BULGARIA 23 FEBRUARY 2012

BANKING Q411 OVERVIEW

BULGARIAN BANKING SYSTEM

110%
Q4 BOTTOM LINE SINKS ON LOWER NII BUT NPLS
GROWTH PACE SLOWS DOWN 95%

Q4 net income of BG banks slumped 28% YoY to 80%

BGN 101m as NII fell 8% YoY. Interest income fell 65%
by 1.9% YoY, while interest expenditures advanced
by 7.2% over the year due to the substantial inflow of 50%
INDUSTRY OVERVIEW

retail deposits and despite lower pricing versus 2010. 2007 2008 2009 2010 2011
On the other hand, provision charges helped the Assets/GDP Loans/GDP Deposits/GDP

bottom line by standing 9% lower vs. Q410

4%
NPLs grew to 14.9% of gross loans in Q4 from

QoQ Growth rates

14.5% at the end of Q3. After a steep increase of 3%
BGN 564m in Q311, new NPLs totalled BGN 416m
in Q4, as mortgage and consumer bad loans lost 2%

velocity, while corporate continued to pick up speed 1%

and added BGN 368m in the last quarter of the year.
-1%
Deposits continued to pile up, while average
rates fell to 4.8% in 2011 from 5.4% in 2010. 2011 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11
Assets Loans Deposits
marked a hefty 13% annual growth in the deposit
base, on 11% rise in deposits from corporate clients
and 14% pick-up in deposits from individuals and
households. The substantial inflow of retail deposits 12%
was more than enough to compensate the outflow of
Interest rates

10%
parent funding.
8%
Loan book rose 4.1% YoY to BGN 56bn at end- 6%
2011 led by the corporate segment (up 6.2%
4%
YoY). Mortgage loans delivered 1.1% annual growth
in 2011, while consumer continued to stagnate with 2%

1.8% YoY dip. We see loan growth in 2012 in the Q4 10 Q1 11 Q2 11 Q3 11 Q4 11

low single-digit territory with fairly weak business LT loans ST loans Term deposits
activity, while at the same time households remain
reluctant to borrow. Foreign funding constraints
remain. Source: BNB, FFBH

KEY FIGURES AND RATIOS 2006 2007 2008 2009 2010 2011
Capital Adequacy Ratio (CAR) 14.5% 13.8% 14.9% 17.0% 17.5% 17.53%
Net Profit in m 413 585 709 399 315 300
Net Interest Margin /NIM/* 4.9% 5.0% 4.9% 4.6% 4.6% 4.4%
Cost / Income 55.0% 47.4% 50.0% 50.2% 49.1% 50.4%
ROaE* 20.2% 21.5% 19.2% 8.7% 6.4% 5.75%
ROaA* 2.14% 2.26% 2.10% 1.12% 0.86% 0.78%
Provisions / Gross loans to NFI 3.0% 2.7% 2.4% 4.0% 5.9% 7.3%
NPLs**/ Gross loans to NFI n.a. 2.1% 2.5% 6.4% 11.9% 14.9%
Loans / Assets 73% 76% 80% 82% 79% 79%
Loans / Deposits 93% 96% 105% 109% 104% 102%

*TTM P&L FIGURES, 4-QUARTER AVERAGE BALANCE SHEET FIGURES

**NPLS - LOANS OVERDUE MORE THAN 90 DAYS SOURCE: BNB, FFBH CALCULATIONS

Tereza Trifonova FFBH Research team PLEASE REFER TO THE TEXT AT THE END OF THIS REPORT
+359 2 460 64 56 +359 2 460 64 15 FOR OUR DISCLAIMER AND ALL RELEVANT DISCLOSURES
tereza.trifonova@ffbh.bg research@ffbh.bg
BULGARIAN BANKING SYSTEM FEBRUARY 2012

