Corporate Responsibility Programme 2009 / 2010 Provident Pénzügyi Zrt.

1. Corporate Responsibility Programme2009 / 2010Provident Pénzügyi Zrt. Contact: Mr. Csongor HAJNA, CR manager csongor.hajna@provident.hu, +36-20-339-0549

2. Who are we?

3. IPF and Provident Pénzügyi Zrt. • IPF: a multinational finance company • listed on the London Stock Exchange • as International Personal Finance (IPF) • British origins, 125 years of history • 2,100,000+ customers worldwide • (UK), Mexico, Poland, Czech Republic, Slovakia, Hungary, Romania • Hungarian affiliate: Provident Pénzügyi Zrt.

4. Provident Pénzügyi Zrt. Provident Pénzügyi Zrt. • Hungarian affiliate of IPF • founded in 2001 • offers small fast cash loans • to individuals • with (optional) home service • 230,000 customers • 120 facilities • 3,500 employees • a major employer in Hungary

5. The Provident service inHungary • Fast loans • with (optional) home service: in 48 hours • if credit assessment is positive • Amount between 30,000 and 220,000 HUF • Short term, 30/45/60 weeks • No limitations in use • Bank transfer (with optional uniquehome service based on customer decision) • Non-secured

6. Customer satisfaction* • 92 % satisfied with efficiency and speed of service • 90 % finds loan agreement easy to understand • 93 % satisfied with the work of our agents • 90 % satisfied with home service • above KPIs increased year by year so far • Our experience says … • Provident customers are well satisfied; they recommend our services to acquaintances. 20 % of our customers contact us based on recommendations from our present customers.This is an important ingredient of our success. * ‘Usage & Attitude Survey‘ by external marketing research supplier, 2009

7. Challenges • Low financial education level in Hungary • business model virtually unknown  issues • extra services  higher price (home service) • short term  high APR • decision makers and the media needs education • e.g.: APR confused with interest or profit (!) • Special economic and political environment • financial crisis sensitive public • continuous „election campaign”  criticism motivated by politics

8. Financial illiteracy • Recent study conducted by Corvinus University • 170 Hungarian students (14-19) from 15 schools nationwide, 100 questions, qualitative research, sponsored by Family Treasure Programme (see later) • 16% of students gave correct answers to very basic financial questions • 8% understands what the bank system’s role in the economy is • 11% explained APR adequately • 34% agrees completely that paying taxes isa common interest • 2% agrees completely that taking loansis a good idea • 30% supports fully the idea of retirement savings

9. Approach andFramework

10. responsible lending responsible marketing governance and transparency responsible management of resources (environment, RSCM, …) employee relations community relations inform regulators and legislation (‘PA’) (not just financial) sustainability equal opportunities reputation management compliance reporting (investor relations) … CR aspects we find important

11. Policies, programmes, resources • Policies & programmes • Responsible lending (FSA TCF) • Community investment (financial literacy) • Environment • Responsible supply chain management • Bribery & corruption, political donations, lobbying • Whistleblowing • Human rights, … • Effectiveness measures • Dedicated resource in-country • Incentives & job descriptions • Wider targets and objectives • Training • Monitoring and auditing, …

12. Organizational framework of CR

13. BusinessPerformance 2009* *2010 financial results not available yet

14. IPF share price and FTSE 250 [ recovery from the crisis ] [ global financial crisis ]

15. Profitability in 2009 IPF • global profit of IPF in 2009 + 5.9% Hungary • GDP drop of Hungarian economy - 6.3% • profit margin of Provident Hungary- 6.3% Background • Global financial crisis hit Hungary harder than most countries • some customers were indebted to banks in foreign currency (Provident lends in HUF only) • deteriorating HUF rates rattled household budgets • Provident loans are unsecured lower priority for settling debt • For more info about performance, see the Annual Report of IPF: • http://www.ipfinannualreport.co.uk/

