Річний звіт Annual Report 2013 · Річний звіт Annual Report 2013. Core...

Річний звіт Annual Report

2013

Core Performance Resultsof the Bankas of year-end 2013*

in UAH thousand

2013 2012 Change

Balance Sheet

Assets 47,085,394 51,202,561 (8.04)%

Mandatory reserves in the National Bank of Ukraine

576,312 526,494 9.46%

Amounts due from credit institutions 30,271 3,525 758.75%

Loans to customers 31,069,913 29,813,198 4.22%

Amounts due to credit institutions 7,708,249 11,941,762 (35.45)%

Amounts due to customers 26,832,644 27,964,034 (4.05)%

Subordinated debt 2,377,704 2,374,272 0.14%

Share capital 3,002,775 3,083,449 (2.62)%

Total equity 8,999,803 8,069,507 11.53%

Income Statement

Net interest income after allowance for loan impairment

2,198,036 2,480,702 (11.39)%

Fees and commissions, net 1,360,126 1,323,138 2.80%

Non-interest income 719,030 –

Non-interest expense (3,005,987) (3,231,535) (6.98)%

Profit before income tax expenses 1,271,205 572,305 122,12%

Profit for the year 1,017,280 319,267 218,63%

General information about the Bank

Group's capital adequacy ratio according to IFRS

30.36% 29.34% (0.8)%

Capital adequacy ratio according to NBU’s requirements

20.62% 18.76% (1.86)%

Number of business outlets (group level) 796 825 (3.27)%

Number of staff (group level) 12,781 13,849 (5,75)%

*According to the International Financial Reporting Standards (IFRS)

Public Joint Stock Company Raiffeisen Bank Aval74

ContentsAddress by the Chairman of the Management Board 76

Report of the Supervisory Board 78

Bank ProfileSuccess story 82

Ratings 83

Corporate governance report 83

Organizational structure 89

Awards and honors 90

Corporate responsibility 91

Membership in professional organizations 93

Market environment

Macroeconomic indicators 96

Ukraine’s banking sector developments in 2013 99

Bank performancePerformance highlights 104

Risk management 105

Network 107

Personnel. Training and development 108

Operations and IT 109

Corporate business 112

Micro business 114

Retail business 117

Treasury services 123

Consolidated financial IFRS statements 126

Raiffeisen Leasing Aval 136

Raiffeisen Bank International at a glance 137

Raiffeisen Glossary 139

Addresses of Raiffeisen Bank International 140

Addresses of Raiffeisen Bank Aval 142

Public Joint Stock Company Raiffeisen Bank Aval 75

Address by the Chairmanof the Management Board

Ladies and Gentlemen,

The reporting year was decisive for the activi-ties of Raiffeisen Bank Aval. As a result of many years of hard work across the entire bank’s departments aimed at improving processes and optimizing costs, collecting problem debts, as well as supporting longstanding relationships with customers, our bank was able to achieve an unprecedented financial result. In accordance with the International Financial Reporting Stand-ards, it totaled more than UAH 1 billion after tax. Although the economic situation in the country, during the reporting period, can hardly be called favorable for Ukrainian banks, with business activities generally slowing down, we hope that the situation will improve in 2014 in spite of the recent political developments.

While in 2012 the primary focus in the proc-ess of the bank reform was on optimizing the structure of branch network management, 2013 was decisive for the improvement of operational services. During the reporting period, the Opera

Nova project was implemented, which enabled us to transfer a significant part of the bank’s regional operational activities to the centralized operational back office in Kherson. This reform not only helped us to optimize the current bank’s processes, but also ensured a better quality of service for customers of Raiffeisen Bank Aval.

Improvements in the operational sphere were accompanied by significant reforms in the IT area – creating a reserve data center, optimizing the work of regional information departments and developing the bank’s IT strategy until 2017. Internet banking for the bank’s private customers – the Raiffeisen Online system – is also devel-oping rapidly. In 2013, the number of its users exceeded 100,000.

During the reporting period, the bank was able to maintain its customers’ loyalty and trust. This was possible due to the continuous and meticu-lous work on maintaining an adequate level of service quality which has become the “visiting card” of our bank in the Ukrainian market. To better understand our customers’ requirements, including those for the quality of services, the bank introduced some new forms of direct com-munication with its customers in 2013.

Two events, organized especially for the bank’s customers in the agricultural sector, were a great success and widely discussed in business circles. The events took place in the premises of leading agricultural companies in the South and Central West and were held in the form of training ses-sions on a wide scope of issues – macroeconom-ics, jurisprudence, marketing, etc.

In general, within the business line of services for corporate customers, agricultural business con-tinued to be one of the main priorities in 2013: several new banking products were offered to customers in that segment – including cash man-agement services, factoring, trade finance, and close cooperation with the Raiffeisen Leasing Aval for the optimal satisfaction of business needs.


The bank’s units, responsible for cooperation with representatives of small and micro busi-nesses, also introduced an interesting training initiative for their customers called Raiffeisen Bank Aval Academy. During four sessions of the Academy, organized in different Ukrainian cities and towns, entrepreneurs learned about specific accounting techniques, and gained experience of business promotion using the Internet, innova-tive banking services, etc. The bank’s specialists presented some revised offers from the service package with additional options to small and micro business entrepreneurs that would enable the customers to receive information about their own accounts, quickly and comfortably, as well as providing solutions to their everyday financial needs. Furthermore, the level of information pro-tection was increased for the customers using the bank’s electronic services.

The reporting year recorded a significant in-crease in the number of customers using Premium banking – an option that is unique for the Ukrain-ian market. As of the end of 2013, there were 10,000 bank’s customers in this segment. This service is offered by the bank’s offices in the five largest cities of Ukraine. Additionally, 24 special premium service areas were created by the bank and 44 special personal managers trained.

Another success story of the business package for private customers is a co-branding program called FISHKA, which has been implemented in conjunction with other leading Ukrainian com-panies. Within the framework of the program, Raiffeisen Bank Aval issued more than 100,000 cards by the end of the reporting period. Partici-pants of the program receive discounts, prizes and special offers when using their cards at refu-eling stations, retail stores, or when buying insur-ance services, etc.

Further proof of Raiffeisen Bank Aval’s posi-tive performance results in 2013 was the great number of awards it received according to vari-

ous ratings and competitions, including Bank for Entrepreneurs, Best Agrarian Bank, Financial Success of the Year, Most Stable (Reliable) Bank with Foreign Capital, Most Recognized Bank Brand, Best Bank for Small and Medium Busi-ness, and Best Project Management Company.

On behalf of the bank’s team, I would like to thank all our customers and partners for their support and assistance. In 2014, we will do our best to ensure further development aimed at achieving our main goal – the complete satis-faction of the modern banking needs of private customers and companies that showed their trust in us and selected Raiffeisen Bank Aval as their bank.

On behalf of the Management Board

Volodymyr Lavrenchuk,Chairman of the Management Board


Reportof the Supervisory Board

Ladies and Gentlemen,

After years of extremely low or even negative growth, 2013 finally showed the first signs of an economic recovery in the Eurozone and Cen-tral and Eastern Europe alike. We also saw an increasing shift of economic growth to Central Europe with Poland, Czech Republic and Slova-kia taking on a leading role in the region. In ad-dition, political decisions about the future of the European Banking Union were finally made and provided more clarity for the European banking sector. However, the business environment for banks remained difficult. Especially the short-term raising of equity capital requirements and vari-ous complex regulatory requirements, as well as banking levies, have been and continue to be an additional burden on banks leading to restricted lending.

In autumn 2013, RBI Group launched the pro-gram “Fit for Future 2016” with the goal to lower costs to the level of 2012 by the year 2016. This means that over the next three years we

will more than offset inflation and save around € 450 million in total. We were also very satis-fied with the € 2.78 billion result of the recent capital increase. The higher free float makes our shares even more attractive for both private and institutional investors. The proceeds will be used to achieve our goal, for the coming 12 to 18 months, of achieving a fully-phased in Basel III CET 1 ratio of 10.0 per cent by the end of the transition period. Both actions were taken in order to support our successful business model across the region and guarantee a sustainable development of the Group in this still challenging environment. Hence, the RBI Group is proud of posting a profit before tax of€ 835 billion.

Despite the recent political and economic turbu-lences in the country, Raiffeisen Bank Aval JSC had the most successful year in the bank’s history. In 2013, the bank posted a profit of UAH1 billion (compared to UAH 319 million in 2012), which was the third best result in Ukraine’s banking sector. The return on equity of the bank jumped from 7.5 per cent in 2012 to 16.1 per cent by the end of 2013 (while the average return on equity on the market was at 0.8 per cent), mainly due to the implementa-tion of an effective cost saving program and the optimization of the regional network. The bank also demonstrated substantial growth in its cost management efficiency, which resulted in a cost/income ratio that improved from 62.6 per cent in 2012 to 58.1 per cent in 2013.

These excellent results would be impossible without loyalty of customers, which was assured


mainly due to a high level of the bank’s service quality. Last year, Raiffeisen Bank Aval continued to realize its permanent Service Quality Program, focused on a customer-oriented culture and proper quality standards. The bank maintained its high service quality and client base. It has a special Customer Service Quality Committee dealing with issues important for clients.

Raiffeisen Bank Aval remains a service quality leader in the Ukrainian banking sector. In 2013, it was awarded as The Bank of a High Payment Culture and High-Quality Client Portfolio by Visa International, and its Call Center was among top three Ukrainian call centers according to the HotSkills rating. The reputation of Raiffeisen Bank Aval was recognized as higher than the market average (according to GfK Ukraine’s research).

In 2013, the Supervisory Board rendered its full support to the Management Board in achieving the results expected by the shareholders.

The composition of the bank’s Management Board underwent a change in the year under review: Deputy Chairman of the Board Arthur

Iliyav left the bank on 21 December, 2013.

The 2013 consolidated financial statements were audited by KPMG Ukraine. The audit did not give rise to any objections, and the legal require-ments were fully complied with.

Let me take this opportunity to thank all employ-ees of Raiffeisen Bank Aval for their hard work in this continuously challenging environment and their constant efforts to serve our customers and bring benefits to the entire Raiffeisen Group.

On behalf of the Supervisory Board

Herbert Stepic,Chairman of the Supervisory Board


Bank profile

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Success story 82

Ratings 83

Corporate governance report 83

Organizational structure 89

Awards and honors 90

Corporate responsibility 91

Membership in professional organizations 93

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Bank profileSuccess story1992 NBU registered Aval JSCB.

199312 regional units of the bank started operations.

1994NBU registered the bank as Aval JSPPB.

1995The bank was accredited as the project implementer with the European Bank for Reconstruction and Deve-lopment.

1996The in-house processing facility (Ukrainian Processing Center) started operation. The bank joined internation-al payment systems Visa and Europay as a member.

1997Western Union recognized Aval as the Best Partner in Eastern Europe.

1999The bank became the member of the Deposit Guaran-tee Fund.

2000Western Union recognized bank Aval as the most in-novative agent of the system.

2001The bank was Ukraine's first to implement payment of pensions based on Onyx plastic cards and imple-mented the in-house Aval-Express system for express money transfer in Ukraine.

2002The authorized capital set the record for the Ukrainian banking system at UAH 500 million. The bank was ranked by Standard & Poor's among the TOP-100 Banks in Central and Eastern Europe.

2003Euromoney magazine recognized Aval as Ukraine's best bank. The bank placed bonds worth UAH 80 million.

2004The authorized capital of the bank set another record at UAH 1 billion. EBRD recognized Aval as one of the largest and most dynamic banks in Central and East-ern Europe.

2005EBRD recognized Aval as one of the most active banks in Southern and Eastern Europe and in the former Soviet Union countries. Raiffeisen International group purchased 93.5% stake in the bank.

2006JSPPB Aval changed its name to Raiffeisen Bank Aval PJSC. Euromoney magazine recognized the bank as Ukraine's Best Bank, EBRD awarded the bank as Ukraine's Most Active Bank in Trade Finance (2006) under the Trade Finance Program (TFP).

2007The bank's assets exceeded UAH 40 billion. The shareholders' equity of the bank grew by UAH 1.5 billion with placement of the 23rd issue of shares. The Banker magazine recognized Raiffeisen Bank Aval as Ukrainian Bank of the Year. The bank's brand was re-cognized as the most valuable of all Ukrainian banks by Ukraine-wide Rating Program Brand Guard.

2008The shareholders' equity grew by UAH 1.4 billion with placement of the 24th issue of shares.

2009The bank changed its legal name to Raiffeisen Bank Aval Public Joint Stock Company (abbreviated as "Raiffeisen Bank Aval JSC"). The bank was again awarded as the Most Valuable Ukrainian Banking Brand by the BrandFinance Global Banking 500 rat-ing published by the Banker magazine and Ukraine's Best Bank according to Euromoney magazine.

2010With the 25th issue of shares, the bank's capital grew by UAH 932.54 million including UAH 582.84 mil-lion growth in the authorized capital to over UAH 3 billion. Euromoney magazine yet again recognized Raiffeisen Bank Aval as Ukraine's Best Bank.

2011Euromoney Magazine awarded Ukraine's Best Bank rank to Raiffeisen Bank Aval.

2012The bank was once again awarded by the Choice of the Year international contest as The Best Servic-ing Bank and in the nomination "The Banking Service Package of the Year".

2013This was an unprecedented year in the bank’s history in terms of the received profits, which reached over1 billion hryvnias.

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Corporate governance reportComposition, responsibilities and functions of the bank’s Supervisory Board, Management Board and executive committees

raiffeisen Bank aval is a public joint stock company with the following governing bodies:— the General Shareholders’ Meeting;— the Supervisory Board;— the Management Board.

The audit Committee and the Internal audit Service are controlling bodies of the bank.

The General Shareholders’ Meeting (hereinafter referred to as the “Meeting”) is the highest govern-ing body of the bank.

All issues related to the bank’s activities lie within the competence of the General Shareholders’ Meeting as the highest governing body.

With a view to reconcile the interests of the bank’s shareholders, officers, employees, business partners and the society as a whole, the Meeting has agreed on and approved the Corporate Governance Prin-ciples of Public Joint Stock Company Raiffeisen Bank Aval (Minutes No.ЗБ-47 of 28.04.2010). These principles are aimed at ensuring a transparent and efficient corporate governance model of the bank.

key corporate governance principles of the bank• ensuringtheprotectionofrightsandlawfulinterestsoftheshareholders;• well-balanced,diligentandefficientperformanceoftheirfunctionsbytheSupervisoryBoardandthe Management Board;• loyaltyandresponsibilityoftheofficerspreventingconflictsofinterests;• transparencyoftheinformationpolicy;• ensuringriskmanagementandcontroloverfinancialandeconomicactivities;• awarenessofthesocialroleofthebankanditsresponsibilityforitsstaff.

RatingsCurrent ratings, assigned by Moody’s agency to Raiffeisen Bank AvalLong-term Deposits — Fgn Curr Caa2

Outlook negative

Short-term Deposits — Fgn Curr NP

Long-term Deposits — Dom Curr Caa1

Bank Financial Strength E

Outlook stable

National Scale Rating B3.ua

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The Supervisory Board was elected based upon the decision of the Meeting (Minutes №ЗБ-50 of 25.04.2013) for protection of rights, representation of the shareholders’ interests, regulation and con-trol over operation of the executive body (the Management Board of the bank).

Composition of the Supervisory Board

— Herbert Stepic, Chairman of the Supervisory Board, Chairman of Raiffeisen Bank International AG Management Board; — Peter Lennkh, Deputy Chairman of the Supervisory Board, Member of Raiffeisen Bank International AG Management Board;— Members of the Supervisory Board – representatives of the shareholder (Raiffeisen Bank Interna-tional AG): karl Sevelda; Johann Strobl; aris Bogdaneris; Martin Gruell; kurt Geiger.

