Poland – the EU front runner in terms of growth performance BRE - BRE Bank – best – in - class financial services’ provider in Poland

Przemysław Gdański BRE Bank Management Board Member Head of Corporate Banking

Tel Aviv, Dec 12, 2010

Poland – the EU front runner in terms of growth performance

Key macroeconomic data – features of Polish economy

Area (Sq. Km) Population (mn) GDP Growth (%) Inflation Rate (%) Exports volume (% of GDP) 2009 312 679 38.2

1.7

3.5

38.9% Poland - the largest from EU new member states in terms of area and population is located at the heart of Europe at the crossroads of major communication corridors, became the EU front runner in terms of growth performance in 2009 as the global crisis wreaked havoc to European economies. With exports to GDP ratio at about 40% it can be classified as a relatively closed economy, which in times of the crisis turned out to be a blessing rather than a curse. Relatively smaller dependence (as compared to its regional peers) on foreign trade reduced the impact of foreign demand shock.

Source: StatOffice.

Poland – the EU front runner amid the global recession… Poland’s GDP (% YoY) European Commission GDP forecasts (% YoY)

Germany Spain France Italy Netherlands Euro area

POLAND

UK EU27

2009

-4,7 -3,7 -2,6 -5,0 -3,9 -4,1

1,7

-4,9 -4,2

2010F

3,4 -0,3 1,6 1,1 1,9 1,7

3,4

1,7 1,8 Source: StatOffice, European Commission interim forecast (Sep’10), BRE forecast.

…currently notes dynamic rebound… Exports and imports (% YoY) Production in industry and construction (% YoY, wda*) Retail sales (% YoY)

40 20 0 -20 -40 09-07 03-08 09-08 03-09 09-09 03-10 09-10 Exports, %YoY Imports, %YoY 25 20 15 10 5 0 -5 -10 -15 08-08 01-09 06-09 Industry, %YoY \ 20 15 10 5 0 -5 11-09 04-10 09-10 -10 08-08 Construction, %YoY 01-09 06-09 11-09 Retail sales, %YoY 04-10 09-10 

Foreign trade increase stimulates Polish industry



Public investment sustains growth in construction sector



Gradual stabilization on the labour market supports retail sales One-off effects of harsh winter

* wda – working day adjusted.

Source: NBP, StatOffice.

…based on recovering external demand from Germany Exports of Poland and Germany (% YoY)

40 30 20 10 0 -10 -20 -30 -40 01'01 01'02 01'03 01'04 01'05 01'06 01'07 01'08 01'09 01'10 German exports Polish exports 

Strong trade relations between Poland and Germany



Germany – the main recipient of Polish exports



Rebound in Germany boosted Polish economy

Source: Bloomberg, NBP, Eurostat.

Financial markets have confidence in Polish assets Poland-Germany 10Y T-bond spread (bp)

8,0 7,0 6,0 5,0 4,0 3,0 2,0 07-09 11-09 03-10 07-10 360 340 320 300 280 260 240 11-10 220 14,0 Poland (%), LA Germany (%), LA Spread (bp), RA

10Y T-bond yields (%)

12,0

Non-residents’ participation in Polish T-bond market (PLN bn)

140 120 100 80 60 40 03-07 10-07 05-08 12-08 07-09 02-10 09-10

Non-residents’ participation in Polish equity market (PLN bn)

300 10,0 250 8,0 6,0 4,0 2,0 05-07 12-07 Poland 07-08 Greece 02-09 Germany 09-09 Ireland 04-10 11-10 Hungary 200 150 100 50 0 12-06 06-07 12-07 06-08 12-08 06-09 12-09 06-10

Poland’s trade with Israel is rather limited … Main recipients of Polish exports (EUR bn, 2009)

0 10 20 30

25,6

Germany France Italy UK Czech Rep.

Netherlands Russia

3,6

Hungary Sweden

2,6 2,6

Spain

2,6

Israel

0,3 6,8 6,7 6,3 5,7 4,1 Main suppliers of Polish imports (EUR bn, 2009)

0 10 20 30

30,1

40 Germany Russia Italy

9,1

Netherlands China

7,1 6,1 5,6

France Czech Rep.

Belgium

5,0 4,3

UK Slovakia Israel

0,2 3,6 3,4 2,6

Source: Eurostat.

… and characterized with the following structure Polish exports to Israel - decomposition (%, 2009) 10,5 9,0 16,8 16,5

Chemicals and related products Manufactured goods classified chiefly by material Machinery and transport equipment Food and live animals Others

47,1 Main export goods:



vehicles



ships, boats



electrical machinery and equipment

Source: Eurostat.