FIRST FINANCIAL BROKERAGE HOUSE

HIGHLIGHTS

NPLs slow down growth pace to reach 14.9% in Q411

Loans with delay in payment of more than 90 days continued to mount but slowed
down growth pace to reach 14.9% of gross loans at 2011 YE (14.5% at end-Sept).
NPLs advanced After a steep increase of BGN 564m in Q311, new NPLs totalled BGN 416m in
slower in Q411, Q4, as mortgage and consumer bad loans lost velocity, while corporate continued
as mortgage and to pick up speed and added BGN 368m in the last quarter of the year.
consumer bad
loans lost velocity, Flash estimates of the National Statistics Institute revealed grim macro picture with
while corporate a feeble 1.5% YoY GDP growth in Q411, while full year 2011 GDP carried a 1.6%
continued to pick YoY increase (lower than the governments forecast of 2.8%), with FDIs hitting a
up speed minimum level. The expected slowdown in Bulgarias exports this year and still
depressed domestic demand signal weak economic growth in 2012. At the same
time unemployment rate is still on the rise as in January it hit 11.1% up from 10.4%
in Dec11. In view of the subdued economic outlook NPLs generation should
continue in 2012, albeit with waning strength.

Meanwhile, impaired loans (loans overdue more than 90 days and restructured
loans) moved up further to 21.9% of gross loans as of end-December 2011 (21.6%
at the end of the previous quarter). The increase came from corporate and
mortgage loans, while impaired consumer loans shrank by 1.5% QoQ and came at
BGN 1.48bn at 2011 YE.

NPLs Impaired loans

800 16% 25% Corporate

14.5% 14.9%
14%
13.5% Consumer
12.9%
600 11.9% 12% 22% Mortgage
10.6%
10%
BGN m

400 8%
19%
6%
200 4%
16%
2%
0 0%
13%
0 0 1 1 1 1
Q 3'1 Q 4'1 Q 1'1 Q 2'1 Q 3'1 Q 4'1
0 0 0 0 1 1 1 1 1 1
n-1 ug -1 ct-1 ec -1 eb-1 pr -1 un-1 ug -1 ct-1 ec -1
Ju A O D F A J A O D
New NPLs (lhs) NPLs/Gross loans (rhs)

Source: BNB

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BULGARIAN BANKING SYSTEM FEBRUARY 2012

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Q411 net income slumps 28% YoY on shrinking NII

Q4 net income
plunged 28% YoY
Banking system Q4 net income plunged 28% YoY to BGN 101m due to dip in net
after reported fall
interest income (down 8% YoY). Interest income fell by 1.9% YoY, while interest
in NII, while risk
expenditures increased by 7.2% over the year due to the substantial inflow of retail
costs came 9%
deposits and despite lower pricing versus 2010. Net trading result also dragged down
lower versus
the bottom line by sinking 17% over the year, while provision costs partly offset the
Q411
above negatives by standing 9% lower compared to Q410. Operating expenses
changed negligibly down 0.5% on an annual basis.

Q4 net income shrank by 40% on a quarterly basis, after NII contracted by 2.7% and
administrative expenses jumped 6.9%. Provision costs also influenced negatively the
Long-expected bottom line by adding 3% QoQ to BGN 338m in Q4.
peak in NPLs
should finally be FY2011 bad-debt charges were down by 2% YoY, after a steep increase of 29% YoY
reached by end- in 2010. This, in combination with the 4.6% YoY increase in gross loans, brought cost
2012, which of risk to 203bp in 2011 from 217bp a year ago. Our opinion is that long-expected
prompts lower risk peak in NPLs should finally be reached by the end of the current year, which would
costs and less prompt lower risk costs and less pressure on banks bottom line vs. 2011.
pressure on banks
bottom line vs.
2011 Profitability Net income

7% 225
600
6% 220
500
5% 215
400
4% 210
in B G N m
in b p

3% 205 300
ROE deteriorated
2% 200 200
to 5.75% in 2011
from 6.36% in 1% 195 100
2010
0% 190 0
YE 10 Q1 11 H1 11 9m 11 YE 11
'0 9 '10 '1 0 '1 0 '10 '1 1 '11 '1 1 '11
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Cost of risk (rhs) NIM (lhs) ROaE (lhs) Pre Provision profit Net profit Provision charge