Functioning of the Supervisory Board

The Supervisory Board of the bank performs the following functions:• approvesthebudgetofthebank;• electsanddismissesmembersoftheManagementBoardofthebank;approvesthetermsandcon-ditions of civil and employment agreements concluded with the members of the Management Board, as well as amounts of remuneration and financial incentives;• controlstheworkoftheManagementBoardofthebank;makesdecisionsonremovaloftheChair-man of the Board from his/her office and election of the acting Chairman of the bank’s Management Board;• establishestheprocedureforauditsandcontroloverfinancialandeconomicactivities;• makesdecisionsanddeterminestheprocedureforcoveringlosses;• makesdecisionsonestablishment,reorganizationandliquidationoflegalentitieswiththepartici-pation of the bank (subsidiaries), branches (directorates), the bank’s representative offices, approval of their Articles of Association (Regulations); makes decisions on the bank’s participation in industrial and financial groups and establishment of banking associations;• approvestheRegulationontheManagementBoardofthebank,RegulationontheCreditCommit-tee and the Regulation on the Internal Audit Service;• appointstheexternalauditoranddefinesthetermsoftheagreementtobeconcludedwiththeaudi-tor, including approval of the amount of payment for the services;• makesdecisionsonappointmentanddismissaloftheChiefAuditorofthebank,approvesauditplans for the Internal Audit Service of the bank, audit reports, summaries and results of audits carried out by the bank’s Internal Audit Service, in particular, those related to legalization (laundering) of il-legal income;• makesdecisionsonelection(change)ofregistrarofownersoftheregisteredsecuritiesofthebank(or securities depository) and on approval of conditions for concluding the agreement with him/her, and establishes the amount of payment for the services;• assessesthelikelihoodofthebank’srecognitionasinsolventasaconsequenceofundertakingorfulfillment of some obligations, including, without limitation, paying dividends or redeeming shares;• takesthedecisiononasignificantdealifthemarketvalueofgoodsorservices,whichconstitutethesubject of such deal, is from 10 to 25 per cent of the asset value, based on the data of the latest annual financial report of the bank, and on conducting deals, in which there is interest, in cases provided by

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the Ukrainian legislation;• takesthedecisiononthescheduledandextraordinaryGeneralShareholders’Meeting,draftstheagenda, decides on the date of such meeting and on including the proposals to the agenda (other than convocation by the shareholders of the extraordinary General Meeting), schedules the date for making the list of the shareholders who are to be notified of the General Meeting and have the right to partici-pate therein, appoints the Chairman of the General Meeting and prepares the proposals regarding the issues to be raised at the Meeting;• electstheRegistrationCommission,exceptforthecasesprovidedforbytheUkrainianlaw;• makesdecisionsonthesaleofshares,whichwereredeemedbythebankearlier;• takesdecisionsonplacementofsecuritiesbythebank(exceptforshares)andonredemptionofthesecurities placed by the bank (except for shares), if stipulated by the offering circular;• schedulesthedateofmakingthelistofpersonsentitledtoreceivedividends,definestheprocedureand period for dividend payment within the timeframe stipulated by the Articles of the bank;• makesdecisionsoninvolvementandselectionofthebank’spropertyappraiserforappraisalofthemarket value of the property (including the bank’s shares) and approval of the terms of the agreement to be concluded with the appraiser, establishes the amount of payment for the services; certifies the market value of the property (including the bank’s shares) in cases provided for by the effective law;• sends to the shareholders bids on purchase of a significant holding of the bank’s shares by a per-son (or associated persons);• electsmembersofthebank’sCreditCommittee;• approvestheestablishment,liquidation,reorganizationandre-subordinationofthebank’sinde-pendent organization units directly subordinated to the Management Board, members of the Board or the Supervisory Board of the bank; determines general principles and salary conditions at the bank, its branches (directorates), outlets and representative offices;• exercisesotherpowersdelegatedtotheSupervisoryBoardbytheGeneralMeeting,andsolvesany other issues within the competence of the Supervisory Board under the Articles of Association of the bank, Regulation on the Supervisory Board and the Ukrainian law.

Issues are submitted to the Supervisory Board for consideration by the shareholders, Chairman of the Supervisory Board, its members, the Audit Committee and the Management Board of the bank.

The audit Committee exercises control over the bank’s financial and economic activities.

The Audit Committee of the bank:• controlsthebank’scompliancewiththeeffectivelawofUkraineandby-lawsoftheNationalBankof Ukraine;• considersthereportsofinternalandexternalauditorsanddraftsrespectiveproposalstotheGen-eral Shareholders’ Meeting;• submitstheproposalstotheGeneralMeetingortheSupervisoryBoardmeetingregardinganyissues pertaining to the competence of the Audit Committee of the bank, with regard to the financial security and stability of the bank and protection of customers’ interests.

Iryna nestor, a representative of the majority shareholder Raiffeisen Bank International AG, Deputy Chairman of the Management Board of the Ukrainian Processing Center PrJSC, is Head of the Audit Committee of the bank.

The Management Board serves as the executive body of the bank, which manages the daily activities of the bank, accumulates the funds necessary for its regular activities, and is responsible for the ef-ficiency of its operation in accordance with the principles and procedure established by the Articles of

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Association of the bank, by the decisions of the General Meeting and the Supervisory Board, and by the Regulation on the Management Board approved by the Supervisory Board of the bank.

The Management Board acts on behalf of the bank within its competence, reports to the General Meeting and the Supervisory Board and arranges for execution of their decisions. The Management Board of the bank consists of at least three members appointed for the period of up to five years with the possibility of early recall.

Composition of the Management Board

Volodymyr Lavrenchuk is Chairman of the Management Board of the bank.

As of January 1, 2014, the Management Board consisted of:— Gerhard Boesch, First Deputy Chairman of the Management Board;— Victor Gorbachov, Deputy Chairman of the Management Board;— robert kossmann, Deputy Chairman of the Management Board;— andreas Gschwenter, Deputy Chairman of the Management Board;— natalia Gurina, Deputy Chairman of the Management Board.

Lyudmila Makarenko is Chief Accountant of the bank.

Functioning of the Management Board

The Management Board has the following powers:• tomanagethebank’scurrentoperationsthroughdeterminingtherules,termsandproceduresofthe bank’s financial and economic activity, to carry out banking and other transactions, to keep ac-

Management Board of the Bank (f.l.t.r.): Robert Kossmann, Andreas Gschwenter, Gerhard Boesch, Natalia Gurina, Volodymyr Lavrenchuk, Victor Gorbachov

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counting and reporting at the bank, and through other legally significant actions aimed at achievement of statutory goals and implementation of the statutory areas of the bank’s activities;• toapprovethebank’sbylaws(rules,procedures,orders,regulations,standards,standardagree-ments, etc.), except for the documents that are subject to approval by the General Meeting or the Su-pervisory Board pursuant to the Articles of Association and the bank’s internal documents;• todevelopandsubmitthedraftbudgetofthebanktotheSupervisoryBoardforapprovalandtoensure the performance of the budget approved by the Supervisory Board;• tocarryoutactionsrelatedtoorganizationoftheGeneralMeetingpursuanttothedecisionsoftheSupervisory Board and according to the procedure provided for by the Articles of Association, Regula-tion on the General Shareholders’ Meeting of the bank and applicable law (except for the cases when the General Meeting is held by shareholders);• toapproveandsetupanorganizationalstructureofthebank,includingthestructureofindepend-ent organization units, to establish and define the functional duties of the bank's organization units and bodies, to determine the number of their employees,etc.;• tomanagetheoperationsofbranches(directorates),representativeofficesandoutletsofthebank,to appoint and dismiss their managers, to define the requirements and standards for operation of inde-pendent organization units;• tomakedecisionsonestablishment,reorganizationandliquidationofthebank’soutlets,approvalof their regulations, to make decisions on participation in unprofitable associations, institutions and or-ganizations;• toimplementthebank’sHRpolicy,includingselection,traininganduseofthestaff,formationofasuccession pool, approval of the staff list and the amounts of remuneration for the bank’s employees pursuant to the principles approved by the Supervisory Board;• toconcludethecollectiveagreementwiththebank’sstaff;• touseanddisposeofmovableandimmovableproperty,funds,securitiesandothertangibleandintangible assets of the bank, including purchase of such assets, transfer of title to such assets, pledge or encumbrance in any other way, within the limits approved by the Supervisory Board;• todefineandimplementthebank’spolicyintheareaofbankingsecrecy,financialmonitoringandother areas that are subject to special regulation pursuant to the law;• toexaminetheauditmaterials,reportsandrecommendationsofexternalandinternalauditorsofthe bank, to take decisions based upon the results of such audits;• tosolveotherissuesrelatedtothebank’sactivity,whichdonotpertaintothecompetenceofotherbank’s bodies or are delegated to the Management Board by the General Meeting or by the Supervi-sory Board, or decision making on which pertains to the competence of the Management Board pursu-ant to the Regulation on the Management Board of the bank and effective Ukrainian law;

The Internal Audit Service of the bank serves as an operating control body of the bank’s Supervisory Board, which carries out audits of the bank and its organization units.

The Internal Audit Service exercises the following functions:• monitorsthebank'sdailyactivities;• controlsthecompliancewiththelaws,regulationsoftheNationalBankofUkraineandresolutionsof the bank’s governing bodies;• reviewscurrentfinancialperformanceresults;• analyzestheinformationaboutthebank'sactivities,professionalactivitiesofitsemployeesandcases of abuse of powers by the bank’s officials;• submitsauditfindingsandproposalstotheSupervisoryBoard;• otherfunctionsrelatedtomonitoringandcontroloverthebank’sactivities.

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In order to ensure the implementation of additional risk management actions, the bank has established standing committees.

The Credit Committee evaluates the quality of the bank’s assets on a monthly basis and draft proposals with regard to provisioning for impairment losses. The Credit Committee is entitled to estab-lish credit committees at branches (directorates), outlets or credit committees for different areas of lend-ing subordinated and reporting to the bank’s Credit Committee, to delegate a part of its powers to such committees and to approve the regulations on them. The Credit Committee is established and operates pursuant to the procedure established by the Supervisory Board.

Assets and Liabilities Committee reviews on a monthly basis the cost of liabilities and the profitability of assets and makes decisions on the interest margin policy; examines assets and liabilities maturity matching and gives recommendations to the relevant units of the bank on elimination of time mismatches. The Committee is established and operates according to the procedure determined by the bank’s Management Board.

Tariff Committee, on a monthly basis, analyzes the ratio between the cost of services and the competitive advantages of the effective tariffs; it is responsible for the bank’s operating income policy. The Committee is established and operates according to the procedure determined by the bank’s Management Board.

Shares hold by the management

The Board members own 24 100 (twenty-four thousand one hundred) ordinary registered shares of the bank.

Shareholders

Raiffeisen Bank Aval is a public joint stock company with 367 LE and 110,072 PI shareholders as of December 31, 2013. LE shareholders own 99.45 per cent of the authorized capital, PI shareholders – 0.55 per cent.

The registered authorized capital of the bank amounts to UAH 3, 002, 774, 908, as of December 31, 2013. During the period of 22 years since its establishment, the bank has carried out 25 issues of or-dinary registered shares in the amount of 29, 977, 749, 080 shares and one issue of preferred shares in the amount of 50, 000, 000 shares at the par value of UAH 0,10 per share, which form the author-ized capital of the bank.

During 2013, ordinary shares of the bank were actively traded in the Ukrainian Stock Exchange and PFTS Stock Exchange. The bank’s ordinary shares are in the second-level quotation list of the Ukrain-ian Stock Exchange. The total number of deals in 2013 constituted over 49,000, with the total value exceeding UAH 392.8 million. In addition, the bank’s ordinary shares are quoted in the second-level list of the PFTS Stock Exchange.

During 2013, pursuant to the decision of the General Shareholders’ Meeting (Minutes No. ЗБ-50 of 25.04.2013), the bank sold additional 0.06 per cent of the authorized capital to its major shareholder – Raiffeisen Bank International AG on the account of the shares bought out by the bank from minority shareholders.

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* Organizational structure of the Head-office of the Raiffeisen Bank Aval JSC as of December 31, 2013

Organizational structure*

Internal Audit Service

Supervisory Board

Corporate Business

Victor Gorbachov

Risk-Management

Natalia GurinaFirst Deputy Chairman of Board

Gerhard BoeschCEO

Volodymyr Lavrenchuk

Operations Support and IT Security/Executive Management

Executive Management/Treasury and Finanсe

Andreas Gschwenter

Operations Division IT ApplicationOperations Division

Cash Collection andCurrency Valuables

Transportation DivisionHR Division

Retail, Marketand Operational RisksManagement Division

RegionalCorporate Clients

Division

Treasury

IT Governance Department

InformationSecurity Division

Physical Security Department

Financial InstitutionsDivision

LargeCorporate Customer

Division

CorporateRisk Management

DivisionExecutive SecretariatRegional Systems

DivisionOperations Services

Division

Legal and Compliance Division

Accounting,Control and Reporting

Division

Corporate Productsand Services Division

Credit Control andCollateral Management

Division

IT Banking Systems Development Division

Organizationand Process Management

Division

PR andCorporate Communications

Service

Controlling andBusiness Intelligence Division

Multinational CompaniesDivisionWorkout DivisionIT Infrastructure

DivisionProperty Development

and Facilities ManagementDivision

Labour Protection Service

Regional Management Group

Analysisand Research Team

Depositary DepartmentAssets ManagementDepartment

DWH Development Department

Procurementand Cost Management

Division

CorporateBusiness Development

Department

Basel II Analytics, Reporting and

Compliance Department

RegionalRisk Management Group

Retail Business

Robert Kossmann

Distributionand Delivery Channels

Division

PI Products Division

SE and Micro BusinessDivision

Retail CollectionDivision

Marketingand Customer RelationshipManagement Department

IT Strategyand Architecture

Department

Project Portfolio and Finance Management

Division

Substantial shareholding in the bank

Raiffeisen Bank International AG, a parent bank and major shareholder of the bank, is a leading Aus-trian financial institution that owns 96.45 per cent of the bank’s authorized capital as of January 1, 2014. Raiffeisen Bank International AG is entitled to a qualifying shareholding by the written permis-sion of the National Bank of Ukraine dated 14 October, 2005 under No. 377.

foreign investors (companies and countries) and their shares in the authorized capital

Raiffeisen Bank Aval has the status of a bank with foreign capital.

The major shareholder – Raiffeisen Bank International AG owns 96.45 per cent of the bank’s author-ized capital.

Apart from the major shareholder of the bank, some large foreign financial institutions invested their own funds and funds of their customers in the stock of the leading banking institution of Ukraine, in par-ticular:East Capital Lux, Luxemburg (0.47 per cent of the authorized capital);Sanibilin Limited, Cyprus (0.47 per cent of the authorized capital);UBS AG, Switzerland (0.08 per cent of the authorized capital); UniCredit Bank AG, Germany (0.07 per cent of the authorized capital), etc.

The total share of foreign capital in the bank’s authorized capital amounts to 98.87 per cent as of January 1, 2014.


Awards and honors

Raiffeisen Bank Aval highly appreciates the trust and recognition demonstrated by its customers, partners and banking experts. This recognition, among other things, is confirmed by a number of regular awards and honors received by the bank as a result of its activities during the reporting year.

For instance, in 2013 Raiffeisen Bank Aval once again became the best in several categories of the annual Ukrainian Banker Awards launched by the All-Ukrainian Financial and Economic Weekly news-paper Investgazeta. The bank became the winner in the Bank for Entrepreneurs category (1st place) and the Best Agrarian Bank (2nd place), and received an award in the Financial Success of the Year category.

Raiffeisen Bank Aval also took the second place in the general table of rating, 50 Leading Banks of Ukraine 2014, published by Kommersant-Ukraine Publishing House and was included in the top three most profitable banks in the country according to the same rating. In general, Raiffeisen Bank Aval received awards from Kommersant-Ukraine as one of the best financial institutions of Ukraine in 12 categories of the rating.

The business weekly Kontrakty named Raiffeisen Bank Aval the Most Stable (Reliable) Bank with Foreign Capital, Best Bank for Small and Medium Business, and Best Bank in the Area of Agricultural Lending.

It also became the leader in the rating of Ukrainian banks in terms of reliability of deposits, which is issued every six month by experts of the Real Economy project. According to the rating on the Minfin [Ministry of Finance] portal, Raiffeisen Bank Aval was recognized as the most stable financial institution for individuals.

For the fourth time in a row, Visa International recognized the institution as the Bank with High Payment Culture and Quality Customer Portfolio.

The Money.ua magazine mentioned Raiffeisen Bank Aval among the leaders of the 2013 Bank Rating based on the results of activities of the Ukrainian banking system during the first nine months of 2013.

The bank became the winner in the Best Project Management category within the framework of the 2013 Project Management Rating.

Furthermore, the bank’s oblast directorates were recognized the best at the regional levels in the past year.

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Corporate responsibility

Raiffeisen Bank Aval JSC is a socially responsible organization. This is confirmed by its position with regard to the country, society, personnel and environment. The bank is convinced that stable and long-term development of activities is only possible under the conditions of support for publicly relevant social initiatives, an appropriate level of social benefits for the employees, introduction of eco-friendly and energy saving technologies, etc.

The bank’s responsibility to society is reflected in the reliability of the financial institution, transparent business conduct, cooperation with local communities and authorities, responsibility to the consumers (high quality of products and services), decent workplaces offers, guarantees of appropriate working conditions, as well as environmental responsibility and active charity and sponsorship efforts.

Stability, reliability

The bank is a subsidiary institution of Raiffeisen Group, the leading Austrian banking group, which has a flawless history of more than 125 years of successful operations in Central and Eastern Europe and bases its activities in Ukraine on the principles of reliability and trust.

Raiffeisen Bank Aval is a reliable international bank with a Ukrainian face that implements the best bank-ing practices and guarantees satisfaction of customer needs in its innovative products and services. The bank has a 22-year history of successful operation in the Ukrainian market, during which time the bank has received recognition in the form of numerous awards, prizes, leading positions in ratings, etc.

Business transparency and business ethics

Raiffeisen Bank Aval fully and timely fulfills its obligations by ensuring transparent financial reports, payment of taxes, official salaries for its personnel, openness and transparency in relations with its cus-tomers, partners, shareholders, employees and authorities.

In its work, the bank strictly adheres to the requirements of applicable Ukrainian legislation and follows the high standards of a socially responsible business conduct set by its parent company – Raiffeisen Bank International AG. These standards are aimed at strengthening the customers’ trust, satisfying the customers’ interests and maintaining the high reputation of Raiffeisen Group in Central and Eastern Europe.

Business relations and business ethics are governed within the bank by its own Code of Employee Conduct.

Raiffeisen Bank Aval takes significant efforts to remain the best employer for its staff showing respect for them and adhering to the principles of fairness. Its objectives include inspiring its employees to be responsible leaders. Ethical behavior and respect to ethnic, cultural and other types of human diversity – be they the customers or the employees – form the basis of the bank’s business practices.

Charity and sponsorship

In 2013, Raiffeisen Bank Aval traditionally carried out active charity and sponsorship activities at the level of its head-office and regional directorates. In that year, the bank financed numerous charity and sponsorship projects.

Support of orphanages and boarding schools, as well as child hospitals and charity funds caring for children remain the priority areas of the bank’s charity activities.

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The bank’s priority sponsorship programs include long-term projects aimed at enhancing Ukrainian identity, culture, art and promotion of the best European values.

Last year, the bank supported several charity and sponsorship projects with the total value of nearly UAH 3.5 million. Charity activities are initiated and supported by the bank’s administration and trade union representing the bank employees.

