1. SERBIA, IT’S TIME TO INVEST! Christoph Pircher Head of Corporate Relationship Management Department II Raiffeisen banka a.d. Begrade, Serbia

2. 1. SERBIA AT A GLANCE

3. ABOUT SERBIA ABOUT SERBIA *Source: www.siepa.sr.gov.yu Total number of inhabitants (last official census taken in 2002) Serbia - 7.498.001 Belgrade - 1.576.124 Individual income (2006 statistics): Serbia – gross 387 EUR, net 265 EUR Belgrade – gross 487 EUR, net 337 EUR Unemployment rate in Belgrade (2006): 18.0% Unemployment rate in Serbia (2006): 28%

4. MARKET ACCESS Serbia is in the center of CEFTA – duty free access to 30 million people market Duty free exports to the EU FTA with Russian Federation - market of 150 mil. people. Limited number of exceptions: complete vehicles, confectionery, some alcoholic beverages Customs operations have been improved by electronic database, electronic declarations, and imports & exports time drastically shortened Source: SIEPA

5. COMPETITIVE LABOR COST 2006 Average Gross Salary: 387 EUR 2006 Average Net Salary: 265 EUR Source: SIEPA

6. First phase Privatization of cement factories which took place in 2001 onwards: Holcim bought Fabrika Cementa Novi Popovac Titan bougth Fabrika Cementa Kosjeric Lafarge bought Fabrika Cementa Beocin Second phase Privatization of breweries and tobacco industry, major deals: Philip Morris (Altria) bought DIN BAT bought DIV Carlsberg, INBEV and Efes bought major breweries PRIVATIZATION

7. FOREIGN DIRECT INVESTMENTS (in Mill. Of US $) MACROECONOMIC DATA

8. MAJOR FOREIGN INVESTORS

9. 2. BANKING SECTOR IN SERBIA

10. BANKING AND ECONOMY CONCLUSION: Due to the closure of large banks and restructuring process undergoing in state-owned banks in Serbia the banks asstets‘ participation in Serbian GDP has declined. Nevertheless, result of new entrants into Serbian banking sector, this ratio is expected to increase. BANKS ASSETS - Share in GDP

11. CONCLUSION: Evident decrease of this indicator is a result of assets restructuring of state-owned banks (i.e. Write-offs of bad loans). Following the resructuring of banking sector and presence of foreign banks, participation of total credits in GDP has begun to increase TOTAL CREDITS - Share in GDP BANKING AND ECONOMY

12. CONCLUSION: Retail market segment is the most dynamic in term of growth rates. The large increase is primarily generated through much larger supply of retail loans in recent years. There is still enough scope for further growth. RETAIL LOANS - Share in GDP BANKING AND ECONOMY

13. DEVELOPMENT OF SERBIAN BANKING SEKTOR in 2007 Number of banks There are 36 banks in the market as of 30/06/07 (vs. 37 as of 31/12/2006) New players Hungarian OTP Bank overtook 3 banks (Niška, Kulska and Zepter Banka). Belgien KBC Group overtooka A Bank. The first American bank in Serbia, Opportunity Banka, obtained an operating licence in 2007. Competition As compared to the neighbouring countries, competition intensity in Serbia is rather high. Moreover, the process of ownership concentration is carried out on ongoing basis. Concentration level in Serbia banking sector over 5% of assets 2% - 5% of assetsBelow 2% of assets Number of banks

14. Share of foreign-owned banks in the total assets in Serbia In mid-2007 drop of the share of foreign-owned banks was recorded for the first time since 2004, which primarily results from foreign borrowing and capital increase by local banks. Share of 5 biggest banks in the total assets in Serbia Furthermore, due to the increased competition (and cross-border financing) as well as quality market dispersion, share of 5 biggest banks in the aggregate assets still shows a decreasing trend. Source: Raiffeisen bank DEVELOPMENT OF SERBIAN BANKING SEKTOR in 2007

15. In 2006 RSD nominal appreciation towards EUR was 7.66% In 2007 RSD deppreciated against EUR nominally for 0.90% (31.12.2006-17.09.2007) It is expected that the EUR/RSD would be around 79 level at the end March 2009 2007 CPI was 11.9% BANKING AND ECONOMY EUR/RSD ANALYSIS AND FORECAST Trend EUR/RSD History 30.03.2007.30.06.2007.19.05.0830.06.200831.12.2008 81.574279.025483.0881.0080.00

16. Reduction in the reference interest rate on dinars Since September 2006, reference interest rate on dinars has been reduced from 18% to 9.75%, which has brought about the following: more attractive overdraft facility due to significantly lower interest rates through increased stability of dinar, banks have started to offer more massively dinar loans without foreign currency clause MONETARY POLICY and EFFECTS ON INTEREST RATES Development of reference i.r. on dinars (2006 – 2007) Izvor: NBS 16,06% 15,25% 19,13% 18,00%

17. Growth of EURIBOR EURIBOR has recorded a significant growth since early 2006 (by approx. 2% ), which has brought about the following effect: Higher interest rates on foreign currency and dinar loans with FCY Clause Growth of EURIBOR (2006 – 2007) Source: Reuters MONETARY POLICY and EFFECTS ON INTEREST RATES

18. 3. MACROECONOMIC OVERVIEW

19. REAL GDP GROWTH - in SERBIA (% yoy) the economic activity continues to “deliver” strong numbers. GDP growth yoy in H1/07 was 7.6% with financial intermediation and trade contributing close to 20%. due to the estimated decrease in the agricultural production (8%-10% yoy) forecast for the GDP growth in 2007 is revised to the level of 6.5%.

