2009

Presentation

Delta Bank- No. 1 in consumer finance in Ukraine

Real 2Q2009 Gross Domestic Product (GDP) reached only 82%* of theyear‟s earlier figure of the same period

9M2009 Consumer Price Index reached 109,1%*

Real Disposable Income melted by 8,3%*

Real Salary Index in August 2009 constituted 88,7% if compared to August2008 *

9M2009 Retail Trade Turnover reached UAH 319 billions which was 83,8%from the result of 9M2008*

FX rate jumped from 5.05 at the beginning of „08 to over 7.8 UAH/USD YE08

Macroeconomic Outlook

2

2005 2006 2007 2008 2009 2010

Population, mn 3 46.90 46.60 46.40 46.10 e 45.90 f 45.70 f

Nominal GDP, US$bn 3 85.70 107.60 141.90 183.10 101.90 f 117.60 f

Nominal GDP, UAHbn 3 438.7 543.5 716.3 949.9 855.8 f 999.3 f

GDP per capita, US$ 4 1826 2307 3059 3969 e 2219 f 2571 f

Real GDP growth, % change y-o-y 3 2.7 7.3 7.6 2.1 -14.7 f 1.3 f

Budget balance, UAHbn 3 -7.8 -3.7 -7.7 -14.2 -77.9 f -69.9 f

Budget balance, % of GDP 3 -1.8 -0.7 -1.1 -1.5 -9.1 f -7.0 f

Consumer prices, % y-o-y, eop 3 10.3 11.6 16.6 22.3 15.0 f 16.0 f

Central Bank policy rate, % 1,5 9.50 8.50 9.00 12.00 9.50 f 9.00 f

Exchange rate UAH/US$, eop 6 5.05 5.05 5.05 7.80 9.00 f 8.00 f

Imports, US$bn 7 36.16 44.14 60.41 84.65 60.95 f 64.00 f

Exports, US$bn 7 35.02 38.95 49.84 67.71 55.86 f 59.49 f

Trade balance, US$bn 7 -1.14 -5.19 -10.57 -16.94 -5.09 f -4.50 f

Current account, US$bn 7 2.53 -1.62 -5.92 -12.94 e 0.36 f 1.67 f

Current account, % of GDP 8 2.95 -1.50 -4.17 -7.07 e 0.36 f 1.42 f

Foreign reserves ex gold, US$bn 7 19.11 21.90 31.79 31.54 25.00 f 23.00 f

Import cover, months g&s 7 5.2 4.9 5.3 3.8 e 4.1 f 3.5 f

Total external debt stock, US$mn 2,7 39619.0 54512.0 82663.0 103230.0 85524.0 f 90377.0 f

Total external debt stock, % of GDP 8 46.24 50.65 58.27 56.37 e 83.95 f 76.88 f

Notes:

e BMI estimates.

f BMI forecasts.

1 Discount Rate;

2 JEDH;

Sources:

3 State Statistics

Committee.

4 State Statisitics

Committee;

5 NBU/BMI;

6 BMI;

7 National Bank of Ukraine;

8 National Bank of

Ukraine/BMI Calculation.

UKRAINE - MACROECONOMIC FORECASTS**

Factors influencing consumer lending market

* Source: Ukraine State Statistics Committee

** Source: Business Monitor International

143,00%

109,40%

142,50%

106,10%

91,70%

103,10%

0,00%

20,00%

40,00%

60,00%

80,00%

100,00%

120,00%

140,00%

160,00%

Nominal Income Actual Disposable Income

Expenditures

2Q2008

2Q2009

Ukrainian Population Income and Expenditures(compared to the corresponding period of the previous year)

SUK001BJ1 v2

Consumer Lending

3

Key players, September 2009*

Privat Bank; 36%

Ukrsibbank; 10%

Delta Bank; 54%

Platinum Bank; 1%

Estimated consumer finance market volume in September 2009 was c. UAH115 mio. - down 4,5 times from UAH 510 mio of September 2008 *