Traditionally, the financial institution provided significant support to orphanages and child health care facilities. Furthermore, the bank used such forms of charity as volunteerism, donations, collection of charity donations for children with serious diseases within the framework of cooperation with Zaporuka charity fund, delivery of presents bought with the employees’ own money for children in orphanages.

In 2013, many charity events were held. They included the charity event in Babanka special boarding school in Cherkasy Oblast, of which the bank has taken care for several years. Within the framework of last year’s campaign, the bank presented to the fosterlings of this educational institution tennis tables, children’s computers, sets for various role games, stationery, toys, table games, hygiene prod-ucts, sweets, etc. For the children’s development, the bank invited as volunteers well-known Ukrainian musicians from the Jazz in Kiev production center, who organized a real master class teaching the schoolchildren jazz fundamentals. The bank also gave money to the boarding school for the construc-tion of a sports ground.

In 2013, the bank financed the implementation of charity, cultural and art projects and social pro-grams with the following funds and organizations involved:— Support for Arts Development charity fund for supporting cultural and art events (with the Title Sponsor status in the National Academic Drama Theater named after Ivan Franko);— Kyiv Mohyla Academy Renaissance international charity fund for the Academy Day celebration;— Kyiv Mohyla Business School LLC for organizing the Innovations magazine publication;— steering committee of the “Voice of the Country. Kids” song contest within the framework of spon-sor participation (money prize for the competition winner);— New European Vod-Platform LLC for supporting the Austrian Film Festival, Diagonale Ukraine;— Oblast municipal concert and show enterprise, Chernihiv Oblast Philharmonic Center of Festivals and Concert Programs, for organizing the 13th International Festival Siversky Music Evenings;— Babylon LLC for organizing a concert of New Era Orchestra in the Master Class education and culture palace;— New Ukraine charity foundation for implementing the Comfortable Apartment project;— Lviv Business School Community NGO for organizing the conference called “The phenomenon of demand: how to become a visionary of customer's desires”;— Zaporuka All-Ukrainian Charity Fund for buying medications for child health care facilities;— Sports and Cultural Initiatives LLC for organizing cross-country ski and mountain ski competitions, Ukrainian Mountain Ski Week in Austria;— Ukrainian Catholic University for supporting training programs, projects and activities of the higher school;— Economics Publishing House LLC for organizing and conducting a seminar on Financial Education for Entrepreneurs;— Nash Mir (Our World) charity organization for buying household appliances for the house of St. Martin de Porres in Fastiv;— Deinternational LLC for organizing an information and business meeting of representatives of Ger-man companies and banking institutions in Ukraine;— National Cultural Union of Germans in Mukachevo Palanok NGO for organizing the participation of the Singing Hearts choir and a dancing group in an international choir festival in Salzburg;— Kyiv of the Future charity foundation for implementing long-term projects in the area of culture, health care, and education;

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— St. Mary International Charity Fund for implementing the charity campaign “Easter Bells – Joyous Echo of Resurrection”;— All-Ukrainian association of small and medium business “Fortress”, for organizing the all-Ukrainian congress of small and medium business;— ARKHITE public association for the concert program “Ragtime”, etc.

At the regional level, oblast directorates of the bank in 2013 organized various charity campaigns and provided charitable support to child educational and health care institutions, NGOs and funds caring about orphans, disabled individuals and veterans.

The goal of Raiffeisen Bank Aval’s charity activities is to provide assistance to those who need it most of all, with as many employees as possible involved in charity and volunteerism.

The bank’s sponsorship effort is aimed at supporting international, national and local projects facilitat-ing the development of Ukrainian and European culture, arts, education, science, and sports.

The bank traditionally pays great attention to these areas of its activity and makes every effort to facili-tate Ukraine’s development and prosperity.

Membershipin professional organizationsIn 2013, Raiffeisen Bank Aval continued to take an active part in the activities of various professional organizations, associations and institutions, and to cooperate with international financial institutions, such as the European Bank for Reconstruction and Development (EBRD) and International Finance Cor-poration (IFC).

Raiffeisen Bank Aval is a member of the following organizations:• IndependentAssociationofUkrainianBanks;• ForumforLeadingInternationalFinancialInstitutions;• StockPartnershipAssociation;• UkrainianInterbankCurrencyExchangePrJSC;• UkrainianStockExchangeCJSC;• NationalDepositoryofUkraine;• All-UkrainianSecuritiesDepositoryPrJSC;• UkrainianNationalMortgageAssociation;• ЕМАUkrainianInterbankPaymentSystemsMemberAssociation;• FirstUkrainianCreditHistoryBureau;• UKRNETUkrainianProjectManagementAssociation;• UkrainianStockTradersAssociation;• SocietyforWorldwideInterbankFinancialTelecommunication(SWIFT);• EuropeanBusinessAssociation;• AmericanChamberofCommerceinUkraine;• InternationalFactoringAssociationInternationalFactorsGroup(IFG);• PerspektivaStockExchangePJSC;• PFTSStockExchangePJSC;• ProfessionalAssociationofRegistrarsandDepositories.

In accordance with the requirements of the applicable laws of Ukraine, the bank is a participant of the Individual Deposit Guarantee Fund that was created in 1998 to protect depositors’ interests.

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Market environment

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Macroeconomic indicators 96

Ukraine's banking sector developments in 2013 99

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Market environmentMacroeconomic indicatorsAccording to the preliminary estimate, Ukraine’s GDP was flat in 2013 (after 0.2 per cent yoy increase in 2012). After five consecutive quarters of GDP decline, the economy grew 3.7 per cent yoy in Q4 2013, also expanding by 2.4 per cent qoq in the seasonally adjusted terms. Thus, the economic performance remained rather poor last year, dampened by subdued external demand and weak domestic investment activity. Across the sectors of the economy, agriculture was the main growth driver last year amid the record high harvest in 2013. The trade sector also posted a positive growth rate, albeit it decelerated substantially compared to the previous year due to a notable slowdown in household income growth. At the same time, most of other sectors of the economy (construction, manufacturing, etc.) performed quite badly last year. The industrial production contracted by 4.7 per cent yoy in 2013 (after 0.5 per cent yoy decline in 2012). Export-oriented manufacturing industries were hit the hardest last year – the output in the chemical industry nosedived by 17.5 per cent yoy amid the slump in the external demand, while the machine building industry (13.8 per cent yoy output decline) apparently suffered from a sharp deterioration in Ukraine’s economic relations with Russia. The metallurgy, a backbone of the Ukrainian industry, posted 5.8 per cent yoy output decrease, deepening from 3.6 per cent yoy fall in 2012. The industries, oriented on the domestic demand (i.e.

Key macroeconomic and fiscal indicators, 2009-20132009 2010 2011 2012 2013

GDP (UAH bn) 913.3 1,082.6 1,302.1 1,411.2 1,454.9

GDP (USD bn) 113.9 136.2 163.4 173.8 178.5

GDP (% yoy) (14.8) 4.1 5.2 0.3 0.0

Industrial production (% yoy) (21.9) 11.2 8.0 (1.0) (4.0)

Private consumption (% yoy) (14.2) 6.7 15.7 11.7 7.8

Gross fixed investment (% yoy) (46.2) 4.7 7.1 0.9 (6.6)

CPI (avg, % yoy) 15.9 9.4 8.0 0.6 (0.2)

CPI (eop, % yoy) 12.3 9.1 4.6 (0.2) 0.5

PPI (eop, % yoy) 14.3 18.7 14.2 0.3 1.7

Real disposable income (% yoy) (10.0) 17.1 8.0 9.7 n/a

Unemployment rate (avg, %) 8.8 8.1 7.9 7.5 7.2

Fiscal balance (% of GDP) (8.7) (7.5) (4.3) (5.5) (6.7)

Public debt (% of GDP) 33.0 40.0 36.0 36.8 40.3

Source: State Statistics Committee, National Bank of Ukraine, Ministry of Finance, Raiffeisen RESEARCH

-15

-10

-5

0

5

10

15

20

25

7.9

2.34.1

5.2

0.3

5.0

12.0

9.0

-0.2

0.0

-5.0

1.5

-14,8

16.6

22.3

12.3

9.1

4.6

GDP (% yoy)

Inflation (eop, % yoy)

2007 2008 2009 2010 2011 2012 2013 2014e 2015f

%GDP growth and inflation

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food and light industries, oil processing), fared not much better given a poor investment climate and a lack of economic stimulus. The mining sector emerged on a slightly positive side, posting 0.4 per cent yoy increase in the output in 2013 – mainly thanks to the rising production in metal ore extraction. The energy sector output fell by 1.3 per cent yoy in 2013.

Consumer prices remained nearly flat in 2013 amid continuing food price deflation, frozen administrative tariffs and looming recession. The eop CPI growth rate constituted 0.5 per cent yoy in 2013, up from a 10-year low of minus 0.2 per cent in 2012. The average CPI growth came at minus 0.3 per cent yoy. The record high harvest last year dampened the growth in food prices (food products comprise over 50 per cent of the consumer basket). In particular, despite some acceleration at the end of the year, food prices declined by 0.7 per cent yoy in 2013, which corresponds to 0.4 p.p. decline in eop CPI growth rate. Fruit prices were hit the hardest with a 17.4-percent drop in 2013, while meat prices decreased by3.1 per cent yoy. On the other hand, prices for dairy products and vegetables increased by 6.2 per cent and 5.8 per cent yoy, respectively, while sugar prices hiked by 18.0 per cent yoy. Alcohol and tobacco prices were the main inflation driver last year, contributing 0.5 p.p. to eop CPI increase. Utility prices were nearly flat last year (0.3 per cent yoy increase), since the government was reluctant to raise retail gas and heating tariffs to a cost-recovery level on the political grounds.

Ukraine’s C/A deficit widened from 8.5 per cent of GDP to 9.1 per cent in 2013 due to the weak external demand, a trade war with Russia and eroding competitiveness amid real exchange rate appreciation. The current account deficit increased by 9.4 per cent yoy compared to the previous year (from USD 14.8 billion to USD 16.1 billion), despite a significant slump in the volume of gas imports last year – energy imports fell by 19 per cent yoy. Also, machinery imports posted a 12.6-percent drop due to the hike in car import duties and the introduction of a vehicle utilization fee. As a result, merchandise imports declined by 5.8 per cent yoy in 2013 (after 4.7 per cent increase in 2012). However, the fall in imports did not lead to an improvement in BoP, as exports fell even more dramatically - by 7.6 per cent (after 1.2 per cent yoy growth in 2012). The machine building was hit the hardest (20 per cent slump in the export volumes compared to 11 per cent increase in 2012), affected by a sharp slowdown of the Russian economy (main destination for Ukraine’s machinery exports), which reduced the demand for investment goods (such as machinery), and trade restrictions on Ukrainian goods imposed last year by the eastern neighbor in the attempt to prevent

2003 2005 2007 2009 2011 2013 2014

4

6

8

10

12

14

16

USD/UAH EUR/UAH

Exchange rate develoment

Public Debt (r.h.s.)General budget deficit

0.7

15.8

1.1

12.3

1.5

20.0

34.6

8.7

7.4

40.0

4.2

36.0

5.5

6.5

36.8

40.3

0

2

4

6

8

10

2006 2007 2008 2009 2010 2011 2012 2013

% of GDP

0

10

20

30

40

50% of GDP

Fiscal indicators

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-8

-10

-4

-2

0

2

4

6

8

Capital account Current account Balance of Payments

USD bn

Balance of payments

Q1

_20

10

Q2

_20

10

Q3

_20

10

Q4

_20

10

Q1

_20

11

Q2

_20

11

Q3

_20

11

Q4

_20

11

Q1

_20

12

Q2

_20

12

Q3

_20

12

Q4

_20

12

Q1

_20

13

Q2

_20

13

Q3

_20

13

Q4

_20

13

-0.0

38

-0.6

34

-0.9

80

-2,5

12

-1.5

98

-1.5

98

-1.4

70

-1.7

18

-2.5

32

-3.3

77

-0.5

69

-0.5

50

.32

1 1.8

21

0.3

6

-0.6

35

0.4

75

0.5

12

4.5

88

-0.6

72

5.1

00

2.0

73 1

.11

3

0.6

82

1.0

42 2

.38

9

0.8

72

-2.5

90

1.8

18

-4.3

50

1.4

84

-2.0

53

3.2

4-3

.79

4.3

66

-4.0

45

1.4

96

4.9

65

2.6

98

5.2

59

5.2

4

-4.8

73 -3

.14

4

-2.3

38

-5.8

94

-4.7

65

3.0

53

2.7

11

Ukraine from signing an Association Agreement with the EU. The notable growth slowdown in EM world heavily weighed on commodity markets. Consequently, the chemical and steel exports went down by 13.8 per cent and 7.0 per cent yoy last year, respectively. At the same time, the cumulative BoP surplus amounted to USD 2 billion last year (after USD 4.2 billion deficit in 2012) as the financial account surplus hiked by 70 per cent in the yoy terms. The external accounts were boosted in December thanks to USD 3 billion bail-out loan, provided by Russia. Also, a strong increase in the balance of ‘other capital’ flows in H2 was due to the fact that Ukraine had accumulated a substantial debt (USD 2.7 billion) to Russia for gas imports. Also, on the positive side, the net FX demand was cut by half in 2013, while the portfolio inflows surged (albeit, the volume of inflows was rather limited). As for the negative trends, the FDI inflow slowed down markedly – USD 6.6 billion in 2012 vs. less than USD 3.3 billion last year (the lowest annual figure since 2004) – on the back of looming economic and political uncertainty and ever-deteriorating business climate. The influx of debt capital into the corporate sector fell visibly last year as well – the balance of long-term borrowings decreased from USD 7.0 billion in 2012 to USD 1.4 billion. A tightened access to the global debt market, apparently, played some role in that, but the main reason might lie in the acceleration of capital outflows on the back of increased political instability.

Ukraine is likely to face strong headwinds in 2014, given the political turmoil at the beginning of the year, the deterioration of the economic relations with the main trading partner and the inevitable implementation of the austerity measures, necessary to restore the financial stability. As a result, we expect the Ukrainian economy to fall into the recession this year, while inflation will shot up on the back of the exchange rate depreciation and a hike in the domestic energy tariffs. On the other side, we see a rather high probability for systemic changes in the country going forward, given the determination of

Key balance of payments and monetary indicators, 2009-20132009 2010 2011 2012 2013

C/A Balance (% of GDP) (1.5) (2.2) (6.3) (8.5) (9.0)

Merchandise trade balance (USD bn) (4.3) (8.4) (16.3) (20.5) (19.6)

FDI (USD bn) 4.7 5.8 7.0 6.6 3.3

Gross external debt (% of GDP) 90.7 86.2 77.3 76.7 79.8

Base money (% yoy) 4.4 15.8 6.3 6.4 14.4

Broad money (% yoy) (5.5) 22.7 14.7 12.5 13.4

USD/UAH (eop) 8.00 7.97 8.00 8.03 8.20

USD/UAH (avg) 8.02 7.95 7.97 8.12 8.15

EUR/UAH (avg) 11.18 10.57 10.98 10.47 10.84

Gross FX reserves (USD bn) 26.5 34.6 31.8 24.5 20.4

Source: National Bank of Ukraine, Raiffeisen RESEARCH

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the new administration, the business community and the civil society to transform the country and a high willingness of the foreign powers to help in this process. This holds especially true if not just an IMF/EU stabilization package is implemented, but also the more general EU cooperation is enhanced (e.g. via entering the Association Agreement with EU). In particular, the local business community (including multinational companies operating in Ukraine) has been quite enthusiastic about the new administration, willing to provide all kinds of support to the government. Therefore, it’s now up to the authorities to exercise this extremely strong business sentiment and push forward decisive reforms. If such a scenario materializes, there is a definitely upside potential to the 2015 forecasts.

Ukraine's banking sector developments in 2013

The banking system in 2013 strongly benefited from the FX market stability, as the improved funding conditions promoted the lending activity, first of all, in the local currency segment. The total loan portfolio of the banking system increased by 11.9 per cent yoy in 2013, up from a mere 2.2 per cent growth in 2012. The loan-to-GDP ratio increased for the first time since 2009 – from 57.4 per cent to 62.7 per cent, albeit it was still well below the peak of 78.4 per cent, reached at end-2009. Across the market segments, the retail lending in the local currency demonstrated the fastest growth for the third year in a row – 22.6 per cent yoy increase (up from 19.2 per cent growth in 2012). Unsecured consumer loans are the most popular products, providing hefty margins to banks. At the same time, the mortgage lending remained largely frozen, amidst the ban on FX lending to the households, high interest rates in the local currency, unaffordable housing prices and much tighter loan conditions. The PI FX loan book continued to shrink (minus 20 per cent yoy in 2013) and so did the exposure of the households to a FX risk – the share of PI foreign currency loans in the total retail loans fell to 35.4 per cent at the end of 2013, the level seen for the last time eleven years ago (for comparison, right before the crisis – in September 2008 – that figure stood at 63 per cent). The CO loan book of the banking system grew 14.5 per cent yoy last year (after 4.9 per cent yoy increase in 2012) and the growth was relatively well balanced between the hryvnia segment and the FX segment – 15.9 per cent and 11.8 per cent yoy growth, respectively.

On the funding side, the total deposit growth accelerated from 16.1 per cent yoy in 2012 to 17.3 per cent in 2013. PI deposits grew somewhat faster than CO deposits – 19.5 per cent and 13.3 per cent yoy increase, respectively. Given stable exchange rate expectations and high interest rate differential (the return on PI hryvnia deposits was around 1,000 b.p. on average higher than on FX deposits), the households increasingly shifted savings into the local currency. PI hryvnia deposits hiked by 38 per cent yoy in 2013, while FX deposits of the households were nearly flat last year (the capitalization of interest earnings also apparently played the role in the build-up of retail hryvnia deposits). Consequently, a deposit de-dollarization trend was rather striking last year – the share of FX deposits in total deposits went down from 43.6 per cent to 36.8 per cent. The structural funding profile of the banking system was improving as new

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60

80

0

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40

60

80

100 %

Total assets Assets' yoy growth rate (r.h.s.)

