1. 1 Asociaţia Societăţilor Financiare - ALB România The Financial Companies Association – ALB Romania 8 th ALB National Conference Evolution of the consumer credit in Romania Bucharest, November 15 th, 2012

2. 2 The European market accounts for 24% of the global market  The global outstanding reached 5,597 billion € at the end of 2011, +4.5% compared with the end 2010 o 39% of the global outstanding is in North America: United States (32%), Canada (6%), Mexico (>1%) o Asia and the Middle East represents the second group with 29% of the global outstanding o Europe incl. Turkey and Russia is the third one with 1314 billion €, or 24% of the global outstanding Consumer Credit Outstanding per Region at the end of 2011 Sources: central banks, Asteres estimates

3. 3 Contrasting dynamics by regions  The overall increase of the global market (+4.5%) demonstrates a certain amount of momentum  However, this increase conceals a decoupling between emerging markets, with brisk growth, and developed markets (except North America) which are struggling or even in decline o South America achieved the highest growth o Asia and the Middle East (including Japan) posted a growth of 5%, but slowed down by Japan, the first market of the region. Excluding Japan, the growth of this region was 16% o The markets in North America and in Europe have reached maturity and present more moderate growth The market picked up in North America (+3.9% in 2011 following a fall of -1.7% in 2010) In Europe (+1.3%) the market was driven by emerging economies, outside EU, with growth of +41% in Russia and +34% in Turkey while the EU27 saw a fall of -2.9% Evolution 2011/2010 of Consumer Credit Outstanding per Region (%) Sources: Asteres estimates

4. 4 EU27 : the consumer credit outstanding unequally distributed Consumer Credit Outstanding at the end of 2011 (EU27) Romania : Outstanding 14,6 billion€ = 1,4% of EU27  The markets are unequally distributed: the top 5 markets account for 75% of the total, while representing 63% of the population  The European market can be split into 3 main groups : o Northern Europe: 56% of the outstanding (41% of population ) o Southern Europe: 37% of the outstanding (39% of population) o Eastern Europe : 7% of the outstanding (20% of population) Sources: central banks, Asteres estimates

5. 5  This was due to the degradation of the European financial and economic environment: o Low consumption in most of the countries (weak GDP growth, austerity measures in some countries) o High unemployment rate ( limiting access to the credit)  Only 7 out of 27countries posted a growth of the outstanding in 2011  Excluding Slovakia, all Central & Eastern countries fell  Romania was also adversely affected in 2011 : - 3.5% EU27: for the 2 nd consecutive year the consumer credit outstanding dropped by 2.9% in 2011 Sources: central banks, Asteres estimates

6. 6 A clear link between the consumer credit growth and the GDP growth Growth of the consumer credit outstanding versus of the GDP growth (2011/2010)  3 countries showing a decrease in outstanding: Romania (-3.5% yoy), Poland (-2.7% yoy) and Bulgaria (-2,2%yoy)  Some of the emerging countries have their credit consumer markets growing fast : Argentina (+50% yoy), Brazil(+20% yoy), Turkey (+32% yoy) and Russia (41% yoy)

7. 7 Credit to individuals (consumer and mortgage) compared to GDP Total credit outstanding to individuals ( consumer and mortgage) related to GDP in 2011  The total households indebtedness (consumer and mortgage) compared to GDP is low in Romania (17%)  Romania is among the countries with the lowest share of mortgage credit in total credit (35%). However it increased compared to 2010, when it was 31%

8. 8 Romania : high consumer credit penetration in % of GDP Consumer credit outstanding divided by GDP (2011)  Consumer credit penetration is important in Romania : 10.7% of GDP at the end of 2011 o However, it is decreasing from the 12.6% of GDP at the end of 2010  Average outstanding per inhabitant in Romania in 2011: 671€ (also decreasing from 704 € in 2010)

9. 9 A Romanian market particularly hit by the crisis in 2009, recovering progressively Consumer Credit Outstanding (banks + IFN) - June 2012:  65.2 bn. RON, decreasing for the fourth consecutive year:  One of the most shaken markets:  A very fast growth before the crisis: +82% and +34% in outstanding 2007/2006 and 2008/20067)  Then a significant drop in 2009: -60% in production  Slow recovery in 2010 (+10%) and in 2011 (+10%) in 2011  We expect the consumer credit production to recover the 2008 level only in 2013 or 2014  A small market at the European level: 1.4% of the outstanding  but important in the Central & Eastern region (#2 after Poland)

10. IFN results: New credit granted by Product Type S1-2012 10 Source: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA EUR 225.87 million

11. IFN results: New credit granted for Personal Consumption S1-2012 11 Source: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA EUR 206.51 million  Gradual recovery in terms of new credit granted for personal consumption in S1-2012: +3.7% vs. S1-2011 : o Revolving loans including credit cards: +18% S1-2012/S1-2011 o Direct personal loans: +4% S1-2012/S1-2011 o Credit at POS: -19% S1-2012/S1-2011 Direct Personal Loans Credit at Point of Sale Revolving credit including credit cards

12.  Globally, the cost of risk (coming from new provisions) of the Consumer Credit companies increased strongly in 2009, and decreased in 2010 and 2011, thanks to a renewed approach both on lenders and consumers sides.  Banking sector :  The weight of the foreign currency loans is very important, representing a threat for the households’ financial health (% of foreign currency loans among total consumer credit outstanding): o 30% in Dec. 2006  48 % in Dec. 2008  56 % in Dec. 2010  57% in Jun. 2012 12 Credit Risk Evolution Sources: National Bank of Romania o The rate of non-performing loans has increased from 11.9% of total loans in Dec. 2010 to 14.3% in Dec. 2011 finally reaching 16.8% in June 2012 (aggregate level: corporate + individuals loans) o But this is a stock: it increases because the non- performing loans remain a long time in the books. Only the flux (new non performing loans) trigger new provisions.

13. 13 Conclusion  After the difficult 2009-2010 period, the Romanian consumer credit market is progressively recovering : o In terms of volumes – but this will need time o In terms of credit risk : we believe the non performing loans will reach the peak in 2012, followed by a better trend starting with 2013  The regulatory environment is changing fast o Globally in a good direction: favoring transparency (ex : OUG 50 ) and responsibility of consumers and lenders (new NBR Regulation - foreign currency loans) o New regulations expected, especially from the EU (i.e. Shadow banking)  The approach of the lenders has been reviewed during the crisis. o Processes (incl. granting rules) o Transparency (ex : costs)  ALB Code of Conduct in place