BANK

OVERVIEW

You are in good hands.

May 2018, Zagreb

2 Agenda

• BANK HISTORY & OWNERSHIP STRUCTURE

• OVERVIEW
• STRATEGY
• MACROECONOMIC DATA
• VOLUMES
• DEPOSITS AND PROFITABILITY
• 2017 AND 2016 IN COMPARISON
• ASSET QUALITY
• FINANCIAL HIGHLIGHTS
• M-KENT
• RETAIL BANKING
• CORPORATE BANKING
• SME BANKING
• TREASURY BANKING
• REPRESENTATIVE OFFICE AND TURKISH DESK
3 Bank history & ownership structure
1998 - 2010 2011 2012 2013 2014 2015 2016 2017

• Banka Brod d.d. • New branch • New banking • Capital increase • New branches: • New branches: • New Internet and
in Zagreb software of EUR 5 million Zadar and Šibenik and Mobile banking
acquired
• Capital increase • New branches: Varaždin Zagreb Dubrava
Banka Brod d.d. • Representative
of EUR 10 million Split and • Capital increase • Subordinated office in Turkey
• Headquarter Dubrovnik of EUR 5 million loan of EUR 1,5
moved to Zagreb • Capital increase • Card & ATM million • Subordinated
of EUR 10 million implementation loan of EUR 3,5
• KentBank million
rebranding

ABOUT SÜZER GROUP

KentBank is entirely owned by Süzer Group which was established in Turkey in 1952.
Pursuant to the liberalization of the Turkish economy starting from the 1980’s, the group embarked on a phase of
growth and became one of the first few Turkish companies whose foreign trade volume exceeds 1 billion dollars.
In 2011 Süzer Group acquired Banka Brod d.d. and has since then, continued to grow together with KentBank d.d.
Süzer Group provides a wide range of activities including real estate development, construction, energy, finance,
tourism and others.
4 Overview

National Bank with 15 branches across major cities in Croatia

Continuous development of digital services

In 2017, the Bank opened its Representative office in Turkey

Access to more than 1.000 ATM’s in MBNet network

Bank on the EU market

At the end of 2017, the Bank had 193 educated, experienced

and professional employees and is constantly working on
improving its staffing structure.
5 Strategy

Focus on service quality:

• quick response Good asset quality Modern business system, Stable and
with a diversified portfolio process and sale channels sustainable profit
• flexible and tailor-made
approach to each client
6 Macroeconomic data
SUMMARY OF MACROECONOMIC INDICATORS
2016 2017 2018F 2019F Croatian GDP growth is expected to
Nominal GDP (EURbn) 46,4 48,7 51,0 53,1 slow down slightly in comparison to
GDP per capita (EUR) 11.118 11.806 12.364 12.873 2016 when the growth rate was at
Real GDP growth (YoY,%) 3,2% 2,8% 2,8% 2,6%
maximum, due to reaction of imports,
CPI Inflation (average% YoY) -1,1% 1,1% 1,2% 1,5%
Unemployment rate (average %) 13,1% 11,2% 9,8% 9,1%
structural lack of labour force in
Exports (EURbn) 22,778 25,081 26,084 27,127 propulsive sectors despite still high
Imports (EURbn) 21,438 23,437 24,843 26,334 unemployment and late restructurings
Trade balance (EURbn) -7,342 -8,158 -8,562 -9,345 in problem enterprises such as
Merchandize trade balance (% of GDP) -15,8 -16,8 -16,8 -17,6
Petrokemija, shipyards and parts of
Current Account (EURbn) 1,209 1,904 1,015 0,816
Current Account (% of GDP) 2,6 3,9 1,9 1,5
Agrokor. Domestic demand is expected
Gross external debt (EURbn) 41,668 40,049 40,887 41,778 to continue to grow at moderate rates,
Gross external debt (% of GDP) 89,8 82,3 80,1 78,7 which implies favourable external
Net FDI (EURbn) 1,893 1,296 2,005 2,225 position despite of somewhat stronger
FDI (% of GDP) 4,1 2,7 3,9 4,2 reaction of imports. Therefore current
EUR/HRK (end-year) 7,56 7,51 7,45 7,45
account position shall remain in the
Trade balance: Import, Export, Tourism receipts, EU transfers | Source: Croatian National Bank, Central Bureau of Statistics, Ministry of Finance
positive zone, a need for rising foreign
RATINGS* debt shall remain contained and
Foreign Currency Domestic Currency capital inflows will mainly continue
LT Rating Outlook LT Rating Outlook via FDI, combining retained earnings
Fitch Ratings BB+ Stable BB+ Stable in traditional inward oriented sectors
Moody’s Ba2 Stable Ba2 Stable
such as telecom and banking, and
Standard & Poor’s BB+ Stable BB+ Stable
greenfield investment in tradable
Source: Bloomberg
sectors, mainly in booming tourism
industry. Inflation is expected to
remain low and the exchange rate
stable.
 7 Volumes