% of GDP

Total assets

62.5

83.2

97.7 96.38

87.0280.97 80.01

87.8

59

76

55

-4.9

2006 2007 2008 2009 2010 2011 2012 2013

7.011.9

6.9

13.4

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Profitability indicators

Total profitROE (%, r.h.s.)

13.5% 12.7%8.5%

-32.5%

-10.2%

UAH bn

4,15 6.62 7.30

-31.49

-13,03

-7.71

4.901.44

-5.3%

3.0%

0.81%

%

-40

-30

-20

-10

0

10

20

-40

-30

-20

-10

0

10

20

2013 2006 2007 2008 2009 2010 2011 2012

80

100

120

140

160

180

200

220

240

260

0

100

200

300

400

500

600

700

800

1000

2013

134.1152.4

205.1

219.0

24

5.4

42

6.9

77

3.9

71

7.5

UAH bn

2006 2007 2008 2009 2010 2011 2012

%

Bank loans and deposits

Total loans Total deposits Loan to deposit ratio (r.h.s.)

72

4.0

79

3.3

18

3.0

28

0.1

35

7.8

32

7.7

41

3.9

48

9.1

80

9.3

56

7.9

90

4.9

66

8.5

174.9

162.2

142.5135.3

lending was predominantly funded by the domestic deposits. As a result, the loan-to-deposit ratio slid further in 2013 – from 142.5 per cent to 136 per cent, albeit the pace of the decrease slowed down substantially compared to the previous years.

The net profit of the banking system nosedived by 70 per cent yoy in 2013 amid the catastrophic results of few large banks and squeezing interest margins. The aggregate after-tax profit amounted to UAH 1,436 million in 2013 (down from UAH 4.9 billion in 2012). Consequently, the average ROE of the banking system slid from the already low level of 3 per cent in 2012 to the negligible 0.8 per cent last year. It’s worth noting that the aggregate financial result was very much distorted by the huge losses incurred by three large banks (UAH 5.5 billion in total), which had to form additional loan-loss provisions. However, even apart from catastrophic results of individual banks, the financial performance of the banking system remained rather poor – only 5 banks out of top 20 (ranked by total assets) posted ROE above 10 per cent in 2013. The main reason for low profitability was shrinking interest margins on the back of elevated funding costs and an anemic lending activity. In particular, despite the slide in depreciation expectations in early 2013, followed by a robust increase in the PI UAH deposit volume, most of the banks did not rush to cut interest rates on hryvnia deposits substantially (apparently, fearing the resurgence of depreciation pressure sometimes in the near future). As a result, the net interest margin of the banking system shrank from 4.5 per cent in 2012 to 4.1 per cent in 2013, while the total net interest income was flat in yoy terms. The dynamics of the commission income looked more encouraging, which was explained by the buoyance of consumer lending activity. The net income from fees and commissions increased by 16 per cent in yoy terms last year, the net non-interest margin went up from 1.7 per cent in 2012 to 1.8 per cent in 2013.

According to the National Bank, 180 banks were operating in Ukraine as of end-December 2013 (up from 176 at year-end 2012). Thus, surprisingly, despite a low profitability and a feeble loan growth, the banking sector somehow remained attractive for new players. Apart from the low consolidation, the concentration levels in the local banking system remained low as well. The share of top 10 banks in total assets increased only slightly last year (from 52.7 per cent to 54.2 per cent), thus remaining far below the levels of 70-80 per cent, observed in other CEE countries. The PI loan segment was characterized by the highest concentration with the 10 leading banks having a combined market share of 66.8 per cent as of end-December (up from 63.8 per cent at year-end 2012).

In terms of the ownership structure, an eroding market share of foreign-owned banks was witnessed on the back of outright exits of several players from the sector and conservative growth strategies, pursued by foreign incumbents. In particular, the share of foreign-owned (non-Russian) banks shrank from 20 per cent to 16 per cent last year, while the number

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of banks with foreign capital decreased from 53 to 49. At the same time, the share of local private banks increased almost symmetrically – from 50 per cent of total assets at the end of 2012 to 55 per cent at year-end 2013. Apparently, the local players of the banking market have been much more comfortable in dealing with the tumultuous macroeconomic environment and far from perfect business climate. The market shares of state-owned and Russian banks were virtually unchanged last year at 18 per cent and 11 per cent, respectively.

This year, experts do not expect any major changes in the banking system trends. The loan growth rate is to remain in the range of 8-12 per cent, as there is no visible potential for a large uptick in the demand for loans. The upper bound of this range is attainable if the FX market situation remains largely stable. Across market segments, the unsecured consumer lending will probably remain the most thriving, albeit the market might soon come close to the saturation point, given a break-neck growth in the last few years and extremely high interest rates. Banks’ profitability will be under pressure this year, given a subdued lending activity, high funding costs and a sizeable exchange rate depreciation (which will have a negative effect on P&L accounts via a rising credit risk, collateral revaluation and additional losses, incurred by banks with a short open FX position (this problem has still been acute for a few large banks as of year-end 2013).

Performance of the banking sector, 2009–20132009 2010 2011 2012 2013

Number of operating banks 182 176 176 176 180

Number of banks with foreign capital 51 55 53 53 49

Share of foreign banks in capital, % 35.8 40.6 41.9 39.5 34.0

Total assets, UAH bn 880.3 942.1 1,054.3 1,127.2 1,278.1

Total assets, % of GDP 96.2 87.0 81.0 80.0 87.8

Total assets growth, % (4.9) 7.0 11.9 6.9 13.4

Financial depth (deposits to GDP), % 35.8 38.3 37.4 40.2 45.9

Loans, % of GDP 78.4 66.9 60.9 57.4 62.2

Loans to deposits ratio, % 219 175 163 143 135

Equity, UAH bn 115.2 137.7 155.5 169.3 192.6

Capital adequacy ratio 18.1 20.8 18.9 18.1 18.3

Return on assets (4.38) (1.45) (0.76) 0.45 0.12

Return on equity (32.5) (10.2) (5.3) 3.0 0.8

Net interest margin 6.2 5.8 5.3 4.5 4.1

Cost to income ratio, % 50.4 54.6 62.6 63.7 63.0

Source: National Bank of Ukraine, Raiffeisen RESEARCH

140

150

160

170

180

190 % of assets #

Competitive landscape

Market share of foreign banks (% of assets)Market share of state-owned banks (% of assets)# of operating banks (r.h.s.)

176

180

175 175

184182

176

0

5

10

15

20

25

30

35

40

45

50

2013 2006 2007 2008 2009 2010 2011 2012

31

.9

33

.0

45

.0

46

.7

42

.6

37

.1

32

.0

8.8

8.0

11

.4

17

.0

16

.9

17

.0

18

.0

27

.01

8.0

176

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Bank performance

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Performance highlights 104

Risk management 105

Network 107

Personnel. Training and development 108

Operations and IT 109

Corporate business 112

Micro business 114

Retail business 117

Treasury services 123

Bank performancePerformance highlights*

In 2013, Raiffeisen Bank Aval earned a profit after tax of UAH 1 billion, that is thrice as high as that in the previous year. Thus, the bank proved the efficiency of its strategy amid the turbulence of the market and the fact that it re-mained one of the leaders of the banking sector by con-tinuing to provide high-quality services to all categories of customers.

Against the general trends of rolling-up of activities by foreign banks in Ukraine and strengthening of the posi-tions of Ukrainian private banks in 2013, Raiffeisen Bank Aval continued to realize the strategy of ensuring prof-itability amid cautious lending activities. The bank’s net assets as of 2013 year-end reduced by 8 per cent to UAH 47.1 billion. As a result, the bank descended from the fourth to the fifth position in terms of assets in the rating of Ukrainian banks, conceding to a competitor with an aggressive growth.

In the environment of a sharpening competition on the lending market caused by the insufficiency of solvent cus-tomers, in 2013 the bank continued extending its opera-tion in PI consumer lending and resumed its lending activ-ity in the corporate segment. This resulted in a 4-percent increase of the bank’s total loan portfolio (after a reduc-tion in the previous year), which amounted to UAH 31.1 billion as of the end of 2013. As a whole, the reduction of the bank’s assets in 2013 was caused by a decreased stock of cash funds and securities, mainly made of inter-nal government loan bonds, in the bank’s portfolio.

Changes in the liability-side transactions reflected the bank’s general trend of conservative development. Amid turbulence and strengthened competition in the domestic resource market, in 2013 Raiffeisen Bank Aval adhered to a moderated interest policy that caused a slight out-flow of term deposits of private individuals. At the same time, the funds of corporate customers and the funds on current accounts of private individuals increased, what evidenced the bank’s high reputation and customer con-fidence. As at the end of 2013, the volume of customer funds totaled UAH 26.8 billion, which is 4 per cent less y-o-y.

In 2013, the bank’s financials remained the best among the main competitors. This enabled an increase in the

Other assets

Trading and investment securitiesTangible and intangibl assets

Loans to customersAmounts due from credit institutonCash and cash equivalents

Assets structure

0

20

10

40

30

60

50

UAH bn

2011 2012 2013

9.8%

2.9%0.9%

7.3%

29.8%

0.53%7.2%

3.2%1.0%

8.7%

33.7%

0.45%

5.73%

2.75%1.06%

5.90%

31.07%

0.58%

0

10

20

30

40

50

60

The evolution of Assets

UAH bn

47.1

54.351.2

2011 2012 2013

0.8%

8.1%

0.04%

12.1%

28.0%

2.4%

0.6%

7.8%

0.04%

16.2%

27.2%

2.4%

Other liabilities

Amounts due to credit institutionLiabilities evidenced by paper

Deposits from customersSubordinated debtEquity

UAH bn

Liabilities & Equity structure

2011 2012 2013

0

10

20

30

40

50

60

0.52%

9.0%

0.08%

8.28%

26.83%

2.4%

*According to the International Financial Reporting Standards (IFRS)

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operational income by 14.3 per cent even despite the reduction in the volume of current assets. Alongside with the cost optimization, it permitted to improve the bank’s financial result to a large extent compared to the previous year.

Risk managementCredit risk

Credit risk management and control are exercised by means of the limits set to the risk amount that the bank is ready to undertake with regard to certain counterparties, as well as geographic and branch concentration, and by means of control of the risks related to such limits.

The procedure for examining the loan quality was developed in Raiffeisen Bank Aval in order to ensure timely identification of possible changes in the counterparties’ loan capacity, including annual review of the collateral amount. In accordance with its policy, the bank assigns ratings within the framework of the loan portfolio. All internal risk categories are identified on the basis of the bank’s rating assignment methodology. The ratings in terms of the risk amount are regularly revised and updated.

During the reporting year, the bank used the following loan risk norms:• thenormforthemaximumamountofthecreditriskperonecounterparty(Н7) – 9.4 per cent (the standard value – maximum 25 per cent);• thenormforhighcreditrisks(Н8) – 10.0 per cent (the maximum value – no more than 800 per cent);• thenormforthelargestamountofloans,guaranteesandsuretiesgrantedtooneinsider(Н9) – 2.35 per cent (the maximum value should not exceed 5 per cent);• thenormforthemaximumtotalamountofloans,guaranteesandsuretiesgrantedtoinsiders(Н10) – 4.27 per cent (the maximum value – no more than 30 per cent).

Market risk

For market risk evaluation, the principles, methods and models, adopted by Raiffeisen Bank International AG (RBI), are used. More specifically, the method of sensitivity analysis is applied for evaluation of the percentage risk of the bank’s portfolios, position monitoring and method of possible loss assessment, as well as monitoring of accumulated losses.

The market risk is evaluated separately for the trading and non-trading (banking) portfolios. The bank controls the level of the acceptable market risk for open positions, setting the respective limits upon con-sentoftheRBIMarketRiskAssessmentCommittee(МАСО).DuringeachmeetingoftheBank’sAssetsand Liabilities Management Committee, a report is presented on the current market risk and its compo-nents, application of the respective limits, analysis of the market factors impact.

Currency risk

The Department for Market and Financial Institutions Risks monitors and analyzes on a daily basis the

0.2%

1.32%

-0.23%

3.58%

0.22%

1.36%

0.28%

3.44%

Other operating profit/lossNet fee and commission incomeNet interest incomeNet traiding income

UAH bn

Operating income breakdown

2012 2013 -1

0

1

2

3

4

5

6

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bank’s open positions for different currencies and precious metals. Furthermore, in order to avoid exces-sive expenses resulting from over-estimation of the open currency position of the bank, the accumulated incomes/losses from currency transactions are controlled. The Department for Market and Financial Institutions Risks also carries out stress tests and calculates potential losses resulting from unfavorable and extreme fluctuations of currency exchange rates.

For the purposes of an open currency position management, respective limits were set for each indi-vidual currency and for the open currency position in general. Additionally, limits for the accumulated incomes/losses from currency transactions and re-evaluation of the open currency position were set. The limits are set upon the bank’s suggestion after approval by the RBI Market Risk Assessment Committee.

When the amount of possible changes of currency exchange rates is calculated, historical fluctuations of the market exchange rates are taken into account for each currency during the reporting year, and possible rate changes are identified with 99 per cent probability. At the same time, the possible increase and decrease in the exchange rate for each currency is independently assessed.

Interest risk

To assess the interest risk in the bank’s portfolios, the sensitivity analysis method is used. In this case, sen-sitivity is measured with regard to the simultaneous shift of the income curve for each currency per one basis point. In addition, the impact of market rates on the bank’s interest income is evaluated.

The limits for sensitivity of the portfolio price to the change of income rates are set separately for the na-tional currency, US Dollar, Euro, Russian Ruble, and Japanese yen. Besides, there is a limit for general sensitivity to interest rate fluctuations.

Price risk

The price risk potentially influences the incomes/losses and the bank’s capital. To avoid the price risk, any changes in price quotations for securities (bonds) in the bank’s trading portfolio are regularly moni-tored, and respective instruments are re-assessed with regard to their market value as of each reporting date. Fluctuations of market interest rates, as well as their compliance with the price quotations for securi-ties are also monitored.

Additionally, the trading position sensitivity to changes of market price quotations (rates) is assessed on a daily basis. An acceptable level of sensitivity to the changes of market price quotations (the sensitivity limit) has been set, and the application of this limit is regularly monitored. Furthermore, limits for the ac-cumulated losses from trading transactions were set in order to restrict the acceptable price risk.

Sensitivity to changes in the market price quotations for the trade portfolio is calculated as a change in the portfolio price as of the reporting date with the interest rate change by 1 basis point (0.01 per cent).

Liquidity risk

For liquidity risk assessment, methods and approaches identified in accordance with the requirements of the National Bank of Ukraine and Raiffeisen Group are used. More specifically, a regular report on the discrepancies between assets and liabilities in terms of their maturity is prepared, and respective gaps in terms of timelines are analyzed. Additionally, the products’ behavior is studied without a pre-set maturity date (customers’ current accounts, banks’ correspondent accounts), as well as fixed-term products that

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may be prolonged under regular agreements.

The bank furthermore analyzes stress scenarios that may influence the liquidity, distinguishing the sce-nario of a combined financial and reputational crisis. Besides, additional liquidity sources are analyzed, including Ukrainian internal government bonds that can be used in emergency situations.

Limits for cumulative gaps are set for each time period within the framework of the scenario developed for normal market conditions, and separate limits are identified for the stress scenario.

Raiffeisen Bank Aval uses the liquidity norms set by the National Bank of Ukraine. To enhance control of the liquidity norms, internal liquidity norms were set, and their value is monitored on a daily basis while the results are presented at each ALMC meeting. If necessary, the bank conducts a stress test for the liquidity values and examines a possible impact of the change in certain internal and external factors.

For the purpose of analysis of financial assets and liabilities with regard to their maturity terms, an as-sumption is used concerning the possibility of early sale of securities in the bank’s portfolios, as well as the sustainability of the customers’ current and fixed-term account balances.

Operational risk

The bank has introduced a centralized /decentralized system for the operation risk management and control. The process of the operational risk management covers all types of the bank’s activities, as well as all the structural levels – from the management level to the level, where the risk is immediately received or generated.

Operational risk management and control is exercised by identifying the “risk appetite” every year for the amount of risk the bank is ready to undertake, as well as by controlling the losses incurred by the bank as a result of occurrence of operational risk events.

The bank uses the principles, tools and methods of operational risk management, adopted by Raif-feisen Bank International AG (RBI). More specifically, these include expert assessment of the risk, identification and monitoring of the indicators of early operational risk warning, scenario analysis, in-troduction of minimum standards for collecting information about the operational risk events, as well as reporting on the operational risk management issues to the Operational Risk Management Committee.

To mitigate operational risk, the bank creates a capital reserve to cover the operational risk. The amount of the operational risk capital is calculated on the basis of a standardized approach.

To reimburse possible losses resulting from occurrence of operational risk, the bank signed risk insur-ance agreements related to its operational activities.

Network

The network of Raiffeisen Bank Aval branches as of the end of 2013 consisted of 798 functioning insti-tutions, namely: • 711fullyfunctioningbranchesprovidingacompletesetofstandardbankingservicestoallgroupsof customers: private persons, microbusiness, small, medium and corporate business customers;

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• 85commissionbranchesworkingwithprivatecustomersandcarryingoutcashdeskoperations;• 2branchesworkingwithVIPcustomers.