Market shares: Delta Bank– 54%, PrivatBank– 36%, Ukrsibbank – 10%,Platinum Bank – 1%*

Significant change in CONSUMER‘S BEHAVIOR

23%** contraction in number of active credit cards during 09M09

As a reference to nine month of YE 2008 number of credit card operationsissued by Ukrainian banks during nine month of YE2009 is down by 9%, aswell as in amount of a single operation – 5%**

Average loan amount in Sep09 was UAH 2 400* compared to UAH 3 190* ayear earlier

Average maturity of a loan:

September 2009 - 7 month,

September 2008 – 12 month *

Credit Cards not offered to new clients*

Services finance ceased

Cash lending – not offered

Purpose-oriented lending is active

0% lending ceased

Market’s key players*

2008 2009

Delta Bank

PrivatBank

Alfa-Bank

Eurocreditbank

Pravex-Bank

ProstoFinance

Home Credit Bank

VAB Bank

Renissance Capital

Russian Standard

FirstCredit Union.

Delta Bank;

PrivatBank;

UkrsibBank;

Platinum Bank.

Market changes

* Source: Delta Bank data

** Source: NBU reporting

SUK001BJ1 v2

Consumer Focused Model – Changes Provoked by the Environment

Sales Finance

POS loans for purchase of consumer

goods

Cash

Loans

Non-purpose installment

loans

Credit Cards

Revolving Credit Cards

Revolving private label credit cards

Car Loans

Used Cars

New cars

Personal Loans

Non-purpose loans issued at

bank offices

Home Equity Loans

Consumer Credit

Main Sales Channels

Channels

Products

Brokers

Credit Card

Deposit Card

Other Sales

Channels:

POSs in

Shops / Partners

Credit Card

Deposit Card

Paper Loans

Cash Loan

Corporate Sales Branches

Deposits

Credit Card

Deposit Card

Cash

Auto

Credit Card

Deposit Card

UkrPost

Internet banking

Telemarketing

4

Only to loyal

customers

Only to loyal

customers

Only to loyal

customersOnly to debit

cards +

overdrafts

Only to loyal

customers

SUK001BJ1 v2

Consumer Lending – Delta’s Dynamics

5

Effective

business

model allows

to stay

profitable

even in

difficult

market

conditions

Increasing number of loan applications with simultaneous reduction of relative level of rejections confirm a positive

