Financials Fund Quarterly Report Q1 2012

Pivdennyi Bank Head Office in Odessa, Ukraine.

Reporting season started off in mid-March with traded banks reporting 2011 full year results. Many of our investors have expressed an interest in seeing our portfolio holdings’ performance relative to traded peers, and we are happy to summarise some 2011 highlights in this report, and you can find more information on the market trends and portfolio banks activities in 2011 in our annual report, available on our website. The banks in the table are ranked by asset size, with growth rates and fundamentals calculated in reporting currencies.

Loan growth y-o-y %

Deposit growth y-o-y %

LTD % Return on average

equity %

Net interest

margin %

Cost/Income ratio %

Sberbank* 40.6 19.3 97.3 28.1 5.8 46.9Nomos Bank 32.0 22.0 117.1 18.2 4.8 47.3Bank St Petersburg 14.8 18.2 92.6 17.2 4.8 36.2Bank Vozrozhdenie 19.5 11.4 85.7 9.0 4.3 65.9Probusinessbank 28.7 60.5 62.6 17.4 14.7 73.9Bank of Georgia 10.6 36.4 95.7 19.0 7.7 49.9Asian-Pacific Bank 89.0 43.4 85.2 30.9 10.7 50.5Locko Bank 6.1 16.9 122.9 15.3 4.7 54.7Bank Pivdennyi 6.0 6.1 88.9 3.3 5.3 62.7Akibank** 13.1 -3.3 86.2 2.6 5.0 70.1FIA Bank** 16.0 15.8 84.4 1.9 4.9 81.6Platinum Bank*** 105.6 403.0 82.2 11.8 n.a. 56.1 * Sberbank is the biggest bank in Russia with its assets about 30% of the financial system ( close to 1 000 operating banks in the country) and is not a peer to our portfolio holdings.** according to RAS that has discrepancies with IFRS. *** according to preliminary IFRS accounts.

There is a clear divergence across Russian banks’ results, mirroring the current competitive environment. All the banks, except Bank St. Petersburg, managed to deliver net interest margin expansion, benefit-ting from higher asset yields in the second half of 2011. Smaller regional traded banks disappointed the market, with Bank St Petersburg reporting weaker-than-expected operational performance and Bank Vozrozhdenie posting higher-than-expected cost/income ratio and cost of risk. Both are currently trading at below book valuations, which is unjustified by fundamentals in our view. While all the traded peers had negative share price performance in March, the fund received an exter-nal valuation of Probusinessbank that resulted in an increase of EUR 18m in our carrying value.

While the first quarter was quiet for the sector, the fund completed two add-on investments in March. An additional share purchase of the Bank of Georgia stock was needed to keep the fund’s stake above 10% after all the bank’s management share options (MSOP shares) vest and those shares are no longer held as treasury shares. The 10% threshold is important for the fund in order to avoid paying Swedish corporate income tax on the gain on investment. The fund has also bought out a minority shareholder in Morgan&Stout, increasing its stake to 54.3%. We believe that the company is able to generate much more value from its current base, and decreasing the number of shareholders to only two will make the eventual sales process easier.

The first quarter of the year is seasonally weak for banks in our region due to the long holiday season in Russia and Ukraine in January, as well as a seasonal decline in activity among both retail and corporate clients. March was the strongest month of the quarter, and according to banks, April was even stronger than expected in terms of growth, on the back of a supportive macro environment in the region.

Retail loan book continued to show very strong growth dynam-ics in Q1 2012 (+6.2% y-t-d) in Russia, with acceleration of real income growth among the population and a favourable macro backdrop expected to stimulate further growth during the year. Lower total loan growth is attributable to the corporate segment, partly due to season-ality and lower corporate activity, and partly due to large corporates switching part of their financing from bank loans to bond issuance. State banks continued to dominate lending in Q1, as extracting Sber-bank’s loan book from the statistics brings the total loan growth figure from 1.5% y-t-d to only 0.3% y-t-d, meaning that Sberbank was the dominant contributor to growth in this segment. This dominance has been visible and increasing for the past two years; the state increased its funding to the system through Ministry of Finance deposits and CBR loans from 2% of assets in 2010 to 5% of assets by the end of 2011, and also increased its contribution to loan growth, with 71% of corporate loan growth coming from state banks in 2011 vs. 54% in 2010.