* Net provisions and ROaE calculated on a TTM basis; Cost of risk is defined as net provisioning expenses
(ttm) divided by average gross loans

Source: BNB

2011 ROE edged down to 5.75% against 6.36% in 2010, after FY2011 net income
NIM deterioration marked a 5% YoY decrease on 1.7% YoY lower NII and 2% YoY increase in OPEX.
which started in Despite 2% YoY fall in bad-debt costs in 2011, provisioning needs remain high and eat
Q311 continued up significant portion of Bulgarian banks bottom line result, thus contributing to a lower
into Q4 ROE vs. that of CEE peers. Therefore, the expected decline of impairment should ease
bottom line pressure in the coming quarters.

We should note that the deterioration in the net interest margin, which started in Q3
continued into the last quarter of 2011. Thus, NIM contracted to 4.4% in 2011, from
4.5% as of 9m11 and versus 4.6% in 2010. Spreads narrowed to 427bp in 2011 from
451bp in 2010 as result of loan rates decreasing faster than deposit rates and higher
share of liquid assets in total assets vs. 2010.

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BULGARIAN BANKING SYSTEM FEBRUARY 2012

FIRST FINANCIAL BROKERAGE HOUSE

Deposits add 2.6% QoQ and 13% YoY to BGN 52.8bn at 2011YE

Deposits from customers grew 2.6% QoQ to BGN 52.8bn at end-2011 due to 4.5%
QoQ increase in retail deposits, while at the same time corporate segment shrank by
0.3%. 2011 marked a hefty 13% annual growth in the deposit base, on 14% rise in
deposits from individuals and households and 11% pick-up in corporate deposits. The
Retail deposits structure of the deposit base remained unchanged compared to 2010, as
marked a retail/corporate deposits stood in 60/40 ratio. Parent banks continued to withdraw
substantial 14% financing from their local units as Q4 saw BGN 1bn decrease in deposits from credit
annual increase, institutions (the bulk of which represents parent funding) leading to BGN 3bn decrease
fully offsetting the for FY 2011. Hence, the share of deposits from credit institutions in total liabilities fell to
continuing outflow 9% at 2011YE from 14% a year ago, while the share of deposits from customers grew
of parent support to 80% from 74% at end-2010. We see that the substantial inflow of retail deposits was
more than enough to compensate the outflow of foreign funding.

Weighted-average interest rate on new term BGN deposits remained broadly

unchanged vs. Q311 and stood at 4.72% in Q4. Hence, full-year weighted-average
rate came at 4.75% compared to 5.4% in 2010. We do not expect significant increase
No significant up- in deposit rates this year, despite the fact that banks would continue to rely
movements in predominantly on local funding sources and need to retain customers with offering
deposit rates this attractive rates. In our opinion the prevailing effect would be that of the ample liquidity
year and feeble loan demand in the sector, which, as we wrote in previous overviews should
keep rates within the 4.5% - 5% range in 2012.

Stabilization of deposit rates would limit further more significant reduction in lending
rates, while domestic perception of risk remains high. In Q411 average rates on both
new ST and LT loans increased slightly QoQ to 7.65% and 10.66%, respectively. 2011
average rates, however, remained lower versus 2010 by 1pp. and 0.6pp respectively
and came at 7.28% and 10.71%.

Interest rates Loans/Deposits ratio*

116%
12%
L/D ratio
112%
10%
108%
8%
104%
6%
100%
4%
96%
2%
09 1 10 1 10 m 1 0 E 1 0 1 11 1 11 m 1 1 E 1 1
09 10 10 10 10 11 11 11 11 YE Q H 9 Y Q H 9 Y
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
LT loans ST loans Term deposits

Source: BNB
*Loans and deposits from NFI

2011 YE L/D ratio remained unchanged from end-September at 99% but was below
the 108% at the end of 2010, as deposits accumulated faster than loans.