To ensure more comfort for customers, an interactive map of the network of branches and ATMs was created, and cosmetic repairs performed in 216 departments.

The efficiency of the network of branches was increased by 29.6 per cent in 2013 as a result of cost optimization, increased sales volumes and reorganization of individual departments.

As of the end of 2013, the bank’s self-service network included:• 2,972ATMsthatprovidedcash;• 492self-servicecenters,whosenetworkcontained492infokiosksand453cashin/cashoutATMs for payments, loan installments, deposit replenishment and provision of other services to custom-ers.

In 2013, the ATM design interface was completely renovated, the 3D-secure service activation was added, as well as the service for foreign cards owners – Dynamic Currency Conversion. Online pay-ments to third party companies that provide telecommunication services, including access to the Internet and satellite TV, were added to the self-service network in the reporting year.

Personnel.Training and development

As of 31 December 2013, Raiffeisen Bank Aval had 13,053 employees (including the subsidiary Raif-feisen Leasing Aval LLC).

By encouraging and supporting constant professional development of its employees, the bank consist-ently implements the policy of priority selection of candidates from the internal personnel reserve to fill the vacancies. As a result of the implementation of this policy, 80 per cent of new positions, including managerial positions, are filled with candidates from among the current bank employees.

The HR policy also includes various methods of personnel retention using social protection mechanisms. The bank actively uses programs of health and accident insurance for various categories of employees: in general, these programs cover nearly 4,000 employees of the bank.

Raiffeisen Bank Aval has a successfully functioning Trade Union of bank employees: in the head-office and in each of the regional directorates, primary trade union organizations were established. The bank administration and the Trade Union cooperate actively in many areas: for organization of social life of the team, cultural and sports events, assistance to the bank employees and their family members, etc. One of the main fundamental principles of the Trade Union activities of Raiffeisen Bank Aval is: “We are striving for harmonization of the strategy of development of the bank and its team; the employer’s suc-cess is impossible without its employees’ success, and vice versa.”

The personnel training and development team of the HR division created a training center that provides regular and ad hoc trainings. All programs of personnel training and development, as well as respective approaches are drafted and implemented in accordance with the standards of Raiffeisen Bank Interna-

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tional AG.

The priority area of personnel training includes trainings on sales and managerial competencies devel-opment delivered by the bank’s training managers. During the reporting year, 16 training and develop-ment programs in various spheres were prepared and implemented. The bank employees took part in 585 internal and external training and development events.

Taking into consideration a large number of bank employees, as well as a constant need for training, each employee received an opportunity to gain knowledge in the form of distant learning. Thus, during the year the bank employees took part in 106,146 online courses and passed 198,167 tests. The total number of training programs includes 320 online courses on various subjects, and 35 of them were developed in 2013.

During the reporting period, the process of work performance management (reconciliation of the annual goals with their further assessment as a criterion of evaluation of the overall efficiency/performance of the employee) involved 1,165 staff members – managers and experts of the bank. Every participant of the process prepared and received approval of his/her immediate supervisor for an individual plan of key competencies development.

Special emphasis was made on the development of the heads of regional directorates. For them, a com-prehensive assessment was conducted using the 360 degrees methodology. The process encompassed 58 employees from administration of the regional directorates, as well as 15 employees from the central office. Based on the assessment results, feedback was provided, and meetings were held to discuss the received reports; individual competencies development plans were prepared for the competencies ne-cessary to improve the work efficiency.

In accordance with the RBI requirements, regular work is carried out to plan succession in the key mana-gerial and expert positions in the bank’s central office, regional directorates and branches. In the course of the work on planning succession in the key managerial positions, evaluation of the potential of se-lected employees was conducted.

A process was launched to revise and improve the approaches to newly appointed employees’ adapta-tion, which is an important component of the improved quality of development planning, increased effi-ciency and reduction of the time period needed by the employee to get involved in the work process and complete the trial period. The adaptation program is the necessary condition for the development of mu-tually beneficial fruitful relations between the bank and a new employee at all levels of the organization.

To improve the quality of services provided to external customers, an ongoing procedure was intro-duced, Evaluation of Quality of Services for External Customers. The quality of internal services is the process aimed at improving the level of the customers’ satisfaction and their loyalty, improvement of business efficiency and cost reduction.

Operations and IT

Completion of the implementation of a large-scale program related to the transformation of operating activities, Opera Nova, should be mentioned as one of the main achievements in the area of Raiffeisen Bank Aval’s operations in the reporting period.

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The key idea was to transfer some types of operations from regions to the centralized back office. The project goal was to improve the level of services and customer satisfaction through improving the per-formance indicators which determine the quality of services, as well as through the increased produc-tivity. This goal was achieved by ensuring better control of process implementation, efficient resource management and scale economy in addition to the clear process of optimization and adequate level of automation.

The program encompasses the following areas: payment processing, card services (including transac-tion accounting), retail loan administration, back office for providing services to legal entities and under-writing of loans for individuals. Improvements were also achieved in such areas as regional archiving and cash management.

The achieved results include:• centralizationofdataprocessinginthesinglecenterinKherson(insteadofprocessingin52localcenters);• significantimprovementofthequalityofservicesprovidedtocustomerswithsimultaneousincreasein productivity by more than 30 per cent;• standardizationofprocesses,whichenablescustomerstouseserviceswithequallyhighqualityinall parts of the country;• creationofcompetenciescentersforfurtherdevelopmentandimprovementofthebank’sservicepackage; • developmentanddeploymentofasystemofdocumentmanagementandelectronicarchiving,which facilitated simplification of processes.

A team of more than 50 bank specialists worked for two and a half years on the implementation of 28 projects within the framework of the transformation program. As a result, the optimum configuration of the bank’s operations was achieved, which ensures the leading positions of Raiffeisen Bank Aval among prominent banks in terms of the quality of provided services.

The priority area of IT development in 2013 was to ensure stable operation of IT systems for uninter-rupted provision of high quality services for the bank’s customers. Other priorities included the following: development and improvement of IT systems, introduction of new business functionality for providing a wider range of services, development of infrastructure solutions, virtualization and centralization of software.

A significant step on the way of IT development and improvement was endorsement of the bank’s IT stra-tegy for 2013-2017, which identifies the respective priorities in line with the bank’s needs and general market trends. A new IT architecture was being developed, which would efficiently support the business and be reliable, flexible and scalable. Analysis was carried out with regard to the launch of a project that would transfer all the bank’s units to the uniform MFO. Pursuant to the IT strategy, migration of the current accounts of corporate customers in ODB Bankmaster continues.

Necessary documents were prepared for the bank’s performance appraisal by an Austrian regulator (ANB). Within the framework of compliance with the respective requirements and harmonization with the international standards, the RCRS system, CPA-instruments, and a product catalog were introduced; GDWH, CMS (Collateral Management System), DPD & Provisions, EWS (Early Warning System) and some other systems were modified; respective DQIs (quality indicators), as well as procedures ensuring the data quality were developed.

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One of the key achievements in the area of infrastructure solutions was the development in 2013 of a consolidated reserve data center on the basis of COD DeNovo. Within the framework of this project, all equipment of the IT infrastructure from some data centers was transferred to the centralized data center. As a result, the bank’s backup systems were united into a single data center with a high reliability level. Furthermore, the backup and testing systems were transferred from the main data center to the consoli-dated backup data center, which reduced the data center electricity consumption by 50 kWatt, and the saved energy was used for development of the bank’s IT infrastructure.

Within the framework of infrastructure unification, the Unified Storage project was successfully imple-mented, within the framework of which ten data storage systems and 0.83 TB data were virtualized, and Dynamic Tiering technology was introduced, as well as the systems for centralized management and analysis of data bodies and disc space, systems of data online migration among the data bodies. Due to the implementation of the Unified Storage project, nearly 70.5 million hryvnias (list price) will be saved on disc resources in 2013-2014. As a result of the project realization, a monolith virtualized infrastruc-ture of data storage was built, which enables flexible management and resource balance, simplified administration and increased productivity of data bodies.

To increase the productivity and reliability of the system operation, the Bankmaster RS migrated from an outdated hardware platform. A scheme of refusal resistance system was also replaced with a more reli-able one, which enabled the bank to free more than 5 Tb disc resources on each server site.

292 servers of the bank branches and 2,099 user workplaces were transferred to the uniform regional virtual infrastructure, which reduced the costs for server equipment maintenance and reduced energy consumption by the branches. As a result, management flexibility and accessibility of IT services in-creased, refusal resistance of the banking systems in the branches increased, and settings of the depart-ments were unified. The ІТ infrastructure in the branches was harmonized with the applicable IT standard.

Within the framework of the regional IT centralization, 95 per cent of communication channels of the branches and regional directorates (RD) were centralized. Refusal from local channels of communication significantly increased the accessibility percentage of the branches, since workability of the active net-work equipment in directorates no longer influences the work of these branches. In the past, the problems with the OD network equipment resulted in the absence of communication and suspension of operations of the branches in the entire oblast.

The primary emphasis in development of the IT systems in 2013 was placed on the introduction of a release approach to software supplies, which decreased the software release timelines and improved the work planning, distribution and combination processes. Large software systems were re-engineered, which led to the improved productivity and resiliency of the systems.

The productivity of the Bankmaster banking system was optimized. Delimitation of the payment process shortened the payment duration by several times. Technological support was optimized and automated in 18 complexes with round-the-clock operations.

In 2013, the bank actively expanded the product line within the Bankmaster system: there were deve-loped deposits, overdrafts, and Cash Management for corporate business. A new module for the End of Period commissions of corporate and small business was developed. This not only offered new opportu-

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nities for the business, but also created conditions for migration of corporate customers from the ISAODs of the directorates within the decentralization process.

Raiffeisen Bank Aval was one of the first in Ukraine to introduce the effective interest rate (EIR) calculation and within the shortest time enforced development and implementation of reserves in accordance with the national standards as required by the NBU.

Corporate business

2013 became another successful year for the bank’s corporate business. The net income of the business line after taxes reached UAH 731 mil-lion, which is 21.3 per cent higher as compared with the similar figures in 2012. The success was possible mainly due to the strong partnership rela-tions with the bank’s customers focused on busi-ness efficiency, introduction of cost cutting initia-tives, as well as due to a high quality of the new loans portfolio. The corporate business in 2013 preserved its positions as one of the key and the most profitable customer segments of the bank. At the same time, the volume of the corporate busi-ness assets as of the end of 2013 reached UAH 20.46 billion (44 per cent of the bank’s total as-sets), the gross income totaled UAH 1.67 billion (31 per cent of the bank’s total income).

The dynamics of these indicators are in line with the strategy of balanced bank development in the period of economic instability. Furthermore, among all the new loans that were granted after 2010, the share of those that can be classified as bad is only 1.3 per cent.

Moreover, according to the results of the survey of the market of banking services for corporate cus-tomers in 2013, the marketing and social survey company GfK Ukraine announced Raiffeisen Bank Aval, for the fourth year in a row, one of the undisputable leaders in the corporate business segment with regard to almost all indicators. The bank provides services to 32 per cent companies in this mar-ket, whereas 13.8 per cent of customers of financial institutions believe Raiffeisen Bank Aval to be their main bank, which is twice as high compared to the bank’s nearest rival.

Raiffeisen Bank Aval was also recognized as one of the most active banks providing services to cor-porate customers by experts of the rating of 50 Leading Ukrainian Banks in 2014 published by the Kommersant-Ukraine Publishing House.

The reporting year was remarkable for the corporate business with an active growth of the volumes of trade finance, services related to money management of enterprises and factoring transactions. Thus, the average volume of documentary business during the year increased by 29 per cent, and the income received from factoring transactions grew by 39 per cent. The bank’s services related to companies’ money management include not only traditional opening and maintenance of current accounts with the help of electronic communication channels, but also money encashment, payment,

Dynamics of the Assets and Liabilitiesof the Corporate Business

2008 2009 2010 2011 2012

23,858

5,696 6,0387,262

8,918 8,483

20,719

18,850

20,533

18,361

UAH mln

25,000

Assets CorB

20,000

15,000

10,000

5,000

0

Liabilities CorB

2013

8,088

20,050

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transportation and counting. Raiffeisen Bank Aval is also one of the leaders in the area of card project services – payment and corporate cards of international payment systems in Ukraine. The bank’s lead-ing position in providing these services was also acknowledged in the rating of 50 Leading Banks of Ukraine 2014: Raiffeisen Bank Aval became the best in the Salary Projects category (1st place) and Funds Encashment (2nd place).

Business financing by the bank includes financing of the floating capital, partnership programs of per-manent assets replacement, and other capital investments for corporate customers.

Several special and unique market programs on agricultural business financing give the agrarians a chance to select precisely those bank products that are necessary in the specific situation and to de-velop comprehensive relations with the bank. Raiffeisen Bank Aval traditionally pays great attention to this sector. The bank sees agricultural business as a strategically important segment, in which it contin-ues to hold the leading positions. Every fifth loan in the bank’s corporate business segment is granted to representatives of the agro-industrial complex. The bank plays an active role, including the sponsor’s role, in organizing large agro-industrial exhibitions and conferences, introduces banking know-how and innovations, and in general is actively developing the market.

The bank’s customers also enjoy the advantages of close cooperation with Raiffeisen Leasing Aval leasing company. Such cooperation gives an opportunity to the bank’s customers to choose among the best financial solutions in the form of various bank loans or leasing programs.

The bank continues to pay great attention to satisfying the need of exporters and importers for high quality bank services. In addition to the trade finance services related to money management and other proposals, such companies can expect efficient support of their business needs from the bank’s trea-sury, since in terms of currency purchase and sale transactions Raiffeisen Bank Aval remains one of the leaders in the Ukrainian banking market. The results of internal surveys permit to estimate this segment as one of those that give the bank a significant competitive advantage in the customers’ eyes.

The structure of the bank’s loan portfolio did not change much in 2013. As in the past, the portfolio of loans granted to corporate customers remained well diversified both in terms of economic branches, and in terms of customer segments.

Among the main priority branches, in financing of which the bank is largely specialized, one should mention all agricultural business segments (producers, processers, agricultural traders), the main areas of wholesale and retail trade, service sphere, transport and communications.

Cross-sale programs for products of the leasing company, treasury and retail business (payment cards, payment) continue to be the main priorities of the corporate business in the sales area. The presence of a personal manager and a modern service model enable the corporate business to offer its customers a complete range of bank products and services regardless of the business vertical that accompanies them.

Corporate businesscore services

•CASHMANAGEMENT: – opening and maintenance of current accounts; – Client-Bank system in the real-time mode (Internet banking) and computer banking in an

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autonomous mode; – statements of account on a mobile phone and e-mail; – money encashment, payment, transportation and counting; – payment services (collection of payments in cash from individuals and cash transfers from authorized agents to the company account); – consolidated reports on accounts for the customer’s own network; – centralized management of payments in all regional and structural units of the company; –statementsoftransactionsintheSWIFTsysteminМТ940,МТ942formats; – cash pooling (distribution of company resources among its structural units in an automated mode); – zero balance (consolidation of the residue funds of system customers); – money transfers, payment documents in national and foreign currencies; – purchase, sale and exchange of foreign currencies; – salary projects; – corporate cards; – acquiring and Internet-acquiring.

•BUSINESSFINANCING:(capital investments, fixed asset replacement, working capital financing) – investment loans; – project financing; – working capital financing; – car loans; – loans for agricultural enterprises; – factoring; – corporate overdrafts (to legal entities); – overdrafts with differentiated interest rates; – trade finance and documentary business (including bank guarantees, export and import letters of credit, standby letters of credit, documentary collection); – leasing; – arrangement and participation in syndicated loan projects; – long-term financing secured by foreign export credit agencies.

•DEPOSITPRODUCTS: – deposits with interests paid at maturity; – deposits with interests paid on a monthly basis; – deposits with top up option; – deposits with full or partial withdrawal of funds before the maturity date; – short-term placement of temporary spare funds (three days or longer).

•SECURITIES: – purchase and sale of securities on behalf of customers; – organization of issuance of bonds to be placed in the domestic and foreign markets; – underwriting (purchase of newly issued securities for their further placement or sale); – depositary services (stock storage and accounting, provision of information and consultations, other services as a stock depositary and custodian);– purchase, sale, discounting and guaranteeing of bills of exchange.

•LEGALANDFINANCIALADVICE.SEARCHFORNEWFOREIGNPARTNERSFORPURCHASEORSALE OF EXISTING COMPANIES AND ENTERPRISES.

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Micro business

In 2013, the bank continued to develop long-term partnership relations with customers in small and mi-cro business segments. Goal-oriented and clear actions of the respective bank units helped to achieve significant levels, and more specifically: the total amount of granted credit funds exceeded UAH 2 bil-lion, which is 70 per cent more compared to 2012. In the area of provision of services to the customers in the micro business segment, the indicator characterizing the percentage income from active transi-tions increased by 85 per cent, which can be explained by the growth of the share of highly profitable short-term credit products that are most popular among the customers. Already more than 20,000 customers are using the Companion credit card, which, as VISA Company confirms, helped the bank to become the best in the area of credit card sales to business customers in Ukraine. The loan portfolio for this product was increased by 60 per cent in 2013.

Last year, the bank also improved the range of services for the customers and introduced new packag-es of services. Active users of the service packages will be offered the most advantageous conditions. Furthermore, a list of services not requiring additional commission fees was significantly extended since they were already included in the service package.

Specially for the small and micro business customers, Raiffeisen Bank Aval developed an identification card. Using this card, the customer always receives the necessary information about the status of the current, card, deposit and loan accounts simply by dialing 0 800 50 50 45.

The bank also launched a special offer for its new customers, “Try With Us!”, which provides opportu-nities for receiving free of charge services* during three months.