Contribution to corporate loan growth by bank type in Russia, %

22%

6%

18%

54%

19%

4%

6%

71%

0% 20% 40% 60% 80%

Other banks

Largest foreign banks

Largest private banks

Largest state banks

2011 2010

Source: CBR, Alfa Research

Despite portfolio banks in Russia not expecting loan growth in 2012 to match 2011 levels, banks are starting to worry about not having enough capital to support their balance sheet growth and satisfy the strong loan demand they currently see. The tougher regulatory environment for capital requirements and provisioning is not making things easier. The regulatory capital adequacy ratio in the Russian banking sector (min. required 10%) decreased in 2011 to 14.7% from 18.1% in 2010, with the number of banks having CAR below the “comfort level” of 12% dou-bling in 2011. Even though the system is able to feed the market with at least 20% loan growth in 2012 according to the CBR, capital constraints are becoming a challenge for the banks seeing strong loan demand.

Reporting seasonFinancials FundQuarterly Report Q1 2012

Probusinessbank

Probusinessbank reported its consolidated audited accounts for 2011 in record time by the end of March. This was facilitated by the central-ised data warehouse that the bank implemented in Q1 2012. We are now expecting the bank to be able to produce timely quarterly reports on its activities. The results were better than expected, showing strong credit growth, further NIM expansion and ROE of 17.6% in EUR terms.

The bank continues its regional expansion, focusing now on smaller cities with 10-20,000 inhabitants, where quite often its only competitor is Sberbank. The first quarter is usually a busy time for new office openings, and this was also the case this year, as the bank added close to 100 new offices in its network, bringing the total number to over 600, and making it the 6th largest bank in Russia by number of offices. Loan growth in Q1 remained above the market level, supported by the strong loan growth from the retail sector. This loan growth was fully deposit funded and the bank intends to retain quite a high level of liquidity going forward.

Russia

Probusinessbank is among the top 40 Russian banks, is headquartered in Moscow and has a nationwide presence through its six regional subsidiary banks, all working under the "Life" brand. The group has an excellent distribution network, with over 600 offices in 60 regions in Russia. Probusinessbank is a consolidator with a good track record in acquiring and integrating regional banks.

Value drivers: profitability increase through lower C/I and improved asset quality, strong distribution network with highly motivated sales forces, non-organic growth.

Rating: B- from Fitch RatingsOwnership stake: 19.93%Acquisition date: November 2006www.prbb.ru/en/information/news/

ProbusinessbankIFRS, Audited

2011 EURm

2010 EURm

y-o-y % change

Net interest income 324.6 223.8 45.0Net interest income after provisions 274.1 158.9 72.5Net profit 48.4 37.8 28.2Total deposits 2 477.7 1 575.4 57.3Net customer loans 1 551.6 1 230.1 26.1Total assets 3 448.4 2 631.5 31.0Net interest margin % 14.7 12.8 -ROaE % 17.6 16.6 -

Financials FundQuarterly Report Q1 2012

Express-Volga Bank Branch (one of the subsidiaries of Life Group) in Saratov, Russia.