Gross external debt of the banking sector declined to 5.8bn as of end-Nov (14.8% of

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BULGARIAN BANKING SYSTEM FEBRUARY 2012

FIRST FINANCIAL BROKERAGE HOUSE

GDP) from 6.9bn as of end-Dec 2010 (19% of GDP) as a result of reduction in ST

financing - 1bn of deposits were withdrawn.

Gross external debt of the banking sector*

9 30%

8
25%
7

percentage of GDP
6 20%
in EUR bn

5
15%
4

3 10%

2
5%
1

0 0%
Nov-09 Mar-10 Jul-10 Nov-10 Mar-11 Jul-11 Nov-11
Grossl debt (lhs) As % of GDP (rhs)

*GDP for 2011 - 38.9bn (NSI flash estimates); GDP for 2010 36.03bn (NSI data as of 11.03.2011) and
GDP for 2009 - 35.04bn.

Source: BNB

Loan book picks up 1.9% QoQ due to growth in the corporate segment

Gross loans marked a 1.9% QoQ increase to BGN 56bn at 2011YE led by growth in
the corporate segment, while consumer and mortgage loans retreated 1.1% and 0.1%
QoQ respectively. The annual increase in loans came at 4.1% mostly as a result of the
6.2% expansion of corporate loans; mortgages also climbed by 1.1% versus 2010, but
consumer contracted by 1.8% YoY.
Gross loans added
4.1% YoY at end- We see loan growth in 2012 in the low single-digit territory with fairly weak business
Dec on 6.2% activity, while at the same time households would remain reluctant to borrow,
growth in the especially if unemployment continues to increase. Given high lending standards and
corporate segment funding constraints (which limit further more significant reduction in deposit pricing) as
and 1.1% YoY well as the weak demand and low income from new lending, rates on loans should not
growth in fall significantly in 2012.
mortgages, while
consumer loans QoQ growth of gross loans
stagnated
5% Corporate
Consumer
4%
Mortgage
3%

2%

1%

0%
Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11
-1%

-2%

Source: BNB

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BULGARIAN BANKING SYSTEM FEBRUARY 2012

FIRST FINANCIAL BROKERAGE HOUSE

A detailed look into the loan sector breakdown reveals that except for transport and
real estate sectors, which contracted in Q4, all other expanded with the highest QoQ
growth rates registered in energy, mining and agriculture. Unlike in the previous two
quarters, loans to the tourist sector increased. Looking at full year 2011, construction
and hotels&restaurants turned out to be the sectors most disfavored by banks,
shrinking by 1.8% YoY and 4.7% YoY, respectively. Full-year loan growth was
strongest in the energy sector (up 30% YoY), followed by agriculture (up 16% YoY)
and mining (up 11% YoY).

2011 loan growth Loan growth (QoQ by sectors)

was strongest in
the energy sector,
14%
followed by
agriculture and 12%
mining 10%
8%
6%
4%
2%
0%
-2%
Ag

Pr

O
En

Tr

Tr

R
th
in

ot
on

ea
oc

at

a
ric

er

-4%
in

er
de

ns

el
er

l
es

g
ul

s
tru

es
s
po
y

,s

&r
tu

s
in

ta
in

ct

r
ew
r

-6%

es
d

t
e

io

te
g
us

ta
ag

n
in
try

ur
d

e
us

a
sy

nt
try

st

s
em
s

Q2'11 Q3'11 Q4'11

Source: BNB

CAR falls slightly in Q4 to 17.53%

Capital adequacy ratio of Bulgarias banking system fell slightly to 17.53% as of 31

December 2011 from 17.75% in the previous quarter but was up from 17.48% at
CAR and liquidity 2010YE. Liquidity remained ample with the liquid assets ratio (calculated as per Ord.
ratios remain 11 of BNB) at 25.6% as of end-December slightly down from 25.9% at the end of the
strong previous quarter, but up from 24.4% at the end of 2010.