For the customers, who are connected to the Client-Bank system and who want to receive up-to-date information about their account balance, cash movement, etc., an SMS (E-mail) info service was intro-duced.

During the year, the bank was actively developing its loan products improving the existing and creating new ones. A new product was introduced – 90 Days Overdraft, the conditions of which make it pos-sible to repay the used loan limit during three months. The customers also began to use a Dovira (Trust) loan program aimed at current activities financing. Its main feature is that the borrower can receive a loan equivalent to EURO 10,000 without any collateral.

*LIST OF FREE OF CHARGE SERVICES OF THE “TRY WITH US!” SPECIAL OFFER: – opening of a current account in national or foreign currency; – depositing and transfer of cash in national and foreign currency; – outgoing and incoming transfers in national and foreign currency; – connection to the Client-Bank system; – SMS Banking (provision of information about the account balance in the form of an SMS mes-sage); – regular Business Payments (transfer of the available residue or a fixed amount upon the custom-er’s instructions following the pre-set rules of procedure); – e-mailing statements of account (sending the customer’s statement of account by e-mail); – provision of a hard copy of the statement of account; – certificate confirming current account opening (issued on the day, when the current account is opened).

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The loans for small and medium business granted by Raiffeisen Bank Aval took the first place in the respective category of the rating of 50 Leading Banks of Ukraine 2014 published by the Publishing House Kommersant-Ukraine. The rating took into consideration the effective rate for the borrower, the time required for loan decision-making, the size of the commission, the maximum duration of the loan, as well as other conditions.

During the reporting period, Raiffeisen Bank Aval launched a Business Academy project that became part of the My Business program developed to help the bank’s customers to successfully run their own business. The Academy includes a set of events to be attended by self-motivated entrepreneurs from different parts of the country. These events are educational and practical: the lecturers, based on their own experience and the experience of other successful companies, teach the participants how to ap-ply certain technologies and avoid mistakes.

Microbusiness services:

•SERVICE PACKAGES (a set of banking services for current account management): – Maximum Solution; – Alternative Solution; – Electronic; – Paper; – Entrepreneur.

•CLIENT-BANK SYSTEM (a system of distance bank current account services that enables account management without the need to visit the bank).

•DEPOSIT PROGRAMS – Deposit line (a possibility of partial withdrawal of funds within the specified limit without terminat-ing the agreement and at a fixed interest rate); – Leader (a possibility to independently identify the scheme of interest payment – on a monthly ba-sis or at the end of the deposit period); – Partner (a possibility to use the deposit as collateral for loan transactions); – Capital (capitalization of interest – on a monthly basis, interest is added to the deposit amount increasing the deposit and the profit from it).

•BUSINESS LOANS – Companion credit card (loans for entrepreneurs without collateral and guarantor); – loans for financing the top-up of working funds (overdraft with the debit balance for 30 days, overdraft with the debit balance for 90 days, revolving and non-revolving loan facility); – loans for investment activities (loans for purchase of equipment, vehicles, real estate and other investment objectives); – special partnership programs for financing of agrarians.

•BANK GUARANTEES – bid guarantee (provided by the bank to customers for participation in bidding procedures); – tourist guarantee (provided to tourist operators); – contract implementation guarantee (ensuring implementation of contractual obligations); – payment guarantee (ensuring fulfillment of the buyer’s obligations to the seller).

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Retail business

The main priority in activities of the business line for private individuals in Raiffeisen Bank Aval during the reporting period was the improvement of services and product proposals.

Deposits

The bank remains one of the leaders in terms of the involved individuals’ funds – as of the end of the reporting year, the amount exceeded UAH 14.5 billion.

The bank’s customers place their savings in demand accounts and deposit accounts. The latter offer some additional advantages for the depositor:• apossibilityofinterestpaymentattheendoftheperiodoronamonthlybasis,orinterestcapitaliza-tion;• apossibilitytotopupinacashorcashlessform(includingbymeansoftheInternetbankingsystemfor individuals, Raiffeisen Online, through bank self-service terminals or with the help of a standing or-der on deposit replenishing without the need to visit the bank);• replenishmentorpartialwithdrawaloffundsduringthebeneficialperiod(sevendaysafterprolon-gation of the deposit) without termination of the agreement;• demanddepositwiththeincreasedinterestrateandfreeaccesstothedepositwithoutrestrictionand loss of the interest – in the bank office or through the Internet banking system for private individu-als, Raiffeisen Online;• depositswiththeinterestrategrowingonamonthlybasis.

Raiffeisen Bank Aval depositors may learn about the status of their account with the help of an Informa-tion Center using their customer ID, or through the Internet banking system for private individuals, Raif-feisen Online.

The deposit account may be in the national currency or in foreign currencies (US Dollar and Euro) on demand or for 1, 2, 3, 6 and 12 months. The fixed term deposit interest rates are not changed during the entire period of the deposit.

Cash loans

In 2013, cash loans were very popular among the best customers of the bank, new customers and holders of salary cards. Every month, campaigns were organized, and new offers were presented for promotion of that product.

The year witnessed an enlargement of the customer category using the cash loan products:• pensionersbyage(Q12013);• pensionersbyseniority(Q32013);• employedpensionerswhohaveasalaryaccountinthebank(Q42013);• bankcustomerswhodonothavesalaryaccountsinthebank,butwhohavecurrentaccounts(Q42013);• wealthybankcustomers(Q42013).

In June and July of the last year, an all-Ukrainian advertising campaign was implemented, which re-sulted in an increased number of new customers who received cash loans.

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The bank regularly developed and implemented promo campaigns for new customers and for the cus-tomers who have a salary account in the bank:• “NeverBefore!CashLoanat0.01percent”(Q12013);• Specialpricesforthecustomerswhohavenotusedtheofferbefore(Q12013);• “ReceiveAwardTotalingTwoLastPaymentsforCashLoan”(Q22013);• “ChooseYourInterestRateYourself!”(acustomersignedaloanagreementwiththebankandinde-pendently set the interest rate for the first 30 days from the day of loan granting (Q4 2013);• Specialpricesforwealthycustomers(Q42013).

In general, in 2013 the bank granted nearly 70,000 loans with the total value of UAH 1.16 billion.

Mortgage

In 2013, the mortgage loan products were offered to the customers who have salary accounts in the bank, premium customers and bank employees under such programs as “Housing on Credit in the Secondary Market” and “Credit Secured by Real Estate”. During the year, UAH 16.7 million were granted as loans.

In the past year, several initiatives were introduced within the framework of loan granting to private individuals aimed at automation and optimization of the loan decision-making processes and loan granting to individuals. As a result, in December 2013 the share of automated decisions on loan grant-ing to this group of customers was approximately 25 per cent, and the time of entering a loan request in the system for decision-making decreased by 35 per cent.

Credit card

During the reporting period, the most popular bank product in this category – the Prozora [Transpar-ent] credit card – won several awards for Raiffeisen Bank Aval:• theProzoraMasterCardcreditcardfortwoyearsinarowwasrecognizedtheleaderinthecardproducts market (according to the results of the 50 Leading Banks of Ukraine 2014 survey conducted by the Publishing House Kommersant-Ukraine). The rating was compiled on the basis of the average annual effective interest rate, the maximum loan amount, the beneficial period when the interest is not calculated, the amount of penalties for untimely repayment, and other conditions; • withintheframeworkoftheinternationalbankconference,MasterCardDay,RaiffeisenBankAvalwas named the Leader in Credit Products Promotion.

In 2013, the number of Prozora credit card holders increased by 150,000 persons; the bank’s loan portfolio with regard to this product increased by UAH 338 million to UAH 1,328.9 million.

During the reporting period, the bank started to sell Prozora credit cards to pensioners.

At the beginning of the year, Raiffeisen Bank Aval started issuing non-contact Prozora credit cards MasterCard PayPass, which enable one-touch buying without giving the card to the cashier.

For the existing and new holders of credit cards, a large-scale campaign was conducted from August 1 to December 31, 2013 – Get Presents for Constant Payments – as an incentive for payments with the Prozora credit card. More than 500 winners received prizes: travel certificated for UAH 15,000 or UAH 20,000, beach sets and bags with plaid blankets.

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Service packages and payment cards

In 2013, Raiffeisen Bank Aval achieved significant results in developing its card products for individu-als and took leading positions in card account servicing: the bank’s share in the Ukrainian payment cards market was 11 per cent, and the number of active card accounts using service packages ex-ceeded 1.6 million.

The bank focused on increasing the number of services included in service packages and on improving the service quality, namely:• byintroducinginnovativeproductssuchasnon-contactpaymentsVisaPayWaveand MasterCard PayPass, which enable one-touch buying. At the beginning of the year, the bank proposed its best cus-tomers to open a bonus card with that innovative technology free of charge;• bylaunchingthe3D-SecureVisaandMasterCardSecureCodetechnologiesthatguaranteead-ditional protection to the card holders during payments on Internet and minimize the threat of unsanc-tioned use of the card;• byissuinginJuly2013anewuniqueco-brandcardVisaFishkapayWave,whichenablesaccu-mulation of points for payments with the card in Ukrainian and foreign outlets within the framework of the Fishka bonus program. With the Visa Fishka payWave payment card, the customer receives more pointsintheoutletsoftheprogrampartners:ОККОnetworkoffillingstations,Furshetchainofstores,ALLO, Mobilochka, A la Minute restaurants, Hot Cafe and in the branches of Universalna Insurance Company. As at the end of the year, the bank issued more than 100,000 co-branded cards Visa Fishka payWave. For the new holders of Visa Fishka payment cards, the bank offers a card activation promo campaign: double Fishka points are calculated for card payments during the first two month from the day of its registration;• startingfromNovember2013,thebank’spremiumcustomerscanuseauniqueproductofthenewgeneration – “Premium 2.0” with exclusive proposals and a Visa Premium card. The main advantages of the new package of services are: – Priority Pass club card that entitles a customer to a free of charge stay in increased-comfort wait-ing rooms of international airports all over the world; – free insurance during trips abroad; – free Concierge Service and other special services;• inDecember2013,thebankintroducedanewsoftwaretoprovideservicestoitscustomers,whichsignificantly improved the quality of services and simplified the process: due to the new software, the number of documents to be signed by the customer was reduced to minimum, the time of service provi-sion was reduced, as well as the number of customer’s visits to the bank’s office.

Internet banking

Internet banking for private individuals (Raiffeisen Online) became very popular. More than 200,000 customers connected to the system during the reporting period.

The bank’s customers using the Raiffeisen Online system can:• makefreeofchargepaymentstothirdparties;• topuptheirdeposits;• payloandebts;• transfermoneytothirdpartiesusingtheircardnumber(betweenthecardsissuedbyRaiffeisenBankAval);• viewthecurrentbalanceandblockedamountsoncardaccounts,etc.

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In 2014, the retail business of the bank plans to significantly increase the functionality of the Raiffeisen Online system. The bank will offer the following to its customers:– management of their limits on card accounts;– automatic regular payment;– payment cards unblocking;– online opening of deposits;– account replenishment from mobile phones;– card-to-card payments using the card number (to the cards opened with any Ukrainian bank);other functions that will save time and money.

Payments

During the reporting period, the bank continued to expand the network of its partner companies in the area of payments through self-service centers (SSC).

A self-service center is a mini-office where bank terminals are installed. They enable the bank custom-ers holding Visa or MasterCard cards issued by Raiffeisen Bank Aval to carry out a large number of transactions on their own without referring to the office staff. Such transactions include: deposit reple-nishment, loan payments, payment of bills, money transfers from one card to another and instant pay-ments, cash placement on the deposit, etc.

Services to payment card holders through ATMs

In 2013, Raiffeisen Bank Aval jointly with the Ukrainian Processing Center (UPC) introduced a Dy-namic Currency Conversion (DCC) service for non-resident individuals through the network of its ATMs, when the holders of the cards issued by foreign banks can conveniently and precisely control their cash funds withdrawn in the ATM network. DCC is a service for exchanging the currency of an acquiring bank owning the ATM for the currency identified by the issuer, which is to be calculated in the course of the DCC service.

In conjunction with the UPC, the bank also increased the number of companies, in whose favor online payments may be performed through ATMs. Today, an ATM may be used not only to receive cash but to exercise instant payments as well. Other services that one can receive in the network of Raiffeisen Bank Aval ATMs include:• accountreplenishment;• informationaboutthecashfundsremainingontheaccountandaprintedmini-statement;• moneytransfersthroughАТМExpress(expressmoneytransferfromonecardtoanother);• PINcodechange;• connectiontotheM-bankingservice;• activationofaccesstotheRaiffeisenOnlinesystemintheactivemode.

Precious metals

Raiffeisen Bank Aval is one of the recognized market leaders in terms of sales of banking metals. It of-fers its customers a wide range of memorable, investment and collectors’ coins produced by the lead-ing mints of the world and by the National Bank of Ukraine, the majority of which are sold by the bank having the exclusive distributor’s rights.

Furthermore, the bank is actively selling coins to other Ukrainian banks in the interbank currency market

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of Ukraine. For the customers who regularly use the bank services and participate it the loyalty pro-gram, there is a program under which they can exchange the accumulated bonuses for an opportunity to buy coins at a special price.

Money transfers

The retail business pays much attention to the development of money transfer services and loyalty pro-grams for the loyal customers of the bank. During the reporting period, the bank offered money trans-fers with the help of the Unistream system, tariffs in the Aval-Express system were replaced with more attractive ones for the customers, and the list of discounts under the loyalty program was extended.

Retail services

• DEPOSIT PRODUCTS – deposits with interest paid at the end of the period; – deposits with interest paid on a monthly basis; – deposits with a possibility of replenishment, interest capitalization and a compound interest rate; – deposits with a possibility of full and partial money withdrawal; – deposits with an interest rate growing on a monthly basis; – demand deposits with an increased interest rate and a free access, without restrictions and loss of interest.

• CURRENT ACCOUNTS – current accounts for private individuals (non-card accounts); – “Investment” current accounts for non-resident individuals (investors).

• CARD PRODUCTS – card accounts on the package terms “Optimal” and “Premium” for private and salary project customers; – a package of services for private customers whose card accounts were opened in US Dollar or Euro; – card accounts on package terms “Optimal Light” for salary project customers; – card accounts on package terms “Pension Basic”, “Pension Light”, and “Pension Optimal” for customers receiving pensions/social welfare payments; – credit cards (tariff packages “Profitable”, “Standard”, and “Premium”); – “MTS Mobile Bonus”: a joint program of the bank and MTS Ukraine.

• LOANS – cash loans for the best customers; – cash loans within the cross sales framework; – cash loans within the standard sales framework.

• MORTGAGE LOANS – housing on credit in the secondary market; – credit secured with real estate.

• SERVICES FOR HOLDERS OF PAYMENT CARDS THROUGH SELF-SERVICE TERMINALS – account balance and mini-statements; – moneytransfersthroughАТМExpress(expressmoneytransferfromonecardtoanother);

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– loan repayments and credit account statements; – replenishment of deposits and deposit account statements; – money transfers and payment to any account; – subscription to the automatic bill payment service.

• ADDITIONAL SERVICES FOR PAYMENT CARD HOLDERS – mobile banking; – payment card to the account in the name of an authorized person; – insurance for the period of a trip abroad; – concierge service; – setting individual limits for the cards; – sending statements of account by e-mail; – online statements of account; – replenishment of deposits from card accounts according to standing orders; – loan repayment from a card account according to standing orders; – payments to companies from a card account according to standing orders; – automatic payment of bills and regular payments (Direct Debit); – services of the payment portal on the bank’s web-site (Internet payments for municipal services, mobile payments, purchase of electronic vouchers, etc.); – PIN code change.

• MONEY TRANSFERS – money transfers through the Western Union system (in Ukraine, to and from abroad); – money transfers between private individuals in Ukraine with the help of Aval Express; – money transfers through the Unistream system (to and from abroad); – registered transfers from Russia through Gazprombank JSB; – money transfers from the USA and Canada through the Meest transfer system; – money transfers from legal entities to private individuals through the Aval-Express system; – expressmoneytransfersbetweencardaccountsthroughATMsorself-serviceterminals(АТМ-Express); – money transfers from a current account to the account of any recipient, including through the SWIFT system; – money transfers through self-service terminals and bank cash desks to the account of any recipi-ent.

• CHECKS – sale of American Express traveler checks (till July 22, 2013); – acceptance of registered and traveler checks on encashment terms and cash payments on them (till October 1, 2013); – cash payments on American Express traveler checks (till October 1, 2013).

• TRANSACTIONS WITH BANK METALS – sale of collectors’ and gift coins of the leading mints of the world as the exclusive distributor in Ukraine; – sale of minted and gift bars of precious metals made by recognized producers; – sale of exclusive coins to individual customer’s order.

• LEASE OF INDIVIDUAL DEPOSIT BOXES FOR PRIVATE INDIVIDUALS

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Raiffeisen Bank Aval offers individual safe deposit boxes for rent. The safe boxes are located in the deposit hall all the time and are guarded and electronically monitored 24 hours a day. The renter’s or his/her authorized representative’s access to the safe deposit box is ensured by an individual pass-word, two keys and an individual card.

Treasury servicesOne of the priority areas of operation of Raiffeisen Bank Aval treasury during the reporting period in-cluded transactions in the international and domestic markets.

The bank is an active participant of the interbank loan market and has a perfect reputation of a reliable partner. Due to this, it is constantly increasing the number of its counterparty banks and the volumes of conversion transaction for the customers and for its own needs. In its work, the bank uses modern trade, information and analytical systems that enable the specialists of the treasury to promptly respond to the current market situation.

The bank continues to hold the leading positions in terms of the cash currency imported to the Ukrainian market with the market share in this segment totaling approximately 25 per cent.