Locko Bank

Locko Bank IFRS, Audited

2011 EURm

2010 EURm

y-o-y % change

Net interest income 55.9 39.0 43.3Net interest income after provisions 46.2 26.1 76.9Net profit 24.7 20.0 23.6Total deposits 684.7 597.7 14.6Net customer loans 841.7 809.3 4.0Total assets 1 442.9 1 223.1 18.0Net interest margin % 4.7 4.2 -ROaE % 15.6 - 14.9

At its meeting in mid-March, the board reviewed and approved the results for 2011, as well as the budget for 2012 and a business plan for 2012-2015. The bank has ambitious plans to further grow its SME busi-ness and become one of the top 5 SME lenders (currently top 10) in the country. In the retail segment, the bank will seek active growth through cross-sales, with the aim of increasing deposits and F&C income with new product offerings. The focus will remain on profit-ability, targeting over 15% ROE and below 50% C/I. As early as Q1, the bank launched many new projects that were targeted to attract new SME business. The sales forces for SME were reorganised so that each SME client will from now on have its own designated client relationship manager. The bank has planned an extensive set of measures that are aimed at increasing customer loyalty and fee & commission income per customer and to extend the average duration of the SME loan port-folio.

Locko Bank is a Moscow-based bank with an established SME franchise. During the last two years, the bank has also started to develop retail banking. The bank has a network of 59 branches in the European part of Russia. It has a proven track record of profitable growth, operational efficiency and good asset quality. Locko Bank is working closely with the EBRD, the IFC and KfW in various SME and trade finance programs, and IFC is also a shareholder of the bank, with a 15% stake.

Value drivers: strong SME franchise, good platform to build retail banking, strong shareholders to support non-organic growth.

Rating: B+ from Fitch RatingsOwnership stake: 11.06%Acquisition date: September 2006www.lockobank.ru/eng/

Financials FundQuarterly Report Q1 2012

Asian-Pacific Bank

Asian-Pacific BankIFRS, Audited

2011 EURm

2010 EURm

y-o-y % change

Net interest income 112.7 59.1 90.7Net interest income after provisions 99.6 72.3 37.7Net profit 53.8 49.0 9.9Total deposits 1 111.2 791.0 40.5Net customer loans 947.1 511.4 85.2Total assets 1 451.5 1 022.5 42.0Net interest margin % 10.7 9.3 -ROaE % 31.3 36.4* -* Net profit/Equity.

Asian-Pacific Bank had another good year in 2011, and in April 2012 paid out an even higher dividend to the fund than last year, at EUR 2m. The bank continues to grow faster than the market and faster than planned on the back of strong loan demand and a favourable macro picture in the region. On the funding side, apart from continued deposit growth, the bank received the second tranche of the EBRD’s 5-year loan supporting the SME sector in the regions of the bank’s operations in the first quarter. In April 2012, Asian-Pacific also debuted on the capital markets, raising a RUB bond for RUB 1.5bn (EUR 38.7m) that was three times oversubscribed. The bank has a high operating margin and profitability is sufficient to feed growth for now, but man-agement has started to discuss new sources of funding for the next year.

According to RAS figures, the bank’s pre-tax profit in Q1 2012 increased by 190% compared to the first quarter last year, with inter-est income increasing by 64%, fees and commissions by 62% (with the main contribution coming from the credit card business, which increased tenfold) and income from securities portfolio by 240% com-pared to Q1 2011.

The bank opened 4 new offices in the first quarter.

Asian-Pacific Bank has now merged with our other two banks in the Russian Far East, has headquarters in Blagoveschensk and ranks among the top 100 Russian banks. The bank operates in 14 regions, with 209 offices focusing on retail and SME clients. Asian-Pacific Bank is a consolidator with strong shareholders and with experience in merging regional banks.

Value drivers: profitability increase from merger synergies and non-organic and organic growth in Russian Far East and Siberia.

