DEPOSIT COVERAGE LIMIT AND KDIF’S TARGET RESERVE RATIO JULY 9, 2015 ALMATY, KAZAKHSTAN

DEPOSIT COVERAGE (AS OF MAY, 2015) Throughout the history of the KDIF’s operations the amount of the deposit coverage limit has been revised and changed five times:  in 2004, from to tenge  in 2007, from to tenge  in 2008, from to tenge  in 2011, from to tenge  in 2015, from to tenge for deposits in national currency (we will give more details on the next slide) The greatest increase in the deposit coverage level (by more than 7 times) was implemented at the peak of the global financial crisis in 2008.

DEPOSIT COVERAGE LIMIT The depositor will be able to claim the remaining amount of deposit from the failed bank’s liquidation commission in the established sequence order. According to the law of the Republic of Kazakhstan «On Mandatory Insurance of Deposits Placed in the Second-Tier Banks of the Republic of Kazakhstan», with amendments and additions as of Deposit insurance coverage in the amount of a depositor’s current balance, without the accrued interest, does not exceed: tenge ( US dollars) for deposits in national currency, tenge ( US dollars) for deposits in foreign currency, following setting off a depositor’s claims against depositor’s liabilities to the bank. If a depositor holds two or more insured deposits of different types or currency, the reimbursement paid by the KDIF shall not exceed tenge.

“Per depositor, per bank” basis of reimbursing all insured deposits of different types and currency, Reimbursement of deposits opened in several banks, separately for each bank, Depositors are reimbursed in national currency, including the foreign currency deposits which are paid in local currency equivalent (currency exchange rate is applied as of the date of entry into effect of a court decision on forced liquidation of the bank). REIMBURSEMENT OF THE DEPOSIT COVERAGE

Sources of the KDIF’ Special Reserve:  Mandatory calendar premiums paid by member-banks,  Penalties applied to banks for failure to fulfill, or improper fulfillment of the Contract of Adhesion,  Recoveries from the assets of forcibly liquidated bank,  Net income,  70% of KDIF’s authorized capital. The Special Reserve funds shall be used exclusively for reimbursing depositors. KDIF’S SPECIAL RESERVE

STRUCTURE OF KDIF’S SPECIAL RESERVE

The adequacy of the Special Reserve determines the solvency and financial stability of the KDIF in the planned period (1 year) by assessing its potential costs and funding needs. In accordance with the Law of the Republic of Kazakhstan «On mandatory insurance of deposits placed with second-tier banks of the Republic of Kazakhstan» target size of the KDIF’s Special Reserve set at not less than 5% aggregate retail deposit balances in member-banks. ADEQUACY OF SPECIAL RESERVE

Based on expert opinion (i.e. the adequacy of the reserve is established based on the of expert opinion on the DI’s “safety margin”) Based on Risk Analysis in establishing and revising the target reserve ratio of the special reserve using the following factors: the deposit coverage limit, the size of DI’s potential liabilities, the state of the banking sector and economy as a whole, the financial standing and probability of default of DIS member-banks. APPROACHES TO DETERMINE TARGET RESERVE RATIO OF SPECIAL RESERVE FOR PAYOUTS

ADEQUACY OF KDIF’S SPECIAL RESERVE

 Determination of data for expected losses (EL) :  The amount of liabilities of the KDIF for the payment of coverage (ЕAD)  Determination of the probability of default of member-banks using the DPS “BATA” (PD)  Estimation of expected share of losses of the KDIF ‘s fund in case of the bank’s liquidation (LGD)  Determination of data for unexpected losses (UL) using the statistical method of Monte Carlo. DETERMINATION OF DATA FOR EL AND UL :

ADEQUACY OF KDIF’S SPECIAL RESERVE

SPECIAL RESERVE AS OF JUNE 1, 2015  34 DIS member banks;  Full coverage of more than 99.7% of the total number of all insured deposits and more than 43,7% of the total amount of all insured deposits;  Special Reserve (with 70% of KDIF’s authorized capital) covers 28 small and medium- sized banks;  Separately Special Reserve (with 70% of KDIF’s authorized capital) covers all banks, except for two SIFIs. # Namethousand KZTin (%) 1SR without 70% of KDIF’s authorized capital ,615,66% 2SR with 70% of KDIF’s authorized capital ,618,59% 3SR according to the law % 4 SR 2015 according to the Methodology ,7% 5The aggregate coverage (obligations on individuals)

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