Investors Relations Presentation June 2020 Bucharest Stock Exchange - - PowerPoint PPT Presentation

Investors Relations Presentation

June 2020

2

Bucharest Stock Exchange (BVB)

Indicator BVB

ISIN

ROBVBAACNOR0

Refinitiv

ROBVB.BX

Bloomberg

BVB.RO

Share price (May 25, 2020)

EUR 5.04 / RON 24.4

Market Cap (May 25, 2020)

EUR 40.6 mn/ RON 196.4 mn

• No. of outstanding shares

8,049,246

ADT 12TM

RON 0.09 mn

P/E (price as of May 2020, 12TM EPS)

24.89x*

P/BV (price as of May 2020)

1.74x*

Dividend Yield

3.3%

52 wk Low - High

19.00 – 27.50

Turnover velocity (12 TM )

12%

100% free-float, listed on its own floor since 2010 20% ownership threshold, majority institutional shareholders Shareholding structure as of April 2020: Romanian institutional investors – 73.79% Foreign institutional investors – 6.88% Romanian private investors – 16.3% Foreign private investors – 1.98% Bucharest Stock Exchange – 1.05% Significant investors > 5%: SIF Transilvania, NN Group N.V., EBRD

Source: BVB, Refinitiv Eikon

• 2,000

4,000 6,000 8,000 10,000 12,000 10 20 30 40 50 2015 2016 2017 2018 2019 2020

Price evolution of BVB vs. BET index (5 years)

BVB BET index (rhs)

3

Growth story in the Emerging Europe

CCP Impressive dividend yield Growing Domestic Potential Potential privatizations and new listings Promotion to Emerging Market Romanian capital market has been promoted to the Emerging Market status by FTSE Russell. The reclassification of the status will become effective in September 2020. Romanian Capital Market recorded one of the highest dividend yields in the world, averaging 8% in 2019 and estimated 5.1% in 2020 Pension funds’ total assets reached EUR 13.5 bn at the end of 2019, 27% higher than the end of the previous year while the AuM of the investment funds (apart from SIFs and FP) increased to EUR 5.4 bn at the end of 2019. The state seems keen to resume SOEs IPOs. Growing pipeline of private companies looking at financing options through the stock exchange. BVB has partnered with energy and financial institutions to put the basis for the Central Counterparty

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Historic moment - Romania was promoted to Emerging Market status

MSCI Global Market Accessibility Review, June 2019

In June 2019, MSCI upgraded Romania

• n Transferability after the market

received 3 additional upgrades

• n

Trading, Market Regulations and Information Flow a year earlier Romania has been promoted to Secondary Emerging Market status 3 years after being introduced on the watchlist

MSCI FTSE

“Of the countries listed in the consultation, Poland and Romania were cited most often as countries where a classification change could be

• justified. As such, they may be included

in future consultations if conditions continue to improve”

S&P

FTSE Country Classification Review, September 2019 S&P Dow Jones Country Classification Consultation Results, October 2017

Source: FTSE Russell, MSCI, S&P Global

5

Major potential for Romania to at least double its Market Cap to GDP ratio

Romania Bulgaria Austria Hungary Poland

Market Capitalization and ADT as of 30.04.2020 GDP as of 31.12.2018 Source: Refinitiv, FESE, BVB, GPW, WBAG, BSE, ZSE

Czech Rep. Croatia 27% 30%

20%

11%

8%

39%

11%

ADT: EUR 260.2 mn/day

• Mkt. Cap.: EUR 102.5 bn

# 449 companies ADT: EUR 152.7 mn/day

• Mkt. Cap.: EUR 86.1 bn

# 778 companies ADT: EUR 2.5 mn/day

• Mkt. Cap.: EUR 17.4 bn

# 119 companies ADT: EUR 48.4 mn/day

• Mkt. Cap.: EUR 19.6 bn

# 44 companies ADT: EUR 17.9 mn/day

• Mkt. Cap.: EUR 23.4 bn

# 55 companies ADT: EUR 0.7 mn/day

• Mkt. Cap.: EUR 4.1 bn

# 81 companies ADT: EUR 10.4 mn/day

• Mkt. Cap.: EUR 18.4 bn

# 84 companies on Main Market

Market Cap. / GDP

Diversified Market size and structure

Note: (%) of share turnover; (%) of market capitalization Data as of January 31, 2020

