Investor Presentation, September 2019 1 About Ziraat Finance - - PowerPoint PPT Presentation

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Investor Presentation, September 2019

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• About Ziraat Finance Group
• ZiraatBank BH d.d. at a glance
• Transformation and business model
• Key financial indicators
• Appendix

Ziraat Finance Group

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T.C. Ziraat Bankasi A.S. - More Than a Bank

(1) Loans include accruals and the loans granted to banks, Deposits include accruals, and the banks’ deposits, securities include accruals. (2) Rankings are among top 7 Banks. The banks are determined as of unconsolidated assets for September 2019 and include: Ziraat Bank, İş Bank, Garanti Bank, Akbank, Yapı Kredi, Halkbank and Vakıfbank Source: BRSA, Publicly available Earnings Reports for peer banks

Rankings 1 1 1 1 1

Total Assets Cash Loans Non-cash Loans Deposits Equtiy Q3 2019

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• About Ziraat Finance Group
• ZiraatBank BH d.d. at a glance
• Transformation and business model
• Key financial indicators
• Appendix

Ziraatbank at a glance with map of network

Commercial bank

The Bank

Our Network

First domestic bank with foreign equity Owned by 100 % of Turkish state owned bank T.C.Ziraat Bankasi A.Ş. More than 60K customers Appetite to grow locally

Owner of 32 branches and intention to grow further

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Federation of Bosina and Herzegovina Republika Srpska Brčko Distrikt

Corporate Branch Sarajevo Branch Ferhadija Branch Butmir Branch Tuzla Branch Lukavac Branch Gračanica Branch Srebrenik Branch Centar Tuzla Branch Goražde Branch Zenica Branch Jelah Branch Kakanj Branch Maglaj Branch Visoko Branch D.Moštre Branch Ilidža Branch Novi Grad Branch Vogošća Branch Hadžići Branch Dobrinja Branch Mostar Branch Konjic Branch Bihać Branch Cazin Branch

• S. Most Branch

Travnik Branch I.Š. Mostar Branch Banja Luka Branch Srebrenica Branch Bijeljina Branch Brčko Branch

7 Financial Bridge with Turkey 32 Branches 308 Employees 100 K customers First domestic bank with foreign capital (1996) Credit line supporting the Bosnian economy Strong Share Capital

ZiraatBank BH d.d.

Assets 23,742 Loan 14,907 Deposits 18,965 Capital 3,159 Capital Adequacy 18,0% ROA 1,47% ROE 10,80% Branches (number) 539 Employees (number) 6,745

Rankings Banking Sektor (FBiH) Q3 2019 (M BAM)

Assets

4%

Loan

5%

Deposits

4%

Branches

6%

8. 8. 10. 12. 9.

Assets Loan Deposits Profit Employees Q3 2019

Participation in the banking sector

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Over 22 Years of Banking Legacy

1996 Oct. 1997 Mar.

Date of Entity incorporation /establishment The first bank in BiH with foreign

• capital. The

bank's core capital was 10M BAM. Becomes a member

• f the SWIFT group

and also member

• f BAMCARD

Sarajevo.

1997 Aug.

The Bank issues the first Maestro card in BiH.

2000 Aug. 2001 Oct.

Ziraat Bank Bosnia dd becomes member of Deposit Insurance Agency

2018 Aug.

Current capital 200 M BAM

2015 Feb. 2016 Oct.

Investment in new banking software Investment in New Head Office building, Increase in capital for 40M BAM The bank has passed a billion in assets and takes significant part in the market

2017 Dec. 2005 Feb. 2013 Oct.

First implemented chip credit card in BiH Implementation

• f GPRS

wireless POS terminals

Bosnia and Herzegovina

Macro Economic Indicators 2017 2018 2019* GDP (M BAM) 31.376 32.954 33.828 GDP per capita (BAM) 8.886 9.415 9.580 Average Net Wage (BAM) 851 879 928 Foreign Direct Investment ( M BAM) 780 784 861 Growth (%) 3,2 3,2 2,7 Inflation (%) 1,2 1,4