Capital adequacy and liquidity ratios

25.9% 25.6%
25.1%
24.4% 24.5%

17.48% 17.66% 17.73% 17.75% 17.53%

15.24% 15.36% 15.54% 15.64% 15.74%

YE10 Q111 H111 9m11 YE11

CAR TierI Liquidityratio

Source: BNB

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BULGARIAN BANKING SYSTEM FEBRUARY 2012

FIRST FINANCIAL BROKERAGE HOUSE

KEY RATIOS OF THE BULGARIAN PUBLICLY TRADED BANKS

2011 results unit BSYS CORP CCB BACB FIB
BSE Ticker: 6C9 4CF 5BN 5F4
CAR (min required 12%) % 17.53% 12.39% n.a. 21.70% 12.32%
Total Assets 000 39 272 934 2 067 184 1 535 591 382 364 3 119 734
Assets Growth % QoQ 0.41% 7.0% 6.7% 7.2% 5.2%
Loans to NFI 000 26 618 598 1 343 867 727 669 216 609 2 110 103
Loans Growth % QoQ 1.8% 14.1% 8.9% -7.1% 1.5%
Deposits from NFI 000 27 000 437 1 668 339 1 317 512 248 035 2 703 144
Deposit Growth % QoQ 2.6% 5.5% 5.7% 14.0% 6.9%
Equity 000 5 342 215 195 875 170 550 101 793 243 909
Net Interest Income 000 1 466 883 41 293 27 137 8 440 79 981
Net Income (Loss) 000 299 689 31 164 6 856 (19 616) 18 664
Net Income Growth % YoY -4.9% -18% -42% n.m. 18%
ROaE* % 5.75% 16.95% 4.55% n.m. 7.9%
ROaA* % 0.78% 1.74% 0.50% n.m. 0.6%
Cost-to-income YTD % 50% 35% 79% 64% 68%
Net Interest Margin* % 4.36% 2.99% 2.78% 2.77% 3.34%
Provisions/Gross loans to NFI % 7.1% 0.9% 1.9% 24.3% 3%
NPLs** % 14.9% 3.7% n.a. 40.6% n.a.
*TTM P&L figures, banks unconsolidated results, except for consolidated results for BACB; 4-quarter average balance sheet figures
** Loans overdue more than 90 days, excl. CORP where the figure covers loans overdue more than 30 days
Source: BNB, Banks, FFBH calculations

FOR RECENT NEWS ON THE BANKS, CLICK BELOW AND SCROLL DOWN:

For Bulgarian American Credit Bank

For Central Cooperative Bank

For Corporate Commercial Bank

For First Investment Bank

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 BULGARIAN BANKING SYSTEM FEBRUARY 2012

FIRST FINANCIAL BROKERAGE HOUSE

PEER GROUP MULTIPLES

as of 22 February
Market
Bloomberg Cap in TTM
Ticker Country Short Name m P/E P/B ROE
PBZRA CZ Croatia Privredna banka Zagreb 1 258 7.5 0.8 9.3
KOMB CP Czech Republic Komern Banka 5 482 14.5 1.7 12.3
OTP HB Hungary OTP Bank 3 804 8.4 0.8 9.5
BRE PW Poland Bre Bank 2 994 11.0 1.6 15.2
KRB PW Poland Kredyt Bank 780 10.0 1.1 11.1
BSK PW Poland ING Bank lski 2 683 12.7 1.7 14.6
GTN PW Poland Getin Bank 419 4.0 0.3 10.2
BZW PW Poland Bank Zachodni WBK 4 042 14.3 2.3 16.9
PEO PW Poland Bank Pekao 9 800 14.8 2.0 13.1
PKO PW Poland PKO Bank Polski 10 466 11.7 2.0 15.4
MIL PW Poland Bank Millennium 1 243 11.4 1.2 9.5
BRD RO Romania BRD - GSG 1 743 7.5 1.3 19.0
TLV RO Romania Banca Transilvania 416 12.5 0.9 6.8
AIKB SG Serbia AIK Banka 145 2.5 0.4 14.1
VUB SK Slovak Republic VUB Banka 909 5.3 0.9 14.8
TAT SK Slovak Republic Tatra Banka 903 4.7 0.8 10.3

