Presentation of Komercijalna

Banka AD Skopje
as at March 31, 2019
Contents

• Komercijalna Banka Overview 3

• The Republic of North Macedonia 11
• Macedonian Banking Sector 13
• Komercijalna Banka Financial Overview 21

Presentation of Komercijalna Banka AD Skopje

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Komercijalna Banka Overview
Overview (I): A cornerstone of the Macedonian financial sector...
Leading Market Position
• Expected to keep market position as one of the leading banks in North Macedonia with assets (EUR 1,868.5 m)* and
deposits from customers (EUR 1,617.6 m) and in terms of net loans to customers (EUR 740.2 m) as at March 31, 2019.
Customer Base
• Leading corporate customer base (33,717 customers**)
• Second largest retail customer base (943,602 customers)
One of Macedonia’s Most Prominent Financial Institutions
• Long-standing history
• Well-established customer relationships
Strong Brand Recognition
• Associated with quality, innovation and trustworthiness
Modern Corporate Governance Structure
• Privatisation completed with 98.75% private ownership (6.1% foreign, as at March 2019) and about 1.25% held by the Public
sector
• Diversified ownership structure with one single shareholder owning 10.09% (Adora Inzenering DOOEL export-import Skopje)
• EBRD has sold its share of 5.245% in November 2017
• East Capital Explorer Investments AB has sold its share of 13.076% in March 2018
• Comprehensive, ‘best-practice’ corporate governance
• Rigorous risk management and anti-money laundering practices

Presentation of Komercijalna Banka AD Skopje

* The data in the presentation are according to NBRNM methodology
** Resident and non-resident corporate customers

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 Overview (II):...with a track record of significant achievements...
Experienced Team of Executives
• Providing leading position in number of areas combined with maintaining stable market position
• History of product innovation and investments in new technologies
Well Invested Distribution channels
• Very well presented branch network covering all major cities and economically significant regions
• Rapidly developing multi channel distribution network comprising POS Terminals, ATM’s, Info kiosks, E-Banking (both retail & corporate, as well
as f/x and in denars), Telephone banking, m-banking, SMS banking
Fully Integrated IT platform
• State-of-the-art system
• Fully protected and readily upgradeable
Driver of Sector Innovation
• First to issue credit cards (1996)
• First to operate ATMs and POS terminals (1996)
• First to establish a dedicated brokerage house (1997)
• Founded one of the country’s two second pillar pension funds (2005)
• Founded the investment fund KB Publikum Invest AD (2009)
• First issuer of contactless card payment (2015)
• Introduction of 3D secure technology for safe on-line purchasing with VISA and MasterCard cards (2016)
• Acceptance of MasterCard cards with BIN 2 (2016)
• Creation of new investment fund KB Publikum MBI 10 by the investment fund KB Publikum Invest AD (2017)
• KomPay – strategically innovative service with the most sophisticated technology for contactless payment with debit and credit cards in
collaboration with MasterCard (2018)
• MBankaCo – mobile application for legal entities providing safe, quick and easy 24-hour access to the most used services of electronic banking
(2018)
Profitable Operation with Sound Asset Quality
• History of profitable operations
• Adequately provisioned loan portfolio
Presentation of Komercijalna Banka AD Skopje

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Overview (III):...a long-standing successful history...

1990

Incorporated as an
1973 open joint stock
company
Operating as
Stopanska Banka, Start of a significant
1966 Skopje Branch as expansion phase
part of an integrated based on organic
Name change to banking system and acquisitive
Komercijalno growth establishing
1963 Investiciona banka nationwide coverage
Skopje and merger
Leading role in with 3 banks
rebuilding the
1955 economy and housing
after disastrous
Established as earthquake in Skopje
Komunalna Banka
under municipal
ownership
Presentation of Komercijalna Banka AD Skopje

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Overview (IV): ...the largest distribution network in the country...
65 branches including headquarters Branch Network
as at March, 2019:
- Coverage of all major cities and
economically significant regions
- 54 city branches (36 in Skopje and 18
regional)
- 11 regional branches
Largest ATM network in the country:
- 156 active ATMs as at March 2019.
(158 as at December 2018)
Total number of sales points*:
– 4,548 as at March 2019 (4,568 in December
2018);
– Average number of active sale places** is
3,461 in March 2019 (4,232 in December
2018).
State-of-the-art IT infrastructure
– Fully integrated
– Real time