ASSETS, M EUR LOANS, M EUR

0 400 300 300

ease ease ease ease

% incr % incr % incr % incr
0 350
growth 245 growth 245 growth 301 growth 301 Continuous increase in asset size:
EUR 96M EUR 250 250 EUR 24M EUR
196M 1 124M 1

0 300
• 2017 vs 2012 asset size increase -
301

301 200 200

204

204
196m EUR or 245% increase
282

282
277

277

0 250
150 150
• Focus on liquidity management

165

165
153

153
0 200 • Significant increase of
customer base
177

177

100 100

107

107
0 150
• Conservative risk management
86

86
153

153

70

70
50 50 approach
0 100
116

116
80

80

41

41

Balance sheet:
0 50 0 0
2012 2013 20122014 20132015 20142016 20152017 2016
F2018 2017 F2018 2012 2013 20122014 20132015 20142016 20152017 2016
F2018 2017 F2018

• Controlled increase in loan portfolio

0 300 2 2 • Loans make up 60% of assets

1,9

1,9
se se in 2017
increa increa
wth 238% rowth 238%
250157M
ro
EUR g 57M EUR g 1 1 • Loan to deposit ratio increased from
1,1

1,1

0 1
62% to 74% between 2012 and 2017
0,7

0,7
0,5

0,5
236

236

• In 2017 loans increased by 8%

230

230
223

223

0 0
0 200

-1 -1
,4

,4
0 250
150 150

165

165
153

153
0 200

177

177
100 100

107

107
Deposits and profitability
0 150

86

86
153

153
8

70

70
50 50
0 100
116

116
80

80

41

41
0 50 0 0 Funding sources:
2012 2013 20122014 20132015 20142016 20152017 2016
F20182017 F2018 2012 2013 20122014 20132015 20142016 20152017 2016
F20182017 F2018

DEPOSITS, M EUR NET PROFIT, M EUR • Retail deposits are the main
0 300 2 2 source of funding

1,9

1,9
ease ease • Significant increase in 2016 due to
% incr % incr
gro wth 238 growth 238
250157M
EUR 57M EUR 1 1
implementation of new channels

1,1

1,1
0 1
for acquisition of international

0,7

0,7
0,5

0,5
236

236
230

230
223

223

0 0
deposits
0 200
• Share of a vista increased from
-1 -1

-1,4

-1,4
5% to 18% in the period between
0 150
2012 and 2017
147

147

-2 -2
• Diversified and stable deposit
129

129

-3,0

-3,0
0 100
-3 -3 base
96

96

-4,0

-4,0
66

66

Profitability:
0 50 -4 -4
2012 2013 20122014 20132015 20142016 20152017 2016
F20182017 F2018 2012 2013 20122014 20132015 20142016 20152017 2016
F20182017 F2018

• Bank started generating profit

since 2015
• 2017 profit amounts to 0,7M EUR
• Losses before 2015 are a result
of high provision expenses and
made investments
9 2017 and 2016 in comparison
ASSETS STRUCTURE LIABILITIES STRUCTURE INCOME STRUCTURE
0,8%
1,8%

5,5%
2,7% 2,6%

11,

14,9
1%

1%
10,

%
6,6%
9,9

25,7
%
14,
8,8

8%

%
12,
5%
1,2% 12,5%
69,3% 66,0% 10,4%
59,5% 54,3% 34,2% 27,8% 0,5% 63,9% 72,6%

Loans Term deposits Net interest Income

Securities Demand deposits Net Fee Income

Cash and deposits
(including CNB) Capital Other operating Income

Other asset Other liabilities

Bank borrowings
Subordinate loan Inner circle - 2016 I Outer circle - 2017

52,4% 39,6% 8,0% 47,3% 37,3% 15,4%

Corporate loans

Retail loans TOTAL LOANS 2016 TOTAL LOANS 2017

SME loans
10 Asset quality
NPL RATIO NPL COVERAGE
30%
30% 100%
100%
30% 100%
90%
90%
90%
25%
25%
25% 80%
80%
80%

