National Bank , National Statistics Institute

BULGARIA’S BANKING SECTOR – OVERVIEW

12 15 12 13 13 15 12 12 11 HU CZ SK BG PL UA RO RU Euro Area

Selected Banking Sector Statistics – Capital/RWA H1’2008 Selected Banking Sector Statistics – Capital/RWA H1’2008

2006 2007 2008

Number of banks

32 29 30

Total bank assets (BGN bn)

42.2 59.1 69.6

Total loans, gross (BGN bn)

22.8 37.2 49.2

Total deposits (BGN bn)

27.6 38.8 41.7

ROAA

2.2% 2.3% 2.2%

ROAE

20.6% 21.6% 19.6%

Capital Adequacy Ratio

14.5% 13.8% 14.9%

Provisions (% of total loans)

2.9% 2.7% 2.1%

Household loans, gross (% of

GDP) 16.6% 23.0% 26.2%

Corporate loans, gross (% of

GDP)

29.6% 43.0% 48.2%

Financial intermediation still low in 2008:

• Assets/GDP at 105%
• Loans/GDP at 74%

Sources: Merrill Lynch, EcoWin, BIS, IMF Global Financial Stability Report – October 2008

Selected Banking Sector Statistics – Loans/Deposits ratio H1’2008 Selected Banking Sector Statistics – Loans/Deposits ratio H1’2008

111 76 65 79 112 120 116 113 153 130 HU UA BG CZ SK TY PL RU RO Euro Area WorldReginfo - ef600a6e-b91f-42fb-9649-846fe5b1a4f4

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POSITION WITHIN THE BANKING INDUSTRY AS OF JUNE 30, 2009

Rank Rank 1 Unicredit Bulbank (2) 11,446,106 Unicredit Bulbank (2) 1,512,337 Unicredit Bulbank (2) 133,372 Citibank (1) 78.4% Texim Priv. Entre. 17.3% BG Amer. Credit 92.0% 1 2 DSK 8,540,465 DSK 1,306,095 DSK 79,267 Texim Priv. Entre. 43.2% Citibank (1) 6.3% Emporiki Bank 89.6% 2 3 United Bulgarian 7,981,280 United Bulgarian 991,378 United Bulgarian 52,774 Corporate Comm. 24.0% BG Amer. Credit 5.8% Alpha (1) 86.7% 3 4 Raiffeisenbank 6,174,327 Raiffeisenbank 901,645 Raiffeisenbank 45,190 BG Amer. Credit 22.3% ING (1) 3.0% DSK 85.7% 4 5 Postbank 5,715,184 Encouragement Bank 611,784 Corporate Comm. 29,190 ING (1) 21.7% Corporate Comm. 2.9% United Bulgarian 85.5% 5 6 First Investment 4,179,817 Postbank 517,916 Piraeus Eurobank 24,472 Int'l Asset Bank 20.3% Unicredit Bulbank (2) 2.3% Procredit 83.7% 6 7 Piraeus Eurobank 3,771,967 Piraeus Eurobank 498,146 BG Amer. Credit 23,157 Unicredit Bulbank (2) 17.6% Int'l Asset Bank 2.3% SG Expressbank 82.0% 7 8 SG Expressbank 2,666,166 First Investment 396,629 First Investment 19,085 DSK 12.1% Encouragement Bank 2.1% Bank West-East 81.8% 8 9 Alpha (1) 2,070,642 SG Expressbank 342,072 Postbank 17,225 Procredit 11.6% DSK 1.9% Piraeus Eurobank 77.1% 9 10 Corporate Comm. 2,006,941 Corporate Comm. 243,587 SG Expressbank 14,896 Investbank 11.4% T.C. Ziraat (1) 1.5% Econ. & Invest. 76.1% 10 11 Central Coop. 1,813,249 Central Coop. 237,449 Citibank (1) 14,799 United Bulgarian 10.6% Raiffeisenbank 1.5% First Investment 73.9% 11 12 Econ. & Invest. 1,805,139 Econ. & Invest. 213,485 Econ. & Invest. 9,225 Allianz Bulgaria 10.1% Commercial Bank D 1.4% MKB Unionbank 73.3% 12 13 Allianz Bulgaria 1,604,412 BG Amer. Credit 207,429 Encouragement Bank 8,616 BNP Paribas (1) 10.1% Bank West-East 1.3% Postbank 69.4% 13 14 MKB Unionbank 1,468,751 Alpha (1) 165,651 Central Coop. 7,697 Raiffeisenbank 10.0% United Bulgarian 1.3% Unicredit Bulbank (2) 64.5% 14 15 Investbank 1,148,553 Allianz Bulgaria 146625 ING (1) 7,665 Bank West-East 10.0% Piraeus Eurobank 1.3% Allianz Bulgaria 64.2% 15 16 Procredit 976,699 MKB Unionbank 130,273 Allianz Bulgaria 7,438 Piraeus Eurobank 9.8% Procredit 1.2% Tokuda 64.1% 16 17 Municipal 910,250 Procredit 103,639 Int'l Asset Bank 6,137 First Investment 9.6% SG Expressbank 1.1% Corporate Comm. 63.8% 17 18 Encouragement Bank 821,633 Investbank 93,716 Procredit 6,019 Commercial Bank D 9.3% Econ. & Invest. 1.0% Raiffeisenbank 62.0% 18 19 BG Amer. Credit 793,241 ING (1) 70,752 Investbank 5,319 SG Expressbank 8.7% Allianz Bulgaria 0.9% Int'l Asset Bank 61.4% 19 20 BNP Paribas (1) 609,008 Int'l Asset Bank 60,387 Texim Priv. Entre. 4,975 Econ. & Invest. 8.6% Investbank 0.9% Investbank 61.2% 20 21 Int'l Asset Bank 545,124 BNP Paribas (1) 48,721 MKB Unionbank 2,647 Municipal 8.2% First Investment 0.9% Central Coop. 61.1% 21 22 ING (1) 519,449 Municipal 48,436 BNP Paribas (1) 2,451 Postbank 6.7% Central Coop. 0.8% Texim Priv. Entre. 53.1% 22 23 Emporiki Bank 485,426 Commercial Bank D 46,764 Commercial Bank D 2,165 Central Coop. 6.5% BNP Paribas (1) 0.8% BNP Paribas (1) 50.7% 23 24 Citibank (1) 471,767 Tokuda 39,008 Municipal 1,975 MKB Unionbank 4.1% Postbank 0.6% Commercial Bank D 47.9% 24 25 Tokuda 322,201 Citibank (1) 37,741 Bank West-East 1,448 Encouragement Bank 2.8% Municipal 0.4% ING (1) 38.2% 25 26 Commercial Bank D 305,886 Emporiki Bank 35,864 Tokuda 434 Tokuda 2.2% MKB Unionbank 0.4% T.C. Ziraat (1) 36.4% 26 27 Bank West-East 218,345 Bank West-East 28,907 T.C. Ziraat (1) 291 T.C. Ziraat (1) 2.2% Tokuda 0.3% Municipal 35.1% 27 28 Texim Priv. Entre. 57,489 T.C. Ziraat (1) 26,514 Emporiki Bank