• Unemployment (%)

20,5 18,4 15,7 Current account deficit ( B BAM) 1.48 1.37 1.16 Current account deficit of % GDP 4,7 4,2

• Foreign trade(milyon BAM)

29.832 31.852 18.811 Export 11.385 12.258 10.976 Import 18.447 19.594 18.255 Public debt ( M BAM) 11.009 11.120

• External debt

7.853 8.205 8.222 Internal debt 3.156 2.915 3.002 CAPITAL CITY Sarajevo AREA 51.197 km2 POPULATION 3,5 million LOCAL CURRENCY Konvertibl Mark (KM) 1 EUR=1,96 KM (Fixed) 1 USD=1,71 KM (2018) ADMINISTRATIVE STRUCTURE Bosnia and Herzegovina consists of two entities:

• Federation of Bosnia and Herzegovina (10

Cantons )

• Republika Srpska

RATING B Positive (Standard & Poors) AIRPORTS Sarajevo, Banja Luka, Tuzla, Mostar Ports Ploce Croatia ports NATURAL RESOURCES Steel, coal, lead, manganese, bauxite MAJOR INDUSTRIAL AREAS Installation of motor vehicles, tanks and aircraft, Textiles, Tobacco products, Furniture made of wood, Small household appliances

Year 1991 2013 Total population 4.377.033 3.531.159

Bosnians 1.902.956 (43,5 %) 1.769.592 (50,1 %) Croats 760.852 (17,4 %) 544.780 (15,4 %) Serbs 1.366.104 (31,2 %) 1.086.733 (30,8 %) Other 347.121 (7,9 %) 130.054 (3,7 %) Urban Population 1.729.768 (39,5 %) 1.506.691 (42,7 %) Rural Population 2.647.265 (60,5 %) 2.024.468 (57,3 %)

Average age

• 39,5

Urban

• 39,7

Rural

• 39,4

Population density 85 /km² 69 /km²

Urban 1.138 /km² 991/km² Rural 53 /km² 41 /km²

Area 51.222,84 km² 51.222,84 km² Residential area by ethnic majority

Bosnian 14.600,82 km² (28,5 %) 15.171,49 km² (29,6 %) Croatian 9.093,51 km² (17,8 %) 8.212,42 km² (16,0 %) Serbian 26.742,12 km² (52,2 %) 25.019,34 km² (48,8 %) Other 786,39 km² (1,5 %) 2.819,59 km² (5,5 %)

Number of municipalities by ethnic m 142 142

Bosnian 63 54 Croatian 25 24 Serbian 54 64

Labor force (2017 forecast)

• 1.500.000

Service

• 765.000 (51 %)

Industry

• 450.000 (30 %)

Agriculture

• 285.000 (19 %)

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2019* - 3rd quarter of 2019

Federation of Bosnia and Herzegovina - Employment and Wage Distribution (31.12.2018)

Federal Bureau of Statistics www.fzs.ba

TOTAL WOMEN TOTAL WOMEN

TOTAL ( FBiH) 519.800 215.317 329.907 188.503 889 1.365

Sarajevo canton 154.041 67.500 62.561 38.973 1.096 1.702 Tuzlanski canton 96.461 35.701 79.378 46.982 797 1.215 Zeničko-dobojski canton 82.688 32.572 58.577 33.396 763 1.164 Hercegovačko-neretvanski canton 54.133 24.729 30.703 16.858 970 1.495 Srednjobosanski canton 50.957 20.576 34.777 17.847 723 1.091 Unsko-sanski canton 37.687 15.992 38.172 20.429 840 1.286 Zapadnohercegovački canton 19.322 7.776 10.820 6.136 796 1.216 Livanjski canton 10.723 4.470 7.388 3.926 884 1.350 Bosansko-podrinjski canton 7.291 3.281 3.169 1.836 796 1.220 Posavski canton 6.497 2.720 4.362 2.120 773 1.180