Polish imports from Israel - decomposition (%, 2009) 8,8

Chemicals and related products

26,5 7,0 35,1

Manufactured goods classified chiefly by material Machinery and transport equipment Miscellaneous manufactured articles Others

22,6 Main import goods:



chemical products



arms, ammunition



electrical machinery and equipment

Israeli investors’ engagement in Poland is low Poland’s liabilities resulting from FDI (EUR bn, 2008)

0 5 10 15 20 25 Netherlands Germany France Luxembourg USA Sweden UK Italy Austria Belgium Israel

0,1 4,4 4,3 4,1 3,8 7,1 5,3 12,5 10,0 18,1 22,0 FDI inflow to Poland - decomposition (EUR bn, 2008)*

0,0 0,5 1,0 1,5 2,0 Germany Netherlands Luxembourg Sweden France Cyprus Austria Iceland USA UK Israel

0,6 0,5 0,5 0,4 0,4 0,04 0,3 1,1 1,3 1,6 1,6 Possible underestimation due to investment through companies registered in other countries.

Source: NBP.

Summary



Poland – the only EU country without recession in 2009



Poland enjoys strong rebound, so far based mainly on external demand from Germany



Polish assets enjoy strong confidence of financial markets



Small trade volume between Israel and Poland



Limited FDI inflow from Israel to Poland – room for improvement

BRE Bank – best – in - class financial services’ provider in Poland

BRE’s strong market position

3 rd

By Total Assets

3 rd

By Total Loans

4 th

By Total Deposits

Estimated position as of Q3 2010 (consolidated data)

167,0 135,0 84,0 62,0 55,0 45,0 43,0 41,0

PK O BP

127,0

Pe ka o BR E IN G B SK BZ W BK M ille nn iu m Kre dy t B an k Ci ti

83,0 55,0 35,0 33,0 33,0 27,0 28

PK O BP Pe ka o BR E M ille nn iu m BZ W BK IN G BS K Kre dy t B an k GE B PH

131,0 101,0 48,0 45,0 39,0 33,0 26,0 24,0 20,0

PK O BP Pe ka o IN G BS K BR E BZ W BK M ille nn iu m Kre dy t B an k Ci ti BG Ż

BRE Bank Group – universal financial services’ provider for financial institutions, corporate customers, HNWI, retail clients ADVISORY SERVICES AND FINANCING SUUPORTED BY EU FUNDING TRADE FINANCE FINANCING CURRENT AND INVESTMENT ACTIVITIES TRANSACTIONAL BANKING TRADITIONAL DEPOSITS RISK MANAGEMENT BRE Bank Group STRUCTERED AND MEZZANINE FINANCING COMPREHENSIVE WEALTH MANAGEMENT INVESTMENT BANKING BROKERAGE SERVICE LEASING FACTORING FINANCING OF COMMERCIAL REAL ESTATE

BRE Bank at a glance A leading universal bank in Poland… Total assets

(PLN B)

Loans

(PLN B)

Deposits

(PLN B)

PKO BP Pekao BRE Bank ING BSK

62 84 167 135 33 55 83 127 45 48 101

BZ WBK Millenium Kredyt Bank BHW

45 43 41 55 13 33 35 27 33 26 24 39

GE BPH

36 28 14

BGZ

 27 19 20 One of the largest universal banking groups in Poland serving over 3 .5

M retail and 13,000 corporate customers 

Strong Corporate and Investment banking business

with 3rd/4th largest corporate deposit/loan portfolio in Poland 

Dynamically growing Retail Banking business

with 3rd/6th largest retail loan/deposit portfolio in Poland 131

Source: BRE Group 3 Q 2010 consolidated financial statements, 3 Q 2010 consolidated financial statements of the banks, Rzeczpospolita …with a differentiated value proposition

Retail Banking

 Multi-brand, multi-channel approach attracting both young and affluent customers  Leading in internet banking  Physical network of retail branches, financial centres and mobile agents  Open-architecture “Investment Fund Supermarket” and insurance supermarket  Continuous product innovation

Corporates & Markets

 Long-standing client relationships across large, medium-sized and small companies  Exclusively dedicated corporate branch and office network  Strengths across corporate and investment banking services  Innovative integrated transactional banking platform

Strong Corporate and Investment Banking Business Exclusively dedicated physical distribution network Integrated and advanced sales approach

    13 thousand customers covered by 200 managers in branches and headquarters relationship Renowned corporate banking internet platform iBRE The best integrated bank corporate platform of 2009 in CEE (a) New customer relationship management (“CRM”) system supports cross selling and upselling activities Analysis of clients’ potential requirements Planning and monitoring of sales activities Transactional banking services available through MultiBank branches (appeal to SMEs)

Leading, comprehensive ‘one-stop shop’ product offering in Poland Transactional banking

innovative and tailored products

Short term and long term financing

fourth largest corporate loan portfolio

Structured and mezzanine finance services Trade Finance Products Corporate Banking Securities sales and trading

leading market making positions (eg IRS/FRA, FX)

