INVESTORS PRESENTATION March 2016 (based on unaudited figures) 1 - - PowerPoint PPT Presentation

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INVESTORS’ PRESENTATION

March 2016

(based on unaudited figures)

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CONTENTS

GROUP OVERVIEW 4 MAIN DEVELOPMENT PILLARS 8 CONSOLIDATED FINANCIAL STANDING 14 MAIN STRATEGIC ORIENTATIONS 20 SHARE INFORMATION 21 APPENDIX 23

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DISCLAIMER

This presentation has been prepared by Bank Audi s.a.l. (“Bank Audi”); is for information purposes only and is intended only for the initial direct recipient hereof. It may not be reproduced or redistributed to any other person. It shall not and does not constitute either an

• ffer to purchase or buy or a solicitation to purchase or buy or an offer to sell or exchange or a

solicitation to sell or exchange any securities of Bank Audi and neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever. Certain statements in this presentation may constitute “forward-looking statements”. These statements appear in a number of places in this presentation and include statements regarding Bank Audi’s intent, belief or current expectations. These forward-looking statements can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “is expected to”, “will”, “will continue”, “should”, “approximately”, “would be”, “seeks” or “anticipates”; or similar expressions or comparable terminology, or the negatives thereof. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and actual results, performance or achievements of Bank Audi may differ materially from those expressed or implied in the forward-looking statements as a result of various factors. There are many factors which could affect Bank Audi’s actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. In addition, even if Bank Audi’s results of operations and financial condition and the development of the industry in which it operates are consistent with forward-looking statements contained herein, those results, condition or developments may not be indicative of results or developments in subsequent periods. Bank Audi does not undertake to update any forward-looking statements made herein. Past results are not indicative of future performance. While the information contained in this presentation and document has been prepared in good faith, no representation or warranty, express or implied, is or will be made and no responsibility or liability is or will be accepted by Bank Audi or any of its subsidiaries or affiliates or by any of their respective directors, officers, employees or agents as to or in relation to the accuracy or completeness thereof or for any loss arising from any use thereof and any and all such liability is expressly disclaimed. This document is not to be relied upon as such in any manner as legal, tax or investment advice and shall not be used in substitution for the exercise of independent judgment and each recipient hereof shall be responsible for conducting its own investigation and analysis of the information contained

• herein. Except where otherwise indicated, the information provided in this document is based
• n matters as they exist as of the date stated or, if no date is stated, as of the date of

preparation and not as of any future date, and the information and opinions contained herein are subject to change without notice. None of Bank Audi or any of its subsidiaries or affiliates accepts any obligation to update or

• therwise revise any such information to reflect information that subsequently becomes

available or circumstances existing or changes occurring after the date hereof. This presentation may not and will not be made directly or indirectly and may not be and will not be distributed in any jurisdiction in which it is unlawful to make such presentation or distribution under applicable laws and regulations. Persons who attend any meeting at which this presentation is used or distributed or who otherwise receive this presentation are required to make themselves aware of and adhere to any and all restrictions applicable to them. In particular, this presentation may not be made in, and may not be and will not be distributed, directly or indirectly, in or into the United States or to any U.S. Person (as defined in Regulation S under the U.S. Securities Act of 1933, as amended “S”),

• ther than as permitted by Regulation S, or to qualified institutional buyers as defined in and in

accordance with Rule 144A under the U.S. Securities Act of 1933, as amended, and this document is not to be distributed, directly or indirectly, in Canada, Australia or Japan or to any citizen or resident of Canada, Australia or Japan. This presentation may only be attended by, and this document may only be distributed to, persons in member states of the European Economic Area who are qualified investors within the meaning of Article 2(1)(E) of the Prospectus Directive (2003/7/EC) (including any amendments thereto, including Directive 2010/73/EU, and including any relevant implementing measure in each relevant member state of the EEA) (“Qualified Investors”) and persons who (i) are outside the United Kingdom, (ii) who have professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services an Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”), and (c) are high net worth companies, unincorporated associations and other bodies to whom it may otherwise lawfully be communicated in accordance with Article 49 (2)(a) to (d) of the Order (all such persons, together with Qualified Investors, being referred to as “relevant persons” ). This presentation must not be acted on or relied on by persons who are not relevant persons and any investment or investment activity to which this presentation relates is available only to relevant persons and will be engaged in only with relevant persons. The information contained herein must be kept strictly confidential and may not be reproduced