Average 9.6 1.2 12.6

Source: Bloomberg

MULTIPLES OF BULGARIAN BANKS

as of 22 February
Bloomberg Market Cap
Ticker Country Short Name in m P/E P/B ROaE
5BN BU Bulgaria Bulgarian-American Credit Bank 47 n.m. 0.46 n.m.
4CF BU Bulgaria Central Cooperative Bank 48 5.25 0.28 4.5%
6C9 BU Bulgaria Corporate Commercial Bank 233 7.48 1.19 16.9%
5F4 BU Bulgaria First Investment Bank 108 5.79 0.44 7.9%

Source: BSE-Sofia, financial reports, FFBH

*Ratios are calculated on a ttm basis

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 BULGARIAN BANKING SYSTEM FEBRUARY 2012

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KEY RATIOS FOR BULGARIAS BANKING SYSTEM

2006 2007 2008 2009 2010 2011
CAR 14.5% 13.8% 14.9% 17.0% 17.48% 17.53%
Profitability
Net Interest Margin 4.9% 5.0% 4.9% 4.6% 4.62% 4.36%
Interest income over IE assets 7.5% 7.8% 8.6% 8.3% 8.03% 7.64%
Interest expense over IB liabilities 2.6% 2.8% 3.7% 3.8% 3.52% 3.36%
Spread (in bps) 494 503 491 447 451 427
Overall profitability
ROaE* 20.2% 21.5% 19.2% 8.7% 6.36% 5.75%
ROaA * 2.1% 2.3% 2.1% 1.1% 0.86% 0.78%
Income diversity
Net interest income / Total
operating income 68% 70% 75% 75% 74% 73%
Efficiency
Cost / Income 55% 47% 50% 50% 49% 50%
Liquidity
Loans to NFI / Assets 51% 61% 69% 70% 69% 68%
Total Loans / Total Deposits 93% 96% 105% 109% 104% 102%
Loans to NFI / Deposits from NFI 79% 93% 115% 114% 108% 99%
Credit quality

Provisions / Gross loans to NFI 3.0% 2.7% 2.4% 4.0% 5.88% 7.11%
Provisions (incl. general provisions
charged directly to equity) / Gross
loans to NFI 5.31% 9.03% 10.25%
Non-performing loans** / Gross
loans to NFI 2.1% 2.5% 6.4% 11.9% 14.9%
Provisions / Non-performing loans** 130% 97% 63% 49% 48%
Provisions (incl. general provisions
charged directly to equity) / Non-
performing loans** 130% 97% 83% 76% 69%
Gross loan portfolio mix
Corporate 64% 65% 65% 64% 65% 65%
Consumer 21% 19% 18% 19% 18% 17%
Mortgage 16% 16% 17% 17% 18% 17%

* TTM P&L figures, 4-quarter average balance sheet figures

** Loans overdue by more than 90 days Source: BNB, FFBH
calculations

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BULGARIAN BANKING SYSTEM FEBRUARY 2012