Market Structure by traded turnover

Market Structure by capitalization

6

7

Significant IPOs over the past 5 years amounting EUR 362 mn

IPO on the Main Market, carried out between in

• 2017. Largest private IPO in the BVB history

following the sale of 25,6% stake in the company for RON 944 mn (EUR 207 mn). IPO on the Main Market, carried in 2017, closed after less than 48 hours following the subscription rate

• f
• ver

270%. 15% stake sold by shareholders for RON 5.5 mn (EUR 1.2 mn). IPO on the Main Market, carried in 2017, closed after less than 48 hours following the subscription rate over 270%. 25% stake sold by shareholders for RON 9 mn (EUR 2 mn). IPO on the Main Market, carried out in 2017 when 25% stake was sold by the shareholders for RON 285 mn (EUR 62 mn). IPO on the Main Market, following the sale of 49% stake in the company for RON 186 mn (EUR 40 mn) IPO on the Main Market, carried out in 2016 when 44% stake was sold by the shareholders for RON 230 mn (EUR 50.5 mn).

Source: BVB

8

More than EUR 5.5 bn raised over the past 5 years through bonds issues and listings

Source: BVB

IIB – Supranational – EUR 460 mn raised, 7 issuances NE Property – Real Estate - EUR 1 bn raised, 2 issuances Romanian Finance Ministry – EUR 1.7 bn raised, 14 issuances Banca Transilvania EUR 285 mn raised Unicredit EUR 135 mn, 3 issuances Globalworth – Real Estate - EUR 1.1 bn raised, 2 issuances City of Bucharest, EUR 610 mn raised, 5 issuances Investia Finance SA BT Leasing EUR 40 mn, 2 issuances

Romania offers attractive dividend yields

Source: BVB, Refinitiv Eikon Dividend yield for 2020 was calculated as gross dividend divided by the latest price available before ex-date. Data until 25.05.2020

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2.5% 5.8% 5.4% 8.7% 8.0% 5.1% 3.6% 3.4% 4.0% 4.8% 4.6% 4.7%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%

2015 2016 2017 2018 2019 2020

BET index dividend yield vs. Avg. Ro.10Y treasury bond

BET Dividend Yield

• Avg. Romania 10 Y Gov. bond yield

5.1%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%

BET index companies dividend yield in 2020 e

Dividend yield 2020 e BET avg. dividend yield e

2.3 3.3 4.5 5.7 7.3 8.9 10.6 13.5 13.4

11.2% 15.4% 19.1% 19.2% 18.7% 19.7% 17.5% 22.0% 18.9%

2012 2013 2014 2015 2016 2017 2018 2019 2020

Pension Funds: Total Assets & Equity allocation

Pillar II & III Total Assets (EUR bn) Equity allocation (%)

10

Growing pension funds and asset management industry

Source: ASF, AAF Pillar 2 data as of April 2020. Open ended funds data as of December 2019.

1.9 3.2 4.3 5.0 5.27 5.34 4.63 5.21

6.5% 4.6% 4.4% 4.6% 4.6% 6.5% 7.5% 8.7%

2012 2013 2014 2015 2016 2017 2018 2019

Open ended funds: Net Assets & Equity allocation

Net Assets (EUR, bn) Equity allocation (%)

Mid-term strategic objective: Double the market liquidity

Increasing retail investors base Attracting more issuers Improving the financial education of the market participants Improving issuers’ transparency and coverage Better international visibility – EM promotion Establishing the Romanian CCP and launching the derivatives market

Double the Liquidity

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A healthy market evolution will only be supported by a CCP

Spot Market Single Stock Futures Index Futures Single Stock Options Currency (FX) Futures Energy Derivatives

We are here..