*According to the new methodology of NBRNM for representation of this type of

data.
**an active sale place is the one where at least one
transaction has been performed. Presentation of Komercijalna Banka AD Skopje
Skopje, June 2019

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Overview (V): ...and an enviable market position

Market share of Komercijalna Banka AD Skopje as at 31.03.2019

Total assets 22.7%

Capital and reserves 18.4%
Total deposits from non-financial sector 26.0%
Total net-loans to non-financial sector 15.0%
Total number of issued cards* 12.6%
- debit cards* 13.3%
- credit cards* 9.9%
Total number of POS and ATM acquiring cards* 17.3%
Credit transfers in the country
- by value* 22.7%
- by number of transactions* 19.8%
Total number of transactional accounts* 19.1%
Total number of deponents* 43.6%

Total trading realized at the MSE 8.6%

Total number of transactions realized at the MSE 30.1%

* As at 31.12.2018
Presentation of Komercijalna Banka AD Skopje

Skopje, June 2019

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Overview (VI): ...International banking awards

Bank of the Year for: STP Excellence Award for:

• 2001 • 2010 • 2007
• 2002 • 2011 • 2009
• 2004 • 2012 • 2010
• 2005 • 2011 &
• 2014

• The Best Bank for 2002, 2003 & 2004 • Best Developing Trade Financier for 2003,
• The Best Bank by Assets Strength for 2005, 2004, & 2008;
2006 & 2007 • Most active issuing bank In RM in 2009 &
• The Best Bank by Capital Strength for 2005 2017
• The Best Bank by Gross Profit for 2005 & • Award for most active participant in the
2007 program of EBRD TFP (Trade Facilitation
• The Best Bank by ROE for 2007 Program) for 2014, 2015 & 2016 (already
thirteen years in a row).
• The Best Bank in • Best Internet Bank in the • Deal of the year for KB/938
Macedonia for: Republic of Macedonia
o 2004, 2005 for 2015.
o 2006, 2007 • Best FX service provider 2007 Participant in the best financial deal
o 2008, 2009 in Macedonia for 2013,
o 2010, 2011 2014, 2017, 2018 and 2019.
o 2012 & 2013 Euro STP Excellence Award for 2014
Award for excellent quality for performing payment and
US Dollar payments STP Excellence Award 2017 financial transfers – STP (Straight-Through-Processing)
Best Performance Award for 2016 & 2017

Presentation of Komercijalna Banka AD Skopje

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Overview (VI-continuing): ...Domestic banking awards

• Prize for best corporate

Awards from the Macedonian Stock Exchange
Non government organization governance
• Crystal bell award for the most transparent company for: Transparency zero corruption
o 2008, 2009, 2010, 2011
• National prize for the social
o 2014, 2015, 2016,
responsibility practice of
o 2017 (II place) and 2018 (II place)
companies in the Republic of
• Plaque for achieving first place in turnover and number of
Macedonia for 2008, 2009, 2011
transactions carried out in 2012, 2014 and 2018; second
& 2014.
place in 2016;
• Second place in 2015 & 2017 - Award for listed company • Award for Corporate Social
with biggest turnover and number of transactions; Responsibility Integrated Approach
• Award for listed company with largest turnover in the last 20 for 2009, 2010 and 2011
years from the existence of the MSE;
• Award for MSE`s member with largest number of
transactions and largest turn-over in the last 20 years since
the founding of the MSE.