77%
70%
70%

77%

73%
20%
20% 70%
20,9%

73%
20%

68%
20,9%

60%
60%

68%
60% Decreasing trend in NPL ratio

61%

61%
61%

61%
15%
15% 50%
50%
till 2017 due to:

53%
15% 50%

53%
13,6%

40%
40%
12,7%

• new high-quality loan portfolio

13,6%

40%
12,7%

10%
10%
10% 30%
30%
9,8%

30%
• systematic improvements for
9,8%

20%
20%
7,8%
6,6%

5%
5% 20% achieving efficient monitoring
7,8%
6,6%

5%
10%
10%
10% and strong collection department
00 00
0 2012
2012 2013
2013 2014
2014 2015
2015 2016
2016 2017
2017 0 2012
2012 2013
2013 2014
2014 2015
2015 2016
2016 2017
2017
2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017
High NPL coverage
24%
24%
24%
CAPITAL ADEQUACY RATIO
22.9 22.9
22%
22% 22.921.5 21.5 Maintenance of low NPL ratio
22% 21.5
20%
20% 19.5 19.5 supported with scoring system
20% 18.6 18.6 19.5 18.9 18.9
18.6 18.9 The Bank maintains a higher
18%
18%
18%
16%
16%
16.0
16.0 15.9 15.9 CAR ratio than it is legally
16.0 15.9
16% 15.7 required at all times.
14%
14%
14% 14.0 14.0
12%
12% 14.0
12% 2010
2010 20112011 2012 2012 2013 2013 2014 2014 2015 20152016 2016
2017 F2018
2017
2010 2011 2012 2013 2014 2015 2016 2017
11 Financial highlights
ASSETS (000 EUR) 31. 12. 2016 31. 12. 2017 CHANGE %
CASH AND ACCOUNTS AT BANKS AND CNB 24,867 28,036 13%
MARKETABLE SECURITIES 96,265 76,806 -20%
LOANS 153,042 164,670 8%
OTHER ASSETS 7,569 7,131 -6%
TOTAL ASSETS 281,743 276,643 -2%

LIABILITIES (000 EUR) 31. 12. 2016 31. 12. 2017 CHANGE%
BANK BORROWINGS 18,560 15,425 -17%
SUBORDINATED LOAN 1,500 5,000 233%
DEPOSITS 230,440 223,478 -3%
OTHER LIABILITIES 3,377 2,080 -38%
CAPITAL 27,866 30,660 10%
TOTAL LIABILITIES AND EQUITY 281,743 276,643 -2%

PROFIT/LOSS (000 EUR) 31. 12. 2016 31. 12. 2017 CHANGE%
NET INTEREST INCOME 6,477 7,982 23%
NET FEE AND COMMISSION INCOME 1,050 1,368 30%
OTHER OPERATING INCOME 2,601 1,633 -37%
TOTAL INCOME 10,129 10,983 8%
TOTAL G&A EXPENSES -7,787 -8,290 6%
IMPAIRMENT LOSSES AND PROVISIONS -1,266 -1,996 58%
PROFIT/(LOSS) 1,076 697 -35%
12 m-Kent

Introduced in August 2017 for IOS and Android

Easy overview of all accounts

“Photo-pay” technology - best in class

Single sign on technology - login once and access both Your

private and business accounts

Convert your purchases to installment payments - great and

unique option

Login with PIN or fingerprint

Opening term deposits with few taps

HRK and SEPA (Single Euro Payments Area) EUR payments

13 Retail banking
RETAIL LOANS, M EUR RETAIL CLIENTS
New products
(m-Kent, 100
100 25.000
30.000
e-Kent,
open sese unts rease
Sales- ”Almighty inincrcereaa 5 atcsc2oe9a%seinc

23,858
orientated
savings)
loan” r
114400%%
orowwthth 102,c7li6enin cr
organization introduced
8080 UU
3366MMEE
RRgg
5.50115%
25.000

75
75

24,791
20.000

19,545
6060

62
62

22,338
Up-selling RETAIL ATM network
20.000
opportunities
BANKING expanded

53
53

19,291
4040

43
43
41
41
40
40
15.000

14,920
Safe deposit 15.000
Marketing

26
26
boxes 2020

11,093
activities introduced
New in Zagreb
interactive
web page 00 10.000
10.000
2012
2012 2013
2013 2014
2014 2015
2015 2016
2016 2017
2017 F2018
F2018 2015
2014 2015 2016 2016 20172017