Number of employment Number of unemployed Net fee (BAM) Gross fee (BAM) Canton Name

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Bosnia and Herzegovina - Foreign Trade

EXPORT - Bosnia and Herzegovina 11/2019 M BAM TURKEY Export Products 11/2019 M BAM Name of country Volume Share Name of country Volume Share Germany 1,580 14% Animal and vegetable fats and oils 95 0.9% Croatia 1,344 12% Iron and steel 47 0.4% Serbia 1,257 11% Furniture, mattress, bed carrier 37 0.3% Italy 1,229 11% Inorganic chemical products 21 0.2% Austria 1,030 9% Explosives 7 0.1% Slovenia 951 9% Weapons and ammunition; Fittings & Accessories 7 0.1% Montenegro 411 4% Paper and cardboard; paper, paper products 7 0.1% Turkey 267 2% Nuclear reactors, boilers, machinery, mechanical watches 6 0.1% Hungary 258 2% Iron and steel products 5 0.0% France 243 2% Cereals 5 0.0% Top 10 Total 8,570 78% Top 10 Total 237 2.2% Total 10,976 100% Total 267 2.4% IMPORT - Bosnia and Herzegovina 11/2019 M BAM Imports from Turkey Products 11/2019 M BAM Name of country Volume Share Name of country Volume Share Croatia 3,241 18% Nuclear reactors, boilers, machinery and mechanical 71 0.4% Serbia 2,544 14% Articles of apparel and clothing accessories, knitted or crocheted 71 0.4% Slovenia 1,639 9% Plastics and articles thereof 71 0.4% Germany 1,636 9% Articles of apparel and clothing accessories, except knitted crochets 66 0.4% Italy 1,552 9% Iron and steel 41 0.2% Austria 972 5% Electrical equipment for ignition and starting of engines 34 0.2% Turkey 753 4% Iron and steel products 29 0.2% Hungary 699 4% Furniture, mattress, bed carrier 25 0.1% SDA 506 3% Aluminum and aluminum products 25 0.1% China 504 3% Fruit for eating; citrus peel or melon and watermelon 24 0.1% İlk 10 Toplam 14,046 77% Top 10 Total 456 2.5% Toplam 18,255 100% Total 753 4.1% FOREIGN TRADE BALANCE

• 7,279

Foreign Trade 29.231

• Export

10.976

• Import

18.255

Foreign Trade with Turkey 1.020

• Export

267

• Import

753

Sector

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Bosnia and Herzegovina - Foreign Investment

38.8 18.0 14.6 6.8 6.8 5.4 4.7 4.5 0.2 0.2

41.0 13.4 15.5 7.3 6.8 5.7 5.0 4.8 0.3 0.2

Austria Turkey Italy Russia Germany B.A.E. Slovenia Saudi Arabia Croatia Other

FBiH Banking Sector Foreign Capital Distribution (%)

31.12.2018 31.12.2017

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2018 Total Assets

4,6%

FBiH Sector ZiraatBank BH

Banking Sector Position

Q3 2019 Total Assets

4,3%

FBiH Sector ZiraatBank BH

Market Share 2018 Total Loans

5,1%

Q3 2019 Total Loans

4,9%

Market Share

Assets, M BAM Loans, M BAM

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

850 1,020 1,015 973 990 1,017

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

18,382 20,210 22,094 22,456 23,082 23,742

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

634 792 728 743 757 740

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

12,270 13,179 14,326 14,583 14,923 14,907

2018 Total Assets

7/15 place

Q3 2019 Total Assets

8/15 place

Rankings 2018 Total Loans

7/15 place

Q3 2019 Total Loans

8/15 place

Rankings

14

2018 Total Deposits

3,8%

FBiH Sector ZiraatBank BH

Banking Sector Position

Q3 2019 Total Deposits

3,5%

FBiH Sector ZiraatBank BH

Market Share 2018 Total Profit

• 13,6%

Q3 2019 Total Profit

0,6%

Market Share

Deposits, M BAM Profit, K BAM

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

506 686 668 620 638 665

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

14,176 15,815 17,604 17,801 18,306 18,965 2016 2017 2018 Q1 2019 Q2 2019 Q3 2019 196 2,620

• 34,743

547 1,245 1,410

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

173,248 239,973 255,355 89,809 181,681 250,924

2018 Total Deposits

9/15 place

Q3 2019 Total Deposits

10/15 place

Rankings 2018 Total Profit

15/15 place

Q3 2019 Total Profit

12/15 place

Rankings

15

Banking Sector Position

ROA (%)

