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PRAVEX BANK

Offering retail banking services since 1992, focusing on individuals and SMEs. Enjoy high returns and diverse financial products.

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PRAVEX BANK

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  1. PRAVEX BANK THE BANK OF NATIONAL SCALEUAH 50mn, 3-year bond, annual put, 13.5% coupon

  2. CONTENTS Term Sheet 3 Brief Profile & History 5 Retail as a strategic priority 7 Operational highlights 13 Key financial information 16 PRAVEX-BANK 2 BANK OF NATIONAL SCALE

  3. BANK OF NATIONAL SCALE TERM SHEET PRAVEX-BANK 3

  4. BANK OF NATIONAL SCALE TERM SHEET (CONT’D) BOND COVENANTS Bond Covenants According to the Prospectus, a bond holder can put the bond at par if the Issuer: 1. Fails to pay interest within five days after the due date 2. Defaults on any other debt obligations totally exceeding USD 10mn 3. Challenges in court the validity of this bond issue 4. Loses any necessary licence/permit to service this bond issue, including, but not limited to, a revocation of the general banking licence 5. The NBU assigns a Temporary Administration to assess its financial status 6. Decides to withdrawal from business activities 7. Fails to execute any court decisions (or its equivalents), resulting in a USD 5mn fine, if such decisions have not been cancelled or suspended within 60 days (or later if applicable for such decisions)since the date of introducing such decisions, they haven't been cancelled or stopped for a period of time. In line with international practice, PRAVEX-BANK decided to accept a number of covenants, which are not yet a standard for the Ukrainian market PRAVEX-BANK 4

  5. BANK OF NATIONAL SCALE BRIEF PROFILE & HISTORY • PRAVEX-BANK is among the pioneers of the domestic banking sector, which received its license in December 1992, about a year after Ukraine gained Independence. • Since inception, servicing private individuals and SMEs was the focus of PRAVEX-BANK, which finally accumulated the eights largest retail loan book servicing 2mn customers through 425 offices and more than 1,500 POS outlets. Retail loans contributed 86% to the total loan portfolio, while deposits from private individuals contributed 98% in total. • PRAVEX-BANK pursues a strategy of a universal bank with an emphasis towards retail which allows to offer a product mix unreachable for pure retail banks. • PRAVEX-BANK was set up by Leonid Chernovetskiy who, upon his election as Kyiv’s mayor in March 2006, transferred the bank’s management to his son, Stepan Chernovetskiy. PRAVEX-BANK 5

  6. BANK OF NATIONAL SCALE Historic Milestones Loan book exceeds UAH 1bn and Euromoney issue the Best Developing Bank award. Business, a reputable business publication, grants an award for Individual Deposits. Pravex starts issung Visa & AmEx cards, joins Western Union and receives a Euromoney award Pravex starts servicing international payment cards and sets up Client-Bank system 1992 1994 1996 1998 2000 2002 2004 2006 In-house express money transfer system Pravex Telegraph is introduced. The Bank also develops an Internet version of its Client-Bank system Pravex becomes the member of Unistream and Moneygram wire payment systems. It starts issuing business and senior Visa cards and receives an Appreciation Award from AmEx. Pravex issues payment cards (Eurocard / Mastercard) and becomes the first to offer precious metals operations to individuals PRAVEX-BANK is registered and is opening its first offices in Kyiv and suburbs PRAVEX-BANK 6

  7. BANK OF NATIONAL SCALE Retail as a strategic priority Various deposits Debit /credit cards Utilities payments Internet banking Travelers’ checks Instant money transfers Operations with precious metals Individual safes Mortgages Car Loans Consumer loans Securities trading Pension program FX services PRAVEX-BANK 7

  8. BANK OF NATIONAL SCALE Retail as a strategic priority First in Kyiv and then regionally, PRAVEX-BANK has committed to individuals and SMEs and was awarded a public trust noted by a number of awards Various deposits Debit /credit cards Utilities payments Internet banking Travelers’ checks Instant money transfers Operations with precious metals Individual safes Mortgages Car Loans Consumer loans While high margin consumer lending has become a priority, the loan portfolio structure will remain conservatively diversified by a significant portion of secured mortgages and car loans Securities trading Pension program FX services PRAVEX-BANK 8

  9. 450 400 350 300 250 200 150 100 50 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 BANK OF NATIONAL SCALE Regional expansion and hefty returns Growth of Branch Network PRAVEX-BANK has built a 425-strong network of branches as of October 1, 2006, and plans to open another 250 offices in 2007. Should these plans realize, Pravex will find itself among top ten locally owned banks in terms of the network size, making it a lucrative target for strategic buyers. High return on equity generated by retail lending Although 48% of the retail loan portfolio constitute secured mortgages, the commitment to this sector through a wide range of products allows to demonstrate a relatively high return on equity. ROE, 9M06 Household loan book/Total loan book PRAVEX-BANK 9