• Gold Supporter Award 2012

• Super brand in Macedonia for 2009 Red Cross of • Certificates of appreciation to
• Super brand in Macedonia for 2015/2016 the Republic of Macedonia blood donors of Komercijalna Banka

• Promoter of the humanitarian movement • Web site of the year for 2014 -
Pay it forward under sponsorship by the Ministry
of Information Technology

Presentation of Komercijalna Banka AD Skopje

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The Republic of North
Macedonia
 The Republic of North Macedonia - Macroeconomic Environment:

Key economic indicators (1) 2015 2016 2017 2018 Q1 2019 In January 2019, The Fitch agency
has confirmed the credit rating of North Macedonia
“BB” with positive outlook due to the positive
Industrial production volume index 4.9% 3.4% 0.2% 5.4% / effects of the more stable political and economic
External Trade of RNM (%) -10.7% 6.7% 14.6% 19.2% / environment, as well as long-term maintenance
of low inflation, stable economic growth and
financial stability.
Real GDP growth (%) 3.9 2.8 0.2 2.7 4.1
Central Government Budget In March 2019 the Credit Rating agency
surplus/deficit (% of GDP) -3.5 -2.6 -2.7 -1.8 -0.5 “Standard & Poor’s” has confirmed the
credit rating of North Macedonia in
Inflation (CPI%) av. -0.3 -0.2 1.4 1.5 1.2 domestic and foreign currency to “BB- stable“,
emphasizing the stability of the domestic currency
Current Account Bal. (EUR'm) -177.1 -275.5 -102.9 -31.9 / and the level of foreign reserves, as well as the
Gross External Debt (EUR'm) 6,290 7,217 7,373 7,908 / stability of the banking system. The Agency also
notes positive assessments of the credit growth
FX Reserves (EUR'm) 2,262 2,613.4 2,336 2,867.1 /
in the country, accenting the positive movements,
Foreign direct invest. (EUR'm) 202.8 316.9 180.0 621.9 / especially in the corporate lending segment.
Unemployment Rate (%) 26.1 23.7 22.4 20.7 17.8
MKD/EUR year end. 61.61 61.6 61.57 61.51 61.53

(1) Source: Ministry of Finance, State Statistical office, NBRNM

Presentation of Komercijalna Banka AD Skopje

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The Macedonian Banking
Sector
Macedonian Banking Sector (I): Structure and characteristics as at 31.03.2019

Structure
• 15 active banks (5 large*, 7 medium and 3 small)
• 2 saving houses
Characteristics
• High concentration with the large banks
• Low level of financial intermediation
Significant growth prospects
• Continuous growth of the level of privatization
• Continuous growth of the participation of the foreign capital
• Improvement of the ownership structure
• Increased network
• Continuous growth of the assets
• Growth in loans
• Growth of deposits
• Increased banking capital
• Constant increase in profitability and efficiency

Presentation of Komercijalna Banka AD Skopje

*As at 31.03.2019, the group of large banks is consisted of the following banks: Komercijalna Banka AD
Skopje, Stopanska Banka AD Skopje, NLB Banka AD Skopje, Ohridska Banka AD Skopje and Halk Bank
AD Skopje.
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Macedonian Banking Sector (II) ...assets...

Total assets (EUR'm)

8,400 8,187 8,252

8,200
8,000
7,800
7,600 7,513
7,400 7,233
7,200
7,000
6,800
6,600
2016 2017 2018 Q1 2019

Total assets

Presentation of Komercijalna Banka AD Skopje

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Macedonian Banking Sector (III) ...and placements to non-financial entities...

Placements to non-financial entities (net) (EUR'm)

5,000 4,880 4,909

4,800
4,600 4,494
4,400
4,216
4,200
4,000
3,800
2016 2017 2018 Q1 2019

Placements to non-financial entities

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Macedonian Banking Sector (IV) ...and deposits from non-financial
entities...

Deposits from non-financial entities (EUR'm)

6,200 6,038 6,033

6,000
5,800
5,600 5,518
5,400 5,250
5,200
5,000
4,800
2016 2017 2018 Q1 2019

Deposits from non-financial entities

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Macedonian Banking Sector (V) ...and capital & reserves...

Capital & reserves (EUR'm)

1,000 884 939

768 814
800
600
400
200
0
2016 2017 2018 Q1 2019
Capital and reserves

Presentation of Komercijalna Banka AD Skopje

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Macedonian Banking Sector (VI) ...and financial results...