20. REAL GDP GROWTH – comparision to other countries

21. 4. RAIFFEISEN BANK IN SERBIA

22. Established in 2001 as the 1 st bank with 100% foreign capital More than 500.000 clients 91 branches Universal bank with 4 business segments: Corporate Banking Retail Banking – Private individuals Retail Banking – SMEs (small & micro enterprises and professionals) Treasury & Investment Banking Raiffeisen Leasing d.o.o. established in 2003 Raiffeisen Future a.d. established in 2006 Raiffeisen Invest a.d. established in 2007 RAIFFEISEN BANKA A.D.

23. As at: 30.06.2007. In million EUR Source: Raiffeisen banka a.d. * the amount does not include RZB portfolio * LOAN PORTFOLIO INCREASE of Raiffeisen Int. (RBRS+RIEEF) in Serbia

24. RIEEF – new source of financing from abroad Thanks to the possibility of providing direct financing from abroad, Raiffeisen Group has managed to offer its clients very attractive and highly competitive interest rates in the market. Growth of RBRS and RIEEF lending in Serbia in millions of euros Source: Raiffeisen banka

25. Market position and market share * RI (RBRS+RIHO) u Srbiji Market position in Serbia Total assets1* Total loans1* As at: 30.09.2007. Prepared by: Raiffeisen banka Raiffeisen banka market share2007 Corporate (L, M, S) Gross loans** Deposits13.9% Consumer Gross loans12.6% Deposits15.4% Total assets** Source: “Statistički bilten” As at: 30.09.2007. ** due to cross border loans of certain banks – non accountable

26. TOP 15 banks by total (gross) loans As at: 30.09.2007. In EUR million Source: NBS Prepared by: Raiffeisen banka RIHO * * Since there are no official statistics for cross border loans - no available data for other banks here

27. TOP 15 banks by total equity * * * In Q4 2007 a significant capital increase of EUR 90 million was realized As at: 30.09.2007. In EUR million Source: NBS Prepared by: Raiffeisen banka

28. Started with operations in July 2001. godine CORPORATE BANKING DIVISION Leading bank for corporates: 64 of top100 domestic companies are banking with Raiffeisen banka 79 of top100 foreign investors are banking with Raiffeisen banka * Raiffeisen International in Serbia (RBRS + RIEEF)

29. started with operations in January 2003. one of leading banks in terms of loan portfolio focus in 2008 will be on: increase in the scope of cooperation with micro clients via intensified loan activities, increase of client deposit base, further development of long-term relations with existing clients service quality improvement, new products introduction and even larger process efficiency aimed at client’s satisfaction increase SE&M – Small & Micro Enterprises and Professionals 31-Dec-0531-Dec-0631-Dec-07 Number of clients11,01117,57823,956 Loan portfolio (in EUR million)100.9144.5 * 212.1 * Deposits (in EUR million)33.349.272.4 *Raiffeisen International (RBRS + RIHO) in Serbia

30. TREASURY & INVESTMENT BANKING DIVISION

31. Founded in February 2003 and started with full-fledged operations in August 2003 Shareholders: 50% Raiffeisen banka a.d. 50% Raiffeisen-Leasing International GmbH, Vienna Serving all three main client segments: corporates, private individuals and SME Branches: Belgrade, Novi Sad, Cacak, Nis, Subotica and Kragujevac Market Share: 22.82% 31-Dec-0431-Dec-05 31-Dec-06 Number of signed contracts4,0877,497 10,942 Portfolio (in EUR mio)79,2137,2 156,0 RAIFFEISEN LEASING D.O.O.