CCP establishment and launching

• f Derivatives

market

Lending & Borrowing Regulated lending platform

Phase I - 1 year Phase II – 1.5 years Phase III – 1.5 years

Other asset classes (e.g. Repo) OTC Liberalization

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Hidroelectrica IPO – Back on the priority list for the Government. Ongoing selection process for advisors. Expected in Q4 2020 / Q1 2021 Other privatizations: CEC Bank, Bucharest Airports – public intentions from the Government

• fficials. Starting date is yet to be decided

Fiscal changes – Challenging taxation system for retail investors. Discussions for a more investor - friendly approach are held

Government Related Projects

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Other projects

New Listings: Momentum in the primary bond market - 10 listings in Q4 2019 alone. Private companies IPOs. Positive developments and potential for larger size issuers Launch of Vektor index, January 2020 – evaluates the IR performance of the listed companies New BVB market making scheme & issuer market making kicking off (2 companies hiring market makers so far in 2020) ESG inquiries on the rise from issuers and buy-side. Ongoing discussions with ESG provider Market data product list update

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Financial Education at BVB

Investor Forums in Bucharest and across the country, Fluent in Finance and many other projects aiming to improve financial education

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Made in Romania in numbers

A unique project of the Bucharest Stock Exchange, launched with the goal of identifying and promoting top Romanian companies in order to finance their growth story via the capital market. The 4th edition will take place in 2020.

NOMINATED COMPANIES SHORT LISTED COMPANIES FINALISTS

15 50 296

+50% vs 2018

16

17

Strong economic growth and EU real convergence although facing headwinds from the current economic crisis

0% 10% 20% 30% 40% 50% 60% 70% 5,000 10,000 15,000 20,000 25,000 30,000 35,000

05 06 07 08 09 10 11 12 13 14 15 16 17 18

Real GDP / capita (EUR, PPS)

Romania as % of EU area (RHS) Euro area Romania

Source: Refinitiv Eikon, INS, Eurostat GDP data as of March 2020.

• 10
• 5

5 10 15

05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

Romania GDP

QoQ: 0.3% YoY: 2.7%

% change

18

Slowing inflation with rising unemployment

Source: Refinitiv Eikon, INS, Ministry of Finance Data as of March 2020.

12M % change

• 4
• 2

2 4 6 8 10 12 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

Romania CPI

Headline: 2.3% Core: 2.3%

1 2 3 4 5 6 7 8 9 10 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

Romania unemployment rate

Unemployment rate: 4.6%

% of GDP

19

Challenging twin deficits although relatively low government debt / GDP ratio

Source: Refinitiv Eikon, INS Data as of December 2019.

10 20 30 40 50 07 08 09 10 11 12 13 14 15 16 17 18 19

Romania government debt

% of GDP

• 0.8
• 2.1
• 2.7
• 5.4
• 9.1
• 6.9
• 5.4
• 3.7
• 2.1
• 1.2
• 0.6
• 2.6
• 2.6
• 2.9
• 4.6
• 8.7
• 10.5
• 13.6
• 11.5
• 4.6
• 5.1
• 5.0
• 4.8
• 0.8
• 0.2
• 0.6
• 1.4
• 2.8
• 4.4
• 5.0
• 18
• 13
• 8
• 3

2

05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

Romania twin deficits

Current Account Balance (% of GDP) Government Deficit / Surplus (% of GDP) (% of GDP)

20

Weakening consumer confidence, however coming from a strong upward trend in the average gross salary

Source: Refinitiv Eikon, INS, DG ECFIN Data as of March 2020.