Rating: B2 from Moody’s

Ownership stake: 17.91%Acquisition date: December 2006www.atb.su/

Akibank

AkibankRAS

2011 EURm

2010 EURm

y-o-y % change

Net interest income 23.4 21.6 8.5Net interest income after provisions 19.3 17.0 13.6Net profit 2.1 1.0 114.6Total deposits 465.6 491.3 -5.2Net customer loans 401.6 362.4 10.8Total assets 556.2 584.1 -4.8Net interest margin % 5.0 5.0 -ROaE % 2.6 1.3 -

Akibank is continuing to work on improving its balance sheet structure to facilitate profitability and keep margins stable. The loan book grew by 11% in the first quarter, which is higher than the market, with new loans consisting mostly of up to 1 year loans to corporate clients. Due to this enhanced loan growth, the bank earned 4.8% ROaE according to RAS in the first quarter. The bank enjoyed continued high activity in April, with loan demand strong and coming from industries such as transportation, manufacturing, agriculture, car trading and leas-ing. Deposit growth has been slower, and even though the bank works hard on attracting new resources (by applying for different programs supporting regional growth) to fund the demand they see, manage-ment does feel restricted by funding at present, and we are therefore discussing capital increase opportunities.

The bank is currently undergoing a Central Bank review, with the results expected closer to the end of May. The management team does not expect any surprises, as the bank’s loan portfolio is well pro-visioned, the bank succeeded in decreasing the share of foreclosed assets in 2011 and continues to work on this particular matter due to tougher provisioning regulations on this kind of asset.

Akibank is a regional bank in the Russian Republic of Tatarstan, headquartered in Naberezhnye Chelny. The bank has a strong market position, servicing big industrial groups and SME clients in the region through 42 offices. The bank is look-ing into opportunities to expand its operations through acquisitions in neighbouring regions.

Value drivers: non-organic growth, organic growth in Moscow with reinforced management team, profitability increase.

Rating: B3 from Moody’s

Ownership stake: 19.99%Acquisition date: June 2007www.akibank.ru

FIA-Bank

FIA-BankRAS

2011 EURm

2010 EURm

y-o-y % change

Net interest income 17.3 11.3 53.0Net interest income after provisions 8.6 7.2 19.2Net profit 1.0 0.7 4.0Total deposits 376.5 331.9 13.4Net customer loans 317.7 279.7 13.6Total assets 457.2 403.7 13.3Net interest margin % 4.9 3.8 -ROaE % 2.0 1.6 -

The operating environment in the Samara region continues to improve in line with the improving macro picture there. Corporate clients have been feeling more comfortable with political risk and therefore have been investing and developing their companies after the presidential election. The first quarter has been seasonally weak for the bank, with loans growing slightly more slowly than planned and net deposits even slightly decreasing due to lower-than-market interest rates, but the second quarter started very well according to the management and the team has a positive outlook. Liquidity is good, loan quality stable and the only concern the management has right now is that the bank is experiencing stronger loan demand than it can currently meet.

Since the bank appointed a new CEO, we have been working on a new development strategy for the bank.

FIA-Bank is based in the Samara region, with 19 offices servicing retail and SME clients. The bank has strong brand recognition in the region and a growing client base. FIA-Bank is an attractive partner for banks seeking expansion in the Samara region.

Value drivers: loan and deposit growth based on a strong retail platform and brand recognition, recovery of auto industry.

Rating: -

Ownership stake: 20.00%Acquisition date: April 2008www.fiabank.ru

Russian banking sector in 1Q2012

RUBbnMarch

2011December

2011February

2012March

2012m-o-m,

% changeq-o-q,

% changey-o-y,

% changeAssets 34 009 41 628 40 874 41 533 1.6 -0.2 22.1Total loans 18 561 23 266 23 092 23 616 2.3 1.5 27.2 – retail loans 4 193 5 551 5 698 5 895 3.5 6.2 40.6 – corporate loans 14 369 17 715 17 395 17 721 1.9 0.0 23.3Deposits and current accounts 20 910 25 566 24 644 24 953 1.3 -2.4 19.3Provisions 1 919 1 988 1 998 2 019 1.1 1.6 5.2 Source: CBR

Financials FundQuarterly Report Q1 2012

Morgan & Stout

Morgan & Stout celebrated its 5-year anniversary in early April by invit-ing its clients on a riverboat dinner on the Moscow River. The company has firmly established itself as one of the top 3 players on the market, with a 600-person-strong operation and a well-balanced client base. A new call centre is now opening in Yaroslav, 250km from Moscow, which will allow the company to further expand its business more cost efficiently as both the rent and salaries are significantly lower than in Moscow.