0.03 0.28

• 3.54

0.23 0.25 0.19 1.00 1.30 1.20 1.60 1.60 1.46 ZiraatBank Sector

ROE (%) Total Income / Average Assets (%) Net Interest Income / Average Assets (%)

0.16 1.67

• 21.16

1.28 1.44 1.09 6.50 8.50 8.70 12.00 11.80 10.80 ZiraatBank Sector 6.46 5.80 5.67 4.91 4.95 4.98 5.58 5.40 5.00 4.80 4.60 4.67 ZiraatBank Sector 3.58 3.44 3.49 2.86 2.83 3.08 3.38 3.20 2.90 2.80 2.60 2.67 ZiraatBank Sector

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• About Ziraat Finance Group
• ZiraatBank BH d.d. at a glance
• Business model
• Key financial indicators
• Appendix

17 We are boosting productivity through operational centralization, digitalization, automated processes and decision support systems.

Strategic Plan

Well-educated, talented and dedicated workforce Continously invest in alternative channel distribution We continue to offer a distinctive customer experience on digital channels by developing technology-oriented, innovative products and services. Financial bridge between Turkey and Bosnia Focus on increasing the portfolio of retail customers Loan placements to Banks on the primary and secondary markets

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• About Ziraat Finance Group
• ZiraatBank BH d.d. at a glance
• Business model
• Key financial indicators
• Appendix

19

Assets Composition

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

5,566 4,892 121,910 159,942 183,494 233,010 158,978 218,755 219,234 116,257 91,080 86,029 28,634 42,751 105,201 107,677 103,145 105,714 53,326 46,611 50,860 61,112 62,051 64,294

661,167 792,873 728,077 743,348 756,504 739,536

MM Lends Liquid Assets Provisions for eventual losses Other Assets Loans

Successfully diversifying asset base (000 BAM) Composition of assets Q3 2019 (%) Growth prospects in line with strategies

MM Lends 22.91% Liquid Assets 8.46% Provisions for eventual losses

• 10.39%

Other Assets 6.32% Loans 72.71%

 Total assets grew Q2 2019 o Q3 2019 by 2,75%, Q3oQ3 vs sector by 4,3% and total loans decrease by 2,24%  Strong focus to finance the Commerce and Manufacturing Sectors.  BAM and *Other values are equally denominated on balance sheet (BAM assets 50% of total assets, other values 50% of total assets)

850.403 1.020.380 * 95% of other values is EUR currency index loans

+27.171 (+2,75%)

1.017.155 1.014.880 972.982 989.984

+2.275 (+0,22%)

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Loan Composition

Loan portfolio by customer segmentation (%) Currency breakdown of loans Q3 2019 (%)

Manufacturing 37% Commerce 21% Service 19% Agriculture 7% Construction 6% Tourism 7% Energy 3%

Breakdown of Loans, Q3 2019

27.8% 62.2% 10.0%

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

73.0% 72.9% 71.3% 66.5% 64.1% 64.9% 27.0% 27.1% 28.7% 28.2% 28.2% 29.8%

5.3% 7.8% 5.30% Corporate Retail Bank Q3 2019

48.3% 51.7% 661.167 792.873

BAM Foreign Currency* Corporate Retail

30.0% 65.0% 5.0%

* 95% of other values is EUR currency index loans

728.077 743.348

Bank Corporate Retail Bank

756.647 739.537 739.537

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NPL

NPL (%)