• r redistributed in any format to any person other than the initial direct recipient hereof

without the express written approval of Bank Audi.

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Connecting customers to opportunities US$ 126 billion of yearly inter –Arab trade turnover in 2014 US$ 39 billion of yearly Turkish Arab trade turnover in 2015

COUNTRY COMPANY

Lebanon Bank Audi Lebanon Audi Private Bank Lebanon Audi Investment Bank Switzerland Bank Audi (Suisse) France Bank Audi France Jordan Bank Audi - Jordan Network Syria Bank Audi Syria Saudi Arabia Audi Capital Egypt Bank Audi Sudan National Bank of Sudan UAE Bank Audi (Representative office) Qatar Bank Audi Egypt Arabeya On-Line Monaco Audi Capital Gestion Turkey Odea Bank

CORPORATE VALUES

• INNOVATION
• TRANSPARENCY
• HERITAGE
• CIVIC ROLE
• HUMAN CAPITAL
• QUALITY

Ranking by Assets

• No. 1 in Lebanon
• No. 19 in MENA

GROUP OVERVIEW: COVERING THE EUROPE – MENAT CORRIDOR

1962 1967 1974 1975 1979 2004 2005 2006 2006 2006 2007 2007 2010 2010 2012 www.bankaudigroup.com Main Development Pillars

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CORPORATE HIGHLIGHTS

• 186 years of banking tradition and experience
• Rated by Moody’s, S&P, and Fitch
• First GDR issue in the broad MENA region in 1995
• Wide and well diversified shareholders’ base
• Accessed 17 times international markets through debt and equity issues
• 87.8% of university graduates staff of total staff
• Abiding by the Beirut and the London Stock exchanges’ regulations
• Competitive National and Regional Positioning

GROUP OVERVIEW: CORPORATE & FINANCIAL HIGHLIGHTS

Footings Customers’ deposits

FINANCIAL HIGHLIGHTS IN U$ MILLION

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www.bankaudigroup.com CORPORATE GOVERNANCE Ethical conduct, Compliance, Anti-corruption, Risk management, Non-discrimination Environmental & Social Management System (ESMS) ECONOMIC DEVELOPMENT Product portfolio, Economic performance, Indirect economic impacts, Procurement practices, Market presence COMMUNITY DEVELOPMENT Local community development Local community support HUMAN DEVELOPMENT Employment practices, Diversity & equal opportunity Training, education, talent development, External human development ENVIRONMENTAL PROTECTION Emissions, Effluents & waste, Energy consumption, ESMS

GROUP OVERVIEW:CORPORATE AND SOCIAL RESPONSIBILITY (CSR) PILLARS

E & S MANAGEMENT SYSTEM

IDENTIFICATION SCREENING

CATEGORIZATION ASSESSMENT APPROVAL MONITORING

REPORTING

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Notes to shareholders structure: 1 Percentage ownership figures represent Common Shares owned by the named Shareholders and are expressed as a percentage

• f the total number of Common Shares issued and outstanding. As at the date hereof, the Bank (and its affiliates) is the

custodian of Shares &/Or GDRs representing 70.61% of the Bank’s common shares; 2 Excluding members of the Audi Family accounted for in a separate row appearing above; 3 Deutsche Bank Trust Company Americas holds Common Shares in its capacity as depositary under the Bank’s GDR Program. In addition to the ownership of Common shares mentioned above, 10.6% of the Bank’s Common Shares are held through GDRs by each of FRH Investment Holding Company s.a.l., The Audi Family, Sheikha Suad H. Al Homaizi, Sheikh Dhiab Bin Zayed Al- Nehayan, and the Al-Hobayeb Family (respectively, 2.30%, 0.92%, 1.81%, 3.13% and 2.44%). Information on GDR ownership is based on self declarations (pursuant to applicable Lebanese regulations) as GDR ownership is otherwise anonymous to Bank Audi.