In March, the fund acquired all the shares from a minority share-holder holding 21.3% of the company at an attractive valuation, increasing its stake to 54.3%. We believe that having only two share-holders in the company with ECFF holding a majority stake will make the eventual sales process easier and we also believe that the company is able to generate much more value from its current base.

Morgan & Stout is a Moscow-based debt collection agency that was established in April 2007. M&S offers the full spectrum of debt collection services, focusing on early phase soft collection and legal services. The company has two main business lines; credit management services and purchased debt. M&S has firmly established itself as one of the top 5 collection companies in Russia, with a diversified client base consisting of retail banks and telecom and utilities companies.

Value drivers: diverse CMS business, high collection efficiency, good technical platform for rapid expansion.

Portfolios under management: EUR 1 059m as of end 2011Total revenues: EUR 7.6m in 2011

Ownership stake: 54.27%Acquisition date: July 2008www.morganstout.com/en/

EE-DF AG

The first quarter is seasonally weak for collections due to the long New Year holidays and other public holidays in February and March. This was also the case with the EE-DF portfolios. In the February board meeting, the board reviewed the performance and adjusted business plans for all the 5 portfolios. The board decided to try to sell one of the smaller portfolios as it is clearly under-performing, with no sign of improvement. The large Rosbank portfolio, purchased jointly with EBRD, was performing according to the business plan until the end of February, but March was disappointing. Corrective measures have been agreed with the servicing company. As there has been significant volatility with pricing and collection performance, the board also decided not to prolong the credit facility agreement and to remain conservative when bidding for any new portfolios. In general, we do not see any good prospects on the market and do not intend to acquire new portfolios during the next 6-9 months.

EE-DF is a joint-venture with the leading European debt collection company Intrum Justitia that aims to become a significant market player in the Russian purchased debt market. The company purchases non-performing retail loan portfolios consisting of mainly non-secured consumer loans, credit cards and car loans. The total commitment amounts to EUR 20m. The purchased portfolios will be serviced by local collection companies, with Morgan & Stout as the preferred partner for the joint-venture.

Value drivers: best-in-class portfolio analysis tools, good portfolio sourcing capabilities, strong partners.

Portfolios under management: n/aTotal revenues: n/aOwnership stake: 25.00%Acquisition date: January 2010

Financials FundQuarterly Report Q1 2012

Pivdennyi bank

Pivdennyi reported weak 2011 results, but they were in line with man-agement forecasts. Although Net Interest margin and fee and commis-sion income both improved, these gains were effectively nullified by higher provisioning. With the liquidity concerns that plagued the mar-ket in Q4 2011 having abated, the bank is now in a good position to grow its loan portfolio somewhat, and has been looking for new borrowers. The corporate market is difficult, however, with lots of competition and many potential clients already looking over-leveraged. The bank has begun preparations to launch more retail and consumer lending products, and will pay a visit to Locko Bank in Moscow to get ideas on expanding its SME business.

First quarter results have not yet been released, but management reports that profits were up year on year. Pivdenny has kept its deposit rates below the market average, which affected the bank’s deposit growth numbers negatively, but will mean that they are able to price loans competitively.

Ukraine

Pivdennyi is the largest bank in the Odessa region, with a 30% market share in southern Ukraine. The bank has a strong regional brand with loyal corporate and retail clientele. The growing Black Sea trade routes offer good growth prospects for the bank to further expand its corporate bank-ing business.

Value drivers: developing SME business and retail lending, increasing profitability.