Net profit (EUR'm)

160.0
135.8
140.0
120.0 102.9 106.6
100.0
80.0
60.0
40.0 30.8
20.0
0.0
2016 2017 2018 Q1 2019
Net profit

Presentation of Komercijalna Banka AD Skopje

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Macedonian Banking Sector (VII) ...and increased profitability

Profitability indicators (EUR'm and %)

13.6% 13.5% 16.0%
17.5%
250.0
250.3 254.2 15.5%
13.5%
200.0 250.1 13.5%
11.5%
150.0 9.5%
7.5%
100.0
5.5%

50.0 1.4%
3.5%
1.5% 1.7% 1.5%
1.5%
60.7
0.0 -0.5%
2016 2017 2018 Q1 2019

NII ROAA ROAE

Presentation of Komercijalna Banka AD Skopje

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Komercijalna Banka
Financial Overview
  Financial
FinancialPerformance (I): Highlights
Performance(I):

• In 2013 Komercijalna Banka AD Skopje acquired 200 ordinary shares issued by Investment fund
Management Company KB Publikum Invest AD Skopje in total amount of EUR 200 thousand. The
share of Komercijalna Banka AD Skopje increased from 50% to 64.29%. Thus, KB Publikum
became subsidiary of the Bank.
• Pursuant to legislation, financial statements of subsidiary are incorporated in consolidated
financial reports, starting from the date the control commences.*
o As at 31.12.2018 the amount of total assets on consolidated basis is EUR 1,860.2 million,
o the amount of total capital and reserves is EUR 202.8 million,
o the amount of consolidated net profit is EUR 29.4 million,
o Total assets of subsidiary as at 31.12.2018 represent less than 1% of the Bank’s total assets.
• According to the Decision on consolidated supervision by the NBRNM (Official Gazette of the RM
No.17/2008) if the amount of total assets of subsidiary is less than 1% of the amount of total assets
of the parent entity, then subsidiary will not be included into the consolidated financial reports for
the purposes of consolidated supervision. Therefore, the capital adequacy is not calculated on
consolidated basis.
• The data from the Income statement and Balance sheet in this presentation are on unconsolidated
basis.

Presentation of Komercijalna Banka AD Skopje

* The Bank prepares semi-annual and annual consolidated financial reports in accordance with the requirements of NBRNM

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 Financial Performance (II): Income statement in million EUR

Index Index
2016* 2017* 2018* Q1 2019* 17/16 18/17

Net interest income 50.1 49.9 40.2 9.3 99.6 80.6

Net fee & commission income 14.1 13.4 14.3 3.8 95.0 106.7
Other income 11.4 19.8 25.6 2.0 173.7 129.3
Total income 75.6 83.1 80.1 15.1 109.9 96.4

Operating expenses -27.9 -27.6 -29.1 -6.3 98.9 105.4

Impairment losses -34.2 -41.6 -19.6 -1.7 121.3 47.2
Operating profit 13.5 13.9 31.4 7.1 103.0 225.9

Share of profit/loss from associate 0.7 0.9 1.1 0.0 128.6 122.2
Profit before tax/loss 14.2 14.8 32.5 7.1 104.2 219.6

Taxation -1.5 -1.5 -3.5 0.0 100.0 233.3

Profit after tax/loss 12.7 13.3 29.0 7.1 104.7 218.0

* * Unconsolidated data
Presentation of Komercijalna Banka AD Skopje
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 Financial Performance (III): Balance sheet in million EUR

Index Index Index

2016* 2017* 2018* Q1 2019* 17/16 18/17 Q1 19/18

Assets
Cash and cash equivalents 545.5 605.1 793.5 746.1 110.9 131.1 94.0
Customer loans 736.3 737.8 754.7 740.2 100.2 102.3 98.1
Bank placements and loans 164.0 94.9 40.9 82.1 57.9 43.1 200.7