CORPORATE GOVERNANCE

BOD Structure 10 Members 5 Executive directors 1 Shareholders representative 4 Independent directors BOD Committees Group Audit Committee Group Risk Committee Remuneration Committee Corporate Governance & Nomination Committee Group Executive Committee Management Committees Asset-Liability Committee Anti-Money Laundering Committee Credit Committee Information Technology Strategic Committee Disclosure Committee Set of Charters Corporate Governance Guidelines Chart of Authorities Committees Charters

GROUP OVERVIEW: GOVERNANCE OF HOLDING BANK

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GROUP OVERVIEW: MENAT OPERATING ENVIRONMENT

Lebanon Turkey Egypt MENA Nominal GDP 2016F (US$ billion) Population 2016F (million) Bank assets* (US$ billion) *February 2016 or latest available Main Development Pillars Under Establishment

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1 Including consolidation adjustments

Lebanese entities include: Bank Audi Lebanon, AIB, Solifac, Gamma, other Lebanese entities and consolidation adjustments Private Banking entities include: APB, BAS, Audi Capital Gestion , BAQ and AC-KSA, Other entities include: BAF, other European entities, BASY, BAJO, BASU, Aolb and other MENA entities

Lebanese Universal Bank Lebanese Universal Bank with MENA Footprints Regional Universal Bank

• 2004-

GROUP OVERVIEW: BUSINESS SEGMENTATION – THE DIVERSIFICATION TREND

ASSETS LOANS NET PROFITS In US$ million

• 2010-
• 2016-

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MAIN DEVELOPMENT PILLARS - LEBANON STRONG LEADERSHIP IN LEBANON

CURRENT STATUS OPPORTUNITY OUTLOOK

• Sustained financial resilience on the back of persistently strong

monetary and banking buffers

• Large cyclical output gap between actual and potential output,

suggesting pent up aggregate demand for goods and services

• Syria’s massive reconstruction needs entailing large opportunities

for Lebanese enterprises

• Potential of gas and oil extraction reinforcing growth, investment

and income per capita while apt to gradually contain public finance imbalances

• Universal banking profile with dominant positioning
• Largest retail accounts portfolio with an 18% market share

supported by innovative technologies, products and services

• Banking with the top 100 corporates with dominant corporate and

commercial loan market shares

• Market maker in trading operations with a turnover on Lebanese

fixed income securities of more than US$ 5.5 billion per annum and an important market share in equity trading on the Beirut Stock Exchange

• Leverage on existing corporate relationship, expertise and regional

presence to grow the regional business with a focus on trade

• Upgrade the SME financing proposition on track to become a high

value driver for the Bank, capturing growth opportunities

• Focus on customer centric retail model supported by innovative

delivery channels, state of the art technologies and tailored made products and services

1 Including close to US$ 30 million relate to Group functions 2 Return on required regulatory capital

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MAIN DEVELOPMENT PILLARS - TURKEY ROBUST GROWTH WITH ENTICING PROSPECTS

CURRENT STATUS OPPORTUNITY OUTLOOK

• A diversified and growing economy with favorable sovereign

debt dynamics and improving trade linkage beyond the country’s traditional European markets

• Real GDP growth in 2015 equivalent to more than twice the

average real GDP growth in emerging markets (excluding China and India), with a forecast of a robust growth to be sustained in 2016 and beyond