Rating: B- from Fitch, B3 from Moody’sOwnership stake: 9.98%

Acquisition date: January 2008http://en.bank.com.ua/

Pivdennyi bankIFRS, Audited

2011 EURm

2010 EURm

y-o-y % change

Net interest income 45.9 34.2 34.1Net interest income after provisions 27.1 26.3 3.1Net profit 4.7 8.0 -41.0Total deposits 991.7 923.8 7.3Net customer loans 881.6 821.5 7.3Total assets 1 216.5 1 172.8 3.7Net interest margin % 5.3 3.8 -ROaE % 3.1 5.8 -

Financials FundQuarterly Report Q1 2012

Nadra Bank

Nadra bankUAS

2011 EURm

2010 EURm

y-o-y % change

Net interest income -30.3 130.0 -123.3Net interest income after provisions 3.0* -76.8 n.m.Net profit 0.2 0.4 -59.9Total deposits 835.9 741.5 12.7Net customer loans 1 954.3 1 844.6 5.9Total assets 2 578.8 2 182.9 18.1Net interest margin % -1.6 6.4 -ROaE % 0.1 1.0 -* due to provisions reversal.

Nadra Bank continued its slow, gradual recovery, reporting a small net profit in Q1. The Bank saw a slight inflow of retail deposits in the first quarter, the first such net quarterly inflows since the bank emerged from temporary administration last August. Since Nadra had significant retail funding before the crisis, this stabilising of deposits is important to the Bank’s rehabilitation. Nadra also posted a positive, although weak NIM of 2.6% in Q1, after showing negative NIM in 2011.

Nadra is the 11th largest bank in Ukraine and the largest independ-ent retail bank in the country. It is a universal commercial bank with a nationwide branch network focusing on the mass retail market. In 2006-2007, Nadra underwent a major rebranding and re-launch of its retail product line, which was very suc-cessful, but the bank experienced severe deposit outflows in late 2008 and the subsequent deterioration of assets led to a distressed situation. The bank was under temporary administration until August 2011, but has since regained its full operational status.

Ownership stake: 0.66%

Acquisition date: August 2006

www.nadrabank.ua/eng/to-you

Financials FundQuarterly Report Q1 2012

Platinum bank

Platinum’s 2011 IFRS consolidated results have not yet been signed off, due to delays at the Cyprus level. However, management expects the auditors to confirm strong results, showing approximately 12% ROE, with higher operating margin than budgeted and lower SG&A. With asset growth of 145% for the year, fuelled by deposit growth of over 400%, Platinum has now moved into the Top 30 in Ukraine on all major retail segment rankings.

The first quarter of 2012 has not been easy for Platinum, as the bank is experiencing light increases in delinquency rates caused by sal-ary delays to borrowers. This naturally causes some concern regarding trends in the underlying economy. Nevertheless, management reports that the bank is on budget through the first quarter and it has stepped up its collections work to combat the delinquency issues. On the bright side, liquidity in the banking sector has improved since Q4 2011, and concerns over a possible UAH devaluation later this year seem to be receding.

Platinum Bank is the only independ-ent pure play consumer finance group in Ukraine. The bank was set up in 2007 with two business lines; mortgage and consumer finance/cash cards. As the market environ-ment has changed significantly since its establishment, the bank is now expanding its product range to become a full service retail and SME bank.

Value drivers: non-organic growth, organic growth through branch roll-out, profitability increase.

Rating: -

Ownership stake: 23.69%Acquisition date: February 2007http://en.platinumbank.com.ua/

Platinum bankIFRS, Unaudited

2011 EURm

2010 EURm

y-o-y % change

*Core income 57.0 28.7 98.6*Core income after provisions 38.1 24.6 55.1Net profit 7.5 8.0 -7.1Total deposits 275.4 53.0 419.7Net customer loans 226.4 106.6 112.4Total assets 415.8 169.8 144.9Net interest margin % n.a. 17.3 -ROaE % 11.1 12.0 -* Net interest income and net fees and commission income.