Retail defined direction to digital banking though

development of totally new service m-Kent (mobile
banking), update of e-Kent (internet banking service) and
web page. With those changes we created interactive digital
channel with emphasize on user experience.
14 Corporate banking
CORPORATE LOANS, M EUR
200
Trade
finance se
increa
394%
Focus on owth
UR gr
asset Turkish 63M E
150
quality desk

CORPORATE 100
Fast and BANKING

97
flexible Flexible

88
service loans

79
50

57
Mobile and Cooperation with

47
Internet banking, development

31
insurance banks and

16
policies EU funds
0
2012 2013 2014 2015 2016 2017 F2018

Syndicated loans Fast and flexible service

Cooperation with highest-quality clients on the
POS services
market
Tailor-made approach Cooperation with HBOR
15 SME banking
SME LOANS, M EUR SME CLIENTS
50 50 3.000 3.000
Cross-selling
opportunities
ease ease se
increa increa
se
with Retail % in1cr95% incr
h 19ro5w s 94% s 94%
rowt th 2.500 2.500 client client
Introduction 40 UR g UR g 1,065 1,065
40 17M E 17M E
of a simple
Sales-orientated loan approval

2.201

2.201
organization process 2.000 2.000
through 30

33

33
30
Scorecard
SME BANKING 1.500 1.500

26

26

1.450

1.450
20 20
Full 1.000 1.000

1.136

1.136
Marketing utilization
activities of Retail

15

15
network 10 10
500 500
9

9
Business cards,
Internet banking,
insurance policies
0 0 0 0
2015 2015 2016 2016 2017 2017 2018 2018 2015 2015 2016 2016 2017 2017

17M EUR or 195% increase in loan portfolio E-banking

since 2015
Scoring system for high asset quality
Participation in tenders published by Fund for
Environmental Protection and Energy Efficiency
for subvention of energy efficient facade renewal
Building renovation loans – total of 170 buildings
were renovated with Kentbank financial support
out of 1.000 buildings in portfolio
Cooperation with 57 building management
companies
16 Treasury Banking
Liquidity management:
MARKETABLE SECURITIES - December 2017 (Per Country)
• Continuously high liquidity
• Managing the liquidity surplus
• Collecting deposits from other

4%
6%
6% financial institutions
• Providing short term funding
through MM operations
15%

Marketable securities trading:

69%
• Active role in marketable
securities trading both in
primary and secondary market
• Mainly Croatian bonds and other
Croatia sovereign bonds (EU)
Italy
France FX desk:
Germany
• Managing foreign currency
Turkey
position according to market
volatility
• Active F/X trade with clients
offering competitive rates
17 Representative office and Turkish desk
Turkish desk established in 2015 in the Bank

Representative office opened in Istanbul at the end of 2017

KentBank pays special attention to economic cooperation

between Croatian and Turkish companies and provides
information and advisory support to partners and customers
Our aim is to create new business opportunities for
entrepreneurs from Croatia and Turkey and to be a bridge
Mrs. Sevgi Pelin Yurdunol, Representative office Director
that connects the economies of these two countries
Corporate and SME entrepreneurs have full access to
comprehensive solutions for all their trade finance
and corporate banking needs as well as an access to
international banking products and services.
 You are in good hands.

KENTBANK

Gundulićeva 1, 10 000 ZAGREB, CROATIA

Tel: +385(0)1 4981 900 | Fax: +385(0)1 4981 910
E-mail: kentbank@kentbank.hr

Corporate Department: corporate@kentbank.hr | FI Department: riznica@kentbank.hr | Retail Department: gradjanstvo@kentank.hr | SME Department: SME@kentbank.hr

Representative Office: Askerocagi Cad. Suzer Plaza Kat:26, No:2607, 343467 Sisli - Istanbul | Turkey: sevgipelin.atik@kentbank.hr
19 Disclaimer statement

The information in this document has been obtained by

Kentbank d.d. from sources believed to be reliable, however,
Kentbank d.d. cannot guarantee the accuracy, completeness,
or correctness of such information. This document has been
issued for information purposes only. Kentbank d.d. does not
accept any liability whatsoever for any direct or consequential
loss arising from any use of this document or its contents due
to misleading information in this document. All estimations
contained in this document are the opinions of Kentbank d.d.
and can be subject to change without notice. This document
cannot be interpreted as an advice to the investors and
Kentbank d.d. can not be held responsible for the results of
investment decisions made on account of this document. This
document has been issued specially to the person, whom
the document is concerned and may not be reproduced,
distributed or shared with third parties for any purpose.