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BULGARIAN BANKING SYSTEM BALANCE SHEET

in 000 2006 2007 2008 2009 2010 2011

Assets
Cash and Current
Accounts in BNB 2 331 003 3 673 730 3 432 116 3 268 094 3 745 104 3 891 493
Claims on Financial
Institutions 4 603 122 4 393 915 3 934 730 4 329 567 3 913 496 4 247 879
Trading Portfolio 1 276 487 1 410 468 838 629 652 334 2 128 691 2 380 435
Loans to Nonfinancial
Institutions 11 104 788 18 554 332 24 579 370 25 212 318 25 953 978 26 618 598
Investment Portfolio 1 630 653 1 409 609 1 827 038 1 765 651 788 479 844 066
Long Term Assets 527 466 651 722 777 431 807 011 798 904 815 002
Other Assets 100 372 118 207 176 382 199 205 366 699 475 460
Total Assets 21 573 891 30 211 983 35 565 696 36 234 181 37 695 350 39 272 934
Liabilities
Deposits of Banks 2 877 708 4 046 886 5 781 559 4 998 697 4 700 964 3 140 775
Deposits of
Customers 14 091 210 19 854 868 21 339 128 22 131 523 23 993 926 27 000 437
Liabilities evidenced
by paper 1 730 934 1 990 236 2 849 595 2 888 981 2 176 230 2 155 323
Other Borrowed
Funds 279 347 795 598 1 159 150 1 084 401 1 100 745 1 147 106
Other liabilities 350 743 350 059 381 266 295 509 594 071 487 078
Total Liabilities 19 329 942 27 037 647 31 510 698 31 399 111 32 565 936 33 930 718
Equity
Shareholder Capital 768 189 1 070 401 1 341 441 1 699 218 1 766 484 1 913 418
Reserves and
retained earnings 1 062 846 1 519 242 2 004 523 2 736 946 3 047 635 3 129 108
Net profit from current
year 412 914 584 692 709 034 398 906 315 295 299 689
Total Equity 2 243 950 3 174 336 4 054 998 4 835 070 5 129 414 5 342 215
Total Equity &
Liabilities 21 573 891 30 211 983 35 565 696 36 234 181 37 695 350 39 272 934

Source: BNB

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BULGARIAN BANKING SYSTEM FEBRUARY 2012

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BULGARIAN BANKING SYSTEM INCOME STATEMENT

in 000 2007 2008 2009 2010 2011 Q4 10 Q3 11 Q4 11

Interest Income
Interest Income 1 748 356 2 514 534 2 639 028 2 592 759 2 571 417 653 413 645 570 640 907
Interest Expenditure (638 045) (1 089 240) (1 183 364) (1 101 201) (1 104 535) (265 964) (279 928) (284 985)
Net Interest Income 1 110 312 1 425 294 1 455 664 1 491 558 1 466 883 387 449 365 643 355 922
Non-Interest Income
Net Fees and
Commissions Income 344 201 400 414 375 733 388 440 401 957 102 543 103 636 105 594
Gains (losses) from
Securities 12 381 (15 682) 26 966 49 070 52 635 21 232 19 802 17 210

Forex Gain (losses) 55 662 60 345 51 881 63 580 54 971 17 699 13 442 14 978
Other Operating
Income 54 395 26 699 28 652 17 920 24 968 8 638 9 172 7 882
Net Non-Interest
Income 466 640 471 777 483 232 519 010 534 531 150 113 146 052 145 663
Total Operating
Income 1 576 951 1 897 070 1 938 896 2 010 568 2 001 414 537 562 511 695 501 584

Operating expenses
Administrative
Expenses (747 244) (948 648) (975 226) (980 856) (1 001 351) (264 421) (246 110) (262 988)
Other Operating
Expenses, net (264) (534) 1 815 (5 568) (8 166) (2 508) (662) (5 153)

Credit Provisions,
Decrease (increase) (182 269) (159 438) (520 480) (673 237) (659 760) (189 084) (167 671) (172 666)
Total Expenses (929 777) (1 108 620) (1 493 891) (1 659 662) (1 669 277) (456 013) (414 442) (440 807)
Net Operating
Income 647 174 788 450 445 004 350 907 332 136 81 549 97 252 60 778