16. Customer portfolio Hungary 2009 • number of customers 227,000 • credit issued / customer 107,000 HUF • lead to loan conversion (% of approved loans) ND38% (!) Overall IPF 2009 • lead to loan conversion 44% Background • Hungary applied a very strict lending policy in 2009 • this kept bad debt and costs in check, but also … • … customer numbers fell by 30% vs. 2008 • Profitability is gradually restored as the crisis wears off

17. Profit in % of interest receivedProvident Hungary, according to Hungarian accounting standards globalfinancialcrisis recovery ? [ 2010 full year data not available yet ]

18. Profit before taxation, first half of the year(Provident Hungary, LSE reporting standards, in GBP) globalfinancialcrisis recovery

19. Self imposed limitations in issuing loans (list not full) weekly installment per customer must not exceed HUF 9.000 one customer can’t take more than 3 loans total amount issued to one customer is limited in HUF 500.000 above HUF 180.000 employment certificate is required Credit control measures

20. Responsibility and profitability • Responsible lending helpedProvident minimize losses • strict lending policies  improvedcustomer portfolio • Provident has started tighteninglending criteria BEFORE the crisis • IPF is committed to maintain operations in Hungary

21. ResponsibleCorporateManagement

22. Safeguarding mechanisms yearly independent audits, internalinspectorate reporting to intl. board, whistle blowing, … Base documents corporate policies for each functional area to comply with practical bestpractice guides for each business unit Evidence based yearly compliance check Governance

23. Sample BPG testing sheet (excerpt) Each of our business units regularlytest themselves against best practice guides. Provident markets check each other’s performance for more accountability and dissemination of knowledge.

24. RSCM aims to eliminate CR risks involved with suppliers societal, ethical, environmental, … Feeds into the purchasing system enforces evaluation of key suppliers basedon CR criteria as well contains clear policies about how to dealwith suppliers exerts counter-corruption effect RSCM(Responsible Supply Chain Management)

25. RSCM questionnaire is part of tendering materials Clearly communicates principles to suppliers Linked to theEnvironmental Programme environmentalrisk assessment ofall major suppliers cars, cell phones, paper, fuel,cleaning, stationery, … RSCM(Responsible Supply Chain Management)

26. Provident has voluntarily signed the Code of Conduct for Hungarian banks and financial institutions on 13th October, 2009 Aim of the Code is to strengthen the confidence indispensable in the relationship between retail borrowers and creditors Code of Conduct „Creditor institutions commit themselves to responsible and transparent lending to their retail customers, in their proceedings during the period preceding the lending transaction and the entire term of the credit granted alike, as well as upon the occurrence of payment difficulties”

27. TreatingCustomersFairly

28. Treating Customers Fairly (TCF) • A complex consumer protection initiative • Started by the UK Financial Supervisory Authority • UK equivalent of „PSZÁF” • FSA co-operates with companies in reaching TCF standards • responsible marketing, best practice guides for operation, informing customers properly, no-barrier early settlement procedures, etc. • For more info follow << this >> link to the FSA's TCF website • IPF joined TCF in 2008 • all Provident affiliates (including Hungary)participate • top management commitments, high priority

29. Treating Customers Fairly (TCF) • Our participation is voluntary • IPF is not a bank  technically we were not required to join • FSA regulations do not bind in Hungary • In some areas TCF standards are stricterthan Hungarian regulations • Still, we believe that … • … sustainable growth stems fromresponsible lending • … responsible lending is acompetitive advantage

30. Treating Customers Fairly (TCF) Several requirements by TCF:

31. Initial TCF BaseBoardTM of Provident (2008) Proposition Human resources Service and delivery Communications

32. 60%product marketing with new, human focused approach 30%education 10% image building Responsible marketingThe ‘60/30/10’ concept What is APR? „Get cash, now!” „In case you fell a bit short.”