Raiffeisen Bank Aval is a member of various associations and committees on banking activities; it also participates in regular meetings with the NBU leadership together with the largest banks in the Ukrainian financial market.

The bank has a status of the primary dealer of the Ministry of Finance and keeps its active position in the market of the state debt securities.

Efficient liquidity management traditionally belongs to the priorities of the bank’s treasury activities. In order to achieve an optimal balance between the risk, profit and liquidity, continuous monitoring and assessment of the bank’s payment position is carried out. Therefore, Raiffeisen Bank Aval is keeping the permanent liquidity balance necessary for protection against possible unfavorable changes in the mac-roeconomic situation and adherence to the necessary liquidity norms set by the NBU.

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Consolidated financial IFRS statements

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Independent Auditors' Report 126

Consolidated IFRS statement of financial position 129

Consolidated IFRS income statement 130

Consolidated IFRS statement of comprehensive income 131

Consolidated IFRS statement of changes in equity 132

Consolidated IFRS statement of cash flows 133

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Consolidated IFRS statement of financial position

notes 2013 2012

assets

Cash and cash equivalents 7 5,734,275 9,773,797

Mandatory reserves in the National Bank of Ukraine 8 576,312 526,494

Trading securities 9 210,622 204,540

Amounts due from credit institutions 10 30,271 3,525

Loans to customers 11 31,069,913 29,813,198

Assets held for sale 12 60,575 352,920

Investment securities: 13

– designated at fair value through profit or loss 5,151,277 6,087,472

– available-for-sale 1,172 108,163

– held-to-maturity 538,629 922,747

Investment property 14 200,558 142,487

Property and equipment 15 2,279,868 2,345,734

Intangible assets 16 467,157 507,310

Current income tax assets 5,565 804

Deferred income tax assets 17 36,480 44,963

Other assets 19 722,720 368,407

Total assets 47,085,394 51,202,561

Liabilities

Amounts due to the National Bank of Ukraine 402,137 150,586

Amounts due to credit institutions 20 7,708,249 11,941,762

Amounts due to customers 21 26,832,644 27,964,034

Debt securities issued 22 70,160 37,514

Current income tax liabilities 95,762 67,868

Subordinated debt 23 2,377,704 2,374,272

Provisions 18 25,481 23,420

Other liabilities 19 573,454 573,598

Total liabilities 38,085,591 43,133,054

equity

Share capital 24 3,002,775 3,083,449

Additional paid-in capital 3,033,375 3,032,776

Revaluation reserves 24 964,647 1,076,158

Reserve and other funds 281,388 278,625

Retained earnings 1,749,434 632,716

Total equity attributable to shareholders of the Bank 9,031,619 8,103,724

Non-controlling interest (31,816) (34,217)

Total equity 8,999,803 8,069,507

Total equity and liabilities 47,085,394 51,202,561

Signed and authorised for release on behalf of the Management Board of the Bank

Volodymyr Lavrenchuk Chairman of the Board

Lyudmila Makarenko Chef Accountant

18 April 2014

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For the year ended 31 December 2013 (thousands of Ukrainian hryvnia)

The full version of Consolidated IFRS Financial Statements is available on http://www.aval.ua/en/about/bank_reports/

Consolidated IFRS income statement

notes 2013 2012Interest incomeLoans to customers 4,758,210 5,082,349

Amounts due from credit institutions 68,282 50,344

Investment securities 655,690 811,727

5,482,182 5,944,420Interest expenseAmounts due to customers (1,377,594) (1,363,191)

Amounts due to credit institutions (412,097) (766,336)

Subordinated debt (194,366) (228,539)

Amounts due to the National Bank of Ukraine (4,425) (3,441)

(1,988,482) (2,361,507)net interest income 3,493,700 3,582,913Allowance for loan impairment 10, 11 (1,295,664) (1,102,211)

net interest income after allowance for loan impairment 2,198,036 2,480,702

Fee and commission income 1,704,136 1,562,955

Fee and commission expense (344,010) (239,817)

fees and commissions, net 26 1,360,126 1,323,138Net gains/(losses) from foreign currencies:

– dealing 141,798 118,895

– translation differences (17,358) 707

Net gains/(losses) from securities:

Trading securities 8,437 (7,487)

Investment securities designated at fair value through profit or loss:

– dealing 30,680 (10,411)

– revaluation 241,105 (211,707)

Investment securities available-for-sale 217,668 –

Other income 27 96,700 81,585

non-interest income/(expenses) 719,030 (28,418)Personnel expenses 28 (1,513,315) (1,543,488)

Depreciation and amortisation 15,16 (449,129) (463,243)

Other administrative and operating expenses 28 (1,016,281) (1,182,970)

Impairment of subsidiaries (8,555) –

Charge of allowances for impairment of other assets and provisions 18 (3,195) (10,497)

Impairment loss from assets held for sale (15,512) –

Revaluation of investment property 14 – (2,919)

non-interest expense (3,005,987) (3,203,117)Profit before income tax expenses 1,271,205 572,305Income tax expenses 17 (253,925) (253,038)

Profit for the year 1,017,280 319,267Attributable to:

– shareholders of the Bank 1,014,879 318,843

– non-controlling interest 2,401 424

1,017,280 319,267Profit attributable to shareholders of ordinary shares 1,014,179 318,143

Profit attributable to shareholders of preference shares 700 700

1,014,879 318, 843Earnings per share

Weighted average number of ordinary shares (in thousands) 29,977,656 29,969,945

Weighted average number of preference shares (in thousands) 49,994 49,986

Basic and diluted earnings per ordinary share (in hryvnias) 0.0338 0.0106

Basic and diluted earnings per preference share (in hryvnias) 0.0140 0.0140

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Consolidated IFRS statement of comprehensive income

notes 2013 2012

Profit for the year 1,017,280 319,267

OTHER COMPREHENSIVE INCOME

Items that are or may be reclassified subsequently to profit or loss:

Unrealised gains on investment securities available-for-sale

24 – 34,258

Change in fair value on investment securities available-for-sale transferred to profit or loss

24 (103,671) –

Income tax relating to gains on investment securities available-for-sale

17, 24 16,587 (5,481)

Total items that are or may be reclassified subsequently to profit or loss

(87,084) 28,777

Items that will not be reclassified to profit or loss:

Revaluation of property 24 – (62,574)

Income tax relating to revaluation of property 17, 24 – 10,012

Total items that will not be reclassified to profit or loss – (52,562)

other comprehensive income for the year, net of tax (87,084) (23,785)

Total comprehensive income for the year 930,196 295,482

Attributable to:

– shareholders of the Bank 927,795 295,058

– non-controlling interest 2,401 424

930,196 295,482

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Consolidated IFRS statement of changes in equity

Notes

attributable to shareholders of the Bank

Non-controlling

interestTotal

equityShare

capital

Additional paid-in capital

Revaluation reserves

Reserve and other funds

Retained earnings Total

31 december 2011 3,083,241 3,032,156 1,155,285 277,092 260,764 7,808,538 (34,641) 7,773,897Total comprehensive income for the year – – (23,785) – 318,843 295,058 424 295,482Depreciation of revaluation reserve 24 – – (23,848) – 23,848 – – –Transfer of tax effect from revaluation of property 24 – – (31,494) – 31,494 – – –Allocation of retained earnings to reserve and other funds – – – 1,533 (1,533) – – –Dividends declared to shareholders of the Bank 24 – – – – (700) (700) – (700)Sale of treasury shares 24 1,546 4,615 – – – 6,161 – 6,161Purchase of treasury shares 24 (1,338) (3,995) – – – (5,333) – (5,333)31 december 2012 3,083,449 3,032,776 1,076,158 278,625 632,716 8,103,724 (34,217) 8,069,507Total comprehensive income for the year – – (87,084) – 1,014,879 927,795 2,401 930,196Depreciation of revaluation reserve 24 – – (23,533) – 23,533 – – –Transfer of revaluation upon disposal of property 24 – – (894) – 894 – – –Allocation of retained earnings to reserve and other funds – – – 2,763 (2,763) – – –Transfer of inflation adjustment 24 (80,875) – – – 80,875 – – –Dividends declared to shareholders of the Bank 24 – – – – (700) (700) – (700)Sale of treasury shares 24 201 599 – – – 800 – 80031 december 2013 3,002,775 3,033,375 964,647 281,388 1,749,434 9,031,619 (31,816) 8,999,803

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Consolidated IFRS statement of cash flows

notes 2013 2012Cash flows from operating activitiesInterest received 5,259,085 5,666,957

Interest paid (2,016,214) (2,292,864)

Commissions received 1,755,361 1,526,976

Commissions paid (344,010) (239,817)

Gains/(losses) from trading securities 5,454 (19)

Gains from dealing in foreign currencies 141,798 118,895

Other operating income received 95,746 77,856

Personnel expenses (1,453,229) (1,558,490)

Other operating and administrative expenses paid (967,522) (945,289)

Income tax paid (208,471) (54,342)

Cash flow from operating activities before changes in operating assets and liabilities

2,267,998 2,299,863

Net (increase)/decrease in operating assets:

Mandatory reserves in the National Bank of Ukraine (53,249) (83,857)

Trading securities (3,098) 98,136

Investment securities designated at fair value through profit or loss 1,258,252 (206,770)

Amounts due from credit institutions (24,024) 6,793

Loans to customers (2,460,118) 3,006,761

Other assets (194,363) (90,781)

Net increase/(decrease) in operating liabilities:

Amounts due to credit institutions, short-term (9,343) (171,020)

Amounts due to customers (1,185,404) 704,378

Debt securities issued 31,950 (5,636)

Other liabilities (52,888) 93,428

net cash flows from/(used in) operating activities (424,287) 5,651,295Cash flows from investing activitiesProceeds from investment securities available-for-sale 220,988 –

Purchase of investment securities held-to-maturity – (3,500)

Proceeds from redemption of investment securities held-to-maturity 400,411 1,332,480

Purchase of investment property (7,875) (27,423)

Proceeds from investment property 5,191 –

Proceeds from assets held for sale 35,134 –

Purchase of property and equipment (209,018) (250,630)

Proceeds from sale of property and equipment 2,079 16,813

Purchase of intangible assets (109,818) (143,384)

Dividends received 953 310

net cash flows from investing activities 338,045 924,666Cash flows from financing activitiesPurchase of treasury shares – (5,333)

Sale of treasury shares 800 6,161

Repayment of borrowings from credit institutions, long-term (3,977,637) (3,962,183)

Dividends paid (685) (688)

net cash flows used in financing activities (3,977,522) (3,962,043)Effect of exchange rate changes on cash and cash equivalents 24,242 (6,902)

net change in cash and cash equivalents (4,039,522) 2,607,016Cash and cash equivalents, 1 January 7 9,773,797 7,166,781Cash and cash equivalents, 31 december 7 5,734,275 9,773,797

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Addresses

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Raiffeisen Leasing Aval 136

Raiffeisen Bank International at a glance 137

Raiffeisen Glossary 139

Addresses of Raiffeisen Bank International 140

Addresses of Raiffeisen Bank Aval 142

Raiffeisen Leasing Aval

Raiffeisen Leasing Aval LLC is a universal leasing company that provides a complete range of leasing services, so that the customers can fill their machinery fleets with various vehicles, agricultural machines and equipment.

The company was founded in June 2006, and since then it has been actively developing and using in its work the many years’ experience of Raiffeisen Group in the sphere of provision of leasing services in Central and Eastern Europe.

Today, Raiffeisen Leasing Aval LLC is a financial institution that effectively compliments the range of services provided by Raiffeisen Bank Aval in the area of customers’ financing and offers competitive conditions, reliability and individual approach to each customer.

According to the Ukrainian Association of Leasing Lessors, during the last five years Raiffeisen Leasing Aval LLC has been one of the top three leaders in the Ukrainian leasing market. In 2013, the company took the second place in terms of the size of the leasing portfolio in the Ukrainian market.

The company offers financing for the purchase of various vehicles, equipment and agricultural ma-chines on leasing terms. The largest share of the leasing portfolio of Raiffeisen Leasing Aval LLC is ac-counted for agricultural finance.

Raiffeisen Leasing Aval actively cooperates with producers and suppliers of agricultural machines and equipment on the most advantageous terms. The company participates in partnership programs in conjunction with domestic and foreign dealers that are striving to create the maximum comfortable financing conditions. One of the most striking examples of such cooperation is a partnership program of Raiffeisen Bank Aval and Raiffeisen Leasing Aval LLC with John Deere, a supplier of high-quality ag-ricultural equipment. Such cooperation enables financing of the customers on the most beneficial terms.

In order to involve a wide group of entrepreneurs and representatives of agricultural business in part-nership relations, Raiffeisen Leasing Aval LLC, together with Raiffeisen Bank Aval, every year takes part in agrarian industry exhibitions. Thus, for six consecutive years they took part in the AGRO exhibition that is an important nationwide event in the agro-industrial complex of Ukraine. Raiffeisen Leasing Aval also participates in the Interagro international agricultural exhibition, the results of which in 2013 de-monstrated high interest of customers in financial leasing services.

To ensure a sustainably high quality of services, the company is constantly making effort to improve its internal business process and systems of support for external and internal customers. Standardization of business processes, minimization of expenses for all types of resources and a strong team spirit are important components of the success of Raiffeisen Leasing Aval LLC.

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Raiffeisen Bank International at a glanceA leading bank in Central and Eastern Europe, including Austria

Raiffeisen Bank Aval is a subsidiary of Raiffeisen Bank International AG (RBI), which regards Central and Eastern Europe (including Austria), as its home market. For more than 25 years, RBI has been operating in the Central and Eastern Europe (CEE) region, where today it maintains a closely knit network of sub-sidiary banks, leasing companies and numerous specialized financial service providers in 15 markets. As a universal bank, RBI ranks among the leading banks in the region. The powerful role played by the bank is supported by the Raiffeisen brand, which is one of the most widely recognized brands in the re-gion. Over time, RBI has positioned itself as a fully integrated corporate and retail banking group in CEE. The bank not only has good access to retail and corporate customers, but also boasts a comprehensive product offering. At the end of 2013 around 58,000 staff served approximately 14.6 million customers in around 3.000 business outlets in CEE.

In Austria, RBI is one of the top corporate and investment banks. It primarily serves Austrian customers, but also international as well as major multinational clients operating in CEE. Moreover, RBI is repre-sented in the world's financial centres and operates branches and representative offices in Asia. All in all, RBI employs about 58,000 staff and has total assets of around € 130.6 billion.

RBI operates subsidiary banks in the following CEE markets:

Albania Raiffeisen Bank Sh.a.

Belarus Priorbank JSC

Bosnia and Herzegovina Raiffeisen BANK d.d. Bosna i Hercegovina

Bulgaria Raiffeisenbank (Bulgaria) EAD

Croatia Raiffeisenbank Austria d.d.

Czech Republic Raiffeisenbank a.s.

Hungary Raiffeisen Bank Zrt.

Kosovo Raiffeisen Bank Kosovo J.S.C.

Poland Raiffeisen Bank Polska S.A.

Romania Raiffeisen Bank S.A.

Russia ZAO Raiffeisenbank

Serbia Raiffeisen banka a.d.

Slovakia Tatra banka, a.s.

Slovenia Raiffeisen Banka d.d.

Ukraine Raiffeisen Bank Aval JSC

As the parent company of these banks, RBI's shareholding in them is at or near to 100 per cent in most cases.

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RBI's development

RZB was founded in 1927 as “Genossenschaftliche Zentralbank”. Raiffeisen established its first subsidi-ary bank in Central and Eastern Europe already back in 1987. Other own subsidiaries have since been established. From 2000 onward, Raiffeisen's expansion into CEE countries has mainly been achieved by acquiring existing banks and subsequently combining them into a holding company that from 2003 operated under the name Raiffeisen International. In April 2005 Raiffeisen International was listed on the stock exchange in order to finance its future growth efficiently. Today’s RBI was established in 2010 through the merger of Raiffeisen International with the principal business areas of Raiffeisen Zentralbank Österreich AG (RZB).

RBI has been listed on the Vienna stock exchange since 25 April 2005 (as Raiffeisen International up until 12 October 2010). RZB, which functions as the central institution of the Austrian Raiffeisen Banking Group (RBG), remained the majority shareholder following the merger, holding approximately 78.5 per cent of the shares as of 31 December 2013. The remaining approximate 21.5 per cent of RBI’s shares were in free float. Due to the capital increase at the beginning of 2014, the free float rose significantly to about 39.3 per cent after RZB waived its subscription rights and participated in the amount of just € 750 million. As of the editorial deadline RZB held 60.7 per cent of RBI’s shares.

For more information please refer towww.rbinternational.com andwww.rzb.at.

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Raiffeisen GlossaryGable Cross The gable cross is part of the trademark used by almost every company in the

Raiffeisen Banking Group and RZB Group in CEE. It represents two stylized horse’s heads, crossed and attached to the gable of a house. It is a symbol of protection rooted in old European folk tradition: a gable cross on the roof was believed to protect the house and its occupants from outside dangers and to ward off evil. It symbolizes the protection and security that the members of the Raiffeisen banks enjoy through their self-determined collaboration. Today, the gable cross is one of Austria’s best-known trademarks and a well-recognized brand in CEE.

Raiffeisen Bank International

Raiffeisen Bank International AG (RBI) regards Central and Eastern Europe (CEE), including Austria, as its home market. In CEE, RBI operates as a universal bank through a closely knit network of subsidiary banks, leasing companies and numerous specialized financial service providers in 15 markets. At the end of 2013 around 58,000 staff served approximately 14.6 million customers in around 3,000 business outlets in CEE. In Austria, RBI is one of the top corporate and investment banks. Moreover, RBI is represented in the world's financial centres and operates branches and representative offices in Asia. All in all, RBI employs about 58,000 staff and has total assets of approximately € 130.6 billion.