Extraordinary items
Income (loss) Before
Tax 647 174 788 450 445 004 350 907 332 136 81 549 97 252 60 778
Tax expenses (63 512) (79 417) (46 099) (39 320) (39 693) (9 828) (10 603) (8 805)
Minority interest +
other after-tax items 1 029 3 708 7 246 0 (1) 1
Net Income 584 692 709 034 398 906 315 295 299 689 71 721 86 649 51 973

Source: BNB

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This report has no regard to the individual investment objectives, financial situation or particular needs of any
specific recipient and should not to be relied upon as authoritative, or taken in substitution for the exercise of
judgment by any receiver. Each recipient should consider the appropriateness of any investment decision
having regard to their own circumstances, the full range of information available and appropriate professional
advice, and should consult their advisors to make sure all involved risks are fully understood.

The information and opinions in this report constitute judgment as at the date of this report, have been
compiled or arrived at from sources believed to be reliable, but no representation or warranty, express or
implied, is made as to their accuracy, completeness or correctness. Opinions expressed herein are subject to
change without notice. This report is not intended to be a complete statement or summary of the securities,
markets or developments mentioned in this report.

Any forecasts or price targets shown for companies discussed in this report may not be achieved due to
multiple risk factors including, without limitation, market volatility, sector volatility, corporate actions, the
unavailability of complete and accurate information and/or the subsequent transpiration that underlying
assumptions made by FFBH, or by other sources relied upon in the report, were inapposite. FFBH accepts no
liability whatsoever for any loss or damage arising from any use of this report or its contents.

The recipient should presume that FFBH, or persons or entities associated with it, or any of its clients, own or have a
position in any securities or investments mentioned in this study, which position may change at any time. FFBH or its
Affiliates may buy, sell or offer to buy or sell, such securities or any related investments as principal or agent on the
open market. FFBH does not act as market maker in the securities mentioned herein.

The analysts certify that their views regarding the companies in this report are independent and that they have
not received nor will receive direct or indirect compensation in exchange for publishing specific views or
recommendations in this report. The recommendation has not been derived as a result of an agreement
between FFBH and the companies mentioned in this report and it has not been presented to the said
companies.

The analysts or persons related to the analysts do not hold 5% or more in any of the companies
mentioned in this report. The analysts or persons related to the analysts do not hold executive positions
or positions of control in any of the companies mentioned in this report. None of the companies
mentioned in this report hold 5% or more in First Financial Brokerage House, but FFBH and First
Investment Bank have common indirect majority owners.

FFBH has not managed an IPO or provided other corporate finance services to the companies mentioned in
this report in the last 12 months. FFBH may provide in the future corporate finance services, or solicit such
business, for the issuers of the securities mentioned in this report.

FFBH is under no obligation to update or keep current the information contain herein.

The procedures undertaken by FFBH to avoid conflicts of interest with regard to investment research
publications are described at http://www.ffbh.bg/Disclaimer.aspx?lan=EN&pid=36.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

INVESTMENTS IN EMERGING MARKETS INVOLVE HIGH RISKS.

THIS REPORT IS PUBLISHED FOR INFORMATION PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A
SOLICITATION OR AN OFFER TO BUY OR SELL ANY SECURITIES OR RELATED FINANCIAL INSTRUMENTS.

DDITIONAL INFORMATION ON THE CONTENTS OF THIS REPORT IS AVAILABLE ON REQUEST

FFBH uses a three-level recommendation scale: Sell, Hold, and Buy. The recommendations are for
evaluative purposes only.

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BULGARIAN BANKING SYSTEM FEBRUARY 2012

FIRST FINANCIAL BROKERAGE HOUSE

Distribution of FFBHs current stock ratings

Buy Hold Sell Under Review Restricted

% of total 52% 24% 19% 5% 0%

Count 11 5 4 1 0

Corporate Finance Clients*

Buy Hold Sell Under Review Restricted

% of total 0% 0% 0% 50% 50%

Count 0 0 0 1 1

* Corporate Finance Clients are companies from which FFBH has received compensation for providing
corporate finance services within the last 12 months.

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