dynamics in the consumer finance business

POS loans issuance dynamics POS loan application dynamics, rejection levels

126,8

63,8

19,5 17,310,2 14,4

16,714,7 26,2

43,355,4

62,3 61,0

0,0

20,0

40,0

60,0

80,0

100,0

120,0

140,0

160,0

180,0

200,0

Sep-0

8

Oct-0

8

Nov-0

8

Dec-0

8

Jan-0

9

Fe

b-0

9

Mar-0

9

Apr-0

9

May-0

9

Jun-0

9

Jul-0

9

Aug-0

9

Sep-0

9

Issuance, mio UAH

Issuance, Fact, mio UAH

38,3%

54,5%

59,7%61,9%

60,1%

55,4%55,2%58,9%

53,8%

45,1%45,6%46,4%48,7%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

Sep-0

8

Oct-0

8

Nov-0

8

Dec-0

8

Jan-0

9

Fe

b-0

9

Mar-0

9

Apr-0

9

May-0

9

Jun-0

9

Jul-0

9

Aug-0

9

Sep-0

9

Number of Applications Approved Number of Applications Rejected

Rejection Ratio

15,3 15,1 14,0 14,0 13,6 13,1 12,9 12,9 12,9 12,8

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

1 2 3 4 5 6 7 8 9 10

%

Loan Portfolio Returns

Cost of Funding

Net Loan Portfolio Margin

0-9 Months

Favorable debt and market

conditions

Emphasis on unique strategy

and growth prospects

Lack of similar financial sector

issuers from Ukraine

Aggressive pricing and short-

term tenor

Luck

10-21 Months

Building credit history

Issue of debut IFRS audited

statements

Started preparation towards

an international and a local

credit rating

Attracting foreign funding

22-33 Months

Launch debut retail deposit

program

Increase scale of retail

deposit campaign through

extensive POS outlets

Launch debut SME deposit

program

Launch deposit program for

local insurers and assets

managers

2006 2007 2008

Wholesale Funding

Approach

Diversification of

Wholesale

Sources

BuildingLocal

Funding

Franchise

Strategy - Funding

No. 1 local bond issuer

in 2006

In November 2006, Delta

pioneered consumer loan

ABS in Ukraine

11 bond issues in 2006-

2007 for the total amount

of nearly $400m

Successfully repaid all

2006 bonds

Balanced liabilities

structure

UAH 2,314 billion retail

deposits collected in 2008

Successfully repaid all

2006-2007 bonds

6

80%

0%11%

9%2006YEForeign Debt

Local Debt

Corporate Deposits

Retail Deposits

51%

12%

28%

10%2007YE 4%

38%

58%

2008YE

34-45 Months

Full-scale retail deposit

program

Reliance on domestic

funding

Repayment of all foreign

funding

Corporate products (salary,

cash settlement etc.)

2009

Using Local

Funding

Franchise

$390 Mio foreign

funding fully repaid

Maintaining a high level

of deposit prolongation

0% 23%

23%

54%

9M2009

SUK001BJ1 v2

Local Funding Base

7

Average Maturity Deposit Retention Ratio

0,98

0,49

0,590,64

0,42

0,35

0,600,54

0,50

0,130,17

0,30

0,41

0,56

0,39

0,53

0,71

0,41

0,72

0,610,61

0,71

0,00

0,20

0,40

0,60

0,80

1,00

1,20

Jan-0

8

Feb-0

8

Mar-

08

Apr-

08

May-0

8

Jun-0

8

Jul-08

Aug-0

8

Sep-0

8

Oct-

08

Nov-0

8

Dec-0

8

Jan-0

9

Feb-0

9

Mar-

09

Apr-

09

May-0

9

Jun-0

9

Jul-09

Aug-0

9

Sep-0

9

Oct-

09

Deposit Portfolio Development

0,00 2,00 4,00 6,00 8,00

Jan-09

Feb-09

Mar-09

Apr-09

May-09

Jun-09

Jul-09

Aug-09

Sep-09

Oct-09

Months

While the

banking

system in

whole shown a

decline in

retail deposits

volume, Delta

Bank

continued to

rise its

portfolio

0,00

500,00

1 000,00

1 500,00

2 000,00

2 500,00

0,00

50,00

100,00

150,00

200,00

250,00

UA

H,

Millio

ns

UA

H,

Billio

ns

All Banks, left scale

Delta Bank Deposits, right scale

SUK001BJ1 v2

Superior Risk management

8

Under normal market conditions Delta Bank used to issue UAH 150-200 mio of consumer loans per month

Operating scoring model (second generation), loan issuance policy oriented for the volume of issuance (rules for loyalty, moderate

credit load, etc.)

Automatic decision making (“white” zone) allowed to assess an application and to make a loan issuance decision within 20

minutes and to review 480 thousand of applications per month

Delta Bank’s risk management function is arguably one of the most sophisticated among Ukrainian banks

Modeling, Prognosis and Actions

Detailed stress testing of the loan portfolio and the future issuances quality exposed the vulnerabilities of the loan issuance policy

under the circumstances of dramatic devaluation and loss of income by Ukrainian population (unemployment, decline of income, etc.)

Based on the results of modeling, a number of decisions was made:

Reduction of the credit exposure per one customer (reduction of the maximum loan amount, rising the personal income

requirements, etc.)

Limiting the maximum loan maturity to 12 months

Rejecting all loan applications made by individuals employed in the most risky sectors of economy (construction, production,

etc.)

