Dr. Veroljub Dugalic Secretary General

Banking Sector of Serbia 2 REMEMBER THE PAST  "Old" foreign exchange savings  Hyperinflation  352,000,000,000,000% ( : )  exchange rate: 1 USD = dinars ( ) official: 1,775,998,648,615 "black market": 8,500,000,000,000  Pyramidal institutions

Banking Sector of Serbia 3

4 RESULT:  Loss of confidence in banks  Savings disappeared  Reform in the year 1993

Banking Sector of Serbia 5 THE NEW BEGINNING: YEAR 2001  Consolidation of banks  Extinction of the 4 major banks  Privatisation  Regulatory role of the National Bank of Serbia  Change of regulatory framework  International Standards for Financial Reporting – ISFR  Basel

Banking Sector of Serbia 6 SERBIAN BANKING TODAY BANKING SECTOR OF SERBIA Element Number of banks Total balance sheet size in mil. dinars 891,947377,264756,9681,161,9361,561,8221,769,368 Growth rate of the total balance sheet size in % %34.4%13.3% Balance sheet size in resp. to the GDP in % Capital in mil. dinars- 207,43386,302136,471215,422327,504419,021 Capital growth rate in % %52.0%27.9% Capital according to the balance sheet size Capital in mil EUR- 3,4741,2631,4702,7264,1334,879 Financial result in mil. dinars - 249,139- 1,1057,27216,72523,47334,956 in mil. dinars Source: NSB, ASB

Banking Sector of Serbia 7 SERBIAN BANKING TODAY BANKING SECTOR OF SERBIA Element Capital-3,4741,0331,2631,3651,4702,9724,4114,879 Financial result -4, Number of banks Number of employees 17,65318,78620,32323,46325,61528,04129,57732,220 Growth of employment in banks / Growth of employment in Serbia / in mil. EUR, % Source: ASB, Republic Institute for Statistics

Banking Sector of Serbia 8 REVENUE STRUCTURE OF BANKS IN THE YEAR 2008 PositionMane of positionAmount INet interest profit/loss95,935,387 PR. 1Interest income157,770,452 RA. 1Interest expenditure61,835,065 IINet profit/loss on fees and commission29,831,854 PR. 2Income from fees and commission38,953,658 RA 2.Fees and commission expenditure9,121,804 IIINet profit on fair value securities sale on BU62,872 IVNet profit on sale of securities available for sale681,151 VNet profit on sale of securities held to maturity46,434 VINet profit on sale of stake130,929 VIINet profit on sale of other placements541,660 VIIINet income from foreign exchange rates differences-53,739,212 IXIncome from dividends and participation985,353 XOther business revenues3,655,897 XINet income per direct writing off of placements and reserves-26,082,096 XIIStaff costs36,060,355 XIIIDepreciation expenses-7,477,341 XIVOther operating expenses43,650,850 XVNet income from the change in value of assets and liabilities69,213,129 XVIProfit/Loss from regular business operations34,957,092 XVIINet profit/loss from suspended business operations0 XVIIIProfit/loss before taxes34,957,092 Revenues from repo placements32.09 Profit (before taxes)34.96 in billion dinars in 000 dinars Source: NBS

Banking Sector of Serbia 9 FINANCIAL RESULT OF THE BANKING SECTOR OF SERBIA AND THE NBS Banking Sector of Serbia34.9 National Bank of Serbia58.1 in 2008, in billion dinars Source: NBS, ASB National Bank of Serbia Banking Sector of Serbia

10 SERBIAN BANKING TODAY INTEREST RATES Item No. Type of interest rate 2008 JanMarJunSepDec 1.Reference interest rate % %15.75 % % 2. Aggregate average weighted interest rate on the NBS securities for open market operations %13.50 %15.75 % % 3. Average weighted interest rate on total bank loans %14.59 %16.93 %17.35 %18.11 % 4. Average weighted passive interest rate on total bank deposits 4.33 %5.20 %6.14 %6.40 %7.32 % Annual level Source: NBS

Banking Sector of Serbia 11 INTEREST RATE ELEMENTS – Presentation of elements covered by the price of one housing loan financed from the external sources 4.21% 2.89% 5.02% 1.31% 4.83% Administrative expenses (Costs of processing and of the distribution network) Cost of provisioning for the client risk Costs of required reserves (45% earmarked resources) 6m EURIBOR CDS (country risk) INTEREST RATE ELEMENTS on Total interest rate: 18.26%

Banking Sector of Serbia 12 SERBIA CREDIT RATING COUNTRY RISK  Serbia credit rating BB-  Euro money (March 2009): According to its credit rating Serbia occupies the 122nd place out of the total of 186 countries, with points out of a maximum of 100 points  economic performances 6.80 (max 25)  political risk (max 25)  Institutional Investor (March 2009): According to its credit rating Serbia occupies the 84th place out of the total of 177 countries (score of 40.7 points out of max 100)