RBI has been listed on the Vienna stock exchange since 25 April 2005 (as Raiffeisen International up until 12 October 2010). RZB, which functions as the central institution of the Austrian Raiffeisen Banking Group (RBG), remained the majority shareholder following the merger, holding approximately 78.5 per cent of the shares as of 31 December 2013. The remaining approximate 21.5 per cent of RBI’s shares were in free float. Due to the capital increase at the beginning of 2014, the free float rose significantly to about 39.3 per cent after RZB waived its subscription rights and participated in the amount of just € 750 million. As of the editorial deadline RZB held 60.7 per cent of RBI’s shares.

RZB Founded in 1927, Raiffeisen Zentralbank Österreich AG (RZB) is the central institution of the Austrian Raiffeisen Banking Group (RBG) and acts as group centre for the entire RZB Group, including RBI. RZB functions as the key link between RBG and RBI, with its banking network in Central and Eastern Europe (CEE) and numerous other international operations.

RZB Group The Group owned and steered by RZB. Raiffeisen Bank International is the Group's largest unit.

Raiffeisen Banking Group

The Raiffeisen Banking Group (RBG) is Austria's largest banking group by total assets. As per year-end 2012, RBG's consolidated balance-sheet total amounted to more than € 291 billion. It represents about a quarter of all banking business in Austria and comprises the country's largest banking network with 2,285 business outlets and more than 29,700 employees. RBG consists of Raiffeisen Banks on the local level, Regional Raiffeisen Banks on the provincial level and RZB as central institution. RZB also acts as the link between the international operations of its group and RBG. Raiffeisen Banks are private cooperative credit institutions, operating as universal banks. Each province's Raiffeisen Banks are owners of the respective Regional Raiffeisen Bank, which in their entirety own approximately 90 per cent of RZB's ordinary shares.

The Raiffeisen Banks go back to an initiative of the German social reformer Friedrich Wilhelm Raiffeisen (1818–888), who, by founding the first cooperative banking association in 1862, has laid the cornerstone of the global organization of Raiffeisen cooperative societies. Only 10 years after the foundation of the first Austrian Raiffeisen banking cooperative in 1886, already 600 savings and loan banks were operating according to the Raiffeisen system throughout the country. According to Raiffeisen's fundamental principle of self-help, the promotion of their members' interests is a key objective of their business policies.

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Addresses of Raiffeisen Bank InternationalRaiffeisen BankInternational AG

AustriaAm Stadtpark 91030 ViennaPhone: +43-1-71 707-0Fax: +43-1-71 [email protected]@rbinternational.com

Banking network

AlbaniaRaiffeisen Bank Sh.a. “European Trade Center”Bulevardi “Bajram Curri”TiranaPhone: +355-4-23 8 1000Fax: +355-4-22 755 99SWIFT/BIC: SGSBALTXwww.raiffeisen.al

BelarusPriorbank JSCV. Khoruzhey Str. 31-A220002 MinskPhone: +375-17-28 9-9090Fax: +375-17-28 9-9191SWIFT/BIC: PJCBBY2Xwww.priorbank.by

Bosnia and Herzegovina Raiffeisen Bank d.d. Bosna i HercegovinaZmaja od Bosne bb71000 SarajevoPhone: +387-33-287 101Fax: +387-33-21 385 1SWIFT/BIC: RZBABA2Swww.raiffeisenbank.ba

BulgariaRaiffeisenbank (Bulgaria) EaD Ulica N. Gogol 18/201504 SofiaPhone: +359-2-91 985 101Fax: +359-2-94 345 28SWIFT/BIC: RZBBBGSFwww.rbb.bg

CroatiaRaiffeisenbank austria d.d. Petrinjska 5910000 ZagrebPhone: +385-1-45 664 66Fax: +385-1-48 116 24SWIFT/BIC: RZBHHR2Xwww.rba.hr

Czech RepublicRaiffeisenbank a.s.Hvězdova 1716/2b14078 Prague 4Phone: + 420-221-141-111Fax: +420-221-142-111SWIFT/BIC: RZBCCZPPwww.rb.cz

HungaryRaiffeisen Bank Zrt.Akadémia utca 61054 BudapestPhone: +36-1-48 444-00Fax: +36-1-48 444-44SWIFT/BIC: UBRTHUHBwww.raiffeisen.hu

KosovoRaiffeisen Bank kosovo J.S.C.Rruga UÇK, No. 5110000 PristinaPhone: +381-38-22 222 2Fax: +381-38-20 301 130 SWIFT/BIC: RBKORS22www.raiffeisen-kosovo.com

PolandRaiffeisen Bank Polska S.a.Ul. Piękna 2000-549 WarsawPhone: +48-22-58 5-2000Fax: +48-22-58 5-2585SWIFT/BIC: RCBWPLPWwww.raiffeisen.pl

RomaniaRaiffeisen Bank S.a. 246 C Calea Floreasca014476 BucharestPhone: +40-21-30 610 00Fax: +40-21-23 007 00SWIFT/BIC: RZBRROBUwww.raiffeisen.ro

RussiaZaO RaiffeisenbankSmolenskaya-Sennaya Sq. 28119002 MoscowPhone: +7-495-72 1-9900Fax: +7-495-72 1-9901SWIFT/BIC: RZBMRUMMwww.raiffeisen.ru

SerbiaRaiffeisen banka a.d.Djordja Stanojevica 1611070 Novi BeogradPhone: +381-11-32 021 00Fax: +381-11-22 070 80SWIFT/BIC: RZBSRSBGwww.raiffeisenbank.rs

SlovakiaTatra banka, a.s.Hodžovo námestie 3P.O. Box 4285005 Bratislava 55Phone: +421-2-59 19-1111Fax: +421-2-59 19-1110SWIFT/BIC: TATRSKBXwww.tatrabanka.sk

SloveniaRaiffeisen Banka d.d.Zagrebška cesta 762000 MariborPhone: +386-2-22 931 00Fax: +386-2-30 344 2SWIFT/BIC: KREKSI22www.raiffeisen.si

UkraineRaiffeisen Bank aval JSC9, Vul Leskova01011 KievPhone: +38-044-49 088 88Fax: +38-044-295-32 31SWIFT/BIC: AVALUAUKwww.aval.ua

Leasing companies

AustriaRaiffeisen-LeasingInternational GmbHAm Stadtpark 31030 ViennaPhone: +43-1-71 707-2071Fax: +43-1-71 707-76 2966www.rli.co.at

AlbaniaRaiffeisen Leasing Sh.a.“European Trade Center”Bulevardi “Bajram Curri”TiranaPhone: +355-4-22 749 20Fax: +355-4-22 325 24www.raiffeisen-leasing.al

BelarusJLLC "Raiffeisen-Leasing"V. Khoruzhey 31-A220002 MinskPhone: +375-17-28 9-9394Fax: +375-17-28 9-9974www.rl.by

Bosnia and HerzegovinaRaiffeisen Leasing d.o.o.SarajevoDanijela Ozme 371000 SarajevoPhone: +387-33-25 435 4Fax: +387-33-21 227 3www.rlbh.ba

BulgariaRaiffeisen Leasing Bulgaria OODMladost 4, Business Park SofiaBuilding 7B, 4th floor1766 SofiaPhone: +359-2-49 191 91Fax: +359-2-97 420 57www.rlbg.bg

CroatiaRaiffeisen Leasing d.o.o.Radnicka cesta 4310000 ZagrebPhone: +385-1-65 9-5000Fax: +385-1-65 9-5050www.rl-hr.hr

Czech RepublicRaiffeisen-Leasing s.r.o.Hvězdova 1716/2b14078 Prague 4Phone: +420-221-511-611Fax: +420-221-511-666www.rl.cz

HungaryRaiffeisen Lízing Zrt.Vaci ut 81-851139 BudapestPhone: +36-1-298 8000Fax: +36-1-298 8010www.raiffeisenlizing.hu

KazakhstanRaiffeisen Leasing kazakhstan LLPShevchenko Str. 146, No. 12050008 AlmatyPhone: +7-727-37 8-5430Fax: +7-727-37 8-5431www.rlkz.at

KosovoRaiffeisen Leasing kosovoGazmend Zajmi n.n., Sunny Hill10000 PristinaPhone: +381-38-22 222 2Fax: +381-38-20 301 136www.raiffeisenleasing-kosovo.com

MoldovaI.C.S. Raiffeisen Leasing S.R.L.Alexandru cel Bun 512012 ChişinăuPhone: +373-22-27 931 3Fax: +373-22-22 838 1www.raiffeisen-leasing.md

PolandRaiffeisen-Leasing Polska S.a.Ul. Prosta 5100-838 WarsawPhone: +48-22-32 636-66Fax: +48-22-32 636-01www.rl.com.pl

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RomaniaRaiffeisen Leasing IFn S.a.246 D Calea Floreasca014476 BucharestPhone: +40-21-36 532 96Fax: +40-37-28 799 88www.raiffeisen-leasing.ro

RussiaOOO Raiffeisen-LeasingStanislavskogo Str. 21/1109004 MoscowPhone: +7-495-72 1-9980Fax: +7-495-72 1-9572www.raiffeisen-leasing.ru

SerbiaRaiffeisen Leasing d.o.o. Djordja Stanojevica 1611070 Novi BeogradPhone: +381-11-220 7400Fax: +381-11-228 9007www.raiffeisen-leasing.rs

SlovakiaTatra-Leasing s.r.o.Hodžovo námestie 381106 BratislavaPhone: +421-2-59 19-3168Fax: +421-2-59 19-3048www.tatraleasing.sk

SloveniaRaiffeisen Leasing d.o.o.Zagrebška cesta 762000 MariborPhone: +386-1-28 162 00Fax: +386-1-24 162 68www.rl-sl.si

UkraineLLC Raiffeisen Leasing aval9, Moskovskyi Av.Build. 5 Office 10104073 KievPhone: +38-044-59 024 90Fax: + 38-044-20 004 08www.rla.com.ua

Real estate leasing companies

Czech RepublicRaiffeisen Leasing Real Estate s.r.o.Hvězdova 1716/2b14078 Prague 4Phone: +420-221-511-610Fax: +420-221-511-641www.rlre.cz

Branches and repre-sentative offices –Europe

FranceRBI Representative Office Paris9-11 Avenue Franklin D. Roos-evelt75008 ParisPhone: +33-1-45 612 700Fax: +33-1-45 611 606

GermanyRBI Frankfurt BranchMainzer Landstraße 5160329 FrankfurtPhone: +49-69-29 921 918Fax: +49-69-29 921 9-22

SwedenRBI Representative Office nordic CountriesDrottninggatan 89, 14th floor113 60 StockholmPhone: +46-8-440 5086Fax: +46-8-440 5089

UKRBI London Branch10 King William StreetLondon EC4N 7TWPhone: +44-20-79 33-8000Fax: +44-20-79 33-8099

Branches andrepresentative offices – Asia and America

ChinaRBI Beijing BranchBeijing InternationalClub Suite 2002nd floorJianguomenwai Dajie 21100020 BeijingPhone: +86-10-65 32-3388Fax: +86-10-65 32-5926

RBI Representative Office HarbinRoom 1104, Pufa PiazaNo. 209 Chang Jiang StreetNang Gang District150090 HarbinPhone: +86-451-55 531 988Fax: +86-451-55 531 988

RBI Hong kong BranchUnit 2102, 21st Floor,Tower One, Lippo Centre89 Queensway, Hong KongPhone: +85-2-27 30-2112Fax: +85-2-27 30-6028

RBI Xiamen BranchUnit B, 32/F, Zhongmin Building,No. 72 Hubin North Road,Xiamen, Fujian Province361013, P.R. ChinaPhone: +86-592-26 2-3988Fax: +86-592-26 2-3998

RBI Representative Office ZhuhaiRoom 2404, Yue Cai BuildingNo. 188, Jingshan Road, Jida,Zhuhai, Guangdong ProvinceP.R. ChinaPhone: +86-756-32 3-3500Fax: +86-756-32 3-3321

IndiaRBI Representative Office Mumbai803, Peninsula HeightsC.D. Barfiwala Road, Andhere (W)400 058 MumbaiPhone: +91-22-26 230 657Fax: +91-22-26 244 529

KoreaRBI Representative Office korea# 1809 Le Meilleur Jongno Tower24 Jongno 1-gaSeoul 110-888Republic of KoreaPhone: +82-2-72 5-7951Fax: +82-2-72 5-7988

MalaysiaRBI Labuan BranchLicensed Labuan BankNo. 110108CLevel 6 (1E), Main Office TowerFinancial ParkLabuanMalaysiaPhone: +607-29 1-3800Fax: +607-29 1-3801

SingaporeRBI Singapore BranchOne Raffles Quay#38-01 North TowerSingapore 048583Phone: +65-63 05-6000Fax: +65-63 05-6001

USARB International Finance (USa) LLC1133 Avenue of the Americas,16th Floor10036 New YorkPhone: +01-212-84 541 00Fax: +01-212-94 420 93

RZB austria Representative Office new York1133 Avenue of the Americas,16th Floor10036 New YorkPhone: +01-212-59 3-7593Fax: +01-212-59 3-9870

VietnamRBI Representative OfficeHo-Chi-Minh-City35 Nguyen Hue Str.,Harbour View TowerRoom 601A, 6th Floor, Dist 1Ho-Chi-Minh-CityPhone: +84-8-38 214 718,+84-8-38 214 719Fax: +84-8-38 215 256

RaiffeisenZentralbank AG

AustriaAm Stadtpark 91030 ViennaPhone: +43-1-26 216-0Fax: +43-1-26 216-1715www.rzb.at

Selected RaiffeisenSpecialist Companies

F.J. Elsner Trading GmbHAm Heumarkt 101030 ViennaPhone: +43-1-79 736-0Fax: +43-1-79 736-230www.elsner.at

kathrein PrivatbankaktiengesellschaftWipplingerstraße 251010 ViennaPhone: +43-1-53 451-300Fax: +43-1-53 451-8000www.kathrein.at

Raiffeisen Centrobank aGTegetthoffstraße 11015 ViennaPhone: +43-1-51 520-0Fax: +43-1-51 343-96www.rcb.at

ZUnO Bank aGMuthgasse 261190 ViennaPhone: +43-1-90 728 88-01www.zuno.eu

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Kyiv

Vinnytsya

Lutsk

Dnipropetrovsk

Chernigiv

Chernivtsi

Cherkasy

Khmelnytsky

Kherson

Kharkiv

Ternopil

SumyRivne

Poltava

Odesa

Mykolaiv

Lviv

Lugansk

Simferopol

Kirovograd

Ivano-Frankivsk

Zaporizhya

Uzhgorod

Zhytomyr

Donetsk

HEAD OFFICE9 Leskova St.,01011, KyivPhone: 0-800-500-500,+380 44 490-88-88E-mail: [email protected]

CHERKASY REGIONAL DIRECTORATE224 Gogolya St.,18000, Cherkasy

CHERNIGIV REGIONAL DIRECTORATE21 Peremohy Ave,14017, Chernigiv

CHERNIVTSI REGIONAL DIRECTORATE143 Golovna St.,58022, Chernivtsi

CRIMEAN REPUBLIC DIRECTORATE32 Naberezhna St.,95000, Simferopol

DNIPROPETROVSK REGIONAL DIRECTORATE4d Artema St.,49044, Dnipropetrovsk

DONETSK REGIONAL DIRECTORATE46v F.Zaitseva St.,83086, Donetsk

IVANO-FRANKIVSK REGIONAL DIRECTORATE19 Nezalezhnosti St.,76000, Ivano-Frankivsk

KHARKIV REGIONAL DIRECTORATE11 Novgorodska St.,61166, Kharkiv

KHERSON REGIONAL DIRECTORATE17 Chervonoflotska St.,73000, Kherson

KHMELNYTSKY REGIONAL DIRECTORATE54 Hrushevskoho St.,29000, Khmelnytsky

KIROVOGRAD REGIONAL DIRECTORATE2/14 Dekabristiv St.,25006, Kirovograd

KYIV REGIONAL DIRECTORATE7-7b Pyrogova St.,01030, Kyiv

LUGANSK REGIONAL DIRECTORATE61 Radyanska St.,91016, Lugansk

LVIV REGIONAL DIRECTORATE8 Mateyka St.,79000, Lviv

MYKOLAIV REGIONAL DIRECTORATE19a Arteleriyska St.,54030, Mykolaiv

ODESA REGIONAL DIRECTORATE20 Velyka Arnautska St.,65000, Odesa

POLTAVA REGIONAL DIRECTORATE5a Monastyrska St.,36014, Poltava

RIVNE REGIONAL DIRECTORATE35 S. Petlyury St.,33000, Rivne

SUMY REGIONAL DIRECTORATE1 Nezalezhnosti Square,40030, Sumy

TERNOPIL REGIONAL DIRECTORATE8 Kardynala Yosypa Slipogo St.,46001, Ternopil

VINNYTSYA REGIONAL DIRECTORATE35 50-richya Peremohy St.,21001, Vinnytsya

VOLYN REGIONAL DIRECTORATE26 Vynnychenka St.,43021, Lutsk

ZAKARPATTYA REGIONAL DIRECTORATE19 Teatralna Square,88000, Uzhgorod

ZAPORIZHYA REGIONAL DIRECTORATE29 Turgeneva St.,69063, Zaporizhya

ZHYTOMYR REGIONAL DIRECTORATE10 Peremogy Square,10014, Zhytomyr

Addressesof Raiffeisen Bank Aval

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Річний звіт Annual Report 2013 · Річний звіт Annual Report 2013. Core...

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Transcript of Річний звіт Annual Report 2013 · Річний звіт Annual Report 2013. Core...