• Recent rebound in confidence indicators and strong fiscal

buffers are easing the downside risks to economic activity

• Dropping oil prices generating a contraction in the current

deficit, Turkey’s most significant imbalance, to fundamentally sustainable levels in addition to boosting growth

• A challenger bank profile with a universal product range
• 1.4% market share in assets, (1.9% in deposits and 1.5% in

performing loans) in 3 years of average activity, ranking 9th among non-state owned conventional banks

• Optimized operating model supported by a good mix to people /

products / technology

• Quick franchise building without incurring any goodwill expense,

profitable after 19 months since launch

• Grow middle corporate and develop value-added SMEs and

consumer segments

• Leverage on the Group’s wide footprint in the MENA region to

capture cross-border opportunities, permitting to become the top MENA bank in Turkey and at the forefront of Turkish banks covering the region

• Sustain growing positive jaws, to quickly improve efficiency and

profitability

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MAIN DEVELOPMENT PILLARS - EGYPT EXPANSION OF NETWORK & PRODUCT RANGE

CURRENT STATUS OPPORTUNITY OUTLOOK

• Gradual return of confidence since the start of the second

transition, generating a noticeable turnaround in economic activity and investment

• State showing firm commitment to address macro challenges

through the implementation of a series of reforms within the context of strong foreign support

• Macro outlook increasingly favorable for the next few years,

reflecting growing optimism reinforced by the recent Zohr gas discovery

• Real GDP growth to average close to 5% over the next 5 years,

exceeding population growth, reinforcing per capital income and translating into double digit growth in banking aggregates

• Resilient to successive political transitions since 2011, sustaining

solid growth trajectory outpacing peers with 18% CAGR in assets and 41% in net profits over the 2010-Mar16 period

• Sound credit policies focusing on defensive businesses

translating into a NPL ratio of 1.3% well below the sector

• Efficient and profitable growing bank with an average ROAA and

ROACE of 1.7% and 19.2% over the 2010-QI16 period

• New development plan encompassing the expansion of the

network and extension of the scope of products and services to cover new business segments such as Islamic, mass affluent, mortgages and others

• Building on a visible and highly regarded brand, to achieve

ambitious growth targets by 2019

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STRATEGY OPPORTUNITY

MAIN DEVELOPMENT PILLARS – PRIVATE BANKING STRONG EXPERTISE & KNOW-HOW

CURRENT STATUS

• The Middle East region continues to be second-fasted growing

private banking market, trailing only to Asia

• Robust growing wealth pools fostering need for wealth and

asset management services

• Wealth management industry currently in transition to

accommodate increasing regulatory transparency requirements and related cost investment, allowing smaller and more agile institution to gain market shares

• Operates thru Banque Audi Suisse, the second largest Arab

Private Bank based in Switzerland since the mid-70s and thru 2 main entities in Lebanon and Saudi Arabia with additional offices in Monaco, Qatar, Jordan and Abu Dhabi

• Full diversified offering with full access to major markets

worldwide and global investment products including discretionary portfolio management, investment advisory, trade execution in all asset classes, structuring and management of Saudi and regional funds and other private banking services

• Deep-rooted in the MENA region, Bank Audi Private Bank also

covers Sub-Saharan Africa (AuMs of US$ 617 million) and Latin America (US$ 669 million) through dedicated desks and RMs

• Recent restructuring of the business line to improve intergroup

synergies and efficiencies

• Plan to establish a footprint in the United Kingdom to support

the private banking development strategy and future expansion to Sub-Saharan Africa and Latin America