32. Branch development – 91 branches in 8 regions (as at: 31.Dec. 2007) 1.Region Belgrade I Beograd (19) Pančevo Grocka Požarevac Smederevo Vršac 2.Region Belgrade II Beograd (19) Obrenovac Stara Pazova Lazarevac 3.Region North Vojvodina Subotica Sombor Kikinda Bačka Topola Senta 4.Region South Vojvodina Novi Sad (5) Bačka Palanka Zrenjanin Vrbas Inđija 125 branches by 2010. 5.Region Central and West Serbia Šabac Ruma Sremska Mitrovica Loznica Valjevo 6.Region Šumadija Kragujevac (2) Kruševac Jagodina Aranđelovac Paraćin 7.Region South-West Srbija Čačak (3) Novi Pazar Kraljevo Užice Ivanjica Gornji Milanovac Prijepolje 8.Region South Serbia Niš (3) Pirot Vranje Leskovac Zaječar Bor

33. 5. INVESTMENT OPPORTUNITIES – REAL ESTATE

34. OFFICE MARKET – General perspective Serbian office market is mainly concentrated in the capital Belgrade and is split into 2 areas: 1.Old Belgrade (“downtown”) 2.New Belgrade The majority of development activity is focused on New Belgrade Prime office market (Class A) enjoys high pace of growth In comparison to other European cities alike, Belgrade Class A office stock is relatively low: Source: Wikipedia *Thereof 100.000 m2 is under construction

35. OFFICE MARKET – Market Demand & conditions Demand for rental space: Belgrade office market is characterized by relatively modest demand up to now: 1.Market demand amounted to approximately 25.000 sqm in 2006 2.Number of international occupiers looking to get a foothold on the Serbian market Price: Prime A class rents’ net prices are similar to comparable eastern European cities such as Bucharest/Warsaw and amount to: EUR 21/sqm/month in Old Belgrade EUR 19/sqm/month in New Belgrade Following factors influence price the most: Quality of works, availability of parking and others Size of leasable area Duration of lease agreement (longer the lease period = lower the rent) Vacancy: The amount of new development in New Belgrade is starting to undermine rental levels as landlords compete for tenants Vacancy is around 9% and is likely to increase further with new developments

36. RETAIL MARKET – SHOPPING CENTRES / MALLS Compared to European standards, retail market in Serbia is in its early stage of development: It offers an excellent market potential, which is expected to grow up to 300,000 sqm in 2010 Retail sector is still fragmented and still dominated by local players, which is usual for a market evolving from a controlled economy to a free market Number of retail projects is currently underway (among the largest are Delta City; MPC Shopping mall Ušće; Idea, Verano- Vero etc.) Recent trend: new supermarkets around the city.

37. RETAIL MARKET – SHOPPING CENTRES / MALLS Rental Prices Prime rents in Belgrade are some of the lowest in Eastern European capital cities: There is no market evidence for supermarket, hypermarket lease transactions; however the price in range of EUR 7-11 per sqm should be treated as reliable

38. The residential inventory in Belgrade has shown a steadily increasing trend over the past few years. Some new residential development is happening in Novi Sad and Niš. Attractive Locations The New Belgrade area is becoming increasingly popular (cca. 800 new flats have been constructed within the last two years and cca 1.800 units are under construction). Other attractive locations include the city centre, Čukarica, Zvezdara, Dedinje. Vračar, Senjak, Banovo Brdo and Voždovac New residential developments are mostly built to a medium standard due to purchasing power of citizens. RESIDENTIAL PROPERTY MARKET

39. Sale prices ranges: Up to EUR 1.300/sqm in the city periphery EUR 2.000 – EUR 2.500/sqm in the city centre, Vračar, Dedinje, Senjak EUR 1.300 – EUR 1.900/sqm in New Belgrade Average rents for good-quality premises in prime locations are between EUR 10/sqm/month -EUR 18/sqm/month. RESIDENTIAL PROPERTY MARKET

40. INDUSTRIAL PROPERTY MARKET / WAREHOUSES The underdeveloped industrial market is rapidly changing as requirements increase for distribution warehouses: Needed by foreign investors attracted to Serbian market due to cheaper labour and favourable tax regime To serve the expanding retail and service sectors Also driven by increase market activity of third-party logistics providers Modern logistics developments are mostly owner-occupied. Distribution warehouses and light-industrial properties are located: Along important traffic links: in Krnješevci and Šimanovci districts In the Port of Belgrade Outside of Belgrade, industrial and technology parks have been developed in the regional cities - Novi Sad, Vršac and Niš The total stock of modern warehousing in the greater Belgrade area is estimated to be less than 90.000 sqm (mostly built in last three years as owner-occupied projects)

41. INDUSTRIAL PROPERTY MARKET – Market Demand Supply: Market is undersupplied and attracts attention of both domestic and foreign developers. Difficulties in finding a site large enough and security of land ownership are the major obstacles for market penetration of international developers. Price: Industrial rents can reach EUR 8/sqm/month and more for prime modern space. Rents for old non-refurbished warehouses, mainly located in Belgrade’s port, range between EUR 3 and EUR 5 /sqm/month Vacancy: Currently close to zero as majority is owner occupied. Expected to increase as large amount of old stock may become empty as tenants upgrade their facilities / to be converted into residential or office space

42. Political environment should get more stable Interesting market in terms of population and growth rates Partners you need are already here First wave of Greenfield investments – still industries which are underserved In Belgrade good human resources available – very similar culture to ours WHY TO INVEST NOW?

43. THANK YOU FOR YOUR ATTENTION! SERBIA, IT’S TIME TO INVEST!