Net balance EUR/month, % change YoY

• 60
• 50
• 40
• 30
• 20
• 10

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

Romania consumer confidence

• 9%

• 1%

• 30%
• 20%
• 10%

• 200

400 600 800 1,000 1,200

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

Romania average gross salary

Average gross monthly salary (EUR) Annual % wage growth (%, YoY)

Financial Results Overview

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Bucharest Stock Exchange Central Depository CCP.RO Investors Compensation Fund Corporate Governance Institute

100% free float 69.04% 59.52%

62.45% 100%

BVB Group and the operated markets

Entities included in the consolidation process

Not included in the consolidation process

Markets operated by BVB

Main Market Listed companies:

81 domestic and 2 foreign* Domestic market cap: EUR 17.5 bn Total market cap: EUR 24.9 bn Instruments: shares, rights, corporate and municipal bonds, government securities, structured products, fund units, tradable UCITS (ETFs), warrants

Listed companies:

279 domestic and 2 foreign*

Total market cap:

EUR 1.7 bn

Instruments:

shares, rights, bonds

AeRO market for SMEs Segments within BVB Group:

• Trading segment – Bucharest Stock Exchange
• Post-trading segment - Clearing & settlement services of the Central

Depository

• Registry segment – Registry activities of the Central Depository
• Other services – Activities of the Investors Compensation Fund

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Source: BVB

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Key financial highlights - consolidated

1Q 2020 1Q 2019 Change (%)

Operating revenues 12.11 8.86 37% Operating expenses (8.02) (7.24) 11% Operating profit 4.09 1.62 153% Operating margin 34% 18% Net financial revenue/(expenses) 0.78 1.69

• 54%

Profit before tax 4.88 3.31 47% Profit from continuing operations 4.21 2.76 52% Loss from discontinued operations

• (0.04)
• 100%

Profit for the period 4.21 2.72 54% Net margin 35% 31% EPS attributable to owners (RON/share) 0.5064 0.3254 56% Return on equity 3% 2%

Financial performance, BVB Group (RON mn, unless otherwise stated)

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Key financial highlights

Financial performance of BVB standalone, before consolidation (RON mn, unless otherwise stated)

1Q 2020 1Q 2019 Change (%)

Operating revenues 7.96 5.38 48% Operating expenses (4.20) (4.01) 5% Operating profit 3.76 1.37 174% Operating margin 47% 26% Net financial revenue/(expenses) 0.55 1.43

• 61%

Profit before tax 4.31 2.80 54% Profit for the period 3.73 2.34 59% Net margin 47% 44% Return on equity 3% 2%

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Analysis of the consolidated results for 1Q 2020

• The operating revenues of the BVB Group in Group in 1Q 2020 were of RON 12.11 mn (1Q 2019: RON 8.86 mn), + 37%, + RON 3.26 mn, growth influenced

by all business segments of the Group

• The consolidated operating expenses of the BVB Group - 1Q 2020, + 11%, respectively RON 0.78 mn, from RON 7.24 mn to RON 8.02 mn, mainly due to the

advance of personnel expenses by RON 0.46 mn and the expenses with services provided by third parties by RON 0.36 mn

• The consolidated operating profit of the BVB Group - 1Q 2020, + 153%, from RON 1.62 mn to RON 4.09 mn as a result of the advance of operating revenues

by 37% while the advance of operating expenses is 11%

• Net financial income, 1Q 2020, -54%, from RON 1.69 mn to RON 0.78 mn, mainly determined by the reduction of unrealized exchange rate differences from

the revaluation of financial instruments in foreign currency that generated a gain of RON 0.01 mn vs. RON 0.96 mn in 1Q 2019, decrease partially covered by the increase of interest income by RON 0.12 mn, up to the value of RON 0.86 mn

• The consolidated net profit of the BVB Group - 1Q 2020, + 54%, from RON 2.72 mn to RON 4.21 mn, 87% being generated by the trading segment of the

Group

12.11 8.86 4.09 1.62 4.21 2.72 2020 2019

Main financial indicators, 1Q 2020 vs. 1Q 2019 (RON mn)

Operating revenues Operating profit Net profit

• 0.25

Trading Post-trading Registry FCI services & other services

Distribution of operating revenues and result, by segment, 1Q 2020 (RON mn)

Operating revenues Operating profit

26

Analysis of the Group trading segment revenues (1/2)