• Partnership with Crossbridge Capital based in London to create

a centralized and specialized wealth management platform

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CONSOLIDATED FINANCIAL STANDING: PERFORMANCE HIGHLIGHTS

INCOME STATEMENT IN US$ MILLION ASSETS & FOOTINGS IN US$ MILLION

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CONSOLIDATED FINANCIAL STANDING: STEADY AND RESILIENT GROWTH

ASSETS IN US$ MILLION LOANS TO CUSTOMERS IN US$ MILLION CUSTOMERS’ DEPOSITS IN US$ MILLION REVENUES & NET EARNINGS IN US$ MILLION EARNINGS PER COMMON SHARE IN US$ KEY PERFORMANCE METRICS

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LOANS BREAKDOWN BY ECONOMIC SECTOR

CONSOLIDATED FINANCIAL STANDING: LOAN PORTFOLIO BREAKDOWN (44% OF TOTAL ASSETS) - END MARCH 2016

LOANS BREAKDOWN BY COLLATERAL

Cash and bank guarantee, 12.5% Real estate mortgage, 25.7% Securities, 5.8% Personal guarantee, 27.6% Unsecured , 28.3%

NET EXPOSURES BY DEVELOPMENT PILLARS

USD, 46.3% TRY, 17.7% EUR, 15.3% EGP, 9.4% LBP, 7.8% JOD, 2.0% OTHER, 1.4% SYP, 0.1%

LOANS BREAKDOWN BY CURRENCY LOANS BREAKDOWN BY CUSTOMERS’ TYPE

Corporate & commercial clients, 64.4% SMEs & small business

• wners, 10.9%

Private & personal clients, 6.6% Retail & consumer clients, 18.0%

LOANS BREAKDOWN BY MATURITY

Short-term facilities, (<1 year), 35.7% Medium-term facilities, (1-3 years), 16.8% Long-term facilities, (>3 years), 47.4%

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CONSOLIDATED FINANCIAL STANDING: ASSET QUALITY - END MARCH 2016

GROSS DOUBTFUL LOANS MOVEMENT IN US$ MILLION SPLIT OF LLP CHARGES IN QI-16 IN US$ MILLION

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0.8%

1 As compared to an average of 3.9% in the MENA region,

6.3% in emerging markets and 7.4% in the world.

9.4%

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CONSOLIDATED FINANCIAL STANDING: LIQUIDITY & PORTFOLIO SECURITIES (52% of TOTAL ASSETS) - END MARCH 2016

879 6,651 607 26 325 339 103 321 9,251 250 3,349 5 4 234 317 96 2 4,256 629 3,302 602 23 91 22 8 319 4,995 66 615 448 4 5 908 35 223 2,304 42 555 410 4 5 4 35 223 1,278 24 61 39 903 1,027 945 7,266 1,056 31 330 1,247 138 543 11,555

LIQUIDITY PORTFOLIO SECURITIES BREAKDOWN OF PLACEMENTS WITH BANKS BREAKDOWN OF PORTFOLIO SECURITIES BY CURRENCY & TYPE

Aaa to Aa3, 7.3% A1 to A3, 56.1% Baa1 to Baa3, 13.4% Ba1 to B3, 8.9% Below B3, 3.0% Not Rated, 11.3%

By Rating

G10 Countries, 70.0% MENA, 29.1% Other Europe, 0.6% Other, 0.4%

By Region

CB CDs 37.0% TBs in LL 14.3% Eurobonds in US$ 7.0% TBs in TRY 1.7% TBs in EGP 11.1% Bonds in other FCY 5.5% Risk ceded leb eurobonds 17.0% Equity instruments 1.3% Other fixed income instruments 5.0%

1 US$ 450 million of exposure to Lebanese Eurobonds.

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CONSOLIDATED FINANCIAL STANDING: CAPITALIZATION

CONSOLIDATED CAR AS PER BASEL III IN US$ MILLION CONSOLIDATED CAPITAL ADEQUACY RATIO EVOLUTION ODEA BANK & BANK AUDI EGYPT CAR AS PER LOCAL REGULATIONS

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• Growth mode in Egypt
• Efficiency enhancement in Lebanon
• Expanding towards higher growth and larger Turkish market
• Re-organizing and expanding the Private Banking business line
• 3 main pillars: Lebanon,

Turkey, Egypt.