Total loans and placements 1,445.8 1,437.8 1,589.1 1,568.4 99.5 110.5 98.7

Other assets 192.7 267.5 271.1 300.1 138.8 101.3 110.7

Total assets 1,638.5 1,705.3 1,860.2 1,868.5 104.1 109.1 100.5

Liabilities
Total deposits 1,428.0 1,491.5 1,617.3 1,622.5 104.4 108.4 100.3

Borrowings & other liabilities 39.0 34.5 41.1 37.5 88.5 119.1 91.2
Total liabilities 1,467.0 1,526.0 1,658.4 1,660.0 104.0 108.7 100.1
Shareholders funds
Share capital 37.1 37.1 37.1 37.0** 100.0 100.0 99.7
Share premium 12.5 12.5 12.5 12.5 100.0 100.0 100.0
Reserves 109.2 116.4 123.2 123.0 106.6 105.8 99.8
Retained earnings 12.7 13.3 29.0 36.0 104.7 218.0 124.1
Shareholders funds 171.5 179.3 201.8 208.5 104.6 112.5 103.3
Total liabilities and
shareholders funds 1,638.5 1,705.3 1,860.2 1,868.5 104.1 109.1 100.5

* Unconsolidated data
** The absolute value in MKD is unchanged. The decrease
is due to changes in f/x course.
Presentation of Komercijalna Banka AD Skopje
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 Financial Performance (IV): Financial indicators

Financial indicators 2016 2017 2018 Q1 2019

Earnings per share (EPS) 5.56 5.86 12.7 8.9

Book value (BV) 75.3 78.7 88.5 91.5
Market price per share(1) 46.8 45.2 82.1 91.8

Dividend Yield 5.21% 6.48% 8.32% 7.43%

Price/Earnings (P/E)(2) 8.42 7.72 6.46 10.31

Price/Book value (P/B)(2) 0.62 0.57 0.93 1.00

Price/Total assets (P/A)(2) 0.065 0.060 0.101 0.112

Market capitalization (in mill. EUR) 106.8 103.0 187.1 209.1

Presentation of Komercijalna Banka AD Skopje
1) Last traded price
2) Calculation according data in MKD
Skopje, June 2019

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 Financial Performance (V): Total Assets

Total assets (1) (in million EUR)

1,868.5
2,000 1,860.2
1,705.3
1,800 1,638.5
1,600
12% 14% 16%
1,400 16% 40%
33% 43%
1,200 35% 40%
1,000 45% 43% 41% 4%
800 10% 6% 2%
600
400
200
0
2016 2017 2018 Q1 2019

Placements to banks Loans to customers Cash and equivalents Other assets

(1) Total balance sheet assets (based on net loans after provisions)
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Financial Performance (VI): Gross Loans to Customers

Gross loans to customers - Corporate vs Retail (EUR'm)

864.7 858.0 851.3 836.9

219.2 221.9 225.4 223.5

25% 26% 26% 27%

74% 74% 73%

75%

645.5 636.1 625.9 613.4

2016 2017 2018 Q1 2019

Corporate loans Retail loans

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 Financial Performance (VII): Liabilities

Total Liabilities (EUR'm)

1,658.4 1,660.0

2%

2%
1,525.9 98%

1,467.0 98%
2%
98%
3%
97%

2016 2017 2018 Q1 2019

Total deposits Borrowed funds & other liabilities

(1) Total deposits include deposits from banks which represent 0.3% within total liabilities in March 2019

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 Financial Performance (VIII): Deposits – Customer Breakdown

Deposits by customer category (EUR'm)

1,617.3 1,622.5
1,428.0 1,491.5
458.3 456.8
424.7 28% 28%
428.2 30% 28% 72%
72%
70% 72%

1,066.8 1,159.0 1,165.7

999.8

2016 2017 2018 Q1 2019

Retail deposits Corporate deposits

Presentation of Komercijalna Banka AD Skopje

(1) Corporate deposits include deposits from banks which represent 0.3% within total deposits in March 2019.

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Financial Performance (IX): Income Breakdown

Income (EUR'm)

83.1 80.1
75.6

50.1 49.9
40.2

25.6
14.1 19.8 14.3 15.1
11.4 13.4
9.3
3.8
2.0

2016 2017 2018 Q1 2019

Total income Net interest income Fee and commission income Other income

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Financial Performance (X): Expenses Breakdown

Operating expenses (EUR'm)

27.9 27.6 29.1

10% 9% 14%
17% 10%
18%
9%
11%
11% 12%
12%
12% 55%
51% 16%
49% 6.3 11%
10%
11%
52%

2016 2017 2018 Q1 2019

Wages, salaries and other employees' costs Materials and services Depreciation and amortization Insurance Other expenses

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Thank you!