  10. 100% Privatbank Oshchadbank PRAVEX-BANK 90% 80% RZB Aval Bank Ukrprombank 70% 60% BNP Ukrsibbank (% of total deposit portfolio) 50% 40% 30% 20% 10% 0% 0% 20% 40% 60% 80% (% of total assets) BANK OF NATIONAL SCALE Focus on the retail: key players Local banks by retail deposit portfolio By sources of funding, PRAVEX-BANK resembles a State-Owned Savings Bank of Ukraine (Oschadbank). The ratio of private deposits will decrease as Pravex further taps capital markets, both domestically and internationally. Pravex’s market share in retail lending The eights largest position in the retail lending was achieved on the back of domestic funding, in contrast to the Pravex’s peers which already tapped international markets PRAVEX-BANK 10

  11. BANK OF NATIONAL SCALE Strength of coverage The number of branches for the selected banks, 2006 1845 PRAVEX-BANK’s retail network compares favorably to a number of the first and the second tier banks and is a core of its retail-driven strategy. Number of branches PRAVEX-BANK 11

  12. 1514 1600 1400 1200 1000 800 600 351 400 200 65 0 2004 2005 9M06 Retail in detail Car and consumer lending Retail loan portfolio is evenly diversified between mortgages (48.2%), car loans (17.9%) and consumer loans (33.7%). PRAVEX-BANK is among pioneers in credit card loans which have a 0.2% share. Number of POS outlets In 9M06 the number of consumer loans via POS terminals doubled YoY to nearly USD 140mn. PRAVEX-BANK is present in all major household appliance chains, including Foxtrot, Eldorado and Domotechnika. PRAVEX-BANK 12 BANK OF NATIONAL SCALE

  13. BANK OF NATIONAL SCALE Operational Highlights Various deposits Debit /credit cards Utilities payments Internet banking Travelers’ checks Instant money transfers Operations with precious metals Individual safes Mortgages Car Loans Consumer loans Securities trading Pension program FX services PRAVEX-BANK 13

  14. 600 100% 90% 500 80% 70% 400 60% (US$m) 50% 300 40% 200 30% 20% 100 10% 0 0% 2001 2002 2003 2004 2005 9M06 Other assets SMEs lending 600 Retail lending Retail loans / Ttl loans (rhs) 500 400 (US$m) 300 200 100 0 2001 2002 2003 2004 2005 9M06 Due to banks Customer accounts Other liabilities Equity BANK OF NATIONAL SCALE Funding growth Growth of assets Between 2001 to 9M 2006 toal assets grew at a CAGR of circa 25%. The increase in assets was mainly fuelled by retail lending which grew by 36.6% on average in 2003-9M06. Funding dynamics PRAVEX-BANK has nearly 100,000 deposit accounts. In 9M06, volume of retail deposits increased by 36% YTD, which is 9.5 percentage points higher than the average growth posted by the banking system. PRAVEX-BANK 14

  15. 14 11.4 12 10.3 9.8 9.2 10 8.2 8 (%) 6.2 6.2 6 5.1 4 2 0 2003 2004 2005 9M06 Shareholders' equity/Assets Shareholders' equity/Loans 16 14.0 14 12 11.0 11.0 11.0 10 8.0 (%) 8 7.0 6 4 2 0 2003 2004 2005 CAR Tier 1 BANK OF NATIONAL SCALE Capitalization & Leverage Leverage coefficients The majority shareholder made a capital injection of USD 6mn in September 2006 which will increase the share capital by 14% once this is officially registered. Capitalization coefficients Tier 1 capital grew by 33.2% to USD 24.5mn in 2005, while the total capital rose by 25% to USD 31.5mn. The bank follows a policy of gradual capital injections and the total capital is expected to reach USD 50mn by the end of 2006. PRAVEX-BANK 15

  16. BANK OF NATIONAL SCALE Key Financial Information Various deposits Debit /credit cards Utilities payments Internet banking Travelers’ checks Instant money transfers Operations with precious metals Individual safes Mortgages Car Loans Consumer loans Securities trading Pension program FX services PRAVEX-BANK 16

  17. BANK OF NATIONAL SCALE Key Ratios PRAVEX-BANK 17

  18. BANK OF NATIONAL SCALE Balance Sheet PRAVEX-BANK 18

  19. BANK OF NATIONAL SCALE Income Statement PRAVEX-BANK 19

  20. BANK OF NATIONAL SCALE JSCB «PRAVEX-BANK» 9/2, Klovsky Uzviz Kyiv 01021 Ukraine Investment department: Vladislav Novikov, Vasiliy Bartkiv Tel.: (044) 521-02-67 e—mail: novikov@pravex.kiev.ua Call centre of the Bank: In Ukraine: 8-800-500-4-500 (round the clock and from the stationary phones in Ukraine), Tel. in Kyiv: (044) 201-16-61, 201-16-62 (round the clock). e-mail: bank@pravex.kiev.ua web: www.pravex.com PRAVEX-BANK 20

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