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

9.0% 8.5% 23.7% 22.5% 22.0% 22.9% 11.7% 9.7% 8.5% 8.2% 7.8% 7.6%

ZiraatBank Sector

NPL ratio by segments (%)

(%) Retail Corporate Total ZiraatBank 7,3 29,6 22,9 Sector 5,8 9,4 7,6

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

155,762 158,383 171,800 172,347 173,045 173,210 166,245 156,466 156,466 156,466 97,792 97,792 21,957 19,356 18,653 23,873 81,397 81,524

506,439 686,175 667,961 620,296 637,750 664,629 Equity Non-Deposit funds Other Deposits 22

Liabilities Composition

Composition of liabilities (000 BAM ) Composition of liabilities Q3 2019 (%)

Equity 17% Non-Deposit Funds 10% Other 8% Deposits 65%

Story about growing

 Total Liabilities grew Q2 2019 o Q3 2019 by 2,75%, Q3oQ3 vs sector by 3,5% and total deposits increase by 4,21%  Substantially all Bank deposits are insured up to the applicable limits set by the Deposit Insurance Agency up to 50.000 BAM.

850.403 1.020.380 1.014.880 972.982 989.984

+2.275 (+0,22%)

1.017.155

+27.171 (+2,75%)

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Diversified and widespread deposit base

Deposits by customer segmentation (%) Currency breakdown of deposits Q3 2019 (%)

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

55.4% 47.9% 49.6% 52.6% 52.7% 54.0% 42.6% 38.7% 43.1% 47.5% 47.2% 45.9%

2.0% 13.4% 7.4% 0.0% 0.0% 0.0%

Corporate Retail Banks Retail Banks

506.439 686.175 51.0% 49.0% 0.0%

Corporate Retail Q3 2019

54.0% 45.9%

BAM Foreign Currency Banks 2016 2017 2018 Q1 2019 Q2 2019 Q3 2019

65.2% 72.7% 71.6% 69.8% 68.8% 66.5% 34.8% 27.3% 28.4% 30.2% 31.2% 33.4%

Time Demand Demand

Demand vs Time deposits Q3 2019 (% of total)

49.0% 51.0%

Corporate Retail Q3 2019

66.5% 33.4%

Demand Time

614.965 667.691 637.750 664.629 664.629

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Profitability

2016 2017 2018 Q1 2019 Q2 2019 Q3 2019 196 2,620

• 34,743

547 1,245 1,410

Net Profit ( BAM K )

20,405

(10.676)

9.890 (18.209)

1410

Net Interest Income Operating Income Direct Expenses Operating Expenses Net Profit

Personnel Expenses Other Loan Fees 2% Fees for Services Renderd Foreign Exchange Earnings Other 22% 65% 11% 48% 20% 32% Facility and Utility Expenses

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• About Ziraat Finance Group
• ZiraatBank BH d.d. at a glance
• Business model
• Key financial indicators
• Appendix

26

Balance Sheet Summary

(000) BAM 2016 2017 2018 Cash and cash equivalents and deposits held with other inst. 158,978 218,755 219,234 Cash and non interest dep accounts 54,150 179,944 173,323 Interest dep. account 104,828 38,811 45,911 Placements with banks 5,566 4,892 121,910 Loans and receivables 661,167 792,873 728,077 Loans 634,077 751,089 596,179 Receivables 27,090 41,784 131,898 Other Assets 53,326 46,611 50,860 Provisions for eventual losses 28,634 42,751 105,201 TOTAL ASSETS 850,403 1.020,380 1,014,880 DEPOSITS 506,439 686,175 667,961 Interest deposits 326,854 482,654 473,071 Non interest deposits 179,585 203,521 194,890 Loans and other borrowings 166,245 156,466 156,466 Subordinated dept 0,00 0,00 0,00 Total Equity 155,763 158,383 171,800 Others 21,957 19,356 18,653 Q1 2019 Q2 2019 Q3 2019 % Change Q3oQ2 % Change Q3o2018 159,942 183,494 233,010 27.0% 6.3% 132,016 142,429 214,031 50.3% 23.5% 27,926 41,065 18,979