Ukranian banking sector in 1Q2012

UAHbnMarch

2011December

2011February

2012March

2012m-o-m,

% changeq-o-q,

% changey-o-y,

% changeAssets 995 1 054 1 061 1 083 2.1 2.7 8.8Total loans 743 793 790 792 0.2 -0.2 6.6 – retail loans 202 196 193 190 -1.5 -3.1 -5.9 – corporate loans 541 597 597 602 0.7 0.8 11.2Deposits and current accounts 439 489 490 497 1.5 1.7 13.2Provisions 118 119 119 114 -4.0 -3.9 -3.0 Source: NBU

Platinum Bank Branch in Kyiv, Grinchenko St., 1 (Maydan).

Bank of Georgia

Georgia

Bank of Georgia is a leading Georgian universal bank, providing a full range of commercial and investment bank-ing, asset and wealth management, insurance, leasing and card process-ing services to its corporate and retail clients. The largest retail bank in the country, with a 36% market share by total assets, Bank of Georgia serves approximately one million retail and corporate clients through its network of 158 branches and 426 ATMs, as well as through other delivery chan-nels including the Internet, mobile banking and a state-of-the-art call centre. Bank of Georgia is listed on the Georgian Stock Exchange and has a premium listing on the London Stock Exchange.

Value drivers: loan book growth, profitability improvement, attractiveness of the region.

Ownership stake: 10.17%

Rating: ‘BB-/BB-’ from S & P, ‘B1/NP’ (FC) & ‘Ba3/NP’ (LC) from Moody’s and ‘BB-/BB-’ from Fitch Ratings

Acquisition date: April 2006www.bog.ge/

Bank of GeorgiaIFRS, Audited

2011 EURm

2010 EURm

y-o-y % change

Net interest income 99.5 91.5 8.7Net interest income after provisions 90.1 71.4 26.2Net profit 57.6 26.4 118.0Total deposits 1 267.7 844.0 50.2Net customer loans 1 212.6 996.2 21.7Total assets 2 162.2 1 686.1 28.2Net interest margin % 7.7 8.7 -ROaE % 18.1 13.7 -

Georgian banking sector in 1Q2012

GELmMarch

2011December

2011February

2012March

2012m-o-m,

% changeq-o-q,

% changey-o-y,

% changeAssets 10 682 12 679 12 683 12 525 -1.2 -1.2 17.3Total loans 6 166 7 519 7 450 7 628 2.4 1.5 23.7 – retail loans 2 397 3 173 3 224 3 248 0.8 2.4 35.5 – corporate loans 3 768 4 346 4 227 4 380 3.6 0.8 16.2Deposits and current accounts 5 494 6 745 6 819 6 767 -0.8 0.3 23.2Provisions 585 536 519 519 0.0 -3.2 -11.3 Source: NBG

Financials FundQuarterly Report Q1 2012

Bank of Georgia formed a UK holding company (Bank of Georgia Holding Plc) and obtained a premium listing on the London Stock Exchange at the end of February and is now targeting FTSE index inclusion, which would further increase the potential number of investors. The management has been actively marketing ever since the listing and further activities are planned for this year to promote the share and to make the bank known to a wider investor audience. The full year results were better than consensus expectations, with 19.0% ROaE and a 60% increase in basic earnings per share. The bank announced an increase in dividend payments to 0.70 GEL/share (0.32 EUR/share).

We expect Bank of Georgia to perform well and to benefit from the strong macroeconomic development in Georgia. Sector reports show that loan growth in the retail segment for the first two months was strong, with 1.6% ytd growth backed by an even stronger increase of 3.2% ytd in retail deposits. Asset quality continues to improve which will further improve the profitability of the banks.

Bank of Georgia Premium Listing on London Stock Exchange in February, London, UK.

Fund performance since inception

East Capital Financials Investors AB (publ) (30.04.2012)

NAV (EUR) % 1 mth % YTD % Since inception326.82 5.7 22.3 -34.6

NAVIndicative NAV is published on East Capital’s website on the 5thbanking day of every month.