33. Examples for TCF tools • Agent charter • a document given to all Provident representatives • booklet, part of starter kit • aims for mutual understanding • clearly explains rights and obligationsof Provident representatives • includes notions about required servicelevel, safety, responsible lending, etc. • informs about feedback channels

34. Examples for TCF tools • Customer Charter • a document sent to all customers • included into the welcome letter • clearly explains • what we offer • fast, comfortable, honest service • what we expect • taking loans responsibly, timely repayments, respect

35. TCFManagementInformation(TCF MI)

36. TCF Management Information • Purpose • MEASURE responsible lending • 35 (!) different factors, monthly • USE DATA while making decisions • SAFEGUARD interests of customers • Model • collect data from internal data owners • compare data to required levels • refine operations based on results • start again (monthly)

37. TCF MI sample KPIs • Product – relevant? • customer satisfaction % • customer retention • Customer care – high quality? • perception of service • complaints (module under discussion, not yet implemented) • call centre response time and % • Agents – available? • training level • retention and turnover

38. TCF MI sample KPIs • Lending – responsible? • compliance with policies • lending, admin, comms, … • checked by independent agency • exceptions % vs. RISK standards • block manual override of policies • benchmark: 0% • meaningful indicators • acceptance rates (lead to loan conversion) • loans cancelled within 15 days • arrears (under discussion, not yet implemented)

39. ProvidentCommunityProgramme

40. Provident community grants • Support local community initiatives or good causes • through recommendations from colleagues • Dedicated application form & guide • available through intranet and managers • Strict evaluation criteria • benefits for the cause AND the company • earmarked funds assigned in advance • projects compete for resources • proven model with 4 years’ history

41. Community projectsEvaluation criteria Provident Community Grant Scoring Model • Weighed, percentage based evaluation of eligibility factors • Grants depend on score ranking and available budget • Alignment to CR strategy • Impact / investment (efficiency) • Adequacy to community needs • Professional background of applicants • Employee involvement • Comms and public affairs value • for the supported cause and for us • Long term opportunities

42. Community investments (LBG KPIs) 2009 • 15.35M HUF community investment • excluding management costs • 55 community projects • incl. financial literacy and environment • 2,169 volunteers • both company and free time • 1.4M HUF in-kind donations • used computers donated to charities • 45.23M leverage • incl. partnerships, employee gifts vocational training, etc. • Ranked 17th on the Hungarian Donors Forum’s „2009 Corporate Donor of the Year” TOP 20 list

43. Guardian Angel Programme • Toy collection volunteer campaign • for disadvantaged kids, countrywide • Provident employees collect used or new toys • children’s wards, nurseries, school for handicapped, … • 5,000 toys, 1,000 donors, 25 partners

44. Flood relief 2010 • 8M HUF aid to communities hit by the flood • distributed by the Hungarian Interchurch Aid • 40 contributed with their own individual cash donations • Edelény – financial crisis management training for local social workers and professionals • on request of the local community, involving a social psychologist

45. A sample community project • Handicapped Children’s Day, Eger (June 2010) • organized by the Heves County Home for Disabled Children • children, conductors and parents prepare for the celebrations together • Provident supports the cause since 2005 • colleagues regularly help the institution with volunteer work as well

46. A sample community project • HBLF Wheelchair Basketball Cup • corporate teams compete each other, helped by handicapped sportsmen • Provident participates and sponsors the Cup since 2005 • the project facilitates re-integration of disabled people

47. Reporting, KPIsIPF Community Report • Follow << this >> link to the2009 CR report of IPF • Provident Hungary reports its „official” (=audited) CR performance through IPF • Report is based on GRI(Global Reporting Initiative) • data compiled from IPF members through standardized reporting system

48. EnvironmentalManagementSystem

49. Environmental Programme Goals • keep eco footprint of the company low • give people an opportunity to get involved (volunteerism) • shape the opinion of 3.400 people ( community impact)

50. Reporting, KPIsEnvironmental Management System • Reporting is based on ISO 14001 environmental management standards* • Yearly audit and trainings by SEQM Ltd. in each country • controls, management • KPIs • achievements vs. targets * IPF has not applied for an official ISO 14001 certificatebut follows the model’s standards