• 53.8%
• 58.7%

116,257 91,080 86,029

• 5.5%
• 29.4%

743,348 756,504 739,536

• 2.2%

1.6% 604,748 615,080 584,195

• 5.0%
• 2.0%

138,600 141,424 155,341 9.8% 17.8% 61,112 62,051 63,788 2.8% 25.4% 107,677 103,145 105,714 2.5% 0.5% 972,982 989,984 1,017,155 2.7% 0.2% 620,296 637,750 664,629 4.2%

• 0.5%

429,616 436,413 437,799 0.3%

• 7.5%

190,680 201,337 226,830 12.7% 16.4% 156,466 97,792 97,792 0.0%

• 37.5%

0,00 58,675 58,675 0.0%

• 172,347

173,045 173,210 0.1% 0.8% 23,873 22,722 22,849 0.6% 22.5%

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Income Statement Summary

(000) BAM 2016 2017 2018 Net interest income 29,174 34,229 34,048 Interest income 37,277 43,039 42,909 Interest expense 8,103 8,81 8,861 Operating income 12,502 11,710 12,495 Total non interest expense 39,349 42,263 81,247 Business and direct expenses 16,470 18,449 54,478 Operating expense 22,879 23,814 26,769 Income tax 888 1,056 41 Net profıt 196 2,62

• 34,743

Q1 2019 Q2 2019 Q3 2019 % Change % Change Q3oQ2 Q3o2018 6,939 13,783 20,405 48.0%

• 40.1%

9,104 18,109 26,886 48.5%

• 37.3%

2,165 4,326 6,481 49.8%

• 26.9%

2,817 5,984 9,890 65.3%

• 20.8%

9,209 18,522 28,885 55.9%

• 64.4%

3,366 6,525 10,676 63.6%

• 80.4%

5,843 11,997 18,209 51.8%

• 32.0%
• 100.0%

547 1,245 1,410 13.3% 95,9%

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Key Financial Ratios

(%) 2016 2017 2018 ROAA 0.03% 0.29%

• 3,54%

ROAE 0.16% 1.67%

• 21,16%

Liquid Assets/Total Assets 19.34% 21.88% 33,22% Loans/Deposits 125.20% 109.46% 79,81% Loans/Assets 74.56% 73.61% 52,53% Deposits/Assets 59.55% 67.25% 65,82% Interest Income / Interest Expense 432.59% 460.31% 453,54% Equity / Total Liability 18.32% 15.52% 16,93% Net Interest Income / Interest Assets 4.19% 3.95% 3,53% Cost / Income Ratio 61,30% 59,05% 65,11% # of Branches 30 30 32 Employees 299 326 332 ATMs 53 54 55 Q1 2019 Q2 2019 Q3 2019 0,22% 0,25% 0,19% 1,27% 1,44% 1,09% 28,18% 27,57% 31,19% 88,24% 88,71% 81,02% 56,26% 57,15% 52,94% 63,75% 64,42% 65,34% 395,85% 394,04% 390,20% 17,71% 17,48% 16,24% 2,76% 2,75% 2,70% 68,52% 69,56% 68,83% 32 32 32 323 313 308 57 62 66

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For further information please contact: Treasury & FI Department Zmaja od Bosne 47 c, 12 Kat. Sarajevo/Bosnia and Herzegovina Phone: (+387) 33 955 039 E-mail: treasury@ziraatbank.ba www.ziraatbank.ba DECLAIMER The information contained in the presentation has been prepared by ZiraatBank BH d.d. For informational purposes only. Although the information in this presentation has been obtained from sources which we believe to be reliable, we cannot guarantee that the information is without fault or entirely accurate. This presentation cannot be interpreted as an advice to anyone and is also strictly confidential and may not be reproduced, distributed or published for any purpose.

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Investor Presentation, June 2018

www.ziraatbank.ba