Trading segment revenues Trends in trading activity

• At the end of March 2020, the market value of all the companies

listed on the Main Market of BVB reached RON 120.29 bn, the equivalent of EUR 24.93 bn

• The trading segment revenues - BVB, 1Q 2020, + 48%, from RON 5.30

mn to RON 7.87 mn as a result of the advance of revenues from shares trading on the main market, both “regular” transactions and secondary public offers, but also due to the increase of the category

• f other revenues of this operating segment
• Trading activity at BVB on the stock market - 2019, +28%, reaching

the level of RON 3.53 bn while the transactions with “regular” shares

• n the regulated market increased by 17% from RON 2,64 bn up to

RON 3,09 bn

• The market of fixed income instruments (bonds and government

securities) – 1Q 2020, -59%, from RON 61 mn to RON 25 mn

• The structured products market increased by 267% compared to 1Q

2019, to RON 137 mn

Breakdown of the Group trading segment revenues in 1Q 2020 (%)

3M 2020 3M 2019

Operating revenues and profit, Group trading segment (RON mn)

• Op. revenues
• Op. profit

Net result

27

Analysis of the Group trading segment revenues (2/2)

2.77 2.66 2.45 2.08 3.53 1Q 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020

Trading value for shares, rights and units (RON bn)

0.037 0.038 0.058 0.053 0.137 1Q 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020

Trading value for certificates (RON bn)

0.06 0.04 0.01 1.90 0.03 1Q 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020

Trading value, fixed-income instruments (RON bn)

44.15 42.91 36.22 31.55 55.18 1Q 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020

Average trading value, shares - regulated market, incl. offers (RON mn/day)

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Analysis of the Group post-trading and registry segment revenues

Post-trading segment revenues

• The revenues related to the post-trading

segment (DC) - Q1 2020, + 15% (from RON 2.38 mn to RON 2.73 mn) as a result of the increase of revenues from maintaining the quality of custodian in the DC system but also

• f

increase in settlement revenues, influenced by the increase in values traded

• n BVB

Registry segment revenues

• The revenues related to the registry segment

(DC) - Q1 2020, increased by 30% (from RON 1.05 mn to RON 1.37 mn) mainly due to the registration of “one-off” revenues

2.73 2.38 0.44 0.28 0.48 0.40 3M 2020 3M 2019

Operating revenues and profit, Group post-trading segment (RON mn)

• Op. revenues
• Op. profit

Net profit 1.37 1.05

3M 2020 3M 2019

Operating revenues and profit, Group registry segment (RON mn)

• Op. revenues
• Op. profit

Net profit

29

Overview of the consolidated financial position

• The consolidated operating expenses of the BVB Group - Q1 2020, advanced by 11%, from RON 7.24 mn to RON

8.02 mn

• Consolidated personnel expenses - Q1 2020, + 12% or RON 0.46 mn, from RON 3.90 mn to RON 4.36 mn as a

result of the advance of salary expenses, as a result of the salary adjustments that took place starting with 2Q 2019, but also as a base effect considering that in 1Q 2019 at the level of DC no expenses were registered with Board allowances. At the same time, the estimated expenses with the benefits to be granted in shares to BVB management and employees decreased compared to 1Q 2019

• Consolidated expenditure with services provided by third parties - 1Q 2020, + 45%, from RON 0.80 mn to RON

1.16 mn, mainly due to the increase with the estimated consultancy expenses related to the CCP Project

• The category of consolidated other operating expenses - 1Q 2020, -2% or RON 0.04 mn, from RON 2.54 mn to

RON 2.50 mn, influenced by the net decrease of the expenses with the rents and utilities (rents expenses + right

• f use assets depreciations), reduction of protocol expenses as a result of the postponement of some events of

the Group, while the expenses with the IT maintenance services increased on the background of the increasing requirements of the regulations in force

3M 2019 3M 2020

Breakdown of operating expenses, 1Q 2020 vs. 1Q 2019 (RON mn)

Personnel costs & Directors' fees Third party services Other operating expenses Business consultancy 33% Audit services 5% Commissions & fees 13% Promotion activities 8% Other third party services 40%

