1. Folie 1 / 13.06.2016 Risk Management at Raiffeisenbank a.d. Alexander Witte, Head of Risk Management Division, Raiffeisenbank a.d. Belgrade

2. Folie 2 / 13.06.2016 First bank established with 100% foreign capital in the country The Bank‘s shareholders: 90% Raiffeisen International 10% IFC, World Bank Group 1000 employees 30 branches and outlets Universal bank for 3 main client segments: Corporate Retail – Private individuals Retail – SMEs (small & medium enterprises and professionals) RAIFFEISENBANK a.d. Belgrade

3. Folie 3 / 13.06.2016 As at: 31.12.2004. Source: Raiffeisenbank a.d. Belgrade, IAS RAIFFEISENBANK a.d. Belgrade

4. Folie 4 / 13.06.2016 TOP 10 BANKS - by total assets As at: 31.03.2005. in million EUR Source: NBS; prepared by: Raiffeisenbank

5. Folie 5 / 13.06.2016 Foreign owned banks by total assets– 30 Sep 2003 (in mio EUR) Banking Industry Development Raiffeisenbank a.d., Belgrade

6. Folie 6 / 13.06.2016 TOP 10 BANKS - by loans to customers As at: 31.03.2005. in million EUR Source: NBS; prepared by: Raiffeisenbank

7. Folie 7 / 13.06.2016 Risk Management Mission To optimise the Bank’s risk/return position, i.e. to minimise risk at any targeted level of return to assist in maximising return at any given level of risk

8. Folie 8 / 13.06.2016 Prague (24 Branches) Warsaw (29 Branches) Vienna Budapest (35 Branches) Ljubljana Sofia (8 Branches) Bucharest (226 Branches/ Offices) Kiev Moscow (4 Branches) Zagreb (8 Branches) Bratislava (73 Branches) Raiffeisen CEE Network Sarajevo (8 Branches) Belgrade Banca Agricola S.A. (Mostar, 8 Branches)

9. Folie 9 / 13.06.2016 Risk Management Which risks do we manage? Credit risks –Corporate -SME -PI -FI -Sovereign Market risks –IR –FX Operational risks

10. Folie 10 / 13.06.2016 Who sets the framework? Risk Management Legislator Central Bank Management Market

11. Folie 11 / 13.06.2016 Risk Management Risk Management Structures CCALCO

12. Folie 12 / 13.06.2016 Credit Risk Management Risk Management Corporate SME Consumers Case-by-case approach Portfolio approach

13. Folie 13 / 13.06.2016 Risk Management: Corporate Corporate Credit Risk Guidelines set by HO: –Rating –Spreading system –Collateral valuation Guidelines set locally and approved by HO: –Credit Policy –Underwriting criteria –Portfolio composition

14. Folie 14 / 13.06.2016 Risk Management: Corporate Quantitative criteria –Interest cover –Ordinary income margin –EBITDA margin –Equity Ratio –Debt amortisation period Qualitative criteria –Industry –Business environment –Ownership –Management quality –Record with th Bank Developed and introduced by RZB Vienna Unified throughout the entire Raiffeisen system – both in Austria and the 15 CEE subsidiaries 10 rating grades Industry sensitive (manufacturing/trade) Based on portfolio history of RZB Basel II compliant Corporate Rating System

15. Folie 15 / 13.06.2016 Risk Management: Corporate Term Sheet approvalall limits Credit Committee Approvalall limits BoD approvallarge limits 3 Stages of Approval Vienna Belgrade

16. Folie 16 / 13.06.2016 Risk Management: SME “Corporate SMEs” –“Corporate/Portfolio approach” simplified spreadsheet based on the corporate model Locally developed rating system, validated by HO –Stronger reliance on qualitative information, track record Micro SMEs –Portfolio approach –Locally developed scoring system –Largely automated decision process based on scoring SME Risk Management

17. Folie 17 / 13.06.2016 Risk Management: Retail Pure portfolio approach Locally developed generic scorecard, validated by HO –Recently revised based on portfolio data –Diversified by product category (Mortgage Loans, Consumer loans…) Partially decentralised, scoring based automated approval process Centralised portfolio management New products require HO approval Consumer Lending

18. Folie 18 / 13.06.2016 Risk Management: Largely analysis and monitoring of counterparty risks FI rating system developed and introduced by HO Local banks rated locally Bank rating based on –Ownership –Management –Capitalisation –Asset quality –Profitability Sovereign risks largely limited to municipality finance FI and sovereign risk management

19. Folie 19 / 13.06.2016 Risk Management Main Risks monitored: –FX –IRG –Liquidity Limits set by HO upon local ALCO’s proposal Local monitoring Excesses reported to HO Market Risks

20. Folie 20 / 13.06.2016 Risk Management Perhaps the most underestimated risk in most banks The only losses suffered so far by Raiffeisenbank can be attributed to operational risk! Operational Risk is relevant to all areas of a Bank’s operations It is therefore a task for all departments of a bank Main areas to watch are –People –Systems –Processes Operational Risk Management

21. Folie 21 / 13.06.2016 Risk Management Groupwide project involving RZB with all its branches and subsidiaries Main objective: efficient, risk adjusted allocation of capital Project duration till 2007 Whatever the local regulations, Raiffeisenbank must become Basel II compliant due to its consolidation into RZB Group Arguably the most important ongoing project in Raiffeisenbank Main impact on –Systems –Processes –Reporting Basel II

22. Folie 22 / 13.06.2016 THANK YOU FOR YOUR ATTENTION!