Chosing the loyal clients and to offer them a selection of alternative products and to reduce the overall maturity of the portfolio

to increase the portfolio turnover

Abolition of the “white” (automatically approved) zone (all the applications are now to be reviewed individually), some loyalty

rules, etc.

Such decisions reduced the volume of issuances to UAH 15-20 mio per month, reduced the number of loan applications passed to the

credit expertise department 10 times, allowed to build the high-quality portfolio during crisis times and to continue the loan issuance

In the beginning of June a new, more sophisticated and validated on the crisis-population, scoring model (third generation) was

implemented, the loan issuance policy was amended as to the maximum loan amount and other loan parameters. Such changes

made it possible to increase the loan issuance volume to UAH 60-70 mio per month

Loan Issuance in the Pre-Crisis Environment

Even in the most difficult time period

Delta Bank never suspended its lending

SUK001BJ1 v2

Superior Risk management (Cont’d)

9

Portfolio Delinquency Ratio,

% of issued loans, evaluated on the date

Source: Internal MIS

Continuous improvement of loan portfolio quality made it possible for Delta to achieve a volume

of loans delinquent for 90+ days of only 2,51% of the total issuance amount

Operating scoring card

(2nd generation)

Expected decline of quality of

issuance related to dramatic

devaluation and unemployment

Analysis of the major crisis threats,

implementation of amendments to the loan

issuance policy, reduction of the issuance volume

Implementation of the new scoring card

(3rd generation), rising the number of

issuances

Opportunities we see for Delta

Our Response to the Changed Environment

10

• Go to a viable corporate banking with a primary focus on cash management services with limited credit exposure

• Add and proactively sell (cross-sell to our 3.5 mio customer base) transactional banking services on the top of our strong presence in retail credit

We will become a more universal bank, i.e.:

• Given 3.5mio customer base we lend only to “the best” clients (cross-sell, up-sell facilities)

• We go to Salary Projects niche: we provide credit card loans to employees of survived companies which lost their servicing banks due to insolvency/state bail-out during crisis

• POS loans continue to show very good credit quality (0,5% on 1st default)

We are more cautious to risk in retail:

• We are looking around for potential M&A targets in Ukraine that would provide scale to Delta‟s position in a post-crisis life

We look beyond crisis:

Source: NBU Data, Delta Bank`s Management Accounting

Delta Bank Performance Indicators

Total customer base

Net Margin

CAR

Cash In Hand and

Highly Liquid Assets

UAH 2,09 bn

Equity

UAH 1,9 bn

Key Performance Indicators as of September 30, 2009

Consumer Loan

Portfolio

12,41%

Net Assets UAH 6,1 bn 3,5 mio

7,03%

UAH 2,3 bn

Net Profit

11,43%

UAH 1,07 bn

RoA

11

Credit Card Loan

Portfolio

Retail Deposit

Portfolio

RoE

0,36%

3,52%

UAH 510 mio

UAH 7,9 mio

NPL

Number of

Employees

3,107

Contact information

Mr. Vitaliy Masyura,

First Deputy Chairman of the Board of

Directors

Ph. 38 044 391-51-00

Fax 38 044 391-51-12

E-mail: V.Masyura@deltabank.com.ua

12

The information contained herein has been obtained from sources believed by Delta

Bank („Delta‟) to be reliable.

Whilst all reasonable care has been taken to ensure that the facts stated herein are

accurate and that the opinions and expectations contained herein are fair and

reasonable, no representation or warranty, express or implied, is made by Delta or

any of its respective agents or affiliates with respect to the fairness, completeness,

correctness, reasonableness or accuracy of the information, opinions and

expectations contained herein.

Any opinion, estimate or projection in this presentation constitutes an opinion,

estimate or projection as of the date of this presentation, and there can be no

assurance that the future financial or other performance of Delta will be consistent

with any such opinion, estimate or projection.

The information in this presentation is subject to change without notice, it may be

incomplete or condensed, and it may not contain all material information concerning

Delta.

Disclaimer

13