Third party services, 1Q 2020 (%)

Rent and office utilities, 6% Amortisation & depreciation, 48% FSA fees and

• ther taxes,

12% Marketing (incl. travel&protocol), 6% Other expenses, 29%

Other operating expenses, 1Q 2020 (%)

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Key events during 1Q 2020

Consolidated financial position (RON mn)

Mar 2020 Dec 2019 Non-current assets 62.1 66.1 Current assets 158.3 151.5 Total assets 220.4 217.6 Shareholders’ equity attributable to owners of the Company 111.0 107.8 Minority interest 42.2 42.1 Total liabilities 67.2 67.7 Total equity and liabilities 220.4 217.6

• Stable dividend policy, with a payout ratio of 100%, after legal reserves.
• The dividend policy is expected to remain unchanged.
• At the end of March 2020, total assets of the BVB Group +1% or RON 2.76 mn vs. the value

from December 31, 2019, up to RON 220.39 mn, influenced by the increase of current assets at a higher level than the decrease of non-current assets

• Current assets, +5% compared to the beginning of the year, from RON 151.51 mn to RON

158.34 mn, mainly as a result of the increase of short-term financial assets but also of the value of trade receivables due to the increase of the invoiced value at the end of March

• Non-current assets, -6% compared to the beginning of the year, from RON 66.12 mn to

RON 62.05 mn, mainly due to the reclassification as current assets of some government securities whose maturity decreased below 1 year

• Total payables of the Group are are mainly short-term, at March 31, 2020 amounting to

RON 67.15 mn, -1% compared to the value as of December 31, 2019 of RON 67.70 mn, mainly due to the reduction of debts with dividends to be paid by the Central Depository in the amount of RON 1.93 mn

• Shareholder’s equity, + 2% compared to the beginning of the year, up to RON 153.24 mn,

influenced by the registration of the current result of 1Q but also due to the acquisition of treasury shares by BVB.

0.87 0.92 1.68 1.13 0.81 3.2% 2.7% 5.9% 5.1% 3.4% 0% 2% 4% 6% 8% 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 2015 2016 2017 2018 2019

Attractive dividend yield

Dividend/share [RON] Dividend yield [%]

Key financial highlights (FY2019) - consolidated

* The preliminary financial results for FY/4Q 2019 are prepared in accordance with IFRS and are not audited.

Financial performance, BVB Group (RON mn, unless otherwise stated)

2019 (prelim) 2018 Change (%) 4Q2019 (prelim) 4Q2018 Change (%) Operating revenue 34.96 39.82

• 12%

8.51 10.85

• 22%

Operating expenses 31.27 30.94 1% 8.84 9.46

• 7%

Operating profit 3.7 8.88

• 58%
• 0.33

1.39

• 123%

Operating margin 11% 22%

• 4%

13% Net financial revenue/(expenses) 4.42 3.63 22% 0.49 0.87

• 43%

Profit before tax 8.17 12.49

• 35%

0.17 2.23

• 93%

Profit from continuing operations 6.83 10.44

• 35%

0.14 1.86

• 93%

Profit from discontinued operation

• 0.25
• 0.17
• Profit for the period

6.83 10.19

• 33%

0.14 2.04

• 93%

Net margin 20% 26% 2% 19% EPS attributable to owners (RON/share) 0.807 1.2111

• 33%

0.0225 0.2329

• 90%

Return on equity 5% 8% 0% 2%

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• ther issuer of securities mentioned herein or to initiate any kind of transaction whatsoever. Neither BVB nor its directors and its delegates accept any liability of any kind for any losses arising from making use of such information. Any person considering an investment in

• securities. Any person should get informed before making an investment. For investing in BVB shares, the financial statements, the quarterly/half yearly/annual reports are available on the BVB website www.bvb.ro. The distribution of this presentation in certain

IR Contact:

Remus Danila PR & IR Officer Email: remus.danila@bvb.ro Phone: +40 745 013 552

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