• Growth strategy for the

Private Banking business line through improved synergies across entities and enhanced

• perating model
• Branching out in Iraq (granted

license for 7 branches)

• Medium term expansion plans

under consideration, the United Kingdom (thru a light structure), Sub-Saharan Africa and Latin America

CURRENT STRATEGY

MAIN STRATEGIC ORIENTATIONS: POSITION THE GROUP AS A LEADING MENAT BANK

www.bankaudigroup.com Main Development Pillars Under Establishment

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COMMON EARNINGS PER SHARE

SHARE INFORMATION: INVESTMENTS CONSIDERATIONS

COMMON BOOK PER SHARE COMMON DIVIDEND PER SHARE PAYOUT RATIO USEFUL SHARE INFORMATION

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SHARE INFORMATION: STOCK MARKET PERFORMANCE & RATIOS

GLOBAL AVERAGE 1.6 EMERGING MARKETS AVERAGE 2.6 MENA AVERAGE 1.4 AUDI 1 0.8

PRICE TO BOOK AS AT APRIL 19th, 2016

GLOBAL AVERAGE 12.0 EMERGING MARKETS AVERAGE 12.5 MENA AVERAGE 9.8 AUDI 1 6.6

PRICE TO EARNINGS AS AT APRIL 19th, 2016

GLOBAL AVERAGE 15.7% EMERGING MARKETS AVERAGE 28.6% MENA AVERAGE 17.4% AUDI 1 5.7%

PRICE TO ASSETS AS AT APRIL 19th, 2016

GLOBAL AVERAGE 3.0 EMERGING MARKETS AVERAGE 2.7 MENA AVERAGE 1.3 AUDI 1 1.4

PEG RATIO AS AT APRIL 19th, 2016

Stock Market Ratios

P/BV (April 11, 2016) ROACE (FY-15)

Sources: Bloomberg, Bank Audi's Group Research Department

Riyadh Bk

Bank Audi v/s MENA Peers

1 Prices as at April 11, 2016

Sources: S&P, Bloomberg, Beirut Stock Exchange, Bank Audi’s Group Research Department

COMPARATIVE P/E RATIOS FOR BANKS1 Audi GDR 6.6x MENA 9.8x KSA 9.2x Qatar 10.8x Audi Listed 6.9x Jordan 15.1x UAE 7.6x Bahrain 8.0x Lebanon 7.0x Egypt 8.7x Kuwait 14.5x Oman 5.6x

1 On the basis of a Bank Audi GDR price of US$ 5.83 on the Beirut

Stock Exchange as at 19/04/2016 Sources: Bloomberg, Zawya Investor, Citigroup, IMF, Beirut Stock Exchange, Bank Audi’s Group Research Department

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APPENDIX

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FINANCIAL STATEMENTS: CONSOLIDATED STATEMENT OF FINANCIAL POSITION

1 After deduction of provisions amounting to US$ 485 million from loans and advances to customers as per IAS 39, of which US$ 160 million representing provisions on collective assessment; 2 Loans granted to related parties against cash collateral amounted to US$ 103 million; 3 Includes an amount of US$ 1,661 million whose risk has been ceded to customers.

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FINANCIAL STATEMENTS: CONSOLIDATED PROFIT & LOSS STATEMENT

2014 QI-15 2015 QI-16

Interest & similar income Interest & similar expenses Net Interest Income Non interest income Total Operating Income Net provisions for credit losses Provision on impairment of financial instruments Net Operating income Personnel expenses Other operating expenses Depreciation of property & equipment Amortization of intangible assets Impairment of goodwill Total Operating Expenses Profit Before Tax Income tax Profit After Tax Net results from discontinued operations = Profit After Tax and Discontinued Operations Net Profit - Group Share Net Profit - Minority Share

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