Banking Sector of Serbia 13 SAVINGS, DEPOSITS, LOANS Household savings113,861193,224266,044391,548423,447 2Retail lending64,183124,651195,453295,005380,693 3Difference (2-1)-49,678-68,573-70,044-96,543-42,754 4Corporate time deposits67,40174,757108,279198,510194,159 5Corporate lending197,022281,855421,181570,444852,253 6Difference (5-4)129,621207,098312,902371,934658,094 7 Difference of total lending and total deposits (3+6) 79,943138,525242,858275,391615,340 in mil. dinars Source: NBS, ASB

Banking Sector of Serbia 14 GDP AND LENDING GDP Loans * GDP (-6) Loans Growth in % * Estimated value Source: NBS, ASB

Banking Sector of Serbia 15 FINANCIAL INTERMEDIATION AND THE GDP * Financial intermediation in proportion with the GDP 3.14%3.12%3.13%3.30%3.81%3.98%4.30% Changes in financial intermdiation -7.4%11.9%12.2%15.6%10.2%5.9% Changes in the GDP (in market prices) -8.3%5.6%5.2%6.9%5.4%-3.5% Source: Republic Institute for Statistics * In the first quater of 2009, estimated value

Banking Sector of Serbia 16 GOVERNMENT – THE WORST DEBTOR The amount of outstanding debt per loans in default Debt of public companies , in billion din.

Banking Sector of Serbia 17 RELEVANT INDICATORS OF THE FINANCIAL POSITION AND STABILITY OF THE BANKING SECTOR IN SERBIA (on )

Banking Sector of Serbia 18 Item No.ELEMENTin billion dinars and in % 1.TOTAL ASSETS 1, TOTAL CAPITAL CAPITAL ADEQUACY RATIO (prescribed minimum 12%) 23.1 % 4.SUM OF LARGE EXPOSURES (maximum allowed 400%) 57.1 % 5.FOREIGN EXCHANGE RISK INDICATOR (maximum prescribed 30%) 9.4 % 6.LIQUIDITY RATIO average 2 Item No.BANK DEPOSITS WITH THE NBSin billion dinars 1. REQUIRED RESERVES - in dinars - foreign exchange deposits of banks NBS LIABILITIES PER REPO TRANSACTONS NBS SAVINGS CERTIFICATES 0.3 TOTAL Item No.OTHER RELEVANT DATAin billion dinars and in % 1.HOUSEHOLDS TIME DEPOSITS IN DINARS HOUSEHOLDS TIME DEPOSITS IN FOREIGN CURRENCY TOTAL STRUCTURE OF TOXIC ASSETS 70.5 % cat. A and B 4.FINANCIAL RESULT 34.9 Source: NBS

Banking Sector of Serbia 19 COMPARATIVE DATA

Banking Sector of Serbia 20 REQUIRED RESERVES OF BANKS ElementSerbiaCroatiaB&HMacedoniaMontenegro Required reserves rate Basis in dinars - differentiated rate (0%,5%, 10%, 45%) Basis in foreign exchange - differentiated rate (0%, 20%, 40%, 45%,100%) 14% uniform rate for entire basis 14% on deposits and borrowed funds up to 1 year 7% on deposits and borrowed funds over 1 year 10% - basis in denars 20% - basis in denars with the currency clause 11,5% - basis in foreign exchange 2,5% - on savings deposits 10% uniform rate on entire basis Source: Central Banks Required reserves387.6 Banks capital , in billion dinars Serbia:

Banking Sector of Serbia 21 REFERENCE INTEREST RATE OF CENTRAL BANKS At the annual level Eurozone Hungary Romania Slovenia Turkey United Kingdom USA Japan Serbia Source: Eurostat, NBS

Banking Sector of Serbia 22 REFERENCE INTEREST RATE OF CENTRAL BANKS (year 2008) At the annual level Source: Eurostat, NBS

Banking Sector of Serbia 23 CAPITAL ADEQUACY Albania B&H Bulgaria Croatia Hungary Macedonia Montenegro Romania Turkey Greece Serbia Source: IMF, Global Financial Stability Report, April 2009

Banking Sector of Serbia 24 CAPITAL ADEQUACY (year 2008) Source: IMF, Global Financial Stability Report, April 2009

Banking Sector of Serbia 25 RETURN ON EQUITY (ROE) in % Albania Bulgaria Croatia Hungary Macedonia Romania Turkey Greece Serbia * Source: IMF, Global Financial Stability Report, April 2009 * ASB data, before taxes Average infl. rate in Serbia

Banking Sector of Serbia 26 RETURN ON EQUITY (ROE) (year 2008) in % Source: IMF, Global Financial Stability Report, April 2009 * ASB data, before taxes

Banking Sector of Serbia 27 AVERAGE INFLATION RATE IN % At the annual level Eurozone Germany Greece France Italy Austria Slovenia USA Japan Serbia Source: Eurostat

Banking Sector of Serbia 28 AVERAGE INFLATION RATE (year 2008) in % At the annual level Source: Eurostat