• 2,998 Emporiki Bank
• 16.7% Emporiki Bank
• 1.2% Encouragement Bank

29.0% 28 29 T.C. Ziraat (1) 39,227 Texim Priv. Entre. 23,014 Alpha (1)

• 26,012 Alpha (1)
• 31.4% Alpha (1)
• 2.5% Citibank (1)

28.6% 29 BANKING SYSTEM 69,468,744 BANKING SYSTEM 9,085,964 BANKING SYSTEM 498,919 BANKING SYSTEM 11.0% BANKING SYSTEM 1.4% BANKING SYSTEM 71.9% Source: BNB: Financial Statements of the Commercial Banks in Bulgaria, March 2009; BACB Calculations; Unconsolidated data; (1) Branches of foreign banks. Capital assumed equal to 8% of assets as these are not subject to BNB capital requirements in % in % Total Assets Capital & Reserves Profit/Loss '000 BG Leva '000 BG Leva '000 BG Leva Return on Equity (annualized) Return on Assets (annualized) in % Loans to Assets Rank 19 Rank 13 Rank 4 Rank 7 Rank 1 Rank 3

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BALANCE SHEET

Balance Sheet, EUR’000 2006 2007 2008 Mar-2009 June-2009 Growth H1’2009/2008 Cash and cash equivalents 43,795 46,828 60,769 50,023 43,794

• 27.9%

Trading portfolio 1,948 1,804 21 139 145 590.5% Loans and advances to customers, net 193,263 301,733 345,763 351,353 349,660 1.1% Investments in securities available-for-sale 5,661 3,251 3,736 3,571 3,469

• 7.2%

Property, plant and equipment 2,410 2,481 2,305 2,233 2,166

• 6.0%

Hedging derivatives 28 1,869 3,269 1,913 2.0% Other assets 1,443 1,631 4,117 3,161 2,982

• 27.6%

Total Assets 248,520 357,756 418,580 413,749 404,129

• 3.5%

Deposits and borrowings from banks 15,342 11,513 10,766 24,693 24,578 128.3% Customer deposits 54,098 99,068 121,989 105,458 111,057

• 9.0%

Other borrowed funds 31,804 66,599 82,259 73,294 63,993

• 22.2%

Other liabilities 2,869 4,097 1,654 1,358 1,204

• 27.3%

Debt securities outstanding 87,293 96,903 105,815 106,103 95,260

• 10.0%

Shareholders Equity 57,114 79,576 96,097 102,843 108,037 12.4% TOTAL LIABILITIES & EQUITY 248,520 357,756 418,580 413,749 404,129

• 3.5%

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