Debt origination

market shares in non-government debt >20%

Largest specialized mortgage bank

(BRE Bank Hipoteczny)

Leasing

No 2 with 9% market share (BRE Leasing)

Investment Banking Brokerage

a leader in brokerage and investment advisory (DI BRE)

Factoring

market share ~14% (Polfactor)

(a) Highest award in the „World’s Best Internet Bank“ (Global Finance) in the category of “the best integrated bank corporate pla tfo rm of 2009” in CEE region Source: Company data

Transaction Banking - fully fledged product range well fitting to dynamic & expanding companies

Advisory services and suport Mass payments identification and reconciliation LCY and FCY payments (incl.SEPA); individual and mass payments Cards incl. prepaid Direct debit Physical cash processing Cash Deposits / transports Accounts Liquidity management Zero / target balancing Pooling Cash disbursements Receivable management Postal order and other settlements Disbursements management Electronic/internet baking (iBRE) Reporting/intergration services

Transaction Banking - comprehensive catalogue of products &

services satisfying the most complex businesses Account Management Products

 Integrated Bank Account Agreement   Current Accounts – LCY / FCY accounts   Pay-roll accounts Escrow accounts   Fiduciary accounts iBRE Account Management module

Disbursements Management Products

 LCY Payments  FCY Payments     SEPA Payments BRE Mass Payments BRE Payroll Payments MT101 – Request for Transfer      BRE Cards - Business Payment Cards Pre-paid Cards Physical Cash disbursements Cheques iBRE Banking, iBRE Cash, iBRE Cards - modules        Concentration / Consolidation Products BRE Balancing – zero-balancing services BRE Pooling - notional BRE Pooling – physical International (X-border) Pooling with Commerzbank iBRE Liquidity Management and planning module iBRE Depo Plus – micro deposits management

Receivables Management Products

 BRE Collect – identification of incoming payments  BRE Mass Collect – identification of bill payments / mass pymts     BRE Collect Plus – identification, matching and reconciliation of incoming payments BRE Direct Debit – B2B and B2C direct debit BRE Direct Debit Consent Management      EBPP with Retail Banking BRE Cash– 5 different models of cash collection services iBRE Collections and Direct Debit modules Cash Management reporting system – tailor made transaction reporting following individual needs

(Short Term) Financing Products

 Invoice Discounting (factoring)  iFactoring – iBRE Invoice.net

 iBRE Trade Finance

( Short term) Investments Products

 BRE Auto-overnight    LCY / FCY deposits Longer term deposits iBRE Deposit module

iBRE – universal, integrated solution facilitating management of entire company’s financials iBRE – Internet financial platform aggregating all financial services, within one access channel

  

Transactional Banking Services

Account management LCY and FCY payment management Cash Management orders management

Other Banking Services

      Letters of credit, bank guarantees, collections Treasury Custody services Information management Customized reporting & analyses Electronic invoices and debt discount

iBRE – universal, integrated solution facilitating management of entire company’s financials

  

Treasury *

  FX Spot FX forward FX Swap IR SWAP Real-time quoting  

eDeposits

Tenor declared by the client Current and customized rates

BRE’s products & services in practice – x’border client case Subsidary 1 Foreign conglomerate Subsidary 2 Subsidary 3 Subsidary 1 Subsidary Polish client Leading comapny of the group Subsidary 2 Subsidary 2 Subsidary Subsidary 3

One of the leading logistic companies operating in over 100 countries with its headquarter in Western Europe’s country and subsidaries in Poland.

Group Revenue : ca. EUR 30 bn Revenue in Poland: PLN 3 bn

BRE’s products & services in practice – x’border client case (continued) Client’s expectations:

     cash collections and withdrawals invoices’s and pay-roll and payments (LCY and FCY) consolidation of financial means of the group enabling effective management of group liquidity automated financial data exchange between the company and the bank guarantees  credit and pre-paid cards    

BRE Bank solutions offered to the client:

 cash operations – cash collections and  withdrawals iBRE-internet based transactional system  d omestic, international payments and additional, complex cash management solutions international cash pooling comprehensive, fully automated financial data exchange – client’s financial system itegrated with iBRE platform comprehensive Trade Finance solutions wide range of payment and credit cards incl.

pre-paid cards

Selection of awards and distinctions 2010 iBRE platform - the winner in five categories of prestigious international contest „World Best Internet Banks 2010” run by Global Finance magazine:



Best Corporate/Institutional Internet Bank Central & Eastern Europe



Best Corporate/Institutional Internet Bank

Poland

  

Best Integrated Corporate Bank Site

Central & Eastern Europe

Best Consumer Internet Bank - mBank

Czech Republic

Best Integrated Consumer Bank Site – mBank and Multibank

Central & Eastern Europe

Selection of awards and distinctions 2010 Award of Euromoney Magazine 2010:

The Management Board won the second place in the category „Bank with most accessible Senior Management”