East Capital Financials Fund

Edmond de Rothschild Securities Jefferies International Pareto – Öhman FondkommissionEquity Sales Equity Sales Equity Capital MarketsHaris Papanikolau+44 207 845 59 60funds@lcfr.co.uk

Judah Plotner+44 207 898 7114funds@jefferies.com

Joakim Appeltofft+46 407 50 22joakim.appeltofft@paretoohman.se

Prices can be found on:Bloomberg: <LCFR >Reuters: LCFR01

Prices can be found on:Bloomberg: <JJFD > / Emerging Europe and Central Asia

Prices can be found on:Bloomberg: <OHMF > / Swedish shares and bondsWeb: www.paretoohman.se / svenska aktier & obligationer

Important NoticeFull information on East Capital’s funds, such as the prospectus and financial reports can be obtained free of charge from East Capital, from our local representatives and are available on East Capital’s website. Every effort has been made to ensure the accuracy of the information in this document but it may be based on unaudited or unverified figures or sources. Availability of East Capital’s funds may be limited or restricted in some countries. Detailed information about where the funds are registered for distribution and what types of distribution are permitted can be obtained at East Capital. The information herein is only directed at those investors located where this information may be distributed, and is not intended for any use which would be contrary to local law or regulation. Investment in funds always involves some kind of risk. Fund units may go up or down in value up and may be affected by changes in exchange rates. Investors may not get back the amount invested. East Capital’s Private Equity and Real Estate Funds (Special Fund Products) are directed at institutions and other professional investors. The Special Fund Products are not UCITS-regulated funds and as a result are not adapted for retail investors in the same way as East Capital’s Public Equity Funds.

How to trade OTC?

The shares in the Fund’s investor consortium, East Capital FinancialInvestors AB (publ.), can be traded over-the-counter (OTC) at Edmond de Rothschild, Jefferies International and Pareto-Öhman. The 534,194 shares are distributed among approximately 1,000 shareholders registered at Euroclear. Institutional, corporate and qualified private investors are represented among the shareholders and a large number of the shareholders hold blocks between 100 and 500 shares.

For additional information regarding the East Capital FinancialsFund, please contact:

East Capital ABE-mail: info@eastcapital.comTel: +46 8 505 88 555

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ECFI Net Asset Value OTC prices at Öhmans RTS Financials

Financials FundQuarterly Report Q1 2012

Portfolio by country %

Portfolio by company %

Russia 65.6Georgia 17.2Ukraine 12.3 Cash and strategic

deposits5.0

Probusinessbank 26.5 Bank of Georgia 17.2Asian - Pacific Bank 14.3 Locko Bank 7.9 Platinum Bank 6.0 Bank Kedr 5.6 Pivdennyi Bank 5.2 Cash and deposits 5.0Morgan & Stout 4.9Akibank 4.0 FIA Bank 2.0Nadra Bank 1.1 ED-EF AG 0.4

Portfolio is net of fees.

Portfolio is net of fees.

Annual General Meeting 2012

On 8 May, the annual general meeting of East Capital Financials Investors was held at East Capital’s offices in Stockholm. The management report of East Capital Financials Fund was presented by the Investment Manager’s representative, Hanna Loikkanen, who gave her view on the current situation and future outlook on the markets where the fund operates. With market conditions and sector profitability showing steady improvement and the fund holdings developing well, the Investment Manager is optimistic about the positive trend in the Net Asset Value.

The annual general meeting approved the annual accounts and elected Albin Rosengren, Bengt Dennis and Jean-Marie Laporte as members of the Board of Directors.

On the same day, the fund’s annual general meeting approved a distribution, on the condition that the contemplated trade sale of Bank Kedr is successfully completed on or before 31 July 2012. The distribution payout is expected in Q3 2012.The management presentation can be downloaded from the East Capital website.